Year-end report (1 Jan-31 Dec 2007)
Continued improved results for Doro - Core business profitable and strong growth
in Care Electronic
Fourth quarter 2007
Sales amounted to SEK 114 million (SEK 121 m)
Continued improved gross margins and considerably lower expenses led to profit
improvement
Profit after tax was SEK 6 million (SEK -62 million)
Earnings per share after tax was SEK 0.32 (SEK -3.55)
Continued strong sales growth in high margin area Care Electronics
Introduction of Easy GSM phones for seniors well received
Full year 2007
Sales amounted to SEK 346 million (SEK 433 m)
Improved gross margins and lowered operational cost base
Operational profit amounted to SEK 9 million (SEK -77 m)
Profit after tax was SEK 8 million (SEK -95 m)
Earnings per share after tax was SEK 0.43 (SEK -8.76)
Strong growth in Care Electronics and increased sales for Business Electronics
Home Electronics still being reduced but profitable after restructuring
Considerably improved cash flow from operations during the latter half of the
year
Comments by the CEO, Jérôme Arnaud
“From an operational and financial point of view Doro is now a better balanced
company. In 2007 we divested loss-making subsidiaries in Australia and Poland,
applied strict cost control and streamlined the organisation. Thus, the
restructuring scheme has resulted in a profit for 2007 as compared with the
losses made over the last couple of years.
The majority of our business is still in Home Electronics, which is operating on
a tough market with years of continued price pressure. In 2007 we managed to
keep up the volumes but lost revenue due to continued falling prices. However we
improved our margins due to a better cost base and favourable currency trend. In
Business Electronics we continued to improve sales both in terms of value and
volumes, while the most impressive performance was the growth in Care
Electronics. Over the year we doubled our sales in this business area, and in
the fourth quarter sales were up almost 160 per cent. In addition, it is an area
with higher margins than our other business areas. We have also expanded Care
Electronics into new markets, including Germany and Spain.
Care Electronics is expected to have a significant impact on Doro's future sales
growth and margins. Via our restructuring scheme we have managed to transform
organisational resources into this area and hence proven that the Doro
organisation can create value in higher margin product areas. We see a strong
demand among the aging population for simplified telephony and electronic
products. The launch of our GSM phone for the elderly in the fourth quarter has
proven this and resulted in good sales growth. We can confidently move on with
our coming product launches in this area in 2008. We will also recruit new
distributors and expand geographically.
Thus, we will continue our repositioning of Doro to become a company well
balanced between Home Telephony, Business Telephony and Care Telephony. In 2008
we will invest in these business areas and through this strategy continue to
improve our added value to our customers and gross margins”.
Sales
The fourth quarter
Doro had sales of SEK 114 million (SEK 121 million) in Q4, which, adjusted for
divestments, is in line with last year. At the same time Doro managed to
increase volumes by 9 per cent during the fourth quarter 2007 compared to the
same period last year.
Full year 2007
Doro's sales for the full year amounted to SEK 346 million (SEK 433 million),
which adjusted for divestments represents a fall of 5 per cent, while volumes
actually rose by 6 per cent.
Operating profit - EBIT
The fourth quarter
The operating profit before tax and financial items was SEK 6 million (SEK -47
million). Following the CEO's change, there is a one-off cost amounting to SEK
2.6 million that is included in the results.
The gross margin improved considerably due to a more favourable mixture of
products with higher margins, notably products within the Care business area.
Products with low margins in Home Telephony have successively been terminated.
In addition, improvement of stock control has had a positive effect.
Full year 2007
For the full year the operating profit before tax and financial items improved
from a loss of SEK 77 million in 2006 to an operational profit of SEK 9 million
in 2007.
The turn-around is an effect of the restructuring scheme with a lower cost base,
divestments of non- core businesses and a larger proportion of high margin
products.
Operating costs have been reduced by 40 per cent compared to last year, this has
partly been possible by focusing the business to fewer entities.
Non-recurring costs amount to SEK 3 million for year 2007 compared to SEK 49
million for year 2006.
Cash flow, investments and financial position
The cash flow from operations during the fourth quarter was SEK 7 million (12
million).
Full year cash flow from operations was SEK - 21 million (SEK -6 million) mainly
due to the restructuring scheme, with a negative impact on 2006's results of SEK
25 million which was paid out during 2007.
Investments for the full year amounted to SEK 5 million (SEK 1 million).
At the close of the period Doro had cash and cash equivalents of SEK 8 million,
as well as unutilized credit facilities of SEK 52 million. Accordingly, the
company had a total of SEK 60 million at its disposal on 31st December 2007. The
equity/assets ratio was 24 per cent at year-end.
Business areas
Doro is active in three business areas and based on the new group structure:
Home Electronics, which is mainly home telephony represents 72 per cent of this
year's sales (83 per cent in 2006), Business Electronics, mainly specialising in
business telephony, 12 per cent of sales (10 per cent) and Care Electronics,
which specialises in telecom and electronic products for senior citizens, 16 per
cent of sales (7 per cent).
Home Electronics
The Home Electronics business area, which previously represented a major part of
Doro's losses, has gradually improved its profit margins over the year. This was
despite continued lower price levels, which resulted in a sales fall of 17 per
cent to SEK 238 million (SEK 286 million). The business area turned to profit as
a result of cost rationalisation and improved margins. Volumes rose by 2 per
cent compared to last year.
In the fourth quarter sales fell by 15 per cent to SEK 79 million (SEK 93
million), mainly due to price pressure. At the same time Doro managed to
increase volumes by 4 per cent.
Doro launched the new NeoBio range in September and during Q4 sales started to
take off. The new range is the next generation DECT telephones, but the design
heritage from Doro's previous series is still visible. Also the new thin line of
DECT telephones, th50 and th55r, was well received by the market with its slim
design. So far the range has been launched in the Nordic region.
Business Electronics
Business Electronics continued to grow through better distribution of existing
products. Sales rose by 15 per cent to SEK 41 million (SEK 35 million), and
volumes by 20 per cent.
During the fourth quarter sales fell by 24 per cent to SEK 8 million (SEK 10
million) and volumes by 24 per cent. The fall was expected since the market is
going through a technological shift to Voice over IP. Doro is planning to launch
new IP telephones in Q1 2008.
A new range of corded telephones was launched in the UK and France during the
fourth quarter, and will be launched in the Nordic region in 2008.
Care Electronics
Care Electronics doubled its sales to SEK 51 million (SEK 26 million), and
volumes by 73 per cent. Care Electronics supplies adapted telecom and electronic
products for senior citizens.
During Q4 sales grew by 158 per cent to SEK 26 million (SEK 10 million), and
volumes by 86 per cent. The sales increase was mainly driven by the launch of a
new GSM phone, HandleEasy 326gsm, with a functional design for elderly people.
In the fourth quarter Doro also delivered a new senior cordless phone, MoveEasy
316, in France through France Telecom. In addition, the photo phone, MemoryPlus
319ph, was launched in senior retail channels in the UK, France, the Nordic
region and Germany.
Regions
Doro's biggest markets are France (40 per cent of sales), the Nordic region (35
per cent) and the UK (10 per cent). In addition, Doro operates through
distributors in other selected markets (15 per cent).
France
Due to difficult market conditions, sales of Home products developed less
favourably in France in Q4. There was also some slowdown in Business
Electronics, while Care Electronics had strong sales.
Nordic region and the UK
The Nordic region, especially Sweden and Norway, saw good growth in all business
areas during the fourth quarter.
The UK increased sales strongly through positive progress of Care Electronics
and Home Electronics.
Other markets
Doro initiated its first sales of Care Electronics products in Germany through
four different distributors. The Plus Range and GSM for the elderly particularly
started to show good sales in Q4.
Personnel
The number of employees has fallen over the year from 87 to 58 as a result of
the restructuring measures. 27 are based in Sweden, 16 in France, 4 in the UK, 4
in Norway and 7 in Hong Kong.
On 24th October, the Board appointed Jérôme Arnaud as the new CEO, who was
previously Managing Director of Doro France. In addition, he headed the Business
Electronics and Care Electronics business areas.
Doro's shares
Doro is listed on the OMX Nordic Exchange Stockholm Small Cap - Telekom/IT.
Eight key employees bought 130 000 shares in the company from DO Intressenter as
of 7th January 2008.
Parent company
The parent company's net sales for the full year amounted to SEK 29 million (SEK
27 m).
The loss before tax for the full year was SEK 31 million (SEK -87 m).
Risks
Doro's risks and instability factors are mainly related to supplier disruption,
customer relations and currency exchange rate fluctuations. Apart from these
risks and instability factors, which are described in the Annual Report 2006 on
pages 21-22, no other risks of any significance have been identified during the
last period.
Outlook
The gradually improved proportion of higher margin products and the full-year
effect of the restructured cost base are expected to have a continued positive
effect on results, while organic growth of sales are still held back by price
pressure in the Home Electronics telephony segment.
Dividend
The Board has decided to recommend the AGM not to pay any dividend for the year
(SEK 0.00).
Future reports and events
Annual report
Doro's annual report will be published on the company's website (www.doro.com)
no later than 10 April, 2008, after which the printed version will be sent to
all shareholders and other individuals who have requested a copy from the
company.
AGM
The Annual General Meeting will be held at the Scandic Star hotel, Glimmervägen
5, Lund at 5 pm on 6th May, 2008.
Quarterly reports
The Board has decided the following dates for the quarterly reports:
January-March 2008: 6th May
January-June 2008: 20th August
January-September 2008: 23rd October
The quarterly reports are available at
Doro's website: www.doro.com
This quarterly report has been drawn up in accordance with the same accounting
principles as the last annual report, see review report.
Lund, 12th February, 2008 - 14.30
The Board Doro AB (publ)
Co. Reg. No 556161-9429
Doro is listed on the OMX Nordic Exchange Stockholm Small Cap - Telekom/IT
Information
For further information, please contact:
CEO Jérôme Arnaud, +46 46 280 50 05
CFO Stefan Sjölin +46 46 280 50 62
Magistratsvägen 10
SE-226 43 Lund, Sverige
Telefon: +46 46 280 50 60
www.doro.co
Review report
Introduction
We have reviewed this year-end report for 2007. The Board of Directors and the
President are responsible for the preparation and presentation of this year-end
report in accordance with IAS 34 and the Swedish Annual Reports Act. Our
responsibility is to express a conclusion on this year-end report based on our
review.
Scope of review
We conducted our review in accordance with the Standard on Review Engagements
SÖG 2410 “Review of Interim Financial Information Performed by the Independent
Auditor of the Entity” issued by the Federation of Authorised Public
Accountants, “FAR.”
A review consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with the Standards on Auditing in Sweden RS and other generally
accepted auditing practices.
The procedures performed in a review do not enable us to obtain a level of
assurance that would make us aware of all significant matters that might be
identified in an audit. Therefore, the conclusion expressed based on a review
does not give the same level of assurance as a conclusion expressed based on an
audit.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the interim report is not prepared, in all material respects, in accordance
with IAS 34 and the Swedish Annual Reports Act.
Lund, February 12, 2008
Ernst & Young
Ingvar Ganestam
Authorized Public Accountant
Chief Auditor
Report 2007
