Year-end report (1 Jan-31 Dec 2007)

Year-end report (1 Jan-31 Dec 2007)Continued improved results for Doro - Core business profitable and strong growthin Care ElectronicFourth quarter 2007 	Sales amounted to SEK 114 million (SEK 121 m) 	Continued improved gross margins and considerably lower expenses led to profitimprovement 	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 receivedFull 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 theyear      	      Comments by the CEO, Jérôme Arnaud   	“From an operational and financial point of view Doro is now a better balancedcompany. In 2007 we divested loss-making subsidiaries in Australia and Poland,applied strict cost control and streamlined the organisation. Thus, therestructuring scheme has resulted in a profit for 2007 as compared with thelosses made over the last couple of years. The majority of our business is still in Home Electronics, which is operating ona tough market with years of continued price pressure. In 2007 we managed tokeep up the volumes but lost revenue due to continued falling prices. However weimproved our margins due to a better cost base and favourable currency trend. InBusiness Electronics we continued to improve sales both in terms of value andvolumes, while the most impressive performance was the growth in CareElectronics. Over the year we doubled our sales in this business area, and inthe fourth quarter sales were up almost 160 per cent. In addition, it is an areawith higher margins than our other business areas. We have also expanded CareElectronics into new markets, including Germany and Spain. Care Electronics is expected to have a significant impact on Doro's future salesgrowth and margins. Via our restructuring scheme we have managed to transformorganisational resources into this area and hence proven that the Doroorganisation can create value in higher margin product areas. We see a strongdemand among the aging population for simplified telephony and electronicproducts. The launch of our GSM phone for the elderly in the fourth quarter hasproven this and resulted in good sales growth. We can confidently move on withour coming product launches in this area in 2008. We will also recruit newdistributors and expand geographically. Thus, we will continue our repositioning of Doro to become a company wellbalanced between Home Telephony, Business Telephony and Care Telephony. In 2008we will invest in these business areas and through this strategy continue toimprove our added value to our customers and gross margins”.Sales The fourth quarterDoro had sales of SEK 114 million (SEK 121 million) in Q4, which, adjusted fordivestments, is in line with last year. At the same time Doro managed toincrease volumes by 9 per cent during the fourth quarter 2007 compared to thesame period last year.Full year 2007Doro'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 volumesactually rose by 6 per cent.Operating profit - EBITThe fourth quarterThe operating profit before tax and financial items was SEK 6 million (SEK -47million). Following the CEO's change, there is a one-off cost amounting to SEK2.6 million that is included in the results. The gross margin improved considerably due to a more favourable mixture ofproducts 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 2007For the full year the operating profit before tax and financial items improvedfrom a loss of SEK 77 million in 2006 to an operational profit of SEK 9 millionin 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 marginproducts. Operating costs have been reduced by 40 per cent compared to last year, this haspartly been possible by focusing the business to fewer entities.Non-recurring costs amount to SEK 3 million for year 2007 compared to SEK 49million for year 2006.Cash flow, investments and financial positionThe cash flow from operations during the fourth quarter was SEK 7 million (12million).Full year cash flow from operations was SEK - 21 million (SEK -6 million) mainlydue to the restructuring scheme, with a negative impact on 2006's results of SEK25 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, thecompany had a total of SEK 60 million at its disposal on 31st December 2007. Theequity/assets ratio was 24 per cent at year-end.Business areasDoro 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 thisyear's sales (83 per cent in 2006), Business Electronics, mainly specialising inbusiness telephony, 12 per cent of sales (10 per cent) and Care Electronics,which specialises in telecom and electronic products for senior citizens, 16 percent of sales (7 per cent).Home ElectronicsThe Home Electronics business area, which previously represented a major part ofDoro's losses, has gradually improved its profit margins over the year. This wasdespite continued lower price levels, which resulted in a sales fall of 17 percent to SEK 238 million (SEK 286 million). The business area turned to profit asa result of cost rationalisation and improved margins. Volumes rose by 2 percent compared to last year.In the fourth quarter sales fell by 15 per cent to SEK 79 million (SEK 93million), mainly due to price pressure. At the same time Doro managed toincrease volumes by 4 per cent.Doro launched the new NeoBio range in September and during Q4 sales started totake off. The new range is the next generation DECT telephones, but the designheritage from Doro's previous series is still visible. Also the new thin line ofDECT telephones, th50 and th55r, was well received by the market with its slimdesign. So far the range has been launched in the Nordic region. Business ElectronicsBusiness Electronics continued to grow through better distribution of existingproducts. Sales rose by 15 per cent to SEK 41 million (SEK 35 million), andvolumes by 20 per cent.During the fourth quarter sales fell by 24 per cent to SEK 8 million (SEK 10million) and volumes by 24 per cent. The fall was expected since the market isgoing through a technological shift to Voice over IP. Doro is planning to launchnew IP telephones in Q1 2008.A new range of corded telephones was launched in the UK and France during thefourth quarter, and will be launched in the Nordic region in 2008.Care ElectronicsCare Electronics doubled its sales to SEK 51 million (SEK 26 million), andvolumes by 73 per cent. Care Electronics supplies adapted telecom and electronicproducts for senior citizens. During Q4 sales grew by 158 per cent to SEK 26 million (SEK 10 million), andvolumes by 86 per cent. The sales increase was mainly driven by the launch of anew GSM phone, HandleEasy 326gsm, with a functional design for elderly people.In the fourth quarter Doro also delivered a new senior cordless phone, MoveEasy316, in France through France Telecom. In addition, the photo phone, MemoryPlus319ph, was launched in senior retail channels in the UK, France, the Nordicregion and Germany.RegionsDoro's biggest markets are France (40 per cent of sales), the Nordic region (35per cent) and the UK (10 per cent). In addition, Doro operates throughdistributors in other selected markets (15 per cent).  FranceDue to difficult market conditions, sales of Home products developed lessfavourably in France in Q4. There was also some slowdown in BusinessElectronics, while Care Electronics had strong sales.Nordic region and the UKThe Nordic region, especially Sweden and Norway, saw good growth in all businessareas during the fourth quarter.The UK increased sales strongly through positive progress of Care Electronicsand Home Electronics.  Other marketsDoro initiated its first sales of Care Electronics products in Germany throughfour different distributors. The Plus Range and GSM for the elderly particularlystarted to show good sales in Q4.PersonnelThe number of employees has fallen over the year from 87 to 58 as a result ofthe restructuring measures. 27 are based in Sweden, 16 in France, 4 in the UK, 4in Norway and 7 in Hong Kong.On 24th October, the Board appointed Jérôme Arnaud as the new CEO, who waspreviously Managing Director of Doro France. In addition, he headed the BusinessElectronics and Care Electronics business areas.Doro's sharesDoro 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 asof 7th January 2008.Parent companyThe parent company's net sales for the full year amounted to SEK 29 million (SEK27 m).The loss before tax for the full year was SEK 31 million (SEK -87 m).RisksDoro's risks and instability factors are mainly related to supplier disruption,customer relations and currency exchange rate fluctuations. Apart from theserisks and instability factors, which are described in the Annual Report 2006 onpages 21-22, no other risks of any significance have been identified during thelast period.OutlookThe gradually improved proportion of higher margin products and the full-yeareffect of the restructured cost base are expected to have a continued positiveeffect on results, while organic growth of sales are still held back by pricepressure in the Home Electronics telephony segment.DividendThe Board has decided to recommend the AGM not to pay any dividend for the year(SEK 0.00).Future reports and eventsAnnual reportDoro'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 toall shareholders and other individuals who have requested a copy from thecompany.AGMThe Annual General Meeting will be held at the Scandic Star hotel, Glimmervägen5, Lund at 5 pm on 6th May, 2008.Quarterly reportsThe Board has decided the following dates for the quarterly reports:January-March 2008: 6th MayJanuary-June 2008: 20th AugustJanuary-September 2008: 23rd  OctoberThe quarterly reports are available atDoro's website: www.doro.comThis quarterly report has been drawn up in accordance with the same accountingprinciples as the last annual report, see review report.Lund, 12th  February, 2008 - 14.30The Board Doro AB (publ)Co. Reg. No 556161-9429Doro is listed on the OMX Nordic Exchange Stockholm Small Cap - Telekom/ITInformation For further information, please contact:CEO Jérôme Arnaud, +46 46 280 50 05 CFO Stefan Sjölin +46 46 280 50 62Magistratsvägen 10SE-226 43 Lund, SverigeTelefon: +46 46 280 50 60www.doro.coReview reportIntroduction We have reviewed this year-end report for 2007. The Board of Directors and thePresident are responsible for the preparation and presentation of this year-endreport in accordance with IAS 34 and the Swedish Annual Reports Act. Ourresponsibility is to express a conclusion on this year-end report based on ourreview. Scope of review We conducted our review in accordance with the Standard on Review EngagementsSÖG 2410 “Review of Interim Financial Information Performed by the IndependentAuditor of the Entity” issued by the Federation of Authorised PublicAccountants, “FAR.” A review consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with the Standards on Auditing in Sweden RS and other generallyaccepted auditing practices. The procedures performed in a review do not enable us to obtain a level ofassurance that would make us aware of all significant matters that might beidentified in an audit. Therefore, the conclusion expressed based on a reviewdoes not give the same level of assurance as a conclusion expressed based on anaudit. ConclusionBased on our review, nothing has come to our attention that causes us to believethat the interim report is not prepared, in all material respects, in accordancewith IAS 34 and the Swedish Annual Reports Act. Lund, February 12, 2008Ernst & YoungIngvar GanestamAuthorized Public AccountantChief AuditorReport 2007


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