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Annual Report 2006
DORO_annualreport_070404-3mm-ble1 1 4/4/07 10:28:46 AM
CEO’s statement 4
Doro in a minute 5
A clear role on the market 6
A new Doro emerging 7
The battle for consumers 9
Home Electronics 10
Luba Sports Electronics 12
Business Electronics 13
Care Electronics 14
Sourcing and distribution 15
Quality 16
Shares 17
Directors’ report 18
Risk management 21
Income statement 23
Balance sheet 24
Shareholders’ equity 26
Cash flow 27
Quarterly summary 28
Five-year summary 29
Accounting principles 30
Notes 33
Definitions 39
Auditors’ report 41
Group management 42
Board of directors 43
Doro AB
President and CEO Rune Torbjörnsen
Head office, Magistratsvägen 10, SE-226 43 Lund, Sweden Telephone +46 46 280 50 60 Fax +46 46 280 50 01
Doro Nordic AB
Magistratsvägen 10, SE-226 43 Lund, Sweden Telephone +46 46 280 50 00 Fax +46 46 280 50 01
Doro Denmark A/S
Park Allé 350 D, DK-2605 Bröndby, Denmark Telephone +45 45 94 02 00 Fax +45 45 82 52 20
Doro Tele OY
Niittykatu 6C, FI-02200 Espoo, Finland
Telephone +358 9 540 000 Fax +358 9 56 26 522
Doro A/S
Kråkerøyveien 2, NO-1671 Kråkerøy, Norway Telephone +47 69 358 600 Fax +47 69 358 669
Doro Atlantel sp.zo.o.
ul. Zawila 45, PL-30-422 Krakow, Poland
Telephone +48 12 415 4557 Fax +48 12 415 9645
Doro UK Ltd
1 High Street, Chalfont St Peter, Buckingshamshire, SL9 9QE, UK
Telephone +44 8708 610 200 Fax +44 1753 883 081
Doro SAS
BP 446, FR-780 55 Saint-Quentin-en-Yvelines Cedex, France Telephone +33 1 30 07 17 00 Fax +33 1 30 07 17 79
Doro Australia Ltd Pty
5/7 Sailsbury Road, Castle Hill NSW 2154, Australia Telephone +61 2 8853 8488 Fax +61 2 8853 8489
Doro Hong Kong Ltd
Unit 222, No. 1 Science Park West Avenue,
Hong Kong Science Park, Shatin, New Territories, Hong Kong
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Year in brief
Annual General Meeting
The Annual General Meeting will be held at 5 p.m. on Wednesday 25 April 2007, at the Scandic Hotel Star in Lund, Sweden.
Right to participate. Shareholders wishing to participate and vote must:
– be registered in the shareholders’ register.
– notify the company of their intention to attend.
Registration in the shareholders’ register kept by VPC AB (the Swedish Central Securities Depository) must be completed not later than 19 April 2007 (5 days before the meeting). Sharehold- ers whose shares are registered in the name of a nominee must temporarily re-register their shares in their own name, no later than 5 days before the AGM. This should be done in good time as it takes some time for nominees to make this re-registra- tion.
Notification. Notification of an intention to participate at the AGM should be made to the company via email to info@doro.
com, by post to Doro AB, Magistratsvägen 10, 226 43 Lund, Sweden by telephone +46 46-280 50 67, or by fax on +46 46 280 50 01 by 3 p.m. on Thursday 19 April at the latest.
The notification should contain the shareholder’s name,
Volumes remain unchanged despite fewer sales. Doro recorded sales of SEK 433 million (SEK 621 m) in 2006, a drop of 30 per cent compared to last year. Adjusted for the sale of Upgrade, sales have fallen by 27 per cent to SEK 394 million (SEK 539 m).
The market for the main product, cordless phones, hasn’t changed in volume terms compared with last year. The market picture should be compared with strong volume growth in 2004 and 2005. The slowing demand led to greater stock levels at customers and competitors in the first six months. Significant clearance sales occurred in the first nine months of the year, while Doro reduced its market share of DECT telephones over this period. Sale prices continued to fall and clearance sales of discontinued models also increased the general price pressure on the market.
Significant losses and major cost-cutting measures. Doro reported a significant loss. The loss before tax and financial items was SEK 77 million (SEK –71 m). The headcount fell by 47 to 80 (127), which led to fewer overheads ahead of 2007. The year was hit with one-off costs and restructuring costs of SEK 49 million (SEK 36 m). Doro sold the previously wholly-owned subsidiary UpGrade Communication AB on 16 August, affecting Doro’s results by around SEK –5 million up until this date. Of the companies sold, Australia burdened results with around SEK –13 million. The Group’s loss after tax was SEK 95 million (SEK –75 m) for the year.
civic registration number, shareholding, telephone number and, if necessary, proxy’s name.
Dividend. It is proposed that no dividend (SEK 0.00 last year) be paid for the 2006 financial year. A redemption of shares is not proposed.
Financial information. Doro AB’s financial information is avail- able in Swedish and English. Reports can be obtained from Doro’s website, www.doro.com or ordered by fax on +46 46 280 50 02 or via email at info@doro.com. Distribution will be via email.
Annual Reports can also be ordered through the mail from Doro AB, Magistratsvägen 10, 226 43 Lund, Sweden.
Doro will publish financial reports for the 2007 financial year on the following dates:
– Q1 report 25 April.
– Q2 report 28 August.
– Q3 report 24 October.
– The unaudited financial statement, 12 February 2008.
– Annual Report for 2007, April 2008.
– Annual General Meeting for 2007, April 2008.
Cash flow has been positively affected by reducing the working capital, but negatively by the significant losses. Cash flow for current activities was SEK –5 million (SEK –44 m).
New share issue and new Board. Doro’s Board decided to hold an extraordinary general meeting on 7 June 2006 and carry out a new share issue with preferential rights for subscription by existing shareholders. The issue was carried out to strengthen the company’s financial position and give Doro financial discre- tion. The new share issue provided Doro with SEK 71.2 million after guarantees and other issue costs.
Nordea. Nordea sold its 9.2 per cent share of Doro AB to DO
Intressenter AB in conjunction with the restructuring announced
on 11 December 2006.
CEO’s statement
We focused the business on the European consumer electronics market and significantly streamlined the organisation in 2006.
As a result, we sold our subsidiary Upgrade Communication. Our marketing companies in Australia, Finland and Poland have been, or will be, replaced by a series of distributors. Staff cuts and selling off loss-making units will cut overheads by around 20 per cent.
We also carried out a number of measures during the year for Doro to improve the way it meets customers’ and suppliers’
demands for an effective and productive distribution chain partner. We built up solid expertise about consumers’ needs and collective behaviour and invested in further developing Doro’s products, both technically and with improved design in coop- eration with world-renowned design companies.
Concentrating the business on the European market means that we will offer our products in future via major electronics chains, independent distributors and agents. To further improve our businesslike approach we have set up four business units – Home Electronics, Luba Sports Electronics, Business Electronics and Care Electronics. As a result, Doro’s skill centres will be concen- trated in Lund and Paris.
A new, significantly stronger sales organisation was set up in 2006 to focus on considerably improving customer care with Key Account functions that work closely with our distributors.
The Hong Kong office will be strengthened and expanded in 2007 to have better control over purchasing, product develop- ment, product quality and supplies from our subcontractors in Asia. The office moved to more modern premises at the Hong Kong Science & Technology Park during the year.
Over the year we reorganised the company’s financial base for our business; Doro’s restructuring and investment in developing the range and new sales organisation has been made significantly easier through the new share issue and Nordea’s capital injec- tion, which gave Doro a total of SEK 96 million.
To underpin Doro’s continued competitive strength in future, we are working on a comprehensive multi-stage strategy. The first is to focus the business and get to grips with profitability. The second is to underpin our competitive strength by extending our
2006 was a very troublesome year for Doro. Growth in Doro’s biggest product area, the market for cordless phones in Europe slowed down, while new environmental regulations were introduced. This consequentially led to major overcapacity in the industry with higher stock levels and continued strong price pressure.
consumer orientation by focusing more clearly on our target groups. The third is to strengthen Doro’s partnership with Euro- pean distributors and safeguard our long-term competitive size and position on the European consumer electronics market. I’ll give you further information about these strategically important issues later in 2007.
I would also like to thank all employees for their sterling work during 2006.
Looking forward to the coming quarters I predict a continued troublesome market situation for cordless phones and Doro’s continued expansion of the product portfolio is of major signifi- cance for the company’s continued development. Overall we are entering 2007 with lower volumes and facing a stiff, ongoing, competitive situation. A clear strategy, reduced working capital and lower overheads also give us less of a risk profile, but also a good opportunity to create a modern consumer electronics company over the long-term.
Rune Torbjörnsen
President and CEO
5 Business concept. To develop and market telecom and electronic
products which provide use, enjoyment and inspiration for an easier, more enjoyable, everyday life.
Aims. Doro’s aims for 2007 are to create profitable growth by:
– Strengthening the brand
– Creating a profitable product portfolio – Continuing with European market expansion – Increasing and streamlining sourcing from Asia
Strategies. Doro will be following its strategy of minor adjust- ments over the next year. The strategy for 2007 is to continue boosting the relevance of Doro’s products with consumers, customers and suppliers by:
– Channelling the product range through various kinds of retailers
– Becoming unparalleled in providing products, quality, design and customer relations
– Deepening our consumer knowledge
– Expanding into new categories for telephony-based and non telephony-based products
– Improving processes for faster, improved product development and management
– Strengthening our brand and identity
Vision. We see a world where consumers want more from con- ventional products. Products that extend personalities through style and design, by expressing priorities, views and values.
People want products that provide an experience, a small “wow”
feeling that brightens up everyday life.
Mission. To please, help and make people’s everyday life simpler through expressive, well-designed electronic products with a personal touch.
Market. Doro mainly operates on the European and Australian corded and cordless telephone markets. As Doro develops more products in other areas, the proportion of telephony products will fall, but still make up the clearly dominant category. The European telephony product market is estimated to be worth around SEK 18 billion. In 2006 Doro launched Dect telephony products, corded telephony products, IP telephony products, accessories such as baby monitors, cordless headsets and uni- versal accessories that can be used for mobile telephony, music and computer applications. The IP telephony market is still in the development stage, but is in a dramatic growth phase. Doro expects the IP telephony market to dramatically reach a growth rate of between 50-100 per cent per year. The IP telephony sector is expected to take around 2-10 per cent of the overall value of the fixed telephony market in 2007. Doro has a strong position among retailers. The clear division in four Business Units – Home Electronics, Luba Sports Electronics, Care Elec- tronics and Business Electronics makes it easier for Doro to complement the product portfolio by adding various new attrac- tive products. The Doro Group has subsidiaries in Sweden, Norway, Denmark, Finland, France, the UK, Australia and Poland.
Sales of Doro’s products take place on around 30 markets.
Competition. Competition varies on the different European markets and within the various business units. In the Home
Doro in a minute
Electronics unit the market for corded telephones remains weak.
Following several years of strong volume growth in the cordless telephone market, over 20 per cent per year, 2006 saw no growth, and continued to witness tough competition and strong price pressure. Competitors within cordless telephony are primarily Siemens, Philips and Panasonic together with certain national operators. Within corded telephony competitors include AT-links, Binatone and national operators. Competition is as yet fragmented for IP telephony and other new products. Within IP telephony Doro competes with companies such as Cisco and a number of smaller players and within the Business Electronics (professional use) business unit mainly with Plantronics and GN Netcom.
Customers. Doro’s largest customers in 2006 were still in the Home Electronics business unit aimed at private consumers.
Customers include electronics chains, department stores, super- markets and telecom operators. Customers in the Nordic region include Elkjöp/El-Giganten, OnOff, TeliaSonera and Coop. In the rest of Europe Doro’s products are sold via Carrefour and Darty (France), Comet (UK), MediaMarkt (Poland), Retravision and Harvey Norman (Australia). Professional products in the Business Electronics business unit aimed at workplaces are primarily sold via chains that offer telephony products or office material. As Doro’s four business units are now being developed, more new types of products will be launched than before in other sales channels.
Products. Doro is now widening its product range beyond telephones in conjunction with the formation of the new business units.
Doro’s product range also includes headsets, baby monitors, Walkie-talkies (PMR), cordless earphones and IP telephones.
Over the next year Doro will continue to launch products within the framework of the four business units.
Employees and organisation. Doro employs 80 people. The head office is in Lund, Sweden. Most development work is carried out at the head office, which also houses the central marketing department. Doro also has local marketing offices in eight coun- tries plus an office in Hong Kong. All manufacturing is subcon- tracted to a group of specially chosen companies in China, South Korea and Taiwan.
Shares. Doro’s shares are quoted on the Stockholm Stock Exchange’s Mindre Bolag (smaller companies) list, under the Doro ticker. At the end of 2006 the total number of shares in the company was 17.4 million and Doro’s total market value was SEK 87 million.
History. Claes Bühler founded Doro in 1974. The first product
was a telephone answering machine called Doro. The Doro name
is derived from the initial two letters of the names of the inven-
tor’s sons, Donald and Robin. In 1993 Doro was introduced onto
the Stockholm Stock Exchange and the following year the com-
pany acquired companies in Norway, Denmark and Finland. In
the late 1990s Doro continued to acquire companies in Europe
and Australia. Rune Torbjörnsen took over as CEO in 2003. Doro
carried out a new share issue in 2006. As a result of the new
share issue Doro’s new main owners are Alted AB, Dirbal AB and
Handels & Investment AB Venture. The subsidiary UpGrade
Communications was sold during the year to Fibrolan Ltd.
Integration of the value chain. Doro’s value is built on a close collaboration between our suppliers and retailers, where Doro contributes with unique expertise and knowledge about the products, design and consumers.
Doro has built up a strong position with its partners and suppli- ers thanks to 30 years’ experience of product development in Asia and by being an enthusiastic and successful customer.
A well-developed logistics network plus effective and flexible processes mean that Doro is strongly positioned with the major European retailers. Close relationships are facilitated through an open, non-prestigious stance towards sharing information about market trends.
Doro’s central role as a bridge between supplier and retailer creates conditions and skills that can be used to expand into new areas and markets. Doro as a product company mainly builds on the following underlying factors:
Focusing on well-defined target groups. Doro has developed market segmentation that identifies and provides wide-ranging knowledge and understanding about different users’ behaviour and habits. It’s crucial for a successful product company to use a segmentation model and interpret different knowledge to cor- rectly develop new, innovative, products irrespective of product category or business unit.
A clear and
productive role on the market
Doro’s role on the market is to be the natural link in the value chain between sup- plier and retailer. Doro uses its wide-ranging knowledge about the market’s various driving forces and then develops products that meet the end user’s needs.
Expansion into new areas. Doro’s strategy also includes provid- ing a better, wider range by using segmentation and other global factors. This means that Doro’s product portfolio will in future be expanded using the target groups’ requirements as a starting point. In future, the portfolio will of course also be characterised by Doro’s solid experience and expertise in telephony, audiology and ergonomics. Ergonomics can be used in many different types of product categories. An important consequence of this is that a more balanced product portfolio is created, with less depend- ency on cordless telephones and thus less risk.
Developing new concepts. To succeed in developing and selling products requires clear, well-defined concepts. Doro’s strong concept development in 2006 has led to a division into four new business units, Home Electronics, Luba Sports Electronics, Care Electronics and Business Electronics. Clear product concepts create greater relevance and thereby significantly improve con- ditions for reaching the target group at the moment it’s most inclined to buy.
Technology and success synergies. Products or functions that
have proven to be successful will, in all likelihood, be success-
ful in many areas. A natural part of Doro’s process is to identify
if a function or product can be used in other concepts and thereby
provide new and better values.
7
A new Doro is
emerging from a tough market situation
During a somewhat troublesome market situation, with strong pricing pressure and a lot of stock at retailers over the first part of the year, Doro has been committed to rearranging its organi- sation according to the change strategy that has characterised the business over the past two years.
The new Doro that’s now emerging is a far more modern and agile company than before. The organisation has slimmed down to a headcount of 80, a drop of 37 per cent compared to last year and a drop of 53 per cent compared to 2004. Apart from a few global factors the changes have been consciously driven by the determination to create a pure product company that can build a profitable business with growth via its unique strength in consumer electronics.
A pure consumer electronics product company
The subsidiary UpGrade Communications was sold as part of the process of becoming a pure product company, which strength- ened Doro’s focus on consumer electronics. The sale has meant that Doro has now completely left the B2B market for systems.
Coupled with the successful share issue in June 2006, this means that Doro can now invest more in new product areas outside telephony and focus on creating the most cost-effective structure for the Group.
The continuing process of change has meant that the five busi- ness units created in 2005 have been streamlined and adjusted to become four business units that meet market needs in a better way. Change is a natural development following Doro’s steps last
year towards new product areas. In 2006 the product range was specified, processes and tools created to further and better reflect the focus on the various business areas.
Four business units in well-defined areas
Doro defined four concepts in 2006 that each shaped the organisation of the new Doro.
A strong brand, mainly in Sweden, and in particular aimed at the retail trade, includes 30 years’ experience in telephony communication. This, coupled with new expertise in consumer goods and good retailer relationships, and a history of volume sales, has meant that the concept has so far been well received by the retail trade, irrespective of channel.
The overall relevance of Doro’s role between supplier and retailer is increasing, something that more people in the stiffening competition haven’t succeeded with.
Every business unit is based on greater focus in areas where Doro has experience, expertise and already successful sales.
– Home Electronics. Products for a better, more comfortable, smarter home. The basic framework is Doro’s telephony business, including IP telephony. Home aims all products towards Doro’s primary target groups. The focus is on creating added value for the modern family and young people moving into their own home for the first time.
Doro continued to adapt itself in 2006 to a market seeing rapid change. The com-
pany’s change strategy and rationalisation scheme made a clear breakthrough and
a new Doro is beginning to take shape. From being by definition a telephony com-
pany strongly seen as industrial, Doro is now a market-adapted, cost-efficient
product company, with a portfolio spanning four distinct areas.
– Luba Sports Electronics. Durable sports electronics for an active and health-conscious target group. The framework is Doro’s successful sales of walkie-talkies (PMR).
Luba Sports Electronics’ ambition is to meet the clearer market requirements. The business unit provides durable sports electronics with smart functions for unhindered communication during outdoor activities.
– Business Electronics. Carefully, thoughtfully developed products for professional use, with high demands for user-friendly sound quality, Ergonomic Sound
™. The framework builds on Doro’s 30 years’ experience of telephony, audiology and successful sales of telephone headsets. Furthermore, greater demands are being placed on avoiding noise-related work injuries. Doro has therefore developed a series of products in the business unit aimed at all target groups using telephony for much of their working day. The products are characterised by very high quality, but mainly by user-friendly sound and functions for audio stress reduction.
– Care Electronics. Specially designed, adapted products for senior citizens with some kind of disability, such as poor hearing or other physical disabilities. The framework builds on the suc- cessful sales of telephones with large buttons, which after considerable analysis has been developed to contain new, unique products. Care Electronics is also the business unit that develops products specifically for senior citizens, with various physical disabilities. The emphasis in Care Electronics is in adapted functionality and expressed simplicity.
Every business unit has far-reaching responsibility for results and the ambition is that the respective business units should be run as if they were individual companies. There are clear signs at the organisation of an entrepreneurial spirit and a strong willingness to create a completely new Doro. The parent company is responsible for group management functions such as strategic business development and overall financing, investment relations and a number of service functions for other parts of the Group.
These functions include coordinating marketing, product devel-
opment and quality assurance, plus coordinating purchasing and logistics to optimise material and product flow. Product develop- ment takes place mainly at the offices in Lund and Hong Kong, while all manufacturing takes place in China, Taiwan and South Korea. Doro’s office in Hong Kong is responsible for maintaining and ensuring good, even quality. The office is also responsible for logistics and supplier relationships, plus carrying out quality checks on site at the manufacturers.
Typical attributes of a Doro product
Doro’s product development places specific emphasis on provid- ing a personal touch.
1. Design with harmony and character 2. User-adapted functions
3. Total quality experience 4. Value-for-money lively design
Doro’s products are sold mainly in the Nordic region, the UK, France, Poland and Australia. Of Doro’s net sales in 2006, around 40 per cent was derived from the Nordic region, around 49 per cent from the rest of Europe and the remaining 11 per cent from the rest of the world.
Wide knowledge about the end user
For a product company like Doro knowledge about the end user is crucial. Doro is therefore using a lot of resources to acquire expertise about consumer values, needs, behaviour and require- ments. Social and consumer trends are also important parameters that Doro is continually monitoring to, as far as possible, safe- guard successful product and concept launches. Doro continued during the year to cooperate with Ericsson Consumer & Enterprise Lab. Access to information about people in over 35 countries helps Doro hone its communication further towards its primary target groups. Doro is extremely committed to aiming its mes- sages at all the important marketing channels such as in stores, retailer material, websites and in the media.
Northern Europe/Central Europe Southern Europe
Doro’s market presence
The battle
for consumers
The battle for consumers has never been tougher. The message about new products with unique functions reaches consumers daily. Doro consciously works to be seen by its target groups all the way from the home to inside the store.
Product design must be formed so it’s easily recognisable, but also so it fits into its pre- conceived environment. Doro therefore works with leading designers around the world to create that little extra to provide character and differentiation, but which is also user- friendly and appreciated by the user.
Doro
Pink Diamond
– Communication is clearly the largest part and consists of com- munication products for the home, i.e. home telephones (corded and cordless) for the fixed network and via the internet. Doro also has combination telephones that provide access to both networks.
– Safety currently consists of baby monitors and many safety- related products are under development.
– Entertainment is a rapidly growing area both for consumer electronics and other areas. Doro began developing many new, attractive products in this area in 2006.
The Doro brand is used for quality products in Home Electronics in the Nordic region, France, the UK, Poland and Australia but also in Italy, Greece, Hungary and the Czech Republic. Some products also use the Doro Matra brand in France, and the Atlantel and Airborne brands.
In 2006 around 49 per cent of Home Electronics’ net sales were attributable to sales of cordless telephones, around 25 per cent to corded telephones, around 3 per cent to IP telephony and around 23 per cent to other products.
Continued strong price pressure on the market
2006 was yet another year characterised by strong price pressure for cordless telephony. The market has also been put under pressure by EU directives about reducing harmful substances in electronics products (RoHS), introduced on 1 July 2006. Prior to the introduction of the directive, European retailers were put under pressure to sell off all products that didn’t comply with the directive, which meant major difficulties for companies like Doro to sell new products. The price per base unit for cordless units calculated from 2002 to 2006 is expected to have fallen by around 43 per cent for analogue telephones and by around 50 per cent for cordless telephones (DECT telephones) and other
According to estimates by the market research company MZA, around 35.2 million cordless telephones were sold in Western Europe in 2006. 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 estimates that the number of handsets sold in Europe in 2006 was 48.6 million. This corresponds to a drop of around 2 per cent compared to 2005. The market for cordless telephones in Western Europe is expected to see sales increasing up to 2010.
The value of the European market for cordless telephones is expected to be around SEK 13.8 billion for 2006 and SEK 14 billion by 2010.
IP telephony is continuing to develop strongly and the technol- ogy is continuing to become more accepted and used. In addition, much of the extra use is due to the extension and speed of broadband networks around the world. According to latest reports from the Swedish PTS (the Swedish National Post and Telecom Agency) the number of subscribers of IP-based telephony was around 314,000 on the Swedish telephony market by mid-2006, a rise of almost 150 per cent compared to the same period in 2005. Doro estimates that the IP telephony market will be around 2–10 per cent of the fixed telephony subscriptions depending on country, with an annual growth rate of around 50–100 per cent. Doro’s aim is to follow market growth and have the same share of IP telephony as the market in general.
DECT technology completely dominates the European market for cordless telephony. The technology is not as dominant in Australia, where various digital and analogue technologies com- pete with each other.
Good relationships with retailers
Doro’s Key Account Management organisation has continued to
Business unit
Home Electronics
Brand: Doro, Doro Matra, Audioline, Atlantel and Airborne.
Key words: Smart function and design for your home.
Target group: Modern families.
with key retailers. Irrespective of national borders each major customer has a key account manager at Doro who makes sure that customer needs are met and requirements covered by Doro’s portfolio.
The close working relationship with a major distributor has meant that Doro’s products are now sold on more markets than at any time in the past.
Successful launch of many new products
In 2006 Home Electronics’ launched the Doro 635ipw, a cord- less telephone for both IP and fixed telephony. A simple press of a button allows the user to switch between using ordinary fixed network calls and Skype. The telephone is also equipped with a Skype contacts book or “buddy list”, which allows the user to see what friends are online and thereby can be called.
It’s as simple to call as usual via the fixed telephone network.
Doro has also launched the new cordless 600 and 700 telephone series. The Doro 700 series consists of a number of telephones with soft lines and new functions compared to the former 500 series. The 700 series also includes the Doro 760x, which is dust, water and shock resistant.
Doro launched a special version of the Doro 720 in 2006 in pink called the Doro Pink Diamond. The telephone was sold as a special edition and was a complete sales success without com- parison and it also helped provide a lot of publicity for Doro as a brand.
Doro 635ipw
A cordless telephone for both IP
and fixed telephony
Business unit
Luba Sports Electronics
Electronics products used today are not just for home environ- ments or at the office. As the convergence between different technologies increases it also provides more, new areas of use.
Doro has developed a concept called Luba Sports electronics.
These include products suited for an active life. The key aspect of these products is that they can be used anywhere, from sail- ing on the ocean to the black ski runs of the Alps.
Smart products for active leisure time
Doro’s Luba Sport Electronics business area develops sports electronics products such as walkie-talkies (PMR), headsets, etc. The range is being developed and will soon include more products. Interest in technology and active leisure time are both areas of interest for the target group that Luba electronics is aiming at. It’s important for Doro to create a fresh product portfolio with an expressed benefit and “must have” feeling. The existing range of sports electronics is limited and many manu- facturers stick strictly to certain types of products such as watches, walkie-talkies or GPS.
More retailers and alternative channels
There is a need for suppliers to the retail trade who can provide something new. Doro’s expertise in other related communication products means that the company is relevant for retailers. The sports retail industry is very interested in Doro’s Luba concept and some of Luba’s products are already sold by the Stadium sports chain in Sweden. A number of other retailers will be added in 2007.
Brand: Doro Luba.
Key words: Sports electronics products developed to tackle tough environments.
Target group: Young people with an interest in tough sporting and leisure activities.
The Luba brand will require time and resources to take its place on the market. The way of achieving a prominent place in the sports segment is to make relevant products for a demanding target group. Top quality must be ensured and the brand must be able to be associated with the right things. Doro will therefore invest in activities to raise awareness. Cooperation with other leading manufacturers in the sports segment is also likely.
Products in the Luba range today include the Doro Luba Freebird, a robust walkie-talkie with a range of 8 kilometres, plus the Doro Luba Blackbird, a watertight watch with an integrated walkie- talkie function.
Fragmented competition
Competition on the market currently consists of manufacturers
that are well-defined to a certain segment of the market. Manu-
facturers of walkie-talkies include companies like Motorola,
Zodiac, etc. Doro’s sport electronics range is under construction
and it’s therefore impossible to estimate a market share yet. We
are however confident that we’ll see promising market growth.
13 Doro’s Business Electronics provides well-adapted products for
a better working environment using Doro’s 30 years’ experience of telephony and in-depth user knowledge.
Customer groups with different requirements
Doro Prosound is aimed at professional users. The target group has been divided into four groups: people who receive calls, people who make calls, for representatives and for office use.
The reason for this division is that the requirements of these different groups varies. In support departments users often have their own headsets and prefer to invest in a headset that suits their demands. On the other hand it’s not unusual for users at a telemarketing company to share headsets and demands for durability and function are often not as strict. A customer group that does place high demands on the design of headsets is receptionists. At an office, bank or hotel it’s often these people who are the face of the company and therefore the demands placed on the product to provide a suitable look increases. The use of headsets has increased internally at many offices as the company has realised the work-related risks of talking a lot on the telephone without a headset. Demands from this customer group mean that products must be both visually and ergonomi- cally pleasing.
Ergonomic sound is an important factor
Ergonomic sound is an important concept for Business Electron- ics. This involves much of the challenge, but also the essence of Doro’s products for professional users. Doro’s extensive expe- rience of telephony and a dedicated approach to audiology has meant that Doro’s headset products can be said to belong to a new generation. ActiveGuard
™technology inhibits sudden high pitch sounds reaching the users’ ears and a more ergonomic sound is achieved using the many fine tuning options both inside and on the outside of the headset.
Brand: Doro Prosound.
Key words: Ergonomic electronics products for professional users.
Target group: Small and medium-sized companies.
Headsets for demanding users
100,000 people in Sweden alone work at Swedish call centres and they all use headsets every day. There are however risks involved with using poor quality headsets. Many studies in the UK show that poor quality headsets can cause acoustic shock or tinnitus. Doro is working hard to constantly develop new, better headsets that eliminate these risks. One example of this is Prosound hs1190. This is a headset with twin earphones specially developed for very demanding users. To protect people’s hearing the hs1190 has been equipped with ActiveGuard
™, which eliminates sudden high noise levels. It comes equipped with reinforced Kevlar cable and a noise-reducing microphone, making Prosound hs1190 the perfect choice for call centres and support departments. TCO Development of Sweden has therefore produced a requirements specification for certification of headsets like those for screens. Requirements that must be met include decibel levels and volume control. Doro is now working on developing new products that can be TCO marked in the near future.
Competitors on the market include the American Plantronics, Danish/German Sennheizer and Danish GNNetcom, where the latter is the dominant player. It is estimated that Doro has 10–15 per cent of the total market. A strong driving force on the market is the transition to IP telephony, a technology that Doro has extensive experience of.
Business unit
Business Electronics
Many people in much of the world are living significantly longer than previous generations and many are remaining in good health long into old age. This is especially true of the western world.
Doro has therefore developed a product series in the Care Elec- tronics business area, which makes it possible for the senior target group to continue communicating in an uncomplicated way.
Two clear product ranges
One in five people in Europe today are over 60 and the average life expectancy is around 78. Though more people feel young at heart well into old age the fact is that age still affects require- ments. There is therefore a huge potential in developing products that meet the demands set by our senior citizens. Doro has therefore now gathered together products aimed at this target group in the Care Electronics business area, which in turn is divided into two segments:
– Easy – communication products adapted to senior citizens’
general needs
– Plus – communication products specially adapted to meet senior citizens’ specific needs
What is significant about Care Electronics’ products is that they have been developed according to the target groups’ needs, but also that they are, just like all other Doro products, characterised by modern design.
Ergonomic products with few competitors
By expanding Doro’s main retailer network with specialist chan- nels more directly aimed at senior citizens it opens up possi- bilities of accessing the target groups on their terms. Care Electronics Easy will be sold via home electronics chains, but both Easy and Plus will be available in places where other prod-
Brand: Doro Care (Easy and Plus).
Key words: Electronic aid and ease of use.
Target group: Senior citizens.
ucts aimed at senior citizens are sold or in partnership with other organisations wishing to reach these target groups. This might be in traditional stores, chemists or internet sales.
In 2006, in partnership with the award-winning Swedish design company Ergonomidesign, Doro developed a completely new product series, which will be launched in 2007. The series includes products that have been developed with the target group’s specialist needs in mind, for products that not only address a certain disability, but also are ergonomically correctly formed. Doro’s audiological expertise has also played an impor- tant role in ensuring that the products are of the highest quality in terms of sound. The current Care Electronics product range mainly consists of a number of different telephones that have some functions specially enhanced for the target group’s needs in mind. Doro AlertEasy 314c is an easy-to-use corded telephone with an alarm, for simple, safe communication. Using the remote control it’s possible to call an alarm number and communicate via speakerphone function. The telephone is also compatible with hearing aids and equipped with a caller identity display.
Doro PhoneEasy DECT 315 is an easy-to-use cordless telephone with large buttons. Answering and calling functions are all accessed using a large green button. More Care Electronics products in addition to telephones will be launched in 2007, such as remote controls and voice amplifiers.
There are a small number of purist competitors on the market today. The British company Geemarc Telecom sells telephony products adapted for the hearing impaired and the French Depaepe has developed products for hospital environments.
Traditional telephony competitors such as Siemens and BT have some similar products, with large buttons, but not with such an overall range as Doro.
Business unit
Care Electronics
15
Sourcing and distribution
New electronics products in a never-ending stream. Almost always from Asia. The
problem is not the range but the choice. We know, because Doro has extensive
experience of sourcing from Asia. We also know what’s needed to develop or find
the right consumer electronics products. From our new office at the Hong Kong
Science & Technology Park our employees work on a daily basis visiting manufac-
turers around China, Taiwan and the rest of Asia. Being on hand in Asia also means
that we can monitor the entire manufacturing process and distribution to the rest
of the world. All supplies are carefully quality assured before being shipped any
further. Time-to-market is crucial for success in today’s electronic world. Or as
they say in China – the wind doesn’t wait for the sailor.
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 spot-checks 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 every quarter.
All suppliers are measured in the following areas:
– Forecast level of customer returns – Delivery checks
– Delivery precision – Lead times
Doro ranks and measures every manufacturer. In this way both Doro and the supplier can see what level the quality controls are at. Doro also often helps in fault finding in the actual manufac- turing 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 sup- plier upon breach of contract.
Doro is a modern company where process steering is an important part of the business. It’s also part of quality assurance for the existence of clear guidelines for how a product is manu- factured for example. Some of the main processes in the company include:
– Idea to product. During this process different product ideas are developed and processes are concluded with a product being decided on for development.
Doro places great emphasis on quality control. Regular checks and monitoring are the main elements in the work run to develop and manufacture new products. A fully-functional quality control with clear internal and external processes is a con- dition for being able to take the next step into the product area.
– Time to market. In this part a product is developed and quality assured from the decision to manufacture to the first manufacturing run being completed.
– Delivery and quality process. In this phase the products are manufactured following different forecasts being carried out. The material flow is handled from the manufacturing unit, via the transport company and to Doro’s warehouse.
– Sales and marketing process. In this process various market- ing material is designed to support the sales companies.
– Financing and reporting process is the name for various supporting processes that create financial resources and reporting for various interested parties.
Doro employs around 15 people responsible for quality assur- ance, of whom 6 work as field inspectors based in China and Hong Kong.
Doro markets and sells products whose use and recycling are 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 Restric- tion of the use of certain Hazardous Substances (”RoHS”), which came into force on 1 July 2006.
EU’s REACH directive (Registration, Evaluation, Authorisa- tion and Restrictions of Chemicals) will come into force in 2007.
The affect 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 affect on Doro will be to ensure ecological design, production and low energy use of battery chargers and external power supply units.
Quality is a
catchword throughout
the organisation
17
Shares
Share data (all values have been re-calculated after the reverse split) 2006 2005 2004 2003 2002 Number of shares, (thousands)
117,408 4,295 4,294 4,294 4,294
Round lot, (SEK) 5.00 5.00 5.00 5.00 5.00
EPS after tax, (SEK)
1–7.59 –15.68 5.55 3.65 0.15 Cash flow per share –0.57 –10.12 –6.70 9.50 4.65 Reported shareholders’ equity, (SEK) 1.81 7.47 21.80 16.40 12.35 Market price at 31 Dec, (SEK) 5.00 30.60 55.00 45.75 34.50
Dividend, (SEK) 0.00 0.00 0.00 0.00 0.00
P/E ratio
2N/A N/A 10.0 12.5 N/A
Dividend yield (%)
3N/A N/A N/A N/A N/A
1
The average number of shares in 2001 was 2,101,791 and in 2006 was 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.
Doro has been listed on the Stockholm Stock Exchange since 1993. There are 17,407,631 shares. A new share issue with preferential rights was carried out in June 2006, which boosted the number of shares from 4,295,000 to 17,180,000. The new share issue was guaranteed by Alted (75%) plus Dirbal and Venture (25%). These companies also bought Nordea’s subscrip- tion rights. An offset share issue was carried out in July for the guarantors for 227,631 shares for remuneration for being guar- antors.
Doro will not pay any dividend for 2006.
There are no outstanding convertibles or synthetic options.
Doro’s share price fell in 2006 by 34 per cent (fell by 44 in 2005). Doro’s market value on 31 December 2006 was SEK 87 million (131).
The AGM was held in Lund on 15 March 2006. Senior managers have held a number of meetings with market ana-
lysts. Share issue
The parent company’s share capital has changed in recent years through new share issues as follows:
Increase in Amount No. of Issue share capital paid Year Issue new shares price
1(SEK m) (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
Major shareholdings as at 31 December 2006
No. of % of No. of % of The 10 largest shareholders shares shares votes votes Mellby Gård Intressenter AB 2,967,999 17.1 2,967,999 17.1
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
Alted AB 825,751 4.7 825,751 4.7
Dirbal AB 800,000 4.6 800,000 4.6
Venture 800,000 4.6 800,000 4.6
Tedde Jeansson, SR 778,355 4.5 172,004 4.5 Tedde Jeansson, JR 655,028 3.8 655,028 3.8
Falkskogen AB 425,000 2.4 425,000 2.4
Hans Björstrand 350,074 2.0 350,074 2.0
Sub-total 11,849,265 68.1 11,849,265 68.1
Ownership structure as at 31 December 2006
No. of As % of all No. of As % of shareholders shareholders shares held all shares
Under 501 shares 2,751 72.9 272,969 1.6
501–1,000 shares 503 13.3 416,600 2.4
1,001–5,000 shares 365 9.7 973,622 5.6
5,001–10,000 shares 65 1.7 484,548 2.8
10,001–20,000 shares 37 1.0 573,540 3.3
20,001–50,000 shares 29 0.8 945,516 5.4
50,001–100,000 shares 7 0.2 528,800 3.0
Over 100,000 shares 14 0.4 5,727,352 32.9
Total 3,774 100.0% 17,407,631 100.0%
The number of shareholders has fallen from 4,130 to 3,774. Of the total shares held, about 10% (2) are held by foreign shareholders and about 44%
(4) by institutional holders.
0 5 10 15 20 25 30 35 40 45
2002 2003 2004 2005 2006
0 500 1000 1500 2000
0 4 8 12 16 20
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© Ecovision
© Ecovision
