Financial statement

Financial statement for 1999 * Sales totalled SEK 1183 million (1000 m) * Profit before tax of SEK 65 million (55 m) * EPS after standard tax of SEK 4.67 (4.67) * Dispute affects profit by SEK 10 million * Swedish company UpGrade Communications acquired (wireless broadband) plus companies in France and Poland * The Board proposes raising the dividend to SEK 2.00 (1.75) Invoiced sales SEK 1183 million +18 % Profit before tax SEK 65 million +18 % EPS after standard tax SEK 4.67 +0 % Dividend per share SEK 2.00 +14 % Business activities DORO the telecommunications company listed on the OTC-list of the OM Stockholm Stock Exchange, recorded a strong rise in sales and profits for 1999. Most of the company's units performed well during the first part of the year, but were negatively affected by a shortage of components and a price war in the UK in the second part. Sales and profits recovered however in Q4. Significant acquisitions (the Swedish wireless broadband technology company UpGrade Communications, plus companies in France and Poland) will mostly have a positive effect on results during 2000. Greater volumes for the product groups with a high technical content - cordless phones and systems such as company switchboards - have led to improved results for DORO. Sales and Results During 1999, DORO recorded sales of SEK 1183 million (1000 m), an increase of 18% on the same period last year. The increase breaks down as follows (SEK m): Previous year 1000 Non-consolidated units in 1998 139 Organic increase, 3% 44 Sales, 1999 1183 The Group made a profit before tax of SEK 65 million (55 m). Demand has been strong and greater volumes led to improved profits. During Q3, competition intensified in the UK and a price war started. A restructuring programme was initiated which included changes to the management, a cut in costs and a new focus on other market sectors. The market recovered during Q4. The introduction of DECT telephony went well. However the global components shortage meant that DORO could not deliver the volumes that could have been sold. Sales in Q4 totalled SEK 401 million (388 m). The profit in Q4 before tax and charges for the dispute mentioned below, was SEK 27 million and after provisions for the dispute SEK 21 million (22 m). Success on export markets and the benefits from finished rationalisation work also helped to boost profits. Disputes DORO works in an environment where production services are purchased. Disputes can arise when suppliers do not deliver products that fulfil the agreed quality, functionality and delivery time. DORO is currently negotiating with a supplier about solving a dispute. The legal advice is that DORO's possibilities of winning the dispute are good. SEK 10 million has been charged to the year's profit by prudence. The remaining maximum risk is estimated to be SEK 20 - 25 million Acquisitions Four acquisitions were carried out during the year. In July an agreement was signed for the acquisition of the UpGrade Communications Group, with companies in Sweden and Denmark, as well as sales companies in Norway, Finland, and Estonia. These acquisitions will make DORO a player in wireless broadband technology and its position within ISDN will be underpinned. The Upgrade Communications Group was consolidated from 1 September. An agreement was drawn up in November with Matra Nortel Communications (MNC) regarding the purchase of their operations in Cordless phones and Terminal products. Their activities were consolidated from 1 January 2000. MNC and DORO have formed a joint venture company in which DORO holds 80.1% and MNC 19.9%. At the same time Audioline France was purchased and consolidated from 1 November 1999. The French activities will be integrated with DORO Matra Telecom. In December an agreement was drawn up with the owners of Atlantel Spzoo about forming a joint venture company in Poland. DORO will hold 75% and the current owners 25%. DORO has received approval from the competition authorities after the end of the financial year. Consolidation will commence from 1 January 2000. Initially, the new businesses are expected to give a low contribution to the Group's profit. Raised dividend The Board formulated a dividend policy in connection with last year's annual accounts. The aim is to pay out between a third and a half of the profit after tax. The Board proposes raising the dividend by SEK 0.25 to SEK 2.00 per share (SEK 1.75). Outlook for the coming year An assessment of the company's position for the forthcoming financial year will be made at the Annual General Meeting on 14 March. Markets The market for switchboards continued to progress positively throughout the year. Sales of DORO Alchemy, the new switchboard that integrates data and telecom networks, had a successful launch in the Nordic region. The international distributor network has continued to expand. The market for cordless telephones has continued to progress well but at a slower pace. Sales of the new DECT telephones have been good. A number of new products have been launched in the Terminal products sector including Petit, the world's smallest telephone, and Secur, a safety system. The ISDN market has been very flat in Sweden. Sales per region and product line Major sales hikes were noted in Australia and Denmark. Sales rose in the Nordic region via the UpGrade Communications acquisition. A major export order to Turkey, worth SEK 60 million, was received in the autumn, 1998. Around SEK 20 million of this order was delivered in 1998 and the rest in1999. DORO is mainly active in the following product lines: cordless telephones, terminal products (telephones, telephone answering machines, caller identity products etc.), switchboards, wireless broadband and ISDN products. The largest proportion of sales is cordless telephones (40% of sales), followed by terminal products (30%) and company switchboards (10%). The proportion for wireless broadband and ISDN products is approaching 10% of total sales. The largest rise in figures is for cordless telephones, and the largest increase in percentage terms is for switchboards. Financial performance and investments The Group's balance sheet total has risen by SEK 139 million to SEK 546 million, since the start of the current financial year. The UpGrade Communications Group has been included since 1 September and Audioline France from 1 November. The recently bought companies are responsible for a majority of the boost to the balance sheet total. Strong sales figures at the end of the year have raised accounts receivable. Investments totalled SEK 11 million (17 m). Goodwill has risen to SEK 40 million (9 m) due to the corporate acquisitions. The Group's net debt (interest-bearing liabilities less cash) has risen by SEK 62 million to SEK 140 million since the beginning of the year. The debt/equity ratio went up from 0.52 to 0.73. Most of this debt is in SEK and GBP. SPP. The SPP insurance company has informed DORO that deposits of SEK 0.7 million are available. This has not been taken up as an asset. Staff The number of employees in the Group rose to 242 (202) mainly due to the addition of companies within UpGrade Communications. A cutback in personnel has been carried out in the UK. Y2K situation The Group reported no disruption from the "Y2K problem" from either customers or internally. Events after the end of the financial year The authorities in Poland have approved the formation of the joint venture company DORO Atlantel Spzoo. An agreement has been signed with Wireless Solutions regarding the supply of wireless broadband products to the DORO Group Parent company The parent company's net sales totalled SEK 24 million (230 m). The profit before tax was SEK 51 million (10 m). The previous parent company, Doro Telefoni, was divided into DORO AB (parent company) and DORO Sverige AB (sales company) from the start of the year. AGM, 14 March 2000 The Annual General Meeting will be held on Tuesday 14 March at 5 p.m. in the Star Hotel, Lund, Sweden. Future reports The board has decided on the following dates for the quarterly reports: 17 April, 17 July, 16 October and 25 January 2001. AGM 2001 14 March. Quarterly reports can be found on DORO's website at http:www.DORO.se. For further information, please contact: Claes Bühler, CEO, +46 46 2805061 Ingvar Karlsson, CFO, +46 46 280 50 62 3 February 2000 Lund, Sweden The Board of Directors, DORO AB ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/02/03/20000505BIT00910/bit0001.DOC http://www.bit.se/bitonline/2000/02/03/20000505BIT00910/bit0002.pdf

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Doro markets telecommunications products under the trademark Doro. Source: Delphi

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