Financial statement (1 Jan. - 31 Dec. 2001)

Financial statement (1 Jan. - 31 Dec. 2001) * Sales totalled SEK 1,099 million (1,454 m) * Loss before tax of SEK 194 million (-44 m) after SEK 180 million in nonrecurring costs * EPS after tax SEK -18.51 (-5.01) * Stagnant market and stiff price competition * Financial reconstruction and new share issue worth SEK 100 million * Major restructuring * Significantly reduced balance sheet and positive cash flow Sales and results DORO, listed on the O-list of the Stockholm Stock Exchange, recorded sales of SEK 1,099 million (1,454 m) in 2001, a fall of 24% compared with the previous year. The Group made a loss before tax of SEK 194 million (-44 m) after making allocations amounting to SEK 58 million to a restructuring reserve. Major one-off costs have been charged to the results amounting to SEK 180 million. In addition to the restructuring reserve, these costs were for clearance sales of old product ranges and writing down of stock (around SEK 50 million) and quality costs (around SEK 50 million). The US dollar rose throughout 2001 and affected margins negatively. Currency costs were high due to unfavourable hedges and termination of loans (SEK 26 million). Sales in Q4 amounted to SEK 322 million (477 m) and the loss before tax was SEK 80 million (-35 m) of which SEK -78 million in one-off costs (costs for restructuring SEK -58 million). Stagnant market and stiff pricing competition Activities in Australia slowed down at the end of 2000, and demand faltered in the Nordic region in Q1 2001 and in the rest of Europe in Q2. The market was bleak during the year partly due to a reduction in overall demand and partly due to distributors reducing their stocks. DORO carried out a considerable stock reduction during the year, including sales of older products. DORO's stocks were written down in Q2 to reflect new market conditions. At the beginning of 2001 DORO was hit by serious quality problems. These problems have negatively affected the results via unusually high guarantee costs that included provisions for future guarantee commitments. New quality procedures and a more rigorous selection of suppliers will significantly reduce the likelihood of these problems recurring. Exchanges and wireless broadband products also experienced flat demand during the year, as many companies and organisations reduced their investments. Financial reconstruction An extraordinary shareholders' meeting on 27 November unanimously agreed to the Board's proposal of a directed issue of redeemable and convertible B shares to Nordbanken worth SEK 70 million and to RunDor worth SEK 30 million (in total SEK 100 million). The new shares were priced at SEK 8.50 each (the average price paid during the ten days of trading before the decision was taken on 17 October). Each B share carries 1/10 of a voting right and the same dividend entitlement as an A share. Up to the 2005 AGM, DORO will be able to redeem these shares at the subscription price plus 10% interest per year. If the B shares are not redeemed they will be converted into A shares at the AGM in 2005. In the event of a new share issue, B shares will carry the same rights as A shares. B shares can also be converted into A shares if a third party acquires them. Payment for the directed issue was made on 6 December and has been used for reducing loans. The Board has also signed a credit agreement with Nordbanken running to the end of 2002. Restructuring and refining of activities Following completion of the strategy review the company will now refine its activities and focus on corded and cordless telephony. An action plan for other activities has been produced and major restructuring will be carried out for core activities. Implementation of measures began in Q4 and will continue during the first half of 2002. Restructuring will comprise the following main measures: * Headcount reduction of around 25% in the Group * Establishment of Nordic structure to obtain synergies within warehousing, service and administration * Clearer customer/channel selection with emphasis on more profitable segments * Concentration on product groups where DORO has strong positions and competitive advantages * More effective product development, quality assurance and product supply The total cost of restructuring is SEK58 million before tax, affecting Q4's results. The provision for restructuring consists of costs for reducing personnel (SEK 21 million), depreciation of goodwill (SEK 18 million), various provisions (SEK 12 million) and other costs (SEK 7 million). In addition a write-down of deferred taxes (SEK 9 million) took place. The restructuring will have an effect of around one third of the cash flow. The effect of restructuring and refining activities will be significantly lower costs, more efficient distribution and a more competitive product range. Cuurency hedges In April and July DORO's Board decided to change its currency policy. To reduce risk levels, 75% (initially 50%) of flows in US dollars were hedged for the next six months of sales. The new rules were phased in during the spring and summer. As purchase volumes fell due to stock reductions and project delays, a hedging surplus was built up. These contracts were terminated prematurely or reserves have been set aside for the costs. Significantly reduced balance sheet The consolidated balance sheet total declined by SEK 327 million to SEK 397 million (724 m) during the financial year. Investments totalled SEK 9 million (11 m). Goodwill stood at SEK 39 million (70 m). The Group's net debt (interest-bearing liabilities less cash) fell by SEK 165 million to SEK 35 million (200 m) during the year. The debt/equity ratio improved from 1.51 to 0.72. Stock has fallen due to considerably lower purchase volumes and comprehensive clearance sales of old models. The cash flow from current activities continued to be positive in Q4 and was positive for the full year at SEK 61 million (-6 m). Dividend and financial targets The Board proposes a dividend of SEK 0.00 (0.00). Previously it was DORO's policy to pay a dividend of between one third and one half of the profit after tax. DORO's Board has now adopted a new policy. This new policy means that when available profits and a financial balance are achieved, B shares will be redeemed. When all B shares have been redeemed a new policy will be adopted. DORO aims to have a maximum debt/equity ratio of 1.3 (interest-bearing debt/equity). It currently lies at 0.72. The 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 5 March. Staff The average number of employees in the Group fell during the year to 276 (312). All companies reduced their headcounts. Significant events after the end of the financial year No significant events have happened after the end of the financial year. Parent company The parent company's net sales totalled SEK 27 million (36 m). The loss before tax was SEK 159 million (-5 m). Major write-downs of shareholdings in subsidiaries, amounting to SEK 105 million, have been made. AGM 5 March 2002 The Annual General Meeting will be held at 5 p.m. on Tuesday 5 March 2002 at the Scandic Hotell Star in Lund, Sweden. Future reports The Board has decided on the following dates for 2002's quarterly reports: 19 April 2002, 2 August 2002, 22 October 2002 and 30 January 2003. Quarterly reports are available at: www.DORO.com. This Financial Statement has been drawn up according to the same accounting principles as the last Annual Report and has not been subject to examination by DORO's auditors. For further information, please contact: Gunnar Åkerblom, CEO, + 46 (0)46 280 50 61 or Ingvar Karlsson, Deputy CEO, +46 (0)46 280 50 62 Lund, Sweden, 24 January 2002 The Board of Directors, DORO AB ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/01/24/20020124BIT00830/bit0002.doc The Full Year-End Report http://www.waymaker.net/bitonline/2002/01/24/20020124BIT00830/bit0002.pdf The Full Year-End Report