Interim report 1 Jan. - 30 June 2000

Interim report (1 Jan. - 30 June 2000) Net sales totalled SEK 635 million (537 m) Profit before tax of SEK 5 million (34 m) EPS after standard tax of SEK 0,34 (2.41) Negative impact of components shortage and strong US dollar Possibility of reaching last year's profit figure Net sales SEK 653 million +22 % Profit before tax SEK 5 million -85 % EPS after standard 0,34 -85 % tax SEK Sales and results During the first six months of the year, DORO, the telecommunications company listed on the O-list (Attract40) of the OM Stockholm Exchange, recorded sales of SEK 653 million (537 m), an increase of 22% on the same period last year. Adjusted for acquisitions, sales were down by 14%. The Group made a profit before tax of SEK 5 million (34 m). Demand has been good, but DORO has not been able to deliver volumes as planned. The US dollar continued to be strong and has only been partly compensated for by higher sales prices. Logistics cost have risen to compensate for delayed deliveries. During last year, DORO reported major success in the UK. The companies acquired in 1999 (UpGrade of Sweden, DORO Matra Telecom of France and DORO Atlantel of Poland) are progressing mainly according to plan. Initially these will contribute significant additional sales and increased balance sheets. Smaller contributions to the results are added before their product ranges have been co-ordinated with the DORO product range, and their organisations have been adapted. Goodwill depreciation has increased and net financial items have fallen due to the acquisitions. Sales for Q2 totalled SEK 306 million (263 m). The result before tax was SEK -7 million (15 m). Global components shortage continues The shortage of different components continued during Q2. This shortage has been caused by a worldwide lack of manufacturing capacity and has mainly affected DECT - digital wireless telephones. The main reason is the substantial growth in demand for mobile phones. DORO's size and importance as a purchaser of different telephony products gives DORO access to the components required. Delivery orders are in place until Q4. The shortage of products increases the purchase price and logistics costs. New projects have been delayed. DORO does not foresee any let up in the global components shortage during 2000. Strong Dollar A majority of DORO's products are bought in US dollars and sold in other currencies. The purchase price usually drops for each different product. The price reduction level has usually absorbed the higher USD exchange rate. In accordance with its currency policy, DORO hedges a limited amount (around 25% of the flow) in US dollars. Due to the components shortage, suppliers' prices are steady or rising. The very strong US dollar and its rapid rise during Q2, have only been marginally compensated for in sales prices. Recovery program During the year an efficiency program is implemented in all subsidiaries in the group. Among the activities is a product rationalisation program that will reduce the number of products by 30 % for the next year. For the newly acquired companies (DORO Matra Telecom, DORO Atlantel and UpGrade Communications) various programs are introduced. Outlook for the coming year The combination of a global shortage of components and a strong US dollar cannot be compensated for by product launches, the companies acquired in 1999 as well as the international launch of exchanges and broadband products. DORO believes that there is still the possibility of achieving a profit for the year similar to last year's (pre-tax profit of SEK 65 million) if the effects of the components shortage and the strong US dollar don't worsen. The USD is actually at a higher level than the average exchange rate during the first half-year. The market DORO and Telia, Sweden, have started working together with the aim of jointly developing and producing products for the consumer market. The first results of the agreement will be seen in Q3 this year, when DORO starts delivering corded and cordless phones to Telia's stores. The products will carry the Telia trademark. UpGrades wireless broadband products (e.g. Wireless Solutions) are being introduced by the DORO subsidiaries. UpGrade has signed an agreement with Witcom for delivery of their microwave links, which increase the speed of products with radio-based point-to-point communication. UpGrade has also signed an agreement with SpectraLink concerning the distribution rights to SpectraLink's new products for wireless IP telephony for LAN. The market for cordless telephones progressed more slowly during the first six months of the year due to the global components shortage. The X100 and 4055 telephones have been launched during the first part of the year. Terminal products (telephones, telephone answering machines, caller identity products etc.) are continuing to perform well, and parts of DORO's product range has been launched in France and Poland. The market for switchboards has progressed well after a subdued start in Q1 following heavy sales at the end of the 1999. The sales of PBX distributors continue to expand in the subsidiaries. DORO's new website has started in Sweden and in the UK and during the coming months all the subsidiaries will be added. The website provides e- commerce solutions for retailers and facilitates accessibility of information. Sales per region and product line Major climbs in sales were noted in Australia and Switzerland. The sales in the Nordic countries have been lower due to the component shortage and restructuring of the Norwegian business. The French activity has been hit by problems in the product supply especially during Q2. Sales in the UK were very high at the start of last year. This year's sales are considerably lower. This is partly a consequence of the restructuring program that is under implementation. DORO is mainly active with the following product lines: cordless telephones, terminal products, switchboards, wireless broadband and ISDN products. The largest proportion of sales is in cordless telephones (50% 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 was for cordless telephones, while wireless broadband products increased most in relative terms. Financial performance and investments The Group's balance sheet total has risen by SEK 179 million to SEK 725 million, since the start of the current financial year. DORO Matra Telecom and DORO Atlantel have been included since 1 January. The recently acquired companies are responsible for a majority of the boost to the balance sheet total. Investments totalled SEK 3 million (4 m). Goodwill has risen to SEK 91 million (8 m) due to corporate acquisitions. The Group's net debt (interest-bearing liabilities less cash) has increased by SEK 48 million to SEK 188 million since the start of the year. The debt/equity ratio has increased from 0.73 to 1.01. Increased trade receivables and seasonable increases of stock explain this increase. Most of these liabilities are in SEK, AUD and GBP. The SPP insurance company has informed DORO that deposits of SEK 0.8 million are available. This has been booked as an income in Q2. Parent company The parent company's net sales totalled SEK 14 million (15 m) during the first six months. The profit before tax was SEK 28 million (38 m). Dividends have been received from the subsidiaries. Future reports The Board has decided on the following dates for the quarterly reports: 16 October and 25 January 2001. The Annual General Meeting will be held on 14 March 2001. Quarterly reports can be found on DORO's website at www.DORO.com. This report has not been audited. For further information, please contact: Claes Bühler, CEO, +46 46 280 50 61 Ingvar Karlsson, CFO, +46 46 280 50 62 17 July 2000 Lund, Sweden The Board of Directors, DORO AB REPORT FOR FIRST HALF YEAR 2000 INCOME STATEMENT (SEK m) [REMOVED GRAPHICS] SUMMARY OF BALANCE SHEET (SEK m) [REMOVED GRAPHICS] SUMMARY OF CASH FLOW (SEK m) [REMOVED GRAPHICS] KEY FIGURES [REMOVED GRAPHICS] Rolling EPS, after standard tax of 30 %, is SEK 2,47 for the last 12 months. Quarterly earnings trend, (SEK m) [REMOVED GRAPHICS] Sales per region (SEK m) Jan-Jun Jan-Jun 1999 1998 2000 1999 Nordic 258 226 553 515 Other 318 238 475 383 Europe Outside 77 73 155 102 Europe Total 653 537 1183 1000 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/07/17/20000717BIT00400/bit0001.doc http://www.bit.se/bitonline/2000/07/17/20000717BIT00400/bit0002.pdf