ASSA ABLOY
Annual Report 2001

Plain-text annual report

Annual Report 2001 31998_ASSA_Omslag_E_DS 02-03-14 13.25 Sida 1 A S S A A B L O Y A n n u a l R e p o r t 2 0 0 1 z e n i t r a M y r r e h T © i ASSA ABLOY AB (publ.) Postal Address: P.O. Box 70340, SE-107 23 Stockholm • Visiting Address: Klarabergsviadukten 90 Phone: +46 (0)8 506 485 00 • Fax: +46 (0)8 506 485 85 Registered No.: SE.556059-3575 • Registered Office: Stockholm, Sweden • www.assaabloy.com 31998_ASSA_Omslag_E_DS 02-03-14 13.25 Sida 2 31998_ASSA_Fram_E_DS 02-03-14 13.12 Sida 1 Contents The year 2001 in brief The President and CEO, Carl-Henric Svanberg Group development The ASSA ABLOY share ASSA ABLOY and the lock industry Strategy and financial objectives Management philosophy Environmental management philosophy The trend towards higher security ASSA ABLOY brand platform ASSA ABLOY technology platforms Integration Project – Volvo Ocean Race Scandinavia Finland Central Europe South Europe United Kingdom North America South Pacific New Markets Hotel locks Identification Report of the Board of Directors Consolidated income statement and cash flow statement Consolidated balance sheet Parent Company income statement and cash flow statement Parent Company balance sheet Accounting and valuation principles Financial risk management Notes Audit report ASSA ABLOY’s Board of Directors ASSA ABLOY’s Group Management Addresses 3 4 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 42 44 48 49 50 56 57 58 59 60 62 63 72 73 74 76 A S S A A B L O Y / 2 0 0 1 • 1 31998_ASSA_Fram_E_DS 02-03-14 13.12 Sida 2 The Annual General Meeting of ASSA ABLOY AB will be held at ‘Cirkus’, Djurgårdsslätten, Djurgården, Stockholm at 3 p.m. on Monday 29 April 2002. Notice of attendance at the Annual General Meeting Shareholders wishing to attend the Meeting must: - be recorded in the register of share- holders kept by Värdepapperscentralen VPC AB (Swedish Central Securities Depository and Clearing Organization), no later than 19 April 2002 and: - give notice of attendance to ASSA ABLOY AB, P.O. Box 70340, SE-107 23 Stockholm, tel. +46 8 506 485 00, fax. +46 8 506 485 85 or on www.assaabloy.com by 4 p.m. on 23 April 2002. Notification must include the shareholder’s name and personal identity number as well as information regarding the number of shares held. Any shareholder whose shares are nominee-registered must also, in order to be entitled to take part in the Meeting, request a temporary entry in the register of shareholders kept by VPC. Share- holders must notify the nominee about this well before 19 April 2002, when this entry must have been effected. 2 • A S S A A B L O Y / 2 0 0 1 Financial information from ASSA ABLOY will be published as follows: Interim Reports: 1 January - 31 March: 29 April 2002 1 January - 30 June: 9 August 2002 1 January - 30 September: 6 November 2002 Year-end Report for 2002: 6 February 2003 Annual Report for 2002: March 2003 Annual Reports and other Reports may be ordered from: ASSA ABLOY AB P.O. Box 70340 SE-107 23 Stockholm Sweden Tel. +46 8 506 485 00 Fax. +46 8 506 485 85 www.assaabloy.com 31998_ASSA_Fram_E_DS 02-03-14 13.12 Sida 3 ASSA ABLOY: growth profile Stable organic growth Trend towards higher security (cid:2) Aftermarket sales more than half the volume Electromechanical products – cross sales – new markets Increasing margins Improvements in each unit – benchmarking – transfer of know-how Cash flow even stronger (cid:2) Work flow and balance sheet rationalization (cid:2) Goodwill amortization Consolidation opportunities – focus on earnings per share (EPS) Fragmented industry – harmonization and R&D requirements lead to consolidation (cid:2) Strong cash flow funds acquisitions The year 2001 in brief: Successful global integration and continued expansion Sales increased by 56 percent to SEK 22,510 M (14,394). Refinancing of the Group (cid:2) Organic growth for comparable units was 3 percent. Income before tax increased by 17 percent to SEK 1,642 M* (1,402). Earnings per share (EPS) increased by 9 percent to SEK 2.98* (2.73). Earnings per share before goodwill amortization increased by 39 percent to SEK 5.39* (3.88). (cid:2) Operating cash flow amounted to SEK 2,338 M (1,756). Successful integration of 30 new companies with 12,000 employees. Integration Project – Volvo Ocean Race The Group’s participation in the Volvo Ocean Race has proved to be an extremely important and successful tool in the work of integrating 30 new companies and their 12,000 employees. There is a perfect geographical match between the Race and the Group, and the project is a highly effective vehicle for uniting employees, partners and customers. *excluding provision for the Merrimac dispute, USD 12.5 M plus interest (SEK 166 M). ASSA ABLOY has restructured its financing during the year. Bank financing has been replaced by capital-market- based long-term bonds and short-term fundings. One of the activities was to issue a 5-year EUR 600 M bond loan, which was oversubscribed several times. Incentive program for the employees An incentive program for the Group’s employees was introduced. The program, which is based on convertible bonds, has a total value of EUR 100 M. The program was heavily oversubscribed and over 4,500 employees are taking part. Acquisitions during 2001 Nine companies were acquired during 2001. The acquisitions represent significant additions to the Group and add geographical and product strengths. The companies acquired during 2001 have sales, pro forma, of SEK 4.5 billion, of which SEK 2.0 billion has been consolidated. Total acquisition price amounts to SEK 4.0 billion. Goodwill amounts to SEK 2.0 billion, of which SEK 1.4 billion will be tax-deductible. A S S A A B L O Y / 2 0 0 1 • 3 (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) 31998_ASSA_Fram_E_DS 02-03-14 13.12 Sida 4 The President and CEO, Carl-Henric Svanberg: “We are turning 100 companies into one global team with a common mission and a common mindset” 2001 has been our most interesting and challenging year so far. Sales increased by 56 percent, and our participation in the Volvo Ocean Race has proved to be an extremely important and successful tool in the work of integrating 30 new companies and their 12,000 employees. As we follow our boat around the world we are making sure in local management meetings that our common way of working is understood, accepted and quickly implemented. This also gives us a chance to inform our business partners about our ideas for the future, and we can make people around the world understand that behind each famous local brand there is a strong global leader. A successful year in a slowing world economy Our goal is to build a true world-leading company in the area of locking solutions through a three-step strategy: • Establish a global platform through acquiring and developing companies locally established positions, with strong brands and significant installed product bases as well as a good recur- ring cash flow. • Develop our Group strength through synergies, joint development projects and expansion of our areas of expertise. • Accelerate our organic growth through our worldwide sales network by offering products that meet rising demands for security, including new and more advanced technologies. This year we have taken a significant step towards our goal, and are now well established in all parts of the world. Sales increased 56 percent to sek 22,510 m, and on a pro forma basis exceed sek 25 billion. Organic growth was 3 percent, two points down from last year mainly due to the slower world economy and the dramatic drop in demand in the hotel segment. 4 • A S S A A B L O Y / 2 0 0 1 to Income before tax and non-recurring items grew by 17 percent to sek 1,642 m. Our work improve efficiency continues. This is not reflected in our reported margin development because of the large new acquired volumes with lower margins. Earnings per share excluding non- recurring items increased by 9 percent, diluted by last year’s share issues. Cash flow after capital expenditure amounted to sek 2,338 m, an indication of the quality of the earnings. The year’s major task of integrating the Yale group is running according to our acquisition plan. The clean-out of un- profitable low-end products has started. The profit improvement potential is well in line with our expectations. The professionalism and enthusiasm among employees is encouraging. Our North American operations have shown steady organic growth des- pite the slowing economy and the September terrorist attacks. Margins continue to increase and the many acquisitions have added new products and markets. This constitutes a solid plat- form for continued strong development. The European companies have also experienced a slower economy. Their organic growth was mainly driven by continued market and product devel- opment. Lips in the Netherlands is quickly improving its profitability, while the turnaround of Yale in the uk requires more time-consuming product and market development. Australia ended the year strongly as a result of successful market develop- ment and cross-selling projects. Our New Markets in eastern Europe, South America, Israel, Asia and Africa form an interesting growth area. The hotel segment faced a dramatic downturn after the September events. On the other hand we saw a clearly increased demand for identification products for access control as a result of a general increased focus on security. Continued acquisitions – increased opportunities for organic growth We are continuing to grow our installed base through acquisitions of traditional lock companies. Obvious examples include Yale (with established positions in many markets throughout the world), Phillips in Mexico, Interlock in New Zealand and Viro in South Africa. 31998_ASSA_Fram_E_DS 02-03-14 13.12 Sida 5 A S S A A B L O Y / 2 0 0 1 • 5 31998_ASSA_Fram_E_DS 02-03-14 13.12 Sida 6 The President and CEO, Carl-Henric Svanberg: z e n i t r a M y r r e h T © i We are also expanding our product portfolio and areas of technical expert- ise. Through the acquisitions of hid and Indala we have created a base for leadership in the area of identification products for access control systems. This is a fast-growing business and will play a vital part in the development of more intelligent locks. Every acquisition also adds organic growth opportunities. All our com- panies work on growth projects to expand their product line or enter new sales channels with existing products. The assa abloy product information database (pid), which contains all Group products, significantly simpli- fies such internal cross-selling. Local business and local excellence with the strength of a global leader The lock business is local. A strong local presence with local products and close customer relations is an obvious advantage. We therefore operate in a multi-domestic structure and spread best practice through intense and inspiring benchmarking, well-established working models and case studies of sister companies. The potential for margin improvements throughout the Group is significant. The local companies also benefit from Group resources such as more advanced technologies, manufacturing of more global products, joint efforts in emerging markets, funding and so on. In this way we are able to offer genuine value to the individual customer in a world where economy of scale is a must. 6 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Fram_E_DS 02-03-14 13.12 Sida 7 The President and CEO, Carl-Henric Svanberg: Developing Group strength For the third time since the Group was founded we have launched an incentive program for our employees. The pro- gram was heavily oversubscribed and more than 4500 people signed up for a total of eur 100 m. In addition we have refinanced our Group during the fall to support our growth strategy: previous bank financing has been replaced by capital-market-based bonds and short- term fundings. We are increasing our efforts in the area of new technologies. There is sig- nificant potential for various forms of intelligent locks, as a result of a grow- ing need for security combined with convenience and safety. The cliq masterkeying cylinder was launched in the fall. This intelli- gent electromechanical cylinder is the first of its kind, powered from the key and therefore easy to install and use. It combines the strength of conventional cylinders with full electronic key and access control. cliq was developed in an international project where the best r&d engineers from our Group compa- nies collaborated with outside experts. Our leadership role in increasing security Our goal is to become ‘The world’s leading lock group’. Today this is a reality in terms of size, although the lock business is still very fragmented. However we will not be satisfied until our customers and partners feel that we are providing the best and most innovative locking solutions for in- creased security in every way, including the best service and support. We are living in a world with a growing need for security. All security work starts with understanding risks and the likely consequences of an inci- dent. The us attacks in September sadly displayed to us all the importance of giving security matters the right attention. Even in these devastating cir- cumstances, the majority of the people involved managed to escape in time due to rigorous security planning and regular safety drills. It is our role to develop awareness and knowledge about risks and ways of improving security. Our locking solutions are used in daily lives in homes, schools, hospitals, shops and offices. The crucial issue is always the same: to provide security that also allows safe and efficient escape in emergency situations and that is con- venient enough to ensure proper usage. The results of a recent survey in France highlight the importance of information and education in security- related work. We asked 1000 people representing the market about their attitudes to security. 26 percent had experienced an intrusion. Trauma and the loss of personal items were far bigger issues than the loss of valuables covered by insurance. 71 percent stated that they had improved their locks and physical security after the intrusion. Unlock Your Life – Our Brand Mission We have agreed on a brand strategy for the Group. All business is carried out under our strong local brands. assa abloy is the endorsement brand guaranteeing world-leading technolo- gies, operational best practice, human resource development and financial strength. At the core of our brand strategy lies our belief that by providing freedom efficient locking solutions we make the world safer and more secure, creating lives. more ‘Unlock Your Life’ describes this and will be used as the theme for our increased market communication over the coming years. in people’s We expect continued good development Our major acquisitions made in recent years have considerably strengthened the Group. We have successfully completed the first and most critical part of the integration process, and the task of realizing synergies is now being intensified. Our Group will be able to take advantage of our world-leading Research and Development and our global distribution strength to meet people’s increasing needs for security. There are opportunities for higher margins in both old and newly acquired companies. In addition, the restructuring of the lock industry is continuing and creates opportunities for further acquisitions. All in all we therefore look forward to continued good sales and profit development. Stockholm, February 2002 Carl-Henric Svanberg President & ceo A S S A A B L O Y / 2 0 0 1 • 7 31998_ASSA_Fram_E_DS 02-03-14 13.12 Sida 8 Group development: Income statement Sales by organizational unit 3) 2001 EUR M1) 2,436 2001 SEK M 2000 SEK M 1999 SEK M 22,510 14,394 10,277 -1,500 -13,863 -8,568 -6,282 936 -594 8,647 -5,488 5,827 3,995 -3,719 -2,612 3,159 -860 -166 2,133 -664 7 1,476 -507 -20 949 2,107 -387 1,720 -331 12 1,402 -453 -34 915 1,383 -189 1,194 -230 17 981 -348 -14 619 Sales Cost of goods sold Gross income Selling and administrative expenses Operating income before goodwill amortization Goodwill amortization Non-recurring items Operating income Financial items 342 -93 -18 231 -72 Share in earnings of associated companies 1 Income before tax Tax Minority interests Net income 160 -55 -2 103 Operating Cash Flow Operating income before goodwill amortization Depreciation and amortization (excluding goodwill) Net capital expenditure Change in working capital Paid and recieved interest Adjustment for non-cash items Operating cash flow 2001 EUR M1) 2001 SEK M 2000 SEK M 1999 SEK M 342 3,159 2,107 1,382 93 -90 -8 -88 5 253 861 -830 -77 -817 43 598 -497 -94 -357 -2 478 -390 -27 -227 2 2,338 1,756 1,218 Capital employed and financing Capital employed - of which goodwill Net debt Minority interests Shareholders' equity 2001 EUR M2) 2,993 1,758 1,669 2001 SEK M 27,861 16,371 15,534 52 481 2000 SEK M 19,779 12,078 8,560 560 1999 SEK M 8,534 3,246 2,998 267 1,272 11,846 10,659 5,269 The ASSA ABLOY product portfolio Mechanical locks, lock systems and accessories, 62% Security doors and fittings, 15% Industrial locks, 4% Electromechanical locks and electronic locks, 19% Scandinavia Finland Central Europe5) South Europe6) United Kingdom North America South Pacific New Markets7) Hotel locks Identification Elimination of internal sales 2001 EUR M1) 213 126 155 314 167 1,048 91 191 114 113 -96 2001 SEK M 1,971 1,165 1,432 2,905 1,545 9,682 841 1,764 1,056 1,043 -894 2000 SEK M 1,889 1,060 1,027 2,232 665 1999 SEK M 1,777 898 575 1,682 270 5,409 3,721 772 981 1,052 - 590 354 965 - -693 -555 Total 2,436 22,510 14,394 10 277 Sales by country 4) USA France United Kingdom Germany Sweden Australia Finland Canada Norway Mexico Denmark Italy Spain Asia (excl. China, Hong Kong and Japan) The Netherlands Africa China Middle East Belgium Czech Republic South America Japan Central America (excl. Mexico) Switzerland New Zealand Poland Baltic Countries Russia Romania Portugal Other Countries Total 2001 EUR M1) 1,075 206 167 104 93 84 72 72 58 48 46 37 37 33 33 32 31 31 27 22 20 16 15 15 7 7 6 6 5 5 2001 SEK M 9,935 1,904 1,545 963 855 775 662 661 538 445 424 344 341 305 304 292 286 282 248 200 185 145 141 137 66 65 59 54 50 49 2000 SEK M 5,418 1,647 1999 SEK M 3,835 1,419 763 780 839 724 606 373 500 152 365 214 178 198 167 110 125 201 171 165 94 50 46 57 39 55 43 28 48 40 340 528 741 563 540 267 476 37 329 68 100 113 89 40 62 40 147 159 25 25 4 36 32 43 34 15 0 23 27 250 198 147 2,436 22,510 14,394 10,277 8 • A S S A A B L O Y / 2 0 0 1 1) 1 EUR = 9.24 SEK 2) 1 EUR = 9.31 SEK 3) Including exports from each market. 4) Sales to customers in each country 5) Germany, the Netherlands, Switzerland and Austria. 6) France, Belgium, Spain and Italy. 7) Asia, eastern Europe, South America, southern Africa and Israel. 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 9 Key data 2001 22,510 3 17.9 14.0 10.2* 1,642* 7.3* 2,338 1.42* 830 1,721 34,669 11,846 15,534 27,861 11,490 35.6 3.5* 1.31 8.9* Sales, SEK M Organic growth, % Gross margin (EBITDA), % Operating margin before goodwill amortization (EBITA), % Operating margin (EBIT), % Income before tax, SEK M Profit margin (EBT), % Operating cash flow, SEK M Operating cash flow / Income before tax Net capital expenditure, SEK M Depreciation and amortization SEK M Total assets, SEK M Shareholders' equity, SEK M Net debt, SEK M Capital employed, SEK M Capital employed excluding goodwill, SEK M Equity ratio, % Interest coverage ratio, times Net debt / equity ratio, times Return on shareholders' equity, % Return on capital employed before goodwill amortization, % Return on capital employed, % Operational return on capital employed, % Earnings per share after tax and full conversion, SEK Earnings per share after tax and full conversion excluding goodwill, SEK Interest on convertible debenture loan net after tax, SEK M Cash earnings per share after tax and full conversion, SEK Shareholders' equity per share after 35.80 full conversion, SEK Number of shares, thousands 353,751 Number of shares after full conversion, thousands 361,730 24,211 Average number of employees 32.9* 9.7* 13.3* 2.98* 8.07* 5.39* 9.0 2000 ** 1999 ** 14,394 5 18.8 14.6 12.0 1,402 9.7 1,756 1.25 497 985 26,029 10,659 8,560 19,779 7,701 43.1 5.5 0.80 13.3 34.2 13.7 16.7 2.73 3.88 8.5 5.81 10,277 5 18.1 13.5 11.6 981 9.5 1,218 1.24 391 667 11,241 5,269 2,998 8,534 5,288 49.2 5.3 0.57 16.2 1998 8,582 6 18.5 12.8 11.2 748 8.7 1,028 1.37 316 623 9,219 2,715 4,237 6,984 4,460 29.8 4.4 1.56 19.0 1997 6,968 8 16.8 11.6 10.1 537 7.7 796 1.48 260 461 7,692 2,317 3,442 5,783 3,948 30.4 4.1 1.49 17.2 *** 28.7 15.6 17.9 2.00 2.61 8.7 26.4 15.2 17.4 1.76 *** 25.2 15.3 17.6 1.23 *** 2.21 1.59 11.7 3.2 4.10 *** 3.75 *** 2.72 *** 30.58 352,453 356,712 16,881 *** 16.95 314,409 324,200 12,654 9.93 284,304 295,448 10,545 *** 8.64 282,928 295,448 8,088 *** * Key data for 2001 are exclusive non-recurring items. ** Key data for 1999 and 2000 have been adjusted for changes in accounting principles *** Comparative figures are adjusted for dilution related to new rights issue, with the adjustment factor 0,987. Definitions (cid:2) Organic growth: Change in sales for comparable units in local currency and adjusted for acquisitions. (cid:2) Gross margin: Operating income before depreciation and amortization as a percentage of sales. (cid:2) Operating margin before goodwill amortization: Operating income before goodwill amortization as a percentage of sales. (cid:2) Operating margin: Operating income as a percentage of sales. (cid:2) Profit margin: Income before tax as a percentage of sales. (cid:2) Operating cash flow: Based on the consolidated cash flow statement. (cid:2) Net capital expenditure: Purchase of tangible fixed assets reduced by sale of tangible fixed assets. (cid:2) Depreciation and amortization: Depreciation / amortization of tangible and intangible fixed assets. (cid:2) Net debt: Interest-bearing liabilities less interest-bearing assets. (cid:2) Capital employed: Total assets reduced by interest-bearing assets and non-interest-bearing liabilities including deferred tax liability. (cid:2) Capital employed excl. goodwill: Total assets reduced by interest-bearing assets, non-interest-bearing liabilities including deferred tax liability, and goodwill. (cid:2) Asset/equity ratio: Shareholders’ equity including minority interests as a percentage of total assets. (cid:2) Interest coverage ratio: Income before tax plus interest net in relation to interest net. (cid:2) Return on shareholders’ equity: Net income plus interest expense after tax regarding convertible debenture loan in relation to average shareholders’ equity after full conversion. (cid:2) Return on capital employed before goodwill amortization: Income before tax plus interest net and goodwill amortization in relation to average capital employed excluding goodwill. (cid:2) Return on capital employed: Income before tax plus interest net in relation to average capital employed. (cid:2) Operational return on capital employed: Income before tax plus interest net and goodwill amortization in relation to average capital employed. (cid:2) Earnings per share after tax and full conversion: Net income plus interest expenses after tax regarding convertible debenture loan in relation to weighted average number of shares after full conversion. (cid:2) Earnings per share after tax and full conversion excluding goodwill: Net income excluding goodwill amortization plus interest expenses after tax regarding convertible debenture loan in relation to weighted average number of shares after full conversion. (cid:2) Cash earnings per share after tax and full conversion: Net income plus interest expenses after tax regarding convertible debenture loan, plus depreciation, amortiza- tion and minority interests, minus share in earnings of associated companies and adjusted for change in deferred tax in relation to weighted average number of shares after full conversion. (cid:2) Shareholders’ equity per share after full conversion: Shareholders’ equity plus convertible debenture loan in relation to number of shares after full conversion. SEK M 24,000 20,000 16,000 12,000 8,000 4,000 0 SEK M 30,000 24,000 18,000 12,000 6,000 0 1995 1996 1997 1998 1999 2000 2001 Sales Income before tax* SEK M 1,800 1,500 1,200 900 600 300 0 % 40 32 24 16 8 0 1995 1996 1997 1998 1999 2000 2001 Capital employed Return on capital employed* Return on capital employed before goodwill amortization* SEK M 2,500 2,000 1,500 1,000 500 0 SEK 1995 1996 1997 1998 1999 2000 2001 Income before tax* Operating cash flow 6 5 4 3 2 1 0 1995 1996 1997 1998 1999 2000 2000 2001 Earnings per share* Earnings per share excl. goodwill* A S S A A B L O Y / 2 0 0 1 • 9 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 10 The ASSA ABLOY share: assa abloy ab has been listed on the since Stockholm Exchange 8 November 1994. In October 1995, the share was moved to the a list. The price of the assa abloy share fell by 18.2 percent in 2001. During the same period, Stockholm Exchange All-Share (sax) fell by 16.9 percent. The closing price at year-end was sek 151.0, corres- ponding to a market capitalization of sek 53,416 m. Including all shares due for conversion, the market capitalization is calculated to be sek 54,621 m. The number of shareholders at year-end was approximately 20,700. Investors outside Sweden, including Wärtsilä Corporation, account for 56 percent of the capital. During the year a total of 294 million shares were traded, which is an aver- age of approximately 1,176,078 shares per trading day and represents about 83 percent of the issued shares. Share capital assa abloy’s share capital at year-end amounted to sek 353,751,412, distri- buted among 19,175,323 Series a shares and 334,576,089 Series b shares. All shares have a par value of sek 1.00 and provide the holders with equal rights to the Company's assets and earnings. Each Series a share carries 10 votes and each Series b share one vote. Convertible debentures for personnel The assa abloy group has issued convertible debentures to employees in the Group. About 400 employees par- ticipated in the first issue in 1995. The debenture amounted to sek 75,004,375 and ran from 29 June 1995 to 30 June 2000. Conversion to Series b shares took place in the period from 1 July 1998 to 15 June 2000. The second debenture was issued in 1997. a total of 1,400 employees participated in this issue. This deben- ture amounts to sek 250,000,000 and runs from 8 December 1997 to 2 December 2002. Conversion to Series b ASSA ABLOY AB’s share trend Share price, SEK B share General index, AFGX Shares traded 1000s/month (incl. off-floor trading) 200 175 150 125 100 75 50 25 4 94 95 96 97 98 99 00 01 (Source: SIX Findata) 10 • A S S A A B L O Y / 2 0 0 1 60 000 40 000 20 000 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 11 shares may be exercised from 1 December 2000 to 15 November 2002. On full conversion at a conversion price of sek 58.70, an additional 4,258,944 shares would be created. In 2001, applications for conversion of debt instruments with a par value of sek 76.2 m were submitted. In 2001 a new program, incentive 2001, was launched, based on four series of convertible bonds each total- ing eur 25 m. The only difference bet- ween the series of bonds is the conver- sion price. The program was offered to employees in 16 countries, and over 4,500 employees decided to participate. On full conversion, at a conversion price for Bond 1 of eur 15.8, Bond 2 of eur 19, Bond 3 of eur 22.1 and Bond 4 of eur 25.3, an additional 5,017,432 shares would be created. The convertible bonds can only be converted from October 2006. Dividend and dividend policy The Board of Directors and President propose that sek 1.00 per share be paid as a dividend to shareholders for the 2001 financial year, corresponding to a direct return of 0.7 percent on the Series b share price of sek 151.0 on 31 December 2001. The aim is that, in the long term, the dividend should correspond to approximately one- third of assa abloy's average earnings after standard tax, but always taking into account assa abloy's long-term financial requirements. Data per share 1) SEK/Share Earnings after 28% standard tax Earnings after full tax method Dividend Dividend, % 3) Direct yield, % 4) Share price at end of period Highest share price Lowest share price Shareholders’ equity Number of shares (1,000s) 5) 2001 3.28 6) 2.98 6) 1.00 2) 30.5 0.7 151.00 186.00 94.50 35.80 2000 2.91 2.73 0.90 30.9 0.5 184.50 206.70 110.50 30.58 7) 361,730 356,712 1999 2.27 2.00 7) 0.74 32.6 0.6 119.50 140.00 73.21 16.95 7) 324,200 1998 1.79 1.76 0.60 33.5 0.8 75.65 92.73 48.07 9.93 295,448 1997 1.36 1.23 0.43 31.6 0.8 51.24 52.95 28.69 8.64 295,448 1996 0.95 0.93 0.30 31.6 1.0 29.28 28.97 12.38 5.40 1995 0.60 0.56 0.22 36.7 1.6 13.24 15.16 5.23 4.37 265,396 221,684 1) Adjusted for new issues. 2) Proposed dividend. 3) Dividend as percentage of earnings per share after 28% standard tax. 4) Dividend as percentage of the share price at the end of the period. 5) After full conversion. 6) Excluding non-recurring items 7) Key data has been adjusted due to change in accounting principle. Share capital ASSA ABLOY's share capital at 31 December 2001 amounted to SEK 353,751,412 distributed among 19,175,323 Series A shares and 334,576,089 Series B shares. All shares have a par value of SEK 1:00 and provide the holders with equal rights to the Company's assets and earnings. Each Series A share carries ten votes and each Series B share one vote. Share capital B shares C shares 20 000 1 428 550 1 714 260 A shares Transaction Year 1989 1994 100:1 split 1994 Bonus issue 1994 Non-cash issue 1 746 005 2 095 206 1996 New share issue 1996 Conversion of C shares into A shares 3 809 466 4 190 412 1997 New share issue 4 190 412 1998 Converted debentures 4 190 412 1999 Converted debentures before split 1999 Bonus issue 1999 4:1 split 1999 New share issue 1999 Converted debentures 16 761 648 18 437 812 after split and new issues 2000 Converted debentures 2000 New share issue 2000 Issue in kind with disapplication of the shareholders' preferential rights 2001 Converted debentures Number of shares after full conversion * SEK 1 per share – balanced number of shares 18 437 812 18 437 812 19 175 323 19 175 323 19 175 323 *SEK 2 000 000 2 000 000 53 592 110 64 310 532 64 310 532 70 732 118 71 075 983 71 369 974 2 000 000 50 417 555 60 501 066 60 501 066 66 541 706 66 885 571 67 179 562 268 718 248 295 564 487 285 479 896 314 002 299 295 970 830 301 598 383 313 512 880 314 408 642 320 036 195 332 688 203 333 277 912 334 576 089 352 453 235 353 751 412 19 175 323 342 554 288 361 729 611 Ownership structure (listed by voting rights) Data is based on the share register at 31 December 2001 A shares 10 546 425 7 118 818 1 510 080 Owner Wärtsilä Corporation SäkI Melker Schörling + family and companies Investment AB Latour Deutsche Bank Janus Capital Corp. Alecta SEB unit trusts Robur unit trusts Nordea unit trusts Other shareholders with more than 50,000 shares Shareholders with 501-50,000 shares Shareholders with up to 500 shares Total number 19 175 323 B shares 27 270 350 811 400 9 484 630 23 713 735 19 637 744 17 767 572 11 555 481 9 907 253 9 468 470 5 354 660 176 599 192 20 688 540 2 317 062 334 576 089 Capital % Voting rights % 25.2 13.7 4.7 4.5 3.7 3.4 2.2 1.9 1.8 1.0 33.6 3.9 0.4 100.0 10.7 2.2 3.1 6.7 5.6 5.0 3.3 2.8 2.7 1.5 49.9 5.8 0.7 100.0 Source: SIS Ägarservice AB and VPC AB A S S A A B L O Y / 2 0 0 1 • 1 1 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 12 ASSA ABLOY and the lock industry: A stable traditional market now in transformation With ongoing sales of about sek 25 billion, assa abloy is the largest lock company in the world – yet its share of a still very fragmented world market is just over 10 percent. The assa abloy group originated in the Nordic region in 1994, with the spin-off of Assa ab from the Swedish security company Securitas and the acquisition shortly thereafter of the Finnish lock company Abloy. Since then the Group has expanded by a combination of organic growth and further acquisitions, most notably of the Yale group of companies in August 2000. Today assa abloy holds market- leading positions in the Nordic region, the uk, Germany, France, Belgium, Spain, Australia and New Zealand as well as many fast-developing new mar- kets including the Czech Republic, Slovakia and Romania. Strong posi- tions are also held in Switzerland and Poland. In the North American market, the Group is the second-largest player in the usa and has leading positions in Canada and Mexico. Following the successful integration of the Yale com- panies, South Africa, the Far East and THE MARKET GROWS – customer satisfaction TRUE ATTRACTIVE TO DISTRIBUTORS – partnerships EDUCATE THE MARKET LEADERSHIP IDENTIFY TRUE CUSTOMER NEEDS – invest in R&D 12 • A S S A A B L O Y / 2 0 0 1 parts of South America have also be- come strong positions. In the specialized field of hotel locks, assa abloy is the world leader through its subsidiaries VingCard- Elsafe and Timelox. Identification technology is another area where the Group holds world leading positions through hid and Indala. Product segments where the Group is active are: • Construction locks • Industrial locks • Door and window hardware and accessories • Electromechanical locks • Hotel locks • Security doors (us market mainly) • Automobile locks (Czech Republic and uk only) • Identification MARKET The global lock market remains frag- mented. In western Europe and North America, a number of the companies are family-owned, with strong and well-established relationships with their local distribution networks and leading positions in their own home markets. In other parts of the world established lock standards and strong brands are less common. The long lifetime of mechanical lock products and the diversity of local standards combine to prevent globali- zation of these products. The after- market share of more than 50 percent has a further strong preserving effect on existing technology. It also has an important stabilizing impact on sales, making the lock industry relatively independent of the cyclical fluctuations of the construction industry. GROWTH FACTORS The trend towards higher security The lock business has seen a steady increase in demand over a long period of time. Through continuous develop- ment of new lock products that meet people’s needs to protect property and information, the market is establishing a basis for stable long-term organic growth 2-3 percent higher than the general rate of economic growth. The assa abloy way of working supports this trend. In our high-tech society, which is becoming ever more vulnerable to breakdowns, the need to safeguard public and commercial information is also increasingly critical. Electromechanical products Electromechanical products are grow- ing in importance. Sales have shown a double-digit growth rate over a number of years, much higher than for traditional mechanical products. This growth has been seen in access control, in door audio and video systems, in convenience solutions for hospitals, department stores and public buildings and in controllable panic exits that combine security and safety. While most electromechanical solu- tions have universal application, success in this area still requires adaptation to local standards and lock dimensions and integration with other mechanical locking systems. Development costs for the core electronic technologies are sig- nificant, which benefits worldwide players like assa abloy which can share the costs among its many markets. 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 13 Taking the lead in security and safety New markets In regions such as Asia, the Baltic countries, the Middle East and Latin America, an increasing proportion of the population now enjoys a higher standard of living, and hence their need for security has also increased. These groups are already demanding lock products that are more advanced than those manufactured locally, and this has helped assa abloy to take the lead in many of these newer markets. COMPETITIVE SITUATION Competition in the lock industry is mostly local. The bigger players with well-known brands and established local presence and distribution arrange- ments generally retain strong positions. The smaller local players still play an important role, but many are now uncertain about their long-term ability to compete with the international play- ers like assa abloy, kaba-Unican and Ingersoll Rand, who have the advantage of being able to use their new technolo- gies in many different markets with local adaptations in the hotel lock sec- tor, on the other hand, standards and products are now global. As the leading lock group in France, assa abloy is actively engaged in the ongoing public debate on security in the home and safety in public places. In the fall of 2000, assa abloy France formed a company-wide association known as l’Observatoire de la Sécurité. Its main purpose is to gather and dis- seminate information about security and safety conditions and needs in France with an aim to improving overall stan- dards. Alain Varenne, Strategic Develop- ment Director at assa abloy in France and Chairman of a Group task force responsible for developing new Stan- dards, explains some of the association’s latest initiatives: “Two surveys conducted for us in the spring and the fall of 2001 by the country’s leading polling organization, sofres, showed clearly that the French public are greatly interested both in security questions at home and in safety in public places (safe escape in emer- gency and panic situations). The first study showed that one out of every four Frenchmen has directly or indi- rectly been victim of a break-in in their home. The figure increases to four in ten in large urban areas such as Paris. This has led to a growing sense of in- security among the population and a keen interest in improved security solu- tions. “The second survey showed that people now have a greater awareness of safety conditions all around them when they shop, eat out, take public transport, or attend sporting events and the like. To address these concerns our association is working on a num- ber of fronts. We spread information and share expertise through seminars, press releases and printed material issu- ed to security professionals, the media and the general public. We are also developing a website www.obs-delase- curite.org where individuals and com- panies can seek further information about a specific security solution.” Alain Varenne concludes: “Forming this association has taught us a great deal about conditions and concerns on our own market. And as the leading company in our field we feel it demon- strates that assa abloy has a long-term commitment to higher security and safety.” Alain Varenne, President, and Lionel Ligneau, General Secretary, of l’Observatoire de la Sécurité, the new association formed by ASSA ABLOY’s French companies to promote awareness of security needs and locking solutions. A S S A A B L O Y / 2 0 0 1 • 1 3 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 14 Strategy and financial objectives: Combining established local positions with the strengths of a global player assa abloy’s goal is to build a true world-leading company in the area of locking solutions through a three-step strategy: • Establish a global platform through acquiring and developing companies with locally established positions, strong brands and significant installed product bases as well as a good recurring cash flow. • Develop Group strength through synergies, joint development projects and expansion of our areas of expertise. • Accelerate our organic growth through our worldwide sales network by offering products that meet rising demands for security, including new and more advanced technologies. Focus on the lock segment As the world’s leading lock company, assa abloy is dedicated to the develop- ment of locking solutions that will con- tribute to new standards of security throughout the world. These range from conventional mechanical locks, door hardware and security doors through high-security masterkey systems to state-of-the-art electromechanical locks, cards and readers for access control. FOCUS ON THE MARKET (cid:127) Growth projects (cid:127) Cross-selling (cid:127) Distribution channels FOCUS ON EFFICIENCY (cid:127) Benchmarking (cid:127) Workflows / lead times (cid:127) Delivery performance CREATING A BASE (cid:127) Organization (cid:127) Basic routines (cid:127) Core products O FIT G P R R E A SIN C IN STEP-BY-STEP 14 • A S S A A B L O Y / 2 0 0 1 Because the lock business is assa abloy’s only business, all companies within the Group can benefit from a rich transfer of know-how and from extensive benchmarking activities designed to spread best practices and promote excellence. Promoting the trend to higher security There is a growing need for security in the world. All security work starts with understanding risks and the con- sequences of any incident. By providing efficient locking solutions, assa abloy aims to help make the world safer and more secure, creating more freedom in people’s lives. The development of new products starts at this point. It is carried out in close cooperation with insurance companies, police, fire officials, end-user organizations and other important decision-making bodies. Group companies engage actively in information and training initiatives that target retailers, architects and security officers as well as end-users, giving them facts about the latest products and security solutions. This creates an important pulling effect for the distributors involved as well as overall market growth. MANAGEMENT MODEL Multi-domestic There are many differences between locks in different countries, and assa abloy’s success as a global leader in the lock industry is based on the close relationship individual Group companies enjoy with their customers at regional and local level. Their understanding of local needs, business arrangements and distribution requirements, and their responsiveness to these, remain para- mount to success in the lock industry. For this reason, the Group continues to run a decentralized organization giving full business responsibility to Country Managers. Major Country Managers are mem- bers of Group Management, which meets regularly. Group Vice Presidents have regional responsibility for a num- ber of countries and ensure that Group methods are applied consistently. Group companies serving the hotel lock market, and the new identification division, are organized separately from the Group’s national lock companies in order to respond more effectively to the opportunities of these specialized inter- national markets. Developing Group strengths In order to accommodate the Group’s rapid expansion, the integration of newly acquired companies is an activity given the highest priority. Over the last 18 months, 30 new companies and 12,000 new employees have been added to the Group. The Volvo Ocean Race is playing a significant role in the integration work. There is a perfect geographical match between the Race and the Group, and the project is an important vehicle for uniting employees, partners and customers. The expanding Group is benefiting from many synergies, which are further strengthening the local companies’ positions. assa abloy’s global size and unmatched knowledge base offer many opportunities for benchmarking, cross- learning and cross-selling, which great- ly contribute to earnings improvement. Joint development of new and more advanced technologies, and joint pro- duction of common products to ensure economies of scale, are playing an increasing role, and together with 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 15 cross-selling are reducing Time To Market for new products. Purchasing is also coordinated throughout the Group and is achieving substantial cost savings on raw materials and components. Other synergies remain to be explored. Wider ownership participation assa abloy wants its employees to participate in the company to the greatest possible extent. A new eur 100 m incentive program was launched in the fall and more than 4,500 employees chose to participate. Management and employees have an ownership intrest in shares and con- vertibles corresponding to eur 250 m. Group information The Group’s rapid expansion calls for a regular flow of information to keep everyone in the picture. The Group in- house magazine, assa abloy news, is published at least four times a year in twelve languages. It contains articles on new products, initiatives and acqui- sitions, communicates Group strategy and development plans, and is current- ly featuring the progress of the Volvo Ocean Race and the individual Group companies in the markets it is visiting. The Group website and intranet are other efficient information tools. EXPANSION STRATEGY Organic growth Organic growth remains crucial to the Group’s long-term success, and is achieved by intensive development efforts in both mature and new markets. In markets where assa abloy is well established, organic growth is driven by gdp growth, increased sales of products to meet rising security needs, filling gaps in product port- folios, expansion into new sales channels, and the introduction of new technologies. The filling of gaps is a targeted growth area. The products are often available in other parts of the Group to speed up this work. In new markets where there are no strong local players, new Group compa- nies are established. assa abloy’s wide product range, ownership of strong, internationally respected brands and use of new, more efficient forms of distribu- tion all lead to steady organic growth. Acquisitions Acquisitions of leading companies are a fast and highly effective way to enter mature markets. They bring the Group strong brands, an installed product base with its recurring business, and well established distribution channels. Acquisitions are also a way to expand the Group’s area of technical expertise. The acquisition of hid in the usa, the world’s leading manufacturer of contactless cards and readers for access control, illustrates this approach. FINANCIAL OBJECTIVES The strategy described above is designed to continue the achievement of a satis- factory earnings trend, with a focus on earnings per share. assa abloy’s financial goal is to achieve a return of more than 20 per- cent on capital employed. This goal was set when the Group was formed in 1994. The goal is increasing automati- cally because of the goodwill added through the acquisitions made. The return in 2001 was 9.7 percent. It is expected that most of the improvement required will be achieved through higher margins, although there are obvious opportunities for reducing the capital employed. A S S A A B L O Y / 2 0 0 1 • 1 5 Scholarship In connection with the Volvo Ocean Race a new scholarship has been established to promote assa abloy’s cross-learning and best practice philo- sophy. Through a nomination process amongst the employees, candidates from all markets get the chance to visit a Group company in another country to learn and promote best practice. Four such scholarships have been awarded so far. 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 16 Management philosophy: People make the difference At assa abloy we believe that people make the difference. This is why our management approach is based on trust, positive thinking and respect for local conditions and cultures. Good management is about creating an atmosphere that encourages employees to make the most of their individual skills for the benefit of the whole company. To achieve the best possible working environment for everyone, our management philosophy is based on four cornerstones: Realism, Vision, Courage and Ethics. Realism means that everyone must excel at their job. Managers must fully understand the business, the market, the products, the competition and all business procedures. Management must have a broad perspective, yet still remember that answers are often found in the details. Our Vision is to be the true world leader in locking solutions. Not only in terms of company size, but in offering our customers the best and most inno- vative products and business concepts. Courage is about spearheading change. This means not just living with change, but also initiating change OUR CORNERSTONES VISION (cid:127) The true leading lock company (cid:127) Leading in size and thought REALISM (cid:127) Know your numbers (cid:127) Seek the truth (cid:127) Don’t be afraid of details (cid:127) Profit drives growth ETHICS (cid:127) Believe in the individual (cid:127) Lead by example (cid:127) Confidence in competence PEOPLE MAKE THE DIFFERENCE COURAGE (cid:127) Lead change 16 • A S S A A B L O Y / 2 0 0 1 through creative innovation that is based on solid know-how and experi- ence. Ethics are central to trust, creativity and commitment and to success in the international security marketplace. High ethical standards attract the finest people and motivate them to be the best they can be. Management training program Our continued success and growth depend on the skills and commitment of every employee and every manager. For this reason, skill enhancement, job rotation and training programs are conducted continuously at all levels within the Group. Our sharp focus on the lock market and active bench- marking establish a good framework for a valuable exchange of ideas and experiences among assa abloy employees from all over the world. As part of this activity, the Group conducts an annual ‘assa abloy mana- gement program’ in which some 25 employees chosen from throughout the Group have the opportunity to hone their leadership skills. The program is led by Group Management and is based on real-life case studies from assa abloy. To date more than 150 managers have participated in this pro- gram. 200 Meeting Every second year assa abloy arranges a ‘200 Meeting’. The last meeting held in September 2000 gathered the Group’s most senior executives together to exchange experience and ideas and review and agree the Group’s vision, objectives and strategies as well as set the priorities for the coming two years. 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 17 Fast track to better integration assa abloy’s participation in the Volvo Ocean Race has provided a golden opportunity to communicate the Group’s management philosophy, objectives and values to local company manage- ment, employees and customers through- out the world. At each stopover along the route, Group Management has been organizing 1-2 day seminars inter- acting with local managers and key staff to discuss sales and marketing objectives, branding strategies and three-year regional priorities. Anna Bernsten, Vice President, Corporate Communications, explains some of the benefits of this Group-wide interaction: “The Race has given us a unique platform for communicating an integrated message to our company managers – some of them very new to the Group following recent acquisi- tions – about who we are and where we are going. At the same time it has given us in Group Management the opportunity to increase our knowledge and understanding of local conditions and trends in the market. “The stopover meetings also give local management a wider international perspective on performances and trends in the lock industry as a whole. These new insights can lead to more effective local operation and strategies as well as new sales initiatives.” Anna Bernsten says the spirit of teamwork among the crew onboard the boat and all the many individuals who support their efforts ashore has relevance for the way assa abloy com- panies work in their day-to-day activi- ties. “There are many parallels between work onboard the boat and our regular operations. Onboard, the entire crew is passionate, focused and dedicated in making the boat go faster. Thanks to their unique combination of skills it is possible to achieve world-class perform- ance when everyone works together toward a common goal. The same atti- tude is important for our employees and assa abloy in our striving for true leadership in the lock industry.” The Asian ‘100 Meeting’ was preceded by regional management training and proved a good platform for cross-learning. A S S A A B L O Y / 2 0 0 1 • 1 7 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 18 Environmental management philosophy: To create environmentally sound solutions assa abloy strives for true leadership of the lock industry. This means being the biggest company not only in size and profit but also in its thinking, i.e. in the development of products, con- cepts and marketing ideas. The Group’s focus on security and safety in society, and its firm belief in people and ethics, make environmental issues a natural part of its daily work. Through an environmental policy and global implementation of the environmental strategy, the aim of assa abloy is to enhance performance by means of loyal customers, strengthened brand values and lower internal costs. Benefits in innovation, costs, marketing and reputation Environmental issues can stimulate new thinking and new ideas in every aspect of the business. It may be in the design of the product, in the production or distribution processes or in solving environmental problems for the customers. Because of ever stricter regulation, costs related to activities having an environmental impact will rise faster than other costs, and proactive measures to eliminate the problems will produce commensurately greater savings. Environmentally friendly initiatives will also create or strengthen loyalty for the assa abloy brands. Customers with their own strong, sustainable environmental strategies will favor the assa abloy companies as suppliers. As in many areas, scale is import- ant if processes are to be run efficiently. Through its size assa abloy can sup- port the necessary investments, and the volumes are large enough to pay back these costs relatively quickly. Reduce, reuse, recycle The assa abloy companies are con- tinously striving to reduce the material content in their products. The con- sumption of energy, water and process resources is also in focus all the time. Waste during production is minimized through selection of methods that give better yields. Production scrap material is reused whenever possible. Other materials and process resources can often be cleaned or treated for reuse. Machinery, tools and containers that are no longer needed in one Group factory may serve well in another. Materials not suitable for reuse are sent for recycling if possible. These include metals like brass, steel and alu- minum and also packaging materials. ISO 14001 assa abloy’s Group Management decided several years ago to introduce the iso 14001 Environmental Manage- ment Standard in the Group companies. Many companies have already achieved iso 14001 certification and there are numerous examples of successful improvements in all areas. However, the Group’s rapid growth through acquisi- tions means there are many new Group members still to embark on the process. The majority of the ASSA ABLOY companies hold ISO 9001 or ISO 9002 quality certification. Nine companies hold ISO 14001 environmental certification: Eight companies are in the process of achieving ISO 14001: Ruko A/S Abloy OY IKON AG FIX AB Assa AB Assa Industri AB AB FAS Låsfabrik TESA Yale Security Products UK FAB a.s. C E Marshall Medeco Security Locks, Inc. TrioVing a.s. Solid AB Sargent Manufacturing Vachette S.A. Yale Italy 18 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 19 The road to ISO 14001 Yale Security Products uk is the ninth assa abloy Group company to achieve certification under the iso 14001 Environmental Management Standard. In summer 2000, as part of a con- tinuing program to develop its business systems, the company looked into the actions required to achieve certification. After initial site surveys, the company committed itself in November 2000 to a program scheduled to achieve certifica- tion during 2001. By the time that new, more detailed company environmental policies had in been prepared and published February 2001, improvement action plans and the writing of a full Environmental System Manual were already well underway. Throughout 2000, environmental awareness training for all employees was undertaken and teams were put in place with the responsibility of contain- ing spillages. Right across the business people became involved in the initia- tives, whether on housekeeping, chemical storage, or recycling and waste reduc- tion programs. The environmental project fitted well with the ongoing operational improvement program called Opera- tional Leadership which began in April 2001. In September the three-phase assessment process by bsi, the uk Standards body, began. This concluded on 5 October 2001 with the recommen- dation for registration. Other Group companies in the uk are planning to seek iso 14001 certifi- cation during 2002. A S S A A B L O Y / 2 0 0 1 • 1 9 95 percent of the water used in the surface finishing process at Guli Security Products in China is now recycled. World-class wastewater treatment Since the introduction of a state-of-the- art wastewater treatment process as part of its new surface finishing plant in 1998, Guli Security Products has led the Chinese lock industry in environ- mental protection standards. 95 per- cent of the water used in the surface finishing process is now recycled with- in the facility as clean, high-quality water, matching international and Chinese standards. Concentrated solids together with remaining 5 the percent water are treated chemically. The precipitate is separated and dried to brick form. The Chinese Environ- mental Protection Bureau collects these bricks for disposal. The liquid is fur- ther treated to meet national standards and discharged through the assigned drainage system that eventually goes to the sea. Previously, surface finishing opera- tions were outsourced. The supplier used rudimentary equipment and pro- cesses that limited Guli’s efforts to upgrade product quality and environ- mental protection. In 1998, taking a long-term growth perspective, Guli invested sek 80 m in a new world-class surface finishing plant at Xiaolan which consists of computer-controlled plating and cleaning lines, flexible polishing lines, an automatic lacquer- ing line and the wastewater treatment facilities. In 2001, the plant treated over 200,000 tons of liquid or the equi- valent of a million bathtubs of water. The entire process of wastewater control is now fully computerized in its adjustment of pH values, replenish- ment of chemicals, water recycling, and solids extraction and compression. Guli’s wastewater process has been commended by the City of Xiaolan as one of the Key National Engineering Projects in Environmental Protection. 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 20 The trend towards higher security: The importance of security is increasing in an insecure world All round the world urbanization is continuing, and as more people accu- mulate more valuables, they are finding they have more and more to protect. The tragedies in New York and Washington in September sadly dis- played to all of us the importance of giving security matters the right atten- tion. Even in these devastating circum- stances, the majority of the people involved managed to escape in time due to rigorous security planning and regular safety drills. Soft values are the most precious In monetary terms many of our pos- sessions can be replaced. Insurance policies cover these losses. What are hard to replace are the ‘soft values’. For individuals, these are the memories associated with stolen objects, our feel- ing of integrity, and our family’s sense of security in their own home. For companies too the most sensitive valu- ables have become the intangibles: your brand, your reliability, your customer base and customer informa- tion, the systems that control your pro- duction flow. All these are hard to set a value on. And the only sure way to protect them is to stop the intruder at the door – outside. Security, safety, convenience and design The primary need is security. In the hierarchy of human needs put forward by the psychologist Abraham Maslow, a sense of security comes next after the most basic physiological needs for air, water and food. Safety is not in principle opposed to security, but it very often presents con- tradictory requirements. You need to keep unwanted visitors away, but it 20 • A S S A A B L O Y / 2 0 0 1 must be easy for everyone inside to get out in an emergency. With traditional mechanical means this inherent conflict is not always easy to resolve. Another conflict is between security and convenience. Good security may be too much trouble. A door with a good lock held open by a wedge leads you back to square one – and no secu- rity at all. A fourth element to consider is design. A good security solution – and even more a good solution combining security and safety – may look very ugly! Design is becoming an increasingly important issue for security and safety devices. Electromechanical products Electromechanical solutions are often the answer to these contradictions. They can integrate good security and good safety by means of alarm connec- tions and time-controlled exits. Access control, door automatics, door closers and door monitoring devices can help to keep doors closed and locked when they should be, but easy to open when an emergency arises. At the same time the electric components make the prod- ucts easy to use, and their small size helps to achieve good-looking designs. The market for electromechanical lock products is growing faster than the lock market as a whole. It has shown double-digit growth for some years and is estimated today at usd 1.5 to 2 billion. assa abloy is represented in all sectors of the worldwide electrome- chanical market and its current market share is estimated at around 20 percent. No other Group offers such a wide selection of products. assa abloy’s range includes releasing and locking products such as electric strikes, mag- nets and motorized and solenoid locks. It produces identification and access control products based, for example, on electronic cylinders (cliq technol- ogy) or radio-frequency identification (proximity). assa abloy companies are also active in new technologies like smart cards and biometric identifica- tion devices. Modern hotel locks also form part of the electromechanical market segment. The professional market for electromechanical products The biggest single application area is access control. Another fast-growing area is door communication systems using surveillance cameras (cctv) or a voice link and giving remote personal control of opening. The latest solutions are more affordable than before and are used increasingly in apartment buildings around the world, in smaller companies and even in private homes. assa abloy’s vision for the profes- sional market for electromechanical products is: To provide locally adapted products offering security, safety and convenience in all major markets. These include communicating, intelligent compo- nents for access control systems – for which you just add system structure and software – as well as intelligent masterkeying employing the CLIQ technology. The residential lock market – a sleeping giant? Modern electromechanical hotel locks were born with VingCard about two decades ago. Today they are the industry standard. Although they are ten times as expensive as traditional locks and must be upgraded two or three times as often, they meet a true customer need for the hotel guest. 31998_ASSA_Fram_E_DS 02-03-14 13.13 Sida 21 Launching a new era in locking The launch of the new cliq technology was awaited with much anticipation by the entire assa abloy group. It was after all the first truly international development project that Group com- panies had ever been engaged in. Moreover, cliq represented a revo- lutionary advance for the industry as a whole. Sweden and Norway were chosen as the markets for the first launch in the spring of 2001. cliq will subsequently be rolled out in other European countries and the rest of the world over a period of several years. Months before the market launch, principal customers in the two countries were provided with a variety of infor- mation materials. Some 150 managers from 50 leading Swedish locksmiths and wholesalers attended a seminar in Iceland where they received detailed technical, product and marketing infor- mation on cliq through seminars and workshops. Kim Rolandsen, a project manager for cliq at Assa ab, says: “The response and enthusiasm for this new technology among our customers have far exceeded our expectations. We anticipate that cliq will amount to 10-15 percent of our total sales in Sweden alone within the next 1-3 years.” Kim says the deve- lopment and subsequent manufactu- ring of cliq have proved a formidable task and a valuable learning experience for everyone involved. “An advanced technology like cliq requires many components to be inte- grated. Coordinating and timing the supply of electronics and software from sometimes distant outside suppli- ers with our own production of the mechanical parts has proved challeng- ing. It has given us invaluable insights into how to manage a global coopera- tion on this scale really effectively,” concludes Kim Rolandsen. Likewise, remotely the modern controlled motorized car lock has been around for less than two decades. Now it is almost a commodity found in most new cars. Again, it costs ten times as much, but it meets a true customer need for convenient security. Residential electromechanical locks have just been born. The first sample products are on the market. But home- owners have not yet discovered them and their benefits are not yet well understood. At present a residential lock is changed every 30 years on aver- age, and the replacement product is normally much the same. But the coming of ‘smart’ homes, and new lifestyles where people spend less time at home and are away more irregularly for work, travel or holidays, are beginning to trigger a demand for more sophisticated security products. At present, like alarms, locks are not a top priority on most consumers’ buying list. This is the challenge – and the opportunity. assa abloy’s vision for the residential market is: Through providing locking concepts that are affordable, secure, safe and convenient, to create a market for intelligent lock products at the consu- mer level. ASSA ABLOY’S CLIQ technology, launched during the year in a number of products in different markets, is the Group’s first technology platform resulting from multi-company development. A S S A A B L O Y / 2 0 0 1 • 2 1 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 22 ASSA ABLOY Brand Platform: Developing our brand assets assa abloy’s many acquisitions in recent years have filled a number of geographical gaps in the Group’s hold- ings. As a result, the assa abloy group holds a unique portfolio of strong brands that represent a priceless asset. Together with the assa abloy group brand, these brands strengthen market- ing efforts and help to maximize sales. As part of the integration of the Group, a branding strategy has been developed and is now being implemented. Group-wide brand strategy The foundation for this strategy is the many local companies with their indi- vidual brands. In many cases, these companies have been active for hun- dreds of years and have built up a sub- stantial installed base with recurrent revenue. Many of the brands also have very high recognition locally. The assa abloy brand serves as an endorsement to the local brands. It supports them by conveying the Group’s global strengths, i.e. world- leading professional management, economy of scale and financial resources. technology, OUR BRAND STRATEGY Each brand has unique values Group company brands The ASSA ABLOY endorsement adds global strength 22 • A S S A A B L O Y / 2 0 0 1 THE ASSA ABLOY THE ASSA ABLOY BRAND BOOK BRAND BOOK BUILDING OUR BRANDS BUILDING OUR BRANDS The Corporate Tagline for the assa abloy brand is ‘The World’s Leading Lock Group’. In the Group’s efforts to increase knowledge of its global lead- ership in locking solutions, the Volvo Ocean Race has proved to be an in- valuable vehicle, both among custo- mers and distribution partners and among the staff of all the Group’s companies. The Brand Platform Simultaneously, the Group has devel- oped a Brand Platform for the assa abloy brand. This is a short, formal document which clarifies the Group’s strategic purpose and articulates what the brand represents. The document concludes that ‘By providing the best locking solutions available, the assa abloy group makes the world safer and more secure, creating more free- dom in people’s lives’. This is crystal- lized in the concept ‘Unlock Your Life’ which will form the basis for all future market communication. Step-by-step implementation The brand strategies are being imple- mented in a cascading process starting from the center. In the past few months, local Brand Champions have been appointed at Group companies around the world who will carry the process forward among their colleagues. The ambition is that every Group employee should understand that a brand con- tains a promise made to the customer, and that it is everyone’s duty to live up to that promise. The first to be reviewed was the Yale brand, for which a Brand Platform has been developed during the year. Over time, the process will involve all of the Group’s brands. 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 23 CORPORATE IDENTITY AND ENDORSEMENT STRATEGY C O R P O R A T E I I D E N T T Y A N D E N D O R S E M E N BRAND MANAGEMENT MANUAL An ASSA ABLOY Group brand Unlocking the full potential of the Yale brand All brands within the assa abloy group are important. But by any stan- dards the Yale brand, which the Group acquired through the acquisition of Yale Intruder Security in August 2000, is a particularly important brand for the entire lock industry. Yale is without doubt the best- known name in the worldwide lock industry and is one of the oldest inter- national brands in any field. Its history stretches back to 1840, when Linus Yale Sr started the business. In 1847, he opened the Yale lock shop in Newport, New York selling hand- made bank locks. His son, Linus Yale Jr, later made several crucial technical advances on which modern locks are still based, setting up his own opera- tion in 1855, then teaming up with Philadelphia engineer Henry R Towne and establishing the original Yale & Towne company in 1868. Today, Yale continues to enjoy an excellent image, and is known virtual- ly everywhere in the world where lock- ing solutions are needed. The acquired Yale companies have given assa abloy market leadership in several countries and strengthened its presence in many others. To maximize the great potential that the Yale brand represents and manage its strengths effectively, assa abloy created a Yale Brand Management Manual during 2001. The work of pre- paring this formal document extended over many months and involved people representing all the various interests of Group companies around the world. Roy Webster, the Yale Brand Manager, explains: “The Manual guides Group companies in all activities related to the Yale brand. These range from brand ownership, market positioning and product range and quality to the vital question of graphi- cal and typographical consistency – the rules for using the Yale logotype and its new tagline ‘The world’s favorite lock’ on letterheads, literature, exhibition stands and so on. “Our vision for Yale is to capture all of its past heritage and re-energize it for the future. The Yale brand should offer peace of mind to consumers around the world by providing the most reliable, accessible residential locking solutions available anywhere.” The Yale Brand Champions bring local knowledge and experience from around the world to the task of strengthening the global role of the Yale brand. A S S A A B L O Y / 2 0 0 1 • 2 3 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 24 ASSA ABLOY technology platforms: Building and sharing across the Group assa abloy’s cliq technology, launched during the year in a number of prod- ucts in different markets, represents the Group’s first common technology plat- form resulting from multi-company development. The cliq technology is based on highly miniaturized electronics that can be placed inside the core of a lock cylinder to make it a really competitive product. cliq has all the intelligence to make the cylinder itself intelligent. It permits high-security authentication using a powerful algo- rithm; it can accept or deny key entry depending on time of day; it can register all accepted and denied entries; and it can terminate the acceptance of, for example, a lost key. The whole functionality is supported by the power of a battery in the key: no power is needed in the cylinder. All these func- tions can be combined fully with the various mechanical coding systems used in the Group’s lock cylinders. cliq is both the first platform designed jointly from the outset and the first electromechanical platform to be used by many different Group com- panies. Previously, important mechani- cal platforms designed by one company have subsequently spread throughout the Group. For example, the Twin lock-cylinder technology developed by Assa in Sweden is now used by many companies around the world. Listening and leading It is often said that the customer doesn’t know he needs a product until he sees it. But if you can’t ask the customer what he needs, how can you then make the products of tomorrow? What the customer certainly does know about are the problems he is experiencing with today’s products. One important responsibility of a progressive and 24 • A S S A A B L O Y / 2 0 0 1 groups extending across country and company borders, across disciplines and involving many external contacts. The aim is to understand the present market and its problems and thereby to conceive the next generation of products. A platform for access control Installing access control can improve security while retaining convenience. Such applications are increasing in popularity, but are limited by their cost and complication. Even though the components used have become cheaper, the labor effort, planning, installation, cabling, customer training and mainten- ance still add up to a significant sum. A typical cost is usd 2-3,000 per door installed, sometimes even more. With its wide market presence in products for the door environment, assa abloy has identified an opportu- nity to create a hardware platform for access control based on components that fit together easily. By offering a minimum of planning and design work and simple installation, it should be possible to bring down the cost per door and thereby to expand the market for access control. Patents The patent portfolio of assa abloy and its many subsidiaries continues to grow. Patents for the protection of key blanks remain one important field, serving the purpose of increasing security for customers. The r&d work of the Group companies also creates many significant technical innovations every year, and more and more of the patents applied for are in the electro- mechanical field, a sign of the growing importance of this area. customer-oriented Group is to keep its ears open and listen to everything the customer has to say – whether it be complaints, compliments or new ideas. All Group companies focus on doing this, and the Group must then collate all the feedback in its joint efforts to create future products and platforms that will meet the needs identified. To lead the lock business forward, assa abloy is increasing its activities in market studies and market research with the aim of understanding today’s problems and defining the products of tomorrow. R&D and generation planning What’s next? What will doors look like in ten years’ time? Where is access con- trol heading? What will the residential lock look like in five or ten years? Based on best knowledge and the inputs received, tentative plans are made on a market by market basis. Plans are discussed and compared. What are the common elements? What are the common needs? Could some product platforms be shared? Could efficiency be increased by working together fields? These some questions come up time and time again. In some cases it is obvious that a need is purely local. But in many others the need is general, even if local imple- mentations are required to meet local conditions and local standards. To deal with such issues, assa abloy has several councils and working in 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 25 ASSA ABLOY operations: Achieving faster deliveries assa abloy’s long-term target is to be so efficient that most products can be manufactured to order within the deli- very lead-time specified by the custo- mer. The Group’s operational model focuses on time, and the first aim is to locate and identify the current causes of delays, which may include quality faults, long machine set-up times or unreliable suppliers. As each problem is solved, the cause of the next time- critical delay becomes apparent. Lead- times and throughput times can be progressively brought down. To assist this process, the Group has developed stock-control software based on coverage time rather than quantity. Stefan Tisell, who designed the program, says: “Some of our com- panies may have up to 10,000 types of products and components and many different suppliers. To maintain an overview of the whole complex situa- tion, they update order volumes and stock levels for each item every day, and the program then calculates what manufacturing or purchase orders are needed to keep inventories in balance.” The program also provides a com- prehensive set of inventory analyses, including division by supplier and identifying slow-moving items and un- realistic minimum order requirements. One of the first Group companies to adopt the Replenishment Model soft- ware was Lips in the Netherlands. The company changed to a profit-center structure at the same time. The results included a dramatic improvement in order fill rate – delivering the right items in the right quantities and on time. Lips Operations Director Ben Schuring comments: “We analyzed all steps of each process and started measuring order fill rate, order backlog time each day. and throughput Material availability is critical to on- time delivery, and the Replenishment Model software lets us see what we need to make or buy to fulfill individual orders.” “Only the most urgent (next-day) orders will be supplied from stock,” says Stefan Tisell. “This will keep our customers happy while significantly reducing capital tied up in inventories and storage space.” The software has a simple graphical user interface and can be directly linked to assa abloy’s existing information database. More than 20 Group compa- nies are using it and others plan to do so. Stefan Tisell demonstrates the Replenishment Model software to Ben Schuring of Lips in the Netherlands. The company was one of the first in the Group to adopt the program and has achieved a dramatic impro- vement in its order fill rate. A S S A A B L O Y / 2 0 0 1 • 2 5 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 26 Integration Project – Volvo Ocean Race: Making the boat go faster – inspiration and unification employees of the companies we had acquired. We needed a fast and effective way to communicate our common Group goals, visions, values and strategies. Not only to distributors, customers and investors and our own upper and middle management, but throughout our entire organization, to our workers in the office, on the shop floor and in the sales force. We found the answer in the Volvo Ocean Race.” Framework for integration “This grueling round-the-world race, which lasts nine months and is con- tested over 32,000 nautical miles, matches our Group’s geographical presence and markets perfectly. It pro- vides an ideal framework for our inte- gration work both internally, through motivational competitions at company level, and externally with our custom- ers. At each of the nine ports from Southampton to Kiel we are holding management meetings with our local companies, and getting together with customers to discuss the local lock market, their needs and how we can best support their objectives. We do all this in a spirit of goodwill and fun against the backdrop of this very demanding sailing competition which itself highlights the importance of excellence through teamwork. “In our bid to win the Volvo Ocean Race we constantly ask ourselves: ‘How can we make the boat go faster?’. And we’ve adopted the same slogan to motivate our own workforce in their day-to-day activities. Whether at sea or on land the answer is the same. Hard dedicated work that strives for perfection in everything we do. This calls for seeking out new innovative technologies that will exceed our customers’ expectations and provide easy-to-use, reliable security solutions for people and property. It also means reducing lead times, cutting costs and reducing excess inventory.” Awareness and pride “In the run-up to the start of the Race at Southampton on 23 September 2001, all our Group companies around the world organized seminars, local competitions and other activities to inform employees and customers about assa abloy’s participation in the Race. These various activities served as an ideal opportunity to build awareness about the assa abloy group and to communicate its core values and ways of working together as a unified team. “As the Race drew ever nearer, expectations rose. People felt a sense of belonging. A team spirit. Traveling to many of our companies around the world I could see for myself how employees and managers felt increased interest and pride about the upcoming event. They had a far better apprecia- tion and understanding of what it meant to be a part of a leading global company. This was half the battle. “Even part way through the Race we can note a remarkable upswing in Group awareness and pride. No mat- ter which boat crosses the finish line first in Kiel, Germany on 9 June 2002,” Anna Bernsten says, “I think we can confidently say that we have already won the most important race of all. We can see how new and old companies within our Group now feel they are truly part of the assa abloy family. By working together we have succeeded in making our boat go faster.” Since the assa abloy group was cre- ated in 1994 it has rapidly grown into the acknowledged world leader in locking solutions, with more than 100 companies operating in 40 countries throughout the world. This remark- able expansion has been achieved through a combination of organic growth from within and the ambitious acquisition of leading lock companies on key markets around the world. By far the biggest acquisition in the Group’s short history was the purchase of Yale Intruder Security in August 2000. This increased the size of the Group by 50 percent overnight. To make the most of the resulting power- house of leading lock companies and their global and local brands, immediate steps were needed to begin integrating the geographically diverse network of companies into a unified global organi- zation. Anna Bernsten, Vice President, Corporate Communications, who is responsible for the integration project, explains this formidable challenge: “We faced an enormous task. assa abloy was the world’s leading lock group, but global awareness of our company and what we stood for was very low even among many of the 26 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 27 z e n i t r a M y r r e h T © i At the ASSA ABLOY race village at each stopover, customers, distributors, employees and the general public intermingle, enjoying the event while absorbing something of the spirit and pride of ‘The World’s Leading Lock Group’. Making the most of the stopover Months before the 60-foot ‘assa abloy’ racing yacht left Southampton on her nine-leg round-the-world race over 32,000 nautical miles, thousands of assa abloy employees in all parts of the world were engaged in a parallel race of their own. One country where this effort was both rewarding and successful was South Africa. Kelly Landro, a Volvo Ocean Race ‘champion’ at the Yale-Union factory near Johannesburg, helped coordinate a range of activities designed to get people involved and excited, and to promote excellence at work. “We launched an internal, performance- based competition where employees were assigned points – which we called ‘nautical miles’ – for attendance, operations, performance, efficiency, planning or purchasing, depending on which department they worked for.” These ‘miles’ were then exchanged for in-house lottery coupons and a chance to win prizes. John Middleton, President of assa abloy south africa, says that in addi- tion to increasing a sense of pride and identification with their local brands, and with assa abloy as a Group, the team spirit stimulated by the project also served as an enabler for all employees to feel equally important at all levels in the company. Other competitions associated with the stopover were directed at customers and consumers. Customers competed on monthly sales growth figures, while every consumer who purchased a Yale Do-It-Yourself package had the chance to win a weekend in Cape Town. In addition, local management meetings were held in connection with the stopover. And colleagues, custo- mers and consumers alike were treated to a number of exciting out- ings including a charter boat cruise to meet up with ‘assa abloy’ when she sailed into Cape Town harbor. A S S A A B L O Y / 2 0 0 1 • 2 7 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 28 Scandinavia: Steady growth helped by the launch of new technology Market and market trends The Scandinavian operations continued to show stable growth during 2001, with Sweden stronger than Norway and Denmark. In 2002 the Norwegian market in particular is expected to show an upswing. is The region’s steady growth founded on a comprehensive portfolio of locally manufactured products, complemented by increased sales of products from other Group companies. During the year the Scandinavian companies collaborated in launching an range of Do-It-Yourself updated products, with local profiling in each country. However, the year’s most signifi- cant event was the development and launch of the new cliq lock technology, which offers customers the best features of mechanical locking with added flexibility and greater security latest advanced derived from the electronics. The technology is equally applicable to new and existing installa- tions without adding to installation costs. During the year the Grorud door- hardware plant in Norway was closed and the business transferred to other Scandinavian companies and to assa abloy’s new Romanian company Urbis International. Awareness about assa abloy throughout Scandinavia has been increased by a number of activities connected with the Volvo Ocean Race and the forthcoming stopover in Gothenburg. SWEDEN assa abloy’s Swedish operations com- prise Assa, Assa Industri, fix, fas Låsfabrik, Solid and the locksmith’s wholesaler aki låsgrossisten. 28 • A S S A A B L O Y / 2 0 0 1 Assa Industri and fix manufacture and market products for oem customers, mainly in Scandinavia. Assa Industri manufactures hinges, lock cases and industrial cylinder locks, while fix pro- duces multipoint locks and door and window hardware. fas Låsfabrik manufactures and markets mortise deadlocks and other locks for private homes and for safes. Assa and Solid serve the commercial construction and consumer markets. Solid develops and markets access con- trol systems, while Assa manufactures and markets security systems based on a comprehensive range of mechanical and electromechanical lock products. The Assa Security Master (asm) specifi- cation software has been upgraded with new functions designed to encourage sales of complete door hardware packages. Individual locksmiths form the main distribution channel for products by Assa and Solid. As electromechanical products continue to grow in importance, which naturally affects distribution, relationships with locksmiths were developed and strengthened during 2001. The year saw a continued slow increase in building activity, focused primarily on the major cities and espe- cially on southern Sweden. The launch during 2001 of the new generation of lock cylinders using cliq technology represents a breakthrough for products that combine mechanical and electronic features to maximum advantage, and will have the greatest possible significance for the cylinder market. The new Do-It-Yourself display panel for customers has achieved great success in both traditional building supply stores and specialized lock outlets. NORWAY assa abloy’s organization in Norway consists of TrioVing and Låsgruppen. TrioVing is Norway’s leading lock manufacturer, selling to the construc- tion industry, oem and retrofit mar- kets. During 2001 TrioVing tendered successfully for a number of major start-up projects. These included the new super-luxury residential ship ‘The World’ and the leading telephone company Telenor’s new headquarters at Fornebu. The development of Fornebu, formerly Oslo’s main airport, involves several phases of expansion. The launch of the new cliq lock technology has been received very posi- tively in Norway and has created a strong marketing base for all the Group’s high-security products. The expanded Do-It-Yourself range was also well received and produced significant sales growth during the fourth quarter of 2001. Låsgruppen is a group of five lock- smith retailers which, together with other leading locksmiths, make up the TrioVing Security Centers group. These centers have a leading role in developing 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 29 Scandinavia: Consolidated sales by companies in the Scandinavian countries in 2001 amounted to SEK 1,971 M (1,889), representing organic growth of 2 percent. GROUP VICE PRESIDENT ASSA ABLOY: HANS JOHANSSON SWEDEN Assa AB Manufactures and markets mechanical and electromechanical lock products. President: Stellan Svensson Assa Industri AB Manufactures and markets lock cases, hinges and cabinet locks for industrial customers. President: Hans Johansson AB FAS Låsfabrik Market leader in mortise deadlocks. President: Ulf Petersson FIX AB Manufactures and markets espagnolettes and fixtures. President: Jerry Pull Solid AB Markets electromechanical lock products under the ABLOY and SOLID brand names. President: John Hedesand AKI Låsgrossisten AB One of Sweden's leading locksmith's wholesalers. President: Harry Grabinsky Another company in the Swedish organization is Assa Portuguesa LDA. NORWAY Låsgruppen a.s. Markets and sells locks and fittings. President: Bjørn Haugsvaer TrioVing a.s. Total supplier of locks and security products for the Norwegian market. President: Tor-Arne Jensen DENMARK Ruko A/S Total supplier of locks and security products for the Danish market. President: Carl Trock FIX A/S Sells ASSA ABLOY products to the Danish door and window industry. President: Keld Madsen M. Sloth & Co. A/S One of Denmark’s leading locksmith’s wholesalers. President: Poul Sloth Trends SEK M Sales Average no. of employees 2001 2000 1999 1998 1997 1,971 1,889 1,777 1,701 1,660 1,765 1,726 1,651 1,657 1,702 Sales by product group Security doors and fittings, 21% Industrial locks, 4% Electromechanical locks and electronic locks, 16% Mechanical locks, lock systems and accessories, 59% The constant arrivals and departures among several hundred small IT businesses renting office/workshop units at Ronneby in Sweden present a security nightmare for the landlord Kjell Svensson at Soft Center Fastighets AB. To avoid changing the locks every time, 25 ASSA Twin Combi cylinders have been upgraded, for evaluation, with ASSA ABLOY’s new CLIQ technology, which allows them to be repro- grammed using software. all sales of Group products to the Danish door and window industry. In 2001 the Danish market was marked by changing conditions and structures and increased competition. During the year Ruko has worked to intensify and to take advantage of the resources within the Sloth organization. The integration process required major effort, but is now ready to produce the expected benefits in 2002. The new cliq lock technology was launched in Denmark during 2001 and, helped by the installed base of lock products meeting the highest secu- rity classification, is creating substan- tial added value for customers. fix has reported some notable suc- cesses during the year, including a new slot-guided hinge which has created a new quality standard for the market. the market for high-security products and in encouraging skilled installation and outstanding service. In 2001 in winning Låsgruppen succeeded some contracts with customers covering the whole country. important DENMARK assa abloy’s organization in Denmark consists of the lock manufacturer Ruko and its subsidiaries Ruko Service and fix. M. Sloth & Co was fully inte- grated into the Ruko organization during 2001. Ruko is the leading total supplier to the lock and security market in Denmark. Mechanical lock systems based on the Combi high-security cylinder form the company’s core busi- ness and meet the Danish Standard’s highest security classification. Ruko also leads the trend toward higher security in Denmark with products such as electromechanical locks and electronic access control systems, which are steadily growing in importance. Ruko Service is responsible for after-sales services, while fix handles 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 30 Finland: Export growth compensates for a flat domestic market Operations of assa abloy in Finland consist of Abloy and Björkboda Lås. Abloy manufactures and markets mechanical and electromechanical locks, door automatics, door closers, fire-door closing systems, handles and fittings. Björkboda Lås produces lock cases for interior doors, cylinder lock cases and high-security lever locks. Market and market trends Abloy’s exports continued to grow in 2001. Sales developed rapidly in eastern Europe, especially in Russia, the Baltic countries and the Czech Republic. Exports to western Europe showed strong increases, especially in the uk and France, although Scandinavia stagnated. The North and South American market areas grew, and in Asia sales increased strongly, especially in the northern part of the continent. The rapidly expanded inter- national network of assa abloy group companies with their marketing resources offers good opportunities for further developing sales of abloy products. Exports of abloy lock cases made by Björkboda Lås to the Baltic coun- tries, Russia and Ukraine developed well due to local representatives’ good hold on the market. The uk market is also promising thanks to the abloy trademark, which is already well known there. But efforts to develop sales of lock cases to other eastern European countries including Poland, the Czech Republic and Hungary have met with little success so far. On the home market sales re- mained at the same level as in 2000 despite the declining construction mar- ket. This decline is expected to continue in 2002. Abloy managed to maintain its sales levels thanks to an increase in 30 • A S S A A B L O Y / 2 0 0 1 door-closer sales – achieved through improved delivery performance and service – and to improved sales of electromechanical lock cases and industrial locking. In the fall of 2001 Abloy noted a global trend towards a split in the lock market. In general the new- construction market weakened in the turmoil following the terrorist attacks in New York in September, but the high-security market and the retrofit market grew. The features of abloy products mean that the company’s export strategy is focused mainly on the high-security and retrofit markets. Continuing strong development of the international market for abloy products is therefore expected. The trend towards higher security International and domestic customers alike are becoming more and more demanding of high security. To offer solutions for this growing high-security market, Abloy launched several new products during the year. In the spring, a new abloy high-security padlock range was launched to both domestic and international markets. In the second half of the year a new-generation patented high-security disk cylinder, abloy protec, was launched on selected markets; and a new-generation electric lock range with handle control was introduced in the fall. In addition, new exit products created cooperatively by Abloy and jpm in France were launched in Finland during the year. The abloy project-hardware prod- uct range was strengthened with two unique new families of architectural hardware designs, abloy interia and abloy forma. In the fall of 2001 Abloy started a campaign to replace out-of-date locking in residential buildings and business premises in Finland with more secure new solutions. The campaign will cont- inue in 2002 and aims to replace falling sales volumes from the new-construction market with similar volumes from the retrofit market. One of the most important events of 2001 was the establishment of a new business unit, Door Automatics, in October. The new unit will focus wholly on the Door Automatics busi- ness – previously part of the Electro- mechanical Locking business unit – and will allow efficient development of the international market for automated door environments. Existing cooperation with the authorized abloy dealer network of locksmiths was intensified by comple- menting the company’s own product range with magnetic locks and electric strikes from other Group companies. The internal education program in customer relations management for the Abloy sales personnel begun in year 2000 was in 2001. completed Continuous product development, training and close communication with customers have enabled Abloy to attract the industry’s most professional distribution partners to consult and serve end-users during sales, installa- tion and after-sales service. 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 31 Finland: Sales by companies in the Finnish organization in 2001 amounted to SEK 1,165 M (1,060), representing organic growth of 2 percent. GROUP VICE PRESIDENT ASSA ABLOY: MATTI VIRTAALA Manager: Kari Mononen Manager: Juha Pikkarainen Manager: Markku Kuivalainen Manager: Jaakko Meriläinen Manager: Jari Toivanen Manager: Kari Mononen Abloy Oy Manufactures and markets lock cylinders, mechanical and electromechanical locks, door closers, door auto- matics and architectural hardware. President: Matti Virtaala Abloy Oy’s business units Construction Locks Industrial Locks Electromechanical Locks Manager: Matti Ahola Architectural Hardware Manager: Kyösti Sormunen Door Closers Door Automatics Exports Domestic Market Abloy Oy Eesti Filiaal Markets and sells ABLOY products in the Baltic countries. Manager: Ahti Ovaskainen Abloy Oy Representative Office Russia Markets and sells ABLOY products in Russia. Manager: Lauri Honka Abloy Oy Representative Office Ukraine Markets and sells ABLOY products in Ukraine. Manager: Volodymyr Livinsky Björkboda Lås Oy Ab Manufactures and markets lock cases. President: Henry Engblom Trends SEK M Sales Average no. of employees 2001 2000 1999 1998 1997 1,165 1,060 898 811 744 1,150 1,123 1,020 970 905 Sales by product group Security doors and fittings, 15% Industrial locks, 9% Electromechanical locks and electronic locks, 16% Mechanical locks, lock systems and accessories, 60% Saku Suurhall in Tallinn, Estonia, the largest concert hall and indoor sports venue in the Baltic countries, will host the Eurovision Song Contest in 2002. The hall is comprehensively equipped with ABLOY door closers, architectural hardware and high-security door locks. technology products such as electro- mechanical locks, door automatics, door closers, padlocks and lock cases to Group companies. The Architectural Hardware busi- ness unit continued its cooperation with the Scandinavian Group compa- nies on door handles and espagnolette handles. The new abloy range of pull handles offers good potential for broader cooperation in the future. During 2001, Björkboda Lås was actively involved in integration pro- jects in Scandinavia. In Sweden, fas’s manufacture of lock cases for interior doors will be gradually replaced by the corresponding abloy range. On the other hand, sales of abloy mechanical lock cases in Sweden have almost ceased and been replaced by the corre- sponding assa range. Collaborative marketing opera- tions to sell abloy products in new market areas were started with other Group companies. In South America, for example, an abloy operation for Brazil has been established with the local Group company La Fonte. During the year Abloy was chosen as a solution supplier for various applica- tions to provide safety and to secure properties, infrastructure and valu- ables against theft, vandalism and sabotage on the commercial, industrial, institutional and private markets. Björkboda Lås found a develop- ment area in the distribution of lock cases to both commercial and residen- tial customer segments in a number of countries. Sales of the abloy range of high-security lock cases meeting the din Standard started promisingly in several market areas. Integration regionally and worldwide The business-unit-based organization of Abloy facilitates close cooperation with other Group companies to develop and manufacture purpose- built products that exactly meet the needs of customers in different markets. Abloy participates in the Group’s pro- duct councils to find and develop new product concepts and solutions, and uses the benchmarking process to constantly develop its functions. Numerous pre-studies for cross- selling opportunities between Abloy, Björkboda Lås and other assa abloy group companies were made during the year. Various cooperation projects are already underway to supply unique 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 32 Central Europe: Excellent prospects for new regional organization assa abloy central europe was created during 2001 to oversee the Group’s operations in Germany, the Nether- lands, Switzerland and Austria. The new regional organization has a sound operational and financial base for future improvements. growth and profit Continuous margin improvements and capital rationalization are supporting cash flow, profit development and balance sheet reduction. This work will continue, giving good prospects for 2002. The organization’s manufacturing units comprise effeff, ikon, Wilhelm Dörrenhaus and bab-ikon in Germany, Lips in the Netherlands and keso in Switzerland. In addition, there are seven sales units operating in Central Europe. The integration of the effeff group in Germany and the divestment of its non-core alarms business are now completed. The acquisitions of Lips in 2000 and the keso group in 2001, and their subsequent integration, have created good market positions in the Netherlands and Switzerland. Coordi- nation of sales forces and production operations has started to improve sales and margins, and growing collabora- tion with other Group companies will support future expansion in the area. The Volvo Ocean Race will be used for future integration of units and make sure that our employees under- stand our way of working. The race is also an ideal vehicle to get in closer contact to our customers and to pro- mote our local strong brands. The Central European market slowed down in 2001. New-construc- tion volume was lower, while the after- sales business and sales of high-security products remained static. The regional in organization’s strong positions 32 • A S S A A B L O Y / 2 0 0 1 electromechanical products and high- security cylinders will ensure stable development. Changes in the distribution structure, involving closer cooperation with appointed System Partners, give opportunities to increase market shares. The implementation of the Euro will harmonize and open the European market, assisted by the changing distri- bution structure and continuing cross- border business integration. Com- panies like assa abloy, operating in the whole area, can gain new opportu- nities in this process. The markets of eastern Europe are also coming closer and closer to Germany and to the influ- ence of central Europe in general. The very fragmented structure of the Central European market, in which a lot of small and medium family-owned lock companies still operate, also generates possibilities of future market restructur- ing and harmonization. GERMANY Europe’s biggest and most developed market for security products has been affected by the overall slowdown in economic growth. New construction is down by 5 percent overall and building in the eastern part of activities Germany have decreased dramatically. However the commercial and renova- tion segments remain at previous levels. The outlook for the coming year indicates no major changes apart from some increase in the renovation area and after-sales market. New regulations affecting equity ratio have tightened credit ratings and caused difficulties for many trading and installation firms. The result is a tendency towards mergers in trade and wholesaler chains. At the same time wholesalers and wholesale associations have announced mergers involving continuing expansion beyond German borders. The awareness of a need for higher security in both the commercial and the residential areas is increasing. Issues such as access control, electro- mechanical locking to achieve greater security and added flexibility and, especially, safe emergency exit systems are high on the priority list of public authorities and institutions such as air- ports, hospitals and schools. in leading position With its strong operations in the areas of electromechanical locking, emergency exit systems and high-security masterkey and access control systems, assa abloy in Germany is now taking influencing a the market towards better locking solutions. The companies effeff, ikon, bab-ikon and Dörrenhaus offer pack- ages that combine security, safety and convenience features, and through their professional sales forces and strong partnership concepts with lead- ing retail and installation firms they are in a position to communicate the value of these packages to professional end- users, decision makers and residential customers. In addition, new distribu- tion channels such as Do-it-Yourself retail stores will help to generate a higher demand for high-quality security products. With their focus on r&d, the German assa abloy group companies 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 33 Inside the Charlemagne Building in Brussels, headquarters of the European Commission, 2,200 BAB lock cylinders are installed. will continue to raise standards in the areas of electromechanical and mech- anical locking. New multipoint locks and electronic cylinders will be intro- duced in 2002 and other products are continuously being developed in response to end-user needs. THE NETHERLANDS Construction activities in the Nether- lands remained stable for the commer- cial and renovation markets but the residential market slowed down. With its strong positions in the diy and service markets assa abloy has been able to increase market shares. By influencing architects, distributors and end-users the company has created a good base for improving sales to the commercial segment with its electromechanical and mechanical high-security products. The integration of Lips is proceed- ing according to plan. Business Units have been established, and significant improvements in delivery times and service have brought new customers. Sales development and better margins are starting to improve ebita (opera- ting margin before goodwill amortiza- tion). The cross-selling of products from other assa abloy companies will be used to win market share in exit devices, multipoint locks and cylin- ders. Positive development of sales and profit is expected. SWITZERLAND The Swiss market is slow but very stable. Established high-security stand- ards form a base for future market development towards electromechani- cal and even higher-security products and solutions. The acquisition of keso was a very important step for assa abloy in Switzerland. keso’s outstanding port- folio of high-security products and cylinders is a perfect complement to the existing assa abloy product range and in particular expands its flat-key technology and systems. The addition of keso gives assa abloy a good position in electro- mechanical locking, and a strong second position in the high-security cylinder market behind kaba. Integration of keso has started very well and is progressing faster than planned. The Group’s tools of bench- marking, cross-learning and continu- ous development work are expected to produce substantial improvements. Cross-selling projects with other assa abloy group companies are expected to bring significant sales development for keso, and better growth is forecast for next year. The local market is not expected to decrease, and stable devel- opment will continue. Central Europe: Sales by companies in the Central Europe organization in 2001 amounted to SEK 1,432 M (1,027). Organic growth for comparable units was 3 percent. GROUP VICE PRESIDENT ASSA ABLOY: EERO LESKINEN GERMANY IKON AG Präzisionstechnik Mainly manufactures and sells high-security cylinders and advanced masterkey systems. CEO: Eero Leskinen Presidents: Bernd-D. Wempen and Gerhardt Ernst BAB-IKON GmbH Schliesstechnik Manufactures and sells small lock systems and standard lock products. President: Eero Leskinen effeff Fritz Fuss GmbH & Co. KGaA Manufactures and sells electronic and electromechanical security systems. Presidents: Martin Brandt, Bernhard Zimmermann and Manfred Kötzle effeff China President: Martin Brandt Rofu AG Swiss manufacturer of electric strikes and door magnets with sales in Switzerland and Germany. President: Ugo Zanolari effeff France S.A. President: Jean-Claude Paris Wilhelm Dörrenhaus GmbH Manufactures and sells standard and special lock cases, mainly for wooden doors. President: Holger Ritz ASSA-Ruko Sicherheitssysteme GmbH Markets and sells the ASSA and Ruko lock ranges on the German market. President: Svend Mølgaard Petersen THE NETHERLANDS Lips Netherland B.V. Manufactures an extensive range of electromechanical and mechanical products, backed by after-sales service and maintenance. President: Jaap Wind Ambouw B.V. Markets and sells mechanical and electromechanical locks and building hardware on the Netherlands market, mainly supplied by IKON and other ASSA ABLOY companies. President: Gert Lubbersen SWITZERLAND IKON Switzerland S.A. Markets and sells IKON, BAB-IKON and ABLOY products on the Swiss market. President: Ugo Zanolari KESO AG Manufactures and sells high-security mechanical and electromechanical cylinders and lock systems. Presidents: Ernst Keller and Eugen Vigini KESO Deutschland GmbH President: Andreas Lipowski KESO France S.A. President: Christophe Jenny KESO Austria GmbH President: Wilhelm Langanger Trends SEK M 2001 2000 1999 1998 1997 Sales 1,432 1,027 575 543 489 Average no. of employees 1,398 1,170 751 747 673 Sales by product group Mechanical locks, lock systems and accessories, 56% Security doors and fittings, 2% Industrial locks, 3% A S S A A B L O Y / 2 0 0 1 • 3 3 A S S A A B L O Y / 2 0 0 1 • 3 3 Electromechanical locks and electronic locks, 39% 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 34 South Europe: Improved growth driven by security and safety demands A new regional organization, assa abloy south europe, was created in 2001 to oversee the Group’s operations in France (Vachette, jpm, Laperche/icb, Stremler, Fichet Serrurerie Bâtiment, Yale Security France and Bezault), Belgium (Litto and Dupéray), Spain (azbe and tesa) and Italy (Nuova f.e.b., mab, Yale Corni and Yale Security Group). Market and market trends In France, the positive trend of late 2000 continued at first, but volumes slowed towards year-end due to in- ventory reductions among distributors and some caution before the Euro in- troduction. Growth is security-driven, helped significantly by new high-end products such as masterkey cylinders and multipoint locks. Security has become an important political issue in France, which explains the wide inter- est in l’Observatoire de la Sécurité – the association created by assa abloy france to inform the media and public about security and safety measures. The specialized high-security com- panies achieved really strong growth this year. As in other markets, orders for electromechanical products fell back in the second half, but are forecast to regain previous growth levels since the projects are delayed rather than lost. The larger general lock companies picked up in the fall, especially jpm where major improvements in the pro- duction flow organization and new product launches are starting to bear fruit. But, as predicted, the entry-level products from cheap imports sold by price-oriented distributors. faced competition The Belgian units recorded another good year of healthy, strong growth. The very active building market stabi- 34 • A S S A A B L O Y / 2 0 0 1 lized in the second half-year and vol- umes remained good. Sales of Fichet’s high-security doors (integrated into the Belgian organization in 1999) rose substantially in response to growing security demands and revitalized market efforts. Hotel lock sales were brisk early in the year but then slowed, as did sales of industrial locks to the telecom sector. Continuing high- security demand and a strong presence in replacement/renovation projects will assure continued positive development in Belgium. Spain is the region’s strongest growth market, achieving record volumes for the high-security abloy cylinders and other security products, despite some slowing in the telecom sector. Further attention given to Fichet, acquired by assa abloy in mid 2000, paid off in extensions to the Point Fort dealer network and in higher sales per outlet. Hotel lock sales held up well. Towards the end of the year the tesa acquisition was com- pleted and the work of integrating the company into the Group started. In Italy too there is increasing awareness of – and interest in – better locking solutions. The lack of clear market leadership has produced a depressed, price-focused market. assa abloy’s units kept up well and are targeting margin improve- ments rather than volumes. A good last quarter lifted sales above last year’s. The newly acquired door-closer manu- facturer mab is integrating very positi- vely in both the region and the Group. Growth for the region is moderate, but still well above that of recent years. There is increasing penetration of electromechanical products made by Yale Corni and Nuova f.e.b. in Italy and by icb, jpm and Laperche in France. l’Observatoire de the French population The trend towards higher security Safety and convenience have become important additional drivers of secur- ity-driven growth. Studies conducted by la Sécurité (just before the terrorist attacks on September 11) show that 43 percent of think supermarkets, schools and cinemas have insufficient safety measures. The figures rise to 49 percent for football stadiums, 50 percent for office buildings, 60 percent for the subway and 64 percent for nightclubs and discos. 65 percent also believe that the security measures in public buildings are not renewed sufficiently often. These results attracted wide attention in the French media, winning recognition for assa abloy. The better-informed public demand for safer public buildings will benefit the entire industry. targeting New products the demands for higher security and safer public buildings have multiplied. jpm introduced an innovative panic exit device. Vachette launched a new family of multipoint locks with good export potential and two new high- security cylinder lines. Laperche’s safety- featured lock won the innovation award for locks at Paris’s batimat 2001 fair in November. Fichet’s new range of high-security doors attracted wide interest – and new volumes – and investments in production are being stepped up to meet demand from France, Belgium and Spain. 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 35 South Europe: Sales by companies in the South Europe organization in 2001 amounted to SEK 2,905 M (2,232). Organic growth for comparable units was 4 percent. GROUP VICE PRESIDENT ASSA ABLOY: BO DANKIS FRANCE Bezault S.A. Manufactures door and window fittings. Managing Director: Michel Brassié Fichet Serrurerie Bâtiment Manufactures high-security cylinders, high-security locks and security doors. Managing Director: Robert Fidanza JPM S.A. Manufactures locks, cylinders, panic bars and escape fittings. Managing Director: Eric Baudru Laperche S.A./ICB Manufactures multipoint locks, cylinders and electromechanical locks. Managing Director: Robert Fidanza Stremler S.A. Manufactures locks and fittings for glass and aluminum-frame doors. Managing Director: Robert Fidanza Vachette S.A. Manufactures locks, multipoint locks, high-security cylinders, panic bars and escape fittings. Managing Director: Frédéric Chanel Yale Security France Sells locks, multipoint locks, cylinders and electromechanical locks. Managing Director: Pascal Bureau BELGIUM Dupéray S.A. Specifies locking solutions aimed at large building projects with prod- ucts mainly from IKON, effeff, Abloy and other Group companies. Managing Director: Dominique Osstyn Litto n.v. Manufactures and sells locks and cylinders with an emphasis on high security. Managing Director: Fernand Clapdorp SPAIN ASSA ABLOY IBÉRICA, S.L. Parent company for ASSA ABLOY’s operations in Spain. Vice President: Jorge García Martínez Vice President: Jose Agustin Telleria AZBE B. ZUBIA, S.A. Manufactures and markets a complete portfolio, through four Business Units. Managing Director: Jorge García Martínez TESA Talleres de Escoriaza S.A. Manufactures a comprehensive range of products including locks, multipoint locks, cylinders and knobsets for buildings. Managing Director: Jose Agustin Telleria ITALY Yale Security Group – Italy Sells cylinders, mechanical and electric rim/mortise locks, cabinet locks, safes and padlocks, in Italy and internationally. Managing Director: Roberto Renzi Nuova F.E.B. S.r.l. Specializes in the production of locks, electric strikes, panic exit devices and electrical supplies. Managing Director: Gilberto Allievi MAB MASELLIS Industriale S.p.A. Manufactures door closers, floor springs and panic exit devices. Managing Director: Gilberto Allievi Yale Corni Sistemi di Sicurezza S.p.A. Panic devices, aluminum/fire locks and electromechanical/electronic closing systems. Managing Director: Roberto Renzi Trends SEK M Sales Average no. of employees 2001 2000 1999 1998 1997 2,905 2,232 1,682 1,559 901 3,099 2,744 2,189 2,013 1,204 Sales by product group Security doors and fittings, 17% Industrial locks, 1% Electromechanical locks and electronic locks, 7% Mechanical locks, lock systems and accessories, 75% The Opéra Garnier in Paris, with its ceiling paintings by Chagall and crystal chandelier weighing over six tons, remains the masterpiece of the French architect Charles Garnier (1825-1898). Since 1989 the opera house has been protected by a high-security masterkey system from JPM using over 400 KESO cylinders as well as rim locks matching the style of the building. This system is continually updated with the latest technologies. In Italy, Nuova f.e.b. launched a new line of panic exit devices and also a new design concept for panic exit devices, designed in Milan. The cliq technology was acclaimed at its French launch at the Eiffel Tower in October. The industry is eagerly awaiting the first deliveries in early 2002. The South Europe group is very active in the various European com- mittees for standards and certification. Possibly the most significant advances are in panic exit devices, where assa abloy is the regional market leader. All units will apply for the new ce certifi- cations and markings as they become available in early 2002, before becoming mandatory later. Integration regionally and within the Group The integration of the newly acquired companies is proceeding well. New management structures developed in the creation of a South Europe region cater for ongoing communication and information flow. Cross-border trade between the companies is becoming important as relations improve. Litto in Belgium has distributed Vachette products for two years now, while jpm panic exit devices go to the Belgian market via Dupéray. azbe in Spain is introducing door closers and panic exit devices from France. Yale in Italy is sourcing high- security cylinders from Vachette and complementary products from Nuova f.e.b. Yale products also go to several French companies. Even more ties are in the making. The French group has actively cul- tivated common projects since 1997 and is now a well functioning team. During 2001 a successful Management Training Program was started where twelve young potential managers were trained in business and assa abloy values and strategies. The program will be extended to the entire South Europe region from early 2002. It is an excellent tool both for internal groom- ing of new generations of managers and for company integration. The South Europe region will host one of the Volvo Ocean Race stopovers at La Rochelle, France in May 2002. Preparations are well underway, handled by a project team from all the countries. Other projects conducted region- ally are Supply Management and Purchase Coordination, an it Forum, a Brand Management Council and seve- ral business development projects. 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 36 United Kingdom: Group synergies, integration and strong brands stabilize sales assa abloy uk, which was formed after the acquisition of Yale Intruder Security in late 2000, has pursued a policy of integration while taking advantage of the strength of the indivi- dual Group companies operating in the its own uk. Each company has strengths in products and marketing, and the aim is to develop these unique aspects while facilitating cross-learning and synergies that achieve cost savings and spread best practice. assa abloy uk is the country’s largest supplier of door and window security products and has a dominant position in the high-security lock mar- ket. But it currently enjoys a relatively small market share of the general door and window hardware market. This leaves exciting opportunities to capita- lize on its strong brands, market pres- ence and access to Group products and to introduce new products in many ancillary areas such as door closers, door handles and window hardware. Separately, assa abloy uk is the major uk-based automotive lock sup- plier. Chubb Locks Custodial Services dominates the jail-sector lock business in the uk, and together with Union- brand products contributes to exports amounting to sek 210 m. Extensive strategic market research has been undertaken to plan the uk group’s development using its strong national brands and companies, supplemented by the vast range of products available from the global assa abloy group. This evaluation has identified opportunities for all the uk companies to develop without undue levels of intra-Group competition. The twin aims are to give existing custo- mers greater choice by enlarging the product range, and to expand the 36 • A S S A A B L O Y / 2 0 0 1 customer base. During 2001 each company progressed in line with this strategy: • Abloy Security and assa continued to grow in the high-security commercial segments with the support of the Nordic factories and the introduction of new keying and electromechanical products. Abloy focuses on distribut- ing through locksmiths and security centers while assa supports the speci- fication of solutions for institutional buildings via architects and builders. • Grorud, supplying fittings to door and window manufacturers, grew strongly after the acquisition of a principal supplier and significant new contracts in the British oem market. • Chubb Lock Custodial Services commissioned the construction of a purpose-built site to accommodate all the manufacturing and admini- strative/sales functions of the compa- ny. This confirmed its commitment to supplying a total service to custo- dial establishments, and continues the development of sophisticated systems that meet the stringent demands for economy and security in private and state-run jails and other secure establishments. • C E Marshall invested in added magnesium diecasting capacity to support the growing market for lightweight steering-column locks, and maintained its profitability despite a difficult year in the auto- motive field. By year end it was collaborating with assa abloy’s other car-lock manufacturer fab of the Czech Republic to pursue new opportunities. • Yale Security Products focused on continued operational efficiency improvements and the development of new product plans to support the repositioning of its Yale, Union and Chubb brands. With this repositioning Yale will focus on residential products and the security of private accommodation, Union will develop a wide range of products from within the Group to support commercial specifiers and ironmongers, and Chubb will provide high-security, technically advanced products for both markets. Market and market trends While the overall market was difficult and remains largely price-driven, significant opportunities for high- specification products have supported the focused strategies of assa, Abloy and Grorud and their continued growth. This reflects the underlying increase in awareness of security, driven by rising criminality and increased accumulation of personal possessions and other valuable assets such as information. The repositioning of the Yale, Union and Chubb brands, and the introduction of innovative and higher- value-added products, will offer the market attractive alternatives to the plethora of imported copycat products. Despite the difficult overall market, assa abloy uk was able to maintain or increase sales in most segments while improving margins during the year. Particular emphasis was placed on restructuring and repositioning Yale in this regard and has resulted in a strong initial order intake in 2002. The trend towards higher security Security requirements continue to grow, and the companies work together with 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 37 United Kingdom: Sales by companies in the UK organization in 2001 amounted to SEK 1,545 M (665). Organic growth for comparable units was 8 percent. GROUP VICE PRESIDENT ASSA ABLOY: GEOFF NORCOTT Abloy Security Ltd. Primarily markets ABLOY electromechanical locks, padlocks and industrial locks. Managing Director: Robin Rice ASSA Ltd. Markets a complete range of ASSA, Ruko and SOLID lock products. Managing Director: Paul Green Grorud Industries Ltd. Manufactures and markets door and window fittings. Managing Director: Bjørn Mønster C E Marshall (Wolverhampton) Ltd Manufactures and supplies high-security locks and door handles as original equipment items to the automotive industry. Managing Director: Raymond Dovey Yale Security Products UK Ltd Manufactures and markets a complete range of door locks, padlocks and architectural hardware under the Yale, Chubb and Union brands. Managing Director: Michael Rayner Chubb Locks Custodial Services Limited Provides custodial locking products and systems to correctional facilities worldwide. Managing Director: Steve Wood Trends SEK M 2001 2000 1999 1998 1997 Sales 1,545 665 270 266 236 Average no. of employees 1,795 704 128 132 147 Sales by product group Security doors and fittings, 3% Industrial locks, 20% Electromechanical locks and electronic locks, 6% Mechanical locks, lock systems and accessories, 71% The National Security Roadshow is a mobile exhibition center created by Yale Security Products UK. It attends customer open days, exhibitions and conferences, publicizing both the Volvo Ocean Race participation and the latest high-security products. government organizations, insurance companies and Standardization bodies to increase consumers’ awareness of standards and the products and solu- tions available. Focus on the end-user has been assisted by the Yale Security Road- show, a purpose-built mobile exhibi- tion which tours the country, visiting trade shows and supporting customers and local-community activities. The display aims to inform customers of general issues related to security and enjoys the support of allied organiza- tions such as ‘Secure by Design’ (a police initiative), insurance companies and Neighborhood Watch. The improvement of security via door and window manufacturers has been supported by the introduction of new multipoint locking products from both Yale and Grorud. This focus on fitting by the manufacturer will protect future sales. Customer research for new prod- ucts focuses on end-users’ desire for products that are both functional and appealing, and has revealed significant opportunities to raise public awareness of security products. Packaging, advert- ising and point-of-sale displays are therefore directed towards customer education to increase understanding of the products’ technical superiority. Integration regionally and worldwide The integration of the uk group has progressed well, exploiting opportuni- ties to share production facilities, skills and services. The companies’ combined knowledge has been incorporated in a product/market matrix, from which strategies to best utilize each company’s strengths in products and marketing have been defined. In the drive to reposition the Yale, Chubb and Union brands, resources have been seconded from Australia, Sweden and Finland. In critical product areas, strategies utilizing products, designs and market- ing programs from other Group com- panies have been developed. There will be significant new product launches in 2002 based on cross-buying, local manufacture and joint sourcing strat- egies. A typical initiative will be the extension of the successful padlock range from Lockwood in Australia to Yale uk. Supported by the Volvo Ocean Race initiative, a real momentum has been developed in the former Yale Intruder Security companies which will manifest itself in a more proactive and confident uk group over the next few years. 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 38 North America: New structures sustain development of a group doubled in size The operations of assa abloy north america have undergone strong and rapid expansion which has resulted in a doub- ling in size over the last 15 months. Following the addition of the Yale Secu- rity Group in late 2000, Phillips and tesa in Mexico were acquired during 2001, while in the usa the Door Group joint venture with spx Corporation has brought four new companies into the North American organization: Ceco, Dominion, Fleming and Trussbilt. Today the North American group consists of more than 30 operating units and employs over 10,000 people. Organic growth has been stable at a level well above the general growth of the economy and the market. ebita (operating margin before goodwill amortization) has also developed positively, both as a result of improved performance by companies in the ‘old’ group and through efforts focused on integrating the new companies into the group. During 2001 these companies have already been able to report gains in efficiency and reduced overhead costs which have had a positive impact on the group’s earnings. assa abloy’s participation in the Volvo Ocean Race has spread Group culture and enhanced team spirit among the American companies. It has also played an important role in inte- grating new units. And all this, long before the boats even have arrived to North American waters. At a time of strong growth it is crit- ical to create the right environment to support efficient integration of the new units as well as to ensure that available synergies are exploited to the maximum possible extent. The overall objective is to create profitable and sustainable organic growth for the group. By mid year a new structure had been laun- 38 • A S S A A B L O Y / 2 0 0 1 ched with the three main objectives of continued and strengthened focus on operational excellence, increased focus on product development to ensure satisfactory levels of innovation and speed to market, and finally a broade- ning of market coverage through addi- tional coordination and focus. In the new structure, companies and units with a common base in terms of products and operations have been brought together, and two additional groups with similar market focus and geographical coverage have been formed. The new structure consists of five product-based groups: • Architectural Hardware Group – Corbin Russwin, McKinney, Norton, Rixson, Sargent, Yale Commercial Locks and Hardware • Door Group – Ceco, Curries, Fleming, Graham, Dominion, Trussbilt • High Security and Aftermarket Group – Abloy, Arrow, ASSA, Medeco, Mul-T-Lock, NEL • Electromechanical Group – Folger Adam Electric Door Control, HES (Hanchett Entry Systems), Securitron • Residential Group – Emtek, Yale Residential The two main sales and marketing organizations – essex and ysg (Yale Security Group) – will be kept separate to support the new strategy of offering more than one alternative in each mar- ket. Additional coordination and brand positioning are other important elements in this strategy. The operations in Canada and Mexico will also be run as separate but coordinated units. Even though the successful integra- tion of the North American group and exploitation of synergies will depend on development within each of the indivi- dual groupings above, there are also substantial opportunities for cross-group collaboration, such as closer market coordination between Ceco and ysg, and cooperation in the detention mar- ket between Trussbilt and Folger Adam. USA The market situation in the usa has softened during the year. A slowdown in new construction was detected quite early in the year. This was compensated to some extent by continued stable development in sectors of prime impor- tance for the us group – institutional construction in general and the educa- tional sector in particular. The negative impact that the events of September 11 have had on the economy as a whole has further slowed down overall con- struction activity. Added emphasis on is security and security upgrades expected to have a positive impact on parts of the assa abloy business over the next few years. But it is too early to say whether this positive impact will completely balance the negative impact from the softer economy. The us group has developed positi- vely during the year and shows overall organic growth of 4 percent with gains in particular for Emtek, hes and Yale Residential. The group’s general market position has been strengthened during the year. Integration of the new units has progressed well and is ahead of plan. For the Yale Security Group the addi- tional focus on operational efficiency, price stability and reducing overhead costs has paid off in lower inventory, increased margins and improved overall profitability. Even though sales have been somewhat soft, the gains in 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 39 North America: Sales by companies in the North American organization in 2001 amounted to SEK 9,682 M (5,409). Organic growth for comparable units was 4 percent. GROUP VICE PRESIDENT ASSA ABLOY: CLAS THELIN USA ESSEX Industries, Inc. Joint sales operation for Curries, Graham, HES, McKinney, Sargent and Securitron, with focus on the institutional construction market. Vice President, Sales and Marketing: Joseph J Hynds, Jr Yale Security Group (YSG) Sales, marketing, service, and support for Ceco Door Products, Corbin Russwin Architectural Hardware, Folger Adam Electric Door Controls, Norton Door Controls, Rixson Specialty Door Controls and Yale Commercial Locks and Hardware. Vice President, Sales and Marketing: Larry Bonhaus Folger Adam Security Inc. Supplier of locks and hardware to the highest-security markets, such as detention and correctional facilities. President: Donald C Stading ARCHITECTURAL HARDWARE GROUP President: Thanasis Molokotos Corbin Russwin Architectural Hardware Manufactures a full range of architectural door hardware and locks, including mechanical and electromechanical mortise and cylindrical locks, panic exit devices, door closers and cylinders. General Manager: Dan Daino McKinney Products Company Manufactures a broad, complete line of hinges. General Manager. John Cordes Norton Door Controls Manufactures a comprehensive range of mechanical and electromechanical surface door closers, door holders and ADA automatic door operators. General Manager: Doug Millikan Rixson Specialty Door Controls Manufactures concealed closers, pivots, and mechanical/ electromechanical door holders, particularly suitable for special applications involving heavier doors, stringent esthetic requirements or other unique openings. General Manager: Eric Tannhauser Sargent Manufacturing Company Manufactures a complete line of locks and door hardware with a wide range of cylindrical locks, mortise locks, exit devices, door closers, electromechanical products and cylinder systems. Director of Operations: Rich Hafersat Yale Commercial Locks and Hardware Manufactures a wide range of commercial door hardware and locks, including mechanical and electromechanical mortise and cylindrical locks, panic exit devices, door closers and cylinders. General Manager: Dick Krajewski DOOR GROUP (USA AND CANADA) President: Ben Fellows Ceco Door Products Manufactures a broad range of steel doors and frames for commercial, industrial and institutional construction markets. President: Carl Hellman Curries Company Manufactures a full range of hollow metal doors and frames with primary focus on the institutional and commercial market. President: Jerry N Currie Dominion Building Products Manufactures a full range of steel frames and doors, aluminum windows and preassembled door units for industrial pre-engineered buildings. President: Tom Granitz Fleming Door Products, Ltd Canada’s largest manufacturer of steel doors and frames for the non-residential building market. President: Bill Strong Graham Manufacturing Corporation Manufactures architectural flush wood doors. President: Jerry N Currie Trussbilt Manufactures high-quality security hollow metal products primarily for the detention market, with a market leading position in this segment. President: Steve Wolgamot HIGH SECURITY AND AFTERMARKET GROUP Abloy Security Inc. Active in the market for industrial locks. President: Jeffrey Carpenter (acting) Arrow Lock Manufacturing Company Mechanical locks and lock cylinders, with an emphasis on the aftermarket and the north-eastern USA. President: Charles E. Armstrong The new addition to the Minneapolis Convention Center combines the solid traditional security of a SARGENT mechanical key system with a SECURITRON digital entry system and exit delay system. Exit delay systems secure exterior doors electronically while permitting authorized entry, but delay unauthorized egress from within, so reducing loss from theft. profitability have far outweighed any negative impact on the sales side. The creation of the Architectural Hardware Group has further speeded up the integration process and ensured improved utilization of resources and further cross-learning between the member companies. Folger Adam Security is well underway to regain its leadership role in detention security. Additional focus on the core business, right sizing of the operation and a strong emphasis on efficiency should bring the company back to double-digit profitability in the next 12 to 18 months. To support this process, the loss-making William Bayley window division will be discontinued. The assa abloy Door Group, formed in April 2001 as a joint venture with spx Corporation, also shows good progress towards integration. In the joint venture assa abloy has 80 percent ownership, management responsibility and the right to buy the remaining shares after two years, so in practical terms the operation already acts as part of the us group. The rationale for the agreement was that the minority partner was a leading producer of security and safety steel doors that were often sold in conjunction with Yale door hardware and were complementary to the doors made by the assa abloy companies Curries and Graham. Curries and Ceco, the two largest units in the Door Group and also the ones with most similar market presen- ce, complement each other well: Curries with its main focus on frames and custom doors and Ceco with an excellent operation producing standard doors. It is expected that it will be possible to exploit further synergies during the next one to two years through a focused and differentiated investment program. Trussbilt, the Door Group’s sup- plier of doors and hollow-metal frames to the detention industry, has success- fully built up a very strong backlog of orders over the last year. A substantial portion of this business is coming from new products and services, which is promising for the future since it has expanded the company’s potential market. Some of these new products can also be used outside the detention industry in applications where increased security is of importance. The strongest growth in the us group has been on the residential side. Emtek has achieved growth exceeding 50 percent for the second year running and continues to develop positively in its chosen niche of the market – decor- 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 40 The US architectural profession's highest prize – the 2001 AIA Honor Award for Interior Architecture – has gone to architects Hardy Holzman Pfeifer Associates for their dazzling restoration of New York's famous Radio City Music Hall, originally built in 1932. The glittering new hall uses Yale Security Group hardware throughout, including Rixson floor closers with special layouts, Corbin Russwin ML2000 locksets and Norton 7500 closers. ative locks and hardware for homes of distinction. Yale Residential also shows strong growth in both retail sales and sales to builders. During the year the two residential companies have successfully launched a significant number of new products to support this growth. The formation of a product group focusing specifically on High Security and the Aftermarket (where most deci- sions for security upgrades are made) provides increased opportunities to influence the trend towards higher security. The member companies take joint initiatives to broaden this market by increasing demand for high-security products. Within the framework of the National Crime Prevention Council (ncpc), the assa abloy group is one of the main sponsors of the National Safety and Security Council (nssc), committed to increasing awareness of safety and security measures that can prevent crime. In order to take advantage of the strength that the different companies have built up over the years, there is a need for further brand positioning and coordination of sales and marketing efforts. The characteristics of local markets vary, based on traditions, distributor support and previous geographic cove- 40 • A S S A A B L O Y / 2 0 0 1 rage. The important work of develo- ping strategies adapted to the different local markets is well underway. It involves the sales forces of all the major us companies and is coordinated at national level. The us group’s ove- rall strategy is always to offer the mar- ket more than one alternative. Coordination and cooperation be- tween companies of the High Security Group and the Architectural Hardware Group have also increased during the year. This is essential to drive the trend towards high security on the new- construction side and to increase awareness among end-users, specifiers, architects, contractors and other important opinion-formers in this segment of the market. Many product introductions by the Architectural Hardware Group have been focused on such higher-security applications. Sargent has launched a new bored-in lock, of so-called T Zone construction, which offers outstanding performance and strength. Yale’s new delayed egress device and Corbin Russwin’s mortise lock for classrooms are other notable launches. Sargent has also launched a new family of stand- alone battery-operated access control devices incorporating proximity tech- nology by hid. Another initiative aimed at driving the trend towards higher security was the Building Security program success- fully launched in 2001. assa abloy joined forces with other companies including Diebold, one of the country’s leading security systems integrators, to offer end-users a complete package of safety and security products and services. CANADA The Canadian market has stabilized after a relatively soft year in 2000. All companies in the Canadian group show stable growth. The integration process has also proceeded smoothly in Canada with the major focus on further market coordination and sharing of best practice in the areas of following-up prospects and projects and managing the early stages of the sales process. In addition to the traditionally strong Sargent, Yale-Corbin, Medeco and Abloy presence on the Canadian market, significant inroads have been made for McKinney, Securitron, hes and Mul-T-Lock. This success has been based on focused efforts to utilize exis- ting channels to the market and build on the strength of the established units. Canada is traditionally a strong high-security market. The main potential 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 41 ASSA Inc. Occupies a leading position in the high-security segment of the market. National Sales Manager: Thomas Demont Medeco Security Locks Inc. Market leader in high-security locks and lock systems for doors and industrial applications. President: Robert Cook NEL Corporation Primarily focuses on marketing and sales of exterior security rim locks under the SEGAL brand. Director: Joseph Kingma ELECTROMECHANICAL GROUP Folger Adam Electric Door Controls Manufactures an extensive range of electric strikes, electro- magnetic locks, power supplies and access control accessories. General Manager: Eric Tannhauser Hanchett Entry Systems, Inc Provides a variety of electromechanical locking products with emphasis on electric strikes. President: Michael Webb Securitron Magnalock Corp. Market leader in magnetic locks and other electromechanical lock products. President: Robert Cook RESIDENTIAL GROUP Emtek Products Inc. Decorative locks and hardware for the residential market. President: Thomas Millar Yale Residential Security Products, Inc. Provides residential locksets for both new construction and retail aftermarket applications. President: Craig Dorsher CANADA ASSA ABLOY of Canada Ltd. Markets and sells Sargent, McKinney, Arrow, Securitron and HES products in Canada. Responsible for overall market coordination in Canada including also Abloy and Medeco. President: Greg M Erwin Abloy Canada Inc. Markets and sells ABLOY products in Canada. President: Stephen Timmons Medeco of Canada Markets and sells Medeco products in Canada. Director: Alan Heaney Yale-Corbin Canada Limited Canadian distribution company for Yale Security Group. President: Bill McLean MEXICO Country Manager: Jorge Arnau Grupo Industrial Phillips S.A de C.V. Leader in the Mexican market for locks and padlocks, manu- facturer of a complete line of rim and mortise locks, hinges, padlocks and door hardware under the brands PHILLIPS and PARKER. President: Juan Manuel Mozas Tesa, S.A. de C.V. Residential locksets manufactured and assembled for new construction, retail aftermarket applications and export under the brands TESA and THOR. President: Lars-Inge Aronsson Yale Security Mexico Market leader in Mexico in cylindrical and tubular locks under the brands YALE and SEGUREX. Responsible for distribution of TOVER locks. President: Roberto Lebrija Pariente Trends SEK M Sales Average no. of employees 2001 2000 1999 1998 1997 9,682 5,409 3,721 2,916 2,402 7,133 4,259 3,305 2,715 2,406 Sales by product group Security doors and fittings, 23% Industrial locks, 2% Electromechanical locks and electronic locks, 9% Mechanical locks, lock systems and accessories, 66% for further growth in this segment is by increasing the base during the new-construction phase. This is there- fore the main emphasis of assa abloy’s efforts to drive the trend towards higher security. Leads are now shared between the companies, and a more cooperative approach is used to sell high-security solutions the new-construction market. Implementation has so far been successful and well received by the market. With the broad range of products available it has been possible to offer different high-security solutions based on individual customer needs. in MEXICO Even though growth in the Mexican market in 2001 was considerably lower than for the last 4-5 years, the situation is very promising since this has been the most stable first year of office for many years for any newly elected Mexican President. The underlying need for construction is also very strong in this fast-expanding market. However, the Mexican economy’s strong dependence on the usa means that it is likely to be negatively influenced by the slowdown there. The Mexican group consists of Yale Security Mexico (the new name for Scovill), tesa and Phillips – three companies with different focus and strengths. Phillips is the market leader in traditional Mexican locking prod- ucts and padlocks, while Yale and tesa are more focused on American-style bored-in locks. Both Yale and tesa have stable market positions in Mexico but also play a significant role in cost- efficient sourcing of products for the us market. tesa has been a main supplier of products to Yale Residential in the usa for some years, and Yale Security Mexico is playing an ever bigger role as a cost-efficient source of products sold by Arrow in the usa. Integration in Mexico has only just started, since the closing of the Phillips transaction took place in September and tesa joined the group in November. A Country Manager was recruited from the industry in September and the new management team has already identified a number of areas to address. They include cross-sourcing of products and components, better utilization of the total production resources, development of best practice on the manufacturing side and coordination of purchasing and export activities. 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 42 South Pacific: Integration benefits the region and the Group to coordinate assa abloy south pacific was formed during 2001 the operations of this region. At the start of the year operations consisted of Abloy Security Limited in Australia (100 percent owned), Lockwood Security Products of Australia and Lockwood Arrow of New Zealand (both 50 percent) and Trimec Technology in Australia (100 percent). In April 2001 Lockwood Security Products (including Lockwood Arrow nz) became a wholly owned subsidiary of assa abloy ab when the former 50/50 joint-venture partner Email Limited sold its interests under a prior arrangement. However, these opera- tions have been managed as wholly owned assa abloy companies since 1999 and much of their success is due to the resulting synergies. In October 2001 assa abloy ac- quired Interlock Group of New Zealand, strengthening the Group’s position in New Zealand and bringing with it valuable knowledge of the oem window market and innovative products and production techniques. Half of Interlock’s sales are exported, primarily to the usa and Japan. Market and market trends During the first half of 2001 the Australian market continued to suffer the effects of the 10 percent Goods and Services Tax imposed on 1 July 2000. This particularly affected the residen- tial market. However, by the end of the third quarter a recovery was well underway. Lockwood’s aggressive product introduction strategy, focusing particu- larly on higher-specification commer- cial products, resulted in organic growth of 4 percent for the year despite a soft residential market. 42 • A S S A A B L O Y / 2 0 0 1 With the residential market recovering and the launching of new products unabated, 2001 has set a firm base for the promotion of a wider range of pro- ducts – both locally manufactured and Group-sourced – in coming years. The New Zealand market recov- ered towards the end of 2001 and will provide many opportunities in future years, helped by a new door-closer range from Lockwood Arrow and synergies resulting from the Interlock acquisition. The export market, particularly to Asia, has been difficult, but added resources and restructuring of the assa abloy asia Sales Offices have produced an initial improvement in results. The trend towards higher security While security demands are increasing in the area, there are also opportunities for products that improve sealing and energy conservation, particularly in the window market. With Lockwood’s technical re- sources, significant input can be made to the development of standards and, in conjunction with major door and window manufacturers, of more sophisticated products to enhance safety and security in residential and commer- cial applications. Interlock’s innovative range will also enhance convenience, esthetics and cost-effectiveness. This drive to high-value products gives window and door manufacturers and builders the opportunity to dis- tinguish themselves from the cost-driven end of the market and promote added product features and customer benefits. Lockwood and Abloy retain a majority share of the commercial market segment and supply the most highly developed keying systems available, based on Scandinavian designs. Abloy’s disk-based technology focuses on the industrial market but also offers commercial building customers an alternative to Lockwood’s more tradi- tional pinned cylinder systems. The companies use the develop- ment of standards to promote the trend to higher security directly to the public via diy stores and locksmiths. For example, Lockwood’s new pad- lock range is supported by a new Australian Standard drafted by the company and based on the European Standard. In addition, the Lockwood Twin Security Council, comprising company representatives and a net- work of leading locksmiths, promotes the assa abloy philosophy of the ‘positive spiral’. Modified versions of existing Residential and Commercial Training Packages are now used to train police personnel in most Australian states, and cooperation with Neighborhood Watch schemes continually improves community awareness. Integration regionally and worldwide A significant contribution to the present position of Lockwood in the Austra- lian market is attributable to the transfer of products and knowledge from the Group. The Twin Keying product line (supported by Assa, Sweden) and the panic exit device range (supported by jpm, France) are two good examples. In both these cases Lockwood was able to launch sophisticated products to the market cost-effectively and rapidly and thereby accelerate the promotion of the trend to higher security. More recently, Lockwood has been able to support other Group companies 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 43 South Pacific: Sales by companies in the South Pacific organization in 2001 amounted to SEK 841 M (772). Organic growth for comparable units was 3 percent. GROUP VICE PRESIDENT ASSA ABLOY: GEOFF NORCOTT AUSTRALIA Lockwood Security Products Pty Limited Manufactures and markets lock products such as door and window hardware, mortise locks, rim locks and door closers for the Australian residential and commercial markets. President: Geoff Norcott General Manager Commercial Products: Joe Perera General Manager Residential Products: Edgar Chin Abloy Security Pty Ltd. Markets and sells the full range of ABLOY products. Managing Director: Joe Lahoud Trimec Technology Pty Ltd. Manufactures electric strikes and related products for Australian and international markets. Managing Director: Roy Bowyer NEW ZEALAND Interlock Group Limited Manufactures and distributes door and window security hardware in the New Zealand market and exports to OEMs in USA, Japan, UK and Canada. Managing Director: Anthony Gledhill Lockwood Arrow Ltd. Manufactures door closers and markets Lockwood products on the New Zealand market. Manager: Bruce Pollard Trends SEK M 2001 2000 1999 1998 1997 Sales 841 772 590 Average no. of employees 1,098 1,004 1,111 – – – – Sales by product group Security doors and fittings, 18% Industrial locks, 5% Electromechanical locks and electronic locks, 7% Mechanical locks, lock systems and accessories, 70% A system for grading the security performance of padlocks, developed by Lockwood Security Products in Australia to guide customers to the correct padlock selection for their application, has since been adopted as the official Australian Padlock Standard. Group companies’ ranges and for the exchange of production techniques and coordination of purchasing in the region. Despite the distances involved, assa abloy south pacific is active in many of the Group’s central councils such as Product Councils and Sourcing Councils. It derives considerable bene- fit from them, and provides equally valuable input. Sound foundations have been laid and growth is accelerating for this part of assa abloy. Its performance and impact on the Group are expected to show increasing benefits over the next few years. The success of the assa abloy racing team (winning both the Sydney to Hobart Race and Leg 3 of the Volvo Ocean Race – Sydney to Auckland) underpinned an extremely successful integration program particularly within the wider assa abloy south pacific community, including not only employees but customers and business partners. such as Yale uk with Australian devel- opments such as its new padlock range (providing both the product and the marketing approach). This has also enabled our major suppliers to benefit from increased volumes generated by coordinated Group purchasing. Joint marketing programs have been developed with Union (uk) to add Trimec and Lockwood to the range sold by Union in the Middle East. The Australian companies will supply Union-branded products to expand the offering to architectural customers there. Opportunities have been taken to source products from within the Group. For example, Guli (China) now manufactures window-stays for Lockwood that were previously bought from Asian companies outside the Group. The future product range for the region will utilize the expertise of Trimec in electromechanical applica- tions to add value and flexibility to mechanical ranges that are already outstanding. The acquisition of Interlock creates opportunities for a new range of win- dow products to be added to other 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 44 New Markets: Continued strong growth reinforced by integration and international projects ASIA In the past two years the Group’s inter- ests in Asia have been greatly expan- ded by the Yale and Lockwood acqui- sitions. During 2001 the operations in each country were integrated under the holding company formed last year, assa abloy asia. Market and market trends The Asian economies remained weak due to the global economic slowdown following the terrorist attacks in the usa. Regional instability in Indonesia and the Philippines further prompted many governments to downgrade fore- casts for economic growth. However, China’s entry into the World Trade Organization in early 2002 and hosting of the 2008 Olympic Games will offset some of the negative economic impact. Yale and Guli remained the major retail brands in Asia. diy has developed significantly, rapidly complementing the traditional hardware distribution channels. Product lead-time and service level to the diy sector provide an important competitive edge. The Group also focused on project specification. Major projects achieved in China include the Beijing head- quarters of the Bank of China and the Industrial and Commercial Bank of China, Plaza 66 in Shanghai, and the Beijing International School. The trend towards higher security assa abloy asia continues to lead the trend toward higher security. In China, the government adopted the Group’s testing procedures for door closers and mortise locks as industry standards. In Malaysia, the Institute of Fire Engineers appointed assa abloy to the Technical Committee for drafting new 44 • A S S A A B L O Y / 2 0 0 1 the throughout fire-door hardware standards. 2002 will focus on establishing Security region Centers to educate the market and to enhance service level. Guli’s technical service centers in China will continue to provide and 24-hour support technical emergency lock-out service. company Integration regionally and worldwide Under the unifying influence of the Volvo Ocean Race, business integra- tion progressed well. The Chinese became manufacturing wholly-owned in February and the name was changed to Guli Security Products, focusing on the local brand. The assa abloy businesses in China – Yale, Guli and effeff – were integrated into assa abloy china. In Hong Kong, Singapore, Malaysia and Thailand similarly, assa abloy, Lockwood and Yale businesses were consolidated, achieving significant business synergies through cross-learning, overhead savings and sharing of project informa- tion and technical knowledge. To support continuing expansion, assa abloy philippines and a presence in India will be established in 2002. EASTERN EUROPE In 2001 most of the Group’s markets in eastern Europe developed well. In the Baltic countries Abloy is represented by the subsidiary Abloy Oy Eesti Filiaal in Estonia and representa- tive offices in Latvia and Lithuania. Assa’s Estonian subsidiary assabalt markets the products of the Group’s Swedish companies in all three Baltic countries. Good organic growth continued in Latvia and Lithuania, and assa abloy has further developed the distribution network. A notable project is the Saku Suurhall sport and concert hall in Tallinn, Estonia, where the Eurovision Song Contest will be held in 2002. In the Czech Republic and Slovakia, assa abloy’s organization consists of fab, the Czech Republic’s largest lock company, and fab Slovakia. The sales company fab Projekt was integrated into fab in 2001. The local distributor of Abloy and VingCard products was acquired in 2001 and the business was renamed Abloy Czech and Abloy Slovakia. Both companies have developed very well. Abloy Czech has been integrated into the Czech organization and now also distributes electromechanical products from effeff in Germany and Securitron in the usa. fab has broadened its port- folio and continues to add products from other Group companies, mostly marketed under its own brand. 2001 saw moderate growth as the economy picked up after recession. Construction locking and sales of electromechanical products have developed particularly well, but revenues from car locks remained weak. Demand for higher-security products continued to grow, and the on- going development of the diy business increased direct sales during the year. In Hungary, the sales company assa abloy hungary is developing well in a very fragmented market. There are encouraging signs of growing demand in the high-security segment. In Poland the Group’s sales are handled by assa abloy poland, which has a strong position in the high end of the lock market. After some strong years the Polish economy has weakened significantly and new-construction activity has leveled out. Nonetheless sales were maintained at the level of 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 45 New Markets: Consolidated sales in New Markets in 2001 amounted to SEK 1,764 M (981). Organic growth for comparable units was 18 percent. GROUP VICE PRESIDENT ASSA ABLOY: ÅKE SUND ASIA ASSA ABLOY Asia Pacific Limited Acts as holding company for the Asia region, marketing and selling Group products primarily for commercial, institutional, residential and industrial applications across Asia. President and CEO: C.K. Jeang Guli Security Products Limited The largest lock factory in China, manufacturing and supplying primarily residential locks and door closers for China and international markets. Sales are conducted from its headquarters in Zhongshan, Guangdong, supported by four strategic business units and branch offices in Beijing, Shanghai, Chongqing and Wuhan. Managing Director: C.K. Jeang ASSA ABLOY Hong Kong Limited Responsible for all sales and marketing activities in North Asia (excluding China) covering Hong Kong, Taiwan, the Philippines, Japan, Korea, Vietnam, Myanmar, Cambodia and Laos. General Manager: Keith Chan ASSA ABLOY Singapore Pte Limited Responsible for all sales and marketing activities in South Asia (excluding Malaysia and Thailand) covering Singapore, India, Pakistan, Bangladesh and Indonesia. Managing Director: Jim Heng Lee ASSA ABLOY Malaysia Sdn Bhd Responsible for sales and marketing activities in Malaysia. Managing Director: Michael Pan ASSA ABLOY (Thailand) Limited Responsible for sales and marketing activities in Thailand. Managing Director: Tab Teh THE BALTIC COUNTRIES ASSABalt AS Markets and sells ASSA products in the Baltic countries. President: Tarmo Talvet Abloy Oy Eesti Filiaal Markets and sells ABLOY products in the Baltic countries. Manager: Ahti Ovaskainen CZECH REPUBLIC FAB a.s. Manufactures and markets construction locks, industrial locks, padlocks, cable locks and car locks. President: Vladimir Bayer Abloy Czech s.r.o. Markets and sells Abloy, VingCard, effeff and Securitron products in Czech Republic. President: Tomas Richter SLOVAKIA FAB Slovakia s.r.o. Manufactures lock cases; markets and sells other FAB products. President: Jaroslav Holzer Abloy Slovakia s.r.o. Markets and sells Abloy, VingCard, effeff and Securitron products in Slovakia. President: Tomas Richter HUNGARY ASSA ABLOY Hungary kft. Markets and sells ASSA ABLOY products in Hungary. Managing Director: Géza Póka Ricardo Orlando, at one of La Fonte’s Metalferco franchise stores in Brazil, demonstrates the result of a joint project with Mul-T-Lock in Israel. 2000, and awareness of high-security products is continuing to increase. The Polish Telecom headquarters is a notable project due to be completed early in 2002. In Romania the Group is repre- sented by assa abloy romania, which markets high-security products from Group companies including Assa and VingCard, and by the manufacturer Urbis Security, which holds a leading position on the Romanian lock market. During 2001, a new company, Urbis International, was formed to manufacture door hardware for Group companies. The relocation of produc- tion machinery in Norway, begun last year, was com- pleted and production technology was upgraded by major investment in a new surface treatment plant. from Grorud Despite a difficult market and a continuing weak economy, assa abloy romania achieved good organic growth, especially in the high-security and hotel sectors, while Urbis main- tained domestic sales at 2000 levels. SOUTH AMERICA assa abloy’s in South America consist of the lock manufac- turer La Fonte in Brazil. interests Market and market trends In a highly fragmented and strongly competitive Brazilian market shared by more than fifteen companies, sales volumes were comparable to last year’s. Organic growth fell back, but La Fonte remains the market-leading brand and the leader in technology in Brazil, and its awareness of market needs means that prospects for future sales growth are highly positive. Increased construc- tion in 2001 was not enough to offset the enormous housing shortage, which is likely to provide excellent future sales opportunities. Brazilian customers remain prima- rily concerned with new designs and styles, but there are signs of increased interest in quality and customer service and in higher-security products and solutions. Sales of Yale-branded products to other South American countries have increased, based on a closer relation- ship with the local distributors. In these areas the prospects for strong organic growth are also positive. The trend towards higher security A general sense of insecurity in Brazil is driving the locks market and the lock towards higher security. industry 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 46 New Markets: However demand currently centers on alarm systems and guard services, and locks are not yet perceived as the main component in improving security. La Fonte’s strategy is to educate the market by promoting high-tech products to dealers, contractors, consultants and opinion makers as well as end-users. The company’s access to the whole range of assa abloy group products will give it a significant technical advantage over local competitors and avoid the need to engage in price wars over ‘commodity’ products. Integration regionally and worldwide The company currently supplies lever handles to sister companies in the usa. In the other direction, La Fonte has introduced a new high-security cylin- der on the Brazilian market as a result of a partnership with Mul-T-Lock in Israel, and a partnership has been established to market abloy products from Finland. in- Employee satisfaction has creased enormously since the company was acquired by the assa abloy group. The major efforts made to inte- grate the company and to transmit Group culture have paid off in impro- ving employees’ confidence about the company. The Volvo Ocean Race has been a great unifying factor, with spe- cial events beginning in July 2001 and running right through to the Race stopover in Rio de Janeiro in February and March 2002. SOUTHERN AFRICA A year after the acquisition of Yale- Union in August 2000, the assa abloy group acquired another leading South African lock company, Viro Locks (sa), which complements the product range. A new holding company, assa abloy south africa, was formed to integrate the companies, which together hold a clear leading position on the South African lock market. Market and market trends The South African market is highly competitive due to the low per capita 46 • A S S A A B L O Y / 2 0 0 1 gdp, which tends to push demand towards low-cost products. The mar- ket was therefore developed during 2001 by beginning to resurrect an insurance grading system for locks and lock solutions. Much work was done with the Public Works Department to get Group products specified for Govern- ment buildings. Presentations to custo- mers explaining the need to promote high-security locking products were accompanied by the launch of high- security Group products from effeff in Germany and Mul-T-Lock in Israel. Other products have been sourced from Securitron and hid in the usa. Sales of diy products continue to increase. The Yale brand is currently being relaunched on the retail market with decision-making guides to help consumers purchase the right product for the application. The trend towards higher security South African consumers have been persuaded that for better home security they must install burglar bars, alarm systems, security sensors and panic devices. assa abloy has now embarked on a campaign to convince them that a chain is only as strong as its weakest link, and that good locks and locking solutions should be re-evaluated for home security. The Association of Insurers & Insurance Assessors has been canvassed to give this campaign legiti- macy. A training academy will also be established to educate both staff and distributors about the benefits of high- security products and provide them with arguments to sell better locking solutions. A padlock grading system based on European (cen) security Standards will be introduced and is expected to be endorsed by the South African Bureau of Standards. Integration regionally and worldwide Rationalization of the Yale-Union and Viro product ranges was started during the year. Cross-learning visits to best- practice assa abloy factories genera- ted valuable ideas to implement locally. Thus ideas drawn from the Lockwood padlock case in Australia are being used to relaunch the Viro padlock under the Yale brand. The Volvo Ocean Race stopover in Cape Town was a valuable tool in the integration of Yale-Union and Viro into the Group (read more about it on page 27). ISRAEL assa abloy’s subsidiary in Israel, Mul- T-Lock, operates in 70 countries worldwide and is represented by four subsidiaries – in the usa, Canada, the uk and France – and some 100 distrib- utors. Market and market trends Israel’s continuing severe recession called for special marketing efforts at home from Mul-T-Lock, its leading lock manufacturer. The company expanded its product range with complementary products purchased from Group companies. The most significant international activity was in Japan, where Mul-T- Lock seized a major marketing oppor- tunity and launched some twenty specially designed types of cylinder. 400,000 cylinders were sold to Japan in 2001, but growing local competition and a slowdown in demand are now affecting sales. Most other export markets, and especially the developing countries, have seen continuing sales expansion. In Latin America, special high-security locking solutions for telecommunica- tions companies deepened penetration of the institutional market. In eastern Europe the main advance was to door manufacturers. In western Europe, market shares continued to increase, but slightly more slowly than in 2000. Among the four marketing and distribution subsidiaries, the penetration of new products and a substantial increase in customers gave the French company an outstanding growth rate of 30 percent. The uk company continued promoting the market for 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 47 POLAND ASSA ABLOY Poland Sp. z o.o. Markets and sells ASSA ABLOY products in Poland. President: Jakub Gawecki ROMANIA ASSA ABLOY Romania s.r.l. Markets and sells ASSA ABLOY products in Romania. President: Gabriel Nicolaescu Urbis Security s.r.l. Manufactures and markets locks and fittings. President: Gabriel Nicolaescu Urbis International s.r.l. Manufactures window and door hardware and sells to other Group companies. President: Attila Sylvester SOUTH AMERICA La Fonte Sistemas de Seguranca Ltda Manufactures a wide range of security products including locksets, exit devices and hinges for commercial, industrial and residential applications. President: Francisco Bastos SOUTHERN AFRICA ASSA ABLOY South Africa Offers the most comprehensive range of architectural, DIY and OEM ranges of physical security hardware. Managing Director: John Middleton Chubb Locks Union Zimbabwe Markets a complete range of security products. Managing Director: Rory Vahey ISRAEL Mul-T-Lock Produces high-security cylinders and locks for institutional, commercial, industrial and residential applications. President and CEO: Tzachi Wiesenfeld UK: Mul-T-Lock (UK) Ltd. Managing Director: Dion McAllister France: Mul-T-Lock France SA Chairman: Yvan Haddad USA: Mul-T-Lock USA Inc. President and CEO: Zvi Yaniv Canada: Mul-T-Lock Canada Inc. President: J. Scott Ferguson Trends SEK M 2001 2000 1999 1998 1997 Sales 1,764 981 354 186 68 Average no. of employees 5,777 3,296 1,774 1,936 385 Sales by product group Security doors and fittings, 5% Industrial locks, 10% Electromechanical locks and electronic locks, 2% Mechanical locks, lock systems and accessories, 83% With 32 floors above ground and five below, the Polish Telecom headquarters in Warsaw is the tallest building designed by a Polish architect. The 1500 steel, aluminum or wooden doors are linked into a three-level masterkey locking system based on ABLOY DISKLOCK PRO technology and combining ABLOY mechanical and electromechanical cylinders and FUNXION door hardware. Integration regionally and worldwide During 2001, Mul-T-Lock finalized its operational plans as a Group member. Business activities with sister com- panies were strengthened and joint ventures have been established with Guli in China, La Fonte in Brazil, and Yale-Union in South Africa. Despite difficult security, political and economic circumstances, the morale of Mul-T-Lock staff remained high. Even though the route of the Volvo Ocean Race lies far from Israel, the event has attracted a lot of interest and stimulated a strong sense of belonging to the Group. Mul-T-Lock’s top-of-the-range E-series padlocks. The us company continued to expand into areas outside New York, while sales in Canada grew by 20 percent. The trend towards higher security Mul-T-Lock continues to focus invest- ment on r&d. A new Electromechanics Department was established during the year to develop products using the cliq technology. The company further expanded its cylinder and lock product range to provide solutions for custom- ers worldwide. One outstanding new product was the Hercular deadbolt, which offers an especially high level of security suited to market needs in the usa and Canada. Another new product, the sbe sliding-bolt padlock series, comple- ments the extra-high-security E-series padlocks. Mul-T-Lock also continues to develop tailor-made solutions and provide sophisticated masterkey systems for the professional market. 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 48 Hotel locks: Increased high-security interest in a slow hospitality market assa abloy’s international marketing of specialized security systems to the hospitality industry is conducted through VingCard-Elsafe Group, with head- quarters in Norway, and Timelox, based in Sweden. Market and market trends After several years of steady growth, 2001 saw a stagnating world hospital- ity market. The events of September 11 then brought an increased focus on security but a sharp decline in travel, new hotel building, and aftermarket sales. The us market was most affected, whereas Europe and Asia experienced only minor setbacks. The marine cruise industry continued strong. In the longer term, the world market is expected to recover and continue growing. VingCard-Elsafe Group In these conditions VingCard, as the global hospitality leader with represen- tation in 137 countries, suffered a slowdown in growth, especially in the latter part of the year, and the safe pro- ducer Elsafe was even harder hit. Both companies immediately responded by trimming operations and cutting costs to safeguard profitability. Security awareness among both hotel guests and operators continued to increase, and the lower end of the market has gradually opened up. VingCard-Elsafe widened its product range accordingly, and many future solutions will be aimed at expansion into the volume market. 2001 saw a clear recognition of excellence in the Group’s product port- folio. The da vinci lock series was given the Norwegian Design Council’s Award for Design Excellence, and innovative Sentinel and Elsafe’s Infinity safes received two awards for best new product at the International Hotel, Motel and Restaurant Show in New York. The safes feature a modular concept including cutting-edge bio- metric recognition technology. During the year an organizational change has been carried through to separate the production from the mar- keting organization to combine sources with other production units within the Group. Timelox Despite the general slowdown Timelox’s hotel division has strengthened its position, increasing sales of its world- leading Dual Card intelligent technology (magnetic cards for guests and smart card for staff) in many new and existing markets to compensate for downturns elsewhere. For guests, a new One Card version now offers not only room access (including remote check-in, bypassing the front desk) but use for transactions in the hotel’s restaurant, shops and casino. An advanced system uses infrared communication to interface, on line, to energy management systems. Staff cards are re-encoded automatically each day so that maids, for example, have access only to rooms due for cleaning. After a successful introduction in Sweden, Timelox wire-free access con- trol systems, based on the same smart card technology as the hotel systems, are now marketed internationally. Functions can include recorded entry through exterior and interior doors, time-limited cards, and canceling of user cards. A camera option allows remote supervision of outlying access points. Customers include hospitals, government offices and military sites in markets such as South America and the Far East, as well as assa abloy group companies worldwide. On the cruise liner Celebrity Cruises Millennium, VingCard has installed 1,650 electronic guestroom locks using Vision software. 48 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Fram_E_DS 02-03-14 13.14 Sida 49 Identification: Continuing growth for contactless technologies hid Corporation, a us company, was acquired by assa abloy in January 2001. hid is a market leader in contactless cards and readers for access control, based on 125 khz Radio Frequency Identification (rfid) techno- logy. The majority of all new access control systems sold in the world today are based on contactless technology. Because of its specialized technology and distribution hid is separately organized as a transnational unit. During the year the Indala business was acquired from Motorola, with a similar product range as hid. Market and market trends From 1997 through 1999, the access control industry grew at an annual rate of about 10 percent, driven in part by preparation for y2k. Growth has since decelerated, but despite the continuing weak economy, hid expects the access control market to grow 8 to 10 percent next year due to heightened security concerns fueled by the terrorist attacks on September 11. hid also foresees stronger international growth based on regionalization of distribution, customer service and technical support in major markets. Use of technologies that protect id cards from duplication and forgery (e.g. holograms and more secure printing methods) increase. is expected to Another trend is the merging of corporate Information Technology and Physical Security departments, which is chang- ing the way decisions are made and security products are selected. As knowledge becomes more valu- able and labor more costly, corpora- tions are demanding consolidation of networks. it and Physical Security departments are beginning to share activities and databases on centralized systems. By working together, the departments can save money, obtain more corporate resources and migrate to new technology sooner. hid also anticipates heightened interest in the storage of biometric tem- plates on id cards, which may drive the use of 13.56 mhz technology. 13.56 mhz is a radio frequency identification (rfid) technology already extensively used internationally in contactless smart cards for mass transportation and cashless vending. The technology is now being introduced into the access control market to meet the growing interest in smart cards and multi- application cards. Integration regionally and worldwide assa abloy group companies are becoming progressively more aware of hid’s products and technologies. For example, hid’s EntryProx reader is being introduced to various assa abloy door-hardware distribution channels. In its new Low Profile range, the us Group company Sargent has leveraged hid’s installed card base by manufac- turing a battery-powered, self-contained electronic lock that incorporates hid’s embedded proximity (eProx) techno- logy, either used alone or combined with a keypad for added security. Applications include computer rooms, storage areas, classrooms and tenant spaces. hid is now collaborating with assa abloy internationally in the develop- ment of an advanced electronic lock system. hid is also taking leading roles in the Group’s Electromechanical Board and Access Control Symposium. Viewed by assa abloy as a techno- logy leader, hid is dedicated to devel- oping and supporting new technologies that promote growth into innovative product areas for the whole Group. Hotel locks: Sales by ASSA ABLOY’s hotel locks operations in 2001 amounted to SEK 1,056 M (1,052). Organic growth for comparable units was -7 percent. VingCard a.s World-leading solution provider of card locks and safes to the hospitality industry. President and CEO of VingCard-Elsafe: Dag Schjerven Elsafe International a.s World leader in safes for hotel rooms. President: Alvin Berg VingCard subsidiaries Brazil Canada France Germany Hong Kong Scandinavia Singapore Thailand UK USA VingCard Produksjon a.s President: Dan Enquist Timelox AB Manufactures and markets card-operated electro- mechanical locks for the hospitality market as well as access controls for hospitals, administrative and business areas.Timelox has distribution and support channels worldwide. President: Jan Wabréus President: Erik Petersen President: Larry Cechet President: Christian Henon President: Heiner Kesting President: Tommy Leung President: Mats Ryden President: Stephen Lim President: Phonlavit Manchakra President: Howard Witt President: Mats Gustafsson Timelox subsidiaries: USA Spain Vice President: Victor Gomez-Guijo Vice President: Matt Mrowczynski Trends SEK M 2001 2000 1999 1998 1997 Sales 1,056 1,052 965 952 794 Average no. of employees 634 710 669 605 623 Sales by product group Hotel safes, 8% Hotel locks, 92% Identification: Total sales by Identification in 2001 amounted to SEK 1,043 M. HID Corporation World-leading producer of cards, readers and identi- fication technology for the access control industry. President and CEO: Joseph J. Grillo Indala World leader in production of RFID cards and readers. President: Steven J. Wagner HID locations US/California US/Colorado US/Connecticut General Manager: Frank D’Eugenio Europe Asia Pacific Managing Director: Spencer Hall Managing Director: Lester Doig President: Joseph J. Grillo Vice President: Peter Lowe Trends SEK M 2001 2000 1999 1998 1997 Sales 1,043 Average no. of employees 311 – – – – – – – – 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 50 Report of the Board of Directors The Annual Report of assa abloy ab (publ.) [Corporate Organization number 556059-3575] contains the Group’s accounts for the financial year 1 January – 31 December 2001. Ownership assa abloy’s principal shareholders are Wärtsilä Corporation (10.7 per- cent of the capital and 25.2 percent of the votes), Investment ab Latour/SäkI (8.9 percent of the capital and 18.2 percent of the votes) and Melker Schörling (3.1 percent of the capital and 4.7 percent of the votes). They are represented on the Board of Directors by, respectively, Georg Ehrnrooth and Göran Ehrnrooth; Gustaf Douglas; and Melker Schörling. Management The Board determines the Group’s overall strategy and the acquisition of companies and real estate. In other respects, the Board is responsible for the organization and administration of the Group in accordance with the Swedish Companies Act. Working pro- cedures in compliance with the Act were established in 1998 and reviewed annually. The Board consists of seven mem- bers, two employee representatives and two deputy employee representatives. The Board meets on not less than four occasions a year, of which one is a meeting combined with a visit and an in-depth review of a country in which the company has operations. During 2001, ten Board meetings were held. assa abloy’s auditor participates in the Board’s annual year-end meet- ing and, as a result, no special audit committee is appointed. A committee, where the main owners are represented by Georg Ehrnrooth, Melker Schörling and Gustaf Douglas nominates the Board of Directors and auditors to be elected at the Annual General Meeting. Group Management consists of 17 people. Geographical responsibilities are allocated within Group Manage- ment to ensure rapid and short decision-making paths. The Group endeavors to achieve a non-hierarchical and simple organizational structure. 50 • A S S A A B L O Y / 2 0 0 1 In the annual budget process, the Board and Group Management estab- lish business frameworks based on improvements on previous years, which also lay the basis for a high degree of decentralization of the Group’s operations. The common financial and accounting policy establishes the financial control and monitoring framework. Important events Benchmarking. Continuous bench- marking between the various units has continued to produce results in the form of higher productivity and further margin improvements in many companies. However, consolidated margins deteriorated, due mainly to dilution by newly acquired companies. Integration of acquired companies. assa abloy is participating in the Volvo Ocean Race to support and speed up the process of integrating more than 100 companies that have been acquired across the world over the past few years, and at the same time to develop and further strengthen the corporate identity of assa abloy in an international context. One ambition is to further spread assa abloy’s vision and corporate values and create a common platform and an increased sense of togetherness for all employees. Focus on increasing growth by cross-selling of products on markets is represented where the Group has continued during the year. Coordination among the various units within the Group progressed. Launch of intelligent lock technology. The Group’s new cliq technology is a concept that integrates electronics and mechanics to create a more secure lock. To open the lock, the key must not only fit mechanically, but its identity, stored on a microchip, must also be approved by the lock. Since every key is unique, individual access rights can be entered for each key holder. Similarly, access rights can be with- drawn for keys that have gone missing. Electromechanical products are enjoying the strongest growth and highest invoicing per product in today’s lock market. This is also the product sector where most innovations are being made. Acquisitions. The acquisitions made during the year represent significant additions to the Group and add geo- graphical and product strengths. The companies acquired during 2001 have a turnover, pro forma, of sek 4.5 bil- lion, of which sek 2.0 billion has been consolidated. Total acquisition price amounts to sek 4.0 billion. Goodwill amounts to sek 2.0 billion, of which sek 1.4 billion will be tax-deductible. Acquisitions made in 2000 that are consolidated in 2001 Acquisition of HID. A traditional lock system is a mechanical access control system consisting of identification – the key – and the blocking mechanism – the lock. In an electronic access control system the identification is done through cards and readers and the blocking mechanism is the electro- mechanical lock. The electronic identification has so far been a missing link in assa abloy’s product portfolio of mechanical and electromechanical locks. It has become increasingly interesting and important to take a leading position in this fast- growing segment too. The progress being made in mobile communication technology and minia- turized electronics is creating opportu- nities for the development of more intelligent locks, including remotely controlled locks. Radio-Frequency Identification (rfid) technology lies at the core of any such development. hid has a world-leading position in contactless cards and readers for access control, based on rfid. The acquisition price was usd 250 m. The goodwill arising from the acquisi- tion has been calculated at usd 215 m. hid is consolidated from 1 January 2001. The acquisition was cash-flow positive from the start. It is expected to contribute to eps from 2002. Acquisitions made in 2001 Acquisition of Grupo Industrial Phillips S.A. de C.V. Phillips is a 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 51 SEK M 25,000 20,000 15,000 10,000 5,000 0 1997 1998 1999 2000 2001 SEK M 2,500 2,000 1,500 1,000 500 0 1997 1998 1999 2000 2001 SEK M 30,000 24,000 18,000 12,000 6,000 0 % 40 32 24 16 8 0 1997 1998 1999 2000 2001 Sales Income before tax* Operating cash flow Capital employed Return on capital employed, % * *Key ratio for 2001 are exklusive non-recurring items. Return on capital employed before goodwill amorization * Mexican company producing a full range of lock products primarily for the Mexican lock market. The company also exports to other Latin American countries. Its main product is the rim lock – the most common type of lock used in Mexico. The product port- folios of Phillips and Scovill (to be renamed Yale Security Mexico) are highly complementary with almost no overlap. Phillips is located in Mexico City and has an extensive distribution net- work. The company was founded in 1959 and has about 2,500 employees. Phillips has shown good growth and high profitability over a number of years. Since Scovill is also located in Mexico City there are synergies and growth opportunities that will benefit both companies. assa abloy first established itself in Mexico in 1998 through the acquisition of Scovill. Mexico has a population of around 100 million. The country is politically stable and is experiencing strong economic growth. The demands for new construction and security are considerable and Phillips is well-positioned to capitalize on these opportunities. Phillips had sales of approximately sek 650 m in 2001 with a high ebit- margin. The goodwill amounts to approximately sek 200 m. Phillips is consolidated from 1 October 2001. The acquisition is expected to contribute to eps from 2002. Acquisition of minority share in Yale- Guli. Discussions with the Chinese government, assa abloy's joint ven- ture partner in Yale-Guli, led to the acquisition of their 40 percent minority stake in February 2001. The price of the shares was usd 23 m. The full ownership improves management’s focus on business-related issues. Clear goals and responsibilities can be set and efficient benchmarking carried out. Acquisition of RIS (Abloy Czech), dis- tributor of abloy and VingCard lock products in the Czech Republic and Slovakia. The acquisition strengthens assa abloy's position in both coun- tries, especially in the area of electro- mechanics. This complements the market-leading already achieved by fab and adds annual sales of czk 58 m (sek 14 m). position Joint venture in North America with UDP. United Door Products (udp) is one of the leading manufacturers of steel doors and frames for non- residential applications in the usa and Canada. It has annual sales of usd 180 m and 1500 employees, and the main operations are Ceco, Dominion Building Products and Fleming with seven manufacturing facilities in the usa, Canada and Mexico. In addition, udp has a leading position in the detention segment through its Trussbilt unit, located in South Dakota, usa. In North America, the same distri- bution channels are used for locks, security-related and safety-related hardware, and doors sold for non- residential applications. Distributors can provide contractors and end-users with a comprehensive product pack- age that meets all safety and security codes and fulfills all needs for door openings. The assa abloy group has supplied locks, key systems, safety and security hardware as well as security steel doors and frames and wooden doors in North America since 1996 when assa abloy made a major com- mitment to the us market. The joint venture with udp will allow assa abloy to better serve customers throughout North America with complementary products and through more efficiently utilizing the companies’ combined resources. Over the years, Ceco’s door prod- ucts and the door hardware products of the Yale Security Group have frequently been sold through the same distributors. Distributors have often combined the products of the two companies to benefit their customers. assa abloy acquired the Yale Security Group in 2000. The joint venture with udp will allow assa abloy to offer, through distributors, the whole range of attractive Ceco doors and Yale door hardware products. In addition there are considerable manufacturing and purchasing syner- gies that can be achieved by the joint venture. For example, udp has achieved manufacturing excellence and cost efficiency in its door produc- tion units, while assa abloy’s Curries business is particularly strong in the production of door frames. Sales of security doors have shown a high degree of stability over many years, with only limited dependence on the general economy. spx Corporation, which owned udp, received usd 96 m in cash and a 20 percent share in the newly formed debt-free joint venture. assa abloy has 80 percent ownership in the joint venture and has the right to buy the remaining share after two years according to an agreed earnings-based formula. spx has a corresponding put option after two years. A S S A A B L O Y / 2 0 0 1 • 5 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 52 The joint venture is consolidated from 1 June 2001. The formation of the joint venture created only a minor goodwill element and will be eps- accretive from the start. Increase of ownership in KESO AG of Switzerland. keso is a leading Swiss manufacturer of mechanical and elec- tronic high-security cylinders for doors and industrial applications. The company has sales of chf 50 m and has built a reputation as one of the world’s leading producers of high- quality locks and cylinders. 50 percent of the company’s sales are currently exported to a number of countries. The company has a particularly strong position in Germany. Ernst Keller, the former sole owner and President of keso, founded the company in 1963. He is the inventor of the company’s cylinder technology, the flat key concept. This technically advanced cylinder offers unchallenged masterkeying possibilities. Ernst Keller will remain President until 2003 to support integration with assa abloy. the keso’s headquarters and main production facility are in Richterswil, close to Zürich. The company has sales subsidiaries in Germany, France and Austria. The number of employees is 320. assa abloy has increased its owner- ship in keso ag from 35 to 65 percent and keso is consolidated from 1 June 2001. This increased ownership will be eps-accretive from 2002. Acquisition of the remaining shares in Lockwood, Australia. In connection with assa abloy’s acquisition of 50 percent of the shares in Lockwood, an option was granted by Email, the seller, to acquire the remaining shares in the company after a three-year period. This option gave assa abloy the right, in the event of a change of ownership of email, to execute its right to acquire the remaining shares earlier. As a result of the change of ownership at Email, assa abloy has acquired the remaining 50 percent of Lockwood shares. The price of these outstanding in shares equaled equity the 52 • A S S A A B L O Y / 2 0 0 1 Lockwood, so that no additional goodwill has been created. Lockwood has developed very positively since the first tranche of shares was taken over at the beginning of 1999. A successful job of creating incremental cross-sales has been carried out. New products such as cylinders, padlocks and panic bars have been developed in collaboration with differ- ent companies in the Group, accepted as local standards and subsequently successfully launched. Other steps to increase operational efficiency within the company are ahead of plan and will further enhance Lockwood’s profitability in the future. Acquisition of MAB, Italian market leader in door closers. Through the acquisitions of the Yale Intruder Security Group and effeff, assa abloy has established a good position in Italy. The acquisition of mab strength- ens this position considerably and increases opportunities to develop the market, including the introduction of products for higher levels of security. assa abloy has the ambition of establishing a leading position and offering a complete range of products in all major markets. Door closers form an important part of a lock package, providing secure operation of a door. The Maselli family founded mab in 1948. The company, with 136 employees, is located in Bologna close to two other assa abloy manufactur- ing units – Nuova f.e.b. and Yale Corni. Over the years mab has built a leading position in Italy in the door closer segment and has successfully developed export business in Europe and the Middle East. There are two main types of door closers, overhead-mounted and floor springs. The company’s position is particularly strong in floor springs. A floor spring is a concealed door closer installed in the floor and is widely used with glass doors, a growing product segment. More than 60 percent of sales are to the replacement sector, for renewing worn-out floor springs with a product having identical dimensions. There are also cross-selling synergies to be developed. Besides the replace- ment throughout the Group of similar products currently sourced externally, there is interest from assa abloy companies worldwide in adding mab products to their portfolios. mab’s annual sales amount to eur 18 m. The acquisition created goodwill of eur 9 m. The company is operating with high profitability, and the acquisition is expected to add to assa abloy’s eps from 2002. mab is consolidated from 1 July 2001. Acquisition of Viro Locks of South Africa. Viro Locks Pty Ltd is one of the leading lock companies on the South African market. The company’s main product lines are padlocks, cylinders, mortise locks and cam locks. Viro was family-owned and has sales of sek 130 m. Performance had been steadily weakening and during the last couple of years the company had been showing losses. However, after a restructuring program the company’s income and cash flow have been turned positive. In August 2000, assa abloy acquired 100 percent of the shares in Yale-Union Security South Africa as part of the global Yale Intruder Security Group acquisition. The two South African businesses complement each other well and the acquisition of Viro consolidates assa abloy’s position in the region. This is a region with grow- ing security needs, and the companies are expected to show good growth in South Africa as well as through exports to other parts of Africa. The purchase price of sek 48 m is in line with net assets. There are significant rationalization opportunities and synergies with existing operations, and the acquisition is expected to be eps-enhancing from 2002. Viro is consolidated from 1 July 2001. Acquisition of Interlock, New Zealand. Interlock is the leading manu- facturer and distributor of window and door security hardware in New Zealand. Interlock has a proven track innovative record of developing products and has developed successful exports to Japan, the uk and the usa. 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 53 SEK M 12,000 10,000 8,000 6,000 4,000 2,000 0 1997 1998 1999 2000 2001 % 60 50 40 30 20 10 0 SEK M 20,000 16,000 12,000 8,000 4,000 0 1997 1998 1999 2000 2001 Shareholders' equity Equity ratio Net debt Net debt / equity ratio Number of employees SEK M 2.5 25,000 2.0 20,000 1.5 15,000 1.0 10,000 0.5 5,000 0.0 0 1,0 0,8 0,6 0,4 0,2 0,0 1997 1998 1999 2000 2001 Average numbers of employees Sales per average no. of employees Interlock’s strength lies in its innovative product and production technologies and, as such, it will contribute signifi- cantly to assa abloy’s philosophies of cross-learning, benchmarking and cross- selling. Interlock will add a competitive range of window security products to its sister companies in the region. Interlock has sales of nzd 60 m. The operation has shown steadily improving profits over several years and shows high profitability. The company is based in Wellington with production units in Auckland and Wellington. The total number of employees is 420. Interlock is consolidated from 1 November 2001. The acquisition is eps-positive from the start. Acquisition of access control business of Indala, USA. Indala is a highly regarded player in the access control industry, with headquarters in San Jose, California. The company was founded in 1985 and acquired by Motorola in 1993. The product offering is similar to hid’s, consisting of rfid-based cards and readers for the access control industry and other applications. The installed base of Indala products is sub- stantial, with 60 million cards and 1 million readers installed. The rfid access control business is expected to achieve sales of usd 25 m this year with low profitability. The acquisition of Motorola’s worldwide assets in Indala creates good scope for synergies in all areas. The goodwill created by the acquisition is minimal. The Indala business is consolidated from 1 November 2001. The acquisition will be eps-positive from the start. Acquisition of TESA, Spain. The acqui- sition of tesa, originally part of the Yale acquisition at the beginning of 2000, was deferred pending regulatory approval in the usa. After closedown of tesa’s subcontract manufacturing for the seller’s hotel locks business, ap- proval was received in November 2001. tesa’s headquarters and main factory are in Irún in northern Spain. The company exports 55 percent of its sales, mainly to Latin America, eastern Europe, France and Italy. Subsidiaries in Mexico and France are part of the acquisition. The company is a leading producer of cylinders, tubular lock cases and advanced electromechanical products. The product portfolio also includes a full range of security doors. tesa has shown stable growth and strong profitability. The demerger of the subcontract hotel locks business will initially result in a drop in sales volume and lower earnings. Correc- tive actions are being taken. Synergies with other Group companies, especially in the South Europe region, are substantial and will help to bring the company back to its former performance level. The acquisition price was gbp 85 m. The acquisition created goodwill of approximately sek 800 m which will be tax-deductible. tesa is consoli- dated from 1 December 2001. Due to the hotel-lock demerger process the acquisition will be eps-dilutive initially but positive from 2003. Financing of acquisitions Refinancing during 2001. The main financing source at the beginning of 2001 was the syndicated loan facility of eur 1,200 m that was signed in connection with the acquisition of Yale Intruder Security during 2000. is a Multi-Currency The facility Revolving Credit (mcrf) split into two tranches: one 364-day tranche of eur 420 m and a five-year tranche of eur 780 m. To diversify and prolong the Group’s financing sources refinancing has been a major accomplished during year. A Swedish Commercial paper-program was launched during the spring for a maximum of sek 3,000 m. A Nordic mtn program was also launched in that process for a maximum of sek 2,000 m. During the fall an emtn program was launched for a maxi- mum of eur 1, 500 m, out of which five-year bonds amounting to eur 600 m were sold in December. the The mcrf syndicated loan facility will be renegotiated during 2002 due to the financing sources that have been launched during 2001. Incentive Program 2001. A new Incentive Program for Group employ- ees was launched in November 2001. The total Program amounts to eur 100 m. As part of this Program assa abloy has issued four convertible bonds of eur 25 m each to a company specially established for the purpose. The average share price assessed over five days prior to 20 November 2001 was sek 148, which with a sek/eur rate of 9.364 gives a conversion price of eur 15.8 for the first bond. The second, third and fourth convertible bonds will have conversion prices of eur 19 (20 percent premium), eur 22.1 (40 percent premium) and eur 25.3 (60 percent premium) respectively. The Program was 200 percent over- subscribed and over 4,500 employees in 16 countries have decided to participate. A S S A A B L O Y / 2 0 0 1 • 5 3 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 54 The Program will run to October 2006 in line with the maturity of the convertible bonds. The dilution will amount to 1.39 percent of the share capital and 0.94 percent of the number of votes, on a fully diluted basis. Ratings. Standard & Poor’s has assigned a ‘single-a-minus’ long-term and an ‘a-2’ short-term corporate credit rating to assa abloy. The ratings reflect the Group's strong positions in entrenched lock markets, a geographically diverse earnings base and strong cash flows, but also a moderate financial profile. Comments on the income statement Group sales totaled sek 22,510.0 m (14,394.1). This is an increase of 56 percent compared with 2000. In local currencies the increase amounted to 47 percent, comprising organic growth of 3 percent (5) for comparable units, while acquired units accounted for 44 percent of the increase in volume. Earnings before interest, tax, depreciation and amortization (ebitda) amounted to sek 4,019.9 m (2,705.4). This was an increase of 49 percent compared with 2000. The increase is primarily due to improvements in operational units and to acquisitions. The gross margin, defined as ebitda in relation to sales, was 17.9 percent (18.8). Operating income before goodwill sek amortization amounted 3,159.2 m (2,107.2), an increase of 50 percent. The operating margin before goodwill amortization was 14.0 per- cent (14.6). to Goodwill amortization amounted to sek 860.4 m (387.0). The increase is attributable to acquisitions during 2001 and 2000. Consolidated income before tax excluding items non-recurring amounted to sek 1,641.6 m (1,402.0). This represents an increase of 17.1 percent compared with the preceding year. income statements of subsidiaries, foreign exchange effects had a positive impact of sek 42 m (21) on income before tax. Profit margin, defined as income translating the In 54 • A S S A A B L O Y / 2 0 0 1 before tax in relation to sales, was 7.3 percent (9.7). The Group’s tax charge totaled sek 507.4 m (453.1), corresponding to an effective tax rate of 34.4 percent (32.3) in relation to income before tax. The Parent Company’s income before tax amounted to sek 430.6 m (130.1). Comments on the cash flow analysis The consolidated operating cash flow amounted to sek 2,338.4 m (1,755.6), equivalent to 142 percent (125) of income before tax. Cash flow from operating activities before interest and tax totaled sek 4,062.8 m (2,703.8), an increase of 50 percent over the previous year. Capital expenditure on tangible fixed assets, less sales of tangible fixed assets, amounted to sek 829.9 m (496.9), which corresponded to 96 percent (83) of depreciation of tangible fixed assets applicable to the financial year. Total purchase price for invest- ments in subsidiaries amounted to sek 6,979.6 m (10,780.6). Acquired net debt totaled sek 82.2 m (1,142.8). The acquisitions carried out in 2001 were financed by borrowings and internally generated cash flow. The dividend to shareholders for the 2000 financial year was sek 317.8 m (237.5), which represents sek 0.90 per share. The Parent Company’s cash flow amounted to sek –357.9 m (338.4). Comments on the balance sheet Accounts receivable amounted to sek 4,338.5 m (3,276.3), corresponding to 19.3 percent (22.8) of sales. The increase was chiefly due to acquired accounts receivable. Inventories amounted to sek 3,812.0 m (2,808.4), which corres- ponds to 16.9 percent (19.5) of sales. This increase likewise is attributable primarily to acquired inventories. Intangible fixed assets amounted to sek 16,557.8 m (12,259.0). The increase includes acquired goodwill of sek 4,263.6 m. Tangible fixed assets amounted to sek 6,941.5 m (4,811.0). Direct net investments in tangible fixed assets totaled sek 829.9 m (496.9). Capital employed in the Group – defined as total assets less interest- bearing assets and non-interest-bearing short-term and long-term liabilities, including deferred tax liabilities – amounted to sek 27,861 m (19,779). The increase is mainly due to the acquisitions of hid, udp, Phillips and tesa. The return on capital employed was 9.7 percent (13.7). The Parent Company has invested further in shares in subsidaries, includ- ing Phillips in Mexico. Shares in assa abloy financial services ab have been contributed to assa abloy treasury s.a. in a non-cash issue in exchange for new shares in assa abloy treasury s.a. Financing Cash and cash equivalents amounted to sek 1,418.4 m (1,479.5). Cash and cash equivalents are invested in banks with high credit ratings. Net debt 15,534.2 m sek amounted (8,559.9), of which sek 1,093.0 m (969.0) consisted of pension liabilities. Net debt increased due to the acquisi- tions but the effect was reduced by the strong operating cash flow. to long-term The Group’s loan financing consists mainly of the Multi- Currency Revolving Credit (mcrf) agreement for a maximum of eur 1,200 m, un emtn program for a max- imum of eur 1,500 m and a Nordic mtn program for a maximum of sek 2,000 m. In addition there is a Swedish Commercial paper-program for a maximum of sek 3,000 m that was launched during the spring. At year end, utilized financing sources were emtn: sek 5,819 m, mcrf: sek 2,697 m, Commercial paper: sek 2,444 m and the Nordic mtn: sek 1,862 m. The interest-coverage ratio, defined as income before taxes increased by net interest divided by net interest, was 3.5 (5.5). for Periods fixed-interest-rate borrowings are generally short, averag- ing less than one year. This is partly because Group revenues largely follow the trends in each country, and partly due to the strong cash flow. equity Shareholders’ totaled 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 55 sek 11,845.6 m (10,659.0). The equi- ty ratio was 35.6 percent (43.1). The net debt / equity ratio, defined as net debt divided by shareholders’ equity, was 1.31 (0.80). Personnel The average number of employees was 24,211 (16,881). The increase was mainly due to the acquisitions. The Group’s total wage, salary and other remuneration payments, including holiday pay but excluding social wel- fare costs, amounted to sek 5,740.9 m (3,539.6). The average number of employees in the Parent Company was 34 (31). Environmental impact Four of the assa abloy group’s sub- sidiaries in Sweden carry out permit- ted business activities in accordance with environmental regulations. The Group’s permitted and registered activities affect the external environ- ment chiefly through the subsidiaries Assa ab, Assa Industri ab, ab fas Låsfabrik and fix ab. The companies operate machine shops and foundries and associated surface-coating plants which have an impact on the external environment through the discharge of water and air. The subsidiaries Assa ab, Assa Industri ab, ab fas Låsfabrik and fix ab are actively addressing environ- mental questions, and are certified in accordance with iso 14001. Outstanding legal disputes assa abloy was informed on 17 November 1999 of the verdict of a jury at a court in Dallas, Texas, which that VingCard could be means required to pay damages of around usd 12.5 m plus interest to a Texas r&d company, Merrimac, concerning a terminated sub-supply contract. The Texas Court of Appeal has confirmed the obligation for VingCard to pay damages. VingCard has filed an appeal against the above judgement to the Texas Supreme Court; however, the potential cost of sek 166.0 m has been provided for as a non-recurring item in the financial statements for 2001. In connection with the acquisition of Mul-T-Lock in Israel, assa abloy agreed that Mul-T-Lock should sell some non-core activities to the former principal owner of Mul-T-Lock for usd 45 m. This former owner has now initiated legal proceedings claiming that Mul-T-Lock should be forced to retain this non-core business. assa abloy and its advisers cannot see any legal basis for such a claim, which is consequently rejected. Accounting principles The new Standard rr9 ‘Income Taxes’ issued by the Swedish Financial Accounting Standards Council has been adopted from 1 January 2001, which represents a change in account- ing principles. All other accounting principles remain unchanged. Outlook for 2002 The large acquisitions made over the last year have considerably strength- ened the Group. The first and critical part of the integration has successfully been concluded and the work of realiz- ing synergies can now accelerate. position, The development potential for assa abloy is substantial. The Group’s strong security-driven growth and potential for continued rationalization as well as the ongoing consolidation of the lock industry create opportunities for continued good growth and profit development. Proposed disposition of earnings As shown in the consolidated balance sheet, the Group’s unrestricted equity amounts to sek 2,200.6 m (1,728.4). No transfer to the Group’s restricted equity is required. The following unappropriated earnings are available for disposition by the shareholders at the Annual General Meeting: Net income for the year: sek 448.9 m Unappropriated earnings brought forward: sek 3,407.8 m Total: sek 3,856.7 m The Board of Directors and the President propose that a dividend of sek 1.00 per share, a maximum total of sek 356.7 m, be distributed to shareholders and that the remainder be carried forward to the new financial year. Stockholm, 7 February 2002 Georg Ehrnrooth Chairman Melker Schörling Vice Chairman Gustaf Douglas Per-Olof Eriksson Göran Ehrnrooth Sven-Christer Nilsson Carl-Henric Svanberg President Mats Persson Employee representative Gösta Johnsson Employee representative My audit report was issued on 9 February 2002 Anders Lundin Authorized Public Accountant PricewaterhouseCoopers AB A S S A A B L O Y / 2 0 0 1 • 5 5 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 56 Consolidated income statement and cash flow statement Consolidated income statement Consolidated cash flow statement Sales (Note 1) Cost of goods sold Gross income 2001 EUR M1) 2001 SEK M 2000 SEK M 1999 SEK M OPERATING ACTIVITIES 2001 EUR M1) 2001 SEK M 2000 SEK M 1999 SEK M 2,436.1 22,510.0 14,394.1 10,277.2 Operating income 230.8 2,132.8 1,720.2 1,193.4 -1,500.3 -13,863.1 -8,567.6 -6,282.5 Depreciation and amortization (Note 4) 186.3 1,721.1 985.2 667.3 935.8 8,646.9 5,826.5 3,994.7 Adjustment for non-recurring items 18.0 166.0 - - Selling expenses -402.2 -3,716.1 -2,496.1 -1,664.5 Administrative expenses (Note 5) -153.7 -1,420.1 -39.7 15.9 -14.2 -367.0 146.7 -131.2 -946.1 -233.3 105.4 -744.2 -151.7 98.5 -149.2 -150.4 Research and development costs Other operating income Other operating expenses Operating income before goodwill amortization (Note 2) Adjustments for non-cash items (Note 25) 4.7 43.0 -1.6 1.9 Cash flow before interest and tax 439.7 4,062.8 2,703.8 1,862.6 Paid and received interest (Note 25) Income tax paid Cash flow before changes in working capital -88.5 -58.1 -817.4 -537.1 -356.9 -453.2 -226.8 -197.8 293.1 2,708.3 1,893.7 1,438.0 341.9 3,159.2 2,107.2 1,382.4 Change in working capital (Note 25) -8.3 -77.1 -94.3 -27.1 Goodwill amortization (Note 4) Non-recurring items (Note 7) -93.1 -18.0 -860.4 -166.0 -387.0 -189.0 - - Cash flow from operating activities 284.8 2,631.2 1,799.4 1,410.9 Operating income 230.8 2,132.8 1,720.2 1,193.4 INVESTING ACTIVITIES Financial items (Note 8) -71.9 -664.4 -330.6 -230.1 Acquisition/disposal of tangible fixed assets (Note 25) -89.8 -829.9 -496.9 Investment in subsidiaries (Note 25) -680.4 -6,286.9 -4,672.4 -390.2 -621.5 Share in earnings of associated companies 0.8 7.2 12.4 Income before tax 159.7 1,475.6 1,402.0 Investment in associated companies (Note 25) Other investments (Note 25) 17.3 980.6 - 0.5 - 4.6 - -3,9 -19.9 -398.4 Income tax (Note 9) Other taxes Minority interests Net income -50.4 -4.5 -2.1 102.7 -465.5 -443.8 -346.6 -41.9 -9.3 -1.3 -19.6 948.6 -33.8 915.1 -14.1 618.6 Earnings per share after tax and before conversion, SEK* Earnings per share after tax and full conversion, SEK 2.99** 2.76 2.16*** 2.98** 2.73 2.00*** Cash flow from investing activities FINANCING ACTIVITIES New share issues Dividends paid Net cash effect of changes in borrowings Cash flow from financing activities -769.7 -7,112.2 -5,189.2 -1,414.0 - - 1,509.9 1,985.2 -34.4 -317.8 -237.5 -178.2 495.3 4,577.2 3,336.3 -1,713.6 460.9 4,259.4 4,608.7 93.4 Earnings per share after tax and full conversion CASH FLOW (Note 25) -24.0 -221.6 1,218.9 90.3 excluding goodwill, SEK 5.39** 3.88 2.61*** * The total number of shares, in thousands, used in the calculation is 353236 for 2001, 331813 for 2000 and 285880 for 1999. ** Excluding non-recurring items *** Adjusted for changes in accounting principles 1) EUR/SEK rate 9.24 2) EUR/SEK rate 9.31 CHANGE IN NET DEBT Net debt at 1 January2) Cash flow impact on net debt Adjustment for acquired cash and cash equivalents Net debt in acquired companies 919.4 519.3 5.5 8.9 8,559.9 2,997.7 4,237.3 4,798.7 2,116.3 -1,803.9 50.7 82.2 2,328.8 1,142.8 - 514.9 49.4 Translation differences and other 215.4 2,042.7 -25.7 Net debt at 31 December2) 1,668.5 15,534.2 8,559.9 2,997.7 OPERATING CASH FLOW Cash flow from operating activities 284.8 2,631.2 1,799.4 1,410.9 Acquisition/disposal of tangible fixed assets (Note 25) Adjustment for income tax paid -89.8 58.1 -829.9 -496.9 -390.2 537.1 453.2 197.8 Operating cash flow 253.1 2,338.4 1,755.6 1,218.5 56 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 57 Consolidated balance sheet Assets Equity and liabilities Fixed assets Intangible fixed assets Goodwill (Note 10) 31 Dec. 2001 EUR M2) 31 Dec. 2001 SEK M 31 Dec. 2000 SEK M 31 Dec. 1999 SEK M 1,758.4 16,371.0 12,077.9 3,245.8 Intangible rights (Note 11) 20.1 186.8 181.1 142.3 Shareholders’ equity (Note 15) Restricted equity Share capital Restricted reserves 31 Dec. 2001 EUR M2) 31 Dec. 2001 SEK M 31 Dec. 2000 SEK M 31 Dec. 1999 SEK M 38.0 353.8 352.5 314.4 998.0 9,291.2 8,578.1 3,151.0 Total intangible fixed assets Tangible fixed assets (Note 12) Buildings Land and land improvements Construction in progress Machinery Equipment 1,778.5 16,557.8 12,259.0 3,388.1 Total restricted equity 1,036.0 9,645.0 8,930.6 3,465.4 239.3 2,228.2 1,618.3 1,077.7 75.1 38.7 698.8 360.6 525.9 237.2 356.0 136.5 312.6 2,909.7 1,914.3 1,088.3 79.9 744.2 515.3 296.9 Unrestricted equity Unrestricted reserves Net income Total unrestricted equity 133.7 102.7 236.4 1,252.0 813.3 1,184.7 948.6 915.1 618.6 2,200.6 1,728.4 1,803.3 Total equity 1,272.4 11,845.6 10,659.0 5,268.7 Total tangible fixed assets 745.6 6,941.5 4,811.0 2,955.4 Minority interests 51.7 481.7 559.8 266.8 Financial fixed assets (Note 13) Shares in associated companies Other shares and participations Long-term receivables Deferred tax receivables Total financial fixed assets 2.4 5.1 12.7 40.7 60.9 22.8 47.5 118.2 378.3 566.8 59.8 7.3 44.2 351.7 463.0 169.0 330.2 29.0 278.3 806.5 Provisions Provision for PRI pensions 6.7 62.6 Provision for other pensions 110.7 1,030.4 Deferred tax liabilities Total provisions 38.5 358.3 155.9 1,451.3 1,250.3 58.9 910.1 281.3 55.8 550.8 333.7 940.3 Total fixed assets 2,585.0 24,066.1 17,533.0 7,150.0 Long-term liabilities (Note 17) Current assets Inventories and work in progress (Note 14) Accounts receivable Prepaid expenses and accrued income Other receivables Short term investments Cash and bank balances 409.5 466.0 27.6 54.0 85.9 95.8 3,812.0 2,808.4 1,564.7 4,338.5 3,276.3 1,796.2 256.9 502.8 800.0 892.7 191.4 467.7 1,020.0 732.1 98.2 184.8 252.1 195.1 Total current assets 1,138.8 10,602.9 8,495.9 4,091.1 TOTAL ASSETS 3,723.8 34,669.0 26,028.9 11,241.1 ASSETS PLEDGED (Note 21) Real estate mortgages Chattel mortgages 5.2 0.0 48.3 0.3 2.0 1.8 24.0 2.1 Long-term loans 1,182.2 11,006.1 7,712.2 2,298.9 Convertible debenture loans (Note 19) 118.7 1,104.9 250.0 298.6 Other long-term non-interest- bearing liabilities 1.8 16.3 3.0 2.8 Total long-term liabilities 1,302.7 12,127.3 7,965.2 2,600.3 Current liabilities Short-term loans Income tax liability Accounts payable Accrued expenses and prepaid income (Note 20) Other current liabilities 437.5 4,074.5 1,398.4 41.9 390.2 214.7 169.1 1,574.1 1,407.3 199.9 1,861.3 1,779.0 92.7 863.0 795.2 77.9 183.5 646.7 886.9 370.0 Total current liabilities 941.1 8,763.1 5,594.6 2,165.0 TOTAL EQUITY AND LIABILITIES 3,723.8 34,669.0 26,028.9 11,241.1 CONTINGENT LIABILITIES (Note 22) Guarantees Other 37.3 0.2 347.7 462.9 2.2 - 165.8 112.7 2) EUR/SEK rate 9.31 A S S A A B L O Y / 2 0 0 1 • 5 7 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 58 Parent Company income statement and cash flow statement Parent Company income statement Parent Company cash flow statement 2001 EUR M1) 2001 SEK M 2000 SEK M -162.7 -168.7 Net income 667.1 504.4 108.0 -60.7 Depreciation (Note 4) Income from the disposal of shares in subsidiaries (Note 6) Liquidation loss (Note 6) Reversal of appropriations Cash flow before changes in working capital 2001 EUR M1) 48.6 0.4 -20.7 34.9 -2.0 2001 SEK M 448.9 4.1 -192.1 322.6 -18.3 2000 SEK M 138.4 3.9 - - -8.4 61.2 565.2 133.9 348.8 -422.6 430.6 18.3 0.0 448.9 363.9 -173.1 130.1 8.4 -0.1 138.4 Current receivables increase/decrease (-/+) Current operating liabilities increase/decrease (+/-) Changes in working capital -26.6 -245.6 113.9 40.1 13.5 370.7 125.1 91.2 205.1 Cash flow from operating activities 74.7 690.3 339.0 INVESTING ACTIVITIES Investments in equipment -0.5 -4.5 -5.8 Investments in subsidiaries -399.4 -3,690.4 -8,758.6 Sales of shares in subsidiaries 298.7 2,759.9 Changes in other financial fixed assets 0.2 1.4 - - Cash flow from investing activities -101.0 -933.6 -8,764.4 FINANCING ACTIVITIES New share issues Dividends paid Net cash effect from changes in borrowings Cash flow from financing activities - -34.4 22.0 -12.4 - 1,518.2 -317.8 203.2 -114.6 -237,5 7,483.1 8,763.8 CASH FLOW -38.7 -357.9 338.4 CASH AND CASH EQUIVALENTS Cash and cash equivalents at 1 January 2) Cash flow Cash and cash equivalents at 31 December 2) 44.8 -38.7 416.9 -357.9 78.5 338.4 6.0 59.0 416.9 Administrative expenses (Notes 3, 5) Other operating income Operating income (Note 2) Income from financial investments: Income from shares and participation in subsidiaries (Note 6) Financial items (Note 8) Income before tax Appropriations Income tax Net income -17.6 72.2 54.6 37.7 -45.7 46.6 2.0 0.0 48.6 1) EUR/SEK rate 9.24 2) EUR/SEK rate 9.31 58 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 59 Parent Company balance sheet Assets Equity and liabilities 31 Dec. 2001 EUR M2) 31 Dec. 2001 SEK M 31 Dec. 2000 SEK M 31 Dec. 2001 EUR M2) 31 Dec. 2001 SEK M 31 Dec. 2000 SEK M Shareholders' equity (Note 15) Fixed assets Tangible fixed assets (Note 12) Equipment Total tangible fixed assets Financial fixed assets (Note 13) 1.4 1.4 13.0 13.0 13.4 13.4 Restricted equity Share capital Share premium reserve Statutory reserve Shares in subsidiaries 2,215.4 20,625.4 19,825.5 Total restricted equity Receivables due from subsidiaries 296.7 2,762.7 Other long-term receivables Other financial assets 0.3 4,4 3.1 40,8 368.7 42.2 Unrestricted equity - Retained earnings Total financial fixed assets 2,516,8 23,432.0 20,236.4 Net income Total fixed assets 2,518.2 23,445.0 20,249.8 Total unrestricted equity 38.0 739.5 69.3 846.8 365.6 48.6 414.2 353.8 352.5 6,884.5 6,809.6 645.4 645.4 7,883.7 7,807.5 3,407.8 3,587.2 448.9 138.4 3,856.7 3,725.6 Total shareholders’ equity 1,261.0 11,740.4 11,533.1 Current assets Receivables due from subsidiaries 871.5 8 113.8 12,254.0 Untaxed reserves (Note 16) - - 18.4 Other receivables Prepaid expenses and accrued income Other short-term investments Cash and bank balances Total current assets 6.1 17.5 17.2 5.5 57.1 162.7 160.6 51.1 48.5 187.3 490.6 79.2 Long-term liabilities Long-term loans Long-term loans due to subsidiaries 917.8 8,545.3 13,059.6 Convertible debenture loan (Note 19) Corporate credit line (Note 18) 667.9 296.7 118.7 22.9 6,218.2 2,762.7 1,104.9 212.9 6,805.0 0.3 250.0 983.7 TOTAL ASSETS 3,436.0 31,990.3 33,309.4 Total long-term liabilities 1106.2 10,298.7 8,039.0 ASSETS PLEDGED None None None Current liabilities Short-term loans Accounts payable Liabilities to subsidiaries Accrued expenses and prepaid income (Note 20) Other current liabilities 43.7 2.0 406.4 18.3 171.8 25.5 1,007.6 9,381.9 13,364.8 13.2 2.3 122.8 21.8 155.4 1.4 Total current liabilities 1,068.8 9,951.2 13,718.9 TOTAL EQUITY AND LIABILITIES 3,436.0 31,990.3 33,309.4 CONTINGENT LIABILITIES (Note 22) Guarantees 560.4 5,217.2 290.6 2) EUR/SEK rate 9.31 A S S A A B L O Y / 2 0 0 1 • 5 9 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 60 Accounting and valuation principles The Group’s accounting and valuation principles comply with Sweden’s the Annual Accounts Act and standards of the Swedish Financial Accounting Standards Council, in accordance with the listing contract of the Stockholm Stock Exchange. The new Standard rr9 ‘Income Taxes’ issued by the Swedish Financial Accounting Standards Council has been adopted from 1 January 2001, which represents a change in account- ing principles. All other accounting principles unchanged remain compared with the preceding year. Consolidated accounts The consolidated financial statements include the Parent Company and com- panies in which the Parent Company held more than 50 percent of the votes at year-end, as well as companies in which the Parent Company exercises control by some other means. The consolidated income state- ment includes companies acquired during the year, with values as from the date of acquisition. The consoli- dated financial statements are pre- pared in accordance with the purchase method, which means that the acquisi- tion value of shares in subsidiaries is eliminated against their shareholders’ equity at the time of acquisition. In this context, shareholders’ equity in subsidiaries is determined on the basis of the fair value of assets, liabilities and provisions at the date of acquisi- tion. If required in accordance with the purchase method, an allocation is made to a restructuring provision. In the case of untaxed reserves in acquired subsidiaries, the estimated tax liability is reported as a provision in accordance with the tax rate in each country. If the acquisition value of shares in a subsidiary exceeds the acquired shareholders’ equity as com- puted above, the difference is reported as goodwill, which is amortized according to plan. If the acquisition value of shares in subsidiaries is less than the acquired shareholders’ equity, 60 • A S S A A B L O Y / 2 0 0 1 a provision for negative goodwill is made, which in accordance with a defined plan. is dissolved Minority interests Minority interests in the year’s income statement and shareholders’ equity are based on subsidiaries’ accounts prepared in accordance with the Group’s accounting principles. than Associated companies Associated companies are defined as companies which are not subsidiaries but companies in which the Parent Company has shareholdings which, directly or indirectly, represent at least 20 percent of all participations. Participations in associated companies are reported in accordance with the equity method. The consolidated income statement includes shares in the income before tax of associated companies. In cases in which the acquisition value of shares in associated the companies was higher shareholders’ equity in the acquired company at the acquisition date, the difference is amortized on the same basis as consolidated goodwill, following an analysis of the character of the surplus value, and is charged against share in earnings of associated companies. Participation the income tax of subsidiaries is included in the Group’s tax expense. In the con- solidated balance sheet, shareholdings in associated companies are reported at the acquisition value, adjusted for dividends and participation in income after the date of acquisition. In determining the equity share, untaxed reserves are attributed to shareholders’ equity after deduction for estimated tax. in Translation of foreign subsidiaries The Group applies the so-called current method for translating the accounts of all foreign subsidiaries that are considered to operate with a high degree of independence. The current method has been applied so that all balance sheet items except net income are translated at the closing- day rate. Net income is translated at the average rate and the difference arising thereby is taken directly to unrestricted reserves. Subsidiaries’ income statements are translated at the average rate for the financial year. Subsidiaries operating in high- inflation countries, e.g. Romania, are translated using the so-called monetary method. is The Group hedges to a certain extent its investment in foreign net assets. Hedging implemented through loans and forward exchange contracts. These are valued at the exchange rate prevailing at year-end. Exchange rate differences on hedging operations, as well as differences that arise when foreign net assets are trans- lated, are carried directly to share- holders’ equity in the balance sheet. Interest differentials on forward contracts are annualized and reported in the income statement. Exchange rates The rates for currencies used in the Group were as follows (average for the year and rate at year-end): Austria Australia Belgium Bermuda Brazil Canada Switzerland China Czech Republic Germany Denmark Estonia Spain Euroland Finland France Great Britain Hong Kong Hungary Indonesia Ireland Average Year-end rate 0.68 5.38 0.23 10.63 4.56 6.62 6.28 1.27 0.29 4.76 1.25 0.60 0.056 9.31 1.57 1.42 15.26 1.35 0.038 0.0010 11.82 rate 0.67 5.33 0.23 10.45 4.49 6.68 6.13 1.25 0.27 4.73 1.24 0.59 0.056 9.24 1.55 1.41 14.92 1.33 0.036 0.0010 11.73 ATS AUD BEF BMD BRL CAD CHF CNY CZK DEM DKK EEK ESP EUR FIM FRF GBP HKD HUF IDR IEP 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 61 Israel India Iran Italy Japan Mauritius Mexico Malaysia Nigeria Netherlands Norway New Zealand Poland Portugal Romania Russia Singapore Slovakia Thailand USA South Africa Zimbabwe Average Year-end rate 2.39 0.22 0.0060 0.0048 0.080 0.35 1.15 2.77 0.088 4.23 1.17 4.38 2.65 0.046 0.00033 0.34 5.69 0.22 0.24 10.53 0.87 0.19 rate 2.46 0.22 0.0059 0.0048 0.085 0.36 1.11 2.72 0.091 4,19 1.15 4.33 2.53 0.046 0.00036 0.35 5.77 0.21 0.23 10.34 1.21 0.19 ILS INR IRR ITL JPY MUR MXN MYR NGN NLG NOK NZD PLN PTE ROL RUR SGD SKK THB USD ZAR ZWD Revenue recognition Revenue recognition of sales of goods is reported at the time of delivery to the customer. All sales are reported less vat, discounts, returns and freight. Intra-Group sales Pricing of deliveries between Group companies is in accordance with busi- ness principles and at market prices. Internal profits arising from intra- Group sales have been eliminated. Leasing Only operational leasing occurs in the Group. Reporting is in accordance with Standard rr6 of the Swedish Financial Accounting Standards Council. ciation period of five years has been applied for intangible rights. Group goodwill is amortized over 10-20 years, depending on the type of company concerned. Goodwill in well-established companies with inde- pendent and well-known trademarks is amortized over 10 years. Goodwill in companies that, in addition, consti- tute a strategic acquisition in terms of products or markets is amortized over 20 years. The depreciation period for office buildings is 50 years, and 25 years for industrial buildings. A depreciation period of 7-10 years is applied to machinery and other technical facilities. Equipment and tools are depreciated over 3-6 years. Taxation All taxes that are expected to apply to the income reported are accounted for in the income statement. These taxes have been estimated in accordance with the tax regulations in each coun- try and are reported as current year tax. Costs and revenue that affect both the financial statements and income taxation but in different financial years are reported as deferred tax. Deferred income taxes are account- ed for under the balance sheet liability method. Accordingly deferred tax is accounted for on all temporary differ- ences between the carrying amount of an asset or liability and its tax base. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Research and development Cash flow statement Research and development costs are expensed as they are incurred. Depreciation according to plan Depreciation according to plan is based on the historical cost of assets, with due consideration of the estimat- ed economic life of the asset. A depre- The cash flow statement has been prepared according to the indirect method. The reported cash flow includes only transactions involving cash payments. As well as cash and bank balances, cash and cash equivalents are taken to include short-term investments that are exposed to only small risks of change in value and have a maturity date less than three months from the date of acquisition. Intangible and tangible assets Intangible and tangible assets are reported at acquisition value after deduction for accumulated deprecia- tion according to plan. Inventories Inventories are valued at the lower of cost and net realizable value in accordance with the fifo method. Provisions have been made for obsolescence. Deductions are made for internal profits arising from deliveries between Group companies. Work in progress and finished goods include both direct costs incurred and an allocation of indirect manufactur- ing costs. Receivables Receivables have been valued in the amounts expected to be received. Receivables, liabilities and provisions in foreign currency Receivables, liabilities and provisions in foreign currency in individual com- panies’ accounts have been translated at the year-end rate. The forward rate has been used when exchange rates have been hedged by means of forward contracts. Provisions Provisions have been made for all obligations attributable to the fiscal year or prior fiscal years which, on the closing date, were likely to be incurred, but which were uncertain as to amount or date of payment. In making provisions for pensions, companies follow their country’s local rules. A S S A A B L O Y / 2 0 0 1 • 6 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 62 Financial risk management assa abloy is exposed to a variety of financial risks through its international business operations. Organization and activities assa abloy’s financial policy, which is reviewed annually by the Board of Directors, constitutes a framework of guidelines and regulations for the management of financial risks and financial activities in general. assa abloy’s financial activities are coordinated centrally within the subsidiary assa abloy treasury s.a. in Switzerland, which functions as the Group’s internal bank. External finan- cial transactions are conducted by the internal bank, which also handles transactions involving foreign curren- cies and interest rates. The internal bank achieves several economies of scale, for example concerning pricing of various interest rates. Financing and liquidity risks Financing and liquidity risks are defined as the risks of being unable to meet payment obligations as a result of inadequate liquidity or difficulties in obtaining credit from external sources. The internal bank is responsible for external borrowing and external investments. assa abloy strives to have access, on every occasion, to both short-term and long-term loan facilities appropriate to its anticipated needs for the year ahead, apart from larger acquisitions. Counterparty risks Financial risk management exposes assa abloy to certain counterparty risks. This exposure arises, for instance, from the placement of surplus cash and through the use of derivative instruments. Group financial policy prescribes detailed rules for handling counterparty risks. 62 • A S S A A B L O Y / 2 0 0 1 Interest-rate risk Cash management Interest-rate fluctuations have a direct impact on assa abloy’s net interests, but there is also an indirect effect on the Group’s operating income as a result of the impact of interest rates on the economy as a whole. The internal bank is responsible for identifying and managing the Group’s interest-rate exposure. Interest duration in the Group is generally short, with an aver- age duration of less than a year. At year-end, the average interest duration was around 5 months. Cash management in subsidiaries focuses on minimizing operating capital employed. The internal bank manages a Group-wide netting system to minimize the number of payment transactions and related costs. In countries with several operating companies, surpluses and deficits are matched in the local subsidiaries at country level through cash pool solutions. The internal bank manages the investment or financing of these cash pools. Financial derivative instruments Financial derivative instruments such as currency and interest-rate forwards are used to the extent necessary. The object of using derivative instruments is solely to reduce exposure to financial risks. Financial derivative instruments are not used with speculative intent. Currency risk Currency risks affect assa abloy mainly through translation of capital employed and net debt, through in foreign translation of subsidiaries, and through flow of goods between countries (‘transaction exposure’). income Translation exposure. The effect aris- ing on translation of capital employed is limited by the fact that financing is largely in local currency. The currency exposure and gearing per currency in the Group should generally reflect the overall exposure and gearing for the whole Group. This limits the effect from movements in individual curren- cies on the gearing for the Group. Exposure of Group earnings. A gener- al strengthening of the Swedish krona by one percent has a negative impact of about sek 240 m on Group sales and sek 6 m on Group earnings. Transaction exposure. Currency risks in the form of transaction exposure, or the relative values of exports and imports of goods, are limited in the Group. The exposure that does exist relates in particular to VingCard’s exports from Norway, chiefly to the usa, and to Abloy’s exports from Finland to the usa. assa abloy’s policy is to keep transaction exposure within a specified framework. 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 63 Notes: Note 1. Sales by organizational unit1) Scandinavia Finland Central Europe 2) South Europe 3) United Kingdom North America South Pacific New Markets 4) Hotel locks Identification Elimination for internal sales 2001 SEK M 1,971 1,165 1,432 2,905 1,545 9,682 841 1,764 1,056 1,043 -894 2000 SEK M 1,889 1,060 1,027 2,232 665 5,409 772 981 1,052 - -693 1999 SEK M 1,777 898 575 1,682 270 3,721 590 354 965 - -555 Total 22,510 14,394 10,277 1) Including exports from each market 2) Germany, the Netherlands, Switzerland and Austria 3) France, Belgium, Spain & Italy 4) Asia, eastern Europe, South America, Southern Africa & Israel Audit Note 2. Salaries and wages, other remu- nerations and social costs Salaries and wages, other remuneration (of which bonus) Group Sweden Finland Norway Denmark Germany United Kingdom Belgium France The Netherlands Czech Republic Canada Australia New Zealand USA China Romania Israel Italy Africa Mexico Spain South America Other 2001 SEK M 262.9 (2.7) ( - ) 266.5 236.7 (0.8) 112.1 (0.7) 371.3 ( - ) 481.9 (0.7) 37.4 (0.5) 525.9 (2.5) 72.8 (0.3) 37.4 (0.1) 80.7 (0.5) 204.7 (0.4) ( - ) 20.7 2,426.8 (14.1) 77.0 (1.1) ( - ) 11.7 74.8 ( - ) 86.6 (0.1) 45.6 (0.0) 109.8 (0.2) 57.4 (0.2) 33.6 (0.2) 106.6 (0.5) 2000 SEK M 233.5 (2.2) 249.8 (0.8) 225.2 (0.4) 89.3 (0.3) 319.4 (0.4) 192.6 (1.7) 30.7 (0.2) 460.5 (2.0) 30.8 (0.3) 29.9 (0.1) 32.6 (0.5) 190.0 (0.1) 7.3 ( - ) 1,197.1 (8.8) 40.6 (0.1) ( - ) 8.7 44.5 ( - ) 35.5 (0.2) 9.4 ( - ) 25.8 (0.3) - - 1999 SEK M (1.5) 205.2 (0.5) 206.5 235.2 (0.6) 90.4 (0.2) 212.2 ( - ) 50.3 (0.1) 27.9 (0.1) 406.9 (1.0) 7.7 ( - ) 29.7 (0.5) ( - ) 20.7 ( - ) 209.1 998.9 (4.0) 7.5 (0.3) ( - ) 8.1 - - - - - - Senior executives' remuneration The Chairman of the Board received in the course of the year a remuneration of SEK 500,000 (180,000). This is decided by the Board within limits set by the AGM. Total remuneration was set by the AGM at SEK 1.875.000 (810,000). The president was paid a salary and other remuneration of SEK 5,582,372 (4,734,000) during the year. In addition he has received a bonus of SEK 1,400,000 (1,200,000). The Chairman of the Board has no pension benefits or severance pay agree- ment. The basic security provided by the pension scheme for the President and others in Group Management is provided on joining the ITP plan or equivalent. In addition to this, the President and other senior executives have the right to receive a pension at the earliest from when they reach the age of 60 years. The pension is based on the retiree's salary on retiring and is 70 percent of this salary between the ages of 60 and 65 and 50 percent after the age of 65 and for the remainder of life. The President has a severance pay agreement of 100 percent of his salary for 24 months. The compensation is only payable where the President is dismissed by the company. Others in Group Management have severance pay agreements of 100 percent salary for up to 12 months. Note 3. Fees paid to audit firms Group 2001 SEK M 2000 SEK M 1999 SEK M Parent Company 2001 2000 SEK M SEK M PricewaterhouseCoopers 20.1 Others Other assignments PricewaterhouseCoopers Others Total 5.0 4.8 4.0 33.9 13.7 2.6 10.6 3.7 30.6 10.6 1.1 7.5 2.9 22.1 2.3 - 2.6 - 4.9 1.2 - 2.2 - 3.4 Note 4. Depreciation and amortization Group 2001 SEK M 860.4 31.8 491.4 216.6 119.8 Goodwill Intangible rights Machinery Equipment Buildings Land and land improvements 1.1 2000 SEK M 387.0 28.5 359.1 146.4 64.2 - 1999 SEK M 189.0 23.0 275.5 108.0 71.8 - Parent Company 2001 2000 SEK M SEK M - - - - - - 4.1 3.9 - - - - Total 1,721.1 985.2 667.3 4.1 3.9 Note 5. Operational leasing agreements Group Parent Company 86.4 (2.1) 68.0 (0.3) Nominal value of agreed future leasing fees: Leasing fee paid during the year: Total 5,740.9 (25.6) 3,539.6 (20.5) 2,784.3 (9.1) Parent Company Sweden 38.0 (5.5) 29.7 (1.2) 21.7 (0.8) Social costs (of which pensions) Group 2001 SEK M 2000 SEK M 1999 SEK M Due in 2002 Due in 2003 Due in 2004 Due in 2005 Due in 2006 Due in 2007 or later 1,720.7(325.9) 1,077.8 (209.9) 792.2 (155.4) Total Total Parent company Sweden 19.1 (6.4) 12.2 (2.4) 11.8 (3.7) A S S A A B L O Y / 2 0 0 1 • 6 3 2001 SEK M 139.3 145.3 100.6 73.7 54.2 43.5 83.2 500.5 2001 SEK M 5.9 5.7 5.7 5.7 5.7 5.7 6.0 34.5 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 64 Note 6. Income from partici- pations in Group companies Note 8. Financial items Parent Company Dividends Group contribution Liquidation loss Income from disposal of shares in subsidiaries Total 2001 SEK M 191.2 288.1 -322.6 192.1 348.8 2000 SEK M - 363.9 - - 363.9 Note 7. Non-recurring items Group 2001 SEK M 2000 SEK M 1999 SEK M Estimated damages, Merrimac Total 166.0 166.0 - - - - Interest income, long-term investments Dividends Exchange rate differences, long-term investments 0.3 Interest income, other 76.4 Group 2001 SEK M 2.4 0.1 2000 SEK M 2.9 - -6.3 27.0 1999 SEK M 1.4 - -3.3 12.7 Exchange rate differences, receivables 2,706.4 1,145.2 130.7 Interest income from Group companies Exchange rate differences from Group companies, receivables - - - - Interest expenses -735.1 -345.1 Exchange rate differences, liabilities -2,675.6 -1,153.2 Interest expenses from Group companies Exchange rate differences from Group companies, liabilities Other financial income Other financial costs Total Note 9. Tax - - - - 1.1 -40.4 -664.4 323.7 -324.8 -330.6 - - -242.6 -129.0 - - - - -230.1 Parent Company 2001 SEK M 2000 SEK M - - - 49.1 - - - - 13.8 - 617.8 388.3 871.3 -395.5 -512.4 -637.8 331.1 -235.6 -164.8 -281.5 -303.6 -99.4 2.3 -113.8 -422.6 - -125.0 -173.1 Tax paid Tax attributable to prior years Deferred tax Total Group 2001 SEK M 2000 SEK M 1999 SEK M -401.3 -426.4 -355.9 19.4 -83.6 15.7 -33.1 1.2 8.1 -465.5 -443.8 -346.6 Parent Company 2001 SEK M 2000 SEK M - 0.0 - 0.0 - -0.1 - -0.1 Explanation for the difference between nominal Swedish tax rates and effective tax rates according to the income statement: Percent Swedish income tax rate The effect of overseas tax rates Non-deductible goodwill amortization Other non-income-related taxes Other Group 2001 28.0 -10.7 18.2 2.9 -4.0 Tax rate according to the income statement 34.4 Deferred tax liabilities and deferred tax receivables are distributed according to the table below: Deferred tax liabilities Fixed assets Inventory Short-term receivables and liabilities Deferred tax receivables Fixed assets Inventory Short-term receivables and liabilities Depreciation and amortization Tax-deductible losses 314.2 36.2 7.9 358.3 4.4 6.0 164.7 142.4 60.8 378.3 64 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 65 2001 SEK M 13,252.8 4,263.6 10.9 985.9 2000 SEK M 3,943.9 8,948.0 - 360.9 1999 SEK M 3,045.8 838.2 14.9 45.0 Note 11. Intangible rights Group 2001 SEK M Acquisition cost 1 January Purchases/acquisitions Sales/disposals Reclassifications Translation differences 360.8 29.2 -4.5 -8.2 31.4 18,513.2 13,252.8 3,943.9 Accumulated acquisition cost 31 December 408.7 2000 SEK M 294.2 57.5 -10.6 - 19.7 360.8 1999 SEK M 277.6 21.6 - - -5.0 294.2 Note 10. Goodwill Group Acquisition cost 1 January Purchases/acquisitions Reclassifications Translation differences Accumulated acquisition cost 31 December Amortization 1 January Amortization for the year Translation differences Accumulated amortization 31 December -2,142.2 -1,174.9 -1,174.9 -860.4 -106.9 -698.1 -387.0 -89.8 -521.5 -189.0 12.4 -698.1 Net book value 31 December 16,371.0 12,077.9 3,245.8 Amortization 1 January -179.7 -151.9 -133.9 Sales/disposals Reclassifications Amortization for the year Translation differences Accumulated amortization 31 December 3.1 4.1 -31.8 -17.6 9.5 - -28.5 -8.8 - - -23.0 5.0 -221.9 -179.7 -151.9 Net book value 31 December 186.8 181.1 142.3 A S S A A B L O Y / 2 0 0 1 • 6 5 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 66 Note 12. Tangible fixed assets – buildings Group – land 2001 SEK M 2000 SEK M 1999 SEK M Group Acquisition cost 1 January 2,269.8 1,629.3 1,529.3 Acquisition cost 1 January Purchases/acquisitions Sales/disposals Reclassifications Translation differences Accumulated acquisition cost 31 December 633.8 -15.5 -19.2 172.4 582.8 -17.3 - 75.0 150.1 -1.2 31.8 -80.7 3,041.3 2,269.8 1,629.3 Purchases/acquisitions Sales/disposals Reclassifications Translation differences Accumulated acquisition cost 31 December Depreciation 1 January -651.5 -551.6 -509.2 Depreciation 1 January Sales/disposals Reclassifications Depreciation for the year Translation differences 1.7 7.5 -119.8 -51.0 7.9 - -64.2 -43.6 0.9 - -71.8 28.5 Sales/disposals Depreciation for the year Translation differences Accumulated depreciation 31 December Accumulated depreciation 31 December -813.1 -651.5 -551.6 2001 SEK M 532.9 147.6 -3.4 -1.4 31.6 2000 SEK M 357.9 163.3 - - 1999 SEK M 329.6 48.1 - 1.1 11.7 -20.9 707.3 532.9 357.9 -7.0 - -1.1 -0.4 -8.5 -1.9 -4.7 -0.3 -0.1 -7.0 -1.8 -0.2 - 0.1 -1.9 Net book value 31 December 2,228.2 1,618.3 1,077.7 The taxable value of the Group's Swedish buildings was SEK 53.0 M. The taxable value of the Group's Swedish land was SEK 11.9 M. Net book value 31 December 698.8 525.9 356.0 – machinery Group Acquisition cost 1 January Purchases/acquisitions Sales/disposals Reclassifications Translation differences Accumulated acquisition cost 31 December 2000 SEK M 3,316.3 1,065.0 -68.3 - 1999 SEK M 3,116.1 367.1 -36.7 - – equipment Group 2001 SEK M Acquisition cost 1 January 1,109.6 Purchases/acquisitions 416.8 2000 SEK M 883.5 393.3 Sales/disposals Reclassifications -114.8 -209.1 5.8 - 1999 SEK M 802.2 139.8 -40.8 4.2 208,0 -130,2 Translation differences 109.6 41.9 -21.9 Parent Company 2001 SEK M 2000 SEK M 24.0 5.8 -4.1 - - 19.6 6.4 -2.0 - - 2001 SEK M 4,521.0 1,373.8 -338.3 27.8 382,9 5,967.2 4,521.0 3,316.3 Accumulated acquisition cost 31 December 1,527.0 1,109.6 883.5 25.7 24.0 Depreciation 1 January -2,606.7 -2,228.0 -2,065.6 Depreciation 1 January -594.3 -586.6 -531.4 -10.6 Sales/disposals Reclassifications Depreciation for the year Translation differences 280.9 -4.5 -491.4 -235.8 59.6 - -359.1 -79.2 22.4 - -275.5 90.7 Sales/disposals Reclassifications 97.3 -3.7 163.9 - 36.1 -1.8 Depreciation for the year -216.6 -146.4 -108.0 Translation differences -65.5 -25.2 18.5 2.0 - -4.1 - -8.0 1.3 - -3.9 - Accumulated depreciation 31 December -3,057.5 -2,606.7 -2,228.0 Net book value 31 December 2,909.7 1,914.3 1,088.3 Accumulated depreciation 31 December Net book value 31 December -782.8 -594.3 -586.6 -12.7 -10.6 744.2 515.3 296.9 13.0 13.4 66 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 67 Note 13. Financial fixed assets Share holdings in subsidiaries Org. number, reg. Office Number of shares Share capital % ASSA ABLOY Sverige AB Timelox AB ASSA ABLOY OY ASSA ABLOY Norge a.s. ASSA ABLOY Danmark A/S ASSA ABLOY Deutschland GmbH ASSA ABLOY France SAS ASSA ABLOY Ltd, (UK) C.E. Marshall (Wolverhampton) Ltd Yale Security Products SpA Mul-T-Lock Ltd ASSA ABLOY Holdings (SA) Ltd Trathfix Properties Proprietary Ltd ASSA ABLOY Inc Abloy Holdings Ltd 556061-8455 Eskilstuna 556214-7735 Landskrona 699.757 Joensuu 979207476 Moss CVR 10050316 Herlev HR B 66227 Berlin 412140907 R.C.S. Nanterre 2096505 Croydon 1233859 Willenhall 79370 Aprilia, Latina 520036583 Yavne 05736293/07 Robertsham 05/30556/06 Robertsham 39347-83 Salem, Oregon 1148165260 St Laurent, Can ASSA ABLOY Australia Pacific Pty Ltd ACN 095354582 Oakleigh, Victoria Lockwood Security Products Pty Ltd ACN 086451907 Oakleigh, Victoria ASSA ABLOY Lockwood Asia Pte Ltd 199804395K Singapore Industrial Cerrajera Scovill, SA de C.V. ICS961204HR7 Mexico D.F. Grupo Industrial Phillips, S.A de C.V. Lips Technology BV ASSA ABLOY Innovation AB Eskilstuna Nyckel AB ASSA ABLOY Treasury S.A. GIP980312169 Mexico 33274584 Amsterdam 556192-3201 Eskilstuna 556180-7156 Eskilstuna 1198-192123 Geneva ASSA ABLOY Reinsurance S.A. CH-660-1690000-9 Geneva Whaig Ltd ASSA ABLOY Asia Pacific Ltd Total EC21330 Bermuda 53451 Hong Kong Share holdings in associated companies 70 15,000 800,000 150,000 500 2 2,000,000 1,330,000 526,000 2,001 15,393,225 200,000 120 100 1 8,190,000 1,070 100,000 84,558,936 27,036,635 400 2,500 1,000 72,300,000 300,000 100,100 400,000 100 100 100 100 100 100 100 100 100 100 89 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Org. number, reg. Office Number of shares Share capital % 934372816 Bergen 00008028 Bogota HR M71690 Mechelen 8727 Pavia 305 182682 145 - 50 29 50 25 Låsgruppen Wilhelm Nielsen AS Cerraduras de Colombia Cerracol S.A MAB Glass Europe NV Renato Fattorini SRL Others Total Note 14. Inventory Group Materials & inventory items Work in progress Finished goods Paid in advance Total 31 Dec. 2001 SEK M 1,027.2 1,209.2 1,554.8 20.8 3,812.0 31 Dec. 2000 SEK M 650.2 1,125.9 1,012.3 20.0 2,808.4 31 Dec. 1999 SEK M 419.3 574.0 559.9 11.5 1,564.7 Book value SEK M 14.0 40.0 631.1 154.8 131.4 700.8 472.7 959.9 79.4 645.6 1,012.4 182.5 5.5 2,194.2 12.6 43.8 226.7 28.4 224.6 861.0 0.2 1.0 0.4 11,353.5 17.3 566.7 64.9 20,625.4 Book value SEK M 13.1 2.8 2.6 1.2 3.1 22.8 A S S A A B L O Y / 2 0 0 1 • 6 7 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 68 Note 15. Shareholders equity Group 31 Dec. 2001, SEK M Opening balance 1 January 2001 Converted shares Dividend Transfers between restricted and unrestricted reserves Exchange difference for the year Net income Share capital 352.5 1.3 - - - - Restricted reserves 8,578.1 56.9* - 656.2 - - Closing balance 31 December 2001 353.8 9,291.2 Unrestricted reserves 1,728.4 - -317.8 -656.2 497.6 948.6 2,200.6 Total 10,659.0 58.2 -317.8 - 497.6 948.6 11,845.6 * The amount raised through conversion has been reduced by SEK 18.0 M which represents the associated transaction costs. Parent Company 31 Dec. 2001, SEK M Opening balance 1 January 2001 Converted shares Dividend Net Income Share capital Premium reserve Restricted reserves Unrestricted reserves 352.5 1.3 - - 6,809.6 74.9 - - 645.4 - - - 3,725.6 - -317.8 448.9 3,856.7 Total 11,533.1 76.2 -317.8 448.9 11,740.4 Closing balance 31 December 2001 353.8 6,884.5 645.4 Total number of shares at 31 December 2001 Series A shares Series B shares Total Voting rights Number of shares 191,753,230 334,576,089 526,329,319 19,175,323 334,576,089 353,751,412 Note 16. Untaxed reserves Parent Company SEK M Difference between book depreciation and planned depreciation Profit equalization reserve 1995 Profit equalization reserve 1996 Total 31 Dec. 2001 31 Dec. 2000 - - - - 3.2 11.4 3.8 18.4 Note 17. Long-term liabilities falling due for payment later than five years after the financial year Group SEK M 31 Dec. 2001 31 Dec. 2000 31 Dec. 1999 Liabilities to credit institutions Other liabilities Total 59.2 0.9 60.1 18.8 0.9 19.7 7.2 0.9 8.1 68 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 69 Note 18. Corporate credit line Check credits for the Group were SEK 621.2 M (636.3) of which SEK 215.3 M (149.4) were used. Note 19. Convertible debenture loans SEK M 31 Dec. 2001 31 Dec. 2000 31 Dec. 1999 1,104.9 250.0 298.6 The convertible debenture loan 97/02 has a variable interest rate equivalent to the 12 month STIBOR less 0.25 percent. The loan terms are from 8 December 1997 to 2 December 2002. Convertible debenture loan 97/02 can be converted to Series B shares between 1 December 2000 and 15 November 2002 inclusive. Full conversion of the convertible debenture loan, at a conversion rate of SEK 58.70, would give 4,258,944 shares. INCENTIVE 2001 has a variable interest rate equivalent to 0,9* Euribor + 54 basis points. Conversion of the Convertible Bonds in INCENTIVE 2001 can happen from October 2006. Full conversion, at a conversion rate of EUR 15.80 for Bond 1, EUR 19.00 for Bond 2, EUR 22.10 for Bond 3 and EUR 25.30 for Bond 4 would create 5,017,432 shares.The total Program amounts to EUR 100 M. Note 20. Accrued expenses and prepaid income Group Parent Company SEK M 31 Dec. 2001 31 Dec. 2000 31 Dec. 1999 31 Dec. 2001 31 Dec. 2000 Accrued expenses, personnel Interest expenses Other Total 581.3 83.3 1,196.7 1,861.3 493.6 167.0 1,118.4 1,779.0 417.3 46.5 423.1 886.9 18.1 49.0 55.7 122.8 12.1 136.4 6.9 155.4 Note 21. Assets pledged Group SEK M 31 Dec. 2001 31 Dec. 2000 31 Dec. 1999 Relating to long-term liabilities to credit institutions: Real estate mortgages Chattel mortgages Total 48.3 0.3 48.6 2.0 1.8 3.8 24.0 2.1 26.1 Note 22. Contingent liabilities SEK M Guarantees Guarantees on behalf of subsidiaries Other Total Group Parent Company 31 Dec. 2001 31 Dec. 2000 31 Dec. 1999 31 Dec. 2001 31 Dec. 2000 89.8 257.9 2.2 349.9 88.6 374.3 - 462.9 90.6 75.2 112.7 278.5 64.0 5,153.2 - 5,217.2 3.1 287.5 - 290.6 A S S A A B L O Y / 2 0 0 1 • 6 9 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 70 Note 23. Average number of employees per country, by gender Group Women 2001 2000 1999 457 439 263 132 443 908 50 912 75 430 51 420 41 1,955 1,469 364 80 238 245 739 83 96 127 10,017 Sweden Finland Norway Denmark Germany United Kingdom Belgium France The Netherlands Czech Republic Canada Australia New Zealand USA China Romania Israel Italy Africa Mexico Spain South America Other Total Parent Company 409 435 298 132 424 404 56 893 35 442 32 392 10 370 390 289 129 351 52 47 755 8 413 27 460 11 1,331 1,036 557 404 78 86 57 121 66 25 7 459 - - - - 33 2 108 6,795 103 4,942 Men 2001 630 695 536 158 632 975 80 2000 1999 570 673 602 159 604 452 77 520 615 586 149 368 97 70 1,409 1,415 1,255 179 345 175 575 62 4,078 1,203 360 270 260 422 604 145 219 182 83 354 62 567 35 20 355 42 603 39 2,784 2,364 416 362 185 103 107 143 99 71 163 18 399 - - - - 49 8 155 7,712 14,194 10,086 Total 2001 1,087 1,134 799 290 1,075 1,883 130 2,321 254 775 226 995 103 6,033 2,672 724 350 498 667 1,343 228 315 309 2000 979 1,108 900 291 1,028 856 133 1999 890 1,005 875 278 719 149 117 2,308 2,010 118 796 94 959 45 4,115 973 766 263 189 164 264 165 96 271 28 768 69 1,063 50 3,400 25 858 - - - - 82 10 258 24,211 16,881 12,654 Sweden 17 14 9 17 17 12 34 31 21 Note 24. Cash and cash equivalents SEK M Cash and bank balances Short-term investments Cash and cash equivalents Group 2001 892.7 525.7 1,418.4 2000 732.1 747.4 1,479.5 1999 195.1 1.1 196.2 Parent Company 2001 51.1 7.9 59.0 2000 79.2 337.7 416.9 Short-term investments in the Consolidated balance sheet at the end of the financial year were SEK 800.0 M (1,020.0), of which SEK 274.3 M (272.4) were non-realizable receivables with a term to maturity of more then three months and investments in securities. These items are not classified as cash or cash equivalents and are not included in the above table. Short-term investments in the Parent Company were SEK 160.6 M (490.6). 70 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 71 Note 25. Cash flow Group Adjustment for non-cash items Sale of fixed assets Change in provisions for pensions Adjustment for non-cash items Paid and received interest Paid interest Received interest Paid and received interest Change in working capital Inventory increase/decrease (-/+) Accounts receivable increase/decrease (-/+) Other receivables increase/decrease (-/+) Trade and other payables increase/decrease (+/-) Change in working capital Purchase of tangible fixed assets Purchase of tangible fixed assets Sale of tangible fixed assets Purchase of tangible fixed assets Investments in subsidiaries Acquired capital employed - whereof goodwill Acquired minority share holdings Less acquired net debt Less minority interests acquired Total purchase price Less acquired cash Less purchase price not yet paid Less paid with own shares Less reclassification from shares in associated companies Less reclassification from other shares Less purchase price received for sold companies Less/Additional unpaid parts of purchase price from previous years Investments in subsidiaries Investments in associated companies Investments in associated companies Investments in associated companies Other investments Investments in other shares and participations Investment and sale of other financial assets Other investments Cash and cash equivalents Cash and cash equivalents at 1 January Cash flow Effect of exchange rate differences Cash and cash equivalents at 31 December (Note 24) 2001 SEK M - 43.0 43.0 SEK M 2001 -883.2 65.8 -817.4 SEK M 2001 170.2 310.4 -30.9 -526.8 -77.1 SEK M 2001 -986.1 156.2 -829.9 SEK M 2001 6,874.7 4,263.6 446.5 -82.2 -259.4 6,979.6 -50.7 -163.0 - -53.5 - - -425.5 6,286.9 SEK M 2001 - - SEK M 2001 - 4.6 4.6 SEK M 2001 1,479.5 -221.6 160.5 1,418.4 2000 SEK M -2.0 0.4 -1.6 SEK M 2000 -387.3 30.4 -356.9 SEK M 2000 -41.0 14.1 -56.3 -11.1 -94.3 SEK M 2000 -604.3 107.4 -496.9 SEK M 2000 12,172.6 8,414.1 - -1,142.7 -249.3 10,780.6 -2 328.9 -107.8 -2,865.9 -114.0 -330.4 -396.0 34.8 4,672.4 SEK M 2000 - - SEK M 2000 - -19.9 -19.9 SEK M 2000 196.2 1,218.9 64.4 1,479.5 1999 SEK M -0.9 2.8 1.9 SEK M 1999 -230.0 3.3 -226.8 SEK M 1999 -3.7 -111.3 -17.1 105.0 -27.1 SEK M 1999 -432.2 42.0 -390.2 SEK M 1999 1,440.4 838.2 - -514.9 -208.6 716.8 -60.5 -34.8 - - - - - 621.5 SEK M 1999 -3.9 -3.9 SEK M 1999 -338.8 -59.6 -398.4 SEK M 1999 121.4 90.3 -15.5 196.2 A S S A A B L O Y / 2 0 0 1 • 7 1 31998_ASSA_Siffror_E_DS 02-03-14 13.25 Sida 72 Audit report: To the General Meeting of the shareholders of assa abloy ab (publ.) Corporate identity number 556059-3575 I have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President of assa abloy ab (publ.) for the financial year 2001. These accounts and the administration of the Company are the responsibility of the Board of Directors and the President. My responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on my audit. I conducted my audit in accordance with generally accepted auditing standards in Sweden. Those standards require that I plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclo- sures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the President, as well as evaluating the over- all presentation of information in the annual accounts and the consolidated accounts. As a basis for my opinion concerning discharge from liability, I examined significant decisions, actions taken and circumstances of the Company in order to be able to determine the liability, if any, to the Company of any Board member or the President. I also examined whether any Board member or the President has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. I believe that my audit provides a reasonable basis for my opinion set out below. The annual accounts and the consolidated accounts have been prepared in accordance with the Annual Accounts Act and, thereby, give a true and fair view of the Company’s and the Group’s financial position and results of operations in accordance with generally accepted accounting principles in Sweden. I recommend to the General Meeting of shareholders that the income statements and balance sheets of the Parent Company and the Group be adopted, that the profit for the Parent Company be dealt with in accordance with the proposal in the administration report and that the members of the Board of Directors and the President be discharged from liability for the financial year. Stockholm 9 February 2002 Anders Lundin Authorized Public Accountant PricewaterhouseCoopers AB 72 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Siffror_E_DS 02-03-14 13.26 Sida 73 ASSA ABLOY’s Board of Directors Georg Ehrnrooth Chairman Born 1940. Master of Science (Engineering). Board Chairman: Varma-Sampo Mutual Pension Insurance Co and Vice Chairman of Rautaruukki Oyj. Board Member: Wärtsilä Oyj Abp, Nokia Oyj Abp, Sampo Oyj Abp, Sandvik AB and Oyj Karl Fazer Abp. Member of the ASSA ABLOY Board since 1994. Holdings through company: 251,680 Series B shares. Gustaf Douglas Born 1938. MBA, Harvard Business School. Principal owner of Latour and SäkI. Board Chairman: Latour AB, Fagerhult, Boxholms Skogar AB, Stockholm Chamber of Commerce, SäkI AB and IFS AB. Vice Chairman: Attendo Senior Care and Securitas AB. Board Member: The Svenska Dagbladet Foundation. Member of the ASSA ABLOY Board since 1994. Holdings through Investment AB Latour: 20,400,000 Series B shares. Through SäkI AB: 7,118,818 Series A shares and 986,000 Series B shares. Göran J. Ehrnrooth Born 1934. Master of Science, Economics. Board Chairman: Fiskars Oyj Abp. Board Member: Wärtsilä Oyj Abp. Member of the ASSA ABLOY Board since 1999. Holdings: nil. Carl-Henric Svanberg President & CEO Born 1952. Master of Science, Bachelor of Economics. President & CEO of the ASSA ABLOY Group since the Group was formed. Board Member: Hexagon AB. Member of the ASSA ABLOY Board since 1994. Holdings: 3,906,471 Series B shares and convertibles corresponding to 442,725 Series B shares. Gösta Johnsson Born 1942. Union trustee at Assa AB, employee representative, Federation of Salaried Employees in Industry and Ser- vices. Chairman of EWC within ASSA ABLOY since 1996. Member of the ASSA ABLOY Board since 1997. Holdings: convertibles corresponding to 6,432 Series B shares. Deputy members Lisbeth Staaf Born 1955. Union trustee at FIX AB. Board Member: Medichus AB. Member of the ASSA ABLOY Board since 1999. Holdings: nil. Melker Schörling Vice Chairman Born 1947. Master of Business Administration. Board Chairman: Securitas AB, Hexagon AB, Karlshamns AB and Attendo Senior Care. Board Member: Cardo AB, Hennes & Mauritz AB, Skandia AB. Member of the ASSA ABLOY Board since 1994. Holdings privately and through company: 1,510,080 Series A shares and 10,499,930 Series B shares. Per-Olof Eriksson Born 1938. Master of Engineering, Doctor of Technology, Hon. Bachelor. Board Chairman: Svenska Kraftnät, Thermia AB, Odlander, Fredriksson & Co and Sapa AB. Board Member: Sandvik AB, AB Custos, Svenska Handelsbanken, SSAB Svenskt Stål AB, Preem Petroleum AB, Skanska AB, and AB Volvo. Member of the Royal Swedish Academy of Engineering Sciences. Member of the ASSA ABLOY Board since 1995. Holdings directly and through company: 4,567 Series B shares and convertibles corresponding to 6,520 Series B shares. Sven-Christer Nilsson Born 1944. Bachelor of Science. Partner in Startupfactory, a venture capital company. Board Chairman: Utfors AB. Board Member: Traction AB, Parthus Technologies plc (Ireland), Northstream AB and Establish AB. Member of the ASSA ABLOY Board since 2001. Holdings: nil. Mats Persson Born 1955. Union trustee at Assa AB, employee representative, Swedish Metal Workers Union. Member of the ASSA ABLOY Board since 1994. Holdings: nil. Per-Edvin Nyström Born 1955. Union trustee at Assa Industri AB, employee representative, Swedish Metal Workers Union. Member of the ASSA ABLOY Board since 1994. Holdings: 1,207 Series B shares and convertibles corresponding to 6,426 Series B shares. Auditor: Anders Lundin Born 1956. Authorized Public Accountant, PricewaterhouseCoopers AB. Auditor for the Assa Group since 1988 and for ASSA ABLOY since 1994. A S S A A B L O Y / 2 0 0 1 • 7 3 31998_ASSA_Siffror_E_DS 02-03-14 13.26 Sida 74 From left: Eero Leskinen, Hans Johansson, Anna Bernsten, Åke Sund, Matti Virtaala, Bo Dankis, Carl-Henric Svanberg, Clas Thelin, Göran Jansson, Geoff Norcott and Ulf Södergren. Other members of Group Management Dag Schjerven Born 1954. Master of Business Administration President of VingCard a.s. and head of the VingCard Group. Employed since October 1999. Holdings: convertibles corresponding to 112,500 Series B shares. C.K. Jeang Born 1955. Master of Business Administration and Science in Engineering. President and CEO for ASSA ABLOY Asia Limited. Employed since August 2000. Holdings: convertibles corresponding to 32,500 Series B shares. Thanasis Molokotos Born 1958. Master of Science. President and CEO of ASSA ABLOY North America Architectural Hardware Group. Employed since 1996. Holdings: 30,000 Series B shares and convertibles corresponding to 95,000 Series B shares. 74 • A S S A A B L O Y / 2 0 0 1 31998_ASSA_Siffror_E_DS 02-03-14 13.26 Sida 75 ASSA ABLOY’s Group Management Executive Management and Group Vice Presidents Matti Virtaala Born 1951. Bachelor of Science (Engineering). President of Abloy Oy and Responsible for Finland. Group Vice President of ASSA ABLOY. Employed since the Group was formed. Board Member: Tulikivi Oyj and GWS Systems Oy. Holdings: 438,058 Series B shares and convertibles corresponding to 66,513 Series B shares. Clas Thelin Born 1954. Master of Science. Responsible for ASSA ABLOY North America Inc. Group Vice President of ASSA ABLOY. Employed since the Group was formed. Holdings: 218,971 Series B shares and convertibles corresponding to 66,513 Series B shares. Ulf Södergren Born 1953. Master of Science, Bachelor of Economics. Group Vice President of ASSA ABLOY, Operations. Employed since May 2000. Holdings: Convertibles corresponding to 140,000 Series B shares. Geoff Norcott Born 1947. Hon. Bachelor of Engineering (Industrial), 1st Class. Responsible for ASSA ABLOY UK and ASSA ABLOY South Pacific. Group Vice president of ASSA ABLOY Employed since August 2000. Holdings: Convertibles corresponding to 142,069 Series B shares. Anna Bernsten Born 1961. Master of Science. Vice President of ASSA ABLOY, Corporate Communications. Employed since October 2000. Holdings: 665 Series B shares and convertibles corresponding to 15,000 Series B Shares. Carl-Henric Svanberg Born 1952. Master of Science, Bachelor of Economics. President & CEO of the ASSA ABLOY Group since the Group was formed. Board Member: Hexagon AB. Member of the ASSA ABLOY Board since 1994. Holdings: 3,906,471 Series B shares and convertibles corresponding to 442,725 Series B shares. Bo Dankis Born 1954. Master of Science. Responsible for ASSA ABLOY South Europe. Group Vice President of ASSA ABLOY. Employed since 1997. Holdings: 86,000 Series B shares and convertibles corresponding to 11,888 Series B shares. Göran Jansson Born 1958. Graduate Diploma in Business Administration. Chief Financial Officer. Employed since 1997. Holdings: 331,600 Series B shares and convertibles corresponding to 66,513 Series B shares. Hans Johansson Born 1955. Master of Science. Responsible for ASSA ABLOY Scandinavia. Group Vice President of ASSA ABLOY. Employed since the Group was formed. Holdings: 640,000 Series B shares and convertibles corresponding to 66,513 Series B shares. Eero Leskinen Born 1956. Master of Science. Responsible for ASSA ABLOY Central Europe. Group Vice President of ASSA ABLOY. Employed since the Group was formed. Holdings through company: 729,745 Series B shares and convertibles corresponding to 66,513 Series B shares. Åke Sund Born 1957. Graduate Diploma in Marketing. Group Vice President of ASSA ABLOY, Market Development and Emerging Markets. Employed since the Group was formed. Holdings: 234,231 Series B shares and convertibles corresponding to 66,513 Series B shares. Tzachi Wiesenfeld Born 1958. Master of Business Administration BSc (Bachelor of Science) in Industrial Engineering. President and CEO of Mul-T-Lock in Israel. Employed since 1999. Holdings: nil Joseph J. Grillo Born 1957. Bachelor of Finance and Economics. President and CEO of ASSA ABLOY Identification Technology Group. Employed since 2001. Holdings: convertibles corresponding to 32,500 Series B Shares. A S S A A B L O Y / 2 0 0 1 • 7 5 31998_ASSA_Siffror_E_DS 02-03-14 13.26 Sida 76 Addresses: HEAD OFFICE: ASSA ABLOY AB P.O. Box 70340 (Klarabergsviadukten 90) 107 23 Stockholm, Sweden Tel: +46 8 506 485 00 Fax: +46 8 506 485 85 Asia ASSA ABLOY ASIA PACIFIC LTD 1314 Park-In Commercial Centre 56 Dundas Street, Mongkok Kowloon, Hong Kong Tel: +852 2260 7220 Fax: +852 2834 7943 ASSA ABLOY Hong Kong 1314 Park-In Commercial Centre 56 Dundas Street, Mongkok Kowloon, Hong Kong Tel: +852 2260 7220 Fax: +852 2834 7943 ASSA ABLOY Malaysia Sdn Bhd No. 1 & 3, Ground & Second Floor Jalan 2/27F Kuala Lumpur Satellite Centre (KLSC) Section 5, Wangsa Maju 53300 Kuala Lumpur Tel +60-3-4142 8622 Fax +60-3-4142 9622 ASSA ABLOY Singapore PTE LTD. Blk 211 Henderson Road #12-04 Henderson Ind. Park Singapore 159552 Tel: +65 274 48 68 Fax: +65 274 53 57 ASSA ABLOY Thailand Ltd 4 Soi Pattanakarn 41, Pattanakarn Rd. Kwang Suanluang 0250 City Khet Suanluang Bangkok Tel +662-722 737 /ext. 1-4 Fax +662-722-737 /ext. 5-6 Australia ABLOY SECURITY PTY LTD Unit 5, 372 Eastern Valley Way Chatswood, NSW 2068 Tel: +61 2 9882 6066 Fax: +61 2 9882 6050 LOCKWOOD SECURITY PRODUCTS PTY LTD P.O. Box 42 Oakleigh Victoria 3166 Tel: +61 3 8574 3888 Fax: +61 3 8574 3400 TRIMEC TECHNOLOGY PTY LTD 5/23 Resolution Drive Caringbah, NSW 2229 Tel: +61 2 9524 0911 Fax: +61 2 9525 7390 Belgium DUPÉRAY S.A Rue van Ysendijck 48-50 1030 Brussels Tel: +32 2 247 79 11 Fax: +32 2 216 17 49 76 • A S S A A B L O Y / 2 0 0 1 LITTO N.V. Canadalaan 73 8620 Nieuwpoort Tel: +32 58 23 41 01 Fax: +32 58 23 89 64 Brazil LA FONTE SISTEMAS DE SEGURANCA LTDA Rua Augusto Ferreira de Moraes, 618 – Socorro CEP 04763-001 São Paulo Tel: +55 11 5693 4700 Fax: +55 11 5521 9803 Canada ASSA ABLOY OF CANADA 3475 14th Avenue Markham, Ontario L3R 0H4 Tel: +1 905 940 2040 Fax: +1 905 940 3242 ABLOY CANADA Inc. 9630 Trans Canada Hwy. Montreal, QC H4S 1V9 Tel: +1 514 335 9500 Fax: +1 514 335 0430 FLEMING DOOR PRODUCTS LTD 20 Barr Road Ajax, Ontario L1S 3X9 Tel: +1 905 683 3667 Fax: +1 905 427 1668 MEDECO CANADA 545 Parkside Drive Waterloo, Ontario N2L 5E7 Tel: +1 519 888 7000 Fax: +1 519 888 6134 YALE-CORBIN CANADA LIMITED 6940 Edwards Blvd. Mississauga, Ontario L5T 2W2 Tel: +1 905 564 5854 Fax: +1 905 564 8182 China ASSA ABLOY ASIA PACIFIC LTD Room 1314 Park-In Commercial Centre 56 Dundas Street, Mongkok Kowloon, Hong Kong Tel: +852 2260 7220 Fax: +852 2834 7943 GULI SECURITY PRODUCTS LIMITED 33-35 Chrysanthemum Road East Xiaolan, Zhongshan Guangdong 528415 Tel: +86 760 210 2326 Fax: +86 760 210 0316 Czech Republic FAB A.S Strojnická 633, 516 21 Rychnov nad Kneznov Tel: +420 445 511 111 Fax: +420 445 534 641 ABLOY CZECH S.R.O Kounicka 70 100 00 Praha 10 Tel: +420 2 74 822 585 Fax: +420 2 74 822 540 Denmark FIX A/S Baunehøjvej 9 8600 Silkeborg Tel: +45 86 81 61 22 Fax: +45 86 81 00 26 RUKO A/S Postboks 505 2730 Herlev Tel: +45 44 54 44 54 Fax: +45 44 54 44 44 RUKO SERVICE A/S Postbox 505 Marielundvej 20 2730 Herlev Tel: +45 44 54 44 54 Fax: +45 44 54 44 44 M. SLOTH & CO. A/S Marielundsvej 20 2730 Herlev Tel: +45 36 41 28 88 Fax: +45 44 54 44 44 Estonia ABLOY OY EESTI FILIAAL Pärnu mnt. 139 F 113 17 Tallinn Tel: +372 6 50 45 90 Fax: +372 6 50 45 91 ASSABALT LTD Valdeku 132, 112 16 Tallinn Tel: +372 6 559 101 Fax: +372 6 559 100 Finland ABLOY OY P.O. Box 108 80101 Joensuu Tel: +358 13 2501 Fax: +358 13 250 2209 BJÖRKBODA LÅS OY AB 25860 Björkboda Tel: +358 2 424 402 Fax: +358 2 424 249 France ASSA ABLOY SOUTH EUROPE BP 524 10081 Troyes, Cedex Tel: +33 3 25 42 30 71 Fax: +33 3 25 43 40 04 BEZAULT S.A 25, rue Michel-Couet 49160 Longué Jumelles Tel: +33 2 41 53 21 00 Fax: +33 2 41 38 81 45 31998_ASSA_Siffror_E_DS 02-03-14 13.26 Sida 77 FICHET SERRURERIE BATIMENT B.P. 1080 76260 Eu Tel: +33 3 22 61 27 00 Fax: +33 3 22 61 27 27 JPM S.A. 40 Route de Paris Avermes 03021 Moulins Cedex Tel: +33 4 70 48 40 00 Fax: +33 4 70 48 40 96 LAPERCHE S.A B.P 5 80531 Friville Cedex Tel: +33 3 22 60 31 00 Fax: +33 3 22 30 17 18 STREMLER S.A. Route Nationale 80860 Nouvion-en-Ponthieu Tel: +33 3 22 23 76 00 Fax: +33 3 22 23 76 09 VACHETTE S.A BP 524 10081 Troyes Cedex Tel: +33 3 25 42 30 30 Fax: +33 3 25 42 40 04 Germany ASSA-RUKO SICHERHEITSSYSTEME GMBH Vogelsanger Strasse 187 50825 Köln Tel: +49 221 54 30 76 Fax: +49 221 54 18 95 BAB-IKON GMBH SCHLIESSTECHNIK Postfach 600419 14404 Potsdam Tel: +49 331 288 80 Fax: +49 331 288 8106 IKON AG PRÄZISIONSTECHNIK P.O.Box 370220, 14132 Berlin Tel: +49 30 810 60 Fax: +49 30 810 626 00 EFFEFF FRITZ FUSS GMBH & CO. Postfach 100490 72425 Albstadt-Ebingen Tel: +49 7431 123 0 Fax: +49 7431 123 240 KESO DEUTSCHLAND GMBH Maurerstrasse 6 21244 Buchholz i.d.N. Tel: +49 4181 9240 Fax: +49 4181 924 100 WILHELM DÖRRENHAUS GMBH Postfach 100180 42501 Krone bei Velbert Tel: +49 2056 98 270 Fax: +49 2056 98 2798 Hungary ASSA ABLOY HUNGARY KFT. 1125 Budapest Kútvölgyi út. 23 Tel: +36 1 214 1622 Fax: +36 1 214 1623 Israel MUL-T-LOCK ISRAEL LTD. P.O. Box 637 Yavne 81104 Tel: +972 8 9424 333 Italy MAB MASELLIS INDUSTRIALE S.P.A. Via Del Tuscolano 6 401 28 BOLOGNA Tel: +39 051 321 567 Fax: +39 051 325 108 NUOVA F.E.B. S.R.L. Via Seragnoli, 7 401 38 BOLOGNA Tel: +39 051 60300 11 Fax: +39 051 60137 81 YALE CORNI SISTEMI DI SICUREZZA S.P.A. Viale delle Nazioni 66 411 00 Modena Tel: +39 059 413 111 Fax: +39 06 928 945 80 YALE SECURITY GROUP ITALY Via dei Rutuli 74/76 040 11 Aprilia (LT) Tel: +39 06 928 941 Fax: +39 06 928 945 80 Mexico GRUPO INDUSTRIAL PHILLIPS S.A. DE C.V. 16 de Septiembre 105 553 70 Naucalpan Tel: +52 21 22 0512 Fax: +52 5 576 5402 TESA S.A. DE C.V. Avenida 8 de Julio No. 2722 Zona Industrial (Z.I.) Gualadajara, Jalisco C.P. 44940 Tel: +52 33 3668 0110 YALE SECURITY MEXICO Viaducto Rio de La Piedad, 525-A Colonia Granjas Mexico 8400 D.F. Mexico Tel: +52 55 58 030800 Fax: +52 55 58 030872 Netherlands AMBOUW B.V Postbox 199 3870 CD Hoevelaken Tel: +31 33 25 35 014 Fax: +31 33 25 35 064 LIPS NEDERLAND B.V. P.O. Box 59 3300 AB Dordrecht Tel: +31 78 639 4041 Fax: +31 78 639 4605 New Zealand INTERLOCK GROUP LIMITED P.O. Box 15 6, Portsmouth Road 103, Miramar, Wellington Tel: +64 4 388 8355 Fax: +64 4 388 8353 LOCKWOOD ARROW N.Z 9B Mahunga Drive, Mangere Bridge, Auckland, Tel: +64 9 634 5590 Fax: +64 9 634 5589 Norway ELSAFE INTERNATIONAL A.S. 7120 Leksvik Tel: +47 74 85 35 00 Fax: +47 74 85 80 30 LÅSGRUPPEN A.S PB 454 Brakerøya 3002 Drammen Tel: +47 32 80 98 00 Fax: +47 32 80 98 52 TRIOVING A.S Postboks 510 Høyden 1522 Moss Tel: +47 69 24 52 00 Fax: +47 69 24 52 50 VINGCARD A.S (HEADQUARTERS) P.O. Box 511 1411 Kolbotn Tel: +47 66 81 40 00 Fax: +47 66 81 40 50 VINGCARD PRODUKSJON P.O. Box 511 1522 Moss Tel: +47 69 24 50 00 Fax: +47 69 24 50 50 Poland ASSA ABLOY POLAND SP. ZO.O. ul Warszawska 76 05-092 Lomianki Tel: +48 22 751 40 25 Fax: +48 22 751 53 56 Portugal ASSA PORTUGUESA, LDA Avenida da Quinta Grande, 89D Alfragide (Norte) 2720-483 Amadora Tel: +351 21 471 96 23 Fax: +351 21 471 96 25 Romania S.C. ASSA ABLOY ROMANIA S.R.L. Str, Mircea Cel Batran, Nr 30-34 2200 Brasov Tel: +40 68 420 131 Fax: +40 68 420 131 S.C. URBIS SECURITY S.R.L. Preciziei Street, No. 5, B-Dul, Sector 6 77562 Bucharest Tel: +40 1 434 0945 Fax: +40 1 221 1578 A S S A A B L O Y / 2 0 0 1 • 7 7 31998_ASSA_Siffror_E_DS 02-03-14 13.26 Sida 78 Russia ABLOY OY REPR. OFFICE Visiting address: Prospekt Vernadskogo 78 E 117454 Moscow Tel: +7 095 937 5090 Fax: +7 095 937 5091 Mail address: ABLOY OY MOSCOW P.O. Box 335 535 01 Lappeenranta, Finland Slovak Republic FAB SLOVAKIA S.R.O. - Projects Division Skolská 14 811 07 Bratislava Tel: +421 2 434 139 93 Fax: +421 2 434 139 93 ABLOY SLOVAKIA S.R.O. Caratovski 26 A 841 02 Bratislava Tel: +421 2 434 139 93 Fax: +421 2 434 139 93 South Africa ASSA ABLOY (SA) (PTY) LTD P.O. Box 82682 Southdale 2135 Tel: +27 11 681 4800 Fax: +27 11 760 1471 Spain ASSA ABLOY IBERICA, S.L. Basabe 3 20550 Aretxabaleta (Gipuzkoa) Tel: +34 943 71 25 84 Fax: +34 943 79 62 96 AZBE B. ZUBIA S.A. Basabe 3, P.O. Box 13 20550 Aretxabaleta (Gipuzkoa) Tel: +34 943 71 29 29 Fax: +34 943 79 86 43 TESA Tallares de Escoriaza S.A. Bario de Ventas no. 35 IRUN 20305 Tel: +34 943 66 91 00 Fax: +34 943 63 32 21 Sweden ASSA AB P.O. Box 371 631 05 Eskilstuna Tel: +46 16 17 70 00 Fax: +46 16 17 70 49 ASSA INDUSTRI AB P.O. Box 371 631 05 Eskilstuna Tel: +46 16 17 70 00 Fax: +46 16 17 70 18 AB FAS LÅSFABRIK P.O. Box 60 631 02 Eskilstuna Tel: +46 16 17 02 33 Fax: +46 16 17 02 17 78 • A S S A A B L O Y / 2 0 0 1 AKI LÅSGROSSISTEN AB P.O. Box 42115 126 12 Stockholm Tel: +46 8 449 24 00 Fax: +46 8 18 74 30 FIX AB Bruksgatan 17 414 51 Gothenburg Tel: +46 31 704 40 00 Fax: +46 31 14 23 55 SOLID AB Sjöviksbacken 24 pl. 8 117 43 Stockholm Tel: +46 8 685 10 00 Fax: +46 8 685 10 20 TIMELOX AB Lodjursgatan 2 261 44 Landskrona Tel: +46 418 513 00 Fax: +46 418 286 96 Switzerland IKON SA B.P. 275 En Budron A6 1052 Le Mont-sur-Lausanne Tel: +41 21 654 26 66 Fax: +41 21 654 26 60 KESO AG Untere Schwandenstrasse 22 8805 Richterswil Tel: +41 1 787 34 34 Fax: +41 1 787 35 35 ROFU AG Rautistrasse 71 88043 Zürich Tel: +41 1 404 10 60 Fax: +41 1 404 10 67 Ukraine ABLOY OY REPR. OFFICE Marka Vovchka Street 18-A 04073 Kiev Tel: +380 44 418 97 73 Fax: +380 44 430 32 18 United Kingdom ABLOY SECURITY LTD. 2-3 Hatters Lane Croxley Business Park Watford, Hertfordshire WD1 8YY Tel: +44 1923 255066 Fax: +44 1923 230281 ASSA LTD. 75 Sumner Road, Croydon, Surrey CRO 3LN Tel: +44 2086 885191 Fax: +44 2086 880285 C E MARSHALL (WOLVERHAMPTON) LTD. Church Street, Willenhall West Midlands WV13 1QW Tel: +44 1902 364500 Fax: +44 1902 634 908 CHUBB LOCKS CUSTODIAL SERVICES LTD. P.O. Box 61 Wednesfield Road, Wolverhampton West Midlands WV10 0EW Tel: +44 1902 455111 Fax: +44 1902 450185 GRORUD INDUSTRIES LTD. Castleside Industrial Estate, Consett, Co. Durham DH8 8HG Tel: +44 1207 581485 Fax: +44 1207 580036 YALE SECURITY PRODUCTS UK LTD. Wood Street, Willenhall West Midlands WV13 1LA Tel: +44 1902 366911 Fax: +44 1902 368535 United States ASSA ABLOY NORTH AMERICA Inc. P.O Box 9827 New Haven, CT 06536-0827 Tel: +1 203 624 52 25 Fax: +1 203 785 81 08 ABLOY SECURITY INC. 6005 Commerce Drive, Suite 330 Irving, TX 75063 Tel: +1 972 753 1127 Fax: +1 972 753 0792 ARROW LOCK MANUFACTURING CO INC. 10300 Foster Avenue Brooklyn, NY 11236 Tel: +1 718 257 4700 Fax: +1 718 257 32 99 ASSA INC. P.O Box 9453 New Haven, CT 06534-0453 Tel: +1 203 603 5959 Fax: +1 203 603 5953 CORBIN RUSSWIN, INC - CLARKSDALE 600 Hwy. 322 Clarksdale, MS 38614 Tel: +1 662 624 8391 Fax: +1 662 627 9786 CECO DOOR PRODUCTS 9159 Telecom Drive Milan, TN 38358 Tel: +1 731 686 8345 Fax: +1 731 686 4211 CURRIES CO. P.O Box 1648 Mason City, IA 50402-1648 Tel: +1 641 423 1334 Fax: +1 641 423 9104 DOMINION BUILDING PRODUCTS Corporate Headquarters 6949 Fairbanks North Houston Houston, TX 77040 Tel: +1 713 466 6790 Fax: +1 832 467 0290 31998_ASSA_Siffror_E_DS 02-03-14 13.26 Sida 79 EMTEK PRODUCTS INC. 15250 E. Stafford Street City of Industry, CA 91744 Tel: +1 626 961 0413 Fax: +1 626 336 2812 ESSEX INDUSTRIES, INC. P.O. Box 9804 New Haven, CT 06536-0804 Tel: +1 203 624 5225 Fax: +1 203 499 68 40 FOLGER ADAM SECURITY INC. 16300 West 103rd Street Lemont, IL 60439 Tel: +1 630 739 3900 Fax: +1 630 739 6400 GRAHAM MANUFACTURING CORP. P.O. Box 1647 Mason City, IA 50402-1647 Tel: +1 641 423 2444 Fax: +1 641 423 1660 HES, INC. 2040 West Quail Phoenix, AZ 85027 Tel: +1 623 582 4626 Fax: +1 623 582 4641 HID CORPORATION 9292 Jeronimo Road Irvine, CA 92618 Tel: +1 949 598 1600 Fax: +1 949 598 1680 INDALA 3041 Orchard Parkway San Jose, CA 95134-2017 Tel: +1 408 383 4000 Fax: +1 408 434 0365 MCKINNEY PRODUCTS CO 820 Davis Street Scranton, PA 18505-5999 Tel: +1 570 346 7551 Fax: +1 570 342 4845 MEDECO HIGH SECURITY LOCKS 3625 Allegheny Drv. P.O. Box 3075 Salem, VA 24153 Tel: +1 540 380 5000 Fax: +1 540 380 5010 NEL CORPORATION INC. 83 East Ave, Suite 107, Norwalk, CT 06851 Tel: +1 203 866 9283 Fax: +1 203 838 4837 NORTON DOOR CONTROLS 3000 Highway 74 East Monroe, NC 28112 Tel: +1 704 233 4011 Fax: +1 704 233 5053 RIXSON 9100 W. Belmont Avenue Franklin Park, IL 60131 Tel: +1 847 671 5670 Fax: +1 847 671 0574 SARGENT MANUFACTURING CO. P.O. Box 9725 New Haven, CT 06536-0915 Tel: +1 203 562 2151 Fax: +1 203 776 5992 SECURITRON MAGNALOCK CORPORATION 550 Vista Boulevard Sparks, NV 89434 Tel: +1 775 355 5625 Fax: +1 775 355 5633 TRUSSBILT 2112 Old Highway 8 NW New Brighton, MN 55112 Tel: +1 651 633 6100 Fax: +1 651 628 9482 VINGCARD, INC. 9333 Forest Lane Dallas, TX 75243 Tel: +1 972 907 2273 Fax: +1 972 907 2771 YALE RESIDENTIAL SECURITY PRODUCTS, INC. 2725 B Northwoods Parkway Norcross, GA 30071 Tel: +1 678 728 7400 Fax: +1 770 448 1102 YALE SECURITY GROUP 1902 Airport Road Monroe, NC 28110 Tel: +1 704 283 2101 Fax: +1 704 283 9446 Zimbabwe CHUBB UNION ZIMBABWE (PVT) LTD. P.O. Box 2555 Harare Tel: +26 34 759 196 Fax: +26 34 759 194 ASSA ABLOY’s ANALYSTS ANDERS TRAPP ANDERS IDBORG ANDERS JEGERS Enskilda Securities +46 8 5222 97 57 anders.trapp@enskilda.se Carnegie +46 8 676 86 88 andidb@carnegie.se ABG Sundal Collier +44 20 7905 5631 anders.jegers@abgsc.com ANDERS FAGERLUND UBS Warburg +46 8 453 73 30 anders.fagerlund@ubsw.com CLAES RASMUSON HSBC Investment Bank +46 8 454 5510 claes.rasmuson@hsbcib.com CHRISTIAN DIEBITSCH BNP Paribas +44 20 7595 3467 christian.diebitsch@bnpparibas.com JAN DWORSKI CAI Cheuvreux +46 8 723 5175 jdworsky@caicheuvreux.com JOHAN SIVANDER Nordea Securities +46 8 407 9249 johan.sivander@nordeasecurities.com LARS NORRBY Alfred Berg +46 8 7235965 lars.norrby@alfredberg.se MATTIAS KARLKJELL Deutsche Bank +46 8 463 55 00 mattias.karlkjell@db.com MATHIAS WALLERSTRÖM Danske Capital +46 8 56881905 mathias.wallerstrom@danskecapital.com MATTHEW LLOYD Credit Lyonnais Securities +44 20 7214 5558 matthew.lloyd@creditlyonnais.co.uk OLOF JONASSON Handelsbanken Investment Banking +46 8 701 12 51 oljo03@handelsbanken.se PATRIK MARSHALL Credit Suisse First Boston +44 20 7888 0289 patrik.marshall@scsb.com PETER EKLÖF ÖRJAN RÖDEN Nordiska Danske Securities +46 8 791 4784 peter.eklof@nordiska.com +46 8 5688 1500 orjan.roden@danskesecurities.com A S S A A B L O Y / 2 0 0 1 • 7 9 31998_ASSA_Siffror_E_DS 02-03-14 13.26 Sida 80 Photo: Ulf Huett Nilsson and Lennart Ström Illustrations: Ehrenstråhle & Co. English editing: Marcom International. Production: Ehrenstråhle & Co AB. Print: ATT Grafiska, Stockholm 2002. 31998_ASSA_Omslag_E_DS 02-03-14 13.25 Sida 2 Annual Report 2001 31998_ASSA_Omslag_E_DS 02-03-14 13.25 Sida 1 A S S A A B L O Y A n n u a l R e p o r t 2 0 0 1 z e n i t r a M y r r e h T © i ASSA ABLOY AB (publ.) Postal Address: P.O. Box 70340, SE-107 23 Stockholm • Visiting Address: Klarabergsviadukten 90 Phone: +46 (0)8 506 485 00 • Fax: +46 (0)8 506 485 85 Registered No.: SE.556059-3575 • Registered Office: Stockholm, Sweden • www.assaabloy.com 

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