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. ASSA ABLOY was introduced on the Stockholm Stock Exchange (now OM Stockholmsbörsen) on November 8 1994. In October 1995 the share was transferred to the A-list. 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 the ASSA ABLOY Group comprises 100 companies in 40 countries.

> ASSA ABLOY Group Companies

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 markets including the Czech Republic, Slovakia and Romania. Strong positions are also held in Switzerland and Poland. In the North American market, the Group is the second-largest player in USA and with leading positions in Canada and Mexico. Following the successful integration of the Yale companies, South Africa, the Far East and parts of South America have also become strong positions.

In the specialized field of hotel locks, ASSA ABLOY is the world leader through its subsidiaries VingCard and Timelox.

Identification is another area where the Group holds world-leading positions through HID and Indala.

Product segments where the Group is active:

• 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

Responsibility is clearly decentralized to one manager per country, with each country forming a natural building block in the Group's operations. 2001 has been the Group's most challenging and interesting year so far. The Group's participation in the Volvo Ocean Race has proven to be an extremely important and successful tool in the work of integrating 30 new companies and their 12,000 employees. The Race passes through almost all of ASSA ABLOY's important markets. At each stopover local management meetings are being held to build networks and to make sure that everybody understands the Group's overall strategy and quickly adopts its way of working. In total, approximately 1,000 employees are participating in these management meetings to create a deep-rooted commitment to the organization. Attitude surveys are being carried out regularly to assess progress. The results so far are significantly better than expected, and when the boat crosses the finish line at the beginning of June, the work of integration should have reached a stage that would otherwise have taken several more years.

At ASSA ABLOY we have a strong believe that giving employees the opportunity to own shares or convertible bonds in the company strengthens the feeling of belonging. A new EUR 100 M incentive program was launched in the fall 2001. More than 4 500 employees chose to participate.

The major acquisitions made in recent years have considerably strengthened the Group. The first and most critical part of the integration process has been completed successfully and the task of realizing synergies is now being intensified. The Group will be able to take advantage of its world-leading Research and Development and its 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.

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 innovative products and business concepts.

Courage is about spearheading change. This means not just living with change, but also initiating change through creative innovation that is based on solid know-how and experience.

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.

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 with locally established positions, strong brands and significant installed product bases as well as a good recurring 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.

We are continuing to grow our installed base through acquisitions of traditional lock companies. Recent examples include Yale (with established positions in many markets throughout the world), Phillips in Mexico, Interlock in New Zealand and Viro in South Africa.

We are also expanding our product portfolio and areas of technical expertise. 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 companies work on growth projects to expand their product line or enter new sales channels with existing products.

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.

Our goal is to become The World's Leading Lock Group. Today this is a reality in terms of size, although the locks 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 increased security in every way, including the best service and support.

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 convenient enough to ensure proper usage.