"Our continued determination to improve our competitive positions through a structured approach by focused management teams means that our businesses are well prepared to take advantage from an upturn when it happens."

Our business model is one of semi-autonomous operating companies, in which performance-focused management teams have clear lines of command and straightforward control systems. This means that our businesses are not unduly distracted by unnecessary activities from their primary task of serving customers and developing new products and applications. The clear lines of command enable managements to focus resources on priority areas, in particular to manage relationships with customers, to maintain focus on product development and to improve internal processes, for example improving lead generation, order fulfilment and response times in the supply chain, whilst implementing efficiency improvement initiatives.

Despite the individual nature of the businesses, considerable emphasis is placed on knowledge sharing across the group and the transfer of best practice, with emphasis on sales and marketing initiatives. Initiatives developed in one company, such as web-based training and customer demonstrations, have been adopted by a number of other companies in the group.

The heads of each of the companies meet periodically with the executive management team to discuss performance and strategy and share best practice. The 2002 Presidents Meeting will be held in Shanghai, China, giving the Presidents the opportunity to visit local offices, customers and distributors in this fast-growing market.

The small corporate centre with a close link to shareholders and the
operating companies ensures that the operating companies are directly tied
to the process of adding shareholder value. Central to our philosophy is a
management style which emphasises delivery against commitments. To best
allow us to manage expectations, we strongly encourage our operating
management teams with "bad news comes early, good news can wait".

A key benefit of the simple structure is its flexibility: we did not need to suddenly restructure our businesses and take short-term measures to cut costs which could be detrimental in the long term, a route which many other companies have been forced down recently in response to the economic climate. Instead we are able to quickly focus on the priorities. Over the past year this has enabled our businesses to strengthen their relative positions. And, as in the past, we continue to look for suitable bolt-on and stand-alone acquisitions where these are appropriate.

The result is that our businesses are operationally and financially geared to take advantage from an upturn when it happens.

Hans Nilsson, Chief Executive

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