Annual report 2014

In many ways, 2014 was a pioneering year for Ostnor. The purchase of theDanish brand Damixa with development and manufacturing in Denmark isa milestone and the Group's largest acquisition ever.

It significantly strengthens our position on the Danish market at the same time as it contributes to increasing our growth. The acquisition, which was a part of Ostnor for the last eight months of the year, increased our sales by a full 17 percent for 2014. Another major effort is the transition to lead-free brass in the production in Mora. We aim to be on the forefront of development and showcase our major focus on the environment and sustainability. The move is an extensive change that has given us important knowledge that we can benefit from and it has involved virtually every part of the organisation. This transition is an important issue for the future of Ostnor and we are now well prepared to meet our customers' demand for lead-free products.

This is not the only effort we are making regarding the environment. Major parts of the production process is environmentally certified in accordance with ISO 14001 and we have a large number of products that save both energy and water. For example,in cooperation with the Copenhagen Airport, we have installed new mixers, leading to a reduction in hot water consumptionby 66 percent. Our production takes place close to the customer, which also contributes to reducing our environmental impact.

Overall, we see that Ostnor's operating income for 2014 dropped from SEK 70 million to SEK 48 million. Of course these are not results we are satisfied with, but a large part of this is attributable to non-recurring costs in connection with the acquisition and production change-over. Adjusted for this, we achieve a profit on a par with last year.

Pleasingly, our three brands Mora Armatur, FM Mattsson and Damixa remain strong, and we have further strengthened our position on the Danish and Norwegian markets. In Sweden, we have long been well established as the market leader. In 2015, we will continue to work on further positioning our brands in the various segments. We will also increase coordination to be able to leverage economies of scale, primarily in purchasing and development projects. We note higher customer demand in terms of modern design, sustainability and energy efficiency. This places considerable demand on our organisation to continue delivering high-quality products that are good value for money and meet this demand. Our long tradition and our skilled craftsmen show that we know what we are doing and do it well.

We are now building Ostnor for the future

In 2015, we can celebrate that Ostnor has had the best and most innovative taps on the market for 150 years. In connection with this, we will be conducting several exciting activities for our customers, suppliers, employees and other partners. We are a part of Swedish industrial history and we will emphasize this in a good way.

Both the acquisition of Damixa and the transition to leadfree products strengthens our strategic position. I am convinced that we will see improvements in our KPI’s already in 2015.

In 2015, Ostnor will also focus on higher cost-efficiency, synergiesin the organisation, economies of scale in production and continued investments in innovation. Every year, we invest nearly SEK 50 million in research and development, which is something we consider important in order to be on the forefront of technical development and be able to offer innovative new products – preferably with several launches a year.

I would like to take this opportunity to thank all of our employees for a year well done! We are now looking forward to an exciting 2015 with several new launches on the way.

Claes Seldeby

President and CEO, Ostnor