ASSA ABLOY Annual Report 2012

ASSA ABLOY Annual Report 2012
Annual Report
2012
The global leader in
door opening solutions
Contents
Report on operations
Annual Report
2012
The global leader in
door opening solutions
Divisions
Cover image
ASSA ABLOY’s door closers help
create a total door opening solution
and can be used in homes as well
as public buildings, elderly homes,
­offices, factories and pre-schools.
CSR
Report of the
Board of Directors
Financial statements
Shareholder information
The ASSA ABLOY Group
Statement by the President and CEO
Vision, financial targets and strategy
Market presence
Product leadership
Cost-efficiency
Growth and profitability
2
8
10
22
30
36
ASSA ABLOY’s divisions
EMEA division
Americas division
Asia Pacific division
Global Technologies division
Entrance Systems division
40
42
44
46
48
52
Sustainable development
54
Report of the Board of Directors
Significant risks and risk management
Corporate governance
Board of Directors
The Executive Team
Remuneration guidelines
for senior management
63
65
68
72
74
77
Sales and income
Consolidated income statement and
Statement of comprehensive income
Comments by division
Results by division
Financial position
Consolidated balance sheet
Cash flow
Consolidated cash flow statement
Changes in consolidated equity
Parent company financial statements
Notes
Comments on five years in summary
Five years in summary
Quarterly information
Definitions of key data
Proposed distribution of earnings
Audit report
78
79
80
81
82
83
84
85
86
88
90
116
117
118
119
120
121
The ASSA ABLOY share
Information for shareholders
122
125
Lock and lock systems
Mobile keys
Access control
Door closers
ASSA ABLOY is the global lea
dedicated to satisfying end-u
and convenience.
ASSA ABLOY is represented on both mature and emerging markets worldwide,
with leading positions in much of Europe, North America,
Asia, Australia and New Zealand.
SHARE OF GROUP SALES
BY REGION 2012
NORTH AMERICA
29%
SOUTH AMERICA
Schools and offices
2%
EUROPE
47%
AFRICA
Museums
ASIA
16%
1%
5%
AUSTRALIA
Homes
NEW
ZEALAND
Hospitals
Electromechanical locks
Entrance automation
Industrial doors
Digital locks
ader in door opening solutions,
user needs for security, safety
As the world’s leading lock group, ASSA ABLOY offers a more
complete range of door opening solutions than
any other company on the market.
47
SEK 47 billion
in sales
Since its formation in 1994, ASSA ABLOY has grown from a
regional company into an international group with
around 43,000 employees and sales of around
SEK 47 billion.
In the fast-growing electromechanical security segment, the Group
has a leading position in areas such as access control,
identification technology, entrance automation and
hotel security.
Industry
Arenas
Railway Stations and Airports
Hotels
Strategies for growth, profitability
and value creation
ASSA ABLOY is the largest global supplier of intelligent lock and security solutions. Its products account for more than one in ten of all lock and security
installations worldwide. The Group’s strategies are based on three cornerstones:
Market presence
A global leading market presence is achieved by exploiting the strength of the brand portfolio,
increasing growth in the core business and expanding into new markets and segments. ASSA
ABLOY has many of the industry’s strongest brands. The sales teams on the local markets are
united under the ASSA ABLOY master brand to better meet the rising demand for more
complete security solutions.
Product leadership
The Group’s product leadership is achieved through the continuous development of products
offering enhanced customer value and lower product costs. A key activity for achieving this is
the use of common product platforms with fewer components. New products are also being
developed in close collaboration with ASSA ABLOY’s end-users to enhance customer value.
Cost-efficiency
Efforts to increase cost-efficiency continue in all areas, including common product platforms
with fewer components and common product development. Production combines flexible
final assembly close to the customer with the transfer of high-volume standard production to
external and internal production units in low-cost countries.
Increased growth and profitability
ASSA ABLOY’s strategic
focus on market presence,
product leadership and
cost-efficiency has been
very successful. The
Group’s earnings trend has
created major value for
customers, shareholders
and employees.
INCREASE IN SALES
SALES ANd OPERATING INCOME (EBIT)
Sales, SEK M
 Sales
Operating income (EBIT)
7,500
40,000
6,000
30,000
4,500
20,000
3,000
10,000
1,500
0
96 1 97
99 1 00
96
971 98
981 99
001 01
011 02
021 03
031 04
04
¹ 1996–2003 have not been adjusted for IFRS.
ASSA ABLOY AnnuAL RepORt 2012
EBIT, SEK M
50,000
05
05
06
07
062 07
08 2, 3 09
08
092, 3 10
10
11
12
112 12
² Excluding items affecting comparability.
0
+1,200%
INCREASE IN OPERATING INCOME
+4,700%
³ Reclassification has been made.
1
Statement by the President and CEO
Winning strategy on
a challenging market
Once again we can look back on a very good year for ASSA ABLOY, despite tough market conditions in a
global recession. Sales rose 12 percent to SEK 46,619 M and organic growth was 2 percent. Operating
income increased 13 percent to SEK 7,501 M and the margin strengthened further to 16.1 percent. Our
performance in 2012 confirms once again the long-term strength of the Group’s strategies and action
programs. during five years of financial crisis, ASSA ABLOY has increased sales by 34 percent and operating income by 36 percent, with a continued strong cash flow and good financial stability. Excellent performance in recent years has consolidated ASSA ABLOY’s position as the largest global supplier of door
opening solutions, providing a sound basis for continued profitable growth and value creation.
Following five years of serious financial disruption,
macroeconomic turbulence and considerable uncertainty in the global economy, there is reason to comment
on the Group’s performance in a longer perspective and
ask the question: How has ASSA ABLOY weathered the
financial crisis?
But let us begin with a slightly more detailed review
of the past year for our divisions.
Divisions
EMEA division The European market remained divided
into two, with overall weak demand. We saw stable
growth, which weakened at the end of the year, in
northern and eastern Europe, while sales fell in southern
Europe in the wake of the financial crisis, austerity policies and a deep recession. EMEA division (Europe, the
Middle East and Africa) reported stable organic growth
of 1 percent, outperforming the total market. Operating
Important events during the year
•
Sales increased by 12 percent to SEK 46,619 M (41,786).
•
Operating income amounted to SEK 7,501 M (6,624¹).
• Earnings per share after full dilution amounted to SEK 13.84 (12.30¹).
• O
perating cash flow amounted to SEK 7,044 M (6,080²).
• I nvestments in product development continued at an
accelerated level and a number of new products were launched.
¹ Excluding items affecting comparability.
2
Excluding restructuring payments.
2 StAtement BY the pReSiDent AnD CeO
ASSA ABLOY AnnuAL RepORt 2012
income and operating margin remained satisfactory,
due to several years of tough cost-efficiency programs
and successful marketing of new products and services.
Americas division On the American markets we saw
a cautious market upturn in North America, mainly in
the residential segment. Renovations and upgrades in
the commercial and institutional segments also showed
positive growth. The Latin American markets continued to show stable growth. Americas division reported
4 percent organic growth and further strengthened its
good operating income and very good operating margin. Several years of considerable investments in market
presence and new products resulted in a strengthened
market position.
Asia Pacific division In the Asia Pacific region, sales
growth remained strong in China and Southeast Asia.
In South Korea, the market was weak, while the considerable export trade in digital door locks grew strongly.
Negative growth in Australia continued but improved
at the end of the year. Asia is an important growth driver
for the Group and has been the focus of several years of
intensive marketing initiatives and acquisitions. ASSA
ABLOY continued to be the clear market leader and gain
market shares on the fast-growing Chinese market. Asia
Pacific division reported 3 percent organic growth with
somewhat lower operating income and maintained
good operating margin.
Global Technologies division Demand for digital identification systems continued to grow strongly, as did
demand for access control, logical access and secure
smart card issuance. Government ID and project orders
Key data
Sales, SEK M
of which: Organic growth, %
Acquired growth, %
Exchange rate effects, %
Operating income (EBIT), SEK M
Operating margin (EBIT), %
Income before tax (EBT), SEK M
Operating cash flow, SEK M3
Return on capital employed, %
Data per share
Earnings per share after tax and dilution (EPS), SEK/share
Equity per share after dilution, SEK/share
Dividend, SEK/share
Number of shares after dilution, thousands
1
2
3
ASSA ABLOY AnnuAL RepORt 2012
experienced negative growth in the wake of austerity
measures. ASSA ABLOY strengthened its position on
these fast-growing future markets, as a result of marketing and innovation initiatives in recent years. Growth
was also strong on the hotel market, particularly in
the renovation segment. Global Technologies division
reported 6 percent organic growth and substantially
improved its operating income and margin.
Entrance Systems division The global market for
entrance automation, doors and entrance solutions,
mainly in the commercial and institutional segments,
weakened in Europe during the year in the wake of
the recession. Demand was stable in North and South
America, while it grew in Asia, particularly in the industrial segment. The market has good underlying growth
potential in the long term, and ASSA ABLOY has rapidly
built a global leading position. Entrance Systems division
reported acquired growth of 37 percent for the year,
while organic growth was –2 percent. Operating income
increased substantially, while the operating margin
declined somewhat.
Group-wide programs are delivering
Our Group-wide initiatives continued successfully during the year. The number of specification sales representatives increased on most markets, which means that
we are increasingly relevant to the customer as a specialist and adviser in total door opening solutions. The
expansion rate on emerging markets was again high,
with 5 percent organic growth. The innovation flow was
strong and the share of products launched in the past
2010
36,823
3
8
–6
6,046
16.4
5,366
6,285
18.5
2010
10.89
58.64
4.00
372,736
2011
41,786
4
17
–8
6,6241
15.91
5,9791
6,080
17.41
2011
12.301
65.54
4.50
371,213
2012
Change
46, 619
2
9
1
7,501
16.1
6,731
7,044
18.2
12%
2012
13.84
71.82
5.102
369,592
13%
13%
16%
Change
13%
Excluding items affecting comparability.
As proposed by the Board of directors.
Excluding restructuring payments.
StAtement BY the pReSiDent AnD CeO 3
Statement by the President and CEO
three years rose to 25 percent. A total of 13 acquisitions
improved our market positions, and complemented our
product offering and technologies.
The review shows that the Group is well on track to
meet the operating margin target of 16 to 17 percent.
The outcome was 16.1 percent. Operating income
increased by 13 percent to SEK 7,501 M. This indicates
considerable strength in the Group’s earning capacity,
even under the difficult conditions that confronted us
during this year’s downturn and the five-year financial
crisis.
increased strength during the financial crisis
Global crises are often critical strength tests for businesses and watersheds for development trends. The
financial crisis and double-dip recession since 2008 can
therefore be an appropriate starting point for an account
of ASSA ABLOY’s strategies, processes and activities for
value creation in a longer perspective.
What have we achieved during this challenging
period?
Since 2008 the Group has increased sales by 34
percent to SEK 46,619 M, and operating income by
ASSA ABLOY’s Executive Team from left
to right: Ulf Södergren, Chief Technology
Officer (CTO); Tzachi Wiesenfeld, Head
of EMEA division; Denis Hébert, Head of
HID Global business unit; Juan Vargues,
Head of Entrance Systems division; Johan
Molin, President and CEO and Head of
Global Technologies division; Thanasis
Molokotos, Head of Americas division;
Carolina Dybeck Happe, Chief Financial
Officer (CFO); Jonas Persson, Head of Asia
Pacific division; and Tim Shea, Head of
ASSA ABLOY Hospitality business unit.
peRFORmAnCe 2008–2012
SALES ANd OPERATING INCOME
Operating income
SEK M
Sales
SEK M
50,000
7,500
40,000
6,000
30,000
4,500
20,000
3,000
10,000
0
4 StAtement BY the pReSiDent AnD CeO
INCOME BEFORE TAX ANd OPERATING CASH FLOW
1,500
08
09
10
11
12
0
SEK M

Sales1
7,000
Operating
income2
6,000
 Income before tax1
 Operating cash flow2
5,000
4,000
3,000
¹ Reclassification has been
made for 2008 and 2009.
²
Excluding items affecting
comparability, 2008,
2009 and 2011.
2,000
1,000
0
08
09
10
11
12
¹ Excluding items affecting
comparability, 2008,
2009 and 2011.
² Excluding restructuring
payments.
ASSA ABLOY AnnuAL RepORt 2012
36 ­percent to SEK 7,501 M, with a stable, high operating margin. Cash flow has increased markedly, as has the
equity ratio, with reduced net indebtedness. Shareholders have seen the share price triple. A good indicator of
value creation is that equity per share has increased by
around 30 percent.
At least as important is the operational shift, which
highlights our strengths for the future. ASSA ABLOY has
tripled its sales on emerging markets to a growing share
of 25 percent. We have accelerated product development, and the share of products launched in the past
three years have reached the target of 25 percent of
sales. We are the market leader overall and in the industry’s digital revolution. Our sales have 46 percent electronic content, a doubling in five years. We have shifted
from 25 percent low-cost content to more than 50 percent, and replaced over 50 old plants with considerably
fewer upgraded and new plants.
Sustainability efforts have been integrated into the
Group’s strategies and business processes. Over the
past seven years, sustainability methods have been
integrated into sales, logistics, manufacturing, product
development and supply management. Our commitment and efforts meet market demand: a more sustainable product is more competitive, more cost-efficient
and creates added value for customers and other stakeholders. Last year ASSA ABLOY updated its sustainability program on the basis of the Group’s risk assessment
process, with targets up to 2015. The 2012 results show
that the Group is well on the way to achieving its more
stringent targets.
All in all, ASSA ABLOY has emerged considerably
strengthened from the crisis. Going forward, we have a
more competitive product offering, improved market
positions and a better cost situation than before the
crisis.
What is the basis of this transformation?
I often say that locks and door opening solutions is a
good business to be in. We have three fundamental and
mutually reinforcing global drivers supporting us:
• Security and convenience are human needs, which
are high on the agenda as prosperity increases.
• We have a strong growth trend, with urbanization
in countries with a predominant share of the global
population.
• We have new digital technologies, which drive the
replacement, upgrade and renovation of door opening solutions.
On the basis of these drivers, the ASSA ABLOY Group
is developing its three strategic action areas, which
provide us with the necessary foundation for organic
growth.
DEVELOPMENT OF EARNINGS PER SHARE
SEK
14
12
10
8
6
4
Earnings per share has
increased by 1,372
­percent since 1996.
ASSA ABLOY Annual Report 2012
2
0
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Increased market presence
An essential task since the mid-2000s has been the
development of an offensive brand structure that creates synergies for our global and local market leadership. Today 75 percent of products are sold under the
ASSA ABLOY brand or co-branded with a strong local
brand. The other 25 percent of products are sold under
global brands, such as Yale, HID, ABLOY and Mul-T-Lock,
as well as non-ASSA ABLOY associated brands, such
as Entrematic, Flexiforce and Helton. Attitude surveys
clearly show that we are well on the way to loading our
Statement by the President and CEO 5
Statement by the President and CEO
brands with our vision of being the global leader in total
door opening solutions, with strong local competence
and presence.
Brand consolidation has gone hand in hand with the
rationalization and development of products and solutions, in which segmentation and lower costs have been
a guiding principle. By segmenting market and customer
development, and focusing on specification sales to
direct and indirect customers, such as installers and
architects, we gain a superior knowledge of customer
needs, can act as a partner in better total door opening
solutions, and generate increased demand. The share
of customer-facing or ‘demand-generating’ staff has
increased considerably in recent years.
Emerging markets have been a key priority. Their
share of sales has tripled to a total share of over 25 percent in seven years, and I venture to have confidence
in the potential for up to a 50 percent share. We have
become China’s largest lock and door company, with a
small but fast-growing market share. However, we also
see substantial future demand in other Asian, South
American and eastern European countries in pace with
increasing prosperity and urbanization.
Complementary acquisitions have built new market
positions and contributed key products and technology.
The 100 acquisitions in the past seven years are proof of
this and have generated additional sales of nearly SEK 20
billion. Our largest ever structural transaction was the
acquisition of Crawford two years ago. This transformed
our Entrance Systems division into a global leader in
entrance automation, creating considerable revenue
and cost synergies with the rest of the Group. Following
its rapid expansion in recent years, Entrance Systems is
now entering a new phase, with a new organization and
good growth and profit conditions.
product leadership
A continuous flow of innovative products, with enhanced customer value and lower costs, creates product leadership, the foundation for long-term successful
organic growth. The Group has implemented a significant reorientation from a relatively fragile base over
the past seven years. R&D investments have increased
by 129 percent since 2005, and the number of development engineers has risen by over 30 percent to around
1,350. Our ambition is to be the industry’s most innovative supplier, and products launched in the past three
years have reached the target of 25 percent.
Product leadership is focused on customer needs
for security, reliability, functionality, design, life cycle
costs and so on. A strong driver is the demand for elec-
6 StAtement BY the pReSiDent AnD CeO
tromechanical locks and entrance automation, which
today account for 46 percent of our sales, double the
share in the mid-2000s. A large part of our substantially
increased investments have focused on these new technologies and developed today’s product and market
leadership. This provides competitiveness for continued
rapid growth, in which sales value per electromechanical
door is increasing, as well as the recurring revenue from
service and upgrades.
The focus on product development has resulted in a
renewal of the Group’s working methods, with a common structured innovation process. In the Group function Shared Technologies and in collaborations in and
between divisions, we have developed common product
platforms, which have considerably reduced the number of components, increased the development rate and
reduced costs. Ideas and competence are spread more
rapidly through the development of R&D competence
centers. Customers are involved earlier and deeper in
the product development process.
Cost-efficiency
In the mid-2000s, ASSA ABLOY had an over-dimensioned
production structure, with a large number of small local
and regional plants. Rationalization of production has
substantially improved cost-efficiency. The policy is to
locate flexible final assembly close to customers and
standard production in low-cost countries. Since 2006,
53 plants have been closed and nearly 15 more plants
are in the process of being closed. A total of 56 plants
have been converted to assembly. Nearly 30 offices have
also been closed. Today around 55 percent of products
are manufactured in low-cost countries, compared with
26 percent in 2005.
Meanwhile the Group has increased the share of
purchases from high-quality suppliers with a good cost
profile. As a result of purchasing competence programs,
specific category managers, better agreements and price
management, the number of suppliers has fallen 25 percent in seven years, while the value of directly purchased
materials has increased by nearly 130 percent.
An important change since the mid-2000s is the
implementation of a number of processes to increase
efficiency in various dimensions of the operations. Value
Analysis and Value Engineering (VA/VE) have enabled us
to reduce the cost of existing products by between 25
and 40 percent through measures in the development,
design and production of existing products. To date,
savings exceed SEK 500 M. Lean processes have led to
more efficient production flows, better materials cost
control, improved administration and decision-making
ASSA ABLOY AnnuAL RepORt 2012
procedures, shorter development times, and increased
cooperation between various parts of the Group. Seamless Flow is automating administrative processes across
the whole value chain, resulting in major savings. By
2017 the number of different business systems is to be
reduced from 120 to 6, while the number of data centers is to be reduced from 55 to 5, and 80 different data
networks are to be consolidated into 1 in the Group’s
Shared Service Center.
Outlook
In these circumstances I should like to thank all our
employees for their excellent efforts during a very
demanding period for the Group. We can be pleased
with the strength we have developed over the past years
and the very good outcome for 2012.
We now face exciting challenges. Many indicators
suggest that the world economy will remain weak for
the foreseeable future, due primarily to the budget cutbacks that many countries are making. It is therefore of
the utmost importance that ASSA ABLOY continues its
ASSA ABLOY AnnuAL RepORt 2012
expansion on the new markets, which are expected to go
on growing well, while at the same time maintaining its
investments in new products and market presence.
Going forward, I see excellent opportunities for
ASSA ABLOY. As I have already said: Locks and door
opening solutions is a good business to be in. Increased
prosperity and urbanization are driving ever-increasing
security and safety needs. If we venture to have confidence in a return to the same growth figures as we had
before the financial crisis, ASSA ABLOY is today better
prepared than ever before to further increase its rate
of value creation.
Stockholm, 7 February 2013
Johan Molin
President and CEO
StAtement BY the pReSiDent AnD CeO 7
Vision
Financial targets
• T
o be the world-leading, most successful
and innovative supplier of total door
opening­ solutions,
• 1
0 percent annual growth through a combination of organic and acquired growth.
• An operating margin of 16 to 17 percent­.
• t o lead in innovation and offer welldesigned, convenient, safe and secure
solutions­ that create added value for our customers, and
• to be an attractive company to work for.
The financial targets are long-term and should
be regarded as an average over an economic
cycle.
Strategy
The Group’s overall focus is to spearhead the trend towards increased security with a productdriven offering centered on the customer. The primary product areas are the traditional segments
of mechanical locks and security doors, as well as the fast-growing segments of electromechanical
and electronic locks, access control, identification technology and entrance automation.
ASSA ABLOY’s strong development is based on long-term structural growth in demand on mature
markets in Europe, North America, Australia and New Zealand, increasing demand on emerging
markets in Asia, eastern Europe, Africa and South America, and successes in fast-growing product
segments.
The strategic action plans have been divided into three focus areas: market presence, product
leadership and cost-efficiency.
Strategy
Goal
Market presence
Product leadership
Cost-
efficiency
pages 10–21
pages 22–29
pages 30–35
Growth and profitability
pages 36–39
Market presence
+ Global leaderindooropeningsolutions
+ 25 percent of sales are on emerging markets, atripleincreaseinsevenyears
+ Theindustry’sleading brands
+ Electromechanicalsolutionsaccount
for 46 percent of sales
Marketpresence
Marketexpansion
forprofitablegrowth
ASSAABLOY’sworld-leadingmarketpresenceisbasedonthreestrategies:
• Exploiting the strength of the brand portfolio,
• Increasing growth in the core business and
• Expanding into new markets and segments.
Thesemarketstrategieshavebeensuccessfulthroughacombinationoforganic
andacquiredgrowthfocusedonprofitable,expandingmarketsandsegments.
Drivers
Theneedforsecurityinworkplacesandhomesisgrowinginpacewithincreasedwelfareandtechnological
development.Demandisdrivenby:
Increased prosperity and
urbanization,particularlyin
emergingmarkets,leadto
newconstructionand
increaseddemandfordoors,
locksandaccesscontrol
systems.
The need for increased securitydrivesmoreadvanced
solutionsandupgradesof
existingsecuritysystems.
Technological development
meetsthedemandforsolutionsofferingincreased
convenienceanduser-friendlinessinadditiontohigh
security.
ASSA ABLOY is focusing its operations on electromechanical and mechanical security products as well as
entrance automation and security doors for the global market. The Group has a global market share of over
10 percent but with large variations between different markets.
CUSTOMERS
DID YOU
KNOW THAT?
The institutional and
commercial market
accounts for 75% of sales.
Private customers and
the residential market
account for 25% of sales.
12 MaRkET pRESEnCE
ASSAABLOYhasalargenumber
ofend-customerswithveryvaried
requirements.Productsandsolutions
aredistributedtothecustomer
incooperationwithanumberof
differentplayersandthrougha
varietyofdistributionchannels
(seeillustrationonpages14–15).
Institutional and commercial market
– complex, demanding projects
The most demanding and dynamic customer segment is
institutional and commercial customers, which account
for around 75 percent of sales. This segment includes
universities, hospitals, offices, airports and shopping
malls used by a large number of people daily. The driver
for electromechanical and advanced solutions is strong.
The procurement of these projects is often complex
and involves many stakeholders on the customer side,
such as property and security managers. ASSA ABLOY’s
common sales force has developed expertise in understanding the multifaceted needs of end-customers and
has contact with many stakeholders in the value chain
to develop optimal solutions for the customer. Distribution and installation are largely handled by installers and
locksmiths.
aSSa aBLOY annUaL REpORT 2012
ShareofGroupsalesbyregion2012
NOrThAMEriCA
ANDCENTrALAMEriCA
WESTErN
ANDEASTErNEurOPE
ASiAAND
MiDDLEEAST
47%
29%
16%
+11%
+12%
SOuThAMEriCA
+9%
1%
+9%
Changerelativeto
thepreviousyear,%
AuSTrALiA
ANDNEWZEALAND
AFriCA
2%
ShareofGroupsales
inlocalcurrency
2012,%
5%
+16%
+1%
SALESONEMErGiNGMArKETS1
SEKM
12,000
10,000
8,000
6,000
4,000
2,000
0
aSSa aBLOY annUaL REpORT 2012
EmergingmarketscompriseAfrica,Asia,theMiddleEast,
SouthAmericaandeasternEurope.
1
2005
2006
2007
2008
2009
2010
2011
2012
Small and medium-sized customers
– professional advice and installation assistance
Consumer market – replacement and upgrade
with advice and installation
This segment consists of institutional, commercial and
residential customers, who generally need professional
advice and installation, which is primarily met by specialized distributors and installers, such as locksmiths.
ASSA ABLOY is working actively to train distributors and
to develop more standardized solutions for small and
medium-sized companies, such as stores and offices.
The majority of sales are replacements or upgrades of
existing security products. However, an increasing number of private individuals want electronic locks, providing
major growth potential for ASSA ABLOY. Private customers have a considerable need for advice and installation
assistance. The Group has therefore developed a number
of home security concepts to meet consumer needs. In
some geographical markets, ASSA ABLOY also works with
door and window manufacturers or specialized distribution channels such as DIY stores and locksmiths.
MaRkET pRESEnCE 13
Marketpresence
DISTRIBUTIOn
ASSAABLOYreachesitsend-customersthroughavarietyofdistributionchannelsatvariousstages
inthesupplychaindependingon
customerneeds,theproductand
solution,andnationalandlocal
requirementsandstandards.The
Grouphasacompetitiveedgedue
toitswell-developedcooperation
withalldistributionplayers,and
seekstoofferitscompetenceas
earlyaspossibleintheplanning
andspecificationofdooropening
solutions.
Distributors – a close partner
ASSA ABLOY works closely with its distribution channels to offer end-customers the right products, correct
installation, and consequently a well-functioning security solution. Distributors also have a key role in providing service and support after installation. This role may
vary between different customer segments.
In the commercial segment, distributors in some
markets act as consultants and project managers to create good security solutions. They have a good knowledge of the customer’s needs and ensure that the products comply with local regulations.
Electromechanical security products mainly reach
the end-user via security installers and specialized distributors. These products are also sold through security
systems integrators who offer a total solution for the
installation of perimeter protection, access control and
increasingly also computer security.
ASSA ABLOY collaborates with
architects and installers.
Distribution channels for the security market
Electronic security products mainly reach the end-user via security installers and specialized distributors.
These products are also sold through integrators who often offer a total solution for the installation of
perimeter protection, access control and increasingly also computer security.
ASSA ABLOY
representative
SpECIFICaTIOn ASSA ABLOY specifies a security solution for major commercial projects jointly with end-customers and other stakeholders.
ASSA ABLOY
SpECIFICaTIOn
Distributor
DISTRIBUTORS
DISTRIBUTIOn CHannELS Security systems integrators, locksmiths and
security installers, building and lock wholesalers, retailers, DIY, hardware
and security stores, OEMs, door and window manufacturers.
Building and lock wholesalers, security consultants and locksmiths have a key role in delivering the products specified for
various construction projects.
14 MaRkET pRESEnCE
aSSa aBLOY annUaL REpORT 2012
Specification of door opening solutions
– competence increasingly important
In order to market innovative new solutions, ASSA
ABLOY collaborates with architects, security consultants
and major end-users to specify appropriate products
and achieve a well-functioning security solution. Building and lock wholesalers, security consultants and locksmiths have a key role in supplying the products specified for various construction projects. Many door and
window manufacturers install lockcases and hardware
in their products before delivering them to customers.
The trend towards more complex security solutions
is increasing the competence required by distributors.
To support the customer in choosing a security solution, ASSA ABLOY has special specification teams that
can offer total security solutions under the ASSA ABLOY
ASSA ABLOY
representative
Installer
SpECIFICaTIOn ASSA ABLOY specifies a security solution for major
commercial projects jointly with end-customers and other stakeholders.
SpECIFICaTIOn
InSTaLLERS
ASSA ABLOY
representative
STakEHOLDERS
Stakeholders
brand to major end-customers. These specification
teams also collaborate with other key groups early on in
the order chain, such as building consultants, architects
and building standards authorities to create demand for
innovative competence. The service offering includes
telephone support, technical drawings, product configuration and e-commerce.
ASSA ABLOY develops the competence of locksmiths,
a key distributor of mechanical and electromechanical security products on many markets. They buy direct
from ASSA ABLOY or via wholesalers and provide advice,
delivery, installation and service. Some locksmiths have
an increased focus on electronics, while IT integrators
are increasingly offering physical security solutions.
ASSA ABLOY
Endrepresentative customer
EnD-CUSTOMERS
EnD-CUSTOMERS
Large institutional and
commercial customers
• Healthcare • Education • Retail
• Hospitality • Offices • Industry
Small and medium-sized customers
• Offices • Stores
Residential market
• Apartments • Houses
STakEHOLDERS
Such as architects, security consultants, public authorities responsible
for security standards and other
stakeholders.
CODES anD SECURITY STanDaRDS
ASSA ABLOY has developed close collaboration with architects and security consultants to specify appropriate
products and achieve a well-functioning security solution. Many door and window manufacturers install lockcases and hardware in their products before delivering them to customers.
aSSa aBLOY annUaL REpORT 2012
MaRkET pRESEnCE 15
Marketpresence
MaRkETS
Theglobalmarketfordooropening
solutionsisdisparateandfragmented.
ASSAABLOYistheindustry’smost
globalplayer,withsalesinmorethan
70countries.Thematuremarketsof
NorthAmericaandEuropeaccount
forthreequartersofGroupsales,and
demandisgrowingslightlyfasterthan
nationalGDP.Asia,theMiddleEast,
russia,SouthAmericaandAfricaare
emergingmarketswithconsiderably
highergrowth.
Major differences
– advantage for global aSSa aBLOY
DID YOU
KNOW THAT?
North Americans spend
more than twice as much on
emergency exit devices as
Europeans. Conversely,
northern Europeans spend
three to four times as much
on high-security locks for
their homes as North
Americans.
The majority of Group sales
are for use in existing buildings and therefore less sensitive to cyclical fluctuations.
16 MaRkET pRESEnCE
The difference in demand between continents and
countries is significant due to different regulations,
standards and requirements. As the most globally
established player, this gives ASSA ABLOY competitive
advantages. There is also a trend among multinationals
towards a more consistent security approach in some
customer segments.
North Americans spend more than twice as much
on emergency exit devices as Europeans, while northern Europeans spend three to four times as much on
high-security locks for their homes as North Americans.
Entrance automation is also considerably more widespread in Europe than in the USA. The same size market
for security and emergency exit solutions in Europe and
the USA would roughly double the total market.
Electromechanical solutions are considerably more
widespread in the commercial segment than in the residential segment. However, an increasing number of private individuals want electronic locks for their homes,
providing a major growth opportunity for ASSA ABLOY.
Fragmented competition
– continued consolidation
The global door opening solutions market remains fragmented, despite consolidation over the past 10 years.
However, the market in each country is relatively consolidated. Companies in the industrialized world are
generally still family-owned and leaders on their home
markets. They are often well established and have strong
ties with local distributors. In less developed countries,
however, established lock standards and brands are less
common.
ASSA ABLOY is the global market leader and has five
main competitors, which partly operate in its segment:
Ingersoll-Rand (USA), Stanley Black & Decker (USA),
Dorma (Germany), Kaba (Switzerland) and Hörmann
(Germany). After the market leader ASSA ABLOY, these
five are strong local players on their home markets and
also have an international presence. The Asian market
is still very fragmented; even the largest manufacturers
have modest market shares.
Asia, the Middle East, eastern Europe, South America and Africa are
emerging markets with considerably higher growth.
SALESBYPrODuCTGrOuP
 Mechanical locks, lock
systems and fittings, 36%
 Entrance automation, 24%
 Electromechanical and
electronic locks, 22%
 Security doors and
hardware, 18%
aSSa aBLOY annUaL REpORT 2012
renovations,refurbishments,extensions,
replacementsandupgradesaccountfor
67percentofASSAABLOY’ssales.
67%
Newconstructionaccountsfor
33percentofASSAABLOY’ssales.
33%
Stability and profitability
Duetoitsuniqueglobalmarketpenetrationandthe
world’slargestinstalledbaseofdooropeningsolutions,two-thirdsofASSAABLOY’ssalesaretothe
aftermarket,whichconsistsofrenovations,refurbishments,extensions,replacementsandupgrades.
Demandintheaftermarketismorestablethanin
newconstruction,andtheGroupisthereforeless
sensitivetocyclicalfluctuations.
TheGroup’sstrategiesalsoprioritizecommercial
andinstitutionalcustomerswithahigherdemand
forelectronicproductsandcomplexsolutions,and
thereforehigherprofitability.
STABiLiTYiNThEAFTErMArKET
ASSAABLOY
suppliestotal
solutiontoCisco
 Aftermarket1, 67%
 New construction, 33%
¹Theaftermarketconsists
ofrenovations,refurbishments,extensions,
replacementsand
upgrades.
BrEAKDOWNBYCuSTOMErSEGMENT
 Commercial and
institutional customers, 75%
 Private customers –
residential market, 25%
aSSa aBLOY annUaL REpORT 2012
Customer:
Cisco is the world’s largest supplier of network equipment
and systems. ASSA ABLOY Australia and ASSA ABLOY Singapore
have supplied all the locks, hardware and fittings for over 300
doors in Cisco’s new Singapore office, a project completed in
November 2012.
Solution:
The ability to deliver a total solution was a contributory factor in
ASSA ABLOY’s appointment as supplier of all the hardware for over
300 doors, of which 55 are connected to an access control system.
The products used included electric mortice locks for doors
connected to the access control system and Synergy mechanical mortice locks for doors not connected to this system, as well
as master key cylinders and Besam swing door operators. ASSA
ABLOY has now implemented 16 successful projects for Cisco in
Asia and the Pacific region.
MaRkET pRESEnCE 17
Marketpresence
MaRkET
STRaTEGIES
DID YOU
KNOW THAT?
A large aftermarket, combined with global sales across
countries with different economic cycles, contributes to
stable sales and profitability.
DID YOU KNOW
THAT?
A large percentage of
ASSA ABLOY’s products are
sold in small volumes to a
large number of end-customers with very different
needs.
The common sales organization operates under the
ASSA ABLOY master brand,
while acting as representatives of the local product
brands already recognized
by the customer.
18 MaRkET pRESEnCE
ASSAABLOY’sworld-leadingmarket
presenceisastrategiccornerstonein
theGroup’sambitionforprofitable
growth.Marketstrategyisbasedon
long-termstructuraldemandgrowth
onmaturemarketsinEuropeand
NorthAmerica,andfast-growing
demandonemergingmarkets.in
ordertoincreaseitsmarketpresence,ASSAABLOYisexploitingthe
strengthofthebrandportfolio,
increasinggrowthinthecorebusiness,andexpandingintonewmarketsandsegments.
Thespectacular
openingof
FriendsArena
Increasing growth in the
core business by segmentation
Over the past seven years ASSA ABLOY has made a
significant strategic shift to an increasingly marketoriented organization in close collaboration with
architects, security consultants, major end-users
and distributors. The main growth potential is found
in existing market channels and an increased share
of distributors’ sales.
One important initiative is the focus on increased
customer relevance through market segmentation.
Sales teams are focusing on different customer segments to gain the industry’s best understanding of
customer needs, build relationships and generate
demand, thereby becoming the end-user’s door
opening solution expert. Segmentation aims at total
door opening solutions customized to the doors’
applications, security and convenience aspects, special requirements for compliance with standards
and regulations, and the need for integration with
new or existing security systems and IT networks.
This focus includes investments in employees
with a clear, direct demand-generating responsibility. In the Americas division, for example, the share
of customer-facing staff rose from 35 percent in
2004 to 56 percent in 2012. In the EMEA division,
the share of customer-facing staff has risen from
42 percent to 48 percent in three years. This trend
is ongoing.
Sweden’s new national arena, Friends Arena,
opened in autumn 2012 and can accommodate
65,000 concertgoers. Apart from concerts, the
arena will host various sports events such as football and speedway. ASSA ABLOY has supplied cylinders, lockcases, handles, door closers, emergency
exit devices, access control, card readers and industrial doors for the arena.
aSSa aBLOY annUaL REpORT 2012
75%
Around 75 percent of products are co-branded with
the local brand and the
ASSA ABLOY master brand.
ASSA ABLOY’s brand strategy
The aSSa aBLOY
master brand
product brands, (examples)
Well-known product brands
benefit from the large
installed base and are
adapted to comply with local
regulations and safety standards. The product brands
are combined with the
ASSA ABLOY master brand.
Global brands
with a unique
market position
products brands,
non endorsed by
aSSa aBLOY, (examples)
Exploiting the strength of the
brand portfolio and the sales force
ASSA ABLOY has grown as a result of its many acquisitions and today the brand portfolio consists of leading
brands. In order to exploit this valuable brand asset while
benefiting from the Group’s size, ASSA ABLOY’s logotype is combined with the individual product brands.
The latter are well known and rooted in local regulations
and security standards. The Group thus capitalizes on
its large global installed base, while increasing the visibility of the ASSA ABLOY master brand, which unites the
Group’s sales departments and represents competence
in total door opening solutions. Around 75 percent of
Group sales are co-branded with the master brand and
local brands.
aSSa aBLOY annUaL REpORT 2012
The ASSA ABLOY master brand is complemented by
four global brands, which are all leaders in their respective market segments: HID in access control, secure card
issuance and identification technology, Yale in the residential market, Mul-T-Lock for locksmiths, and ABLOY
in high-security locks. The Group also has non endorsed
product brands that are not directly associated with
ASSA ABLOY, such as Entrematic, Flexiforce and Helton.
These brands have a leading position and a unique market positioning, which is therefore important to exploit.
In order to compete effectively on a global market,
the sales force operates as an integrated organization
and representatives of the ASSA ABLOY master brand.
They create solutions for the customer using various
products manufactured under established local brands.
Consequently, customers can be offered total door
opening solutions, while recognizing the local brands.
MaRkET pRESEnCE 19
Marketpresence
The Group sees good expansion opportunities
in new markets and segments
Geographical expansion
OEM market
Geographical expansionismainlyachieved
throughacquisitionsofleadinglocalcompanies
withwell-knownbrands,inordertobuilda
strongplatformonemergingmarketsinAsia,
easternEurope,theMiddleEast,AfricaandSouth
America.Thesemarketshaveincreasedtheir
shareofGroupsalesfrom12percentsevenyears
agoto25percentin2012.
The OEM market fordoorandwindowmanufacturershasconsiderablepotential.Theaimis
tobuildaglobalpresencethroughacquisitions
andorganicgrowth.Since2000,Groupsalesof
securitydoorshaveincreasedfromSEK 2 billion
tooverSEK8billion,andaccountedfor18percentoftotalGroupsalesin2012.
Residential market
Effortstodevelopchannelsandproductsforthe
global residential marketundertheYalebrandare
ongoing.TheGroup’sleadingcompetenceand
marketpresenceindigitaldoorlocksinChinaand
SouthKoreaarealsocreatingasignificantbasisfor
globalexpansioninthisfuturetechnology.
Increased demand for electromechanical products
Theincreaseddemandforelectromechanical
productsisacleartrend.increasedtechnical
standardizationisdrivingintegrationofvarious
componentsinthesecuritysolution.ASSAABLOY’s
productsaimatopenstandardstofacilitate
integrationwiththecustomer’sothersecurityand
administrativesystems.TheGroup’sstrengthin
specifictechnologiesiscreatinginterestingnew
growthareas.OneexampleisrFiD,whichenables
hotellockstobeopenedbyacardorcellphone.
20 MaRkET pRESEnCE
aSSa aBLOY annUaL REpORT 2012
Well-functioning
doorsat
Copenhagen
airport
Customer:
Copenhagen’s international airport, Kastrup, has 60 airlines in operation and over 62,000 passengers per day. In 2011,
22.7 million people passed through the airport, making Kastrup the largest Nordic airport. The airport has a maximum
capacity of 83 take-offs and landings per hour and can accommodate 108 planes. Kastrup employs 2,060 people and a
total of 22,000 people work at and around the airport. 500 companies operate in the area, including logistics companies, restaurants and cafes.
Challenge:
The 22.7 million people that pass through the airport each year want to make their way easily to get to their departures
on time or to meet arriving friends and relatives.
It must be easy for airlines to move planes in and out of the hangars, and the planes must be kept secure even when
they are not in the air. The airport’s emergency services must be able to rely on the doors opening rapidly and at the
right time. All the airport’s operators must be able to move goods and staff in and out through the buildings efficiently
in terms of time and energy.
Solution:
ASSA ABLOY Entrance Systems has in total over 1,200 pedestrian entrance solutions, over 500 door and docking solutions as well as many hangar doors and high-speed doors installed at Kastrup. These doors are branded Besam, Crawford, Albany and Megadoor.
ASSA ABLOY Entrance Systems and Kastrup Airport have now signed as a service frame agreement on all pedestrian
doors/automatic entrance doors. Together with the service performed by ASSA ABLOY Entrance Systems already on a
majority of the industrial, high-speed and hangar doors, ASSA ABLOY Entrance Systems makes life easier for the companies and passengers at Copenhagen Airport Kastrup.
Entrance automation
Entrance automation isafast-growingmarketinwhich
ASSAABLOYhasgainedglobalmarketleadership
throughacquisitions,innovationandorganicgrowth.
ThetotalmarketisestimatedatEur20billionwitha
growthrateaboveGDPandisstillveryfragmented.
Thelargestpotentialisinretail,transport,logisticsand
manufacturinginthewakeofincreasedglobalization.
ASSAABLOYhasauniqueofferingoftotalautomatic
dooropeningsolutionsandacomprehensiveservice
concept.
aSSa aBLOY annUaL REpORT 2012
MaRkET pRESEnCE 21
Product
leadership
+ The most innovative supplier
of total door opening solutions
+ Products launched in the past three years
exceeded 25 percent of total sales
+ Electromechanical products and entrance
automation have increased from 20 percent
to 46 percent of sales in 10 years
+ Clear leadership in secure
identity solutions and entrance automation
Product leadership
Successful product development
provides basis for organic growth
A constant flow of innovative new products to the market is the single
most important driver of organic growth. Successful product development
is therefore vital for the Group’s future. In 2012 sales of products launched
in the past three years exceeded 25 percent, which means that a first
milestone has been reached.
PRODUCT
LEADERSHIP
DID YOU
KNOW THAT?
Group sales of electromechanical products including entrance
automation have increased
from 20 percent to 46 percent
of sales in 10 years.
Docking solution from
Entrance Systems.
24 PRODUCT LEADERSHIP
ASSA ABLOY’s vision is to be the
most innovative supplier of total
door opening solutions, and R&D
investments have increased substantially in recent years. ASSA ABLOY
aims to double the innovation rate
by means of a Group-wide structured innovation process.
Successful product development and leadership is
the single most important driver for maintaining
the target of 5 percent organic growth per year over
an economic cycle. The focus on product leadership has been very consistent and is reflected in the
number of product development engineers, which
has risen by more then 30 percent to over 1,350
people in seven years. Sales of products launched in the
past three years have reached the Group’s target of 25
percent, a sharp increase in just a few years. This 25 percent target is a well-considered level in view of the 10 to
15-year product life cycle.
Today’s customer base helps develop
tomorrow’s security solutions
ASSA ABLOY has the world’s largest base of installed
locks and lock systems, and its products are well adapted
to comply with local and regional standards. The Group
builds on this installed lock base to develop tomorrow’s
solutions, in which electronic codes supplement or
replace mechanical identification, such as metal keys.
Electromechanical products including entrance automation have increased from 20 to 46 percent of Group sales
in ten years.
This does not mean that sales of mechanical products are falling, but that electromechanical products are
growing three to four times faster. An increased share of
electromechanical products also means an increase in
the sales value per door, as well as in the recurring revenue from service and upgrades. The number of installed
doors in the market fitted with some form of electromechanical solution is estimated at 3 to 5 percent. This
share may very well rise to 20 percent or more in the
future, representing a very large potential for upgrades
as well as new sales of these door opening solutions.
The implementation of Lean-Innovation has shown
that development time can be halved, while results
are improved. With this new approach, the Group has
also seen the benefit of continuous parallel technology
development.
The growing need for sustainable solutions is embedded in the Group’s development processes. Product
specifications and customer solutions may be based on
life cycle costs, a reduction in energy consumption in
buildings and other climate impact, as well as concrete
savings in materials consumption.
ASSA ABLOY ANNUAL REPORT 2012
TECHNICAL
DEVELOPMENT
MECHANICAL PRODUCTS
the basic technical solution is simple: a lockcase in a wall or a door contains a bolt, which is
advanced or retracted by a key. the pin-tumbler
lock was invented by Linus Yale in the middle of
the 1800’s. It consists of an outer casing and a
plug with drilled channels in which springloaded pins are lifted to the right height with
the correct key that opens the lock. the wafertumbler lock contains circular wafers with holes
for the key. the correct key turns the wafers to
the right position and the lock can be opened or
closed in combined action with a side bar. Lever
tumbler locks have a number of locking levers
built into the lockcase. the correct key lifts the
levers and frees the bolt to open or close.
ChAnGE In PRODuCt mIx
ELECTROMECHANICAL PRODUCTS
2000
SEK 14 billion
mechanical products, 66%
Electromechanical products, 20%
Security doors,14%
the first electromechanical locks were developed in the
early 20th century, when the bolt was operated by an
electric motor and/or electromagnet instead of muscular effort. Electromechanical technology has developed
substantially over the past 20 years with various code
systems. the lock itself is still based on mechanical principles, while the key element utilizes electronic codes
and readers with a control unit that evaluates the read
code. Electronic codes can be stored on cards, on
mechanical keys with a chip or be transmitted wirelessly from a cell phone. the reader provides a signal to
an electrically operated opening or closing mechanism.
ENTRANCE AUTOMATION
2012
SEK 47 billion
this is a fast-growing and global leading business within
ASSA ABLOY. the technology is usually described as
automatic as it is based on sensors, electronics and electric motors that open and close doors without direct
user involvement. typical application areas are large
entrances to institutions, organizations and companies,
which are used by many people daily. the technology
has developed into central control and monitoring systems for whole building complexes for enhanced security, convenience and a better environment.
mechanical products, 36%
Entrance automation, 24%
Electromechanical products, 22%
Security doors, 18%
ASSA ABLOY ANNUAL REPORT 2012
PRODUCT LEADERSHIP 25
Product leadership
Product
development process
the innovation strategy aims to
create cost and quality benefits
for the customer through constant small steps. the Group-wide
product development process is
based on ASSA ABLOY’s global
presence and strengthens local
operations. the ambition is to
halve development time and increase the number of new products. All new projects are driven
by customer needs.
A common process with increased customer
focus and better product planning
ASSA ABLOY continues to develop the Group-wide product
development process with the goal of halving development
time and increasing the number of new products. A clear gateway model with common terminology and interdisciplinary
collaboration ensures the quality of the product development
PRODUCT
SPECIFICATION
Master
specification
Requirements
specification
Project proposal/
pilot study
PRODUCT BOARD
CUSTOMER NEEDS AND REQUIREMENTS
PRODUCT
LEADERSHIP
Brighthandle designed door
handles communicate with
colored light.
26 PRODUCT LEADERSHIP
Product leadership is achieved and
maintained through the continuous
development of products offering
enhanced customer value and lower
product costs, often in close collaboration with ASSA ABLOY’s end-users
and distributors.
Customers are increasingly demanding more
advanced lock and door products, and the technical level is constantly rising, with electromechanical door opening solutions growing considerably
faster than traditional mechanical products. Global
common product platforms adapted to the local
markets have therefore become increasingly important. These platforms are developed by the Group
product development function, Shared Technologies, and through collaboration within and between
divisions.
Customer needs are integrated into the Group’s
product development and innovation processes as
a result of systematic collaboration at many levels
and in many dimensions. The Group conducts ongoing studies of various customer segments, giving
rise to new product concepts. Future Lab is an internet forum in which ASSA ABLOY can ask customers
questions about requirements, trends and product
initiatives.
ASSA ABLOY strengthens its customer relevance
through continuous multidimensional development. Customer needs are constantly developing
with regard to functional integration, design, compliance with regulations and standards in other countries,
openness to other systems, and simplicity in installation,
operation and maintenance.
Substantial strengthening of
entrance automation offering
ASSA ABLOY is a global leader in automatic doors
through its Entrance Systems division. The division’s
annual sales have risen from SEK 3 billion to nearly
SEK 11 billion in five years. As a result, the Group has
gained clear product and market leadership in entrance
automation.
Automatic doors have sensors and electronics that
ensure a convenient and energy-saving door environment in, for example, stores, hotels and hospitals. It
is increasingly important to be able to offer a total
entrance automation solution comprising both automatic door opening solutions and industrial doors. The
InvEStmEntS In RESEARCh AnD DEvELOPmEnt¹
SEK M
1,400
1,200
1,000
800
600
400
200
0
08
09
10
11
12
¹ Reclassification has been made
for 2008 and 2009.
ASSA ABLOY ANNUAL REPORT 2012
process. Product management is a very important factor, and the number of product
managers increased sharply during the year.
Customer requirements and views are a natural part of the Group’s process for
strengthening customer relationships and integrating customers into the Group’s
product development process, thereby increasing the fitness for purpose of the
product offering.
A number of in-depth studies conducted jointly with customers have resulted in
the development of many new concepts and products.
Product and
process design
Industrialization
and marketing
CUSTOMERS
Launch
PRODUCT BOARD
service offering can therefore be expanded to include
automatic entrances for pedestrian traffic at the front
of a commercial building and for goods deliveries at the
rear of the building. A number of acquisitions in recent
years have strengthened the product range with solutions for all entrances and doors in which central control systems can minimize drafts and energy losses in
buildings.
RFID enhances security and is more user-friendly
The year 2012 saw the launch of
Seos, the world’s first commercial ecosystem for issuing and
managing digital keys on cell
phones with NFC technology.
ASSA ABLOY ANNUAL REPORT 2012
Since the acquisition of HID Global ten years ago,
ASSA ABLOY has had clear market and product leadership in secure identity solutions. Products and services
include keys, keycards and other identity carriers that
are encoded, giving access to doors and computers. The
codes and the electronic keys are managed securely and
distributed encrypted.
In North America, HID Global products are estimated to account for 70 percent of the installed base in
secure identity solutions. The position is also strong on
other markets. Acquisitions during the year have further
strengthened ASSA ABLOY’s position in this area.
Radio frequency identification (RFID) and wireless
communication allow the Group to create new security applications, while offering services that are userfriendly. RFID technology is also the basis for the rapid
expansion of logical access control, in which computers
are provided with ASSA ABLOY’s software that prevents
start-up if the user fails to present the right access card.
This technology has allowed HID Global to become
the global leader in ePassport programs and national
programs for various types of ID cards and driving
licenses, including the very advanced US Green Card
(a permit allowing a foreign national to live and work
permanently in the USA). Deliveries also include a range
of very high capacity ID printers, Fargo. The year 2012
saw the launch of a new model, which is particularly suitable for major ID card programs in the public sector, universities and large companies.
Wireless Aperio technology allows cost-effective connection of several doors in an existing access control system. Battery-operated electromechanical cylinders and
locks communicate wirelessly with the existing network,
avoiding expensive installation costs, new keycards and
new access systems. Today many leading manufacturers
of access control systems have integrated Aperio technology into their systems.
Cell phone replaces key
VingCard uses RFID and the wireless technology offered
by mobile telephony in combination with near field
communication (NFC). The hotel guest can use their cell
phone to book and pay online. The cell phone serves as
a code carrier, and guests can also use their cell phone
to unlock the door of their hotel room by holding the
phone close to the lock. More than half a million hotel
rooms out of ASSA ABLOY Hospitality’s installed base of
over 7 million rooms have been recently fitted with or
upgraded to RFID solutions, and interest in the technology continues to grow.
The year 2012 saw the launch of Seos, the world’s first
commercial ecosystem for issuing and managing digital keys on cell phones with NFC technology. Seos provides the customer with a complete system in which cell
phones replace ordinary keys and keycards for opening
doors in homes, workplaces, hotels, offices, hospitals,
PRODUCT LEADERSHIP 27
Product leadership
universities, and industrial and other commercial buildings. Access control can be centrally managed and security staff can, for example, send temporary digital keys
to visitors and service staff. Seos digital keys can be protected by PIN codes.
Total door opening solutions
are ASSA ABLOY’s strength
ASSA ABLOY’s sales are not only based on new innovations. The Group’ strength is the variety of traditional
and new products that can be combined to create a
large number of different door environments. ASSA
ABLOY has products for different climates, different
types of buildings, and plants with varied security and
safety requirements. By combining hundreds of thousands of different components to meet the needs of
consumers, architects and installers, the Group creates
products with the right quality, design and price, which
are ideal for both new buildings and renovations.
In recent years a number of products have been
launched with the aim of reducing energy consumption in buildings. By using doors with improved insulation together with new sealing products, loss of heat to
a cooler environment can be reduced, while in hot climates air conditioning costs can be cut. In addition, the
use of recycled materials in doors is increasingly possible
and desirable.
total door opening solution
magnetic lock
Automatic
door closer
Electronic strike plate
Electronic lockcase
Access control
Emergency
exit device
Handle
Electronic hardware
Electromechanical
cylinders
28 PRODUCT LEADERSHIP
ASSA ABLOY ANNUAL REPORT 2012
the Essence hotel lock is the ultimate minimalist lock
solution. All the lock’s electronic components are
housed in the door and are RFID and nFC controlled.
Albany insulated door for cold stores from ASSA ABLOY
Entrance Systems, designed for increased security,
improved productivity and lower maintenance costs.
the system is remotely controlled and validated in
accordance with the customer’s own rules.
Double-leaf door from ASSA ABLOY’s Group company
Pan Pan in China. An extra lock in the middle of the
door enhances security.
ASSA ABLOY’s Aperio wireless cupboard lock makes it
simple and cost-efficient to link access control to cupboards and pedestals requiring control and verification.
CLIQ Remote allows access to be controlled and managed from remote locations. the keys are programmed
remotely via the administration system and validated
in accordance with the customer’s own rules.
FARGO Industrial Series is a new advanced printer for
card personalization and issuance suitable for customers
requiring high card volumes and extra durability, such as
government ID cards, universities and large companies.
New innovations
drive growth
ASSA ABLOY is leading
development in fastgrowing electromechanical and entrance
automation technologies. New products and
solutions that create
cost and quality benefits
for the customer drive
growth.
ASSA ABLOY ANNUAL REPORT 2012
PRODUCT LEADERSHIP 29
Costefficiency
+ Constant major cost reductions
a strategic priority
+ Production restructuring program
providing significant results
+ Number of suppliers reduced
by 17 percent in five years
+ Price management for price leadership
Cost-efficiency
Successful
restructuring programs
ASSA ABLOY is endeavoring to radically reduce the breakeven point
through cost-efficiency and improved processes, to achieve the operating margin target of 16-17 percent. Restructuring programs are continuously improving the production structure and product costs. Flexible
final assembly close to the customer is combined with the transfer of
standard production to low-cost countries. Lean programs, outsourcing
and automated flows are further increasing cost-efficiency, which is a
condition for ASSA ABLOY being a price leader and contributing to
sustainable development.
PRODUCTION
STRUCTURE
ASSA ABLOY is moving from manufacturing everything itself to concentrating efficient assembly plants in highcost countries, transferring production
to low-cost countries, and sourcing
more non-critical components.
The restructuring programs have been very successful, resulting in considerable savings and increased
efficiency in the production units. Four programs
launched between 2006 and 2009 have led to the
closure of 53 production units. The majority of
the remaining production units in high-cost countries have switched from full production to mainly
final assembly and customization. As a result of this
restructuring, 6,765 employees have left the Group.
Ongoing restructuring activities include closures
or switching another 34 plants in high-cost countries
from full production to assembly and customization,
affecting 770 employees.
Standard production has been increasingly transferred to internal and external production units in
low-cost countries. Today 55 percent of products are
manufactured in low-cost countries, compared with
43 percent five years ago. This is also reflected in the
distribution of the Group’s staff, with 48 percent of
total employees now located in low-cost countries,
compared with 38 percent five years ago. The production process has been improved, while local presence
on end-customer markets in both high- and low-cost
32 COST-EFFICIENCY
countries has been strengthened for fast delivery and
efficient assembly of customized products.
Automated production in ASSA ABLOY’s Americas division.
ChAnGE In PRODuCtIOn StRuCtuRE
%
100
80
60
40
20
0
08
09
10
11
12
high-cost countries,
Full production
high-cost countries,
Assembly
Low-cost countries,
Production
Acquired production
units
An increasing volume of standard production has been transferred to
internal and external units in low-cost countries. the production process
has been improved, while local presence on end-customer markets
ensures fast delivery and efficient assembly of customized products.
ASSA ABLOY ANNUAL REPORT 2012
PROFESSIONAL SOURCINg
A sharp increase in sourcing is an important element in a more cost-efficient
structure in which assembly is concentrated in high-cost countries. the ambition
is to have a limited number of high-quality suppliers as strategic partners based
on delivery contracts, category management, and development, quality and
sustainability guidelines.
Extensive work is in progress to develop competence,
create category responsibility, and coordinate and
streamline purchases of raw materials and components.
This is driven by the outsourcing of component supply
to external suppliers in low-cost countries and the ambition to exploit economies of scale.
Increased outsourcing has resulted in material costs
rising from 28 to 36 percent of sales in five years, or an
increase of 85 percent in absolute terms. This makes
totally new demands on the purchasing organization,
which has moved from simple call off to professional
sourcing. Today the divisions have specialized purchasing managers for each component category. Central
purchasing centers in the Group efficiently manage
different component categories. These activities have
resulted in a 17 percent reduction in the number of
suppliers over the past five years, despite a 34 percent
increase in sales over the same period as a result of
organic and acquired growth.
numBER OF SuPPLIERS
ShARE OF tOtAL PuRChASES In LOW-COSt COuntRIES
Number
%
10,000
60
9,000
50
8,000
7,000
40
6,000
30
5,000
4,000
08
09
10
11
12
Reducing the number of suppliers helps to cut costs and improve
quality. By active efforts, ASSA ABLOY has reduced the total number
of suppliers by 17 percent over the past years.
20
08
09
10
11
12
the share of the Group’s total purchases of raw materials, components
and finished goods from low-cost countries has increased from 38 percent to 55 percent over the past five years.
Cost-efficiency increases with a larger share of purchases from a smaller number of high-quality suppliers, based on delivery contracts and
development, quality and sustainability guidelines.
ASSA ABLOY ANNUAL REPORT 2012
COST-EFFICIENCY 33
Cost-efficiency
PROCESS
DEVELOPMENT
ASSA ABLOY applies a number of tested
methods to increase cost-efficiency.
Lean methods include all processes and
result in increased customer value
using less resources at all stages. value
Analysis and value Engineering (vA/vE)
involve in-depth analyses of products
and production processes to avoid
materials waste. Seamless Flow
optimizes the Group’s flows through
It standardization and integration of
information dissemination.
Today all ASSA ABLOY’s major workplaces have wellfunctioning Lean programs and organization for both
production and administration. Implementation is
ongoing. The results show more efficient production
flows, better materials cost control, improved decisionmaking procedures, shorter development times, and
increased collaboration with the marketing and sales
organization. In 2012 the Group implemented more
Lean projects than in any previous year.
Value Analysis focuses on eliminating materials
waste, improving products and increasing customer
value in existing products through a structured process. The same applies to Value Engineering, which
is part of the product development process. ASSA
ABLOY can point to results involving product cost
savings of between 25 and 40 percent. A total of over
124 studies were conducted during the year involving
1,200 employees. Since the methodology was introduced in 2007, the Group has made savings of more
than SEK 570 M as a result of VA/VE.
ASSA ABLOY aims to maximize resources for innovation, product development, production and sales.
Other operations, i.e. administrative support functions,
account for 30 percent of all staff and more than 40 percent of the total personnel cost. This is equivalent to
around 25 percent of sales. The most important activity
for streamlining these functions across the business is
automated flows, known as Seamless Flow. The goal is to
reduce or totally eliminate manual work in all processes
so that more resources can be transferred to production
and sales. Seamless Flow is a process project in which a
coordinated and optimized IT structure is fundamental.
On the customer side, this includes e-ordering, while
on the supplier side, e-purchasing projects are in progress. Manufacturing, product development, logistics
and other internal processes are now included in Seamless Flow.
The most important activities in IT optimization
include a reduction in the number of ERP systems from
more than 120 to six. The number of data centers is to be
reduced from 55 to five worldwide, while today’s more
than 80 networks are to be consolidated into just one.
The implementation of Seamless Flow and the coordination and optimization of the IT structure will also enable
the more efficient coordination of support functions.
Price management
As a market leader, ASSA ABLOY also has the role of a
price leader. A high innovation and product development rate and constant streamlining of all areas of the
business provide the basis for the best value at the best
price for customers. ASSA ABLOY operates an active
price management program, with a shift from costbased to value-based pricing, systematic and fact-based
monitoring of price trends and discounting, a detailed
calculation of shipping costs, and a price strategy that
manages the significant differences between new sales
and the aftermarket.
Lean methods are used
to increase efficiency in
all major workplaces and
administrative processes.
34 COST-EFFICIENCY
ASSA ABLOY ANNUAL REPORT 2012
mobile access control
prized at netflix
netflix, founded 1997, is the leading online subscription service streaming
tv episodes and movies over the internet. As netflix has a mobile, global
work force, the company recently began exploring various ways of using
cell phones for physical and logical access control. A pilot project for
mobile access control was implemented in collaboration with hID Global.
Challenge:
Unlike many other companies, Netflix’s over 1,000 employees at headquarters do not need to use photo ID badges. Instead
they have been using pocket-size ProxKey key fobs from HID Global, which offer contactless technology smoothly and conveniently. Netflix has a totally paperless employee induction system, which is entirely online.
Solution:
HID Global’s solution of sending digital keys direct to new employees’ cell phones was intended to help further streamline this
process. multiCLASS SE readers were configured to read both contactless keycards and NFC-enabled smartphones with Seos
digital keys. Participants in the pilot project emphasized the increased security as one of the many advantages of using smartphones for opening doors. In addition, 90 per cent of participants found the solution user-friendly, while 88 percent stated
that they would like to use a smartphone to open all locked doors at Netflix. According to 81 percent of the respondents, the
fact that Netflix is testing and implementing mobile access solutions makes the company a more fun and exciting workplace.
ASSA ABLOY ANNUAL REPORT 2012
35
Growth and
profitability
+ Sales growth from SEK 3 billion to
SEK 47 billion in 18 years
+ Total average sales growth
of 16 percent since 1994
+ Operating income (EBIt), excluding items
affecting comparability, has increased
from SEK 156 M to SEK 7,501 M, by
more than 4,700 percent, since 1994
+ Earnings per share has increased
by 1,300 percent to SEK 13.84 since 1994
Growth and profitability
Strategy to deliver stable,
long-term value
value-creating strategies for all the Group’s stakeholders have enabled
ASSA ABLOY to become by far the largest global supplier of door opening
solutions since its formation in 1994. Organic growth and acquisitions,
market-leading technological development and cost-efficiency have
transformed the company from a traditional, regional lock company into a
modern, multinational security company in intelligent door opening solutions.
growth from SEK 3 billion to
SEK 47 billion in 18 years
Since ASSA ABLOY’s formation in 1994, Group sales have
risen from SEK 3 billion to SEK 47 billion. Today the Group
has around 43,000 employees, compared with 4,700
employees in 1994. Operating income (EBIT) excluding
items affecting comparability has increased from SEK
156 M in 1994 to SEK 7,501 M in 2012, an increase of
over 4,700 percent.
ASSA ABLOY was founded when Securitas (Sweden)
and Metra (Finland) merged their lock businesses.
The company had operations in Sweden, Finland, Norway, Denmark and Germany at that time. The strategy
of increasing market presence through organic and
acquired growth has been successful. Global market
leadership involves Group operations in 70 countries
and sales worldwide. Since 2007, the Group has focused
on enhancing its presence on emerging markets in
Asia, eastern Europe, the Middle East, Africa and South
America. Sales on these markets are growing rapidly
and account for 25 percent of total Group sales, while
China accounts for 9 percent. Sales on emerging markets
4,700%
Operating income
(EBIT) has increased
by over 4,700 percent
in 18 years.
New technology areas
New technology areas and innovative products are the
most important sources of organic growth. The Group
SALES AnD OPERAtInG InCOmE (EBIt)
 Sales
Sales, SEK M
Operating income (EBIT)
EBIT, SEK M
50,000
7,500
40,000
6,000
30,000
4,500
20,000
3,000
10,000
1,500
0
96 1 971
96
97
38 gROWTH AND PROFITABILITY
totaled SEK 115 M or 3 percent of total Group sales 18
years ago.
Today more than one in ten lock purchasers worldwide
chooses a lock from ASSA ABLOY, which has the world’s
largest installed base of locks and lock systems. Demand
for safety and security is constantly increasing worldwide, and the Group has never had a wider product range,
higher market penetration and so many innovative new
products.
At the start, the product range largely consisted of
mechanical security products such as traditional locks
and handles for entrance doors, with market penetration mainly in northern and central Europe. ASSA ABLOY
has become the industry’s global technology leader as a
result of its product leadership strategy combined with
acquisitions. The product offering has gradually widened
from traditional lock products to include security doors,
entrance automation and secure identity solutions.
981 991
98
99
00 1 011 021 031 04
00
01 02 03 04
05
05
062
06
07
07
08 2, 3 09 2, 3 10
08
09 10
11 2 12
11
12
0
¹ 1996–2003 have not been adjusted for IFRS.
² Excluding items affecting comparability.
³ Reclassification has been made.
ASSA ABLOY ANNUAL REPORT 2012
Strategy
market
presence
Product
leadership
Costefficiency
Increasing growth in the core
business.
Developing products with
enhanced customer value in
close collaboration with endusers and distributors.
Continuous streamlining of the
production structure, with flexible assembly and final assembly
in high-cost countries close to
the customer and the transfer of
standard production to low-cost
countries.
Exploiting the strength of the
brand portfolio and the sales
force.
Expanding into new markets
and segments.
Innovation and product
development to increase
cost-efficiency.
Quality product development –
for quality products.
Cost benefits from a substantial
increase in outsourcing.
Increased cost-efficiency
through methods and processes
such as Lean, VA/VE and Seamless Flow.
Efficient price management for
price leadership.
targets
Growth and profitability
10 percent annual growth through a combination of organic and acquired growth.
An operating margin of 16 to 17 percent.
The financial targets are long-term and should be regarded as an average over an economic cycle.
therefore invests heavily in R&D. Investments in product development have increased by between 10 and 20
percent per year in recent years, and products launched
in the past three years account for a quarter of sales.
The Group employs over 1,350 development engineers.
Electromechanical products now account for 46 percent of Group sales, and the growth rate remains high.
Value creation is driven by clear cost-efficiency strategies. Group-wide programs to streamline products and
the production structure, and cost savings in production processes, sourcing and administration are prerequisites for good profits, high profitability and stable
finances. As a result, ASSA ABLOY contributes to longterm sustainable business, which creates value for customers, employees and shareholders, and to social sustainable development.
ASSA ABLOY’S DEvELOPmEnt AnD ACQuISItIOnS 2008-2012
2008 – Wireless
technology launched
the new Aperio wireless
technology is launched, making
it easy for customers to upgrade
their access control systems.
Other acquisitions: Beijing
tianming and Shenfei (China),
Gardesa and valli & valli (Italy),
Copiax (Sweden), Cheil (South
Korea) and Rockwood (uSA).
2009 – Strong results
despite weak market
Acquisition of the Ditec
Group, a leading company in
automatic doors, industrial
doors, high-performance
doors and gate automation.
Other acquisitions: Portsystem
2000 (Sweden), maiman (uSA)
and Cerracol (Colombia).
2010 – Acquisitions strengthen
customer offering in Asia
Acquisition of Pan Pan, China’s
largest manufacturer of highsecurity steel doors, King Door
Closers, South Korea’s leading
manufacturer of door closers,
Paddock, the uK’s leading
manufacturer of multi-point
locks, ActivIdentity, a leader
in secure identity solutions
(uSA), Security metal Products
(uSA) and LaserCard (uSA).
Other acquisitions: Interest in
Agta Record (Switzerland).
2011 – global leader in
entrance automation
Acquisition of Crawford Entrance
Solutions and FlexiForce, which
strengthen the customer offering
in industrial doors, docking
solutions and garage doors.
Other acquisitions: Swesafe
(Sweden), Portafeu (France),
metalind (Croatia), Electronic
Security Devices (uSA), and
Angel metal (South Korea).
2012 – Acquisitions strengthen
Entrance Systems range
the acquisition of Albany Door
Systems, a global leader in
high-performance doors, is
completed. ASSA ABLOY also
acquires 4Front (uSA), a leader
in docking systems, Securistyle
Group holdings Limited
and traka (uK), Frameworks
manufacturing (uSA), and helton
(Canada), which manufactures
overhead door hardware. In
China, the Group acquires
the hardware manufacturer
Shandong Guoqiang.
Other acquisitions: Dynaco
(Belgium) and Shantou Longhu
Sanhe metal holdings (China).
In addition to the acquisitions listed above, ASSA ABLOY has acquired a number of smaller companies.
ASSA ABLOY ANNUAL REPORT 2012
gROWTH AND PROFITABILITY 39
ASSA ABLOY’s
divisions
ASSA ABLOY is divided into three regional and two global divisions.
Regional divisions
The regional divisions manufacture
and sell mechanical and electromechanical locks, digital door locks,
cylinders and security doors adapted
to the local market’s standards and
security requirements.
Americas
Share of sales
Share of operating income
21% 25 % Read about the division’s operations and performance
on pages 44–45
Global Technologies
The global divisions manufacture and
sell electronic access control, identification products and entrance automation
on the global market.
Share of sales
Share of operating income
13 % 14 % Read about the division’s operations and performance
on pages 48–50
Asia Pacific
EMEA
Share of sales
Share of operating income
28 % 29 % Read about the division’s operations and performance
on pages 42–43
Entrance Systems
Share of sales
Share of operating income
24 % 20 % Read about the division’s operations and
performance on pages 52–53
Share of sales
Share of operating income
14 % 12 % Read about the division’s operations and
performance on pages 46–47
EMEA
Growth and continued good
profitability in a year of
challenging market conditions
2012 was a challenging year with continuing weak economic
activity and austerity measures seen across many European
countries. Emerging markets in Eastern Europe, the Middle
East, Turkey and Africa experienced strong demand growth.
The division’s investments in new products and market leadership contributed to increased sales. Operating income and
margin remained at a good level due to intensive efforts on
market presence, cost-efficiency and price management.
EMEA’s markets are very diverse, with a major difference
in product demand due to local differences in building
and security standards and climate. ASSA ABLOY’s local
companies have a good knowledge of local lock standards and long-term relationships with their distributors, stabilizing demand. In addition, the aftermarket is
important, with a large installed lock base.
The sales organizations are coordinated under the
ASSA ABLOY master brand. Market presence was strengthened through the continued consolidation of brands
and products. A more complete product program now
reaches more customers. Trade fair participation under
the ASSA ABLOY brand was more intensive than ever. Marketing was further developed through unique online and
offline campaigns for Yale, including TV advertising that
attract much attention.
Successful specification sales of total door opening
solutions continued. The division has 240 dedicated specification sales representatives, a sharp increase. Contacts
with key partners, such as architects and security experts,
were continuously strengthened. During the year more
than 12,000 projects were specified, involving more than
1,400,000 doors. A large proportion of these projects were
in the commercial sector, such as universities, hospitals and
major commercial buildings.
Demand in Eastern Europe, Turkey the Middle East
and Africa, which jointly account for around 17 percent
of sales, is growing substantially. Sales in these emerging
markets rose more than 13 percent during the year and
were particularly strong in Russia. This is the result of a
deliberate investment in a larger distribution network
for ABLOY products. Electromechanical locks and solutions for the commercial sector account for a substantial
fast-growing share of sales. Several large deliveries are
being made to the sports facilities in Sochi, Russia for the
2014 Winter Olympics.
In Africa sales rose by 11 percent. The African continent is expected to have major potential due to its rapid
urbanization rate and increased standard of living. EMEA
Offering: Mechanical and electromechanical locks, digital
door locks, security doors and fittings.
diverse markets. Products are sold primarily through a number
of distribution channels and also directly to end users.
Markets: EMEA is the leader in its product areas in Europe, the
Middle East and Africa. The commercial segment accounts for
around 60 percent of sales and the residential segment for 40
percent. EMEA comprises a large number of Group companies
with a good knowledge of their local and in many respects
Brands: ABLOY, ASSA, IKON, Mul-T-Lock, TESA, UNION, Vachette
and Yale.
Report on the year
• Sales: SEK 13,382 M (13,030) with 1 percent organic
growth.
• Operating income (EBIT) excluding restructuring
costs: SEK 2,279 M (2,203).
• Operating margin: 17.0 percent (16.9).
Market development
The Cliq Remote key management system is controlled by
cell phone.
The mature markets were marked by subdued demand
for most of the year, affected by the fiscal problems and
tough austerity measures in southern Europe and a
deepening economic slowdown in western Europe. The
Nordic and German-speaking countries showed strong
growth in the first half of the year, which weakened in
the second half. France and the UK showed weak growth.
Sales fell relatively sharply in southern Europe. The
emerging markets in Eastern Europe, the Middle East,
Turkey and Africa continued to grow rapidly, resulting in
strong sales growth for the division.
Market presence
FACTS ON EMEA
42 EMEA DIVISION
Acquisitions: Traka and Securistyle (UK).
ASSA ABLOY ANNuAL REpORT 2012
is positioning itself on the markets, which are expected to account for
90 percent of Africa’s GDP by 2015.
Two acquisitions of British companies complemented the product
portfolio. Securistyle strengthens the division’s position in window
hardware on mature markets. The company has sales of around SEK 225
M. Traka is a leader in electronic key management and secure storage
solutions, with high innovation competence and growth. Sales total
around SEK 140 M.
product leadership
Efficient product development is the most important activity for creating organic growth. The Group’s new development process focuses on
enhanced customer value, while the products are more cost-efficient
and maintain a higher quality. Group-wide product platforms with
fewer components contribute to enhanced customer value and lower
costs. Substantially increased investment in R&D in recent years has
increased the share of products launched in the past three years to over
25 percent, a doubling in three years.
The division’s High Impact products were a major success during the
year. There are currently six such products, which have been developed
in the past two years. Particular importance has been placed on a high
technical standard and modern design. Marketing is coordinated across
the whole division with special competence teams that cooperate
closely with the local sales teams.
The new door closer range under the ASSA ABLOY brand – a High
Impact product – has been a major success. Launched in 2011, sales have
now reached over EUR 15 M or around 1 percent of the division’s sales.
Demand for the other five High Impact products is increasing sharply:
Aperio, an electromechanical lock that can be wirelessly connected to
networks; Cliq Remote, another innovative mobile electromechanical
cylinder system; Smartair, an access control system; DDL, digital door
locks, and Code Handle, a digital door and window handle. Additional
products launches and further product development are in progress.
Cost-efficiency
Cost-efficiency efforts have focused on the division’s production structure. The relocation of component production to low-cost countries continued during the year. The remaining plants in western Europe are being
rapidly transformed into fewer, more efficient plants for final assembly
and product customization in close contact with demand growth.
The number of production plants has almost halved since 2005.
The Group’s broad, deep programs for Lean production methods, Seamless Flow in various administrative processes, as well as outsourcing and
more efficient supply management run parallel to the rationalization
of the production structure. The program to reduce the number of ERP
systems and harmonize IT use is progressing country by country and is
estimated to be completed with a common ERP system by 2016. Several
important steps were taken in supply management during the year. The
share of purchases in low-cost countries continued to increase and is
beginning to approach the short-term target of 40 percent. The share of
external suppliers is in the process of being halved, compared with 2005.
The division coordinates purchases in major categories and is changing
the procurement process from tendering to target cost contracts.
Implementation of VA/VE methods continued to yield positive
results. Product development aims for major cost savings through a
sustainable approach to materials consumption, logistics and packaging. Sustainability efforts were intensified through several program
activities across the whole division, especially the introduction of better measuring methods. Investments are being made to reduce energy
consumption and CO2 emissions in production plants, while new methods were introduced for process water purification.
ASSA ABLOY ANNuAL REpORT 2012
The number of specification sales representatives has increased sharply.
KEY FIGURES
SEK M
2011
2012
13,030
0
2,203
16.9
13,382
1
2,279
17.0
Capital employed
Capital employed
– of which goodwill
Return on capital employed1, %
8,950
5,564
22.0
9,217
5,846
22.6
Cash flow
Cash flow2
Average number of employees
2,142
10,071
2,241
10,260
Income statement
Sales
Organic growth, %
Operating income (EBIT)1
Operating margin (EBIT)1, %
1
2
Excluding items affecting comparability of SEK 587 M in 2011.
Excluding restructuring payments.
SALES AND OPERATING INCOME
SEK M
SEK M
14,000
2,800
12,000
2,400
10,000
2,000
 Sales1
Operating income2
1
1,600
8,000
6,000
08
09
10
11
12
1,200
2
Reclassification has been
made for 2008 and 2009.
Excluding items affecting
comparability in 2008, 2009
and 2011.
SALES BY PRODUCT GROUP
Mechanical locks, lock
systems and fittings, 62 %
Electromechanical and
electronic locks, 24%
Security doors and
hardware, 14 %
EMEA DIVISION 43
Americas
Increased market presence and innovation strengthen sales and earnings
Sales rose mainly due to growth in high-security and electromechanical products, as well as a recovery in the North
American residential market. Apart from Brazil, demand continued to grow in Latin America. Several years of considerable
investments in market presence and product development
resulted in a strengthened market position. Continued costefficiency measures and increased customer activities contributed to an increased operating margin.
Report on the year
• Sales: SEK 9,671 M (8,906) with 4 percent organic
growth.
• Operating income (EBIT) excluding restructuring
costs: SEK 2,007 M (1,812).
• Operating margin: 20.8 percent (20.3).
Market development
Security Metal Products
steel security door with
frosted glass with Sargent
Harmony Wiegand lock
from Americas division.
This year was the second year of growth following the
deep recession of 2009–2010. Sales growth was strong
overall in Central and South America, and additionaly for
high-security and electromechanical products in the institutional and commercial segments. Demand for mechanical lock products and security doors was stable. The division was able to meet increased demand and strengthen
its market presence with a number of new products and
solutions in both North and Latin America.
The residential market in North America showed
strong growth. Renovations and upgrades have shown
relatively stable growth in recent years, which strengthened in 2012.
The Latin American markets showed stable growth
with increased demand driven by urbanization and
growing prosperity. The exception was Brazil, where new
construction fell due to high interest rates.
Market presence
In the North American market there is a clear distinction
between products for the residential segment and those
for the commercial segment. The distribution channels
are also separate. Safety and security requirements are
higher in the commercial segment, particularly regarding fire and evacuation safety. The division has therefore
had a segmented marketing and sales organization for a
number of years to meet each customer group’s specific
demands, combined with experts in a number of areas
such as electronic access control.
Considerable investments have been made in recent
years to strengthen the division’s market presence. In
the USA, direct sales people account for 60 percent of
marketing and sales staff, compared with 30 percent in
2004. The number of specification sales representatives
and specialist teams has increased sharply. These target
leading architectural firms with training and the introduction of new products and solutions in their role as the endcustomer’s door solution expert. A large training program
has been devoted to the latest electromechanical products
and solutions. These have experienced strong demand
growth on the replacement market in recent years.
ASSA ABLOY has the industry’s leading brands in
North America. The main emphasis in brand management is on the overall message that ASSA ABLOY is the
leading player in total door opening solutions. During
the year the division took part in over 50 trade fairs. Fixed
and mobile exhibitions continued to attract an increased
number of visitors in over 300 cities in North America.
The acquisition of Frameworks Manufacturing and
Alarm Controls Corporation strengthen the division’s
offering of total door opening solutions for commercial
and institutional customers in the USA and Canada.
product leadership
The division has doubled its R&D investments since
2009. The main focus is on the fast-growing electromechanical area and products that support the devel-
FACTS ON AMERICAS
Offering: Mechanical and electromechanical locks, cylinders,
door fittings, security doors and door frames.
Markets: US, Canada, Mexico, Central America and South America. 88 percent of sales are in the USA and Canada where ASSA
ABLOY has an extensive sales organization and sells its products
through distributors.
Institutional and commercial customers are the largest endcustomer segments and account for 90 per cent of sales. The
private residential segment is accounts for 10 percent of sales.
Sales in South America and Mexico take place mainly through
44 AMERICAS DIVISION
distributors, wholesalers and DIY stores. Sales in these markets
are more evenly distributed between the commercial and residential segments.
Brands: Some of the leading brands are Ceco, Corbin Russwin,
Curries, Emtek, Medeco, Phillips, SARGENT and La Fonte.
Acquisitions: Frameworks Manufacturing Inc. and Alarm
Controls Corporation (USA).
ASSA ABLOY ANNuAL REpORT 2012
Mobile Innovation Showrooms bring door opening solutions to architects, end-users, integrators and other customers.
opment of building standards. Nearly 300 significant products and
solutions have been launched in the past three years. Design and climate-smart solutions are increasing in importance. The share of overall
sales from new products exceeded 20 percent during the year, contributing substantially to a stronger market position.
The year saw the launch of new wireless-controlled digital locks for
the residential segment. Consequently, the division has strengthened
its product offering for the fast-growing home automation market
(systems to control and monitor a number of different functions in the
home via electronic networks).
Increased commitment to sustainable construction practices is a
significant trend. Buildings account for 40 percent of all energy consumption in the USA, with 5 percent leakage through doors. ASSA
ABLOY has the widest offering of certified doorway products designed
to meet sustainable construction regulations and guidelines, including
energy efficiency, materials and resources, and indoor environmental
quality. This offering experienced considerable demand during the year.
Cost-efficiency
Americas division’s production structure has been undergoing major
rationalization since 2005. The number of production plants has been
reduced by 40 percent, including 14 acquisitions during the period.
A total of 16 factories have been consolidated and a number of centers of excellence for development and manufacturing have been created. Implementation of Lean projects continued at an undiminished
rate not only in production but also in administration, where more
than one-third of the projects are being implemented. A large number
of products have been reviewed and processes simplified using VA/VE
methods in product development. The number of parts in a SARGENT
electromechanical lock has, for example, been reduced from 48 to 20,
with improvements in the performance.
More efficient supply management and increased outsourcing to
low-cost countries have helped to nearly double cost savings since
2008. The number of suppliers has fallen by 30 percent, while the share
of materials and components sourced from low-cost countries has
increased substantially.
The implementation of Seamless Flow activities continued to give positive results. Production is moving towards the ‘paperless plant’. A large
number of workstations have been modernized, with robots and semi- or
fully automated machinery. Order management has been streamlined,
not least due to the introduction of fully automated e-commerce mainly
for sales of standardized products to wholesalers, where the share of
e-commerce has risen to over 50 percent in just a few years.
ASSA ABLOY ANNuAL REpORT 2012
KEY FIGURES
SEK M
2011
2012
Income statement
Sales
Organic growth, %
Operating income (EBIT)1
Operating margin (EBIT)1, %
8,906
2
1,812
20.3
9,671
4
2,007
20.8
Capital employed
Capital employed
– of which goodwill
Return on capital employed1, %
8,468
6,041
22.8
8,301
5,913
23.6
Cash flow
Cash flow2
Average number of employees
1,731
6,658
1,797
6,620
1
2
Excluding items affecting comparability of SEK 150 M in 2011.
Excluding restructuring payments.
SALES AND OPERATING INCOME
SEK M
SEK M
12,000
2,400
10,000
2,000
8,000
1,600
 Sales1
Operating income2
1
6,000
4,000
1,200
08
09
10
11
12
800
2
Reclassification has been
made for 2008 and 2009.
Excluding items affecting
comparability in 2008, 2009
and 2011.
SALES BY PRODUCT GROUP
Mechanical locks, lock
systems and fittings, 49 %
Electromechanical and
electronic locks, 39 %
Security doors and
hardware, 12 %
AMERICAS DIVISION 45
Asia Pacific
Continued expansion in Asia and rapid
growth in digital lock solutions
The division’s sales increased on the important Chinese
market, where demand slowed during the year. Growth
was strong on the Southeast Asian emerging markets, while
it was negative in Australia, which resulted in a somewhat
lower operating margin but improved operating income.
Demand for digital lock solutions increased rapidly in Asia
where the Group is the clear market leader.
Report on the year
• Sales: SEK 7,224 M (6,633) with 3 percent organic
growth.
• Operating income (EBIT) excluding restructuring
costs: SEK 978 M (933).
• Operating margin: 13.5 percent (14.1).
Market presence
The high growth rate in China slowed during the year.
The underlying growth factors in the country – the
urbanization trend, industrialization, new construction
and increased prosperity – continue to be important
growth drivers. The credit restrictions imposed by the
Chinese government in late 2011 to avoid overheating
in the economy resulted in a lower investment tempo
in the domestic economy, while the export sector continued to grow strongly. All ASSA ABLOY’s product areas
experienced strong growth. The Group has a strong and
clearly leading position on the advanced South Korean
market, with a wide product range of total door opening
solutions. The domestic market was weak, while the considerable export sales of the Group companies iRevo and
King continued to grow at a high rate. Demand for digital door locks is considerable in South Korea and iRevo is
the market leader. The company collaborates with other
ASSA ABLOY has a very strong position on the major
emerging market of China. The need for security is
increasing strongly in pace with urbanization, prosperity and new housing construction. Demand for security
doors is increasing rapidly and the division sold over two
million units in 2012. There is tough competition from
a very large number of small local firms, whose main
weapon is low prices, but business failure has accelerated in the wake of lower growth and higher costs.
ASSA ABLOY’s market share remains small, but expansion potential is strengthened by the increased need for
consolidation.
The division continued to make major investments in
the specification of door opening solutions and training.
The number of specification sales representatives doubled during the year.
Market presence in China strengthened as a result of
the acquisition of Sanhe Metal, with sales of SEK 130 M.
This gives the division a comprehensive position in the
fire door segment in the fast-growing coastal regions.
The acquisition of Guoqiang, with sales of around SEK
Offering: Mechanical and electromechanical locks, digital
door locks, high-security doors and hardware.
mature markets with established lock standards. Renovations
and upgrades account for the majority of sales.
Markets: China accounts for 50 percent of sales, South Korea
and the rest of Asia for 20 percent, Australia and New Zealand
for 20 percent, and exports to the rest of the world for 10 percent. The Asian countries are emerging markets without
established security standards. New construction accounts
for around three-quarters of sales. In China, the same types of
lock, handle and hardware are often used in both homes and
workplaces. The production units in China also supply ASSA ABLOY’s other divisions. Australia and New Zealand are
Brands: In China Baodean, Guli, Pan Pan, Liyi (Shenfei), Doormax,
Beijing Tianming, Golking, Sahne and Longdian. In South
Korea Gateman, Angel and King and the global Yale brand. In
­Australia and New Zealand, the largest brands are Lockwood
and Interlock.
Market development
Door designed by ASSA
ABLOY’s Group company
Pan Pan in China.
Group companies to adapt and export digital door locks
to the residential markets in China, Southeast Asia, India,
Australia, Singapore, and the EMEA and Americas divisions, a successful expansion that is ongoing.
Growth in India and several other countries in Southeast Asia continued to increase at a high rate. The division’s sales in India increased by 18 percent following
significant investments in market presence and the marketing of new products. Sales also increased rapidly in
Vietnam and Indonesia from low levels.
The Australian market position is very strong.
Demand, which has been weak since 2011 due to a low
level of new construction and fewer government stimulus measures, improved towards the end of the year.
Facts on Asia Pacific
Acquisitions: Sanhe Metal and Guoqiang (China). Sale agree­
ment: Wangli (China).
46 Asia Pacific DivisionASSA ABLOY Annual Report 2012
Airports are an important customer segment for ASSA ABLOY.
600 M, opens up a new, growing segment for the division in window
hardware in China. Guoqiang is one of China’s leading manufacturers
of window hardware with a strong patent portfolio. In 2012, an agreement was reached to sell the co-owned Chinese company Wangli, with
annual sales of SEK 600 M.
Following substantial sales growth, the division established its
own sales companies in the highly populated countries of Vietnam
and Indonesia, which have a population of 85 million and 220 million
respectively. Urbanization, industrialization and rapidly rising prosperity provide significant growth potential on these markets.
Product leadership
The Group’s product leadership is an important factor for market
penetration in Asia. Demand for digitalization and access control is
increasing rapidly and sales more than doubled in the region. In China,
the number of digital door lock distributors rose from 50 to 100, with
major successes on the residential market.
The investment in India was strengthened by the development of
several unique products for this major market, contributing to the
division’s high share of products launched in the past three years of
31 percent.
Cost-efficiency
The division’s Chinese production units account for a large share of the
Group’s production and employees. The division had about 14,600
employees in China. More than 90 percent of the Chinese production
is sold on the domestic market and less than 10 percent is exported to
other regions.
The number of employees fell by around 1,300 people, excluding
acquisitions, compared with 2011, as a result of intensified implementation of Lean processes, an increased share of purchases and outsourcing, and the automation of production processes. These efficiency
measures are necessary to meet increased cost pressure particularly
from wage increases in China, but also to reduce the division’s sensitivity to cyclical fluctuations, thereby improving margin growth. Systematic efforts to increase the share of coordinated purchases are increasing rapidly and give positive results. The efforts will continue in 2013.
KEY FIGURES
SEK M
2011
2012
Income statement
Sales
Organic growth, %
Operating income (EBIT)1
Operating margin (EBIT)1, %
6,633
9
933
14.1
7,224
3
978
13.5
Capital employed
Capital employed
– of which goodwill
Return on capital employed1, %
4,278
3,410
23.6
5,168
4,326
20.7
Cash flow
Cash flow2
Average number of employees
912
15,784
1 348
15,284
Excluding items affecting comparability of SEK 48 M in 2011.
Excluding restructuring payments.
1
2
SALES AND OPERATING INCOME
SEK M
SEK M
8,000
1,000
7,000
900
6,000
800
5,000
700
4,000
600
3,000
500
2,000
1,000
08
09
10
11
12
 Sales1
Operating income2
Reclassification has been
made for 2008 and 2009.
2
Excluding items affecting
400
comparability in 2008, 2009
300 and 2011.
1
SALES BY PRODUCT GROUP
Mechanical locks, lock
systems and fittings, 54 %
Electromechanical and
electronic locks, 8 %
Security doors and
hardware­, 38 %
ASSA ABLOY Annual Report 2012Asia Pacific Division 47
Global Technologies
Continued good growth
with new products and services
Demand was strong in the markets for upgrading and
supplementing existing systems. Sales increased, driven
by launches of new products and services and successful
expansion in emerging markets. Continued streamlining
and cost-efficiency programs contributed to a significant
profit increase and a strong margin improvement.
Report on the year
• Sales: SEK 6,262 M (5,756) with 6 percent organic
growth.
• Operating income (EBIT) excluding restructuring
costs: SEK 1,073 M (897), a 20 percent increase.
• Operating margin: (EBIT): 17.1 percent (15.6)
HID Global’s iCLASS SE technology contributes to increased
security, mobility and flexibility.
Global Technologies division consists of two business
units: HID Global and ASSA ABLOY Hospitality.
HID GLOBAL
Market development
Demand remained strong in all markets for upgrading
and supplementing existing systems. The traditional
product areas in identity and access management
showed strong, stable demand. Sales rose as a result of
a successful focus on emerging markets, such as China,
Indonesia, Russia and Brazil, and marketing of new products and services in recent years. The division made a
strong contribution to the Group’s core operations in
electronic door opening solutions, with high growth in
physical access control, accounting for 40 percent of the
Group’s sales in 2012.
Demand for secure identity solutions is increasing
in all markets. HID Global improved its market-leading
position through the launch of innovations in mobile
access and identity solutions, more efficient card printers, and new technology in converged access solutions
combining physical with logical access control and other
integrated solutions.
Market presence
HID Global is making a long-term investment in its global
leading market presence, with considerable success in
the institutional and commercial markets. Increased
emphasis on unique selling points, a scalable ecosystem of security solutions, and a global partner program
further strengthened the brand position. Brand consolidation has been very successful, resulting in the consolidation of 17 brands into a single HID Global brand
in just five years. All product lines have gained wider
distribution worldwide, strengthening brand loyalty
while a complete product portfolio can be offered to
all customers. The focus on market segmentation continued and resulted in deeper customer dialogue and
a stronger customer offering across all product lines.
The development of specification expertise continues
with investments in special teams for global advice and
development in cooperation with end-customers. For
example, the focused sales initiative in Government ID
Solutions has resulted in a leading position in four key
segments: e-documents, ID readers, personalization and
issuance solutions, and professional support solutions.
HID Global’s solutions are in many important national
programs for various types of ID cards, passports, driving
licenses and vehicle registration, including 27 ePassport
programs and 49 national ID/eID programs. HID Global
reader technology is used by the world’s five largest document reader suppliers.
The American company EasyLobby, a specialist in visitor management solutions, was acquired at the end of
2011. The Group company was successfully integrated
in 2012.
product leadership
The global product strategy is to offer a complete ecosystem for secure identity management with solutions
for all parts of the value chain. In 2012 the main focus
FACTS ON GLOBAL
TECHNOLOGIES
Offering: HID Global is a global leader in secure identity solutions, primarily in identity and access management, and in contactless identification technology solutions.
ASSA ABLOY Hospitality is a global leader in electronic lock
systems and safes for hotels and cruise ships.
48 GLOBAL TECHNOLOGIES DIVISION
Markets: Customers are mainly in the institutional and commercial sectors worldwide.
Brands: HID Global and VingCard.
Acquisitions: Codebench, USA.
ASSA ABLOY ANNuAL REpORT 2012
was on improving convenience in use and installation, product and system security, and systems integration. Quality assurance work showed
positive results. Customer satisfaction with delivered quality was very
high.
ASSA ABLOY has a world-class product development process. HID
Global has broadened the innovation process to include systems integration and an overall approach comprising development platforms,
as well as collaborations with external partners, customers and other
parts of the Group.
Several new products and solutions were launched during the year.
FARGO HDP8500 is an industrial class ID printer, which is particularly
suitable for large government ID card programs and other demanding
environments. It allows considerable reductions in materials costs and
initial investments in printer hardware.
pivCLASS is an extensive range of security solutions, which make it
easier for the US Federal Government, its subcontractors and others to
comply with high security requirements and use personal ID cards for
physical access control. The new EDGE EVO and VertX EVO IP-enabled
platforms, forms a unique portfolio of advanced, networked solutions.
The year also saw the launch of Seos, the worlds first commercial ecosystem for digital keys in NFC cell phones, which was met with considerable interest. Seos enables doors to be opened by holding the cell
phone in front of the lock. Private individuals and security staff can send
temporary digital keys to visitors via their cell phone.
Cost-efficiency
Efforts to reduce inventories and optimize working capital across all
product areas and geographical regions continued with positive results
in 2012. HID Global began consolidation of distribution and production plants in the USA, with the announced closure of four units and
the construction of a new plant in Austin, Texas, that is due for completion in 2014. A new production plant is under construction in Malaysia
for deliveries to the fast-growing Asian markets. This consolidation will
contribute significant cost savings in future years.
A major global project has begun to consolidate the number of strategic suppliers. Work will continue in 2013, resulting in greater flexibility, an increased rate of development and launch of new products in the
market, better quality and reduced costs.
The new plants in the USA and Malaysia are being built to the highest sustainability and high energy efficiency standards to comply with
the requirements of ISO 14001. Continuous sustainability audits of
important suppliers now cover 98 percent of the annual materials flow.
Sustainability is a criterion in the development of new products and
solutions. Examples include low-energy access control readers, ENERGY
STAR compliant card printers, and biodegradable cards.
KEY FIGURES
SEK M
2011
2012
Income statement
Sales
Organic growth, %
Operating income (EBIT)1
Operating margin (EBIT)1, %
5,756
11
897
15.6
6,262
6
1,073
17.1
Capital employed
Capital employed
– of which goodwill
Return on capital employed1, %
6,449
4,846
14.3
5,717
4,524
17.3
Cash flow
Cash flow2
Average number of employees
933
2,819
1 140
3,029
1
2
Excluding items affecting comparability of SEK 87 M in 2011.
Excluding restructuring payments.
SALES AND OPERATING INCOME
SEK M
SEK M
7,000
1,200
6,000
1,000
 Sales1
Operating income2
5,000
800
4,000
600
3,000
08
09
10
11
12
400
Reclassification has been made
for 2008 and 2009.
2
Excluding items affecting comparability in 2008, 2009 and 2011.
1
SALES BY PRODUCT GROUP
Access control, 52 %
Identification technology, 26 %
Hotel locks, 22%
HID GLOBAL
HID Global supplies solutions for secure identity creation and management to commercial companies, healthcare, educational
and financial institutions as well as government and state institutions. HID Global’s open technology platforms provide significant benefits.
pRODuCT AND SERVICE OFFERING
physical access control: cards, card readers and networked access
control units.
Secure issuance: card printers and software.
Identity assurance: smart cards, readers and credential management
and other software.
ASSA ABLOY ANNuAL REpORT 2012
Government ID: cards, card printers, readers, software and professional services
for government-issued credentials.
Managed Services: customized smart cards and secure identity issuance, such
as mobile keys.
Mobile access control: digital keys and reader technology for NFC cell phones.
Contactless identification: RFID tags, readers and embedded solutions for
identification.
GLOBAL TECHNOLOGIES DIVISION 49
Global Technologies
ASSA ABLOY HOSpITALITY
Report on the year
VingCard’s RFID (radio frequency identification) lock
system offers functions such
as contactless access control
using encoded communication and secure, copy protected
software.
ASSA ABLOY Hospitality experienced strong growth,
despite an economic slowdown that affected demand
for hotel rooms in mature markets. Sales growth was
driven by increased global demand for renovation and
upgrade projects. Active market development in recent
years led to several major contracts for deliveries to
global hotel chains.
The market for new hotel construction remained
weak. Demand from the cruise ship market declined due
to a more subdued global economy. The aftermarket’s
good margins further strengthened operating profit and
operating margin.
ASSA ABLOY Hospitality’s customers are a clear
example of the rapid market trend towards increasingly
advanced electromechanical technology and entrance
automation. In recent years marketing efforts have
focused on promoting the replacement or upgrade of
installed lock systems that use magnetic strip cards.
The latest contactless RFID (radio frequency identification) technology provides hotels and hotel guests
with considerably more secure, flexible and user-friendly
locks, which also create opportunities for major energy
savings.
ASSA ABLOY Hospitality has established itself as a
market leader with a clear hi-tech image. Today nearly
three-quarters of sales are RFID-based systems and
more than 750,000 VingCard RFID locks have now been
installed globally. The new VISIONLINE system is also
attracting considerable interest. It is integrated with
the hotel’s other operating systems to add efficient new
housekeeping, security, front desk and maintenance
functions. This allows the front desk to cancel keys and
authorize room changes, extension of stay and access to
conference rooms without the guest needing to hand in
or exchange their key.
VingCard Elsafe has also established itself as an important supplier of energy management systems for the
hotel market through its Orion range launched in 2010.
Sensors that can detect guest presence in the room and
information from the door lock when the guest enters
and leaves the room allow Orion to efficiently manage
energy consumption. The technology can contribute to
energy cost savings of up to 20-30 percent.
Market presence
Global market presence has gradually strengthened in
recent years, with deliveries to 166 countries. Sales have
increased rapidly on new emerging markets due to targeted marketing initiatives. Market presence in China,
for example, strengthened during the year and sales rose
sharply, due to a high level of investment in the country
and modernization in the hotel sector.
product leadership
Product development continued at a high rate during
the year. One important launch was Seos, the world’s
first commercial ecosystem for digital keys in NFC (Near
Field Communication) cell phones. The hotel guest can
check in and receive their electronic key using their cell
phone. On arrival the guest can enter their hotel room
using their cell phone. RFID technology was further
developed with a new common electronic platform. This
is suitable for both old and new locks and provides better
performance. The newly developed concept of loyalty
cards was launched by several major global hotel chains
during the year. The Hotel’s guest’s loyalty card acts as a
room key, the booking confirmation and room number
are sent by SMS or Email, the guest skips the front desk
and uses their loyalty card to open the assigned door.
Booking confirmation and room number are sent to the
guest by SMS or email. VingCard Elsafe launched a new
electronic concept, Essence by VingCard. All lock components are housed in the door, a new stage in the development of door design.
Cost-efficiency
ASSA ABLOY Hospitality continued its successful relocation of component production to high-quality suppliers in low-cost countries, mainly China. The program
to streamline production and product development
in the new Shanghai production plant yielded positive
results. It included major efforts to reduce environmental impact. VA/VE methods have contributed to considerable materials savings in production, as well as a life
cycle perspective. Implementation of the global ERP system also continued, which will strengthen Hospitality’s
Seamless Flow program to automate an increasing number of process flows. This system will be taken into use in
the beginning of 2013.
FACTS
ASSA ABLOY HOSpITALITY
ASSA ABLOY Hospitality manufactures and sells electronic lock
systems, safes, energy management systems and minibars for
hotels and cruise ships under the VingCard Elsafe brand. It is the
50 GLOBAL TECHNOLOGIES DIVISION
world’s best-known brand for hotel lock systems and in-room
safes, with products installed in over seven million hotel rooms
in more than 42,000 hotels worldwide.
ASSA ABLOY ANNuAL REpORT 2012
VingCard Elsafe security
solution for Park Inn
Trysil Mountain Resort
On 19 December 2011 the Rezidor Hotel Group, SkiStar and Peab opened Park
Inn Trysil Mountain Resort in the Norwegian ski resort of Trysil. The hotel has 369
rooms and is part of the Park Inn by Radisson chain, Rezidor’s young and dynamic
mid-priced brand. Guests are offered a carefree stay, a relaxed and personal
atmosphere, and comfortable modern rooms.
Challenge:
The 33,000 square meter Park Inn Trysil Mountain Resort has four apartment wings, which are connected to the main building with its conference facilities, lobby, restaurant and spa via a 30 meter long glazed bridge. The hotel complex is located
around 800 meters above sea level, and it is a challenge to service and maintain all these buildings in low temperatures. VingCard Elsafe was commissioned to develop an access control solution, which makes it easier for technicians and reception staff,
while providing guests with increased security and flexibility.
Solution:
VingCard Elsafe supplied 471 electromechanical locks and 32 wall-mounted RFID (radio frequency identification) readers,
which are all wirelessly connected to an access control system. The company’s R&D department developed new software,
which enables guests to use their SKIDATA lift pass to open the door of their hotel room at Park Inn Trysil Mountain Resort and
other participating facilities. The Rezidor Hotel Group, SkiStar and Peab are extremely satisfied with this solution and VingCard
Elsafe’s continuous control of the facility.
ASSA ABLOY ANNuAL REpORT 2012
51
Entrance Systems
More growth platforms for
continued global expansion
Demand was weak in Europe but continued at a stable level
in North America, while growing strongly on emerging
markets. The division has successfully integrated the many
acquisitions made in recent years and continued to acquire
companies to strengthen its global leading position in
entrance automation. Operating income increased, while
the operating margin weakened somewhat.
Report on the year
• Sales: SEK 10,979 M (8,278) with -2 percent organic
growth.
• Operating income (EBIT) excluding restructuring
costs: SEK 1,546 M (1,197).
• Operating margin: 14.1 percent (14.5).
Market development
Besam revolving door in
a hospital environment.
Growth declined in western Europe, which accounts for
the majority of sales, but the picture was diverse. Sales in
Germany, Austria, Switzerland and the Nordic countries
grew in the first half of the year, but weakened gradually
during the year. Sales fell sharply in the crisis-hit countries in southern Europe. Demand remained at a stable
level in North and South America, with all the division’s
companies reporting positive growth. Asia also showed
positive growth particularly in the industrial segment.
The strongest segment during the year was industrial
customers, with strong demand on the whole for Crawford, Albany and the newly acquired Dynaco. The healthcare and transport sectors were negatively impacted by
fiscal restrictions and fewer investments in major public
projects, which affected Besam. The residential segment
also experienced weakening demand, while demand in
the retail trade was stable.
Nearly 40 percent of the division’s sales are generated
by the comprehensive service offering, with its high and
regular sales. This has helped to counterbalance equipment sales, which are more cyclical.
The division has grown very strongly in recent years
mainly through acquisitions. Sales have nearly tripled
since 2010, and ASSA ABLOY has consequently achieved
a global leading position. The year was marked by intensive integration activities. The division now has a number
of geographically and technologically well-positioned
platforms for continued rapid global growth. It has also
invested in the development of new products, solutions
and service, which provided strength in the weakened
business climate in 2012.
Market presence
A significant trend is that the entrance automation market
is developing from a large number of regional markets to
a more global market. The division is driving this development through acquisitions and global growth platforms.
The year saw the start of major organization development
to further strengthen market presence. The division’s
companies are organized into three groups focusing on
direct sales, indirect sales via distributors and component
sales. Within these groups, sales activities for both products and service will be segmented even more effectively,
with specialist teams for large end-customer segments,
providing customers with their own problem solvers.
The Key Account Management concept for selected
customers continued its successful development. This
is an answer to the globalization of major industrial,
transport and retail companies, which are aiming for harmonized total door opening systems for their facilities
worldwide. The service concept continued to be developed with solutions for regular preventive service.
The acquisition of Albany Door Systems was completed during the year, as was the acquisition of Dynaco,
a leading manufacturer of automatic high-performance
FACTS ON
ENTRANCE SYSTEMS
Offering: Entrance automation products, components and service. The product range includes automatic swing, sliding and
revolving doors, air curtains, gate automation, garage doors,
high-performance doors, industrial doors, docking solutions
and hangar doors.
Markets: Entrance Systems is a global leader with sales worldwide. It has sales companies in 30 countries and distributors in
60 countries. Service operations account for nearly 40 percent
of sales.
52 ENTRANCE SYSTEMS DIVISION
The products are sold through two channels. In the direct channel, new equipment and comprehensive service are sold direct
to the end-customer, while in the indirect channel, products and
components are sold to end-customers through distributors.
Brands: Besam, Crawford, Megadoor, Albany, FlexiForce,
Normstahl, Ditec and EM.
Acquisitions: Albany and 4Front (USA), Dynaco (Belgium) and
Helton (Canada).
ASSA ABLOY ANNuAL REpORT 2012
doors specializing in sales to a global distributor network. The acquisition of Helton fits well with the acquisition of FlexiForce in 2011. Helton
manufactures overhead door components for private and industrial
customers on the North American market. The American company
4Front, a leader in docking systems, was acquired at the end of the year.
The company offers a complete product range of docking systems and a
large range of fittings for increased safety in the loading bay area.
product leadership
Investments in new product development continued to increase.
Strengthening product development competence and increasing the
rate of new product launches are an important part of the integration
of acquired companies. The new product development organization
established in recent years has considerably streamlined the development of new products and shortened the lead times to market. Product
development and production are achieving significant economies of
scale in resource and component utilization, due to an increasing number of common product platforms and modular solutions for more and
more products.
Environmental considerations and energy efficiency are strong sales
arguments. VA/VE methods in the product development phase reduce
energy and raw material consumption in the production process,
reducing product cost and increasing customer value. The division has
also begun the development of new service concepts, increasing focus
on preventive and improvement service. The aim is to offer customers
total modernization solutions for the division’s door opening solutions
and those of its competitors. This involves extensive upgrades of old
installations with a series of new products and components. This type
of major renovation and modernization requirement is expected to
increase in the coming years.
Cost-efficiency
An important task during the year, in the wake of the many acquisitions, was simplifying the complexity and streamlining the structure
of production and administration. The extensive program to rationalize the production structure of the newly acquired units accelerated. A
number of production plants are being closed, with production transferred between existing plants in both high- and low-cost countries.
Meanwhile investments are being made in five final assembly plants in
strategic locations in Europe. Complementary programs are coordinating supply management to reduce the number of suppliers. Many
administrative functions can likewise be coordinated and concentrated
to increase efficiency. A large number of IT-based systems are set to be
replaced by fewer systems.
Dynaco high speed doors.
KEY FIGURES
SEK M
2011
2012
Income statement
Sales
Organic growth, %
Operating income (EBIT)1
Operating margin (EBIT)1, %
8,278
5
1,197
14.5
10,979
–2
1,546
14.1
Capital employed
Capital employed
– of which goodwill
Return on capital employed1, %
10,837
7,153
12.2
13,189
8,323
12.3
Cash flow
Cash flow2
Average number of employees
1,317
5,605
1,648
7,429
1
2
Excluding items affecting comparability of SEK 423 M in 2011.
Excluding restructuring payments.
SALES AND OPERATING INCOME
SEK M
SEK M
12,000
1,800
10,000
1,500
8,000
1,200
6,000
900
4,000
600
2,000
300
0
08
09
10
11
12
0
 Sales1
Operating income2
1
2
Reclassification has been made
for 2008 and 2009.
Excluding items affecting comparability in 2008, 2009 and 2011.
SALES BY PRODUCT GROUP
Products, 63%
Service, 37%
Megadoor hangar door.
ASSA ABLOY ANNuAL REpORT 2012
ENTRANCE SYSTEMS DIVISION 53
Sustainable development
Corporate responsibility
drives a more profitable ASSA ABLOY
ASSA ABLOY’s sustainability initiatives are based on the operations impact of the
environment, increasing demand for sustainable products, and the intention to
be a responsible and attractive company. Work on relevant sustainability issues
is integrated across the value chain – from product development to recycling.
Sustainability Report
2012
The global leader in
door opening solutions
Further information about
ASSA ABLOY’s sustainability
initiatives is to be found in the
2012 Sustainability Report,
which will be published in connection with the 2013 Annual
General Meeting.
ASSA ABLOY has a Group-wide Code of Conduct that
provides the basis for everyone’s behavior. The Group
identifies continuing risks and opportunities to be managed in dialogue with internal and external stakeholders.
It helps customers reduce their energy consumption and
environmental impact through continuing improvements to production processes, and the development
of new products and solutions. Sustainable products
account for an ever-increasing share of Group sales.
The drivers for ASSA ABLOY’s sustainability initiatives are risk management and reduction, streamlining
production and administration, and the management
of opportunities. This approach enables ASSA ABLOY to
meet customer expectations, expand market share and
create value.
employees, suppliers and other stakeholders. The Code
is based on international standards and is available in 22
languages. ASSA ABLOY monitors compliance with the
Code of Conduct. Action is taken in case of non-compliance with the Code.
The Code is available to all employees. It forms
part of the induction of new employees, and it is every
employee’s responsibility to read and comply with the
Code and related policies. Whistle-blowing procedures
are in place to enable all employees to report suspected
infringements. Reported cases are investigated by a special committee headed by ASSA ABLOY’s HR director.
Suppliers are informed of ASSA ABLOY’s Code of Conduct and undertake in writing to comply with it in their
collaboration with the Group. Since 2011, the Code of
Conduct has been supplemented with a separate anticorruption policy, which is now being implemented
across the Group.
Control of sustainability initiatives
The Code of Conduct is Group-wide and establishes the
principles that ASSA ABLOY has defined for the Group’s
SOme Of the reSuLtS Of the SuStAinABiLitY prOgrAm
¹ for comparable units. total
energy consumption amounted
to 692 gWh including units
acquired during the year and
increased reporting.
² for comparable units. total
consumption amounted to 20
tonnes including units aquired
during the year and increased
reporting.
3
for comparable units. the total
injury rate (ir) was 9.1 including
units acquired during the year
and increased reporting.
4
for comparable units. the total
injury lost day rate (iLDr) was
171 including units acquired
during the year and increased
reporting.
5
for comparable units. number
of certificates and corresponding certifiable systems for north
American units amounted to
100. the change is due to the
closure of plants under the
restructuring program and to
the addition of a number of new
plants with certificates. Sales
companies with iSO 14001 certification are included in the
reports from 2012.
54 SuSTaInablE dEvElOpmEnT
Deterioration
unchanged
improvement
Targets
Results
2008
Results
2009
Results
2010
Results
2011
Results
2012
Energy consumption – 15 percent reduced
consumption 2015 compared with 2010,
based on normalized values.
482 GWh
491 GWh
605 GWh
632 GWh¹
633 GWh
Organic solvents – Phase out all use of
perchloroethylene and trichloroethylene.
42 tonnes
44 tonnes
32 tonnes
22 tonnes
17 tonnes ²
Health and safety
Zero vision and targets for improvement:
– IR, injury rate = number of injuries per million
hours worked.
– ILDR, injury lost day rate = number of days lost
due to injuries per million hours worked.
IR: 8.7
ILDR: 166
IR: 8.4
ILDR: 150
IR: 7.8
ILDR: 141
IR: 8.9
ILDR: 161
IR: 9.03
ILDR: 1734
ISO 14001 – Compliance at all factories with
significant environmental impact.
63
62
69
75
915
Suppliers – Sustainability appraisals –
Code of Conduct requirement for all suppliers.
Sustainability audits of suppliers in risk category.
100
sustainability
audits
in China
178
sustainability
audits
in China
376
sustainability
audits
in China
493
sustainability
audits
in Asia
795
sustainability
audits
in Asia
Gender equality – Improve current levels of
gender equality at senior levels.
Level 2: 0 %
Level 3: 11 %
Level 4: 17 %
Level 5: 23 %
Level 2: 0 %
Level 3: 15 %
Level 4: 18 %
Level 5: 20 %
Level 2: 0 %
Level 3: 16 %
Level 4: 18 %
Level 5: 24 %
Level 2: 0 %
Level 3: 15 %
Level 4: 19 %
Level 5: 26 %
Level 2: 18 %
Level 3: 16 %
Level 4: 18 %
Level 5: 23 %
Trend
aSSa ablOY annual REpORT 2012
aSSa ablOY’s way of working
The Board of Directors has the overall responsibility,
while the Executive Team is responsible for operational
management of relevant sustainability issues and the
Group’s strategies.
Appointed coordinators at divisional and company
level are responsible for the availability and implementation of environmental guidelines, programs and tools.
HR functions at Group and divisional level are responsible for the same in the management of social and business ethical issues. The divisions and Group companies
are responsible for compliance with the Group’s Code
of Conduct.
ASSA ABLOY provides information, guidelines and
tools to support the Group companies in their work
on relevant sustainability issues. There is a Group-wide
database for reporting and monitoring of the sustainability program. This database is a knowledge bank that
employees working with sustainability can access.
The targets now governing the work apply until 2015
and have been formulated for all the Group’s divisions.
These targets include ASSA ABLOY’s most important sustainability issues: water consumption, chemicals management, energy efficiency, health and safety, employee
issues, supplier relations, and the overall control of sustainability initiatives. The program has been part of creating a structure for sustainability initiatives.
A target-based activity
ASSA ABLOY has been working in accordance with a sustainability program since 2007. The program has been
revised regularly; the last time was in 2010. In 2012, the
Group continued working to achieve the targets and
to integrate newly acquired companies into the Group
reporting. In 2012, 293 companies were included in the
Group reporting, an increase of 15 percent on 2011.
ASSA ABLOY has gradually increased the accuracy and
the level of detail of internal reporting to increase control and ensure continuous progress with the Group’s
sustainability initiatives.
repOrting unitS
300
250
200
150
100
the number of reporting units
in the group has increased to
293 (256).
50
0
08
09
10
11
12
SuStAinABiLitY initiAtiVeS Are integrAteD ACrOSS the VALue ChAin
INNOVATION
New products are evaluated from a life cycle perspective. Many recently
developed products save energy as a result of improved insulation and
intelligent control of various door opening solutions.
aSSa ablOY annual REpORT 2012
ov
ati
on
Sou
rcin
Code of Conduct and
Corporate governance
g
employees
ce
CUSTOMERS
ASSA ABLOY’s ambition is to supply high-quality products that fulfill
customer needs, have a long service life and are manufactured with minimal
resource consumption and environmental impact over their life cycle.
inn
n
rese
MARKET PRESENCE
ASSA ABLOY respects the laws and regulations governing business ethics
in the countries in which it operates, and requires all partners to act in the
same way.
Cu
ket p
mar
MANUFACTURING
The manufacture of the Group’s products should be carried out safely and
with minimal environmental impact. Hazardous processes are gradually
being phased out and replaced by eco-friendly alternatives.
m
sto
SOURCING
The Group’s suppliers in risk areas are evaluated from a sustainability perspective. Suppliers failing to comply with the Group’s requirements are
requested to make improvements or will otherwise be phased out.
s
er
manufacturing
SuSTaInablE dEvElOpmEnT 55
Sustainable development
aSSa ablOY’s customer offering
Sales of products and solutions with a sustainable profile
are increasing.
Development of energy-efficient products is a central part of ASSA ABLOY’s product development. Energyefficient products account for an ever-increasing share
of Group sales. Understanding and satisfying customer
needs is crucial for retaining a strong market position.
Demand for sustainable products is increasing, and
it is important for the Group to develop products that
meet customer expectations, and get them certified and
included in the databases used by architects for building
specification. The increased use of various certifications
for sustainable and green construction means that the
characteristics of ASSA ABLOY’s products are increasing
in importance and make them more attractive to the
market.
ASSA ABLOY has a number of climate-smart products, which combined with increased security help the
customer to reduce energy consumption and create a
better quality indoor environment.
progress towards more sustainable products
ASSA ABLOY’s ambition is to have world-class product
development. This requires a good knowledge of customer needs today and tomorrow, as well as knowledge
of the product’s value chain. Group companies use the
Group’s product innovation process and environmental
checklist for all new product development.
The product innovation process has three important
stages:
• Product management – refers to the strategic aspects
of the process.
• Involving customers in product development. Voice
of the Customer ensures ASSA ABLOY develops products that customers want.
• The Gateway process – ensures that development
projects are structured and efficient.
The Group has carried out product life cycle analyses
to evaluate where the largest environmental impact
occurs. The amount of materials used accounts for a
significant part of a product’s environmental impact,
and this is something ASSA ABLOY has successfully
addressed in Value Analysis/Value Engineering (VA/VE) in
product development. In the case of electromechanical
products, standby power consumption has a relatively
large environmental impact. ASSA ABLOY has therefore launched a number of products with considerably
reduced energy consumption in standby mode.
ASSA ABLOY can reduce its environmental impact
and costs through a reduced and efficient use of chemicals, energy and materials in the production process. The
Group’s environmental checklist provides a structured
review of materials selection, design and manufacturing
processes to reduce the amount of hazardous materials
and ensure sustainable and efficient processes. Reducing the amount of packaging materials for different customer groups and forms of delivery is an important issue
in working towards more resource-efficient operations.
SuStAinABLe DeVeLOpment prOgrAm in Brief
2004–2008
Code of Conduct with updates
Whistle-blowing
Internal audits
Due diligence directive
Tools for supplier control
Employee survey
2009
Sales companies and offices
are included in reported
figures
Increased monitoring of
energy consumption and CO2
Launch of joint recruitment
and selection guide
Sustainability strategy for product development including
checklists
Marketing and sales training
Training in supplier control
25 percent more Group companies included in reporting
2012
Increased reporting of
environmental data on
water usage and greenhouse gases¹
Improved analysis and benchmarking opportunities between
Group companies
15 percent more Group
companies included in
reporting
Updated Code of Conduct
Internal semi-annual
reporting for increased
internal control
Implementation of an anti-bribery
policy across the Group
2010
Increased audit of suppliers
in low-cost countries
Targets for 2015 are defined
for all monitored areas
56 SuSTaInablE dEvElOpmEnT
2011
Increased reporting of environmental data
Target of 30 percent women in
management positions within
ASSA ABLOY
More than 6,000 employees
participated in anti-bribery
training
¹the increased reporting is
presented in ASSA ABLOY’s
Sustainability report 2012.
aSSa ablOY annual REpORT 2012
energy-efficient
door system from
entrance Systems
Challenge:
The ICA Group has set a target to reduce its carbon emissions by 30 percent between 2006 and 2020. ICA has
made a strategic investment in a pilot project, the ICA store at Sannegården in Gothenburg, using energy reducing
technology.
Solution:
Part of the solution is that ASSA ABLOY Entrance Systems has supplied two energy-efficient Besam RD3L revolving doors to ICA. This is a high-capacity door opening solution, which is 20 percent more energy-efficient than any
other current automatic door system, due to enhanced insulation and the use of low-energy bulbs. The door design
ensures separation between internal and external environments.
Result:
In this pilot project, ICA has managed to reduce energy consumption by around 35 percent, compared to a fiveyear-old ICA store. Besam’s revolving doors are responsible for about a third of this energy reduction. The reduction
is equivalent to the annual energy consumption of two medium-sized Swedish households. In addition, the indoor
environment has improved, due to a more even indoor climate and a reduction in noise and exhaust fumes from the
exterior.
The pilot project was successful and ICA estimates that it could reduce its carbon emissions by 30 percent.
ICA intends to apply these energy-reducing principles in the construction of new ICA stores.
Security Intersects with Sustainability
Challenge:
Facilities are faced with the challenge of increasing security within the
restraints of their existing budget with minimal disruption to the building. Together with the growing trend of sustainable building design, many
facilities seek to leverage existing infrastructure while maximizing energy
efficiency and achieving sustainability goals.
Solution:
To meet this end-user security challenge, Group brands Corbin Russwin
and SARGENT have developed IP-enabled Power over Ethernet (PoE) and
WiFi locking solutions that utilize existing infrastructure to expand access
control. These high performing electronic access control solutions, particularly PoE locks, help achieve numerous sustainability goals. The Corbin Russwin Access 800 IP1 PoE lock easily brings online access control to
more doors and provides substantial advantages, including minimized
components – access control functions (e.g. door position monitoring and
request to exit sensor) are incorporated in one lock body rather than separately purchased and installed components. This PoE lock uses 50% less
power per activation than traditional access control solutions using PoE,
and significantly less standby power than traditional access control. Facilities also re-use existing building infrastructure adding to the overall ROI
savings.
Result:
The Access 800 IP1 exemplifies a new generation of energy-efficient, sustainable access control products. When the total Life Cycle Assessment of
a PoE system is considered, the result is less energy and material used during manufacturing, shipping, installation and use.
aSSa ablOY annual REpORT 2012
SuSTaInablE dEvElOpmEnT 57
Sustainable development
development of supplier relations
Evaluation and improvement of the supplier base is
a continuous process. Supplier selection is based on
standardized criteria for both quality and work on relevant sustainability issues. Good supplier control and
working in accordance with jointly agreed action plans
result in increased product quality and more sustainable
processes.
ASSA ABLOY’s suppliers are required to comply with
its Code of Conduct. Quality and sustainability audits are
carried out before new suppliers are approved. Suppliers
deemed to be in a risk category are prioritized for audit.
The system used to monitor suppliers’ compliance
with the Code of Conduct includes factors such as
wages, overtime, noise levels, protective equipment,
chemicals management, accident reporting, environmental management systems, and health and safety
training.
Any supplier failing to comply with these requirements is requested to implement necessary improvements in accordance with an action plan. The contract is
terminated if action is not taken.
Supplier selection process
A red or yellow grade can be upgraded through an
improvement plan. If no action is taken, the supplier
is immediately classed as red. All purchases from the
supplier are then stopped until a green grade has been
achieved.
Audits conducted
In 2012 ASSA ABLOY conducted 795 (493) sustainability
audits. At year-end, 806 (461) active suppliers had satisfied the minimum standards for quality and relevant
sustainability issues, and were therefore considered reliable. 10 (19) suppliers were blacklisted. Sustainability
audits have been gradually extended to cover a larger
geographical area. In 2012 suppliers in all low-cost
countries were included.
All new suppliers in low-cost countries carry out a
self-assessment of their sustainability, in accordance
with a standardized process, before they can be considered as potential suppliers to ASSA ABLOY. This is followed by an on-site audit. ASSA ABLOY annually monitors previously approved suppliers.
ASSA ABLOY’s supplier database
The process has three stages:
• Supplier self-assessment – the supplier assesses its
ability to meet ASSA ABLOY’s requirements, using a
form from ASSA ABLOY.
• On-site audit – a sustainability audit assesses how
well a potential supplier meets ASSA ABLOY’s
requirements.
• Extended sustainability audit – this complements the
standard audit.
Following the audit, the supplier is graded green, yellow
or red. Green means the supplier is approved; yellow
means the supplier needs to improve within a specific
time frame; and red means the supplier is not approved.
The Group’s suppliers are listed, graded and monitored
in a supplier database. Audit reports on both quality and
relevant sustainability issues are regularly entered into
the database. Suppliers are listed with a standardized
name, geographical location, type of products and other
information, in order that green suppliers can be used by
many group companies with similar needs.
The database also lists non-approved and blacklisted
suppliers to ensure that they are not used again. Sustainability audit results override quality audit results regarding non-compliance. This means that a supplier rejected
for poor management of relevant sustainability issues is
either stopped immediately or must wait until the deficiencies have been addressed for approval.
SuStAinABiLitY AuDitS Of SuppLierS in ASiA
ShAre Of tOtAL purChASeS in LOW-COSt COuntrieS
Number
%
800
60
700
600
50
500
400
40
300
200
30
100
0
08
09
10
11
12
in 2012 ASSA ABLOY conducted 795 (493) sustainability audits.
58 SuSTaInablE dEvElOpmEnT
20
08
09
10
11
12
the share of the group’s total purchases of raw materials, components
and finished goods that comes from low-cost countries has risen from
38 percent to 55 percent in the past five years.
aSSa ablOY annual REpORT 2012
Hazardous chemicals
more efficient production
Energy
ASSA ABLOY’s ambition is to reduce energy consumption and emissions of harmful greenhouse gases.
The Group is therefore implementing a three-stage
approach to reduce energy consumption.
The first stage is to concentrate manufacture in as
few plants as possible, in order to maintain full capacity,
efficient working practices and high quality.
The second stage is to introduce smart solutions that
reduce energy and water consumption in both offices
and plants.
The third stage is to evaluate alternative energy
sources, which combined with innovative product
design, can make manufacturing processes even more
energy-efficient.
Water consumption
ASSA ABLOY works continuously to reduce the use of
hazardous substances in the production process and
find substitutes for them. Most production plants have
phased out chlorinated organic solvents successfully.
Health and safety
ASSA ABLOY should offer a safe working environment
and has a zero vision for accidents at work. The goal is to
create a culture where each individual contributes to a
safe workplace and good health.
ASSA ABLOY has defined a number of targets
intended to lead to ongoing improvements. These targets are based on the zero vision.
Health and safety audits are included in the internal
audits, and risk assessment is carried out routinely. Incident reporting and analysis are used to identify preventive measures.
Efforts to improve water use efficiency have focused on
plants with surface treatment processes, which account
for the bulk of consumption. Technical improvements
in the purification and reuse of water in the production
process have reduced water consumption.
Waste management
The Reduce, Reuse, Recycle principle is applied across
the organization. This principle means that ASSA ABLOY
works systematically to reduce the amount of materials in products, develop products that can be upgraded
rather than replaced, and enable recycling of both production waste and the finished products at the end of
their life cycle. The Group has refined its monitoring of
waste in various types of materials with the aim of better
monitoring and reducing the amount of waste.
uSe Of ChLOrinAteD OrgAniC SOLVentS (per AnD tri)
Tons
50
40
30
20
10
0
inJurieS per miLLiOn hOurS WOrKeD
08
09
10
11
12
2012 represents development
for comparable units from
2011.
energY uSe
GWh
10
700
600
8
500
6
400
300
4
2
0
aSSa ablOY annual REpORT 2012
08
09
10
11
12
2012 represents development
for comparable units from
2011.
200
100
0
08
09
10
11
12
2012 represents development
for comparable units from
2011.
SuSTaInablE dEvElOpmEnT 59
Sustainable development
Employees generate success
Gender equality
ASSA ABLOY’s vision and ambition is to be an attractive
company to work for. Each individual has r­ esponsibility
for his/her professional development. It is important
that all employees feel that they contribute. Competition for talent is intensifying and ASSA ABLOY is investing globally and locally to offer stimulating assignments
with clear responsibility, good development opportunities, and a positive, engaging work situation.
ASSA ABLOY’s ambition is to achieve a better gender balance at all levels in the organization. In 2011, the Group
set a target of 30 percent women in management positions at levels 2 to 5 by 2020. A gender equality policy is
already in place to direct these efforts.
The trend in the share of women at management
level is monitored in connection with the Talent Management Process. Other measures include prioritizing
the underrepresented gender in the recruitment process provided they have equal qualifications, and aiming
for at least one person from the underrepresented gender among the final candidates.
ASSA ABLOY Employee Survey
Manufacture of industrial
doors at the Entrance Systems
plant at Torslanda, Sweden.
The ASSA ABLOY Employee Survey is an efficient means
of finding out what the employees think about their
work situation, how they perceive ASSA ABLOY as an
employer, how they perceive health and safety in their
workplace and if everyone is given equal opportunities.
The survey is carried out every 18–24 months. The most
recent survey took place in March 2012, and received
responses from nearly 28,000 employees. The results in
2012 show a slight improvement in all areas compared
to the previous survey (2010).
The results have been broken down into 275 units,
making them more relevant to all employees and enabling appropriate actions to be taken at the local level
to achieve further improvements.
Common knowledge base
A good knowledge of the company in which you work
and an understanding of how your own efforts relate
and contribute to the overall goals are crucial for motivation and commitment. One way to achieve this is that
all employees have a common understanding of what
ASSA ABLOY’s business is and how the goals are to be
achieved. To create this basic knowledge all employees
complete the interactive induction program ‘Entrance
to ASSA ABLOY’. This program is available in 15 languages and covers the Group’s history, organization,
products, strategy and Code of Conduct.
AVERAGE NUMBER OF EMPLOYEES
Men
Women
Number
50,000
ASSA ABLOY is an acquisition-intensive Group, and it is
important to monitor how monitor how new units are
operating in relation to ASSA ABLOY’s Code of Conduct
and policies. Third party social audits in accordance
with internationally accepted methods have been conducted for several years for this purpose. These audits
cover areas such as working conditions, human rights,
the work environment, workplace culture and skills
development. During the year audits were conducted at
one production plant in China and one in Romania. The
audits are followed by measures to implement improvements where needed.
NUMBER OF EMPLOYEES BY REGION
Europe, 15,904
North America, 7,631
Central and South
America, 850
Africa, 520
Asia, 16,802
Australia and
New Zealand, 1,055
Women AT DIFFERENT LEVELS of THE ORGANIZATION
Share of women,%
Level
2 – reports to CEO
3 – reports to level 2
4 – reports to level 3
5 – reports to level 4
40,000
30,000
20,000
Levels 2 – 5
10,000
Average number of
employees
0
60 Sustainable development Growing with care
08
09
10
11
12
2008
2009
2010
2011
2012
0
11
17
23
0
15
18
20
0
16
18
24
0
15
19
26
18
16
18
23
–
–
–
24
22
40
39
37
35
35
In 2012, the definition has been revised to include only managerial and
specialist positions. This has had a negative impact on levels 4 and 5.
ASSA ABLOY Annual Report 2012
management training
Recruitment and future supply of competence
Every year ASSA ABLOY offers a number of senior managers the opportunity to take part in one of the Group’s
two senior management development programs: ASSA
ABLOY Management Training (MMT) and ASSA ABLOY
‘Boosting Market Leadership Program’
MMT is intended to provide participants with an
increased knowledge of all areas of ASSA ABLOY’s operations, develop their internal contact network, and contribute to sharing best practices and identifying new
business opportunities. This is of particular importance
for ASSA ABLOY in view of its continuing acquisition of
companies.
The ASSA ABLOY ‘Boosting Market Leadership Program’ was launched in 2011. This is a tailor-made program developed in collaboration with IMD in Lausanne,
Switzerland. The program’s main aim is to support the
implementation of ASSA ABLOY’s strategy.
ASSA ABLOY has great confidence in its employees, and
it is up to each individual to take responsibility for their
career. A basic principle of ASSA ABLOY’s recruitment
policy is to give priority to internal candidates provided
they have equal qualifications to external applicants.
All job vacancies are advertised on the Group’s global
intranet to encourage and facilitate internal mobility.
Recruitment takes place locally in the majority of cases.
Scholarship program
ASSA ABLOY’s Scholarship Program offers employees the
opportunity to work for a short period at another Group
company, in order to share knowledge and experience
and learn about other cultures and working practices.
This program is open to all employees.
Employee development
dialogue with external stakeholders
ASSA ABLOY’s stakeholders in sustainability issues are
shareholders, investors, analysts, customers, suppliers,
employees, local communities, NGOs and the media.
The Group’s policy of openness means that we listen to
these stakeholders and take on board their views.
During the year ASSA ABLOY held a round-table discussion with investors on ASSA ABLOY’s management
of sustainability issues. Round-table discussions have
been held annually for a number of years. Requests from
investors have generally concerned more externally
available information on suppliers in low-cost countries, procedures for establishing new operations and
the acquisition process. Investors have also requested
increased transparency with regard to the targets for
each monitored area. These meetings have proved valuable and given the Group important feedback.
ASSA ABLOY has a well-established global employee
development process at all levels, the Talent Management Process. The aim is to support career development in a structured way, optimize the utilization of
the Group’s total resources, and ensure that the skills
needed to meet future requirements are available.
Learning and networking
A new IMD program is bringing ASSA ABLOY’s senior managers
together for an intensive and informative week with lots of learning
and networking.
More than 250 of ASSA ABLOY’s senior managers from 32 countries
have taken part in IMD programs since 2005, when ASSA ABLOY began
collaboration with the world-leading Swiss business school, IMD. A
new program, Boosting Market Leadership, was launched in 2011.
This program is held once or twice a year and focusses on key strategic issues, such as market leadership, innovation and growth. The
aim is to give ASSA ABLOY’s senior managers an inspirational and
informative experience.
Allen Wong, Vice President of Operations and Technology, ASSA
ABLOY Asia Pacific, has taken part in two IMD programs.
aSSa ablOY annual REpORT 2012
“It was a fantastic experience,” said
Allen. “I learned a lot and it was quite
intensive but very enjoyable. I learned
just as much from my course colleagues as from the program itself.”
Allen has already applied two
models he learned on the course; one
concerns motivation and the other
Allen Wong, Vice President of
concerns values. “The program is very
Operations and Technology,
relevant to our job and our leadership
ASSA ABLOY Asia Pacific.
development,” he said. Allen considers that in particular he learned to think on new lines, introduce new
models and develop a more effective leadership style.
SuSTaInablE dEvElOpmEnT 61
Report of the Board of Directors
and Financial statements
Contents
Report of the Board of Directors
Significant risks and risk management
Corporate governance
Board of Directors
The Executive Team
Remuneration guidelines for
senior management
Sales and income Consolidated income statement and
Statement of comprehensive income
Comments by division
Results by division
Financial position
Consolidated balance sheet
Cash flow
Consolidated cash flow statement
Changes in consolidated equity
Parent company financial statements
63
65
68
72
74
77
78
79
80
81
82
83
84
85
86
88
Notes
1 Significant accounting and valuation principles
2 Sales
3 Auditors’ fees
4 Other operating income and expenses
5 Share of earnings in associates
6 Operating leases
7 Expenses by nature
8 Depreciation and amortization
9 Exchange differences in the income statement
10 Financial income
11 Financial expenses
12 Tax on income
13 Earnings per share
14 Intangible assets
15 Tangible assets
16 Shares in subsidiaries
17 Investments in associates
18 Deferred tax
19 Other financial assets
20Inventories
21 Trade receivables
22 Parent company’s equity
23 Share capital, number of shares and
dividend per share
24 Post-employment employee benefits
25 Other provisions
26 Other current liabilities
27 Accrued expenses and deferred income
28 Contingent liabilities
29 Assets pledged against liabilities to
credit institutions
30 Business combinations
31 Assets of disposal group classified as held
for sale and discontinued operations
32 Cash flow
33Employees
34 Financial risk management and
financial instruments
Comments on five years in summary
Five years in summary
Quarterly information
Definitions of key data
Proposed distribution of earnings
Auditor’s report
62 90
95
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96
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98
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101
102
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121
ASSA ABLOY Annual Report 2012
Report of the Board of Directors
The Annual Report of ASSA ABLOY AB (publ.), corporate identity number 556059-3575,
contains the consolidated financial statements for the financial year 1 January to 31
December 2012. ASSA ABLOY is the global leader in door opening solutions, dedicated
to satisfying end-user needs for security, safety and convenience.
Significant events
Sales and income
Sales for the year totaled SEK 46,619 M (41,786), with
organic growth of 2 percent (4) and acquired growth of 9
percent (17). Operating income (EBIT) excluding restructuring costs rose 13 percent to SEK 7,501 M (6,624), equivalent
to an operating margin of 16.1 percent (15.9). Income
before tax excluding restructuring costs totaled SEK 6,731 M
(5,979).
Operating cash flow excluding restructuring payments
remained strong and amounted to SEK 7,044 M (6,080).
Earnings per share after full dilution excluding restructuring
costs were SEK 13.84 (12.30), an increase of 13 percent.
Restructuring
The restructuring programs launched during the period
2006–2007 have been completed. The activity level in the
remaining restructuring programs remained high during the
year and is expected to continue in the same way during the
years 2013–2014.
At year-end 2012, 6,765 employees had left the Group as
a result of the changes in the production structure since the
programs began, of which 896 employees left during the
year. A total of 53 production plants closures have been
implemented and a large number of plants in high-cost
countries have switched from production to final assembly.
A total of 28 offices have also closed during the equivalent
period. The Group’s production is increasingly concentrated
to its own plants in China, central and eastern Europe and to
external suppliers in low-cost countries.
Payments related to the restructuring programs totaled
SEK 498 M (373) for the full year. At year-end 2012, the
remaining provisions for restructuring measures amounted
to SEK 1,068 M (1,665).
Acquisitions and divestments
On 11 January 2012, 100 percent of the share capital was
acquired in Albany Door Systems (USA), a global leader in
automatic high-performance doors. The company has
global market penetration in industrial automatic high-performance doors. The products are used for industrial applications and in logistics centers, where there is a major need
for customized automatic high-performance doors with
high security and access control. Albany also offers service
and maintenance on the company’s principal markets. The
company is headquartered in Georgia, USA.
On 1 March 2012, 100 percent of the share capital was
acquired in Dynaco (Belgium). Dynaco is a leading manufacturer of automatic high-performance doors specializing in
ASSA ABLOY AnnuAL RepORt 2012
sales to a global distributor network. The acquisition of
Dynaco further strengthens ASSA ABLOY’s position in the
fast-growing market segment of high-performance doors.
Dynaco adds manufacturing expertise, with many leading
patented products and a global distribution channel. The
company is headquartered in Moorsel, Belgium.
On 29 May 2012, 100 percent of the share capital was
acquired in Guoqiang, a Chinese manufacturer of window
hardware. Guoqiang offers a complete range of window
hardware mainly for the Chinese market. The company has a
good market presence in China through an extensive network of sales offices. Guoqiang provides a good fit with the
existing offering in total door opening solutions in China
and gives access to the Chinese window hardware market.
The company is headquartered in Leling, Shandong Province, China.
On 24 December 2012, 100 percent of the share capital
was acquired in 4Front, a leading American player in docking
systems. The company offers a complete product range of
docking systems and a large range of fittings. The acquisition
increases the strategic foothold on the important North
American entrance automation market, and provides an
excellent fit with the Group’s growing product portfolio in
docking systems.
A total of 13 acquisitions, including minor acquisitions,
were consolidated during the year. The total purchase price
of these acquisitions was SEK 4,799 M, and preliminary
acquisition analyses show that goodwill and other intangible
assets with an indefinite useful life amount to SEK 3,768 M.
During the year an agreement was signed to sell the
Group’s 70-percent interest in Wangli Security Products Ltd
in China. The business was not considered to be a good fit
with ASSA ABLOY’s operations in the long-term. The divestment is dependent on the approval of the authorities and is
expected to be completed in 2013. The business has been
shown as an asset in a disposal group held for sale. Sales and
operating income have not been reported on a current
basis. No significant capital gain/loss is expected to arise on
the sale.
Research and development
ASSA ABLOY’s expenditure on research and development
during the year amounted to SEK 1,344 M (1,202), equivalent to 2.9 percent (2.9) of sales.
ASSA ABLOY has a central function, Shared Technologies,
with responsibility for the standardization of electronics in
the Group’s common platforms. The objective is that standardization should result in lower development costs and a
shorter development time for new products.
RepORt OF the BOARD OF DiReCtORS 63
Report of the Board of Directors
Sustainable development
Four of ASSA ABLOY’s subsidiaries in Sweden carry on licensable activities in accordance with the Swedish Environmental Code. The Group’s licensable and notifiable activities
have an impact on the external environment through the
subsidiaries ASSA AB and ASSA OEM AB. These companies
operate engineering workshops and associated surfacecoating plants, which have an impact on the external environment through emissions to water and air as well as solid
waste. The subsidiaries ASSA AB and ASSA OEM AB are
actively addressing environmental issues and are certified in
accordance with ISO 14001. Crawford Entrance Solutions
also carries on licensable and notifiable activities in Gothenburg and Strömstad.
Most units outside Sweden carry on licensable activities
and hold equivalent licenses under local legislation.
ASSA ABLOY’s units worldwide are working purposefully
to reduce greenhouse gas emissions. This applies to units on
both mature and emerging markets, and to both existing
and newly acquired companies.
The 2012 Sustainability Report, reporting on the Group’s
prioritized environmental activities and providing other
information on sustainable development, will be published
at the time of the Annual General Meeting in April 2013.
64 RepORt OF the BOARD OF DiReCtORS
transactions with related parties
No transactions occurred between ASSA ABLOY and related
parties that significantly affected the company’s financial
position and results.
Significant events after the financial year-end
No significant events occurred after the financial year-end
and up to the date of adoption of the Annual Report of ASSA
ABLOY AB.
Outlook
Long-term outlook
ASSA ABLOY anticipates an increase in demand for security
solutions in the long term. A focus on customer value and
innovations as well as leverage on the Group’s strong position will accelerate growth and increase profitability.
Organic sales growth is expected to be strong. The operating margin (EBIT) and operating cash flow are expected to
develop favorably.
ASSA ABLOY AnnuAL RepORt 2012
Report of the Board of Directors
Significant risks and risk management
Risk management
Uncertainty about future developments and the course of
events is a natural risk for any business. Risk-taking in itself
provides opportunities for continued economic growth, but
naturally the risks may also have a negative impact on business operations and company goals. It is therefore essential
to have a systematic and efficient risk assessment process
and an effective risk management program in general. The
purpose of risk management at ASSA ABLOY is not to avoid
risks, but to take a controlled approach to identifying, managing and minimizing the effects of these risks. This work is
based on an assessment of the probability of the risks and
their potential impact on the Group.
ASSA ABLOY is an international group with a wide geographical spread, involving exposure to various forms of
strategic, operational and financial risks. Strategic risks refer
to changes in the business environment with potentially significant effects on ASSA ABLOY’s operations and business
objectives. Operational risks comprise risks directly attributable to business operations, entailing a potential impact on
the Group’s financial position and performance. Financial
risks mainly comprise financing risk, currency risk, interest
rate risk, credit risk, and risks associated with the Group’s
pension obligations.
ASSA ABLOY’s Board of Directors has overall responsibility for risk management within the Group and determines
the Group’s strategic focus based on recommendations
from the Executive Team. In view of the decentralized structure of the Group, and to keep risk analysis and risk management as close as possible to the actual risks, a large proportion of operational risk management takes place at division
and business unit level.
Strategic risks
The risks of this nature encountered by ASSA ABLOY include
various forms of business environment risks with an impact
on the security market in general, mainly changes in customer behavior, competitors and brand positioning. In addition, there are country-specific risks.
ASSA ABLOY has global market penetration, with sales
and production in a large number of countries. The emphasis is on western Europe and North America, but the proportion of sales in Asia and in central and eastern Europe has
increased in recent years. The Group is therefore naturally
exposed to both general business environment risks and
ASSA ABLOY AnnuAL RepORt 2012
country-specific risks, including political decisions and comprehensive changes in the regulatory framework etc.
Changes in customer behavior in general and the actions of
competitors affect demand for different products and their
profitability.
Customers and suppliers, including the Group’s relationships with them, are subject to continuous local review. As
regards competitors, risk analyses are carried out both centrally and locally.
The Group owns a number of the strongest brands in the
industry, including several global brands that complement
the ASSA ABLOY master brand. Local product brands are
gradually being linked increasingly to the master brand.
Generally speaking, ASSA ABLOY’s good reputation is one of
the Group’s strengths and serves as a foundation for market
leadership.
Activities to maintain and further strengthen ASSA
ABLOY’s good reputation are constantly ongoing. These
include ensuring compliance with ASSA ABLOY’s Code of
Conduct. The Code is an expression of the Group’s high
ambitions with regard to social responsibility, commitment
and environmental considerations.
Operational risks
Operational risks comprise risks directly attributable to business operations and with a potential impact on the Group’s
financial position and performance. They include legal and
environmental risks, acquisition of new businesses, restructuring measures, availability and price fluctuations of raw
materials, customer dependence etc. Risks relating to compliance with laws and regulations and to financial reporting
and internal control are also included in this category.
The table on page 66 describes in more detail the management of these risks.
Financial risks
Group Treasury at ASSA ABLOY is responsible for the Group’s
short- and long-term financing, financial cash management,
currency risk and other financial risk management. Financial
operations are centralized in a Treasury function, which
manages most financial transactions as well as financial risks
with a group-wide focus.
A financial policy, which is approved by the Board, regulates the allocation of responsibilities and control of the
Group’s financing activities. Group Treasury has the main
StRAtegiC RiSkS
OpeRAtiOnAL RiSkS
FinAnCiAL RiSkS
Changes in the business environment
with potentially significant effects on
operations and business objectives.
Risks directly attributable to business
operations with a potential impact on
financial position and performance.
Financial risks with a potential impact
on financial position and performance.
•Customerbehavior
•Competitors
•Brandpositioning
•Country-specificrisksetc.
•Legalandenvironmentalrisks
•Acquisitionofnewbusinesses
•Restructuringmeasures
•Availabilityandpricefluctuations
of raw materials
•Customerdependenceetc.
•Financingrisks
•Currencyrisks
•Interestraterisks
•Financialcreditrisks
•Risksassociatedwithpension
obligations
RepORt OF the BOARD OF DiReCtORS 65
Report of the Board of Directors
Significant risks and risk management
Operational risks
Risk management
Comments
Legal risks
The Group continuously monitors anticipated and
implemented changes in legislation in the countries in which it operates.
At year-end 2012 there are considered to be no
outstanding legal disputes that may lead to significant costs for the Group.
A group-wide legal policy has been implemented,
specifying the legal framework in which business
operations may be conducted.
Ongoing and potential disputes and other legal
matters are reported regularly to the Group’s
central legal function.
Guidelines on compliance with applicable competition, export control and anti-bribery legislation have been implemented.
Legal risks associated with property and liability
issues are continually evaluated.
environmental risks
Ongoing and potential environmental risks are
regularly monitored in the operations. External
expertise is brought in for environmental assessments when necessary.
Prioritized environmental activities and other
information on sustainable development are
reported in the Group’s Sustainability Report.
Acquisition of new businesses
Acquisitions are carried out by a number of people with considerable acquisition experience and
with the support of, for example, legal and financial consultants.
The Group’s acquisitions in 2012 are reported in
the Report of the Board of Directors and in Note
30, Business combinations.
Acquisitions are carried out according to a uniform and predefined group-wide process. This
consists of four documented phases: strategy,
evaluation, implementation and integration.
Restructuring measures
The Group is implementing
specific restructuring programs,
which entail some production
units changing direction mainly
to final assembly while certain
units are closed.
price fluctuations and
availability of raw materials
The restructuring programs are carried on as a
series of projects with stipulated activities and
schedules.
The scope, costs and savings of the restructuring
programs are presented in more detail in the
Report of the Board of Directors.
The various projects are systematically monitored
on a regular basis.
Raw materials are purchased and handled primarily at division and business unit level.
For further information about procurement of
materials, see Note 7.
Regional committees coordinate these activities
with the help of senior coordinators for selected
material components.
Credit losses
Trade receivables are spread across a large number of customers in many markets.
Commercial credit risks are managed locally at
company level and monitored at division level.
insurance risks
A group-wide insurance program is in place, mainly
relating to property, business interruption and liability risks. This program covers all business units.
The Group’s exposure to the risk areas listed above
is regulated by means of its own captive insurance
company.
Risks relating to internal
control of financial reporting
The organization is considered to be relatively transparent, with a clear allocation of responsibilities.
Instructions about the allocation of responsibilities,
authorization and other internal control procedures are laid down in an internal control manual.
Receivables from each customer are relatively
small in relation to total trade receivables. The risk
of significant credit losses for the Group is considered to be limited.
The Group’s insurance cover is considered to be
generally adequate, providing a reasonable balance between assessed risk exposure and insurance costs.
Internal control and other related issues are
reported in more detail in the Report of the Board
of Directors, section on Corporate governance.
Compliance with internal control is evaluated
annually for all operating companies.
Risks relating to financial
reporting
A well-established Controller organization at both
division and Group level analyzes and monitors
financial reporting quality.
A comprehensive systematic risk assessment of
financial reporting has been implemented.
66 RepORt OF the BOARD OF DiReCtORS
See also the section ‘Basis of preparation’ in Note 1.
Further information on risk management relating
to financial reporting can be found in the Report
of the Board of Directors, section on Corporate
governance.
ASSA ABLOY AnnuAL RepORt 2012
responsibility for financial risks within the framework established in the financial policy. A large number of financial
instruments are used in this work. Accounting principles,
risk management and risk exposure are described in more
detail in Notes 1 and 34, as well as Note 24 regarding postemployment employee benefits.
The Group’s financial risks mainly comprise financing
risk, currency risk, interest rate risk, credit risk, and risks associated with the Group’s pension obligations.
Financing risk
Financing risk refers to the risk that financing the Group’s
capital requirements and refinancing outstanding loans
become more difficult or more expensive. It can be reduced
by maintaining an even maturity profile for loans and a high
credit rating. The risk is further reduced by substantial unutilized confirmed credit facilities.
Currency risk
Since ASSA ABLOY sells its products in countries worldwide
and has companies in a large number of countries, the
Group is exposed to the effects of exchange rate fluctuations. These fluctuations affect Group earnings when the
income statements of foreign subsidiaries are translated to
Swedish kronor (translation exposure), and when products
are exported and sold in countries outside the country of
production (transaction exposure). Translation exposure is
primarily related to earnings in USD and EUR. This type of
exposure is not hedged. Currency risk in the form of transaction exposure, i.e. the relative values of exports and imports
of goods, is relatively limited in the Group, even though it is
expected to increase over time due to rationalization of production and purchasing. In accordance with financial policy,
the Group only hedged a very limited part of current currency flows in 2012. As a result, exchange rate fluctuations
had a direct impact on business operations
Exchange rate fluctuations also affect the Group’s debtequity ratio and equity. The difference between the assets
and liabilities of foreign subsidiaries in the respective foreign
currency is affected by exchange rate fluctuations and
causes a translation difference, which affects the Group’s
comprehensive income. A general weakening of the Swedish krona leads to an increase in net debt, but at the same
time increases the Group’s equity. At year-end, the largest
foreign net assets were denominated in USD and EUR.
ASSA ABLOY AnnuAL RepORt 2012
Interest rate risk
With respect to interest rate risks, interest rate changes have
a direct impact on ASSA ABLOY’s net interest expense. The
net interest expense is also impacted by the size of the Group’s
net debt and its currency composition. Net debt was SEK
14,732 M (14,207) at year-end 2012. Debt was mainly
denominated in SEK, USD and EUR. Group Treasury analyzes
the Group’s interest rate exposure and calculates the impact
on income of interest rate changes on a rolling 12-month
basis. In addition to raising variable-rate and fixed-rate
loans, various interest rate derivatives are used to adjust
interest rate sensitivity. At year-end, the average fixed interest term, excluding pension liabilities, was 32 months (16).
Credit risk
Credit risk arises in ordinary business operations and as a
result of the financial transactions carried out by Group Treasury. Trade receivables are spread across a large number of
customers, which reduces the credit risk. Credit risks relating to operational business activities are managed locally at
company level and monitored at division level.
Financial risk management exposes ASSA ABLOY to certain counterparty risks. Such exposure may arise, for example, as a result of the placement of surplus cash, borrowings
and derivative financial instruments. Counterparty limits are
set for each financial counterparty and are continuously
monitored.
Pension obligations
At year-end 2012, ASSA ABLOY had obligations for pensions
and other post-employment benefits of SEK 5,437 M
(5,300). The Group manages pension assets valued at SEK
3,193 M (3,115). Provisions in the balance sheet for pension
plans and post-employment healthcare benefits totaled SEK
1,224 M (1,173). Unrecognized actuarial losses and
expenses relating to past service in accordance with applicable regulations, the so-called corridor, amounted at yearend 2012 to SEK 1,073 M. Changes in the value of assets and
liabilities from year to year are due partly to the development of equity and debt capital markets and partly to the
actuarial assumptions made. These assumptions include
discount rates, as well as anticipated inflation and salary
increases.
RepORt OF the BOARD OF DiReCtORS 67
Report of the Board of Directors
Corporate governance
ng
rti
po
l re
cia
an
Fin
it
ud
Board of Directors
Audit Committee
Remuneration Committee
la
na
ter
Important internal rules
and regulations
• Articles of association
• Board of Directors’ rules
of procedure
• Financial policy
• Accounting Manual
• Communications Policy
• Insider Trading Policy
• Internal control
procedures
• Code of Conduct and
Anti-Bribery Policy
Shareholders
General Meeting
Nomination
Committee
Ex
Important external rules
and regulations
• Swedish Companies Act
• NASDAQ OMX
Stockholm Rule Book
for Issuers
• Swedish Code of
Corporate Governance
(www.corporategovernanceboard.se)
ASSA ABLOY is a Swedish public limited liability company,
with registered office in Stockholm, Sweden, whose series B
share is listed on the NASDAQ OMX Stockholm.
The Group’s corporate governance is based on the
Swedish Companies Act, the rules and regulations of NASDAQ OMX Stockholm and the Swedish Code of Corporate
Governance, as well as other applicable external laws, regulations and recommendations, and internal rules and regulations.
This Corporate Governance Report has been prepared
as part of ASSA ABLOY’s application of the Swedish Code of
Corporate Governance. ASSA ABLOY reports no deviations
from the Swedish Code of Corporate Governance for 2012.
ASSA ABLOY’s objective is that its activities should generate good long-term returns for its shareholders and
other stakeholders. An effective scheme of corporate governance for ASSA ABLOY can be summarized in a number
of interacting components, which are described below.
CEO and Executive Team
Management philosophy
Guidelines and policies
Internal control and risk management
Decentralized organization
shareholders
At year-end ASSA ABLOY had 17,591 shareholders (18,697).
The principal shareholders are Investment AB Latour (9.5
percent of the share capital and 29.5 percent of the votes)
and Melker Schörling AB (3.9 percent of the share capital
and 11.5 percent of the votes). Foreign shareholders
accounted for around 68 percent (64) of the share capital
and around 46 percent (44) of the votes. The ten largest
shareholders accounted for around 38 percent (38) of the
share capital and around 58 percent (58) of the votes. For
further information on shareholders, see page 123.
A shareholders’ agreement exists between Gustaf Douglas,
Melker Schörling and related companies and includes an
agreement on right of first refusal if any party disposes of
Series A shares. The Board of ASSA ABLOY is not aware of any
other shareholders’ agreements or other agreements
between shareholders in ASSA ABLOY.
Share capital and voting rights
ASSA ABLOY’s share capital amounted at year-end to SEK
370,858,778 distributed among 19,175,323 Series A shares
and 351,683,455 Series B shares. The total number of votes
was 543,436,685. Each Series A share carries ten votes and
each Series B share one vote. All shares have a par value of
68 RepoRt of the BoaRd of diRectoRs
SEK 1.00 and give shareholders equal rights to the company’s assets and earnings.
Repurchase of own shares
Since 2010 the Board has requested and received a mandate from the Annual General Meeting to repurchase and
transfer ASSA ABLOY shares. The aim has been to be able to
adapt the company’s capital structure and thereby contributing to increased shareholder value, to be able to exploit
acquisition opportunities by fully or partly financing company acquisitions with its own shares, and to secure the
company’s long-term incentive programs. The 2012 Annual
General Meeting authorized the Board to repurchase, during the period until the next Annual General Meeting, a
maximum number of Series B shares so that after each
repurchase ASSA ABLOY holds a maximum 10 percent of
the total number of shares in the company.
ASSA ABLOY holds a total of 600,000 (400,000) Series B
shares after repurchase to secure the company’s undertakings in connection with the company’s long-term incentive
programs (LTI 2010, LTI 2011 and LTI 2012). These shares
account for around 0.2 percent (0.1) of the share capital
and each share has a par value of SEK 1.00. The purchase
consideration amounted to SEK 103 M (65).
Of the above shares, 200,000 (100,000) Series B shares
were repurchased in 2012. These account for around 0.05
percent (0.03) of the share capital and each share has a par
value of SEK 1.00. The purchase consideration amounted to
SEK 38 M (17).
Share and dividend policy
ASSA ABLOY’s Series B share is listed on the NASDAQ OMX
Stockholm Large Cap list. At year-end ASSA ABLOY’s market
capitalization amounted to SEK 90,082 M. The Board’s
objective is that, in the long term, the dividend should be
equivalent to 33–50 percent of income after standard tax,
but always taking into account ASSA ABLOY’s long-term
financing requirements.
General Meeting
Shareholders’ rights to decide on the affairs of ASSA ABLOY
are exercised at the General Meeting. Shareholders who are
registered in the share register on the record date and have
duly notified their intention to attend are entitled to take
part in the General Meeting, either in person or via a proxy.
Resolutions at the General Meeting are normally passed by
simple majority. For certain matters, however, the Swedish
Companies Act prescribes that a proposal should be supported by a higher majority. Individual shareholders who
wish to have an issue raised at the General Meeting can
apply to ASSA ABLOY’s Board of Directors at a special
address published on the company’s website well before
the Meeting.
The Annual General Meeting should be held within six
months of the end of the company’s financial year. Matters considered at the Annual General Meeting include
among other things: dividend distribution; adoption of the
income statement and balance sheet; discharge of the Board
of Directors and the CEO from liability; election of board
assa aBLoY annuaL RepoRt 2012
members and Chairman of the Board of Directors; appointment of the Nomination Committee and auditors; determination of remuneration guidelines for senior management
and fees for the Board of Directors and auditors. An Extraordinary General Meeting may be held if the Board of Directors
considers this necessary or if ASSA ABLOY’s auditors or shareholders holding at least 10 percent of the shares so request.
2012 Annual General Meeting
The Annual General Meeting in April 2012 was attended by
shareholders representing 60.2 percent of the share capital
and 73.0 percent of the votes.
At the Annual General Meeting, Carl Douglas, Birgitta
Klasén, Eva Lindqvist, Johan Molin, Sven-Christer Nilsson,
Lars Renström and Ulrik Svensson were re-elected as members of the Board of Directors. Jan Svensson was elected as
a new member of the Board of Directors. Further, Lars Renström was elected as the new Chairman, and Carl Douglas as
Vice Chairman. Gustaf Douglas declined re-election and was
thanked for over 17 years’ service as a member of the Board
of Directors, including the past six years as Chairman.
The Annual General Meeting approved a dividend of
SEK 4.50 per share, in accordance with the proposal of the
Board of Directors and the CEO. In addition, the Annual
General Meeting passed resolutions on fees payable to the
Board of Directors, remuneration guidelines for senior
management, authorization of the Board of Directors
regarding repurchase and transfers of own Series B shares,
and the implementation of a long-term incentive program
(LTI 2012) for senior management and other key staff in the
Group, as well as appointing members of the Nomination
Committee prior to the 2013 Annual General Meeting.
Nomination Committee
The Nomination Committee prior to the 2013 Annual General Meeting comprises Gustaf Douglas (Investment AB
Latour), Mikael Ekdahl (Melker Schörling AB), Liselott Ledin
(Alecta), Marianne Nilsson (Swedbank Robur fonder) and
Per-Erik Mohlin (SEB fonder/SEB Trygg Liv). Gustaf Douglas is
Chairman of the Nomination Committee. If a shareholder
represented by one of the members of the Nomination
Committee ceases to be among the major shareholders in
ASSA ABLOY, the Nomination Committee has the right to
appoint another representative of one of the major shareholders to replace such a member. The same applies if a
member of the Nomination Committee ceases to be
employed by such a shareholder or leaves the Nomination
Committee before the 2013 Annual General Meeting for
any other reason.
The Nomination Committee has the task of preparing,
on behalf of the shareholders, resolutions on the election of
the Chairman, the Vice Chairman and other members of the
Board of Directors, the appointment of the auditor, the election of the Chairman of the Annual General Meeting, the
appointment of the Nomination Committee prior to the
Annual General Meeting, and fees and associated matters.
Prior to the 2013 Annual General Meeting, the Nomination Committee has made an assessment of whether the
current Board of Directors is appropriately composed and
assa aBLoY annuaL RepoRt 2012
fulfills the demands made on the Board of Directors by the
company’s present situation and future direction. The
annual evaluation of the Board of Directors was part of the
basis for this assessment. The search for suitable board
members is carried on throughout the year and proposals
for new board members are based in each individual case on
a profile of requirements established by the Nomination
Committee.
Shareholders wishing to submit proposals to the Nomination Committee can do so by emailing:
nominationcommittee@assaabloy.com.
The Nomination Committee’s proposals are published
at the latest in conjunction with the formal notification of
the Annual General Meeting, which is expected to be issued
around 21 March 2013.
Board of directors
In accordance with the Swedish Companies Act, the Board
of Directors is responsible for the organization and administration of the Group and for ensuring satisfactory control of
bookkeeping, asset management and other financial circumstances. The Board of Directors decides on the Group’s
overall objectives, strategies and policies, as well as on
acquisitions, divestments and investments. The Board of
Directors approves the Annual Report and Interim Reports,
proposes a dividend and remuneration guidelines for senior
management to the Annual General Meeting, and makes
decisions concerning the Group’s financial structure.
The Board’s other duties include among other things:
• continuously evaluating the company’s operational
management, including the work of the CEO,
• ensuring that there are effective systems in place for
monitoring and control of the company’s operations,
• ensuring that the company’s information provision is
transparent, accurate, relevant and reliable,
• ensuring that there is satisfactory control of the company’s compliance with laws and other regulations applying to the company’s operations, and
• ensuring that necessary ethical guidelines for the company’s conduct are established.
The Board of Directors’ rules of procedure and instructions
for the division of duties between the Board of Directors
and the CEO are updated and approved at least once a year.
The Board of Directors has also issued written instructions
specifying how financial reporting to the Board of Directors
should be carried out.
In addition to leading the work of the Board of Directors,
the Chairman should continuously monitor the Group’s
operations and development through contact with the CEO.
The Chairman should consult the CEO on strategic issues
and represent the company in matters concerning the ownership structure. The Chairman should also, when necessary,
take part in particularly important external discussions and,
in consultation with the CEO, in other matters of particular
significance. The Chairman should ensure that the work of
the Board of Directors is evaluated annually, and that new
members of the Board of Directors receive appropriate
training.
RepoRt of the BoaRd of diRectoRs 69
Report of the Board of Directors
Corporate governance
The Board of Directors has at least four scheduled meetings
and one statutory meeting per year. The scheduled meetings
take place in connection with the company’s publication of
its year-end or quarterly results. At least once a year the
Board of Directors visits one of the Group’s businesses, possibly combined with a board meeting. In addition, extra board
meetings are held when necessary. All meetings follow an
approved agenda. Prior to each meeting, a draft agenda
including documentation is sent to all board members.
The Board of Directors has a Remuneration Committee
and an Audit Committee. The purpose of these Committees
is to deepen and streamline the work of the Board of Directors and to prepare matters in these areas. The Committees
have no decision-making powers. The members of the Committees are appointed annually by the Board of Directors at
the statutory board meeting. Instructions for the Committees are included in the Board of Directors’ rules of procedure.
Board of Directors’ work in 2012
During the year the Board of Directors held nine meetings
(five scheduled meetings, one statutory meeting and three
extraordinary meetings). One board member was absent at
two meetings. All board members were present at the other
meetings. At the scheduled board meetings, the CEO
reported on the Group’s performance and financial position, including the outlook for the coming quarters. Investments, acquisitions and divestments were also considered.
All acquisitions and divestments with a value (on a debt-free
basis) exceeding SEK 100 M are decided by the Board of
Directors. This amount presumes that the matter relates to
acquisitions or divestments within the framework of the
strategy agreed by the Board of Directors.
More important matters dealt with by the Board of
Directors during the year included, among other things,
ASSA ABLOY’s investment in Seos, a commercial ecosystem
for creating and managing digital keys in NFC cell phones.
In addition, the Board of Directors dealt with a number of
acquisitions, including Guoqiang and 4Front. During the
year, the Board of Directors conducted in-depth reviews of
the Group’s operations in Entrance Systems and EMEA and
visited Americas’ operations Curries and Graham in the USA.
Remuneration Committee
During 2012 the Remuneration Committee comprised Lars
Renström (Chairman), Jan Svensson and Sven-Christer Nilsson.
The Remuneration Committee’s task is to draw up remuneration guidelines for senior management, which the
Board of Directors proposes to the Annual General Meeting
for resolution. The Board of Directors’ proposal for guidelines prior to the 2013 Annual General Meeting can be seen
on page 77.
The Remuneration Committee also prepares, negotiates
and evaluates matters regarding salaries, bonus, pension,
severance pay and incentive programs for the CEO and
other senior executives.
The Committee held one meeting in 2012 at which all
members were present.
70 RepoRt of the BoaRd of diRectoRs
The Remuneration Committee’s work included, among
other things, preparing a proposal for the remuneration of
the Executive Team, evaluating existing incentive programs,
and preparing a proposal for a long-term incentive program
for 2013. The meetings of the Committee are minuted, the
minutes are distributed with material for the Board of Directors and a verbal report is given at board meetings.
Audit Committee
During 2012 the Audit Committee comprised Ulrik
Svensson (Chairman), Birgitta Klasén and Jan Svensson.
The duties of the Audit Committee include the continuous quality assurance of ASSA ABLOY’s financial reporting.
Regular communication is maintained with the company’s
auditor on matters including the focus and scope of the
audit. The Audit Committee is also responsible for evaluating the audit assignment and informing the Board of Directors and the Nomination Committee of the results, as well as
continuously monitoring the current risk status of legal risks
in the operations. The Audit Committee held four meetings
in 2012 at which all members, the company’s auditor and
representatives of senior management were present. More
important matters dealt with by the Audit Committee during the year included internal control, financial statements
and valuation matters, tax matters and legal risk areas.
The meetings of the Committee are minuted, the minutes are distributed with material for the Board of Directors
and a verbal report is given at board meetings.
ASSA ABLOY’s Board of Directors
The Board of Directors is elected annually at the Annual
General Meeting for the period until the end of the next
Annual General Meeting and shall according to the articles
of association comprise a minimum six and a maximum ten
members elected by the Meeting. Two of the members are
appointed by the employee organizations in accordance
with Swedish law. The employee organizations also appoint
two deputies. The Board of Directors currently consists of
eight elected members and two employee representatives.
With the exception of the CEO, none of the board members
are members of the Executive Team. The CEO has no significant shareholdings or partnerships in companies with significant business relationships with ASSA ABLOY.
Remuneration of the Board of Directors
The Annual General Meeting passes a resolution on the
remuneration to be paid to board members. The 2012
Annual General Meeting passed a resolution on board fees
totaling SEK 4,600,000 (excluding remuneration for committee work), to be allocated between the members as follows:
SEK 1,350,000 to the Chairman, SEK 750,000 to the Vice
Chairman and SEK 500,000 to each of the other members
appointed by the Annual General Meeting and not employed
by the company. As remuneration for committee work, the
Chairman of the Audit Committee is to receive SEK 200,000,
the Chairman of the Remuneration Committee SEK 100,000,
members of the Audit Committee (the Chairman excluded)
SEK 100,000, and members of the Remuneration Committee
(the Chairman excluded) SEK 50,000.
assa aBLoY annuaL RepoRt 2012
The Chairman of the Board of Directors and other board
members have no pension benefits or severance pay agreements. The CEO and employee representatives do not
receive board fees. For further information on the remuneration of board members in 2012, see Note 33.
Independence of the Board of Directors
position
independent of the company
and its management
independent of the company’s
major shareholders
Chairman
Vice Chairman
Board member
Board member
Board member, President and CEO
Board member
Board member
Board member
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes
–
Yes
No
No
name
ASSA ABLOY’s Board of
Directors fulfills the requirements for independence
in accordance with the
Swedish Code of Corporate
Governance.
Lars Renström
Carl Douglas
Birgitta Klasén
Eva Lindqvist
Johan Molin
Sven-Christer Nilsson
Jan Svensson
Ulrik Svensson
The Board of Directors’ composition and shareholdings
name
position
Lars Renström
Carl Douglas
Birgitta Klasén
Eva Lindqvist
Johan Molin
Chairman of the Board
Vice Chairman
Board member
Board member
Board member,
President and CEO
Board member
Board member
Board member
Board member, employee
representative
Board member, employee
representative
Deputy, employee
representative
Deputy, employee
representative
Sven-Christer Nilsson
Jan Svensson
Ulrik Svensson
Seppo Liimatainen
Mats Persson
Rune Hjälm
Per Edvin Nyström
1
assa aBLoY annuaL RepoRt 2012
elected
Born
Remuneration
committee
audit
committee
series a
shares¹
series B
shares¹
2008
2004
2008
2008
1951
1965
1949
1958
Chairman
–
–
–
–
–
Member
–
–
13,865,243
–
–
10,000
21,300,000
7,000
2,300
2006
2001
2012
2008
1959
1944
1956
1961
–
Member
Member
–
–
–
Member
Chairman
–
–
–
–
526,267
5,000
2,000
3,000
2003
1950
–
–
–
2,600
1994
1955
–
–
–
–
2005
1964
–
–
–
–
1994
1955
–
–
–
5,727
Including related parties and through companies. Shareholdings as at 31 December 2012. This information is updated regularly at www.assaabloy.com
RepoRt of the BoaRd of diRectoRs 71
Report of the Board of Directors
Corporate governance Board of Directors
Board members elected at the 2012 Annual General Meeting
Lars Renström
Carl Douglas
Birgitta Klasén
Eva Lindqvist
Johan Molin
Lars Renström
Chairman.
Board member since 2008.
Born 1951.
Master of Science in Engineering and Bachelor of Science in
Business Administration and Economics. President and CEO
of Alfa Laval AB since 2004. President and CEO of Seco Tools
AB 2000–2004. President and Head of Division of Atlas
Copco Rock Drilling Tools 1997–2000. Prior to that, a
number of senior posts at ABB and Ericsson.
Other appointments: Board member of Alfa Laval AB.
Shareholdings (including related parties and through
companies): 10,000 Series B shares.
carl douglas
Vice Chairman.
Board member since 2004.
Born 1965.
BA (Bachelor of Arts).
Self-employed.
Other appointments: Vice Chairman of Securitas AB. Board
member of Investment AB Latour and Swegon AB.
Shareholdings (including related parties and through
companies): 13,865,243 Series A shares and 21,300,000
Series B shares through Investment AB Latour.
Birgitta Klasén
Board member since 2008.
Born 1949.
Master of Science in Engineering.
Independent IT consultant (Senior IT Advisor). Chief
Information Officer (CIO) and Head of Information
Management at EADS (European Aeronautics Defence and
Space Company) 2004–2005. CIO and Senior Vice President
of Pharmacia 1996–2001. Prior to that, CIO of Telia. Held
various posts at IBM 1976–1994.
Other appointments: Board member of Acando AB and IFS AB.
Shareholdings (including related parties and through
companies): 7,000 Series B shares.
eva Lindqvist
Board member since 2008.
Born 1958.
Master of Science in Engineering and Bachelor of Science in
Business Administration and Economics.
Senior Vice President of Mobile Business at TeliaSonera AB
2006–2007. Prior to that, several senior posts at TeliaSonera
AB, including President and Head of Business Operation
International Carrier, and various posts in the Ericsson Group
1981–1999.
Other appointments: Board member of companies
including Tieto Oy, Transmode AB and Episerver AB. Member
of the Royal Swedish Academy of Engineering Sciences (IVA).
Shareholdings (including related parties and through
companies): 2,300 Series B shares.
Johan Molin
Board member since 2006.
Born 1959.
Bachelor of Science in Business Administration and
Economics.
President and CEO of ASSA ABLOY AB since 2005. CEO of
Nilfisk-Advance 2001–2005. Various senior positions mainly
in finance and marketing, later divisional head in the Atlas
Copco Group 1983–2001.
Other appointments: Chairman of Nobia AB.
Shareholdings (including related parties and through
companies): 526,267 Series B shares.
sven-christer nilsson
Board member since 2001.
Born 1944.
Bachelor of Science.
President and CEO of Telefonaktiebolaget LM Ericsson 1998–
1999, various executive positions mainly in marketing and
general management in the Ericsson Group 1982–1997.
Other appointments: Chairman of the Swedish Defence
Materiel Administration (FMV). Board member of Sprint
Nextel Corporation and CEVA, Inc.
Shareholdings (including related parties and through
companies): 5,000 Series B shares.
Sven-Christer Nilsson
Shareholdings as at 31 December 2012. This information is updated regularly at www.assaabloy.com
72 RepoRt of the BoaRd of diRectoRs
assa aBLoY annuaL RepoRt 2012
Ulrik Svensson
ulrik svensson
Board member since 2008.
Born 1961.
Bachelor of Science in Business Administration and
Economics.
CEO of Melker Schörling AB. CFO of Swiss International
Airlines Ltd. 2003–2006. CFO of Esselte AB 2000–2003 and
Controller/CFO of the Stenbeck Group’s foreign telecoms
ventures 1992–2000.
Other appointments: Board member of AarhusKarlshamn AB,
Loomis AB, Hexagon AB, Hexpol AB and Flughafen Zürich AG.
Shareholdings (including related parties and through
companies): 3,000 Series B shares.
Jan svensson
Board member since 2012.
Born 1956.
Mechanical Engineer and Bachelor of Science in Business
Administration and Economics.
President and CEO of Investment AB Latour since 2003.
Other appointments: Chairman of AB Fagerhult, Nederman
Holding AB and Oxeon AB. Board member of Loomis AB,
Investment AB Latour and Tomra Systems ASA.
Shareholdings (including related parties and through
companies): 2,000 Series B shares.
Jan Svensson
Board members appointed by employee organizations
seppo Liimatainen
Board member since 2003.
Born 1950.
Employee representative, Federation of Salaried Employees
in Industry and Services.
Shareholdings: 2,600 Series B shares.
Seppo Liimatainen
Mats persson
Board member since 1994.
Born 1955.
Employee representative, Swedish Metal Workers Union.
Shareholdings: –
Mats Persson
Rune Hjälm
Rune hjälm
Deputy board member since 2005.
Born 1964.
Employee representative, Swedish Metal Workers Union.
Chairman of EWC, European Works Council in the
ASSA ABLOY Group.
Shareholdings: –
per edvin nyström
Deputy board member since 1994.
Born 1955.
Employee representative, Swedish Metal Workers Union.
Shareholdings: 5,727 Series B shares.
Per Edvin Nyström
Shareholdings as at 31 December 2012. This information is updated regularly at www.assaabloy.com
assa aBLoY annuaL RepoRt 2012
RepoRt of the BoaRd of diRectoRs 73
Report of the Board of Directors
Corporate governance The Executive Team
The Executive Team
Johan Molin
Carolina Dybeck Happe
Denis Hébert
Jonas Persson
Tzachi Wiesenfeld
Thanasis Molokotos
Tim Shea
Juan Vargues
Ulf Södergren
Johan Molin
Born 1959.
Bachelor of Science in Business
Administration and Economics.
President and CEO.
Head of Global Technologies division.
Employed since: 2005.
Shareholdings: 526,267 Series B shares.
tzachi Wiesenfeld
Born 1958.
Bachelor of Science in Industrial
Engineering, MBA.
Executive Vice President.
Head of EMEA division.
Employed since: 2000.
Shareholdings: 11,113 Series B shares.
carolina dybeck happe
Born 1972.
Masters degree in Finance.
Executive Vice President and
Chief Financial Officer (CFO).
Employed since: 2012.
Shareholdings: 5,769 Series B shares.
thanasis Molokotos
Born 1958.
Master of Science in Engineering.
Executive Vice President.
Head of Americas division.
Employed since: 1996.
Shareholdings: 37,157 Series B shares.
denis hébert
Born 1956.
Bachelor of Commerce, MBA.
Executive Vice President.
Head of Global Technologies
business unit HID Global.
Employed since: 2002.
Shareholdings: 9,301 Series B shares.
tim shea
Born 1959.
Degree in Mechanical Engineering, MBA.
Executive Vice President.
Head of Global Technologies
business unit ASSA ABLOY Hospitality.
Employed since: 2004.
Shareholdings: 5,584 Series B shares.
Jonas persson
Born 1969.
Master of Science in Engineering.
Executive Vice President.
Head of Asia Pacific division.
Employed since: 2009.
Shareholdings: 13,333 Series B shares.
Juan Vargues
Born 1959.
Degree in Mechanical Engineering, MBA.
Executive Vice President.
Head of Entrance Systems division.
Employed since: 2002.
Shareholdings: 10,677 Series B shares.
ulf södergren
Born 1953.
Master of Science in Engineering and
Bachelor of Science in Business
Administration and Economics.
Executive Vice President.
Chief Technology Officer (CTO).
Employed since: 2000.
Shareholdings: 6,907 Series B shares.
Shareholdings as at 31 December 2012. This information is updated regularly at www.assaabloy.com
74 RepoRt of the BoaRd of diRectoRs
assa aBLoY annuaL RepoRt 2012
the executive team and organization
The Executive Team consists of the CEO, the heads of the
Group’s divisions, the Chief Financial Officer and the Chief
Technology Officer. ASSA ABLOY’s operations are divided
into five divisions, where the fundamental principle is that
the divisions should be responsible, as far as possible, for
business operations, while various functions at headoffice
are responsible for coordination, monitoring, policies and
guidelines at an overall level. The Group’s structure results
in a geographical and strategic spread of responsibility
ensuring short-decision-making paths. The Group’s management philosophy is based on trust and respect for local
cultures and conditions.
Guidelines and policies
The Group’s most important guidelines and policies define
the product areas in which the Group should operate and
describe the principles for market development, growth,
product development, organization, cost-efficiency and
employee development. These principles are described in
the publication ‘Our Road to the Future’, which has been
provided to all employees in the Group. Other important
guidelines and policies concern financial control, communication issues, insider issues, the Group’s brands, business
ethics, export control, and environmental issues.
ASSA ABLOY’s financial policy and accounting manual provide the framework for financial control and monitoring.
The Group’s communications policy aims to ensure essential information is provided at the right time and in compliance with applicable rules and regulations. ASSA ABLOY has
adopted an insider policy to complement applicable Swedish insider legislation. This policy applies to all persons
reported to the Swedish Financial Supervisory Authority as
holding insider position in ASSA ABLOY AB (including subsidiaries) as well as certain other categories of employees.
Brand guidelines aim to protect and develop the major
assets that the Group’s brands represent.
ASSA ABLOY has adopted a Code of Conduct that applies
to the whole Group. The Code, which is based on a set of
internationally accepted conventions, defines the values and
guidelines that should apply within the Group with regard to
the environment, health and safety, business ethics, working
conditions, human rights and social responsibility. Application of the Code of Conduct in the Group’s different units is
monitored regularly to ensure compliance and relevance.
ASSA ABLOY has also adopted an anti-bribery policy and an
export control policy that applies to the whole Group.
assa aBLoY annuaL RepoRt 2012
Decentralized organization
ASSA ABLOY’s operations are decentralized. Decentralization is a deliberate strategic choice based on the industry’s
local nature and a conviction of the benefits of a divisional
control model.
ASSA ABLOY’s operating structure is designed to create
maximum transparency, to facilitate financial and operational monitoring, and to promote the flow of information
and communication across the Group. The Group consists
of five divisions, which are divided into around 30 business
units. These consist in turn of a large number of sales and
production units, depending on the structure of the business unit concerned. Apart from monitoring by unit, monitoring of products and markets is also carried out.
internal control of financial reporting
ASSA ABLOY’s process for internal control of financial
reporting is designed to provide reasonable assurance of
reliable financial reporting, which is in compliance with
generally accepted accounting principles, applicable laws
and regulations, and other requirements for listed companies. The process is based on the internal control framework
issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). It can be divided into a
number of sub-components, as defined in the above framework, and is described in more detail below.
Control environment
The Board of Directors is responsible for effective internal
control and has therefore established fundamental documents of significance for financial reporting. These documents include, among other things, the Board of Directors’
rules of procedure and instructions to the CEO, the Code of
Conduct, financial policy, and an annual financial evaluation
plan. Regular meetings are held with the Audit Committee.
The Group has an internal control function whose primary
objective is ensuring reliable financial reporting.
ASSA ABLOY’s effective decentralized organizational
structure makes a substantial contribution to a good control environment. All units in the Group apply uniform
accounting and reporting instructions. Minimum levels for
internal control of financial reporting have been established
and are monitored annually for all operating companies.
The Code of Conduct was previously reviewed and updated,
and compliance is monitored systematically in operations.
RepoRt of the BoaRd of diRectoRs 75
Risk assessment
Risk assessment includes identifying and evaluating the risk
of material errors in accounting and financial reporting at
Group, division and local levels. A number of previously
established documents govern the procedures to be used
for accounting, finalizing accounts, financial reporting and
review. The entire Group uses a financial reporting system
with pre-defined report templates.
Control activities
The Group’s controller and accounting organization at both
central and division level plays a significant role in ensuring
reliable financial information. It is responsible for complete,
accurate and timely financial reporting.
A global financial internal audit function has been established and carries out annual financial evaluations in accordance with the plan annually adopted by the Audit Committee. The results of the financial evaluations for 2012 are submitted to the Audit Committee and the auditors. Groupwide internal control guidelines are reviewed annually.
These guidelines affect various procedures, such as ordering
and purchasing (including payments), finalizing accounts
and plants, as well as compliance with various relevant policies, legal issues and HR issues.
Information and communication
Reporting and accounting manuals as well as other financial
reporting guidelines are available to all employees concerned on the Group’s intranet. A regular review and analysis of financial outcomes is carried out at both business unit
and division level and as part of the Board of Directors’
established operating structure. The Group also has established procedures for external communication of financial
information, in accordance with the rules and regulations
for listed companies.
Review process
The Board of Directors and the Audit Committee evaluate
and review the Annual Report and Interim Reports prior to
publication. The Audit Committee monitors the financial
reporting and other related issues, and regularly discusses
these issues with the external auditors.
All business units report their financial results monthly
in accordance with the Group’s accounting principles. This
76 RepoRt of the BoaRd of diRectoRs
reporting serves as the basis for quarterly reports and a
monthly legal and operating review. Operating reviews conform to a structure in which sales, earnings, cash flow, capital employed and other important key figures and trends for
the Group are compiled, and form the basis for analysis and
actions by management and controllers at different levels.
Financial reviews take place quarterly at divisional board
meetings, monthly in the form of performance reviews and
through more informal analysis. Other important groupwide components of internal control are the annual business planning process and monthly and quarterly forecasts.
The Group-wide internal control guidelines were
reviewed during the year in all operating companies
through self-assessment and in some cases a second opinion from external auditors. These self-assessments are then
reviewed at division and Group level to further improve the
reliability of the financial reporting.
external audit
At the 2010 Annual General Meeting, PricewaterhouseCoopers (PwC) were appointed as the company’s external
auditors for a four-year period up to the end of the 2014
Annual General Meeting, with authorized public accountant
Peter Nyllinge as the auditor in charge. PwC have been the
Group’s auditors since the Group was formed in 1994. Peter
Nyllinge, born 1966, is responsible for auditing SEB, Securitas and Ericsson as well as ASSA ABLOY.
PwC submits the audit report for ASSA ABLOY AB, the
Group and a large majority of the subsidiaries worldwide.
The audit of ASSA ABLOY AB also includes the administration by the Board of Directors and the CEO.
The company’s auditor attends all Audit Committee
meetings as well as the February board meeting, at which he
reports his observations and recommendations concerning
the group audit for the year.
The external audit is conducted in accordance with
International Standards in Auditing (ISA), which has been
good auditing practice in Sweden since 2011. The audit of
the financial statements for legal entities outside Sweden is
conducted in accordance with statutory requirements and
other applicable rules in each country. For information
about the fees paid to auditors and other assignments carried out in the Group in the past three financial years, see
Note 3 and the Annual Report for 2011, Note 3.
assa aBLoY annuaL RepoRt 2012
Report of the Board of Directors
Remuneration guidelines
for senior management
the Board of directors’ proposal for remuneration
guidelines for senior management
The Board of Directors of ASSA ABLOY proposes that the
2013 Annual General Meeting adopts the following guidelines for the remuneration and other employment conditions of the President and CEO and the other members of
the Executive Team. The proposed guidelines below do not
involve any material change, compared with the guidelines
adopted by the 2012 Annual General Meeting. The basic
principle is that remuneration and other employment conditions should be in line with market conditions and be
competitive. ASSA ABLOY takes into account both global
remuneration practice and practice in the home country of
each member of the Executive Team. The total remuneration of the Executive Team should consist of basic salary,
variable components in the form of annual and long-term
variable remuneration, other benefits and pension.
The total remuneration of the Executive Team, including
previous commitments not yet due for payment, is reported
in Note 33.
Fixed and variable remuneration
The basic salary should be competitive and reflect responsibility and performance. The variable part consists of remuneration paid partly in cash and partly in the form of shares.
The Executive Team should be able to receive variable cash
remuneration, based on the outcome in relation to financial
targets and, when applicable, individual targets. This remuneration should be equivalent to a maximum 75 percent of
the basic salary (excluding social security costs).
In addition, the Executive Team should, within the framework of the Board of Directors’ proposal for a long-term
incentive program, be able to receive variable remuneration in the form of shares, based on the outcome in relation to a range determined by the Board of Directors for the
assa aBLoY annuaL RepoRt 2012
performance of earnings per share during 2013. This remuneration model also includes the right, when purchasing a
share under certain conditions, to receive a free matching
share from the company. This remuneration should, if the
share price is unchanged, be equivalent to a maximum 75
percent of the basic salary (excluding social security costs).
The cost of variable remuneration for the Executive Team
as above, assuming maximum outcome, totals around SEK
61 M (excluding social security costs). This calculation is
made on the basis of the current members of the Executive
Team.
Other benefits and pension
Other benefits, such as company car, extra health insurance
or occupational healthcare, should be payable to the extent
this is considered to be in line with market conditions in the
market concerned. All members of the Executive Team
should be covered by defined contribution pension plans,
for which pension premiums are allocated from the executive’s total remuneration and paid by the company during
the period of employment.
Notice and severance pay
If the CEO is given notice, the company is liable to pay the
equivalent of 24 months’ basic salary and other employment benefits. If one of the other members of the Executive
Team is given notice, the company is liable to pay a maximum six months’ basic salary and other employment benefits plus an additional 12 months’ basic salary.
Deviations from guidelines
The Board of Directors should have the right to deviate from
these guidelines if there are particular reasons for doing so
in an individual case.
RepoRt of the BoaRd of diRectoRs 77
Sales and income
• Organicgrowthwas2percent(4),whileacquiredgrowthwas9percent(17).
• Operatingincome(EBIT)increasedby13percenttoSEK7,501M(6,624),
equivalenttoanoperatingmarginof16.1percent(15.9).
• Earningspershareafterfulldilutionincreasedby13percenttoSEK13.84(12.30).
Sales
TheGroup’ssalesamountedtoSEK46,619M(41,786).
ExchangerateeffectshadanimpactonsalesofSEK290M
(–2,309).
Change in sales
%
Organicgrowth
Acquiredgrowth
Exchangerateeffects
Total
2011
2012
4
17
–8
13
2
9
1
12
Thetotalchangeinsalesfor2012was12percent(13).Organic
growthwas2percent(4)andacquiredunitsmadeapositive
contributionof9percent(17).
Sales by product group
Mechanicallocks,locksystemsandfittingsaccountedfor36
percent(38)oftotalsales.Electromechanicalandelectronic
locksroseto46percent(42)ofsales,ofwhichentrance
automationaccountedfor24percentagepoints(20).Securitydoorsandhardwareaccountedfor18percent(20)of
sales.
Cost structure
Totalwagecosts,includingsocialsecurityexpensesandpensionexpenses,amountedtoSEK12,705M(11,835),equivalentto27percent(28)ofsales.Theaveragenumberof
employeesintheGroupwas42,762(41,070).
TheGroup’smaterialcostsamountedtoSEK16,111M
(14,655),equivalentto35percent(35)ofsales.
OtherpurchasingcoststotaledSEK9,256M(7,616),
equivalentto20percent(18)ofsales.
Depreciationandamortizationofnon-currentassets
amountedtoSEK1,034M(1,022),equivalentto2percent
(2)ofsales.
Operating income
Operatingincome(EBIT)excludingrestructuringcostsrose
toSEK7,501M(6,624),duetoefficiencysavingsandcontinuedgrowthinoperations.Thecorrespondingoperating
marginwas16.1percent(15.9).Exchangerateeffects
amountedtoSEK37M(–430).
Operatingincomebeforedepreciationandamortization
(EBITDA)excludingrestructuringcoststotaledSEK8,536M
(7,646).Thecorrespondingmarginwas18.3percent(18.3).
Items affecting comparability
Operatingincomefortheyearwasnotreducedbyrestructuringcosts(–1,420).Netincomefortheyearfromassetsheld
forsaleanddiscontinuedoperationsamountedtoSEK11M
(404).In2011CardoFlowSolutionsandLorentzen&Wettre
weredivested,givingrisetoacapitalgainofSEK 404M.
Income before tax
IncomebeforetaxexcludingrestructuringcoststotaledSEK
6,731M(5,979).TheexchangerateeffectamountedtoSEK
28M(–399).NetfinancialitemsamountedtoSEK–770M
(–645).Thechangeinnetfinancialitemsismainlydueto
increasedpensionandinterestexpenses.Theprofitmargin,
definedasincomebeforetaxinrelationtosales,was14.4
percent(14.3)excludingrestructuringcosts.
Theparentcompany’sincomebeforetaxwasSEK
3,507 M(2,297).
Tax
TheGroup’staxexpensetotaledSEK1,617M(1,095),equivalenttoaneffectivetaxrateof24percent(24).
Earnings per share
Earningspershareafterfulldilution,excludingitemsaffectingcomparability,amountedtoSEK13.84(12.30),an
increaseof13percent.
SALES AND OPERATING INCOME
SEK M
SEK M
50,000
7,500
40,000
6,000
30,000
4,500
20,000
3,000
 Sales
Operating income1
1,500
10,000
1
0
78 CONSOLIDATED fINANCIAL STATEMENTS
08
09
10
11
12
0
Excluding items affecting comparability
2008, 2009 and 2011.
ASSA ABLOY ANNuAL rEpOrT 2012
Consolidated income statement and
Statement of comprehensive income
Income statement, SEK M
Note
Sales
Costofgoodssold
Gross income
2
Sellingexpenses
Administrativeexpenses
Researchanddevelopmentcosts
Otheroperatingincomeandexpenses
Shareofearningsinassociates
Operating income
2011
2012
41,786
–26,829
14,957
46,619
–28,190
18,429
–6,408
–2,109
–1,202
–77
43
5,204
–7,162
–2,410
–1,344
–82
70
7,501
59
–704
4,559
32
–802
6,731
3
4
5
6–9,33
Financialincome
Financialexpenses
Income before tax
10
9,11
Taxonincome
Net income from continuing operations
12
–1,095
3,465
–1,617
5,114
31
404
3,869
11
5,125
3,843
26
5,112
14
10.45
10.33
12.30
13.85
13.84
13.84
Net income of disposal group classified as held for sale and
discontinued operations
Net income
Net income attributable to:
Parentcompany’sshareholders
Non-controllinginterest
Earnings per share
beforedilution,SEK
afterdilution,SEK
afterdilutionandexcludingitemsaffectingcomparability,SEK
13
13
13
Statement of comprehensive income, SEK M
2011
2012
Net income
3,869
5,125
Other comprehensive income
Shareofothercomprehensiveincomeofassociates
Cashflowhedges
Netinvestmenthedges
Exchangeratedifferences
Total comprehensive income
21
–30
–108
327
4,079
–96
–1
181
–978
4,232
Total comprehensive income attributable to:
–Parentcompany’sshareholders
–Non-controllinginterest
4,040
39
4,226
6
SALES BY PRODUCT GROUP, 2012
EARNINGS PER SHARE AFTER TAX AND DILUTION
 Mechanical locks, lock systems
and fittings, 36% (38)
 Entrance automation, 24% (20)
 Electromechanical and
electronic locks, 22% (22)
 Security doors and
hardware, 18% (20)
SEK
 Earnings per share
14
after tax and dilution1
12
10
8
6
4
2
1
0
ASSA ABLOY ANNuAL rEpOrT 2012
08
09
10
11
12
Excluding items affecting comparability
2008, 2009 and 2011.
CONSOLIDATED fINANCIAL STATEMENTS 79
Comments by division
ASSAABLOYisorganizedintofivedivisions.EMEA(Europe,MiddleEastandAfrica)division,Americas(North
and SouthAmerica)divisionandAsiaPacific(Asia,AustraliaandNewZealand)divisionmanufactureandsell
mechanicalandelectromechanicallocks,securitydoorsandhardwareintheirrespectivegeographicalmarkets.
GlobalTechnologiesdivisionoperatesworldwideintheproductareasofaccesscontrolsystems,securecard
issuance,identificationtechnologyandhotellocks.EntranceSystemsdivisionisaglobalsupplierofentrance
automationproductsandservice.
EMEA
SalestotaledSEK13,382M(13,030),withorganicgrowth
of 1percent(0).Acquiredunitscontributed4percent(5)
to sales.Operatingincomeexcludingrestructuringcosts
amountedtoSEK2,279M(2,203),withanoperatingmargin
(EBIT)of17.0percent(16.9).Returnoncapitalemployed
excludingrestructuringcostswas22.6percent(22.0).OperatingcashflowbeforeinterestpaidwasSEK 2,241M
(2,142).
DemandonmatureEuropeanmarketsremainedweak
duringtheyear.Continuedintensiveeffortsonmarketpresence,cost-efficiency,andthelaunchofnewproducts
improvedtheoperatingmargin.
Americas
SalestotaledSEK9,671M(8,906),withorganicgrowthof
4 percent(2).Acquiredunitscontributed1percent(1)to
sales.Operatingincomeexcludingrestructuringcosts
amountedtoSEK2,007M(1,812),withanoperatingmargin
(EBIT)of20.8percent(20.3).Returnoncapitalemployed
excludingrestructuringcostswas23.6percent(22.8).OperatingcashflowbeforeinterestpaidwasSEK 1,797M
(1,731).
Salesrosemainlyinhigh-securityproductsandelectromechanicalproducts,combinedwitharecoveryonthe
Americanresidentialmarket.Theoperatingmargin
remainedhighduetostrengthenedmarketpresenceand
a broadproductportfolio.
Asia pacific
SalestotaledSEK7,224M(6,633),withorganicgrowthof
3 percent(9).Acquiredunitscontributed1percentnet(4)
tosales.Operatingincomeexcludingrestructuringcosts
amountedtoSEK978M(933),withanoperatingmargin
(EBIT)of13.5percent(14.1).Returnoncapitalemployed
excludingrestructuringcostswas20.7percent(23.6).OperatingcashflowbeforeinterestpaidwasSEK1,348M(912).
SalesrosefurtherinChina,wheremarketdemandslowed
duringtheyear.Demandwasstrongonthemajorityofother
Asianmarkets,butnegativeinAustralia.Operatingmargin
andcashflowweremaintainedata goodlevel.
Global Technologies
SalestotaledSEK6,262M(5,756),withorganicgrowthof
6 percent(11).Acquiredunitscontributed1percent(13)
to sales.Operatingincomeexcludingrestructuringcosts
amountedtoSEK1,073M(897),withanoperatingmargin
(EBIT)of17.1percent(15.6).Returnoncapitalemployed
excluding restructuringcostswas17.3percent(14.3).OperatingcashflowbeforeinterestpaidwasSEK1,140M(933).
Thedivisionshowedcontinuedstrongorganicgrowth
duringtheyearforbothbusinessunits,HIDGlobaland
Hospitality,drivenbynewproductsandservices.Operating
marginandoperatingcashflowincreasedconsiderably.
Entrance Systems
SalestotaledSEK10,979M(8,278),withorganicgrowthof
–2percent(5).Acquiredunitscontributed37percent(110)
tosales.Operatingincomeexcludingrestructuringcosts
amountedtoSEK1,546M(1,197),withanoperatingmargin
(EBIT)of14.1percent(14.5).Returnoncapitalemployed
excludingrestructuringcostswas12.3percent(12.2).OperatingcashflowbeforeinterestpaidwasSEK1,648M
(1,317).
DemandwasstablebutweakinEuropeduringtheyear.
Themarketpositioncontinuedtostrengthenconsiderably
duetomajoracquisitions.Salesandoperatingcashflow
increasedsubstantially,comparedwiththepreviousyear.
Other
Thecostsofgroup-widefunctions,suchascorporatemanagement,accountingandfinance,supplymanagementand
group-wideproductdevelopment,amountedtoSEK382M
(418).EliminationofsalesbetweentheGroup’ssegments
andrestructuringcostsareincludedin‘Other’.
EXTERNAL SALES, 2012
 EMEA, 28% (30)
 Americas, 21% (21)
 Asia Pacific, 14% (15)
 Global Technologies, 13% (14)
 Entrance Systems, 24% (20)
80 CONSOLIDATED fINANCIAL STATEMENTS
ASSA ABLOY ANNuAL rEpOrT 2012
Results by division
EMEA1
SEK M
2011
Sales,external
Sales,internal
Sales
Organicgrowth
Shareofearningsinassociates
Americas2
Asia pacific3
Global
Technologies4
Entrance
Systems
Other
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
12,762 13,177
268
204
13,030 13,382
8,867
39
8,906
9,623
48
9,671
6,243
391
6,633
6,705
518
7,224
5,688
67
5,756
6,191
71
6,262
8,226 10,923
52
57
8,278 10,979
–
–8177
–817
Total
2012
2011
2012
– 41,786 46,619
–8987
–
–
–898 41,786 46,619
0%
2
1%
–6
2%
–
4%
–
9%
–
3%
5
11%
–
6%
–
5%
41
–2%
71
–
–
–
–
4%
43
2%
70
2,203
2,279
1,812
2,007
933
978
897
1,073
1,197
1,546
–418
–382
6,624
7,501
16.9%
–587
17.0%
–
20.3%
–150
20.8%
–
14.1%
–48
13.5%
–
15.6%
–87
17.1%
–
14.5%
–423
14.1%
–
–
–125
–
–
15.9%
–1,420
16.1%
–
Operating income (EBIT)
Operatingmargin(EBIT)
Netfinancialitems
Taxonincome
Netincomefromdiscontinuedoperations
Net income
1,616
12.4%
2,279
17.0%
1,662
18.7%
2,007
20.8%
885
13.3%
978
13.5%
810
14.1%
1,073
17.1%
774
9.3%
1,546
14.1%
–543
–
–382
–
5,204
12.5%
–645
–1,095
404
3,869
7,501
16.1%
–770
–1,617
11
5,125
Capitalemployed
–ofwhichgoodwill
–ofwhichotherintangible
andtangibleassets
–ofwhichsharesinassociates
Returnoncapitalemployedexcluding
itemsaffectingcomparability
8,950
5,564
9,217
5,846
8,468
6,041
8,301
5,913
4,278
3,410
5,168
4,326
6,449
4,846
5,717
4,524
10,837
7,153
13,189
8,323
–1,041
–
–518
–
37,942
27,014
41,073
28,932
2,590
33
2,556
22
1,484
–
1,442
–
2,464
–
2,488
315
1,258
–
1,133
–
2,237
1,178
3,377
1,182
93
–
97
–
10,126
1,211
11,093
1,519
22.0%
22.6%
22.8%
23.6%
23.6%
20.7%
14.3%
17.3%
12.2%
12.3%
–
–
17.4%
18.2%
Operatingincome(EBIT)
Restructuringcosts
Depreciation
Investmentsinfixedassets
Salesoffixedassets
Changeinworkingcapital
Cash flow 5
1,616
587
385
–331
8
–123
2,142
2,279
–
353
–441
128
–79
2,241
1,662
150
182
–140
5
–128
1,731
2,007
–
176
–211
9
–185
1,797
885
48
148
–215
10
35
912
978
–
162
–203
274
135
1,348
810
87
169
–98
0
–35
933
1,073
–
172
–112
0
8
1,140
774
423
126
–111
19
86
1,317
1,546
–
164
–113
109
–59
1,648
–543
125
12
–3
10
–73
–472
–382
–
6
–7
9
102
–272
5,204
1,420
1,022
–898
52
–238
6,563
7,501
–
1,034
–1,086
530
–77
7,902
0
–482
–312
–546
0
–482
6,080
–312
–546
7,044
133
140
41,070
42,762
Operating income (EBIT) excluding
items affecting comparability
Operatingmargin(EBIT)excluding
itemsaffectingcomparability
Itemsaffectingcomparability6
Adjustmentfornon-cashitems
Interestpaidandreceived
Operating cash flow 5
Averagenumberofemployees
1Europe,MiddleEastandAfrica.
2NorthandSouthAmerica.
3Asia,AustraliaandNewZealand.
4ASSAABLOYHospitalityand
HID Global.
5Excludingrestructuringpayments.
6Itemsaffectingcomparability
consistofrestructuringcosts.
7OfwhicheliminationsSEK898M
(817).
10,071
10,260
6,658
6,620
15,784
15,284
3,029
5,605
7,429
ThesegmentshavebeendeterminedonthebasisofreportingtotheCEO,whomonitorstheoverallperformanceand
makesdecisionsonresourceallocation.
Thedifferentsegmentsgeneratetheirrevenuefromthe
manufactureandthesaleofmechanical,electromechanical
andelectroniclocks,locksystemsandfittings,andsecurity
doorsandhardware.
Thebreakdownofsalesisbasedoncustomersalesinthe
respectivecountry.Salesbetweensegmentsarecarriedout
atarm’slength.
Forfurtherinformationonsales,seeNote2.
OPERATING INCOME, 2012 1, 2
AVERAGE NUMBER OF EMPLOYEES, 2012
 EMEA, 29% (31)
 Americas, 25% (26)
 Asia Pacific, 12% (13)
 Global Technologies, 14% (13)
 Entrance Systems, 20% (17)
ASSA ABLOY ANNuAL rEpOrT 2012
2,819
1
Operating income excluding
items affecting comparability.
2
“Other” is not included in the
calculation. See section Comments by division for what is
included in “Other”.
 EMEA, 24% (25)
 Americas, 16% (16)
 Asia Pacific, 36% (38)
 Global Technologies, 7% (7)
 Entrance Systems, 17% (14)
CONSOLIDATED fINANCIAL STATEMENTS 81
Financial position
• CapitalemployedamountedtoSEK41,073M(37,942).
• Returnoncapitalemployedremainedhighat18.2percent(17.4).
• Thenetdebt/equityratiowas0.55(0.60).
SEK M
Capitalemployed
–ofwhichgoodwill
Assetsandliabilitiesofdisposalgroup
heldforsale
Netdebt
Equity
–ofwhichnon-controllinginterests
2011
2012
37,942
27,014
41,073
28,932
–
14,207
23,735
208
384
14,732
26,725
183
Capital employed
CapitalemployedintheGroup,definedastotalassetsless
interest-bearingassetsandnon-interest-bearingliabilities
includingdeferredtaxliabilities,amountedtoSEK41,073 M
(37,942).Thereturnoncapitalemployedexcludingitems
affectingcomparabilitywas18.2percent(17.4).
IntangibleassetsamountedtoSEK34,422M(31,455).
Theincreaseismainlyduetotheeffectsofcompletedacquisitions.Duringtheyear,goodwillandotherintangibleassets
withanindefiniteusefullifehavearisentoapreliminary
valueofSEK3,768Masaresultofcompletedacquisitions.
A valuationmodelbasedondiscountedfuturecashflowsis
usedforimpairmenttestingofgoodwillandotherintangibleassetswithanindefiniteusefullife.
TangibleassetsamountedtoSEK5,603M(5,684).Capitalexpenditureontangibleandintangibleassets,lesssales
oftangibleandintangibleassets,totaledSEK556M(846).
DepreciationamountedtoSEK1,034M(1,022).
TradereceivablesamountedtoSEK7,557M(6,924)and
inventoriestotaledSEK5,905M(5,704).Theaveragecollectionperiodfortradereceivableswas51days(47).Material
throughputtimewas98days(97).TheGroupismakingsystematiceffortstoincreasecapitalefficiency.
Net debt
NetdebtamountedtoSEK14,732M(14,207),ofwhichpensioncommitmentsandotherpost-employmentbenefits
accountedforSEK1,224M(1,173).
Netdebtwasincreasedbyacquisitionsandthedividend
toshareholdersandreducedbythecontinuedstrongpositiveoperatingcashflow.Thenetincreaseismainlydueto
increasedacquisitionactivity.
NET DEBT
SEK M
1.0
12,000
0.8
9,000
0.6
6,000
0.4
3,000
0.2
82 CONSOLIDATED fINANCIAL STATEMENTS
08
Equity
TheGroup’sequitytotaledSEK26,725M(23,735)atyearend.Thereturnonequitywas20.1percent(16.7).The
equityratiowas44.6percent(42.9).Thedebt/equityratio,
definedasnetdebtdividedbyequity,was0.55(0.60).
CAPITAL EMPLOYED AND RETURN ON CAPITAL EMPLOYED
15,000
0
External financing
TheGroup’slong-termloanfinancingmainlyconsistsofa
PrivatePlacementProgramintheUSAtotalingUSD750M,
ofwhichUSD698M(500)islong-term,aGMTNprogramof
SEK5,392M(2,656),andaloanfromtheEuropeanInvestmentBankofEUR110 M(110).Duringtheyearnewissues
weremadeunderthePrivatePlacementProgramintheUSA.
AtotalofUSD250Mwasraiseddividedintothreetranches
of 7,10and12years.Inaddition,nineissuesweremade
undertheGMTNprogramforatotalamountofaroundSEK
2,800M.Otherchangesinlong-termloansaremainlydueto
someoftheoriginallong-termloansnowhavinglessthan
oneyeartomaturity.
TheGroup’sshort-termloanfinancingmainlyconsistsof
twoCommercialPaperProgramsforamaximumUSD1,000
M(1,000)andSEK5,000M(5,000)respectively.Atyear-end,
SEK2,152M(4,242)oftheCommercialPaperProgramshad
beenutilized.Inaddition,substantialcreditfacilitiesare
available,mainlyintheformofaMulti-CurrencyRevolving
CreditFacilityofEUR1,100M(1,100),whichwaswholly
unutilizedatyear-end.Thereductioninshort-termfinancingismainlylinkedtotheincreaseinlong-termcapitalmarketissuesimplementedtoextendtheGroup’smaturity
structure.Theinterestcoverageratio,definedasincome
beforetaxplusnetinterest,dividedbynetinterest,was10.4
(8.8).Fixedinteresttermsfellsomewhatduringtheyear,
withanaveragetermof32months(16)atyear-end.
CashandcashequivalentsamountedtoSEK907M
(1,665)andareinvestedinbankswithhighcreditratings.
SomeoftheGroup’smainfinancingagreementscontaina
customaryChangeofControlclause.Thisclausemeansthat
lendershavetherightincertaincircumstancestodemand
therenegotiationofconditionsortoterminatetheagreementsshouldcontrolofthecompanychange.
09
10
11
12
0
 Net debt
Net debt / equity
SEK M
%
42,000
28
 Capital employed
36,000
24
30,000
20
Return on capital
employed1
24,000
16
18,000
12
12,000
8
6,000
4
1
0
08
09
10
11
12
0
Excluding items affecting comparability
2008, 2009 and 2011.
ASSA ABLOY ANNuAL rEpOrT 2012
Consolidated balance sheet
SEK M
ASSETS
Non-current assets
Intangibleassets
Tangibleassets
Investmentsinassociates
Otherfinancialassets
Deferredtaxassets
Total non-current assets
Current assets
Inventories
Tradereceivables
Currenttaxreceivables
Othercurrentreceivables
Prepaidexpensesandaccruedincome
Derivativefinancialinstruments
Short-terminvestments
Cashandcashequivalents
Assetsofdisposalgroupclassifiedasheldforsale
Total current assets
TOTAL ASSETS
EQuITY AND LIABILITIES
Equity
Parent company's shareholders
Sharecapital
Othercontributedcapital
Reserves
Retainedearnings
Non-controllinginterest
Total equity
Non-current liabilities
Long-termloans
Deferredtaxliabilities
Pensionprovisions
Othernon-currentprovisions
Othernon-currentliabilities
Total non-current liabilities
Current liabilities
Short-termloans
Convertibledebentures
Derivativefinancialinstruments
Tradepayables
Currenttaxliabilities
Currentprovisions
Othercurrentliabilities
Accruedexpensesanddeferredincome
Liabilitiesofdisposalgroupclassifiedasheldforsale
Total current liabilities
TOTAL EQuITY AND LIABILITIES
ASSA ABLOY ANNuAL rEpOrT 2012
Note
2011
2012
14
15
17
19
18
31,455
5,684
1,211
164
786
39,301
34,422
5,603
1,519
89
1,370
43,003
20
21
5,704
6,924
325
620
551
234
50
1,665
–
16,072
55,373
5,905
7,557
336
822
578
114
24
907
610
16,853
59,856
368
9,227
–287
14,219
23,527
208
23,735
371
9,675
–1,173
17,670
26,543
183
26,725
34
18
24
25
34
7,422
497
1,173
1,315
2,668
13,075
11,194
1,226
1,224
1,871
704
16,219
34
34
34
6,531
896
179
3,796
330
2,028
1,642
3,161
–
18,563
55,373
3,301
–
87
3,883
822
1,204
3,991
3,397
226
16,911
59,856
34
34
34
31
23
25
26
27
31
CONSOLIDATED fINANCIAL STATEMENTS 83
Cash flow
• OperatingcashflowremainedverystrongandamountedtoSEK7,044M(6,080).
• NetcapitalexpendituretotaledSEK557M(846).
Operating cash flow
SEK M
2011
2012
Operatingincome(EBIT)
Restructuringcosts
Depreciation
Netcapitalexpenditure
Changeinworkingcapital
Interestpaidandreceived
Non-cashitems
Operating cash flow1
5,204
1,420
1,022
–846
–238
–482
0
6,080
7,501
–
1,034
–557
–77
–546
–312
7,044
Operatingcashflow/
Incomebeforetax
1.022
1.05
1Excludingrestructuringpayments.
²Excludingrestructuringcosts.
TheGroup’soperatingcashflowamountedtoSEK7,044M
(6,080),equivalentto105percent(102)ofincomebefore
taxexcludingrestructuringcosts.
Net capital expenditure
Netcapitalexpenditureonintangibleandtangibleassets
totaledSEK556M(846),equivalentto54percent(83)of
thedepreciationonintangibleandtangibleassets.Thelow
netcapitalexpenditureismainlyduetorealestatesalesduringtheyear.Inaddition,theGroup’slong-termeffortsto
streamlinetheproductionstructurecontributedtothelow
netcapitalexpenditure.
Change in working capital
SEK M
2011
2012
Inventories
Tradereceivables
Tradepayables
Otherworkingcapital
Change in working capital
–32
–249
235
–192
–238
0
–192
–22
136
–77
relationship between cash flow from operating activities
and operating cash flow
SEK M
2011
2012
Cashflowfromoperatingactivities
Restructuringpayments
Netcapitalexpenditure
Reversaloftaxpaid
Operating cash flow
5,347
373
–846
1,206
6,080
5,990
498
–557
1,113
7,044
Investments in subsidiaries
Thetotalpurchasepriceofinvestmentsinsubsidiaries
amountedtoSEK4,799M(13,600),ofwhichthecashflow
effectwasSEK–3,836M(–12,297).Acquiredcashtotaled
SEK345M(411).
Change in net debt
Netdebtwasmainlyaffectedbythestrongpositiveoperatingcashflow,thedividendtoshareholdersandacquisitions.
SEK M
Netdebtat1January
Operatingcashflow
Restructuringpayments
Taxpaid
Acquisitions/Disposals
Dividend
Shareissue
Purchaseoftreasuryshares
Exchangeratedifferencesandothers
Cashandcashequivalentsofdisposal
groupclassifiedasheldforsale
Net debt at 31 December
2011
2012
10,564
–6,080
373
1,206
6,511
1,472
–308
17
452
14,207
–7,044
498
1,113
4,619
1,683
–450
38
–321
–
14,207
390
14,732
Thematerialthroughputtimewas98days(97)atyear-end.
Capitaltiedupinworkingcapitalincreasedtoalesserextent
duringtheyear,whichhadanimpactoncashflowofSEK–77M
(–238)overall.
INCOME BEFORE TAX AND OPERATING CASH FLOW
SEK M
 Income before tax1
 Operating cash flow2
8,000
7,000
6,000
5,000
CAPITAL EXPENDITURE
SEK M
%
1,000
2.5
 Net capital
800
2.0
 Depreciation
600
1.5
400
1.0
200
0.5
expenditure
4,000
3,000
2,000
1,000
0
84 CONSOLIDATED fINANCIAL STATEMENTS
08
09
10
11
12
1
Excluding items affecting comparability
2008, 2009 and 2011.
2
Excluding restructuring payments.
0
08
09
10
11
12
Net capital
expenditure
% of sales
0
ASSA ABLOY ANNuAL rEpOrT 2012
Consolidated cash flow statement
SEK M
OpErATING ACTIVITIES
Operatingincome
Depreciation
Reversalofrestructuringcosts
Restructuringpayments
Othernon-cashitems
Cash flow before interest and tax
Interestpaid
Interestreceived
Taxpaidonincome
Cash flow before changes in working capital
Changesinworkingcapital
Cash flow from operating activities
INVESTING ACTIVITIES
Investmentsintangibleandintangibleassets
Salesoftangibleandintangibleassets
Investmentsinsubsidiaries
Investmentsinassociates
Disposalsofsubsidiaries
Otherinvestments
Cash flow from investing activities
fINANCING ACTIVITES
Dividends
Long-termloansraised
Long-termloansrepaid
Shareissue
Purchaseoftreasuryshares
Netcasheffectofchangesinotherborrowings
Cash flow from financing activities
CASH fLOW
CASH AND CASH EQuIVALENTS
Cash and cash equivalents at 1 January
Cashflow
Effectofexchangeratedifferences
Cashandcashequivalentsofdisposalgroupheldforsale
Cash and cash equivalents at 31 December
ASSA ABLOY ANNuAL rEpOrT 2012
Note
8
32
32
14,15
14,15
32
32
32
34
2011
2012
5,204
1,022
1,420
–373
0
7,273
7,501
1,034
–
–498
–312
7,726
–512
30
–1,206
5,585
–596
50
–1,113
6,067
–238
5,347
–77
5,990
–898
52
–12,297
–
6,690
–904
–7,357
–1,086
530
–3,836
–352
–12
19
–4,738
–1,472
1,512
–646
308
–17
2,641
2,326
316
–1,683
4,507
–2,169
450
–38
–2,632
–1,564
–312
1,302
316
47
–
1,665
1,665
–312
–56
–390
907
CONSOLIDATED fINANCIAL STATEMENTS 85
Changes in consolidated equity
parent company’s shareholders
SEK M
Note
Opening balance 1 January 2011
Netincome
Othercomprehensiveincome
Total comprehensive income
Dividendfor2010
Stockpurchaseplans
Shareissue
Purchaseoftreasuryshares
Total transactions with parent
company’s shareholders
Closing balance 31 December 2011
23
Opening balance 1 January 2012
Netincome
Othercomprehensiveincome
Total comprehensive income
Dividendfor2011
Stockpurchaseplans
Shareissue
Purchaseoftreasuryshares
Changeinnon-controllinginterest
Total transactions with parent
company’s shareholders
Closing balance 31 December 2012
Other contributed
Share
capital
capital
366
retained Non-controlling
earnings
interest
reserves
8,921
–484
11,849
3,843
197
197
3,843
–1,472
16
23
2
169
26
13
39
306
–17
23
2
368
306
9,227
–287
23
368
9,227
–287
–1,473
14,219
14,219
5,112
–886
–886
23
3
371
448
9,675
–1,173
DIVIDEND
SEK
SEK
 Equity per share after
15
 Return on equity after tax, %
12
70
35
60
30
50
25
40
20
9
30
15
6
20
10
10
5
–38
5
–4
–1,660
17,670
–32
183
–1,242
26,725
 Dividend per share
 Earnings per share
dilution, SEK
after tax and dilution1
3
1
0
86 CONSOLIDATED fINANCIAL STATEMENTS
08
09
10
11
12
0
–1,165
23,735
23,735
5,125
–893
4,232
–1,683
27
450
–38
1
448
EQUITY PER SHARE AFTER DILUTION AND
RETURN ON EQUITY AFTER TAX
%
208
14
–7
6
–27
5,112
–1,655
27
23
3
208
Total
20,821
3,869
210
4,079
–1,472
16
308
–17
0
08
09
10
11
12
Excluding items affecting comparability
2008, 2009 and 2011.
ASSA ABLOY ANNuAL rEpOrT 2012
ASSA ABLOY secures
state-of-the-art hospital
St. Alexius Medical Center and its recently constructed Women & Children’s
Hospital, supports the prevention, treatment and elimination of pediatric disease
through its 60 medical and surgical specialties. This state-of-the-art, child-friendly
environment also offers flexible visiting hours, convenient meal options, and
private spaces meeting the needs of Chicago’s northwest suburbs.
Challenge:
avingestablisheddooropeningstandardsforitsfacilities,St.AlexiusMedicalCentersoughttobalancethisconsistencywith
H
theevaluationandintegrationofrelevantlife-safetyandsecuritysolutionstohelpthenewfacilitymeetitsgoalsforthepatient
experience.Sinceitwasapediatricfacility,itwasequallyimportantthatsafetyandsecuritybeseamless.
Solution:
SSAABLOY,withacloseend-userrelationship,proposedtheuseofnewproductinnovationstomodernizethesafetyand
A
securityofthe500dooropeningfacility.ThenewMedecoX4keysystemwithpatentprotectionuntil2027,allowedthefacility
to updateitsmechanicalsecurityandalsoallowforfutureupgradeofotherhospitalfacilities.
NewSARGENTwirelessaccesscontrolsolutionsextendedthereachoftheEACsystemandprovidedthesecurityandaudit
capabilitiesnecessarytomeethealthcareprivacyrequirements.Electromechanicalexitdevicesandtherecentlydesignedpush/
pulltrim,allwiththeMicroShieldantimicrobialfinishbecamenewstandardsforthefacility.
ProductBrands–HardwareandAccessControl:HES,Markar,McKinney,Norton,Rixson,Rockwood,Sargent;HollowMetal
DoorsandFrames:Curries;KeySystem:Medeco;Solutions:MicroShield.
ASSA ABLOY ANNuAL rEpOrT 2012
CONSOLIDATED fINANCIAL STATEMENTS 87
Parent company financial statements
Income statement
– parent company
Statement of
comprehensive income
– parent company
Balance sheet
– parent company
SEK M
Note
2011
2012
Administrativeexpenses
Researchanddevelopmentcosts
Otheroperatingincomeandexpenses
Operating income
3,6,8,9
6,8,9
4
9,33
–662
–297
1,808
849
–775
–313
1,938
850
Financialincome
Financialexpenses
Groupcontributions
Income before tax
10
9,11
2,394
–714
–232
2,297
9,975
–6,970
–348
3,507
Taxonincome
Net income
12
–29
2,268
–11
3,496
SEK M
2011
2012
Net income
2,268
3,496
Other comprehensive income
Changesinvalueoffinancialinstruments
Total comprehensive income
258
2,526
84
3,580
2011
2012
14
15
16
19
109
3
31,789
1,141
33,042
923
3
28,100
1,489
30,515
2,825
45
27
0
2,897
35,939
2,411
38
17
4
2,470
32,985
368
8,905
371
8,905
340
2,261
2,268
14,142
788
2,947
3,496
16,507
SEK M
ASSETS
Non-current assets
Intangibleassets
Tangibleassets
Sharesinsubsidiaries
Otherfinancialassets
Total non-current assets
Current assets
Receivablesfromsubsidiaries
Othercurrentreceivables
Prepaidexpensesandaccruedincome
Cashandcashequivalents
Total current assets
TOTAL ASSETS
EQuITY AND LIABILITIES
Equity
Restricted equity
Sharecapital
Statutoryreserve
Non-restricted equity
Sharepremiumreserve
Retainedearnings
Netincome
Total equity
Note
22
23
provisions
Otherprovisions
Total provisions
25
76
76
73
73
Non-current liabilities
Long-termloans
Total non-current liabilities
34
2,646
2,646
5,386
5,386
34
34
549
896
65
17,413
7
145
19,075
35,939
–
–
55
10,779
4
181
11,019
32,985
–
10,613
–
9,405
Current liabilities
Short-termloans
Convertibledebentures
Tradepayables
Currentliabilitiestosubsidiaries
Othercurrentliabilities
Accruedexpensesanddeferredincome
Total current liabilities
TOTAL EQuITY AND LIABILITIES
Assetspledged
Contingentliabilities
88 pArENT COMpANY fINANCIAL STATEMENTS
27
29
28
ASSA ABLOY ANNuAL rEpOrT 2012
Cash flow statement
– parent company
SEK M
Note
2011
2012
8
849
157
1,006
850
250
1,100
Interestpaidandreceived
Dividendsreceived
Taxpaidandreceived
Cash flow before changes in working capital
–558
2,280
–1
2,727
–473
9,775
3
10,405
Changesinworkingcapital
Cash flow from operating activities
–86
2,641
–242
10,163
–117
0
–11,825
–951
–12,893
–1,063
0
–2,592
–331
–3,986
–1,472
13,050
–1,617
308
–17
10,252
0
–1,655
4,109
–9,039
450
–38
–6,173
4
0
0
0
0
4
4
OpErATING ACTIVITIES
Operatingincome
Depreciation
Cash flow before interest and tax
INVESTING ACTIVITIES
Investmentsintangibleandintangibleassets
Salesoftangibleandintangibleassets
Investmentsinsubsidiaries
Otherinvestments
Cash flow from investing activities
fINANCING ACTIVITIES
Dividends
Loansraised
Loansrepaid
Shareissue
Purchaseoftreasuryshares
Cash flow from financing activities
CASH fLOW
CASH AND CASH EQuIVALENTS
Cash and cash equivalents at 1 January
Cashflow
Cash and cash equivalents at 31 December
restricted equity
Change in equity
– parent company
SEK M
Opening balance 1 January 2011
Netincome
Hedgeaccounting
Write-upofsharesinsubsidiaries
Total comprehensive income
Dividendfor2010
Stockpurchaseplans
Shareissue
Purchaseoftreasuryshares
Total transactions with parent
company’s shareholders
Closing balance 31 December 2011
Opening balance 1 January 2012
Netincome
Hedgeaccounting
Total comprehensive income
Dividendfor2011
Stockpurchaseplans
Shareissue
Purchaseoftreasuryshares
Total transactions with parent
company’s shareholders
Closing balance 31 December 2012
ASSA ABLOY ANNuAL rEpOrT 2012
Note
Non-restricted equity
Share
capital
Statutory
reserve
fair value
reserve
Share
premium
reserve
366
8,905
–
34
23
2
23
retained
earnings
3,476
2,268
–17
275
2,526
–1,472
16
–17
306
2
368
8,905
–
340
340
–1,473
4,529
–1,165
14,142
368
8,905
–
340
4,529
3,496
84
3,580
–1,655
27
–38
14,142
3,496
84
3,580
–1,655
27
450
–38
–1,666
6,443
–1,215
16,507
23
3
448
23
Total
12,781
2,268
–17
275
2,526
–1,472
16
308
–17
371
8,905
–
788
pArENT COMpANY fINANCIAL STATEMENTS 89
Notes
Note 1 significant accounting and valuation principles
the Group
ASSA ABLOY applies International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU), the
Swedish Annual Accounts Act and standard RFR 1 of the
Swedish Financial Reporting Board. The accounting principles are based on IFRS as endorsed by 31 December 2012
and have been applied to all years presented, unless stated
otherwise. This Note describes the most significant accounting principles that have been applied in the preparation of
the financial statements, which comprise the information
appearing on pages 63–120.
Basis of preparation
ASSA ABLOY’s consolidated financial statements have been
prepared in accordance with IFRS as endorsed by the EU. The
consolidated financial statements have been prepared in
accordance with the cost method, except regarding financial assets and liabilities (including derivatives) measured at
fair value through profit and loss.
Key estimates and assessments for accounting purposes
The preparation of financial statements requires estimates
and assessments to be made for accounting purposes. The
management also makes assessments when applying the
Group’s accounting principles. Estimates and assessments
may affect the income statement and balance sheet as well
as the supplementary information that appears in the financial statements. Thus changes in estimates and assessments
may lead to changes in the financial statements.
Estimates and assessments play an important part in the
valuation of items such as identifiable assets and liabilities in
acquisitions, impairment testing of goodwill and other
assets, in determining actuarial assumptions for calculating
employee benefits and other types of provisions, as well as
in the valuation of deferred taxes. Estimates and assessments are continually reassessed and are based on a combination of historical experience and reasonable expectations
about the future.
The Group considers that estimates and assessments
relating to impairment testing of goodwill and other intangible assets with indefinite useful life are of material importance to the consolidated financial statements. The Group
tests carrying amounts for impairment on an annual basis.
The recoverable amounts of cash generating units are determined by calculating their values in use. The calculations are
based on certain assumptions about the future which, for
the Group, are associated with the risk of material adjustments in carrying amounts during the next financial year.
Material assumptions and the effects of reasonable changes
in them are described in Note 14.
The actuarial assumptions made when calculating postemployment benefits to employees also have material importance for the consolidated financial statements. Information
on these actuarial assumptions is to be found in Note 24.
New and revised standards applied by the Group
None of the standards and interpretations to be applied for the
first time for the financial year beginning 1 January 2012 had a
significant impact on the consolidated financial statements.
New and revised IFRS not yet effective
The following new IFRS and revisions to current IFRS have
been published but are not yet effective, and have not been
applied in the preparation of the financial statements.
• IAS 1 (Revised) Presentation of Financial Statements
• IAS 19 (Revised) Employee Benefits.
• IFRS 9 Financial instruments.
90 Notes
• IFRS 10 Consolidated financial statements.
• IFRS 12 Disclosures of interests in other entities.
• IFRS 13 Fair value measurement.
The above new and revised standards apply from 1 January
2013, with the exception of IFRS 10 and 12 which become
effective on 1 January 2014, and IFRS 9 which becomes
effective on 1 January 2015. All the standards except IFRS 9
have been adopted by the EU. Management analyzes the
impact of the new and revised IFRS on the financial statements. The new IFRS 10 and the revised IAS 19 require retroactive application, while the other standards are applied
prospectively, and consequently have no impact on financial
statements prepared before the respective effective date.
The agreed revision of IAS 19 Employee Benefits means
that the ‘corridor’ method is no longer applicable. Instead
actuarial gains and losses are to be recognized in other comprehensive income when they arise, and expenses relating to
service provided in previous years are to be recognized
immediately. In addition, interest expenses and anticipated
return on plan assets are replaced by a net interest rate,
which is to be equivalent to the discount rate. These changes
are being implemented retroactively, which means that comparative information for the financial year 2012 is to be recalculated when preparing the financial statements for 2013. In
this recalculation, unrecognized expenses relating to service
provided in previous years and unrecognized actuarial losses
as at 31 December 2011 are accounted for as an adjustment
of opening equity after taking into account tax effects. These
items total SEK 1,092 M as at 31 December 2011 and SEK
1,073 M as at 31 December 2012. The Group’s total pension
provision, adjusted for amounts in the ‘corridor’, consequently totals SEK 2,297 M (2,265) at year-end 2012 (see
Note 24).
In other respects, none of the new IFRS listed above are
considered to have a significant impact on the consolidated
financial statements.
Consolidated financial statements
The consolidated financial statements include ASSA ABLOY
AB (the Parent company) and companies in which the Parent
company held, directly or indirectly, more than 50 percent of
the voting rights at the end of the period, as well as companies in which the Parent company otherwise has a controlling interest, for example by having the right to formulate
financial and operating strategies. Companies acquired during the year are included in the consolidated financial statements with effect from the date when a controlling interest
was obtained. Companies sold during the year are included
in the consolidated financial statements up to the date when
a controlling interest ceased.
The consolidated financial statements have been prepared in accordance with the purchase method, which
means that the cost of shares in subsidiaries was eliminated
against their equity at the acquisition date. In this context,
equity in subsidiaries is determined on the basis of the fair
value of assets, liabilities and contingent liabilities at the
acquisition date. Consequently only that part of the equity
in subsidiaries that has arisen after the acquisition date is
included in consolidated equity. The Group determines on
an individual basis for each acquisition whether a non-controlling interest in the acquired company shall be recognized at fair value or at the interest’s proportional share of
the acquired company’s net assets. Any negative difference,
negative goodwill, is recognized as revenue immediately
after determination.
Additional purchase considerations for acquisitions
completed after 1 January 2010 are classified as financial liaAssA ABLoY ANNuAL report 2012
Note 1 cont.
bilities and revalued through profit or loss in operating
income. Substantial additional purchase considerations are
discounted to present value. Acquisition-related transaction
costs are expensed as incurred. Revaluation of additional
purchase considerations for acquisitions completed before
1 January 2010 is recognized as a change in goodwill.
Intra-group transactions and balance sheet items and
unrealized profits on transactions between Group companies are eliminated in the consolidated financial statements.
Non-controlling interests
Non-controlling interests are based on subsidiaries’
accounts with application of fair value adjustments resulting
from a completed acquisition analysis. Non-controlling
interests’ share in subsidiaries’ earnings is shown in the
income statement, in which net income is attributed to the
Parent company’s shareholders and to non-controlling
interests. Non-controlling interests’ share in subsidiaries’
equity is shown separately in consolidated equity. Transactions with non-controlling interests are shown as transactions with the Group’s shareholders.
Associates
Associates are defined as companies which are not subsidiaries but in which the Group has a significant, but not a controlling, interest. This is usually taken to be companies in
which the Group’s shareholding represents between 20 and
50 percent of the voting rights.
Investments in associates are accounted for in accordance with the equity method. In the consolidated balance
sheet, shareholdings in associates are reported at cost, and
the carrying amount is adjusted for the share of associates’
earnings after the acquisition date. Dividends from associates are reported as a reduction in the carrying amount of
the holdings. The share of associates’ earnings is reported in
the consolidated income statement in operating income as
the holdings are related to business operations.
Segment reporting
Operating segments are reported in accordance with internal
reporting to the chief operating decision maker. Chief operating decision maker is the function that is responsible for allocation of resources and assessing performance of the operating segments. The divisions form the operational structure for
internal control and reporting and also constitute the Group’s
segments for external financial reporting. The Group’s business is divided into five divisions. Three divisions are based
on products sold in local markets in the respective division:
EMEA, Americas and Asia Pacific. Global Technologies’ and
Entrance Systems’ products are sold worldwide.
Foreign currency translation
Functional currency corresponds to local currency in each
country where Group companies operate. Transactions in
foreign currencies are translated to functional currency by
application of the exchange rates prevailing on the transaction date. Foreign exchange gains and losses arising from the
settlement of such transactions are normally reported in the
income statement, as are those arising from translation of
monetary balance sheet items in foreign currencies at the yearend rate. Exceptions are transactions relating to qualifying cash
flow hedges, which are reported in comprehensive income.
Receivables and liabilities are valued at the year-end rate.
In translating the accounts of foreign subsidiaries prepared
in functional currencies other than the Group’s presentation
currency, all balance sheet items except net income are translated at the year-end rate and net income is translated at the
average rate. The income statement is translated at the aver-
AssA ABLoY ANNuAL report 2012
age rate for the period. Foreign exchange differences arising
from the translation of foreign subsidiaries are reported as
translation differences in comprehensive income.
The table below shows the weighted average rate and
the closing rate for currencies used in the Group, relative to
the Group’s presentation currency (SEK).
Country
Currency
Argentina
Australia
Brazil
Canada
Switzerland
Chile
China
Colombia
Czech Republic
Denmark
Euro zone
United Kingdom
Hong Kong
Hungary
Israel
India
Kenya
South Korea
Lithuania
Mexico
Malaysia
Norway
New Zealand
Poland
Romania
Russia
Singapore
Thailand
Turkey
USA
South Africa
ARS
AUD
BRL
CAD
CHF
CLP
CNY
COP
CZK
DKK
EUR
GBP
HKD
HUF
ILS
INR
KES
KRW
LTL
MXN
MYR
NOK
NZD
PLN
RON
RUB
SGD
THB
TRY
USD
ZAR
Average rate
Closing rate
2011
2012
2011
2012
1.57
6.73
3.88
6.57
7.31
0.013
1.01
0.0035
0.37
1.21
9.02
10.38
0.83
0.032
1.81
0.139
0.074
0.0059
2.61
0.52
2.12
1.16
5.16
2.19
2.13
0.22
5.16
0.21
3.88
6.50
0.90
1.48
6.98
3.46
6.74
7.22
0.014
1.07
0.0037
0.35
1.17
8.71
10.70
0.87
0.030
1.75
0.126
0.080
0.0060
2.52
0.51
2.18
1.16
5.46
2.08
1.96
0.22
5.39
0.22
3.74
6.74
0.82
1.61
7.03
3.71
6.78
7.36
0.013
1.10
0.0036
0.35
1.20
8.96
10.68
0.89
0.029
1.82
0.130
0.081
0.0060
2.59
0.49
2.18
1.15
5.35
2.04
2.08
0.22
5.33
0.22
3.61
6.92
0.85
1.32
6.76
3.18
6.54
7.13
0.014
1.04
0.0037
0.34
1.16
8.62
10.49
0.84
0.030
1.74
0.119
0.076
0.0061
2.50
0.50
2.12
1.17
5.34
2.12
1.95
0.21
5.32
0.21
3.63
6.51
0.77
Revenue
Revenue comprises the fair value of goods sold, excluding
VAT and discounts, and after eliminating intra-group sales.
The Group’s sales revenue arises principally from sales of
products. Service related to products sold makes up a limited fraction of revenue. Revenue from sales of the Group’s
products is recognized when all significant risks and rewards
associated with ownership are transferred to the purchaser
in accordance with applicable conditions of sale, which is
normally upon delivery. If the product requires installation
at the customer’s premises, revenue is recognized when
installation is completed. Revenue from service contracts is
recognized on a continuous basis over the contract period.
In the case of installations over a longer period of time, the
percentage of completion method is used.
Intra-group sales
Transactions between Group companies are carried out at
arm’s length and thus at market prices. Intra-group sales are
eliminated from the consolidated income statement, and
profits on such transactions have been eliminated in their
entirety.
Government grants
Grants and support from governments, public authorities
and the like are reported when there is reasonable assurance that the company will comply with the conditions
attaching to the grant and that the grant will be received.
Grants relating to assets are reported after reducing the carrying amount of the asset by the amount of the grant.
Notes 91
Note 1 cont.
Research and development
Research costs are expensed as they are incurred. Development costs are reported in the balance sheet only to the
extent that they are expected to generate future economic
benefits for the Group and provided such benefits can be
reliably measured.
Capitalized development expenditure is amortized over
the expected useful life. Such intangible assets, which are
not yet in use, are tested annually for impairment. Expenditure on the development of existing products is expensed as
incurred.
Borrowing costs
Borrowing costs are interest expenses and other expenses
directly related to borrowing. Borrowing costs directly relating to acquisition, construction or production of a qualified
asset (an asset that necessarily takes a substantial period of
time to complete for its intended use or sale) are capitalized
as part of the cost of that asset. Other borrowing costs are recognized as expenses in the period in which they are incurred.
Tax on income
The income statement includes all tax that is to be paid or
received for the current year, adjustments relating to tax due
for previous years, and changes in deferred tax. Tax sums
have been calculated at nominal amounts, in accordance
with the tax regulations in each country, and in accordance
with tax rates that have either been decided or have been
notified and can confidently be expected to be confirmed.
For items reported in the income statement, associated tax
effects are also reported in the income statement. The tax
effects of items reported directly against equity or comprehensive income are themselves reported against equity or
comprehensive income. Deferred tax is accounted for using
the liability method. This means that deferred tax is
accounted for on all temporary differences between the carrying amounts of assets and liabilities and their respective
tax bases. Deferred tax assets relating to tax losses carried
forward or other future tax allowances are reported to the
extent that it is probable that the allowance can be offset
against taxable income in future taxation. Deferred tax liabilities relating to temporary differences resulting from investments in subsidiaries are not reported in the consolidated
financial statements, since the Parent company can control
the time at which the temporary differences are reversed,
and it is not considered likely that such reversal will occur in
the foreseeable future. Deferred tax assets and deferred tax
liabilities are offset when there is a legal right to do so and
when the deferred tax amounts concern the same tax
authority.
Cash flow statement
The cash flow statement has been prepared according to the
indirect method. The reported cash flow includes only transactions involving cash payments.
Cash and cash equivalents
’Cash and cash equivalents’ covers cash and bank balances
and short-term financial investments with durations of less
than three months from the acquisition date.
Goodwill and acquisition-related intangible assets
Goodwill represents the positive difference between the
cost of acquisition and the fair value of the Group’s share of
the acquired company’s net identifiable assets at the acquisition date, and is reported at cost less accumulated impairment losses. Goodwill is allocated to cash generating units
(CGU) and is tested annually to identify any impairment loss.
92 Notes
Cash generating units are subject to systematic annual
impairment testing using a valuation model based on discounted future cash flows. Deferred tax assets based on
local tax rates are reported in terms of tax-deductible goodwill (with corresponding reduction of the goodwill value).
Such deferred tax assets are expensed as the tax deduction
is utilized. Other acquisition-related intangible assets consist chiefly of various types of intellectual property rights,
such as brands, technology and customer relationships.
Identifiable acquisition-related intellectual property rights
are initially recognized at fair value at the acquisition date
and subsequently at cost less accumulated amortization
and impairment losses. Amortization is on a straight-line
basis over the estimated useful life. Acquisition-related
intangible assets with an indefinite useful life are tested for
impairment annually in the same way as goodwill.
Other intangible assets
An intangible asset that is not acquisition-related is reported
only if it is likely that the future economic benefits associated with the asset will flow to the Group, and if the cost of
the asset can be measured reliably. Such an asset is initially
recognized at cost and is amortized over its estimated useful
life, usually between three and five years. Its carrying
amount is cost less accumulated amortization and impairment losses.
Tangible assets
Tangible assets are reported at cost less accumulated depreciation and impairment losses. Cost includes expenditure
that can be directly attributed to the acquisition of the asset.
Subsequent expenditure is capitalized if it is probable that
economic benefits associated with the asset will flow to the
Group, and if the cost can be reliably measured. Expenditure
on repairs and maintenance is expensed as it is incurred.
Depreciable amount is the cost of an asset less its estimated
residual value. No depreciation is applied to land. For other
assets, cost is depreciated over the estimated useful life,
which for the Group results in the following average depreciation periods:
• Office buildings 50 years.
• Industrial buildings 25 years.
• Plant and machinery 7–10 years.
• Equipment and tools 3–6 years.
The residual value and useful life of assets are reviewed at
each financial year-end and adjusted when necessary. Profit
or loss on the disposal of tangible assets is recognized in the
income statement as ‘Other operating income’ or ‘Other
operating expenses’, based on the difference between the
selling price and the carrying amount.
Leasing
The Group’s leasing is chiefly operating leasing. The lease
payments are expensed at a constant rate over the period of
the contract and are reported as operating expenses.
Impairment
Assets with an indefinite useful life are not amortized but are
tested for impairment on an annual basis. For impairment
testing purposes, assets are grouped at the lowest organizational level where there are separate identifiable cash flows,
so-called cash generating units (CGU).
For assets that are depreciated/amortized, impairment
testing is carried out when events or circumstances indicate
that the carrying amount may not be recoverable.
When an impairment loss has been established, the value of
the asset is reduced to its recoverable amount. The recoverAssA ABLoY ANNuAL report 2012
Note 1 cont.
able amount is the higher of the asset’s fair value less selling
expenses, and its value in use.
Inventories
Inventories are valued in accordance with the ‘first in, first
out’ principle at the lower of cost and net realizable value at
year-end. Deductions are made for internal profits arising
from deliveries between Group companies. Work in progress and finished goods include both direct costs incurred
and a fair allocation of indirect manufacturing costs.
Trade receivables
Trade receivables are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest method. A provision is recognized when there is
objective evidence that the Group will not be able to collect
recorded amounts. The year’s change in such a provision is
reported in the income statement as selling expenses.
Financial assets
Financial assets include cash and cash equivalents, trade
receivables, short-term investments and derivatives and are
classified in the following categories; financial assets valued
at fair value through the income statement, available-forsale assets, loan receivables and trade receivables. Management determines the classification of its financial assets at
initial recognition.
Financial assets valued at fair value through
the income statement
This category has two sub-categories: financial assets heldfor-trading and those designated at fair value through
income statement at inception. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short term or if so designated by management.
Derivatives are also classified as held-for-trading unless they
are designated as hedges. Assets in this category are classified as current assets.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative assets that
have been identified as available for sale or assets that have not
been classified in any other category. They are included in Noncurrent assets, unless management intends to sell the asset
within 12 months of the end of the reporting period. Changes
in fair value are reported in Other comprehensive income.
Loan receivables and trade receivables
Trade receivables and short-term investments are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than
12 months after the reporting date, which are classified as
non-current assets.
Financial liabilities
Financial liabilities include additional purchase considerations,
loan liabilities, trade payables and derivative instruments.
Reporting depends on how the liability is classified.
Financial liabilities valued at fair value through
the income statement
This category includes derivatives with negative fair value
that are not used for hedging, additional purchase considerations and financial liabilities held for trading. Liabilities are
measured at fair value on a continuous basis and changes in
value are reported in the income statement as a financial item.
AssA ABLoY ANNuAL report 2012
Loan liabilities
Loan liabilities are valued initially at fair value after transaction costs, and thereafter at amortized cost. The amortized
cost is determined based on the effective interest rate when
the loan was raised. Accordingly, surplus values and negative
surplus values as well as direct issue expenses are allocated
over the loan period. Non-current loan liabilities have an
anticipated term to maturity exceeding one year, while current loan liabilities have a term to maturity of less than one
year.
Trade payables
Trade payables are initially valued at fair value and thereafter
at amortized cost using the effective interest method.
Recognition and measurement of financial
assets and liabilities
Regular purchases and sales of financial assets are recognized
on the trade date, the date on which the Group commits to
purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets
not carried at fair value through the income statement,
where the transaction cost is reported in the income statement. The fair values of quoted investments are based on
current bid prices. If the market for a financial asset is not
active, the Group establishes fair value by using various valuation techniques. These include the use of available information on recent arm’s-length transactions, reference to other
instruments that are substantially the same and discounted
cash-flow analysis. The Group assesses at each reporting date
whether there is objective evidence that a financial asset or a
group of financial assets is impaired. A financial asset is derecognized when the right to receive cash flows from the asset
expires or is transferred to another party through the transfer
of all the risks and benefits associated with the asset to the
other party. A financial liability is derecognized when the
obligation is fulfilled, cancelled or expires, see above.
Derivative instruments and hedging
Derivatives are recognized in the balance sheet at transaction date and are measured at fair value, both initially and on
subsequent revaluations. The method of reporting profit or
loss depends on whether the derivative is classified as a
hedging instrument, and if so, the nature of the item being
hedged. Derivatives are classified within the Group as either
fair value hedges of recognized assets or liabilities or a firm
commitment (fair value hedge).
For fair value hedges, changes in value of both the
hedged item and the hedging instrument are reported in
the income statement (financial items) in the period in
which they arise. Changes in fair value of derivatives not designated as hedging instruments are reported on a continuous basis in the income statement (financial items). For net
investment hedges, the part of changes in fair value classified as effective is recognized in other comprehensive
income. The ineffective part of the profit or loss is recognized immediately in the income for the period as financial
items. Accumulated profit or loss in other comprehensive
income is recognized in the income for the period when foreign operations, or part thereof, are sold.
Changes in fair value for derivatives not designated as
hedging instruments are reported on a continuous basis in
the income statement (financial items).
When the transaction is entered into, the Group documents the relationship between the hedging instrument
and the hedged item, as well as the Group’s risk management
objectives and risk management strategy as regards the hedging. The Group also documents its assessment, both when
Notes 93
Note 1 cont.
hedging is entered into and on a regular basis, of whether the
derivative instruments used in hedge transactions are effective in counteracting changes in fair value that relate to the
hedged items. The fair value of currency derivatives is calculated at net present value based on prevailing forward contract prices on the reporting date, while interest rate swaps
are valued using estimates of future discounted cash flows.
Provisions
A provision is recognized when the Group has a legal or constructive obligation resulting from a past event and it is probable that an outflow of resources will be required to settle
the obligation, and that a reliable estimate can be made of
the amount. Provisions are reported at a value representing
the probable outflow of resources that will be needed to settle the obligation. The amount of a provision is discounted to
present value where the effect of time value is material.
Assets and liabilities in disposal groups classified
as held for sale
Assets and liabilities are classified as held for sale when their
carrying amounts are to be recovered principally through a
sale transaction and a sale is considered highly probable.
They are stated at the lower of carrying amount and fair value
less selling expenses.
Employee benefits
Both defined contribution and defined benefit pension plans
exist in the Group. Comprehensive defined benefit plans are
found chiefly in the USA, the UK and Germany. Post-employment medical benefits also exist, mainly in the USA, which
are reported in the same way as defined benefit pension
plans. Calculations relating to the Group’s defined benefit
plans are performed by independent actuaries and are based
on a number of actuarial assumptions such as discount rate,
future inflation and salary increases. Obligations are valued
on the reporting date at their discounted value. For funded
plans, obligations are reduced by the fair value of the plan
assets. Unrecognized actuarial gains and losses lying outside
the so-called corridor (exceeding the higher of 10 percent of
the present value of the obligation or the fair value of plan
assets) are spread over the expected average remaining
working lives of the employees. Pension expenses for defined
benefit plans are spread over the employee’s service period.
The Group’s payments relating to defined contribution pension plans are reported as an expense in the period to which
they refer, based on the services performed by the employee.
Swedish Group companies apply UFR 4, which means that tax
on pension costs is calculated on the difference between
pension expense in accordance with IAS 19 and pension
expense determined in accordance with local regulations.
Equity-based incentive programs
Equity-based remuneration refers to remuneration to
employees, including senior executives, in accordance with
ASSA ABLOY’s long-term incentive program presented for
the first time at the 2010 Annual General Meeting. A company must report the personnel costs relating to equitybased incentive programs based on a measure of the value
to the company of the services provided by the employees
during the programs. Since the value of the employees’ services cannot be reliably calculated, the cost of the program
is based on the value of the assigned share instrument. Since
the long-term incentive program in its entirety is equity
regulated, an amount equivalent to the personnel cost is
reported in the balance sheet as equity in retained earnings.
The personnel cost is also reported in the income statement, where it is allocated to the respective function.
94 Notes
Long-term incentive program
ASSA ABLOY has equity-based remuneration plans where
settlement will be in the form of shares. For the long-term
incentive program, personnel costs during the vesting
period are reported based on the shares’ fair value on the
assignment date, that is, when the company and the
employees entered into an agreement on the terms and
conditions for the program. The long-term incentive program comprises two parts: a matching part where the
employee receives one share for every share the latter
invests during the term of the program and a performancebased part where the outcome is based on the company’s
financial results (EPS target) during the period. The program
requires that the employee continues to invest in the longterm incentive program and that the latter remains
employed in the ASSA ABLOY Group.
Fair value is based on the share price on the assignment
date, a reduction in fair value relating to the anticipated dividend has not been made as the participants are compensated for this. The employees pay a price equivalent to the
share price on the investment date. The vesting terms are
not stock market based and affect the number of shares that
ASSA ABLOY will give to the employee when matching. If an
employee stops investing in the program, all remaining personnel costs are immediately recognized in the income statement. Personnel costs for shares relating to the performancebased program are calculated on each accounting date
based on an assessment of the probability of the performance targets being achieved. The costs are calculated based
on the number of shares that ASSA ABLOY expects to need
to issue at the end of the vesting period. When matching
shares, social security contributions must be paid in some
countries to the value of the employee’s benefit. This value is
based on fair value on each accounting date and reported as
a provision for social security contributions.
Earnings per share
Earnings per share before dilution is calculated by dividing
the net income attributable to the Parent company’s shareholders by the weighted average number of outstanding
shares (less treasury shares). Earnings per share after dilution is calculated by dividing the net income attributable to
the Parent company’s shareholders by the sum of the
weighted average number of ordinary shares and potential
ordinary shares that may give rise to a dilutive effect. The
dilutive effect of potential ordinary shares is only reported if
their conversion to ordinary shares would lead to a reduction in earnings per share after dilution.
Dividend
Dividend is reported as a liability once the Annual General
Meeting has approved the dividend.
the parent company
The Group’s Parent company, ASSA ABLOY AB, is responsible
for the management of the Group and provides group-wide
functions. The Parent company’s revenue consists of intragroup franchise and royalty revenues. The significant balance sheet items consist of shares in subsidiaries, intragroup receivables and liabilities, and external borrowing.
The Parent company has prepared its annual accounts in
accordance with the Swedish Annual Accounts Act
(1995:1554) and standard RFR 2 of the Swedish Financial
Reporting Board. RFR 2 requires the Parent company, in its
annual accounts, to apply all the International Financial
Reporting Standards (IFRS) endorsed by the EU in so far as
this is possible within the framework of the Annual Accounts
Act and with regard to the relationship between accounting
AssA ABLoY ANNuAL report 2012
Note 1 cont.
and taxation. The recommendation states what exceptions
from, and additions to, IFRS should be made.
Revenue
The Parent company’s revenue consists of intra-group
franchise and royalty revenues. These are reported in the
income statement as ‘Other operating income’ to make it
clear that the Parent company has no product sales similar
to those of other group companies with external business.
Pension obligations
Pension obligations for the Parent company are accounted
for in accordance with FAR RedR 4 and are covered by taking
out insurance with an insurance company.
Dividend
Dividend revenue is recognized when the right to receive
payment is judged to be firm.
Research and development costs
Research and development costs are expensed as they are
incurred.
Intangible assets
Intangible assets comprise patented technology and other
intangible assets. They are amortized over 4–5 years.
Tangible assets
Tangible assets owned by the Parent company are reported
at cost less accumulated depreciation and any impairment
losses in the same way as for the Group. They are depreciated over their estimated useful life, which is 5–10 years for
equipment and 4 years for IT equipment.
Leasing
In the Parent company all lease agreements are treated as
rental agreements (operating leases) regardless of whether
they are financial or operating leases.
Shares in subsidiaries
Shares in subsidiaries are reported at cost less impairment
losses. When there is an indication that the value of shares
and interests in subsidiaries or associates has fallen, the
recoverable amount is calculated. If this is lower than the
carrying amount, an impairment loss is recognized. Impairment losses are reported in Earnings from participations in
subsidiaries, which is included in Financial items in the
income statement.
Financial instruments
Derivative instruments are recorded at fair value. Changes in
the fair values of derivative instruments are reported in the
income statement with the exception of exchange rate
changes relating to a monetary item that forms part of a net
investment in a foreign operation, which are reported in the
fair value reserve.
Note 2 sales
Customer sales by country
seK M
USA
China
France
Sweden
Germany
United Kingdom
Australia
Canada
Netherlands
Norway
Finland
Denmark
South Korea
Belgium
Italy
Spain
Mexico
Austria
Switzerland
Czech Republic
Saudi Arabia
Poland
New Zealand
United Arab Emirates
South Africa
Brazil
Russia
Indonesia
Hong Kong
Romania
India
Israel
Turkey
Singapore
Portugal
Thailand
Colombia
Chile
Ireland
Croatia
Slovakia
Estonia
Japan
Other countries
total
Sales by product group
seK M
Mechanical locks, lock systems
and fittings
Entrance automation
Electromechanical
and electronic locks
Security doors and hardware
total
Group
2011
2012
9,772
3,861
2,979
2,652
2,192
1,977
1,793
1,273
1,462
1,049
1,068
852
793
726
903
820
614
526
522
396
277
308
284
281
297
284
199
173
230
236
214
195
176
159
195
116
136
125
91
51
91
92
66
1,280
41,786
11,220
4,304
3,147
2,986
2,567
2,354
1,869
1,659
1,548
1,221
1,118
927
906
895
748
727
624
602
531
388
374
333
311
296
284
272
264
234
234
226
212
193
188
176
167
162
158
147
111
103
102
99
95
1,537
46,619
Group
2011
2012
15,877
8,444
16,762
11,100
9,044
8,421
41,786
10,193
8,564
46,619
Group contributions
The parent company reports group contributions in accordance with RFR 2. Group contributions received and paid
are recognized as financial income and financial expenses
respectively in the income statement. The tax effect of
group contributions is recognized in accordance with IAS 12
in the income statement.
Contingent liabilities
The Parent company has guarantees on behalf of its subsidiaries. Such an obligation is classified as a financial guarantee
in accordance with IFRS. For these guarantees, the Parent
company applies the allowed exception in RFR 2, reporting
these guarantees as a contingent liability.
AssA ABLoY ANNuAL report 2012
Notes 95
Note 3 Auditors’ fees
Note 6 operating leases
Group
seK M
2011
Audit assignment
PwC
Other
30
11
parent company
2012
2011
37
10
3
–
2012
3
–
Audit related services in
addition to audit
assignment
PwC
Other
1
–
1
–
1
–
1
–
tax advice
PwC
Other
8
2
13
2
1
–
2
–
19
3
74
14
1
78
15
–
20
5
–
11
other services
PwC
Other
total
Note 4 other operating income and expenses
Group
seK M
2011
2012
12
–20
–22
–37
–15
5
–77
18
16
–39
–
–11
–66
–82
Rent received
Business-related taxes
Transaction expenses from acquisitions
Impairment of tangible asset
Exchange rate differences
Other, net
total
Parent company
Other operating income in the Parent company consist
mainly of franchise and royalty revenues from subsidiaries.
Note 5 share of earnings in associates
Agta Record AG
Saudi Crawford Doors Factory Ltd
Låsgruppen Wilhelm Nielsen AS
Goal Co., Ltd
Tallares Agui S.A.
Other
total
2011
2012
37
4
2
–
–
0
43
69
1
3
5
–9
0
70
The share of earnings in Agta Record AG has been estimated
on the basis of the associated company’s latest available
financial report, which is the published Interim Report for
the first half of 2012.
96 Notes
Lease payments
during the year
total
Nominal value of agreed
future lease payments:
Due for payment in
(2012) 2013
Due for payment in
(2013) 2014
Due for payment in
(2014) 2015
Due for payment in
(2015) 2016
Due for payment in
(2016) 2017
Due for payment in
(2017) 2018 or later
total
parent company
2011
2012
2011
2012
463
463
466
466
16
16
13
13
423
419
15
15
331
304
15
16
235
237
15
16
177
161
15
16
128
121
16
17
126
1,420
112
1,354
16
92
17
97
Note 7 expenses by nature
In the income statement costs are broken down by function.
Cost of goods sold, Selling expenses, Administrative
expenses and Research and development costs amount to
SEK 39,106 M (36,548). Below, these same costs are broken
down by nature:
Group
seK M
Remuneration of employees (Note 33)
Direct material costs
Depreciation (Note 8, 14, 15)
Other purchase expenses
Restructuring costs
total
2011
2012
11,835
14,655
1,022
7,616
1,420
36,548
12,705
16,111
1,034
9,256
–
39,106
Note 8 Depreciation and amortization
Group
seK M
Group
seK M
Group
parent company
seK M
2011
2012
2011
2012
Intangible assets
Machinery
Equipment
Buildings
Land improvements
total
183
452
228
157
2
1,022
222
443
218
148
3
1,034
156
–
1
–
–
157
249
–
1
–
–
250
Note 9 exchange differences in the income statement
Group
seK M
Exchange differences
reported in operating
income
Exchange differences
reported in financial
expenses (Note 11)
total
parent company
2011
2012
2011
2012
–15
–11
0
0
7
–8
10
0
9
9
11
11
AssA ABLoY ANNuAL report 2012
Note 10 Financial income
Note 13 earnings per share
Group
seK M
Earnings from investments in subsidiaries
Earnings from investments in associates
Intra-group interest
income
Other financial
income
External interest
income and similar
items
total
2011
parent company
2012
2011
2012
–
–
2,256
9,750
–
–
24
25
–
–
114
200
23
14
–
–
36
59
18
32
0
2,394
0
9,975
Note 11 Financial expenses
Intra-group interest
expenses
Interest expenses, convertible debentures
Interest expenses, other
liabilities
Interest expenses, interest
rate swaps
Interest expenses, foreign
exchange forwards
Exchange rate differences
on financial instruments
Fair value adjustments on
derivatives, hedge
accounting
Fair value adjustments on
derivatives, non-hedge
accounting
Fair value adjustments on
borrowings, hedge
accounting
Fair value adjustments on
shares and interests
Other financial expenses
total
Earnings per share after dilution
parent company
Earnings attributable to the Parent
company's shareholders
Interest expenses for convertible
debentures, after tax
Net profit for calculating earnings
per share after dilution
Weighted average number of
shares issued (thousands)
Assumed conversion of convertible
debentures (thousands)
Stock purchase plan
Weighted average number of shares
for calculations (thousands)
earnings per share after
dilution (seK per share)
of which from continuing operations
of which from discontinued operations
2012
3,843
5,112
367,833
369,185
10.45
9.35
1.10
13.85
13.82
0.03
Group
2011
2012
3,843
5,112
11
4
3,854
5,116
367,833
369,592
4,680
114
–
–
372,627
369,592
10.33
9.24
1.09
13.84
13.81
0.03
2012
2011
2012
–
–
–429
–534
–14
–5
–14
–5
–562
–652
–226
–148
–8
10
–
–
–41
–83
–
–
7
10
9
11
–1
–20
–
–
–18
–8
–
–
Earnings per share after dilution and excluding
items affecting comparability
1
20
–
–
seK M
Group
–
–68
–704
–
–74
–802
–22
–32
–714
–6,280
–14
–6,970
Note 12 tax on income
Group
seK M
Earnings attributable to the Parent
company's shareholders
Weighted average number of shares
issued (thousands)
earnings per share before dilution
(seK per share)
of which from continuing operations
of which from discontinued operations
Group
2011
2011
Fair value adjustments on shares and interests relate to
impairment losses in connection with dividends received.
Current tax
Tax attributable to
prior years
Foreign withholding tax
Deferred tax
total
seK M
seK M
Group
seK M
Earnings per share before dilution
parent company
2011
2012
2011
2012
–1,048
–1,776
–30
–11
–142
–
95
–1,095
8
–
151
–1,617
5
–4
–
–29
–
–
–
–11
Earnings attributable to the Parent
company's shareholders
Interest expenses for convertible
debentures, after tax
Items affecting comparability, after tax
Net profit for calculating earnings
per share after dilution
Weighted average number of
shares issued (thousands)
Assumed conversion of convertible
debentures (thousands)
Stock purchase plan
Weighted average number of shares
for calculations (thousands)
earnings per share after dilution
and excluding items affecting
comparability (seK per share)
of which from continuing operations
of which from discontinued operations
2011
2012
3,843
5,112
11
736¹
4
–
4,590
5,116
367,833
369,592
4,680
114
–
–
372,627
369,592
12.30
11.21
1.09
13.84
13.81
0.03
¹ Items affecting comparability for 2011 consist of restructuring costs and net
income from discontinued operations.
Explanations for the difference between nominal Swedish
tax rate and effective tax rate based on income before tax:
Group
percent
Swedish rate of tax on
income
Effect of foreign tax rates
Non-taxable income/nondeductible expenses, net
Deductible goodwill
Utilized loss carry-forward
not recognized in prior
period
Non-deductible restructuring costs
Other
effective tax rate in
income statement
AssA ABLoY ANNuAL report 2012
parent company
2011
2012
2011
2012
26
4
26
4
26
–
26
–
–5
0
–3
0
–25
–
–26
–
–2
–3
–
–
1
0
–
0
–
–
–
–
24
24
1
0
Notes 97
Note 14 Intangible assets
Group
parent company
Goodwill
Intangible
assets
total
Intangible
assets
opening accumulated acquisition value
Purchases
Acquisitions of subsidiaries
Sales/disposals
Reclassifications
Reclassification to assets of disposal group held for sale
Adjustments for acquisitions in the prior year
Exchange rate differences
Closing accumulated acquisition value
27,080
–
3,146
–
–
–104
–177
–947
28,998
5,521
152
1,062
–12
433
–31
276
–225
7,176
32,599
152
4,208
–12
433
–135
99
–1,172
36,174
1,060
1,063
–
–
–
–
–
–
2,123
opening accumulated amortization/impairment
Acquisitions of subsidiaries
Sales/disposals
Reclassifications
Impairment
Amortization
Exchange rate differences
Closing accumulated amortization/impairment
Carrying amount
–66
–
–
–
–
–
0
–66
28,932
–1,079
–7
9
–433
–10
–222
56
–1,686
5,490
–1,143
–7
9
–433
–10
–222
56
–1,752
34,422
–951
–
–
–
–
–249
–
–1,200
923
Goodwill
Intangible
assets
total
Intangible
assets
opening accumulated acquisition value
Purchases
Acquisitions of subsidiaries
Adjustments for acquisitions in the prior year
Exchange rate differences
Closing accumulated acquisition value
22,343
–
4,584
–34
187
27,080
3,789
112
1,590
–
30
5,521
26,132
112
6,174
–34
215
32,599
945
115
–
–
–
1,060
opening accumulated amortization/impairment
Impairment
Amortization
Exchange rate differences
Closing accumulated amortization/impairment
Carrying amount
–64
–2
–
–
–66
27,014
–875
–
–183
–21
–1,079
4,442
–939
–
–183
–21
–1,143
31,455
–795
–
–156
–
–951
109
2012, seK M
Group
2011, seK M
98 Notes
parent company
Intangible assets consist mainly of brands and licenses. The
carrying amount of intangible assets with an indefinite useful
life amounts to SEK 4,026 M (3,412) and relates to brands.
Useful life has been defined as indefinite where the time
period, during which an asset is deemed to contribute economic benefits, cannot be determined.
Amortization and impairment of intangible assets are
mainly recognized as cost of goods sold in the income statement.
The item Adjustments for acquisitions in the prior year
refers to changes in connection with adoption of a final acquisition analysis for acquisitions completed in the previous year.
These calculations are based on estimated future cash flows,
which in turn are based on financial budgets for a three-year
period approved by management. Cash flows beyond the
three-year period are extrapolated using estimated growth
rates according to the information below.
Impairment testing of goodwill and intangible assets
with indefinite useful life
Goodwill and intangible assets with an indefinite useful life
are allocated to the Group’s Cash Generating Units (CGUs),
which consist of the Group’s five divisions.
For each cash-generating unit, the Group annually tests
goodwill and intangible assets with an indefinite useful life
for impairment, in accordance with the accounting principle
described in Note 1. Recoverable amounts for Cash Generating Units have been determined by calculating value in use.
Management has determined the budgeted operating margin based on previous results and expectations of future
market development. A growth rate of 3 percent (3) has
been used for all CGUs to extrapolate cash flows beyond the
budget period. This growth rate is considered to be a conservative estimate. Further, an average discount rate in local
currency after tax has been used in the calculations. The difference in value compared with using a discount rate before
tax is not deemed to be material.
Material assumptions used to calculate values in use:
• Budgeted operating margin.
• Growth rate for extrapolating cash flows beyond the
budget period.
• Discount rate after tax used for estimated future
cash flows.
AssA ABLoY ANNuAL report 2012
Note 14 cont.
2012
Overall, the discount rate used varied between 9.0 and 10.0
percent (EMEA 9.0 percent, Americas 9.0 percent, Asia
Pacific 10.0 percent, Global Technologies 10.0 percent and
Entrance Systems 9.0 percent).
Goodwill and intangible assets with an indefinite useful life
were allocated to the Cash Generating Units as summarized
in the following table:
seK M
eMeA
Americas
Asia pacific
Global
technologies
entrance
systems
total
Goodwill
Intangible assets with
indefinite useful life
total
5,846
5,913
4,326
4,524
8,323
28,932
198
6,044
221
6,134
1,160
5,486
349
4,873
2,098
10,421
4,026
32,958
2011
Overall, the discount rate used varied between 9.0 and
10.0 percent (EMEA 9.0 percent, Americas 9.0 percent, Asia
Pacific 10.0 percent, Global Technologies 10.0 percent and
Entrance Systems 9.0 percent).
Goodwill and intangible assets with an indefinite useful life
were allocated to the Cash Generating Units as summarized
in the following table:
seK M
eMeA
Americas
Asia pacific
Global
technologies
entrance
systems
total
Goodwill
Intangible assets with
indefinite useful life
total
5,564
6,041
3,410
4,846
7,153
27,014
241
5,805
245
6,286
1,022
4,432
346
5,192
1,558
8,711
3,412
30,426
sensitivity analysis
A sensitivity analysis has been carried out for each cashgenerating unit. The results of this analysis are summarized
below.
2012
If the estimated operating margin after the end of the budget period had been one percentage point lower than the
management’s estimate, the total recoverable amount
would be 6 percent lower (EMEA 5 percent, Americas 4 percent, Asia Pacific 7 percent, Global Technologies 5 percent,
and Entrance Systems 6 percent).
If the estimated growth rate used to extrapolate cash
flows beyond the budget period had been one percentage
point lower than the basic assumption of 3 percent, the total
recoverable amount would be 13 percent lower (EMEA 13
percent, Americas 13 percent, Asia Pacific 11 percent, Global
Technologies 11 percent, and Entrance Systems 13 percent).
If the estimated weighted capital cost used for the
Group’s discounted cash flows had been one percentage
point higher than the basic assumption of 9.0 to 10.0 percent, the total recoverable amount would be 14 percent
lower (EMEA 14 percent, Americas 14 percent, Asia Pacific
13 percent, Global Technologies 13 percent, and Entrance
Systems 14 percent).
These calculations are hypothetical and should not be
viewed as an indication that these factors are any more or
less likely to change. The sensitivity analysis should therefore
be interpreted with caution.
None of the hypothetical cases above would lead to an
impairment of goodwill in an individual Cash Generating
Unit.
AssA ABLoY ANNuAL report 2012
2011
If the estimated operating margin after the end of the budget period had been one percentage point lower than the
management’s estimate, the total recoverable amount
would be 5 percent lower (EMEA 5 percent, Americas 5 percent, Asia Pacific 6 percent, Global Technologies 5 percent,
and Entrance Systems 6 percent).
If the estimated growth rate used to extrapolate cash
flows beyond the budget period had been one percentage
point lower than the basic assumption of 3 percent, the total
recoverable amount would be 13 percent lower (EMEA 13
percent, Americas 13 percent, Asia Pacific 11 percent, Global
Technologies 11 percent, and Entrance Systems 13 percent).
If the estimated weighted capital cost used for the
Group’s discounted cash flows had been one percentage
point higher than the basic assumption of 9.0 to 10.0 percent, the total recoverable amount would be 14 percent
lower (EMEA 14 percent, Americas 14 percent, Asia Pacific
13 percent, Global Technologies 13 percent, and Entrance
Systems 14 percent).
These calculations are hypothetical and should not be
viewed as an indication that these factors are any more or
less likely to change. The sensitivity analysis should therefore
be interpreted with caution.
None of the hypothetical cases above would lead to an
impairment of goodwill in an individual Cash Generating
Unit.
Notes 99
Note 15 tangible assets
Group
2012, seK M
opening accumulated
acquisition value
Purchases
Acquisitions of subsidiaries
Sales/disposals
Reclassification to assets of
disposal group held for sale
Reclassifications
Exchange rate differences
Closing accumulated
acquisition value
opening accumulated
depreciation/impairment
Acquisitions of subsidiaries
Sales/disposals
Depreciation
Reclassification to assets of
disposal group held for sale
Reclassifications
Exchange rate differences
Closing accumulated
depreciation/impairment
Carrying amount
Buildings
Land and
land
improvements
4,121
129
52
–399
839
1
57
–73
6,629
311
296
–527
–
295
–153
–
67
–21
4,045
parent company
Construction in
progress
total
equipment
2,314
196
99
–261
555
297
56
–67
14,458
934
560
–1,327
18
1
–
–
58
–15
–452
–
24
–146
–
–371
20
58
0
–752
–
–
–
870
6,300
2,226
490
13,931
19
–1,992
–28
158
–148
–142
–2
–
–3
–4,852
–106
511
–443
–1,786
–71
234
–218
–
–
–
–
–8,773
–207
903
–812
–15
–
–
–1
–
–14
72
–
–1
3
–41
4
393
–
11
133
–
–
–
–41
0
602
–
–
–
–1,952
2,093
–145
725
–4,534
1,766
–1,697
529
–
490
–8,328
5,603
–16
3
Buildings
Land and
land
improvements
3,706
61
338
–23
56
–18
820
7
51
–1
0
–38
6,272
232
142
–210
148
44
4,121
839
–1,728
11
–104
–157
0
–14
–1,992
2,128
Machinery equipment
Group
2011, seK M
opening accumulated
acquisition value
Purchases
Acquisitions of subsidiaries
Sales/disposals
Reclassifications
Exchange rate differences
Closing accumulated
acquisition value
opening accumulated
depreciation/impairment
Sales/disposals
Impairment
Depreciation
Reclassifications
Exchange rate differences
Closing accumulated
depreciation/impairment
Carrying amount
100 Notes
parent company
Construction in
progress
total
equipment
2,244
166
69
–167
–21
22
382
318
–
–6
–234
95
13,042
784
600
–407
–51
106
17
1
–
–
–
–
6,629
2,314
555
14,458
18
–139
0
0
–2
0
–1
–4,436
173
–99
–452
–11
–27
–1,698
153
–9
–228
12
–15
–
–
–
–
–
–
–8,002
337
–212
–840
0
–56
–14
–
–
–1
–
–
–142
697
–4,852
1,777
–1,786
528
–
555
–8,773
5,684
–15
3
Machinery equipment
AssA ABLoY ANNuAL report 2012
Note 16 shares in subsidiaries
parent company
Company name
ASSA Sverige AB
Timelox AB
ASSA ABLOY Entrance Systems AB
ASSA ABLOY Kredit AB
ASSA ABLOY Försäkrings AB
ASSA ABLOY Identification Technology Group AB
ASSA ABLOY Svensk Fastighets AB
ASSA ABLOY Asia Holding AB
ASSA ABLOY IP AB
ASSA ABLOY OY
ASSA ABLOY Norge A/S
ASSA ABLOY Danmark A/S
ASSA ABLOY Deutschland GmbH
ASSA ABLOY Nederland Holding B.V.
Pan Pan DOOR Co LTD
ASSA ABLOY France SAS
Interlock Holding AG
HID Global Switzerland S.A.
ASSA ABLOY Holding GmbH
ASSA ABLOY Ltd
ITG (UK) Ltd
HID Global Ireland Teoranta
Mul-T-Lock Ltd
ASSA ABLOY Holdings (SA) Ltd
ASSA ABLOY Inc
Fleming Door Products, Ltd
ABLOY Holdings Ltd
AAC Acquisition Inc.
ASSA ABLOY Australia Pacific Pty Ltd
ASSA ABLOY South Asia Pte Ltd
Grupo Industrial Phillips, S.A de C.V.
Cerraduras de Colombia S.A.
ASSA ABLOY Innovation AB
ASSA ABLOY Hospitality AB
ASSA ABLOY North America AB
WHAIG Limited
ASSA ABLOY Asia Pacific Ltd
Cardo AB
ASSA ABLOY Portugal, Unipessoal, Lda (Portugal)
ASSA ABLOY Entrance Systems Italy S.p.A.
ASSA ABLOY Holding Italia S.p.A.
total
Corporate identity number,
registered office
Number of
shares
556061-8455, Eskilstuna
556214-7735, Landskrona
556204-8511, Landskrona
556047-9148, Stockholm
516406-0740, Stockholm
556645-4087, Stockholm
556645-0275, Stockholm
556602-4500, Stockholm
556608-2979, Stockholm
1094741-7, Joensuu
979207476, Moss
CVR 10050316, Herlev
HR B 66227, Berlin
52153924, Raamsdonksveer
210800004058002, Dashiqiao
412140907, R.C.S. Versailles
CH-020.3.913.588-8, Zürich
CH-232-0730018-2, Granges
FN 273601f, A-6175, Kematen
2096505, Willenhall
5099094, Haverhill
364896, Galway
520036583, Yavne
1948/030356/06, Roodepoort
039347-83, Oregon
147126, Ontario
1148165260, St Laurent, Quebec
002098175, Ontario
ACN 095354582, Oakleigh, Victoria
199804395K, Singapore
GIP980312169, Mexico
Public Deed 2798, Bogota
556192-3201, Stockholm
556180-7156, Göteborg
556671-9851, Stockholm
EC21330, Bermuda
53451, Hong Kong
556026-8517, Malmö
PT500243700, Alfragide
IT06698790968, Milano
IT01254420597, Rome
70
15,000
1,000
400
60,000
1,000
1,000
1,000
1,000
800,000
150,000
60,500
1
180
–
15,184,271
211,000
2,500
1
1,330,000
1
501,000
13,787,856
100,220
100
25,846,600
1
1
48,190,000
4,300,000
27,036,635
2,201,670
2,500
1,000
1,000
100,100
1,000,000
27,000,000
1
50,000
650,000
share of
equity %
100
100
100
100
100
100
100
100
100
100
100
100
100
100
36 2
100
98 1
100
100
100
100
100
90 1
100
100
100
100
100
100
100
100
71 1
100
100
100
100
100
100
100
100
100
Carrying
amount,
seK M
197
22
181
3,036
60
220
0
189
0
4,257
538
376
1,086
771
567
1,964
0
47
109
3,077
1
293
901
184
2,237
0
13
17
242
48
765
142
105
14
0
303
72
5,093
0
0
973
28,100
1 The Group’s holdings amount to 100 percent. ² The Group’s holdings amount to 70 percent.
Note 17 Investments in associates
Group
2012 Company name
Country of registration
Agta Record AG
Goal Co., Ltd
Låsgruppen Wilhelm Nielsen AS
SARA Loading Bay Ltd
Talleres Agui S.A.
Saudi Crawford Doors Ltd
Other
total
Switzerland
Japan
Norway
United Kingdom
Spain
Saudi Arabia
Number of
shares
share of
equity %
5,077,964
2,300,790
305
4,999
4,800
800
38
38
50
50
40
40
Carrying
amount,
seK M
1,163
315
15
13
7
5
1
1,519
The share of equity in Agta Record AG has been estimated on the basis of the associated company’s latest available financial
report, which is the published Interim Report for the first half of 2012. For the period January to June, the company’s revenue
totaled SEK 1,081 M (1,019) and income after tax was SEK 65 M (41). The company’s assets totaled SEK 2,095 M (2,007)and
total liabilities amounted to SEK 722 M (720).
Group
AssA ABLoY ANNuAL report 2012
2011 Company name
Country of registration
Agta Record AG
Talleres Agui S.A
Låsgruppen Wilhelm Nielsen AS
Saudi Crawford Doors Ltd
Ditec Istanbul Otomatik Gecis Sistemleri Ltd
Other
total
Switzerland
Spain
Norway
Saudi Arabia
Turkey
Number of
shares
share of
equity %
5,077,964
4,800
305
800
350
38
40
50
40
35
Carrying
amount,
seK M
1,171
17
15
6
1
1
1,211
Notes 101
Note 18 Deferred tax
Group
seK M
2011
2012
Deferred tax assets
Tangible and intangible assets
Pensions
Tax losses and other tax credits
Other deferred tax assets
Deferred tax assets
183
115
366
122
786
279
87
397
607
1,370
Deferred tax liabilities
Deferred tax assets, net
497
289
1,226
144
393
–205
95
289
–249
151
–
6
289
–27
–20
144
Change in deferred tax
Opening balance
Acquisitions of subsidiaries, net
Reported in income statement
Reclassification to liabilities of disposal
group held for sale
Exchange rate differences
Closing balance
The Group has tax loss carryforwards and other tax credits of
SEK 2,400 M (3,500) for which deferred tax assets have not
been recognized, as it is uncertain whether they can be offset against taxable income in future taxation.
Deferred tax assets and deferred tax liabilities, which
were recognized net in the previous year, were recognized
gross in 2012.
Note 19 other financial assets
parent
company
Group
seK M
Investments in associates
in parent company
Other shares and
interests
Interest-bearing
non-current receivables
Other non-current
receivables
total
2011
2012
2011
2012
–
–
1,141
1,489
52
4
–
–
44
29
–
–
68
164
56
89
–
1,141
–
1,489
Note 20 Inventories
seK M
2011
2012
Materials and supplies
Work in progress
Finished goods
Advances paid
total
1,663
1,459
2,348
234
5,704
1,751
1,397
2,561
196
5,905
Impairment of inventories amounted to SEK 181 M (43).
Note 21 trade receivables
Group
seK M
2011
2012
Trade receivables
Provision for bad debts
total
7,461
–537
6,924
8,127
–570
7,557
5,075
5,279
1,675
371
340
2,386
2,064
447
337
2,848
–84
–174
–279
–537
6,924
–111
–139
–320
–570
7,557
Maturity analysis
Impaired trade receivables:
< 3 months
3–12 months
> 12 months
total
102 Notes
2011
2012
EUR
USD
GBP
AUD
CNY
SEK
Other currencies
total
2,374
1,675
319
282
545
443
1,286
6,924
2,349
2,169
400
296
677
328
1,338
7,557
Current year change in
provision for bad debts
2011
2012
465
77
–80
–77
150
2
537
537
30
–67
–72
162
–20
570
Opening balance
Acquisitions and disposals
Receivables written off
Reversal of unused amounts
Provision for bad debts
Exchange rate differences
Closing balance
Note 22 parent company’s equity
The Parent company’s equity is split between restricted and
non-restricted equity. Restricted equity consists of share
capital and the statutory reserve. Restricted funds must not
be reduced by issue of dividends. Non-restricted equity consists of the share premium reserve, retained earnings and
net income for the year.
The statutory reserve contains premiums (amounts
received from share issues that exceed the nominal value of
the shares) relating to shares issued up to 2005.
Note 23 share capital, number of shares
and dividend per share
Number of shares (thousands)
Opening balance at
1 January 2011
Share issue
Closing balance at
31 December 2011
Number of votes,
thousands
Group
Trade receivables not due
Trade receivables due not impaired:
< 3 months
3–12 months
> 12 months
trade receivables per currency
Opening balance at
1 January 2012
Share issue
Closing balance at
31 December 2012
Number of votes,
thousands
series A
series B
total
share
capital,
seK K
19,175
–
347,002
2,073
366,177
2,073
366,177
2,073
19,175
349,075
368,250
368,250
191,753
349,075
540,828
19,175
–
349,075
2,609
368,250
2,609
368,250
2,609
19,175
351,684
370,859
370,859
191,753
351,684
543,437
All shares have a par value of SEK 1.00 and give shareholders
equal rights to the company’s assets and earnings. All shares
are entitled to dividends subsequently determined. Each
Series A share carries ten votes and each Series B share one
vote. All issued shares are fully paid.
The weighted average number of shares was 369,185
thousand (367,833) during the year. The weighted average
number of shares after the effects of outstanding long-term
incentive programs was 369,592 thousand (372,627) during the year.
The total number of treasury shares as at 31 December
2012 amounted to 600,000. A total of 200,000 shares were
repurchased in 2012.
Dividend per share
The dividend paid during the financial year totaled SEK 1,655 M
(1,472), equivalent to SEK 4.50 (4.00) per share. A dividend
for 2012 of SEK 5.10 per share, a total of SEK 1,888 M, will
be proposed at the Annual General Meeting on Thursday,
25 April 2013.
AssA ABLoY ANNuAL report 2012
Note 24 post-employment employee benefits
Amounts recognized in the income statement
Post-employment employee benefits include pensions and
medical benefits. Pension plans are classified as either
defined benefit plans or defined contribution plans. Pension
obligations reported in the balance sheet mainly relate to
defined benefit pension plans. ASSA ABLOY has defined benefit plans in a number of countries, those in the USA, the UK
and Germany being the most significant ones. There are also
plans for post-employment medical benefits in the USA.
pension costs, seK M
Defined benefit pension plans (A)
Defined contribution pension plans
Post-employment medical benefit
plans (A)
total
2011
2012
80
295
163
381
27
402
22
566
2011
2012
652
754
Amounts recognized in the balance sheet
pension provisions, seK M
Provisions for defined benefit
pension plans (B)
Provisions for post-employment
medical benefits (B)
Provisions for defined contribution
pension plans
pension provisions
441
418
80
1,173
52
1,224
Financial assets
pension provisions, net
–23
1,150
–
1,224
A) Specification of amounts recognized in the income statement
post-employment
medical benefits
pension costs, seK M
Current service cost
Interest on obligation
Expected return on plan assets
Actuarial losses (gains), net
Write-down/reversal of pension receivables ¹
Past service cost
Losses (gains) on curtailments/settlements
total
–of which, included in:
Operating income
Net financial items
total
Defined benefit
pension plans
total
2011
2012
2011
2012
2011
2012
6
21
–
0
–
0
–
27
5
20
–
1
–
0
–5
22
48
204
–176
28
–15
1
–10
80
54
215
–155
69
–
–3
–17
163
54
225
–176
28
–15
1
–10
107
59
235
–155
70
–
–3
–21
185
6
21
27
1
21
22
39
41
80
34
129
163
45
62
107
35
150
185
1 In accordance with limitation rule for the valuation of pension plan surplus, IAS 19 paragraph 58.
Actuarial gains/losses arising from changes in the actuarial
assumptions for defined benefit pension plans are recognized to the extent that their accumulated amount exceeds
a ‘corridor’, which is equivalent to 10 percent of the higher
of the pension obligation’s present value and the fair value of
the plan assets. The surplus/deficit outside this ‘corridor’ is
recognized over the expected average remaining service
period as from the year after the actuarial gain/loss arose.
The actual return on plan assets for defined benefit plans
amounted to SEK 274 M (32) in 2012.
Partly funded or unfunded pension plans are reported as
provisions for pensions.
B) Specification of amounts recognized in the balance sheet
post-employment
medical benefits
specification of defined benefits, seK M
Present value of funded obligations (C)
Fair value of plan assets (D)
Net value of funded plans
Present value of unfunded obligations (C)
Unrecognized actuarial gains (losses)
Unrecognized past service cost
Provisions for defined contribution pension plans
total
AssA ABLoY ANNuAL report 2012
Defined benefit
pension plans
total
2011
2012
2011
2012
2011
2012
–
–
–
–
–
–
4,046
–3,115
931
4,083
–3,193
891
4,046
–3,115
931
4,083
–3,193
891
472
–30
–1
441
415
2
0
418
782
–1,033
–28
652
937
–1,062
–12
754
1,254
–1,063
–29
1,093
80
1,173
1,354
–1,060
–13
1,172
52
1,224
Notes 103
Note 24 cont.
C) Movement in obligations
post-employment
medical benefits
seK M
opening present value of obligations
Current service cost
Interest on obligation
Employee contributions
Actuarial losses (gains)
Past service cost
Write-down/reversal of pension receivables
Curtailments
Acqusitions/disposals
Payments
Exchange rate differences
Closing present value of obligations
Defined benefit
pension plans
total
2011
2012
2011
2012
2011
2012
438
6
21
–
22
–
–
–
–
–26
11
472
472
5
20
0
–27
0
–
–5
–
–28
–20
417
4,046
48
204
–
327
–
–15
20
329
–192
61
4,828
4,828
54
215
1
267
–3
–
–17
67
–212
–180
5,020
4,484
54
225
–
349
–
–15
20
329
–218
72
5,300
5,300
59
235
1
240
–3
–
–22
67
–240
–200
5,437
D) Movement in fair value of plan assets
Defined benefit
pension plans
seK M
2011
2012
opening fair value of plan assets
Expected return on plan assets
Actuarial gains (losses)
Curtailments
Acqusitions/disposals
Net payments
Exchange rate differences
Closing fair value of plan assets (e)
2,854
176
–144
–5
227
–94
101
3,115
3,115
155
119
–
–
–83
–113
3,193
E) Plan assets allocation
plan assets
2011
2012
Shares
Interest-bearing investments
Other assets
total
1,547
1,187
381
3,115
1,695
1,107
391
3,193
+1%
–1%
3
45
–2
–38
F) Sensitivity analysis of medical benefits
the effect of a 1 percent change in the assumed medical cost trend, seK M
Effect on the aggregate of the current service cost and interest expense
Effect on the defined benefit obligation
G) Key actuarial assumptions
united Kingdom
Key actuarial assumptions (weighted average), %
Discount rate
Expected annual return on plan assets 1
Expected annual salary increases
Expected annual pension increases
Expected annual medical benefit increases
Expected annual inflation
As at 31 December
Present value of obligations (+)
Fair value of plan assets (–)
obligations, net
Germany
usA
2011
2012
2011
2012
2011
2012
4.7
6.6
n/a
2.9
n/a
2.9
4.5
5.2
n/a
2.6
n/a
2.7
4.5
n/a
2.8
1.2
n/a
1.5
3.2
n/a
2.6
2.2
n/a
1.6
4.6
6.1
3.5
2.0
9.2
3.1
4.0
5.6
4.0
2.0
9.0
3.0
2008
2009
2010
2011
2012
3,963
–2,604
1,359
4,696
–2,817
1,879
4,484
–2,854
1,630
5,300
–3,115
2,185
5,437
–3,193
2,244
1 The expected return on plan assets is determined on the basis of the expected returns on assets underlying the current investment policy. Plan assets chiefly consist
of equity instruments and interest-bearing investments. The expected return is mainly based on risk premiums and indexes for interest-bearing investments on the
market.
pensions with Alecta
Commitments for old-age pensions and family pensions for
salaried employees in Sweden are guaranteed in part
through insurance with Alecta. According to UFR 3 this is a
defined benefit plan that covers many employers. For the
2012 financial year the company has not had access to information making it possible to report this plan as a defined
benefit plan. Pension plans in accordance with ITP that are
guaranteed through insurance with Alecta are therefore
reported as defined contribution plans. The year’s pension
contributions that are contracted to Alecta total SEK 23 M
104 Notes
(28), of which SEK 8 M (6) relates to the Parent company.
Alecta’s surplus may be distributed to the policy-holders
and/or the persons insured. As at 30 September 2012 Alecta’s surplus expressed as the collective consolidation level
amounted to 123 percent (113 as at 31 December 2011).
The collective consolidation level consists of the market
value of Alecta’s assets as a percentage of its insurance commitments calculated according to Alecta’s actuarial calculation assumptions, which do not comply with IAS19.
AssA ABLoY ANNuAL report 2012
Note 25 other provisions
Note 28 Contingent liabilities
Group
seK M
opening balance at
1 January 2011
Provisions for the year
Deferred considerations
acquisitions
Reversal of non-utilized amounts
Utilized during the year
Exchange rate differences
Closing balance at
31 December 2011
Group
restructuring
reserve
seK M
other
total
924
1,224
1,640
403
2,564
1,627
1
–91
–403
10
65
–194
–246
10
66
–285
–649
20
1,665
1,678
3,343
seK M
restructuring
reserve
other
total
1,665
133
–
1,678
553
39
3,343
686
39
–
70
70
–12
–62
–
62
–12
–
–133
–498
–25
–167
–215
–13
–300
–713
–38
1,068
2,007
3,075
Group
2011
2012
74
61
–
–
–
74
–
61
10,613
10,613
9,405
9,405
Guarantees
Guarantees on behalf of
subsidiaries
total
In addition to the guarantees shown in the table above, the
Group has a large number of minor bank guarantees for performance of obligations in operating activities. No material
liabilities are expected as a result of these guarantees.
Group
<1 year
>1<2 year
>2<5 year
>5 year
total
2011
2012
25
10
30
9
74
25
9
22
5
61
Note 29 Assets pledged against liabilities
to credit institutions
Group
seK M
Real estate mortgages
Other mortgages
total
parent company
2011
2012
2011
2012
305
134
439
106
32
138
–
–
–
–
–
–
Note 30 Business combinations
seK M
2011
2012
Cash paid for acquisitions
Paid part for prior year
Deferred considerations
12,599
555
446
3,876
–
923
total purchase price
13,600
4,799
The restructuring reserve relates to the ongoing restructuring
programs launched in 2008, 2009 and 2011. The closing balance is expected to be chiefly utilized in the next three years
and mainly relates to severance payments. The non-current
part of the restructuring reserve totaled SEK 373 M. For further information on the restructuring programs, see the
Report of the Board of Directors. Other provisions relate to
estimated deferred purchase considerations, taxes and legal
obligations including future environment-related measures.
Acquired assets and liabilities
Intangible assets
Other non-current assets
Inventories
Receivables
Cash and cash equivalents
Interest-bearing liabilities
Other liabilities
Non-controlling interest
Acquired net assets at fair value
1,590
843
803
1,371
411
–244
–2,038
0
2,736
1,055
410
477
818
345
–439
–1,000
–13
1,653
parent company
Other provisions in the parent company relate to estimated
deferred purchase considerations.
Disposed acquired net assets
–6,280
–
Goodwill
4,584
3,146
12,599
3,876
–411
–345
109
305
12,297
3,836
5,143
644
5,588
2,830
480
347
Balance sheet breakdown:
2011
2012
Other non-current provisions
Current provisions
total
1,315
2,028
3,343
1,871
1,204
3,075
Note 26 other current liabilities
Group
seK M
VAT and excise duty
Employee withholding tax
Advances received
Social security contributions
and other taxes
Deferred considerations
Other current liabilities
total
2011
2012
397
25
573
353
83
409
81
134
432
1,642
68
2,705
373
3,991
Note 27 Accrued expenses and deferred income
Group
AssA ABLoY ANNuAL report 2012
2012
Maturity profile – guarantees, seK M
Group
opening balance at
1 January 2012
Provisions for the year
Acquisitions of subsidiaries
Deferred considerations
acquisitions
Reclassification to liabilities of
disposal groups held for sale
Reclassifications
Reversal of non-utilized
amounts
Utilized during the year
Exchange rate differences
Closing balance at
31 December 2012
parent company
2011
parent company
seK M
2011
2012
2011
2012
Personnel-related expenses
Customer-related
expenses
Deferred income
Accrued interest expenses
Other
total
1,630
1,768
91
91
611
126
131
663
3,161
547
201
98
784
3,397
–
–
40
14
145
–
–
48
42
181
Cash paid for acquisitions
Cash and cash equivalents in acquired
subsidiaries
Paid deferred considerations for
acquisitions in previous years
Change in cash and cash equivalents
due to acquisitions
Net sales from acquisition date
EBIT from acquisition date
Net income from acquisition date
The net sales of acquired units for 2012 totaled SEK 4,487 M
(6,601) and net income amounted to SEK 460 M (5,676).
Acquisition-related costs for 2012 totaled SEK 39 M (22)
and have been reported as other operating expenses in the
income statement.
Acquisition analyses have been prepared for all acquisitions in 2012. The acquisition analysis for the acquisition of
4Front, which was completed on 24 December, is preliminary pending a final valuation of the fair value of acquired
identifiable intangible assets.
Notes 105
Note 30 cont.
See below for an account of all significant acquisitions completed in 2012 and 2011.
2012
Albany Doors
On 11 January 2012, 100 percent of the share capital was
acquired in Albany Door Systems (USA), a global leader in
automatic high-performance doors. The company has
global market penetration in industrial automatic high-performance doors. The products are used for industrial applications and in logistics centers, where there is a major need
for customized automatic high-performance doors with
high security and access control. Albany also offers service
and maintenance on the company’s principal markets. The
company is headquartered in Georgia, USA. Intangible
assets in the form of the brand and customer relationships
have been disclosed separately. Residual goodwill mainly
relates to synergies and other intangible assets, which do
not meet the criteria for separate recognition.
Dynaco
On 1 March 2012, 100 percent of the share capital was
acquired in Dynaco (Belgium). Dynaco is a leading manufacturer of automatic high-performance doors specializing in
sales to a global distributor network. The acquisition of
Dynaco further strengthens ASSA ABLOY’s position in the
fast-growing market segment of high-performance doors.
Dynaco provides manufacturing expertise, with many leading patented products and a global distribution channel. The
company is headquartered in Moorsel, Belgium. Intangible
assets in the form of the brand and customer relationships
have been disclosed separately. Residual goodwill mainly
relates to synergies and other intangible assets, which do
not meet the criteria for separate recognition.
Guoqiang
On 29 May 2012, 100 percent of the share capital was
acquired in Guoqiang, a Chinese manufacturer of window
hardware. Guoqiang offers a complete range of window
hardware mainly for the Chinese market. The company has a
good market presence in China through an extensive network of sales offices. Guoqiang provides a good fit with the
existing offering in total door opening solutions in China and
gives access to the Chinese window hardware market. The
company is headquartered in Leling, Shandong Province,
China. The brand has been disclosed separately, and residual
goodwill mainly relates to synergies and other intangible
assets, which do not meet the criteria for separate recognition.
Other acquisitions
Other significant acquisitions during the year comprised
Securistyle (UK), Traka (UK), Helton (Canada), Sanhe Metal
(China) and 4Front (USA).
2011
LaserCard
On 31 January 2011 the Group acquired 100 percent of the
share capital in LaserCard Corporation, a leading provider of
secure ID solutions to government and commercial customers worldwide. LaserCard has a unique product portfolio of
smart cards, services and product solutions for complex ID
systems management, which are used by more than 400
customers in 44 countries. The company’s strength lies in
106 Notes
its knowledge and management of various types of secure
identities and technologies, such as personal identification,
border controls, secure government services, and access to
buildings. Its product portfolio complements ASSA ABLOY’s
HID Global business unit. LaserCard is headquartered in
California, USA. Intangible assets in the form of brand and
customer relationships have been disclosed. Residual goodwill is mainly attributable to synergies and other intangible
assets, which do not meet the criteria for separate recognition.
FlexiForce
On 6 April 2011 the Group acquired 100 percent of the
share capital in FlexiForce, a global leader in components for
industrial sectional doors and residential garage doors. FlexiForce specializes in the manufacture and distribution of
components for overhead sectional doors and has a strong
position in product development and marketing as well as a
solid customer base.
FlexiForce adds a new and very important distribution
channel for reaching industrial door manufacturers. The
company is headquartered in the Netherlands. Intangible
assets in the form of brand and customer relationships have
been disclosed separately. Residual goodwill is mainly attributable to synergies and other intangible assets, which do not
meet the criteria for separate recognition.
Swesafe
On 6 April 2011 the Group acquired 100 percent of the
share capital in Swesafe, Sweden’s largest locksmith. This
acquisition is an important step in the development of the
Swedish market in the fast-growing electromechanical segment. Ownership of the largest locksmith in Sweden means
that locksmiths and systems integrators will become more
project oriented and focused on electronic products and
the service offering. In addition, it will provide a further
understanding of end-customer needs. Goodwill is mainly
attributable to synergies and other intangible assets, which
do not meet the criteria for separate recognition.
Cardo Entrance Solutions
Cardo’s Entrance Solutions division is a leading supplier of
industrial doors, logistics systems, garage doors, customer
service and other services. The acquisition of Cardo Entrance
Solutions represents a strategically important step in the
development of ASSA ABLOY’s operations in the Entrance
Systems division. Overall, this will strengthen the Group’s
product offering and create a strong entrance automation
supplier with a wide range of products, customer service
and other services. The acquisition of Cardo is expected to
generate considerable synergies largely through a combination of the companies’ respective offerings.
Cardo Entrance Solutions was created in 2010 through
the coordination of two previous divisions, Door & Logistic
Solutions and Residential Garage Doors. Under the Crawford
and Megadoor brands, it offers total industrial door, docking
and service solutions for service-intensive customers in
transport, logistics and trade. The division also offers standardized and customized garage doors for the consumer
market. The range includes up and over doors, overhead sectional doors, side sectional doors and the automation for
these products. These doors are positioned as exclusive,
offering good design, quality and high security. The main
brands are Crawford and Normstahl.
AssA ABLoY ANNuAL report 2012
Note 30 cont.
Intangible assets in the form of the brand and customer relationships have been disclosed separately. Residual goodwill
mainly relates to synergies and other intangible assets,
which do not meet the criteria for separate recognition.
The table below shows the final purchase price allocation
for Cardo Entrance Solutions.
seK M
Cash paid
Less: Discontinued operations
total purchase price
2011
11,340
–6,280
5,060
Fair value of acquired net assets
Goodwill
–2,009
3,051
Acquired assets and liabilities in accordance with purchase price allocations
Intangible assets
Other non-current assets
Inventories
Receivables
Cash and cash equivalents
Interest-bearing liabilities
Other liabilities
Acquired net assets at fair value
1,597
555
515
919
176
–111
–1,642
2,009
Purchase prices settled in cash
Purchase prices discontinued operations
Cash and cash equivalents in acquired
subsidiaries
Change in Group cash and cash equivalents resulting from acquisitions
11,340
–6,690
–176
4,474
Net sales from acquisition date
EBIT from acquisition date
Net income from acquisition date
3,709
455
5,699
Note 31 Assets of disposal group classified as held for
sale and discontinued operations
Group
seK M
2012
Assets of disposal group classified as
held for sale
Intangible assets
Tangible assets
Deferred tax assets
Inventories
Trade receivables
Cash and cash equivalents
total
–
–
–
–
–
–
–
135
17
26
33
9
390
610
Liabilities of disposal group classified as
held for sale
Provisions
Trade payables
Current tax liabilities
Other current liabilities
Accrued expenses and deferred income
total
–
–
–
–
–
–
12
92
9
80
33
226
–
–
–
–
568
–542
26
–6
–
–9
–
11
–
–
–
54
–3
3
–
54
Net income of disposal group classified
as held for sale
Sales
Costs
Income before tax
Tax on income
Impairment of assets of disposal group
held for sale
Net income of disposal group classified
as held for sale
Cash flow from disposal group classified
as held for sale
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash flow from disposal group classified
as held for sale
AssA ABLoY ANNuAL report 2012
2011
Discontinued operations
In 2011, Cardo Flow Solutions and Lorentzen & Wettre,
which were part of Cardo Entrance Solutions acquired
during the year, were divested. These divestments were
reported in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations. The cash flow effect
and the result from divestments are shown in the table
below:
Group
seK M
Disposed net assets
Assets of disposal group held for sale
Liabilities of disposal group held for sale
total
Purchase prices received
Less: Cash and cash equivalents in disposed subsidiaries
Change in cash and cash equivalents
due to disposal
Net income after tax from discontinued
operations during the holding period
Net income from discontinued
operations
2011
2012
–7,539
1,161
–6,378
–
–
–
6,690
–
–
–
6,690
–
92
–
404
–
Note 32 Cash flow
Group
seK M
Adjustments for non-cash items
Profit on sales of non-current assets
Change in pension provision
Other
Adjustments for non-cash items
Change in working capital
Inventories increase/decrease (–/+)
Trade receivables increase/
decrease (–/+)
Trade payables increase/
decrease (+/–)
Other working capital increase/
decrease (–/+)
Change in working capital
2011
2012
3
40
–43
0
–347
48
–13
–312
–32
0
–249
–192
235
–22
–192
–238
136
–77
–13,600
–4,799
Investments in subsidiaries
Total purchase price
Less, part of purchase prices paid in
prior year
Less, acquired cash and cash equivalents
Less, unpaid parts of purchase prices
Paid purchase prices
relating to acquisitions in prior years
Investments in subsidiaries
555
411
446
–
345
923
–109
–12,297
–305
–3,836
Disposal of subsidiaries
Purchase prices received
Less, disposed cash and cash equivalents
Disposal of subsidiaries
6,690
–
6,690
–12
–
–12
–876
5
–28
–904
14
19
other investments
Investments in/sales of other shares
and interests
Investments in/sales of other
non-current receivables
other investments
Notes 107
Note 33 employees
Salaries, wages, other remuneration and social security costs
Group
seK M
Salaries, wages and other remuneration
Social security costs
– of which pensions
total
parent company
2011
2012
2011
2012
9,704
2,131
402
11,835
10,627
2,078
416
12,705
115
59
21
174
118
53
24
171
Fees to Board members in 2012 (including committee work), SEK thousand
Name and post
Board
remuneration
Committee
Audit
Committee
total
Lars Renström, Chairman
Carl Douglas, Vice Chairman
Birgitta Klasén, Member
Eva Lindqvist, Member
Johan Molin, President and CEO
Sven-Christer Nilsson, Member
Ulrik Svensson, Member
Jan Svensson, Member
Employee representatives (2)
total
1,350
750
500
500
–
500
500
500
–
4,600
100
–
–
–
–
50
–
50
–
200
–
–
100
–
–
–
200
100
–
400
1,450
750
600
500
–
550
700
650
–
5,200
stockrelated
benefits other benefits
pension costs
Total fees for Board members amounted to SEK 4.6 M in 2011.
Remuneration and other benefits of the Executive Team in 2012
seK thousands
Johan Molin
Other members of the Executive Team (8)
total remuneration and benefits
Fixed salary Variable salary
12,536
34,498
47,034
9,270
16,014
25,284
4,742
9,244
13,986
126
3,280
3,406
4,326
8,234
12,560
Total remuneration and other benefits for the Executive Team amounted to SEK 90 M in 2011.
Salaries and remuneration for the Board of Directors
and the parent company’s Executive Team
Salaries and remuneration for the Board of Directors and the
parent company’s Executive Team totaled SEK 44 M (37).
Social security costs amounted to SEK 33 M (20), of which
8 SEK M (7) were pension costs.
Long-term incentive programs
At the 2010 Annual General Meeting, it was decided to
launch a long-term incentive program (LTI 2010) for senior
executives and other key staff in the Group. The aim of LTI
2010 is to create the prerequisites for retaining and recruiting competent staff for the Group, providing competitive
remuneration and uniting the interests of shareholders,
senior executives and key staff.
At the 2011 and 2012 Annual General Meetings, it was
decided to implement further long-term incentive programs for senior executives and other key staff in the Group.
The new long-term incentive programs, LTI 2011 and LTI
2012, have been drawn up with similar terms to LTI 2010.
For each Series B share acquired by the CEO within the
framework of LTI 2010, LTI 2011 and LTI 2012, the company
awards one matching stock option and four performancebased stock options. For each Series B share acquired by
other members of the Executive Team, the company awards
one matching stock option and three performance-based
stock options. For other participants, the company awards
one matching stock option and one performance-based
stock option. In accordance with the terms of the incentive
108 Notes
programs, employees have acquired a total of 264,670
shares in ASSA ABLOY AB, of which 90,038 shares were
acquired in 2012 within the framework of LTI 2012.
Each matching stock option entitles the holder to receive
one free Series B share in the company after three years, provided that the holder, with certain exceptions, is still
employed in the Group when the interim report for Q1
2013, 2014 and 2015 for the respective program is published, and has retained the shares acquired within the
framework of the long-term incentive programs. Each performance-based stock option entitles the holder to receive
one free Series B share in the company three years after
allotment, provided that the above conditions have been
fulfilled. In addition, the maximum level in a range determined by the Board for the performance of the company’s
earnings per share must have been fulfilled. The performance based condition for each respective year has been
fulfilled for all three programs.
Outstanding matching and performance-based stock
options for LTI 2012 total 264,027. The total number of outstanding matching and performance-based stock options
for LTI 2010, LTI 2011 and LTI 2012 amounted to 701,941 on
the reporting date.
Fair value is based on the share price on the allotment
date. The present value calculation is based on data from an
external party. Fair value is adjusted for participants who do
not retain their holding of shares for the duration of the program. In the case of performance-based shares, the company assesses the probability of the performance targets
AssA ABLoY ANNuAL report 2012
Note 33 cont.
being met when calculating the compensation expense.
The fair value of ASSA ABLOY’s Series B share on the allotment date for LTI 2012 of 22 May 2012 was SEK 187.77. The
equivalent value on the allotment date for LTI 2011 of 25
May 2011 was SEK 173.29. The equivalent value on the allotment date for LTI 2010 of 28 July 2010 was SEK 161.79.
The total cost of the Group’s three long-term incentive
programs amounted to SEK 27 M (16) in 2012.
Other equity-based incentive programs
ASSA ABLOY has previously issued a number of convertible
debentures to employees in the Group. At year-end 2012,
there were no outstanding convertible debentures issued to
employees in the Group. For further information on other
equity-based incentive programs, see the section on the
ASSA ABLOY share (page 122).
Notice and severance pay
If the CEO is given notice, the company is liable to pay the
equivalent of 24 months’ basic salary and other employment benefits. If one of the other members of the Executive
Team is given notice, the company is liable to pay a maximum six months’ basic salary and other employment benefits plus an additional 12 months’ basic salary.
Average number of employees per country, broken down by gender
Group
2011
China
USA
France
Sweden
Germany
United Kingdom
Czech Republic
Mexico
Netherlands
Finland
Australia
Italy
Romania
South Korea
Malaysia
Spain
Canada
Norway
Belgium
Denmark
Israel
South Africa
Brazil
Switzerland
New Zealand
Colombia
Austria
Ireland
Chile
Other
total
2012
total
of which
women
of which
men
total
of which
women
of which
men
14,781
5,861
2,200
1,857
1,453
1,319
1,139
1,128
949
955
764
802
539
669
472
733
434
550
306
448
353
418
336
343
316
389
190
208
167
993
41,070
6,083
1,855
703
517
475
466
550
527
167
340
209
202
228
255
260
183
104
139
85
131
102
187
74
112
108
46
42
88
37
264
14,538
8,698
4,006
1,497
1,340
978
853
586
601
782
615
556
600
312
414
212
550
330
411
222
317
251
231
262
231
208
343
148
120
130
730
26,532
14,545
5,915
2,259
2,156
1,788
1,594
1,188
1,071
1,050
924
754
733
684
678
655
650
645
580
468
462
405
380
356
319
300
290
217
215
175
1,307
42,762
6,293
1,870
696
569
530
532
583
477
176
316
221
178
265
242
421
165
157
134
114
188
122
166
92
101
95
41
47
77
42
320
15,229
8,252
4,045
1,563
1,588
1,257
1,062
605
594
873
607
533
556
419
436
233
485
488
446
354
274
283
214
264
218
205
249
171
138
133
987
27,533
parent company
2011
Sweden
total
2012
total
of which
women
of which
men
total
of which
women
of which
men
124
124
26
26
98
98
125
125
25
25
100
100
total
of which
women
of which
men
total
of which
women
of which
men
8
9
2
–
6
9
8
9
2
1
6
8
3
17
–
2
3
15
3
17
1
3
2
14
Gender distribution of Board of Directors and Executive Team
2011
Board of Directors 1
Executive Team
–of which Parent company's
Executive Team
total
2012
1 Excluding employee representatives.
AssA ABLoY ANNuAL report 2012
Notes 109
Note 34 Financial risk management
and financial instruments
Financial risk management
ASSA ABLOY is exposed to a variety of financial risks due to
its international business operations. ASSA ABLOY’s units
have carried out financial risk management in accordance
with the Group’s financial policy. The principles for financial
risk management are described below.
Organization and activities
ASSA ABLOY’s financial policy, which is determined by the
Board of Directors, provides a framework of guidelines and
regulations for the management of financial risks and financial activities.
ASSA ABLOY’s financial activities are coordinated centrally and the majority of financial transactions are conducted by the subsidiary ASSA ABLOY Financial Services AB,
which is the Group’s internal bank. External financial transactions are conducted by Treasury. Treasury achieves significant economies of scale when negotiating borrowing agreements, using interest rate derivatives and managing currency flows.
Capital structure
The objective of the Group’s capital structure is to safeguard
its ability to continue as a going concern, and to generate
good returns for shareholders and benefit for other stakeholders. Maintaining an optimal capital structure enables
the Group to keep capital costs as low as possible. The Group
can adjust the capital structure based on the requirements
that arise by varying the dividend paid to shareholders, return-
ing capital to shareholders, issuing new shares or selling assets
to reduce debt. The capital requirement is assessed on the
basis of factors such as the net debt/equity ratio.
Net debt is defined as interest-bearing liabilities, including negative market values of derivatives, plus pension provisions, less cash and cash equivalents, other interest-bearing
investments and positive market values of derivatives. The
table ’Net debt and equity’ shows the position as at 31
December.
Net debt and equity
Group
seK M
Non-current interest-bearing receivables
Short-term interest-bearing investments
incl. positive market values of derivatives
Cash and bank balances
Pension provisions
Non-current interest-bearing liabilities
Current interest-bearing liabilities incl.
negative market values of derivatives
total
equity
Net debt/equity ratio, times
2011
2012
–44
–29
–284
–1,665
1,173
7,422
–138
–907
1,224
11,194
7,605
14,207
23,735
0.60
3,388
14,732
26,725
0.55
Another important variable in the assessment of the Group’s
capital structure is the credit rating assigned by credit rating
agencies to the Group’s debt. It is essential to maintain a
good credit rating in order to have access to both long-term
and short-term financing from the capital markets when
needed. ASSA ABLOY maintains both long-term and shortterm credit ratings from Standard & Poor’s and a short-term
rating from Moody’s.
Maturity profile – financial instruments
31 December 2011
seK M
Long-term bank loans
Long-term capital market loans
Convertible loans
Short-term bank loans
Commercial papers and
short-term capital market loans
Derivatives
total by period
31 December 2012
<1 year
>1<2 year
>2<5 year
>5 year
<1 year
>1<2 year
>2<5 year
>5 year
–7
–284
–903
–1,213
–49
–648
–
–
–341
–3,804
–
–
–1,070
–2,734
–
–
–9
–351
–
–804
–74
–2,308
–
–
–538
–4,764
–
–
–648
–4,415
–
–
–5,396
20
–7,781
–
29
–669
–
65
–4,080
–
–2
–3,806
–2,519
29
–3,654
–
43
–2,340
–
43
–5,259
–
19
–5,044
Cash and cash equivalents incl.
interest-bearing receivables
Non-current interest-bearing
receivables
Deferred considerations
Trade receivables
Trade payables
Net total
1,949
–
–
–
1,045
–
–
–
44
–134
6,924
–3,796
–2,794
–
–2,288
–
–
–2,957
–
–166
–
–
–4,246
–
–
–
–
–3,806
29
–2,705
7,557
–3,883
–1,611
–
–257
–
–
–2,596
–
–144
–
–
–5,403
–
–8
–
–
–5,052
Confirmed credit facilities
Credit facilities maturing < 1 year
Adjusted maturity profile¹
10,306
–455
7,057
–
–
–2,957
–9,851
–
–14,097
–
–
–3,806
9,957
–472
7,874
–9,485
–
–12,081
–
–
–5,403
–
–
–5,052
1 For maturity structure of guarantees, see Note 28.
110 Notes
AssA ABLoY ANNuAL report 2012
Note 34 cont.
External financing/net debt
Amount,
seK M
Credit lines/facilities
US Private Placement Program
US Private Placement Program
US Private Placement Program
US Private Placement Program
US Private Placement Program
US Private Placement Program
US Private Placement Program
US Private Placement Program
US Private Placement Program
Multi–Currency RCF
Bank loan EIB
Global MTN Program
521
491
325
325
794
163
456
976
488
9,485
949
12,934
Other long-term loans
total long-term loans/facilities
US Private Placement Program
Incentive Program
Global CP Program
259
28,165
342
–
6,507
Swedish CP Program
Other bank loans
Overdraft facility
total short-term loans/facilities
total loans/facilities
5,000
201
1,132
13,181
41,346
Maturity
May 2015
Dec 2016
Apr 2017
May 2017
Dec 2018
Aug 2019
May 2020
Aug 2022
Aug 2024
Jun 2014
Jul 2018 2
Mar 2014
Jun 2014
Dec 2014
Jan 2015
Aug 2015
Oct 2015
Oct 2015
Jun 2016
Jun 2016
Aug 2016
May 2017
Jun 2018
Dec 2020
Feb 2027
Dec 2013
Cash and bank balances
Short-term interest-bearing
investments
Long-term interest-bearing
investments
Market value of derivatives
Pensions
Net debt
Carrying
amount,
seK M
567 1
491
325
325
794
163
456
976
488
0
948
388
1,293
300
259
248
500
226
304 1
117
250
500
500
257 1
261
259
11,194
342
–
162
948
1,042
201
605
3,301
14,495
Currency
Amount
2011
Amount
2012
of which
parent
company,
seK M
USD
USD
USD
USD
USD
USD
USD
USD
USD
EUR
EUR
EUR
EUR
SEK
EUR
SEK
SEK
JPY
NOK
NOK
SEK
SEK
SEK
EUR
EUR
80
76
50
50
122
0
70
0
0
1,100
110
45
150
0
0
0
0
0
250
100
0
0
500
0
0
80
76
50
50
122
25
70
150
75
1,100
110
45
150
300
30
250
500
3,000
250
100
250
500
500
30
30
388
1,293
300
259
250
500
226
286
117
250
500
500
259
259
USD
EUR
USD
EUR
SEK
53
100
220
10
2,650
53
–
25
110
1,050
–907
–24
–29
–27
1,224
14,732
1 The loans are subject to hedge accounting.
2 The loan amortizes starting November 2016. In the table the average date of maturity of the loan has been stated.
Rating
Agency
short- term outlook Long-term
Standard & Poor’s
Moody’s
A2
P2
Stable
Stable
A–
n/a
Credit
outlook
Stable
In March 2012 Standard & Poor’s revised the outlook on the
long-term rating from negative to stable. This was confirmed
in November 2012.
AssA ABLoY ANNuAL report 2012
Financing risk and maturity profile
Financing risk is defined as the risk of being unable to meet
payment obligations as a result of inadequate liquidity or
difficulties in obtaining external financing. ASSA ABLOY
manages financing risk at Group level. Treasury 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. In accordance with
financial policy, the available loan facilities should include a
Notes 111
Note 34 cont.
reserve (facilities available but not utilized) equivalent to
10 percent of the Group’s total annual sales.
Maturity profile
The table ‘Maturity profile’ on page 110 shows the maturities for ASSA ABLOY’s financial instruments, including confirmed credit facilities. During the year, the maturity profile
was extended through a number of capital market transactions. The maturities are not concentrated to a particular
date in the immediate future. When the refinancing requirement is assessed, the credit facility of EUR 1,100 M maturing
in June 2014, which was wholly unutilized at year-end, is
taken into account. Moreover, existing financial assets are
also taken into account. The table shows undiscounted
future cash flows relating to the Group’s financial instruments at the reporting date, and these amounts are therefore not found in the balance sheet.
Interest-bearing liabilities
The Group’s long-term loan financing mainly consists of a
Private Placement Program in the USA totaling USD 750 M,
of which USD 698 M (500) is long-term, a GMTN program of
SEK 5,392 M (2,656), and a loan from the European Investment Bank of EUR 110 M (110). During the year new issues
were made under the Private Placement Program in the USA.
A total of USD 250 M was raised divided into three tranches
of 7, 10 and 12 years. In addition, nine issues were made
under the GMTN program for a total amount of around SEK
2,800 M. Other changes in long-term loans are mainly due to
some of the original long-term loans now having less than
one year to maturity.
The Group’s short-term loan financing mainly consists of
two Commercial Paper Programs for a maximum USD 1,000
M (1,000) and SEK 5,000 M (5,000) respectively. At year-end,
SEK 2,152 M (4,242) of the Commercial Paper Programs had
been utilized. In addition, substantial credit facilities are
available, mainly in the form of a Multi-Currency Revolving
Credit Facility of EUR 1,100 M (1,100), which was wholly
unutilized at year-end. The reduction in short-term financing is mainly linked to the increase in long-term capital market issues implemented to extend the Group’s maturity
structure. At year-end the average time to maturity for the
Group’s interest-bearing liabilities, excluding the pension
provision, was 47 months (31).
Some of the Group’s main financing agreements contain
a customary Change of Control clause. This clause means
that lenders have the right in certain circumstances to
demand the renegotiation of conditions or to terminate the
agreements should control of the company change.
112 Notes
Convertible debentures
Incentive 2006 matured in 2011 and the debentures were
converted in full. Conversion was managed by an external
party and began in 2010. A further 2,073,184 Series B shares
were issued in 2011. A total of 2,332,344 Series B shares
were issued in connection with Incentive 2006.
Incentive 2007 matured in 2012. Half of the convertible
debentures relating to Incentive 2007 were converted.
Conversion was managed by an external party and took
place in 2012. A total of 2,608,400 Series B shares were
issued in connection with Incentive 2007.
Currency composition
The currency composition of ASSA ABLOY’s borrowing
depends on the currency composition of the Group’s assets
and other liabilities. Currency swaps are used to achieve the
desired currency composition. See the table ‘Net debt by
currency’ on page 113.
Cash and cash equivalents and other interest-bearing
receivables
Short-term interest-bearing investments amounted to SEK
24 M (50) at year-end. In addition, ASSA ABLOY has longterm interest-bearing receivables of SEK 29 M (44) and
financial derivatives with a positive market value of SEK 114
M (234) which, in addition to cash and cash equivalents, are
included in the definition of net financial debt. Cash and
cash equivalents are mainly invested in bank accounts or
interest-bearing instruments with high liquidity from issuers
with a credit rating of at least A-, according to Standard &
Poor’s or similar rating agency. The average term for cash
and cash equivalents was 1 day (1.0) at year-end 2012.
The parent company’s cash and cash equivalents are held
in a sub-account to the Group account.
Group
parent company
seK M
2011
2012
2011
2012
Cash and bank balances
Short-term investments
with maturity less than
3 months
Cash and cash
equivalents
1,665
907
4
42
–
–
–
–
1,665
907
4
42
50
24
23
–
44
29
–
–
234
1,993
114
1,074
–
27
–
42
Short-term investments
with maturity more than
3 months
Long-term interestbearing receivables
Positive market value
of derivatives
total
AssA ABLoY ANNuAL report 2012
Note 34 cont.
Net debt by currency
31 December 2011
seK M
Net debt including
currency swaps
Net debt excluding
currency swaps
Net debt including
currency swaps
USD
EUR
SEK
AUD
DKK
CZK
CAD
KRW
Other
total
5,937
4,510
3,913
–4
13
3
–29
265
–402
14,207
5,465
2,399
5,791
661
260
178
–141
265
–672
14,207
5,488
5,314
3,497
30
16
19
30
171
169
14,732
6,406
4,882
2,045
650
250
226
212
171
–108
14,732
Interest rate risks in interest-bearing assets
Treasury manages interest rate risk in interest-bearing
assets. Derivative instruments such as interest rate swaps
and FRAs (Forward Rate Agreements) may be used to manage interest rate risk. These investments are mostly shortterm. The term for the majority of these investments is three
months or less. The fixed interest term for these short-term
investments was 1 day (1.0) at year-end 2012. A downward
change in the yield curve of one percentage point would
reduce the Group’s interest income by around SEK 8 M (8)
and consolidated equity by SEK 6 M (6).
Transaction exposure
Currency risk in the form of transaction exposure, or exports
and imports of goods respectively, is relatively limited in the
Group, even though it can be significant for individual business units. The main principle is to allow currency fluctuations to have an impact on the business as quickly as possible. As a result of this strategy, current currency flows are not
normally hedged.
Interest rate risks in borrowing
Changes in interest rates have a direct impact on ASSA
ABLOY’s net interest. Treasury is responsible for identifying
and managing the Group’s interest rate exposure. It analyzes
the Group’s interest rate exposure and calculates the impact
on income of changes in interest rates on a rolling 12-month
basis. The Group strives for a mix of fixed rate and variable
rate borrowings, and uses interest rate swaps to continuously adjust the fixed interest term. The financial policy stipulates that the average fixed interest term should normally
be 24 months. At year-end, the average fixed interest term
on gross debt, excluding pension obligations, was around 34
months (16). An upward change in the yield curve of one
percentage point would increase the Group’s interest
expense by around SEK 74 M (93) and reduce consolidated
equity by SEK 56 M (71).
Currency, seK M
2011
2012
AUD
CAD
CNY
CZK
EUR
GBP
PLN
RON
SEK
410
439
–754
–203
742
357
91
–41
–756
325
537
–1,094
–165
1,049
459
145
–199
–822
Currency risk
Currency risk affects ASSA ABLOY mainly through translation
of capital employed and net debt, translation of the income
of foreign subsidiaries, and the impact on income of flows of
goods between countries with different currencies.
AssA ABLoY ANNuAL report 2012
31 December 2012
Net debt excluding
currency swaps
Transaction flows relating to major currencies
(import + and export –)
Currency exposure
Translation exposure in income
The table below shows the impact on the Group’s income
before tax of a 10 percent weakening of the Swedish krona
(SEK) in relation to the major currencies, while all other variables remain constant.
Impact on income before tax of a 10 percent
weakening of SEK
Currency, seK M
AUD
CAD
CNY
EUR
GBP
HKD
NOK
USD
2011
2012
38
16
53
151
18
6
23
201
39
18
51
158
26
22
26
234
Notes 113
Note 34 cont.
Translation exposure in the balance sheet
The impact of translation of equity is limited by the fact that
a large part of financing is in local currency.
The capital structure in each country is optimized based
on local legislation. As far as possible, gearing per currency
should generally aim to be the same as for the Group as a
whole to limit the impact of fluctuations in individual currencies. Treasury uses currency derivatives to achieve appropriate financing and to eliminate undesirable currency exposure.
The table ‘Net debt by currency’ on page 113 shows the
use of currency forward contracts in relation to financing in
major currencies. These forward contracts are used to neutralize the exposure arising between external debt and
internal requirements.
Financial credit risk
Financial risk management exposes ASSA ABLOY to certain
counterparty risks. Such exposure may arise from the investment of surplus cash as well as from investment in debt
instruments and derivative instruments.
ASSA ABLOY’s policy is to minimize the potential credit
risk relating to surplus cash by using cash flow from subsidiaries to repay the Group’s loans. This is primarily achieved
through cash pools put in place by Treasury. Around 85 percent (85) of the Group’s sales were settled through cash
pools in 2012. However, the Group can in the short term
invest surplus cash in banks to match borrowing and cash
flow.
Derivative instruments are allocated between banks
based on risk levels defined in the financial policy, in order to
limit counterparty risk. Treasury only enters into derivative
contracts with banks that have a good credit rating.
ISDA agreements (full netting of transactions in case of
counterparty default) have been entered into in the case of
interest rate and currency derivatives.
114 Notes
Commercial credit risk
The Group’s trade receivables are distributed across a large
number of customers who are spread globally. The concentration of credit risk associated with trade receivables is
therefore limited. The fair value of trade receivables corresponds to the carrying amount. Credit risks relating to operating activities are managed locally at company level and
monitored at division level.
Commodity risk
The Group is exposed to price risks relating to purchases of
certain commodities (primarily metals) used in production.
Forward contracts are not used to hedge commodity purchases.
Fair value of financial instruments
Derivative financial instruments such as currency and interest rate forwards are used to the extent necessary. The use of
derivative instruments is limited to reducing exposure to
financial risks.
The positive and negative fair values in the table ‘Outstanding derivative financial instruments’ on page 115 show
the fair values of outstanding instruments at year-end, based
on available fair values, and are the same as the carrying
amounts in the balance sheet. The nominal value represents
the gross value of the contracts.
For accounting purposes, financial instruments are classified into measurement categories in accordance with IAS
39. The table ‘Financial instruments’ on page 115 provides
an overview of financial assets and liabilities, measurement
category, and carrying amount and fair value per item.
When calculating fair value only general changes in market rates are taken into account and not credit spread movements for the individual company.
AssA ABLoY ANNuAL report 2012
Note 34 cont.
Outstanding derivative financial instruments at 31 December
31 December 2011
Instrument, seK M
31 December 2012
positive fair
value
Negative
fair value
Nominal
value
positive fair
value
Negative
fair value
Nominal
value
106
112
16
234
–126
–37
–16
–179
9,936
14,845
502
25,283
25
89
0
114
–34
–49
–4
–87
2,688
4,059
1,295
8,042
Foreign exchange forwards, funding
Interest rate swaps
Forward Rate Agreements
total
Financial instruments: carrying amounts and fair values by measurement category
2011
IAs 39
category*
Carrying
amount
Financial assets
Other shares and interests
Other financial assets
Trade receivables
Derivative instruments – hedge accounting
Derivative instruments – held for trading
Derivative instruments, total
3
1
1
5
2
Short-term investments
Cash and cash equivalents
2012
Fair value
Carrying
amount
Fair value
52
112
6,924
95
139
234
52
112
6,924
95
139
234
4
1,519
7,557
75
39
114
4
1,519
7,557
75
39
114
1
1
50
1,665
50
1,665
24
907
24
907
Financial liabilities
Long-term loans – hedge accounting
Long-term loans – not hedge accounting
Long-term loans, total
2
4
922
6,500
7,422
922
6,907
7,829
2,041
9,153
11,194
2,041
9,543
11,584
Convertible debentures
Short-term loans – hedge accounting
Short-term loans – not hedge accounting
Derivative instruments – held for trading
Trade payables
Deferred considerations
4
2
4
2
4
2
896
562
5,969
179
3,796
2,531
896
562
5,969
179
3,796
2,531
–
65
3,235
87
3,883
3,114
–
65
3,235
87
3,883
3,114
seK M
* Applicable IAS 39 categories:
1 = Loan receivables and other receivables.
2 = Financial instruments at fair value through profit or loss.
3 = Available-for-sale financial assets.
4 = Financial liabilities at amortized cost.
5 = Derivative hedge accounting.
Financial instruments: measured at fair value
2011
seK M
Financial assets
Derivative instruments
Other shares and interests
Financial liabilities
Long-term loans –
hedge accounting
Short-term loans –
hedge accounting
Derivative instruments
Deferred considerations¹
2012
Carrying
amounts
Quoted
prices
observable data
Nonobservable data
Carrying
amounts
Quoted
prices
observable data
Nonobservable data
139
–
–
–
139
–
–
–
39
–
–
–
39
–
–
–
917
–
917
–
2,041
–
2,041
–
562
179
2,531
–
–
–
562
179
–
–
–
2,531
65
87
3,114
–
–
–
65
87
–
–
–
3,114
1 Deferred considerations often depend on the earnings trend of an acquired business over a certain period. Measurement of the additional purchase consideration is
based on the management’s best judgment. Discounting to present value takes place in the case of significant amounts.
AssA ABLoY ANNuAL report 2012
Notes 115
Comments on five years in summary
2008
2008 was a record year for ASSA ABLOY, with increased sales
and profit due to focused efforts to increase demand mainly
on the commercial and institutional markets. The Group
increased its investments in product development and
more products than ever were launched on the market. The
economic situation weakened towards the end of the year
as the financial crisis had a negative impact on investments
in new construction.
2009
The financial crisis led to a downturn in both the housing
and commercial construction markets worldwide, which
was unprecedented in the Group’s history. ASSA ABLOY was
nevertheless able to maintain good profitability and
strengthen its market position even under very trying market conditions. Efficient product development with a strong
customer focus, a stronger market presence and continued
cost cutting contributed substantially to the good performance. Cash flow and working capital utilization showed
positive development during the year.
Cost adjustments in the form of staff redundancies and
the relocation of components and basic products to lowcost countries continued at a high rate during the year. A
third restructuring program was launched towards the end
of the year. The new products launched were well received
by customers and strengthened ASSA ABLOY’s market-leading position in total door opening solutions.
Eight acquisitions were made during the year, consolidating the Group’s position in industrial and automatic doors
and increasing annual sales by around SEK 1,200 M.
2010
Organic growth was 3 percent, with Asia and South America
reporting strong growth and North America showing good
and increasing growth. Europe began the year well but
growth gradually slowed. Continued investments in the
marketing organization and the launch of new products
strengthened the Group’s market leadership. Acquired
growth was 8 percent.
Operating income rose 12 percent and cash flow developed well during the year.
A total of 13 acquisitions were completed during the
year, including Pan Pan (China), King Door Closers (South
Korea), ActivIdentity (USA) and Paddock (UK). These acquisitions increase annual sales by SEK 2,880 M. An agreement
was signed to acquire a majority shareholding in Cardo, a
leading Swedish industrial door company.
116 Comments on five years in summary
2011
2011 was a successful year for ASSA ABLOY despite challenging market conditions and some slowdown in the second
half of the year on mature markets. Organic growth was 4
percent, driven by continued investments in new products
and the marketing organization. The year saw high acquisition activity in general, with 18 completed acquisitions,
increasing sales by 17 percent. The acquisition of Crawford
was the Group’s largest ever structural transaction.
The year also saw two major disposals of acquired businesses, which were not considered to be a good fit with
ASSA ABLOY in the long term.
A new restructuring program was launched during the
year to further increase the Group’s cost-efficiency. The previous programs have proved to be very successful, resulting
in major savings and further increased efficiency in the production units.
Continued streamlining, a strengthened market position
and the launch of innovative new products consolidated
ASSA ABLOY’s leading position and the Group is well positioned for long-term sustainable growth.
Operating income excluding restructuring costs
increased 10 percent and cash flow remained strong. Earnings per share after full dilution excluding items affecting
comparability increased 13 percent.
2012
Organic growth was 2 percent, despite the continued weak
market conditions globally. The share of sales on emerging
markets continued to increase to over 25 percent of total
sales. The major investments in product development in
recent years have been fruitful. This can be seen from the
share of products launched in the past three years, which
has increased considerably and currently accounts for
around 25 percent of total sales.
Operating income excluding items affecting comparability increased by 13 percent during the year and operating
cash flow remained very strong. Earnings per share after full
dilution, excluding items affecting comparability, increased
by 13 percent, compared with 2011.
A total of 13 acquisitions were completed during the
year, which mainly strengthened the position in entrance
automation for high-performance doors and docking systems. These acquisitions increase annual sales by a total of
around SEK 4,500 M and provide important products and
technology.
Activities in the ongoing restructuring programs
remained at a high level during the year. The transfer of production to low-cost countries continued, combined with
conversion of plants from production to assembly and
installation. More than 6,700 employees have left the Group,
as a result of these activities since the programs began in
2006.
In summary, it may be stated that ASSA ABLOY continued
gradually to expand and consolidate its leading market position during the year, and showed good earnings capacity
under the prevailing economic circumstances.
assa aBLoy annuaL report 2012
Five years in summary
2008
2009
sales and income
Sales
Organic growth, %
Acquired growth, %
Operating income before depreciation/amortization (EBITDA)
Depreciation
Operating income (EBIT)
Income before tax (EBT)
Net income
amounts in seK m unless stated otherwise
34,8294
0
4
6,4471
–921
5,5261
3,499
2,438
34,9634
–12
3
6,4261
–1,014
5,4131
3,740
2,659
36,823
3
8
7,041
–995
6,046
5,366
4,080
41,786
4
17
7,6461
–1,022
6,6241
4,559
3,869
46,619
2
9
8,536
–1,034
7,501
6,731
5,125
Cash flow
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash flow
Operating cash flow3
4,369
–2,648
–1,311
410
4,769
5,924
–1,835
–3,741
348
6,843
5,729
–4,027
–2,597
–895
6,285
5,347
–7,357
2,326
316
6,080
5,990
–4,738
–1,564
–312
7,044
Capital employed and financing
Capital employed
– of which goodwill
– of which other intangible and tangible assets
– of which investments in associates
Assets and liabilities of disposal group classified as held for sale
Net debt
Non-controlling interest
Shareholders' equity, excluding non-controlling interest
32,850
20,669
7,945
38
–
14,013
163
18,674
30,382
20,333
7,541
39
–
11,048
162
19,172
31,385
22,279
8,336
37
–
10,564
169
20,652
37,942
27,014
10,126
1,211
–
14,207
208
23,527
41,073
28,932
11,093
1,519
385
14,732
183
26,543
7.18
9.221
54.76
3.60
137.80
11.07
10.89
58.64
4.00
189.50
10.45
12.301
65.54
4.50
172.60
13.85
13.84
71.82
5,102
242.90
19.1
16.4
14.6
18.5
18.31
15.91
10.9
13.6
Data per share, seK
Earnings per share after tax and before dilution
Earnings per share after tax and dilution (EPS)
Shareholders' equity per share after dilution
Dividend per share
Price of Series B share at year-end
6.60
9.211
55.91
3.60
88.50
Key data
Operating margin (EBITDA), %
Operating margin (EBIT), %
Profit margin (EBT), %
Return on capital employed, %
Return on capital employed excluding items
affecting comparability, %
Return on shareholders' equity, %
Equity ratio, %
Net debt/equity ratio, times
Interest coverage ratio, times
Interest on convertible debentures net after tax
Number of shares, thousands
Number of shares after dilution, thousands
Average number of employees
18.51,4
15.91,4
10.0
13.3
17.2
12.8
41.9
0.74
5.7
81.0
365,918
380,713
32,723
2010
18.41,4
15.51,4
10.7
13.1
16.2
12.7
45.4
0.57
7.2
31.9
365,918
372,931
29,375
2011
18.5
19.1
45.9
0.51
10.1
9.9
366,177
372,736
37,279
17.4
16.7
42.9
0.60
8.8
10.5
368,250
371,213
41,070
2012
18.3
16.1
14.4
18.2
18.2
20.1
44.6
0.55
10.4
3.9
370,859
370,859
42,762
¹ Excluding items affecting comparability in 2008, 2009 and 2011.
² For 2012, as proposed by the Board.
³ Excluding restructuring payments
4 Reclassification has been made for 2008 and 2009. Reclassification has not been made for 2007. The Group has made a reclassification that affects direct distribution
costs and depreciation on capitalized product development expenditure. The reason is to give a true and fair view of the allocation between direct and indirect costs
as well as for product development expenses. In order to maintain comparability, the financial statements for 2008 and 2009 have been adjusted. The reclassification
involves the transfer of direct distribution costs from selling expenses and administrative expenses, and where appropriate from sales, to cost of goods sold. In addition,
depreciation on product development has been moved from cost of goods sold to selling expenses and administrative expenses. Both these adjustments affect gross
income. Operating income is not affected.
RETURN ON CAPITAL EMPLOYED¹
OPERATING MARGIN (EBIT)¹
%
%
20
20
15
15
10
10
5
5
AVERAGE NUMBER OF EMPLOYEES
Number
45,000
37,500
30,000
22,500
15,000
7,500
1 Excluding items affecting compara-
bility 2008, 2009 and 2011.
assa aBLoy annuaL report 2012
0
08
09
10
11
12
0
08
09
10
11
12
0
08
09
10
11
12
five years in summary 117
Quarterly information
Q1
2012
Q2
2012
Q3
2012
Q4
2012
full
year
2012
41,786
4%
10,839
3%
11,997
3%
11,545
1%
12,239
0%
46,619
2%
4,469
38.0%
16,287
39.0%
4,307
39.7%
4,687
39.1%
4,603
39.9%
4,832 18,429
39.5%
39.5%
2,002
18.5%
–251
2,151
18.3%
–270
7,646
18.3%
–1,022
1,929
17.8%
–274
2,157
18.0%
–272
2,183
18.9%
–251
2,268
18.5%
–238
8,536
18.3%
–1,034
1,615
15.4%
–
1,615
–156
1,460
13.9%
–321
1,751
16.2%
–
1,751
–169
1,582
14.6%
–348
1,881
16.0%
–1,420
461
–158
303
2.6%
–158
6,624
15.9%
–1,420
5,204
–645
4,559
10.9%
–1,095
1,655
15.3%
–
1,655
–173
1,481
13.7%
–341
1,885
15.7%
–
1,885
–208
1,677
14.0%
–385
1,932
16.7%
–
1,932
–184
1,748
15.1%
–452
2,030
16.6%
–
2,030
–205
1,825
14.9%
–439
7,501
16.1%
–
7,501
–770
6,731
14.4%
–1,617
–4
943
17
1,156
419
1,653
–27
118
404
3,869
–
1,140
4
1,295
7
1,303
–
1,386
11
5,125
941
2
1,143
13
1,644
8
114
4
3,843
26
1,138
2
1,293
2
1,294
9
1,386
0
5,111
14
operatinG CasH fLoW
Q1
2011
Q2
2011
Q3
2011
Q4
2011
full
year
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
full
year
2012
Operating income (EBIT)
Restructuring costs
Depreciation
Net capital expenditure
Change in working capital
Interest paid and received
Non-cash items
operating cashflow 2
Operating cash flow / Income before tax
1,377
–
253
–161
–963
–74
16
448
0.37
1,615
–
248
–223
–181
–152
4
1,311
0.90
1,751
–
251
–216
–125
–121
–12
1,528
0.97
461
1,420
270
–245
1,031
–135
–8
2,794
1.622
5,204
1,420
1,022
–846
–238
–482
0
6,080
1.023
1,655
–
274
–183
–1,155
–482
4
483
0.33
1,885
–
272
–165
–300
–180
–77
1,435
0.86
1,932
–
251
–265
266
–100
–116
1,967
1.13
2,030
–
238
57
1,112
–154
–123
3,160
1.73
7,501
–
1,034
–557
–77
–546
–312
7,044
1.05
CHanGe in net DeBt
Q1
2011
Q2
2011
Q3
2011
Q4
2011
full
year
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
full
year
2012
10,564
–448
48
235
11,606
–
–
–
21,586
–1,311
67
363
996
1,472
17
–
23,403
–1,528
75
190
–6,415
–
–
–308
16,159
–2,794
183
418
324
–
–
–
10,564
–6,080
373
1,206
6,511
1,472
17
–308
14,207
–483
92
360
1,489
–
–
–
15,749
–1,435
86
341
1,221
1,655
38
–450
18,003
–1,967
118
173
452
28
–
–
16,509
–3,160
202
239
1,019
–
–
–
14,207
–7,044
498
1,113
4,181
1,683
38
–450
tHe Group in summary
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Sales
Organic growth
Gross income excluding items
affecting comparability
Gross income/ Sales
operating income before depreciation
(eBitDa) excluding restructuring costs
Operating margin (EBITDA)
Depreciation
operating income (eBit) excluding
items affecting comparability
Operating margin (EBIT)
Items affecting comparability 1
operating income (eBit)
Net financial items
income before tax (eBt)
Profit margin (EBT)
Tax
Net income of disposal group classified as
held for sale and discontinued operations
net income
8,699
6%
10,502
5%
10,841
2%
11,744
4%
3,560
40.9%
4,050
38.6%
4,208
38.8%
1,630
18.7%
–253
1,863
17.7%
–248
1,377
15.8%
–
1,377
–162
1,215
14.0%
–268
amounts in seK m unless stated otherwise
allocation of net income:
Parent company shareholders’
Non-controlling interests
Net debt at start of period
Operating cash flow
Restructuring payments
Tax paid
Acquisitions/Disposals
Dividend
Purchase of treasury shares
Share issue
Cash and cash equivalents of disposal
group classified as held for sale
Exchange rate differences and other
net debt at end of period
Net debt / equity ratio
net DeBt
Long-term interest-bearing receivables
Short-term interest-bearing
investments including derivatives
Cash and bank balances
Pension provisions
Long-term interest-bearing liabilities
Short-term interest-bearing liabilities
including derivatives
total
118 QuarterLy information
–
–
–
–
–419
213
742
–84
21,586 23,403 16,159 14,207
1.03
1.10
0.69
0.60
full
year
2011
–
–
324
59
7
390
452
83
474
–356
–84
118
14,207 15,749 18,003 16,509 14,732 14,732
0.60
0.64
0.72
0.66
0.55
0.55
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
–64
–58
–49
–44
–32
–33
–30
–29
–378
–1,298
1,179
7,479
–315
–1,299
1,214
6,582
–488
–1,582
1,233
6,535
–284
–1,665
1,173
7,422
–202
–1,208
1,215
8,153
–256
–1,143
1,237
8,726
–211
–971
1,214
10,028
–138
–907
1,224
11,194
14,668 17,279 10,510
7,605
21,586 23,403 16,159 14,207
7,824
9,472
6,479
3,388
15,749 18,003 16,509 14,732
assa aBLoy annuaL report 2012
CapitaL empLoyeD anD finanCinG
Capital employed
– of which goodwill
– of which other intangible and
tangible assets
– of which investments in associates
Assets and liabilities of disposal groups
held for sale
Net debt
Non-controlling interests
Shareholders' equity, excluding
non-controlling interests
Data per sHare, seK
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
36,267
25,343
38,232
25,663
39,667
27,138
37,942
27,014
40,193
27,824
42,603
29,924
41,285
28,635
41,073
28,932
8,496
1,111
10,129
1,121
10,043
1,234
10,126
1,211
10,436
1,206
10,599
1,231
10,917
1,444
11,093
1,519
6,299
21,586
198
6,379
23,403
301
–
16,159
201
–
14,207
208
–
15,749
214
396
18,003
211
382
16,509
183
385
14,732
183
20,783
20,907
23,308
23,527
24,231
24,785
24,975
26,543
Q1
2011
Q2
2011
Q3
2011
Q4
2011
full
year
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
full
year
2012
2.57
2.53
3.08
3.07
4.40
4.42
0.40
0.30
10.45
10.33
3.09
3.10
3.51
3.51
3.50
3.49
3.74
3.74
13.85
13.84
Earnings per share after tax
and before dilution
Earnings per share after tax and dilution
Earnings per share after tax and dilution
excluding items affecting comparability 1
Shareholders' equity per share
after dilution
2.52
3.05
3.30
3.43
12.30
3.10
3.51
3.49
3.73
13.84
58.34
59.35
65.91
65.79
65.54
68.24
67.24
67.39
71.61
71.82
numBer of sHares
mar
2011
Jun
2011
sep
2011
Dec
2011
full
year
2011
mar
2012
Jun
2012
sep
2012
Dec
2012
full
year
2012
Number of shares before dilution,
thousands
Weighted average number of shares
after dilution, thousands
367,732 368,250 368,250 368,250 368,250 368,250 370,859 370,859 370,859 370,859
373,038 373,000 372,946 372,627 372,627 368,057 368,352 369,155 369,592 369,592
1 Items affecting comparability consist of restructuring costs and net income from discontinued operations in 2011.
2 Excluding restructuring payments.
3 Operating income before tax excluding items affecting comparability.
Definitions of key data
organic growth
Change in sales for comparable units after adjustments
for acquisitions and exchange rate effects.
operating margin (eBitDa)
Operating income before depreciation and amortization
as a percentage of sales.
operating margin (eBit)
Operating income as a percentage of sales.
profit margin (eBt)
Income before tax as a percentage of sales.
operating cash flow
See the table on operating cash flow for detailed information.
net capital expenditure
Investments in fixed assets less disposals of fixed assets.
Depreciation
Depreciation/amortization of tangible and intangible assets.
net debt
Interest-bearing liabilities less interest-bearing assets.
Capital employed
Total assets less interest-bearing assets and non-interestbearing liabilities including deferred tax liability.
assa aBLoy annuaL report 2012
equity ratio
Shareholders’ equity as a percentage of total assets.
interest coverage ratio
Income before tax plus net interest divided by net interest.
return on shareholders’ equity
Net income excluding non-controlling interests, plus interest
expenses after tax for convertible debentures, as a
percentage of average shareholders’ equity (excluding
non-controlling interests) after dilution.
return on capital employed
Income before tax plus net interest as a percentage of average
capital employed.
earnings per share after tax and before dilution
Net income excluding non-controlling interests divided by
weighted average number of shares before dilution.
earnings per share after tax and dilution
Net income excluding non-controlling interests, plus interest expenses after tax for convertible debentures, divided by
weighted average number of shares after dilution.
shareholders’ equity per share after dilution
Equity excluding non-controlling interests, plus convertible
debentures, divided by number of shares after dilution.
QuarterLy information 119
Proposed distribution of earnings
The following earnings are at the disposal of the Annual General Meeting:
Share premium reserve: SEK 788 M
Retained earnings brought forward: SEK 2,947 M
Net income for the year: SEK 3,496 M
TOTAL: SEK 7,231 M
The Board of Directors and the President and CEO propose that a dividend of SEK 5.10 per share, a total of SEK 1,888 M,
be distributed to shareholders and that the remainder, SEK 5,343 M, be carried forward to the new financial year.
The dividend amount is calculated on the number of outstanding shares as per 6 February 2013.
No dividend is payable on ASSA ABLOY AB’s holding of treasury shares, the exact number of which is determined
on the record date for payment of dividend. ASSA ABLOY AB held 600,000 treasury shares as at 6 February 2013.
Tuesday, 30 April 2013 has been proposed as the record date for dividends. If the Annual General Meeting confirms this
proposal, dividends are expected to be distributed by Euroclear Sweden AB on Monday, 6 May 2013.
The Board of Directors and the President and CEO declare that the consolidated accounts have been prepared in accordance
with International Financial Reporting Standards, IFRS, as adopted by the EU and give a true and fair view of the Group’s
financial position and results. The Parent company’s annual accounts have been prepared in accordance with generally
accepted accounting principles in Sweden and give a true and fair view of the Parent company’s financial
position and results.
The Report of the Board of Directors for the Group and the Parent company gives a true and fair view of the development of
the Group’s and the Parent company’s business operations, financial position and results, and describes material risks and
uncertainties to which the Parent company and the other companies in the Group are exposed.
Stockholm, 6 February 2013
Lars Renström
Carl Douglas
Chairman of the Board
Vice Chairman of the Board
Birgitta Klasén
Eva Lindqvist
Board member
President and CEO
Sven-Christer Nilsson
Jan Svensson
Ulrik Svensson
Board member
Board member
Johan Molin
Board member
Seppo Liimatainen
Board member
Mats Persson
Employee representative
Employee representative
Our audit report was issued on 6 February 2013
PricewaterhouseCoopers AB
Peter Nyllinge
Authorized Public Accountant
120 proposeD DistriBution of earninGs
assa aBLoy annuaL report 2012
Auditor’s report
to the annual meeting
of the shareholders of assa aBLoy aB,
corporate identity number 556059-3575
report on the annual accounts and consolidated accounts
We have audited the annual accounts and consolidated
accounts of ASSA ABLOY AB for the year 2012. The annual
accounts and consolidated accounts of the company are
included in the printed version of this document on pages
63–120.
Responsibilities of the Board of Directors and the President and
CEO for the annual accounts and consolidated accounts
The Board of Directors and the President and CEO are responsible for the preparation and fair presentation of these annual
accounts and consolidated accounts in accordance with
International Financial Reporting Standards , as adopted by
the EU, and the Annual Accounts Act, and for such internal
control as the Board of Directors and the President and CEO
determine is necessary to enable the preparation of annual
accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these annual
accounts and consolidated accounts based on our audit. We
conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply
with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the annual
accounts and consolidated accounts are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the annual
accounts and consolidated accounts. The procedures
selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the
annual accounts and consolidated accounts, whether due to
fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the company’s preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board
of Directors and the President and CEO, as well as evaluating
the overall presentation of the annual accounts and consolidated accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinions
In our opinion, the annual accounts have been prepared in
accordance with the Annual Accounts Act and present fairly,
in all material respects, the financial position of the parent
company as of 31 December 2012 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated
accounts have been prepared in accordance with the Annual
Accounts Act and present fairly, in all material respects, the
financial position of the group as of 31 December 2012 and
of their financial performance and cash flows for the year
then ended in accordance with International Financial
assa aBLoy annuaL report 2012
Reporting Standards, as adopted by the EU, and the Annual
Accounts Act. A corporate governance statement has been
prepared. The statutory administration report and the corporate governance statement are consistent with the other
parts of the annual accounts and consolidated accounts.
We therefore recommend that the annual meeting of
shareholders adopt the income statement and balance
sheet for the parent company and the group.
report on other legal and regulatory requirements
In addition to our audit of the annual accounts and consolidated accounts, we have examined the proposed appropriations of the company’s profit or loss and the administration
of the Board of Directors and the President and CEO of ASSA
ABLOY AB for the year 2012.
Responsibilities of the Board of Directors and
the President and CEO
The Board of Directors is responsible for the proposal for
appropriations of the company’s profit or loss, and the Board
of Directors and the President and CEO are responsible for
administration under the Companies Act.
Auditor’s responsibility
Our responsibility is to express an opinion with reasonable
assurance on the proposed appropriations of the company’s
profit or loss and on the administration based on our audit.
We conducted the audit in accordance with generally
accepted auditing standards in Sweden.
As a basis for our opinion on the Board of Directors’ proposed appropriations of the company’s profit or loss, we
examined the Board of Directors’ reasoned statement and a
selection of supporting evidence in order to be able to
assess whether the proposal is in accordance with the Companies Act.
As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and
consolidated accounts, we examined significant decisions,
actions taken and circumstances of the company in order to
determine whether any member of the Board of Directors or
the President and CEO is liable to the company. We also
examined whether any member of the Board of Directors or
the President and CEO has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or
the Articles of Association.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinions.
Opinions
We recommend to the annual meeting of shareholders that
the profit be appropriated in accordance with the proposal
in the statutory administration report and that the members of the Board of Directors and the President and CEO be
discharged from liability for the financial year.
Stockholm, 6 February 2013
PricewaterhouseCoopers AB
Peter Nyllinge
Authorized Public Accountant
auDit report 121
The ASSA ABLOY share
share price trend in 2012
2012 was a good year on NASDAQ OMX Stockholm, with a
12 percent rise in the index. It was also a very good year for
ASSA ABLOY’s Series B share, whose value increased by fully
41 percent from SEK 172.60 to SEK 242.90. Market capitalization amounted to SEK 90,082 M (63,560) at year-end.
The lowest closing price during the year was SEK 171.70
recorded on 4 January, while the highest closing price was
SEK 244.80 recorded on 27 December.
be traded on markets other than the stock exchanges where
it is listed, trading has become more fragmented, while the
total turnover of many shares has increased. The ASSA
ABLOY share is now not only traded on NASDAQ OMX Stockholm, but was traded on more than ten different markets in
2012, such as Boat, Bats Chi-X, Burgundy and Turquoise.
Increasingly fragmented trading means that an ever-increasing share of trading in most Swedish shares takes place on
markets other than NASDAQ OMX Stockholm. Trading on
NASDAQ OMX Stockholm accounted for 36 percent of turnover of the share in 2012, compared with 43 percent in
2011, 51 percent in 2010, and 65 percent in 2009.
Listing and trading
ASSA ABLOY’s Series B share has been listed on NASDAQ
OMX Stockholm, Large Cap since 8 November 1994. Total
turnover of the Series B share on all markets amounted to
746 million (918) shares in 2012, equivalent to a turnover
rate of 201 percent (249). Turnover of the series B share on
NASDAQ OMX Stockholm amounted to 270 million (391)
shares, equivalent to a turnover rate of 73 percent (106).
The average turnover rate was 74 percent (96) on NASDAQ
OMX Stockholm, and 77 percent (101) on the Large Cap list.
The implementation of the EU’s Markets in Financial
Instruments Directive (MiFID) in late 2007 has changed the
structure of equity trading in Europe. Now that a share can
ownership structure
The number of shareholders at year-end was 17,591
(18,697) and the ten largest shareholders accounted for
around 38 percent (38) of the share capital and 58 percent
(58) of the votes. Shareholders with more than 50,000
shares, a total of 361 shareholders, accounted for 95 percent
(97) of the share capital and 98 percent (97) of the votes.
Investors outside Sweden accounted for around 68 percent (64) of the share capital and 46 percent (44) of the
votes, and were mainly in the USA and the United Kingdom.
SHARE PRICE TREND AND TURNOVER 2003–2012
DIVIDEND PER SHARE 2003–2012
SEK
No. of shares traded, thousands
300
200,000
180,000
240
180
160,000
SEK
140,000
6
120,000
5
100,000
4
80,000
120
3
60,000
2
40,000
60
1
20,000
0
2003
2004
Series B share
2005
2006
2007
OMX Stockholm
2008
2009
2010
2011
2012
0
0
03 04 05 06 07 08 09 10 11 12
No. of shares traded, thousands (incl. after hours)
2012 proposed dividend
Data per share
seK/share 1
Earnings after tax and dilution ²
Dividend
Dividend yield, % 5
Dividend, % 2, 6
Share price at year-end
Highest share price
Lowest share price
Equity²
Number of shares, thousands 7
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
9.02
9.213
9.223
10.89
12.303
13.84
3.31
6.33
6.97
7.993
1.25
2.60
3.25
3.25
3.60
3.60
3.60
4.00
4.50
5.104
1.5
2.3
2.6
2.2
2.8
4.1
2.6
2.1
2.6
2.1
33.9
42.0
47.6
64.0
40.5
52.3
47.8
37.0
36.6
36.8
85.50 113.50 125.00 149.00 129.75
88.50 137.80 189.50 172.60 242.90
110.00 113.50 126.00 151.00 164.00 126.00 142.50 199.20 194.90 244.80
67.00
84.00
89.25 109.00 124.50
69.75
71.50 126.60 133.50 171.70
31.23
34.74
42.85
39.13
46.76
55.91
54.76
58.64
65.54
71.82
370,935 378,718 378,718 376,033 380,713 380,713 372,931 372,736 371,213 370,859
1 Adjustments made for new issues.
5 Dividend as percentage of share price at year-end.
2 2003 has not been adjusted for IFRS.
6 Dividend as percentage of adjusted earnings in line with dividend policy.
3 Excluding items affecting comparability 2006, 2008, 2009 and 2011.
7 After full dilution.
4 Proposed dividend by the Board.
122 tHe assa aBLoy sHare
assa aBLoy annuaL report 2012
ASSA ABLOY’s ten largest shareholders
Based on the share register at 31 December 2012.
shareholders
Investment AB Latour
Melker Schörling AB
Capital Group fonder
BlackRock fonder
Swedbank Robur fonder
Norges Bank
SHB fonder
AMF Försäkring & Fonder
Harris Associates fonder
SEB fonder & SEB Trygg Liv
Other shareholders
total number
series a shares
series B shares
total number
of shares
share capital, %
votes, %
13,865,243
5,310,080
21,300,000
9,162,136
31,693,500
18,730,437
10,135,991
9,402,027
5,542,930
5,046,500
4,894,400
4,622,692
231,152,842
351,683,455
35,165,243
14,472,216
31,693,500
18,730,437
10,135,991
9,402,027
5,542,930
5,046,500
4,894,400
4,622,692
231,152,842
370,858,778
9.5
3.9
8.5
5.1
2.7
2.5
1.5
1.4
1.3
1.2
62.3
100.0
29.5
11.5
5.8
3.4
1.9
1.7
1.0
0.9
0.9
0.9
42.5
100.0
19,175,323
Source: SIS Ägarservice AB and Euroclear Sweden AB.
OWNERSHIP STRUCTURE (SHARE CAPITAL)
OWNERSHIP STRUCTURE (VOTES)
Investment AB Latour, 9.5%
Capital Group Funds, 8.5%
BlackRock Funds, 5.1%
Melker Schörling AB, 3.9%
Swedbank Robur Funds, 2.7%
Norges Bank, 2.5%
SHB Funds, 1.5%
AMF Insurance & Funds, 1.4%
Harris Associates Funds, 1.3%
SEB fonder & SEB Trygg Liv, 1.2%
Other shareholders, 62.3%
Share capital
The share capital amounted to SEK 370,858,778 at year-end,
distributed among a total of 370,858,778 shares, comprising
19,175,323 Series A shares and 351,683,455 Series B shares.
All shares have a par value of SEK 1.00 and give shareholders
equal rights to the company’s assets and earnings. Each Series
A share carries ten votes and each Series B share one vote.
year
series a
shares
1989
1994
1994
1994
1996
1996
1997
1998
1999
1999
1999
1999
1999
2000
2000
2000
2001
2002
2002
2010
2011
2012
2012
assa aBLoy annuaL report 2012
Investment AB Latour, 29.5%
Melker Schörling AB, 11.5%
Capital Group Funds, 5.8%
BlackRock Funds, 3.4%
Swedbank Robur Funds, 1.9%
Norges Bank, 1.7%
SHB fonder, 1.0%
AMF Insurance & Funds, 0.9%
Harris Associates Funds 0.9%
SEB fonder & SEB Trygg Liv, 0.9%
Other shareholders, 42.5%
transaction
series C
shares
series B
shares
share
capital, seK
2,000,000
2,000,000
2,000,000
50,417,555
60,501,066
60,501,066
66,541,706
66,885,571
67,179,562
53,592,110
64,310,532
64,310,532
70,732,118
71,075,983
71,369,974
268,718,248
295,564,487
295,970,830
301,598,383
313,512,880
333,277,912
334,576,089
344,576,089
346,742,711
347,001,871
349,075,055
349,075,055
351,683,455
351,683,455
285,479,896
314,002,299
314,408,642
320,036,195
332,688,203
352,453,235
353,751,412
363,751,412
365,918,034
366,177,194
368,250,378
368,250,378
370,858,778
370,858,778
20,000
Split 100:1
Bonus issue
Non-cash issue
New share issue
Conversion of Series C shares into Series A shares
New share issue
Converted debentures
Converted debentures before split
Bonus issue
Split 4:1
New share issue
Converted debentures after split and new issues
Converted debentures
New share issue
Non-cash issue
Converted debentures
New share issue
Converted debentures
Converted debentures
Converted debentures
Converted debentures
Converted debentures
Number of shares after dilution
1,746,005
2,095,206
3,809,466
4,190,412
4,190,412
4,190,412
16,761,648
18,437,812
18,437,812
18,437,812
19,175,323
19,175,323
19,175,323
19,175,323
19,175,323
19,175,323
19,175,323
19,175,323
19,175,323
19,175,323
1,428,550
1,714,260
tHe assa aBLoy sHare 123
The ASSA ABLOY share
share capital and voting rights
The share capital amounted to SEK 370,858,778 at year-end,
distributed among a total of 370,858,778 shares, comprising
19,175,323 Series A shares and 351,683,455 Series B shares.
All shares have a par value of SEK 1.00 and give shareholders
equal rights to the company’s assets and earnings. The total
number of votes amounts to 543,436,685. Each Series A
share carries ten votes and each Series B share one vote.
Repurchase of own shares
Since 2010 the Board has requested and received a mandate
from the Annual General Meeting to repurchase and transfer
ASSA ABLOY shares. The aim has been to be able to adapt the
company’s capital structure, and thereby contributing to
increased shareholder value, to be able to exploit acquisition opportunities by fully or partly financing company
acquisitions with its own shares, and to secure the company’s long-term incentive programs. The 2012 Annual General Meeting authorized the Board to repurchase, during the
period until the next Annual General Meeting, a maximum
number of Series B shares so that after each repurchase
ASSA ABLOY holds a maximum 10 percent of the total number of shares in the company.
ASSA ABLOY holds a total of 600,000 (400,000) Series B
shares after repurchase, to secure the company’s obligations
in connection with the company’s long-term incentive programs (LTI). These shares account for 0.2 percent (0.1) of the
share capital and each share has a par value of SEK 1.00. The
purchase consideration amounted to SEK 103 M (65).
Of the above shares, 200,000 (100,000) Series B shares were
repurchased in 2012. These account for 0.05 percent (0.03) of
the share capital and each share has a par value of SEK 1.00. The
purchase consideration amounted to SEK 38 M (17).
Dividend and dividend policy
The objective of the dividend policy is that, in the long term,
the dividend should be equivalent to 33–50 percent of
income after standard tax, but always taking into account
ASSA ABLOY’s long-term financing requirements.
The Board of Directors and the Precident and CEO propose that a dividend of SEK 5.10 per share (4.50) be paid to
shareholders for the 2012 financial year, equivalent to a dividend yield on the Series B share of 2.10 percent (2.6).
other equity-based incentive programs
ASSA ABLOY has issued a number of convertible debentures
to employees in the Group.
In 2007 it was decided to launch an incentive program,
Incentive 2007. The program matured in 2012. Half of the
convertible debentures relating to Incentive 2007 were converted. Conversion was managed by an external party and
took place in 2012. A total of 2,608,400 Series B shares were
issued in connection with Incentive 2007.
At year-end 2012, there were no outstanding convertible
debentures issued to employees in the Group.
For long-term incentive programs see Note 33.
Analysts who cover ASSA ABLOY
124 tHe assa aBLoy sHare
Company
name
telephone
email
ABG Sundal Collier
Bank of America Merrill Lynch
Barclays Capital
Carnegie
Carnegie
Cheuvreux
Credit Suisse
Danske Bank
Deutsche Bank
DnB NOR
Dresdner Kleinwort
Enskilda Securities
Erik Penser
Exane BNP Paribas
Goldman Sachs
Handelsbanken Capital Markets
Handelsbanken Capital Markets
ICAP Securities Ltd
J.P. Morgan
Nomura
Nomura
Pareto Securities
Redburn Partners
Sanford C. Bernstein
Société Générale
Swedbank Markets
UBS
UBS
UniCredit Bank AG
Anders Idborg
Ben Maslen
Allan Smylie
Kenneth Toll Johansson
Agnieszka Vilela
Andreas Dahl
Andre Kukhnin
Oscar Stjerngren
Johan Wettergren
Lars Brorson
Colin Grant
Stefan Andersson
Max Frydén
Jonathan Mounsey
Aaron Ibbotson
Peder Frölén
Jon Hyltner
Nick Wilson
Andreas Willi
Klas Bergelind
Daniel Cunliffe
David Jacobsson
James Moore
Martin Prozesky
Sébastien Grunter
Niclas Höglund
Guillermo Peigneux
Fredric Stahl
Alasdair Leslie
+46 8 566 286 74
+44 207 996 4783
+44 207 773 4873
+46 8 5886 8911
+46 8 5886 8586
+46 8 723 51 63
+44 207 888 0350
+46 8 5688 0606
+46 8 463 55 18
+44 207 621 6149
+44 207 475 9161
+46 8 522 296 57
+46 8 463 8463
+44 207 039 9529
+44 207 774 6661
+46 8 701 1251
+46 8 701 1275
+44 207 532 4683
+44 207 134 4569
+44 207 102 5097
+44 207 102 5096
+46 8 402 5272
+44 207 000 2135
+44 207 170 0577
+33 1 4213 4722
+46 8 5859 1800
+46 8 453 7308
+46 8 493 7309
+44 207 826 7961
anders.idborg@abgsc.se
ben.maslen@baml.com
allan.smylie@barcap.com
kentol@carnegie.se
agnvil@carnegie.se
adahl@cheuvreux.com
andre.kukhnin@credit-suisse.com
oscar.stjerngren@danskebank.se
johan.wettergren@db.com
lars.brorson@dnbnor.no
colin.grant@dkib.com
stefan.andersson@enskilda.se
max.fryden@penser.se
jonathan.mounsey@exanebnpparibas.com
aaron.ibbotson@gs.com
pefr15@handelsbanken.se
johy01@handelsbanken.se
nicholas.wilson@icap.com
andreas.p.willi@jpmorgan.com
klas.bergelind@nomura.com
daniel.cunliffe@nomura.com
david.jacobsson@paretoohman.se
james.moore@redburn.com
martin.prozesky@bernstein.com
sebastien.grunter@sgcib.com
niclas.hoglund@swedbank.se
guillermo.peigneux-lojo@ubs.com
fredric.stahl@ubs.com
alasdair.leslie@unicreditgroup.de
assa aBLoy annuaL report 2012
Information for shareholders
Annual General Meeting
The Annual General Meeting of ASSA ABLOY AB will be held
at Moderna Museet (Museum of Modern Art), Skeppsholmen, Stockholm at 15.00 on Thursday, 25 April 2013.
Shareholders wishing to attend the Annual General Meeting
should:
• Be registered in the share register kept by Euroclear
Sweden AB by Friday, 19 April 2013.
• Notify ASSA ABLOY AB of their intention to attend by
Friday, 19 April 2013.
Registration in the share register
In addition to notification of intention to attend, shareholders whose shares are nominee registered must be temporarily registered in their own name in the share register (so
called voting right registration) to be able to attend the
Annual General Meeting. In order for this registration to be
completed by Friday, 19 April 2013, the shareholder should
contact his/her bank or nominee well in advance of this
date.
Notification of intention to attend
• Website www.assaabloy.com
• Address
ASSA ABLOY AB, Annual General Meeting
Box 7842, SE-103 98 Stockholm, Sweden
• Telephone +46 (0)8 506 485 14
The notification should state:
• Name
• Personal or corporate identity number
• Address and daytime telephone number
• Number of shares
• Any assistants attending
A shareholder who is to be represented by a proxy should
submit the proxy in connection with the notification of intention to attend the Annual General Meeting. Proxy forms
are available at: www.assaabloy.com.
Nomination Committee
The Nomination Committee has the task of preparing resolutions on the election of the Chairman, the Vice Chairman
and other members of the Board of Directors, the appointment of the auditor, the election of the Chairman of the
Annual General Meeting, and fees and associated matters.
The Nomination Committee prior to the 2013 Annual
General Meeting comprises Gustaf Douglas (Investment AB
Latour), Mikael Ekdahl (Melker Schörling AB), Liselott Ledin
(Alecta), Marianne Nilsson (Swedbank Robur Fonder) and
Per-Erik Mohlin (SEB Fonder/SEB Trygg Liv). Gustaf Douglas
is Chairman of the Nomination Committee.
Dividend
Tuesday, 30 April 2013 has been proposed as the record
date for dividends. If the Annual General Meeting approves
the proposal, dividends are expected to be distributed by
Euroclear Sweden AB on Monday, 6 May 2013.
Further information
Niklas Ribbing, Head of Investor Relations
Telephone: +46 (0)8 506 485 79
niklas.ribbing@assaabloy.com
Reports can be ordered from
ASSA ABLOY AB
• Website www.assaabloy.com
• Telephone +46 (0)8 506 485 00
• Fax
+46 (0)8 506 485 85
• Post
ASSA ABLOY AB
Box 70340
SE-107 23 Stockholm
Sweden
Financial reporting
First quarter: 24 April 2013
Second quarter: 19 July 2013
Third quarter: 28 October 2013
Fourth quarter and Year-end report: February 2014
Annual Report 2013: March 2014
Production: ASSA ABLOY in cooperation with Hallvarsson & Halvarsson.
Photo: Peter Hoelstad/Molly & Co, Gerard Jörén, Getty Images and ASSA ABLOYs photographic library, among others.
Printing: Elanders AB, Falköping in March 2013.
125
ASSA ABLOY is the global
leader in door opening solutions,
dedicated to satisfying
end-user needs for security,
safety and convenience
www.assaabloy.com
» Future shareholder value is based on organic
and acquired growth as well as continued
rationalization and synergies in the Group «
– Johan Molin, President and CEO
ASSA ABLOY AB
P.O. Box 70 340
SE-107 23 Stockholm
Sweden
Visiting address:
Klarabergsviadukten 90
Tel +46(0)8 506 485 00
Fax +46(0)8 506 485 85
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