ASSA ABLOY Annual Report 2011

FY2011 Annual Report · ASSA ABLOY

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Annual Report
2011

The global leader in
door opening solutions

Contents

The ASSA ABLOY Group
Statement by the President and CEO
Vision, financial targets and strategy
Market presence
Product leadership
Cost-efficiency
Growth and profitability
ASSA ABLOY divisions
EMEA division
Americas division
Asia Pacific division
Global Technologies division
Entrance Systems division
Employees
Sustainable development
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
Notes
Comments on five years in summary
Five years in summary
Quarterly information
Definitions of key data
Proposed distribution of earnings
Audit report
The ASSA ABLOY share
Information for shareholders
Glossary

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Annual Report
2011

The global leader in
door opening solutions

Report on operations

The divisions

CSR

Report of the
Board of Directors

Financial statements

Shareholder information

Cover photograph: Camille Smith

Camille Smith, who works in accounting
at ASSA ABLOY Americas, pictured in front
of Yale University – one of ASSA ABLOY’s
customers.

Online Annual Report
ASSA ABLOY’s online Annual Report has
many user-friendly functions. The texts can
be read out loud and the financial tables
can be expanded and downloaded in Excel.
All information in the Annual Report can
be found easily by menu navigation or
by using the Search function. The online
Annual Report is available at:
www.assaabloy.com/annualreport2011.

Locks and locking systems

Mobile keys

Access control

Door closers

ASSA ABLOY is the global leader in door opening solutions,
dedicated to satisfying end-user needs for security, safety
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.

EUROPE

48 %

NORTH AMERICA

28 %

Share of Group sales by
region 2011

ASIA

16 %

SOUTH AMERICA

2 %

AFRICA

1 %

AUSTRALIA

NEW
ZEALAND

5 %

Schools and offices

Museums

Homes

Hospitals

Door closers

Electromechanical locks

Entrance automation

Industrial doors

Digital locks

ASSA ABLOY is the global leader in door opening solutions,
dedicated to satisfying end-user needs for security, safety

and convenience.

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.

42Sales of SEK 42 billion

Since its formation in 1994, ASSA ABLOY has grown from a
regional company into an international group with
around 41,000 employees and sales of around
SEK 42 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.

Hospitals

Industry

Arenas

Airports

Hotels

Creating opportunities for growth and profitability

Today ASSA ABLOY is the leading 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 strategy to further
strengthen the Group’s position is divided into three areas:

World-leading
market presence

A world-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.

The Group’s
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.

Efforts to increase
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

SALES AND OPERATING INCOME (EBIT)

INCREASE IN SALES

 Sales Operating income (EBIT)

Sales, SEK M

50,000

40,000

30,000

20,000

10,000

0
961 971 981 991 001 011 021 031 04
96
00
04

05 062 07 082,3 092,3 10 112
05
08
11

+1,100 %

EBIT, SEK M

7,500

6,000

4,500

3,000

INCREASE IN OPERATING INCOME

1,500

+4,100 %

VISION, FINANCIAL TARGETS AND STRATEGY 1

ASSA ABLOY creates
opportunities for
increased growth and
profitability through
a strong focus on the
strategy’s three areas
of market presence,
product leadership and
cost-efficiency.

¹ 1996–2003 have not been
adjusted for IFRS.
² Excluding items affecting
comparability.
³ Reclassification has been made.

ASSA ABLOY ANNUAL REPORT 2011

Statement by the President and CEO
Winning strategy on a challenging market

2011 was a successful year for the Group despite very challenging market conditions. I am pleased to
note that our strategic direction has led to continued profitable growth. Organic growth was a satisfac-
tory 4 percent despite weak demand on mature markets throughout the year. Growth slowed gradually
during the year on emerging markets except Asia. Long-term growth is generated by investments in the
market organization and new products, and these continued even more intensively during the year.
2011 was also the year the Group made its largest ever structural transaction with the acquisition of
Crawford, and the subsequent sales of the divisions that were not a good fit with the business in the
long term. A total of 18 companies were acquired during the year, increasing sales by 17 percent. Efforts
to increase efficiency continued during the year, and a new restructuring program covering all divisions
was launched in late 2011. Strong organic growth, major acquisitions and successful efficiency programs
resulted in record sales and earnings and a continued robust financial position.

Strategic action plans
We operate in an industry that is under consolidation and
increased presence on existing and new markets is therefore
crucial for the Group’s growth and position as market leader.
Organic growth is the single most important driver for
growth and requires strong innovative product leadership.
In addition, continuous efforts to increase cost-efficiency
are required to secure strong value creation. We create the
opportunities for future growth with continued high prof-
itability by combining enhanced market presence, strong
innovative product leadership and cost-efficiency.

Market presence
Brand consolidation continued during the year and today a
full 80 percent of the Group’s products are sold under the
ASSA ABLOY brand or the ASSA ABLOY brand combined
with the local brand. The remaining 20 percent of products
are sold under the global brands Yale, HID, ABLOY and Mul-
T-Lock, which complement ASSA ABLOY’s market presence
and product range. Brand consolidation and rationalization
of the product segment mean that wide and total product

programs can be offered to more customers on more mar-
kets. This also results in an increased segment focus and
lower costs.

ASSA ABLOY not only works with direct customers, par-
ticularly distributors, wholesalers and locksmiths, but also
with installers, architects and end-customers at all stages
to generate increased demand for the Group’s products.
Specification sales are an important activity in this context,
and the number of specification sales representatives in the
Group is constantly increasing. Streamlining of the support
organization also means that resources can be transferred
from pure administration to customer-related tasks.

Emerging markets accounted for 25 percent of Group
sales during the year, a threefold increase in just seven years.
A continuing increased presence on emerging markets is
crucial for sales growth, as these markets will experience
much higher growth than mature markets in the foresee-
able future.

2011 was an intensive year for acquisitions and a total
of 18 acquisitions were completed, with annual sales of SEK
6,800 M, equivalent to 18 percent acquired growth. These

Important events during the year

•

Sales increased with 13 percent to SEK 41,786 M (36,823)

Operating income amounted to SEK 6,624 M1 (6,046)

Earnings per share after full dilution amounted to SEK 12.301 (10.89)

Operating cash flow amounted to SEK 6,080 M (6,285)2

Investments in product development continued at an accelerated
level and a number of new products were launched

•

Largest ever structural transaction through the acquisition of Crawford

¹ Excluding items affecting comparability.
2 Excluding restructuring payments.

STATEMENT BY THE PRESIDENT AND CEO

ASSA ABLOY ANNUAL REPORT 2011

acquisitions complemented the product range, provided
new technology and increased the Group’s geographical
market presence. The acquisition of the Swedish company
Crawford, the Group’s largest ever structural transaction,
accounted for two-thirds of these acquired sales. Other
major acquisitions included FlexiForce (Netherlands), Laser-
Card (USA), Swesafe (Sweden), Portafeu (France) and Angel
Metal (South Korea).

Product leadership
The largest driver for organic growth is a continuous flow of
innovative new products, with enhanced customer value
and lower costs. Successful product development is there-
fore crucial for the Group’s future. ASSA ABLOY’s vision is to
be the most innovative supplier of total door opening solu-
tions, and investments in R&D have increased annually in
recent years. Today the Group employs over 1,200 develop-
ment engineers, an increase of 32 percent over the past five
years.

uct platforms have led to a sharp increase in new products.
Sales of products launched in the past three years exceeded
20 percent for the second consecutive year. The target is to
reach 25 percent.

Development of Group-wide platforms was successfully

carried on by the Group product development function,
Shared Technologies, and through collaboration within and
between the divisions.

Customers are increasingly demanding more advanced
lock and door products, and the technical level is constantly
rising. Meanwhile sales of electromechanical door opening
solutions are growing considerably faster than those of tra-
ditional mechanical products and have risen from 20 per-
cent to 42 percent of Group sales in ten years. The number of
installed doors in the market fitted with some form of elec-
tromechanical solution is estimated at 3 to 5 percent. This
share may very well rise to 20 percent or more in the future,
representing a considerable potential for upgrades as well as
new sales of these door opening solutions.

The Group-wide product development process based on

customer needs and the launch of more Group-wide prod-

Particularly exciting product launches during the
year included the wireless networked Aperio cylinder,

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 M4
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

2009

34,9631
–12
3
9
5,413²
15.51, 2
4,779²
6,843
16.2²

2009

9.22²

54.76
3.60

2010

36,823
3
8
–6
6,046
16.4
5,366
6,285
18.5

2011

41,786
4
17
–8
6,624²
15.9²
5,979²
6,080
17.4²

Change

13%

10%

11%
–3%

2010

2011

Change

10.89

58.64
4.00

12.30²

65.54
4.50³

13%

372,931

372,736

371,213

¹ Reclassification has been made for 2009. ² Excluding items affecting comparability. ³ As proposed by the Board of Directors.
4 Excluding restructuring payments.

ASSA ABLOY ANNUAL REPORT 2011

STATEMENT BY THE PRESIDENT AND CEO 3

the innovative Codehandle window and patio door lock,
the successful pilot installations using mobile keys and
NFC technology, in which the key is received wirelessly
by the cell phone, and the Group-wide new door closer
product range. Major acquisitions also provided the Group
with many new products, including entrance automation
products.

Cost-efficiency
ASSA ABLOY works continuously on improvements to the
production structure, product costs and the administrative
flow to increase cost-efficiency. Production combines flex-
ible final assembly close to the customer with the transfer of
standard production to low-cost countries. Product devel-
opment focuses on common product platforms with fewer
components and an effective product development pro-
cess. Automated administrative flows, also known as Seam-
less Flow, and an optimized IT structure are further key activ-
ities for increasing cost-efficiency in the Group.

The restructuring programs for the production units
have been very successful, resulting in considerable savings
and increased efficiency in the Group’s production units. A
total of 44 units have been closed and a further seven are
set to close under the existing programs. A new restructur-
ing program to further improve the efficiency of existing and
recently acquired production units in high-cost countries
was launched in 2011. This program covers all five divisions
and entails the closure of 17 production units and a switch
to final assembly in a further number of units, affecting
around 2,000 employees in high-cost countries.

In product development, the Group works with common

product platforms, fewer components and increased pur-
chases from low-cost countries. The product development
process is constantly being improved and Lean-methods are
being implemented to further streamline and shorten the
development process. During the year, 300 VA/VE analyses
were conducted. These target existing product designs and
normally lead to a 25 to 40 percent reduction in product
cost.

The implementation of Lean-methods continues in the
Group’s operations. These lead to more efficient production
flows, better material cost control, improved decision-mak-

ing procedures, shorter development times, and increased
cooperation with the marketing and sales organization.
The year saw the implementation of over 600 Lean-projects
in production units and 150 projects in office administra-
tion in the Americas and EMEA divisions, resulting in large
savings.

The Group continues its efforts to implement Seamless

Flow in administration. This entails a reduction in manual
work and an automated flow from the customer through the
company’s various processes to the suppliers. Cost reduc-
tions and increased efficiency and quality will be immedi-
ate as these solutions are implemented. A key component
is e-commerce with the customers, which has now reached
20 percent, compared with 10 percent three years ago.

The most important activities in IT optimization include

a reduction in the number of ERP systems from more than
120 to 6. The number of data centers is to be reduced from
55 to 5 worldwide, while today’s more than 80 networks are
to be consolidated into just one.

Development of the divisions
EMEA division
Demand in European markets was weak during the year
and strongly impacted by the fiscal problems in many coun-
tries and the subsequent budgetary tightening. Organic
growth was 0 percent (2). Sales remained unchanged or
were slightly positive in the majority of northern and cen-
tral European markets. Eastern Europe experienced strong
sales growth. The southern European markets, particularly
Italy and Spain, experienced negative growth. Exports from
the southern European companies to North Africa were also
negatively impacted by the political unrest in the region.

The wireless networked Aperio cylinder and a brand new

Pan-European door closer program were launched during
the year. Digital door locks for the residential market were
launched on several markets under the Yale brand and were
very well received. The division also launched new versions
of the innovative electromechanical Cliq Remote cylinder
for the commercial market with considerable success.

Operating income remained strong due to the restruc-
turing and efficiency measures implemented in recent years.

PERFORMANCE 2007–2011

SALES AND OPERATING INCOME

INCOME BEFORE TAx AND OPERATING CASh FLOW

Sales
SEK M

42,000

36,000

30,000

24,000

18,000

12,000

6,000

Operating income
SEK M

7,000

6,000

5,000

4,000

3,000

2,000

1,000

 Sales1
Operating income2

¹ Figures for 2008 and
2009 are affected by
reclassification.
² Excluding items affecting
comparability, 2008,
2009 and 2011.

10 11

SEK M

7,000

6,000

5,000

4,000

3,000

2,000

1,000

10 11

 Income before tax1
 Operating cash flow2

¹ Excluding items affecting
comparability, 2008,
2009 and 2011.
2 Excluding restructuring
payments.

STATEMENT BY THE PRESIDENT AND CEO

ASSA ABLOY ANNUAL REPORT 2011

» 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

The year saw the acquisition of Swesafe (Sweden), Portafeu
(France), Metalind (Croatia) and a number of small distribu-
tors in Europe, Latin America and Africa.

Americas division
Sales increased somewhat in the first half of the year, but the
low level of new construction projects particularly in North
America resulted in stable sales for the full year. Organic
growth was 2 percent (–2). The commercial and institu-
tional segments, which accounts for a large part of the divi-
sion’s sales, showed weak but positive growth, mainly driven
by renovations and upgrades. The residential segment,
which only accounts for a minor part of the division’s sales,
experienced good demand during the year due to a num-
ber of new product launches. The Latin American markets,
apart from Brazil, showed strong growth during the year.
The standard of living is constantly rising in these countries,
impacting demand positively. In Brazil, however, demand
was negatively impacted by the slowing economy, high
interest rates and the general downturn particularly in the
new construction segment.

Many new electromechanical products and total security

solutions for each customer segment were launched.

Marketing initiatives, innovative new products and effi-
ciency measures enabled the division to maintain a strong
operating income.

The year saw the acquisition of Electronic Security

Devices (USA).

Asia Pacific division
Sales in China grew strongly during the year, particularly in
the security door segment. The growth rate slowed towards
the end of the year, mainly caused by the credit restrictions
imposed by the Chinese government to avoid overheat-
ing in the economy. However, the ongoing programs for
publicly subsidized housing projects in inland regions had
a positive impact on demand. Sales growth in the South
Korean business units was strong during the year, and par-
ticularly the export sales of the Group companies iRevo and
King grew very strongly. Growth in the rest of Asia was very

strong. On the Indian and Indonesian markets, which have
considerable growth potential, sales grow substantially
from a small base. In Australia and New Zealand, the market
position remained strong, but sales growth was negative
during the year, mainly due to a reduction in government
stimulus measures. The division reported 9 percent (14)
organic growth for the year.

A combination of acquisitions and organic growth has
enabled the Group to establish a very strong presence on
the Chinese and South Korean markets. In China, sales of
security doors in particular have grown very strongly due to
the acquisition of Pan Pan. This has led to the establishment
of sales channels in new regions in China where growth is
expected to be high in the future. In South Korea, acquisi-
tions in recent years have also resulted in strong, market
leadership. The Group can now offer a wide product range
and total door opening solutions in both these markets.
The Group is now establishing itself in a similar way on mar-
kets in South and South-east Asia through a combination of
acquisitions and organic growth.

Operating income remained strong despite reduced
sales in the profitable markets of Australia and New Zealand
and increased sales in emerging markets with lower operat-
ing margins.

The year saw the acquisition of Angel Metal (South Korea).

Global Technologies division
Demand for HID Global’s products was strong during the
year. New products and active marketing efforts resulted in
considerable interest in secure identity solutions in all mar-
kets. The traditional product areas in identity and access
management showed stable, strong demand. Product
development and marketing in recent years in the product
area of government ID programs, driving licenses and the
like led to a number of major project orders. ASSA ABLOY
Hospitality experienced strong full-year growth driven by
continued increased demand for renovation and upgrade
projects. However, the market for new hotel and cruise ship
construction remained at a low level. The division reported
11 percent (10) organic growth for the year.

PERFORMANCE 2007–2011

DEvELOPMENT OF EARNINGS PER ShARE

SEK

13
12
11
10
9
8
7
6
5
4
3
2
1
0

READ MORE ABOUT ASSA ABLOY’S DIVISIONS, PAGE 38–51.

ASSA ABLOY ANNUAL REPORT 2011

STATEMENT BY THE PRESIDENT AND CEO 5

ASSA ABLOY’s Executive Team from left: Tzachi Wiesenfeld, Head of EMEA division; Thanasis Molokotos, Head of Americas division;
Johan Molin, President and CEO and Head of Global Technologies division; Ulf Södergren, Chief Technology Officer (CTO);

HID Global’s acquisition and integration of ActivIdentity
(acquired in December 2010) and LaserCard (acquired in
January 2011) into its existing operations has provided the
unit with a comprehensive set of competencies in secure
identity management for government ID programs and a
unique technical and knowledge platform for the develop-
ment of tomorrow’s Government ID services.

ASSA ABLOY Hospitality has worked actively to upgrade

customers’ installed locks from magnetic stripe card lock-
ing systems to more secure, flexible and user-friendly locks
using radio frequency identification (RFID). Demand for the
new contactless RFID hotel locks increased sharply during
the year, and more than half a million VingCard RFID locks
were installed globally.

The division’s operating income showed positive growth

but profitability was negatively impacted by the dilutive
effect of acquisitions and large project orders.

Entrance Systems division
New sales of automatic doors showed good growth
throughout the year, while service sales continued to grow
strongly. Demand increased in the retail, logistics and manu-
facturing segments, but was more restrained in the health-
care segment. Organic growth was 5 percent (–2).

The year saw the major acquisitions of Crawford and
FlexiForce. Crawford supplies industrial doors, docking solu-
tions and garage doors, while FlexiForce supplies compo-
nents for industrial and garage doors. At the end of the year
an agreement was signed to acquire Albany Door Systems,
which will result in a strong position in high-performance
doors. The year also saw minor acquisitions in Canada, Aus-
tralia and New Zealand, further consolidating the division’s
world-leading position in entrance automation. The divi-
sion has grown from SEK 3 billion to over SEK 8 billion in just
a few years and now has a strong integrated offering within
entrance automation.

Rationalization of the production structure resulted in

a good earnings trend.

STATEMENT BY THE PRESIDENT AND CEO

ASSA ABLOY ANNUAL REPORT 2011

Jonas Persson, Head of Asia Pacific division; Tim Shea, Head of the ASSA ABLOY Hospitality business unit; Juan Vargues, Head of
Entrance Systems division. Denis Hébert, Head of the HID Global business unit; Tomas Eliasson, Chief Financial Officer (CFO).

Future development
The Group consolidated its market leadership during the
year and is well positioned for long-term sustainable growth
due to its global presence and the market’s widest product
range. Our focus on the profitable commercial segment,
the high proportion of aftermarket sales and the increas-
ing share of fast-growing electromechanical and electronic
products ensure strong growth and earnings.

Looking forward into 2012, continued good growth on
the emerging markets is expected, but at a lower level than
last year. On the mature markets a stable development is
expected with an unchanged or slightly positive sales trend.
The underlying business cycle continues to be affected by
the uncertainty on the financial markets and budget restric-
tions in many countries, which primarily impacts the market
segments that are dependent on public financing.

Major efforts by employees
Finally I should like to thank all our employees who con-
tributed to the Group’s success during the year, and I look
forward to our continued joint efforts to make ASSA ABLOY
even more successful.

Since its formation in 1994, ASSA ABLOY has gone through
several distinct stages of development and established a
global leadership position. Despite fantastic growth dur-
ing this period, many important markets and product areas
remain to be developed. The continued demand for safety
and security solutions, as well as population growth and
urbanization ensure an underlying structural demand for
the Group’s products, which will increase over time. Com-
bined with the implemented and planned restructuring
measures, this means that we have excellent opportunities
for continued growth and good profitability.

Stockholm, 9 February 2012

Johan Molin
President and CEO

ASSA ABLOY ANNUAL REPORT 2011

STATEMENT BY THE PRESIDENT AND CEO 7

Vision

•

To be the world-leading, most successful and innovative supplier
of total door opening solutions,

to lead in innovation and offer well-designed, convenient, safe and
secure solutions that create added value for our customers, and

•

to be an attractive company to work for.

Financial targets

•

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.

STATEMENT BY THE PRESIDENT AND CEO

ASSA ABLOY ANNUAL REPORT 2011

Strategy

The Group’s overall focus is to spearhead the trend towards higher security with a product-driven
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

Product
leadership

pages 20–27

Goal

Growth and
profitability

pages 34–37

Cost-
efficiency

pages 28–33

Market
presence

pages 10–19

ASSA ABLOY ANNUAL REPORT 2011

STATEMENT BY THE PRESIDENT AND CEO 9

Sustainable door opening solutions from ASSA ABLOY are used throughout
41 Cooper Square, New York City’s first LEED Platinum-certified academic
building at The Cooper Union for the Advancement of Science and Art.

Market presence

assa aBLOY annuaL repOrt 2011

Market
presence

A world-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 annuaL repOrt 2011

Market presence 11

Market presence
Three main approaches to enhancing
market presence

A world-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.

the security market
Today ASSA ABLOY is the global leader in total door open-
ing solutions. As the Group has grown, its product portfolio
has expanded and evolved to cover the widely varying needs
of airports, schools, hospitals, offices and homes. Growth
in the security market is fuelled by several factors. The most
salient is the global increase in prosperity and urbanization,
which leads to new construction and an increased demand
for doors, hardware and access control systems. The gen-
eral global trend towards increased security places security
thinking high on the agenda, driving the development of
more advanced solutions and upgrades of existing security
systems. Finally, the increasing demand for solutions offering
convenience and simplicity in addition to high security may
be mentioned.

The total security market consists primarily of security
services and electromechanical and mechanical security
products. ASSA ABLOY estimates the total security market
to be worth over EUR 250 billion. The Group has focused its
operations on electromechanical and mechanical security
products as well as security doors. The segment in which the
Group is active accounts for around 15 percent of the total
market. ASSA ABLOY has a global market share of over 10
percent of that segment but with large variations between
different markets.

ing doors and windows, as well as new construction. The
market is growing 1–2 percent above each country’s GDP,
averaged over an economic cycle, and is relatively stable for
ASSA ABLOY. The majority of Group sales are for use in exist-
ing buildings and therefore less sensitive to cyclical fluctua-
tions. The large aftermarket, combined with the spread of
ASSA ABLOY’s sales across a large number of countries with
different economic cycles, contributes to stable sales and
profitability.

ASSA ABLOY’s electromechanical security product range
includes electronic cylinders, automatic doors, secure iden-
tification and various access control products, some of
which use radio frequency identification (RFID). Electrome-
chanical products generally offer high functionality and high
security, making them ideal for commercial applications.
Focused product development in this area is constantly
expanding the applications for ASSA ABLOY’s electrome-
chanical products. Annual growth in the market for elec-
tromechanical security products is estimated to be two to
three times higher than for mechanical security products.
This is partly due to the fact that today only 3 to 5 percent
of all doors have electromechanical locks or access control
systems, but this percentage is constantly rising. Electro-
mechanical products account for over 40 percent of Group
sales and this percentage is steadily increasing every year.

Mechanical and electromechanical security products
The mechanical security product range includes lock cylin-
ders, lock cases, door closers, industrial locks, emergency
exit devices and window hardware. ASSA ABLOY is also a
major manufacturer of steel security doors and door hard-
ware. Growth in mechanical security products is mainly
driven by renovations and replacements of old locks in exist-

customer segments
ASSA ABLOY’s main customer segment is the commercial
segment comprising institutional and commercial end-cus-
tomers, such as schools, hospitals, universities, airports and
large office buildings. The commercial segment accounts for
around 75 percent of Group sales, while the private residen-
tial segment accounts for around 25 percent.

» Annual growth in the market for electromechanical security
products is estimated to be two to three times higher than
for mechanical security products «

Market presence

assa aBLOY annuaL repOrt 2011

Share of Group sales by region 2011

NORTH AMERICA

EUROPE

ASIA

28 %
+8 %

48 %
+32 %

16 %
+29 %

Share of Group sales
in local currencies
2011, %

Change relative to
the previous year, %

SOUTH AMERICA

AFRICA

2 %
+7 %

1 %
+2 %

Increased saLes On eMergIng Markets

AUSTRALIA AND
NEW ZEALAND

5 %
–3 %

Share of Group sales
in local currencies
2011, %

Change relative to
the previous year, %

2006

2011

Emerging markets, 12%
Mature markets, 88%

Emerging markets, 25%
Mature markets, 75%

assa aBLOY annuaL repOrt 2011

Market presence 13

Market presence

Major customers
– Institutional and commercial market
This segment consists of institutional and commercial cus-
tomers such as universities, hospitals, offices, airports and
shopping malls, through which a large number of people
pass daily. The procurement of these projects is often com-
plex and involves many stakeholders on the customer side,
such as property and security managers. ASSA ABLOY’s com-
mon 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 opti-
mal security solutions for the customer. Distribution and
installation are largely handled by installers and locksmiths.

Small and medium-sized customers
This segment is characterized by the customer’s need for
professional advice and installation, which is primarily met
by specialized distributors and installers, such as locksmiths.
ASSA ABLOY works actively to train distributors and to
develop more standardized solutions for small and medium-
sized companies, such as stores and offices.

has 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.

distribution channels
In today’s market, products mainly reach the end-customer
through a variety of distribution channels, particularly lock-
smiths, building and lock wholesalers, door and window
manufacturers, and security system integrators.

differences between markets
North Americans spend more than twice as much on emer-
gency exit devices as Europeans. Conversely, northern Euro-
peans spend three to four times as much on high-security
locks for their homes as North Americans. Automatic doors
are also much more common in Europe than in the USA.
If the demand for both security and evacuation solutions
was equally large in Europe and the USA, the total market
would roughly double, representing considerable long-term
potential for ASSA ABLOY.

Consumer market
The majority of sales are replacements or upgrades of exist-
ing security products. Private customers have a consider-
able need for advice and installation assistance. ASSA ABLOY

The technological paradigm shift from mechanical to
electromechanical locking is considerably larger in the com-
mercial segment than in the private residential segment.
However, an increasing number of private individuals want

» 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 TOTAL SECURITY MARkET

ASSA ABLOY’S SALES BY PRODUCT GROUP

 ASSA ABLOY’s
product areas, 15%
 Security guards and
other, 27%
 Fire alarms, 2%
 Doors and windows, 40%
 Intrusion protection, 3%
 IT security and logical
access control, 4%
 Alarm centers, 9%

 Mechanical locks, lock

systems and fittings, 38%
 Electromechanical and
electronic locks, 22%

 Entrance automation, 20%
 Security doors and
hardware, 20%

Market presence

assa aBLOY annuaL repOrt 2011

electronic locks for their homes, providing a major growth
opportunity for ASSA ABLOY. Through its presence in South
Korea, the Group is the world’s leading producer of resi-
dential electronic locks, and a number of products were
launched in 2011 on markets in the USA, Australia, the UK
and Scandinavia.

Globally, the lock market is still fragmented. However, the

market in each country is relatively consolidated, as com-
panies 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 stan-
dards and brands are less common.

competition
Although some consolidation has taken place over the past
ten years, the security industry is still fragmented in a global

perspective. Some countries have one strong manufacturer
with a large share of the local market. These companies
often focus on their domestic market and have limited inter-
national operations.

ASSA ABLOY is the global market leader; its main com-
petitors are four other major players, which partly operate
in ASSA ABLOY’s segment: Ingersoll-Rand, Stanley Black &
Decker, Dorma and Kaba. Two of these are based in the USA
and two in Europe. All these competitors are strongest on
their home markets as well as having a presence on some
other markets, although none of them have equivalent
international market penetration to ASSA ABLOY. The Asian
market is still very fragmented; even the largest manufactur-
ers have modest market shares.

» The majority of Group sales are for use in existing buildings

and therefore less sensitive to cyclical fluctuations «

67 % 33 %

33% of ASSA ABLOY’s sales consist of new
construction.

67% of ASSA ABLOY’s sales consist of
renovations, refurbishments, extensions
replacements and upgrades.

WHAT DRIvES DEMAND?

BREAkDOWN BY CUSTOMER SEGMENT

 Aftermarket1, 67%
 New construction, 33%

¹ The aftermarket consists of
renovations, refurbishments,
extensions, replacements and
upgrades.

 Commercial and

institutional customers, 75%

 Private customers –

residential market, 25%

assa aBLOY annuaL repOrt 2011

Market presence 15

Market presence

Increased Market presence

assa aBLOY’s strategy for increasing its market
presence has three main approaches:
• Exploiting the strength of the brand portfolio.
•
Increasing growth in the core business.
• Expanding into new markets and segments.

exploiting the strength of the brand portfolio
Common sales force
In order to compete effectively in a global market, the sales
force operates as an integrated organization under the
ASSA ABLOY master brand. The sales staff represent ASSA
ABLOY and create solutions for the customer using different
products manufactured under established local brands.
Consequently, customers can be offered total door opening
solutions, while recognizing the local brands.

ASSA ABLOY’s brand strategy
As a result of its many acquisitions, ASSA ABLOY owns a
variety of well-known brands and has the world’s largest
installed lock base. In order to exploit and manage this
valuable asset while benefiting from the Group’s size, ASSA
ABLOY’s logotype is combined with the individual product
brands. This approach preserves the link to the installed
lock base, while increasing the visibility of the ASSA ABLOY
master brand.

The master brand is complemented by four global
brands, which are all leaders in their respective market

segments. These brands are 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 growing visibility of ASSA ABLOY
as the master brand for complete security solutions demon-
strates the considerable breadth of the Group’s product
range as the world’s largest supplier of security solutions.

Increasing growth in the core business
Growth in the core business is achieved through close
collaboration with architects, security consultants, major
end-users and distributors. Continued clear market
segmentation is also vital for offering relevant solutions
to the customer.

Total door opening solutions
The requirements in different areas vary considerably, since
the door opening solution for each door is adapted to the
door’s location and application, such as whether it is an
entrance door, a computer room door or a conference room
door. The door’s functionality must also be adapted on the
basis of security and convenience. This may be affected by
whether it is an internal or external door, the opening fre-
quency, the number of users, and special requirements such
as fire safety. Customers are also increasingly demanding
that the products can be easily integrated into new or exist-
ing security systems and IT networks.

» A large aftermarket, combined with global sales
across countries with different economic cycles,
contributes to stable sales and profitability «

Market presence

assa aBLOY annuaL repOrt 2011

assa aBLOY’s Brand strategY

the assa aBLOY master brand

ASSA ABLOY is the Group’s master brand under
which the sales departments are united.

some product brands

80 %

Around 80 percent of
products are co-branded
with the local brand and the
ASSA ABLOY master brand.

Well-known product brands benefit from the large installed lock 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

Complementary global brands, where the products’ leadership and market positioning in their respective segment are
unique or overlap with ASSA ABLOY.

Tracking flowers around the world
with ASSA ABLOY

Customer:

Challenge:

Solution:

Flora Holland is one of the world’s largest flower auction houses, with five auction centers across the Netherlands.
The auction house rents stacking carts to customers for the transport of flowers and plants around the world.

Flora Holland merged with the Aalsmeer Flower Auction in 2009. Since then, there has been a need to develop a
single uniform stacking cart system for more than 250,000 carts which are in circulation around the world.

ASSA ABLOY Nederland was called in to develop a prototype for a new lock plate for the stacking carts with a profile
cylinder and unique key profile that could be tracked using an RFID tag. The auctioneer ordered 145,000 lock plates
in total.

assa aBLOY annuaL repOrt 2011

Market presence 17

Market presence

dIstrIButIOn channeLs fOr the securItY Market

75 %

of sales are to the
institutional and
commercial market.

Specification of door opening solutions
increasingly important
Bringing new and innovative solutions to market requires
close collaboration not only with distributors, but also with
architects, security consultants and major end-users. This
collaboration stimulates demand from distributors and cus-
tomers. Building and lock wholesalers, security consultants
and locksmiths have a key role in delivering the products
specified for various construction projects. 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 lock cases and fittings in their prod-
ucts before delivering them to customers.

In contrast, electromechanical security products mainly

reach the end-user via security installers and specialized
distributors. These products are also sold through security
integrators who often offer a total solution for the installa-
tion of perimeter protection, access control and increasingly
also computer security.

In today’s security market,
manufacturers of security
products, such as ASSA
ABLOY, mainly reach their
end-customers through
a variety of distribution
channels. A large percentage
of ASSA ABLOY’s products
are sold in small volumes
to a large number of end-
customers with very
different needs.

25 %

of sales are to private
customers and the
residential market.

Electromechanical security products mainly reach the end-user via security installers and specialized distributors.
These products are also sold through security integrators who often offer a total solution for the installation of
perimeter protection, access control and increasingly also computer security.

FEEDBACk | DEMAND | INCREASED SALES

specIfIcatIOn ASSA ABLOY specifies a security solution for major
commercial projects jointly with end-customers and other stakeholders.

ASSA ABLOY
Representative

Distributor

assa aBLOY

specIfIcatIOn

dIstrIButOr

dIstrIButIOn channeLs Security system 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.

expanding into new markets and segments
The Group is expanding into new markets and segments by
establishing on new geographical markets, developing the
OEM market, exploiting opportunities on the residential
market, and introducing new technology.

Geographical expansion is mainly achieved through
acquisitions. Establishment on markets with rising popu-
lations and developing economies enables the Group to
build a strong platform for future growth. Emerging markets
in Asia, eastern Europe, the Middle East, Africa and South
America accounted for 25 percent of total Group sales in
2011, compared with 12 percent five years ago. The Group’s

presence on the OEM market for door and window manu-
facturers varies between markets, providing considerable
potential for increased market penetration.

The global door market is worth around EUR 80 billion

and is an area with considerable growth potential. Since
2000, Group sales of security doors have risen from SEK 2
billion to over SEK 8 billion and accounted for 20 percent of
total Group sales in 2011.

The door automation market is another area with very
large growth potential. Traditionally ASSA ABLOY has only
been active in door automation for people traffic. Through
the recent acquisitions within the Entrance Systems division,

Market presence

assa aBLOY annuaL repOrt 2011

stakehOLders

cOdes and securItY standards

» The common sales organization operates under the

ASSA ABLOY master brand, but also acts as representatives
of the local product brands recognized by the customer «

Increased focus on distributors
ASSA ABLOY works closely with its distribution channels to
offer end-customers the right products, correct installation
and consequently a well-functioning security solution. Dis-
tributors also have a key role in providing service and sup-
port after installation. This role may vary between different
customer segments. In the commercial segment, distribu-
tors in some markets act as consultants and project manag-
ers to create good security solutions. They understand the
customer’s needs and ensure that products comply with
local regulations.

As technology moves towards more complex security solu-
tions, distributors need increasing skills levels. Locksmiths,
who are key distributors of mechanical and electromechani-
cal security products on many markets, are an example
of specialized security distributors. They buy direct from
the manufacturer or via wholesalers and provide advice,
products, installation and service. Some locksmiths have
an increased focus on electronics, while IT integrators are
increasingly also offering physical security solutions.

FEEDBACk | DEMAND | INCREASED SALES

ASSA ABLOY
Representative

Installer

specIfIcatIOn ASSA ABLOY specifies a security solution for major
commercial projects jointly with end-customers and other stakeholders.

ASSA ABLOY
Representative

End-
customer

InstaLLer

specIfIcatIOn

end-custOMer

end-custOMers
Large institutional and
commercial customers
• Healthcare • Education • Retail

• Hospitality • Offices • Industry

Small and medium-sized customers
• Offices • Stores

Residential market
• Apartments • Houses

ASSA ABLOY
Representative

Stakeholders

stakehOLders

cOdes and securItY standards

stakehOLders
Such as architects, security consul-
tants, public authorities responsible
for security standards and other
stakeholders.

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 lock cases and fittings in
their products before delivering them to customers.

the Group has entered the much larger entrance automa-
tion market, which includes industrial doors, systems for
loading docks and garage doors. The global entrance auto-
mation market is estimated at EUR 15 billion and is still very
fragmented.

Efforts to develop channels and products for the residen-

tial market continue, with digital door locks a high-priority
product area.

The increased demand for electromechanical products is

one of the clearest trends in the security market.

This product area is also seeing increased technical stan-
dardization in which different components in the security
solution can be easily integrated with one another. ASSA
ABLOY’s products aim for open standards to facilitate inte-
gration with the customer’s other security and administra-
tive systems. Interesting new growth areas are created by
exploiting the Group’s strength in specific technologies.
One example is RFID, which is now adapted to special appli-
cations such as contactless hotel locks opened by a card or a
mobile phone.

assa aBLOY annuaL repOrt 2011

Market presence 19

With its unique cold weather and energy-saving features,
a Megadoor door system was the perfect solution for
Continental Airlines’ hangar doors at Cleveland Hopkins
International Airport.

prOduct LeadershIp

assa aBLOY annuaL repOrt 2011

Product
leadership

The Group’s product leadership
is achieved through the continu-
ous development of products
offering enhanced customer
value and lower product costs.

assa aBLOY annuaL repOrt 2011

prOduct LeadershIp 21

Product leadership
Successful product development
drives organic growth

A constant flow of innovative new products to the market is the single most important source of organic
growth. Successful product development is therefore vital for the Group’s future. In 2011 sales of
products launched in the past three years exceeded 20 percent of total sales, and the target is 25 per-
cent. ASSA ABLOY’s vision is to be the most innovative supplier of total door opening solutions, and
investments in R&D have increased substantially in recent years. ASSA ABLOY is creating tomorrow’s
secure, convenient and flexible security solutions by developing Group-wide technology platforms.

product leadership
Successful product development and product leadership
are the single most important driver for maintaining the tar-
get of 5 percent organic growth per year over an economic
cycle. The focus on product leadership has been very con-
sistent and can be seen in the number of product develop-
ment engineers, which has risen by 32 percent to over 1,200
people in five years. Sales of products launched in the past
three years exceeded 20 percent of total sales for the second
consecutive year, a sharp increase in just a few years. The tar-
get is 25 percent, which is a well-considered level in view of
the 10 to 15-year product life cycle.

Product leadership is achieved and maintained through
the continuous development of products offering enhanced
customer value and lower product costs, often in close col-
laboration with ASSA ABLOY’s end-users and distributors.
The product development process is under constant
improvement and renewal. Several customer segments
were studied in detail during the year giving rise to inter-
esting new product concepts. ASSA ABLOY Future Lab is an
internet forum in which the Group can ask customers ques-
tions to obtain information on long-term trends and prod-
uct initiatives. The implementation of Lean Innovation has
shown that development time can be halved and results
improved. Using this new approach, the Group has also seen
the benefit of continuous parallel technology development.
Customers are increasingly demanding more advanced lock

and door products and the technical level is constantly ris-
ing, with electromechanical door opening solutions grow-
ing considerably faster than traditional mechanical prod-
ucts. Global common product platforms adapted to the
local markets have therefore become increasingly impor-
tant. These platforms are developed by the Group product
development function, Shared Technologies, and through
collaboration within and between divisions.

today’s customer base helps develop
tomorrow’s security solutions
ASSA ABLOY has the largest base of installed locks and lock
systems in the world 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 mechani-
cal identification. Electromechanical products including
entrance automation, have risen from 20 percent to 42 per-
cent of Group sales in ten years. This does not mean that
sales of mechanical products are falling but that electrome-
chanical 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 recur-
ring revenue from service and upgrades. The number of
installed doors in the market fitted with some form of elec-
tromechanical solution is estimated at 3 to 5 percent. This
share may very well rise to 20 percent or more in the future,

» Successful product development
is the single most important
source of organic growth «

INvESTMENTS IN RESEARCH AND DEvELOPMENT¹

SEK

1,400

1,200

1,000

800

600

400

200

10 11

¹ Reclassification has been made
for 2008 and 2009.

prOduct LeadershIp

assa aBLOY annuaL repOrt 2011

representing a very large potential for upgrades as well as
new sales of these door opening solutions.

People are assigned access rights to doors or computers.
Keys, cards and other ID credentials are assigned codes, and
these codes and access rights are managed securely and dis-
tributed encrypted. ASSA ABLOY has further consolidated its
position in secure identification through acquisitions during
the year. Since the acquisition of HID Global ten years ago,
ASSA ABLOY has had clear market and product leadership in
secure identity solutions, and sales currently total over SEK 4
billion. In North America, products from HID Global are esti-
mated to account for 70 percent of the installed lock base,
and the position is also strong on other markets.

security and convenience
Security is not just a question of identification. The mechani-
cal and electromechanical products that prevent intrusion
and permit rapid evacuation are just as important to the
final solution. A well-specified security solution also takes
into account the design of the products and ensures that
they facilitate use. The Group’s electromechanical products
help to meet all these security requirements. The electro-
mechanical segment is growing rapidly and now accounts
for 42 percent of Group sales.

substantial strengthening of
entrance automation offering
The Group is a global leader in automatic doors through
its Entrance Systems division. Automatic doors have sen-
sors 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 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 build-
ing. A number of acquisitions in 2011 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. Entrance Systems division’s sales
have risen from SEK 3 billion to SEK 8 billion in five years,

and the target is SEK 20 billion by 2015. This means that the
Group has gained clear product and market leadership in
entrance automation.

rfId enhances security and is user-friendly
Radio frequency identification (RFID) and wireless commu-
nication allow the Group to create new security applications
while offering services that are user-friendly.

Wireless Aperio technology allows cost-effective con-
nection 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 con-
trol systems have integrated Aperio technology into their
systems.

In contrast to Aperio, Smartair is an off-line system.
Smartair’s update-on-card facility increases security and
convenience through validation; access is updated on the
keycard for a specific period. If the card is not updated in one
of the special readers or printers that come with the system,
the person is not granted access. Lost cards can easily be
blocked and are of no use to unauthorized people.

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.

The Secure Identity Object (SIO) product developed
in-house during the year has further increased security in
access control.

cell phone replaces key
In the hotel segment, VingCard has used RFID and the wire-
less technology offered by mobile telephony in combina-
tion 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 phones to unlock the door of their hotel room by hold-
ing the phone close to the lock. In 2011 collaboration in NFC
technology at Arizona State University was launched with
RIM, which manufactures smartphones under the Black-
berry brand. This received a very positive response from
students.

CHANGE IN PRODUCT MIx

2000
sek 14 billion

2011
sek 42 billion

Mechanical products, 66%
Electromechanical products, 20%
Security doors, 14%

Mechanical products, 38%
Electromechanical products, 22%
Entrance automation, 20%
Security doors, 20%

assa aBLOY annuaL repOrt 2011

prOduct LeadershIp 23

Project specifications and collaboration with
architects to create total security solutions
are important for driving increased sales for
ASSA ABLOY.

The Group is carefully following developments in this area
through its participation in the NFC Forum and other wire-
less technology organizations.

Using wireless technology from ASSA ABLOY, many
hotels have connected their rooms online, providing guests
with enhanced security and comfort, such as arranging
room changes without visiting the lobby. 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 just continues to grow.

VingCard Orion was also launched during the year and

is an energy management system in which temperature
control of the hotel room depends on the guest’s presence,
but can also be controlled and monitored from reception.

total door opening solutions are assa aBLOY’s strength
The Group’s 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 differing
security and safety requirements. By combining hundreds of
thousands of 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.

a common process with increased customer focus
and better product planning
ASSA ABLOY continues to develop a Group-wide product
development process with the aim of halving development
time and increasing the number of new products. A clear
gateway model with common terminology and interdis-
ciplinary collaboration ensures the quality of the product
development process. Product management is a very impor-
tant factor, and the number of product managers increased
sharply during the year.

Voice of the Customer is a natural part of the Group’s
process for strengthening customer relationships and inte-
grating customers into the Group’s product development
process, thereby increasing the fitness for purpose of the
Group’s product offering.

A number of in-depth studies conducted jointly with cus-
tomers have resulted in the development of many new con-
cepts and products.

prOduct LeadershIp

assa aBLOY annuaL repOrt 2011

Some ASSA ABLOY products

digital door locks for housing in scandinavia
The smart digital door lock, Yale Doorman, was launched
in Scandinavia in 2011. The lock allows users to lock and
unlock their homes using electronic key fobs, a PIN code
or remote control. The key fob can be easily blocked if
lost and a new one registered by the user.

The PIN code allows access at all times without a key.
A temporary code can also be communicated by phone
to a person who needs to gain access to the home.
The lock is self-locking, making the family more
secure at home and confident the door is locked when
away from home.

Yale Doorman is user-friendly owing to the simple
key setting and registration process, spoken instructions
in all the Scandinavian languages and the illuminated
keypad.

Mobile access technology Wins sesaMe
HID Global’s Secure Identity Objects™
(SIO) technology won the 2011 SESAME
award for innovation at CARTES. Deliv-
ering enhanced security, portability
and flexibility, SIO technology operates
within HID’s Trusted Identity Platform®
(TIP™) that enables digital credentials
to be securely embedded into a variety
of trusted devices, including Near Field
Communications (NFC) mobile phones
and related devices. To accommodate
evolving security challenges, SIO tech-
nology also provides users with the abil-
ity to dynamically increase security lev-
els updates to efficiently address future
changes in requirements as they occur.

state-of-the-art platform delivers high-
security access control features
HID Global’s new EDGE EVO® and
VertX EVO™ controller platform for IP
access control solutions is an open and
scalable platform that provides organiza-
tions with the most extensive access device
systems. The platform delivers enhanced
security features including superior perfor-
mance and future upgrade options, extend-
ing the value of an open architecture access
control development platform by protect-
ing an organization’s hardware investment
for end-user installations. EDGE EVO and
VertX EVO include a comprehensive Devel-
oper Tool Kit that is equipped with OPIN API
for both migration from HID Global’s pre-
mier EDGE® and VertX® controller technol-
ogy as well as new development using the
latest platform.

assa aBLOY annuaL repOrt 2011

prOduct LeadershIp 25

Some ASSA ABLOY products

norton safeZone
Norton’s SafeZone door closer/holder is an
award winning innovation featuring a built-
in motion sensor that detects movement
through a doorway.

SafeZone enhances the safety and con-
venience features of an opening by holding
the door open to allow safe passage for slow
moving people like the very young, elderly or
infirm. It also eases the way for carts, gurneys
or other bulky objects that are difficult to
navigate through an opening equipped with
a standard door closer.

Ideal for use in healthcare facilities,

schools and retail stores, SafeZone eliminates
unnecessary cycles on openings subjected
to heavy traffic of people or equipment by
holding the door open as long as needed. This
reduces damage caused by equipment hit-
ting the door. SafeZone also reduces the like-
lihood a door will be propped open, resulting
in energy savings and increased security.

Opening doors with a cell phone
The market for mobile access control is grow-
ing strongly. ASSA ABLOY Mobile Keys and
NFC-enabled phones now make it possible to
unlock doors securely using a cell phone. The
mobile key is transmitted to the NFC-enabled
phone where it is stored in a secure element.
When the user holds the phone in front of
a lock or reader access rights and identities
are transferred to the lock in a similar way to
using an access card. Transmitting mobile
keys wirelessly to cell phones has had a major
influence on the access control industry. A
cell phone can now be used to open doors in
homes, hotels, universities and commercial
buildings.

ASSA ABLOY Mobile Keys provide the
infrastructure and the technology that allow
the transfer of physical keys and access cards
to a cell phone.

attractive design and customer needs in focus
The Crawford 242FG overhead sectional door is a
fully glazed door, designed to be used when there is
a need for light, exposure, or vision. Typical applica-
tions are show-rooms, fire stations, or other appli-
cations where optimal daylight inlet and/or expo-
sure possibilities are desirable.

The panels are fully glazed, which gives the door

a modern, attractive and unique appearance.

The Crawford 242FG overhead sectional door

is designed to meet all operational and safety
requirements in the European Directives and the
standards issued by the European Standardization
Committee, CEN.

prOduct LeadershIp

assa aBLOY annuaL repOrt 2011

cliq remote is controlled by mobile phone
Cliq Remote is a new locking system enabling the user
to control a key’s access rights by mobile phone.

The keys are programmed remotely via the admin-

istration system. Each time a Cliq key is inserted into
an updating unit, it connects via the internet to the
administration system, downloads new access rights
and removes old rights. This allows detailed control of
access rights so that an individual can open a certain
door for a certain period.

The key also energizes the lock cylinder, which
therefore does not need its own power supply. The
battery lasts for around 30,000 door operations and
two years’ use. Information transfer and the key’s
access rights are encrypted using the same technology
as banks use in digital certificates.

The locking system, which was launched in 2010,
has attracted great interest and ASSA ABLOY has received
a number of large order of the system during 2011.

tight-sealing sliding doors improve energy
savings for Besam customers
Besam has launched greener configurations for their
existing sliding door profile packages. The TightSeal
features extra brushes and rubber bumpers for a more
energy-saving seal and the configuration is available
for existing as well as new sliding door systems. Ben-
efits include less air leakage and water infiltration,
which is especially optimal during non-business hours
but also beneficial whenever the door is closed during
opening hours.

Studies show that reducing air leakage can lead to
energy savings of up to 60 percent compared to stan-
dard sliding door systems. Depending on the configu-
ration, the very attractive payback time for the cus-
tomer is between 12 and 24 months. When fitted to
the Besam Frame and Slim Thermo, these automatic
door systems meet BS EN 12207 (Air Permeability)
Class 1 standards for thermal efficiency, an official
European regulation that will come in to force in 2013.

assa aBLOY annuaL repOrt 2011

prOduct LeadershIp 27

Tamar is the government headquarters in Hong kong that
includes The Central Government Complex and Legislative
Council. It is the administrative and executive hub of the
Hong kong government. The building complex also
contains an open space for public as recreational facilities.

ASSA ABLOY has supplied a total door- and security
solution comprising high security locking and entrance
automation while keeping a large degree of flexibility and
convenience.

Cost-
efficiency

Efforts to increase cost-
efficiency continue in all
areas, including common
product platforms with
fewer components and
common product
development.

Cost-efficiency
Successful restructuring programs

ASSA ABLOY works continuously on improvements to the production structure, product costs and the
administrative flow to increase cost-efficiency. Production combines flexible final assembly close to the
customer with the transfer of standard production to low-cost countries. Product development focuses
on common product platforms with fewer components and an effective product development process.
Automated administrative flows, also known as Seamless Flow, and an optimized IT structure are further
key activities for increasing cost-efficiency in the Group.

successful improvements to production structure
The restructuring programs for the production units have
been very successful, resulting in considerable savings and
increased efficiency in the Group’s production units. At year-
end the three restructuring programs launched between
2006 and 2009 had led to the closure of 44 production
units, and the closure of a further seven units is planned
before the programs are fully implemented. In addition,
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 restructur-
ing, 5,869 employees have left the Group and a further 457
redundancies are planned.

A new restructuring program to further improve the effi-

ciency of existing and recently acquired production units
in high-cost countries was launched in 2011. This program
covers all five divisions and entails the closure of 17 produc-
tion units and a switch to final assembly in a further num-
ber of units, affecting around 2,000 employees in high-cost
countries.

Standard production has been increasingly transferred to
internal and external production units in low-cost countries.
Today 48 percent of products are manufactured in low-cost
countries, compared with 33 percent five years ago. This
is also reflected in the distribution of the Group’s staff, as
51 percent of total employees are now located in low-cost
countries, compared with 34 percent five years ago. The pro-
duction process has been improved, while local presence on
end-customer markets in both high- and low-cost countries
ensures fast delivery and efficient assembly of customized
products.

Va/Ve
Value Analysis/Value Engineering (VA/VE) is a methodology
involving both product improvements and cost savings. A
total of over 300 studies were conducted during the year
involving 1,900 employees. Cost savings for a product are
normally between 25 and 40 percent in a study. Since the
methodology was introduced in 2007, more than SEK 430 M
in savings have been identified and implemented.

Implementation of Lean methods
The implementation of Lean methods continues in the
Group’s operations. These methods lead to more efficient
production flows, better material cost control, improved
decision-making procedures, shorter development times
and increased cooperation with the marketing and sales
organization. The year saw the implementation of over 600
Lean projects in production units and 150 projects in office
administration in the Americas and EMEA divisions.

seamless flow and It
Administrative support functions in the Group account for
30 percent of all staff and more than 40 percent of the total
personnel cost. This represents around 25 percent of sales.
The most important activity for streamlining these func-
tions across the business is automated flows. The imple-
mentation of automated flows is known as Seamless Flow,
and the goal is to reduce or totally eliminate manual work in
all processes. Seamless Flow is a process project in which a
coordinated and optimized IT structure is fundamental for
implementation.

CHANGE IN PRODUCTION STRUCTURE

SHARE OF PRODUCTION IN LOW-COST COUNTRIES

100

High-cost countries,
Full production
High-cost countries,
Assembly
Low-cost countries,
Production
Acquired production
units

10 11

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.

The share of the Group’s total purchases of raw materials, components
and finished goods from low-cost countries has increased from 33 per-
cent to 48 percent over the past five years.

cOst-effIcIencY

assa aBLOY annuaL repOrt 2011

It OptIMIZatIOn

FROM MORE THAN 120 ERP SYSTEMS

TO 6

SHARED SERvICE CENTER

FROM MORE THAN 55 DATA CENTERS

TO 5

FROM MORE THAN 80 NETWORkS

TO 1

cOMMOn erp
pLatfOrM

scaLaBLe
It Infrastructure

reLIaBLe and
secure It enVIrOn-
Ment

On the customer side, this means e-ordering by both large
and small customers. On the supplier side, e-purchasing is to
be introduced. Manufacturing, product development, logis-
tics and other internal process are to be included in Seam-
less Flow.

The most important activities in IT optimization include

NUMBER OF SUPPLIERS

Number

8,000

7,000

6,000

5,000

4,000

The implementation of Seamless Flow and the coordination
and optimization of the IT structure will also enable the effi-
cient coordination of support functions.

professional sourcing
In the purchasing area, a comprehensive supply management
project for raw materials and components is in progress. This
is increasingly important as areas of component supply are
outsourced to external suppliers in low-cost countries, while
the Group is striving to increasingly exploit economies of
scale. Increased outsourcing has resulted in material costs ris-
ing from 28 percent to 36 percent of sales in five years. This
increase is 85 percent in absolute terms. This makes totally
new demands on the purchasing organization, which has
moved from simple call off to professional sourcing. The divi-
sions have appointed specialized purchasing managers for
each component category. A number of central purchas-
ing centers have been established in the Group to efficiently
handle different component categories. Moreover, these
activities have resulted in a 20 percent reduction in the num-
ber of suppliers over the past five years, despite a 50 percent
increase in sales over the same period as a result of organic
and acquired growth.

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 20 percent over the past five years.

assa aBLOY annuaL repOrt 2011

cOst-effIcIencY 31

Customer:

Challenge:

Solution:

Security on track
on the Beijing metro
line with HID Global

The Fangshan line of the Beijing metro is 25 km
long with 11 stations and has been operating since
December 2010.

To ensure the metro is running safely, the physical
access system needed to prevent unauthorized access
and closely manage access to all stations, electrical
substations, parking lots and major facilities at metro
line sections. It also needed to safeguard equipment
and staff at key locations.

HID Global’s VertX V1000 controller and partner soft-
ware offered a centralized, web-based access control
system to monitor all stations and site equipment in
real-time. Each station control center can now also
operate independently using an HID V100 reader
interface when communication is lost with the host.
HID iCLASS R10 readers were installed at the entry
points including office, equipment and mechanical
rooms.

cOst-effIcIencY

assa aBLOY annuaL repOrt 2011

Customer:

Challenge:

Solution:

ASSA ABLOY equips state-of-the-art veterinary school

The University of Queensland’s School of veterinary Sciences is a 14,000 square meter teaching complex, spanning five
buildings and includes a major research facility, a teaching hospital, laboratories, animal-holding facilities and admin-
istrative facilities.

The veterinary school recently relocated, and the school’s new state-of-the-art location needed a range of locking systems
that would secure access to the many buildings and facilities in the complex.

ASSA ABLOY Australia was chosen to provide all the locks – a range of mechanical and electronic locks for the veterinary
school. The facilities were equipped with Lockwood 3570 and 3580 mechanical and electric mortise locks, 1800 and
4800 series plate furniture, 7,714 door closers and ABLOY Protec keying.

assa aBLOY annuaL repOrt 2011

cOst-effIcIencY 33

The National Stadium in Warsaw was built for UEFA EURO 2012.
Apart from the football stadium, the development includes
restaurants, conference facilities and offices as well as a vIP
department and a sports museum. Over 2,000 ASSA ABLOY door
closers, 950 ABLOY electromechanical locks, 1,800 HID readers,
1,800 ABLOY Protec cylinders and 50 panic exit devices were
used to meet the stadium’s unique security requirements.

grOWth and prOfItaBILItY

assa aBLOY annuaL repOrt 2011

Growth
and
profitability

ASSA ABLOY creates oppor-
tunities for increased growth
and profitability through a
strong focus on the strategy’s
three areas of market pres-
ence, product leadership and
cost-efficiency.

assa aBLOY annuaL repOrt 2011

grOWth and prOfItaBILItY 35

Growth and profitability
Successful expansion

Today ASSA ABLOY is the global leader in intelligent door opening solutions following 17 years of
successful expansion. Since its formation in 1994, the Group has expanded successfully through a
combination of organic growth and acquisitions, transforming the company from a traditional lock
company into a modern, multinational security company in intelligent door opening solutions.

» Successful expansion through organic growth and acquisitions «

growth from sek 3 billion to sek 42 billion in 17 years
Since ASSA ABLOY’s formation, Group sales have risen from
SEK 3 billion to SEK 42 billion. Today the Group has around
41,000 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 6,624 M in 2011, an increase of over 4,100 percent.

ASSA ABLOY was founded when Securitas in Sweden and
Metra in Finland merged their lock businesses. The company
had operations in Sweden, Finland, Norway, Denmark and
Germany at that time.

Today the Group has its own operations in 60 countries
and sales worldwide. ASSA ABLOY is focusing on enhancing
its presence on emerging markets in Asia, eastern Europe,
the Middle East, Africa and South America. Sales on these
markets account for 25 percent of total Group sales, while
China accounts for over 9 percent of total sales.

Today more than one in ten lock purchasers worldwide

choose an ASSA ABLOY lock, and the Group continues to
grow. Demand for safety and security is constantly increas-
ing in the world, and the Group has never had a wider prod-
uct range, higher market penetration and so many innova-
tive new products.

At the start in 1994, 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. Over the past 17
years, market penetration has become global as a result of
acquisitions and organic growth. The product offering has
gradually widened from traditional lock products to include
security doors, entrance automation and secure identity
solutions. Launches of innovative new products continued
in 2011, particularly in the fast-growing product segments
of electromechanical locks, entrance automation, access
control and identification technology. Today the original
product areas account for 38 percent of Group sales, due
to the widening of the product offering and to the much
higher growth rate in the new electromechanical product
segments.

New technology areas and innovative products are the

most important driver for organic growth and the Group
therefore invests heavily in R&D. Investments in product
development have increased by between 10 and 20 percent
per year in recent years and today the Group employs over
1,200 development engineers.

ASSA ABLOY has come a long way in 17 years. However,
the Group has high targets and expectations for its future
development. The demand for secure and safe security solu-
tions is constantly increasing and will offer the Group major
opportunities.

SALES AND OPERATING INCOME (EBIT)

 Sales Operating income (EBIT)

EBIT, SEK M

Sales
Operating income (EBIT)

7,500

6,000

4,500

3,000

1,500

¹ 1996–2003 have not been
adjusted for IFRS.
² Excluding items affecting
comparability.
³ Reclassification has been made.

05 062 07 082,3 092,3 10 112
05
08
11

0
961 971 981 991 001 011 021 031 04
96
00
04

4,100 %

Operating income (EBIT)
has increased by over
4,100 percent in 17 years.

Sales, SEK M

50,000

40,000

30,000

20,000

10,000

grOWth and prOfItaBILItY

assa aBLOY annuaL repOrt 2011

Strategy

Market
presence

Product
leadership

Cost-
efficiency

Exploiting the strength of the
brand portfolio.

Increasing growth in the core
business.

Expanding into new markets
and segments.

Developing products offering
enhanced customer value and
lower product costs.

Common product platforms
with fewer components.

Close collaboration with
ASSA ABLOY’s end-users and
distributors.

Common product platforms
and fewer components result in
cost-efficiency.

Production combines flexible
final assembly close to the custo-
mer with the transfer of high-
volume standard production to
low-cost countries.

Implementation of Lean met-
hods continues.

Seamless Flow streamlines
administration.

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.

SALES AND OPERATING INCOME (EBIT)

ASSA ABLOY’S DEvELOPMENT AND ACQUISITIONS 2007–2011

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).

2007 – expansion in asia
A new brand strategy is launched,
with ASSA ABLOY as the master
brand. The Group acquires
iRevo in South korea, a major
player in digital door locks.
Other acquisitions: Aontec
(Irish Republic), Baodean
(China), Powershield (Uk),
Pyropanel (Australia), Pemko
Manufacturing Company and
La Force Associates (USA), Alba
(Israel), Esety (Italy), Integrated
Engineering (Netherlands)
and Portronik (Canada).

2010 – acquisitions strengthen
customer offering in asia
Acquisition of Pan Pan, China’s
largest manufacturer of high-
security 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 and
FlexiForce, which strengthen
the customer offering in
industrial doors, docking
solutions and garage doors.
An agreement was signed to
acquire Albany Door Systems,
a global leader in automatic
high-performance doors.
Other acquisitions: Swesafe
(Sweden), Portafeu (France),
Metalind (Croatia), Electronic
Security Devices (USA), and
Angel Metal (South korea).

In addition to the acquisitions
listed here, ASSA ABLOY
has acquired a number of
smaller companies.

assa aBLOY annuaL repOrt 2011

grOWth and prOfItaBILItY 37

ASSA ABLOY’s

ASSA ABLOY is divided into three regional and two global divisions. The regional divisions manu-
facture and sell mechanical and electromechanical locks, cylinders and security doors adapted to

divisions

Americas page 42

shAre of group

EMEA page 40

Asia Pacific page 44

sales

operating income (eBit)

sales

operating income (eBit)

sales

operating income (eBit)

21 %

26 %

30 %

31 %

15 %

13 %

Americas division manufactures and sells
mechanical and electromechanical locks,
cylinders, security doors and door frames
in North and South America.

EMEA division manufactures and sells mechani-
cal, electromechanical and electronic locks,
cylinders, security doors and fittings in Europe,
the Middle East and Africa.

Asia Pacific division manufactures and sells
mechanical and electromechanical locks,
cylinders, high-security doors and hardware
in China, Asia, Australia and New Zealand.

division

Global Technologies page 46

shAre of group

sales

operating income (eBit)

14 %

13 %

division

Entrance Systems page 50

shAre of group

sales

operating income (eBit)

20 %

17 %

Global Technologies is a global leader in elec-
tronic security solutions. The division consists
of two business units: HID Global which is a
global leader in secure identification and access
control solutions, and ASSA ABLOY Hospitality
which is a global leader in electronic lock sys-
tems and safes for hotels and cruise ships.

Entrance Systems division is a global leader in
entrance automation products, components
and service. The product range includes auto-
matic swing, sliding and revolving doors, air
curtains, gate automation, garage doors, indus-
trial doors, docking solutions and hangar doors.
The acquisition of Albany Door Systems greatly
strengthens the position within high-perfor-
mance doors.

the divisions

AssA ABLoY AnnuAL report 2011

ASSA ABLOY’s

divisions

the local market’s standards and security requirements. The global divisions manufacture and sell
electronic access control, identification products and entrance automation on the global market.

Lock and locking systems

Electromechanical locks

Access control

Mobile keys

Door closers

Entrance automation

products and brands

The products consist mainly of mechanical
and electromechanical locks, cylinders, high-
security doors and hardware.

Some of the divisions’ largest brands are:
eMeA: ABLOY, ASSA, IKON, Mul-T-Lock, TESA,

UNION, Yale and Vachette.

Americas: Ceco, Corbin Russwin, Curries,
Emtek, Medeco, Phillips, SARGENT and La Fonte.

Asia pacific: Baodean, Gateman, Guli,
King, Pan Pan, Shenfei, Tianming, Wangli, Yale,
Lockwood and Interlock.

products and brands

HID Global is a global leader in secure iden-
tity solutions, primarily in identity and access
manage ment, and in contactless identification
solutions under the HID brand.

ASSA ABLOY Hospitality is a global leader in
electronic lock systems and safes for hotels and
cruise ships under the VingCard Elsafe brand.

products and brands

The product range includes automatic swing,
sliding and revolving doors, air curtains, gate
automation, garage doors, industrial doors,
docking solutions and hangar doors. The acqui-
sition of Albany Door Systems greatly strength-
ens the position within high-performance
doors.

The products are sold under the global lead-

ing brands of Besam, Crawford, Megadoor,
Albany, FlexiForce, Normstahl, Henderson, Ditec
and EM.

AssA ABLoY AnnuAL report 2011

the divisions 39

EMEA
Product launches and aggressive marketing initiatives
consolidated market leadership

The European market was weak during the year and sales were largely unchanged on the previous year.
However, EMEA consolidated its market-leading position through innovative product launches and
powerful marketing initiatives. New products included the wireless networked Aperio cylinder and a
brand new Pan-European door closer program. The year saw the acquisition of Swesafe (Sweden),
Portafeu (France), Metalind (Croatia) and a number of small distributors in Europe, Latin America and
Africa. The division’s profitability remained very strong due to the restructuring and streamlining
measures implemented.

eMeA in brief
The EMEA division manufactures and sells mechanical, electromechanical and
electronic locks, cylinders, security doors and fittings in Europe, the Middle East
and Africa. EMEA consists of a number of Group companies, which have a good
knowledge of their local, often diversified, markets and sell products under some
of the industry’s most respected brands, such as ABLOY, ASSA, IKON, Mul-T-Lock,
TESA, UNION, Yale and Vachette.

report on the year
The division’s sales for the year totaled SEK 13,030 M
(13,036) with an organic growth of 0 percent. Operating
income (EBIT) excluding restructuring costs was SEK 2,203
M (2,174), representing an operating margin of 16.9 percent
(16.7).

Demand in European markets was weak during the
year and strongly impacted by the fiscal problems in many
countries and the subsequent budgetary constrains. Sales
remained unchanged or slightly positive in the majority of
northern and central European markets. Eastern Europe
experienced strong sales growth and car lock sales also
showed good growth. The southern European markets, par-
ticularly Italy and Spain, experienced negative development.
Exports from the southern European companies to North
Africa were also negatively impacted by the political unrest
in the region. Operating income remained strong due to the
restructuring and streamlining measures implemented over
the past few years.

The year saw the acquisition of Swesafe (Sweden),

Portafeu (France), Metalind (Croatia) and a number of small
distributors in Europe, Latin America and Africa.

Market presence
The EMEA division operates in a strongly diversified mar-
ket with major local differences regarding building regula-
tions, security standards and climate. Consequently there
is a major difference between the products in demand and
sold in each local market. ASSA ABLOY’s regional companies
have a good knowledge of local lock standards and long-
term relationships with their distributors, making demand
stable. In addition, the aftermarket accounts for a significant
proportion of sales, since the installed lock base consists
of many millions of units that are continually replaced and
upgraded.

The division’s sales organizations are coordinated under the
ASSA ABLOY master brand, and the consolidation of brands
and the product offering made considerable progress during
the year. Consequently a more complete product program
can be offered more simply to more customers, consider-
ably strengthening market presence. One example is the
important door closer product range, which was launched
during the year in all European markets, reducing the num-
ber of brands from over 20 to just one brand, ASSA ABLOY.
The door closer launch provides all markets with a wider,
standardized range of modern door closers and joint central
distribution. At the same time the number of product ver-
sions and inventories are considerably reduced. This is a pio-
neering project that has led to an enhanced customer offer-
ing, increased sales and lower costs.

Further, segmentation of the sales force between dif-
ferent customer groups as well as various types of partner-
ship with distributors are key success factors. This results in
increasing knowledge of both the customer and the product
offering. In central European markets, partnership with the
distributors that sell the electromechanical CLIQ cylinder
has led to a 25 percent increase in sales per distributor since
the program began five years ago.

The focus on the specification of total door opening solu-

tions continued during the year and the division now has
350 employed specification sales representatives to further
strengthen collaboration with architects and security con-
sultants. Implemented project specifications rose by more
than 5 percent in both number and value. A general trend
is also for a constantly increasing value per door in these
projects.

Accelerated establishment in emerging markets in EMEA

is increasingly important for continued growth. This takes
place both organically and through acquisitions. The latest
acquisition was the Croatian company Metalind, which in
addition to the Croatian market has market penetration in
the neighboring Balkan countries.

product leadership
Efficient product development with a clear customer focus
is the most important activity for creating organic growth.
The use of Group-wide product platforms with fewer com-
ponents is constantly increasing, contributing to enhanced
customer value and lower costs. Substantially increased
investment in R&D in recent years has resulted in the launch
of many new electromechanical products that are both

eMeA division

AssA ABLoY AnnuAL report 2011

» Aggressive
marketing
initiatives to
develop and lead
the European
lock market «

secure and easy to use. These new products include the new
wireless networked Aperio cylinder.

Aperio is an electromechanical cylinder that can be con-
nected wirelessly to a network. The product is also designed
so that it can easily be integrated with other access control
and security systems. Consequently doors fitted with Ape-
rio cylinders can be flexibly connected to, for example, the
whole security system of a hospital, an airport, a large office
or equivalent without needing to run cables to each door,
making the building more secure at a lower cost.

During the year the launch of digital door locks under
the Yale brand and new versions of the innovative electro-
mechanical Cliq Remote cylinder also continued on several
EMEA markets. These digital door locks mainly target the
residential market and have been very well received. Cliq
Remote chiefly targets commercial customers with many
remote installations, such as telecoms companies with a
large number of base stations.

The Group’s new product development process focuses

on increased customer value, while improving cost-effi-
ciency and maintaining higher quality. The products have
been well received by customers and have strengthened
ASSA ABLOY’s market-leading position in total security
solutions.

Cost-efficiency
In 2011 the Group launched a new efficiency program for
the production structure and one-third of this new program
consists of projects in EMEA. As in previous programs, the
aim is to improve production efficiency and transfer compo-
nent production to low-cost countries, while the remaining
production plants in western Europe focus on final assem-
bly and product customization. When the program is fully
implemented there will be fewer than 30 production and
assembly plants in EMEA, of which only a handful will be full
production plants, compared with over 60 plants five years
ago, of which nearly all were full production plants. This
change has resulted in a radical improvement in the divi-
sion’s level of costs. Further positive effects are that struc-
tural changes always lead to a review and rationalization of
the product programs, improved logistics solutions, a review
of the supplier base and improved quality.

The changes in the production structure, which mainly
affect the direct production resources, result in an adjust-
ment of the indirect production resources and the number
of employees has declined by 33 percent in recent years.

In the purchasing area, the share of purchases in low-cost
countries has risen to 37 percent, and the short-term target
is 40 percent. In addition, purchases are coordinated in the
division’s major categories to better exploit economies of
scale.

Implementation of the common ERP system has begun
and the whole division will be converted by the end of 2014.
This common system is the foundation for streamlining the
Group’s administrative flows referred to as Seamless Flow.
Streamlining the administrative flows enables the imple-
mentation of electronic order and order management sys-
tems for distributors and other customers, shorter lead
times, higher quality with the elimination of sources of error,
better internal efficiency and an increased service level for
customers and distributors.

KEY FIGURES
seK M

2010

2011

13,036
2
2,174
16.7

income statement
Sales
Organic growth, %
Operating income (EBIT)1
Operating margin (EBIT)1, %
Capital employed
Capital employed
– of which goodwill
Return on capital employed1, %
Cash flow
Cash flow2
Average number of employees
1 Excluding items affecting comparability of SEK 587 M in 2011.
2 Excluding restructuring payments.

8,759
5,471
21.6

2,607
9,471

13,030
0
2,203
16.9

8,950
5,564
22.0

2,142
10,071

SALES AND OPERATING INCOME

SEK M

14,000

12,000

10,000

8,000

6,000

10 11

SEK M

2,800

2,400

2,000

1,600

1,200

 Sales1

Operating income2

1 Reclassification has been
made for 2008 and 2009.
2 Excluding items affecting
comparability in 2008, 2009
and 2011.

CAPITAL EMPLOYED AND RETURN ON CAPITAL EMPLOYED

SEK M

12,000

10,000

8,000

6,000

4,000

10 11

 Capital employed
Return on capital
employed1

¹ 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%

MARKET SEGMENTS

Commercial segment, 55%
Residential segment, 45%

AssA ABLoY AnnuAL report 2011

eMeA division 41

Americas
Increased market presence and innovation
in challenging market conditions

Sales increased somewhat in the first half of the year driven by gradual increasing demand in South
America and the renovation market. The low level of new construction projects, particularly in North
America, resulted in stable sales for the full year. Marketing initiatives continued in the market and
included the Mobile Innovation Showrooms and product development. Many new electromechanical
products and total opening solutions were launched during the year. Marketing initiatives, the launch of
innovative new products and efficiency measures enabled the division to maintain a strong operating
income. The year saw the acquisition of the US company Electronic Security Devices.

Americas in brief
The Americas division manufactures and sells mechanical and electromechanical
locks, cylinders, security doors and door frames in North and South America. The
majority of the division’s sales are in North America where ASSA ABLOY has an exten-
sive sales organization and sells its products through distributors.

The two largest end-user segments are the institutional and commercial seg-
ments while the residential segment accounts for only a minor part of sales. Sales in
South America and Mexico take place mainly through distributors, wholesalers and
DIY stores and are more evenly distributed between the residential and commercial
segments in these markets.

Some of the division’s leading brands are Ceco, Corbin Russwin, Curries, Emtek,

Medeco, Phillips, SARGENT and La Fonte.

report on the year
The division’s sales for the year totaled SEK 8,906 M (9,536)
with an organic growth of 2 percent. Operating income
(EBIT) amounted to SEK 1,812 M (1,886), representing an
operating margin of 20.3 percent (19.8).

New construction in the commercial and institutional
segments in the USA and Canada has declined substantially
in the past few years as a result of the economic slowdown.
However, renovations and upgrades have shown more sta-
ble development. The division’s sales trend was positive at
the beginning of the year due to some recovery in the com-
mercial segment, but slowed towards the end of the year.
This mainly affected the principal product areas of mechani-
cal lock products and security doors, while sales of electro-
mechanical products and high-security products experi-
enced strong demand throughout the year.

Activity in the residential market in the USA and Canada
was good during the year due to a number of new product
launches.

The Latin American markets, apart from Brazil, showed
strong growth during the year. The standard of living is con-
stantly rising in these countries, impacting demand posi-
tively. In Brazil, however, demand was negatively impacted
by the slowing economy, high interest rates and the general
downturn particularly in the new construction segment.
The year saw the acquisition of the US company Elec-

tronic Security Devices.

Market presence
In the North American market there is a clear distinction
between products for the residential segment and products

for the non-residential segment. The distribution channels
are also completely separate. Safety and security require-
ments are higher in the non-residential segment than in the
residential segment, particularly regarding fire and evacu-
ation safety. The division has therefore had a segmented
marketing and sales force for a number of years to meet
each customer group’s specific requirements, combined
with experts in a number of areas such as electronic access
control.

A number of initiatives were implemented during the
year focusing on customer demand for total door opening
solutions in electromechanical products, security doors and
aesthetic door opening solutions. Growth in these areas in
which dedicated sales forces worked closely with customers
was strong during the year.

The focus on the various mobile events (Mobile Innova-
tion Showrooms) continued during the year with a sizable
increase in attendance versus the previous year. The Mobile
Innovation Showroom allows customers to view and learn
more about the latest door opening solutions at local ven-
ues. Sponsorship of architectural exhibitions was also suc-
cessful and led to more than 150 new enquiries relating to
major specification projects.

The division’s specification consultants also work
closely with architects and security consultants early in
the construction process to ensure compliance with build-
ing standards and customer requirements. Such activities
strengthen relations with architects and increase the likeli-
hood of orders when the project is procured. The market for
some of the major commercial and institutional segments,
such as school construction, has declined by between 25
percent and 40 percent over the past two years, while the
division’s specification sales to the same customer group
have risen 3 percent during the same period.

product leadership
Product development continued at a high rate during the
year in both the electromechanical and mechanical areas.
Sales of products launched in the past three years exceeded
20 percent of sales. Aesthetic and climate-smart solutions
are also increasing in importance. In addition to product
development, much work was invested in the commercial-
ization process, in other words, how new innovations are
efficiently brought to market.

Key launches of door and hardware opening solutions
in the commercial and institutional segments during the

AMeriCAs division

AssA ABLoY AnnuAL report 2011

» Increased focus on market presence, innovation and

cost control in challenging market conditions «

year included the SafeZone intelligent door holder/closer
and products based on the Group’s Aperio technology. The
SafeZone intelligent door holder/closer holds the door open
while someone is in the doorway. This is an important func-
tion for people with limited mobility who otherwise risk
being knocked over by a closing door. Aperio is a technology
for wireless networked electronic cylinders. These products
were awarded several prestigious prizes for design and func-
tion by the design and architecture world.

Launches in the residential segment included the Yale
Real Living product range, which is designed to integrate
with the networked lock and security systems that are
increasingly common in the home.

Four of the Group’s door companies, Ceco, CURRIES,
Graham and Maiman, were certified by the GREENGUARD
Environmental Institute during the year. GREENGUARD cer-
tifies products that enhance indoor air quality. ASSA ABLOY
was also the first door manufacturer in North America to
achieve certification of its Trio-E hinged door to the Ameri-
can UL Environment (Underwriters Laboratories) standard,
UL IRS 102.

Cost-efficiency
Operational excellence is focusing on increased administra-
tive efficiency, efficient production, Lean-methods and coor-
dinated purchasing for the production units. The year saw
the implementation of 350 Lean-projects throughout the
division. Lean-methods are now not only used in the pro-
duction process but are being rolled out to all areas. In 2011
nearly one-third of the projects concerned office adminis-
tration and this proportion is constantly rising.

The implementation of Seamless Flow activities to
streamline order management has increased the division’s
cost-efficiency and e-commerce is fundamental in this pro-
cess. Fully automated e-commerce now exceeds 15 percent
of the division’s sales. However, a major part of sales is best
suited to semi-automated e-commerce. This applies partic-
ularly to large complicated project deliveries in which many
products are specially configured. In other areas, such as
sales to wholesalers, fully automated e-commerce is more
suitable and the share of e-commerce has risen from 10 per-
cent to 50 percent in just a few years. This has taken place
through a careful analysis of the sales process and utiliza-
tion of the existing tools already in place without the need
for any major capital expenditure. Apart from continuing to
drive e-commerce in sales, it is now also being extended to
purchasing operations.

Work is in progress in the IT area to implement a com-

mon ERP system. Currently 20 percent of the division is
covered by this common system, which will be fully imple-
mented by 2015.

KEY FIGURES
seK M

2010

2011

9,536
–2
1,886
19.8

8,163
6,039
21.3

2,013
6,969

8,906
2
1,812
20.3

8,468
6,041
22.8

1,731
6,658

SALES AND OPERATING INCOME

SEK M

12,000

10,000

8,000

6,000

4,000

SEK M

2,400

 Sales1

Operating income2

2,000

1,600

1,200

800

10 11

1 Reclassification has been made
for 2008 and 2009.
2 Excluding items affecting compa-
rability in 2008, 2009 and 2011.

CAPITAL EMPLOYED AND RETURN ON CAPITAL EMPLOYED

SEK M

10,000

8,000

6,000

4,000

10 11

SALES BY PRODUCT GROUP

 Capital employed
Return on capital
employed1

¹ Excluding items affecting compa-
rability in 2008, 2009 and 2011.

Mechanical locks, lock
systems and fittings, 51%
Electromechanical and
electronic locks, 10%
Security doors and
hardware, 39%

MARKET SEGMENTS

Commercial segment, 85%
Residential segment, 15%

AssA ABLoY AnnuAL report 2011

AMeriCAs division 43

Asia Pacific
Strong sales growth and
market leadership in Asia

The division grew throughout the year driven by strong growth in China, where demand particularly for
security doors was high. Growth was also strong on the markets in South Korea and South Asia. Efforts
to develop the specification and project markets and to expand into new emerging markets, includ-
ing India, continued intensively. The year saw the acquisition of the South Korean lock company Angel
Metal. As a result of organic growth and strategic acquisitions, the Group can now offer a total range of
door opening solutions on the Asian markets.

Asia pacific in brief
The Asia Pacific division manufactures and sells mechanical and electromechanical
locks, digital door locks, high-security doors and hardware. China accounts for 50 per-
cent, Australia and New Zealand for 30 percent, and the other Asian markets, domi-
nated by South Korea, for 20 percent of the division’s sales.

In Asia, the division’s largest brands are the Chinese brands Baodean, Guli, Pan
Pan, Shenfei Liyi, Doormax, Beijing Tianming, Wangli and Longdian, the South Korean
brands Gateman, Angel and King and the global brand Yale. In Australia and New
Zealand, the largest brands are Lockwood and Interlock.

The Australian and New Zealand markets are mature, with established lock stan-
dards. The majority of sales are for renovations and upgrades. The Asian markets do
not yet have such established security standards, and the majority of products are
sold for new construction. In China, the same types of lock, handle and hardware are
often used for both homes and offices. The production units in China also supply
ASSA ABLOY’s other divisions.

report on the year
The division’s sales for the year totaled SEK 6,633 M (6,081),
with an organic growth of 9 percent. Operating income
(EBIT) was SEK 933 M (843), representing an operating mar-
gin of 14.1 percent (13.9).

Sales in China continued to grow strongly driven by
the underlying urbanization trend, economic growth and
increased prosperity. Growth was particularly strong in the
security door segment. Towards the end of the year the
growth rate slowed caused mainly by the credit restrictions
imposed by the Chinese government to avoid overheat-
ing in the economy. This had an impact on demand mainly
in the residential segment in the coastal regions. However,
demand remained strong from institutional customers in
healthcare and infrastructure. Many property developers in
the coastal regions chose to change direction from hous-
ing to commercial projects, which to some extent offset the
sales decline in the residential segment. The ongoing pro-
grams for publicly subsidized housing projects in the inland
regions also had a positive impact on demand and led to a
strong increase in Group sales.

The South Korean business units experienced strong
sales growth during the year. Export sales by the Group com-
panies iRevo and King grew very strongly, while the domestic
market developed more weakly particularly towards the end
of the year. iRevo is the market leader in digital door locks

in South Korea and has also successfully established itself in
China, Australia, Singapore, the UK and the USA in collabora-
tion with Group companies in these markets. Expansion is
set to continue in the coming years.

Growth was very strong in the rest of Asia. On the Indian

and Indonesian markets, which have considerable growth
potential, sales increased sharply from a small base. The divi-
sion continued its initiatives to develop the sales organiza-
tion with focused sales teams and an emphasis on fewer but
stronger brands, which has further strengthened the divi-
sion’s product offering.

In Australia and New Zealand, the market position
remained strong but sales growth was negative during the
year. In Australia, the reduction in government stimulus
packages resulted in reduced demand. In New Zealand,
demand slowed due to the strong earthquake in the South
Island.

The acquisition of the lock company Angel Metal in the
second half of the year further strengthened the position on
the South Korean market.

Market presence
The Group has established a very strong presence on the
Chinese and South Korean markets through a combination
of acquisitions and organic growth. In China, sales of secu-
rity doors in particular have grown very strongly as a result of
the acquisition of Pan Pan. This has led to the establishment
of sales channels in new regions in China where growth is
expected to be high in the future. In South Korea, acquisi-
tions in recent years have also led to a strong and leading
market position. The Group can now offer a wide prod-
uct range and total door opening solutions on both these
markets.

The Group is now establishing itself in a similar way on
the markets in South-east and South Asia through a combi-
nation of acquisitions and organic growth.

Specification of total door opening solutions is very
important for sales growth on all markets. The number of
specification sales representatives continues to increase and
the strategic collaboration with architects and security con-
sultants is being strengthened.

The local sales organizations are united under the
ASSA ABLOY master brand to better meet the demand for
total door opening and security solutions.

AsiA pACifiC division

AssA ABLoY AnnuAL report 2011

» Sales in China continued to grow strongly driven by the
underlying urbanization trend, economic growth and
increased prosperity «

KEY FIGURES
seK M

2010

2011

6,081
14
843
13.9

4,080
3,202
25.1

917
15,510

6,633
9
933
14.1

4,278
3,410
23.6

912
15,784

product leadership
Innovation, continued product development and a widen-
ing of existing product ranges are important factors for the
division enhancing an already attractive product range and
increasing sales. The year saw the launch of a number of new
mechanical lock products for doors and windows in Austra-
lia and New Zealand.

The South Korean company King Door Closers launched

an innovative new recessed door closer, while the Chinese
company Shenfei launched a range of CE marked door clos-
ers for the European market. The Chinese companies Pan
Pan and Wangli launched a brand new, simpler door range,
which has met with great success in the new social housing
construction project.

Electromechanical security products are increasing in
importance. iRevo successfully launched a number of inno-
vative new types of digital door lock during the year, includ-
ing a new DIN-compliant lock.

Cost-efficiency
Most production now takes place in Chinese production
units, and continuous efforts are in progress to increase
their efficiency. Important areas are projects for semi-auto-
mated processes, the implementation of Lean methods and
supply management.

The production units in Australia and New Zealand focus
on customized solutions and final assembly. A large propor-
tion of the components and standard products for these
markets are manufactured in the division’s Chinese plants.

SALES AND OPERATING INCOME

SEK M

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

10 11

SEK M

1,000

 Sales1

900

800

700

600

500

400

300

Operating income2

¹ Reclassification has been made
for 2008 and 2009.
² Excluding items affecting compa-
rability in 2008, 2009 and 2011.

Sysselsatt kapital/avkastning på sysselsatt kapital

CAPITAL EMPLOYED AND RETURN ON CAPITAL EMPLOYED

SEK M

4,500

3,750

3,000

2,250

1,500

750

10 11

SALES BY PRODUCT GROUP

 Capital employed
Return on capital
employed1

¹ Excluding items affecting compa-
rability in 2008, 2009 and 2011.

Mechanical locks, lock
systems and fittings, 46%
Electromechanical and
electronic locks, 8%
Security doors and
hardware, 46%

MARKET SEGMENTS

Commercial segment, 60%
Residential segment, 40%

AssA ABLoY AnnuAL report 2011

AsiA pACifiC division 45

Global Technologies
Strong growth and innovative product launches
in HID Global and ASSA ABLOY Hospitality

Demand for upgrading and complementing existing systems was strong in all markets, while the market
for new installations remained weak. Sales for the year showed strong growth due to a number of inno-
vative product launches. HID Global launched new products and services in logical and physical access
and in contactless identification, which were well received by the market. The year saw the acquisition
of the US company LaserCard. New product launches by ASSA ABLOY Hospitality, particularly in RFID
locks, further strengthened the market position.

global technologies in brief
Global Technologies has a leading position as a supplier of electronic security
solutions worldwide. The division consists of two business units, HID Global and
ASSA ABLOY Hospitality, with sales mainly to the commercial segment.
HID Global is a global leader in secure identity solutions, primarily in identity and
access management, and in contactless identification technology solutions under the
HID brand.
ASSA ABLOY Hospitality is a global leader in electronic lock systems and safes for
hotels and cruise ships under the VingCard Elsafe brand.

report on the year
The division’s sales for the year totaled SEK 5,756 (5,015),
with an organic growth of 11 percent. Operating income
(EBIT) excluding restructuring costs amounted to SEK 897
M (862), representing an operating margin of 15.6 percent
(17.2).

hid global in brief
HID Global is a global leader in secure identity solutions
for physical and logical access control, identity assurance,

Physical
access control

Identification
technologies

Secure
issuance

Secure
Identity
Solutions

Mobile
access

Identity
assurance

Managed
services

Government
ID

secure card issuance and a variety of technology solutions
for contactless identification applications. Identity and
access management product lines include contactless smart
cards, fixed and mobile readers access controllers, identity
tokens, and card management systems. The product range
also includes card printing and encoding hardware and soft-
ware and specialized government ID solutions for identity
cards and electronic passports.

hid global – main events in 2011
Demand for HID Global’s products was strong during the
year. New products and active marketing efforts resulted in
considerable interest in secure identity solutions in all mar-
kets. The traditional product areas in identity and access
management showed stable, strong demand.

Product development and marketing in the product area
of government ID programs, driving licenses and the like led
to a number of major project orders.

The acquisition and the integration of ActivIdentity
(acquired in December 2010) and LaserCard (acquired in
January 2011) into HID Global’s existing operations have
provided the unit with a comprehensive set of competen-

hid global’s product areas
HID Global works with common technology platforms
for developing secure identity solutions. Below are some
examples of HID Global’s product offering in this area of
the security market.

physical access control, contactless cards, readers and
access controllers

secure issuance card printers, encoders and software

identity assurance, strong authentication and credential
management

government id, highly secure media, ePassports, ID cards
and readers

Managed services, custom card services and remote
issuance of identity data

Mobile access, digital keys and reader technology for
NFC enabled mobile phones

identification technologies, technology solutions for
contactless identification applications

gLoBAL teChnoLogies division

AssA ABLoY AnnuAL report 2011

KEY FIGURES
seK M

2010

2011

5,015
10
862
17.2

5,772
4,265
14.7

868
2,487

5,756
11
897
15.6

6,449
4,846
14.3

933
2,819

SALES AND OPERATING INCOME

SEK M

6,000

5,000

4,000

3,000

2,000

10 11

SEK M

1,000

 Sales1

Operating income2

800

600

400

200

1 Reclassification has been made
for 2008 and 2009.
2 Excluding items affecting compa-
rability in 2008, 2009 and 2011.

CAPITAL EMPLOYED AND RETURN ON CAPITAL EMPLOYED

SEK M

6,500

5,500

4,500

3,500

2,500

10 11

SALES BY PRODUCT GROUP

 Capital employed
Return on capital
employed1

¹ Excluding items affecting compa-
rability in 2008, 2009 and 2011.

Access control, 52%
Identification technology, 27%
Hotel locks, 21%

MARKET SEGMENTS

Commercial segment, 100%
Residential segment, 0%

» Global leader in secure identity

and hotel security «

cies in strong authentication, credential management, and
highly secure media for government ID programs together
with a unique technical and knowledge platform for the
development of tomorrow’s Government ID services. This
has resulted in the formation of two new business segments:
Identity Assurance and Government ID Solutions. Identity
Assurance has is focused on strong authentication and
card management and systems for government, financial
and commercial customers. Government ID Solutions was
formed through the merger of LaserCard with the HID eGov-
ernment business for national ID and passport deployments.
HID Global also created two further business segments

during the year: Mobile Access and Managed Services.
Mobile Access offers virtual key issuance, and reader tech-
nology for NFC (near field communications) enabled mobile
phones. Managed Services is a service offering for custom-
ized smart cards and remote issuance of secure identity
data.

Market presence
HID Global continued its long-term investment in market
presence with considerable success in products, services
and solutions for the institutional and commercial mar-
ket segments. Significant progress has been made in brand
strategy and the focus on a customer-segmented sales force.
The consolidation of HID Global’s brands has been very

successful and resulted in the consolidation of 17 brands
into a single brand – HID – in just five years. Some previously
well-known brands have been retained as product names
under the global HID brand. This reinforces global brand
loyalty, while providing a complete product and integrated
solutions portfolio offer to all customers.

The well-established market position in the global uni-

versity market was further strengthened through a pilot
mobile key program (Mobile Access) at Arizona State Uni-
versity in collaboration with Research in Motion and Verizon
Wireless.

As a result of marketing campaigns targeting govern-
ment customers and a focused sales force in Government
ID Solutions, HID Global has now supplied to 27 countries’
ePassport programs and 49 national programs for various
types of ID cards and driving licenses. In addition, the five
largest contactless ID reader manufacturers use HID Glob-
al’s components for government projects in 12 countries,
including the USA, Canada, France, Germany, Russia and Italy.

product leadership
HID Global’s product strategy involves creating an eco-sys-
tem for secure identity management with solutions for all
parts of the value chain. The HID’s Secure Identity Object
(SIO) is a key part of this eco-system. SIO is an in-house
developed data structure and encryption scheme, which
can be applied to all types of SIO ready identity devices, such
as smart cards, cell phones, electromechanical locks and SIM
cards.

The year saw the launch of the new iCLASS SE (SIO
enabled) product line, a new secure identity management
platform for physical access control. In 2011 the product
won prizes for best product at the industry’s two largest
global trade fairs. Strategic alliances were established with
Sony and NXP as a part of the development strategy. A num-
ber of important patents were also granted during the year.

AssA ABLoY AnnuAL report 2011

gLoBAL teChnoLogies division 47

Identity Assurance launched a number of new products
for US federal agencies’ PIV (Personal Identity Verification)
cards. PIV is a common standard for identification of federal
employees, which is under implementation in the USA.

Cost-efficiency
HID Global continued its efforts to reduce inventories
thereby optimizing the management of working capital.
Good progress was made in implementing the project
across all product areas and geographical regions, and activi-
ties will continue in 2012.

Consolidation of inlay production and card lamination to
the production unit in Malaysia was completed in 2011 and
efforts to increase efficiency continued successfully in the
other production plants worldwide.

Major progress was made in the quality assurance area
in reducing the cost of poor quality in the operations and
improving the delivered quality to customers. This initiative
has resulted in an improved Genuine HID “customer experi-
ence” as well as lower costs for the business.

HID Global also increased its activities in Value Analysis/

Value Engineering (VA/VE). The goal is to reduce product
costs while increasing functionality. This has led to signifi-
cant cost savings in both the existing product range and the
production of new products.

AssA ABLoY hospitality in brief
ASSA ABLOY Hospitality manufactures and sells electronic
locking systems, safes, energy management solutions and
minibars for hotels and cruise ships under the VingCard
Elsafe brand. VingCard Elsafe is the world’s best-known
brand for hotel locking systems and in-room safes and has
products installed in over 7 million hotel rooms in more
than 42,000 hotels worldwide.

AssA ABLoY hospitality – main events in 2011
ASSA ABLOY Hospitality experienced strong full-year growth
driven by continued increased demand for renovation and
upgrade projects. However, the market for new hotel and
cruise ship construction remained at a low level.

ASSA ABLOY Hospitality has worked actively to upgrade

customers’ installed locks from magnetic stripe card lock-
ing systems to more secure, flexible and user-friendly locks
using contactless radio frequency identification (RFID).
Demand for the new contactless RFID hotel locks rose
sharply in 2011 and more than half a million VingCard
RFID locks were installed globally. RFID technology offers
increased security and when combined with wireless ZigBee
technology the system is constantly online. This provides a
very reliable and cost-efficient security system, improving
efficiency and reducing maintenance costs for hotels.

The new VISIONLINE by VingCard system is integrated
with the hotel’s other operating systems to add efficient
new housekeeping, security, front desk and maintenance
functions. The system improves customer service by
enabling 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 their key. New inte-
grated technology has been developed within the VISION-
LINE system, such as mobile keys that allow guests to use
their cell phone as a key, loyalty cards for regular guests that
enable guests to avoid check-in and go straight to their hotel
room.

VingCard Elsafe has also established itself as an important
supplier of energy management solutions for the hotel mar-
ket through its Orion range launched in 2010. Using sensors
to detect guest presence in the room together with informa-
tion from the door lock when the guest enters and leaves the
room, Orion can determine guest presence in the room to
optimize air conditioning energy usage while ensuring guest
comfort. This results in cost savings for the hotel and a more
eco-friendly use of hotel rooms.

Market presence
It is strategically important for ASSA ABLOY Hospitality to
expand its customer base beyond the traditional hotel and
cruise sectors. Marketing efforts are therefore being made
in other segments, such as retirement and student accom-
modation, where security and accessibility requirements
can be met by the products and technologies offered by
ASSA ABLOY Hospitality. Future initiatives are in progress to
offer integrated security solutions with other ASSA ABLOY
companies.

product leadership
One strategic priority for increased growth in ASSA ABLOY
Hospitality is offering upgrades for previously installed prod-
ucts. Important components in achieving this are technolo-
gies such as RFID, NFC in cell phones and ZigBee RF online
solutions, which are designed to facilitate gradual upgrade
of existing technology to better satisfy customer needs and
investment plans.

Hospitality succeeded in achieving strong growth during
the year by offering value-creating customer solutions. One
example of this was the development of a loyalty card con-
cept, which enables a number of major global hotel chains
to offer their regular guests a RFID loyalty card that can be
used as a room key. The booking confirmation and room
number are sent to the hotel guest by SMS or email before
arrival. The guest can then bypass check-in at the front desk
and go straight to their hotel room and enter using their loy-
alty card.

The many types of RFID readers have been combined

into a common electronic platform to reduce cost and
streamline production. This new platform, which is suitable
for both old and new locks, has moreover provided consid-
erably better performance, such as increased reading range,
higher reading speed and better reliability.

Cost-efficiency
Major efforts are also being made to increase efficiency in
the business unit through relocation of production to low-
cost countries and outsourcing of component production
to high-quality suppliers in low-cost countries.

ASSA ABLOY Hospitality has successfully transferred
all production and purchasing from high-cost to low-cost
countries, primarily China. It is now investing considerable
effort in streamlining production and product development
in the new production plant in Shanghai, China. As a result,
it has succeeded in further improving efficiency in the value
chain, while improving product quality and delivery reliabil-
ity for customers worldwide.

Hospitality continued to implement the global ERP sys-
tem, which is scheduled to be fully installed by 2012. This
system will improve the efficiency of administrative and
global purchasing functions and develop the web-based
ordering portal used by business partners network.

gLoBAL teChnoLogies division

AssA ABLoY AnnuAL report 2011

Customer:

Challenge:

Solution:

Arizona State puts mobile keys to the test

Arizona State University (ASU) is committed to the use and management of advanced technology, including solutions that
optimize security and convenience for students, faculty and staff.

ASU first adopted iCLASS® technology for its campus ID cards in 2004 as part of a major safety and security initiative. In 2011,
ASU wanted to evaluate the benefits of moving its student housing keys onto NFC smartphones.

In the first university pilot of NFC smartphones carrying digital keys for access control, HID Global deployed iCLASS SE readers
and HES electric strikes on secured doors to ASU’s main residence hall. Students and staff participating in the pilot were given
NFC smartphones carrying iCLASS SE® technology. To open door locks, pilot participants presented the smartphones to a
door reader, which opened once their identity was authenticated.

AssA ABLoY AnnuAL report 2011

Entrance Systems
Acquisitions consolidate Entrance Systems’
leading position in entrance automation

New sales of automatic doors showed good growth throughout the year, while service sales continued
to grow strongly. Demand increased in the retail, logistics and manufacturing segments, but was more
restrained in the healthcare segment. Newly acquired Crawford and FlexiForce saw positive growth in
industrial door sales. An agreement to acquire Albany Door Systems was signed at the end of the year,
which will provide a strong position in high-performance doors. Rationalization of the production
structure resulted in a strong earnings trend.

entrance systems in brief
The Entrance Systems division is a global leader in entrance automation products,
components and service. The product range includes automatic swing, sliding and
revolving doors, air curtains, gate automation, garage doors, industrial doors, docking
solutions and hangar doors. The acquisition of Albany Door Systems greatly strength-
ens the position within high-performance doors.

The products are sold through both a direct and an indirect sales channel. In the

former, equipment and a comprehensive service offering are sold direct to end-
customers, while in the latter products and components are sold to end-customers
through distributors.

The products are sold under the global leading brands of Besam, Crawford, Albany,

FlexiForce, Normstahl, Henderson, Ditec and EM.

report on the year
The division’s sales for the year totaled SEK 8,278 M (4,072)
with an organic growth of 5 percent. Operating income
(EBIT) excluding restructuring costs was SEK 1,197 M (627),
representing an operating margin of 14.5 percent (15.4).

The market recovery began in late 2010 and continued
throughout 2011 with stable, strong demand on all markets.
Sales of new equipment rose as a result of both product and
market initiatives. The retail, logistics and manufacturing
segments grew, while growth in the healthcare sector and
garage door sales was more restrained. Service sales contin-
ued to be a key success factor for achieving profitability and
growth.

The year saw the major acquisitions of the Swedish com-

pany Crawford and the Dutch company FlexiForce. Craw-
ford supplies industrial doors, docking solutions and garage
doors, while FlexiForce supplies components for industrial
and garage doors. In October an agreement was signed to
acquire the American company Albany Door Systems, which
is a leader in automatic high-performance doors. The year
also saw acquisitions in Canada, Australia and New Zealand.
The division has established a global leading position in

entrance automation through these acquisitions and has
grown from SEK 3 billion to over SEK 8 billion in just a few
years. It now has a strong integrated offering comprising
automatic door solutions for pedestrian traffic, industrial
doors, docking solutions, garage doors, gate automation and
entrance solutions for industrial, commercial, institutional
and private customers, with a strong service offering mainly
for the industrial, commercial and institutional segments.

Market presence
The entrance automation market is in the process of chang-
ing from a number of regional markets to a more global
market. This makes new demands on global presence and
global product platforms for continued growth and profit-
ability. The year’s major acquisitions are part of this trend
and have further strengthened the division’s market pres-
ence in Europe, where Crawford and Normstahl have their
main operations, as well as on emerging markets thanks to
Crawford’s favorable market position in the Middle East and
China. Megadoor has a strong position in North America and
FlexiForce has built up a good presence on several emerg-
ing markets. Market presence is also increasing on emerging
markets in Africa, Latin America and Asia Pacific. Overall, the
division now has sales companies in 30 countries and autho-
rized distributors in 50 countries.

Increased globalization leads to certain customers
increasing in size and becoming fully or partly global. The
division is therefore working intensively on its Key Account
Management concept, in which total door systems and
service are sold to selected major customers. The largest
opportunities are in the retail, transport, logistics and manu-
facturing segments.

Entrance Systems is also working continuously to widen
the customer offering by selling total automatic door open-
ing solutions for pedestrian traffic and industrial doors
including a comprehensive service concept. Regular preven-
tive service is beneficial to customers and ongoing contact
with end-customers provides increased opportunities for
additional sales. The division’s service organization is striv-
ing to become more efficient, further automate processes
and increase the number of customer visits.

product leadership
The division invested heavily in product leadership in 2011.
There was an increased focus on product development
in the new parts of the division by setting up new prod-
uct organizations and developing common platforms and
modular solutions. Several Value Engineering projects were
also started during the year to further increase the division’s
competitiveness by increasing customer value while reduc-
ing product cost.

Products launched by Besam during the year included
energy-saving door automation solutions such as Besam
TightSeal, and security-enhancing solutions for swing doors

entrAnCe sYsteMs division

AssA ABLoY AnnuAL report 2011

» Entrance

automation
acquisitions
strengthen the
customer
offering «

in stores such as Flush Bolt. The door closer offering was wid-
ened and new software was launched in sliding door auto-
mation to increase operational reliability. New functions
were also developed for revolving doors, including laser sen-
sors and air curtains for UniTurn.

Crawford launched products including a new low-thresh-

old pass door, new controllers, and a glazed sectional door,
Crawford 242 Fully Glazed, intended for use in exhibition
halls. It also launched a new loading dock, Crawford Step
Autodock, which offers more flexible height adjustment
when loading and unloading goods.

FlexiForce launched SafeStep components for low-
threshold doors, which target door manufacturers. The
same technology is used in SideStep components for side
doors and DoubleStep components for double doors.

A new garage door with an extra smooth surface finish,
Normstahl Entrematic g60 Satin, was also launched on the
market.

Ditec Entrematic developed a new product portfolio
for remote control of door automation, new safety sensors
and new functions for high-performance doors to increase
speed, reliability and aesthetics.

Product customization to conform to local conditions
and market requirements on the Asian and North American
markets continued during the year, as well as standardiza-
tion work on new functional and safety standards, which
strengthened competitiveness on several key markets.

Cost-efficiency
In December a new synergy- and restructuring program was
announced. The aim of this program is mainly to streamline
the production structure in the newly acquired units, and
to achieve revenue and cost synergies with the division’s
existing units. The program which entails the closure of a
number of production plants and the transfer of production
between existing plants in both high- and low-cost coun-
tries. Meanwhile investments are being made in five final
assembly plants in strategic locations in Europe. This is done
to increase proximity to customers, generate cost-efficiency
in logistics, and increase competitiveness with regard to
both product cost and lead times.

An efficient purchasing organization is an important part

of these changes. In parallel coordination of common plat-
forms for components is taking place, which is expected to
result in cost savings and increased competitiveness.

Central functions have also been streamlined, and syn-
ergies are being generated at the local level by starting to
consolidate legal entities to streamline administration.
Extensive work is also in progress in IT, where the division is
implementing common business systems, customer man-
agement systems and e-commerce solutions. Measures to
increase productivity are also in constant progress in the
service organization, and the division began implementing
PDAs for service engineers in North America.

KEY FIGURES
seK M

2010

2011

4,072
–2
627
15.4

4,365
3,303
14.6

580
2,738

8,278
5
1,197
14.5

10,837
7,153
12.2

1,243
5,605

SALES AND OPERATING INCOME

SEK M

8,500

7,500

6,500

5,500

4,500

3,500

2,500

10 11

SEK M

1,200

1,050

900

750

600

450

300

 Sales1

Operating income2

1 Reclassification has been made
for 2008 and 2009.
2 Excluding items affecting compa-
rability in 2008, 2009 and 2011.

CAPITAL EMPLOYED AND RETURN ON CAPITAL EMPLOYED

SEK M

12,000

10,000

8,000

6,000

4,000

2,000

10 11

 Capital employed
Return on capital
employed1

¹ Excluding items affecting compa-
rability in 2008, 2009 and 2011.

SALES BY PRODUCT GROUP

Products, 62%
Service, 38%

MARKET SEGMENTS

Commercial segment, 93%
Residential segment, 7%

AssA ABLoY AnnuAL report 2011

entrAnCe sYsteMs division 51

Employees
Employees generate the success

ASSA ABLOY’s vision and ambition is to be an attractive company to work for. It is also increasingly
important to be able to recruit and retain employees with the competence and the experience required
to secure the Group’s continued success. Considerable efforts are therefore being made globally and
locally to offer stimulating assignments with clear accountability, good development opportunities and
a positive, engaging work situation.

Common knowledge base
A good knowledge of the company in which you work and an
understanding of how your own efforts relate and contrib-
ute to the overall goals are crucial for motivation and com-
mitment. One activity to achieving this is that all employees
complete the web-based interactive induction program
’Entrance to ASSA ABLOY’. This program is available in 15 lan-
guages and covers the Group’s history, organization, prod-
ucts, strategy and Code of Conduct. A new version of the
program was launched in 2011.

Global employee survey
A global employee survey, first carried out in 2006, is con-
ducted every 18 to 24 months to give employees a chance
to express their views on their work, their workplace and the
company, thereby encouraging employee participation and
commitment. The survey is followed by activities in areas
that show the need for change and improvement.

Evaluation and comparison with the results of previ-
ous surveys show the impact of the measures taken and the
areas that need prioritizing in the ongoing improvement
process. The fourth survey will be conducted in spring 2012.
In addition to the overall results for the Group and the
divisions, the results are broken down into more than 200
different units, enabling more relevant communication, tar-
geted measures and the involvement of many employees.

management training
Every year ASSA ABLOY offers a number of senior manag-
ers the opportunity to take part in one of the Group’s two
development programs: ASSA ABLOY Management Training
(MMT) and ASSA ABLOY “Boosting Market Leadership Pro-
gram”. In 2011 57 managers took part.

MMT, which is an internal program, provides participants

with an increased knowledge of all areas of ASSA ABLOY’s
operations, develops their internal network and helps to
share best practices and identify new business opportuni-
ties. This is of particular importance for ASSA ABLOY in view
of its continuing acquisition of new companies, and it is
therefore also a tool for successful integration. Since MMT
was launched in 1996, 420 managers from 34 countries
(including the 2012 program) have taken part. The program
comprises three modules over a calendar year and takes
place in different global locations where ASSA ABLOY has
extensive operations.

ASSA ABLOY paves the way for women

Agnès Richter, Product Group Manager, ASSA ABLOY France, was one of 20
participants in a June 2011 workshop in Stockholm on the topic of increasing
the number of women in senior management positions.

ASSA ABLOY strives to promote more women in the Group. The overall goal is to have
women in 30 percent of management positions by 2020.

ASSA ABLOY’s HR Director Krister Eriksson believes a better balance between men
and women at all levels in the organization will contribute to making ASSA ABLOY an
even stronger company, both in terms of performance and as an attractive employer.
“It will broaden our perspective on various issues, which will help us make better
decisions,” Krister says. “Gender diversity should be part of the Group’s DNA.” Studies
show that companies with women in senior management positions perform better.
ASSA ABLOY’s traditional business and technology has historically attracted mostly
men, so it’s certainly a challenge to attract and retain women in the Group.

To ensure that ASSA ABLOY reaches the goal of 30 percent women in manage-
ment positions by 2020, the divisions will increase the effort to achieve a better bal-
ance of managerial positions and there will be a systematic follow up of the progress.
The ambition is also to increase the proportion of female participants in leadership
programs such as IMD, the international business school ASSA ABLOY cooperates
with. “Primarily, we want to promote the women already working for the company,”
says Krister. “I think perhaps women need an extra push and support to apply for jobs
internally.” It’s a matter of changing the company culture. And we can do it.

EmployEEs

AssA ABloy AnnuAl rEport 2011

» ASSA ABLOY’s
vision is to be
an attractive
company to
work for «

The ASSA ABLOY “Boosting Market Leadership Program”
was launched in 2011. This is a new tailor-made program
developed in collaboration with IMD in Lausanne, Switzer-
land, and a continuation of the collaboration that began in
2005 with the ASSA ABLOY Business Leadership Program.
The program’s main aim is to support the implementation
of ASSA ABLOY’s strategy. In 2012 about 60 senior managers
are expected to take part.

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 pro-
gram is open to all employees.

Employee development
ASSA ABLOY has a well-established global employee devel-
opment process at all levels, the Talent Management Pro-
cess. The aim is to support career development in a struc-
tured way, to optimize utilization of the Group’s total
resources, and to ensure that the necessary competence is
available to meet future requirements.

recruitment
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.

Gender equality
ASSA ABLOY’s ambition is to achieve a better gender balance
at all levels in the organization. A separate gender equality
policy has been developed to underline this ambition.

In order to further drive this agenda a workshop was
arranged in Stockholm in June 2011, with participants from
all divisions and the Executive Team, to discuss measures
and targets. The participants agreed on a target of a total of
30 percent women at levels 2 to 5 in the Group by 2020. It
was also decided to increase the focus on this issue in con-
nection with the Talent Management Process. Other mea-
sures include prioritizing the underrepresented gender in
the recruitment process provided they have equal qualifica-
tions and aiming for at least one person from the underrep-
resented gender among the final candidates.

AVERAGE NUMBER OF EMPLOYEES

Number

50,000

40,000

30,000

20,000

10,000

10 11

NUMBER OF EMPLOYEES BY REGION

GENDER DISTRIBUTION

Europe, 14,474
North America,
7,423
Central and South
America, 911
Africa, 479
Asia, 16,703
Pacific, 1,080

Men, 65%
Women, 35%

Female managers at different levels
in the organization

level

2007

2008

2009

2010

2011

percentage of females

2 – reports to CEO
3 – reports to level 2
4 – reports to level 3
5 – reports to level 4

level 2–5

All employees

0
14
19
22

–

0
11
17
23

–

0
15
18
20

–

0
16
18
24

–

0
15
19
26

ASSA ABLOY AB head office is not included.
The decrease is due to the acquisitions of Pan Pan and Crawford.

AssA ABloy AnnuAl rEport 2011

EmployEEs 53

Sustainable development
Climate-smart products increasingly important

Sustainability initiatives are based on a knowledge of the environmental impact of operations, the
increasing demand for green products and the intention to be a responsible and attractive company.
ASSA ABLOY’s sustainability initiatives are integrated throughout the value chain – from sourcing to
recycling.
The overall sustainability program is based on the Group’s Code of Conduct and an ongoing risk
analysis and involves both internal and external stakeholders.
Ongoing improvements in manufacturing processes and new products actively help customers to
reduce their energy consumption and environmental impact. Climate-smart products account for an
ever-increasing share of sales and include the eco-certified Trio-E hinged door, an electronic lock cylin-
der with halved energy consumption, and the Orion energy management system from VingCard Elsafe.

Sustainability Report
2011

The global leader in
door opening solutions

The 2011 Sustainability
Report will be published in
connection with the 2012
Annual General Meeting.

Code of Conduct
The Code of Conduct establishes the principles that
ASSA ABLOY applies in relation to its employees, suppliers
and other stakeholders. The Code is based on international
standards, is consistent across the global organization and is
available in 22 languages. ASSA ABLOY monitors the imple-
mentation of the Code of Conduct and deals immediately
with any non-compliance.

The Code of Conduct is available to all employees, who

are required to read and abide by it and related policies.
Whistle-blowing procedures are in place to enable employ-
ees to report infringements.

Suppliers are informed of ASSA ABLOY’s Code of Conduct
and undertake in writing to comply with it in their collabora-
tion with the Group.

Group continued work on the sustainability program with
increased targets for Group companies, and the number of
Group companies integrated into the sustainability program
and reporting to the Group increased by 25 percent. During
the year ASSA ABLOY increased the accuracy and the level
of detail in internal reporting to increase control and ensure
continuous progress in the Group.

New targets for 2015 have been drawn up for all divisions

in the Group. These include chemical handling, energy effi-
ciency, health and safety, supplier relations, product devel-
opment, employee issues and overall control. The program
has made it possible to introduce procedures for quality and
environmental management and to establish a structure for
ongoing improvements in day-to-day operations, providing
a stable basis for a sustainable future for the Group.

AssA ABloy’s way of working
Social responsibility and sustainable development are based
on ASSA ABLOY’s Code of Conduct. The Board of Direc-
tors has the overall responsibility, while the Executive Team
handles operational management of sustainability and the
Group’s strategies.

Appointed coordinators at divisional and Group com-
pany level are responsible for the availability and implemen-
tation of sustainability and environmental guidelines, pro-
grams and tools. HR functions at Group and divisional level
monitor social and ethical issues. The divisions and their
companies are responsible for compliance with the Group’s
Code of Conduct and for reporting back to Head Office.

A committee led by ASSA ABLOY’s HR director monitors

compliance with the Code of Conduct and includes two
employee representatives. Matters dealt with by the com-
mittee include whistle-blowing cases

In addition to information and guidelines, ASSA ABLOY’s

intranet also provides tools to support Group companies
in their sustainability initiatives. These tools include a data-
base of previous best practice in the Group. This database
includes all the facts, reporting and monitoring relating to
the sustainability program. Statistics and reports can be
extracted from the database to enable Group companies to
compare their performance with other ASSA ABLOY Group
companies and assess the measures to be taken.

Sustainability program
The first sustainability program was launched in 2007 and
completed in 2010 with all the targets fulfilled. In 2011 the

Corporate governance
ASSA ABLOY complies with the Swedish Code of Corporate
Governance, which forms part of the NASDAQ OMX rules
governing the Stockholm Stock Exchange. The principles of
the Code are that companies should either comply with the
rules or explain any deviation from them. The Code stipu-
lates responsibilities and procedures for the Annual General
Meeting, ASSA ABLOY’s Board of Directors and the Executive
Team.

supplier control
Auditing and improving the supplier base is a continuous
task, and supplier selection is based on standardized crite-
ria for both quality and sustainability. Good supplier control
and jointly agreed action plans result in increased product
quality and sustainable processes.

Suppliers are also required to comply with the Code of
Conduct. Quality and sustainability audits are carried out
before new suppliers are approved, and these audits are pri-
oritized for suppliers deemed to be in a risk category.

The system used to monitor suppliers’ compliance with

the Code of Conduct includes factors such as wages, over-
time, noise levels, protective equipment, chemical handling,
accident reporting, environmental management systems,
and health and safety training.

Any supplier failing to comply with these requirements is

asked to implement necessary improvements, and the con-
tract is terminated if non-compliance continues.

sustAinABlE dEvElopmEnt

AssA ABloy AnnuAl rEport 2011

sustAinABility integrated in each part of the value chain

CUSTOMERS
ASSA ABLOY’s ambition is to supply high-quality products that fulfill customer
requirements, have a long life and are manufactured with minimal use of
resources and environmental impact during their life cycle.

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.

SOURCING
The Group’s suppliers in risk areas are evaluated from a sustainability
perspective. Suppliers failing to comply with the Group’s requirements are
encouraged to make improvements or will otherwise be phased out.

MANUFACTURING
Manufacture of the Group’s products should be carried out safely and with
the least possible environmental impact. Hazardous processes are gradually
being phased out and replaced by eco-friendly alternatives.

SALES
ASSA ABLOY respects laws and regulations concerning business ethics in the
countries in which it operates and requires all partners to act in the same way.

Custo

 Sourcing

 Innovation

 Manufacturing

 Sales

 Customers

Sale s

M
a
n
u

Code of Conduct and
Corporate governance

Employees

n
n
o
v
a

tio
n

Sourci n g

Supplier selection process
The process has three stages:
• Supplier self-assessment – the supplier assesses its

ability to meet ASSA ABLOY’s requirements.

All new suppliers in low-cost countries carry out a self-
assessment of their sustainability according to a standard-
ized process before they can be considered as potential sup-
pliers to the Group. This is followed by an on-site audit.

• On-site audit – the sustainability audit assesses how

Screening will continue, with annual monitoring of previ-

well a potential supplier meets requirements.

ously approved suppliers.

• Extended sustainability audit – this complements the

standard audit.

» An important part of ASSA ABLOY’s sustainable

development program is ensuring that all suppliers
meet the Group’s requirements «

After 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.

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 performed
In 2011 ASSA ABLOY performed 493 sustainability audits.
At year-end, 461 active suppliers had satisfied the minimum
standards for quality and sustainability and were classed as
reliable. 19 suppliers were blacklisted. On-site sustainability
audits have been extended to a wider geographical area. In
2012 suppliers in all low-cost countries will be included in
the annual sustainability audit.

ASSA ABLOY’s supplier database
The Group’s suppliers are listed, graded and monitored in
a supplier database. Both quality and sustainability audit
reports are regularly entered in the database. Suppliers are
listed with a standardized name, geographical location, type
of products and other information so that good 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. Sustain-
ability audit results override quality audit results regarding
non-compliance. This means that a supplier rejected for sus-
tainability non-compliance is either stopped immediately
or must wait until the deficiencies have been addressed for
approval.

sales of climate-smart products increasing
The Group is continuously focusing on energy-efficient
products, which account for an ever-increasing share of
sales. Demand for sustainable or green products is increas-
ing, and it is important for the Group to develop green prod-
ucts and get them certified and included in 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
becoming more important.

NUMBER OF REPORTING UNITS

ACCIDENTS PER MILLION hOURS WORkED

300

250

200

150

100

The number of reporting
units in the Group
has increased from
204 to 256.

09 10

2011 and 2010 relate to
comparable units.

AssA ABloy AnnuAl rEport 2011

sustAinABlE dEvElopmEnt 55

Sustainable development

ASSA ABLOY has a number of climate-smart products, which
combined with increased security help the customer to
reduce their energy consumption and create a better qual-
ity indoor environment. A detailed understanding of the
customer’s needs and increased environmental require-
ments as well as competence development of the Group’s
employees are important aspects for strengthening market
position.

One example is the Orion energy management system
from VingCard Elsafe. This intelligent solution uses informa-
tion from the door lock to control the temperature setting
depending on the guest’s presence in the room, result-
ing in lower heating and cooling costs and increased guest
comfort. Several installations have shown that, thanks to
the system’s considerable energy savings, the investment
is recouped within two years. Customer installations of the
Orion system have been found to reduce energy consump-
tion by around 20–30 percent, and more in some cases.
The system, which was launched in late 2010, was awarded
a prize for best climate-smart technology, and sales of the
system were very strong in 2011.

Another example is that ASSA ABLOY was the first door
manufacturer to achieve certification of its hinged door to
the American UL Environment (Underwriters Laboratories)
standard, UL IRS 102. These standards measure the health
and environmental impacts of door manufacture and use.
The Trio-E door is the first door to be certified to these sus-
tainability standards on the North American market.

product development
ASSA ABLOY’s ambition to achieve world-class product
development involves looking at the environmental impact
of every product, and not just focusing on climate-smart
products.

Group companies use the Group’s product innovation

process and environmental checklist for all new product
development.

The product innovation process has three important
elements:
• Product management – addressing the strategic aspects

of the process.

• Voice of the Customer – ensuring the company develops

products that customers want.

• The Gateway process – ensuring that development proj-

ects are structured and efficient.

The Group has carried out product life cycle analyses to
evaluate the stages in which 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 devel-
opment. In the case of electromechanical products, standby
power consumption is of major significance for environ-
mental impact. A number of new products have therefore
been launched with sharply 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 that
processes are sustainable and efficient. One important area
is reducing the amount of packaging materials for different
customer groups and delivery formats.

manufacturing
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.

ENERGY USE

USE OF ChLORINATED ORGANIC SOLVENTS (PER AND TRI)

GWh

700

600

500

400

300

200

100

2011 and 2010 relate
to comparable units.

Tonnes

100

2011 and 2010 relate
to comparable units.

sustAinABlE dEvElopmEnt

AssA ABloy AnnuAl rEport 2011

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
Efforts to improve water efficiency have focused on plants
with surface treatment processes, where most of the con-
sumption occurs.

Technical improvements in the purification and reuse of

water in the production process have reduced water con-
sumption. In 2011 new very eco-friendly purification tech-
nology was installed in one of the Group’s large production
plants in Israel. This technology is based on the purification
of waste water using electricity instead of chemicals and
results in very high water purification, very little waste and a
low operating cost.

Waste management
The Reduce, Reuse, Recycle principle is applied across the
organization by reducing the amount of material in prod-
ucts, designing products that can be upgraded rather than
replaced, and enabling recycling of production waste and
the products at the end of their life cycle. The Group has
refined the monitoring of waste in various types of materials
with the aim of better monitoring and reducing the amount
of waste.

Hazardous chemicals
ASSA ABLOY also works continuously to reduce hazardous
substances in the production process and find substitutes
for them. Most production plants have, for example, phased
out chlorinated organic solvents successfully.

Health and safety
ASSA ABLOY is committed to providing a safe working envi-
ronment and eliminating risks that can cause accidents or
impair the health and wellbeing of employees. The aim is to
create a culture where everybody contributes to improved
health and safety.

ASSA ABLOY has defined a number of targets intended to
lead to ongoing improvements. These targets are based on a
zero vision for work-related accidents.

Health and safety audits are included in the internal
audits, and risk assessment is carried out routinely. Inci-
dent reporting and analysis are used to identify preventive
measures.

All units are graded and compared with each other. As a
result, special initiatives can be implemented at plants with
the greatest need.

sales and customers
ASSA ABLOY’s communication with its customers is primar-
ily through the sales force, and its image as a sustainable
company is often based on the customer’s relationship with
the sales representatives.

ASSA ABLOY’s requirements with regard to the Code of
Conduct and business ethics therefore form an important
part of the Group’s sales training. Sustainability can provide
new business opportunities.

A responsible employer
Factory compliance audits covering areas such as working
conditions, human rights, human resources issues, the work
environment, workplace culture and skills development are
conducted regularly at ASSA ABLOY’s factories. These audits
are conducted by external auditors in accordance with inter-
nationally accepted procedures to obtain an impartial view
of the situation at each factory. In 2011 independent audits
were conducted at two production plants in China with
excellent results.

The audits are followed by measures to implement

improvements where needed.

stakeholders
ASSA ABLOY’s stakeholders in the area of sustainable devel-
opment include shareholders, investors, customers, suppli-
ers, employees, local communities, NGOs and the media.
The company’s policy of openness means listening to these
stakeholders and taking on board their views.

During the year ASSA ABLOY held round-table discus-
sions and separate meetings with a number of investors. At
ASSA ABLOY’s annual capital market day in 2011 the Group
reported on its sustainability program and investors were
given an opportunity to ask questions. Requests from inves-
tors have generally concerned making more information
externally available about sourcing in low-cost countries,
such as procedures for establishing new operations, due
diligence procedures, suppliers, sourcing volumes, indica-
tors for and information on supplier audits, and information
on non-approved suppliers. 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 on issues such as sup-
pliers, the sustainability agenda and new business opportu-
nities for green products.

AssA ABloy AnnuAl rEport 2011

sustAinABlE dEvElopmEnt 57

Sustainable development

Change from brass to stainless steel for increased durability, reduced
environmental impact and increased flexibility towards the customer

Problem:

Solution:

Result:

For high durability and esthetical reasons many components of the locks have been processed with brass material.
Brass demands an additional surface treatment process in order to protect the surface. The brass material composes
of different hazardous substances and the brass plating process itself demands electricity. The additional surface
treatment process gives longer lead times, a more complicated production process and limits the flexibility towards
the customers.

ASSA ABLOY VingCard Elsafe has replaced the brass material with stainless steel, a change with several positive out-
comes. The application of stainless steel eliminates the entire extra process of surface treatment to five out of nine
components. The impact falls through on 90 percent of the total lock volume of which 75 percent of the stainless steel
components remain untreated and only 15 percent are coated to match other components still made in brass and
regular electroplating.

A more sustainable product in every sense of the word: reduced input of material, reduced electricity consumption
by 70 percent and reduced carbon emissions by 70 percent, higher quality and longer durability. In addition to the
environmental benefits of eliminating the use of hazardous substances, the accompanying waste and the electricity
consumption – there are several additional upsides.
From a customer perspective the application of stainless steel results in a more sustainable and durable product and
makes the delivery process shorter and more flexible to the customer needs.
From an ASSA ABLOY perspective it brings eliminated production processes, reduced resource consumption,
reduced costs, shorter lead times within the production process, reduced amount of transportation by more efficient
location of suppliers and more secure and high quality deliveries from a smaller amount of suppliers. In summary it
creates a more attractive product.

SUSTAINABLE DEVELOPMENT PROGRAM IN BRIEF

2007
Sustainability
program

2004–2006
Code of Conduct

Whistle-blowing

Internal audits

Due diligence directive

Tools for supplier
control

Employee survey

2008
Sustainability strategy
for product
development including
checklists

Employee survey

Marketing and sales
training

Training in supplier
control

Updated Code of Conduct

2009
Sales companies and
offices are included in
reported figures

Increased monitoring
of energy consumption
and CO2
Launch of joint recruit-
ment and selection guide

2010
Increased audit of
suppliers in low-cost
countries

Targets for 2015 are
defined for all moni-
tored areas

2011
Increased reporting of
environmental data

25 percent more Group
companies included in
reporting

Improved analysis and
benchmarking opportuni-
ties between Group
companies

Updated Code of Conduct

sustAinABlE dEvElopmEnt

AssA ABloy AnnuAl rEport 2011

Customer:

Challenge:

Solution:

Crawford Uk outfits sustainable logistics warehouse

Gazeley Ltd’s distribution center in Chatterley Valley, Staffordshire, called Blue Planet, is the first building to achieve an
‘Outstanding’ design rating from BRE Environmental Assessment Method (BREEAM).

Gazeley Ltd had stringent specification requirements; the majority of materials used in the building are A or A+ rated in
BRE Global’s Green Guide to Specification.

McLaren Construction involved Crawford Uk at an early stage of this development as Crawford had demonstrated its
ability to meet Gazeley’s requirements. Thirty eight dock levelers were required for the 34,000 square meter warehouse
and this also involved supplying and installing dock doors, dock levelers, bay shelters traffic lights, dock lights and level
access doors.

Some of the results of the sustainability program

targets

results 2008

results 2009

results 2010

results 2011

trend

Energy consumption – 15 percent reduced
consumption 2015 compared with 2010,
based on normalized values.

organic solvents – Phase out all use of
perchloroethylene and trichloroethylene.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.

iso 14001 – Compliance at all factories with
significant environmental impact.5

482 GWh

491 GWh

605 GWh

590 GWh¹

42 tonnes

44 tonnes

32 tonnes

22 tonnes

IR: 8.7
ILDR: 166

IR: 8.4
ILDR: 150

IR: 7.8
ILDR: 141

IR: 8.03
ILDR: 1444

suppliers – Sustainability appraisals –
Code of Conduct requirement for all suppliers.
Sustainability audits of suppliers in risk category.

100 sustain-
ability audits
in China

Gender equality – Improve current levels of
gender equality at senior levels.

Level 2: 0 %
Level 3: 11 %
Level 4: 17 %
Level 5: 23 %

178 sustain-
ability audits
in China

Level 2: 0 %
Level 3: 15 %
Level 4: 18 %
Level 5: 20 %

376 sustain-
ability audits
in China

Level 2: 0 %
Level 3: 16 %
Level 4: 18 %
Level 5: 24 %

493 sustain-
ability audits
in Asia

Level 2: 0 %
Level 3: 15 %
Level 4: 19 %
Level 5: 26 %

¹ For comparable units. Total energy consumption amounted to 632 GWh including units

Deterioration

Unchanged

Improvement

acquired during the year and increased reporting.

² Plants with totally closed washing processes will be phased out when the machinery

is taken out of service. Read more about the updated target in the 2011 Sustainability Report.

3 For comparable units. The total injury rate (IR) was 8.9 including units acquired during the year and increased reporting.
4 For comparable units. The total injury lost day rate (ILDR) was 161 including units acquired during the year and increased reporting.
5 Number of certificates and corresponding certifiable systems for North American units.
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.

AssA ABloy AnnuAl rEport 2011

sustAinABlE dEvElopmEnt 59

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
Executive Team
Remuneration guidelines for
senior management

61
63
66
70
72

75
76

77
78
79
80
81
82
83
84
86

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 leasing agreements
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 Shares in associates
18 Deferred tax
19 Other financial assets
20 Inventories
21 Accounts 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 short-term liabilities
27 Accrued expenses and prepaid income
28 Contingent liabilities
29 Assets pledged against liabilities to

credit institutions
30 Business combinations
31 Cash flow
32 Employees
33 Financial risk management and

financial instruments

Comments on five years in summary
Five years in summary
Quarterly information
Definitions of key data terms
proposed distribution of earnings
Audit report

88
93
94
94
94
94
94
94
94
95
95
95
95
96
98
99
99
100
100
100
100
100

100
101
103
103
103
103

103
103
105
106

108
114
115
116
117
118
119

ASSA ABLOY AnnuAL RepORt 2011

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–31
December 2011. 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 41,786 M (36,823), with
organic growth of 4 percent (3) and acquired growth of 17
percent (8). Operating income (EBIT) excluding restructur-
ing costs rose 10 percent to SEK 6,624 M (6,046), equivalent
to an operating margin of 15.9 percent (16.4). Income
before tax excluding restructuring costs totaled SEK 5,979 M
(5,366).

Operating cash flow excluding restructuring payments

remained strong and amounted to SEK 6,080 M (6,285).
Earnings per share after full dilution excluding restructuring
costs were SEK 12.30 (10.89), an increase of 13 percent.

Restructuring
A new restructuring program was launched in 2011 com-
prising 17 plant and office closures and a switch from full
production to final assembly at a further number of produc-
tion plants. Around 2,000 employees in high-cost countries
are affected. On full implementation the annual cost saving
is estimated at SEK 430 M. The total cost of the program is
SEK 1,420 M gross.

The activities of the previous restructuring programs
launched during the period 2006–2009 continued at a high
level during the year. At year-end 2011, 5,869 employees
had left the Group as a result of the changes in the produc-
tion structure since the programs began. A total of 44 plant
closures have been implemented and a large number of
plants in high-cost countries have switched from produc-
tion to final assembly. Around 20 offices have also closed.
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 373 M (465) for the full year. At year-end 2011, the
remaining provisions for restructuring measures amounted
to SEK 1,665 M (924).

Acquisitions and divestments
In 2011 Cardo’s Entrance Solutions division was acquired, a
leading supplier of industrial doors, logistics systems, garage
doors, customer service and other services. This acquisition
represents a strategically important step in the develop-
ment of ASSA ABLOY’s operations in the Entrance Systems
division. Overall, this will strengthen ASSA ABLOY’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 through a combination of the com-
panies’ respective offerings. The range includes up and over

doors, overhead sectional doors, side sectional doors and
the automation for these products. These doors are posi-
tioned as exclusive, offering good design, quality and high
security. The main brands are Crawford and Normstahl. The
acquisition of Cardo is classed as a significant acquisition
and the purchase price allocation is presented separately
in Note 30.

On 31 January 2011, 100 percent of the share capital was

acquired in LaserCard Corporation, a leading provider of
secure ID solutions to government and commercial custom-
ers 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.

On 6 April 2011, 100 percent of the share capital was
acquired 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.

On 6 April 2011, 100 percent of the share capital was
acquired in Swesafe, Sweden’s largest locksmith. This acqui-
sition is an important step in the development of the Swed-
ish market in the fast-growing electromechanical segment.
These acquisitions were EPS-accretive from the acquisition
date.

A total of 18 acquisitions, including minor acquisitions,
were consolidated during the year. The total purchase price
of these acquisitions on a debt-free basis, excluding disposal
groups, was SEK 7,096 M, and preliminary purchase price
allocations indicate that goodwill and other intangible
assets with an indefinite useful life amount to SEK 5,985 M.
The year saw the disposal of parts of the Cardo Group’s
operations acquired during the year. The businesses sold,
Cardo Flow Solutions and Lorentzen & Wettre, were not
considered to be a good fit with ASSA ABLOY’s operations in
the long term. These disposals gave rise to a capital gain of
SEK 404 M after disposal and financing costs.

Research and development
ASSA ABLOY’s expenditure on research and development
during the year amounted to SEK 1,202 M (1,015), equiva-
lent to 2.9 percent (2.8) 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 stan-
dardization should result in lower development costs and a
shorter development time for new products.

ASSA ABLOY AnnuAL RepORt 2011

RepORt OF the BOARD OF DiReCtORS 61

Report of the Board of Directors

Sustainable development
Four of ASSA ABLOY’s subsidiaries in Sweden carry on licens-
able activities in accordance with the Swedish Environmen-
tal 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 surface-
coating plants, which have an impact on the external envi-
ronment through emissions to water and air as well as solid
waste. Crawford Entrance Solutions also carries on licens-
able and notifiable activities in Gothenburg and Strömstad.
The subsidiaries ASSA AB and ASSA OEM AB are actively
addressing environmental issues and are certified in accor-
dance with ISO 14001. 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 2011 Sustainability Report, reporting on the Group’s

Significant events after the end of the financial year
The acquisition of Albany Door Systems was completed
on 11 January 2012 after approval by the authorities con-
cerned. Albany Door Systems is one of the global leaders in
industrial automatic high-performance doors. The company
has around 700 employees. Sales for 2012 are expected
to total SEK 1,300 M with an operating margin of around
8 percent. Integration began immediately after completion
and is estimated to cost SEK 150 M. The acquisition will be
EPS-accretive from the start.

A preliminary purchase price allocation for Albany Door
Systems cannot be presented at the time of the preparation
of these financial statements in view of the short time avail-
able after the acquisition date.

Outlook
Long-term outlook
Long term, ASSA ABLOY expects an increase in security-
driven demand. Focus on end-user value and innovation as
well as leverage on ASSA ABLOY’s strong position will accel-
erate growth and increase profitability.

prioritized environmental activities and providing other
information on sustainable development, will be published
at the time of the Annual General Meeting in April 2012.

Organic sales growth is expected to continue at a good
rate. The operating margin (EBIT) and operating cash flow
are expected to develop well.

transactions with related parties
No transactions that have significantly affected the com-
pany’s financial position and performance have taken place
between ASSA ABLOY and related parties.

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2011

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 busi-
ness 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, man-
aging 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 geo-

graphical 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 attribut-
able 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’
pension obligations.

ASSA ABLOY’s Board of Directors has overall responsibil-
ity 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 struc-
ture of the Group, and to keep risk analysis and risk manage-
ment as close as possible to the actual risks, a large propor-
tion 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 cus-
tomer behavior, competitors, brand positioning and envi-
ronmental risks. In addition, there are country-specific risks.
ASSA ABLOY has global market penetration, with sales
and production in a large number of countries. The empha-
sis is on western Europe and North America, but the propor-
tion of sales in Asia and in central and eastern Europe has
increased in recent years. The Group is therefore exposed
to both general business environment risks and country-

specific risks, including political decisions and comprehensive
changes in the regulatory framework. 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 relation-

ships 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 comple-
ment 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 busi-
ness operations and with a potential impact on the Group’s
financial position and performance. They include legal risks,
acquisition of new businesses, restructuring measures, avail-
ability and price fluctuations of raw materials, and customer
dependence. 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 64 describes in more detail the man-

agement 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 controls
of the Group’s financing activities. Group Treasury has the
main responsibility for financial risks within the framework

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.

• Customer behavior
• Competitors
• Brand positioning
• Environmental risks
• Country-specific risks

• Legal risks
• Acquisition of new businesses
• Restructuring measures
• Availability and price fluctuations

of raw materials

• Customer dependence etc.

• Financing risks
• Currency risks
• Interest rate risks
• Financial credit risks
• Risks associated with pension

obligations

ASSA ABLOY AnnuAL RepORt 2011

RepORt OF the BOARD OF DiReCtORS 63

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 coun-
tries in which it operates.

At year-end 2011 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 cen-
tral legal function.

Guidelines on compliance with current competi-
tion and anti-bribery legislation have been imple-
mented.

Legal risks associated with property and liability
issues are continually evaluated together with
insurance company representatives.

Acquisition of new businesses

Acquisitions are carried out by a number of peo-
ple with considerable acquisition experience and
with the support of, for example, legal and finan-
cial consultants.

The Group’s acquisitions in 2011 are reported in
the Report of the Board of Directors and in Note
30, Business combinations.

Acquisitions are carried out according to a uni-
form 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.

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.

price fluctuations and
availability of raw materials

Raw materials are purchased and handled primar-
ily at division and business unit level.

For further information about procurement of
materials, see Note 7.

Credit losses

insurance risks

Regional committees coordinate these activities
with the help of senior coordinators for selected
material components.

Trade receivables are spread across a large num-
ber of customers in many markets.

Commercial credit risks are managed locally at
company level and monitored at division level.

Receivables from each customer are relatively
small in relation to total trade receivables. The risk
of significant credit losses for the Group is consid-
ered to be limited.

A Group-wide insurance program is in place, mainly
relating to property, business interruption and lia-
bility risks. This program covers all business units.

The Group’s insurance cover is considered to
be generally adequate, providing a reasonable
balance between assessed risk exposure and
insurance costs.

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 regarding financial
reporting

The organization is considered to be relatively
transparent, with a clear allocation of responsi-
bilities.

Internal control and other related issues are
reported in more detail in the Report of the Board
of Directors, section on Corporate governance.

Instructions about the allocation of responsibili-
ties, authorization and other internal control
procedures are laid down in an internal control
manual.

Compliance with internal control is evaluated
annually for all operating companies in the form
of self-assessment and via the Group’s Manage-
ment Assurance function.

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.

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.

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2011

established in the financial policy. A large number of finan-
cial instruments are used in this work. Accounting principles,
risk management and risk exposure are described in more
detail in Notes 1 and 33, as well as Note 24 regarding post-
employment 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 unuti-
lized confirmed credit facilities.

Currency risk
Since ASSA ABLOY sells its products in countries world-
wide and has companies in over 60 countries, the Group is
exposed to the effects of exchange rate fluctuations. Such
changes 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 fairly limited in the Group, 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 limited part of current currency flows in 2011.
As a result, exchange rate fluctuations had a direct impact
on business operations.

Exchange rate fluctuations also affect the Group’s debt-
equity ratio and equity. The difference between the assets
and liabilities of foreign subsidiaries in the respective for-
eign currency is affected by exchange rate fluctuations and
causes a translation difference which affects the Group’s
comprehensive income. A general weakening of the Swed-
ish krona leads to an increase in net debt, but at the same
time increases Group equity. At year-end, the largest foreign
net assets were denominated in USD and EUR.

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 14,207 M (10,564) at year-end 2011 and 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 fixed-rate and variable-rate
loans, various interest rate derivatives are used to adjust
interest rate sensitivity. At year-end, the average fixed inter-
est term, excluding pension liabilities, was 16 months (23).

Credit risk
Credit risk arises in ordinary business operations and as a
result of the financial transactions carried out by Group Trea-
sury. Trade receivables are spread across a large number of
customers, which reduces the credit risk. Credit risks relat-
ing to operational business activities are managed locally at
company level and monitored at division level.

Financial risk management exposes ASSA ABLOY to cer-
tain counterparty risks. Such exposure may arise, for exam-
ple, 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 2011, ASSA ABLOY had obligations for pen-
sions and other post-employment benefits of SEK 5,300 M
(4,484). The Group manages pension assets valued at SEK
3,115 M (2,854). Pension provisions in the balance sheet
amount to SEK 1,173 M (1,078). 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.

ASSA ABLOY AnnuAL RepORt 2011

RepORt OF the BOARD OF DiReCtORS 65

Report of the Board of Directors
Corporate governance

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 corporate governance of ASSA ABLOY is based on the
Swedish Companies Act, the rules and regulations of NASDAQ
OMX Stockholm and the Swedish Code of Corporate Gover-
nance, 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 2011.
ASSA ABLOY’s objective is that its activities should gen-
erate 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 interact-
ing components, which are described below.

Important external rules
and regulations
• Swedish Companies Act
• NASDAQ OMX

Stockholm Rule Book
for Issuers

• Swedish Code of

Corporate Governance

Important internal rules
and regulations
• Articles of association
• Board of Directors’ rules

of procedure
• Financial policy,

accounting manual,
communications policy,
and insider policy
Internal control
procedures

•

• Code of Conduct and
anti-bribery policy

orting
Financial rep

Share-
holders
General Meeting
Nomination
Committee

Board of Directors
Audit Committee
Remuneration Committee

CEO and Executive Team
Management philosophy
Guidelines and policies
Internal control and risk management

Decentralized organization

shareholders
At year-end ASSA ABLOY had 18,697 shareholders (20,199).
The principal shareholders are Investment AB Latour (9.5
percent of the share capital and 29.6 percent of the votes)
and Melker Schörling AB (3.9 percent of the share capi-
tal and 11.5 percent of the votes). Foreign shareholders
accounted for around 64 percent (63) of the share capital
and around 44 percent (43) of the votes. The ten largest
shareholders accounted for around 38 percent (31) of the
share capital and around 58 percent (53) of the votes. For
further information on shareholders, see page 121.

A shareholders’ agreement exists between Gustaf Douglas,
Melker Schörling and related companies and includes, among
other things, an agreement on right of first refusal if any party
disposes of Series A shares. The Board of Directors 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
368,250,378 distributed among 19,175,323 Series A shares
and 349,075,055 Series B shares. The total number of votes
was 540,828,285. Each Series A share carries ten votes and
each Series B share one vote. All shares have a par value of
SEK 1.00 and give shareholders equal rights to the com-
pany’s assets and earnings.

Repurchase of own shares
Since 2010 the Board of Directors has requested and
received a mandate from the Annual General Meeting to
buy back and transfer ASSA ABLOY shares. The aim has been
to be able to adjust the company’s capital structure, 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 ensure
the company’s undertakings under long-term incentive
programs. The 2011 Annual General Meeting authorized
the Board of Directors 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 400,000 (300,000) Series B
shares after repurchase to secure the company’s undertak-
ings in connection with the company’s long-term incentive
programs (LTI 2010 and LTI 2011). These shares account
for 0.1 percent (0.1) of the share capital and each share
has a par value of SEK 1.00. The purchase consideration
amounted to SEK 65 M (48).

Of the above shares, 100,000 (300,000) Series B shares
were repurchased in 2011. These account for 0.03 percent
(0.1) of the share capital and each share has a par value of SEK
1.00. The purchase consideration amounted to SEK 17 M (48).

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 63,560 M. The Board of
Directors’ 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 day and
who 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 mem-
bers and Chairman of the Board of Directors; appointment
of the Nomination Committee and auditors; determination
of remuneration guidelines for senior management and fees

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assa aBLoY annuaL RepoRt 2011

for the Board of Directors and auditors. An Extraordinary
General Meeting may be held if the Board of Directors con-
siders this necessary or if ASSA ABLOY’s auditors or share-
holders holding at least 10 percent of the shares so request.

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.

2011 Annual General Meeting
The Annual General Meeting in April 2011 was attended by
shareholders representing 54.5 percent of the share capital
and 69.0 percent of the votes.

At the Annual General Meeting, Gustaf Douglas, 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. Gustaf Douglas
was re-elected as Chairman of the Board of Directors.

The Annual General Meeting approved a dividend of SEK
4.00 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 repur-
chase and transfers of own Series B shares, and the imple-
mentation of a long-term incentive program (LTI 2011)
for senior management and other key staff in the Group, as
well as appointing members of the Nomination Committee
prior to the 2012 Annual General Meeting.

Nomination Committee
The Nomination Committee prior to the 2012 Annual Gen-
eral Meeting comprises Mikael Ekdahl (Melker Schörling
AB), Gustaf Douglas (Investment AB Latour), Liselott Ledin
(Alecta), Marianne Nilsson (Swedbank Robur Fonder) and
Per-Erik Mohlin (SEB Fonder/SEB Trygg Liv). Mikael Ekdahl 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 2012 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 and other members of the Board of Directors,
the appointment of the auditor, the election of the Chair-
man of the Annual General Meeting, the appointment of the
Nomination Committee prior to the Annual General Meet-
ing, and fees and associated matters.

Shareholders wishing to submit proposals to the Nomi-

nation Committee can do so by emailing:
nominationcommittee@assaabloy.com.

Prior to the 2012 Annual General Meeting, the Nomi-
nation Committee has made an assessment of whether
the current Board of Directors is appropriately composed
and 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

The Nomination Committee’s proposals for changes in

the Board of Directors at the 2012 Annual General Meet-
ing were published on 21 December 2011. After over 17
years as a member of the Board of Directors of ASSA ABLOY,
including the past six years as Chairman, Gustaf Douglas will
leave the Board of Directors at the 2012 Annual General
Meeting. The Nomination Committee intends to propose
Lars Renström as the new Chairman, Carl Douglas as Vice
Chairman and Jan Svensson as a new member of the Board
of Directors. The Nomination Committee’s other propos-
als 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 2012.

Board of directors
In accordance with the Swedish Companies Act, the Board
of Directors is responsible for the organization and admin-
istration 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 of Directors’ 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 compa-
ny’s compliance with laws and other regulations apply-
ing to the company’s operations, and

• ensuring that necessary ethical guidelines for the com-

pany’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 sig-
nificance. The Chairman should ensure that the work of the

assa aBLoY annuaL RepoRt 2011

RepoRt of the BoaRd of diRectoRs 67

Report of the Board of Directors
Corporate governance

Board of Directors is evaluated annually, and that new mem-
bers of the Board of Directors receive appropriate training.

guidelines to the 2012 Annual General Meeting is set out on
page 75.

The Board of Directors has at least four scheduled meet-

The Remuneration Committee also prepares, negotiates

ings 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 relating to each
point 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 Direc-
tors 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 Direc-
tors at the statutory board meeting. Instructions for the
Committees are included in the Board of Directors’ rules of
procedure.

The Board of Directors’ work in 2011
During the year the Board of Directors held 12 meetings
(five scheduled meetings, one statutory meeting and six
extraordinary meetings), including four by telephone and
two per capsulam. One member was absent at two meet-
ings, two members were absent at two meetings and three
members were absent at one meeting. All board members
were present at the other meetings. At the scheduled
board meetings, the CEO has reported on the Group’s per-
formance and financial position, including the outlook for
the coming quarters. Investments, acquisitions and divest-
ments were also considered. All acquisitions and divest-
ments 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 divest-
ments 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 the completion of the
acquisition of Cardo, including the divestments of Cardo
Flow Solutions and Lorentzen & Wettre. In addition, the
Board of Directors dealt with a further number of acquisi-
tions including Albany Door Systems and FlexiForce. During
the year the Board of Directors conducted in-depth reviews
of the Group’s operations in Entrance Systems and HID
Global and visited Crawford and FlexiForce’s operations in
the Netherlands. The Board of Directors also decided to
adopt an updated anti-bribery policy during the year.

Remuneration Committee
During 2011 the Remuneration Committee comprised
Gustaf Douglas (Chairman) 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

and evaluates matters regarding salaries, bonus, pension,
severance pay and incentive programs for the CEO and
other senior executives.

The Committee held three meetings in 2011, including

one by telephone, at which all members were present.

During the year 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 2012. The meetings of the
Remuneration 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 2011 the Audit Committee comprised Ulrik Svens-
son (Chairman), Birgitta Klasén and Lars Renström.

The duties of the Audit Committee include the continu-
ous 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 evaluat-
ing the audit assignment and informing the Board of Direc-
tors 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 2011 at which all members, the company’s auditor and
representatives of the Executive Team were present. More
important matters dealt with by the Audit Committee dur-
ing the year included internal control, financial statements
and valuation matters, tax matters and legal risk areas.

The meetings of the Audit Committee are minuted, the
minutes are distributed with material for the Board of Direc-
tors 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 sig-
nificant 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 2011
Annual General Meeting passed a resolution on board
fees totaling SEK 4,000,000 (excluding remuneration for

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assa aBLoY annuaL RepoRt 2011

committee work), to be allocated between the members as
follows: SEK 1,000,000 to the Chairman and SEK 500,000 to
each of the other members 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 SEK 100,000 and members of the
Remuneration Committee SEK 50,000.

The Chairman 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 2011, see Note 32.

Independence of the Board of Directors

position

independent of the company
and its management

independent of the company’s
major shareholders

The Board of Directors of
ASSA ABLOY meets the
requirements for indepen-
dence, in accordance with
the Swedish Code of Corpo-
rate Governance.

name

Gustaf Douglas
Carl Douglas
Birgitta Klasén
Eva Lindqvist
Johan Molin
Sven-Christer Nilsson
Lars Renström
Ulrik Svensson

Chairman of the Board
Board member
Board member
Board member
Board member, President and CEO
Board member
Board member
Board member

Yes
Yes
Yes
Yes
No
Yes
Yes
Yes

The Board of Directors’ composition and shareholdings

name

position

elected Born

Remuneration
committee

audit
committee

series a
shares¹

series B
shares¹

Gustaf Douglas

Carl Douglas
Birgitta Klasén
Eva Lindqvist
Johan Molin

Chairman of
the Board
Board member
Board member
Board member
Board member,
President and CEO

Sven-Christer Nilsson Board member
Board member
Lars Renström
Board member
Ulrik Svensson
Board member,
Seppo Liimatainen
employee representative
Board member,
employee representative
Deputy, employee
representative
Deputy, employee
representative

Per Edvin Nyström

Mats Persson

Rune Hjälm

1994 1938
2004 1965
2008 1949
2008 1958

2006 1959
2001 1944
2008 1951
2008 1961

2003 1950

1994 1955

2005 1964

1994 1955

Chairman
–
–
–

–
Member
–
–

–

– 13,865,243 21,300,000
–
–
–
7,000
–
Member
1,000
–
–

–
–
Member
Chairman

–

–
–
–
–

–

516,282
5,000
10,000
3,000

2,600

–

7,727

1 Including family and through companies. Shareholdings as of 31 December 2011. This information is updated regularly at www.assaabloy.com

assa aBLoY annuaL RepoRt 2011

RepoRt of the BoaRd of diRectoRs 69

No
No
Yes
Yes
–
Yes
Yes
No

incentive
program
series B
shares

–
–
–
–

215,300
–
–
–

–

Report of the Board of Directors
Corporate governance Board of Directors

Board members elected at the 2011 Annual General Meeting

Gustaf douglas
Chairman of the Board.
Board member since 1994.
Born 1938.
MBA, Harvard Business School 1964.
Principal shareholder of Investment AB Latour.
Self-employed since 1980.
Other appointments: Board member of Stiftelsen Svenska
Dagbladet and the Swedish Moderate Party.
Shareholdings (including family and through companies):
13,865,243 Series A shares and 21,300,000 Series B shares
through Investment AB Latour.

carl douglas
Board member since 2004.
Born 1965.
Bachelor of Arts.
Self-employed.
Other appointments: Vice Chairman of Securitas AB.
Board member of Investment AB Latour and Swegon AB.
Shareholdings (including family and through companies): –

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
at Pharmacia 1996–2001. Prior to that CIO at Telia. Held
various posts at IBM 1976–1994.
Other appointments: Board member of Acando AB
and IFS AB.
Shareholdings (including family 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 Telia Sonera AB
2006–2007. Prior to that several senior posts at Telia Sonera
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 family and through companies):
1,000 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 posts mainly
in finance and marketing, later divisional head in the Atlas
Copco Group 1983–2001.
Other appointments: Chairman of Nobia AB.
Shareholdings (including family and through companies):
516,282 Series B shares. Incentive 2007 corresponding,
on full conversion, to 215,300 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 National
Defence Materiel Administration (FMV). Board member of
Sprint Nextel Corporation and CEVA, Inc.
Shareholdings (including family and through companies):
5,000 Series B shares.

Gustaf Douglas

Carl Douglas

Birgitta Klasén

Eva Lindqvist

Johan Molin

Sven-Christer Nilsson

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assa aBLoY annuaL RepoRt 2011

Shareholdings as of 31 December 2011. This information is updated regularly at www.assaabloy.com

Lars Renström
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 and
TeliaSonera AB.
Shareholdings (including family and through companies):
10,000 Series B shares.

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 family and through companies):
3,000 Series B shares.

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.

Mats persson
Board member since 1994.
Born 1955.
Employee representative, Swedish Metal Workers Union.
Shareholdings: –

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: 7,727 B-aktier.

Lars Renström

Ulrik Svensson

Seppo Liimatainen

Mats Persson

Rune Hjälm

Per Edvin Nyström

assa aBLoY annuaL RepoRt 2011

RepoRt of the BoaRd of diRectoRs 71

Shareholdings as of 31 December 2011. This information is updated regularly at www.assaabloy.com

Report of the Board of Directors
Corporate governance The Executive Team

Johan Molin

Tomas Eliasson

Denis Hébert

Thanasis Molokotos

Jonas Persson

Tim Shea

Ulf Södergren

Juan Vargues

Tzachi Wiesenfeld

tomas eliasson¹
Born 1962.
Bachelor of Science in Business
Administration and Economics.
Executive Vice President.
Chief Financial Officer (CFO).
Employed since: 2006.
Shareholdings: Incentive 2007
corresponding, on full conversion, to
23,600 Series B shares.

thanasis Molokotos
Born 1958.
Master of Science in Engineering.
Executive Vice President.
Head of Americas division.
Employed since: 1996.
Shareholdings: 32,635 Series B shares.
Incentive 2007 corresponding, on full
conversion, to 25,700 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: 3,477 Series B shares.
Incentive 2007 corresponding, on full
conversion, to 9,400 Series B shares.

Juan Vargues
Born 1959.
Degree in Mechanical Engineering, MBA.
Executive Vice President.
Head of Entrance Systems division.
Employed since: 2002.
Shareholdings: 6,124 Series B shares.
Incentive 2007 corresponding, on full
conversion, to 79,600 Series B shares.

The Executive Team

Johan Molin
Born 1959.
Bachelor of Science in Business
Administration and Economics.
President and CEO.
Head of Global Technologies division.
Employed since: 2005.
Shareholdings: 516,282 Series B shares.
Incentive 2007 corresponding, on full
conversion, to 215,300 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: 5,802 Series B shares.
Incentive 2007 corresponding, on full
conversion, to 44,000 Series B shares.

Jonas persson
Born 1969.
Master of Science in Engineering.
Executive Vice President.
Head of Asia Pacific division.
Employed since: 2009.
Shareholdings: 10,836 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: 4,358 Series B shares.
Incentive 2007 corresponding, on full
conversion, to 60,800 Series B shares.

tzachi Wiesenfeld
Born 1958.
Bachelor of Science in
Industrial Engineering, MBA.
Head of EMEA division.
Executive Vice President.
Employed since: 2000.
Shareholdings: 6,611 Series B shares.
Incentive 2007 corresponding, on full
conversion, to 23,400 Series B shares.

changes in the executive team
¹ Tomas Eliasson, Executive Vice President and Chief Financial Officer, is leaving ASSA ABLOY
on 10 February 2012. He is succeeded by Carolina Dybeck Happe as from 1 March 2012.

Shareholdings as of 31 December 2011. This information is updated regularly at www.assaabloy.com

RepoRt of the BoaRd of diRectoRs

assa aBLoY annuaL RepoRt 2011

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 headquar-
ters are responsible for coordination, monitoring, policies
and guidelines at an overall level. The Group’s structure
results in a geographical and strategic spread of responsibil-
ity ensuring short-decision-making paths. The Group’s man-
agement 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
staff development. These principles are described in the
publication ‘Our Road to the Future’, which has been pro-
vided to all employees in the Group. Other important guide-
lines and policies concern financial control, communication
issues, insider issues, the Group’s brands, business ethics
and environmental issues. ASSA ABLOY’s financial policy
and accounting manual provide the framework for financial
control and monitoring. The Group’s communications pol-
icy aims to provide essential information 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 respon-
sibility. Application of the Code of Conduct in the Group’s
different units is monitored regularly to ensure compliance
and relevance. Further, ASSA ABLOY has adopted an anti-
bribery policy that applies to the whole Group.

Decentralized organization
ASSA ABLOY’s operations are decentralized. Decentraliza-
tion is a deliberate strategic choice based on the local
nature of the lock industry 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 opera-
tional 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 busi-
ness unit concerned. Apart from monitoring by unit, moni-
toring 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 compa-
nies. 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 frame-
work, and is described in more detail below.

Control environment
The Board of Directors is responsible for effective internal
control and has therefore established fundamental docu-
ments of significance for financial reporting. These docu-
ments include the Board of Directors’ rules of procedure
and instructions to the CEO, the Code of Conduct, financial
policy, and an annual financial evaluation plan etc. 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.

assa aBLoY annuaL RepoRt 2011

RepoRt of the BoaRd of diRectoRs 73

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
2011 are submitted to the Audit Committee and the audi-
tors. Group-wide 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 rel-
evant policies, legal issues and HR issues.

Information and communication
Reporting and accounting manuals as well as other finan-
cial 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 estab-
lished 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 reporting serves as the basis for quarterly reports and
a monthly 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 Group-
wide components of internal control are the annual busi-
ness 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 opin-
ion 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, Pricewaterhouse-
Coopers (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 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 administra-
tion 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 carried out in accordance with
International Standards on Auditing, ISA, which is consid-
ered good auditing practice in Sweden since 2011. The
audit of the financial statements for legal entities outside
Sweden is carried out in accordance with statutory require-
ments, and other applicable rules in each country. For infor-
mation about the fees paid to auditors and other assign-
ments carried out in the Group in the past three financial
years, see Note 3 and the Annual Report for 2010, Note 3.

RepoRt of the BoaRd of diRectoRs

assa aBLoY annuaL RepoRt 2011

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
2012 Annual General Meeting adopts the following guide-
lines for the remuneration and other employment condi-
tions 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 2011 Annual General Meeting. The basic
principle is that remuneration and other employment con-
ditions should be in line with market conditions and com-
petitive. ASSA ABLOY takes into account both global remu-
neration 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 32.

Fixed and variable remuneration
The basic salary should be competitive and reflect respon-
sibility and performance. The variable part consists of
remuneration paid partly in cash and partly in the form of
shares. The Executive Team should have the opportunity to
receive variable cash remuneration based on the outcome
in relation to financial targets and, when applicable, indi-
vidual targets. This remuneration should be equivalent to
a maximum 75 percent of the basic salary (excluding social
security expenses).

in relation to a range determined by the Board for the per-
formance of earnings per share in 2012. 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 basic salary (excluding social security expenses).

The cost of variable remuneration for the Executive Team
as above, assuming maximum outcome, amounts to a total
of around SEK 60 M (excluding social security expenses).
This calculation is made on the basis of the current mem-
bers 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 execu-
tive’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 employ-
ment benefits. If one of the other members of the Executive
Team is given notice, the company is liable to pay a maxi-
mum six months’ basic salary and other employment ben-
efits plus an additional 12 months’ basic salary.

In addition, the Executive Team should, within the frame-

work of the Board of Directors’ proposal for a long-term
incentive program, have the opportunity to receive variable
remuneration in the form of shares based on the outcome

Deviations from guidelines
The Board should have the right to deviate from these
guidelines if there are particular reasons for doing so in
an individual case.

assa aBLoY annuaL RepoRt 2011

RepoRt of the BoaRd of diRectoRs 75

Sales and income

• Organic growth was 4 percent (3), while acquired growth was 17 percent (8).

• Operating income (EBIT) excluding items affecting comparability rose 10 percent to SEK 6,624 M (6,046),

equivalent to an operating margin of 15.9 percent (16.4).

• Earnings per share after full dilution excluding items affecting comparability amounted to SEK 12.30 (10.89).

sales
The Group’s sales rose to SEK 41,786 M (36,823). Exchange
rate effects had an impact on sales of SEK –2,309 M (–1,626).

change in sales

Organic growth
Acquired growth
Exchange rate effects
total

2010

2011

3
8
–6
5

4
17
–8
13

The total change in sales for 2011 was 13 percent (5). Organic
growth was 4 percent (3), while acquired units made a positive
contribution of 17 percent (8).

sales by product group
Mechanical locks, lock systems and fittings accounted for
38 percent (42) of sales. Electromechanical and electronic
locks rose to 42 percent (36) of sales, of which entrance
automation accounted for 20 percent (11). Security doors
and hardware accounted for 20 percent (22) of sales.

cost structure
Total wage costs, including social security expenses and pen-
sion expenses, rose to SEK 11,835 M (10,110), equivalent to
28 percent (27) of sales. The average number of employees
in the Group rose to 41,070 (37,279).

The Group’s material costs rose to SEK 14,655 M

(12,553), equivalent to 35 percent (34) of sales.

Other purchasing costs rose to SEK 7,616 M (7,049),

equivalent to 18 percent (19) of sales.

Depreciation and amortization of non-current assets
amounted to SEK 1,022 M (995), equivalent to 2 percent (3)
of sales.

operating income
Operating income (EBIT) excluding restructuring costs rose to
SEK 6,624 M (6,046) due to efficiency savings and continued
growth in operations. The corresponding operating margin
was 15.9 percent (16.4). Exchange rate effects amounted to
SEK –430 M (–262).

Operating income before depreciation and amortization

(EBITDA) excluding restructuring costs rose to SEK 7,646 M
(7,041). The corresponding margin was 18.3 percent (19.1).

items affecting comparability
Operating income for the year was reduced by restructuring
costs of SEK 1,420 M (–), of which impairment of assets,
mainly machinery and equipment, amounted to SEK 224 M.
The remaining amount mainly related to payments in con-
nection with staff redundancies. Divestment of Cardo Flow
Solutions and Lorentzen & Wettre gave rise to a capital gain
of SEK 404 M.

income before tax
Income before tax excluding restructuring costs totaled
SEK 5,979 M (5,366). The exchange rate effect amounted
to SEK –399 M (–232). Net financial items amounted to
SEK –645 M (–680). This improvement is partly due to lower
pension expenses. Profit margin, defined as income before
tax in relation to sales, was 14.3 percent (14.6) excluding
restructuring costs.

The parent company’s income before tax was

SEK 2,297 M (954).

tax
The Group’s tax expense totaled SEK 1,095 M (1,286), equiv-
alent to an effective tax rate of 24 percent (24). Non-deduct-
ible restructuring costs increased the effective tax rate by
one percentage point.

earnings per share
Earnings per share after full dilution excluding items affect-
ing comparability amounted to SEK 12.30 (10.89).

SALES AND OPERATING INCOME

SEK M

42,000

36,000

30,000

24,000

18,000

12,000

6,000

SEK M

7,000

6,000

5,000

4,000

3,000

2,000

1,000

 Sales

Operating income1

1 Excluding items affecting comparability
2008, 2009 and 2011.

assa aBloY annual report 2011

group financial reports

Consolidated income statement and
Statement of comprehensive income

income statement, seK M

Sales
Cost of goods sold
gross income

Selling expenses
Administrative expenses
Research and Development costs
Other operating income and expenses
Share of earnings in associates
operating income

Financial income
Financial expenses
income before tax

Tax on income
net income from continuing operations

Net income from discontinued operations
net income

net income attributable to:
Parent company shareholders’
Non-controlling interest

earnings per share
before dilution, SEK
after dilution, SEK
after dilution excluding items affecting comparability, SEK

statement of comprehensive income, seK M

net income

other comprehensive income
Share of other comprehensive income of associates
Cashflow hedges
Net investment hedges
Exchange rate differences
total comprehensive income

total comprehensive income attributable to:
– Parent company shareholders’
– Non-controlling interest

note

4
5
6–9, 32

10
9, 11

13
13
13

2010

36,823
–21,987
14,836

–5,666
–2,039
–1,015
–73
3
6,046

26
–706
5,366

–1,286
4,080

–
4,080

4,050
30

11.07
10.89
10.89

2010

4,080

–
–
–
–1,249
2,831

2,805
26

2011

41,786
–26,829
14,957

–6,408
–2,109
–1,202
–77
43
5,204

59
–704
4,559

–1,095
3,465

404
3,869

3,843
26

10.45
10.33
12.30

2011

3,869

21
–30
–108
327
4,079

4,040
39

SALES BY PRODUCT GROUP, 2011

EARNINGS PER SHARE AFTER TAX AND DILUTION

 Mechanical locks, lock systems

and fittings, 38% (42)
 Electromechanical and

electronic locks, 22% (25)
 Entrance automation, 20% (11)
 Security doors and
hardware, 20% (22)

SEK

 Earnings per share

after tax and dilution1

1 Excluding items affecting comparability
2008, 2009 and 2011.

assa aBloY annual report 2011

group financial reports 77

Comments by division

ASSA ABLOY is organized into five divisions. EMEA (Europe, Middle East and Africa) division, Americas (North and
South America) division and Asia Pacific (Asia, Australia and New Zealand) division manufacture and sell mechanical
and electromechanical locks, security doors and hardware in their respective geographical markets. Global Technol-
ogies division operates worldwide in the product areas of access control systems, secure card issuance, identification
technology and hotel locks. Entrance Systems division is a global supplier of automatic doors and service.

eMea
Sales totaled SEK 13,030 M (13,036), with organic growth
of 0 percent (2). Acquired units contributed 5 percent (1)
to sales. Operating income excluding restructuring costs
amounted to SEK 2,203 M (2,174), with an operating margin
(EBIT) of 16.9 percent (16.7). Return on capital employed
excluding restructuring costs was 22.0 percent (21.6).
Operating cash flow before interest paid amounted to
SEK 2,142 M (2,607).

Demand on European markets was weak during the year.

The launch of new products and continued efficiency sav-
ings resulted in a maintained operating margin and a contin-
ued strong cash flow.

americas
Sales totaled SEK 8,906 M (9,536), with organic growth of
2 percent (–2). Acquired units contributed 1 percent (2) to
sales. Operating income excluding restructuring costs
amounted to SEK 1,812 M (1,886), with an operating margin
(EBIT) of 20.3 percent (19.8). Return on capital employed
excluding restructuring costs was 22.8 percent (21.3).
Operating cash flow before interest paid amounted to
SEK 1,731 M (2,013).

The commercial segment showed stable demand, driven

partly by the renovation market. New electromechanical
products were launched during the year. The operating mar-
gin remained strong due to continued active marketing and
a strong product portfolio.

asia pacific
Sales totaled SEK 6,633 M (6,081), with organic growth of
9 percent (14). Acquired units contributed 4 percent net
(43) to sales. Operating income excluding restructuring
costs amounted to SEK 933 M (843), with an operating
margin (EBIT) of 14.1 percent (13.9). Return on capital
employed excluding restructuring costs was 23.6 percent
(25.1). Operating cash flow before interest paid amounted
to SEK 912 M (917).

Growth in China was strong for the year as a whole, but
slowed in the latter part of the year. Demand was robust on
the majority of Asian markets, but weaker in Australia. Oper-
ating margin and cash flow were maintained at a high level.

global technologies
Sales totaled SEK 5,756 M (5,015), with organic growth of
11 percent (10). Acquired units contributed 13 percent (1)
to sales. Operating income excluding restructuring costs
amounted to SEK 897 M (862), with an operating margin
(EBIT) of 15.6 percent (17.2). Return on capital employed
excluding restructuring costs was 14.3 percent (14.7).
Operating cash flow before interest paid amounted to
SEK 933 M (868).

The division showed strong organic growth for the year.
Underlying operating income remained strong, but profit-
ability was negatively impacted by the effects of acquisitions.

entrance systems
Sales totaled SEK 8,278 M (4,072), with organic growth of
5 percent (–2). Acquired units contributed 110 percent (17)
to sales. Operating income excluding restructuring costs
amounted to SEK 1,197 M (627), with an operating margin
(EBIT) of 14.5 percent (15.4). Return on capital employed
excluding restructuring costs was 12.2 percent (14.6).
Operating cash flow before interest paid amounted to
SEK 1,243 M (580).

New sales of automatic doors were strong during the

year. Major acquisitions considerably strengthened the
market position. Sales and operating cash flow doubled
compared with the previous year.

other
The costs of Group-wide functions, such as corporate man-
agement, accounting and finance, supply management and
Group-wide product development, amounted to SEK 418 M
(346). Elimination of sales between the Group’s segments
and restructuring costs are included in ‘Other’.

EXTERNAL SALES, 2011

 EMEA, 30% (34)
 Americas, 21% (26)
 Asia Pacific, 15% (15)
 Global Technologies, 14% (14)
 Entrance Systems, 20% (11)

group financial reports

assa aBloY annual report 2011

Results by division

seK M

Sales, external
Sales, internal
sales

Organic growth
Share of earnings in associates

operating income (eBit) exclud-
ing items affecting comparability
Operating margin (EBIT) exclud-
ing items affecting comparability
Items affecting comparability 6

operating income (eBit)
Operating margin (EBIT)
Net financial items
Tax on income
net income

Capital employed
–of which goodwill
– of which other intangi-
ble and tangible assets
–of which shares in associates
Return on capital employed exclud-
ing items affecting comparability

Operating income (EBIT)
Restructuring costs
Depreciation
Investments in fixed assets
Sales of fixed assets
Change in working capital
cash flow 5

Adjustment for non-cash items
Paid and received interest
operating cash flow 5

eMea1

americas2

asia pacific3

global
technologies4

entrance
systems

2010

2011

12,660 12,762
268
13,036 13,030

376

2%
3

0%
2

2010

9,491
45
9,536

–2%
–

2011

8,867
39
8,906

2%
–

2010

5,698
384
6,081

14%
–

2011

6,243
391
6,633

9%
–

2010

4,951
64
5,015

10%
–

2011

5,688
67
5,756

11%
–

2010

4,024
48
4,072

–2%
–

2011

8,226
52
8,278

5%
41

other

total

2010

2011

2010

2011

–
–916 7
–916

– 36,823 41,786

–817 7
–817 36,823 41,786

–
–

3%
3

4%
43

2,174

2,203

1,886

1,812

843

933

862

897

627

1,197

–346

–418

6,046

6,624

16.7%
–

2,174
16.7%

16.9%
–587

1,616
12.4%

19.8%
–

1,886
19.8%

20.3%
–150

1,662
18.7%

13.9%
–

843
13.9%

14.1%
–48

885
13.3%

17.2%
–

862
17.2%

15.6%
–87

810
14.1%

15.4%
–

627
15.4%

14.5%
–423

774
9.3%

–
–

–346
–

–
–125

–543
–

16.4%
–

6,046
16.4%
–680
1,286
4,080

15.9%
–1,420

5,204
12.5%
–645
–1,095
3,869

8,759
5,471

2,632
37

8,950
5,564

2,590
33

8,163
6,039

1,566
–

8,468
6,041

1,484
–

4,080
3,202

2,306
–

4,278
3,410

2,464
–

5,772
4,265

1,267
–

6,449
4,846

1,258
–

4,365 10,837
7,153
3,303

431
–

2,237
1,178

245
–

136
–

–1,041 31,385 37,942
– 22,279 27,014

93
–

8,336 10,126
1,211

21.6%

22.0%

21.3%

22.8%

25.1%

23.6%

14.7%

14.3%

14.6%

12.2%

–

18.5%

17.4%

2,174
–
417
–357
40
334
2,607

1,616
587
385
–331
8
–123
2,142

1,886
–
222
–124
10
19
2,013

1,662
150
182
–140
5
–128
1,731

843
–
142
–217
19
130
917

885
48
148
–215
10
35
912

862
–
145
–109
0
–30
868

810
87
169
–98
0
–35
933

627
–
57
–55
8
–58
580

774
423
126
–111
19
12
1,243

–346
–
14
–8
85
–33
–288

45
–455

–543
125
12
–3
10
1
–398

0
–482

6,046
–
995
–870
162
362
6,695

45
–455
6,285

5,204
1,420
1,022
–898
52
–238
6,563

0
–482
6,080

Average number of employees

9,471 10,071

6,969

6,658 15,510 15,784

2,487

2,819

2,738

5,605

104

133 37,279 41,070

1 Europe, Middle East and Africa.
2 North and South America.
3 Asia and Pacific.
4 ASSA ABLOY Hospitality and
HID Global.
5 Excluding restructuring payments.
6 Items affecting comparability con-
sist of restructuring costs.
7 Of which eliminations SEK 817 M
(916).

The segments have been determined on the basis of report-
ing to the CEO, who monitors the overall performance and
makes decisions on resource allocation.

The breakdown of sales is based on customer sales in the
respective country. Sales between segments are carried out
at arm’s length.

The different segments generate their revenue from the
manufacture and the sale of mechanical, electromechanical
and electronic locks, lock systems and fittings, and security
doors and hardware.

For further information on sales, see Note 2.

OPERATING INCOME, 2011 1.2

AVERAGE NUMBER OF EMPLOYEES, 2011

 EMEA, 31% (34)
 Americas, 26% (30)
 Asia Pacific, 13% (13)
 Global Technologies, 13% (13)
 Entrance Systems, 17% (10)

1 Operating income excluding
items affecting comparability.

2 “Other” is not included in the
calculation. See section Com-
ments by division for what is
included in “Other”.

 EMEA, 25% (25)
 Americas, 16% (19)
 Asia Pacific, 38% (42)
 Global Technologies, 7% (7)
 Entrance Systems, 14% (7)

assa aBloY annual report 2011

group financial reports 79

Financial position

• Capital employed amounted to SEK 37,942 M (31,385).

• Return on capital employed remained high at 17.4 percent (18.5).

• The net debt/equity ratio was 0.60 (0.51).

seK M

Capital employed
– of which goodwill
Net debt
Equity
–of which non-controlling interests

2010

31,385
22,279
10,564
20,821
169

2011

37,942
27,014
14,207
23,735
208

capital employed
The Group’s capital employed, defined as total assets less
interest-bearing assets and non-interest-bearing liabilities
including deferred tax liabilities, amounted to SEK 37,942 M
(31,385). The return on capital employed excluding items
affecting comparability was 17.4 percent (18.5).

Intangible assets amounted to SEK 31,455 M (25,193).
The increase is mainly due to the effects of completed acqui-
sitions. During the year, goodwill and other intangible assets
with an indefinite useful life have arisen to a preliminary
value of SEK 5,985 M. A valuation model based on dis-
counted future cash flows is used for impairment testing of
goodwill and other intangible assets with an indefinite use-
ful life.

Tangible assets amounted to SEK 5,684 M (5,422). Capi-
tal expenditure on tangible and intangible assets, less sales
of tangible and intangible assets, totaled SEK 846 M (708).
Depreciation amounted to SEK 1,022 M (995).

Accounts receivables totaled SEK 6,924 M (5,596) and
inventories totaled SEK 5,704 M (4,825). The average collec-
tion period for accounts receivables was 47 days (51). Mate-
rial throughput time was 97 days (103). The Group is making
systematic efforts to increase capital efficiency.

net debt
Net debt amounted to SEK 14,207 M (10,564), of which pen-
sion commitments and other post-employment benefits
accounted for SEK 1,173 M (1,078).

Net debt was increased by acquisitions and the dividend
to shareholders and reduced by the continued strong posi-
tive operating cash flow. The net increase is mainly due to
increased acquisition activity.

External financing
The Group’s long-term loan financing mainly consists of
Private Placement Program in the USA totaling USD 500 M
(580), GMTN program of SEK 2,658 M (2,705) and a loan
from the European Investment Bank of EUR 110 M (0).
During the year, long-term bilateral financing totaling
EUR 110 M was raised from the European Investment Bank.
The 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 and to a new loan of SEK 500 M with
a seven-year term raised under the GMTN program.

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 4,242 M (747) 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 increase in short-term financing
is mainly linked to financing the acquisition of Cardo.

The interest coverage ratio, defined as income before tax

plus net interest, divided by net interest, was 8.8 (10.1).
Fixed interest terms fell somewhat during the year, with an
average term of 16 months (23) at year-end.

Cash and cash equivalents amounted to SEK 1,665 M
(1,302) and are invested in banks with high credit ratings.

Some of the Group’s main financing agreements contain
a customary so called 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 agreement should control of the company change.

equity
The Group’s equity totaled SEK 23,735 M (20,821) at year-
end. The return on equity was 16.7 percent (19.1). The
equity ratio was 42.9 percent (45.9). The debt/equity ratio,
defined as net debt divided by equity, was 0.60 (0.51).

NET DEBT

CAPITAL EMPLOYED AND RETURN ON CAPITAL EMPLOYED

SEK M

15,000

12,000

9,000

6,000

3,000

 Net debt

Net debt / equity

1.0

0.8

0.6

0.4

0.2

SEK M

42,000

36,000

30,000

24,000

18,000

12,000

6,000

 Capital employed
Return on capital
employed1

1 Excluding items affecting comparability
2008, 2009 and 2011.

assa aBloY annual report 2011

group financial reports

Consolidated balance sheet

seK M

assets
non-current assets
Intangible assets
Tangible assets
Shares in associates
Other long-term financial assets
Deferred tax receivables
total non-current assets

current assets
Inventories
Accounts receivables
Current tax receivables
Other short-term receivables
Prepaid expenses and accrued income
Derivative financial instruments
Short-term investments
Cash and cash equivalents
total current assets
total assets

eQutiY anD liaBilities
equity
Parent company's shareholders
Share capital
Other contributed capital
Reserves
Retained earnings

Non-controlling interest
total equity

non-current liabilities
Long-term loans
Convertible debenture loans
Deferred tax liabilities
Pension provisions
Other long-term provisions
Other long-term liabilities
total non-current liabilites

current liabilities
Short-term loans
Convertible debenture loans
Derivative financial instruments
Accounts payables
Current tax liabilities
Short-term provisions
Other short-term liabilities
Accrued expenses and prepaid income
total current liabilities
total eQuitY anD liaBilities

note

2010

2011

14
15
17
19
18

20
21

33
33
33

33
33
18
24
25
33

33
33
33

25
26
27

25,193
5,422
37
856
702
32,210

4,825
5,596
311
581
416
146
2
1,302
13,179
45,389

366
8,921
–484
11,849
20,652
169
20,821

7,235
899
309
1,078
1,793
2,134
13,448

2,481
311
72
3,123
458
771
1,146
2,758
11,120
45,389

31,455
5,684
1,211
164
786
39,301

5,704
6,924
325
620
551
234
50
1,665
16,072
55,373

368
9,227
–287
14,219
23,527
208
23,735

7,422
–
497
1,173
1,315
2,668
13,075

6,531
896
179
3,796
330
2,028
1,642
3,161
18,563
55,373

assa aBloY annual report 2011

group financial reports 81

Cash flow

• Operating cash flow remained very strong and amounted to SEK 6,080 M (6,285).

• Net capital expenditure totaled SEK 846 M (708).

relationship between cash flow from operating activities
and operating cash flow

seK M

Cash flow from operating activities
Restructuring payments
Net capital expenditure
Reversal of tax paid
operating cash flow

2010

5,729
465
–708
799
6,285

2011

5,347
373
–846
1,206
6,080

investments in subsidiaries
The total purchase price for acquisitions of subsidiaries
amounted to SEK 13,600 M (4,898), of which the cash flow
effect was SEK –12,297 M (–2,594). Acquired cash totaled
SEK 411 M (705).

change in net debt
Net debt was mainly affected by the strong positive operat-
ing cash flow, the dividend to shareholders and increased
acquisitions.

seK M

Net debt at 1 January
Operating cash flow
Restructuring payments
Tax paid
Acquisitions/Disposals
Dividend
Share issue
Purchase of treasury shares
Exchange rate differences and others
net debt at 31 December

2010

11,048
–6,285
465
799
3,319
1,317
–
48
–147
10,564

2011

10,564
–6,080
373
1,206
6,511
1,472
–308
17
452
14,207

operating cash flow

seK M

Operating income (EBIT)
Restructuring costs
Depreciation
Net capital expenditure
Change in working capital
Paid and received interest
Non-cash items
operating cash flow1

Operating cash flow/
Income before tax

1 Excluding restructuring payments.
² Excluding restructuring costs.

2010

6,046
–
995
–708
362
–455
45
6,285

2011

5,204
1,420
1,022
–846
–238
–482
0
6,080

1.17

1.022

The Group’s operating cash flow amounted to SEK 6,080 M
(6,285), equivalent to 102 percent (117) of income before
tax excluding restructuring costs.

net capital expenditure
Direct net capital expenditure on intangible and tangible
assets totaled SEK 846 M (708), equivalent to 83 percent
(71) of the depreciation on intangible and tangible assets.
The low net capital expenditure is partly due to the Group’s
long-term efforts to streamline the production structure.

change in working capital

seK M

Inventories
Accounts receivables
Accounts payables
Other working capital
change in working capital

2010

–338
–118
406
412
362

2011

–32
–249
235
–192
–238

The material throughput time was 97 days (103) at year-end.
Capital tied up in working capital increased during the year,
which had an impact on cash flow of SEK –238 M (362) over-
all. However, the increased capital tied up in working capital
was reduced due to suppliers’ increased credit periods.

INCOME BEFORE TAX AND OPERATING CASH FLOW

CAPITAL EXPENDITURE

SEK M

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

 Income before tax1
 Operating cash flow2

1 Excluding items affecting comparability
2008, 2009 and 2011.

2 Excluding restructuring payments.

SEK M

1,000

800

600

400

200

 Net capital
expenditure
 Depreciation
Net capital
expenditure
% of sales

2.5

2.0

1.5

1.0

0.5

group financial reports

assa aBloY annual report 2011

Consolidated cash flow statement

seK M

operating actiVities
Operating income
Depreciation
Reversal of restructuring costs
Restructuring payments
Non-cash items
cash flow before interest and tax

Interest paid
Interest received
Tax paid on income
cash flow before changes in working capital

Changes in working capital
cash flow from operating activities

inVesting actiVities
Investments in tangible and intangible assets
Sales of tangible and intangible assets
Investments in subsidiaries
Disposals of subsidiaries
Other investments
cash flow from investing activities

financing actiVites
Dividends
Long-term loans raised
Long-term loans repaid
Share issue
Purchase of treasury shares
Net cash effect of changes in other borrowings
cash flow from financing activities
casH floW

casH anD casH eQuiValents
cash and cash equivalents at 1 January
Cash flow
Effect of exchange rate differences
cash and cash equivalents at 31 December

note

14, 15
14, 15
31
31
31

2010

6,046
995
–
–465
45
6,621

–463
8
–799
5,367

362
5,729

–870
162
–2,594
–34
–691
–4,027

–1,317
139
–1,000
–
–48
–371
–2,597
–895

2,235
–895
–38
1,302

2011

5,204
1,022
1,420
–373
0
7,273

–512
30
–1,206
5,585

–238
5,347

–898
52
–12,297
6,690
–904
–7,357

–1,472
1,512
–646
308
–17
2,641
2,326
316

1,302
316
47
1,665

assa aBloY annual report 2011

group financial reports 83

Changes in consolidated equity

seK M

opening balance 1 January 2010
Net income
Other comprehensive income
total comprehensive income
Dividend for 2009
Stock purchase plans
Share issue
Purchase of treasury shares
Change in non-controlling interest
sum of transactions with parent
company shareholders’
closing balance 31 December 2010

opening balance 1 January 2011
Net income
Other comprehensive income
total comprehensive income
Dividend for 2010
Stock purchase plans
Share issue
Purchase of treasury shares
sum of transactions with parent
company shareholders’
closing balance 31 December 2011

parent company’s shareholders

share
capital

other con-
tributed
capital

366

8,887

note

reserves

760

–1,244
–1,244

0
366

34
8,921

–484

366

8,921

–484

197
197

306

2
368

306
9,227

–287

retained
earnings

non controlling
interest

9,159
4,050

4,050
–1,317
6

–48

–1,359
11,849

11,849
3,843

3,843
–1,472
16

–17

–1,473
14,219

162
30
–5
26

–19

–19
169

169
26
13
39

208

total

19,334
4,080
–1,249
2,831
–1,317
6
34
–48
–19

–1,344
20,821

20,821
3,869
210
4,079
–1,472
16
308
–17

–1,165
23,735

SHAREHOLDERS’ EQUITY PER SHARE AFTER DILUTION AND
RETURN ON SHAREHOLDERS’ EQUITY AFTER TAX

DIVIDEND

SEK

 Shareholders’ equity per
share after dilution, SEK
 Return on shareholders’

equity after tax, %

SEK

 Dividend per share
 Earnings per share

after tax and dilution1

1 Excluding items affecting comparability
2008, 2009 and 2011.

group financial reports

assa aBloY annual report 2011

Grand Hyatt San Francisco
installs solutions from VingCard Elsafe

The Grand Hyatt San Francisco, which is part of the Hyatt Hotels Corporation hotel chain.

The spectacular Grand Hyatt San Francisco has recently been totally renovated and needed an ultramodern security
system and an efficient energy management solution that could be integrated with the hotel’s others systems to
achieve maximum efficiency.

VingCard’s Signature RFID locks, Elsafe’s Infinity electronic safes and the Orion energy management solution were
integrated using the VISIONLINE system, providing the hotel with a total security and energy management system.

Customer:

Challenge:

Solution:

assa aBloY annual report 2011

group financial reports 85

Parent company financial statements

income statement
– Parent company

seK m

Administrative expenses
Research and Development costs
Other operating income and expenses
operating income

statement of
comprehensive income
– Parent company

Balance sheet
– Parent company

Financial income
Financial expenses
Group contributions
income before tax

Tax on income
net income

seK m

net income

other comprehensive income
Changes in value of financial instruments
total comprehensive income

seK m

assets
non-current assets
Intangible assets
Tangible assets
Shares in subsidiaries
Other long-term financial assets
total non-current assets

current assets
Receivables from subsidiaries
Other short-term receivables
Prepaid expenses and accrued income
Cash and cash equivalents
total current assets
total assets

eQuity anD liaBilities
equity
Restricted equity
Share capital
Statutory reserve
Unrestricted equity
Premium fund
Retained earnings
Net income
total equity

Provisions
Other provisions
total provisions

non-current liabilities
Long-term loans
Convertible debenture loans
total non-current liabilities

current liabilities
Short-term loans
Convertible debenture loans
Accounts payables
Short-term liabilities to subsidiaries
Current tax liabilities
Other short-term liabilities
Accrued expenses and prepaid income
total current liabilities
total eQuity anD liaBilities

Assets pledged
Contingent liabilities

note

3, 6, 8, 9
6, 8, 9
4
9, 32

10
9, 11

2010

–612
–233
1,623
778

1,147
–246
–725
954

3
957

2010

957

–
957

2011

–662
–297
1,808
849

2,394
–714
–232
2,297

–29
2,268

2011

2,268

258
2 526

note

2010

2011

14
15
16
19

33
33

29
28

150
3
19,686
776
20,615

3,476
58
25
0
3,559
24,174

366
8,905

34
2,709
767
12,781

–
–

2,702
899
3,601

300
311
20
6,960
16
6
179
7,792
24,174

–
6,136

109
3
31,789
1,141
33,042

2,825
45
27
0
2,897
35,939

368
8,905

340
2,261
2,268
14,142

76
76

2,646
–
2,646

549
896
65
17,413
–
7
145
19,075
35,939

–
10,613

Parent comPany financial statements

assa aBloy annual rePort 2011

cash flow statement
– Parent company

change in equity
– Parent company

seK m

oPeratinG actiVities
Operating income
Depreciation
cash flow before interest and tax

Paid and received interest
Dividends received
Tax paid and received
cash flow before changes in working capital

Changes in working capital
cash flow from operating activities

inVestinG actiVities
Investment in tangible and intangible assets
Sales of tangible and intangible assets
Investments in subsidiaries
Other investments
cash flow from investing activities

financinG actiVities
Dividends
Loan raised
Loan repaid
Share issue
Purchase of treasury shares
cash flow from financing activities
casH floW

casH anD casH eQuiValents
cash and cash equivalents at 1 January
Cash flow
cash and cash equivalents at 31 December

note

2010

778
183
961

–145
1,028
9
1,853

–141
1,712

–11
0
–603
–713
–1,327

–1,317
4,415
–3,435
–
–48
–385
0

0
0
0

2011

849
157
1,006

–558
2,280
–1
2,727

–86
2,641

–117
0
–11,825
–951
–12,893

–1,472
13,050
–1,617
308
–17
10,252
0

0
0
0

restricted shareholders’ equity

unrestricted shareholders’ equity

seK m

opening balance 1 January 2010
Net income
total comprehensive income
Stock purchase plans
Purchase of treasury shares
Share issue
Dividend for 2009
sum of transactions with parent
company shareholders’
closing balance 31 December 2010

opening balance 1 January 2011
Net income
Hedge accounting
Write-up of share in subsidiaries
total comprehensive income
Stock purchase plans
Purchase of treasury shares
Share issue
Dividend for 2010
sum of transactions with parent
company shareholders’
closing balance 31 December 2011

note

share
capital

statutory
reserve

366

8,905

0
366

8,905

366

8,905

2
368

8,905

fair value
reserve

Premium
fund

retained
earnings

–

34
34

306

340
340

3,878
957
957
6
–48

–1,317

–1,359
3,476

3,476
2,268
–17
275
2,526
16
–17

–1,472

–1,473
4,529

total

13,149
957
957
6
–48
34
–1,317

–1,325
12,781

12,781
2,268
–17
275
2,526
16
–17
308
–1,472

–1,165
14,142

assa aBloy annual rePort 2011

Parent comPany financial statements 87

Notes

Note 1 significant accounting and valuation principles
the Group
ASSA ABLOY applies International Financial Reporting Stan-
dards (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 princi-
ples are based on IFRS as endorsed by 31 December 2011
and have been applied to all years presented, unless stated
otherwise. This Note describes the most significant account-
ing principles that have been applied in the preparation of
the financial statements, which comprise the information
appearing on pages 61–118.

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 finan-
cial 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 finan-
cial 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 assess-
ments are continually reassessed and are based on a combi-
nation of historical experience and reasonable expectations
about the future.

The Group considers that estimates and assessments
relating to impairment testing of goodwill and other intan-
gible assets with indefinite useful life are of material impor-
tance to the consolidated financial statements. The Group
tests carrying amounts for impairment on an annual basis.
The recoverable amounts of cash generating units are deter-
mined 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 adjust-
ments in carrying amounts during the next financial year.
Material assumptions and the effects of reasonable changes
in them are described in Note 14.

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 2011 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 19 (Revised) Employee Benefits.
IFRS 9 Financial instruments.
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 9 which becomes effective
on 1 January 2015. All the standards are still subject to the
EU’s approval process. Management analyzes the impact of
the new and revised standards on the financial statements.
The new IFRS 10 and the revised IAS 19 require retroactive
application, while the other standards are applied prospec-
tively and consequently have no impact on financial state-
ments 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 com-
prehensive 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 com-
parative information for the financial year 2012 is to be recal-
culated 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 the reporting date. The Group’s
total pension provision, adjusted for amounts in the ‘corri-
dor’, consequently totals SEK 2,265 M (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 compa-
nies in which the Parent company otherwise has a control-
ling interest, for example by having the right to formulate
financial and operating strategies. Companies acquired dur-
ing the year are included in the consolidated financial state-
ments 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 pre-

pared 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-con-
trolling interest in the acquired company shall be recog-
nized 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 lia-
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.

Notes

AssA ABLoY ANNuAL report 2011

Note 1 cont.

Intragroup transactions and balance sheet items and unreal-
ized profits on transactions between Group companies are
eliminated in the consolidated financial statements.

The rates for currencies used in the Group, relative to the
Group’s presentation currency (SEK), were as follows – the
weighted average for the year, and the closing day rate.

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. Transac-
tions with non-controlling interests are shown as transac-
tions with the Group’s shareholders.

Associates
Associates are defined as companies which are not subsid-
iaries but in which the Group has a significant, but not a con-
trolling, interest. This is usually taken to be companies in
which the Group’s shareholding represents between 20 and
50 percent of the voting rights.

Interests 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 car-
rying 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 hold-
ings. The share of associates’ earnings is reported in the con-
solidated income statement in operating income as the
holdings are related to business operations.

Segment reporting
Operating segments are reported in accordance with inter-
nal 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 consti-
tute the Group’s segments for external financial reporting.
The Group’s business is divided into five divisions. Three divi-
sions 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 transac-
tion 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 year-
end 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 pre-
pared in functional currencies other than the Group’s pre-
sentation 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 average rate for the period. Foreign
exchange differences arising from the translation of foreign
subsidiaries are reported as translation differences in com-
prehensive income.

Country

Currency

2010

2011

2010

2011

Average rate

Closing rate

ARS
Argentina
AUD
Australia
BRL
Brazil
CAD
Canada
CHF
Switzerland
CLP
Chile
CNY
China
COP
Colombia
CZK
Czech Republic
DKK
Denmark
EUR
Euro zone
United Kingdom GBP
HKD
Hong Kong
HUF
Hungary
ILS
Israel
INR
Indien
KES
Kenya
KRW
South Korea
LTL
Lithuania
MXN
Mexico
MYR
Malaysia
NOK
Norway
NZD
New Zealand
PLN
Poland
RON
Romania
RUB
Russia
SGD
Singapore
THB
Thailand
USD
USA
ZAR
South Africa

1.85
6.61
4.10
6.98
6.94
0.014
1.07

0.38
1.28
9.57
11.14
0.93
0.035
1.93
0.158
0.091

1.57
6.73
3.88
6.57
7.31
0.013
1.01
0.0038 0.0035
0.37
1.21
9.02
10.38
0.83
0.032
1.81
0.139
0.074
0.0062 0.0059
2.61
0.52
2.12
1.16
5.16
2.19
2.13
0.22
5.16
0.21
6.50
0.90

2.77
0.57
2.24
1.19
5.19
2.38
2.27
0.24
5.29
0.23
7.23
0.98

1.72
6.93
4.05
6.85
7.20
0.015
1.03

0.35
1.21
8.99
10.53
0.88
0.032
1.91
0.152
0.085

1.61
7.03
3.71
6.78
7.36
0.013
1.10
0.0034 0.0036
0.35
1.20
8.96
10.68
0.89
0.029
1.82
0.130
0.081
0.0060 0.0060
2.59
0.49
2.18
1.15
5.35
2.04
2.08
0.22
5.33
0.22
6.92
0.85

2.60
0.55
2.21
1.15
5.21
2.26
2.10
0.23
5.28
0.23
6.84
1.02

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 lim-
ited 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
etc 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.

Research and development
Research costs are expensed as they are incurred. Develop-
ment costs are reported in the balance sheet only to the

AssA ABLoY ANNuAL report 2011

Notes 89

Note 1 cont.

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. Expendi-
ture 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 relat-
ing 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 as 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 compre-
hensive 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 car-
rying 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 set
against taxable income in future taxation. Deferred tax liabil-
ities relating to temporary differences resulting from invest-
ments 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 trans-
actions 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 acqui-
sition date, and is reported at cost less accumulated impair-
ment losses. Goodwill is allocated to cash generating units
(CGU) and is tested annually to identify any impairment loss.
Cash generating units are subject to systematic annual

impairment testing using a valuation model based on dis-
counted future cash flows. Deferred tax assets based on
local tax rates are reported in terms of tax-deductible good-
will (with corresponding reduction of the goodwill value).
Such deferred tax assets are expensed as the tax deduction
is utilized. Other acquisition-related intangible assets con-
sist 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 associ-
ated 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 impair-
ment losses.

Tangible assets
Tangible assets are reported at cost less accumulated depre-
ciation 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 depre-
ciation 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 organiza-
tional 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 recov-

Notes

AssA ABLoY ANNuAL report 2011

Note 1 cont.

erable amount is the higher of the asset’s fair value less sell-
ing 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 prog-
ress and finished goods include both direct costs incurred
and a fair allocation of indirect manufacturing costs.

Accounts receivables
Accounts receivables are recognized initially at fair value and
subsequently measured at amortized cost using the effec-
tive 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.

Financial assets
Financial assets include cash and cash equivalents, accounts
receivables, short-term investments and derivatives and are
classified in the following categories; financial assets valued
at fair value through the income statement, available-for-
sale assets, loan receivables and accounts receivables. Man-
agement 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 held-
for-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 sell-
ing 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 classi-
fied 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 Non-current 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 compre-
hensive income.

Loan receivables and accounts receivables
Accounts receivables and short-term investments are non-
derivative financial assets with fixed or determinable pay-
ments 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 consider-
ations, loan liabilities, accounts 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 consider-

ations 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.

Loan liabilities
Loan liabilities are valued initially at fair value after transac-
tion 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. Long-term loan liabilities have an antic-
ipated term to maturity exceeding one year, while current
loan liabilities have a term to maturity of less than one year.

Accounts payables
Trade payables are 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 recog-
nized 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 state-
ment. 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 valua-
tion techniques. These include the use of available informa-
tion 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 derec-
ognized 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 transac-
tion 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 des-
ignated as hedging instruments are reported on a continu-
ous basis in the income statement (financial items). For net
investment hedges, the part of changes in fair value classi-
fied as effective is recognized in other comprehensive
income. The ineffective part of the profit or loss is recog-
nized 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 for-
eign 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).

AssA ABLoY ANNuAL report 2011

Notes 91

Note 1 cont.

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 objec-
tives and risk management strategy as regards the hedging.
The Group also documents its assessment, both when hedg-
ing is entered into and on a regular basis, of whether the
derivative instruments used in hedge transactions are effec-
tive in counteracting changes in fair value that relate to the
hedged items. The fair value of currency derivatives is calcu-
lated at net present value based on prevailing forward con-
tract 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 con-
structive 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 rep-
resenting 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.

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 dis-
count 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 ser-
vice period. The Group’s payments relating to defined con-
tribution 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 com-
pany must report the personnel costs relating to equity-
based 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’ ser-
vices 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 reg-
ulated, 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 state-
ment, where it is allocated to the respective function.

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 pro-
gram 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 performance-
based 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 long-
term 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 divi-
dend has not been made as the participants are compen-
sated 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 per-
sonnel costs are immediately recognized in the income
statement. Personnel costs for shares relating to the perfor-
mance-based program are calculated on each accounting
date based on an assessment of the probability of the per-
formance 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 match-
ing 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 share-
holders by the weighted average number of outstanding
shares (less shares in treasury shares). Earnings per share
after dilution is calculated by dividing the net income attrib-
utable to the Parent company’s shareholders by the sum of
the weighted average number of ordinary shares and poten-
tial 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 reduc-
tion 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 intra-
group franchise and royalty revenues. The significant bal-
ance sheet items consist of shares in subsidiaries, intra-
group 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

Notes

AssA ABLoY ANNuAL report 2011

Note 1 cont.

Act and with regard to the relationship between accounting
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 fran-
chise 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 is reported at
cost less accumulated depreciation and any impairment
losses in the same way as for the Group. They are depreci-
ated 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. Impair-
ment 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.

Group contributions
The parent company reports Group contributions in accor-
dance 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 subsid-
iaries. 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.

Note 2 sales

Sales to customer, by country

seK M

USA
China
France
Sweden
Germany
United Kingdom
Australia
Netherlands
Canada
Finland
Norway
Italy
Denmark
Spain
South Korea
Belgium
Mexico
Austria
Switzerland
Asia (excluding China, South Korea,
Singapore, India and Thailand)
Czech Republic
Poland
South Africa
Brazil
New Zealand
Africa (excluding South Africa)
United Arab Emirates
Saudi Arabia
Romania
Hong Kong
India
Russia
Israel
Portugal
Central America (excluding Mexico)
Turkey
Singapore
Baltic countries
Colombia
Chile
Thailand
South America (excluding Brazil,
Chile and Colombia)
Middle East (excluding Saudi Arabia,
United Arab Emirates and Israel)
Ireland
Greece
Other countries
total

Sales by product group

seK M

Mechanical locks, lock systems
and fittings
Electromechanical locks, access control
and identification technology
Entrance automation
Security doors and hardware
total

Group

2010

9,955
3,182
2,487
1,805
1,725
1,742
1,841
1,105
1,274
837
774
925
705
885
694
457
678
286
417

310
352
147
372
321
278
250
127
273
85
215
189
160
211
203
193
135
129
111
125
105
100

110

2011

9,772
3,861
2,979
2,652
2,192
1,977
1,793
1,462
1,273
1,068
1,049
903
852
820
793
726
614
526
522

468
396
308
297
284
284
284
281
277
236
230
214
199
195
195
191
176
159
154
136
125
116

114

103
70
73
302
36,823

102
91
55
385
41,786

Group

2010

2011

15,591

15,877

8,990
4,110
8,132
36,823

9,044
8,444
8,421
41,786

AssA ABLoY ANNuAL report 2011

Notes 93

Note 3 Auditors’ fees

Note 6 operational leasing agreements

seK M

Audit assignment
PwC
Other

Audit related services in
addition to audit
assignment
PwC
Other

tax advice
PwC
Other

other services
PwC
Other
total

Group

parent company

Group

parent company

2010

2011

2010

2011

seK M

2010

2011

2010

2011

28
6

1
–

6
2

8
2
53

30
11

1
–

8
2

19
3
74

3
–

1
–

1
0
6

3
–

1
–

15
–
20

Leasing fees paid
during the year
total

Nominal value of agreed
future leasing fees:
Due for payment in
(2011) 2012
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 or later
total

343
343

463
463

310

423

237

331

177

235

177

128

99
988

126
1 420

13
13

16
91

16
16

16
92

Note 4 other operating income and expenses
Group

seK M

2010

2011

Rent received
Net income from sales of fixed assets
Government grants
Business-related taxes
Disposal of subsidiaries
Transaction expenses acquisitions
Write-down of tangible asset
Insurance compensation, net
Exchange rate differences
Other, net
total

12
92
9
–20
–3
–61
–144
66
–26
2
–73

12
–3
6
–20
0
–22
–37
0
–15
2
–77

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

seK M

Agta Record AG
Saudi Crawford Doors Factory Ltd
Låsgruppen Wilhelm Nielsen AS
Other
total

Group

2010

2011

–
–
3
–
3

37
4
2
0
43

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 2011.

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 36,548 M (30,707). Below, these same costs are broken
down by nature:

seK M

Remuneration of employees (Note 32)
Direct material costs
Depreciation (Note 8, 14, 15)
Other purchase expenses
Restructuring costs
total

Group

2010

10,110
12,553
995
7,049
–
30,707

2011

11,835
14,655
1,022
7,616
1,420
36,548

Note 8 Depreciation and amortization

seK M

2010

2011

2010

2011

Group

parent company

Intangible assets
Machinery
Equipment
Buildings
Land improvements
total

163
442
237
152
1
995

183
452
228
157

2
1 022

182
–
1
–
–
183

156
–
1
–
–
157

Note 9 exchange rate differences in income statement
parent company

Group

seK M

2010

2011

2010

2011

Exchange rate differences
reported in operating
income
Exchange rate differences
reported in financial
expenses (Note 11)
total

–26

–15

5
–21

7
–8

94
94

9
9

Notes

AssA ABLoY ANNuAL report 2011

Note 13 earnings per share

Earnings per share before dilution

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)

Earnings per share after dilution

seK M

Earnings attributable to the Parent
company's shareholders
Interest expenses for convertible
debenture loans, 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)

Group

2010

2011

4,050

3,843

365,744

367,833

11.07

10.45

Group

2010

2011

4,050

3,843

4,060

3,854

365,744

367,833

7,001
65

4,680
114

372,810

372,627

10.89

10.33

Earnings per share after dilution and excluding
items affecting comparability

Group

seK M

Earnings attributable to the Parent
company's shareholders
Interest expenses for convertible
debenture loans, 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)

2010

2011

4,050

3,843

10
–

11
736¹

4,060

4,590

365,744

367,833

7,001
65

4,680
114

372,810

372,627

10.89

12.30

¹ Items affecting comparability for 2011 consist of restructuring costs and net

income from discontinued operations.

Note 10 Financial income

seK M

2010

2011

2010

2011

Group

parent company

Earnings from partici-
pations in subsidiaries
Earnings from partici-
pations in associates
Intra-group interest
income
Other financial
income
External interest
income and similar
items
total

–

24
26

–

1,028

2,256

–

119

114

–

36
59

0
1,147

0
2,394

Note 11 Financial expenses

seK M

2010

2011

2010

2011

Group

parent company

Intra-group interest
expenses
Interest expenses, con-
vertible debenture loans
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 participations
Other financial expenses
total

–

–87

–429

–13

–14

–13

–14

–519

–562

–164

–226

–50

–38

–8

–41

–1

–18

–1

–

0
–96
–706

–
–68
–704

–44
–32
–246

–22
–32
–714

Note 12 tax on income

Group

parent company

seK M

2010

2011

2010

2011

Current tax
Tax attributable to
prior years
Foreign withholding tax
Deferred tax
total

–971

–1,048

–289
–
–26

–142
–
95
–1,286 –1,095

3
–
–
3

–30

5
–4
–
–29

Explanations for the difference between nominal Swedish
tax rate and effective tax rate based on income before tax:

percent

2010

2011

2010

2011

Group

parent company

Swedish rate of tax on
income
Effect of foreign tax rates
Non-taxable income/non-
deductible expenses, net
Deductible goodwill
Utilized loss carry-forward
not recognized in prior
period
Non-deductible restruc-
turing costs
Other
effective tax rate in
income statement

26
4

–6
–1

–3

–
4

26
4

–5
0

–2

1
0

26
–

–26
–

–

–
–

26
–

–25
–

–

–
–

AssA ABLoY ANNuAL report 2011

Notes 95

Note 14 Intangible assets

2011, seK M

opening accumulated acquisition value
Purchases
Acquisitions of subsidiaries
Adjustments for acquisitions in the prior year
Exchange rate differences
Closing accumulated acquisition value

opening accumulated amortization/impairment
Impairment
Amortization
Exchange rate differences
Closing accumulated amortization/impairment
Carrying amount

2010, seK M

opening accumulated acquisition value
Purchases
Acquisitions of subsidiaries
Adjustments for acquisitions in the prior year
Sales/disposals
Exchange rate differences
Closing accumulated acquisition value

opening accumulated amortization/impairment
Amortization
Exchange rate differences
Closing accumulated amortization/impairment
Carrying amount

Group

Intangible
assets

3,789
112
1,590
–
30
5,521

–875
–
–183
–21
–1,079
4,442

Group

Intangible
assets

2,778
112
1,117
2
–12
–208
3,789

–787
–163
75
–875
2,914

Goodwill

22,343
–
4,584
–34
187
27,080

–64
–2
–
–
–66
27,014

Goodwill

20,397
–
2,988
97
–
–1,139
22,343

–64
–
–
–64
22,279

parent company

Intangible
assets

945
115
–
–
–
1,060

–795
–
–156
–
–951
109

parent company

Intangible
assets

934
11
–
–
–
–
945

–613
–182
–
–795
150

total

26,132
112
6,174
–34
215
32,599

–939
–
–183
–21
–1,143
31,455

total

23,175
112
4,105
99
–12
–1,347
26,132

–851
–163
75
–939
25,193

Intangible assets consist mainly of brands and licenses. The
carrying amount of intangible assets with an indefinite use-
ful life amounts to SEK 3,412 M (1,950).

Useful life has been defined as indefinite where the time

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.

period during which an asset is deemed to contribute eco-
nomic benefits cannot be determined.

Amortization and impairment of intangible assets are

mainly recognized as cost of goods sold in the income
statement.

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 Generat-
ing Units have been determined by calculating value in use.
These calculations are based on estimated future cash flows,

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.

Management has determined the budgeted operating mar-
gin 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 con-
servative estimate. Further, an average discount rate in local
currency after tax has been used in the calculations. The dif-
ference in value compared with using a discount rate before
tax is not deemed to be material.

Notes

AssA ABLoY ANNuAL report 2011

Note 14 cont.

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

Goodwill
Intangible assets with
indefinite useful life
total

eMeA

5,564

241
5,805

Americas

Asia pacific

Global
technologies

entrance
systems

6,041

245
6,286

3,410

1,022
4,432

4,846

346
5,192

7,153

1,558
8,711

total

27,014

3,412
30,426

2010
Overall, the discount rate employed 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 indefinite useful life
were allocated to the Cash Generating Units as summarized
in the following table:

seK M

Goodwill
Intangible assets with
indefinite useful life
total

eMeA

5,471

233
5,704

Americas

Asia pacific

Global
technologies

entrance
systems

6,039

233
6,272

3,202

974
4,176

4,265

342
4,607

3,303

168
3,471

total

22,279

1,950
24,229

sensitivity analysis
A sensitivity analysis has been carried out for each cash-
generating unit. The results of this analysis are summarized
below.

2011
If the estimated operating margin after the end of the bud-
get 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 per-
cent, Asia Pacific 6 percent, Global Technologies 5 percent,
and Entrance Systems 6 percent).

2010
If the estimated operating margin after the end of the bud-
get period had been one percentage point lower than the
management’s estimate, 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 growth rate to extrapolate cash flows
beyond the budget period had been one percentage point
lower than the basic assumption of 3 percent, total recover-
able amount would be 13 percent lower ( EMEA 13 percent,
Americas 13 percent, Asia Pacific 11 percent, Global Technol-
ogies 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 per-
cent, 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).

If the estimated weighted cost of capital used for the
Group’s discounted cash flow had been one percentage
point higher than the starting assumption of 9.0 to 10.0 per-
cent, 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 Sys-
tems 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.

These calculations are hypothetical and should not be
viewed as an indication that these figures are any more or
less likely to be changed. 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 2011

Notes 97

Note 15 tangible assets

2011, seK M

Buildings

Group

parent company

Machinery

equipment

total

equipment

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

Construction in progress
Carrying amount

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

Construction in progress
Carrying amount

Land and
land
improve-
ments

820
7
51
–1
0
–38

839

–139
0
0
–2
0
–1

–142

Land and
land
improve-
ments

829
6
91
–25
5
–86

820

–30
0
–119
–1
–1
12

–139

3,706
61
338
–23
56
–18

4,121

–1,728
11
–104
–157
0
–14

–1,992

3,794
72
212
–84
31
–319

3,706

–1,816
51
–12
–152
1
200

–1,728

6,272
232
142
–210
148
44

6,629

–4,436
173
–99
–452
–11
–27

2,244
166
69
–167
–21
22

2,314

–1,698
153
–9
–228
12
–15

13,042
467
600
–401
184
11

13,903

–8,002
337
–212
–840
0
–56

–4,852

–1,786

–8,773

6,784
327
179
–444
112
–686

6,272

–4,971
422
–13
–442
2
566

2,347
178
27
–158
47
–197

2,244

–1,776
142
–
–237
–1
174

13,754
583
509
–711
195
–1,288

13,042

–8,594
615
–144
–832
1
952

–4,436

–1,698

–8,002

1,978

681

1,836

546

382
5,422

2,128

697

1,777

528

555
5,684

2010, seK M

Buildings

Group

parent company

Machinery

equipment

total

equipment

17
1
–
–
–
–

–14
–
–
–1
–
–

–15

–
3

16
1
–
–
–
–

–13
–
–
–1
–
–

–14

–
3

Notes

AssA ABLoY ANNuAL report 2011

Note 16 shares in subsidiaries

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

1 The Group’s holdings amount to 100 percent.
² The Group’s holdings amount to 70 percent.

Note 17 shares in associates

Corporate identity number,
registered office

Number of
shares

% of share
capital

Book value,
seK M

parent company

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
2
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
12,000
650,000

100
100
100
100
100
100
100
100
100
100
100
100
100
100
362
100
98¹
100
100
100
100
100
90¹
100
100
100
100
100
100
100
100
71¹
100
100
100
100
100
100
100
100
100

197
22
181
528
60
220
0
189
0
4,257
538
376
1,086
771
567
1,964
0
47
26
3,077
1
293
901
184
2,237
0
13
17
242
48
765
142
105
14
0
303
72
11,373
0
63
911
31,789

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

Group

Number of
shares

% of share
capital

Book value,
seK M

5,077,964
4,800
305
800
350

38
40
50
40
35

1,171
17
15
6
1
1
1,211

The share of capital 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 2011. For the period January to June, the company’s revenue
totaled SEK 1,019 M and income after tax was SEK 41 M. The company’s assets totaled SEK 2,007 M and total liabilities
amounted to SEK 720 M.

2010 Company name

Talleres Agui S.A
Låsgruppen Wilhelm Nielsen AS
Mab Iberica SA
Other
total

AssA ABLoY ANNuAL report 2011

Country of registration

Number of
shares

% of share
capital

Book value,
seK M

Group

Spain
Norway
Spain

4,800
305
700

40
50
24

17
16
0
4
37

Notes 99

Note 18 Deferred tax

seK M

Deferred tax receivables
Tax-deductible goodwill
Pensions
Tax losses and other tax credits
Other deferred tax receivables
Deferred tax receivables

Deferred tax liabilities
Deferred tax receivables, net

Change in deferred tax

Opening balance
Acquisitions of subsidiaries, net
Reported in income statement
Exchange rate differences
Closing balance

Accounts receivables per currency

Group

2010

2011

262
127
232
81
702

309
393

751
–239
–26
–93
393

235
115
366
70
786

497
289

393
–205
95
6
289

EUR
USD
GBP
AUD
CNY
SEK
Other currencies
total

Current year change in
provision for bad debts

Opening balance
Acquisition and disposals
Receivables written off
Reversal of unused amounts
Provision for bad debt
Exchange rate differences
Closing balance

2010

1,747
1,477
270
308
399
248
1,147
5,596

2011

2,374
1,675
319
282
545
443
1,286
6,924

2010

2011

392
39
–81
–5
148
–28
465

465
77
–80
–77
150
2
537

The group has tax losses carried forward and other tax cred-
its of SEK 3,500 M (2,400) for which deferred tax assets have
not been recognized, as it is uncertain whether the allow-
ance can be set against taxable income in future taxation.

Note 19 other financial assets

seK M

2010

2011

2010

2011

Group

parent
company

Participations in associ-
ates in parent company
Other shares and
participations
Interest-bearing
long-term receivables
Other long-term
receivables
total

Note 20 Inventories

seK M

Materials and supplies
Work in progress
Finished goods
Advances paid
total

–

762

32
856

–

68
164

–

1,141

750

–
776

–

–
1,141

Group

2010

1,417
1,214
1,984
210
4,825

2011

1,663
1,459
2,348
234
5,704

Write-downs of inventory amounted to SEK 43 M (142).

Note 21 Accounts receivables

seK M

Accounts receivables
Provision for bad debts
total

Maturity analysis

Accounts receivables not due
Accounts receivables past due not
impaired:
< 3 months
3–12 months
> 12 months

Impaired accounts receivables:
< 3 months
3–12 months
> 12 months

Group

2010

6,061
–465
5,596

2011

7,461
–537
6,924

4,163

5,075

1,375
284
239
1,898

–87
–142
–236
–465

1,675
371
240
2,386

–84
–174
–279
–537

total

5,596

6,924

Note 22 parent company’s equity
The Parent company’s equity is split between restricted and
unrestricted equity. Restricted equity consists of share capi-
tal and the statutory reserve. Restricted funds must not be
reduced by issue of dividends. Unrestricted equity consists
of premium fund, retained earnings and the year’s net
income.

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)

series A

series B

total

share
capital,
seK t

19,175
–

346,743
259

365,918
259

19,175

347,002

366,177

191,753

347,002

538,755

19,175
–

347,002
2,073

366,177
2,073

19,175

349,075

368,250

191,753

349,075

540,828

Opening balance at
1 January 2010
Share issue
Closing balance at
31 December 2010

Number of votes,
thousands

Opening balance at
1 January 2011
Share issue
Closing balance at
31 December 2011

Number of votes,
thousands

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 367,833
thousand (365,744) during the year. The weighted average
number of shares after full conversion of outstanding con-
vertible bonds and the effects of the long-term incentive
program was 372,627 thousand (372,810) during the year.
The total number of treasury shares as at 31 December
2011 amounted to 400,000. A total of 100,000 shares were
repurchased in 2011.

Dividend per share
The dividend paid during the financial year totaled SEK 1,472 M
(1,317), equivalent to SEK 4.00 (3.60) per share. A dividend
for 2011 of SEK 4.50 per share, a total of SEK 1,657 M, will be
proposed at the Annual General Meeting on Wednesday,
25 April 2012.

100

Notes

AssA ABLoY ANNuAL report 2011

note 24 post-employment employee benefits
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 are mainly due to
defined benefit pension plans. ASSA ABLOY has defined ben-
efit plans in a number of countries, those in the USA, the UK
and Germany being the most significant ones. These are also
obligations related to post-employment medical benefits
also exist in the USA.

Amounts recognized in the income statement

pension costs, SeK M

2010

2011

Defined benefit pension plan (A)
Defined contribution pension plan
Post-employment medical benefit
plan (A)
total

177
169

33
379

80
295

27
402

Amounts recognized in the balance sheet

pension provisions, SeK M

2010

2011

Provisions for defined benefit
pension plans (B)
Provisions for post-employment
medical benefits (B)
Provisions for defined contribution
pension plans
pension provisions

Financial assets
pension provisions, net

566

436

76
1,078

–26
1,052

A) Specification of amounts recognized in the income statement

pension costs, SeK M

Current service cost
Interest on obligation
Expected return on plan assets
Net actuarial losses (gains), net
Write-down pension receivables ¹
Past service cost
Losses (gains) on curtailments/settlements
total
–of which, included in:
Operating income
Net financial items
total

post-employment
medical benefits

2010

2011

6
24
–
–1
–
4
–
33

10
23
33

6
21
–
0
–
0
–
27

6
21
27

Defined benefit
pension plans

total

2010

46
218
–167
67
15
0
–2
177

44
133
177

2011

48
204
–176
28
–15
1
–10
80

39
41
80

2010

52
242
–167
66
15
4
–2
210

54
156
210

652

441

80
1,173

–23
1,150

2011

54
225
–176
28
–15
1
–10
107

45
62
107

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 recog-
nized 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.

Amortization of actuarial gains/losses that arose in 2011
thus begins in 2012 to the extent amortization is applicable
under current rules and regulations.

The actual return on plan assets for defined-benefit plans

amounted to SEK 32 M (299) in 2011.

Partly funded or unfunded pension plans are reported as

provisions for pensions.

B) Specification of amounts recognized in the balance sheet

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

post-employment
medical benefits

2010

2011

–
–
–

438
–2
0
436

–
–
–

472
–30
–1
441

Defined benefit
pension plans

total

2010

3,305
–2,854
451

741
–623
–3
566

2011

4,046
–3,115
931

782
–1,033
–28
652

2010

3,305
–2,854
451

1,179
–625
–3
1,002
76
1,078

2011

4,046
–3,115
931

1,254
–1,063
–29
1,093
80
1,173

ASSA ABLOY AnnuAL repOrt 2011

nOteS 101

Note 24 cont.

C) Movement in obligations

post-employment
medical benefits

Defined benefit
pension plans

total

2010

2011

402
6
24
52
–
–
–
–32
–14
438

438
6
21
22
–
–
–
–26
11
472

2010

4,294
46
218
–26
15
–15
–
–188
–298
4,046

2011

4,046
48
204
327
–15
20
329
–192
61
4,828

seK M

opening obligations
Current service cost
Interest on obligation
Actuarial losses (gains)
Write-down of pension receivables
Curtailments /settlements
Acqusitions/disposals
Payments
Exchange rate differences
Closing obligation

D) Movement in fair value of plan assets

seK M

opening fair value of plan assets
Expected return on plan assets
Actuarial gains (losses)
Curtailments / settlements
Acqusitions/disposals
Net payments
Exchange rate differences
Closing fair value of plan assets (e)

E) Plan assets allocation

plan assets

Shares
Interest-bearing investments
Other assets
total

F) Sensitivity analysis on medical benefits

the effect of a 1percent change in the assumed medical cost trend rate, seK M

Effect on the aggregate of the current service cost and interest cost
Effect on the defined benefit obligation

G) Key actuarial assumptions

2010

4,696
52
242
26
15
–15
–
–220
–312
4,484

2011

4,484
54
225
349
–15
20
329
–218
72
5,300

Defined benefit
pension plans

2010

2,817
167
132
–
–
–61
–201
2,854

2010

1,439
1,065
350
2,854

2011

2,854
176
–144
–5
227
–94
101
3,115

2011

1,547
1,187
381
3,115

+1%

3
52

–1%

–3
–44

Key actuarial assumptions (weighted average), %

2010

2011

Discount rate
Expected return on plan assets 1
Expected future salary increases
Expected future pension increases
Expected future medical benefit increases
Expected inflation

As at 31 December

Present value of obligation (+)
Fair value of plan assets (–)
obligation, net

5.1
6.3
2.3
2.4
10.0
2.7

3.9
6.1
2.4
1.8
9.2
2.5

2007

4,384
–3,177
1,207

2008

3,963
–2,604
1,359

2009

4,696
–2,817
1,879

2010

4,484
–2,854
1,630

2011

5,300
–3,115
2,185

1 The expected return on plan assets is determined by considering the expected returns available on assets underlying the current investment policy. Plan assets
chiefly consist of equity instruments and interest-bearing investments. The expected return reflects risk premiums and indexes of 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
2011 financial year the company has not had access to infor-
mation 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 contribu-
tion that are contracted to Alecta amounts to SEK 28 M (14),

of which SEK 6 M (6) relates to the Parent company. Alecta’s
surplus may be distributed to the policy-holders and/or the
persons insured. At the end of 2011 Alecta’s surplus
expressed as collective consolidation level amounted to
113 percent (146). 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.

102

Notes

AssA ABLoY ANNuAL report 2011

Note 25 other provisions

seK M

opening balance at
1 January 2010
Provisions for the year
Reclassification
Reversal of non-utilized
amounts
Utilized during the year
Exchange rate differences
Closing balance at
31 December 2010

restruc-
turing
reserve

1,577
–
–

–49
–465
–139

Group

other

total

978
944
286

–18
–517
–33

2,555
944
286

–67
–982
–172

Note 28 Contingent liabilities
Group

parent company

seK M

2010

2011

2010

2011

Guarantees
Guarantees on behalf of
subsidiaries
total

–
49

–

–
74

6,136 10,613
6,136 10,613

In addition to the guarantees shown in the table above the
Group has a large number of small performance guarantees
issued by banks in the ordinary course of business. No mate-
rial obligations are expected as a result of these guarantees.

924

1,640

2,564

Group

Maturity profile-guarantees, seK M

2010

2011

seK M

opening balance at
1 January 2011
Provisions for the year
Additional purchase price sub-
sidiaries
Reversal of non-utilized
amounts
Utilized during the year
Exchange rate differences
Closing balance at
31 December 2011

Balance sheet breakdown:

Other long-term provisions
Other short-term provisions
total

restruc-
turing
reserve

924
1,224

–91
–403
10

other

total

1,640
403

–194
–246
10

2,564
1,627

–285
–649
20

1,665

1,678

3,343

Group

2010

1,793
771
2,564

2011

1,315
2,028
3,343

The restructuring reserve relates to the ongoing restructur-
ing 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 long-
term part of the restructuring reserve totaled SEK 717 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.

parent company
Other provisions in the parent company relate to estimated
deferred purchase considerations.

Note 26 other short-term liabilities

seK M

VAT and excise duty
Employee withholding tax
Advances received
Social security contributions
and other taxes
Short-term deferred considerations
Other short-term liabilities
total

Group

2010

2011

238
65
261

54
48
480
1,146

397
25
573

81
134
432
1,642

Note 27 Accrued expenses and prepaid income

Group

parent company

seK M

2010

2011

2010

2011

Personnel-related
expenses
Customer-related
expenses
Prepaid income
Accrued interest expenses
Other
total

1,434

1,630

411
68
85
760
2,758

611
126
131
663
3,161

–
–
42
50
179

–
–
40
14
145

<1 year
>1<2 year
>2<5 year
>5 year
total

8
10
13
18
49

25
10
30
9
74

Note 29 Assets pledged against liabilities
to credit institutes

Group

parent company

seK M

2010

2011

2010

2011

Real Estate mortgages
Other mortgages
total

225
45
270

305
134
439

–
–
–

Note 30 Business combinations

seK M

Cash paid
Paid part prior year
Unpaid part of purchase prices

total purchase price

2010

2,959
–
1,939

4,898

2011

12,599
555
446

13,600

Fair value of acquired net assets

–1,910

–2,736

Disposed acquired net assets
Goodwill

–
2,988

–6,280
4,584

Acquired assets and liabilities in accor-
dance with purchase price allocations
Intangible assets
Other tangible assets
Inventories
Receivables
Cash and cash equivalents
Interest-bearing liabilities
Other liabilities
Non-controlling interest
Acquired net assets at fair value

Purchase prices settled in cash
Cash and cash equivalents in acquired
subsidiaries
Change in Group cash and cash equiva-
lents resulting from acquisitions

Net sales from times of acquisition
EBIT from times of acquisition
Net income from times of acquisition

1,117
620
437
504
705
–390
–1,081
–2
1,910

1,590
843
803
1,371
411
–244
–2,038
0
2,736

2,959

12,599

–705

–411

2,254

12,188

2,142
323
195

5,143
644
5,588

The net sales of acquired entities for 2011 totaled SEK
6,601 M (2,880) and net income amounted to SEK 5,676 M
(163). Net income includes payment for divested opera-
tions acquired during the year. Acquisition-related costs
totaled SEK 22 M (61) in 2011 and have been reported as
other operating expenses in the income statement.

AssA ABLoY ANNuAL report 2011

Notes 103

Note 30 cont.

The acquisition of Cardo is classified as a single material
acquisition and the purchase price allocation is therefore
presented separately below. Other major acquisitions in
2011 included Lasercard (USA), FlexiForce (Netherlands)
and Swesafe (Sweden). The major acquisitions in 2010 were
Pan Pan (China), ActivIdentity (USA), Paddock (United King-
dom) and King Door Closers (South Korea).

Preliminary acquisition analyses have been prepared for

all acquisitions in 2011. Contingent considerations for
acquisitions in 2010 and 2011 are recognized in the balance
sheet as other non-current liabilities and other current lia-
bilities respectively, and are discounted in the case of major
acquisitions. In 2011 there was no material revaluation of
additional purchase considerations in the income state-
ment. See below for further information on contingent con-
siderations for the acquisition of Pan Pan.

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 custom-
ers 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 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 Cali-
fornia, USA. Intangible assets in the form of brand and cus-
tomer relationships has been disclosed. Residual goodwill is
mainly attributable to synergies and other intangible assets
that do not fulfill 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. Flexi-
Force 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. The purchase
price allocation is preliminary.

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 seg-
ment. 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 that do
not fulfill 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 combina-
tion 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 stan-
dardized and customized garage doors for the consumer
market. The range includes up and over doors, overhead sec-
tional 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.

Intangible assets in the form of brand and customer rela-

tionships has been disclosed. Residual goodwill is mainly
attributable to synergies and other intangible assets that do
not fulfill the criteria for separate reporting.

The table below shows the purchase price allocation for

Cardo Entrance Solutions as at 18 March 2011, excluding
disposal groups held for sale, in accordance with IFRS 5 Non-
current Assets Held for Sale and Discontinued Operations.
This acquisition analysis is preliminary pending final mea-
surement of the fair value of acquired identifiable intangible
assets.

seK M
Cash paid
Less: Discontined operations
total purchase price

Fair value of acquired net assets
Goodwill

Purchase prices settled in cash
Purchase prices discontinued operations
Cash and cash equivalents in acquired
subsidiaries
Change in Group cash and cash equiva-
lents resulting from acquisitions

Net sales from times of acquisition
EBIT from times of acquisition
Net income from times of acquisition

2011
11,340
–6,280
5,060

–1,932
3,128

1,474
555
517
921
176
–111
–1,600
–
1,932

11,340
–6,690

–176

4,474

3,709
455
5,699

2010
Pan Pan
On 1 January 2010 the Group acquired 70 per cent of Pan
Pan, China´s largest manufacturer of high security steel
doors. Through the acquisition of Pan Pan the ASSA ABLOY
Group further strengthen its market leading position in
China. Pan Pan manufactures high security doors in the form
of fire, anti theft, armored, corrosion proof and standard

104

Notes

AssA ABLoY ANNuAL report 2011

Note 30 cont.

high security doors. The company has an extensive well
established distribution network across China and comple-
ments well ASSA ABLOY’s other door companies on the
Chinese market. The acquisition is an important step in the
strategy of expansion into the fast growing emerging mar-
kets. The Company manufactures in six locations in China
and is headquartered in Yingkou, north of Beijing. The brand
and customer relationships have been separately recog-
nized and remaining goodwill is chiefly related to synergies
and other intangible assets not qualified for separate recog-
nition. The reciprocal right to buy / sell the remaining 30 per-
cent stake to the counterparty is reported as a deferred con-
sideration, which means that the company results and finan-
cial position are consolidated at 100 percent from the date
of acquisition. Deferred consideration is discounted to pres-
ent value and the discounting effects are reported as finan-
cial items. The bulk of the purchase price has not been paid
and the amount due is dependent on the earnings perfor-
mance of the Company during the period 2010–2012.

King Door Closers
On 1 May 2010 the Group acquired 100 percent of the share
capital of King Door Closers, South Korea´s leading door
closer company. The acquisition is another important step
for the Group in it’s strive to enlarge its presence within the
emerging markets. King adds apart from market leadership
in South Korea also important export customers mainly in
other parts of the Middle east and the Asian region. King has
a comprehensive range of basic and certified commercial
and residential door closers as well as a complete range of
floor springs. King is based in Seoul, South Korea. The brand
has been separately recognized and remaining goodwill is
chiefly related to synergies and other intangible assets not
qualified for separate recognition.

Paddock
On 1 August 2010 the Group acquired 100 percent of the
share capital of Paddock, the UK´s leading multipoint lock
manufacturer. The strategically important acquisition
enhances ASSA ABLOYs leading position in the fast growing
multipoint lock segment. The acquisition is part of the strat-
egy to expand the presence in the mature markets by adding
complementary lock products to the current portfolio. The
company has an extensive distribution network across the
UK, which complements well ASSA ABLOY’s existing Yale
multipoint lock business. The Company is based in Walsall,
north of Birmingham. The brand has been separately recog-
nized and remaining goodwill is chiefly related to synergies
and other intangible assets not qualified for separate recog-
nition.

ActivIdentity
On 17 December 2010 the Group acquired 100 percent of
the share capital of ActivIdentity, a global leader in strong
authentication and credential management. ActivIdentity is
an ideal fit with HID Global, finally enabling a unique solu-
tion to convergence between the logical and physical access
domains via a single credential. ActivIdentity’s market lead-
ership in credential management systems, broad portfolio
of complementary strong authentication products and Pro-
fessional Services capabilities complements ASSA ABLOY’s
HID Global Business Unit. ActivIdentity is headquartered in
California, USA.

Disposals of subsidiaries
In 2011 Cardo Flow Solutions and Lorentzen & Wettre,
which were part of Cardo Entrance Solutions acquired dur-
ing the year, were divested. These disposals have been
reported in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations. In 2010 small busi-
nesses were divested in Switzerland and Russia. Cash flow
effects and the result from disposals are shown in the table
below:

seK M

Disposed net assets
Fixed assets
Inventories
Receivables
Cash and cash equivalents
Assets in disposal group held for sale
Liabilities
Liabilities in disposal group held for sale
Disposed net assets to carrying amount

Purchase prices received
Less, cash and cash equivalents in
disposed subsidiaries
Change in cash and cash
equivalents for the Group

Net income after tax from discontinued
operations during the holding period
Other
result from disposals

Note 31 Cash flow

seK M

Adjustments for non-cash items
Profit on sales of fixed assets
Change of pension obligations
Other
Adjustments for non-cash items

Change in working capital
Inventory increase/decrease (–/+)
Accounts receivables increase/
decrease (–/+)
Accounts payables increase/
decrease (+/–)
Other working capital increase/
decrease (–/+)
Change in working capital

Investments in subsidiaries
Total purchase price
Less, paid part of purchase prices prior
year relating to actual year acqusitions
Less, acquired cash and cash equivalents
Less, unpaid parts of purchase prices
Plus, paid parts of purchase prices
relating to prior years
Investments in subsidiaries

Disposal of subsidiaries
Purchase prices received
Less, disposed cash and cash equivalents
Disposal of subsidiaries

other investments
Investments in/sales of other shares
Investments in/sales of other
financial assets
other investments

Group

2010

2011

–
–
–8
–34
–
9
–
–33

–

–34

–
31
–3

–
–
–
–
–7,539
–
1,161
–6,378

6,690

–

6,690

92
–
404

Group

2010

2011

–84
54
75
45

–338

–118

406

412
362

3
40
–43
0

–32

–249

235

–192
–238

–4,898

–13,600

–
705
1,939

555
411
446

–340
–2,594

–109
–12,297

–
–34
–34

–721

30
–691

6,690

–876

–28
–904

AssA ABLoY ANNuAL report 2011

Notes 105

Note 32 employees

Salaries, wages, other remuneration and social security costs

seK M

Salaries, wages and other remuneration
– which of bonus
Social security costs
– of which pensions
total

Group

2010

8,322
46
1,788
379
10,110

2011

9,704
48
2,131
402
11,835

Fees to Board members in 2011 (including committe work), SEK thousands

Name and post

Gustaf Douglas, Chairman
Carl Douglas, Member
Birgitta Klasén, Member
Eva Lindqvist, Member
Johan Molin, President and CEO
Sven-Christer Nilsson, Member
Lars Renström, Member
Ulrik Svensson, Member
Employee representatives (2)
total

Board

1,000
500
500
500
–
500
500
500
–
4,000

remuneration
Committe

Audit
Committee

social
security costs

100
–
–
–
–
50
–
–
–
150

–
–
100
–
–
–
100
200
–
400

112
157
188
157
–
56
189
220
–
1,079

parent company

2010

2011

103
8
66
19
169

115
8
59
21
174

total

1,212
657
788
657
–
606
789
920
–
5,629

Remuneration and other benefits of the Executive Team in 2011

seK thousands

Fixed salary Variable salary

benefits other benefits

pension costs

stockrelated

Johan Molin
Other members of the Executive Team (8)
total remuneration and benefits
total costs1
1 Total costs for the Executive Team include social fees on salaries and benefits, special pension tax and additional costs for other benefits. Salaries and other benefits

11,582
31,594
43,176
51,342

3,969
9,136
13,105
15,736

8,250
15,102
23,352
27,405

2,587
4,880
7,467
8,921

117
2,956
3,073
3,249

paid to the Executive Team during 2010 totaled SEK 74 M and social security costs SEK 43 M, of which SEK 29 M were pension costs.

Salaries and remuneration for the Board of Directors and
the parent company’s Executive Team
Salaries and other remuneration for the Board of Directors
and the parent company’s Executive Team totaled SEK 37 M
(37). Social security expenses amounted to SEK 20 M (35),
of which SEK 7 M (8) 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 recruit-
ing competent staff for the Group, providing competitive
remuneration and uniting the interests of shareholders,
senior executives and key staff.

At the 2011 Annual General Meeting, it was decided to

launch a further long-term incentive program for senior
executives and other key staff in the Group. This new long-
term incentive program is called LTI 2011 and has been
drawn up with similar terms to LTI 2010.

For each Series B share acquired by the CEO within the
framework of LTI 2010 and LTI 2011, the company awards
one matching stock option and four performance-based
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 pro-

grams, employees have acquired a total of 174,632 shares in
ASSA ABLOY AB, of which 87,068 shares were acquired in
2011 within the framework of LTI 2011.

Each matching stock option entitles the holder to receive
one Series B share, free of charge, in the company after three
years, provided that the holder is still employed in the Group
when the interim report for Q1 2014 (Q1 2013 for LTI 2010)
is published, and has maintained the shares acquired within
the framework of the long-term incentive programs. Each
performance-based stock option entitles the holder to
receive one Series B share, free of charge, in the company
three years after allocation, provided that the above condi-
tions have been fulfilled. In addition, the maximum level in a
range determined by the Board of Directors for the perfor-
mance of the company’s earnings per share in 2011 must
have been fulfilled (earnings per share in 2010 for LTI 2010).
This condition has been fulfilled.

Outstanding matching and performance-based stock
options for LTI 2011 total 240,595. The total number of out-
standing matching and performance-based stock options
for LTI 2010 and LTI 2011 amounted to 443,680 on the
reporting date.

Fair value is based on the share price on the assignment
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 pro-
gram. In the case of performance-based shares, the com-
pany assesses the probability of the performance targets
being met when calculating the compensation expense.

106

Notes

AssA ABLoY ANNuAL report 2011

Note 32 cont.

The fair value of ASSA ABLOY’s Series B share on the allot-
ment date of 25 May 2011 was SEK 173.29. The fair value
of the Series B share on the allotment date for LTI 2010 of
28 July 2010 was SEK 161.79.

value and therefore do not result in any personnel cost for
the Group. For further information on other equity-based
incentive programs, see the section on the ASSA ABLOY
share (page 122).

In 2011 the total cost of the Group’s long-term incentive
programs amounted to SEK 16 M, of which SEK 7 M relates to
LTI 2011 and SEK 9 M to LTI 2010. In 2010 the cost of LTI
2010 amounted to SEK 6 M.

Other equity-based incentive programs
ASSA ABLOY has issued a number of convertible debentures
to employees in the Group, of which one (Incentive 2007) is
still active but matures in 2012. These were issued at market

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 employ-
ment benefits. If one of the other members of the Executive
Team is given notice, the company is liable to pay a maxi-
mum six months’ basic salary and other employment bene-
fits plus an additional 12 months’ basic salary.

Average number of employees per country, with breakdown into women and men

Group

2010

of which
women

of which
men

5,806
1,799
707
465
371
339
523
583
326
102
180
181
225
156
134
151
191
287
124
96
183
108
129
112
63
86
26
30
42
139
13,664

8,644
3,943
1,175
837
679
675
512
527
547
409
745
632
598
437
254
319
204
165
224
308
241
269
216
191
117
129
86
88
62
382
23,615

2011

of which
women

of which
men

6,083
1,855
703
517
475
466
550
527
340
167
165
202
209
183
255
139
227
260
131
104
187
102
112
108
85
88
42
30
53
173
14,538

8,698
4,006
1,497
1,340
978
853
586
601
615
782
745
600
555
550
414
411
312
212
317
330
231
251
231
208
221
120
148
96
68
556
26,532

total

14,781
5,861
2,200
1,857
1,453
1,319
1,139
1,128
955
949
910
802
764
733
669
550
539
472
448
434
418
353
343
316
306
208
190
126
121
729
41,070

parent company

2010

of which
women

of which
men

27
27

77
77

2010

of which
women

of which
men

2
–

–
2

6
9

3
15

2011

of which
women

of which
men

26
26

98
98

2011

of which
women

of which
men

2
–

–
2

6
9

3
15

total

124
124

total

8
9

3
17

total

14,449
5,742
1,882
1,301
1,049
1,014
1,035
1,110
873
511
925
813
823
593
388
470
395
452
348
404
424
377
345
303
181
215
112
118
104
523
37,279

total

104
104

total

8
9

3
17

China
USA
France
Sweden
Germany
United Kingdom
Czech Republic
Mexico
Finland
Netherlands
South America
Italy
Australia
Spain
South Korea
Norway
Romania
Malaysia
Denmark
Canada
South Africa
Israel
Switzerland
New Zealand
Belgium
Ireland
Austria
Portugal
Hong Kong
Other
total

Sweden
total

Gender-split in senior management

Board of Directors 1
Executive Team
–of which Parent company's
Executive Team
total

1 Excluding employee representatives.

AssA ABLoY ANNuAL report 2011

Notes 107

Note 33 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.

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, includ-
ing negative market values of derivatives, plus pension provi-
sions, 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.

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 finan-
cial activities.

ASSA ABLOY’s financial activities are coordinated cen-

trally and the majority of financial transactions are con-
ducted by the subsidiary ASSA ABLOY Financial Services AB,
which is the Group’s internal bank. External financial transac-
tions are conducted by Treasury. Treasury achieves signifi-
cant economies of scale when negotiating borrowing agree-
ments, using interest rate derivatives and managing cur-
rency flows.

Net debt and equity

seK M

Long-term interest-bearing receivables
Short-term interest-bearing investments
incl. positive market values of derivatives
Cash and bank balances
Pension provisions
Long-term interest-bearing liabilities
Short-term interest-bearing liabilities
incl. negative market values of derivatives
total
equity
Net debt/equity ratio, times

Group

2010

–62

–170
–1,280
1,078
8,134

2,864
10,564
20,821
0.51

2011

–44

–284
–1,665
1,173
7,422

7,605
14,207
23,735
0.60

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 stake-
holders. 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, returning

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 short-
term credit ratings from Standard & Poor’s and a short-term
rating from Moody’s.

Maturity profile – financial instruments

seK M

<1 year >1<2 year >2<5 year

>5 year

<1 year >1<2 year >2<5 year

>5 year

31 December 2010

31 December 2011

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

Cash and cash equivalents incl.
interest-bearing receivables
Long-term interest-bearing
receivables
Additional purchase
considerations
Accounts receivables
Accounts payables
Net total

Committed credit facilities
Credit facilities maturing < 1 year
Adjusted maturity profile¹

–37
–303
–324
–1,133

–1,402
–23
–3,222

1,304

–48
5,596
–3,123
513

24,330
–5,142
19,701

–255
–1,382
–905
–

–
37
–2,505

–

–29
–
–
–2,487

–
–
–2,487

–81
–3,277
–
–

–
73
–3,285

–

–1,932
–
–
–5,193

–19,189
–
–24,382

–120
–3,258
–
–

–
11
–3,367

–

–
–
–
–3,367

–
–
–3,367

1 For maturity structure of guarantees, see Note 28.

–7
–284
–903
–1,213

–5,396
20
–7,781

1,949

–134
6,924
–3,796
–2,794

10,306
–455
7,057

–49
–648
–
–

–
29
–669

–

–2,288
–
–
–2,957

–
–
–2,957

–341
–3,804
–
–

–
65
–4,080

–

–166
–
–
–4,246

–9,851
–
–14,097

–1,070
–2,734
–
–

–
–2
–3,806

–

–
–
–
–3,806

–
–
–3,806

108

Notes

AssA ABLoY ANNuAL report 2011

Note 33 cont.

External financing/net debt

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
Multi–Currency RCF
Bank loan EIB
Global MTN Program

Other long-term loans
total long-term loans/facilities
US Private Placement Program
Global MTN Program

Incentive Program
Global CP Program

Swedish CP Program
Other bank loans
Overdraft facility
total short-term loans/facilities
total loans/facilities

Maturity

Dec 2013
May 2015
Dec 2016
Apr 2017
May 2017
Dec 2018
May 2020
Jun 2014
Jul 2018 2
Mar 2014
Jun 2014
Jun 2016
Jun 2016
Jun 2018

May 2012
Feb 2012
May 2012
Jun 2012

Amount,
seK M

363
554
523
346
346
844
484
9,851
985
13,433

253
27,982
554

896
6,920

5,000
806
1,098
15,273
43,255

Carrying
amount,
seK M

Currency

Amount
2010

Amount
2011

of which
parent
company,
seK M

USD
USD
USD
USD
USD
USD
USD
EUR
EUR
EUR
EUR
NOK
NOK
SEK

USD
SEK
SEK
EUR
USD
EUR
SEK

52
80
76
50
50
122
70
1,100
0
45
150
250
100
0

80
300
250
100
0
0
747

52
80
76
50
50
122
70
1,100
110
45
150
250
100
500

80
300
250
100
220
10
2,650

363
622 1
523
346
346
844
484
0
985
403
1,343
2951
115
500
253
7,422

562 1
300
250
896
1,518
89
2,635
806
370
7,426
14,848

–1,665

Cash and bank balances
Short-term interest-bearing
investments
Long-term interest-bearing
investments
Market value of derivatives
Pensions
Net debt
1 The loans are subject to hedge acconting .
2 The loan amortizes starting November 2016. In the table the average date of maturity of the loan has been stated.

–44
–55
1,173
14,207

–50

403
1,343
295
115
500

2,656

300
250
896

1,446
4,102

–4

–23

4,075

Rating

Agency

short- term outlook Long-term

Standard & Poor’s
Moody’s

A2
P2

Stable
Stable

A –
n/a

Credit
outlook

Negative

However, when the acquisition of Cardo was announced
Standard & Poor’s placed the rating on negative credit
watch. This was removed in April and replaced by negative
outlook. Moody’s rating remains unchanged since the
previous year.

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 responsi-
ble for external borrowing and external financial invest-
ments. ASSA ABLOY strives to have access on every occasion
to both short-term and long-term loan facilities. In accor-

dance with financial policy, the available facilities should
include a 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 108 shows the maturi-
ties for ASSA ABLOY’s financial instruments including con-
firmed credit facilities. These maturities are not concen-
trated to a particular date in the immediate future, particu-
larly taking into account the credit facility of EUR 1,100 M
maturing in 2014, which was wholly unutilized at year-end.
The bridging facilities raised in connection with the acquisi-
tion of Cardo have been repaid in full, partly though revenue
from the disposals made and partly by raising new long-term
and short-term loans. Moreover, financial assets are also
taken into account when assessing the maturity profile. 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.

AssA ABLoY ANNuAL report 2011

Notes 109

Note 33 cont.

Interest-bearing liabilities
The Group’s long-term financing mainly consists of Private
Placement Program in the USA totaling USD 500 M (580),
GMTN program of SEK 2,656 M (2,705) and a loan from the
European Investment Bank of EUR 110 M (0). During the
year, long-term bilateral financing totaling EUR 110 M was
raised from the European Investment Bank. The 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 and to a new loan of SEK 500 M with a seven-year
term raised under the GMTN program.

At year-end, the average time to maturity, excluding the
pension provision, was 31 months (39). Some of the Group’s
main financing agreements contain a customary so called
Change of Control clause. This clause means that lenders
have the right in certain circumstances to demand the rene-
gotiation of conditions or to terminate the agreement
should control of the company change.

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 has a variable interest rate equivalent to
0.9* EURIBOR + 35 basis points. Any conversion of Incentive
2007 will take place in a 30-day period in May and June
2012. Full conversion at a conversion rate of EUR 18.00 for
Series 1, EUR 20.50 for Series 2, EUR 23.00 for Series 3 and
EUR 25.40 for Series 4 will add 4,679,610 Series B shares.

The dilutive effect of full conversion amounts to 1.3 percent
of share capital and 0.9 percent of the total number of votes.
At year-end 2011, Incentive 2007 amounted to EUR 100 M.

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 111.

Cash and cash equivalents and other
interest-bearing receivables
Short-term interest-bearing investments amounted to SEK
50 M (24) at year-end. In addition, ASSA ABLOY has long-
term interest-bearing receivables of SEK 44 M (62) and
financial derivatives with a positive market value of SEK 234 M
(146) 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 (3.3) at year-end 2011.

The parent company’s cash and cash equivalents are held

in a sub-account to the Group account.

Group

parent company

seK M

Cash and bank balances
Short-term investments
with maturity less than
3 months
Cash and cash
equivalents

Short-term investments
with maturity more than
3 months
Long-term interest-
bearing receivables
Positive market value
of derivatives
total

2010

1,280

2011

1,665

–

1,302

1,665

146
1,512

234
1,993

2010

2011

–

–
40

–

–
27

110

Notes

AssA ABLoY ANNuAL report 2011

Note 33 cont.

Net debt by currency

seK M

USD
EUR
SEK
AUD
NOK
KRW
CNY
GBP
Other
total

31 December 2010

31 December 2011

Net debt excluding
currency swaps

Net debt including
currency swaps

Net debt excluding
currency swaps

Net debt including
currency swaps

4,094
3,603
2,500
–10
467
337
–225
–83
–119
10,564

4,813
2,265
2,594
577
221
337
–225
–314
296
10,564

5,937
4,510
3,913
–4
453
265
–604
–121
–142
14,207

5,465
2,399
5,791
661
306
265
–604
–424
348
14,207

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 man-
age interest rate risk. These investments are mostly short-
term. 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 (1.2) at year-end 2011. A downward
change in the yield curve of one percentage point would
reduce the Group’s interest income by around SEK 8 M (9)
and consolidated equity by SEK 6 M (7).

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 continu-
ously adjust the fixed interest term. The financial policy stip-
ulates 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
16 months (23). An upward change in the yield curve of one
percentage point would increase the Group’s interest
expense by around SEK 93 M (58) and reduce consolidated
equity by SEK 71 M (44).

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.

Transaction exposure
Currency risk in the form of transaction exposure, or exports
and imports of goods respectively, is relatively limited in the
Group. 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.

Transaction flows relating to major currencies
(import + and export –)

Currency, seK M

AUD
CAD
CNY
CZK
EUR
GBP
NOK
SEK
USD

Currency exposure

2010

400
433
–710
–144
836
160
–195
–802
198

2011

410
439
–754
–203
742
357
–237
–756
–185

Translation exposure of 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 vari-
ables remain constant.

Impact on income before tax of a 10 percent
weakening of SEK

Currency, seK M

2010

2011

AUD
CAD
CNY
DKK
EUR
GBP
NOK
USD

39
18
46
11
143
23
32
206

38
16
53
12
151
18
23
201

AssA ABLoY ANNuAL report 2011

Notes 111

Note 33 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 111 shows the
use of currency forward contracts in relation to financing in
major currencies. These forward contracts are used to neu-
tralize 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 invest-
ment 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 subsid-
iaries to repay the Group’s loans. This is primarily achieved
through cash pools put in place by Treasury. Around 85 per-
cent (86) of the Group’s sales were settled through cash
pools in 2011. 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.

Commercial credit risk
The Group’s accounts receivables are distributed across a
large number of customers who are spread globally. The
concentration of credit risk associated with accounts receiv-
ables is therefore limited. The fair value of accounts receiv-
ables corresponds to the carrying amount. Credit risks relat-
ing 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 pur-
chases.

Fair value of financial instruments
Derivative financial instruments such as currency and inter-
est 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 ’Out-
standing derivative financial instruments’ on page 113 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 classi-

fied into measurement categories in accordance with IAS
39. The table ’Financial instruments’ on page 113 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 mar-
ket rates are taken into account and not credit spread move-
ments for the individual company.

112

Notes

AssA ABLoY ANNuAL report 2011

Note 33 cont.

Outstanding derivative financial instruments at 31 December

Instrument, SeK M

Foreign exchange forwards, funding
Interest rate swaps
Forward Rate Agreements
total

31 December 2010

31 December 2011

positive fair
value

negative
fair value

nominal
value

positive fair
value

negative
fair value

nominal
value

41
105
–
146

–62
–10
–
–72

4,974
2,760
–
7,734

106
112
16
234

–126
–37
–16
–179

9,936
14,845
502
25,283

Financial instruments: carrying amounts and fair values by measurement category

2010

2011

IAS 39
category*

Carrying
amount

Fair value

Carrying
amount

Fair value

3
1
1
5
2

1
1

2
4

4
2
4
2
4
2

762
94
5,596
96
50
146

2
1,302

1,477
5,758
7,235

1,210
–
2,481
72
3,123
1,920

762
94
5,596
96
50
146

2
1,302

1,477
5,939
7,416

1,210
–
2,481
72
3,123
1,920

52
112
6,924
95
139
234

50
1,665

917
6,500
7,422

896
562
5,969
179
3,796
2,531

52
112
6,924
95
139
234

50
1,665

917
6,907
7,829

896
562
5,969
179
3,796
2,531

SeK M

Financial assets
Other shares and interests
Other financial assets
Accounts receivables
Derivative instruments – hedge accounting
Derivative instruments – held for trading
Derivative instruments, total

Short-term investments
Cash and cash equivalents

Financial liabilities
Long-term loans – hedge accounting
Long-term loans – not hedge accounting
Long-term loans, total

Convertible debenture loans
Current liabilities – hedge accounting
Current liabilities – not hedge accounting
Derivative instruments – held for trading
Accounts payables
Additional purchase considerations

* 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

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

2010

2011

Carrying
amounts

Quoted
prices

Observ-
able data

non-
observ-
able data

Carrying
amounts

Quoted
prices

Observ-
able data

non-
observ-
able data

50
762

–
762

50
–

1,477

–
72
1,920

–

–
–
–

1,477

–
72
–

–
–

–

–
–
1,920

139
–

917

562
179
2,531

–
–

–

–
–
–

139
–

917

562
179
–

–
–

–

–
–
2,531

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 major acquisitions.

ASSA ABLOY AnnuAL repOrt 2011

nOteS 113

Comments on five years in summary

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 devel-

oped 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 acquisi-
tions increase annual sales by SEK 2,880 M. An agreement
was signed to acquire a majority share holding in Cardo, a
leading Swedish industrial door company.

2011
2011 was a successful year for ASSA ABLOY despite challeng-
ing 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 acquisi-
tion 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 busi-

nesses, 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 pre-
vious programs have proved to be very successful, resulting
in major savings and further increased efficiency in the pro-
duction 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 posi-
tioned for long-term sustainable growth.

Operating income excluding restructuring costs

increased 10 percent and cash flow remained strong. Earn-
ings per share after full dilution excluding items affecting
comparability increased 13 percent.

2007
The year saw strong growth for ASSA ABLOY, combined with
continued very satisfactory growth in earnings. All five divi-
sions showed growth, increased profitability and an
improved return. ASSA ABLOY’s strong performance was
based on long-term structural growth in demand in the
Group’s most important markets in Europe and North
America, increasing demand in new markets, and successes
in fast-growing segments such as electromechanical locks,
access control, secure smart-card issuance, automatic doors
and identification technology. The acquisition rate remained
high during the year and major acquisitions included Bao-
dean (China), iRevo (South Korea), Aontec (Irish Republic),
Power-shield (Northern Ireland), Pemko (North America)
and Pyropanel (Australia).

The successful implementation of the three-year restruc-
turing program for the Group’s manufacturing units contin-
ued during the year. All 50 projects are proceeding accord-
ing to plan and more than 1,300 employees out of a planned
total of 2,000 have now left the Group. At year-end 2007,
cost savings were running at over 60 percent of the final tar-
get of achieving annual savings of SEK 600 M in 2009.

Sales volume growth, acquisitions, price management

and the restructuring measures implemented, as well as
continuous improvements in production, administration
and market development, contributed to the strong finan-
cial performance.

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 mar-
ket conditions. Efficient product development with a strong
customer focus, a stronger market presence and continued
cost cutting contributed substantially to the good perfor-
mance. 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 low-
cost 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-lead-
ing position in total door opening solutions.

Eight acquisitions were made during the year, consolidat-

ing the Group’s position in industrial and automatic doors
and increasing annual sales by around SEK 1,200 M.

114

Notes

AssA ABLoY ANNuAL report 2011

Five years in summary

Amounts in seK M unless stated otherwise

2007

2008

2009

2010

2011

sales and income
Sales
Organic growth, %
Acquired growth, %
Operating income before depreciation/amortization (EBITDA)
Depreciation
Operating income (EBIT)
Income before tax (EBT)
Net income

Cash flow
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash flow
Operating cash flow3

Capital employed and financing
Capital employed
– of which goodwill
– of which other intangible and tangible assets
– of which shares in associates
Net debt
Non-controlling interest
Shareholders' equity, excluding non-controlling interest

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

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 debenture loan net after tax
Number of shares, thousands
Number of shares after dilution, thousands
Average number of employees

33,550
7
5
6,366
–909
5,458
4,609
3,368

3,871
–2,127
–1,568
176
4,808

28,621
17,270
6,782
39
12,953
201
15,467

9.18
9.02
46.76
3.60
129.75

19.0
16.3
13.7
18.4

18.4
21.0
41.5
0.83
7.4
55.0
365,918
380,713
32,267

34,8294
0
4
6,4471
–921
5,5261
3,499
2,438

4,369
–2,648
–1,311
410
4,769

32,850
20,669
7,945
38
14,013
163
18,674

6.60
9.211
55.91
3.60
88.50

34,9634
–12
3
6,4261
–1,014
5,4131
3,740
2,659

5,924
–1,835
–3,741
348
6,843

30,382
20,333
7,541
39
11,048
162
19,172

7.18
9.221
54.76
3.60
137.80

36,823
3
8
7,041
–995
6,046
5,366
4,080

5,729
–4,027
–2,597
–895
6,285

31,385
22,279
8,336
37
10,564
169
20,652

11.07
10.89
58.64
4.00
189.50

18.51.4
15.91.4
10.0
13.3

18.41.4
15.51.4
10.7
13.1

17.2
12.8
41.9
0.74
5.7
81.0
365,918
380,713
32,723

16.2
12.7
45.4
0.57
7.2
31.9
365,918
372,931
29,375

19.1
16.4
14.6
18.5

18.5
19.1
45.9
0.51
10.1
9.9
366,177
372,736
37,279

41,786
4
17
7,6461
–1,022
6,6241
4,559
3,869

5,347
–7,357
2,326
316
6,080

37,942
27,014
10,126
1,211
14,207
208
23,527

10.45
12.301
65.54
4.502
172.60

18.31
15.91
10.9
13.6

17.4
16.7
42.9
0.60
8.8
10.5
368,250
371,213
41,070

¹ Excluding items affecting comparability in 2008, 2009 and 2011.
² For 2011, 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

AVERAGE NUMBER OF EMPLOYEES

Number

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

1 Excluding items affecting compara-

bility 2008, 2009 and 2011.

AssA ABLoY ANNuAL report 2011

Notes 115

Quarterly information

tHe Group IN suMMArY
Amounts in seK M unless stated otherwise

Sales
Organic growth
Gross income excluding items
affecting comparability
Gross income/ Sales
operating income before depreciation
(eBItDA) excluding restructuring costs
Gross margin (EBITDA)
Depreciation
operating income (eBIt) excluding
Items affecting comparability
Operating margin (EBIT)
Items affecting comparability1
operating income (eBIt)
Net financial items
Income before tax (eBt)
Profit margin (EBT)
Tax
Net income

Allocation of net income:
Parent company shareholders’
Non-controlling interests

operAtING CAsH FLoW

Operating income (EBIT)
Restructuring costs
Depreciation
Net capital expenditure
Change in working capital
Paid and received interest
Non-cash items
operating cashflow 2
Operating cash flow / Income before tax

CHANGe IN Net DeBt

Net debt at start of period
Operating cash flow
Restructuring payments
Tax paid
Acquisitions/Disposals
Dividend
Purchase of treasury shares
Share issue
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 obligations
Long-term interest-bearing liabilities
Short-term interest-bearing liabilities
including derivatives
total

Q 1
2010

8,345
–3%

Q 2
2010

9,356
2%

Q 3
2010

9,474
6%

Q 4
2010

Full
year
2010

9,648 36,823
3%

Q 1
2011

Q 2
2011

Q 3
2011

Q 4
2011

Full
year
2011

8,699 10,502 10,841 11,744 41,786
4%

3,361
40.3%

3,761
40.2%

3,846
40.6%

3,869 14,836
40.3%
40.1%

3,560
40.9%

4,050
38.6%

4,208
38.8%

4,469 16,287
39.0%
38.0%

1,536
18.4%
–241

1,295
15.5%
–
1,295
–137
1,158
13.9%
–278
880

1,780
19.0%
–265

1,515
16.2%
–
1,515
–152
1,363
14.6%
–333
1,031

1,875
19.8%
–245

1,630
17.2%
–
1,630
–190
1,440
15.2%
–341
1,099

1,851
19.2%
–244

1,606
16.6%
–
1,606
–201
1,405
14.6%
–334
1,071

7,041
19.1%
–995

6,046
16.4%
–
6,046
–680
5,366
14.6%
–1,286
4,080

1,630
18.7%
–253

1,377
15.8%
–
1,377
–162
1,215
14.0%
–268
943

1,863
17.7%
–248

1,615
15.4%
–
1,615
–156
1,460
13.9%
–321
1,156

2,002
18.5%
–251

1,751
16.2%
–
1,751
–169
1,582
14.6%
–348
1,653

2,151
18.3%
–270

7,646
18.3%
–1,022

1,881
16.0%
–1,420
461
–158
303
2.6%
–158
118

6,624
15.9%
–1,420
5,204
–645
4,559
10.9%
–1,095
3,869

876
4

1,019
11

1,090
9

1,064
7

4,050
30

941
2

1,143
13

1,644
8

114
4

3,843
26

Q 1
2010

Q 2
2010

Q 3
2010

Q 4
2010

1,295
–
241
–50
–475
–77
–64
870
0.75

1,515
–
265
–270
79
–170
21
1,440
1.06

1,630
–
245
–153
167
–29
30
1,890
1.31

1,606
–
244
–235
591
–179
58
2,085
1.48

Q 1
2010

Q 2
2010

Q 3
2010

Q 4
2010

Full
year
2010

6,046
–
995
–708
362
–455
45
6,285
1.17

Full
year
2010

Q 1
2011

Q 2
2011

Q 3
2011

Q 4
2011

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

Q 1
2011

Q 2
2011

Q 3
2011

Q 4
2011

Full
year
2011

5,204
1,420
1,022
–846
–238
–482
0
6,080
1.023

Full
year
2011

–870
112
261
768
–
–
–
150

11,048 11,469 12,608 10,864
–2,085
101
203
1,458
–
–
–
23
11,469 12,608 10,864 10,564
0.51

–1,440
182
241
373
1,317
48
–
418

–1,890
71
94
720
–
–
–
–739

0.57

0.62

0.55

–448
48
235
3,319 11,606
–
1,317
–
48
–
–
–419
–147

11,048 10,564 21,586 23,403 16,159 10,564
–6,080
–6,285
373
465
1,206
799
6,511
1,472
17
–308
452
10,564 21,586 23,403 16,159 14,207 14,207
0.60

–1,528
75
190
–6,415
–
–
–308
742

–1,311
67
363
996
1,472
17
–
213

–2,794
183
418
324
–
–
–
–84

0.51

1.03

1.10

0.69

0.60

Q 1
2010

–64

Q 2
2010

–60

Q 3
2010

–56

Q 4
2010

–62

Q 1
2011

–64

Q 2
2011

–58

Q 3
2011

–49

Q 4
2011

–44

–699
–1,216
1,114

–205
–1,271
1,150
10,561 10,265

–252
–1,225
1,056
9,481

–170
–1,280
1,078
8,134

1,773

2,864
11,469 12,608 10,864 10,564

1,860

2,729

–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

7,605
14,668 17,279 10,510
21,586 23,403 16,159 14,207

116

QuArterLY INForMAtIoN

AssA ABLoY ANNuAL report 2011

CApItAL eMpLoYeD AND FINANCING

Capital employed
– of which goodwill
– of which other intangible and

tangible assets

– of which shares in associates
Assets and liabilities in disposal groups
held for sale
Net debt
Non-controlling interests
Shareholders' equity, excluding
non-controlling interests

DAtA per sHAre, seK

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

NuMBer oF sHAres

Number of shares before dilution,
thousands
Weighted average number of shares
after dilution, thousands

Q 1
2010

Q 2
2010

Q 3
2010

Q 4
2010

31,523 33,051 30,495 31,385
22,480 23,659 22,085 22,279

7,797
38

8,160
37

7,450
37

8,336
37

Q 1
2011

Q 2
2011

Q 3
2011

Q 4
2011

36,267 38,232 39,667 37,942
25,343 25,663 27,138 27,014

8,496 10,129 10,043 10,126
1,211
1,111

1,234

1,121

–

–
11,469 12,608 10,864 10,564
169

157

167

174

–

6,299

6,379

–
21,586 23,403 16,159 14,207
208

301

201

198

–

19,887 20,269 19,474 20,652

20,783 20,907 23,308 23,527

Q 1
2010

Q 2
2010

Q 3
2010

Q 4
2010

Full
year
2010

Q 1
2011

Q 2
2011

Q 3
2011

Q 4
2011

Full
year
2011

2.39
2.36

2.79
2.74

2.98
2.93

2.91
2.86

11.07
10.89

2.57
2.53

3.08
3.07

4.40
4.42

0.40
0.30

10.45
10.33

2.36

2.74

2.93

2.86

10.89

2.52

3.05

3.30

3.43

12.30

56.94

57.89

55.65

58.65

58.64

58.34

59.35

65.91

65.79

65.54

Mar
2010

Jun
2010

sep
2010

Dec
2010

Full
year
2010

Mar
2011

Jun
2011

sep
2011

Dec
2011

Full
year
2011

365,918 365,918 365,918 366,177 366,177 367,732 368,250 368,250 368,250 368,250

372,931 372,882 372,827 372,810 372,810 373,038 373,000 372,946 372,627 372,627

Definitions of key data terms

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.

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 in 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-interest-
bearing liabilities including deferred tax liability.

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 debenture loans, 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 inter-
est expenses after tax for convertible debenture loans,
divided by weighted average number of shares after dilution.

shareholders’ equity per share after dilution
Equity excluding non-controlling interests, plus convertible
debenture loan, divided by number of shares after dilution.

AssA ABLoY ANNuAL report 2011

QuArterLY INForMAtIoN 117

Proposed distribution of earnings

The following earnings are at the disposal of the Annual General Meeting:

Premium fund: SEK 340 M
Retained earnings brought forward: SEK 2,261 M
Net income for the year: SEK 2,268 M
TOTAL: SEK 4,869 M

The Board of Directors and the President and CEO propose that a dividend of SEK 4.50 per share, a total of SEK 1,657 M,
be distributed to shareholders and that the remainder, SEK 3,212 M, be carried forward to the new financial year.
The dividend amount is calculated on the number of outstanding shares as per 9 February 2012.

Monday, 30 April 2012 has been proposed as the record date for dividends. If the Annual General Meeting confirms this pro-
posal, dividends are expected to be distributed by Euroclear Sweden AB on Monday, 4 May 2012.

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 finan-
cial 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, 9 February 2012

Gustaf Douglas
Chairman of the Board

Carl Douglas
Board member

Birgitta Klasén
Board member

Sven-Christer Nilsson
Board member

Eva Lindqvist
Board member

Lars Renström
Board member

Johan Molin
President and CEO

Ulrik Svensson
Board member

Seppo Liimatainen
Employee representative

Mats Persson
Employee representative

Our audit report was issued on 9 February 2012

PricewaterhouseCoopers AB

Peter Nyllinge
Authorized Public Accountant

118

proposeD DIstrIButIoN oF eArNINGs

AssA ABLoY ANNuAL report 2011

Audit 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 2011. The annual
accounts and consolidated accounts of the company are
included in the printed version of this document on pages
61–118.

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 respon-
sible 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 mate-
rial 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 Stan-
dards on Auditing and generally accepted auditing stan-
dards 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 prepa-
ration and fair presentation of the annual accounts and con-
solidated accounts in order to design audit procedures that
are appropriate in the circumstances, but not for the pur-
pose of expressing an opinion on the effectiveness of the
company’s internal control. An audit also includes evaluat-
ing 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 consoli-
dated accounts.

We believe that the audit evidence we have obtained is suf-
ficient 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 2011 and of its financial perfor-
mance and cash flows for the year then ended in accordance
with the Annual Accounts Act, and 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 2011 and
of their financial performance and cash flows in accordance
with International Financial Reporting Standards, as
adopted by the EU, and the Annual Accounts Act. A corpo-
rate governance report has been prepared. The statutory
administration report and the corporate governance report
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 consoli-
dated accounts, we have examined the proposed appropria-
tions 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 2011.

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’ pro-

posed 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 Com-
panies Act.

As a basis for our opinion concerning discharge from lia-

bility, 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 contra-
vention 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 opinion.

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 mem-
bers of the Board of Directors and the President and CEO be
discharged from liability for the financial year.

Stockholm 9 February 2012

PricewaterhouseCoopers AB

Peter Nyllinge
Authorized Public Accountant

AssA ABLoY ANNuAL report 2011

AuDIt report 119

The ASSA ABLOY share

share price trend in 2011
In 2011 OMX Stockholm fell 17 percent, while ASSA ABLOY’s
Series B share performed better than the index, falling 9 per-
cent from SEK 189.50 to SEK 172.60. Market capitalization
amounted to SEK 63,560 M (69,391) at year-end.

The highest closing price during the year was SEK 194.90

recorded on 11 January, while the lowest closing price was
SEK 133.50 recorded on 19 August.

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
918 million (910) shares in 2011, a turnover rate of 249 per-
cent (249). Turnover of the Series B share on NASDAQ OMX
Stockholm amounted to 391 million (464) shares, equiva-
lent to a turnover rate of 106 percent (127). The average
turnover rate remained unchanged at 96 percent (95) on
NASDAQ OMX Stockholm and was 101 percent (99) on the
Large Cap list.

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 Stock-
holm, but was traded on more than ten different markets in
2011. Increasingly fragmented trading means that an ever-
increasing share of trading in most Swedish shares takes
place outside NASDAQ OMX Stockholm. Trading on NAS-
DAQ OMX Stockholm accounted for 43 percent of turnover
of the share in 2011, compared with 51 percent in 2010 and
65 percent in 2009.

ownership structure
The number of shareholders at year-end was 18,697
(20,199) and the ten largest shareholders accounted for
around 38 percent (31) of the share capital and 58 percent
(53) of the votes. Shareholders with more than 50,000
shares, a total of 361 shareholders, accounted for 97 percent
(95) of the share capital and 97 percent (96) of the votes.

Investors outside Sweden accounted for around 64 (63)

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

percent of the share capital and around 44 percent (43) of
the votes, and were mainly in the USA and the United King-
dom.

SHARE PRICE TREND AND TURNOVER 2002–2011

DIVIDEND PER SHARE 2002–2011

SEK

300

240

180

120

No. of shares traded, thousands

200,000

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

SEK

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Series B share

OMX Stockholm

No. of shares traded, thousands (incl. after hours)

2011 proposed dividend

Data per share

seK/share 1

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

3.53
1.25
1.3
32.2
99.50
159.50
76.50
35.85

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
1 Adjustments made for new issues.
2 2002–2003 have not been adjusted for IFRS.
3 Excluding items affecting comparability 2006, 2008, 2009 and 2011.
4 Proposed dividend.

3.31
1.25
1.5
33.9
85.50
110.00
67.00
31.23

6.33
2.60
2.3
42.0
113.50
113.50
84.00
34.74

6.97
3.25
2.6
47.6
125.00
126.00
89.25
42.85

7.993
3.25
2.2
64.0
149.00
151.00
109.00
39.13

9.02
3.60
2.8
40.5
129.75
164.00
124.50
46.76

9.213
3.60
4.1
52.3
88.50
126.00
69.75
55.91

9.223
3.60
2.6
47.8
137.80
142.50
71.50
54.76

10.89 12.303
4.504
2.6
36.6
172.60
194.90
133.50
65.48

4.00
2.1
37.0
189.50
199.20
126.60
58.64

370,935 370,935 378,718 378,718 376,033 380,713 380,713 372,931 372,736 371,213

5 Dividend as percentage of share price at year-end.
6 Dividend as percentage of adjusted earnings in line with dividend policy.
7 After full dilution.

120

tHe AssA ABLoY sHAre

AssA ABLoY ANNuAL report 2011

ASSA ABLOY’s ten largest shareholders
Based on the share register at 31 December 2011.

shareholders

series A shares

series B shares

Investment AB Latour
Melker Schörling AB
Capital Group Funds
Harris Associates
Alecta
Swedbank Robur Funds
SEB Funds & SEB Trygg Liv
Norska staten
Folksam-Group
AMF Funds
Other shareholders
total number

13,865,243
5,310,080

19,175,323

21,300,000
9,162,136
34,151,600
18,245,322
8,390,000
7,533,035
6,928,260
6,468,627
5,359,412
5,265,000
226,271,663
349,075,055

Source: SIS Ägarservice AB and Euroclear Sweden AB.

total number
of shares

35,165,243
14,472,216
34,151,600
18,245,322
8,390,000
7,533,035
6,928,260
6,468,627
5,359,412
5,265,000
226,271,663
368,250,378

share capital, %

Votes, %

9.5
4.0
9.3
5.0
2.3
2.0
1.9
1.8
1.5
1.4
61.3
100.0

29.6
11.6
6.3
3.4
1.6
1.4
1.3
1.2
1.0
1.0
41.6
100.0

OWNERSHIP STRUCTURE (SHARE CAPITAL)

OWNERSHIP STRUCTURE (VOTES)

Investment AB Latour, 9,5 %
Capital Group Funds, 9,3 %
Harris Associates, 5,0%
Melker Schörling AB, 4,0 %
Alecta, 2,3 %
Swedbank Robur Funds, 2,0 %
SEB Fonder & SEB Trygg Liv, 1,9 %
Norska staten, 1,8%
Folksam-Group, 1,5 %
AMF Funds, 1,4 %
Other shareholders, 61,3 %

Investment AB Latour, 29,6%
Melker Schörling AB, 11,6%
Capital Group Funds, 6,3%
Harris Associates, 3,4%
Alecta, 1,6%
Swedbank Robur Funds, 1,4%
SEB Fonder & SEB Trygg Liv, 1,3%
Norska staten, 1,2%
Folksam-Group, 1,0%
AMF Funds, 1,0%
Other shareholders, 41,6%

Share capital
ASSA ABLOY’s share capital at 31 December 2011 amounted
to SEK 368,250,378, distributed among 19,175,323 Series A
shares and 349,075,055 Series B shares. All shares have a par

value of SEK 1.00 and provide the holders with equal rights
to the company’s assets and earnings. Each Series A share
carries ten votes and each Series B share one vote.

Year

1989
1994
1994
1994
1996
1996
1997
1998
1999
1999
1999
1999
1999
2000
2000
2000
2001
2002
2002
2010
2011

transaction

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
Number of shares after dilution

series A
shares

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

series C
shares

20,000

1,428,550
1,714,260

series B
shares

2,000,000

50,417,555
60,501,066
60,501,066
66,541,706
66,885,571
67,179,562

268,718,248
295,564,487
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
353,560,643

share
capital, seK

2,000,000
2,000,000

53,592,110
64,310,532
64,310,532
70,732,118
71,075,983
71,369,974

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
371,212,727

AssA ABLoY ANNuAL report 2011

tHe AssA ABLoY sHAre 121

The ASSA ABLOY share

share capital and voting rights
The share capital amounted at year-end to SEK 368,250,378
distributed among a total of 368,250,378 shares, comprising
19,175,323 Series A shares and 349,075,055 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 540,828,285. Each Series A
share carries ten votes and each Series B share one vote.

Repurchase of own shares
Since 2010 the Board of Directors has requested and
received a mandate from the Annual General Meeting to buy
back and transfer ASSA ABLOY shares. The aim has been to
be able to adjust the company’s capital structure, 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 ensure the
company’s undertakings under long-term incentive pro-
grams. The 2011 Annual General Meeting authorized the
Board of Directors 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 400,000 (300,000) Series B
shares after repurchase to ensure the company’s undertak-
ings in connection with the company’s long-term incentive
programs (LTI 2010 and LTI 2011). These shares account for
0.1 percent (0.1) of the share capital and each share has a
par value of SEK 1.00. The purchase consideration amounted
to SEK 65 M (48).

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 CEO propose that a divi-
dend of SEK 4.50 per share (4.00) be paid to shareholders for
the 2011 financial year, equivalent to a dividend yield on the
Series B share of 2.6 percent (2.1).

Incentive programs
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.

For each Series B share acquired by the CEO within the
framework of LTI 2010, the company awards one matching
stock option and four performance-based stock options. For
each Series B share acquired by other members of the Exec-
utive Team, the company awards one matching stock option
and three performance-based stock options. For other par-
ticipants, the company awards one matching stock option
and one performance-based stock option.

Each performance-based stock option entitles the holder

to receive one Series B share, free of charge, in the company
three years after allotment, provided that the above condi-
tions have been fulfilled. In addition, the maximum level in a
range determined by the Board of Directors for the perfor-
mance of the company’s earnings per share in 2010 must
has been fulfilled. This condition has been fulfilled.

At the 2011 Annual General Meeting, it was decided to
launch a new long-term incentive program (LTI 2011) for
senior executives and other key staff in the Group.

For each Series B share acquired by the CEO within the
framework of LTI 2011, the company awards one matching
stock option and four performance-based stock options. For
each Series B share acquired by other members of the Exec-
utive Team, the company awards one matching stock option
and three performance-based stock options. For other par-
ticipants, the company awards one matching stock option
and one performance-based stock option.

Each performance-based stock option entitles the holder

to receive one Series B share, free of charge, in the company
three years after allotment, provided that the above condi-
tions have been fulfilled. In addition, the maximum level in a
range determined by the Board of Directors for the perfor-
mance of the company’s earnings per share in 2011 must
has been fulfilled. This condition has been fulfilled.

Other equity-based incentive programs
ASSA ABLOY has issued a number of convertible debentures
to employees in the Group.

In 2006 it was decided to launch an incentive program for

senior executives and other key staff in the Group, Incentive
2006. Incentive 2006 matured in 2011 and the debentures
were converted in full. Conversion was managed by an exter-
nal 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.

In 2007 it was decided to launch a new incentive pro-
gram, Incentive 2007. Any conversion of Incentive 2007 can
take place in a 30-day period in May and June 2012. Full con-
version at a conversion rate of EUR 18.00 for Series 1, EUR
20.50 for Series 2, EUR 23.00 for Series 3 and EUR 25.40 for
Series 4 will add 4,679,610 Series B shares.

The dilutive effect of full conversion of Incentive 2007
amounts to 1.3 percent of share capital and 0.9 percent of
the total number of votes.

At year-end 2011 Incentive 2007 amounted to EUR 100 M.
Around 1,400 employees in some 15 countries are par-

ticipating in Incentive 2007.

122

tHe AssA ABLoY sHAre

AssA ABLoY ANNuAL report 2011

Analysts who follow ASSA ABLOY

Company

Name

telephone

ABG Sundal Collier
Bank of America Merrill Lynch
Barclays Capital
Carnegie
Cheuvreux
Credit Suisse
Danske Bank
Deutsche Bank
DnBNOR
Dresdner Kleinwort
Enskilda Securities
Erik Penser Bankaktiebolag
Exane BNP Paribas
Goldman Sachs
Goldman Sachs
Handelsbanken Capital Markets
Handelsbanken Capital Markets
ICAP Securities Ltd
JP Morgan
Morgan Stanley
Nordea
Nordea
Pareto Securities
Redburn Partners
Société Générale
Swedbank Markets
The Royal Bank of Scotland
The Royal Bank of Scotland
UBS

Anders Idborg
Ben Maslen
Allan Smylie
Kenneth Toll Johansson
Andreas Dahl
Andre Kukhnin
Oscar Stjerngren
Johan Wettergren
Lars Brorson
Colin Grant
Julian Beer
Max Frydén
Jonathan Mounsey
Sam Edmunds
Aaron Ibbotson
Peder Frölén
Jon Hyltner
Nick Wilson
Nico Dil
Guillermo Peigneux
Ann-Sofie Nordh
Johan Trocmé
David Jacobsson
James Moore
Sébastien Grunter
Niclas Höglund
Daniel Cunliffe
Klas Bergelind
Fredric Stahl

+46 8 566 286 74
+44 20 7996 4783
+44 20 7773 4873
+46 8 588 68 911
+46 8 723 51 63
+44 20 7888 0350
+46 8 568 80 606
+46 8 463 55 18
+44 20 7621 6149
+44 20 7475 9161
+46 8 522 296 52
+46 8 463 84 63
+44 207 039 9529
+44 20 7552 1289
+44 20 7774 6661
+46 8 701 12 51
+46 8 701 12 75
+44 20 7532 4683
+44 20 7325 4292
+34 9141 81398
+46 8 534 91 452
+46 8 5349 13 99
+46 8 402 52 72
+44 20 7000 2135
+33 1 4213 4722
+46 8 5859 1800
+44 20 7678 9158
+44 20 7678 6001
+46 8 493 73 09

anders.idborg@abgsc.se
ben.maslen@baml.com
allan.smylie@barcap.com
kentol@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
julian.beer@enskilda.se
max.fryden@penser.se
jonathan.mounsey@exanebnpparibas.com
samson.edmunds@gs.com
aaron.ibbotson@gs.com
pefr15@handelsbanken.se
johy01@handelsbanken.se
nicholas.wilson@icap.com
nico.dil@jpmorgan.com
guillermo.peigneux@morganstanley.com
ann-sofie.nordh@nordea.com
johan.trocme@nordea.com
david.jacobsson@paretoohman.se
james.moore@redburn.com
sebastien.grunter@sgcib.com
niclas.hoglund@swedbank.se
daniel.cunliffe@rbs.com
klas.bergelind@rbs.com
fredric.stahl@ubs.com

AssA ABLoY ANNuAL report 2011

tHe AssA ABLoY sHAre 123

Information for shareholders

Annual General Meeting
The Annual General Meeting of ASSA ABLOY will be held at
Moderna Museet (Museum of Modern Art), Skeppsholmen,
Stockholm at 15.00 on Wednesday, 25 April 2012. Share-
holders wishing to attend the Annual General Meeting
should:
• Be registered in the share register kept by Euroclear

Sweden AB by Thursday, 19 April 2012.

• Notify ASSA ABLOY AB of their intention to attend by

Thursday, 19 April 2012.

Dividend
Monday, 30 April 2012 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 Friday, 4 May 2012.

Further information
Niklas Ribbing, Head of Investor Relations
Telephone: +46 (0) 8 506 485 79
niklas.ribbing@assaabloy.com

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 registration to be completed
by Thursday, 19 April 2012, the shareholder should contact
his/her bank or nominee well in advance of this date.

reports can be ordered from AssA ABLoY AB
• Website www.assaabloy.com
• Telephone +46 (0) 8 506 485 00
+46 (0) 8 506 485 85
• Fax
ASSA ABLOY AB
• Post
Box 70340
SE-107 23 Stockholm
Sweden

Financial reporting
First quarter: 24 April 2012
Second quarter: 27 July 2012
Third quarter: 29 October 2012
Fourth quarter and Year-end report: February 2013
Annual Report 2012: March 2013

online Annual report
ASSA ABLOY’s online Annual Report has many user-friendly
functions. The texts can be read out loud and the financial
tables can be expanded and downloaded in Excel. All infor-
mation in the Annual Report can be found easily by menu
navigation or by using the Search function.
The online Annual Report is available at:
www.assaabloy.com/annualreport2011

Notification of intention to attend
• Website www.assaabloy.com
• Address ASSA ABLOY AB ”årsstämman”,
Box 7842, SE-103 98 Stockholm

• Telefon +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 a completed proxy form 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 deci-
sions on the election of the 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 Commit-
tee prior to the 2012 Annual General Meeting comprises
Mikael Ekdahl (Melker Schörling AB), Gustaf Douglas (Invest-
ment AB Latour), Liselott Ledin (Alecta), Marianne Nilsson
(Swedbank Robur Fonder) and Per-Erik Mohlin (SEB Fonder/
SEB Trygg Liv). Mikael Ekdahl is Chairman of the Nomination
Committee.

124

INForMAtIoN For sHAreHoLDers

AssA ABLoY ANNuAL report 2011

Glossary

Aperio
Aperio is a new technology enabling mechanical locks to be
wirelessly connected to an existing access control system.
Aperio locks can be installed in new or existing access
control systems and opened using the same credentials as
for that system.

Lean
Lean production philosophy is about using as few resources
as possible. The focus is on just-in-time production, which
means that materials, parts and products are in the right
place at the right time. Striving for continuous improvement
is an integral part of Lean philosophy.

ElectroLynx
ElectroLynx is an ASSA ABLOY solution that simplifies the
installation of electrical devices in doors. It consists of a wir -
ing system and simple, snap-together connectors that can
be used with all electrical products from ASSA ABLOY and
installed inside doors if required. This solution means that
installers do not need to solder and connect individual
wires.

Gateway process
ASSA ABLOY’s product development is based on a struc-
tured Gateway process, which means all projects must
pass through six different stages from concept to installed
product.

High Definition Printing (HDP)
Fargo HDP (High Definition Printing) is a process used in the
production of tamper-resistant and very durable ID cards.
HDP produces high-quality images, which are sandwiched
between Fargo’s HDP film and the card and are destroyed
automatically if anyone attempts to tamper with the card.

NFC
Near field communication (NFC) is a short-range wireless
connectivity standard that uses magnetic field induction to
enable communication between devices when they touch
or are held in close proximity.

OEM
An Original Equipment Manufacturer is a company that
manufactures the final product for sale on the open market.
Usually the OEM does not sell the product direct to the
customer but through dealers. The product may consist of
the company’s own components or a combination of own
and purchased components.

RFID
Radio frequency identification is a technology for reading
and storing information remotely using small radio trans-
mitter-receivers and RFID tags. An RFID tag can be small
enough to fit into an ordinary retail price tag, or be placed in
a glass capsule and injected under a pet’s skin for identifica-
tion purposes. One use of RFID technology is in keycards.

Hi-O
Hi-O (Highly Intelligent Opening) is a standardized new
technology for security and control of door environments,
which allows interconnectivity – communication between
all components in a door opening solution.

ZigBee
ZigBee is a standard for wireless control and monitoring of
equipment in homes, commercial properties, industry and
wherever necessary. The technology is energy-efficient and
the wireless platform facilitates retrofitting.

Inlay
An RFID inlay is one of the components in a contactless card
or similar document. It consists of a circuit board connected
to an antenna mounted on plastic film.

Production: ASSA ABLOY in cooperation with Hallvarsson & Halvarsson.
Photo: Russell Corriveau, DSS Training Development Manager, ASSA ABLOY Americas, Peter Hoelstad, Gerard Jörén,
Getty Images, Photo Copyright Arizona Board of Regents. All Rights Reserved. Used With Permission,
www.polen.travel and ASSA ABLOYs photographic library, among others.
Printing: Elanders AB, Falköping in March 2012.

ASSA ABLOY is the global
leader in door opening solutions,
dedicated to satisfying
end-user needs for security,
safety and convenience

www.assaabloy.com

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

» 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