ASSA ABLOY Annual Report 2013

FY2013 Annual Report · ASSA ABLOY

Loading PDF…

Annual Report
2013

The global leader in
door opening solutions

Contents

Report on operations
The ASSA ABLOY Group
Statement by the President and CEO
Vision, financial targets and strategy
Market presence
Product leadership
Cost-efficiency
Growth and profitability

Divisions
ASSA ABLOY’s divisions
EMEA division
Americas division
Asia Pacific division
Global Technologies division
Entrance Systems division

CSR
Sustainable development

Report of the Board of Directors
Report of the Board of Directors

Significant risks and risk management
Corporate governance
Board of Directors
Executive Team
Remuneration guidelines for senior
management

2
8
10
22
30
36

40
42
44
46
48
52

62
65
68
72
74
77

Annual Report
2013

The global leader in
door opening solutions

Financial statements
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 ratios
Proposed distribution of earnings
Auditor’s report

Shareholder information
The ASSA ABLOY share
Information for shareholders

78
79

80
81
82
83
84
85
86
88
90
116
117
118
119
120
121

122
125

Digital door locks for the residential market
(DDL) provide increased security and conve-
nience for the user. ASSA ABLOY offers many
exciting new electromechanical security
products for both the commercial and the
residential markets.

For further information about the company and
its operations visit: www.ASSA ABLOY.com

Locks and lock systems

Mobile keys

Access control

Door closers

ASSA ABLOY is the global leader in door opening solutions

ASSA ABLOY is represented on both mature and emerging
markets worldwide, with leading
positions in much of Europe,
North America and
Asia Pacific.

Share of Group sales
by region 2013

44 %
1%

EuROPE

AFRICA

NORTh AMERICA

SOuTh AMERICA

ASIA

OCEANIA

32 %
2 %
17%
4 %

ASSA ABLOY’s product offering satisfies end-user needs for security, safety and convenience.

Schools and offices

Museums

homes

hospitals

Industry

Arenas

Railway stations and airports

hotels

Door closers

Electromechanical locks

Entrance automation

Industrial doors

Digital locks

ASSA ABLOY is the global leader in door opening solutions

ASSA ABLOY offers a complete range of door opening
solutions.

48SEK 48 billion

in sales

Since its formation in 1994, ASSA ABLOY has grown
from a regional company into an international group
with around 43,000 employees and sales of over
SEK 48 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.

ASSA ABLOY’s product offering satisfies end-user needs for security, safety and convenience.

Schools and offices

Museums

homes

hospitals

Industry

Arenas

Railway stations and airports

hotels

ASSA ABLOY’s strategy for profitable growth.

Read more on pages 10–39.

Market presence

Product leadership

Cost-efficiency

Increasing growth in the core
business and expanding into
new markets and segments.

Continuously developing
innovative products offering
enhanced customer value and
lower product costs.

Reducing the cost base
through improved processes,
flexible final assembly close to
the customer and production
in low-cost countries.

4 %

Sales increased by 4 percent

to SEK 48,481 M (46,619).

SEK 14.84

Earnings per share after full dilution

increased to SEK 14.84 (SEK 13.97).

SEK 7,923 M

Operating income amounted

to SEK 7,923 M (7,501).

SEK 6,803 M

Operating cash flow amounted

to SEK 6,803 M (7,044).

Investments

in product development continued at

an accelerated rate and a number of

new products were launched.

Key data

Sales, SEK M
of which: Organic growth, %
of which: Acquired growth, %
of which: Exchange rate effects, %
Operating income (EBIT), SEK M
Operating margin (EBIT), %
Income before tax (EBT), SEK M
Operating cash flow, SEK M3
Return on capital employed, %

Data per share

Earnings per share after tax and dilution (EPS), SEK/share
Equity per share after dilution, SEK/share
Dividend, SEK/share
Weighted average number of shares after dilution, thousands

1 Excluding items affecting comparability.
2 As proposed by the Board of Directors.
3 Excluding restructuring payments.

2011

41,786
4
17
–8
6,6241
15.91
5,9791
6,080
17.41

2011

12.301
65.54
4.50
371,213

2012

46,619
2
9
1
7,501
16.1
6,784
7,044
18.1

2013

48,481
2
4
–2
7,9231
16.31
7,3811
6,803
17.11

Change

9%
–3%

2012

2013

Change

13.97
69.86
5.10
369,592

14.841
77.83
5.702

370,259

6%
11%
12%

Statement by the President and CEO

high innovation rate creates
value in a weak market

ASSA ABLOY had another good year in 2013. Sales rose 4 percent to SEK 48,481 M with
2 percent organic growth. Operating income increased by 6 percent to SEK 7,923 M and
the margin strengthened further to 16.3 percent. The Group can now look back on several
years of growth, rising profits and good cash flow in one of the deepest economic crises
for many decades. This shows that ASSA ABLOY has employees and strategies that create
value even in weak market conditions. We have created a sound basis for continued suc-
cess through constantly increased market presence, a high innovation and product devel-
opment rate and cost-efficiency across all processes.

2013 was another challenging year in which the global
economy remained weak in many countries affected by
sovereign debt problems. In these circumstances, we
at ASSA ABLOY have every reason to be pleased with
the Group’s performance. We had strong growth, we
increased our earnings and we strengthened our finan-
cial stability. The theme of my Statement is how to pro-
ceed on this path and continue creating value for our
stakeholders.

But first may I provide a slightly more detailed review

of the past year for our divisions.

The divisions
EMEA division. In the mature markets of western Europe,
the picture was varied. Scandinavia and the UK showed
good growth while Germany was stable. The weak trend
in France, Spain, the Netherlands, Italy and Finland
continued during the year. Demand was strong in the
emerging markets of eastern Europe and Africa, where
the Group has made major marketing investments in
recent years. The focus on specification sales resulted in
an increased number of large project orders for offices,
hospitals and the education sector, as well as major secu-
rity projects with several European telecoms operators.

The division increased the share of products launched
in the past three years to 30 percent of total sales. This
meets substantially increased demand for electrome-
chanical products. The multiannual program for ration-
alization of the plant structure and cost-efficiency con-
tinued to yield good results and contributed to stable
margin growth in a challenging market.

Americas division. Sales of mechanical and electro-
mechanical locks and cylinders showed healthy growth
during the year. Demand in the residential segment was
strong in the USA for the third consecutive year. While
the new construction market bottomed out during the
year, with a 34 percent decline since the peak in 2009, the
division has weathered the downturn considerably bet-
ter and saw a more rapid upturn this year. The explana-
tion includes a strong offering of new electromechanical
products and services with improved performance, as
well as strong demand for renovations and upgrades. We
experienced a similar demand scenario in Latin America
with healthy growth. Market presence has been strength-
ened by focusing on activities that drive end-customer
demand. Cost-efficiency has been a priority, our pro-
grams have delivered and an already good margin could
be further improved. The year saw a major acquisition

DeveloPMenT Key fiGureS

SALES AND OPERATING INCOME

INCOME BEFORE TAx AND OPERATING CASh FLOW

Sales
SEK M

50,000

40,000

30,000

20,000

10,000

Operating income
SEK M

8,000

6,400

4,800

3,200

1,600

12 13

 Sales1
Operating income2

1 Reclassification has been

made for 2009.

2 Excluding items affecting
comparability 2009, 2011
and 2013.

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, 2009, 2011
and 2013.

2 Excluding restructuring

12 13

payments.

STaTeMenT by The PreSiDenT anD Ceo

aSSa abloy annual rePorT 2013

of Ameristar, the leading US manufacturer of perimeter
security consisting of high-security fencing and gates.
Asia Pacific division. ASSA ABLOY is a clear market
leader in Asia and sales rose on the important Chinese
market, despite continued subdued demand. Growth
was high in South Korea, due to good export demand
for digital door locks, as well as in Southeast Asia. Invest-
ments in market presence continued at a high rate,
where populous and fast-growing countries such as
Vietnam, Indonesia and the Philippines are now interest-
ing markets. Product leadership is an important factor
for market development in Asia where customers rap-
idly adopt hi-tech security products such as digital door
locks and access control systems. Several new products
were successfully launched in India. A large proportion of
the Group’s employees are located in China, and invest-
ments in automation, Lean processes and an increased
share of purchases and outsourcing reduced the number
of employees and contributed to an improved margin.

Global Technologies division. Demand for HID Global
products was strong in all customer segments and prod-
uct areas, except the institutional segment, which was
affected by budget restrictions in many countries. The
positive trend in upgrading and complementing the
product range continued, and we saw a sharp increase
in major project orders. Hospitality had another good
growth year, with strong growth in renovations and
upgrades and positive growth in the USA, Latin America,
Asia and the Pacific. Demand from the cruise ship market
increased substantially. Good organic growth and cost-
efficiency further improved the division’s margins.

Entrance Systems division. Demand remained weak in
Europe, particularly in southern Europe, but with signs of
a leveling off towards the end of the year. The American
markets and Asia grew at a good rate. The Pacific region
returned to positive growth towards the end of the year.
Sales of automatic doors, industrial doors, high-perfor-

mance doors and docking systems were stable. Organi-
zational development took an important step forward
with brand launches for the three distribution channels.
The comprehensive business development program of
acquisitions, market positioning and reorganization con-
tinued successfully, as well as new product development
and cost-saving programs. Operating income increased
and the operating margin was stable. The year saw a
major acquisition of Amarr, the third largest player in the
North American market for overhead sectional doors
with a very strong and attractive market position.

a good business to be in
Door opening solutions are a good business to be in. These
are products and services that are strongly associated
with the global welfare trend. Urbanization, higher secu-
rity requirements and technological development give us
three very dynamic and important human need areas in
which to operate: homes, workplaces and retail outlets.
Over the past 20 years, ASSA ABLOY has grown to
become the global leader in an attractive sector, which
is growing faster than global GDP. We have the lead-
ing brands, easily the largest installed base and are the
market leader in all major regions and countries includ-
ing the USA and China. The aftermarket accounts for 67
percent of sales, providing greater stability, with a main
emphasis on commercial and institutional customers,
75 percent, resulting in higher profitability.

Since 2004, ASSA ABLOY has nearly doubled its sales.
Operating income (EBIT) has increased by 115 percent
and earnings per share by over 130 percent. We have cre-
ated value for our stakeholders with good growth in the
Group’s total value and an increase in equity per share of
over 180 percent.

It is my belief that the explanation is found in our clear

strategies for market presence, product leadership and
cost-efficiency.

DEVELOPMENT OF EARNINGS PER ShARE1)

SEK

Earnings per share
has increased by 1,500
percent since 1996.

1) Excluding items affecting

comparability.

aSSa abloy annual rePorT 2013

STaTeMenT by The PreSiDenT anD Ceo 3

Statement by the President and CEO

increased market presence
Our marketing strategy aims to strengthen market pres-
ence by increasing customer value. It is an advantage to
be big and global, not only with respect to volumes and

+ Market presence

potential for long runs and low costs. Operating in many
different social, cultural and economic environments
also strengthens our collective business expertise. Dur-
ing the lengthy financial crisis, ASSA ABLOY has invested
significant resources to increase market presence in
the fastest growing markets and especially in one of the
world’s potentially largest markets, China.

We can anticipate changes in demand behavior in
fast-growing markets in Asia, South America and Africa
by utilizing our knowledge and experience of mature
markets. Many members of a growing middle class in
these countries are now moving straight from simple
mechanical locks to electromechanical door opening
solutions. Since the crisis began in 2009, sales in emerg-
ing markets have doubled to SEK 12 billion or 26 percent
of total sales. Being the industry’s number one in China is
a good position for future growth.

ple and goods that should quickly and safely enter and
exit the buildings where they live, work and shop.
Over the past four years, we have substantially

boosted the share of products launched in the past three
years. This focus has helped to offset subdued demand
in many mature markets. We have increased the share
from 16 percent to 27 percent, in other words, we have
exceeded our own target of 25 percent. This applies
especially to electromechanical products where we are
now setting the standard for future demand, with a focus
on electronic and mobile solutions, entrance automa-
tion and security doors. We are increasing product value
in the mechanical product area through VA/VE methods.
More about this and our product development process
can be found on pages 22–29.

Today sustainability is integrated across the whole
value chain from concept to recycling. The number of eco-
and energy-rated buildings is growing very rapidly based
on increasingly international standards. ASSA ABLOY’s
innovative products and solutions are today in the fore-
front of sustainability development, and we are a partner
and influence national and international standards.
Sustainability is part of all stages in our own processes,
to reduce resource waste and environmental impact.

In mature markets, we drive demand
through ever-broader and deeper coop-
eration with distribution. This comprises
a large number of players, such as archi-
tects, security consultants, wholesalers, retailers and
locksmiths, who influence and advise end-customers.
ASSA ABLOY cooperates closely with these players to
market new, innovative solutions and increase their
competence. This is called specification, and the num-
ber of specifiers has increased strongly within the Group.
They contribute to raising the standards of end-cus-
tomers’ requirement specifications, thereby creating
increased demand for the Group’s products.

innovative products create growth
A continuous flow of innovative products, with
enhanced customer value at lower cost, creates product
leadership, which is the foundation for organic growth.
ASSA ABLOY is a product-driven company. Our innova-
tion and product development provide increased value
for our customers and their customers, that is, the peo-

+ Product leadership

Cost-efficiency across all processes
The third main strategy is cost-efficiency, which has been
crucial to the Group’s good, stable margins during the
difficult years. While organic demand and growth have
been low and provided little support on the revenue
side, cost pressure has remained high. We also have to
take into account that our acquisitions, at least in the
early years, have a lower margin than our average.

ASSA ABLOY implements many measures and pro-
grams to reduce costs, and thus, by extension, to sup-
port our price leadership in the market. During the year,
for example, we intensified work on ‘should-cost’ esti-
mates for our purchases. This is described in more detail
on pages 30–35 under Cost-efficiency.

In view of the margin dilution of acquisitions and the

major investments in expansion in emerging markets,
we have seen a strong margin improvement in EMEA,

STaTeMenT by The PreSiDenT anD Ceo

aSSa abloy annual rePorT 2013

ASSA ABLOY’s Executive Team from left to right: Tzachi Wiesenfeld, Head of EMEA division; Denis Hébert, Head of HID Global business unit;
Jonas Persson, Head of Asia Pacific division; Carolina Dybeck Happe, Chief Financial Officer (CFO); Johan Molin, President and CEO and Head
of Global Technologies division; Thanasis Molokotos, Head of Americas division; Ulf Södergren, Chief Technology Officer (CTO); Juan Vargues,
Head of Entrance Systems division; and Tim Shea, Head of ASSA ABLOY Hospitality business unit.

aSSa abloy annual rePorT 2013

STaTeMenT by The PreSiDenT anD Ceo 5

Statement by the President and CEO

Americas and Global Technologies. These divisions have
improved margins significantly since 2006 to good,
stable levels even during the financial crisis.

Consistent strategy implementation
Strategy implementation in the organization takes place
with clarity, responsibility and speed.

+ Cost-

efficiency

We are clear about
what we want to
achieve by constantly
returning to the tar-
get for our strategies
and being consistent
in our communica-

tions. Responsibility should be simply and clearly formu-
lated. Clarity also includes striving for simplification. It is
about focusing on what is essential for target fulfilment.
The quest for simplification drives people to seek new or
different solutions to complicated problems.

Decentralized responsibility is ASSA ABLOY’s leading

organ izational principle. Operational responsibility in
the organization should be close to customers, devel-
opment, production and sales. Local and regional profit
centers are responsible for corporate goals.

Speed is crucial to staying ahead. At ASSA ABLOY
this is expressed in the requirement for rapid follow-up.
Analysis and measures to resolve deviations and prob-
lems are prioritized. A key cultural issue is to immedi-
ately addressing the many matters that continuously
appear. Employees should not have to wait long for a
response from managers or others. It is ultimately about
respect for other people, their time and employeeship
in the Group.

Well prepared for profitable growth
This overview shows that we are in line with our corpo-
rate goals and have successfully worked our way through
a weak global economy. We have gained better market
positions through active market investments and acqui-
sitions, we have a more competitive product offering
through investment in innovation and product develop-
ment, and we have a better cost position due to inten-
sive streamlining. As a result, we are well prepared to
continue our profitable growth.

In 2013 we saw a continued recovery in growth in the

USA, weak but stable growth in Europe and continued
good growth in most emerging markets, though not as
strong as before the crisis.

However, there are considerable uncertainties and sig-
nificant risks of setbacks. The fundamental problems of
the financial and debt crises have not been solved, with
respect to the balance between liabilities and assets in
various regions and countries, and between the public,
private and household sectors. The budget situation and
interest rates make it difficult for politicians to pursue an
aggressive stimulus policy, and the banking sector still
has significant structural weaknesses in many countries.
In addition, there are challenging social tensions trig-
gered by austerity policies.

My assessment is that the global economy is slowly
improving, but remains affected by the austerity mea-
sures that many countries are implementing. We are
therefore committed to the strategy of reducing our
dependence on mature markets and expanding strongly
in emerging markets, which are expected to maintain
good growth. We will also prioritize investments in
new products, particularly in the growth area of elec-
tromechanics, and have a high tempo in our efficiency
programs.

Finally, I should like to thank all our employees for
their excellent efforts during a demanding year. We are

STaTeMenT by The PreSiDenT anD Ceo

aSSa abloy annual rePorT 2013

in an exciting industry with good growth. People’s need
for security and door opening solutions is increasing in
pace with the general welfare trend. Our homes, work
places and retail outlets will constantly be in dynamic
development, with new construction and renovation
worldwide. We are well prepared to address our chal-
lenges – continuing to be the global leading, most inno-
vative and efficient supplier of door opening solutions.

Stockholm, 7 February 2014

Johan Molin
President and CEO

ASSA ABLOY’s strategic
focus on market presence,
product leadership and
cost-efficiency has been
very successful. The
Group’s growth and earn-
ings trend have created
significant value for cus-
tomers, shareholders and
employees.

Increased growth and profitability

Increase In saLes 1994–2013

saLes anD OPeraTInG IncOMe (eBIT)

+1,300 %

Increase In OPeraTInG IncOMe
1994–2013

+5,000 %

sales, seK M
Sales, SEK M
50,000
50000

 Sales Operating income (EBIT)

40,000
40000

30,000
30000

20,000
20000

10,000
10000

0
0

96
961

97
971

98
981

99
991

00
001

01
011

02
021

03
031

04
04

05
05

06
062

07
07

09
08
10
082, 3 092, 3 10

11
112

12
12

1 1996–2003 have not been adjusted for IFrs.
2 excluding items affecting comparability.
3 reclassification has been made.

sales
Operating Income (eBIT)

eBIT, seK M
EBIT, SEK M
8,000

6,400

4,800

3,200

1,600

0
13
132

ASSA ABLOY AnnuAL repOrt 2013

StAtement BY the preSident And CeO 7

Value creation strategy

Vision

• To be the world-leading, most successful and innovative

supplier of total door opening solutions,

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

• to be an attractive company to work for.

Strategy and targets

Long-term and as an average over an economic cycle

10% annual growth through a combination

of organic and acquired growth. 16 –17% operating margin

Strategy for growth and profitability

The Group’s overall strategic direction is to spearhead the trend
towards increased security with a product-driven offering centered on the customer. The
strategic action plans are focused on three areas: market presence, product leadership and cost-efficiency.

Market
Presence

Increasing growth in
the core business
and expanding into
new markets and
segments.

Product
leadership

Continuously devel-
oping innovative
products offering
enhanced customer
value and lower
product costs.

Cost-
efficiency

Reducing the cost
base through
improved processes,
flexible final assem-
bly close to the
customer and
production in low-
cost countries.

pages 10–21

pages 22–29

pages 30–35

Employees

Values

Sustainability

continuing professional devel-
opment, skills and values are the
basis for the Group’s success.

are based on accountability, equality
principles and collaboration for a
focused, results-driven company with
high business ethics.

is integrated in all Group
processes: innovation, product
development, manufacturing,
logistics and sales.

Market presence

+ Global leader in
door opening solutions

+ 25 percent of sales are on emerging
markets, a threefold increase in

seven years

A world-leading market presence is achieved by
increasing customer value and expanding into
new markets and segments through start-ups and
acquisitions. Customer value is supported by an
efficient segmentation of sales channels and the
strength of the brand portfolio, which includes
many of the industry’s strongest brands and the
global ASSA ABLOY master brand.

+ The industry’s leading brands

+ Electromechanical solutions account

for 49 percent of sales

Market presence

Market expansion for
profitable growth

Global drivers

Three customer needs

Need for
increased security

Living

Living. Around 5 billion people are estimated to live in cities by
2030, compared with 3.5 billion today. New and upgraded hous-
ing with good security is a high-priority welfare factor and resi-
dential investment is expected to grow faster than global GDP.

Urbanization

Technological
development

Working

Working. Most new jobs are being created in the cities especially
in the service sector. The strong growth in sectors such as educa-
tion, healthcare, and public and private administration requires
significant investment in new buildings as well as upgrades and
renovations. The need for secure, flexible solutions for entry and
exit is increasing rapidly.

Shopping

Shopping. The global middle class is forecast to have increased
from one to two billion by 2030. A rapid increase in consumer
demand is driving new construction, expansions and upgrades of
shopping centers, malls, and convenience stores. Together with
an increased flow of goods, this requires major investments and
smart, energy-efficient door opening solutions.

1212

Market preSence

aSSa aBLOY annuaL repOrt 2013

ASSA ABLOY’s world-leading market presence is based on three strategies:
• exploiting the strength of the brand portfolio,
• increasing growth in the core business and
• expanding into new markets and segments.

These market strategies have been successful through a combination of organic and
acquired growth focused on profitable, expanding markets and segments.

Market segmentation

Aftermarket

75%

Institutional and commer-
cial market – share of sales.

25 %

Private customers and
residential market – share
of sales.

institutional and commercial market –
complex, demanding projects
The most demanding and dynamic customer seg-
ment is institutional and commercial customers,
which account for around 75 percent of sales and
offer a higher profitability potential. These include
universities, hospitals, offices, airports and shopping
malls used by a large number of people daily. The
driver for electromechanical and advanced solutions
is strong. The procurement of these projects is often
complex and involves many stakeholders on the cus-
tomer side, such as property and security managers.
ASSA ABLOY’s common sales force has developed
expertise in understanding the multifaceted needs
of end-customers and has contact with many stake-
holders in the value chain to develop optimal solu-
tions for the customer. Distribution and installation
are largely handled by installers and locksmiths.
For small and medium-sized customers,

ASSA ABLOY offers a complete product and service
offering. This segment consists of institutional, com-
mercial and residential customers, who generally
need professional advice and installation, which is
primarily met by specialist distributors and installers,
such as locksmiths. ASSA ABLOY is actively working
to train distributors and to develop more standard-
ized solutions for small and medium-sized busi-
nesses, such as stores and offices.

Consumer market – replacement and upgrade
with advice and installation
The majority of sales are replacements or upgrades
of existing security products. However, an increas-
ing number of private individuals want electro-
mechanical locks, providing major growth potential
for ASSA ABLOY. Private customers have a consid-
erable need for advice and installation assistance.
The Group has therefore developed a number of
home security concepts to meet consumer needs.
In some geographical markets, ASSA ABLOY also
cooperates with door and window manufacturers
or specialist distribution channels such as DIY stores
and locksmiths.

Stability and profitability
Due to its unique global market penetration and the
world’s largest installed base of door opening solutions,
two-thirds of ASSA ABLOY’s sales are to the aftermar-
ket, and the trend is upwards. The aftermarket consists
of renovations, refurbishments, extensions, replace-
ments and upgrades. Demand in the aftermarket is
more stable than in new construction, which means
that ASSA ABLOY’s sales and profitability are less sensi-
tive to cyclical fluctuations. The Group’s strategies also
prioritize commercial and institutional customers with
a higher demand for electronic products and complex
solutions, and therefore higher profitability.

STABILITY IN ThE AFTERMARKET

 Aftermarket, 67%
 New construction, 33%

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

aSSa abloy annual rePorT 2013

MarKeT PreSenCe 1313

Market presence

Distribution

ASSA ABLOY reaches its end-customers through a variety of distribution channels at various
stages in the supply chain depending on customer needs, the product and solution, and
national and local requirements and standards. The Group has a competitive edge due to
its well-developed cooperation with all distribution players and has sharply increased the
proportion of staff involved with distribution over the past five years. The aim is to increase
knowledge and demand by offering competence as early as possible in the planning and
specification of door opening solutions.

Distributors – a close partner
ASSA ABLOY works closely with its distribution chan-
nels to offer end-customers the right products, correct
installation, and consequently a well-functioning secu-
rity solution. This collaboration creates good customer
relations, market demand and entry barriers for com-
petitors. Distributors also have a key role in providing
service and support after installation.

The distributor’s role may vary between different
customer segments. In the commercial segment, dis-

tributors in some markets act as consultants and proj-
ect managers to create good security solutions. They
have a good knowledge of customer needs and ensure
that the products comply with local regulations.
Electromechanical security products mainly reach the
end-user through security installers and specialist dis-
tributors. These products are also sold through secu-
rity systems integrators, who offer a total solution for
the installation of perimeter protection, access control
and increasingly also computer security.

Distribution channels for the security market

ASSA ABLOY
representative Distributor

aSSa abloy

DiSTribuTorS

DiSTribuTion ChannelS Security systems integrators,
locksmiths and security installers, building and lock whole-
salers, retailers, DIY, hardware and security stores, OEMs,
door and window manufacturers.

STaKeholDerS

CoDeS anD SeCuriTy STanDarDS

Building and lock wholesalers, security consultants and locksmiths have a key
role in delivering and installing the products specified for various construc-
tion projects.

1414

MarKeT PreSenCe

aSSa abloy annual rePorT 2013

Specification of door opening solutions –
competence increasingly important
In order to market innovative new solutions,
ASSA ABLOY collaborates with architects, security con-
sultants and major end-users to specify appropriate
products and to achieve a well-functioning security solu-
tion. Building and lock wholesalers, security consultants
and locksmiths have a key role in supplying the prod-
ucts specified for various construction projects. Many
door and window manufacturers install lockcases and
hardware in their products before delivering them to
customers.

The trend towards more complex security solutions
is increasing the competence required by distributors.
To support the customer in their choice of security solu-
tion, ASSA ABLOY has substantially increased the propor-
tion of skilled staff working in special specification teams
that offer total security solutions to major customers.
These specification teams also collaborate with other

key groups early on in the order chain, such as building
consultants, architects and building standards agen-
cies, to create demand for innovative competence. The
service offering includes telephone support, technical
drawings, product configuration, and e-commerce.

ASSA ABLOY shares competence with locksmiths, a

key distributor of mechanical and electromechanical
security products in many markets. They buy direct from
ASSA ABLOY or through wholesalers and provide advice,
delivery, installation and service. Some locksmiths have
an increased focus on electronics, while IT integrators
are increasingly offering physical security solutions.

Electronic security products mainly reach the end-user through security installers and
specialist distributors. These products are also sold through security systems integra-
tors, who often offer a total solution for the installation of perimeter protection, access
control and increasingly also computer security.

ASSA ABLOY
representative

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

ASSA ABLOY
representative

inSTallerS

SPeCifiCaTion

enD-CuSToMerS

Installer

ASSA ABLOY
representative

STaKeholDerS

CoDeS anD SeCuriTy STanDarDS

enD-CuSToMerS
Large institutional and
commercial customers
• Healthcare • Education • Retail
• Hospitality • Offices • Industry

Small and medium-sized customers
• Offices • Stores

Residential market
• Apartments • Houses

STaKeholDerS
Such as architects, security
consultants, public authorities
responsible for security stan-
dards 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 hardware in their products before delivering them to customers.

aSSa abloy annual rePorT 2013

MarKeT PreSenCe 1515

Market presence

Markets

The global market for door opening solutions is largely fragmented. ASSA ABLOY is the
industry’s most global player and is represented in more than 70 countries, with sales
worldwide. The mature markets of North America, Europe, and Australia, where the mar-
ket is more consolidated, account for three-quarters of ASSA ABLOY’s sales. In the emerg-
ing markets of Asia, the Middle East, Russia, South America and Africa, growth is higher and
markets more fragmented.

Major differences and globalization
– advantage for aSSa abloy
The difference in demand between continents and
countries is significant due to different regulations, stan-
dards and requirements. As the most globally estab-
lished player with regional and local presence, this gives
ASSA ABLOY competitive advantages. But the globaliza-
tion trend also means a more similar safety approach,
especially among global companies with installations in
many countries, which seek large-scale smart and cost-
effective corporate solutions. This also benefits global
ASSA ABLOY.

Over the next 10 years emerging markets are expected

to have higher growth than mature markets. These mar-
kets are demanding mechanical products but increas-
ingly also electromechanical products. The Group’s share
of sales to emerging markets has increased from 10 to
25 percent in eight years. ASSA ABLOY is also the global
leader in electromechanical and digital door locks.

Electromechanical solutions are considerably more

common in the commercial segment than in the resi-
dential segment. An increasing number of individuals
want electronic locks for their homes, providing major
growth potential for ASSA ABLOY.

China has been and will be an important emerging
market for the foreseeable future. As a result of organic

and acquired growth, ASSA ABLOY’s sales in China have
increased from SEK 429 M to SEK 4,806 M in eight years.
Today the Group is the country’s largest manufacturer
and supplier of locking solutions. The profitable after-
market for maintenance and upgrades already accounts
for 30 percent of sales, a share that is expected to
increase in the future.

fragmented competition
– continued consolidation
The global door opening solutions market remains frag-
mented, despite ongoing consolidation over the past 10
years. However, the market in each country is relatively
consolidated in mature markets. Companies in Europe,
for example, are generally still family-owned and have a
good position in their respective domestic markets. They
are often well established and have strong ties with local
distributors. In emerging markets, however, established
lock standards and brands are less common and markets
are more fragmented.

ASSA ABLOY is the global market leader and has
five main competitors, which partly operate in its seg-
ments: Allegion (USA), Stanley Black & Decker (USA),
Dorma (Germany), Kaba (Switzerland) and Hörmann
( Germany). The Asian market is still very fragmented and
the largest manufacturers have a limited market share.

Asia, the Middle East, eastern
Europe, South America and
Africa are emerging markets
with higher growth than
mature markets.

SALES BY PRODuCT GROuP

 Mechanical locks, lock

systems and fittings, 33%
 Entrance automation, 25%
 Electromechanical and
electronic locks, 24%
 Security doors and
hardware, 18%

Mechanical locks, lock systems and fittings are still the largest,
and growing, sub-market in door opening solutions. Growth
is, however, considerably higher in electromechanical prod-
ucts and entrance automation. ASSA ABLOY is the global
product and market leader in all major product segments.

1616

MarKeT PreSenCe

aSSa abloy annual rePorT 2013

Growth in Group sales
by region 2013

EuROPE

AFRICA

–1%

+14 %

Geographical expansion is mainly achieved through
acquisitions of leading local companies with well-known
brands, in order to build a strong platform on emerging
markets in Asia, eastern Europe, the Middle East, Africa
and South America. Emerging markets have increased
their share of Group sales from 10 percent eight years
ago to 25 percent in 2013.

NORTh AMERICA

+19 %
+13%

SOuTh AMERICA

ASIA

+9 %

OCEANIA

+4 %

SALES BY REGION

SALES ON EMERGING MARKETS1

 Europe 44%
 Africa 1%
 North America 32%
 South America 2%
 Asia 17%
 Oceania 4%

SEK M
15,000

12,000

9,000

6,000

3,000

aSSa abloy annual rePorT 2013

2006

2007

2008

2009

2010

2011

2012

2013

1 Emerging markets are Africa,
Asia, the Middle East, South
America and eastern Europe.

MarKeT PreSenCe 1717

Market presence

Market strategies

ASSA ABLOYs world-leading market presence is a strategic cornerstone in the Group for
profitable growth. Market strategy is based on long-term technology-driven growth in
demand on mature markets in Europe and North America and fast-growing demand on
emerging markets driven by urbanization. In order to increase its market presence,
ASSA ABLOY will exploit the strength of its brand portfolio, increase growth in the core
business by segmentation, and expand into new markets and product lines.

increasing growth in the core business
by segmentation
Over the past seven years ASSA ABLOY has made a signif-
icant strategic shift to an increasingly market-oriented
organization in close collaboration with architects,
security consultants, major end-users and distributors.
The main growth potential is found in existing market
channels and an increased share of distributors’ sales.
One important initiative is the focus on increased
customer relevance through market segmentation.
Sales teams are focusing on different customer seg-
ments to gain the industry’s best understanding of cus-
tomer needs, build relationships and generate demand,
thereby becoming the end-user’s door opening solution
expert. Segmentation aims at total door opening solu-

tions customized to the doors’ applications, security and
convenience aspects, special requirements for compli-
ance with standards and regulations, and the need for
integration with new or existing security systems and IT
networks.

This focus includes investments in employees with
a clear, direct demand-generating responsibility. In the
Americas division, for example, the share of customer-
facing staff has risen from 35 percent in 2004 to 56 per-
cent. In the EMEA division, the share has risen from 42
percent to 50 percent. This trend is ongoing.

Secure and
attractive entrances

Customer:
The Mall of Istanbul is planned to be a mixed-use development with retail, residential,
office and hotel space, as well as a large entertainment area.

Challenge:
The customer needed safe and convenient pedestrian entrances to handle a high flow of
people and meet the demanding design requirements for this new mall, which is one of
the most prestigious in Istanbul. A key challenge to solve was disabled and trolley access
to the mall.

Solution:
Pedestrian door solutions from ASSA ABLOY Entrance Systems, consisting of 4 Besam
Uniturn revolving doors, 2 RD3 revolving doors and 76 Besam Slim automatic sliding
door systems, all meeting the demanding security and aesthetic requirements.

1818

MarKeT PreSenCe

aSSa abloy annual rePorT 2013

Around 75 percent of products are
co-branded with the local brand and
the ASSA ABLOY master brand.

75 %

ASSA ABLOY’s brand strategy

The aSSa abloy
master brand

Examples of product brands

Well-known product brands
benefit from the large
installed base and are adapted
to comply with local regula-
tions and safety standards.
The product brands are com-
bined with the ASSA ABLOY
master brand

Global brands with
a unique market
position

Examples of
non-endorsed
product brands

Exploiting the strength of the brand portfolio
and the sales force
ASSA ABLOY has grown as a result of its many acquisi-
tions and today the brand portfolio consists of leading
brands. In order to exploit this valuable brand asset while
benefiting from the Group’s size, ASSA ABLOY’s logo-
type is combined with the individual product brands.
The latter are well known and rooted in local regulations
and security standards. The Group thus capitalizes on
its large global installed base, while increasing the vis-
ibility of the ASSA ABLOY master brand, which unites the
Group’s sales departments and represents competence
in total door opening solutions. Around 75 percent of
Group sales are co-branded with the master brand and
local brands.

The ASSA ABLOY master brand is complemented by

dential market, Mul-T-Lock for locksmiths, and ABLOY in
high-security locks. The Group also has non-endorsed
product brands, such as Entrematic, Flexiforce and Hel-
ton. These brands represent leading expertise in spe-
cialty products and service, with a unique market posi-
tioning that is important to exploit.

In order to compete effectively on a global market,
the sales force operates as an integrated organization
and represents the ASSA ABLOY master brand. They cre-
ate solutions for the customer using various products
manufactured under established local brands. Conse-
quently, customers can be offered total door opening
solutions, while recognizing well established and known
local brands.

global brands, which are all leaders in their respective
market segments: HID in access control, secure card
issuance and identification technology, Yale in the resi-

A dedicated organization is planned to be put in place
in Luxembourg in order to accelerate the building of the
ASSA ABLOY Master Brand.

aSSa abloy annual rePorT 2013

MarKeT PreSenCe 1919

Market presence

Emerging trends in the security market

Demand for electromechanical door opening solutions is increasing rapidly worldwide and
the growth rate is higher than for traditional mechanical solutions. In many emerging
markets demand is “leaping” over mechanical solutions, with users moving straight from
the simple mechanical locks of rural areas to electromechanical locks. ASSA ABLOY is the
global leader in electromechanical solutions, entrance automation and security doors
thanks to investments in product development and complementary acquisitions.

EMERGING TRENDS: ELECTROMEChANICAL, SECuRITY DOORS AND ENTRANCE AuTOMATION

 Mechanical locks, lock systems and fittings
 Security doors and hardware
 Electromechanical locks
 Entrance automation

SEK 3.5 billion

1994

14%

20%

SEK
14
billion

66%

2000

18%

24%

SEK 48 billion

33%

25%

2013

Growing market segments
Electromechanical products
The increased demand for electromechanical prod-
ucts is a clear trend. Increased technical standardiza-
tion is driving integration of various components in the
security solution. ASSA ABLOY’s products aim at open
standards to facilitate integration with the customer’s
other security and administrative systems. The Group’s
strength in specific technologies is creating interesting
new growth areas, such as Bluetooth and NFC, which
enable hotel locks to be opened with a cell phone.

Security doors
Security doors are a relatively new segment for
ASSA ABLOY, which has grown rapidly through acquisi-
tions into a global leader. Demand is growing rapidly,
driven by stricter regulations and requirements and
increased security needs to protect lives, goods and

equipment, which is concentrated in larger and more
sophisticated facilities. The offering is often combined to
provide entrance automation solutions. ASSA ABLOY has
a complete global range of products and service for most
environments with exceptional security requirements.

Entrance automation
Entrance automation is a fast-growing market in which
ASSA ABLOY has gained global market leadership
through acquisitions, innovation and organic growth.
The total market is estimated at EUR 20 billion with a
growth rate above GDP and is still very fragmented. The
largest potential is in retail, transportation, logistics and
manufacturing in the wake of increased globalization.
ASSA ABLOY has a unique offering of total automatic
door opening solutions and a comprehensive service
concept.

2020

MarKeT PreSenCe

aSSa abloy annual rePorT 2013

harvard Business
School’s Tata hall
Reflects Technology
and Sustainability

Customer: Demand for Harvard Business School executive programs continues to rise and the construction of Tata Hall, a new facility named for alumnus

Ratan N. Tata, Chairman of the Tata Group, which enriches the learning experience of executive students and also reflects its state-of-the-art
practices in the areas of technology and sustainability, helps Harvard meet its executive education program demands.

Challenge: Harvard was challenged to design and construct a sustainable, technology-rich facility that would house roughly 180 bedrooms, two-tiered
classrooms, living group rooms and informal gathering spaces, in its seven story facility. This facility needed to provide functional security for
new executive program attendees each week while also contributing to its sustainability goals.

Solution:

ASSA ABLOY collaborated with William Rawn and Associates (architect) and Harvard to identify the best solutions to meet the everyday sus-
tainability needs and the access control required for various groups of students monthly. The arc-shaped, glass and brick building contains
CECO sustainable openings with Sargent decorative hardware, Pemko thresholds and weatherstripping meeting its need for Sound Transmis-
sion Control (STC) on classrooms and large meeting rooms. Integrated Wiegand Harmony locks from Sargent provide the card access control
on bedrooms and are part of a complete door opening solution with Graham wood doors. Harvard business school also uses HID Global iCLASS
access control cards and readers.

aSSa abloy annual rePorT 2013

MarKeT PreSenCe 2121

Product leadership

+ The most innovative supplier
of total door opening solutions

+ Products launched in the past

three years exceeded 27 percent

of total sales

Product leadership is achieved through innovation
and continuous product development to
enhance customer value and reduce product
costs. Customer benefits are developed in close
cooperation with end-users in a constant process
with many small steps. The main objective is to
meet or exceed customer expectations.

+ Electromechanical products and entrance

automation have increased from 24 percent
to 49 percent of sales in 10 years

+ Clear leadership in secure identity solutions

and entrance automation

Product leadership

High development rate accele
rates share of new products

A constant flow of new, innovative and sustainable products to the market is the single
most important driver for the Group’s target of 5 percent organic growth. Successful
product development is therefore vital for the Group’s competitiveness and future. Since
2005, ASSA ABLOY has increased R&D investment by 130 percent. The share of products
launched in the past three years has accelerated from 16 percent in 2010 to more than
27 percent of Group sales in 2013.

Product leadership

ASSA ABLOY’s vision is to be the most innovative supplier of total door opening solutions.
The Group is well established as the global product leader. R&D investment has increased
substantially in the past five years, reaching a new record level in 2013. The groupwide,
structured innovation process was further developed towards the target of doubling the
innovation rate.

The focus on product leadership has been very consist
ent. The number of product development engineers
has increased by more than 70 percent to nearly 14,000
in eight years, many with an electronics focus. Sales of
products launched in the past three years have increased
to more than 27 percent, exceeding the Group’s target
of 25 percent. This is a wellconsidered level in view of
the 10 to 15year product life cycle. During the year the
U.S. business magazine Forbes ranked ASSA ABLOY as
one of the world’s 100 most innovative companies.

Future security solutions
ASSA ABLOY has the world’s largest installed base of
locks and lock systems, and its products are well adapted
to comply with local and regional standards. The Group
builds on this installed lock base to develop tomorrow’s
solutions. A strong driver is the robust demand for elec
tromechanical solutions. Traditional mechanical iden
tification, such as metal keys, is being supplemented or
replaced by electronic codes.

Mechanical products continue to increase, but elec
tromechanical products are growing considerably faster.
Electromechanical products including entrance auto
mation have increased from 24 to 49 percent of Group

sales in 10 years. An increased share of electromechani
cal products also means an increase in the sales value
per door, as well as in the recurring revenue from service
and upgrades. The share of installed doors in the mar
ket fitted with some form of electromechanical solution
is estimated at 3 to 5 percent. This share may well reach
20 percent or more in the future, representing a very
large potential for upgrades and new sales of these door
opening solutions.

Another strong driver is the demand for sustainable
solutions, not least driven by increasing demand for Envi
ronmental Product Declarations (EPD). Sustainability
is integrated into the Group’s development processes
from the concept stage to recycling of wornout prod
ucts. Specifications for the development of new prod
ucts and customer solutions may be based on life cycle
costs, a reduction in energy consumption in buildings
and other climate impact, as well as concrete savings in
materials consumption, packaging and transport solu
tions. The Group has a forum for sustainability issues in
future products, which collects and passes on expertise
in this field.

Internal process development is intensive to achieve
the targets of halving the development time and increas
ing the share of new products. The Group has 80 devel
opment units whose employees regularly undergo spe
cialized training programs and participate in projects,
which aim to increase knowledge sharing, networking
and buildup of knowledge banks to accelerate devel
opment processes. The introduction of Lean Innovation
and other efficiency measures shows that development
time can be halved, while results are improved. With
this new approach, the Group has been able to carry out
continuous parallel technology development in many
projects in various locations.

assa aBloY annual rePort 2013

High-performance doors
from Entrance Systems.

2424

Product leadershiP

Technology development

Mechanical products
The basic technical solution is simple: a lockcase in a
wall or a door contains a bolt, which is advanced or
retracted by a key. The pin-tumbler lock was invented
by Linus Yale. It consists of an outer casing and a plug
with drilled channels in which spring-loaded pins are
lifted to the right height with the correct key that
opens the lock. The wafer-tumbler lock contains cir-
cular wafers with holes for the key. The correct key
turns the wafers to the right position and the lock can
be opened or closed in combined action with a side
bar. Lever tumbler locks have a number of locking
levers built into the lockcase. The correct key lifts the
levers and frees the bolt to open or close.

Electromechanical products
Demand for electromechanical products is increas-
ing every year, while the demands on the lock and
evacuation functions are constantly rising. Safety
and security are combined with convenience to
suit different environments. Functionality is differ-
ent at different times of day and on different days
of the week, requiring digital control and electro-
mechanical function. Access control and identity
management in real time place new demands on
both identity documents and lock and evacuation
products. Today a host of new technologies are used
that enable smart cards, tags or cell phones to iden-
tify and authenticate the person seeking access.
Biometric solutions that scan fingerprints, recognize
faces or scan the iris are also on the rise and require
electromechanics to function.

Entrance automation
Entrance automation is a fast-growing business within
ASSA ABLOY. The technology is usually described as
automatic as it is based on sensors, electronics and elec-
tric motors that open and close doors without direct
user involvement. Applications include entrances to

institutions, organizations and companies, which are
used by many people daily. The technology has devel-
oped into central control and monitoring systems for
whole building complexes for enhanced security, con-
venience and a better environment.

ChANGE IN PRODuCT MIx

2000
SeK 14 billion

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

2013
SeK 48 billion

Mechanical products, 33%
Entrance automation, 25%
Electromechanical products, 24%
Security doors, 18%

Since 2000, electro-
mechanical products
including entrance auto-
mation have increased
from 20 to 49 percent
of Group sales.

aSSa abloy annual rePorT 2013

ProDuCT leaDerShiP 2525

Product leadership

Rapid and innovative
product development
process

The innovation strategy aims to create
cost and functional benefits for the
customer through constant small steps.
All new projects are driven by customer
needs. The Group-wide innovation pro-
cess is based on ASSA ABLOY’s global
presence and strengthens local opera-
tions. The strategy has three objectives:
new products should account for at
least 25 percent of sales, new products
should contribute to higher margins,
and innovation efficiency should be
doubled through a combination of
more efficient processes and higher
product value.

Management

ProDuCT ManaGeMenT

PRE PRODuCT INNOVATION (PPI)

NEW PRODuCT INNOVATION (NPI)

CuSToMer neeDS

Organization and Knowledge

INNOVATION CuLTuRE AND PRINCIPLES

Product development

An innovation process driven by enhanced customer value, sustainability and lower
product costs forms the basis for ASSA ABLOY’s product leadership. Innovation often
takes place in close cooperation with end-users and distributors.

Customers are increasingly demanding more advanced
lock and door products. Customer needs are changing
rapidly with regard to functional integration, design,
compliance with regulations and standards in other
countries, openness to other systems, and simplicity in
installation, operation and maintenance. A strong driver
is the accelerating demand for electromechanical door
opening solutions, which are growing considerably faster
than traditional mechanical products.

In these circumstances, ASSA ABLOY is constantly
developing its own innovation process, which is based
on three common foundations.
• A Group-wide organization for innovation with com-
mon processes and tools for knowledge flow, plan-
ning, resource management and development in
close cooperation with customers at over 80 different
product development centers, to increase the flow of
new products.

• Collaboration across the Group for better resource
utilization through group-wide development and
product platforms. These are becoming increasingly
important for cost-efficient product development
and high flexibility in adapting to local markets and
rapid technological development.

• Continued development of competence in electro-

mechanics to further enhance product leadership in
the fast-growing segment of electromechanical door
opening solutions using new wireless technologies.
Today only 3–5 percent of all doors have some form of
electromechanical solution.

Customer needs are integrated into the Group’s innova-
tion processes as a result of systematic collaboration in
many dimensions. The Group conducts ongoing studies
of various customer segments, giving rise to new prod-
uct concepts. Future Lab is an internet forum in which
ASSA ABLOY can ask customers questions about require-
ments, trends and product initiatives.

Substantial strengthening of entrance
automation offering
ASSA ABLOY is a global leader in entrance automa-
tion through its Entrance Systems division. The divi-
sion’s annual sales have risen from SEK 3 billion to nearly
SEK 12 billion in five years. As a result, the Group has
gained clear product and market leadership in entrance
automation.

INVESTMENTS IN RESEARCh AND DEVELOPMENT¹

SEK M

1,400

1,200

1,000

800

600

400

200

12 13

made for 2009.

¹ Reclassification has been

2626

ProDuCT leaDerShiP

aSSa abloy annual rePorT 2013

ProDuCT ManaGeMenT

CuSToMer neeDS

Organization and Knowledge

CONTINuOuS PRODuCT INNOVATION (CPI)

värDeSKaPanDe

a constant cycle of renewal
Product leadership is a strategic responsibility for the
division managements. The number of product man-
agers has increased significantly in recent years. The
product board has a central role in coordinating all par-
ties involved, product development, marketing, sourc-
ing, production and quality, as well as securing cus-
tomer needs and technological advances. Considerable
resources are invested in understanding customer needs
and requirements and integrating them into the initial
development stage with requirement specifications and
studies of new concepts. This is followed by a develop-
ment process of product specifications, product and
process design, leading to production planning, mar-
keting and launch. The product’s life among customers
is documented and followed up with suggestions and
ideas for further development, making ASSA ABLOY’s
innovation process into a constant cycle of renewal and
development.

Entrance automation uses sensors and electronics
that ensure a convenient and energy-saving door envi-
ronment in, for example, stores, hotels and hospitals.
It is increasingly important to be able to offer a total
entrance automation solution comprising automatic
door opening solutions, industrial doors and high-per-
formance doors. The service offering can therefore be
expanded to include all automatic entrances for pedes-
trian traffic at the front of a commercial building and for
goods deliveries at the rear of the building. A number of
acquisitions in recent years have strengthened the prod-
uct range with solutions for all entrances and doors in
which central control systems can minimize draughts
and energy losses in buildings.

rfiD enhances security and is more user-friendly
Since the acquisition of HID Global 13 years ago,
ASSA ABLOY has had clear market and product leader-
ship in secure identity solutions. Products and services
include keys, keycards and other identity carriers that
are encoded, giving access to doors and computers. The
codes and the electronic keys are managed securely and
distributed encrypted.

In North America, HID Global products are estimated
to account for a high proportion of the installed base in
access control. The position is also strong on other mar-
kets. Acquisitions during the year have further strength-
ened ASSA ABLOY’s position in this area.

Radio frequency identification (RFID) and wireless
communication allow the Group to create new secu-
rity applications, while offering services that are user-
friendly. RFID technology is also the basis for the rapid
expansion of logical access control, in which computers

are provided with ASSA ABLOY’s software that prevents
start-up if the user fails to present the right access card.
This technology has allowed HID Global to become

the global leader in ePassport programs and national
programs for various types of ID cards and driving
licenses, including the very advanced US Green Card
(a permit allowing a foreign national to live and work
permanently in the USA). The product portfolio also
includes a range of very high capacity ID printers, Fargo.
The year 2012 saw the launch of a new model, which is
particularly suitable for major ID card programs in the
public sector, universities and large companies.

Wireless Aperio technology, which has been launched
globally, allows cost-effective connection of more doors
in an existing access control system. Battery-powered
electromechanical cylinders and locks communicate
wirelessly with the existing network, avoiding expensive
installation costs, new keycards and new access control
systems. Today many leading manufacturers of access
control systems have integrated Aperio technology into
their systems

Cell phone replaces key
VingCard uses RFID and the wireless technology offered
by mobile telephony. The hotel guest can use their cell
phone to book and pay online. The cell phone serves as
a code carrier, and guests can also use their cell phone
to unlock the door of their hotel room by holding the
phone close to the lock. More than half a million hotel
rooms out of ASSA ABLOY Hospitality’s installed base of
over 7 million rooms have been recently fitted with or
upgraded to RFID solutions, and interest in the technol-
ogy continues to grow.

aSSa abloy annual rePorT 2013

ProDuCT leaDerShiP 2727

Product leadership

The year 2012 saw the launch of Seos, the world’s first
commercial ecosystem for issuing and managing digital
keys on cell phones. Seos provides the customer with a
complete system in which cell phones replace ordinary
keys and keycards for opening doors in homes, work-
places, hotels, offices, hospitals, universities, and indus-
trial and other commercial buildings. Access control can
be centrally managed and security staff can, for example,
send temporary digital keys to visitors and service staff.
Seos digital keys can be protected by a PIN.

Total door opening solutions are aSSa abloy’s
strength
ASSA ABLOY’s strength is the variety of traditional and
new products that can be combined to create a large
number of different door environments. It has products

for different climates, different types of buildings, and
plants with varied security and safety requirements. By
combining hundreds of thousands of different compo-
nents to meet the needs of consumers, architects and
installers, the Group creates products with the right
quality, design and price, which are suitable for both new
and existing buildings.

In recent years a number of products have been
launched with the aim of reducing energy consump-
tion in buildings. By using doors with improved insula-
tion together with new sealing products, loss of heat
to a cooler environment can be reduced, while cool-
ing energy consumption in hot climates can be cut. In
addition, the use of recycled materials in doors further
reduces the environmental impact.

Magnetic lock

Automatic
door closer

Electronic strike plate

Electronic lockcase

Access control

Handle

Electromechanical
cylinders

Emergency
exit device

Electronic hardware

2828

ProDuCT leaDerShiP

aSSa abloy annual rePorT 2013

new innovations
drive growth
ASSA ABLOY is leading
development in fast-
growing electromechan-
ical and entrance auto-
mation technologies for
sustainable door open-
ing solutions. New prod-
ucts and solutions that
create cost and quality
benefits for the cus-
tomer drive growth.

GATEMAN A100-Fh is the first push-pull digital door
lock (DDL) developed by iRevo for the residential
market. The push-pull bar is the widest in the domes-
tic DDL market, users can operate it with a light
touch; even with one finger. And the curved keypad
makes entering a PIN-code or card touching simple.
Most of all, the exclusive push-pull mortise helps
users make a swift exit in emergencies through its
anti-panic feature.

hID Global’s award-winning iCLASS SE® Platform sets
the standard for adaptable, interoperable and secure
access control. The platform’s readers, credentials and
encoding tools simplify how identities are created, used
and managed, across a broad range of applications. The
platform is powered by Seos, providing compatibility
with microprocessor-based credentials including cards,
smartphones and other mobile devices.

The KS100 server cabinet lock with Aperio® technology
brings real-time access control in a single-card system to
individual server cabinet doors. It uses local wireless
communication between the lock and Aperio hub to
connect to an access control system, greatly improving
the monitoring and security level of each server cabinet.
This convenient system uses existing ID badges so there
are no keys to control or replace and no codes to secure
or remember.

Lockwood’s Elevation is an electric window control
system designed to open and close the window with
the touch of a button. The system is easily controlled
via a touch screen keypad or by being integrated with
building control systems.
The Lockwood Elevation touch screen display is an
elegant touch pad designed to control up to 30 Eleva-
tion window actuators. The touch pad can be pro-
grammed to open windows individually or groups
of windows programmed from a pre-defined list.

The ASSA ABLOY Safety Door Closer is the world’s first
door closer with an integrated escape route locking
system. It offers a simple solution for retrofitting fire
doors and smoke protection doors with an integrated
escape route locking system.

The new Crawford 1042 overhead sectional door, devel-
oped for warehouses, logistics centres, industries and all
kinds of commercial premises. Built on common com-
ponent platforms in a modular way, it boasts a whole
range of improvements and innovations. It is robust,
flexible and efficiently sealed which means it will keep
its good looks and provide energy efficiency benefits
throughout its life.

aSSa abloy annual rePorT 2013

ProDuCT leaDerShiP 2929

Cost-efficiency

+ Constant major cost reductions
a strategic priority

+ Production restructuring program
providing significant results

ASSA ABLOY aims to radically reduce the cost base
through cost-efficiency and sustainable operations.
This is achieved by applying Lean methods in
manufacturing, professional sourcing and
outsourcing. Production combines final assembly
close to the customer with the transfer of standard
production to low-cost countries.

+ number of suppliers reduced
by 26 percent in five years

+ Price management for price leadership

Cost-efficiency

New restructuring program
for continued streamlining

ASSA ABLOY is striving to radically reduce the breakeven point through restructuring
programs, cost-efficiency and improved processes, to achieve the operating margin target
of 16–17 percent. A new three-year program for the production structure was launched
in 2013. It follows a series of programs that are estimated to have reduced costs by
around SEK 2 billion annually since 2006. Lean programs, outsourcing, automated flows
and active price management are further increasing cost-efficiency, which is a condition
for ASSA ABLOY being a price leader and contributing to sustainable development.

Production structure

ASSA ABLOY is working continuously to streamline and simplify the production
structure. A new restructuring program was launched in 2013, which is motivated by
26 new acquisitions since the last restructuring program began. Around 30 units are
to be closed, including 10 factories. The cost of the program is SEK 1 billion with a
payback period of just over three years.

The restructuring programs reflect an active global
acquisition strategy. ASSA ABLOY is moving from manu-
facturing everything itself to concentrating efficient
assembly plants in high-cost countries, transferring pro-
duction to low-cost countries, and sourcing more non-
critical components.

The restructuring programs have been very success-
ful, resulting in considerable savings and increased effi-
ciency in the production units. The five programs since
2006 have led to the closure of 56 production units and
another 12 units are being closed down. 68 factories
have been converted into assembly plants, with another
seven left to convert. Meanwhile, 29 office units have
been closed. The majority of the remaining produc-
tion units in high-cost countries have switched from
full production to mainly final assembly and customiza-

tion. In connection with this restructuring, around 7,500
employees will have left the Group.

As a result, standard production has been increasingly

transferred to internal and external production units in
low-cost countries. Today 53 percent of products are man-
ufactured in low-cost countries, compared with 44 per-
cent five years ago. This is also reflected in the distribution
of the Group’s staff, with 47 percent of total employees
now located in low-cost countries, compared with 38 per-
cent five years ago. Production processes and sustainable
development have been improved through investment in
modern, efficient production equipment, while local pres-
ence on end-customer markets in both high- and low-cost
countries has been strengthened to ensure fast delivery
and efficient assembly of customized products.

Standard production has been increasingly transferred to internal and external production 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.

3232

CoST-effiCienCy

aSSa abloy annual rePorT 2013

Professional sourcing

A sharp increase in the sourcing of raw materials and more standardized products
is an important element in production rationalization. The ambition is to have an
increasingly limited number of high-quality suppliers, mainly in low-cost countries.
These become strategic partners based on delivery contracts, category management
and development, quality and sustainability guidelines.

Increased outsourcing to fewer qualified suppliers has
resulted in material costs rising from 32 to 35 percent
of sales in five years. This makes totally new demands
on the purchasing organization, which has moved from
simple call off to professional sourcing. Today the divi-
sions have specialist purchasing managers for each

component category. Central purchasing centers in the
Group efficiently manage different component catego-
ries. These activities have resulted in a 26 percent reduc-
tion in the number of suppliers over the past five years,
despite a significant increase in sales over the same
period as a result of organic and acquired growth.

NuMBER OF SuPPLIERS

ShARE OF TOTAL PuRChASES IN LOW-COST COuNTRIES

Number

12,000

10,000

8,000

6,000

4,000

2,000

Reducing the number of suppliers is important for reducing costs and
improving quality. Active efforts have reduced the total number of sup-
pliers by 26 percent over the past five years.

The share of the Group’s total purchases of raw materials, components
and finished goods from low-cost countries has risen to 53 percent over
the past five years.

Cost-efficiency increases with a larger share of purchases from a smaller number of high-quality suppliers, based on delivery contracts and
development, quality and sustainability guidelines.

aSSa abloy annual rePorT 2013

CoST-effiCienCy 3333

Costefficiency

Process development

ASSA ABLOY applies a number of tested methods to increase costefficiency. Lean methods
include all processes and result in increased customer value using less resources at all
stages. Value Analysis and Value Engineering (VA/VE) involve indepth analyses of products
and production processes to avoid materials waste. Seamless Flow optimizes the Group’s
flows through IT standardization and integration of information dissemination.

Today all ASSA ABLOY’s major workplaces have well
functioning Lean programs and organization for both
production and administration. Implementation is
ongoing. The results show more efficient production
flows, better material cost control, improved decision
making procedures, shorter development times, and
increased collaboration with the marketing and sales
organization. In 2013 the Group implemented more
Lean projects than in any previous year.

Value Analysis (VA) is a structured process for opti
mizing cost and customer value in existing products. The
same applies to Value Engineering (VE), which is part of
the product development process. VA/VE is carried out
by focused, crossfunctional teams. Cost savings may
amount to 20–40 percent for individual products.

In 2013, 181 studies were conducted and a total of
more than 3,500 employees have received training in
these methods in recent years. Since the methodology
was introduced in 2007, the Group has made savings of
more than SEK 780 M through VA/VE.

ASSA ABLOY aims to maximize resources for inno
vation, product development, production and sales.
Administrative support functions account for 30 percent
of all staff and more than 40 percent of the total person
nel cost. The most important activity for streamlining

these functions across the business is automated and
standardized flows, known as Seamless Flow.

The process of consolidating the number of IT systems

into an integrated and optimized IT infrastructure is
fundamental. The most important activities in IT opti
mization include a reduction in the number of ERP sys
tems, data centers and networks. Ecommerce is being
developed to facilitate and streamline contact with the
Group’s customers and suppliers. Product Data Manage
ment (PDM) is being introduced to describe the Group’s
products digitally.

The implementation of Seamless Flow and the coor

dination and optimization of the IT infrastructure will
also enable more efficient coordination of support
functions.

During the year ASSA ABLOY intensified the work on

‘shouldcost’ estimates for purchases i.e. knowledge
about what the services and products purchased by the
Group ‘should cost’. This methodology is likely to result
in significant potential for cost reductions. ‘Should cost’
involves an analysis of additional evidence on value chain
structure and content, key factors driving costs, insight
into price formation in the market and at suppliers. Since
the start the Group has educated about 200 employees
in this methodology.

Energyefficient healing environment

Customer: Castle Rock Adventist Hospital is part of the Centura Health system. A full service, 50 bed hospital located in a suburb of Denver called Castle
Rock, Colorado. The services offered are Level III Trauma Center, emergency services, comprehensive imaging center, ICU, Birthplace and a full
complement of surgical services. The ER and imaging center have been open since September, 2011 while the hospital opened on August 1,
2013.

Challenge:

Solution:

Patient healing, regulatory requirements, building aesthetics and amenities, costefficiency, and a stafffriendly workplace are among many
considerations addressed by today’s healthcare organizations as they strive to create healing environments using evidencebased design.

ASSA ABLOY Door Security Solutions met the hospital’s needs with a product portfolio for this facility’s approximately 750 architectural
door openings. Aesthetically pleasing hardware including electromechanical access control is delivered by Sargent H1 Harmony Integrated
Wiegand locks with integral door position switch, card reader, and requesttoexit sensor in a single device. Sargent 80 Series exit devices
secure egress doors, while Sargent 8200 Series mortise locks secure all other openings, including patient room doors equipped with Sargent
push/pull trim and MicroShield antimicrobial finish. Graham wood doors and Curries metal doors and frames are used throughout, along with
McKinney hinges and Rixson pivots and floor closers. Exterior doors keep the cold Rocky Mountain weather at bay with Curries TrioE energy
efficient openings. Employee utility room access is facilitated by Norton SafeZone door operators. A Medeco X4 high security key system puts
the finishing touch on a facility utilizing total door opening solutions from ASSA ABLOY.

3434

cost-eFFiciencY

assa aBloY annual rePort 2013

Meeting high security
requirements in Munich

Customer: Stadtwerke München GmbH (SWM) is the largest municipal company in

Germany. With over 7,500 employees, SWM supplies the regional capital of
Munich and the surrounding area with public services such as electricity, gas,
water, district heating and cooling.
Via its subsidiaries SWM also provides telecommunications services and
operates the public passenger transport network in Munich.

Challenge: SWM is responsible for several thousand properties. These include buildings,

Solution:

shafts and transformer stations, some of which are over 100 years old. Its
re sponsibility also covers installations using new and old locking systems,
different organizational setups including employee shift work and oncall
services, the widely different environmental conditions in district heating
systems, damp and high dust exposure in the underground spaces and tempera
ture deviations in power stations.
Due to the requirement by the Federal Ministry of the Interior for the protec
tion of critical infrastructures, a standardized and sustainable locking and access
solution was urgently needed.

The VERSO CLIQ system from ASSA ABLOY met the system requirements and
also offered the essential software enhancements to meet SWM’s demands.
The tailormade VERSO CLIQ became a special solution offering a quantum leap
forward in terms of functionality, security and application.

Its benefits include onkey programmable access rights, authorization of up to
20,000 locking cylinders per key, the possibility of up to 1,500 freely programma
ble groups per key, multiclient capability with decentralized allocation of rights
and new procedures for a clear and comprehensible allocation of access rights.
As of November 2013, 14,000 cylinders, 3,000 keys and 50 authorization termi
nals had been installed. The total project comprises 40,000–50,000 cylinders.

assa aBloY annual rePort 2013

cost-eFFiciencY 3535

Growth and
profitability

+ Sales growth from SeK 3 billion to

SeK 48 billion in 19 years

+ Total sales growth of
1,300 percent since 1994

ASSA ABLOY’s strategic focus on market
presence, product leadership and cost-
efficiency has been very successful. The
Group’s growth and earnings trend have
created significant value for customers,
shareholders and employees.

+ operating income (EBIT), excluding items a affecting
comparability, has increased by over 5,000 percent

from seK 156 M to seK 7,923 M since 1994

+ earnings per share has increased by 7,200 percent

to SEK 14.84 since 1994

Growth and profitability

Global leadership with
value-creating strategies

Value-creating strategies for all the Group’s stakeholders have enabled ASSA
ABLOY to become by far the largest global supplier of door opening solutions
since its formation in 1994. Organic growth and acquisitions, market-leading
techno logical development and cost-efficiency have transformed the company
from a traditional, regional lock company into a modern, multinational security
company in innovative door opening solutions.

Demand for safety and security is constantly increasing
worldwide. Today more than one in ten lock purchasers
worldwide chooses a lock from ASSA ABLOY, which has
the world’s largest installed base of locks and lock systems.
Since ASSA ABLOY’s formation in 1994, Group sales

have risen from SEK 3 billion to SEK 48 billion and the
number of employees from 4,700 to around 43,000.
Operating income (EBIT) excluding items affecting com-
parability has increased from SEK 156 M in 1994 to SEK
7,923 M in 2013, an increase of over 5,000 percent.

ASSA ABLOY was founded when Securitas (Sweden)
and Metra (Finland) merged their north European lock
businesses. The first growth phase began with a strategy
of organic and acquired growth and rapid international
expansion.

Product leadership
ASSA ABLOY has become the industry’s global technol-
ogy leader as a result of its product leadership strategy
combined with acquisitions. The offering has expanded to
include security doors, entrance automation and secure
identity solutions. The Group is successively increas-
ing R&D investment. New technology areas and innova-
tive products are the most important sources of organic
growth and raise the entry barriers for competitors.

Investments in product development have increased

by over 10 percent per year in recent years, and prod-
ucts launched in the past three years account for more
than a quarter of sales. Electromechanical products have
increased to 49 percent of Group sales, and the growth
rate remains high.

Growth and market leadership
The second growth phase took off in 2005, with a priority
to expand in emerging markets in Asia, eastern Europe,
the Middle East, Africa and South America. Value creation
was strengthened by a strategic focus on product leader-
ship to accelerate organic growth and cost-efficiency to
promote resource efficiency in all dimensions and sus-
tainable development.

Today global market leadership involves company
operations in more than 70 countries and worldwide
sales. The Group’s leading brands are a significant asset.
Emerging markets are strategic priorities for future
growth. Sales on these markets are growing rapidly and
account for 25 percent of total Group sales, a fourfold
increase in eight years. China accounts for around 10
percent of total sales, more than a tenfold increase since
2006.

Cost-efficiency
The third strategic pillar is reducing resource consump-
tion, whether capital, human or physical resources, and
thereby working for increased value creation and sus-
tainable development. The strategies for cost-efficiency
in all dimensions drive a number of different group-wide
programs to streamline capital management, products,
the production structure, cost reductions in produc-
tion processes, sourcing and administration, as well as
activities to reduce environmental impact. These pro-
grams are prerequisites for good profitability and stable
finances. As a result, ASSA ABLOY contributes to long-
term sustainable operations, which create value for cus-
tomers, employees and shareholders, combined with
social sustainable development.

Strategy

Market presence

Product leadership

Cost-efficiency

Target

Growth and profitability

3838

GroWTh anD ProfiTabiliTy

aSSa abloy annual rePorT 2013

Since 2006, ASSA ABLOY has acquired 110 companies, fulfilling its ambition of 5 percent
acquired growth per year. In 2013, ASSA ABLOY made 12 acquisitions, which added SEK
4,200 M in annual sales, a 9 percent increase. The Group has a focused acquisition strategy
in three areas: Increasing geographical market presence • Complementing the product
range • Adding new technologies in key areas

ACQuISITION STRATEGY
AND PROCESS

STRATEGY

EVALuATION

TRANSACTION

INTEGRATION

ASSA ABLOY’S DEVELOPMENT AND ACQuISITIONS 2009–2013

2009 – Strong results despite
weak market

2010 – acquisitions strengthen
customer offering in asia

2011 – Global leader
in entrance automation

2012 – acquisitions strengthen
entrance Systems range

2013 – Continued expansion
in uSa

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).

Acquisition of Pan Pan, China’s
largest manufacturer of high-secu-
rity steel doors, King Door Closers,
South Korea’s leading manufac-
turer 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).

Acquisition of Crawford Entrance
Solutions and FlexiForce, which
strengthen the customer offering
in industrial doors, docking solu-
tions and garage doors.
Other acquisitions: Swesafe (Swe-
den), Portafeu (France), Metalind
(Croatia), Electronic Security
Devices (USA), and Angel Metal
(South Korea).

Acquisition of Ameristar (USA), a
manufacturer of perimeter protec-
tion and gates for industrial and
high-security purposes, and the
fire and security door manufac-
turer Mercor SA (Poland).
ASSA ABLOY also signs an agree-
ment to acquire Amarr, the third
largest player in the North Ameri-
can sectional door market.
Other acquisitions: Xinmao and
Huasheng (China).

The acquisition of Albany Door
Systems, a global leader in high-
performance doors, is completed.
ASSA ABLOY also acquires 4Front
(USA), a leader in docking systems,
Securistyle Group Holdings Lim-
ited and Traka (UK), Frameworks
Manufacturing (USA), and Helton
(Canada), which manufactures
overhead door hardware. In China,
the Group acquires the hardware
manufacturer Shandong
Guoqiang.
Other acquisitions: Dynaco (Bel-
gium) and Shantou Longhu Sanhe
Metal Holdings (China).

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

SALES AND OPERATING INCOME (EBIT)

Sales, SEK M
Sales, SEK M
50,000
50000

 Sales Operating income (EBIT)

EBIT, SEK M
EBIT, SEK M
8,000

Sales
Operating Income (EBIT)

40,000
40000

30,000
30000

20,000
20000

10,000
10000

0
0

96
961

97
971

98
981

99
991

00
001

01
011

02
021

03
031

04
04

05
05

06
062

07
07

10
08
09
082, 3 092, 3 10

11
112

12
12

6,400

4,800

3,200

1,600

0
13
132

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

5,000 % Operating income (EBIT) has increased

by over 5,000 percent in 19 years.

GroWTh anD ProfiTabiliTy 3939

aSSa abloy annual rePorT 2013

ASSA ABLOY’s
divisions

ASSA ABLOY is divided
into three regional and
two global divisions.

americas

Regional divisions

The regional divisions manufacture and
sell mechanical and electromechanical
locks, digital door locks, cylinders and
security doors adapted to the local
market’s standards and security
requirements.

Share of sales

Share of operating income

21%

26 %

Read about the division’s operations and performance on pages 44–45

Global divisions

The global divisions manufacture and sell
electronic access control, identification
products and entrance automation on
the global market.

Global Technologies

Share of sales

Share of operating income

13 %

14%

Read about the division’s operations and performance on pages 48–50

aSSa abloy’S DiviSionS

aSSa abloy annual rePorT 2013

eMea

asia Pacific

Share of sales

Share of operating income

Share of sales

Share of operating income

27%

14 %

12%

Read about the division’s operations and performance on pages 42–43

Read about the division’s operations and performance on pages 46–47

entrance Systems

Share of sales

Share of operating income

25 %

21%

Read about the division’s operations and performance on pages 52–53

aSSa abloy annual rePorT 2013

aSSa abloy’S DiviSionS 41

EMEA

Good results in a
challenging market

In western Europe, several years of weak demand showed signs of bottoming out during
the second half of the year. Demand remained strong in emerging markets in eastern
Europe, the Middle East and Africa. The division continued its product development at
a high rate and products launched in the past three years now account for 30 percent
of sales. Investments in increased market presence and intensive work on rationalization
and efficiency programs contributed to a continued good result.

report on the year
• Sales: SEK 13,165 M (13,382) with –1 percent organic

growth.

• Operating income (EBIT) excluding restructuring

costs: SEK 2,197 M (2,279).

• Operating margin: 16.7 percent (17.0).

Market development
The mature markets in western Europe again showed a
varied picture, with strong growth in Scandinavia, stable
growth in Germany and signs of a recovery in the UK and
Italy. Continued recession reduced demand in France,
the Netherlands and Spain, but with some signs of bot-
toming out in the second half of the year. The share
of major projects showed a good increase. Marketing
investments in recent years in eastern Europe, the Mid-
dle East, Turkey and Africa have resulted in significant
sales increases and continued market share successes.
The share of sales to emerging markets is now 17 per-
cent. Demand for electromechanical products was par-
ticularly strong.

Market presence
EMEA’s market presence is based on a good knowledge
of local building and lock standards and long-term rela-
tionships with distributors. The division’s markets are
very diverse, with a major difference in product demand.
The aftermarket accounts for a significant proportion of
sales, providing stable demand. ASSA ABLOY has the lar-
gest installed lock base compared with its competitors.

During the year a significant increase was noted in the

share of large projects supplying advanced door open-
ing solutions in sectors such as offices, hospitals, schools

and universities. This was the result of the focus in recent
years on specification sales of total door opening solu-
tions with a high technological content. The division
now has 230 specification sales representatives. Con-
tacts with key partners, such as architects and security
experts, are continuously strengthened. During the year
more than 12,000 projects were specified, comprising
over 1.4 million doors. Sales capacity also increased due
to efforts to reallocate resources from administration
to sales through staff education and training. Today a
majority of the sales staff are engaged in direct sales.

Several large security projects were launched with

global and European telecoms operators and public
authorities. Deliveries also include software for elec-
tronic door opening solutions based on ASSA ABLOY
technology such as Aperio and Cliq Remote. The soft-
ware is customized for integration in customers’ IT
systems.

The sales organizations are coordinated under the
ASSA ABLOY master brand. Brand consolidation contin-
ued with some 10 ongoing projects. Market presence
with complete product programs is consequently even
clearer.

In Africa, sales rose during the year. The African con-
tinent is expected to have major growth potential, with
a high urbanization rate and increased living standard.
EMEA is positioning its presence in the 50 largest cities,
which are expected to account for 90 percent of Africa’s
GDP by 2015.

The division’s most important acquisition during the
year was the Polish company Mercor SA. The company is
a leading manufacturer of security and fire doors in east-
ern Europe, with a strong position in its domestic mar-

faCTS on eMea
offering: Mechanical and electromechanical locks, digital door
locks, security doors and hardware fittings.

Markets: EMEA is the leader in its product areas in Europe, the
Middle East and Africa. The commercial segment accounts for
around 60 percent of sales and the residential segment for 40
percent. EMEA comprises a large number of group companies

with a good knowledge of their local and in many respects
diverse markets. Products are sold primarily through a number
of distribution channels, but also directly to end-users.

brands: ABLOY, ASSA, ASSA ABLOY, IKON, Mul-T-Lock, TESA,
UNION, Vachette and Yale.

acquisitions 2013: Mercor SA (Poland).

4242

aSSa abloy’S DiviSionS

aSSa abloy annual rePorT 2013

kets of Poland, the Czech Republic and Slovakia. Mercor has annual sales
of around SEK 370 M with good profitability. Based in Gdansk, it has 550
employees at plants in Poland, the Czech Republic and Slovakia.

Product leadership
Efficient product development is the most important activity for creating
organic growth. Increased investments in recent years in innovation and
product development have yielded good results. The division increased
the share of products launched in the past three years to 30 percent of
total sales, which is more than a doubling in three years. Nearly 250 new
products are in the pipeline for the coming years. The strong product
development meets the sharply increasing demand for electromechanical
products. These increased their share of total sales from 24 percent to 26
percent during the year. The trend indicates a continuing strong increase in
electromechanical products in the coming years.

The division benefits greatly from the Group’s development of common

product platforms. Additional platforms were launched during the year,
facilitating significant quality improvements, fewer components and faster
production, which provides enhanced customer value at lower costs.

The division’s High Impact products (HIP) continued to be successful,
with high growth figures. Particular importance is placed on a high techni-
cal standard and modern design for these products. Marketing is coordi-
nated across the whole division with special competence teams that coop-
erate closely with local sales teams.

The success of the new door closer range under the ASSA ABLOY

brand continued, an example of a High Impact product launched in 2011.
Demand is also increasing sharply for the other five High Impact products:
Aperio, an electromechanical cylinder that can be wirelessly connected to
networks; Cliq Remote, an innovative electromechanical cylinder system;
Smartair, an access control system; DDL, residential digital door locks; and
Code Handle, a digital door and window handle.

Cost-efficiency
The division’s production structure has changed substantially over the
past few years, with consolidation of cylinder and lock production in two
large, efficient production units in the Czech Republic and Romania. Their
competitiveness strengthened further during the year as a result of a
major investment program in new machinery and automation. Productiv-
ity and flexibility will increase considerably, while costs and environmental
impact are reduced. These production plants are complemented by units
for final assembly and customization with a high service level and rapid
distribution, located close to customers in the major markets in western
Europe. The total number of production plants has halved since 2005.

Rationalization of the fragmented product range also continued, to
reduce complexity and to focus on higher-margin products. The number
of products has been reduced by around 30 percent since 2010 and will
continue to decline in the coming years.

Several important steps were taken in supply management dur-
ing the year. The share of purchases in low-cost countries exceeded the
short-term target of 40 percent and will continue to increase in the com-
ing years. Implementation of VA/VE methods continued to yield posi-
tive results. Product development aims for major cost savings through
a sustainable approach to materials consumption, logistics and packag-
ing. Sustainability initiatives were intensified through several program
activities across the whole division, especially the introduction of better
measuring methods. Every year all the regions suggest a number of differ-
ent sustainability projects with a strong economy profile in areas such as
energy, water, packaging, harmful materials and recycling. The response
was very positive during the year.

The number of specification sales representatives has increased sharply.

KEY FIGuRES

SeK M

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

2012

2013

13,382
1
2,279
17.0

9,217
5,846
22.6

2,241
10,260

13,165
–1
2,197
16.7

10,499
6,395
20.7

2,084
10,089

1 Excluding items affecting comparability of SEK 300 M in 2013.
2 Excluding restructuring payments.

SALES AND OPERATING INCOME

SEK M

14,000

12,000

10,000

8,000

6,000

SEK M

2,800

2,400

2,000

1,600

1,200

 Sales1

Operating income2

1 Reclassification has been
made for 2009.
2 Excluding items affecting
comparability in 2009, 2011
and 2013.

SALES BY PRODuCT GROuP

Mechanical locks, lock
systems and fittings, 60 %
Electromechanical and
electronic locks, 26 %
Security doors and
hardware , 14 %

aSSa abloy annual rePorT 2013

aSSa abloy’S DiviSionS 4343

Americas

Increased marketing initiatives
strengthen sales and earnings

The division’s sales showed strong growth during the year in mechanical and electro-
mechanical locks and cylinders, the residential sector in the uSA, and in South America.
Growth increased in the security door and high-security product segments, while it
declined slightly in Canada and Mexico. Investments in innovation and product develop-
ment resulted in a large offering of new products and solutions and a strengthened
market position. Continued rationalization and efficiency programs contributed to
an increase in operating income and an improvement in the operating margin.

report on the year
• Sales: SEK 10,121 M (9,671) with 6 percent organic

growth.

• Operating income (EBIT) excluding restructuring

costs: SEK 2,140 M (2,007).

• Operating margin: 21.1 percent (20.8).

Market development
The positive recovery in demand following the 2009–
2010 crisis continued for the third consecutive year
at an accelerated rate in the USA and in the residential
segment. The recession in the overall USA construction
market appears to have bottomed out during the year,
following a 39 percent decline from its peak in 2009.
The division’s sales decline was lower during the same
period, with a more rapid recovery rate than underlying
demand. The explanations are strong efforts in prod-
uct development, sales of new products with improved
performance at a higher price, as well as increased lev-
els of building renovation and upgrades in the market.
The trend towards more electromechanical solutions
was strong and the division received several impor-
tant orders for major projects with total door opening
solutions.

Sales growth in Central and South America continued
and market position was strengthened due to the launch
of a number of new products and solutions, as well as
establishment of new distribution centers.

Market presence
Investments in market presence have increased by 70
percent since 2008. The focus is on activities that drive
end-customer demand. In the USA, customer-facing
sales staff have doubled and now account for over 60
percent of marketing and sales staff in less than ten years.
The number of specifiers and specialist representatives
has increased sharply. They collaborate with the leading
architectural firms and provide training and the intro-
ductions to new products and solutions in their role as
the end-customer’s door opening solution expert. Addi-
tional training, including online and offline programs,
has contributed to growth.

The development of products, solutions and

improved cooperation with distribution, have enabled
the division to increase sales in the commercial con-
struction segment. This segment grew by over 10 per-
cent per year, while growth in the institutional segment
was limited by budget restrictions. Sales in the aftermar-
ket have grown by over 10 percent in recent years and
continued to increase during this year.

Expansion in Latin American markets is a priority.
Sales have increased by double digits annually. The divi-
sion has expanded its presence with two major regional
distribution centers, one in Peru and the other in a free-
trade zone in Colombia, resulting in faster deliveries to
the region.

ASSA ABLOY has the majority of the industry’s lead-
ing brands in North America. The main emphasis is on an
overall message that ASSA ABLOY is the leading provider
of total door opening solutions. This message is sup-
ported by the division’s six mobile exhibitions for educa-

faCTS on aMeriCaS
offering: Mechanical and electromechanical locks, digital door
locks, cylinders, door fittings, security doors, door frames, and
industrial high-security fencing and gates.

Markets: USA, Canada, Mexico, Central America and South
America. The majority of sales are in the USA and Canada where
ASSA ABLOY has an extensive sales organization and sells its
products through distributors.

Institutional and commercial customers are the largest cus-
tomer segments. The non-residential business accounts for 85
percent of sales, while the residential segment accounts for 15

percent of sales.
Sales in South America and Mexico take place mainly through
distributors, wholesalers and DIY stores. Sales in these markets
are more evenly distributed between the commercial and resi-
dential segments.

brands: Some of the leading brands are: Ceco, Corbin Russwin,
Curries, Emtek, Medeco, Phillips, SARGENT, La Fonte and
Ameristar.

acquisitions 2013: Ameristar (USA).

4444

aSSa abloy’S DiviSionS

aSSa abloy annual rePorT 2013

tion, health, aesthetics, access control, locksmith solutions and a general
exhibition, all of which present and demonstrate door opening solutions
in close proximity to customers.

An increasingly important growth initiative is the focus on sustain-
able solutions. Today green buildings account for a growing proportion
of all new non-residential construction in the USA. ASSA ABLOY has the
broadest offering and is one of the few in the industry able to supply cer-
tified door opening solutions that comply with the market’s constantly
developing regulations and standards for energy efficiency, sound control
and carbon dioxide emissions. Demand for this offering grew as demon-
strated by several large projects were implemented during the year.

In line with the focus on electronic solutions, the division has devel-
oped wireless solutions to meet the fast-growing demand in home auto-
mation. Other niche initiatives are solutions for behavioral disorder treat-
ment centers, parking meters, gaming machines and vending machines,
primarily in the USA and Canada.

With the acquisition of Ameristar, the leading US manufacturer of
high-security industrial fencing and gates, ASSA ABLOY establishes a new
strategic platform in a segment with strong growth. The acquisition is a
good fit with the Group’s security solutions offering, with both manufac-
turing and sales synergies. Ameristar had sales of around USD 169 M in
2013 and has 650 employees.

Product leadership
Market leadership is based on a constant flow of new technologies, prod-
ucts and solutions that meet customer demand. With increased invest-
ment in product development of 160 percent since 2008, there are now
220 new products in various development phases for launch in the com-
ing years. In the past three years, 280 new products have been launched,
which resulted in new products accountin for 24 percent of total sales.
The focus is on electromechanical and electronic products and solu-
tions that support the various needs and access control systems required
in end-customers’ buildings. Around 30 leading suppliers of Electronic
Access Control (EAC) systems have integrated the divisions’ locks into
their solutions. Many of these leverage RFID technology from HID. Today
the division has the largest offering of wireless solutions for the residen-
tial, commercial and institutional markets. Yale Real Living digital door
locks are marketed in nearly 2,000 AT&T stores in the USA for the fast-
growing home automation market. Other new and successful solutions
are the Aperio Wireless Cabinet Lock for cabinets requiring access con-
trol, such as pharmaceutical cupboards in healthcare, and the Wi-Fi Cam-
pus Lock for universities. Many electromechanical solutions are compat-
ible with ASSA ABLOY’s Seos ecosystem for digital keys.

Cost-efficiency
Americas division’s production structure has been undergoing major
rationalization since 2008, resulting in cost reductions close to USD 270
M. The number of production plants has been reduced by 40 percent,
inclusive of 15 acquisitions, since 2005. A total of 16 production plants
have been consolidated and a number of centers of excellence for devel-
opment and manufacturing have been created. Implementation of Lean
projects continued at an undiminished rate not only in production but
also in administration, where more than one-third of the projects are
being implemented. A large number of products have been updated
and processes simplified using VA/VE methods in product development.
The implementation of Seamless Flow activities continued to yield good
results.

More efficient supply management and increased outsourcing to low-

cost countries has helped double cost savings since 2008.

Mobile Innovation Showrooms bring door opening solutions to
architects, end-users, integrators and other customers.

KEY FIGuRES

SeK M

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

2012

2013

9,671
4
2,007
20.8

8,301
5,913
23.6

1,797
6,620

10,121
6
2,140
21.1

10,475
7,319
22.7

1,983
6,726

1 Excluding items affecting comparability of SEK 18 M in 2013.
2 Excluding restructuring payments.

SALES AND OPERATING INCOME

SEK M

12,000

10,000

8,000

6,000

4,000

SEK M

2,400

2,000

1,600

1,200

800

 Sales1

Operating income2

1 Reclassification has been
made for 2009.
2 Excluding items affecting
comparability in 2009, 2011
and 2013.

SALES BY PRODuCT GROuP

Mechanical locks, lock
systems and fittings, 46 %
Electromechanical and
electronic locks, 14%
Security doors and
hardware , 40 %

aSSa abloy annual rePorT 2013

aSSa abloy’S DiviSionS 4545

Asia Pacific

Continued expansion and rapid
growth in digital lock solutions

The division’s sales increased on the important Chinese market, though at a lower rate
than previously. The market in China showed strong growth in fire doors, a positive
trend for traditional lock products, and a weak trend for security doors. Growth was high
in South Korea, due to good export demand for digital door locks (DDL), and on South-
east Asian markets. New Zealand experienced strong growth, while Australia showed a
stable trend. Demand for digital lock solutions continued to increase rapidly in Asia
where the Group is a market leader.

report on the year
• Sales: SEK 7,420 M (7,224) with 4 percent organic

markets across the region and to the EMEA and Americas
divisions.

growth.

• Operating income (EBIT) excluding restructuring

costs: SEK 1,032 M (978).

• Operating margin: 13.9 percent (13.5).

Market development
The growth rate in China continued at a good level with
large regional differences. The trend was strong for fire
doors, positive for traditional lock products and weak
for security doors. The underlying growth factors in
the country – the urbanization trend, industrialization,
new construction and increasing prosperity – are intact.
However, the credit restrictions imposed by the Chinese
government in late 2011 to avoid overheating in the
economy have resulted in a lower investment rate par-
ticularly in the residential sector and in the well-devel-
oped coastal regions. More than 90 percent of Chinese
production is sold on the domestic market and less than
10 percent is exported to other regions. The export sec-
tor also showed a more subdued trend.

ASSA ABLOY has a clearly leading position on the
advanced South Korean market. The domestic market
remained weak, while the considerable export sales
of the group companies iRevo and King continued to
increase at a high rate. Demand for digital door locks is
significant in South Korea and is growing rapidly across
the region. iRevo is the market leader and collabo-
rates with great success with other group companies
to adapt and export digital door locks to residential

Growth continued to increase at a high rate in India,
while it was somewhat more subdued in Southeast Asia.
Sales also rose in Vietnam and Indonesia, where the divi-
sion is now building up a broad market presence.

The good market position was further consolidated
in Australia. Demand, which has been weak since 2011
due to a low level of new construction and fewer govern-
ment stimulus measures, improved somewhat. In New
Zealand, growth was strong during the year.

Market presence
ASSA ABLOY has a market-leading position on the major
emerging market of China, although the market share
remains small. There is tough competition from a very
large number of small local firms. However, business
failure among the smaller competitors has accelerated
in the wake of lower growth and higher cost inflation.
Expansion potential is strengthened by the consolida-
tion trend. The need for security is increasing sharply
in pace with urbanization, prosperity and new hous-
ing. Demand for fire doors and digital locks is increas-
ing rapidly, while growth in residential security doors
has slowed somewhat. The division continued to make
major investments in sales staff for specification of door
opening solutions and in the training of distributors. To
increase the security standards in China, the division is
working actively with the government and authorities to
develop products and set new industrial standards for
locks and fire doors.

faCTS on aSia PaCifiC
offering: Mechanical and electromechanical locks, digital door
locks, high-security doors and hardware.

Markets: China accounts for 50 percent of sales, South Korea
and the rest of Asia for 20 percent, Australia and New Zealand for
20 percent, and exports to the rest of the world for 10 percent.
The Asian countries are emerging markets without established
security standards. New construction accounts for around
three-quarters of sales. In China, the same types of lock, handle
and hardware are often used in both homes and workplaces. The
production units in China also supply ASSA ABLOY’s other divi-

sions. Australia and New Zealand are mature markets with
established lock standards. Renovations and upgrades account
for the majority of sales.

brands: In China: Baodean, Guli, Pan Pan, Liyi (Shenfei), Door-
max, Beijing Tianming, Guoqiang, Sahne and Longdian. In South
Korea: Gateman, Angel and King and the global Yale brand. In
Australia and New Zealand, the largest brands are Lockwood and
Interlock.

acquisitions 2013: Xinmao and Huasheng (China).

4646

aSSa abloy’S DiviSionS

aSSa abloy annual rePorT 2013

China remains an important emerging market for ASSA ABLOY.

Market presence in China was strengthened by the acquisition of two
regional leading manufacturers of fire and security doors, Xinmao and
Huasheng in northeastern and eastern China respectively. Xinmao has
sales of nearly SEK 190 M and 360 employees, while Huasheng has sales
of SEK 210 M and 460 employees. The two companies complement the
Group’s offering both geographically and commercially.

Investments in market presence continued at a high rate in the fast-
growing and populous markets in India, Indonesia, Vietnam and the Phil-
ippines. The newly established subsidiaries in Indonesia and Vietnam
contributed to continued strong sales growth. Industrialization, urban-
ization and rising prosperity provide significant growth potential.

Product leadership
The Group’s product leadership is an important factor for market pene-
tration in Asia. Product development resources continued to be strength-
ened at a high rate and now include nearly 300 development engineers.
The trend is driven by fast-growing regional demand for hi-tech products
in digitization and access control. Sales of digital locks rose 80 percent in
China and Southeast Asia and the number of digital door lock distributors
has increased sharply with major successes in the residential market.

The investment in India was strengthened by the development of sev-
eral unique products for this major market, contributing to the division’s
high share of products launched in the past three years, which continued
to increase to 34 percent.

Sustainability initiatives were further strengthened by a new organiza-

tion and a centralized responsibility for the whole region with a sustain-
ability board, which monitors developments on the division’s markets.
Water consumption and carbon emissions have been the focus and good
improvements were made during the year.

Cost-efficiency
The division’s Chinese production units account for a large share of the
Group’s production and employees. The division had around 12,600
employees in China.

The number of employees continued to fall by around 1,800 people,
excluding acquisitions, compared with 2012 despite increased produc-
tion. This is primarily the result of increased automation, intensified
implementation of Lean processes, and an increased share of purchases
and outsourcing. These efficiency measures are necessary to meet
increased cost pressure particularly from wage rises in China, but also to
reduce the division’s sensitivity to cyclical fluctuations, thereby improv-
ing margin growth. Systematic efforts to increase the share of coordi-
nated purchases are increasing rapidly and yielded positive results.

KEY FIGuRES

SeK M

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

2012

2013

7,224
3
978
13.5

5,168
4,326
20.7

7,420
4
1,032
13.9

7,436
4,311
16.3

1,348
15,284

932
14,243

1 Excluding items affecting comparability of SEK 183 M in 2013.
2 Excluding restructuring payments.

SALES AND OPERATING INCOME

SEK M

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

SEK M

1,000

 Sales1

900

800

700

600

500

400

300

Operating income2

1 Reclassification has been
made for 2009.
2 Excluding items affecting
comparability in 2009, 2011
and 2013.

SALES BY PRODuCT GROuP

Mechanical locks, lock
systems and fittings, 53 %
Electromechanical and
electronic locks, 9 %
Security doors and hard-
ware, 38 %

aSSa abloy annual rePorT 2013

aSSa abloy’S DiviSionS 4747

Global Technologies

Continued good growth
and stronger margins

Sales continued to increase with strong organic growth of 6 percent. Demand was
strong in all markets for hID Global’s secure identity solutions, with a sharp increase in
project orders. The similarly strong sales growth in hospitality, together with streamlin-
ing and a cost focus, once again improved the division’s good earnings and margin
trend.

report on the year
• Sales: SEK 6,472 M (6,262) with 6 percent organic

growth.

• Operating income (EBIT) excluding restructuring
costs: SEK 1,184 M (1,073), a 10 percent increase.

• Operating margin (EBIT): 18.3 percent (17.1).

Global Technologies division consists of two business
units: HID Global and ASSA ABLOY Hospitality.

hiD Global

Market development

Demand was strong in all product areas, customer
segments and geographical markets, except the public
sector market, which was squeezed by budget restric-
tions in many countries. The strong demand in recent
years for upgrading and complementing existing sys-
tems continued and was supplemented by a significant
increase in major project orders and investments in new
technological solutions. Growth was particularly strong
in markets such as China, Indonesia, Russia and Latin
America, a result of focused marketing of new products
and services in recent years. The division made a strong
contribution to the Group’s other core operations in
electromechanical door opening solutions, with high
growth in physical access control.

Demand for secure identity solutions is increasing in
all markets. HID Global consolidated its market-leading
position through several innovative launches in mobile
access and identity solutions, more efficient card print-
ers, and new technology in converged access solutions
combining physical with logical access control and other
integrated solutions.

Market presence
HID Global is making a long-term investment in its
world-leading market presence, with considerable suc-
cess in the institutional and commercial markets.

The brand position strengthened in several key mar-

kets through unique customer offerings and a global
partner program. The prioritized focus on emerging
markets continued with significant training initiatives.
Mobile solutions are attracting considerable interest in
many countries, which are moving straight to wireless
communication technologies.

In the USA, the U.S. Citizenship and Immigration Ser-
vices selected HID Global as a supplier of Green Cards for
permanent residence in the country. In 2013, HID Global
produced and supplied around two million Green Cards.
Brand consolidation continued; 17 brands have been
consolidated into a single HID Global brand in five years.
All product lines have thus gained increased distribu-
tion worldwide, strengthening brand loyalty, while a
complete product portfolio can be offered to all custom-
ers. The focus on market segmentation continued and
resulted in deeper customer dialogue and a stronger cus-
tomer offering across all product lines. The development
of specification expertise continues with investments
in special teams for proffessional services and develop-
ment in cooperation with end-customers. The focused
sales effort in Government ID Solutions resulted in sev-
eral major orders and HID Global’s solutions are now
found in many national programs for various types of ID
cards, passports, driving licenses and vehicle registration,
including 39 ePassport programs and 50 national ID/eID
programs. Additionally, HID Global reader technology
is used by the world’s five largest electronic document
reader suppliers in the government market.

faCTS on Global TeChnoloGieS
offering: HID Global is a global leader in secure identity solu-
tions, primarily in identity and access management, and in con-
tactless identification technology solutions.
ASSA ABLOY Hospitality is a global leader in electronic lock
systems and safes for hotels and cruise ships.

Markets: Customers are mainly in the institutional and commer-
cial sectors worldwide.

brands: HID Global and VingCard.

4848

aSSa abloy’S DiviSionS

aSSa abloy annual rePorT 2013

Product leadership
The global product strategy is to gain a large share of the fast-growing
electronic identity and access control market and to develop electronic
door opening solutions in collaboration with other Group operations.
HID Global develops complete ecosystems for customer segments such
as manufacturing companies, the financial sector, government agen-
cies, healthcare and educational institutions with solutions for all parts
of the value chain. Working with open standards is an important prin-
ciple, which facilitates the development of new solutions for upgrades
of many different systems and adaptation to new technology and new
applications. The division is an important development partner to many
major players in the global IT industry and is actively involved in standards
development.

Several new products and solutions were launched during the year.

The new FARGO C50 is a compact card printer mainly for small and
medium-sized retail companies and customers in emerging markets. It is
very user-friendly with all the functions available in a few minutes for the
production of ID cards, loyalty cards, charge cards and membership cards.
Mobile Access also achieved a market breakthrough in 2013. Mobile
Access, which is powered by Seos, is the world's first commercial ecosys-
tem for delivering digital keys to cell phones. The Seos credential tech-
nology, which won the Asia SESAMES Award as one of the industry's most
innovative technological solutions, enables doors to be opened by hold-
ing the cell phone in front of the lock. Private individuals and security staff
can send temporary digital keys to visitors via their cell phone. This year
saw the launch of several new initiatives that facilitate customers in creat-
ing their own Seos based solutions on smart cards or cell phones.

Cost-efficiency
For several years the division has been executing structural projects
across all product and market areas to increase efficiency and reduce
costs. The process of consolidating production and distribution plants in
the USA has been successfully implemented, with the closure of five facili-
ties and the construction of a new facility in Austin, Texas well underway.
The new HID Global North American operations center will also accom-
modate the division's headquarters, which is relocating from Irvine,
California in 2014. A new production plant in Malaysia, which is mainly
intended to supply the fast-growing Asian markets, was opened during
the year. These structural measures are expected to result in significant
productivity gains and cost reductions in the future.

The division continued to implement the Group’s Lean Production,
Seamless Flow and VA/VE programs during the year. A large number of
processes have been simplified and accelerated, resulting in significant
efficiencies and savings.

Continuous sustainability audits of important suppliers now cover 98
percent of the annual materials flow. Sustainability is an important factor
in the development of new products and solutions in manufacturing and
distribution processes.

HID Global’s new production unit and headquarters in Austin, Texas, USA.

KEY FIGuRES

SeK M

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

2012

2013

6,262
6
1,073
17.1

5,717
4,524
17.3

1,140
3,029

6,472
6
1,184
18.3

6,114
4,511
19.7

870
3,136

1 Excluding items affecting comparability of SEK 38 M in 2013.
2 Excluding restructuring payments.

SALES AND OPERATING INCOME

SEK M

7,000

6,000

5,000

4,000

3,000

SEK M

1,200

1,000

800

600

400

 Sales1

Operating income2

1 Reclassification has been
made for 2009.
2 Excluding items affecting

comparability in 2009, 2011
and 2013.

SALES BY PRODuCT GROuP

Access control, 48%
Identification technology, 29%
hotel locks, 23%

hiD Global
HID Global supplies solutions for secure identity creation and management to commercial companies, healthcare, educational
and financial institutions as well as government and state institutions. HID Global’s open technology platforms provide significant benefits.

ProDuCT anD ServiCe offerinG
Physical access control: smart cards, card readers, visitor manage-
ment and networked access control units.
Secure issuance: card printers, printer accessories and software.
identity assurance: smart cards, readers and credential manage-
ment software.

Government and citizen ID: cards, eID cards, card printers, readers, software and pro-
fessional services for government-issued credentials.
Mobile access control, Seos: digital keys and reader technology for NFC and bluetooth
enbled smart phones.
Contactless identification: RFID tags, readers and embedded solutions for
identification.

aSSa abloy annual rePorT 2013

aSSa abloy’S DiviSionS 4949

aSSa abloy hoSPiTaliTy

report on the year
ASSA ABLOY Hospitality experienced strong growth dur-
ing the year, mainly due to increased demand for renova-
tion and upgrade projects. The American market contin-
ued to show a positive trend. Europe, the Middle East and
Africa showed a more mixed trend with a positive ending
of the year.

Sales growth was strong in the important Chinese

market, the rest of Asia, Australia and New Zealand.
Marketing initiatives in South America in recent years
resulted in good sales growth. Demand from the cruise
ship market increased substantially following weak new
construction in recent years. Continued stable demand
for service and maintenance helped to strengthen both
operating income and operating margin.

ASSA ABLOY Hospitality’s customers are a clear
example of the rapid market trend towards increasingly
advanced electromechanical technology. In recent years
marketing initiatives have focused on promoting the
replacement or upgrade of installed lock systems based
on magnetic-stripe cards.

ASSA ABLOY Hospitality has established itself as a
global market leader in RFID (Radio Frequency Identi-
fication) technology and online wireless technologies.
These provide hotels and hotel guests with considerably
more secure, flexible and user-friendly locks and oppor-
tunities for mobile solutions and major energy savings.
Today nearly three-quarters of sales are RFID-based sys-
tems and more than a million VingCard RFID locks have
now been installed globally. The new online wireless
VISIONLINE system has attracted considerable interest. It
is integrated with the hotel’s other operating systems to
add efficient new housekeeping, security, front desk and
maintenance functions. This allows the front desk to can-
cel keys, authorize room changes, extend the stay with-
out reprograming each individual key, and give access to
conference rooms without the guest needing to hand in
or exchange their key.

Market presence
Global market presence has gradually strengthened
in recent years, with deliveries worldwide. Sales have
increased rapidly in new emerging markets due to tar-
geted marketing initiatives. Market presence in China
strengthened further during the year. South America is a
focus region for initiatives to increase market shares. Con-
siderable successes resulted in very high growth in 2013,
which is expected to continue in the next few years.

Product leadership
The product development rate remained high during the
year. VingCard Elsafe launched Essence, the world’s first
‘invisible’ door lock, creating totally new opportunities
for design-conscious hotels. All components are embed-
ded in the door and use RFID and wireless technologies.
Essence sales got off to a successful start, positioning
Hospitality for increased activity in the new construction
segment.

Another design-focused launch was Allure, a hi-tech
premium product – ‘no lock on the door’ – giving hotel
designers extreme aesthetic flexibility in a luxury envi-
ronment. The development of Seos, the world’s first
commercial ecosystem for digital keys in smartphones
continued with new functions. Seos leads the way in
mobile developments in the hotel market. The guest can
check in and receive their electronic key using their cell
phone. On arrival the guest can enter their hotel room
using their cell phone.

VingCard Elsafe has also established itself as an impor-

tant supplier of energy management systems for the
hotel market through its Orion range. Sensors that can
detect guest presence in the room and information from
the door lock when the guest enters and leaves the room
allow Orion to efficiently manage energy consumption.
The technology can contribute to energy cost savings of
up to 20-30 percent. The product range was upgraded
in 2013 with several new functions that strengthen cost-
efficiency and integration with the hotel’s other control
systems. The market potential is very good in the renova-
tion segment.

Cost-efficiency
ASSA ABLOY Hospitality has now completed its suc-
cessful relocation of all component production to high-
quality suppliers in low-cost countries, mainly China.
The implementation of a global business management
system, AX ERP, was completed in spring 2013. It has
supported a number of Seamless Flow initiatives, which
have led to significant efficiency improvements and
cost reductions. The potential for increasing efficiency
remains considerable. VA/VE methods with a life cycle
perspective have contributed to considerable materials
savings in production. The results of customer and other
external sustainability audits of the division’s plants have
been positive.

aSSa abloy hoSPiTaliTy
ASSA ABLOY Hospitality manufactures and sells electronic lock systems, safes,
energy management systems and minibars for hotels and cruise ships under the
VingCard Elsafe brand. It is the world’s best-known brand for lock systems and in-

room safes, with products installed in over seven million hotel rooms in more
than 42,000 hotels worldwide.

5050

aSSa abloy’S DiviSionS

aSSa abloy annual rePorT 2013

Flexible access control ideal
for on-demand offices

Customer: Performance Buildings provides technology for on-demand offices. It has a

partnership with Munich-based Design Offices to design and implement high-
end technology offerings for tenants of shared office workspaces that utilize
office space as and when required.

Challenge: Performance Buildings and Design Offices needed a secure access control sys-

Solution:

tem that was easy to use and delivered cost benefits.
They needed interoperable, secure, convenient and future-proof access
control technology for office spaces and a cost efficient IP-based solution that
could be easily integrated and installed. The system needed to support the
on-demand functionality, with an open application programming interface
(API) that allows for a wide choice of custom configurations.

HID Global was selected because it was the only company with the ability to
support the cutting-edge IT architecture and provide the flexibility that the
customer required.
The core solution was HID Global’s EdgeReader® ERP40, an IP-based card
reader that meets the demands of open architecture, IP-centric environments.
In addition, HID Global’s multiCLASS SE® reader provides tenants with flex-

ibility in using a range of access control card technologies, such as contact-
less proximity cards and smart cards, or even NFC smartphones. Office visitors
can also access office workspaces via Performance Buildings’ touch screen
enabled by HID Global’s EdgeReader.
Performance Buildings reported that it had seen a return on investment
within six months of deployment in Munich and improved efficiencies thereafter.

VISIONLINE
suits combined
hotel and office
building

Customer: The Waldorf Astoria Hotel Berlin was the first Waldorf Astoria to open in Europe. It was built close to the famous Kurfürstendamm

(Ku’damm) shopping street in the former western part of Berlin. The impressive building is called ‘Zoofenster,’ which means ‘window onto
the zoo’ because it is situated next to Berlin Zoo. The building is 118 meters high and has 33 floors. The hotel uses the first 15 floors and has
242 luxury rooms.

Challenge: To provide a secure solution for the hotel floors and the independent office floors also located in the ‘Zoofenster’ building with one software

solution. Two different purposes, hotel guest rooms and offices, needed to be implemented in a single lock control management system.

Solution:

The hotel uses VISIONLINE by VingCard with convenient interfaces to its property management system. This ensures a silent and smooth
operation which is absolutely mandatory for a luxury hotel like the Waldorf Astoria. The office floors are rented out by the owner of the
building to different companies such as law firms, and VISIONLINE by VingCard manages this commercial environment with its high security
requirements. VISIONLINE by VingCard was the perfect match here. Its large range of features and options give maximum flexibility to fulfill
the different customers’ requirements. The ability to combine online and offline parts in a cost-efficient wireless online network, avoiding
hard-wire cabling, was another reason the customer chose a solution from ASSA ABLOY Hospitality.

aSSa abloy annual rePorT 2013

aSSa abloy’S DiviSionS 5151

Entrance Systems

high business development rate
for continued global expansion

Demand remained weak in Europe, particularly in southern Europe, but with signs of a
leveling off towards the end of the year. The American markets and Asia grew at a good
rate. Australia and New Zealand returned to positive growth towards the end of the
year. Sales of automatic doors, industrial doors and docking systems were stable, but
sales of high-performance doors declined in Europe. The comprehensive business devel-
opment program of acquisitions, market positioning and reorganization continued
successfully, as well as new product development and cost-saving programs. Operating
income increased and the operating margin was stable.

report on the year
• Sales: SEK 12,237 M (10,979) with 0 percent organic

growth.

• Operating income (EBIT) excluding restructuring

costs: SEK 1,733 M (1,546).

• Operating margin (EBIT): 14.2 percent (14.1).

Market development
Sales were slightly negative in western Europe, but the
picture was varied. Demand showed slightly positive
growth in Germany, Austria, Switzerland and the Nordic
countries, but remained negative in the crisis-hit coun-
tries in southern Europe. However, there were signs of a
leveling off towards the end of the year. Sales increased
sharply in North America and Asia and to a lesser extent
in Australia and New Zealand.

The US residential market was the strongest segment
during the year, while the global industrial segment saw
somewhat more subdued performance in Pedestrian
Door Solutions, Industrial Doors & Docking Solutions
and High Performance Door Solutions. The health-
care and transport sectors continued to be negatively
impacted by fiscal restrictions and fewer investments in
major public projects, which reduced demand for auto-
matic doors. Development was stable in the retail sector.
Nearly 35 percent of the division’s sales are generated
by the comprehensive service offering, with its high, reg-
ular sales. Demand strengthened during the year, help-
ing to offset new sales, which are more cyclical.

Market presence
The organization of the three marketing channels was
further developed during the year. In the direct chan-
nel, total solutions for major customer segments such
as retail, healthcare, manufacturing, distribution and
logistics, transportation and mining are marketed under
the ASSA ABLOY brand. Close cooperation with archi-
tects and other specifiers drives demand. A common and
much enhanced concept for the important service busi-
ness was also launched, mainly aimed at upgrading and
modernizing existing equipment.

Component and hardware sales were combined

under the FlexiForce brand. The components are
mainly for overhead sectional doors in the industrial,
commercial and residential segments, which are sold
through distributors and installers. The product range is
comprehensive.

Indirect sales were combined under the Entrematic
brand, which was launched in January 2013. Entrematic
has a complete offering in four business areas: Sectional
Doors & Docking Americas, Sectional Doors & Docking
EMEA, High Performance Doors and Entrance Automa-
tion. The indirect channel caters to local distributors and
installers. As a result of product and customer segmenta-
tion, Entrematic can provide enhanced customer value
with innovative products, high delivery reliability and
an efficient sales process in which e-commerce is set to
increase.

The division has grown very strongly in recent
years mainly through acquisitions. Sales have tripled
since 2010. As a result, ASSA ABLOY has achieved a

faCTS on enTranCe SySTeMS
offering: Entrance automation products, components and ser-
vice. The product range includes automatic swing, sliding and
revolving doors, gate automation, hardware, garage doors, high-
performance doors, industrial doors, docking solutions and han-
gar doors.

Markets: Entrance Systems is a global leader with sales world-
wide. It has sales companies in over 30 countries and distribu-
tors in 90 countries. Service operations account for nearly 35
percent of sales. The products are sold through three channels.
In the direct channel, new equipment and comprehensive ser-

vice are sold direct to end-customers under the ASSA ABLOY
brand. The indirect channel caters mainly to large and medium-
sized distributors under the Entrematic brand. FlexiForce sells
components and hardware for overhead sectional doors in the
industrial and residential segments.

brands: Besam, Crawford, Megadoor, Albany, FlexiForce, Kelley,
Serco, Normstahl, Dynaco, Ditec, EM and Amarr.

acquisitions 2013: Amarr (USA) and a number of smaller
acquisitions in Norway, Canada and Australia.

5252

aSSa abloy’S DiviSionS

aSSa abloy annual rePorT 2013

world-leading position in entrance automation. The year was marked by
continuing intensive integration activities. The division now has a number
of geographically and technologically well-positioned platforms for con-
tinued rapid global growth.

Strengthening presence in emerging markets is a priority task for the
next three years, with the ambition of increasing the share to 25 percent
of the division’s total sales. The strategy aims at organic growth with a
substantially increased range of modern door opening solutions as well
as acquisitions.

With the acquisition of Amarr, ASSA ABLOY gained a leading position
in the American market for overhead sectional doors. The company is the
third largest in its segment in the USA, with sales of USD 330 M and 1,200
employees, and is also established in Canada and Mexico. Amarr has 77
door centers in North America and provides an additional platform for
continued rapid expansion in the American markets.

Product leadership
Increasing investments in product development is a priority in order to
strengthen the division’s organic growth. The new product development
organization established in recent years in the various business areas has
considerably streamlined new product development. Expertise is spread
through the development of technology centers in western Europe and
the establishment of R&D capacity in eastern Europe and China. Com-
mon product platforms and modular solutions reduce the complexity
and lead times associated with new product development, while oppor-
tunities for cost-efficient product differentiation increase.

The year saw the launch of a new generation of Besam sliding and
swing doors based on a global platform. A new generation of industrial
doors also based on a new modular global platform was launched under
the Crawford brand during the year. The high launch rate is set to con-
tinue in 2014.

Cost-efficiency
Consolidation of the plant structure, with a large share of manufactur-
ing in low-cost countries, is an important prerequisite for increased cost-
efficiency. The production of common basic components on global and
modular platforms will soon be concentrated in a substantially reduced
number of plants. An intensive investment program is in progress to
establish customized final assembly across Europe for more flexible and
efficient regional distribution. Complementary programs are coordinat-
ing supply management and have reduced the number of suppliers to
major partners that can collaborate in product development processes.
Special initiatives based on Lean and Seamless Flow processes have
started in administration. Many functions will be coordinated locally to
increase efficiency. A reduction in the number of IT-based systems to a
few common systems within 3–5 years is a major project that will cover all
areas in the division.

Environmental considerations and energy efficiency are strong sales
arguments. VA/VE methods in the product development phase reduce
energy and raw material consumption in the production process, reduc-
ing product cost and increasing customer value.

The division has also begun the development of new service concepts,

complementing the already existing reactive and preventive offerings
with improvement service. The aim is to offer customers modernization
solutions for the division’s own door opening solutions and those of its
competitors. This involves extensive upgrades of old installations with a
range of new products and services that have already been launched and
many more products currently under development. This type of major
renovation and modernization requirement is expected to increase in the
coming years.

Docking solution from Entrance Systems.

KEY FIGuRES

SeK M

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

2012

2013

10,979
–2
1,546
14.1

13,189
8,323
12.3

1,648
7,429

12,237
0
1,733
14.2

14,592
9,282
12.1

1,792
8,191

1 Excluding items affecting comparability of SEK 313 M in 2013.
2 Excluding restructuring payments.

SALES AND OPERATING INCOME

SEK M

12,000

10,000

8,000

6,000

4,000

2,000

SEK M

1,800

1,500

1,200

900

600

 Sales1

Operating income2

1 Reclassification has been

made for 2009.

300

2 Excluding items affecting

comparability in 2009, 2011
and 2013.

SALES BY PRODuCT GROuP

Products, 65%
Service, 35%

aSSa abloy annual rePorT 2013

aSSa abloy’S DiviSionS 5353

Sustainable development

Increasing demand for products
with a sustainability profile

The Group’s strategy for growth and profitability underlies ASSA ABLOY’s sustainability
priorities and initiatives. ASSA ABLOY is working on relevant sustainability issues across the
value chain – from product development to recycling. The Group’s business opportunities
linked to the demand for products with sustainability performance are growing every year.

The drivers for ASSA ABLOY’s sustainability initiatives
are to create innovative products and solutions with
higher sustainability performance that help custom-
ers to reduce resource consumption, while efficient
production also reduces the company’s own resource
consumption. By managing and reducing business risks
and managing opportunities, ASSA ABLOY will meet
customer expectations, focus on product leadership,
expand in the market and create value. Sustainability
initiatives support the Group’s overall objectives.

Sustainability control
ASSA ABLOY’s group-wide Code of Conduct provides
the basis for everyone’s behavior. It is an important sup-
port in the Group’s decentralized organization where
employees make important decisions daily close to the
local market.

The Code of Conduct establishes the principles that
ASSA ABLOY has defined for the Group’s employees, sup-
pliers and other stakeholders. It is based on international
standards and is available in 22 languages.

The Code includes all employees. It forms an important
part of the induction of new employees, and it is every
employee’s responsibility to comply with the Code
and related policies. Whistle-blowing procedures are
in place to enable all employees to report suspected
infringements. Reported cases are investigated by a
special committee headed by the Group’s HR director.
Suppliers are informed of ASSA ABLOY’s Code of
Conduct and undertake in writing to comply with it in
their collaboration with the Group.

ASSA ABLOY monitors and follows up compliance

with the Code through internal audits and supplier
audits. Action is taken in case of non-compliance with
the Code.

For a number of years, the Code has been supple-
mented by a separate anti-corruption policy. During the
year, selected units were audited for compliance with
this anti-corruption policy.

¹ For comparable units. Total

energy consumption amounted
to 691 GWh including units
acquired during the year and
increased reporting.

² For comparable units. Total con-
sumption amounted to 14.4
tonnes including units acquired
during the year and increased
reporting.

3 For comparable units. The total
injury rate (IR) was 7.2 percent
including units acquired during
the year and increased report-
ing.

4 For comparable units. The total
injury lost day rate (ILDR) was
164 including units acquired
during the year and increased
reporting.

5 For comparable units. Number
of certificates and correspond-
ing certifiable systems for North
American units amounted to
101. The change is due to the
closure of plants under the
restructuring program and to
the addition of a number of new
plants with certificates. Sales
companies with ISO 14001 cer-
tification are included in report-
ing from 2012.

6 The historical numbers have
been adjusted with proforma
data.

SOME OF ThE RESuLTS OF ThE SuSTAINABILITY PROGRAM

Improvement

unchanged

Deterioration

Target

results
2009

results
2010

results
2011

results
2012

results
2013

Trend

energy consumption6 – 15 percent reduction
in consumption in 2015 compared with 2010,
based on normalized values.

organic solvents – Phase out all use of perchlo-
roethylene and trichloroethylene.

health and safety6
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.

491 GWh

603 GWh

627 GWh¹

691 GWh

676 GWh

44 tonnes

32 tonnes

22 tonnes

20 tonnes²

14 tonnes²

IR: 8.4
ILDR: 150

IR: 7.6
ILDR: 157

IR: 9.2
ILDR: 182

IR: 9.13
ILDR: 1874

IR: 7.23
ILDR: 1634

iSo 14001 – Compliance at all factories with sig-
nificant environmental impact.

100 5

1015

Suppliers – Sustainability appraisals – Code of
Conduct requirement for all suppliers. Sustain-
ability audits of suppliers in risk category.

Gender equality – Improve current levels of gen-
der equality at senior levels.

178
sustainabil-
ity audits in
China

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

376
sustainabil-
ity audits in
China

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

493
sustainabil-
ity audits in
Asia

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

795
sustainabil-
ity audits in
Asia

Level 2: 18 %
Level 3: 16 %
Level 4: 18 %
Level 5: 23 %

885
sustainabil-
ity audits in
Asia

Level 2: 22 %
Level 3: 13 %
Level 4: 19 %
Level 5: 24 %

5454

SuSTainable DeveloPMenT

aSSa abloy annual rePorT 2013

ASSA ABLOY’s way of working
The Board of Directors has the overall responsibility,
while the Executive Team is responsible for operational
management of relevant sustainability issues and the
Group’s strategies.

The divisions and group companies are responsible
for compliance with the Code of Conduct and providing
feedback to headquarters.

Appointed staff at divisional and company level are
responsible for the availability and implementation of
environmental guidelines, programs and tools. HR func-
tions at Group and divisional level are responsible for the
same in the management of social and business ethical
issues.

ASSA ABLOY provides information, guidelines and
tools to support the group companies in their work on
relevant sustainability issues. There is a group-wide data-
base for reporting and monitoring of sustainability initia-
tives and of good practice from group companies. This
database is a knowledge bank that everyone can access.
During the year ASSA ABLOY implemented a new
group-wide reporting system, which is intended to sim-
plify the integration of new companies and improve the
quality of data, as well as facilitating monitoring and
knowledge transfer.

A target-based activity
ASSA ABLOY is working to achieve the sustainability tar-
gets set for the period 2010–2015. These targets include

the Group’s most important sustainability issues: water
consumption, chemicals management, energy effi-
ciency, health and safety, employee issues, supplier rela-
tions, and the overall control of sustainability initiatives.

ASSA ABLOY has been successful in integrating
acquired companies, which have to operate in accor-
dance with the Group’s targets. In 2013, 327 companies
were included in Group reporting, an increase of 12 per-
cent (15) on 2012.

ASSA ABLOY has gradually increased the accuracy and

the level of detail of internal reporting to increase con-
trol and ensure continuous progress with the Group’s
sustainability initiatives. Since 2012 internal reporting
has taken place every six months.

REPORTING uNITS 2013

Number

350

300

250

200

150

100

The number of reporting units
in the Group has increased to
327 (293).

SuSTAINABILITY INITIATIVES ARE INTEGRATED ACROSS ThE VALuE ChAIN

innovation

Sourcing

Manufacturing

Market presence

Customers

Employees | Code of Conduct | Corporate Governance

INNOVATION
New products are evaluated from a life cycle per-
spective. Many recently developed products save
energy as a result of improved insulation and
intelligent control of various door opening
solutions.

MANuFACTuRING
The manufacture of the Group’s products should
be carried out safely and with minimal environ-
mental impact. hazardous processes are gradu-
ally being phased out and replaced by eco-
friendly alternatives.

CuSTOMERS
ASSA ABLOY’s ambition is to supply high-quality
products that fulfill customer needs, have a long
service life and are manufactured with minimal
resource consumption and environmental
impact over their life cycle.

SOuRCING
The Group’s suppliers in risk areas are evaluated
from a sustainability perspective. Suppliers failing
to comply with the Group’s requirements are
requested to make improvements or will other-
wise be phased out.

MARKET PRESENCE
ASSA ABLOY respects the laws and regulations
governing business ethics in the countries in
which it operates, and requires all partners to act
in the same way.

aSSa abloy annual rePorT 2013

SuSTainable DeveloPMenT 5555

Sustainable development

aSSa abloy’s customer offering
Demand for products and solutions with a sustainability
profile is increasing.

The product innovation process has several important
stages including:
• Product management – refers to the strategic aspects

Development of energy-efficient products is a central

part of ASSA ABLOY’s product development. Products
that reduce the user’s energy consumption and total
operating costs account for an ever-increasing share
of Group sales. Understanding and satisfying customer
needs is crucial for retaining a strong market position.
It is important for ASSA ABLOY that energy-sav-
ing products are certified and included in the data-
bases used by architects for building specification. The
increased use of various certifications for sustainable
and green construction has driven development and
made these products more attractive.

ASSA ABLOY has decided to increase information on
product sustainability performance through the intro-
duction of environmental product declarations (EPD).
In 2013, pilot projects were conducted on a number of
ASSA ABLOY’s product groups. As a result, as from 2014
the Group’s most important product groups will carry
EPDs, based on life cycle assessment. Efforts to include
the remaining and future product lines will continue.

ASSA ABLOY has a number of products, which com-

bined with increased security help the customer to
reduce energy consumption and create a better quality
indoor environment.

Progress towards more sustainable products
ASSA ABLOY’s ambition is to have world-class product
development. This requires a good knowledge of cus-
tomer needs today and tomorrow, as well as knowledge
of the product’s value chain. Group companies use the
Group’s product innovation process and environmental
checklist for all new product development.

•

of the product.
Involving customers in product development –
Voice of the Customer ensures that ASSA ABLOY
develops products that the customers want.

• Efficient delivery of innovation projects – ensures that

projects are structured and efficient.

Product life cycle assessments have provided
ASSA ABLOY with knowledge of where the greatest
environmental impact occurs. The amount of materials
used accounts for a significant part of a product’s envi-
ronmental impact, and this is something the Group has
successfully addressed using Value Analysis/Value Engi-
neering (VA/VE) in product development. In the case of
electromechanical products, standby power consump-
tion has a relatively large environmental impact. Based
on this knowledge, ASSA ABLOY has launched a number
of products with considerably reduced energy con-
sumption in standby mode.

ASSA ABLOY can reduce its environmental impact
and costs through a reduced and efficient use of water,
chemicals, energy and materials in the production pro-
cess. The Group’s environmental checklist provides a
structured review of materials selection, design and
manufacturing processes to ensure sustainable and
efficient processes. Moreover, initiatives to reduce
the amount of packaging materials for different cus-
tomer groups and forms of delivery are important for
more resource-efficient operations, particularly as
ASSA ABLOY expands and transportation needs grow.

SuSTAINABLE DEVELOPMENT PROGRAM IN BRIEF

2004–2008

2009

2011

2012

2013

Code of Conduct with
updates

Whistle-blowing

Internal audits

Due diligence directive

Tools for supplier
control

Employee survey

Sustainability strategy
for product develop-
ment including
checklists

Marketing and sales
training

Training in supplier
control

Sales companies and offices
are included in reported
figures

Increased monitoring of
energy consumption and
CO2

Launch of joint recruitment
and selection guide

2010

Increased audit of suppliers
in low-cost countries

Targets for 2015 are defined
for all monitored areas

Increased reporting of
environmental data

25 percent more group
companies included in
reporting

Improved analysis and
benchmarking opportu-
nities between group
companies

Updated Code of
Conduct

Implementation of an
anti-corruption policy
across the Group

Target of 30 percent
women in management
positions within
ASSA ABLOY

Increased reporting of
environmental data on
water usage and green-
house gases¹

15 percent more group
companies included in
reporting

Internal semi-annual
reporting for increased
control

More than 6,000
employees participated
in anti-corruption
training

¹ The increased reporting is
presented in ASSA ABLOY’s
Sustainability Report 2012.

12 percent more group
companies included in
reporting

Introduced new
reporting system for
increased control

Conducted 885
sustainability audits dur-
ing the year

Pilot projects for EPD
certification of important
product groups

5656

SuSTainable DeveloPMenT

aSSa abloy annual rePorT 2013

hID builds new headquarters
and operations center

Challenge: During 2012, HID Global began designing its new Headquarters and Genu-

ine HID Operations Center in Austin, Texas. The goal was to substantially
exceed standard practice in energy, economic and environmental perfor-
mance. There would be a commitment to the employee experience, and a
showcase for ASSA ABLOY’s portfolio of green products. Water usage and
waste management would be state-of-the-art, and the building would sup-
port growth without a corresponding increase in energy consumption.

Solution:

Result:

The site selection was based on multiple criteria including proximity to retail
amenities and public transportation. To avoid adding to landfills, all concrete
and asphalt on the site was reused in the construction process. Water con-
servation, including waste and irrigation management, was a major focus,
with new low-flow fixtures installed reducing potable water consumption
an average of 55 percent. There was a significant investment in lighting capa-
bilities including LED bulbs, automated motion detection shutoff, daylight
standby sensors and dimmers throughout the facility.

HID Global recycled 86,200 kilograms of metal and 44,600 kilograms of
concrete, and re-purposed 12,200 cubic metres of asphalt. Water usage
was cut 55 percent, saving 142,000 litres monthly. The ratio of emissions
to sales volume is expected to improve by 20 percent using all LED light-
ing, with a two-year payback. HID Global expects a 30 percent overall
energy cost reduction in the future from a reduced North American foot-
print, Energy Star efficient appliances, LED lighting, and building moni-
toring systems. Facility design is devoted to minimizing environmental
impact with the goal of leadership in energy and environmental design
(LEED) certification.

Demineralization
solution reduces
water consumption

Challenge: ASSA ABLOY Romania had three plating lines consuming up to 72,000 cubic meters of water per year. Two new plating lines were needed for

production, which would have further increased water consumption. The price of water has increased by 96 percent in Romania in the last four
years, resulting in significant production cost increases year on year.

Solution:

After reviewing numerous water re-circulation solutions the most suitable technologywas identified: a demineralization solution using ion
exchange resins. Implementing this system meant that ASSA ABLOY Romania could re-circulate up to 90 percent of the water consumed, mak-
ing it possible to install the two new plating lines. The waste water from the system can potentially be used as onsite greywater for WC flushing
which would increase the re-circulation rate to 95 percent.

Result:

ASSA ABLOY Romania has massively reduced the water consumption of the facility, while also saving EUR 50,000 per annum. The solution has a
favorable payback period of 1.5 years; meaning the system makes sense economically and environmentally.

aSSa abloy annual rePorT 2013

SuSTainable DeveloPMenT 5757

Sustainable development

Development of supplier relations
ASSA ABLOY is working systematically with its suppliers
to improve sustainability performance across the sup-
ply chain. Evaluation and improvement of the supplier
base is a continuous process. Supplier selection is based
on standardized criteria for both quality and work on
relevant sustainability issues. Good supplier control and
working in accordance with jointly agreed action plans
result in increased product quality and more sustainable
processes.

ASSA ABLOY’s suppliers are required to comply with
its Code of Conduct. Quality and sustainability audits are
carried out before new suppliers are approved. Suppliers
deemed to be in a risk category are prioritized for audit.
The system used to monitor suppliers’ compliance

with the Code of Conduct includes factors such as
wages, overtime, noise levels, protective equipment,
chemicals management, accident reporting, environ-
mental management systems, and health and safety
training.

Any supplier failing to comply with these require-
ments is requested to implement necessary improve-
ments in accordance with an action plan. The contract is
terminated if action is not taken.

Supplier selection process
The process has three stages:
• Supplier self-assessment – the supplier assesses its
ability to meet ASSA ABLOY’s requirements, using a
form from ASSA ABLOY.

• On-site audit – a sustainability audit assesses how
well a potential supplier meets ASSA ABLOY’s
requirements.

• Extended sustainability audit – this complements the

standard audit.

The supplier is evaluated and graded using a color cod-
ing system of green, yellow, orange, purple or red. Green
means the supplier is approved. Yellow, orange and

purple mean the supplier is underperforming to vari-
ous extent and needs to improve within a specific time
frame, while red means the supplier is not approved.
A red, purple, orange or yellow rating can be

upgraded, if the supplier improves in line with an action
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.
ASSA ABLOY monitors approved suppliers.

Audits conducted
In 2013 ASSA ABLOY conducted 885 (795) sustainabil-
ity audits. At year-end, 1,046 (806) active suppliers had
satisfied the minimum standards for quality and rel-
evant sustainability issues, while 31 (10) suppliers were
blacklisted. Sustainability audits have been gradually
extended to cover a larger geographical area. Since 2012
suppliers in all low-cost countries have been included.

ASSA ABLOY’s supplier database
Suppliers representing around 95 percent of the Group’s
supplier costs in low-cost countries are included in
ASSA ABLOY’s database.

Suppliers are listed, graded and monitored in the
supplier database. Audit reports on both quality and
relevant sustainability issues are regularly entered into
the database. Information on green-rated suppliers is
entered, in order that they can supply several 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 with
respect to non-compliance. This means that a supplier
rejected for poor management of relevant sustainabil-
ity issues is either stopped immediately or must wait for
approval until the deficiencies have been addressed.

SuSTAINABILITY AuDITS OF SuPPLIERS IN
LOW-COST COuNTRIES

ShARE OF TOTAL PuRChASES IN LOW-COST COuNTRIES

Number

1,000

800

600

400

200

In 2013 ASSA ABLOY conducted 885 (795) sustainability audits.

The share of the Group’s total purchases of raw materials, components
and finished goods from low-cost countries has risen to 53 percent in
the past five years.

5858

SuSTainable DeveloPMenT

aSSa abloy annual rePorT 2013

More efficient production
Energy and carbon emissions
ASSA ABLOY is striving to reduce energy consumption
and associated carbon emissions. The Group is working
within several areas to reduce the energy consumption.
One important area is to concentrate manufacturing
in as few plants as possible, in order to maintain full utili-
zation, efficient working practices and high quality.

An innovative product design makes it possible to
chose material and processes with less environmental
impact.

Water consumption
Efforts to improve water use efficiency have focused on
plants with surface treatment processes, which account
for the bulk of consumption. Technical improvements
in the purification and reuse of water in the production
process have reduced water consumption.

Waste management
The Reduce, Reuse, Recycle principle is applied across
the organization. This principle means that ASSA ABLOY
works systematically to reduce the amount of materi-
als in products, develop products that can be upgraded
rather than replaced, and enable recycling of both pro-
duction waste and the finished products at the end of
their life cycle. The Group has refined its monitoring of
waste in various types of materials with the aim of bet-
ter monitoring and reducing the amount of waste. The
Group has reduced the amount of waste generally and
hazardous waste in particular.

Hazardous chemicals
ASSA ABLOY works constantly to reduce the use of haz-
ardous substances in the production process and find
substitutes for them. Most production plants have suc-
cessfully phased out chlorinated organic solvents.

Health and safety
ASSA ABLOY should offer a safe working environment
and has a zero vision for accidents at work. The goal is
to create a culture where each individual contributes to
a safe workplace and good health. In 2013, the Group
reversed the negative trend and the number of acci-
dents fell.

ASSA ABLOY has defined a number of targets

intended to lead to a safer working environment. More
stringent safety procedures have been implemented in
all units and reporting has been refined.

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 preven-
tive measures.

ENERGY uSE

GWh

700

600

500

400

300

200

100

2013 represents develop-
ment for comparable
units from 2012.

uSE OF ChLORINATED ORGANIC SOLVENTS (PER AND TRI)

INJuRIES PER MILLION hOuRS WORKED

Tonnes

2013 represents develop-
ment for comparable
units from 2012.

Number

2013 represents development
for comparable units from
2012.

aSSa abloy annual rePorT 2013

SuSTainable DeveloPMenT 5959

Sustainable development

employees generate success
ASSA ABLOY’s vision and ambition is to be an attractive
company to work for. Each individual has responsibil-
ity for his/her professional development. It is important
that all employees feel that they contribute. Competi-
tion for talent is intensifying and ASSA ABLOY is invest-
ing globally and locally to offer stimulating assignments
with clear responsibility, good development opportuni-
ties, and a positive, engaging work situation.

recruitment and competence supply
ASSA ABLOY has great confidence in its employees. It
is up to the individual to take responsibility for their
career. A basic principle of ASSA ABLOY’s recruitment
policy is to give priority to internal candidates provided
they have equal qualifications to external applicants.
All job vacancies are advertised on the Group’s global
intranet to encourage and facilitate internal mobility.
Recruitment takes place locally in the majority of cases.

Common knowledge base
A good knowledge of the company and an understand-
ing of how your own efforts contribute to the overall
goals are crucial for motivation and commitment. In
order to create a consensus on what ASSA ABLOY’s busi-
ness is and how the goals are to be achieved, all employ-
ees undergo an interactive training program “Entrance
to ASSA ABLOY”. A new version of the program was
launched in 2013 and it is now available in 15 languages.
Topics include the Group’s history, organization, prod-
ucts, strategy and Code of Conduct.

Gender equality and diversity
ASSA ABLOY’s ambition is to achieve a better gender
balance at all levels in the organization. In 2011, the
Group set a target of 30 percent women in management
positions at levels 2 to 5 by 2020. In 2013, the propor-
tion was 22 percent. The Group’s gender equality policy
serves as guidance.

The trend in the share of women at manage-

ment level is monitored in connection with the Talent

Management Process. Other measures include priori-
tizing the underrepresented gender in the recruitment
process provided they have equal qualifications, and
aiming for at least one person from the underrepre-
sented gender among the final candidates.

ASSA ABLOY is also working to increase diversity. The
Group’s Code of Conduct states that employees should
be given the same conditions regardless of gender, reli-
gion, age, physical disability, sexual orientation, nation-
ality, political opinion or social and ethnic origin.

Growing with care
ASSA ABLOY is an acquisition-intensive Group, and it is
important to monitor how new units are operating in
relation to the Group’s Code of Conduct and policies.
Third party social audits in accordance with internation-
ally accepted methods have been conducted for several
years for this purpose. These audits cover areas such as
working conditions, human rights, the work environ-
ment, workplace culture and skills development. Where
warranted the audits lead to measures for improvement.
During the year audits were conducted at one produc-
tion plant in the Czech Republic and one in Colombia.

aSSa abloy employee Survey
The ASSA ABLOY Employee Survey is an efficient means
of finding out what employees think about their
work situation, how they perceive ASSA ABLOY as an
employer, how they perceive health and safety in their
workplace, and whether they consider they are given

NuMBER OF EMPLOYEES BY REGION

Europe, 15,386
North America, 9,053
South America, 840
Africa, 490
Asia, 15,730
Oceania, 1,057

AVERAGE NuMBER OF EMPLOYEES

WOMEN AT DIFFERENT LEVELS OF ThE ORGANIZATION

Women
Men

Number

50,000

40,000

30,000

20,000

10,000

12 13

level

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

all employees

Share of women,%

2010
0
16
18

24
–

2011
0
15
19

26
24

2012
18
16
18

23
22

2009
0
15
18

20
–

2013
22
13
19

24
22

For 2012 and 2013, the definition has been revised to include only
managerial and specialist positions. This has had a negative impact
on levels 4 and 5.

6060

SuSTainable DeveloPMenT

aSSa abloy annual rePorT 2013

equal opportunities. The survey is carried out every
18–24 months. The results are broken down into over
275 workplaces to enable concrete action plans relevant
to employees. The most recent survey took place in
March 2012 and almost 28,000 employees responded.
The 2012 results show a slight improvement in all areas
compared to the previous survey (2010). A new survey
will be conducted in February 2014.

leadership and management training
ASSA ABLOY has a well-established global development
process for senior managers, the Talent Management
Process. The aim is to support career development in a
structured way, optimize the utilization of the Group’s
total resources, and ensure that the skills needed to
meet future requirements are available.

Every year ASSA ABLOY offers a number of senior
managers the opportunity to take part in one of its
two senior management development programs:
ASSA ABLOY Management Training (MMT) and
ASSA ABLOY ‘Boosting Market Leadership Program’.
MMT is intended to provide participants with an
increased knowledge of all areas of ASSA ABLOY’s opera-
tions, develop their internal contact network, and con-
tribute to sharing best practices and identifying new
business opportunities. The program has three modules
based on the Group’s three strategic pillars: market pres-
ence, product leadership and cost-efficiency. This is of
particular importance for ASSA ABLOY, which acquires
several companies each year.

More than 300 of ASSA ABLOY’s senior managers
from 32 countries have taken part in IMD programs since
2005, when ASSA ABLOY began collaboration with the
world-leading Swiss business school IMD in Lausanne.
A new program was launched in 2011, ‘Boosting Market
Leadership’, with around 30 participants per program.
This is tailor-made and developed in collaboration with

IMD. The program’s main aim is to support the imple-
mentation of ASSA ABLOY’s strategies. It focuses on
problem solving, implementation and activities based
on an analysis of various case studies.

employee development
Employee development includes annual performance
reviews with all employees. Based on these, all employ-
ees receive an opportunity for continued professional
development with ongoing feedback on their perform-
ance. Employee development also includes an internal
labor market, where the aim is to increase mobility, so
that knowledge, experience and values are shared across
the Group. For instance, ASSA ABLOY’s Scholarship Pro-
gram offers employees the opportunity to work for a
short period at another group company. This program is
open to all employees.

External dialogue on sustainability
ASSA ABLOY’s stakeholders in sustainability issues are
shareholders, investors, analysts, customers, suppliers,
employees, local communities, NGOs and the media.
The Group’s policy of openness means that ASSA ABLOY
listens to these stakeholders and take on board their
views.

During the year ASSA ABLOY held a roundtable dis-
cussion with investors on ASSA ABLOY’s management of
sustainability issues. Roundtable discussions have been
held annually since 2005. Requests from investors have
generally concerned more externally available informa-
tion on suppliers in low-cost countries, procedures for
start-ups, the acquisition process, and increased trans-
parency with regard to the targets for each monitored
area. Moreover, interest in how ASSA ABLOY manages
the sustainability aspects of the innovation process has
increased over the years. These meetings are valuable
and provide the Group with important feedback.

Program pilots a path to leadership
and commercialization

ASSA ABLOY Americas Leadership Development Program
brought 35 emerging leaders together with the goal of turn-
ing good management into great leadership. The six-day
employee development workshop at the Babson College
Executive Education Center featured curriculum that empha-
sized the three mainstays of our strategy: Product Leadership,
Customer Intimacy and Operational Excellence.
Participants examined real-world case studies in classes led
by Babson professors and ASSA ABLOY leaders, and then
worked on team projects every evening. On the final day each
of the six teams proposed an original, polished business idea.

The quality of those final projects was a reflection of both the
success of the program and the level of talent of the
participants.
“In a word, they were excellent,” said Jack Dwyer, VP human
resources and administration who helped create the pro-
gram. “We were in awe of the presentations and the ideas the
teams developed. All six of these ideas were worthy of
implementation.”
The emerging leaders left with enthusiasm, insight and solid
skills to apply to the next chapter of their careers.

aSSa abloy annual rePorT 2013

SuSTainable DeveloPMenT 6161

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

Sales and income
Consolidated income statement and
Statement of comprehensive income
Comments by division
Results by division
Financial position
Consolidated balance sheet
Cash flow
Consolidated cash flow statement
Changes in consolidated equity
parent company financial statements

63
65
68
72
74

77
78

79
80
81
82
83
84
85
86
88

notes

1 Significant accounting and valuation principles
2 Sales
3 Auditors’ fees
4 Other operating income and expenses
5 Share of earnings in associates
6 Operating leases
7 Expenses by nature
8 Depreciation and amortization
9 Exchange differences in the income statement
10 Financial income
11 Financial expenses
12 Tax on income
13 Earnings per share
14 Intangible assets
15 Tangible assets
16 Shares in subsidiaries
17 Investments in associates
18 Deferred tax
19 Other financial assets
20 Inventories
21 Trade receivables
22 Parent company’s equity
23 Share capital, number of shares and

dividend per share

24 Post-employment employee benefits
25 Other provisions
26 Other current liabilities
27 Accrued expenses and deferred income
28 Contingent liabilities
29 Assets pledged against liabilities to

credit institutions
30 Business combinations
31 Assets of disposal group classified as held
for sale and discontinued operations

32 Cash flow
33 Employees
34 Financial risk management and

financial instruments

Comments on five years in summary
Five years in summary
Quarterly information
Definitions of key ratios
proposed distribution of earnings
Auditor’s report

90
96
96
96
96
96
97
97
97
97
97
97
97
98
100
101
101
102
102
102
102
102

102
103
105
105
105
105

105
106

107
107
108

110

116
117
118
119
120
121

ASSA ABLOY AnnuAL RepORt 2013

Report of the Board of Directors

The Annual Report of ASSA ABLOY AB (publ.), corporate identity number 556059-3575,
contains the consolidated financial statements for the financial year 1 January to 31
December 2013. 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 48,481 M (46,619), with
organic growth of 2 percent (2) and acquired growth of
4 percent (9). Operating income (EBIT) excluding restruc-
turing costs rose 6 percent to SEK 7,923 M (7,501), equiva-
lent to an operating margin of 16.3 percent (16.1). Income
before tax excluding restructuring costs totaled SEK 7,381 M
(6,784).

Operating cash flow excluding restructuring payments
remained strong and amounted to SEK 6,803 M (7,044). Earn-
ings per share after full dilution excluding restructuring costs
amounted to SEK 14.84 (13.97), an increase of 6 percent.

Restructuring
In 2013 a new restructuring program was launched com-
prising the closure of some 30 production plants and offices
as well as outsourcing. All divisions are included in this pro-
gram and around 2,400 employees net are affected by the
program. The total cost of the program is SEK 1,000 M
before tax and this was expensed in full in 2013. The payback
period is estimated at just over three years.

The activity level in the restructuring programs launched
in previous years remained high during the year. At year-end
2013, 8,358 employees had left the Group as a result of the
changes in the production structure since the programs
began, of which 1,593 employees left during the year. A total
of 57 production plant closures have been implemented
and a large number of plants in high-cost countries have
switched from production to final assembly. A total of 28
offices have also closed during the equivalent period. The
Group’s production is increasingly concentrated in 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 647 M (498) for the full year. At year-end 2013, the
remaining provisions for restructuring measures amounted
to SEK 1,369 M (1,068).

Acquisitions and divestments
On 2 November 2013, the assets were acquired in Ameristar
(USA), the leading US manufacturer of perimeter security
consisting of high-security fencing and gates. The company,

with annual sales of around SEK 1,200 M, offers a complete
product range in high-security fencing and gates for indus-
trial use, complementing ASSA ABLOY’s security solutions
offering for the American market. Ameristar provides the
Group with valuable new competencies and is a perfect fit
with its broad range of door opening solutions. The com-
pany is headquartered in Tulsa, Oklahoma, USA.

On 25 November 2013, 100 percent of the share capital
was acquired in Amarr (USA), the third largest player in the
North American market for overhead sectional doors, with a
very strong and attractive market position. Annual sales
total around SEK 2,100 M. Amarr is another important build-
ing block for ASSA ABLOY in building global leadership in
entrance automation. Its size, product offering and market
position provide a strong base in North America in overhead
sectional doors. The company is headquartered in Winston-
Salem, North Carolina, USA.

On 16 December 2013, 100 percent of Mercor’s fire door

business in Poland, the Czech Republic and Slovakia was
acquired, with annual sales of around SEK 370 M. The com-
pany is a leading manufacturer of security and fire doors in
eastern Europe, with a strong position in its domestic mar-
kets of Poland, the Czech Republic and Slovakia. The acquisi-
tion is part of the strategy of offering total door opening
solutions to ASSA ABLOY’s customers and consolidating the
market position in eastern Europe.

A total of 10 acquisitions, including minor acquisitions,
were consolidated during the year. The total purchase price
of these acquisitions was SEK 4,643 M, and acquisition analy-
ses indicate that goodwill and other intangible assets with
an indefinite useful life amount to SEK 3,360 M.

In February 2013, the Group’s 70-percent interest in
Wangli Security Products Ltd (China) was divested. The busi-
ness was not considered to be a good fit with ASSA ABLOY’s
operations in the long term. The business was recognized as
an asset of a disposal group held for sale. Sales and operating
income have not been recognized on a current basis. The
capital loss totaled SEK 11 M.

In October 2013, ASSA ABLOY signed an agreement to
acquire two leading manufacturers of fire and security doors
in China, Xinmao and Huasheng. The acquisitions require
the approval of the public authorities concerned and are
expected to be completed in Q1 2014.

ASSA ABLOY AnnuAL RepORt 2013

RepORt OF the BOARD OF DiReCtORS 63

Report of the Board of Directors

Research and development
ASSA ABLOY’s expenditure on research and development
during the year totaled SEK 1,390 M (1,344), equivalent to
2.9 percent (2.9) of sales.

ASSA ABLOY has a central function, Shared Technologies,

with responsibility for the standardization of electronics in
the Group’s common platforms. The objective is that stan-
dardization should result in lower development costs and a
shorter development time for new products.

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. The subsidiaries ASSA AB and ASSA OEM AB are
actively addressing environmental issues and are certified in
accordance with ISO 14001. Crawford Entrance Solutions
also carries on licensable and notifiable activities in Gothen-
burg and Strömstad.

Most units outside Sweden carry on licensable activities

and hold equivalent licenses under local legislation.

ASSA ABLOY’s units worldwide are working purposefully
to reduce greenhouse gas emissions. This applies to units on

both mature and emerging markets, and to both existing
and newly acquired companies.

The 2013 Sustainability Report, reporting on the Group’s

prioritized environmental activities and providing other
information on sustainable development, is available on the
company’s website: www.assaabloy.com.

transactions with related parties
No transactions occurred between ASSA ABLOY and related
parties that significantly affected the company’s financial
position and performance.

Significant events after the financial year-end
No significant events occurred after the financial year-end
and up to the date of adoption of the Annual Report of
ASSA ABLOY AB.

Outlook
Long-term outlook
ASSA ABLOY anticipates an increase in demand for security
solutions in the long term. A focus on customer value and
innovations as well as leverage on the Group’s strong posi-
tion will accelerate growth and increase profitability.
Organic sales growth is expected to be strong. The

operating margin (EBIT) and operating cash flow are
expected to develop favorably.

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2013

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 sig-
nificant 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’s
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 and brand positioning. In addi-
tion, 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 naturally
exposed to both general business environment risks and
country-specific risks, including political decisions and com-
prehensive changes in the regulatory framework etc.
Changes in customer behavior in general and the actions of
competitors affect demand for different products and their
profitability.

Customers and suppliers, including the Group’s relation-

ships with them, are subject to continuous local review. As
regards competitors, risk analyses are carried out both cen-
trally and locally.

The Group owns a number of the strongest brands in the

industry, including several global brands that complement
the ASSA ABLOY master brand. Local product brands are
gradually being linked increasingly to the master brand.
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, with a potential impact on the Group’s
financial position and performance. They include legal and
environmental risks, acquisition of new businesses, restruc-
turing measures, availability and price fluctuations of raw
materials, customer dependence etc. Risks relating to com-
pliance with laws and regulations and to financial reporting
and internal control are also included in this category.

The table on page 67 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.

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
• Country-specific risks etc.

• Legal and environmental 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 2013

RepORt OF the BOARD OF DiReCtORS 65

Report of the Board of Directors
Significant risks and risk management

A financial policy, which is approved by the Board, regulates
the allocation of responsibilities and control of the Group’s
financing activities. Group Treasury has the main responsi-
bility for financial risks within the framework established in
the financial policy. A large number of financial instruments
are used in this work. Accounting principles, risk manage-
ment and risk exposure are described in more detail in
Notes 1 and 34, as well as Note 24 regarding post-employ-
ment employee benefits.

The Group’s financial risks mainly comprise financing
risk, currency risk, interest rate risk, credit risk, and risks asso-
ciated with the Group’s pension obligations.

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 19,595 M (15,805) at year-end 2013. Debt was
mainly denominated in SEK, USD and EUR. Group Treasury
analyzes the Group’s interest rate exposure and calculates
the impact on income of interest rate changes on a rolling
12-month basis. In addition to raising variable-rate and
fixed-rate loans, various interest rate derivatives are used to
adjust interest rate sensitivity.

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 borrowing and a
high credit rating. The risk is further reduced by substantial
unutilized confirmed credit facilities.

Currency risk
Since ASSA ABLOY sells its products in countries worldwide
and has companies in a large number of countries, the
Group is exposed to the effects of exchange rate fluctua-
tions. These fluctuations affect Group earnings when the
income statements of foreign subsidiaries are translated to
Swedish kronor (translation exposure), and when products
are exported and sold in countries outside the country of
production (transaction exposure). Translation exposure is
primarily related to earnings in USD and EUR. This type of
exposure is not hedged. Currency risk in the form of transac-
tion exposure, i.e. the relative values of exports and imports
of goods, is relatively limited in the Group, even though it is
expected to increase over time due to rationalization of pro-
duction and purchasing. In accordance with financial policy,
the Group only hedged a very limited part of current cur-
rency flows in 2013. 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 foreign
currency is affected by exchange rate fluctuations and
causes a translation difference, which affects the Group’s
comprehensive income. A general weakening of the Swed-
ish krona leads to an increase in net debt, but at the same
time increases the Group’s equity. At year-end, the largest
foreign net assets were denominated in USD and EUR.

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 2013, ASSA ABLOY had obligations for pensions
and other post-employment benefits of SEK 5,381 M
(5,437). The Group manages pension assets valued at
SEK 3,425 M (3,193). Provisions in the balance sheet for
defined benefit and defined contribution pension plans and
post-employment medical benefits totaled SEK 2,015 M
(2,297). 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. Significant revaluations of obligations and plan assets
are recognized on a current basis in the balance sheet and in
other comprehensive income. The assumptions made
include discount rates, as well as anticipated inflation and
salary increases.

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2013

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 2013 there are considered to be no
outstanding legal disputes that may lead to signif-
icant costs for the Group.

A group-wide legal policy has been implemented,
specifying the legal framework in which business
operations may be conducted.

Ongoing and potential disputes and other legal
matters are reported regularly to the Group’s
central legal function.

Guidelines and policies on compliance with cur-
rent competition, export control and anti-corrup-
tion legislation have been implemented. Legal
risks associated with property and liability issues
are continually evaluated.

environmental risks

Ongoing and potential environmental risks are
regularly monitored in the operations. External
expertise is brought in for environmental assess-
ments when necessary.

Prioritized environmental activities and other
information on sustainable development are
reported in the Group’s Sustainability Report.

Acquisition of new businesses

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

The Group’s acquisitions in 2013 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 within the respective restruc-
turing program 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, Expenses by nature.

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. No individual
customer in the Group accounts for more than
10 percent of sales.

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.

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

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 exposure to the risk areas listed above
is regulated by means of its own captive insurance
company.

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

Risks relating to internal
control of financial reporting

The organization is considered to be relatively trans-
parent, with a clear allocation of responsibilities.

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 responsibilities,
authorization and other internal control procedures
are laid down in an internal control manual. Compli-
ance with internal control is evaluated annually for
all operating companies.

Risks relating to financial
reporting

A well-established Controller organization at both
division and Group level analyzes and monitors
financial reporting quality.

An annual internal audit of financial reporting is
performed for selected group companies on a
rotating basis.

See also the section ‘Basis of preparation’ in Note 1.

Further information on risk management relating
to financial reporting can be found in the Report of
the Board of Directors, section on Corporate
governance.

ASSA ABLOY AnnuAL RepORt 2013

RepORt OF the BOARD OF DiReCtORS 67

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 Group’s corporate governance is based on the

Swedish Companies Act, the NASDAQ OMX Stockholm Rule
Book for Issuers 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 2013.
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.

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 17,199 shareholders (17,591).
The principle shareholders are Investment AB Latour (9.5
percent of the share capital and 29.5 percent of the votes)
and Melker Schörling AB (3.9 percent of the share capital
and 11.5 percent of the votes). Further, Capital Group
Fonder accounted for 10.7 percent of the share capital and
7.3 percent of the votes. Foreign shareholders accounted
for around 67 percent (68) of the share capital and around
46 percent (46) of the votes. The ten largest shareholders
accounted for around 37 percent (38) of the share capital
and 57 percent (58) of the votes. For further information on
shareholders, see page 123.

A shareholders’ agreement exists between Gustaf
Douglas, Melker Schörling and related companies and
includes an agreement on right of first refusal if any party
disposes of Series A shares. The Board of 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 370,858,778 distributed among 19,175,323 Series A
shares and 351,683,455 Series B shares. The total number of
votes was 543,436,685. Each Series A share carries ten votes
and each Series B share one vote. All shares have a par value

of 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
repurchase and transfer ASSA ABLOY shares. The aim has
been to be able to adapt 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
secure the company’s long-term incentive programs (LTI).
The 2013 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 600,000 (600,000) Series B
shares after repurchase to secure the company’s undertak-
ings in connection with its long-term incentive programs
(LTI). These shares account for around 0.2 percent (0.2) of
the share capital and each share has a par value of SEK 1.00.
The purchase consideration amounted to SEK 103 M (103).
No shares were repurchased in 2013.

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 125,814 M. The Board of
Directors’ objective is that, in the long term, the dividend
should be equivalent to 33–50 percent of income after stan-
dard tax, but always taking into account ASSA ABLOY’s long-
term financing requirements.

General Meeting
Shareholders’ rights to decide on the affairs of ASSA ABLOY
are exercised at the General Meeting. Shareholders who are
registered in the share register on the record date and have
duly notified their intention to attend are entitled to take
part in the General Meeting, either in person or by 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 sup-
ported 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
for the Board of Directors and auditors. An Extraordinary

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

Stockholm Rule Book
for Issuers

• Swedish Code of

Corporate Governance
(www.bolagsstyrning.se)

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

of procedure
• Financial Policy
• Accounting Manual
• Communications Policy
Insider Trading Policy
•
Internal control
•
procedures

• Code of Conduct and
Anti-Corruption Policy

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2013

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.

Shareholders wishing to submit proposals to the Nomina-
tion Committee can do so by emailing:
nominationcommittee@assaabloy.com.

2013 Annual General Meeting
The Annual General Meeting in April 2013 was attended by
shareholders representing 60.2 percent of the share capital
and 73.0 percent of the votes.

At the Annual General Meeting, Lars Renström, Carl
Douglas, Birgitta Klasén, Eva Lindqvist, Johan Molin, Sven-
Christer Nilsson, Jan Svensson and Ulrik Svensson were re-
elected as members of the Board of Directors. Further, Lars
Renström was re-elected as Chairman and Carl Douglas as
Vice Chairman.

The 2013 Annual General Meeting approved a dividend
of SEK 5.10 per share, in accordance with the proposal of the
Board of Directors and the CEO. In addition, the Annual Gen-
eral Meeting passed resolutions on fees payable to the
Board of Directors, remuneration guidelines for senior man-
agement, authorization of the Board of Directors regarding
repurchase and transfers of own Series B shares, and the
implementation of a long-term incentive program (LTI
2013) for senior management and other key staff in the
Group, as well as appointing members of the Nomination
Committee prior to the 2014 Annual General Meeting.

Nomination Committee
The Nomination Committee prior to the 2014 Annual Gen-
eral Meeting comprises Gustaf Douglas (Investment AB
Latour), Mikael Ekdahl (Melker Schörling AB), Liselott Ledin
(Alecta), Marianne Nilsson (Swedbank Robur fonder) and
Johan Strandberg (SEB fonder/SEB Trygg Liv). Gustaf Doug-
las is Chairman of the Nomination Committee. If a share-
holder represented by one of the members of the Nomina-
tion Committee ceases to be among the major sharehold-
ers in ASSA ABLOY, the 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 2014 Annual General Meeting for any other reason.

The Nomination Committee has the task of preparing,
on behalf of the shareholders, resolutions on the election of
the Chairman, the Vice Chairman and other members of the
Board of Directors, the appointment of the auditor, the elec-
tion of the Chairman of the Annual General Meeting, the
appointment of the Nomination Committee prior to the
Annual General Meeting, and fees and associated matters.
Prior to the 2014 Annual General Meeting, the Nomina-

tion 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
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.

The Nomination Committee’s proposals for the 2014
Annual General Meeting are published at the latest in con-
junction with the formal notification of the Annual General
Meeting, which is expected to be issued around 2 April 2014.

Board of Directors
In accordance with the Swedish Companies Act, the Board
of Directors is responsible for the organization and adminis-
tration of the Group and for ensuring satisfactory control of
bookkeeping, asset management and other financial cir-
cumstances. 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 own-
ership structure. The Chairman should also, when necessary,
take part in particularly important external discussions and,
in consultation with the CEO, in other matters of particular
significance. The Chairman should ensure that the work of
the Board of Directors is evaluated annually, and that new
members of the Board of Directors receive appropriate
training.

The Board of Directors has at least four scheduled meet-

ings and one statutory meeting per year. The scheduled
meetings take place in connection with the company’s publi-
cation 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

ASSA ABLOY AnnuAL RepORt 2013

RepORt OF the BOARD OF DiReCtORS 69

Report of the Board of Directors
Corporate governance

an approved agenda. Prior to each meeting, a draft agenda
including documentation is sent to all board members.

The Board of Directors has a Remuneration Committee
and an Audit Committee. The purpose of these Committees
is to deepen and streamline the work of the Board of Direc-
tors and to prepare matters in these areas. The Committees
have no decision-making powers. The members of the Com-
mittees are appointed annually by the Board of Directors at
the statutory board meeting. Instructions for the Commit-
tees are included in the Board of Directors’ rules of procedure.

Board of Directors’ work in 2013
During the year the Board of Directors held nine meetings
(five scheduled meetings, one statutory meeting and three
extraordinary meetings). One board member was absent at
three meetings. All board members were present at the
other meetings. At the scheduled board meetings, the CEO
reported on the Group’s performance and financial posi-
tion, including the outlook for the coming quarters. Invest-
ments, acquisitions and divestments were also discussed.
All acquisitions and divestments with a value (on a debt-free
basis) exceeding SEK 100 M are decided by the Board of
Directors. This amount presumes that the matter relates to
acquisitions or divestments within the framework of the
strategy agreed by the Board of Directors.

More important matters dealt with by the Board of Direc-

tors during the year included, among other things, ASSA
ABLOY’s brand strategy and product development. The Board
of Directors also dealt with the new restructuring program
during the year. In addition, the Board of Directors dealt with
a number of acquisitions including Ameristar, Amarr and
Mercor. During the year, the Board of Directors conducted an
in-depth review of the Group’s operations in Asia Pacific and
visited EMEA’s operations in Bucharest, Romania.

Remuneration Committee
During 2013 the Remuneration Committee comprised
Lars Renström (Chairman), Jan Svensson and Sven-Christer
Nilsson.

The Remuneration Committee’s task is to draw up remu-
neration guidelines for senior management, which the Board
of Directors proposes to the Annual General Meeting for res-
olution. The Board of Directors’ proposal for guidelines prior
to the 2014 Annual General Meeting is set out on page 77.

The Remuneration Committee also prepares, negotiates
and evaluates matters regarding salaries, bonus, pension, sev-
erance pay and incentive programs for the CEO and other
senior executives.

The Committee held two meetings in 2013, one of which

was by phone. One member was absent at one of the meet-
ings. All members were present at the other meeting.

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 2014. The meetings of the Committee are minuted, the
minutes are distributed with material for the Board of Direc-
tors and a verbal report is given at board meetings.

Audit Committee
During 2013 the Audit Committee comprised Ulrik
Svensson (Chairman), Birgitta Klasén and Jan Svensson.

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 2013 at which all members, the company’s
auditor and representatives of senior management were
present. More important matters dealt with by the Audit
Committee during the year included internal control, finan-
cial statements and valuation matters, tax matters, insur-
ance and risk management matters, and legal risk areas.

The meetings of the Committee are minuted, the min-
utes are distributed with material for the Board of Directors
and a verbal report is given at board meetings.

ASSA ABLOY’s Board of Directors
The Board of Directors is elected annually at the Annual
General Meeting for the period until the end of the next
Annual General Meeting and shall, according to the articles
of association, comprise a minimum six and a maximum ten
members elected by the Meeting. Two of the members are
appointed by the employee organizations in accordance
with Swedish law. The employee organizations also appoint
two deputies. The Board of Directors currently consists of
eight elected members and two employee representatives.
With the exception of the CEO, none of the board members
are members of the Executive Team. The CEO has no signifi-
cant shareholdings or partnerships in companies with sig-
nificant 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 2013
Annual General Meeting passed a resolution that board fees
should remain unchanged in relation to the previous year at
a total amount of SEK 4,600,000 (excluding remuneration
for committee work), to be allocated between the mem-
bers as follows: SEK 1,350,000 to the Chairman, SEK 750,000
to the Vice Chairman and SEK 500,000 to each of the other
members appointed by the Annual General Meeting and
not employed by the company. As remuneration for com-
mittee 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
(except the Chairman) SEK 100,000, and members of the
Remuneration Committee (except the Chairman)
SEK 50,000.

The Chairman and other board members have no pen-
sion benefits or severance pay agreements. The CEO and
employee representatives do not receive board fees. For fur-
ther information on the remuneration of board members in
2013, see Note 33.

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2013

Independence of the Board of Directors

ASSA ABLOY’s Board
of Directors fulfills the
requirements for
independence in
accordance with the
Swedish Code of
Corporate Governance.

name

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

position

independent of the company
and its management

independent of the company’s
major shareholders

Chairman
Vice Chairman
Board member
Board member
Board member, President and CEO
Board member
Board member
Board member

Yes
Yes
Yes
Yes
No
Yes
Yes
Yes

Yes
No
Yes
Yes
–
Yes
No
No

The Board of Directors’ composition and shareholdings

position

elected

Born

Remuneration
Committee

Audit
Committee

name

Lars Renström
Carl Douglas
Birgitta Klasén
Eva Lindqvist
Johan Molin

Chairman
Vice Chairman
Board member
Board member
Board member, President
and CEO

Sven-Christer Nilsson Board member
Board member
Jan Svensson
Board member
Ulrik Svensson
Board member, employee
Kurt Hellström
representative
Board member, employee
representative
Deputy, employee
representative
Deputy, employee
representative

Seppo Liimatainen

Mats Persson

Rune Hjälm

2008
2004
2008
2008

2006
2001
2012
2008

1951
1965
1949
1958

1959
1944
1956
1961

2013

1957

1994

1955

2005

1964

2013

1950

Chairman
–
–
–

–
Member
Member
–

–
–
Member
–

–
–
Member
Chairman

–

Series A
shares¹

–
13,865,243
–
–

Series B
shares¹

10,000
21,300,000
7,000
2,300

–
–
–
–

–

533,542
5,000
2,000
3,000

–

2,600

1 Including related parties and through companies. Shareholdings as at 31 December 2013. This information is updated regularly at www.assaabloy.com.

ASSA ABLOY AnnuAL RepORt 2013

RepORt OF the BOARD OF DiReCtORS 71

Report of the Board of Directors
Corporate governance Board of Directors

Board members elected by the 2013 Annual General Meeting

Lars Renström
Chairman.
Board member since 2008.
Born 1951.
Master of Science in Engineering and Bachelor of Science in
Business Administration and Economics. President and CEO
of Alfa Laval AB since 2004. President and CEO of Seco Tools
AB 2000–2004. President and Head of Division of Atlas
Copco Rock Drilling Tools 1997–2000. Prior to that, a
number of senior posts at ABB and Ericsson.
Other appointments: Board member of Alfa Laval AB and
Tetra Laval Group.
Shareholdings (including related parties and through
companies): 10,000 Series B shares.

Carl Douglas
Vice Chairman.
Board member since 2004.
Born 1965.
BA (Bachelor of Arts).
Self-employed.
Other appointments: Vice Chairman of Securitas AB. Board
member of Investment AB Latour and Swegon AB.
Shareholdings (including related parties and through
companies): 13,865,243 Series A shares and 21,300,000
Series B shares through Investment AB Latour.

Birgitta klasén
Board member since 2008.
Born 1949.
Master of Science in Engineering.
Independent IT consultant (Senior IT Advisor). Chief
Information Officer (CIO) and Head of Information
Management at EADS (European Aeronautics Defence and
Space Company) 2004–2005. CIO and Senior Vice President
at Pharmacia 1996–2001. Prior to that, CIO of Telia. Held
various posts at IBM 1976–1994.
Other appointments: Board member of Acando AB
and IFS AB.
Shareholdings (including related parties and through
companies): 7,000 Series B shares.

eva Lindqvist
Board member since 2008.
Born 1958.
Master of Science in Engineering and Bachelor of Science in
Business Administration and Economics.
Senior Vice President of Mobile Business at TeliaSonera AB
2006–2007. Prior to that, several senior posts at TeliaSonera
AB, including President and Head of Business Operation
International Carrier, and various posts in the Ericsson Group
1981–1999.
Other appointments: Board member of companies
including Tieto Oy, Sweco AB and Episerver AB. Member of
the Royal Swedish Academy of Engineering Sciences (IVA).
Shareholdings (including related parties and through
companies): 2,300 Series B shares.

Johan Molin
Board member since 2006.
Born 1959.
Bachelor of Science in Business Administration and
Economics.
President and CEO of ASSA ABLOY AB since 2005. CEO of
Nilfisk-Advance 2001–2005. Various senior positions mainly
in finance and marketing, later divisional head in the Atlas
Copco Group 1983–2001.
Other appointments: Chairman of Nobia AB.
Shareholdings (including related parties and through
companies): 533,542 Series B shares.

Sven-Christer nilsson
Board member since 2001.
Born 1944.
Bachelor of Science.
President and CEO of Telefonaktiebolaget LM Ericsson 1998–
1999, various executive positions mainly in marketing and
general management in the Ericsson Group 1982–1997.
Other appointments: Chairman of the Swedish Defence
Materiel Administration (FMV). Board member of CEVA, Inc.
Shareholdings (including related parties and through
companies): 5,000 Series B shares.

Lars Renström

Carl Douglas

Birgitta Klasén

Eva Lindqvist

Johan Molin

Sven-Christer Nilsson

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2013

Shareholdings as at 31 December 2013. This information is updated regularly at www.assaabloy.com.

Report of the Board of Directors

Corporate governance Board of Directors

ulrik Svensson
Board member since 2008.
Born 1961.
Bachelor of Science in Business Administration and
Economics.
CEO of Melker Schörling AB since 2006. CFO of Swiss
International Airlines Ltd. 2003–2006. CFO of Esselte AB
2000–2003 and Controller/CFO of the Stenbeck Group’s
foreign telecoms ventures 1992–2000.
Other appointments: Board member of AarhusKarlshamn AB,
Loomis AB, Hexagon AB, Hexpol AB and Flughafen Zürich AG.
Shareholdings (including related parties and through
companies): 3,000 Series B shares.

Jan Svensson
Board member since 2012.
Born 1956.
Degree in Mechanical Engineering and Bachelor of Science
in Business Administration and Economics.
President and CEO of Investment AB Latour since 2003.
Other appointments: Chairman of AB Fagerhult, Nederman
Holding AB and Oxeon AB. Board member of Loomis AB,
Investment AB Latour and Tomra Systems ASA.
Shareholdings (including related parties and through
companies): 2,000 Series B shares.

Board members appointed by employee organizations

kurt hellström
Board member since 2013.
Born 1957.
Employee representative, Federation of Salaried Employees in
Industry and Services (PTK).
Shareholdings (including related parties and through companies): –

Mats persson
Board member since 1994.
Born 1955.
Employee representative, Swedish Metal Workers Union.
Shareholdings (including related parties and through companies): –

Rune hjälm
Deputy board member since 2005.
Born 1964.
Employee representative, Swedish Metal Workers Union.
Chairman of European Works Council (EWC) in the
ASSA ABLOY Group.
Shareholdings (including related parties and through companies): –

Seppo Liimatainen
Deputy board member since 2013.
Born 1950.
Employee representative, Federation of Salaried Employees in
Industry and Services (PTK).
Shareholdings (including related parties and through companies):
2,600 Series B shares

Ulrik Svensson

Jan Svensson

Kurt Hellström

Mats Persson

Rune Hjälm

Seppo Liimatainen

ASSA ABLOY AnnuAL RepORt 2013

RepORt OF the BOARD OF DiReCtORS 73

Shareholdings as at 31 December 2013. This information is updated regularly at www.assaabloy.com.

Report of the Board of Directors
Corporate governance Executive Team

Johan Molin

Tzachi Wiesenfeld

Carolina Dybeck Happe

Thanasis Molokotos

Denis Hébert

Tim Shea

Magnus Kagevik

Juan Vargues

Ulf Södergren

Executive Team

Johan Molin
Born 1959.
Bachelor of Science in Business
Administration and Economics.
President and Chief Executive Officer (CEO).
Head of Global Technologies division.
Employed since: 2005.
Shareholdings: 533,542 Series B shares.

tzachi Wiesenfeld
Born 1958.
Bachelor of Science in Industrial
Engineering, MBA.
Executive Vice President.
Head of EMEA division.
Employed since: 2000.
Shareholdings: 11,321 Series B shares.

thanasis Molokotos
Born 1958.
Master of Science in Engineering.
Executive Vice President.
Head of Americas division.
Employed since: 1996.
Shareholdings: 36,785 Series B shares.

tim Shea
Born 1959.
Master of Science in Engineering, MBA.
Executive Vice President.
Head of Global Technologies
business unit ASSA ABLOY Hospitality.
Employed since: 2004.
Shareholdings: 8,647 Series B shares.

Juan Vargues
Born 1959.
Degree in Mechanical Engineering, MBA.
Executive Vice President.
Head of Entrance Systems division.
Employed since: 2002.
Shareholdings: 24,149 Series B shares.

Carolina Dybeck happe
Born 1972.
Bachelor of Science in Business
Administration and Economics.
Executive Vice President and
Chief Financial Officer (CFO).
Employed since: 2012.
Shareholdings: 7,719 Series B shares.

Denis hébert
Born 1956.
Bachelor of Science in Business
Administration and Economics, MBA.
Executive Vice President.
Head of Global Technologies
business unit HID Global.
Employed since: 2002.
Shareholdings: 22,730 Series B shares.

Magnus kagevik
Born 1967.
Master of Science in Mechanical
Engineering.
Executive Vice President.
Head of Asia Pacific division.
Employed since: 2007.
Shareholdings: 5,749 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: 12,377 Series B shares.

Changes in the executive team
Jonas Persson, Executive Vice President and Head of Asia Pacific division during the period
2009–2013, left ASSA ABLOY on 31 December 2013. He is succeeded by Magnus Kagevik as
from 1 January 2014.

Shareholdings as at 31 December 2013. This information is updated regularly at www.assaabloy.com.

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2013

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,
export control, and environmental issues. ASSA ABLOY’s
financial policy and accounting manual provide the frame-
work for financial control and monitoring. The Group’s com-
munications policy aims to ensure that essential informa-
tion is provided at the right time and in compliance with
applicable rules and regulations. ASSA ABLOY has adopted
an insider policy to complement applicable Swedish insider
legislation. This policy applies to all persons reported to the
Swedish Financial Supervisory Authority as holding an
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 eth-
ics, working conditions, human rights and social responsi-
bility. Application of the Code of Conduct in the Group’s dif-
ferent units is monitored regularly to ensure compliance
and relevance. ASSA ABLOY has also adopted an anti-cor-
ruption policy and an export control policy that apply to the
whole Group.

Decentralized organization
ASSA ABLOY’s operations are decentralized. Decentraliza-
tion is a deliberate strategic choice based on the industry’s
local nature and a conviction of the benefits of a divisional
control model.

ASSA ABLOY’s operating structure is designed to create

maximum transparency, to facilitate financial and 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 40 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, among other things, the Board of Directors’
rules of procedure and instructions to the CEO, the Code of
Conduct, financial policy, and an annual financial evaluation
plan. Regular meetings are held with the Audit Committee.
The Group has an internal audit function whose primary
objective is ensuring reliable financial reporting.

ASSA ABLOY’s effective decentralized organizational
structure makes a substantial contribution to a good con-
trol 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 2013

RepORt OF the BOARD OF DiReCtORS 75

Risk assessment
Risk assessment includes identifying and evaluating the risk
of material errors in accounting and financial reporting at
Group, division and local levels. A number of previously
established documents govern the procedures for account-
ing, financial statements, 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 estab-
lished and carries out annual financial evaluations in accor-
dance with the plan annually adopted by the Audit Commit-
tee. In 2013 separate compliance testing of the Group’s
anti-corruption policy was performed in four operating
companies. The results of the financial evaluations and the
compliance evaluation of the anti-corruption policy are
submitted to the Audit Committee and the auditors.
Group-wide internal control guidelines are reviewed annu-
ally. These guidelines affect various procedures, such as
order, purchase, financial statements, plant management,
compliance with various policies, legal issues and HR issues.

Information and communication
Reporting and accounting manuals as well as other financial
reporting guidelines are available to all employees con-
cerned on the Group’s intranet. A regular review and analy-
sis 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 legal and operating review. Operating reviews con-
form to a structure in which sales, earnings, cash flow, capi-
tal 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. PwC have been the Group’s
auditors since its formation in 1994. In connection with the
2013 Annual General Meeting, the authorized public
accountant Bo Karlsson became the auditor in charge,
replacing the authorized public accountant Peter Nyllinge.
In addition to ASSA ABLOY, Bo Karlsson, born 1966, is
responsible for auditing SKF and Fagerhult.

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 conducted in accordance with
International Standards in Auditing (ISA), which has been
good auditing practice in Sweden since 2011. The audit of
the financial statements for legal entities outside Sweden is
conducted in accordance with statutory requirements and
other applicable rules in each country. For information
about the fees paid to auditors and other assignments car-
ried out in the Group in the past three financial years, see
Note 3 and the Annual Report for 2012, Note 3.

RepORt OF the BOARD OF DiReCtORS

ASSA ABLOY AnnuAL RepORt 2013

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
Annual General Meeting adopts the following guidelines for
the remuneration and other employment conditions of the
President and CEO and the other members of the Executive
Team. The proposed guidelines below do not involve any
material change, compared with the guidelines adopted by
the 2013 Annual General Meeting. The basic principle is that
remuneration and other employment conditions should be
in line with market conditions and competitive. ASSA ABLOY
takes into account both global remuneration practice and
practice in the home country of each member of the Execu-
tive Team. The total remuneration of the Executive Team
should consist of basic salary, variable components in the
form of annual and long-term variable remuneration, other
benefits and pension.

The total remuneration of the Executive Team, including
previous commitments not yet due for payment, is reported
in Note 33.

Fixed and variable remuneration
The basic salary should be competitive and reflect responsi-
bility and performance. The variable part consists of remu-
neration paid partly in cash and partly in the form of shares.
The Executive Team should be able to receive variable cash
remuneration, based on the outcome in relation to financial
targets and, when applicable, individual targets. This remu-
neration should be equivalent to a maximum 75 percent of
the basic salary (excluding social security costs).

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

work of the Board of Directors’ proposal for a long-term
incentive program, be able to receive variable remuneration
in the form of shares, based on the outcome in relation to a
range determined by the Board of Directors for the perfor-

mance of earnings per share during 2014. This remunera-
tion model also includes the right, when purchasing a share
under certain conditions, to receive a free matching share
from the company. This remuneration should, if the share
price is unchanged, be equivalent to a maximum 75 percent
of the basic salary (excluding social security costs).

The cost of variable remuneration for the Executive Team

as above, assuming maximum outcome, totals around
SEK 54 M (excluding social security costs). This calculation
is made on the basis of the current members of the Execu-
tive 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 bene-
fits plus an additional 12 months’ basic salary.

Deviation from guidelines
The Board of Directors should have the right to deviate from
the guidelines adopted by the Annual General Meeting, if
there are particular reasons for doing so in an individual case.

ASSA ABLOY AnnuAL RepORt 2013

RepORt OF the BOARD OF DiReCtORS 77

Sales and income

• Organic growth was 2 percent (2), while acquired growth was 4 percent (9).

• Operating income (EBIT) excluding items affecting comparability increased by 6 per-

cent to SEK 7,923 M (7,501), equivalent to an operating margin of 16.3 percent (16.1).

• Earnings per share after full dilution, excluding items affecting comparability,

increased by 6 percent to SEK 14.84 (13.97).

Sales
The Group’s sales totaled SEK 48,481 M (46,619). Exchange
rate effects had an impact on sales of SEK –1,156 M (290).

Change in sales

Organic growth
Acquired growth
Exchange rate effects
total

2012

2013

2
9
1
12

2
4
–2
4

The total change in sales for 2013 was 4 percent (12). Organic
growth was 2 percent (2) and acquired units made a positive
contribution of 4 percent (9).

Sales by product group
Mechanical locks, lock systems and fittings accounted for 33
percent (36) of total sales. Electromechanical and electronic
locks rose to 49 percent (46) of sales, of which entrance auto-
mation accounted for 25 percentage points (24). Security
doors and hardware accounted for 18 percent (18) of sales.

Cost structure
Total wage costs, including social security expenses and pen-
sion expenses, amounted to SEK 13,759 M (12,705), equiva-
lent to 28 percent (27) of sales. The average number of
employees was 42,556 (42,762).

The Group’s material costs amounted to SEK 16,977 M

(16,111), equivalent to 35 percent (35) of sales.

Other purchasing costs totaled SEK 9,789 M (9,256),

equivalent to 20 percent (20) of sales.

Depreciation and amortization of non-current assets
amounted to SEK 993 M (1,034), equivalent to 2 percent (2)
of sales.

Operating income
Operating income (EBIT) excluding restructuring costs rose
to SEK 7,923 M (7,501), due to efficiency savings and contin-
ued growth in operations. The corresponding operating
margin was 16.3 percent (16.1). Exchange rate effects
amounted to SEK –261 M (37).

Operating income before depreciation and amortization
(EBITDA) excluding restructuring costs totaled SEK 8,917 M
(8,536). The corresponding margin was 18.4 percent (18.3).

items affecting comparability
Operating income for the year was reduced by restructuring
costs of SEK 1,000 M (–), of which impairment of non-current
assets and inventories totaled SEK 85 M. The remainder
mainly relates to costs in connection with staff cuts and can-
cellation of lease agreements.

income before tax
Income before tax excluding restructuring costs totaled
SEK 7,381 M (6,784). The exchange rate effect amounted to
SEK –247 M (28). Net financial items amounted to SEK
–542 M (–717). The improvement in net financial items is
mainly due to lower interest expenses and lower expenses
for discounted deferred considerations. The profit margin,
defined as income before tax in relation to sales, was 15.2
percent (14.6) excluding restructuring costs.

The parent company’s income before tax was

SEK 2,896 M (3,507).

tax
The Group’s tax expense totaled SEK 1,595 M (1,623), equiv-
alent to an effective tax rate of 25 percent (24).

earnings per share
Earnings per share after full dilution, excluding items affect-
ing comparability, amounted to SEK 14.84 (13.97), an
increase of 6 percent.

SALES AND OPERATING INCOME

MSEK

60,000

50,000

40,000

30,000

20,000

10,000

09 10

MSEK

9,000

7,500

6,000

4,500

3,000

1,500

 Sales

Operating income1

1 Excluding items affecting
comparability 2009, 2011
and 2013.

COnSOLiDAteD FinAnCiAL StAteMentS

ASSA ABLOY AnnuAL RepORt 2013

Consolidated income statement and
Statement of comprehensive income

note

4
5
6–9, 33

10
9, 11

13
13
13

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 income1
Financial expenses1
income before tax1

Tax on income1
net income from continuing operations1

Net income of disposal group classified as held for
sale and discontinued operations
net income1

net income attributable to:
Parent company’s shareholders1
Non-controlling interest

earnings per share
before dilution, SEK1
after dilution, SEK1
after dilution and excluding items affecting comparability, SEK1

Statement of comprehensive income, Sek M

net income1

Other comprehensive income:
items that will not be reclassified to profit or loss
Actuarial gain/loss on post-employment benefit obligations, net after tax1
total1

items that may be reclassified subsequently to profit or loss
Share of other comprehensive income of associates
Cashflow hedges
Net investment hedges
Exchange rate differences
total

total comprehensive income1

total comprehensive income attributable to:
– Parent company’s shareholders1
– Non-controlling interest

2012
Restated

46,619
–28,190
18,429

–7,162
–2,410
–1,344
–82
70
7,501

32
–749
6,784

–1,623
5,161

11
5,172

5,158
14

13.97
13.97
13.97

2012

5,172

–34
–34

–96
–1
181
–978
–893

4,245

4,238
6

2013

48,481
–30,082
18,399

–7,575
–2,470
–1,390
–133
94
6,924

28
–571
6,381

–1,595
4,786

–11
4,775

4,772
2

12.89
12.89
14.84

2013

4,775

225
225

–18
9
0
143
134

5,133

5,129
4

¹ The amounts for 2012 has been adjusted due to a change in accounting principles for defined benefit pension plans.

SALES BY PRODUCT GROUP, 2013

EARNINGS PER SHARE AFTER TAX AND DILUTION

 Mechanical locks, lock systems

and fittings, 33% (36)

 Entrance automation, 25% (24)
 Electromechanical and

electronic locks, 24% (22)

 Security doors and
hardware, 18% (18)

SEK

 Earnings per share

after tax and dilution1

1 Excluding items affecting
comparability 2009, 2011
and 2013.

ASSA ABLOY AnnuAL RepORt 2013

COnSOLiDAteD FinAnCiAL StAteMentS 79

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 Technologies 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
entrance automation products and service.

eMeA
Sales totaled SEK 13,165 M (13,382), with organic growth
of –1 percent (1). Acquired units contributed 1 percent (4)
to sales. Operating income excluding restructuring costs
amounted to SEK 2,197 M (2,279), with an operating margin
(EBIT) of 16.7 percent (17.0). Return on capital employed
excluding restructuring costs was 20.7 percent (22.6).
Ope r ating cash flow before interest paid was SEK 2,084 M
(2,241).

global technologies
Sales totaled SEK 6,472 M (6,262), with organic growth of
6 percent (6). Acquired units contributed 0 percent (1)
to sales. Operating income excluding restructuring costs
amounted to SEK 1,184 M (1,073), with an operating margin
(EBIT) of 18.3 percent (17.1). Return on capital employed
excluding restructuring costs was 19.7 percent (17.3).
Ope rating cash flow before interest paid was SEK 870 M
(1,140).

Demand in western Europe remained weak, but showed

The division showed continued strong organic growth

signs of leveling off in the latter part of the year. Increased
market presence, continued cost-efficiency and new prod-
ucts contributed to a continued good operating margin.

during the year for both business units, HID Global and
ASSA ABLOY Hospitality, driven by new products and ser-
vices. Operating margin and return on capital employed
increased substantially.

Americas
Sales totaled SEK 10,121 M (9,671), with organic growth of
6 percent (4). Acquired units contributed 2 percent (1) to
sales. Operating income excluding restructuring costs
amounted to SEK 2,140 M (2,007), with an operating margin
(EBIT) of 21.1 percent (20.8). Return on capital employed
excluding restructuring costs was 22.7 percent (23.6).
Operating cash flow before interest paid was SEK 1,983 M
(1,797).

Growth remained good in the majority of the division’s

product areas, particularly electromechanical products.
Profitability was strong due to continued expansion of mar-
ket presence and an innovative product program.

Asia pacific
Sales totaled SEK 7,420 M (7,224), with organic growth of
4 percent (3). Acquired units contributed 2 percent net (1)
to sales. Operating income excluding restructuring costs
amounted to SEK 1,032 M (978), with an operating margin
(EBIT) of 13.9 percent (13.5). Return on capital employed
excluding restructuring costs was 16.3 percent (20.7). Ope-
rating cash flow before interest paid was SEK 932 M (1,348).
Sales increased in China and South Korea during the year,
but demand was more subdued on Southeast Asian markets
and stable in Australia. Operating margin and cash flow were
maintained at a good level.

entrance Systems
Sales totaled SEK 12,237 M (10,979), with organic growth of
0 percent (–2). Acquired units contributed 14 percent (37)
to sales. Operating income excluding restructuring costs
amounted to SEK 1,733 M (1,546), with an operating margin
(EBIT) of 14.2 percent (14.1). Return on capital employed
excluding restructuring costs was 12.1 percent (12.3).
Ope rating cash flow before interest paid was SEK 1,792 M
(1,648).

The market position continued to strengthen consider-

ably, partly due to acquisitions and new product develop-
ment. Sales and operating cash flow increased substantially
compared with the previous year, while the operating mar-
gin remained healthy.

Other
The costs of group-wide functions, such as corporate man-
agement, accounting and finance, supply management and
group-wide product development, totaled SEK 363 M (382).
Elimination of sales between the Group’s segments and
restructuring costs are included in ‘Other’.

EXTERNAL SALES, 2013

 EMEA, 27% (28)
 Americas, 21% (21)
 Asia Pacific, 14% (14)
 Global Technologies, 13% (13)
 Entrance Systems, 25% (24)

COnSOLiDAteD FinAnCiAL StAteMentS

ASSA ABLOY AnnuAL RepORt 2013

Results by division

eMeA1

Americas2

Asia pacific3

global
technologies4

entrance
Systems

Sek M

Sales, external
Sales, internal
Sales

2012

2013

2012

2013

13,177 12,957
209
13,382 13,165

204

9,623 10,074
48
9,671 10,121

Organic growth
Share of earnings in associates

1%
–6

–1%
1

4%
–

6%
–

2012

6,705
518
7,224

3%
5

2013

6,879
542
7,420

4%
19

2012

6,191
71
6,262

6%
–

2013

2012

2013

6,406 10,923 12,166
71
6,472 10,979 12,237

6%
–

–2%
71

0%
74

Other

total

2012

–
–8987
–898

–
–

2013

–
–9357
–935

2012

2013

46,619 48,481
–
46,619 48,481

–

–
–

2%
70

2%
94

Operating income (eBit) excluding
items affecting comparability
Operating margin (EBIT) excluding
items affecting comparability
Items affecting comparability 6

Operating income (eBit)
Operating margin (EBIT)
Net financial items8
Tax on income8
Net income from discontinued operations
net income8

Capital employed8
–of which goodwill
– of which other intangible
and tangible assets
–of which shares in associates
Return on capital employed excluding
items affecting comparability8

Operating income (EBIT)
Restructuring costs
Depreciation and amortization
Investments in tangible
and intangible assets
Sales of tangible and intangible assets
Change in working capital
Cash flow 5

Non-cash items
Interest paid and received
Operating cash flow 5

2,279

2,197

2,007

2,140

978

1,032

1,073

1,184

1,546

1,733

–382

–363

7,501

7,923

17.0%
–

2,279
17.0%

16.7%
–300

1,897
14.4%

20.8%
–

2,007
20.8%

21.1%
–18

2,121
21.0%

13.5%
–

978
13.5%

13.9%
–183

850
11.4%

17.1%
–

1,073
17.1%

18.3%
–38

1,146
17.7%

14.1%
–

1,546
14.1%

14.2%
–313

1,420
11.6%

–
–

–382
–

–
–149

–512
–

16.1%
–

16.3%
–1,000

7,501
16.1%
–717
–1,623
11
5,161

6,924
14.2%
–542
–1,595
–11
4,786

9,217 10,499
6,395
5,846

8,301 10,475
7,319
5,913

2,556
22

2,703
8

1,442
–

2,384
–

5,168
4,326

2,488
315

7,436
4,311

2,481
371

5,717
4,524

1,133
–

1,338
–

3,377
1,182

3,850
1,296

6,114 13,189 14,592
9,282
8,323
4,511

–169
–

–708
–

41,422 48,408
28,932 31,817

22.6%

20.7%

23.6%

22.7%

20.7%

16.3%

17.3%

19.7%

12.3%

12.1%

2,279
–
353

–441
128
–79
2,241

1,897
300
328

–376
39
–104
2,084

2,007
–
176

–211
9
–185
1,797

2,121
18
179

–192
11
–154
1,983

978
–
162

–203
274
135
1,348

850
183
157

–224
24
–57
932

1,073
–
172

–112
0
8
1,140

1,146
38
159

–376
1
–98
870

1,546
–
164

–113
109
–59
1,648

1,420
313
168

–138
31
–2
1,792

97
–

–

–382
–
6

–7
9
102
–272

–312
–546

97
–

11,093 12,854
1,675

1,519

–

18.1%

17.1%

–512
149
2

–2
–
–82
–445

17
–431

7,501
–
1,034

–1,086
530
–77
7,902

–312
–546
7,044

6,924
1,000
993

–1,308
105
–497
7,218

17
–431
6,803

Average number of employees

10,260 10,089

6,620

6,726 15,284 14,243

3,029

3,136

7,429

8,191

140

171

42,762 42,556

1 Europe, Middle East and Africa.
2 North and South America.
3 Asia, Australia and New Zealand.
4 ASSA ABLOY Hospitality and
HID Global.
5 Excluding restructuring payments.
6 Items affecting comparability
consist of restructuring costs.
7 Of which eliminations SEK 935 M
(898).
8 Adjusted due to change in
accounting principles for defined
benefit pension plans.

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, 2013 1, 2

AVERAGE NUMBER OF EMPLOYEES, 2013

 EMEA, 27% (29)
 Americas, 26% (25)
 Asia Pacific, 12% (12)
 Global Technologies, 14% (14)
 Entrance Systems, 21% (20)
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, 24% (24)
 Americas, 16% (16)
 Asia Pacific, 34% (36)
 Global Technologies, 7% (7)
 Entrance Systems, 19% (17)

ASSA ABLOY AnnuAL RepORt 2013

COnSOLiDAteD FinAnCiAL StAteMentS 81

Financial position

• Capital employed amounted to SEK 48,408 M (41,422).

• Return on capital employed remained high at 17.1 percent (18.1).

• The net debt/equity ratio was 0.68 (0.61).

Sek M

Capital employed
– of which goodwill
Assets and liabilities of disposal group
held for sale
Net debt
Equity
–of which non-controlling interests

2012

41,422
28,932

385
15,805
26,001
183

2013

48,408
31,817

–
19,595
28,813
0

Capital employed
Capital employed in the Group, defined as total assets less
interest-bearing assets and non-interest-bearing liabilities
including deferred tax liabilities, amounted to SEK 48,408 M
(41,422). The return on capital employed excluding items
affecting comparability was 17.1 percent (18.1).

Intangible assets amounted to SEK 38,280 M (34,422).
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 3,436 M as a result of completed acquisitions.
A valuation model, based on discounted future cash flows, is
used for impairment testing of goodwill and other intangi-
ble assets with an indefinite useful life.

Tangible assets amounted to SEK 6,390 M (5,630). Capi-
tal expenditure on tangible and intangible assets, less sales
of tangible and intangible assets, totaled SEK 1,202 M (557).
Depreciation and amortization amounted to SEK 993 M
(1,034).

Trade receivables amounted to SEK 8,531 M (7,557) and
inventories totaled SEK 6,498 M (5,905). The average collec-
tion period for trade receivables was 53 days (51). Material
throughput time was 93 days (98). The Group is making sys-
tematic efforts to increase capital efficiency.

net debt
Net debt amounted to SEK 19,595 M (15,805), of which pen-
sion commitments and other post-employment benefits
accounted for SEK 2,015 M (2,297).

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
high acquisition activity and deferred considerations paid
for acquisitions completed in previous years.

External financing
The Group’s long-term loan financing mainly consists of a
Private Placement Program in the USA totaling USD 698 M
(698), a GMTN program of SEK 8,506 M (5,392), a loan from
the European Investment Bank of EUR 110 M (110), and a
loan from the Nordic Investment Bank of EUR 110 M (0).
During the year, a total of nine issues were made under the
GMTN program for a total amount of around SEK 3,100 M.
Other changes in long-term loans are mainly due to some of
the original long-term loans now having less than one year
to maturity.

The Group’s short-term loan financing mainly consists of
two Commercial Paper Programs for a maximum USD 1,000
M (1,000) and SEK 5,000 M (5,000) respectively. At year-end,
SEK 1,580 M (2,152) 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 900 M (1,100), which was wholly
unutilized at year-end. The reduction in short-term financ-
ing is mainly linked to the increase in long-term capital mar-
ket issues implemented to extend the Group’s maturity
structure. The interest coverage ratio, defined as income
before tax plus net interest, divided by net interest, was 13.5
(11.1). Fixed interest terms fell somewhat during the year,
with an average term of 21 months (34) at year-end.

Cash and cash equivalents amounted to SEK 362 M (907)

and are invested in banks with high credit ratings. Some of
the Group’s main financing agreements contain a customary
Change of Control clause. This clause means that lenders
have the right in certain circumstances to demand the rene-
gotiation of conditions or to terminate the agreements
should control of the company change.

equity
The Group’s equity totaled SEK 28,813 M (26,001) at year-
end. The return on equity was 17.5 percent (20.9). The
equity ratio was 43.8percent (43.2). The debt/equity ratio,
defined as net debt divided by equity, was 0.68 (0.61).

NET DEBT

CAPITAL EMPLOYED AND RETURN ON CAPITAL EMPLOYED

 Net debt

Net debt / equity

SEK M

20,000

15,000

10,000

5,000

1,00

1.0

0.75

0.50

0.25

0,00

SEK M

50,000

40,000

30,000

20,000

10,000

 Capital employed
Return on capital
employed1

1 Excluding items affecting
comparability 2009, 2011
and 2013.

COnSOLiDAteD FinAnCiAL StAteMentS

ASSA ABLOY AnnuAL RepORt 2013

Consolidated balance sheet

Sek M

ASSetS
non-current assets
Intangible assets
Tangible assets
Investments in associates
Other financial assets
Deferred tax assets
total non-current assets

Current assets
Inventories
Trade receivables
Current tax receivables
Other current receivables
Prepaid expenses and accrued income
Derivative financial instruments
Short-term investments
Cash and cash equivalents
Assets of disposal group classified as held for sale
total current assets
tOtAL ASSetS

eQuitY 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
Deferred tax liabilities
Pension provisions
Other non-current provisions
Other non-current liabilities
total non-current liabilities

Current liabilities
Short-term loans
Convertible debentures
Derivative financial instruments
Trade payables
Current tax liabilities
Current provisions
Other current liabilities
Accrued expenses and deferred income
Liabilities of disposal group classified as held for sale
total current liabilities
tOtAL eQuitY AnD LiABiLitieS

note

1 January
2012
Restated

2012
Restated

14
15
17
19
18

20
21

34
34
34
31

34
18
24
25
34

34
34
34

25
26
27
31

31,455
5,684
1,211
164
1,141
39,656

5,704
6,924
325
620
551
234
50
1,665
–
16,072
55,728

368
9,227
–287
13,482
22,790
208
22,998

7,422
497
2,265
1,315
2,668
14,167

6,531
896
179
3,796
330
2,028
1,642
3,161
–
18,563
55,728

34,422
5,603
1,519
89
1,719
43,352

5,905
7,557
336
822
578
114
24
907
610
16,853
60,205

371
9,675
–1,173
16,946
25,819
183
26,001

11,194
1,226
2,297
1,871
704
17,292

3,301
–
87
3,883
822
1,204
3,991
3,397
226
16,911
60,205

2013

38,280
6,390
1,675
86
1,677
48,109

6,498
8,531
352
869
699
139
204
362
–
17,654
65,763

371
9,675
–1,041
19,808
28,812
0
28,813

13,329
1,416
2,015
2,373
976
20,109

4,875
–
107
4,393
1,276
856
1,754
3,580
–
16,842
65,763

ASSA ABLOY AnnuAL RepORt 2013

COnSOLiDAteD FinAnCiAL StAteMentS 83

Cash flow

• Operating cash flow remained strong and amounted to SEK 6,803 M (7,044).

• Net capital expenditure totaled SEK 1,202 M (557).

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

2012

5,990
498
–557
1,113
7,044

2013

6,224
647
–1,202
–1,134
6,803

investments in subsidiaries
The total purchase price of investments in subsidiaries
amounted to SEK 4,643 M (4,799), of which the cash flow
effect was SEK –4,783 M (–3,836). Acquired cash totaled
SEK 53 M (345).

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

Sek M

Net debt at 1 January
Operating cash flow
Restructuring payments
Tax paid
Acquisitions/Disposals
Dividend
Share issue
Purchase of treasury shares
Revalutation of post-employment bene-
fit obligations
Exchange rate differences and others
Cash and cash equivalents of disposal
group classified as held for sale
net debt at 31 December

2012

15,299
–7,044
498
1,113
4,619
1,683
–450
38

–19
–321

2013

15,805
–6,803
647
1,134
6,784
2,007
–
–

–361
382

390
15,805

–
19,595

Operating cash flow

Sek M

Operating income (EBIT)
Restructuring costs
Depreciation and amortization
Net capital expenditure
Change in working capital
Interest paid and received
Non-cash items
Operating cash flow1

Operating cash flow/
Income before tax

1 Excluding restructuring payments.
² Excluding restructuring costs.

2012

7,501
–
1,034
–557
–77
–546
–312
7,044

2013

6,924
1,000
993
–1,202
–497
–431
17
6,803

1.04

0.922

The Group’s operating cash flow amounted to SEK 6,803 M
(7,044), equivalent to 92 percent (104) of income before
tax excluding restructuring costs.

net capital expenditure
Net capital expenditure on intangible assets and tangible
assets totaled SEK 1,202 M (557), equivalent to 121 percent
(54) of the depreciation on intangible assets and tangible
assets. During the year net capital expenditure increased
due to some major building investments. The low net capital
expenditure in the comparative period is mainly due to
property sales completed in 2012.

Change in working capital

Sek M

Inventories
Trade receivables
Trade payables
Other working capital
Change in working capital

2012

0
–192
–22
136
–77

2013

–166
–520
333
–143
–497

The material throughput time was 93 days (98) at year-end.
Capital tied up in working capital increased somewhat during
the year, which had an impact on cash flow of SEK –497 M (–77)
overall.

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 2009, 2011
and 2013.
2 Excluding restructuring payments.

SEK M

1,400

1,200

1,000

800

600

400

200

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

3.0

2.5

2.0

1.5

1.0

0.5

0,0

COnSOLiDAteD FinAnCiAL StAteMentS

ASSA ABLOY AnnuAL RepORt 2013

Consolidated cash flow statement

Sek M

OpeRAting ACtiVitieS
Operating income
Depreciation and amortization
Reversal of restructuring costs
Restructuring payments
Other 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
Investments in associates
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
Purchase of shares in subsidiaries from non-controlling interest
Stock purchase plans
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 of disposal group held for sale
Cash and cash equivalents at 31 December

note

14, 15
14, 15
32

32
32

2012

7,501
1,034
–
–498
–312
7,726

–596
50
–1,113
6,067

–77
5,990

–1,086
530
–3,836
–352
–12
19
–4,738

–1,683
4,507
–2,169
450
–38
–
–
–2,632
–1,564
–312

1,665
–312
–56
–390
907

2013

6,924
993
1,000
–647
17
8,286

–443
12
–1,134
6,721

–497
6,224

–1,308
105
–4,783
–131
85
1
–6,030

–2,007
4,000
–353
–
–
–2,155
–52
–164
–731
–537

907
–537
–9
–
362

ASSA ABLOY AnnuAL RepORt 2013

COnSOLiDAteD FinAnCiAL StAteMentS 85

Changes in consolidated equity

Sek M

Opening balance 1 January 2012
Effect of change in accounting principles
for defined benefit pension plans
Adjusted opening balance 1 January 2012
Net income
Other comprehensive income
total comprehensive income
Dividend for 2011
Stock purchase plans
Share issue
Purchase of treasury shares
Change in non-controlling interest
total transactions with parent
company’s shareholders
Closing balance 31 December 2012

Opening balance 1 January 2013
Net income
Other comprehensive income
total comprehensive income
Dividend for 2012
Stock purchase plans
Change in non-controlling interest
total transactions with parent
company’s shareholders
Closing balance 31 December 2013

parent company’s shareholders

Share
capital

Other con-
tributed
capital

Reserves

Retained
earnings

non-controlling
interest

total

368

9,227

–287

14,219

208

23,735

note

368

9,227

–287

–886
–886

448

3
371

448
9,675

–1,173

371

9,675

–1,173

132
132

371

9,675

–1,041

–737
13,482
5,158
–34
5,124
–1,655
27

–38
5

–1,660
16,946

16,946
4,772
225
4,997
–1,888
–18
–229

–2,135
19,808

208
14
–7
6
–27

–4

–32
183

183
2
2
4
–155

–32

–187
0

–737
22,998
5,172
–927
4,245
–1,683
27
450
–38
1

–1,242
26,001

26,001
4,775
359
5,133
–2,044
–18
–260

–2,322
28,813

EQUITY PER SHARE AFTER DILUTION AND
RETURN ON EQUITY AFTER TAX

DIVIDEND

SEK

 Equity per share after

dilution, SEK

 Return on equity after tax, %

SEK

 Dividend per share
 Earnings per share

after tax and dilution1

1 Excluding items affecting
comparability 2009, 2011
and 2013.

COnSOLiDAteD FinAnCiAL StAteMentS

ASSA ABLOY AnnuAL RepORt 2013

Traka solves security
challenge at world’s
largest theme park

Customer: The world’s largest theme park employs 50,000 people at
its Resort in the USA, which is the most visited attraction in
the world encompassing numerous theme parks, golf cour-
ses and dining, accommodation, shopping and entertain-
ment complexes.

Challenge: Most employees access hospitality areas, hotel rooms, cor-
porate facilities, maintenance vehicles and equipment with
mechanical keys or key cards. The challenge for Traka was to
provide an automated electronic process for key manage-
ment with increased security, accountability and efficiency,
managed from a centralized database.

Solution:

Traka provided a network of 180 electronic key cabinets and
intelligent locker systems located resort-wide to control
access to and monitor 9,000 keys, as well as managing poo-
led vehicles and phones. The Traka administration software
is hosted on a centralized server and system administrators
have “regionalized” access to administer and run reports on
keys and equipment. Employees access Traka key cabinets
with their existing employee badge and are only allowed
to release the keys they are authorized to. If keys are not
returned on time, software alarms notify the system admi-
nistrators. As an extension to the theme park the customer
has now implemented Traka key control in each of its four
cruise vessels as well and at other properties including sites
in Hawaii. ASSA ABLOY has also installed HID Global iCLASS
access control cards, readers and ID card printers.

ASSA ABLOY Entrance
Systems provide
solutions to Rolls Royce
Aerospace

Customer: Rolls Royce’s newest UK manufacturing facility of Rolls Royce Aerospace, an approximately 20,000m2 manufacturing facility with a capacity to

produce over 2,000 fan and turbine discs per year.

Challenge: Automatic entrances were needed for both internal and external openings, with major considerations for energy- and cost-efficiency, as well as

meeting rigorous design demands.

Solution:

A package of pedestrian, exterior and interior industrial door solutions – ASSA ABLOY Entrance Systems offered a single point of contact for all
doors, handling all aspects of design, specification, manufacture and installation industrial and pedestrian door products. More than 120
Crawford sectional doors, high speed doors and Besam automatic revolving doors were installed. Rolls Royce is also equipped with HID Global
smart cards.

ASSA ABLOY AnnuAL RepORt 2013
ASSA ABLOY AnnuAL RepORt 2013

COnSOLiDAteD FinAnCiAL StAteMentS 87
COnSOLiDAteD FinAnCiAL StAteMentS 87

Parent company financial statements

income statement
– parent company

Sek M

Administrative expenses
Research and development costs
Other operating income and expenses
Operating income

Financial income
Financial expenses
income before appropriations and tax

Appropriations - Group contributions
Tax on income
net income

Statement of
comprehensive income
– parent company

Sek M

net income

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

Balance sheet
– parent company

Sek M

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

Current assets
Receivables from subsidiaries
Other current receivables
Prepaid expenses and accrued income
Cash and cash equivalents
total current assets
tOtAL ASSetS

eQuitY AnD LiABiLitieS
equity
Restricted equity
Share capital
Revaluation reserve
Statutory reserve
Fair value reserve
Non-restricted equity
Share premium reserve
Retained earnings incl. Net income for the year
total equity

provisions
Other provisions
total provisions

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

Current liabilities
Short-term loans
Trade payables
Current liabilities to subsidiaries
Current tax liabilities
Other current liabilities
Accrued expenses and deferred income
total current liabilities
tOtAL eQuitY AnD LiABiLitieS

Assets pledged
Contingent liabilities

note

3, 6, 8, 9
6, 8, 9
4
9, 33

10
9, 11

2012

–775
–313
1,938
850

9,975
–6,970
3,855

–348
–11
3,496

2012

3,496

84
3,580

2013

–997
–438
2,261
826

2,418
–704
2,540

356
–165
2,731

2013

2,731

33
2,764

note

2012

2013

14
15
16
19

29
28

923
3
28,100
1,489
30,515

2,411
38
17
4
2,470
32,985

371
–
8,905
–

788
6,443
16,507

73
73

5,386
5,386

–
55
10,779
–
4
181
11,019
32,985

–
9,405

1,486
3
29,673
1,619
32,781

5,628
25
42
0
5,695
38,476

371
275
8,905
101

787
6,926
17,365

9
9

5,973
5,973

2,049
40
12,658
153
4
225
15,129
38,476

–
9,088

pARent COMpAnY FinAnCiAL StAteMentS

ASSA ABLOY AnnuAL RepORt 2013

Cash flow statement
– parent company

Change in equity
– parent company

Sek M

OpeRAting ACtiVitieS
Operating income
Depreciation and amortization
Cash flow before interest and tax

Interest paid and received
Dividends received
Tax paid and received
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
Other investments
Cash flow from investing activities

FinAnCing ACtiVitieS
Dividends
Loans raised
Loans 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

2012

850
250
1,100

–473
9,775
3
10,405

–242
10,163

–1,063
0
–2,592
–331
–3,986

–1,655
4,109
–9,039
450
–38
–6,173
4

0
4
4

Sek M

Opening balance 1 January 2012
Net income
Hedge accounting
total comprehensive income
Dividend for 2011
Stock purchase plans
Share issue
Purchase of treasury shares
total transactions with parent
company’s shareholders
Closing balance 31 December 2012

Opening balance 1 January 2013
Net income
Hedge accounting
total comprehensive income
Reclassification
Dividend for 2012
Stock purchase plans
total transactions with parent
company’s shareholders
Closing balance 31 December 2013

Share
capital

368

3
371

371

Restricted equity

non-restricted equity

Revalu-
ation
reserve

Statutory
reserve

Fair value
reserve

Share
premium
reserve

Retained
earnings

–

8,905

–

340

–

275

275
275

8,905

–

33
33
67

67
101

448

448
788

788

–1

–1
787

4,529
3,496
84
3,580
–1,655
27

–38

–1,666
6,443

6,443
2,731

2,731
–341
–1,888
–18

–2,247
6,926

2013

826
429
1,255

–399
1,831
13
2,700

–404
2,296

–894
–
208
–130
–816

–1,888
4,797
–4,393
–
–
–1,484
–4

4
–4
0

total

14,142
3,496
84
3,580
–1,655
27
451
–38

–1,215
16,507

16,507
2,731
33
2,764
–
–1,888
–18

–1,906
17,365

ASSA ABLOY AnnuAL RepORt 2013

pARent COMpAnY FinAnCiAL StAteMentS 89

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 the Swedish Financial
Reporting Board’s RFR 1 Supplementary Accounting Rules
for Corporate Groups. The accounting principles are based
on IFRS as endorsed by 31 December 2013 and have been
applied to all years presented, unless stated otherwise. This
Note describes the most significant accounting principles
that have been applied in the preparation of the financial
statements, which comprise the information provided on
pages 63–120.

Basis of preparation
ASSA ABLOY’s consolidated financial statements have been
prepared in accordance with IFRS as endorsed by the EU. The
consolidated financial statements have been prepared in
accordance with the cost method, except for financial assets
and liabilities (including derivatives) measured at fair value
through profit or 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 provided in the financial
statements. Consequently changes in estimates and assess-
ments may lead to changes in the financial statements.

Estimates and assessments play an important part in the
measurement of items such as identifiable assets and liabili-
ties in acquisitions, in impairment testing of goodwill and
other assets, in determining actuarial assumptions for calcu-
lating employee benefits and other provisions, as well as in
the valutation of deferred taxes. Estimates and assessments
are continually evaluated and are based on both historical
experience and reasonable expectations about the future.
The Group considers that estimates and assessments
relating to impairment testing of goodwill and other intangi-
ble 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 vales in use. The calculations are
based on certain assumptions about the future which, for the
Group, are associated with the risk of material adjustments in
carrying amounts during the next financial year. Material
assumptions and the effects of reasonable changes in them
are described in Note 14.

The actuarial assumptions made when calculating post-
employment employee benefits also have material impor-
tance for the consolidated financial statements. For informa-
tion on these actuarial assumptions, see Note 24.

New and revised standards applied by the Group
As from 1 January 2013, IAS 1 Presentation of Financial
Statements has been revised regarding the presentation of
Other comprehensive income. The revised IAS 1 requires
items recognized in Other comprehensive income to be
presented in two groups: Items that cannot be reversed
through profit or loss, and Items that can be reversed
through profit or loss in subsequent periods.

As from 1 January 2013, IAS 19 (Revised) Employee Ben-
efits also applies. The revised standard requires retroactive

application and means that the ‘corridor’ method is no
longer applicable. Instead actuarial gains and losses are to be
recognized in other comprehensive income when they arise,
and expenses relating to service provided in previous years
are to be recognized immediately. In addition, interest
expenses and anticipated return on plan assets are replaced
by a net interest rate, which is to be equivalent to the dis-
count rate. These changes are being implemented retroac-
tively, which means that comparative information for the
2012 financial year is to be recalculated when preparing the
financial statements for 2013. In this recalculation, unrecog-
nized expenses relating to service provided in previous years
and unrecognized actuarial losses as at 31 December 2011
are recognized as an adjustment of opening equity after tak-
ing into account tax effects.

The total effect on the consolidated balance sheet for 2011

is an increase in deferred tax assets of SEK 355 M to SEK 1,141
M, an increase in pension provisions of SEK 1,092 M to
SEK 2,265 M, and a reduction in equity of SEK 737 M to
SEK 22,998 M. The effect on the consolidated balance sheet
for 2012 is an increase in deferred tax assets of SEK 349 M to
SEK 1,719 M, an increase in pension provisions of SEK 1,073 M
to SEK 2,297 M, and a reduction in equity of SEK 724 M to
SEK 26,001 M. The effect on the income statement for 2012
is areduction in the item Financial expenses of SEK 53 M to
SEK –749 M, and an increase in tax on income of SEK 6 M to
SEK –1,623 M. Earnings per share before dilution increased
from SEK 13.85 to SEK 13.97. Earnings per share after dilution
increased from SEK 13.84 to SEK 13.97.

None of the other standards and interpretations to be
applied as from 1 January 2013 had a significant impact on the
consolidated financial statements.

New and revised IFRS not yet effective
The following 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.
•
•
•
•
•

IFRS 9 Financial Instruments
IFRS 10 Consolidated financial statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRIC 21 Levies

Of the above new standards, IFRS 10–12 are effective from
1 January 2014, while IFRS 9 and IFRIC 21 have not yet been
endorsed by the EU. The new IFRS 10 requires 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. None
of the new IFRS are considered to have a material 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 Par-
ent company held, directly or indirectly, more than 50 per-
cent of the voting rights at the end of the period, as well as
companies in which the Parent company otherwise has a
controlling interest, for example by having the right to for-
mulate financial and operating strategies. Companies
acquired during the year are included in the consolidated
financial statements with effect from the date when a con-
trolling interest arose. Companies divested 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

nOteS

ASSA ABLOY AnnuAL RepORt 2013

Note 1 cont.

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.

Deferred considerations for acquisitions completed after

1 January 2010 are classified as financial liabilities and reval-
ued through profit or loss in operating income. Significant
deferred considerations are discounted to present value.
Acquisition-related transaction costs are expensed as
incurred. Revaluation of deferred considerations relating to
acquisitions completed before 1 January 2010 is recognized
as a change in goodwill.

Intra-group transactions and balance sheet items, and
unrealized profits on transactions between Group compa-
nies are eliminated in the consolidated financial statements.

Non-controlling interests
Non-controlling interests are based on the subsidiaries’
accounts with application of fair value adjustments resulting
from a completed acquisition analysis. Non-controlling
interests’ share in subsidiaries’ earnings is recognized 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 recognized separately in consolidated equity.
Transactions with non-controlling interests are recognized
as transactions 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 generally refers to companies in which
the Group’s shareholding represents between 20 and 50
percent of the voting rights.

Investments in associates are accounted for in accordance

with the equity method. In the consolidated balance sheet,
shareholdings in associates are recognized at cost, and the
carrying amount is adjusted for the share of associates’ earn-
ings after the acquisition date. Dividends from associates are
recognized as a reduction in the carrying amount of the hold-
ings. The share of associates’ earnings is recognized in the
consolidated income statement in operating income as the
holdings are related to business operations.

Segment reporting
Operating segments are reported in accordance with 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 consist of products 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 recognized 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 qualify-
ing cash flow hedges, which are recognized in other com-
prehensive income. Receivables and liabilities are measured
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. Exchange differ-
ences arising from the translation of foreign subsidiaries are
recognized as translation differences in other comprehen-
sive income.

The table below shows the weighted average rate and
the closing rate for important currencies used in the Group,
relative to the Group’s presentation currency (SEK).

Country

Currency

2012

2013

2012

2013

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
India
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
TRY
Turkey
USD
USA
ZAR
South Africa

1.48
6.98
3.46
6.74
7.22
0.014
1.07

0.35
1.17
8.71
10.70
0.87
0.030
1.75
0.126
0.080

1.20
6.29
3.03
6.32
7.06
0.013
1.06
0.0037 0.0035
0.33
1.16
8.67
10.23
0.84
0.029
1.81
0.11
0.076
0.0060 0.0060
2.51
0.51
2.06
1.11
5.33
2.06
1.97
0.20
5.21
0.21
3.41
6.52
0.68

2.52
0.51
2.18
1.16
5.46
2.08
1.96
0.22
5.39
0.22
3.74
6.74
0.82

1.32
6.76
3.18
6.54
7.13
0.014
1.04

0.34
1.16
8.62
10.49
0.84
0.030
1.74
0.119
0.076

1.00
5.77
2.79
6.09
7.32
0.012
1.08
0.0037 0.0034
0.33
1.20
8.97
10.75
0.84
0.030
1.87
0.105
0.076
0.0061 0.0062
2.60
0.50
1.98
1.06
5.31
2.16
2.01
0.20
5.14
0.20
3.05
6.52
0.62

2.50
0.50
2.12
1.17
5.34
2.12
1.95
0.21
5.32
0.21
3.63
6.51
0.77

Revenue
Revenue comprises the fair value of goods sold, excluding
VAT and discounts, and after eliminating intra-group sales.
The Group’s sales revenue mainly consists of product sales.
Service related to products sold represents a limited share
of revenue. Revenue from sales of the Group’s products is
recognized when all significant risks and benefits associated
with ownership have been transferred to the purchaser in
accordance with applicable terms of sale, which is normally
upon delivery. If the product requires installation at the cus-
tomer’s premises, revenue is recognized when installation

ASSA ABLOY AnnuAL RepORt 2013

nOteS 91

Note 1 cont.

has been completed. Revenue from service contracts is rec-
ognized on a continuous basis over the contract period. In
the case of installations over a longer period of time, the per-
centage of completion method is used.

assets and deferred tax liabilities are offset when there is a
legal right to do so and when deferred taxes relate to the
same tax authority.

Intra-group sales
Transactions between group companies are carried out at
arm’s length and thus at market prices. Intra-group sales are
eliminated from the consolidated income statement, and
profits on such transactions have been eliminated in their
entirety.

Government grants
Grants and support from governments, public authorities
and the like are recognized when there is reasonable assur-
ance that the company will comply with the conditions
attaching to the grant and that the grant will be received.
Grants relating to assets are recognized after reducing the
carrying amount of the asset by the amount of the grant.

Research and development
Research expenditure is expensed as incurred. Development
expenditure is recognized in the balance sheet to the extent
that it is 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 further 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 attrib-
utable to the acquisition, construction or production of a
qualifying asset (an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale) are
included in the cost of the asset. Other borrowing costs are
recognized as an expense 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. These taxes
have been calculated at nominal amounts, in accordance
with the tax regulations in each country, and in accordance
with tax rates that have either been decided or have been
notified and can confidently be expected to be confirmed.
For items recognized in the income statement, associated
tax effects are also recognized in the income statement. The
tax effects of items recognized directly against equity or in
other comprehensive income are themselves recognized
against equity or in other comprehensive income. The liabil-
ity method is used in accounting for deferred tax. This
means that deferred tax is recognized on all temporary dif-
ferences between the carrying amounts of assets and liabili-
ties and their respective tax bases. Deferred tax assets relat-
ing to tax losses carried forward or other future tax allow-
ances are recognized to the extent that it is probable that
the allowance can be offset against taxable income in future
taxation. Deferred tax liabilities for temporary differences
relating to investments in subsidiaries are not recognized in
the consolidated financial statements, since the Parent com-
pany can control the time at which the temporary differ-
ences are reversed, and it is not considered likely that such
reversal will occur in the foreseeable future. Deferred tax

Cash flow statement
The cash flow statement has been prepared according to the
indirect method. The recognized cash flow includes only
transactions involving cash payments.

Cash and cash equivalents
Cash and cash equivalents include cash and bank balances,
and short-term financial investments that mature within
three months of the acquisition date.

Goodwill and acquisition-related intangible assets
Goodwill represents the positive difference between the
acquisition cost and the fair value of the Group’s share of the
acquired company’s identifiable net assets at the acquisition
date, and is recognized at cost less accumulated impairment
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 impair-
ment testing using a valuation model based on discounted
future cash flows. Deferred tax assets based on local tax
rates are recognized in terms of tax-deductible goodwill
(with corresponding reduction of the goodwill value). Such
deferred tax assets are expensed as the tax deduction is
utilized. Other acquisition-related intangible assets consist
chiefly of various types of intellectual property rights, such
as brands, technology and customer relationships. Identifi-
able acquisition-related intellectual property rights are ini-
tially recognized at fair value at the acquisition date and sub-
sequently at cost less accumulated amortization and impair-
ment 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 annu-
ally in the same way as goodwill.

Other intangible assets
An intangible asset that is not acquisition-related is recog-
nized only if it is likely that the future economic benefits
associated with the asset will flow to the Group, and if the
cost of the asset can be reliably measured. Such an asset is
initially recognized at cost and is amortized over its esti-
mated useful life, usually between three and five years. The
carrying amount is the cost less accumulated amortization
and impairment losses.

Tangible assets
Tangible assets are recognized at cost less accumulated
depreciation and impairment losses. Cost includes expendi-
ture directly attributable to acquisition of the asset. Subse-
quent expenditure is capitalized if it is probable that eco-
nomic 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 incurred. Depre-
ciable amount is the cost of an asset less its estimated resid-
ual value. Land is not depreciated. For other assets, cost is
depreciated over the estimated useful life, which for the
Group results in the following average depreciation periods:
• Buildings 25–50 years.
• Land improvements 10–25 years.
• Machinery 7–10 years.
• Equipment 3–6 years.

The residual value and useful life of assets are reviewed at
each financial year and adjusted when necessary. Gain or loss

nOteS

ASSA ABLOY AnnuAL RepORt 2013

Note 1 cont.

on the disposal of tangible assets is recognized in the
income statement as ‘Other operating income’ or ‘Other
operating expenses’, and consists of the difference between
the selling price and the carrying amount.

Leasing
The Group’s leasing is chiefly operating leasing. The lease
payments are expensed on a straight-line basis over the
term of the lease and are recognized 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 many not be recoverable.

Impairment losses are recognized in the amount by
which the carrying amount of the asset exceeds the recover-
able amount, which is the higher of the asset’s fair value, less
selling expenses, and value in use.

Inventories
Inventories are valued in accordance with the ‘first in, first out’
principle at the lower of cost and net realizable value at year-
end. Deductions are made for internal profits arising from
deliveries between Group companies. Work in progress and
finished goods include both direct costs incurred and a fair
allocation of indirect production costs.

Trade receivables
Trade 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
recognized in the income statement as selling expenses.

Financial assets
Financial assets include cash and cash equivalents, trade
receivables, short-term investments and derivatives, and are
classified in the following categories: financial assets at fair
value through profit and loss, available-for-sale financial
assets, and loans and receivables. Management determines
the classification of financial assets at initial recognition.

Financial assets at fair value through the income statement
This category is divided into two sub-categories: financial
assets held for trading, and those classified on acquisition as
financial assets at fair value through profit and loss. A finan-
cial asset is classified in this category if acquired principally
for the purpose of selling in the short term or if classified as
such by management. Derivatives are also classified as held
for trading provided they are not defined as hedges. Assets
in this category are classified as current assets.

Available-for-sale financial assets
Available-for-sale financial assets are non-derivative assets that
have been identified as available for sale or assets that have not
been classified in any other category. They are included in 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 recognized in Other comprehensive income.

Loan receivables and trade receivables
Trade receivables and short-term investments are non-
derivative financial assets with fixed or determinable pay-
ment streams, which are not quoted in an active market.
They are recognized in current assets, except for receivables
maturing more than 12 months after the reporting date,
which are classified as non-current assets.

Financial liabilities
Financial liabilities include deferred considerations, loan liabili-
ties, trade payables and derivative instruments. Recognition
depends on how the liability is classified.

Financial liabilities at fair value through
the income statement
This category includes derivatives with negative fair value
that are not used for hedging, deferred considerations, and
financial liabilities held for trading. Liabilities are measured
at fair value on a continuous basis and changes in value are
recognized in the income statement as a financial item.

Loan liabilities
Loan liabilities are initially valued at fair value, net of transac-
tion costs, and subsequently at amortized cost. Amortized
cost is determined based on the effective interest rate calcu-
lated when the loan was raised. Accordingly, surplus values
and negative surplus values as well a direct issue expenses
are allocated over the term of the loan. Non-current loan lia-
bilities have an anticipated term of more than one year,
while current loan liabilities have a term of less than one
year.

Trade payables
Trade payables are initially valued at fair value, and subse-
quently at amortized cost using the effective interest method.

Recognition and measurement of
financial assets and liabilities
Acquisitions and sales of financial assets are recognized on the
trade date, the date on which the Group commits to purchase
or sell the asset. Transaction costs are initially included in fair
value for all financial instruments, except for those recognized
at fair value through profit and loss where the transaction cost
is recognized through profit and loss. The fair value of quoted
investments is based on current bid prices. In the absence of
an active market for an investment, the Group applies various
measurement techniques to determine fair value. These
include use of available information on current arm’s length
transactions, comparison with equivalent assets and analysis
of discounted cash flows. The Group assesses at each report-
ing date whether there is any objective evidence that a finan-
cial asset or a group of financial assets is impaired. A financial
asset is derecognized from the balance sheet 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 from the balance sheet when the obligation is
fulfilled, cancelled or expires, see above.

Derivative instruments and hedging
Derivative instruments are recognized in the balance sheet
at the transaction date and are measured at fair value, both
initially and in subsequent revaluations. The method for rec-
ognizing profit or loss depends on whether the derivative
instrument is designated as a hedging instrument, and if so,
the nature of the hedged item. For derivatives not desig-
nated as hedging instruments, changes in value are recog-

ASSA ABLOY AnnuAL RepORt 2013

nOteS 93

Note 1 cont.

nized on a continuous basis through profit or loss under
financial items, either as income or expense.

income is recognized in the income statement when the for-
eign operation, or part thereof, is sold.

The Group designates derivatives as follows:

i) Fair value hedge: a hedge of the fair value of an identified
liability;
ii) Cash flow hedge: a hedge of a certain risk associated with
a forecast cash flow for a certain transaction; or
iii) Net investment hedge: a hedge of a net investment in a
foreign subsidiary.

When entering into the hedge transaction, the Group docu-
ments the relationship between the hedging instrument
and hedged items, as well as its risk management strategy
for the hedge. The Group also documents its assessment,
both on inception and on a regular basis, of whether the
derivative instruments used in hedge transactions are effec-
tive in offsetting changes in fair value attributable to the
hedged items.

The fair value of forward exchange contracts is calculated
at net present value based on prevailing forward rates on the
reporting date, while interest rate swaps are measured by
estimating future discounted cash flows.

For information on the fair value of derivative instru-
ments, see Note 34, ‘Financial risk management and finan-
cial instruments’. Derivatives at fair value, with a maturity of
more than 12 months, are classified as non-current interest-
bearing liabilities or receivables. Other derivatives are classi-
fied as current interest-bearing liabilities and investments
respectively.

Fair value hedges
For derivatives that are designated and qualify as fair value
hedges, changes in value of both the hedged item and the
hedging instrument are recognized on a continuous basis in
the income statement (under financial items). Fair value
hedges are used to hedge interest rate risk in borrowing
linked to fixed interest terms. If the hedge would no longer
qualify for hedge accounting, the fair value adjustment of
the carrying amount is dissolved through profit or loss over
the remaining term using the effective interest method.

Cash flow hedges
For derivatives that are designated and qualify as cash flow
hedges, changes in value of the hedging instrument are rec-
ognized on a continuous basis in other comprehensive
income for the part relating to the effective portion of the
hedges. Gain or loss arising from ineffective portions of
derivatives is recognized directly in the income statement
under financial items. When a hedging instrument expires, is
sold or no longer qualifies for hedge accounting, and accu-
mulated gains or losses relating to the hedge are recognized
in equity, these gains/losses remain in equity and are taken
to income, while the forecast transaction is finally recog-
nized in the income statement. When a forecast transaction
is no longer expected to occur, the accumulated gain or loss
recognized in equity is immediately transferred to Other
comprehensive income in the income statement. When a
forecast transaction is no longer expected to occur, the gain
or loss recognized in Other comprehensive income is recog-
nized directly under financial items.

Net investment hedges
For derivatives that are designated and qualify as net invest-
ment hedges, the portion of value changes in fair value
designated as effective is recognized in other comprehen-
sive income. The ineffective portion of the gain or loss is rec-
ognized directly in profit or loss for the period under finan-
cial items. Accumulated gain or loss in other comprehensive

Provisions
A provision is recognized when the Group has a legal or con-
structive obligation resulting from a past event and it is prob-
able that an outflow of resources will be required to settle
the obligation, and that a reliable estimate of the amount can
be made. Provisions are recognized at a value equivalent to
the outflow of resources that will probably be required to
settle the obligation. The amount of a provision is discounted
to present value where the effect of time value is considered
material.

Assets and liabilities of a disposal group
classified as held for sale
Assets and liabilities are classified as held for sale when their
carrying amounts will principally be recovered through a sale
and when such a sale is considered highly probable. They are
recognized at the lower of carrying amount and fair value less
selling expenses.

Employee benefits
The Group operates both defined contribution and defined
benefit pension plans. Comprehensive defined benefit plans
are found chiefly in the USA, the UK and Germany. Post-
employment medical benefits are also provided, mainly in
the USA, and 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. Actuarial gains and losses resulting from
experience-based adjustments and changes in actuarial
assumptions are recognized in other comprehensive income
during the period they arise. The pension expense for defined
benefit plans is spread over the employee’s service period.
The Group’s payments relating to defined contribution pen-
sion plans are recognized as an expense in the period to
which they relate, 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 differ-
ence between pension expense determined in accordance
with IAS 19 and pension expense determined in accordance
with the regulations applicable in the legal entity.

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. As
the long-term incentive program in its entirety is equity set-
tled, an amount equivalent to the personnel cost in the bal-
ance sheet is recognized as equity in retained earnings. The
personnel cost is also recognized in the income statement,
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

ASSA ABLOY AnnuAL RepORt 2013

nOteS

Note 1 cont.

incentive program, personnel costs during the vesting
period are recognized 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
performance-based program are calculated on each
accounting date based on an assessment of the probability
of the performance targets being achieved. The costs are
calculated based on the number of shares that ASSA ABLOY
expects to need to settle at the end of the vesting period.
When matching shares, social security contributions must
be paid in some countries to the value of the employee’s
benefit. This value is based on fair value on each accounting
date and recognized as a provision for social security contri-
butions.

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 treasury shares). Earnings per share after dilu-
tion are calculated by dividing the net income attributable
to the Parent company’s shareholders by the sum of the
weighted average number of ordinary shares and potential
ordinary shares that may give rise to a dilutive effect. The
dilutive effect of potential ordinary shares is only recognized
if their conversion to ordinary shares would lead to a reduc-
tion in earnings per share after dilution.

Dividend
Dividend is recognized as a liability after the Annual General
Meeting has approved the dividend.

the parent company
The Group’s Parent company, ASSA ABLOY AB, is responsible
for group management and provides group-wide functions.
The Parent company’s revenue consists of intra-group fran-
chise and royalty revenues. The significant balance sheet
items consist of shares in subsidiaries, intra-group receiv-
ables and liabilities, and external borrowing. The Parent
company has prepared its annual accounts in accordance
with the Swedish Annual Accounts Act (1995:1554) and the
Swedish Financial Reporting Board’s RFR 2 Accounting for
Legal Entities. RFR 2 requires the Parent company, in its
annual accounts, to apply all the International Financial
Reporting Standards (IFRS) endorsed by the EU in so far as
this is possible within the framework of the Annual Accounts
Act and with regard to the relationship between accounting
and taxation. The recommendation states which 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 recognized in the
income statement as ‘Other operating income’ to make
clear that the Parent company has no product sales like
other group companies with external operations.

Pension obligations
The Parent company’s pension obligations 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 considered certain.

Research and development costs
Research and development costs are expensed as incurred.

Intangible assets
Intangible assets comprise patented technology and other
intangible assets. They are amortized over 4–5 years.

Tangible assets
Tangible assets owned by the Parent company are recog-
nized at cost less accumulated depreciation and any impair-
ment losses in the same way as for the Group. They are
depreciated over their estimated useful life, which is 5–10
years for equipment and 4 years for IT equipment.

Leasing
In the Parent company all lease agreements are classified as
rental agreements (operating leases) irrespective of
whether they are financial or operating leases.

Shares in subsidiaries
Shares in subsidiaries are recognized 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 recognized in Financial expenses in the
income statement.

Financial instruments
Derivative instruments are recognized at fair value. Changes
in the value of derivatives are recognized in profit or loss,
with the exception of exchange rate changes relating to
monetary items that form part of the company’s net invest-
ment in a foreign operation, which are recognized in the fair
value reserve.

Group contributions
The Parent company recognizes group contributions in
accordance with the revised RFR 2. Group contributions
received and paid are recognized under appropriations in
the income statement. Figures for the comparative year
have been adjusted correspondingly. 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 alternative rule in RFR 2, reporting
these guarantees as a contingent liability.

ASSA ABLOY AnnuAL RepORt 2013

nOteS 95

note 2 Sales

Customer sales by country

note 3 Auditors’ fees

group

Sek M

2012

2013

2012

2013

group

parent company

Sek M

USA
China
Sweden
France
Germany
United Kingdom
Canada
Australia
Netherlands
Norway
Finland
South Korea
Denmark
Belgium
Mexico
Italy
Spain
Austria
Switzerland
Czech Republic
New Zealand
Saudi Arabia
United Arab Emirates
Poland
Brazil
South Africa
Russia
Hong Kong
India
Israel
Turkey
Singapore
Colombia
Thailand
Chile
Portugal
Ireland
Malaysia
Japan
Slovakia
Philippines
Indonesia
Hungary
Romania
Estonia
Croatia
Kenya
Taiwan
Egypt
Lithuania
Latvia
Other countries
total

2012

11,220
4,304
2,986
3,147
2,567
2,354
1,659
1,869
1,548
1,221
1,118
906
927
895
624
748
727
602
531
388
311
374
296
333
272
284
264
234
212
193
188
176
158
162
147
167
111
87
95
102
92
234
93
226
99
103
76
43
43
43
32
1,024
46,619

2013

12,962
4,806
3,074
2,973
2,470
2,324
1,793
1,717
1,458
1,291
1,070
931
912
851
728
699
669
555
508
384
357
342
333
322
290
270
261
244
235
207
201
182
177
173
147
147
138
132
128
119
106
102
100
99
97
92
73
51
48
45
40
1,052
48,481

Sales by product group

Sek M

Mechanical locks, lock systems
and fittings
Entrance automation
Electromechanical
and electronic locks
Security doors and hardware
total

group

2012

2013

16,762
11,100

10,193
8,564
46,619

16,034
12,077

11,602
8,768
48,481

Audit assignment
PwC
Other

Audit-related services
in addition to audit
assignment
PwC

tax advice
PwC
Other

Other services
PwC
Other
total

37
10

13
2

14
1
78

38
10

8
3

13
4
76

3
–

2
–

5
–
11

5
–

–

1
1

6
0
13

note 4 Other operating income and expenses
group

Sek M

Rental income
Business-related taxes
Transaction expenses from acquisitions
Exchange rate differences
Other, net
total

2012

18
16
–39
–11
–66
–82

2013

11
13
–56
–17
–84
–133

Parent company
Other operating income in the Parent company consists
mainly of franchise and royalty revenues from subsidiaries.

note 5 Share of earnings in associates

Sek M

Agta Record AG
Goal Co., Ltd
Saudi Crawford Doors Factory Ltd
Låsgruppen Wilhelm Nielsen AS
Tallares Agui S.A.
Other
total

group

2012

2013

69
5
1
3
–9
0
70

68
19
6
1
0
0
94

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 2013.

note 6 Operating leases

Sek M

Lease payments
during the year
total

nominal value of agreed
future lease payments:
Due for payment in:
(2013) 2014
(2014) 2015
(2015) 2016
(2016) 2017
(2017) 2018
(2018) 2019 or later
total

group

parent company

2012

2013

2012

2013

466
466

547
547

419
304
237
161
121
112
1,354

535
414
311
227
178
234
1,899

13
13

15
16
16
16
17
17
97

15
15

15
16
16
16
17
17
97

During the year lease payments consist of fees for assets that
are held as operational leases such as rented premises,
machinery, and computer equipment. The Group has no
substantial operational leases since the lease agreements
are spread over a large number of subsidiaries.

nOteS

ASSA ABLOY AnnuAL RepORt 2013

note 7 expenses by nature
In the income statement costs are broken down by function.
Below, these same costs are broken down by nature:

Sek M

Remuneration of employees (Note 33)
Direct material costs
Depreciation and amortization (Note 8, 14, 15)
Other purchase expenses
total

group

2012

2013

12,705 13,759
16,111 16,977
993
9,789
39,106 41,518

1,034
9,256

note 12 tax on income

group

parent company

Sek M

2012

2013

2012

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

–1,776

–1,863

8
–
145

178
–
90
–1,623 –1,595

–11

–
–
–
–11

2013

–178

13
–
–
–165

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

note 8 Depreciation and amortization

group

parent company

percent

group

parent company

2012

2013

2012

2013

Sek M

Intangible assets
Machinery
Equipment
Buildings
Land improvements
total

2012

222
443
218
148
3
1,034

2013

2012

2013

224
410
197
158

3
993

249
–
1
–
–
250

427
–
1
–
–
428

note 9 exchange differences in the income statement
parent company

group

Sek M

2012

2013

2012

2013

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

–11

–17

10
0

–4
–21

11
11

–5
–5

note 10 Financial income

Sek M

2012

2013

2012

2013

group

parent company

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

–

–
14

18
32

–

–
10

9,750

2,109

200
–

281
–

18
28

0
9,975

0
2,418

note 11 Financial expenses

Sek M

2012

2013

2012

2013

group

parent company

Intra-group interest
expenses
Interest expenses,
convertible debentures
Interest expenses, other
liabilities
Interest expenses,
interest rate swaps
Interest expenses, foreign
exchange forwards
Exchange rate differences
on financial instruments
Fair value adjustments on
derivatives, non-hedge
accounting
Fair value adjustments on
shares and interests
Other financial expenses
total

–

–5

–

–534

–508

–5

–

–599

–580

–148

–170

–83

–34

–8

–4

–

–5

–

–
–74
–749

–
–36

–6,2801
–14
–571 –6,970

–
–21
–704

¹ Fair value adjustments on shares and interests relate to impairment losses in

connection with dividends received.

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

–3
0

–3

–
0

22
7

–3
0

–1

0
0

26
–

–25
–

–

–
–

22
–

–16
–

–

–
–

note 13 earnings per share

Earnings per share before dilution

Sek M

Earnings attributable to the Parent
company's shareholders1
Weighted average number of shares issued
(thousands)
earnings per share before
dilution (Sek per share)
of which from continuing operations
of which from discontinued operations

Earnings per share after dilution

Sek M

Earnings attributable to the Parent
company's shareholders1
Interest expenses for convertible
debentures, after tax
Net profit1
Weighted average number of
shares issued (thousands)
earnings per share after
dilution (Sek per share)
of which from continuing operations
of which from discontinued operations

group

2012

2013

5,158

4,772

369,185 370,259

13.97
13.94
0.03

12.89
12.89
–

group

2012

2013

5,158

4,772

4
5,162

–
4,772

369,592 370,259

13.97
13.94
0.03

12.89
12.89
–

Earnings per share after dilution and excluding
items affecting comparability

group

Sek M

Earnings attributable to the Parent
company's shareholders1
Interest expenses for convertible
debentures, after tax
Items affecting comparability, after tax2
Net profit1
Weighted average number of
shares issued (thousands)
earnings per share after dilution
and excluding items affecting
comparability (Sek per share)
of which from continuing operations
of which from discontinued operations

2012

2013

5,158

4,772

4
–
5,162

–
721
5,493

369,592 370,259

13.97
13.94
0.03

14.84
14.84
–

¹ 2012 has been adjusted due to a change in accounting principles for defined
benefit pension plans.
2 Items affecting comparability consist of restructuring costs.

ASSA ABLOY AnnuAL RepORt 2013

nOteS 97

note 14 intangible assets

group

parent company

2013, Sek M

goodwill

Brands

Opening accumulated acquisition cost
Purchases
Acquisitions of subsidiaries
Sales/disposals
Reclassifications
Exchange rate differences
Closing accumulated acquisition cost

Opening accumulated amortization/impairment
Sales/disposals
Reclassifications
Amortization
Exchange rate differences
Closing accumulated amortization/impairment
Carrying amount

28,998
–
2,684
–
–
194
31,876

–66
–
–
–
7
–59
31,817

4,156
1
751
–
–62
63
4,909

–59
–
41
–6
–1
–24
4,885

Other
intangible
assets

3,020
151
163
–75
117
54
3,429

–1,627
74
–50
–219
–30
–1,851
1,578

total

36,174
152
3,598
–75
55
311
40,214

–1,752
74
–9
–224
–24
–1,934
38,280

intangible
assets

2,123
991
–
–
–
–
3,114

–1,200
–
–
–427
–
–1,627
1,487

group

parent company

2012, Sek M

goodwill

Brands

Opening accumulated acquisition cost
Purchases
Acquisitions of subsidiaries
Sales/disposals
Reclassifications
Reclassification to assets of disposal group held for sale
Adjustments for acquisitions in the prior year
Exchange rate differences
Closing accumulated acquisition cost

Opening accumulated amortization/impairment
Acquisitions of subsidiaries
Sales/disposals
Reclassifications
Impairment
Amortization
Exchange rate differences
Closing accumulated amortization/impairment
Carrying amount

27,080
–
3,146
–
–
–104
–177
–947
28,998

–66
–
–
–
–
–
0
–66
28,932

3,275
1
622
0
–
–31
276
13
4,156

–34
–
0
–
0
–25
0
–59
4,097

Other
intangible
assets

2,246
151
440
–12
433
–
–
–238
3,020

–1,045
–7
9
–433
–10
–197
56
–1,627
1,393

total

32,599
152
4,208
–12
433
–135
99
–1,172
36,174

–1,143
–7
9
–433
–10
–222
56
–1,752
34,422

intangible
assets

1,060
1,063
–
–
–
–
–
–
2,123

–951
–
–
–
–
–249
–
–1,200
923

Other intangible assets consist mainly of customer relations
and technology. The carrying amount of intangible assets
with an indefinite useful life amounts to SEK 4,840 M (4,026)
and relates to brands.

Useful life has been defined as indefinite where the time
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 state-
ment.

These calculations are based on estimated future cash flows,
which in turn are based on financial budgets for a three-year
period approved by management. Cash flows beyond the
three-year period are extrapolated using estimated growth
rates according to the information below.
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.

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.

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 2013

Note 14 cont.

2013
Overall, the discount rate after tax 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:

2013, Sek M

Goodwill
Intangible assets with
indefinite useful life
total

eMeA

6,395

205
6,599

Americas

Asia pacific

global
technologies

7,319

586
7,905

4,311

1,153
5,463

4,511

350
4,862

entrance
Systems

9,282

2,547
11,828

total

31,817

4,840
36,657

2012
Overall, the discount rate after tax 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:

2012, Sek M

Goodwill
Intangible assets with
indefinite useful life
total

eMeA

5,846

198
6,044

Americas

Asia pacific

global
technologies

5,913

221
6,134

4,326

1,160
5,486

4,524

349
4,873

entrance
Systems

8,323

2,098
10,421

total

28,932

4,026
32,958

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

2013
If the estimated operating margin after the end of the budg-
et period had been one percentage point lower than the
management’s estimate, the total recoverable amount
would be 6 percent lower (EMEA 6 percent, Americas 4 per-
cent, Asia Pacific 7 percent, Global Technologies 5 percent,
and Entrance Systems 7 percent).

If the estimated growth rate used to extrapolate cash
flows beyond the budget period had been one percentage
point lower than the basic assumption of 3 percent, the total
recoverable amount would be 13 percent lower (EMEA 13
percent, Americas 13 percent, Asia Pacific 11 percent, Global
Technologies 11 percent, and Entrance Systems 13 percent).

If the estimated weighted capital cost used for the
Group’s discounted cash flows had been one percentage
point higher than the basic assumption of 9.0 to 10.0 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).

These calculations are hypothetical and should not be
viewed as an indication that these factors are any more or
less likely to change. The sensitivity analysis should therefore
be interpreted with caution.

None of the hypothetical cases above would lead to an
impairment of goodwill in an individual Cash Generating Unit.

2012
If the estimated operating margin after the end of the budg-
et period had been one percentage point lower than the
management’s estimate, the total recoverable amount
would be 6 percent lower (EMEA 5 percent, Americas 4 per-
cent, Asia Pacific 7 percent, Global Technologies 5 percent,
and Entrance Systems 6 percent).

None of the hypothetical cases above would lead to an
impairment of goodwill in an individual Cash Generating Unit.

ASSA ABLOY AnnuAL RepORt 2013

nOteS 99

note 15 tangible assets

2013, Sek M

Buildings

ments Machinery equipment

Land and
land
improve-

Construc-
tion in
progress

total

equipment

group

parent company

Opening accumulated
acquisition cost
Purchases
Acquisitions of subsidiaries
Sales/disposals
Reclassifications
Exchange rate differences
Closing accumulated
acquisition cost

Opening accumulated
depreciation/impairment
Sales/disposals
Impairment
Depreciation
Reclassifications
Exchange rate differences
Closing accumulated
depreciation/impairment
Carrying amount

4,045
59
282
–234
18
69

4,239

–1,952
200
–28
–158
35
–60

–1,963
2,276

870
2
11
–40
120
–4

959

–145
1
–
–3
–48
–2

–198
761

6,300
180
205
–329
101
124

2,226
163
57
–166
48
1

490
751
23
–3
–339
4

13,931
1,156
579
–772
–52
193

6,581

2,329

927

15,034

–4,534
308
–27
–410
4
–83

–4,742
1,839

–1,697
140
0
–197
21
–9

–1,741
588

–
–
–
–
–
–

–
927

–8,328
648
–55
–769
12
–154

–8,644
6,390

19
1
–
–
–
–

–16
–
–
–1
–
–

–17
3

2012, Sek M

Buildings

ments Machinery equipment

Land and
land
improve-

Construc-
tion in
progress

total

equipment

group

parent company

Opening accumulated
acquisition cost
Purchases
Acquisitions of subsidiaries
Sales/disposals
Reclassification to assets of
disposal group held for sale
Reclassifications
Exchange rate differences
Closing accumulated
acquisition cost

Opening accumulated
depreciation/impairment
Acquisitions of subsidiaries
Sales/disposals
Depreciation
Reclassification to assets of
disposal group held for sale
Reclassifications
Exchange rate differences
Closing accumulated
depreciation/impairment
Carrying amount

4,121
129
52
–399

–
295
–153

4,045

–1,992
–28
158
–148

–
–14
72

839
1
57
–73

–
67
–21

870

–142
–2
–
–3

–
–1
3

6,629
311
296
–527

58
–15
–452

2,314
196
99
–261

–
24
–146

555
297
56
–67

–
–371
20

14,458
934
560
–1,327

58
0
–752

6,300

2,226

490

13,931

–4,852
–106
511
–443

–41
4
393

–1,786
–71
234
–218

–
11
133

–
–
–
–

–
–
–

–8,773
–207
903
–812

–41
0
602

–1,952
2,093

–145
725

–4,534
1,766

–1,697
529

–
490

–8,328
5,603

18
1
–
–

–
–
–

–15
–
–
–1

–
–
–

–16
3

100

nOteS

ASSA ABLOY AnnuAL RepORt 2013

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 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
HID Global Ireland Teoranta
Mul-T-Lock Ltd
ASSA ABLOY Holdings (SA) Ltd
ASSA ABLOY Inc
Fleming Door Products, Ltd
ABLOY Canada Inc.
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 Hospitality AB
WHAIG Limited
ASSA ABLOY Asia Pacific Ltd
Cardo AB
ASSA ABLOY Portugal, Unipessoal, Lda (Portugal)
ASSA ABLOY Mobile Services AB
ASSA ABLOY Holding Italia S.p.A.
total

¹ The Group’s holdings amount to 100 percent.

note 17 investments in associates

2013 Company name

Agta Record AG
Goal Co., Ltd
SARA Loading Bay Ltd
Talleres Agui S.A.
Saudi Crawford Doors Ltd
Other
total

Corporate identity number,
Registered office

number
of shares

Share of
equity %

Carrying
amount,
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
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
364896, Galway
520036583, Yavne
1948/030356/06, Roodepoort
039347-83, Oregon
147126, Ontario
104722749 RC0002, Vaughn, Ontario
002098175, Ontario
ACN 095354582, Oakleigh, Victoria
199804395K, Singapore
GIP980312169, Mexico
Public Deed 2798, Bogota
556180-7156, Göteborg
EC21330, Bermuda
53451, Hong Kong
556026-8517, Malmö
PT500243700, Alfragide
556909-5929, Stockholm
IT01254420597, Rome

70
15,000
1,000
400
60,000
1,000
1,000
1,000
800,000
150,000
60,500
1
180
–
15,184,271
211,000
2,500
1
1,330,000
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
1,000
100,100
1,000,000
27,000,000
1
50,000
650,000

100
100
100
100
100
100
100
100
100
100
100
100
100
661
100
981
100
100
100
100
90 1
100
100
100
100
100
100
100
100
711
100
100
100
100
100
100
100

Country of registration

Switzerland
Japan
United Kingdom
Spain
Saudi Arabia

group

number of
shares

Share of
equity %

5,166,945
2,778,790
4,999
4,800
800

39
46
50
40
40

197
22
181
3,036
60
220
12
189
4,257
538
376
1,086
771
2,228
1,964
0
47
109
3,077
293
901
184
2,237
0
13
17
242
48
765
142
14
303
72
5,093
0
5
974
29,673

Carrying
amount,
Sek M

1,277
371
14
8
5
0
1,675

The share of equity in Agta Record AG has been estimated on the basis of the associated company’s latest available financial
report, which is the published Interim Report for the first half of 2013. For the period January to June, the company’s revenue
totaled SEK 1,061 M (1,081) and income after tax was SEK 72 M (65). The company’s assets totaled SEK 2,160 M (2,095) and
total liabilities amounted to SEK 708 M (722).

2012 Company name

Agta Record AG
Goal Co., Ltd
Låsgruppen Wilhelm Nielsen AS
SARA Loading Bay Ltd
Talleres Agui S.A.
Saudi Crawford Doors Ltd
Other
total

Country of registration

Switzerland
Japan
Norway
United Kingdom
Spain
Saudi Arabia

group

number of
shares

Share of
equity %

5,077,964
2,300,790
305
4,999
4,800
800

38
38
50
50
40
40

Carrying
amount,
Sek M

1,163
315
15
13
7
5
1
1,519

ASSA ABLOY AnnuAL RepORt 2013

nOteS 101

note 18 Deferred tax

Sek M

Deferred tax assets
Tangible and intangible assets
Pensions
Tax losses and other tax credits
Other deferred tax assets
Deferred tax assets

Deferred tax liabilities
Tangible and intangible assets
Other deferred tax liabilities
Deferred tax liabilities
Deferred tax assets, net

Change in deferred tax

Opening balance
Acquisitions of subsidiaries, net
Recognized in income statement
Reclassification to liabilities of disposal
group held for sale
Revaluation of post-employment benefit
obligations, net
Exchange rate differences
Closing balance

group

2012

2013

279
436
397
607
1,719

1,110
116
1,226
493

644
–249
145

–27

–
–20
493

404
409
360
504
1,677

1,350
66
1,416
262

493
–145
90

–

–136
–41
262

The Group has tax loss carry forwards and other tax credits
of SEK 1,800 M (2,400) for which deferred tax assets have
not been recognized, as it is uncertain whether they can be
offset against taxable income in future taxation.

note 19 Other financial assets

group

parent
company

trade receivables per currency

EUR
USD
CNY
SEK
GBP
CAD
AUD
Other currencies
total

Current year change in
provision for bad debts

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

2012

2,349
2,169
677
328
400
253
296
1,085
7,557

2012

537
30
–67
–72
162
–20
570

2013

2,410
2,430
920
476
440
287
262
1,307
8,531

2013

570
18
–105
–61
110
10
541

note 22 parent company’s equity
The Parent company’s equity is split between restricted and
non-restricted equity. Restricted equity consists of share
capital and the statutory reserve. The statutory reserve con-
tains premiums (amounts received from share issues that
exceed the nominal value of the shares) relating to shares
issued up to 2005.

Non-restricted equity consists of share premium
reserves, retained earnings and net income for the year.

note 23 Share capital, number of shares
and dividend per share

Sek M

2012

2013

2012

2013

number of shares (thousands)

Investments in associates
in parent company
Other shares and
interests
Interest-bearing
non-current receivables
Other non-current
receivables
total

note 20 inventories

Sek M

Materials and supplies
Work in progress
Finished goods
Advances paid
total

–

56
89

–

1,489

1,619

–

55
86

–
1,489

–
1,619

group

2012

1,751
1,397
2,561
196
5,905

2013

1,913
1,542
2,806
236
6,498

Impairment of inventories amounted to SEK 166 M (181).

note 21 trade receivables

Sek M

Trade receivables
Provision for bad debts
total

Maturity analysis

Trade receivables not due
Trade receivables due not impaired:
< 3 months
3–12 months
> 12 months

Impaired trade receivables:
< 3 months
3–12 months
> 12 months

total

group

2012

8,127
–570
7,557

2013

9,073
–541
8,531

5,279

6,021

2,064
447
337
2,848

–111
–139
–320
–570
7,557

2,199
479
375
3,052

–70
–127
–345
–541
8,531

Series A

Series B

total

Share
capital,
Sek k

19,175
–

349,075
2,609

368,250
2,609

19,175

351,684

370,859

191,753

351,684

543,437

19,175

351,684

370,859

19,175

351,684

370,859

191,753

351,684

543,437

Opening balance at
1 January 2012
Share issue
Closing balance at
31 December 2012

Number of votes,
thousands

Opening balance at
1 January 2013
Closing balance at
31 December 2013

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 370,259
(369,185) during the year. Non of the Group’s outstanding
long-term incentive programs can lead to dilution in the
future.

The total number of treasury shares as at 31 December

2013 amounted to 600,000. No shares have been repur-
chased during the year.

Dividend per share
The dividend paid during the financial year totaled SEK 1,888 M
(1,655), equivalent to SEK 5.10 (4.50) per share. A dividend
for 2013 of SEK 5.70 per share, a total of SEK 2,110 M, will
be proposed at the Annual General Meeting on Wednesday,
7 May 2014.

102

nOteS

ASSA ABLOY AnnuAL RepORt 2013

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 in the balance sheet mainly relate to defined
benefit plans. ASSA ABLOY has defined benefit pension plans
in a number of countries, with those in the USA, the UK and
Germany being the most significant.

The defined benefit plans in the USA and the UK are

secured by assets in pension funds, while the plans in
Germany are chiefly unfunded. In the USA, there are also
unfunded plans for post-employment medical benefits.
The operations of pension funds are regulated by
national regulations and practice. The responsibility for
monitoring the pension plans and their assets rests mainly
with the boards of the pension funds, but can also rest more
directly with the company. The Group has an overall policy
for the limits within which asset allocation should be made.
Each pension fund adjusts its local asset allocation accord-
ing to the nature of the local pension obligation, particu-
larly the remaining term and the breakdown between
active members and pensioners. The Group has not
changed the processes used for managing these risks com-
pared with previous periods.

The investments are well diversified so that depreciation

of an individual investment should not have any material
impact on the plan assets. The majority of assets are
invested in shares as the Group considers that shares pro-
duce the best long-term return at an acceptable risk level.
The total allocation to shares should not, however, exceed
60% of total assets. Fixed income assets are invested in a
combination of ordinary government bonds and corporate
bonds but also in inflation-indexed bonds. The average
term of these is normally somewhat shorter than the term
of the underlying liability. Bonds should not account for less
than 30% of assets. A small proportion of assets is also
invested in real estate and alternative investments, mainly
hedge funds.

As at 31 December 2013, shares accounted for 49 per-
cent (47) and fixed income securities for 31 percent (35)
of plan assets, while other assets accounted for 20 percent
(18). The actual return on plan assets in 2013 was SEK 333
M (274).

Amounts recognized in the income statement

pension costs, Sek M

2012

2013

Defined contribution pension plans
Defined benefit pension plans
Post-employment medical benefit plans
total

of which, included in:
Operating income
Net financial items

381
111
21
513

416
97

371
136
27
534

449
85

Amounts recognized in the balance sheet

pension provisions, Sek M

2012

2013

Provisions for defined benefit
pension plans
Provisions for post-employment
medical benefits
Provisions for defined contribution
pension plans
pension provisions

1,828

1,567

417

389

52
2,297

60
2,015

pensions with Alecta
Commitments for old-age pensions and family pensions for
salaried employees in Sweden are secured in part through
insurance with Alecta. According to UFR 3, this is a defined
benefit plan that covers many employers. For the 2013
financial year, the company has not had access to informa-
tion making it possible to report this plan as a defined bene-
fit plan. Pension plans in accordance with ITP secured
through insurance with Alecta are therefore reported as
defined contribution plans. The year’s pension contributions
that are contracted to Alecta total SEK 25 M (23), of which
SEK 9 M (8) relates to the Parent company. Pension contri-
butions are expected to remain largely unchanged in 2014.

Alecta’s surplus can be distributed to policyholders and/or

the insured. As at 30 September 2013, Alecta’s surplus
expressed as the collective consolidation level amounted to
153 percent (123 percent as at 30 September 2012). The col-
lective 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 assump-
tions, which do not comply with IAS 19. The collective consol-
idation level is normally allowed to vary between 125 and 155
percent. If the consolidation level deviates from this range,
measures in the form of an adjustment of the premium level
should be taken to return to the normal range.

Specification of defined benefit pension plans, post-employment medical benefits and plan assets by country

united kingdom

germany

uSA

Other countries

total

Specification of defined
benefits, Sek M

Present value of funded
obligations

Fair value of plan assets
Net value of funded plans

Present value of unfunded
obligations
Present value of unfunded
medical benefits
net value of defined benefit
pension plans

Provisions for defined
contribution pension plans
total

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

1,912

2,072

–1,760
152

–1,874
199

–23
55

1,689

1,536

482

356

4,083

4,044

–23
56

–1,200
489

–1,323
213

–210
273

–205
151

–3,193
891

–3,425
619

–

548

554

–

152

199

603

610

–
152

0
199

–
603

–
610

–

413

902

–
902

385

598

–
598

–

311

394

937

417

948

389

588

549

2,245

1,956

52
640

60
608

52
2,297

60
2,015

ASSA ABLOY AnnuAL RepORt 2013

nOteS 103

Note 24 cont.

Movement in obligations

2013, Sek M

Opening balance at 1 January 2013

Acquisitions/disposals

Recognized in the income statement:
Current service cost
Past service cost
Write-down/reversal of pension receivables
Curtailments
Interest on obligation
total recognized in the income statement

Recognized in other comprehensive income:
Return on plan assets,
excluding amounts included above
Gain/loss from change in demographic assumptions
Gain/loss from change in financial assumptions
Experience gains/losses

Remeasurement of net pension obligations
Exchange rate differences
total recognized in other comprehensive income

Payments:
Employer contributions
Employee contributions
Payments
total payments
Closing balance 31 December 2013

2012, Sek M

Opening balance at 1 January 2012 (restated)

Acquisitions/disposals

Recognized in the income statement:
Current service cost
Past service cost
Curtailments
Interest on obligation
total recognized in the income statement

Recognized in other comprehensive income:
Return on plan assets,
excluding amounts included above
Gain/loss from change in financial assumptions
Remeasurement of net pension obligations
Exchange rate differences
total recognized in other comprehensive income

Payments:
Employer contributions
Employee contributions
Payments
total payments
Closing balance 31 December 2012 (restated)

Plan assets allocation

plan assets

Shares
Government bonds
Corporate bonds
Inflation-linked bonds
Property
Cash and Cash equivalents
Alternative investments
Other assets
total

post-employ-
ment medical
benefits

Defined bene-
fit pension
plans

417

–

5
1
5
–
16
27

–
–
–30
–

–30
0
–30

–
0
–25
–25
389

5,021

62
6
0
0
198
265

–
9
–92
–49

–133
72
–61

–
–5
–228
–233
4,992

post-employ-
ment medical
benefits

Defined bene-
fit pension
plans

472

–

5
0
–5
20
21

–
–27
–27
–20
–47

0
0
–28
–28
417

4,828

54
–3
–17
215
249

–
267
267
–180
87

1
1
–212
–210
5,021

plan assets

–3,193

–

–
–
–
–
–129
–129

–198
–
–
–

–198
–34
–231

–35
–
163
128
–3,425

plan assets

–3,115

–

–
–
–
–138
–138

–136
–
–136
113
–23

–
–
83
83
–3,193

2012

1,485
263
624
220
244
0
211
147
3,193

total

2,245

67
6
5
0
85
163

–198
9
–123
–49

–361
38
–323

–35
–5
–91
–130
1,956

total

2,185

59
–3
–22
97
132

–136
240
104
–87
17

1
1
–157
–155
2,245

2013

1,678
384
460
227
239
0
238
197
3,425

104

nOteS

ASSA ABLOY AnnuAL RepORt 2013

Note 24 cont.

Key actuarial assumptions

key actuarial assumptions (weighted average), %

2012

2013

2012

2013

2012

2013

united kingdom

germany

uSA

Discount rate
Expected annual salary increases
Expected annual pension increases
Expected annual medical benefit increases
Expected annual inflation

4.5
n/a
2.6
n/a
2.7

4.4
n/a
2.3
n/a
2.3

3.2
2.6
2.2
n/a
1.6

3.5
2.8
1.8
n/a
1.8

4.0
n/a
2.0
7.8
3.0

4.8
n/a
2.0
7.3
3.0

Sensitivity analysis of the pension provision

the effect of a 1 percent change in some actuarial assumptions, change in percent

Discount rate
Expected annual medical benefit increases

note 25 Other provisions

note 26 Other current liabilities

Sek M

Opening balance at
1 January 2012
Provisions for the year
Acquisitions of subsidiaries
Deferred considerations
acquisitions
Reclassification to liabilities of
disposal groups held for sale
Reclassifications
Reversal of non-utilized
amounts
Utilized during the year
Exchange rate differences
Closing balance at
31 December 2012

Sek M

Opening balance at
1 January 2013
Provisions for the year
Reclassifications
Reversal of non-utilized
amounts
Utilized during the year
Exchange rate differences
Closing balance at
31 December 2013

Balance sheet breakdown:

Other non-current provisions
Other current provisions
total

group

Restruc-
turing
reserve

Other

total

1,665
133
–

–

–12
–62

–133
–498
–25

1,678
553
39

–
62

–167
–215
–13

3,343
686
39

–12
–

–300
–713
–38

1,068

2,007

3,075

group

Restruc-
turing
reserve

1,068
914
24

–12
–647
22

Other

total

2,007
282
–24

–291
–108
–6

3,075
1,196
–

–303
–756
17

1,369

1,860

3,229

group

2012

1,871
1,204
3,075

2013

2,373
856
3,229

The restructuring reserve relates to the ongoing restructuring
programs launched in 2008, 2009, 2011 and 2013. The clos-
ing balance is expected to be chiefly utilized in the next three
years and mainly relates to severance payments. The non-cur-
rent part of the restructuring reserve totaled SEK 598 M. For
further information on the restructuring programs, see the
Report of the Board of Directors. Other provisions relate to
taxes and legal obligations including future environment-
related measures.

+1.0%

13.4
9.7

–1.0%

–10.9
–8.3

group

2012

2013

353
83
409

68
2,705
373
3,991

446
93
398

69
273
475
1,754

Sek M

VAT and excise duty
Employee withholding tax
Advances received
Social security contributions
and other taxes
Deferred considerations
Other current liabilities
total

note 27 Accrued expenses and deferred income

group

parent company

Sek M

Personnel-related expenses
Customer-related
expenses
Deferred income
Accrued interest expenses
Other
total

2012

1,768

547
201
98
784
3,397

2013

2012

2013

1,868

140

639
263
100
710
3,580

–
–
48
42
181

–
–
57
28
225

note 28 Contingent liabilities
group

parent company

Sek M

2012

2013

2012

2013

Guarantees
Guarantees on behalf of
subsidiaries
total

–
61

–

–
89

9,405
9,405

9,088
9,088

In addition to the guarantees shown in the table above, the
Group has a large number of minor bank guarantees for per-
formance of obligations in operating activities. No material
liabilities are expected as a result of these guarantees.

group

Maturity profile – guarantees, Sek M

2012

2013

<1 year
>1<2 years
>2<5 years
>5 years
total

25
9
22
5
61

45
3
33
8
89

note 29 Assets pledged against liabilities
to credit institutions

group

parent company

parent company
Other provisions in the parent company relate to provisions
for restructuring reserves and estimated deferred consider-
ations for 2012.

Sek M

2012

2013

2012

2013

Real estate mortgages
Other mortgages
total

106
32
138

44
30
74

–
–
–

ASSA ABLOY AnnuAL RepORt 2013

nOteS 105

note 30 Business combinations

Sek M

purchase prices
Cash paid for acquisitions during the year
Holdbacks and deferred consideration
for acquisitions during the year
Adjustment of purchase prices for acqui-
sitions in prior years
Fair value of investments in associates
held before the business combination

total

Acquired assets and liabilities
at fair value
Intangible assets
Tangible assets
Deferred tax assets
Other financial assets
Inventories
Current receivables and investments
Cash and cash equivalents
Non-controlling interest
Deferred tax liabilities
Pension provisions
Other non-current liabilities
Current liabilities
total

goodwill

Cash paid for acquisitions during the year
Cash and cash equivalents in acquired
subsidiaries
Paid deferred considerations for
acquisitions in previous years
Change in cash and cash equivalents
due to acquisitions

Net sales from acquisition date
EBIT from acquisition date
Net income from acquisition date

2012

2013

3,876

3,991

923

607

–

4,799

4,643

1,055
353
43
14
477
818
345
–13
–231
–67
–232
–909
1,653

3,146

3,876

–345

305

3,836

2,830
480
347

914
579
23
18
464
499
53
–
–168
–1
–111
–311
1,959

2,684

3,991

–53

845

4,783

517
46
24

The table above includes fair value adjustments of acquired
net assets from acquisitions made in previous years.

Acquisition analyses have been prepared for all acquisi-

tions in 2013. The net sales of acquired units for 2013
totaled SEK 3,702 M (4,487) and net income amounted to
SEK 261 M (460). Acquisition-related costs for 2013 totaled
SEK 56 M (39) and have been reported as other operating
expenses in the income statement.

See below for an account of some acquisitions com-

pleted in 2013 and 2012.

2013
Ameristar
On 2 November 2013 the Group acquired the assets of
Ameristar, the leading US manufacturer of perimeter secu-
rity solutions. Ameristar offers a comprehensive product
range of industrial and high security fencing and gates, com-
plementing the ASSA ABLOY offering of security solutions in
the American market. Ameristar brings new valuable com-
petencies to the Group as well as providing an excellent fit
with the Group’s broad array of security and safety solutions.
Ameristar is headquartered in Tulsa, Oklahoma. Intangible
assets in the form of the brand and patents have been dis-
closed. Residual goodwill mainly relates to synergies and
other intangible assets that do not meet the criteria for sep-
arate reporting.

Amarr
On 25 November 2013 the Group acquired 100 per cent of
the share capital of Amarr (USA), the third largest player in
the North American sectional door market, with a very
strong and attractive market position. Amarr is another
important building block for the ASSA ABLOY Group in
building global leadership within Entrance Automation.

Amarr’s size, product offering and market position give a
strong footprint within sectional doors in North America.
Amarr is headquartered in Winston-Salem, North Carolina.
Intangible assets in the form of brand have been disclosed.
Residual goodwill mainly relates to synergies and other
intangible assets that do not meet the criteria for separate
reporting.

Other acquisitions
Other notable acquisitions during the year comprised
Monterings-service AS Norport (Norway) och Mercor (Poland,
Czech Republic and Slovakia) .

2012
Albany Doors
On 11 January 2012, 100 percent of the share capital was
acquired in Albany Door Systems (USA), a global leader in
automatic high-performance doors. The company has
global market penetration in industrial automatic high-per-
formance doors. The products are used for industrial appli-
cations and in logistics centers, where there is a major need
for customized automatic high-performance doors with
high security and access control. Albany also offers service
and maintenance on the company’s principal markets. The
company is headquartered in Georgia, USA. Intangible
assets in the form of the brand and customer relationships
have been disclosed separately. Residual goodwill mainly
relates to synergies and other intangible assets, which do
not meet the criteria for separate recognition.

Dynaco
On 1 March 2012, 100 percent of the share capital was
acquired in Dynaco (Belgium). Dynaco is a leading manufac-
turer of automatic high-performance doors specializing in
sales to a global distributor network. The acquisition of
Dynaco further strengthens ASSA ABLOY’s position in the
fast-growing market segment of high-performance doors.
Dynaco provides manufacturing expertise, with many lead-
ing patented products and a global distribution channel. The
company is headquartered in Moorsel, Belgium. Intangible
assets in the form of the brand and customer relationships
have been disclosed separately. Residual goodwill mainly
relates to synergies and other intangible assets, which do
not meet the criteria for separate recognition.

Guoqiang
On 29 May 2012, 100 percent of the share capital was
acquired in Guoqiang, a Chinese manufacturer of window
hardware. Guoqiang offers a complete range of window
hardware mainly for the Chinese market. The company has a
good market presence in China through an extensive net-
work of sales offices. Guoqiang provides a good fit with the
existing offering in total door opening solutions in China and
gives access to the Chinese window hardware market. The
company is headquartered in Leling, Shandong Province,
China. The brand has been disclosed separately, and residual
goodwill mainly relates to synergies and other intangible
assets, which do not meet the criteria for separate recogni-
tion.

Other acquisitions
Other notable acquisitions during 2012 comprised
Securistyle (United Kingdom), Traka (United Kingdom),
Helton (Canada), Sanhe Metal (China) and 4Front (USA).

106

nOteS

ASSA ABLOY AnnuAL RepORt 2013

note 31 Assets of disposal group classified as held

note 32 Cash flow

for sale and discontinued operations

group

Sek M

2012

2013

Sek M

Assets of disposal group classified as
held for sale
Intangible assets
Tangible assets
Deferred tax assets
Inventories
Trade receivables
Cash and cash equivalents
total

Liabilities of disposal group classified as
held for sale
Provisions
Trade payables
Current tax liabilities
Other current liabilities
Accrued expenses and deferred income
total

net income of disposal group classified
as held for sale
Sales
Costs
income before tax
Tax on income
Impairment of assets of disposal group
classified as held for sale
Net income of disposal group classified as
held for sale
net income of disposal group classified
as held for sale

Cash flow from disposal group classified
as held for sale
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash flow from disposal group classified
as held for sale

135
17
26
33
9
390
610

12
92
9
80
33
226

568
–542
26
–6

–9

–

54
–3
3

Adjustments for non-cash items
Profit on sales of non-current assets
Change in pension provision
Share of earnings in associates
Dividend from associates
Other
Adjustments for non-cash items

Change in working capital
Inventories increase/decrease (–/+)
Trade receivables increase/
decrease (–/+)
Trade payables increase/
decrease (+/–)
Other working capital increase/
decrease (–/+)
Change in working capital

investments in subsidiaries
Total purchase price
Fair value of investments in associates
held before the business combination
Less, acquired cash and cash equivalents
Less, unpaid parts of purchase prices
Paid purchase prices
relating to acquisitions in prior years
investments in subsidiaries

Disposal of subsidiaries
Purchase prices received, net
Less, disposed cash and cash equivalents
Disposal of subsidiaries

Other investments
Investments in/sales of other shares
and interests
Investments in/sales of other
non-current receivables
Other investments

–
–
–
–
–
–
–

–
–
–
–
–
–

–
–
–
–

–

–11

–
85
–

group

2012

2013

–347
48
–70
25
32
–312

–192

–22

136
–77

–24
73
–94
34
27
17

–166

–520

333

–143
–497

–4,799

–4,643

–
345
923

45
53
607

–305
–3,836

–845
–4,783

–12
–
–12

14
19

85
–
–85

–3
1

Assets of disposal group classified as held for sale
In 2012 an agreement was signed to sell the Group’s 70 per-
cent interest in the Chinese company Wangli Security Prod-
ucts Ltd. and the business was recognized in the balance
sheet as Assets of disposal group classified as held for sale. In
2013 the sale was completed, resulting in a capital loss of
SEK 11 M. On completion the Group received a first part pay-
ment of SEK 85 M of the purchase price.

ASSA ABLOY AnnuAL RepORt 2013

nOteS 107

note 33 employees

Salaries, wages, other remuneration and social security costs

Sek M

Salaries, wages and other remuneration
Social security costs
– of which pensions
total

group

2012

10,627
2,078
416
12,705

2013

11,395
2,363
449
13,759

Fees to Board members in 2013 (including committee work), SEK thousand

name and post

Lars Renström, Chairman
Carl Douglas, Vice Chairman
Birgitta Klasén, Member
Eva Lindqvist, Member
Johan Molin, President and CEO
Sven-Christer Nilsson, Member
Ulrik Svensson, Member
Jan Svensson, Member
Employee representatives (4)
total
Total fees for Board members amounted to SEK 5.2 M in 2012.

Board

1,350
750
500
500
–
500
500
500
–
4,600

Remuneration
Committee

Audit
Committee

100
–
–
–
–
50
–
50
–
200

–
–
100
–
–
–
200
100
–
400

parent company

2012

2013

130
77
24
207

147
94
25
241

total

1,450
750
600
500
–
550
700
650
–
5,200

Remuneration and other benefits of the Executive Team in 2013, SEK thousands

name

Fixed salary Variable salary

benefits Other benefits

pension costs

Stock-related

9,415
Johan Molin, President and CEO
7,818
Other members of the Executive Team (8)
17,233
total remuneration and benefits
Pension costs for the year for the President and CEO have increased compared to previous year due to retroactive adjustments for the years 2006 to 2012. Total remu-
neration and other benefits for the Executive Team amounted to SEK 102 M in 2012.

13,377
34,410
47,787

9,795
15,748
25,543

6,333
12,672
19,005

117
3,309
3,426

Salaries and remuneration for the Board of Directors
and the parent company’s Executive Team
Salaries and remuneration for the Board of Directors and the
parent company’s Executive Team totaled SEK 48 M (44).
Social security costs amounted to SEK 46 M (33), of which
37 SEK M (24) were pension costs and tax on 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, 2012 and 2013 Annual General Meetings, it
was decided to implement further long-term incentive pro-
grams for senior executives and other key staff in the Group.
The new long-term incentive programs, LTI 2011, LTI 2012
and LTI 2013 and have been drawn up with similar terms to
LTI 2010.

For each Series B share acquired by the CEO within the
framework of LTI 2011, LTI 2012 and LTI 2013, 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
programs, employees have acquired a total of 243,024
shares in ASSA ABLOY AB, of which 65,918 shares were
acquired in 2013 within the framework of LTI 2013.

Each matching stock option entitles the holder to receive
one free Series B share in the company after three years, pro-
vided that the holder, with certain exceptions, is still
employed in the Group when the interim report for Q1
2014, 2015 and 2016 for the respective program is pub-
lished, and has retained the shares acquired within the
framework of the long-term incentive programs. Each per-
formance-based stock option entitles the holder to receive
one free Series B share in the company three years after
allotment, provided that the above conditions have been
fulfilled. In addition, the maximum level in a range deter-
mined by the Board of Directors for the performance of the
company’s earnings per share must have been fulfilled. The
performance-based condition for each respective year has
been fulfilled for all three programs.

Outstanding matching and performance-based stock
options for LTI 2013 total 190,571. The total number of out-
standing matching and performance-based stock options
for LTI 2011, LTI 2012 and LTI 2013 amounted to 668,711 on
the reporting date of 31 December 2013.

Fair value is based on the share price on the allotment
date. The present value calculation is based on data from an
external party. Fair value is adjusted for participants who do
not retain their holding of shares for the duration of the 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.

The fair value of ASSA ABLOY’s Series B share on the allot-
ment date for LTI 2013 of 21 May 2013 was SEK 272.33. The
equivalent value on the allotment date for LTI 2012 of 22
May 2012 was SEK 187.77. The equivalent value on the allot-
ment date for LTI 2011 of 25 May 2011 was SEK 173.29.

108

nOteS

ASSA ABLOY AnnuAL RepORt 2013

Note 33 cont.

The total cost of the Group’s four long-term incentive pro-
grams excluding social security costs amounted to SEK 34 M
(27) in 2013. In April 2013 a redemption of LTI 2010 took
place and 204,611 shares at a total market value of SEK 52 M
were transferred to the participants of the program. The
payment for the transferred shares was recognized in equity.

Other equity-based incentive programs
ASSA ABLOY has previously issued a number of convertible
debentures to employees in the Group. At year-end 2013,
there were no outstanding convertible debentures issued to
employees in the Group.

Average number of employees per country, broken down by gender

China
USA
France
Sweden
Germany
United Kingdom
Mexico
Czech Republic
Netherlands
Finland
Canada
Romania
Australia
South Korea
Malaysia
Italy
Norway
Spain
Belgium
Denmark
Israel
Brazil
South Africa
Switzerland
New Zealand
Colombia
Austria
Ireland
Poland
Chile
Hong Kong
Other
total

Sweden
total

total

14,545
5,915
2,259
2,156
1,788
1,594
1,071
1,188
1,050
924
645
684
754
678
655
733
580
650
468
462
405
356
380
319
300
290
217
215
166
175
132
1,009
42,762

total

125
125

group

2012

of which
women

of which
men

6,293
1,870
696
569
530
532
477
583
176
316
157
265
221
242
421
178
134
165
114
188
122
92
166
101
95
41
47
77
33
42
57
230
15,229

8,252
4,045
1,563
1,588
1,257
1,062
594
605
873
607
488
419
533
436
233
556
446
485
354
274
283
264
214
218
205
249
171
138
133
133
75
779
27,533

2013

of which
women

of which
men

4,360
2,047
651
562
476
502
473
565
169
300
202
300
209
234
420
154
129
137
118
117
116
107
162
82
92
52
38
66
29
52
56
215
13,192

9,115
4,804
1,492
1,511
1,120
1,051
902
607
840
590
624
516
556
426
238
463
465
443
360
331
273
275
203
223
201
207
162
131
147
122
78
888
29,364

total

13,475
6,851
2,143
2,073
1,597
1,553
1,375
1,172
1,009
890
826
816
764
660
658
617
594
580
477
448
389
382
365
305
293
259
200
197
175
174
134
1,103
42,556

parent company

2012

of which
women

of which
men

25
25

100
100

2013

of which
women

of which
men

27
27

109
109

2013

of which
women

of which
men

2
1

1
3

6
8

2
14

total

136
136

total

8
9

3
17

Gender distribution of Board of Directors and Executive Team

Board of Directors 1
Executive Team
–of which Parent company's
Executive Team
total

1 Excluding employee representatives.

2012

of which
women

of which
men

2
1

1
3

6
8

2
14

total

8
9

3
17

ASSA ABLOY AnnuAL RepORt 2013

nOteS 109

note 34 Financial risk management

and financial instruments

Financial risk management
ASSA ABLOY is exposed to a variety of financial risks due to
its international business operations. Financial risk manage-
ment for ASSA ABLOY’s units has been implemented 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, and other interest-
bearing investments including positive market values of
derivatives. The table ‘Net debt and equity’ shows the posi-
tion 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

Non-current interest-bearing receivables
Short-term interest-bearing investments
incl. positive market values of derivatives
Cash and bank balances
Pension provisions
Non-current interest-bearing liabilities
Current interest-bearing liabilities incl.
negative market values of derivatives
total
equity
net debt/equity ratio

group

2012

–29

–138
–907
2,297
11,194

3,388
15,805
26,001
0.61

2013

–27

–343
–362
2,015
13,329

4,983
19,595
28,813
0.68

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 benefits 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
solid 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 instruments1

Sek M2

Long-term bank loans
Long-term capital market 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
Non-current interest-bearing
receivables
Derivatives (inflow)
Deferred considerations
Trade receivables
Trade payables
net total

Confirmed credit facilities
Credit facilities maturing < 1 year
Adjusted maturity profile¹

<1 year

–9
–351
–804

–2,519
–4,064
–7,747

1,045

29
3,940
–2,705
7,557
–3,883
–1,764

9,957
–472
7,722

31 December 2012

31 December 2013

>1<2
years

–74
–2,308
–

–
–348
–2,730

>2<5
years

–538
–4,764
–

–
–587
–5,889

>5 years

<1 year

–648
–4,415
–

–
–504
–5,567

–20
–2,408
–1,254

–3,662
–8,737
–16,080

>1<2
years

–320
–2,307
–

–
–579
–3,206

>2<5
years

–600
–5,858
–

–
–598
–7,056

>5 years

–1,511
–4,305
–

–
–54
–5,870

–

704

–

–
390
–257
–
–
–2,597

–9,485
–
–12,083

–
630
–144
–
–
–5,403

–
–
–5,403

–
523
–8
–
–
–5,052

–
–
–5,052

27
8,962
–273
8,531
–4,393
–2,522

8,074
–548
5,004

–
600
–284
–
–
–2,890

–
–
–2,890

–
667
–380
–
–
–6,769

–8,074
–
–14,843

–
154
–
–
–
–5,716

–
–
–5,716

1 For maturity structure of guarantees, see Note 28.
2 The amounts in the table are undiscounted and include future known interest payments. The exact amounts are not therefore found in the balance sheet.

110

nOteS

ASSA ABLOY AnnuAL RepORt 2013

Note 34 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
US Private Placement Program
US Private Placement Program
US Private Placement Program
Multi–Currency RCF
Bank loan NIB

Bank loan EIB
Global MTN Program

Amount,
Sek M

522
492
326
326
796
163
456
326
652
489
8,074
493
493
987
13,457

Other long-term loans
total long-term loans/facilities
Global MTN Program

Global CP Program

Swedish CP Program
Other bank loans
Overdraft facility
total short-term loans/facilities
total loans/facilities

320
28,373

6,521

5,000
486
1,179
13,185
41,558

Maturity

May 2015
Dec 2016
Apr 2017
May 2017
Dec 2018
Aug 2019
May 2020
Aug 2022
Aug 2022
Aug 2024
Jun 2018
Dec 2019
Dec 2021

Jul 20182
Jan 2015
Jul 2015
Aug 2015
Oct 2015
Oct 2015
Jun 2016
Jun 2016
Aug 2016
Nov 2016
Nov 2016
May 2017
Sep 2017
Jun 2018
Oct 2018
Feb 2020
Nov 2020
Dec 2020
Nov 2023
Mar 2025
Feb 2027

Mar 2014
Jun 2014
Dec 2014

Carrying
amount,
Sek M

Currency

Amount
2012

Amount
2013

Of which
parent
company,
Sek M

USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
EUR
EUR
EUR
EUR
EUR
EUR
SEK
SEK
JPY
NOK
NOK
SEK
EUR
EUR
SEK
CHF
SEK
EUR
EUR
EUR
EUR
USD
EUR
EUR

EUR
EUR
SEK
USD
EUR
SEK

80
76
50
50
122
25
70
0
150
75
1,100
0
0
110
30
0
250
500
3,000
250
100
250
0
0
500
0
500
0
0
0
30
0
0
30

45
150
300
25
110
1,050

80
76
50
50
122
25
70
50
100
75
900
55
55
110
30
30
250
500
3,000
250
100
250
30
40
500
100
500
30
50
35
30
25
30
30

45
150
300
25
69
799

269
269
250
500
186
265
106
250
269
359
500
731
500
268
448

267

269
269

404
1,346
300

5541
492
326
326
796
163
456
3301
652
489
0
493
493
987
269
269
250
500
186
2791
106
250
269
359
500
731
500
268
449
3101
2621
1631
2631
269
320
13,329
404
1,346
300
163
619
799
486
760
4,875
18,204

–362

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 accounting.
2 The loan amortizes starting November 2016. In the table the average date of maturity of the loan has been stated.

–27
–31
2,015
19,595

–204

Rating

Agency

Short-
term

Standard & Poor’s
Moody’s

A2
P2

Out-
look

Stable
Stable

Long-term

A –
n/a

Credit
outlook

Stable

The Group’s credit rating remained unchanged during the year.

ble for external borrowings and external investments.
ASSA ABLOY strives to have access on every occasion to both
short-term and long-term loan facilities. In accordance with
financial policy, the available loan facilities, including avail-
able cash and cash equivalents, should include a reserve
(facilities available but not utilized) equivalent to 10 percent
of the Group’s total annual sales.

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-

Maturity profile
The table ‘Maturity profile’ on page 110 shows the maturi-
ties for ASSA ABLOY’s financial instruments, including con-
firmed credit facilities. During the year, the maturity profile
was extended through a number of capital market transac-

ASSA ABLOY AnnuAL RepORt 2013

nOteS 111

Note 34 cont.

tions. The maturities are not concentrated to a particular
date in the immediate future. The Group’s Multi-Currency
Revolving Credit Facility was renewed during the year. The
amount was reduced from EUR 1,100 M to EUR 900 M as the
lower amount is considered adequate to cover the Group’s
liquidity requirement. The new facility matures in 2018,
which is taken into account when the refinancing require-
ment is assessed. This credit facility was wholly unutilized at
year-end. Moreover, existing financial assets are also taken
into account. The table shows undiscounted cash flows
relating to the Group’s financial instruments at the report-
ing date, and these amounts are therefore not found in the
balance sheet.

Interest-bearing liabilities
The Group’s long-term loan financing mainly consists of a
Private Placement Program in the USA totaling USD 698 M,
of which USD 698 M (698) is long-term, a GMTN program of
SEK 8,506 M (5,392), of which SEK 6,457 M (5,392) is long-
term, a loan from the European Investment Bank of EUR 110
M (110), and a loan from the Nordic Investment Bank of
EUR 110 M (0). The loan from the Nordic Investment Bank
was raised in the last quarter of the year. During the year,
nine new issues were made under the GMTN program for a
total amount of around SEK 3,100 M. Other changes in long-
term loans are mainly due to some of the originally long-
term loans now having less than one year to maturity.

The Group’s short term loan financing mainly consists of
two Commercial Paper Programs for a maximum USD 1,000
M (1,000) and SEK 5,000 M (5,000) respectively. At year-end,
SEK 1,580 M (2,152) 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 900 M (1,100), which was wholly
unutilized at year-end. The reduction in short-term financ-
ing is mainly linked to the increase in long-term capital mar-
ket issues implemented to extend the Group’s maturity pro-
file. At year-end the average time to maturity for the Group’s
interest-bearing liabilities, excluding the pension provision,
was 45 months (47).

Some of the Group’s main financing agreements contain a
customary Change of Control clause. This clause means that
lenders have the right in certain circumstances to demand
the renegotiation of conditions or to terminate the agree-
ments should control of the company change.

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’ below.

Cash and cash equivalents and other
interest-bearing receivables
Short-term interest-bearing investments totaled SEK 204 M
(24) at year-end. In addition, ASSA ABLOY has non-current
interest-bearing receivables of SEK 27 M (29) and financial
derivatives with a positive market value of SEK 138 M (114)
which, in addition to cash and cash equivalents, are included
in the definition of net financial debt. Cash and cash equiva-
lents are mainly invested in bank accounts or interest-bear-
ing 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 equiva-
lents was 1 day (1) at year-end 2013.

The Parent company’s cash and cash equivalents are held

in a sub-account to the Group account.

Sek M

2012

2013

2012

2013

group

parent company

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

907

362

–

907

362

114
1,074

204

138
731

–

–
42

–

–
–

Net debt by currency

Sek M

USD
EUR
SEK
AUD
DKK
CZK
CAD
KRW
Other
total

31 December 2012

31 December 2013

net debt excluding
currency swaps

net debt including
currency swaps

net debt excluding
currency swaps

net debt including
currency swaps

6,069
5,470
3,588
30
16
19
30
171
412
15,805

6,987
5,038
2,136
650
250
226
212
171
135
15,805

5,894
8,551
4,008
27
34
25
49
195
812
19,595

10,370
5,165
2,238
608
195
343
261
195
220
19,595

Interest rate risks in interest-bearing assets
Treasury manages interest rate risk in interest-bearing
assets. Derivative instruments such as interest rate swaps
and FRAs (forward rate agreements) may be used to manage
interest rate risk. These investments are mostly 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) at year-end 2013. A downward
change in the yield curve of one percentage point would
reduce the Group’s interest income by around SEK 1 M (8)
and consolidated equity by SEK 1 M (6).

112

nOteS

ASSA ABLOY AnnuAL RepORt 2013

Note 34 cont.

Interest rate risks in borrowing
Changes in interest rates have a direct impact on ASSA
ABLOYs net interest expense. Treasury is responsible for
identifying and managing the Group’s interest rate expo-
sure. It analyses the Group’s interest rate exposure and cal-
culates the impact on income of changes in interest rates on
a rolling 12-month basis. The Group strives for a mix of fixed
rate and variable rate borrowings, and uses interest rate
swaps to continuously adjust the fixed interest term. The
financial policy stipulates that the average fixed interest
term should normally be 24 months. At year-end, the aver-
age fixed interest term on gross debt, excluding pension lia-
bilities, was around 21 months (34). An upward change in
the yield curve of one percentage point would increase the
Group’s interest expense by around SEK 102 M (74) and
reduce consolidated equity by SEK 76 M (56).

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, even though it can be significant for individual busi-
ness units. The main principle is to allow currency fluctua-
tions to have an impact on the business as quickly as possi-
ble. 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
DKK
EUR
GBP
RON
SEK
USD

Currency exposure

2012

325
537
–1,094
–144
1,049
459
–199
–822
–44

2013

370
535
–1,069
266
702
591
–256
–2,413
1,101

Translation exposure in income
The table below shows the impact on the Group’s income
before tax of a 10 percent weakening of the Swedish krona
(SEK) in relation to the major currencies, with all other vari-
ables constant.

Impact on income before tax of a 10 percent
weakening of SEK

Currency, Sek M

2012

2013

AUD
CAD
CNY
EUR
GBP
HKD
NOK
USD

39
18
51
158
26
22
26
234

36
18
52
167
9
21
24
233

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. Whenever possible, according to local
conditions, 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 and loans to achieve appropriate financing and
to eliminate undesirable currency exposure.

The table ‘Net debt by currency’ on page 112 shows the
use of forward exchange contracts in relation to financing in
major currencies. Forward exchange contracts are used to
neutralize the exposure arising between external debt and
internal requirements.

Financial credit risk
Financial risk management exposes ASSA ABLOY to certain
counterparty risks. Such exposure may arise from the 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 subsidiar-
ies to repay the Group’s loans. This is primarily achieved
through cash pools put in place by Treasury. Around 87 per-
cent (85) of the Group’s sales were settled through cash pools
in 2013. However, the Group can in the short term invest sur-
plus 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 with respect
to interest rate and currency derivatives. The table on page
114 shows the impact of this netting.

Commercial credit risk
The Group’s trade receivables are distributed across a large
number of customers who are spread globally. No single cus-
tomer accounts for more than 1% of the Group’s sales. The
concentration of credit risk associated with trade receiv-
ables is therefore limited. The fair value of trade receivables
is equivalent to the carrying amount. Credit risks relating to
operating activities are managed locally at company level
and monitored at division level.

Commodity risk
The Group is exposed to price risks relating to purchases of
certain commodities (primarily metals) used in production.
Forward contracts are not used to hedge commodity pur-
chases.

Fair value of financial instruments
Derivative financial instruments such as forward exchange
contracts and forward rate agreements 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 114 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 is equiva-
lent to 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 114 provides
an overview of financial assets and liabilities, measurement
category, and carrying amount and fair value per item.

ASSA ABLOY AnnuAL RepORt 2013

nOteS 113

Note 34 cont.

Disclosures of offsetting of financial assets and liabilities

2012

2013

Amounts
netted
in the
balance
sheet

Net
amounts
in the
balance
sheet

Amount
covered
by net-
ting
agree-
ment but
not offset

Net
amount

Gross
amount

Amounts
netted
in the
balance
sheet

Net
amounts
in the
balance
sheet

Amount
covered
by net-
ting
agree-
ment but
not offset

Net
amount

–
–

114
87

47
50

67
37

139
107

–
–

139
107

65
60

74
47

seK M

Financial assets
Financial liabilities

Gross
amount

114
87

Netted financial assets and financial liabilities only consist of derivative instruments.

Outstanding derivative financial instruments at 31 December

31 December 2012

31 December 2013

Instrument, seK M

positive fair
value

Negative
fair value

Nominal
value

positive fair
value

Negative
fair value

Nominal
value

Foreign exchange forwards, funding
Interest rate swaps1
Cross currency swaps
total
1 For interest rate swaps, only one leg is included in nominal value.

25
89
0
114

–34
–49
–4
–87

2,688
4,059
1,295
8,042

77
62
0
139

–13
–50
–45
–108

13,174
7,018
1,319
21,511

Financial instruments: carrying amounts and fair values by measurement category

2012

2013

IAs 39
category*

Carrying
amount

Fair value

Carrying
amount

Fair value

3
1
1
5
2

1
1

4
4

4
4
5
2
4
2

4
1,519
7,557
75
39

24
907

2,041
9,153
11,194

65
3,235
–
87
3,883
3,114

4
1,519
7,557
75
39

24
907

2,041
9,543
11,584

65
3,235
–
87
3,883
3,114

4
1,675
8,531
62
77

204
362

2,161
11,168
13,329

–
4,875
50
58
4,393
937

4
1,675
8,531
62
77

204
362

2,161
11,330
13,491

–
4,875
50
58
4,393
937

seK M

Financial assets
Other shares and interests
Other financial assets
Trade receivables
Derivative instruments – hedge accounting
Derivative instruments – held for trading

Short-term investments
Cash and cash equivalents

Financial liabilities
Long-term loans – hedge accounting
Long-term loans – not hedge accounting
Long-term loans, total

Short-term loans – hedge accounting
Short-term loans – not hedge accounting
Derivative instruments - hedge accounting
Derivative instruments – held for trading
Trade payables
Deferred considerations

* Applicable IAS 39 categories:
1 = Loan and 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.

The fair value of long-term borrowing is based on observable data by discounting cash flows to market rate, while the fair
value of current receivables and current liabilities is considered to correspond to the carrying amount.

Financial instruments: measured at fair value

seK M

Financial assets
Derivative instruments

Financial liabilities
Derivative instruments
Deferred considerations¹

2012

2013

Carrying
amounts

Quoted
prices

observ-
able data

Non-
observ-
able data

Carrying
amounts

Quoted
prices

observ-
able data

Non-
observ-
able data

87
3,114

–

–
–

87
–

–

–
3,114

108
937

–

–
–

108
–

–

–
937

1 Deferred considerations often depend on the earnings trend of an acquired business over a certain period. Measurement of the deferred consideration is based on
the management’s best judgment. Discounting to present value takes place in the case of significant amounts.

114

Notes

AssA ABLoY ANNuAL report 2013

Securing the venue for the 2014 APEC summit

Customer:

In preparation for the 2014 APEC summit, the Chinese government is building an international conference and exhibition center, a boutique
hotel and 12 VIP villas at Yanqi Lake, 50km northeast of downtown Beijing.

Challenge: As a very high-profile construction project, safety and security is of the utmost importance. The layouts of the villas are unique, adding to
the complexity of designing an integrated hardware solution for the project. ASSA ABLOY specified ANSI products to ensure predictable
performance, safety and security.

Solution:

ASSA ABLOY supplied an ANSI product package that included 10,000 Yale hinges, 1,600 sets of Doormax locksets and 1,100 sets of Doormax
door closers, 600 sets of Yale door concealed closers, 350 sets of exit devices and a 4-level master key system.

Digital door locks for
new landmark buildings
in Gwangyang City

Customer: Engineering and construction firm Daelim E&C is building two multi purpose

residential-commercial buildings that will be the tallest in South Jeolla
Province, South Korea. Both buildings will have three subterranean floors
and 47 floors above ground, for a total floor area of 77,973m2.

Challenge: Located in the prestigious Jung-dong residential area of Gwangyang City, the
buildings will be earthquake-resistant and house 440 luxury apartments fea-
turing every modern convenience. In keeping with the modern aesthetic of the
buildings, Daelim E&C specified push-pull door locks and high-quality doors.

Solution:

iRevo will supply 440 GATEMAN A110-FH push-pull digital door locks for use
in this high-profile construction project. In selecting the GATEMAN A110-FH,
the customer said the product exceeded their expectations due to its out-
standing design and innovative features.

ASSA ABLOY AnnuAL repOrt 2013

nOteS 115

Comments on five years in summary

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.

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 acqui-
sitions 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.

2012
Organic growth was 2 percent, despite the continued weak
market conditions globally. The share of sales on emerging
markets continued to increase to over 25 percent of total
sales. The major investments in product development in
recent years have been fruitful. This can be seen from the
share of products launched in the past three years, which
has increased considerably and currently accounts for
around 25 percent of total sales.

Operating income excluding items affecting comparabil-

ity increased by 13 percent during the year and operating
cash flow remained very strong. Earnings per share after full
dilution, excluding items affecting comparability, increased
by 13 percent, compared with 2011.

A total of 13 acquisitions were completed during the
year, which mainly strengthened the position in entrance
automation for high-performance doors and docking sys-
tems. These acquisitions increase annual sales by a total of
around SEK 4,500 M and provide important products and
technology.

Activities in the ongoing restructuring programs

remained at a high level during the year. The transfer of pro-
duction to low-cost countries continued, combined with
conversion of plants from production to assembly and
installation. More than 6,700 employees have left the Group,
as a result of these activities since the programs began in
2006.

In summary, it may be stated that ASSA ABLOY continued
gradually to expand and consolidate its leading market posi-
tion during the year, and showed good earnings capacity
under the prevailing economic circumstances.

2013
Demand remained weak in Europe but leveled off during the
year, combined with a continuing recovery in the USA and
strong sales growth in emerging markets. Continued sub-
stantial investment in innovative new products further con-
solidated market leadership, with products launched in the
past three years accounting for a record 27 percent of sales.
Operating income, excluding items affecting compara-
bility, increased by 6 percent compared with 2012, and cash
flow showed a positive trend. Earnings per share after full
dilution, excluding items affecting comparability, increased
6 percent.

A total of 10 acquisitions were consolidated during the

year, which mainly strengthened the position in entrance
automation for overhead sectional doors and in high-secu-
rity fencing and gates for the North American market. These
acquisitions increase annual sales by a total of around
SEK 3,700 M and provide important products and technol-
ogy.

A new restructuring program was launched during the
year for the purpose of continuing to increase the cost-effi-
ciency of all divisions. Some 30 production plants and offices
are set to close with an estimated payback period of just
over three years. At year-end 2013, more than 8,500
employees had left the Group as a result of restructuring
activities since the programs began in 2006.

116

COMMentS On FiVe YeARS in SuMMARY

ASSA ABLOY AnnuAL RepORt 2013

Five years in summary

Amounts in Sek M unless stated otherwise

2009

2010

2011

2012

2013

Sales and income
Sales
Organic growth, %
Acquired growth, %
Operating income before depreciation/amortization (EBITDA)
Depreciation and amortization
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 investments in associates
Assets and liabilities of disposal group classified as held for sale
Net debt
Non-controlling interest
Shareholders' equity, excluding non-controlling interest

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 ratios
Operating margin (EBITDA), %
Operating margin (EBIT), %
Profit margin (EBT), %
Return on capital employed, %
Return on capital employed excluding items
affecting comparability, %
Return on shareholders' equity, %
Equity ratio, %
Net debt/equity ratio, times
Interest coverage ratio, times
Interest on convertible debentures net after tax
Number of shares, thousands
Number of shares after dilution, thousands
Average number of employees

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

18.41,4
15.51,4
10.7
13.1

16.2
12.7
45.4
0.57
7.2
31.9
365,918
372,931
29,375

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
4.50
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

46,619
2
9
8,536
–1,034
7,501
6,7845
5,1725

5,990
–4,738
–1,564
–312
7,044

41,4225
28,932
11,093
1,519
385
15,8055
183
25,8195

13.975
13.975
69.865
5.10
242.90

18.3
16.1
14.65
18.15

18.15
20.95
43.25
0.615
11.15
3.9
370,859
370,859
42,762

48,481
2
4
8,9171
–993
7,9231
6,381
4,775

6,224
–6,030
–731
–537
6,803

48,408
31,817
12,854
1,675
–
19,595
0
28,812

12.89
14.841
77.83
5.702
339.80

18.41
16.31
13.2
14.9

17.1
17.5
43.8
0.68
13.5
–
370,859
370,859
42,556

¹ Excluding items affecting comparability in 2009, 2011 and 2013.
² For 2013, as proposed by the Board of Directors.
³ Excluding restructuring payments
4 Reclassification has been made for 2009. The Group has made a reclassification that affects direct distribution costs and depreciation on capitalized product devel-
opment expenditure. The reason is to give a true and fair view of the allocation between direct and indirect costs as well as of product development expenses. In
order to maintain comparability, the financial statements for 2009 have been adjusted. The reclassification involves the transfer of direct distribution costs from sell-
ing 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.

5 2012 has been adjusted due to a change in accounting principles for defined benefit pension plans.

RETURN ON CAPITAL EMPLOYED¹

OPERATING MARGIN (EBIT)¹

AVERAGE NUMBER OF EMPLOYEES

Number

50,000

40,000

30,000

20,000

10,000

1 Excluding items affecting compara-

bility 2009, 2011 and 2013.

ASSA ABLOY AnnuAL RepORt 2013

FiVe YeARS in SuMMARY 117

Quarterly information

the gROup in SuMMARY
Amounts in Sek M unless stated otherwise

Q 1
2012

Q 2
2012

Q 3
2012

Q 4
2012

Full
year
2012

Q 1
2013

Q 2
2013

Q 3
2013

Q 4
2013

Full
year
2013

Sales
Organic growth
gross income excluding items
affecting comparability
Gross income/ Sales
Operating income before depreciation
(eBitDA) excluding items affection com-
parability
Operating margin (EBITDA)
Depreciation and amortization
Operating income (eBit) excluding
items affecting comparability
Operating margin (EBIT)
Items affecting comparability1
Operating income (eBit)
Net financial items4
income before tax (eBt)4
Profit margin (EBT)4
Tax4
Net income of disposal group classified as
held for sale and discontinued operations
net income4

Allocation of net income:
Parent company shareholders4
Non-controlling interests

OpeRAting CASh FLOW

Operating income (EBIT)
Restructuring costs
Depreciation and amortization
Net capital expenditure
Change in working capital
Interest paid and received
Non-cash items
Operating cashflow 2
Operating cash flow / Income before tax4

ChAnge in net DeBt
Net debt at start of period4
Operating cash flow
Restructuring payments
Tax paid
Acquisitions/Disposals
Dividend
Purchase of treasury shares
Remeasurement of net pension
obligations
Share issue
Cash and cash equivalents of disposal
group classified as held for sale
Exchange rate differences and other
net debt at end of period4
Net debt / equity ratio4

net DeBt

Non-current interest-bearing receivables
Current interest-bearing
investments including derivatives
Cash and bank balances
Pension provisions4
Other non-current interest-bearing
liabilities
Current interest-bearing liabilities includ-
ing derivatives
total4

10,839 11,997 11,545 12,239
0%

46,619 10,868 12,239 12,131 13,242 48,481
2%

–1%

4,307
39.7%

4,687
39.1%

4,603
39.9%

4,832
39.5%

18,429
39.5%

4,358
40.1%

4,786
39.1%

4,839
39.9%

5,176 19,159
39.5%
39.1%

1,929
17.8%
–274

1,655
15.3%
–
1,655
–165
1,490
13.7%
–344

2,157
18.0%
–272

1,885
15.7%
–
1,885
–192
1,692
14.1%
–390

2,183
18.9%
–251

1,932
16.7%
–
1,932
–166
1,766
15.3%
–458

2,268
18.5%
–238

2,030
16.6%
–
2,030
–193
1,836
15.0%
–431

8,536
18.3%
–1,034

7,501
16.1%
–
7,501
–717
6,784
14.6%
–1,623

1,911
17.6%
–250

1,662
15.3%
–
1,662
–129
1,533
14.1%
–383

2,226
18.2%
–256

1,970
16.1%
–
1,970
–138
1,832
15.0%
–458

2,339
19.3%
–249

2,090
17.2
–
2,090
–124
1,966
16.2%
–492

2,440
18.4%
–238

2,202
16.6%
–1,000
1,202
–152
1,050
7.9%
–262

8,917
18.4%
–993

7,923
16.3%
–1,000
6,924
–542
6,381
13.2%
–1,595

–
1,146

4
1,306

7
1,316

–
1,405

11
5,172

–11
1,138

–
1,374

–
1,474

–
788

–11
4,775

1,144
2

1,303
2

1,307
9

1,405
1

5,158
14

1,138
1

1,372
2

1,474
0

788
0

4,772
2

Q 1
2012

Q 2
2012

Q 3
2012

Q 4
2012

1,655
–
274
–183
–1,155
–112
4
483
0.32

1,885
–
272
–165
–299
–180
–77
1,435
0.85

1,932
–
251
–265
266
–100
–116
1,967
1.11

2,030
–
238
57
1,112
–154
–123
3,160
1.72

Q 1
2012

Q 2
2012

Q 3
2012

Q 4
2012

Full
year
2012

7,501
–
1,034
–557
–77
–546
–312
7,044
1.04

Full
year
2012

Q 1
2013

Q 2
2013

Q 3
2013

1,662
–
250
–228
–1,110
–73
–2
498
0.33

1,970
–
256
–233
–234
–165
–6
1,589
0.87

2,090
–
249
–280
232
–53
–63
2,175
1.11

Q 4
2013

1,202
1,000
238
–461
615
–139
86
2,541
1.243

Q 1
2013

Q 2
2013

Q 3
2013

Q 4
2013

Full
year
2013

6,924
1,000
993
–1,202
–497
–431
17
6,803
0.923

Full
year
2013

15,299 16,833 19,071 17,559
–3,160
–1,435 –1,967
202
118
239
173
1,019
452
–
27
–
–

–483
92
360
1,489
–
–

86
341
1,221
1,655
38

15,299 15,805 15,364 16,628 17,356 15,805
–6,803
–7,044
647
498
1,134
1,113
6,784
4,181
2,007
1,683
–
38

–1,589
109
353
385
1,888
–

–2,175
118
154
2,545
89
–

–2,541
230
271
3,957
29
–

–498
190
357
–104
–
–

–8
–

–16
–450

–18
–

23
–

–19
–450

–300
–

–148
–

80
–

7
–

–361
–

–
83

324
474

7
–84
16,833 19,071 17,559 15,805
0.61

59
–356

0.72

0.79

0.71

–
–86

390
118

–
382
15,805 15,364 16,628 17,356 19,595 19,595
0.68

–
286

–
265

–
–83

0.57

0.61

0.62

0.63

0.68

Q 1
2012

–32

Q 2
2012

–33

–202
–1,208
2,298

–256
–1,143
2,305

Q 3
2012

–30

–211
–971
2,264

Q 4
2012

–29

–138
–907
2,297

Q 1
2013

–29

–375
–870
1,972

Q 2
2013

–24

–384
–940
1,908

Q 3
2013

–27

–339
–619
1,941

Q 4
2013

–27

–342
–362
2,015

8,153

8,726 10,028 11,194

12,265 11,262 11,045 13,329

7,824

3,388
16,833 19,071 17,559 15,805

6,479

9,472

2,401

4,983
15,364 16,628 17,356 19,595

5,356

4,806

118

QuARteRLY inFORMAtiOn

ASSA ABLOY AnnuAL RepORt 2013

CApitAL eMpLOYeD AnD FinAnCing
Capital employed4
– of which goodwill
– of which other intangible and

tangible assets

– of which investments in associates
Assets and liabilities of disposal group
held for sale
Net debt4
Non-controlling interests
Shareholders' equity, excluding
non-controlling interests4

Q 1
2012

Q 2
2012

Q 3
2012

Q 4
2012

40,546 42,950 41,626 41,422
27,824 29,924 28,635 28,932

Q 1
2013

Q 2
2013

Q 3
2013

Q 4
2013

42,170 43,433 44,884 48,408
28,742 29,446 28,841 31,817

10,436 10,599 10,917 11,093
1,519

1,444

1,206

1,231

10,937 11,302 11,094 12,854
1,675

1,613

1,466

1,532

–

396

385
16,833 19,071 17,559 15,805
183

183

211

214

382

–

–
15,364 16,628 17,356 19,595
0

–

23,499 24,064 24,266 25,819

26,738 26,805 27,527 28,812

Definitions of key ratios

DAtA peR ShARe, Sek

Earnings per share after tax
and before dilution4
Earnings per share after tax and dilution4
Earnings per share after tax and dilution
excluding items affecting comparability 1,4
Shareholders' equity per share
after dilution4

Q 1
2012

Q 2
2012

Q 3
2012

Q 4
2012

Full
year
2012

Q 1
2013

Q 2
2013

Q 3
2013

Q 4
2013

Full
year
2013

3.11
3.11

3.54
3.54

3.53
3.53

3.79
3.79

13.97
13.97

3.07
3.07

3.71
3.71

3.98
3.98

2.13
2.13

12.89
12.89

3.11

3.54

3.53

3.79

13.97

3.07

3.71

3.98

4.08

14.84

66.25

65.28

65.48

69.65

69.86

72.21

72.39

74.35

77.83

nuMBeR OF ShAReS

Number of shares before dilution,
thousands
Weighted average number of shares
after dilution, thousands

Mar
2012

Jun
2012

Sep
2012

Dec
2012

Full
year
2012

Mar
2013

Jun
2013

Sep
2013

Dec
2013

Full
year
2013

368,250 370,859 370,859 370,859 370,859 370,859 370,859 370,859 370,859 370,859

368,057 368,352 369,155 369,592 369,592 370,259 370,259 370,259 370,259 370,259

1 Items affecting comparability consist of restructuring costs.
2 Excluding restructuring payments.
3 Operating income before tax excluding items affecting comparability.
4 2012 has been adjusted due to a change in accounting principles for defined benefit pension plans.

Organic growth
Change in sales for comparable units after adjustments
for acquisitions and exchange rate effects.

Operating margin (eBitDA)
Operating income before depreciation and amortization
as a percentage of sales.

Operating margin (eBit)
Operating income as a percentage of sales.

profit margin (eBt)
Income before tax as a percentage of sales.

Operating cash flow
See the table on operating cash flow for detailed information.

net capital expenditure
Investments in tangible and intangible assets less disposals
of tangible and intangible assets assets.

Depreciation
Depreciation/amortization of intangible and tangible 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 debentures, as a
percentage of average shareholders’ equity (excluding
non-controlling interests) after dilution.

Return on capital employed
Income before tax plus net interest as a percentage of average
capital employed.

earnings per share after tax and before dilution
Net income excluding non-controlling interests divided by
weighted average number of shares before dilution.

earnings per share after tax and dilution
Net income excluding non-controlling interests, plus inter-
est expenses after tax for convertible debentures, divided by
weighted average number of shares after dilution.

Shareholders’ equity per share after dilution
Equity excluding non-controlling interests, plus convertible
debentures, divided by number of shares after dilution.

ASSA ABLOY AnnuAL RepORt 2013

QuARteRLY inFORMAtiOn 119

Proposed distribution of earnings

The following earnings are at the disposal of the Annual General Meeting:

Share premium reserve: SEK 787 M
Retained earnings brought forward: SEK 4,195 M
Net income for the year: SEK 2,731 M
TOTAL: SEK 7,714 M

The Board of Directors and the President and CEO propose that a dividend of SEK 5.70 per share, a total of SEK 2,110 M,
be distributed to shareholders and that the remainder, SEK 5,603 M, be carried forward to the new financial year.
The dividend amount is calculated on the number of outstanding shares as per 6 February 2014.

No dividend is payable on ASSA ABLOY AB’s holding of treasury shares, the exact number of which is determined
on the record date for payment of dividend. ASSA ABLOY AB held 600,000 treasury shares as at 6 February 2014.

Monday, 12 May 2014 has been proposed as the record date for dividends. If the Annual General Meeting confirms this
proposal, dividends are expected to be distributed by Euroclear Sweden AB on Thursday, 15 May 2014.

The Board of Directors and the President and CEO declare that the consolidated accounts have been prepared in accordance
with International Financial Reporting Standards, IFRS, as adopted by the EU and give a true and fair view of the Group’s
financial position and results. The Parent company’s annual accounts have been prepared in accordance with generally
accepted accounting principles in Sweden and give a true and fair view of the Parent company’s financial
position and results.

The Report of the Board of Directors for the Group and the Parent company gives a true and fair view of the development of
the Group’s and the Parent company’s business operations, financial position and results, and describes material risks and
uncertainties to which the Parent company and the other companies in the Group are exposed.

Stockholm, 6 February 2014

Lars Renström
Chairman of the Board

Carl Douglas
Vice Chairman of the Board

Birgitta Klasén
Board member

Sven-Christer Nilsson
Board member

Eva Lindqvist
Board member

Jan Svensson
Board member

Johan Molin
President and CEO

Ulrik Svensson
Board member

Kurt Hellström
Employee representative

Mats Persson
Employee representative

Our audit report was issued on 6 February 2014

PricewaterhouseCoopers AB

Bo Karlsson
Authorized Public Accountant

120

pROpOSeD DiStRiButiOn OF eARningS

ASSA ABLOY AnnuAL RepORt 2013

Proposed distribution of earnings

Auditor’s report

to the annual meeting
of the shareholders of ASSA ABLOY AB,
corporate identity number 556059-3575

Report on the annual accounts and consolidated accounts
We have audited the annual accounts and consolidated
accounts of ASSA ABLOY AB for the year 2013. The annual
accounts and consolidated accounts of the company are
included in the printed version of this document on pages
63–120.

Responsibilities of the Board of Directors and the President and
CEO for the annual accounts and consolidated accounts
The Board of Directors and the President and CEO are respon-
sible for the preparation and fair presentation of these annual
accounts in accordance with the Annual Accounts Act and
the consolidated accounts in accordance with International
Financial Reporting Standards , as adopted by the EU, and the
Annual Accounts Act, and for such internal control as the
Board of Directors and the President and CEO determine is
necessary to enable the preparation of annual accounts and
consolidated accounts that are free from material misstate-
ment, 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 opinions.

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 2013 and of its financial perfor-
mance and its cash flows for the year then ended in accor-
dance with the Annual Accounts Act. The consolidated
accounts have been prepared in accordance with the Annual
Accounts Act and present fairly, in all material respects, the
financial position of the group as of 31 December 2013 and
of their financial performance and cash flows for the year
then ended in accordance with International Financial

Reporting Standards, as adopted by the EU, and the Annual
Accounts Act. A corporate governance statement has been
prepared. The statutory administration report and the cor-
porate governance statement are consistent with the other
parts of the annual accounts and consolidated accounts.
We therefore recommend that the annual meeting of

shareholders adopt the income statement and balance
sheet for the parent company and the group.

Report on other legal and regulatory requirements
In addition to our audit of the annual accounts and consoli-
dated accounts, we have also audited the proposed appro-
priations of the company’s profit or loss and the administra-
tion of the Board of Directors and the President and CEO of
ASSA ABLOY AB for the year 2013.

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
Companies 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 opinions.

Opinions
We recommend to the annual meeting of shareholders that
the profit be appropriated in accordance with the proposal
in the statutory administration report and that the mem-
bers of the Board of Directors and the President and CEO be
discharged from liability for the financial year.

Stockholm, 6 February 2014

PricewaterhouseCoopers AB

Bo Karlsson
Authorized Public Accountant

ASSA ABLOY AnnuAL RepORt 2013

AuDitOR’S RepORt 121

The ASSA ABLOY share

Share price trend in 2013
In 2013 NASDAQ OMX Stockholm showed a positive trend
and closed up 23.2 percent following a strong end to the
year. ASSA ABLOY’s Series B share rose 39.9 percent from
SEK 242.90 to SEK 339.80. The highest closing price during
the year was SEK 342.20 recorded on 27 December, while the
lowest closing price was SEK 238.00 recorded on 19 August.

At year-end, market capitalization amounted to
SEK 125,814 M (90,082), calculated on both Series A and
Series B shares.

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
585 million shares (797) in 2013, equivalent to a turnover
rate of 158 percent (215). Turnover of the Series B share on
NASDAQ OMX Stockholm amounted to 202 million shares

(271), equivalent to a turnover rate of 55 percent (73). The
average turnover rate fell to 67 percent (74) on NASDAQ
OMX Stockholm, and to 68 percent (77) on the Large Cap list.
The implementation of the EU’s Markets in Financial

Instruments Directive (MiFID) in late 2007 has totally
changed the structure of equity trading in Europe. Share
trading now takes place on both regulated markets and
other trading platforms, and has thus become more frag-
mented. Consequently, an ever-increasing proportion of
trading in shares in Swedish companies now takes place on
markets other than NASDAQ OMX Stockholm.

In 2013 the ASSA ABLOY share was traded on more than
10 different markets, with trading on NASDAQ OMX Stock-
holm accounting for only around 35 percent of share turn-
over, compared with 65 percent in 2009. The diagram below
shows the trend and distribution of trading in ASSA ABLOY’s
Series B share on various markets over the past five years.

SHARE PRICE TREND AND TURNOVER 2004–2013

DIVIDEND PER SHARE 2004–2013

SEK

500

400

300

200

100

No. of shares traded, thousands

200,000

160,000

120,000

80,000

40,000

SEK

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

ASSA ABLOY B
ASSA ABLOY B, total return

SIX Return Index

OMX Stockholm

No. of shares traded, thousands (incl. after hours)

2013 proposed dividend

SHARE PRICE AND TURNOVER 2013

MARKETS FOR THE SHARE

SEK

360

340

320

300

280

260

240

220

200

No. of shares traded, thousands

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

ASSA ABLOY B

OMX Stockholm

No. of shares traded, thousands (incl. after hours)

No. of shares traded, millions

1,000

800

600

400

200

Stockholm
BOAT
BATS Chi-X
London

Turquoise
Burgundy
Others

Data per share

Sek/share 1

2007

2005

2010

2004

2012

2013
14.842
5.703
1.7
38.4
339.80
342.20
238.00
77.83
378,718 378,718 376,033 380,713 380,713 372,931 372,736 371,213 370,859 370,859

2011
12.302
4.50
2.6
36.6
172.60
194.90
133.50
65.54

2006
7.992
3.25
2.2
64.0
149.00
151.00
109.00
39.13

2009
9.222
3.60
2.6
47.8
137.80
142.50
71.50
54.76

2008
9.212
3.60
4.1
52.3
88.50
126.00
69.75
55.91

13.97
5.10
2.1
36.5
242.90
244.80
171.70
69.86

10.89
4.00
2.1
37.0
189.50
199.20
126.60
58.64

9.02
3.60
2.8
40.5
129.75
164.00
124.50
46.76

6.97
3.25
2.6
47.6
125.00
126.00
89.25
42.85

6.33
2.60
2.3
42.0
113.50
113.50
84.00
34.74

Earnings after tax and dilution
Dividend
Dividend yield, % 4
Dividend, % 5
Share price at year-end
Highest share price
Lowest share price
Equity
Number of shares, thousands 6
1 Adjustments made for new issues.
2 Excluding items affecting comparability 2006, 2008, 2009, 2011 and 2013.
3 Dividend proposed by the Board of Directors.

4 Dividend as percentage of share price at year-end.
5 Dividend as percentage of earnings per share after tax and dilution,

excluding items affecting comparability.

6 After full dilution.

122

the ASSA ABLOY ShARe

ASSA ABLOY AnnuAL RepORt 2013

Ownership structure
The number of shareholders at year-end was 17,199
(17,591) and the ten largest shareholders accounted for
around 37 percent (38) of the share capital and 57 percent
(58) of the votes. Shareholders with more than 50,000
shares, a total of 379 shareholders, accounted for 96 percent

(95) of the share capital and 97 percent (98) of the votes.

Investors outside Sweden accounted for around 67 per-
cent (68) of the share capital and around 46 percent (46) of
the votes, and were mainly in the USA and the United
Kingdom.

ASSA ABLOY’s ten largest shareholders
Based on the share register at 30 December 2013.

Shareholders

Series A shares

Series B shares

Investment AB Latour
Melker Schörling AB
Capital Group funds
Norges Bank
Swedbank Robur fonder
AMF Försäkring & Fonder
Alecta
SHB fonder
Saudi Arabian Monetary Agency
SEB fonder & SEB Trygg Liv
Other shareholders
total number

13,865,243
5,310,080

19,175,323

21,300,000
9,162,136
39,704,009
13,960,644
10,830,478
5,516,500
5,140,000
4,861,511
4,501,804
4,238,547
232,467,826
351,683,455

Source: SIS Ägarservice AB and Euroclear Sweden AB.

total number
of shares

35,165,243
14,472,216
39,704,009
13,960,644
10,830,478
5,516,500
5,140,000
4,861,511
4,501,804
4,238,547
232,467,826
370,858,778

Share capital, %

Votes, %

9.50
3.90
10.70
3.80
2.90
1.50
1.40
1.30
1.20
1.10
62.70
100.00

29.50
11.50
7.30
2.60
2.00
1.00
0.90
0.90
0.80
0.80
42.70
100.00

OWNERSHIP STRUCTURE (SHARE CAPITAL)

OWNERSHIP STRUCTURE (VOTES)

Capital Group funds, 10.7%
Investment AB Latour, 9.5%
Melker Schörling AB, 3.9%
Norges Bank, 3.8%
Swedbank Robur fonder, 2.9%
AMF Försäkring & Fonder, 1.5%
Alecta, 1.4%
SHB fonder, 1.3%
Saudi Arabian
Monetary Agency, 1.2%
SEB fonder & SEB Trygg Liv, 1.1%
Other shareholders, 62.7%

Investment AB Latour, 29.5%
Melker Schörling AB, 11.5%
Capital Group funds, 7.3%
Norges Bank, 2.6%
Swedbank Robur fonder, 2.0%
AMF Försäkring & Fonder, 1.0%
Alecta, 0.9%
SHB fonder, 0.9%
Saudi Arabian

Monetary Agency, 0.8%

SEB fonder & SEB Trygg Liv, 0.8%
Other shareholders, 42.7%

Share capital and voting rights
The share capital amounted to SEK 370,858,778 at year-end,
distributed among a total of 370,858,778 shares, comprising
19,175,323 Series A shares and 351,683,455 Series B shares.
All shares have a par value of SEK 1.00 and give shareholders
equal rights to the company’s assets and earnings. The total
number of votes amounts to 543,436,685. Each Series A
share carries ten votes and each Series B share one vote.

ASSA ABLOY holds a total of 600,000 (600,000) Series B
shares after repurchase, to secure the company’s obligations
in connection with the company’s long-term incentive pro-
grams (LTI). These shares account for 0.2 percent (0.2) of the
share capital and each share has a par value of SEK 1.00. The
purchase consideration amounted to SEK 103 M (103).

No shares were repurchased in 2013.

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 President and CEO pro-
pose that a dividend of SEK 5.70 per share (5.10) be paid to
shareholders for the 2013 financial year, equivalent to a divi-
dend yield on the Series B share of 1.7 percent (2.1).

In 2013 the total return on the ASSA ABLOY share,
defined as market price movement plus reinvested divi-
dends, was 43 percent, compared with the total return SIX
Return Index, which was up 28 percent. Over the 10-year
period 2004–2013, the total return on the share was 409
percent, compared with a 212 percent rise in the SIX Return
Index and a 118 percent rise in OMX Stockholm.

ASSA ABLOY AnnuAL RepORt 2013

the ASSA ABLOY ShARe 123

The ASSA ABLOY share

Share capital

Year

1989
1994
1994
1994
1996
1996
1997
1998
1999
1999
1999
1999
1999

2000
2000
2000
2001
2002
2002
2010
2011
2012
2012
2013

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 share issues
Converted debentures
New share issue
Non-cash issue
Converted debentures
New share issue
Converted debentures
Converted debentures
Converted debentures
Converted debentures
Converted debentures
Number of shares after dilution

Analysts who cover ASSA ABLOY

Company

ABG Sundal Collier
Bank of America Merrill Lynch
Barclays Capital
Carnegie
Carnegie
Cheuvreux
Citigroup Investment Research
Credit Suisse
Danske Bank
Deutsche Bank
DnB NOR
Enskilda Securities
Espirito Santo Investment Bank
Exane BNP Paribas
Goldman Sachs
Handelsbanken Capital Markets
Handelsbanken Capital Markets
HSBC
Imperial Capital
J.P. Morgan
Morgan Stanley
Pareto Securities
Redburn Partners
Sanford C. Bernstein
Société Générale
Swedbank Markets
UBS
UBS

name

Anders Idborg
Ben Maslen
Allan Smylie
Johan Wettergren
Agnieszka Vilela
Joakim Höglund
Natalia Mamaeva
Andre Kukhnin
Oscar Stjerngren
Peter Reilly
Lars Brorson
Stefan Andersson
Nick Wilson
Jonathan Mounsey
Aaron Ibbotson
Peder Frölén
Jon Hyltner
Colin Gibson
Jeff Kessler
Andreas Willi
Markus Almerud
David Jacobsson
James Moore
Martin Prozesky
Sébastien Grunter
Anders Roslund
Guillermo Peigneux
Fredric Stahl

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
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
349,075,055
351,683,455
351,683,455

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
368,250,378
370,858,778
370,858,778

telephone

+46 8 566 286 74
+44 207 996 4783
+44 207 773 4873
+46 8 5886 8743
+46 8 5886 8586
+46 8 723 51 63
+44 207 986 4077
+44 207 888 0350
+46 8 5688 0606
+44 207 545 9835
+44 207 621 6149
+46 8 522 296 57
+44 203 364 6766
+44 207 039 9529
+44 207 774 6661
+46 8 701 1251
+46 8 701 1275
+44 207 991 6592
+1 212 351 9701
+44 207 134 4569
+44 207 425 9870
+46 8 402 5272
+44 207 000 2135
+44 207 170 0577
+33 1 4213 4722
+46 8 5859 0093
+46 8 453 7308
+46 8 493 7309

anders.idborg@abgsc.se
ben.maslen@baml.com
allan.smylie@barcap.com
johan.wettergren@carnegie.se
agnvil@carnegie.se
jhoglund@keplercheuvreux.com
natalia.mamaeva@citi.com
andre.kukhnin@credit-suisse.com
oscar.stjerngren@danskebank.se
peter.reilly@db.com
lars.brorson@dnbnor.no
stefan.andersson@enskilda.se
nick.wilson@espiritosantoib.co.uk
jonathan.mounsey@exanebnpparibas.com
aaron.ibbotson@gs.com
pefr15@handelsbanken.se
johy01@handelsbanken.se
colin.gibson@hsbcib.com
JKessler@imperialcapital.com
andreas.p.willi@jpmorgan.com
markus.almerud@morganstanley.com
david.jacobsson@paretoohman.se
james.moore@redburn.com
martin.prozesky@bernstein.com
sebastien.grunter@sgcib.com
anders.roslund@swedbank.se
guillermo.peigneux-lojo@ubs.com
fredric.stahl@ubs.com

124

the ASSA ABLOY ShARe

ASSA ABLOY AnnuAL RepORt 2013

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, 7 May 2014. Sharehold-
ers wishing to attend the Annual General Meeting should:
• Be registered in the share register kept by Euroclear

Sweden AB by Wednesday, 30 April 2014.

• Notify ASSA ABLOY AB of their intention to attend by

Wednesday, 30 April 2014.

Registration in the share register
In addition to notification of intention to attend, sharehold-
ers whose shares are nominee registered must be temporarily
registered in their own name in the share register (so-called
voting right registration) to be able to attend the Annual
General Meeting. In order for this registration to be com-
pleted by Wednesday, 30 April 2014, the shareholder should
contact his/her bank or nominee well in advance of this date.

nomination Committe
The Nomination Committee has the task of preparing reso-
lutions on the election of the Chairman, the Vice Chairman
and other members of the Board of Directors, the appoint-
ment of the auditor, the election of the Chairman of the
Annual General Meeting, and fees and associated matters.
The Nomination Committee prior to the 2014 Annual
General Meeting comprises Gustaf Douglas (Investment AB
Latour), Mikael Ekdahl (Melker Schörling AB), Liselott Ledin
(Alecta), Marianne Nilsson (Swedbank Robur fonder) and
Johan Strandberg (SEB fonder/SEB Trygg Liv). Gustaf Douglas
is Chairman of the Nomination Committee.

Dividend
Monday, 12 May 2014 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 Thursday, 15 May 2014.

Notification of intention of attend
• Website
• Address
•
• Telephone +46 (0)8 506 485 14

www.assaabloy.com
ASSA ABLOY AB, Annual General Meeting
Box 7842, SE-103 98 Stockholm, Sweden

Further information
Niklas Ribbing, Head of Investor Relations
Telephone: +46 (0)8 506 485 79
niklas.ribbing@assaabloy.com

The notification should state:
• Name
• Personal or corporate identity number
• Address and daytime telephone number
• Number of shares
• Any assistants attending

A shareholder who is to be represented by a proxy should
submit the proxy in connecting with the notification of
intention to attend the Annual General Meeting. Proxy
forms are available at: www.assaabloy.com.

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: 29 April 2014
Second quarter: 18 July 2014
Third quarter: 23 October 2014
Fourth quarter and Year-end report: February 2015
Annual Report 2014: March 2015

Production: ASSA ABLOY in cooperation with Hallvarsson & Halvarsson.
Photo: Peter Hoelstad/Molly & Co, Kristian Älegård, Getty Images and ASSA ABLOY’s photographic library, among others.
Printing: Elanders Sverige in March 2014.

125

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

www.assaabloy.com
www.assaabloy.com

ASSA ABLOY AB
ASSA ABLOY AB
P.O. Box 70 340
P.O. Box 70 340
SE-107 23 Stockholm
SE-107 23 Stockholm
Visiting address:
Visiting address:
Klarabergsviadukten 90
Klarabergsviadukten 90
Tel+46(0)8 506 485 00
Tel+46(0)8 506 485 00
Fax +46(0)8 506 485 85
Fax +46(0)8 506 485 85

» Future shareholder value is based on organic and
» Future shareholder value is based on organic and

acquired growth and a continuing process of
acquired growth and a continuing process of
rationalization and synergies across the Group «
rationalization and synergies across the Group «

Johan Molin, President and CEO
Johan Molin, President and CEO