Annual Report
2021
Experience a safer
and more open world
The annual accounts and consolidated accounts of the com-
pany are included on pages 42–98 and 102 in this document.
ASSA ABLOY | ANNUAL REPORT 2021
Contents
Who we are
How we create value
How we operate
What we offer
Financial statements
Introduction ....................................................................................................... 1
The year in brief
................................................................................................2
Statement from our CEO
.......................................................................... 4
Who we are
........................................................................................................ 6
The global leader in access solutions ................................... 6
ASSA ABLOY in your daily life .................................................. 8
How we create value .................................................................... 10
Market and trends .................................................................... 10
Our value creation business model ....................................12
Sustainability ...............................................................................14
Strategic overview ........................................................................ 17
Strategic activities in 2021 ................................................... 18
Growth through customer relevance ............................... 20
Product leadership through innovation .......................... 24
Cost-efficiency in everything we do .................................. 28
Evolution through people ..................................................... 31
Divisions overview ........................................................................ 34
Opening Solutions EMEIA ...................................................... 36
Opening Solutions Americas ............................................... 37
Opening Solutions Asia Pacific ............................................ 38
Global Technologies – HID Global ...................................... 39
Global Technologies – Global Solutions ........................... 40
Entrance Systems ..................................................................... 41
Report of the Board of Directors ............................................. 42
Significant risks and risk management ............................. 46
Corporate governance ........................................................... 49
Board of Directors ................................................................ 54
Executive Team ...................................................................... 56
Internal control – financial reporting ............................ 59
Remuneration guidelines for senior executives ........... 60
Financial statements .................................................................... 62
Notes ............................................................................................. 74
Five years in summary ............................................................. 99
Comments on five years in summary ............................. 100
Definitions of key ratios ...................................................... 101
Board of Directors and CEO assurance .......................... 102
Auditor’s report ..................................................................... 103
Shareholder information ........................................................ 108
Investment story .................................................................... 108
The ASSA ABLOY share ........................................................ 109
Information for shareholders ............................................ 112
Financial calendar and contact details .......................... 113
We are the global leader in
access solutions. We are 51,000
employees in more than
70 countries around the world.
In an ever-changing world, we
develop new products and
solutions so that people feel safe
and secure and experience
a more open world.
We are a global company with a
uniquely decentralized business model.
We have about 1,000 sites including
130 production facilities and 100 R&D
sites. Our strategic objectives guide our
daily operations.
We offer a complete range of
innovative access solutions of
mechanical and electromechanical
locks, cylinders, keys, tags, security
doors, identification products and
automated entrances, delivered
by our five divisions.
Who we are
How we create value
How we operate
What we offer
Accelerating
profitable growth
As markets gradually moved out of lockdowns, we shifted focus to activi-
ties that accelerate our long-term growth and profitability. Some of the
activities include upgrading the installed base, leading the transition from
mechanical to electromechanical access solutions, growing our recurring
revenues, growing in emerging markets and creating sustainable solutions
through innovation. We also continued with our acquisition strategy. These
initiatives will strengthen our position as the leading access solution group
in the industry.
ANNUAL REPORT 2021 | ASSA ABLOY
The year in brief
SALES AND OPERATING INCOME (EBIT)
1
EARNINGS PER SHARE
1,2
Strong recovery
• Sales increased by 8% to SEK 95,007 M (87,649) as many markets
recovered strongly after Covid-restrictions eased up.
• Operating income increased by 19% to SEK 14,181 M (11,916)
with an operating margin of 14.9% (13.6).
Acquisitions during the year
• In total, 13 acquisitions were completed, and two businesses
were divested, contributing to net acquired sales growth of 2%
for the year.
• The acquisition of the Hardware and Home Improvement busi-
ness unit of Spectrum Brands was announced. This will add about
15% to sales and is an important strategic step in developing our
residential business in North America. The acquisition is subject
to regulatory approval and customary closing conditions.
Large number of new products
• Investments in product development continued and contributed
to the launch of more than 400 products. 22% (25) of sales were
generated by products launched in the last three years.
Sustainability program making progress
• The implementation of the 2025 sustainability program contin-
ued and resulted in improved sustainability performance across
the Group versus the base year 2019.
• ASSA ABLOY became a member of the Dow Jones Sustainability
Index Europe. The index tracks the performance of the top 20%
of the 600 largest European companies in the S&P Global Broad
Market IndexSM that lead the field in terms of sustainability.
Key figures 2020 2021 Change
Sales, SEK M 87,649 95,007 +8%
of which: Organic growth, % -8 +11
of which: Acquired growth, net total, % 4 +2
of which: Exchange rate effects, % -3 -5
Operating income (EBIT), SEK M
1
11,916 14,181 +19%
Operating margin, %
1
13.6 14.9
Income before tax (EBT), SEK M
1
11,133 13,538 +22%
Operating cash flow, SEK M 14,560 13,265 -9%
Return on capital employed 13.0 15.2
Dividend, SEK/share
2
3.90 4.20 8%
1
Excluding items affecting comparability.
2
As proposed by the Board of Directors.
The year in brief
1 Earnings per share has been restated due to the 3:1 share split in 2015.
2
Excluding items affecting comparability.
SEK
0
2
4
6
8
10
21201918171615141312
1
Excluding items affecting comparability.
20,000
40,000
60,000
80,000
100,000
21201918171615141312
5,000
7,500
10,000
12,500
15,000
Sales, SEK M EBIT, SEK M
Sales Operating income (EBIT)
Sales recovered
strongly and
increased by 8%
in 2021 and we
shifted our focus
to activities that
accelerate our
long-term profit-
able growth.
2
ASSA ABLOY | ANNUAL REPORT 2021
The injury rate decreased by 13% and has
decreased by 20% since 2019. We have
worked systematically throughout the
organization with actions and awareness
campaigns to reduce the injury rate.
In 2021, our greenhouse gas emissions
increased by 2% versus 2020 due to the
higher activity level. However, compared
to the base year 2019, the emissions have
decreased by 17% and we are on track
to achieve the target for 2025 of a 25%
emission reduction in absolute terms
versus 2019.
Injury rate Carbon footprint absolute
TARGET 2021 VS. 2019 (BASE YEAR)
–33% –25%
Goals and outcomes
We have set ambitious but achievable financial and sustainability goals. The
financial targets are set to balance growth with a return rate that can create
substantial value. During the ten years prior to the pandemic, we grew by
The year in brief
Sales grew by 8% in 2021 driven by
record-high organic growth as pandemic
restrictions were eased and the activity
levels improved in many of our markets.
Acquired growth contributed with net 2%
in sales, while currency fluctuations had a
negative effect on sales of -5%.
The adjusted operating margin was 14.9
(13.6), reflecting a strong recovery as
many markets opened up from restric-
tions and lockdowns. The margin was
diluted by our acquisitions and dilutions
by 70bps, higher raw material cost and
other inflationary cost items.
Annual growth through a
combination of organic and
acquired growth
Operating margin
1
1
Excluding items affecting comparability.
1
Number of injuries per million hours worked.
OVER A BUSINESS CYCLE
10% 16–17%
SEK M
0
20,000
40,000
60,000
80,000
100,000
21201918171615141312
%
10
12
14
16
18
20
21201918171615141312
more than 9% annually with an adjusted operating margin of more than 16%.
The sustainability targets set for 2025 are one step on the way for us to
become net zero in 2050.
0
1
2
3
212019
Injury rate
1
0
100
200
300
212019
’000 tons
3
ANNUAL REPORT 2021 | ASSA ABLOY
Increased focus on
accelerating growth
Sales recovered strongly in 2021 and increased by 8% to SEK
95,007 M, as our core markets gradually opened up during
the year. The organic sales grew very strongly by 11%, net
acquired growth was 2% and we had a negative currency ef-
fect of -5%. Both demand and operations were impacted by
Covid-19 and our operations were also affected by material
and component shortages.
Another challenge during the year was the significantly
higher raw material costs. In some markets the price of
materials increased by more than 200%. This created a big
challenge, but we were able to offset most of the effect
through operational efficiency measures and strong price
adjustments. As a result, the higher raw material cost im-
pacted the operating margin by less than 50bps.
Despite all the operational challenges, total operating
profit grew 19% to SEK 14,181 (11,916) M and the adjusted
operating margin increased 1.3 pts to 14.9%. Operating cash
flow was strong, at SEK 13,265 (14,560) M, despite higher
working capital.
Divisional development
Demand returned gradually during the year and adjusted
for currency and acquisitions, sales were back to or above
pre-pandemic levels in EMEIA, Americas and Entrance
Systems by mid-2021.
The recovery was strong in EMEIA where organic sales
grew 13% during the year. This followed continued solid
demand in the residential segment and a strong recovery in
non-residential demand.
The Americas division grew 14% organically during 2021
with continued strong demand in Latin America and the res-
idential segment in the US, while the recovery of the com-
mercial and institutional demand drove our growth towards
the second half of the year. Raw material costs increased the
most in the US, but due to strong price management and
cost actions, most of the inflation pressure was offset.
Despite Asia Pacific continuing to be impacted by lock-
downs and restrictions throughout most of the year and the
building industry slowdown in China, we managed to report
positive organic sales growth with improved profitability.
In Global Technologies, volumes also remained below pre-
pandemic levels, particularly in the travel-related verticals.
Component shortages also impacted sales negatively in the
second half of the year. It is, however, encouraging to see
that the demand is gradually increasing and that our mobile
key solutions are getting more traction. This is a trend we
expect to continue.
Finally, Entrance Systems performed very strongly in 2021,
growing organically by 14% in combination with historically
high margins. The new organization which was implemented
in 2020 and the successful integration of agta record con-
tributed to the positive performance.
Accelerating profitable growth
Our strategy, with its four strategic objectives, our decentral-
ized organization and our focus on protecting the bottom line
and cash flow have, with strong operational execution, led
us successfully through the pandemic. As mobility gradually
increased, we shifted our focus to activities that accelerate our
long-term profitable growth.
An important driver is how we proactively are upgrading the
installed mechanical base to more value-adding electrome-
chanical products and solutions with accelerated investments
in product development as a strong enabler. R&D accounted
for 4% of our sales and resulted in more than 400 new product
launches in 2021. Organic sales growth from our electrome-
chanical products was very strong, and this also provides op-
portunities to grow our recurring revenue from licenses and
software. We have seen a strong acceleration of our software
as a service business over recent years and it now makes up
around 5% of total sales. We are still at the beginning of the
transformation to smarter and even more user-friendly access
solutions and there are almost unlimited opportunities.
The increased focus on sustainable buildings and our
investments in a sustainable product offering are other
important growth drivers. In 2021, ‘green’ specification sales
grew faster than traditional specification sales, and this trend
will further accelerate.
We also have many untapped opportunities in the emerg-
ing markets. All divisions have specific strategies in place to
increase our presence and growth in these markets.
In a world with more connected products, there is a greater
need for cross-divisional collaboration. Our ‘Together We’
program strives to realize more synergies across entities, and
it is good to see how this collaboration has resulted in new
products and sales growth. The Linus smart lock in the EMEIA
region and the Incedo access control platform are two good
examples of strong internal collaboration.
Acquisitions – an important driver for growth
In addition to ongoing activities to accelerate our organic
growth, we continue to deliver on our successful acqui-
sition strategy. During 2021, we finalized 13 acquisi-
tions, which combined contributed to 4% of our sales. In
particular, we announced the acquisition of the Hardware
and Home Improvement business unit (HHI) of Spectrum
Demand gradually strengthened in 2021, after a very challenging 2020 due to the outbreak of the pan-
demic. While the market conditions improved, significantly higher material costs, material shortages
and logistical challenges put pressure on our operations. These challenges were addressed thanks to
strong execution by our experienced and decentralized operational teams, and we can put a year be-
hind us in which we report strong organic growth and operating profit improvements. During the year,
we increased the focus on growth-accelerating initiatives. We also announced the acquisition of the
Hardware and Home Improvement business unit of Spectrum Brands, which will enable ASSA ABLOY to
expand into the residential segment in North America.
MSEK
95,007
total sales
MSEK
700
efficiency savings
from manufacturing
program
MSEK
14,181
operating result
Statement from our CEO
4
ASSA ABLOY | ANNUAL REPORT 2021
Brands, which is a leading provider of security, plumbing,
and builders’ hardware products to the North American
residential segment. HHI will bring strong, well-known
brands and high quality, innovative products to our resi-
dential portfolio in North America.
Sustainability
Our work with sustainability is an avenue to opportunities
that both accelerates our sales and reduces our emission
footprint and operational costs. We are making good pro-
gress on our 2025 sustainability program. Our health and
safety record continues to improve and we are also on track
to deliver significant absolute emission reductions. Further
emission reductions will be achieved through a combina-
tion of energy efficiency improvements at our sites, consoli-
dation of our manufacturing footprint and a move to more
renewable energy. In our product development processes,
we use our Sustainability Compass, which improves product
performance and reduces the environmental footprint of
our new products and solutions. Sustainability is embedded
in our strategy and guides us in everything we do.
Material shortages, inflation and the Covid-19 pandemic
have been significant challenges in 2021 and affected our
daily lives to a large degree, but they have not changed the
fundamental drivers of our industry. Instead, we see that
many businesses and individuals are shifting more and more
to electromechanical products and solutions. We will there-
fore continue to target 10% annual growth combined with
an operating margin of 16-17% over a business cycle.
Thanks to the efforts of our employees and our loyal
customers, our position as the leader of access solutions
has strengthened. We look forward to launching many new
products and solutions to help people feel safe, secure and
experience a more open world.
Thank you!
Stockholm, 2 March 2022
Nico Delvaux
President and CEO
Statement from our CEO
5
ANNUAL REPORT 2021 | ASSA ABLOY
Who we are
The global leader
in access solutions
Access solutions for every need
We offer a complete range of access solutions with market-leading positions in areas such as
mechanical and electromechanical locking, access control, identification technology, entrance
automation, security doors, hotel security and mobile access. Our offerings are delivered both
separately and together as part of a full-service access solution.
Strong brands
Our brands play an important role in creating trust, loyalty and differentia-
tion. We use a combination of master, endorsed and standalone brands to
reach all our audiences. ASSA ABLOY is our employer brand and main
commercial brand, HID covers secure identities and access management,
and Yale covers residential products and services.
Regional divisions
Global divisions
Opening
Solutions
EMEIA
Global
Technologies
Opening
Solutions
Americas
Entrance
Systems
Opening
Solutions
Asia Pacific
A decentralized organization
We are a global company with a uniquely decentralized business model that enables us to quickly meet and deliver on
customer needs. Our local business units know local standards inside-out and optimize resources and products according to
the local conditions and demand.
The regional divisions manufacture and sell mechanical and electromechanical locks, digital door locks, cylinders and secu-
rity doors, adapted to the local market’s standards and security requirements. The global divisions manufacture and sell access
solutions, identification products and entrance automation in the global market. Read more on pages 34–41.
Group brand and employer brand
Master brands
Service
Solutions
Entrance automation
Openings
Identities
Master key systems
Access control
Authentications
Data and analytics
6
ASSA ABLOY | ANNUAL REPORT 2021
39%
Europe
Sales
9%
Asia
Sales
1%
Africa
Sales
4%
Oceania
Sales
44%
North America
Sales
3%
South America
Sales
•• Country sites and larger locations
In total, we have about 1,000 sites,
comprising more than 100 R&D
sites and 130 production facilities.
The other sites are distribution
centers and offices. ASSA ABLOY
has operations in more than 70
countries.
Global presence
Electromechanical on the rise
The Group sees fast-growing demand for electrome-
chanical products and solutions. Since 2011 these
have increased from 22% to 30% of Group sales.
Mechanical products continue to grow, but electro-
mechanical products are growing considerably faster.
Sales by product group Customer split New construction/Aftermarket
Together we create access
51,000
employees
6%
of our employees
work in R&D
9,500
patents
>70
countries
Mechanical locks, lock
systems and fittings, 23%
Entrance automation, 31%
Electromechanical and
electronic locks, 30%
Security doors and
hardware, 16%
Commercial, 75%
Residential, 25%
Commercial, 75%
Residential, 25%
New construction, 33%
Aftermarket, 67%
New constuction, 33%
Aftermarket, 67%
7
ANNUAL REPORT 2021 | ASSA ABLOY
The global leader in access solutions | Who we are
ASSA ABLOY in your daily life
We are part of people’s everyday life all over the world! We provide access solutions from the perimeter
to the core of buildings. You will find ASSA ABLOY’s products and solutions in your home, at work or
school, when you shop or travel. Some products are very visible to you like keys, locks and doors, while
other products are embedded in solutions like e-passports and identity solutions.
Enterprise
1
Automatic sliding doors are particularly suitable for
entrances and indoor areas with large pedestrian
flows. Automatic sliding doors allow you to enter a
building conveniently without manually open doors.
2
Inside the building, there are mechanical and
electromechanical key systems, software and
solutions for access control. There are also systems and
solutions for secure issuance and management of
identities with specific security requirements, such as staff
ID cards. Positioning solutions provide a secure and digital
solution to address social distancing, workplace
optimization and contact tracing to locate, notify and
isolate if employee health is compromised.
3
ASSA ABLOY has a complete offering for
service, maintenance and upgrading of automatic
entrances and loading docks to enable a more seamless
customer experience.
4
Bollards and other safety devices protect pedestrians
from motor vehicles. The various models can be
permanently installed, portable or retractable, and they
can be integrated in security and alarm systems.
5
Mobile keys, physical access control systems
including readers and controllers to manage access
in the building.
6
Electromechanical locks and other hardware such as
security-rated doors, frames and delivery lockers
work together with physical access control systems,
including readers and controllers to manage access and
package deliveries.
4
1
2
10
9
12
11
3
8
7
Enterprise
Hotel/retail
Multi-family building
Who we are | ASSA ABLOY in your daily life
Multi-family building
7
Complete solutions for multi-famility buildings,
ranging from mechanical locks to sophisticated,
customized access control systems. Digital door locks
can easily be opened with a code or a smartphone app.
The app enables controlling the lock remotely to let in
authorized people and to, for example, open the door for
service and deliveries directly into the home.
8
High-security fences and gates protect against
unauthorized entry.
8
ASSA ABLOY | ANNUAL REPORT 2021
Hotel/retail
9
Complete access solutions for retail premises and
hotels. For the hospitality industry, our offering
includes mobile access solutions, access management
systems, staff safety, in-room safes and energy control.
10
With mobile access, hotel guests can use a
smartphone to directly book a room. Secure Seos
technology then sends a digital key to the guest’s
mobile phone, enabling the guest to bypass the front
desk and go directly to the room and unlock the door. The
solution is connected to the hotel’s booking and security
systems, and the digital key will be deleted at check-out.
6
1
5
Outside
Inside
Door closersDelivery
lockers
Hinges Air louvers
Key pads, push but-
tons, key switches,
touch bars
Electric strikes
Panic bars
Kick plates
Door
operators
Floor closers Wireless locks
Cabinet
locks
Glass door
hardware
Power supplies
Mechanical &
electro-mechanical
locks & keys
Steel doors & frames
11
Revolving doors create spacious entrances and are
ideal when climate control is a priority. Advanced
sensor technology ensures functionality in the door’s
features, while conveniently controlling safe traffic flows
and providing superior separation of indoor and outdoor
climates. Side doors are added for increased accessibility
and rapid evacuation.
12
Garage doors, bars and gates are secure and easy
to connect to the building’s access control system.
9
ANNUAL REPORT 2021 | ASSA ABLOY
ASSA ABLOY in your daily life | Who we are
How we
create value
Strong trends
drive our industry
The access control industry is subject to strong underlying trends
which drive growth and demand for our products. The basic need
for safety and security is one of the most fundamental needs. Con-
venient and secure access solutions, combined with an increased
focus on energy efficiency in buildings, will drive profitable growth
in our industry for the foreseeable future.
Market overview
The access solution industry is an ever-evolving industry that
today has a global value of more than USD 100 bn annually.
It has a history of stable growth, driven by the develop-
ment of more secure, innovative access solutions with an
increased focus on convenience and ways of improving the
sustainability performance of buildings.
Through continuous evolution, local standards have
emerged, driven by local needs. As a result, the market for
access solutions is fragmented, particularly in emerging
markets. At ASSA ABLOY, we secure buildings from the pe-
rimeter to their shell and core. We are the largest provider of
access solutions, but due to the fragmentation of the market
our global market share is still low, meaning that we have
significant potential to grow.
Industry trends
New technologies
Emerging technologies and technical innovations are
enabling the development of convenient new solutions
for customers and providing new business opportunities.
The change of the product mix to more electromechani-
cal products will continue and bring with it many business
opportunities, while supporting recurring revenues and
software as a service.
Local regulations
ASSA ABLOY is one of the few global players in the industry
able to supply access solutions that comply with the local
markets’ constantly changing regulations, standards and
requirements. This creates good customer relations, market
demand and entry barriers for competitors.
We have a strong local presence with local manufacturing in both mature and
emerging markets. Currently we have operations in more than 70 countries.
This enables us to quickly deliver and respond to local customer demands.
We have increased our investments in R&D and shifted to more software
development. The proportion of electromechanical products that we sell has
increased from 22% to 30% over the last ten years.
Growing trends
There are a number of trends driving increased demand for
access solutions, including meeting the individual’s most
basic need for safety and security. The shift to electrome-
chanical and digital solutions enables us to offer even more
convenient customer solutions and also add more service-
based solutions offerings. At the same time, the demand
for more sustainable and resilient products is fuelled by
the strong growth in green buildings and more sustainable
urban environments around the world.
ASSA ABLOY’s response:
The shift to electro-
mechanical and
digital solutions
enable us to offer
even more con-
venient customer
solutions.
10
ASSA ABLOY | ANNUAL REPORT 2021
1
Source: Dodge Data & Analysis, World Green Building Trend 2018.
As the global leader in access solutions, we provide state-of-the-art prod-
ucts and services related to openings and entrance automation as well as
trusted identities with the safety and security of our customers in mind.
We are developing products that help our customers reduce their envi-
ronmental impact and offer Environmental Product Declarations (EPDs)
for important product groups. EPDs make our products more attractive
because they help our customers to achieve higher ratings in their green
building certification. In 2020, we committed to setting science-based
targets illustrating our commitment to reduce our own emissions as well.
Given our global leading position and strong R&D resources, we are
at the forefront of developing new solutions to meet the ever-changing
needs for secure and safe access solutions.
We invest in markets where we see urbanization taking place.
Urbanization
Urbanization is taking place around the world, with the most
apparent shifts in the emerging markets where an increased
need for housing, workplaces and commercial buildings drives
demand for access solutions. For example, the United Nations
projects that the population living in urban areas will increase
by 2.5 billion people by 2050. This is fueling the demand for
access solutions.
Demand for security
The basic need for safety and security is fundamental. In a world
with a high perception of uncertainty, the demand and need for
secure, convenient and efficient access solutions is increas-
ing – both in the residential and non-residential segments. The
growth is further supported by the demand for convenient and
time-efficient access solutions.
Sustainability
As concerns for the environment grow, customers are looking
for sustainable solutions. This increases the demand for more
green buildings and access systems. For example, about 50%
1
of
all new commercial buildings are now expected to be certified
according to green building standards. This also requires more
transparency regarding the environmental impact of products,
production and working conditions. There is also increasing
regulation for more energy-efficient buildings and access solu-
tions.
Digitalization
The rapid development of digital solutions continues in all
areas of society and places demands on new digital technolo-
gies, including access solutions. This provides opportunities
to develop new, more convenient and secure access solutions.
One such opportunity is remote management, where homes,
offices and other premises can be monitored, and access can be
managed remotely. In addition, premises are more frequently
protected via interconnected systems that both increase the
level of security while also enhancing efficiency and accuracy.
ASSA ABLOY’s response:
Megatrends
11
ANNUAL REPORT 2021 | ASSA ABLOY
Market and trends | How we create value
Every day, we help billions of people to experience a more open world with innovative
solutions that enable safe, secure and convenient access to physical and digital places.
By responsibly using human capital, natural resources and capital, we continuously create
sustainable value for our shareholders and other stakeholders. Together we create value!
We help people feel safe, secure
and experience a more open world
How we create value | Our value creation business model
How we operate
51,000
employees in more than
70 countries around the
world. We are truly global,
uniquely local
2,800
employed in R&D
working with our
sus tain able innovations
190
strong brands and diversi-
fied product portfolio
9,500
patents
130
efficient production and
assembly facilities
~50,000
suppliers for direct mate-
rial and indirect services.
We have strategic and
cost efficient suppliers
SEK 70 bn
in shareholder equity
Our resources
Together we are guided by our core values and beliefs
Empowerment
We have trust in
people
Innovation
We have the
courage to change
Integrity
We stand up for
what’s right
Sustainability is
part of everything
we do throughout
ASSA ABLOY’s
value chain. It is an
important element in
innovation, sourcing,
production, employee
development and in
ASSA ABLOY’s products
and solutions as well
as in the Group’s
relationships with all
stakeholders.
We are a global company with a uniquely
decentralized business model with about 1,000
sites including 130 production facilities. We use
a multi-brand strategy to leverage our global
and local strengths and address different market-
and customer segments and routes to market.
Acquiring relevant businesses to continue our
growth is key in our strategy.
Our strategic objectives
The Group’s strategic direction is to lead the
trend towards the world’s most innovative and
well-designed access solutions.
Our strategic objectives are executed locally,
which gives a high level of autonomy in decision-
making so we stay close to our customers.
Evolution through people
Developing our people, and growing their careers
within ASSA ABLOY, is how we secure the Group’s
future success and growth.
Cost-efficiency in everything we do
All activities must lead to improved efficiency where
realized savings can be invested in innovation and
activities that accelerate our growth.
Product leadership through innovation
Innovation is an enabler for everything we do and is the
most important driver for our organic sales growth.
Growth through customer relevance
We believe that continued profitable growth starts with
understanding our customers.
12
ASSA ABLOY | ANNUAL REPORT 2021
Electromechanical products
30%
Security doors and hardware
16%
Entrance automation
31%
Mechanical locks
23%
A
more
open
world
Value creation to stake holders in 2021
Our aim is to deliver safety, security and convenience. We offer a complete
range of unique and innovative access solutions.
Our offering
Shareholders and investors
• Dividends and capital
appreciation
SEK 4.3 bn
dividend paid
Employees
• Professional development
• Safe and stable workplace
• Inclusive workplace with
equal opportunities
SEK 27.9 bn
in salaries and other remuneration
Customers
• Increased security and competi-
tiveness for our customers
• Sustainable products with
environmental product
declarations
>400
new products launched
Suppliers and partners
• Technological development
• Stable partner
SEK ~45 bn
in supplier payments
Society
• Increased safety and security
• Reduced environmental impact
• Paid taxes and employment
SEK 2.6 bn
in income tax
13
ANNUAL REPORT 2021 | ASSA ABLOY
Accelerating towards
a sustainable future
ASSA ABLOY has made a long-term climate commitment to reduce carbon emissions
in line with the 1.5-degree ambition level of the Paris agreement. Our work with sustain-
ability will further improve our competitiveness and resilience as an organization.
Sustainability targets 2025 vs. 2019
Our sustainability program to 2025
focuses on the most material areas, en-
suring we have the biggest impact where
it is needed most. Targets include carbon
footprint (-25%), water intensity (-25%)
and injury rate (-33%) amongst others.
Science Based Targets
ASSA ABLOY has committed to set-
ting science-based targets, limiting a
global temperature rise to 1.5°C, by
halving absolute carbon emissions
by 2030.
Net zero
ASSA ABLOY has committed
to reaching net-zero no later
than 2050.
2025
2030
2050
How we create value | Sustainability
The UN Sustainable Development Goals
ASSA ABLOY is a strong advocate of all 17 UN Sustainable
Development Goals (SDGs), with a focus on six of the goals
that have the most material impact. Our Sustainability
program to 2025 was developed to ensure our targets and
ambition contribute directly to the SDGs.
According to the World Green Building Council, buildings
are responsible for 38% of global energy-related carbon
emissions and 50% of all extracted materials. As the global
leader in access solutions, ASSA ABLOY has an important
role to play in leading our industry to reduce emissions
across the entire value chain. We believe we can have a great
impact and support the global goals by focusing on the fol-
lowing six SDGs:
Achievements in 2021
ASSA ABLOY is accelerating towards a sustainable future. We
committed to setting science-based targets in 2020 and by
2021 we were deep into the target setting process, analyz-
ing our footprint and the improvements we need to make
across our entire value chain. However, we are not waiting
until our targets are ratified to start working towards achiev-
ing the goal. To reduce our emissions, the Group is taking a
multifaceted approach: Within our operations, we continue
to roll out our Green Team Playbook while driving major
overhauls of some of our most energy- and carbon-intensive
sites. Through sustainable innovation and our Sustainability
Compass, we focus on reducing the embodied carbon of
our solutions and making them more energy-efficient, and
energy-independent where possible through technologies
such as energy harvesting. This enables us to support our
customers in reducing their environmental impact, making
us more relevant to our customers. We are also working
closely with our material suppliers to identify and imple-
ment emission reduction opportunities.
Climate and carbon emissions reduction is a major focus
area for ASSA ABLOY, though we remain firmly focused on
our broader sustainability targets as well to reduce our
water consumption, minimize our waste, and operate in a
responsible way globally.
For more details on our sustainability program 2025,
our work towards the SDGs, and our continuing efforts to
further improve health and safety in the organization, please
see our Sustainability Report.
Climate action
Responsible consumption and production
Decent work and economic growth
Clean water and sanitation
Sustainable cities and communities
Industry, innovation and infrastructure
READ MORE IN OUR SUSTAINABILITY REPORT
14
ASSA ABLOY | ANNUAL REPORT 2021
Sustainable product leadership at
California’s Sonoma Academy
“ASSA ABLOY was a leading participant and an
active contributor that met a challenge with
a clear solution and compatible products.”
CASE FACTS
Project: Sonoma Academy,
Santa Rosa, California.
Sustainability accreditations:
Living Building Challenge
Materials Petal and Zero Carbon
Certified; LEED v3 Platinum Cer-
tified; WELL Building Standard
Education Pilot Certified. The
project is also certified under
the following LBC Petals: Place,
Energy, Health & Happiness,
Materials, Equity and Beauty.
ASSA ABLOY Products: Door
openings, frames, hinges and
electrified hardware.
QQ What are the specifics of this project and design initiatives?
AA – Located in southeastern Santa Rosa, California, the
Sonoma Academy Janet Durgin Guild & Commons is a testa-
ment to the future of sustainability. One specific goal of this
project was to avoid all Red List ingredients/chemicals. To
accomplish this, every single product and material used in
construction had to be vetted and often, alternatives found.
It’s the first project to achieve both LBC Materials Petal
1
and
Zero Carbon Certification by the International Living Future
Institute (ILFI).
QQ What role did sustainability play in the architectural design?
AA – Sonoma Academy owners wanted to expose and edu-
cate students on the importance of sustainability, and what
better way to do that than in the building itself? The materi-
als vetting process was difficult, as it involved many different
classes of products. We used doors and accessories with LBC
Declare labels which are hard to come by and require a lot of
work to reach that level. ASSA ABLOY was a leading partici-
pant in that program and an active contributor that met a
challenge with a clear solution and compatible products.
QQ Why was ASSA ABLOY chosen for the project?
AA – ASSA ABLOY’s door frame and door hardware products
were used in the Guild & Commons facility and its participa-
tion in the Declare Program made procuring ingredient-
transparent materials simple. Better yet, ASSA ABLOY prod-
ucts offered Declare labels demonstrating they were free
of Red List ingredients and compliant with both VOC
2
and
CDPH
3
emissions targets. The project was pleased to have
found ASSA ABLOY an ally in creating healthier materials and
spaces. Every project can include sustainable attributes and
have an impact on the client’s life or the industry at large.
ASSA ABLOY
in your daily life
MEGHAN COLE, SUSTAINABILITY COORDINATOR,
WRNS STUDIO, SAN FRANCISCO, USA
1
The intent of the LBC (Living Building Challenge) Materials Petal is to help create a materials economy that is non-toxic, ecologically
restorative, transparent and socially equitable.
2
Volatile Organic Compounds.
3
California Department of Public Health.
Photo: © Celso Rojas 2021
15
ANNUAL REPORT 2021 | ASSA ABLOY
“If a key is lost or stolen this minimizes the
security risk, because each individual key
can be deactivated if required and have
access rights changed or removed, providing
a dynamic secure system.”
UK Power Networks upgrades
its locking systems
CASE FACTS
Project: Upgrade of UK Power
Networks locking systems in
south east England and London,
including 29,000 km
2
, 130,000
substations and 189,000 km of
overhead lines and under-
ground cables.
Solution: Abloy’s PROTEC2 CLIQ,
ABLOY PROTEC2.
ASSA ABLOY’s business unit Abloy UK has been awarded
a 5-year contract with UK Power Networks to upgrade the
current mechanical locking systems to a combined electro-
mechanical and mechanical locking solution, for its high and
low voltage distribution networks.
QQ Who is UK Power Networks?
AA – UK Power Networks is the UK’s biggest electricity distri-
butor, delivering power to 8.3 million homes and businesses
across London, the South East and the East of England. It
keeps power flowing to 19 million people.
QQ What kind of solution did it choose for its site security and
access management?
AA – Products specified include a mix of Abloy’s PROTEC2
CLIQ® electromechanical and ABLOY PROTEC2 mecha-
nical padlocks and cylinders, which will be controlled
and administered using the new CIPE Manager operating
system. Abloy will supply around 9,500 padlocks per annum,
together with programmable PROTEC2 CLIQ Bluetooth Low
Energy keys.
QQ Why do customers choose Abloy?
AA – CLIQ® offers high security and flexibility that supports
the complex workflow of organizations in the energy sector
by enabling audit trails to be generated for individual cylin-
ders, padlocks, keys and system users.
QQ How does Abloy’s solution help with third-party access
needed for critical sites?
AA – The CLIQ® keys are programmable, so a temporary
contractor can be issued with a key that permits entry to
specific sites for a limited time period. After the authoriza-
tion period ends, the key cannot open the lock. If a key is
lost or stolen this minimizes the security risk, because each
individual key can be deactivated if required and have access
rights changed or removed, providing a dynamic secure
system.
ASSA ABLOY
in your daily life
16
ASSA ABLOY | ANNUAL REPORT 2021
Strategic overview
The Group’s vision is to be the global leader in providing innovative
access solutions. Our purpose is to help people feel safe, secure and
experience a more open world. Our core values, beliefs and strategic
objectives help guide us.
Purpose
To every day help people feel
safe, secure and experience a
more open world
Vision
To be the global leader in provid-
ing innovative access solutions
that help people feel safe and
secure so that they can experi-
ence a more open world
Mission
• Building sustainable share-
holder value
• Providing added value to
our customers, partners and
end-users
• Being a world leading organi-
zation where people succeed
• Conducting business in
an ethical, compliant and
sustainable way
Financial targets
Core values
and beliefs
Our strategic objectives
Empowerment
We have trust in
people
Innovation
We have the
courage to change
Integrity
We stand up for
what’s right
Growth
5%
organic
5%
acquired
=
10%
total growth
EBIT
16–17%
How we
operate
Cost-efficiency
in everything we do
Product leadership
through innovation
Growth through
customer relevance
Evolution through
people
Sustainability
is part of
everything we
do throughout
ASSA ABLOY’s
value chain.
17
ANNUAL REPORT 2021 | ASSA ABLOY
How we operate | Strategic activities
Strategic activities in 2021
To accelerate our profitable growth in line with the financial targets,
ASSA ABLOY works with a number of strategic activities. Continued
investments in product innovation, strengthening the common culture,
and initiatives to reduce our cost base are key enablers for our strategic
initiatives. These are described in more detail on pages 24–33.
Demand in many markets improved gradually in 2021 and
was back to, or even above, pre-pandemic levels in three of
our five divisions. Therefore, we gradually shifted our focus
to accelerate our profitable growth. One important activity
is the upgrading of the installed base to lead the transition
from mechanical to electromechanical solutions. The pan-
demic has accelerated this transition, providing opportuni-
ties to accelerate our recurring revenue from licenses and
software. Another driver is growth in the emerging markets,
where we have many untapped opportunities. The shift to
more sustainable solutions will also drive growth.
Continue with successful acquisitions
Acquisitions are a vital part of our growth strategy. Since
ASSA ABLOY was founded in 1994, we have acquired more
than 300 businesses that have generated significant value.
In 2021, we announced our to date largest acquisition ever
of the Hardware and Home Improvement business unit of
Spectrum Brands, which will contribute about 15% in annual
sales. The businesses that we acquire are often leading
access providers in their respective markets with well-
established customer bases and brands with strong growth
potential to contribute to our financial targets. We see many
opportunities to continue our acquisition journey and our
divisions have identified more than 900 potential acquisi-
tion targets globally.
Upgrade the installed base
One strong growth driver is the transition from mechani-
cal products to electromechanical products and solutions.
Before the pandemic, our electromechanical products grew
by more than 10% annually in our regional divisions. As ASSA
ABLOY has the largest installed base of access solutions
globally, the transition to electromechanical products and
solutions provides us with great opportunities to grow. The
largest opportunities are in the commercial and institution-
al segments that comprise the largest portion of our sales.
The change in the product mix will continue and provide
many opportunities. At the same time, this transition will
support recurring revenues and software monetization.
Generate more recurring revenues
The aftermarket represents two-thirds of our sales, provid-
ing a stable recurring demand through renovations, replace-
ments and upgrades, as well as services. New construction,
which constitutes about one-third of our business, is more
cyclical in nature. We aim to generate more recurring rev-
enues through software licenses, identity management and
service agreements as the demand for electromechanical,
digital and smart solutions increases. Connected products,
new features and subscription services will continue to ac-
celerate profitable growth in the future.
Accelerate growth in emerging markets
Emerging markets also offer significant growth potential
with many untapped opportunities. During the last ten
years, the sales in our emerging markets, excluding China,
has grown about 40%. Our ambition is to grow more than
10% in the emerging markets in the coming years through
a combination of organic growth and acquisitions. Having
18
ASSA ABLOY | ANNUAL REPORT 2021
Strategic activities | How we operate
the right people with local knowledge of the market will be
essential for reaching our target.
In China, we have been consolidating our organization,
including brands, R&D centers and operations. This will help
position us for profitable growth also in the commercial
and institutional segments and increase our exposure in the
aftermarket.
Sustainable solutions
Sustainability will be vital to economic and industrial
development in the coming decades and is clearly a driver
for growth. Our customers’ expectations in relation to
sustainability are constantly increasing. Studies indicate
that 70% of consumers search for green products and about
50% of all new commercial constructions are built accord-
ing to green standards. Within our product development,
we not only look at the product’s sustainable footprint, but
we also develop products that contribute to the customer’s
total sustainability solution. Our 276 verified Environmental
Product Declarations (EPDs) guide our customers in making
sustainable decisions. These EPDs give us an advantage over
competitors and are an important differentiator.
Demands on our own production are increasing as more
of our customers commit to science-based targets. We have
set ambitious targets for 2025 and are committed to the
science-based targets initiative. These targets will be achieved
through efficiency improvements in our operations and sup-
ply chain, enabled by technology improvements.
The strategic
activities help us
accelerate our
profitable growth
in line with our
financial targets.
19
ANNUAL REPORT 2021 | ASSA ABLOY
20
ASSA ABLOY | ANNUAL REPORT 2021
How we operate | Strategic objectives
Strategic objective #1
Growth through
customer relevance
Growth through customer relevance is about understanding
the ever-shifting needs of our customers so we can provide
them with the most appropriate solutions. Our solutions
are designed to address the demands for safety, security,
sustainability and convenience from specific customer
segments. Through our local presence, global leadership,
processes and tools, we continue to gain in-depth customer
insights and knowledge to exceed our customers’ demands
and fuel the growth of our company.
30%
share of electro-
mechanical products,
an increase from 22%
to 30% in ten years.
No. 1
in the world within
access solutions.
45%
increase in subscription
sales in 2021.
21
ANNUAL REPORT 2021 | ASSA ABLOY
Strategic objectives | How we operate
Market insights and segmentation
We continuously monitor trends, customers, and our
competitors to increase our market insights. We have also
segmented our markets into end-user verticals to gain a
deeper understanding of the specific needs of customers
and end-users so we can deliver more customized and
targeted products and solutions.
Acquisitions help us increase our customer relevance and
cater to specific markets. For example, the acquisition of In-
vengo Textile Services, which tracks and monitors linen and
textile assets, reinforces our offering within the global RFID
ecosystem. Another example is the acquisition of Capitol
Door Service, a leading pedestrian door distributor and ser-
vice company, that will help us grow our position in the US.
Institutional and commercial markets represent about
75% of total sales, while smart locks and the smart home
trend are driving sales in the residential market, which ac-
counted for 25% of total sales in 2021.
The aftermarket continues to represent a large portion of
our sales – 67% – providing stable demand through renova-
tions, replacements and upgrades, as well as services. New
construction accounted for about 33% of sales in 2021,
driven primarily by growth in the residential market and
certain non-residential segments.
Seamless customer experiences
Offering a world-class customer experience is a key ele-
ment in our efforts to be the brand of choice and nurture
loyal customers. Our goal is to ensure that all touchpoints,
whether digital or physical, are as seamless as possible.
Our digital platforms make it easier for customers to ex-
plore, buy, install and service our products. In 2021 we com-
pleted the implementation of a single application to further
enhance the customer experience with our Yale smart prod-
ucts. Our Yale Access app, available in 174 countries, allows
seamless interconnectivity with smart home products and
services from external vendors, including Google Assistant,
Amazon Alexa, and Philips Hue.
Partnerships open new channels to customers and
together we can develop innovative product features that
enhance our customer offering and accelerate growth. Our
Yale smart locks, for example, are integrated with Google’s
smart home software in a solution specifically designed to
seamlessly communicate with Google Nest solutions.
We are further improving the customer experience
through dedicated resources and investments in user in-
terfaces and other tools. We constantly measure customer
experience across different touchpoints using Net Promoter
Score® (NPS®) or CSAT (customer satisfaction) surveys,
and follow up by implementing changes in the business to
improve or resolve identified gaps.
Sustainability a growth enabler
Today’s customers are increasingly driven by sustainabil-
ity agendas and the demand for sustainable buildings.
Our customers increasingly take into consideration the
environmental performance of a product when making
design and purchase decisions, with certifications such as
LEED and BREEAM helping to drive this trend. ASSA ABLOY
is in an excellent position to help customers meet their
environmental targets by offering a growing portfolio of
green solutions, which are developed in accordance with
our Sustainability Compass. The Sustainability Compass,
which is used to assess various environmental attributes in
new products, helps us secure sustainability through design,
decreasing the environmental footprint of each new innova-
tion. Our efforts to offer more sustainable solutions through
specifications continue to pay off, and sales have acceler-
ated, driven by “green” specifications in 2021.
Taking e-business further
E-business is a key strategic initiative for the Group. In 2021,
we continued to make progress towards our ambition of
providing the best digital customer experience to discover,
buy and service our offering. All divisions have strategies in
place to increase the pace of digitalization through invest-
ments in tools, processes, and dedicated resources.
We have started to migrate our various branded websites
to a new, customer-centric global platform, which went live
in 2021. Having the majority of our brands on a single online
platform enhances the customer experience and makes
it easier to navigate between our various products and
Mechanical locks, lock
systems and fittings, 23%
Entrance automation, 31%
Electromechanical and
electronic locks, 30%
Security doors and
hardware, 16%
North America, 44%
South America, 3%
Europe, 39%
Asia, 9%
Oceania, 4%
Africa, 1%
Sales by product group, 2021
Sales by region, 2021
Legend
Legend
Legend
Legend
Legend
Legend
Sales channels
The majority of our sales go through distribu-
tors. Most markets are fragmented where we
sell our products to several distributors. We
work proactively with these distributors in
product marketing and product develop-
ment, with the aim to grow our share of their
business. The end-customers are influenced
by specification, and also by direct relation-
ships with some key accounts.
ASSA ABLOY
OEM
Integrators,
installers
(incl. lock -
smiths) and
DIY
Distributor/
wholesaler
End customer
Create demand through management
of sales channels and channel partners
Demand driven by specifications,
brand loyalty and recurring revenues
75%
Commercial
institutional
and commercial
market
25%
Residential
private customers
and residential
market
33%
New construction
67%
Aftermarket
renovations, remodeling
and additions, replace-
ments and upgrades of
existing access solutions,
as well as ongoing service
Breakdown of
ASSA ABLOY’s
sales
22
ASSA ABLOY | ANNUAL REPORT 2021
How we operate | Strategic objectives
solutions. Our efforts in social media to raise awareness and
drive customers to our websites and webshops have also
been significantly accelerated.
During the year we made significant investments, in
areas such as training, further rollout of e-shops, and data
analytics to offer an improved digital experience.
Our ambition is for e-commerce to increase as a share
of the total Group sales. Overall, sales through our web-
shops and configurators continue to grow double-digit
year over year.
Tools to increase collaboration
We work with common processes and a structured ap-
proach to master data management. Customer Relationship
Management (CRM) systems help us deliver more targeted
information to customers and collaborate across divisions.
We have our own BIM-enabled (Building Information
Modeling) software platform called ASSA ABLOY Openings
StudioTM. The industry-leading tool helps create and visual-
ize openings for complete specifications, faster and more
seamlessly. Through Openings Studio, our teams work closer
with architects, contractors and other partners to deliver
the most suitable solutions. In 2021, we continued our
international rollout of Openings Studio and the tool is now
available in more than 50 markets.
Our brands
ASSA ABLOY is our main commercial brand and we have
master, endorsed, and standalone brands to reach all of
our target groups. HID is a market-leading brand for secure
identities and access management, and our Yale brand has
strong recognition in residential markets worldwide. We
also have a number of well-known brands that are endorsed
by one of the master brands and we maintain some stan-
dalone niche brands that are sold mainly through distribu-
tors and installers.
Pricing management activities
We continue to focus on pricing management and have a
global network of managers dedicated to pricing activities.
Value-based pricing techniques enable us to capture the full
value of our products and services. We regularly review and
track price performance, price optimization and discount
management, among other areas, through established key
performance indicators. During the year, we focused on
training related to pricing models for our subscription sales,
such as for software or service agreements. We continued
to invest in resources and platforms to drive this area, result-
ing in a growth in subscription sales by 45% in 2021. These
combined pricing efforts help protect our profitability while
delivering increased customer value.
Emerging markets
We are expanding our presence in emerging markets
through organic growth and acquisitions. We will grow
these markets by having a local presence and developing
products and services tailored to local standards and re-
quirements. Our 2021 acquisition of MR Group’s hardware
division, with parts of its operations in Morocco, is an exam-
ple in this direction, expanding our footprint in North Africa.
While we traditionally tend to have a strong position in the
premium segments, we are also expanding our offering in
the low and mid-range segments to attract more custom-
ers in emerging markets. Our share of sales in the emerging
markets was 15% in 2021 and the organic growth was 11%.
23
ANNUAL REPORT 2021 | ASSA ABLOY
A connected solution for smooth
operations at DB Schenker
“Docking Management System gives us full control
of our terminals, improving energy efficiency,
productivity, and our working environment.”
CASE FACTS
Project: DB Schenker,
Södertälje, Sweden.
ASSA ABLOY Products:
ASSA ABLOY delivers over 100
solutions including complete
docking stations, overhead
sectional doors and high-speed
doors.
QQ Why did you need new docking solutions?
AA – We’re in the process of constructing an important new
terminal in Södertälje, Sweden, that needs docking sta-
tions, overhead sectional doors and high-speed doors. This
is one of the largest and most important business areas in
the Stockholm region, so we needed a partner we can trust
to deliver.
QQ Why did you choose ASSA ABLOY?
AA – We’ve had a strong relationship with ASSA ABLOY
Entrance Systems for many years, so we know our new ter-
minal is in safe hands. ASSA ABLOY is a one-stop shop for all
the products and services we need, so it’s easy and conveni-
ent for us, and we know everything will be delivered on time.
The ASSA ABLOY Docking Management System (DMS)
is something that really appealed to our business too – it
means our terminal will be fully equipped with intelligent
doors and docking solutions that ensure our production
never stops.
QQ How will you use the DMS?
AA – The DMS provides real-time data insights helping us
to manage our fleet in the docking area. It also allows us to
control when our doors are open and closed for energy ef-
ficiency, security, and optimal working conditions.
The service team at ASSA ABLOY monitors the data to
identify any issues with our entrances so they can quickly fix
them to reduce any downtime.
QQ Would you recommend the DMS?
AA – Absolutely! The DMS gives us full control of our terminals,
improving energy efficiency, productivity, and our working
environment. Our service agreement also means that we have
lifetime after-care of our entrances, ensuring our operation
continues to run smoothly, saving us time and money.
ASSA ABLOY
in your daily life
STEFAN JOHANSSON, MANAGER AT SCHENKER PROPERTY
24
ASSA ABLOY | ANNUAL REPORT 2021
How we operate | Strategic objectives
Strategic objective #2
Product leadership
through innovation
ASSA ABLOY is recognized as one of the most innovative
companies globally and we continue to reinforce that
position. We are delivering product leadership through
innovation by focusing on ten strategic actions designed
to accelerate organic growth, ensure more efficiency in
resource utilization, and secure a constant flow of new,
enhanced, innovative and sustainable products. In 2021, we
focused on several areas where we see growing demand,
such as in service and predictive maintenance, and on
sustainability where solutions like our ultra-low power locks
are contributing to energy reductions for customers.
22%
of sales generated by
products launched in
the last three years.
>500
new patents during
the last three years.
>400
number of product
launches during 2021.
A groundbreaking transparent OLED automatic sliding door
will take image quality to a new level thanks to a collaboration
between ASSA ABLOY Entrance Systems and leading consumer
electronics company LG Electronics.
25
ANNUAL REPORT 2021 | ASSA ABLOY
Strategic objectives | How we operate
Organization
ASSA ABLOY is well-positioned when it comes to innovation
capabilities. Throughout our innovation organization, which
includes more than 100 R&D sites, we utilize common tools
and ways of working to align strategic initiatives and im-
prove transparency. At the same time, we can leverage the
Group’s broad competence and benefit from the diversity
of a global organization that also maintains a local presence
and knowledge. Our innovation organization also facilitates
cross-divisional collaboration and promotes career develop-
ment and job flexibility, helping us to retain and attract key
talent.
Process
Product quality, safety, and security
We apply a “first time right” approach to product develop-
ment to ensure that each product meets the highest re-
quirements for quality, safety, and security as well as design
and sustainability. Processes, tools, training, and governance
support this culture. Through the Group’s gateway process
for product development, we work with a quality assur-
ance assessment, which also drives high security and safety.
Within the gateway process we are able to monitor our
investments in innovation through a post-launch review and
retrospectively evaluate the business case based on sales,
quality, and customer satisfaction. In 2021, we added ad-
ditional resources in quality and continued to add dedicated
security centers to meet customer requirements and main-
tain our position as the global leader in access solutions.
Excellence in product management and innovation
While we work with product management excellence to
identify the right things to do, innovation process excellence
guides us in doing things right. It addresses project execution,
the continuous delivery of hardware and software, and add-
on development like customization, quality improvement,
and value engineering. Our “fail fast, learn fast” approach
decreases our time to market, improves our ability to respond
to change and lowers cost. An agile process for continuous
product innovation increases speed and enhances the digi-
talization of our products and services.
In 2021 we revised our product management training to
emphasize the importance of working with visionary scen-
arios. This is helping us to envision the future of our industry
based on current trends related to customers, industries, and
technology. With over 100 sites working in product manage-
ment, we have the ability to gather excellent insights into the
needs of local markets and customers.
Innovation and awards
In 2021, new products launched during the last three
years accounted for 22% of total sales. During the year, we
launched more than 400 products and filed for around 150
patents that were added to our patent portfolio of about
9,500 patents. Our innovation agenda also includes break-
through innovation, which can enable the Group to create
new market opportunities.
During the year, ASSA ABLOY received multiple awards
for innovation, including the Red Dot design award for
the energy-efficient SW60 swing door operator, which
contributes to better hygiene through its touchless user
interface. The Linus® Smart Lock was ranked number one
among nearly 10,000 entries, winning an iF Design Award in
2021 for its sleek, innovative and functional design. This was
just one of many accolades for the Linus door lock, which is
meeting a growing demand for smart security solutions with
stylish design.
Product
Generation planning
The entire Group uses generation planning to define future
product offerings. Each division is responsible for determin-
ing its own plans, which are reviewed annually to identify
synergy effects. Generation plans provide direction to prod-
uct and technology roadmaps and secure that our business
strategy and objectives are reflected in our innovation
activities. Generation plans also outline platform, technol-
ogy and capability needs over time.
Increasing standardization
ASSA ABLOY plays a key role in the Connectivity Standards
Alliance (CSA) and other organizations working to ensure
the interoperability of products and develop open, global
standards for the Internet of Things (IoT). Through internal
standardization of interfaces, we have begun this journey
by increasing the interoperability between products and
software from different Group entities. We are working to
ensure product compatibility and security with third-party
products and systems such as smart home systems and
building management systems. Having fewer, more stand-
ard interfaces reduces complexity and improves the user
experience.
SEK M
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2120191817
Investments in research
and development
Product quality
Product safety
& security
Generation
plans
Technology &
platforms
Sustainable
products
Standard Interfaces
& API’s
Product
management
excellence
Innovation process
excellence
Breakthrough
innovation
Collaboration
Innovation
Centers
P
r
o
c
e
s
s
P
r
o
d
u
c
t
Strategic
actions
Innovation strategy
O
r
g
a
n
i
z
a
t
i
o
n
The ASSA ABLOY innovation strategy is structured around three strategic pillars - organization, process
and product. For each area we have defined strategic actions which are the core of our strive for product
leadership through innovation. Efficient execution of these strategic actions will secure a constant flow of
new, enhanced, innovative and sustainable products that optimize customer value. Together they will help
us accelerate organic sales growth.
26
ASSA ABLOY | ANNUAL REPORT 2021
How we operate | Strategic objectives
Development of digital and mechanical products
Digital solutions and software comprise an important part of
our product portfolio, and we have a digital service organiza-
tion that supports a growing number of customers. Through
“the digital factory,” a cross-functional approach, we are able
to work seamlessly throughout the organization and towards
customers. In 2021, we focused on a number of strategic
areas where we see growing demand, such as within cloud-
based access control and connected devices (IoT). Service
and predictive maintenance is another growth area as our
customers digitalize and transition to industry 4.0.
The Covid-19 pandemic has triggered higher demand for
touchfree products and digital innovations such as our Mobile
Access for hotel check-in, and HID Location Services, a real-time
location system (RTLS). Among its many advantages, RTLS helps
customers control social distancing in, for example, offices
or healthcare facilities. During the year, we also continued to
develop our core mechanical products and helped our custom-
ers reduce health risks with anti-bacterial handles and other
low-touch solutions like arm and foot pull handles.
Compass for sustainability benefits
All newly released products have a sustainability value
proposition that is in line with ASSA ABLOY’s strategic goal
to be perceived as the most sustainable company in the
industry. Our Sustainability Compass is used to assess a
variety of environmental attributes in new products, includ-
ing recycled content, raw materials, and energy in use. A
material reference list and a restricted material list based
on the EU’s REACH
1
regulation and RoHS
2
rules help guide
designers to make choices that lower the environmental
impact of products. The Sustainability Compass plays an
important role in our innovation processes, guiding the
development of each product we develop to ensure benefits
for both customers and the environment. Energy harvesting
and ultra-low power locks, which reduce energy consump-
tion, carbon emissions, and costs for customers, were just a
couple of the areas in focus in 2021.
1
Registration, Evaluation, Authorization and Restriction of Chemicals.
2
Restriction of Hazardous Substances.
P
a
c
k
a
g
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R
a
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m
a
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r
i
a
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R
e
d
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e
Sustainability compass
The Sustainability Compass is a
tool to increase our efficiency
and decrease the environmental
footprint. The Compass includes
eight dimensions:
• Reduce – five areas
• Reuse
• Recycle – two areas
The green leaf indicates sustain-
able footprint to minimize
the footprint throughout the
lifecycle.
Sustainability
Compass
We look at innovation as a sys-
tem. We believe that efficiency is
maximized by embracing the en-
tire system. For example, strong
product management is neces-
sary to run efficient projects.
Having a mix of pre product, new
product and continuous product
innovation will also help us
achieve long-term success. ASSA
ABLOY’s innovation system is our
engine, and all parts need to work
separately, but also together.
The innovation system sup-
ports the dynamics between
incremental and disruptive
innovation, which are necessary
to develop new solutions for our
short- and long-term success.
Innovation system
Innovation Strategy incl. IP and Technology
Product management
Customer and market insights
Innovation culture and knowledge
Continuous product
innovation (CPI)
Pre product
innovation (PPI)
New product
innovation (NPI)
Management
Product innovation
is an enabler to
increase our long-
term profitable
growth.
ASSA ABLOY joins Hyatt to roll out
room keys in Apple Wallet
“Our approach to technology always includes listening
to guests and members. They want near-instantaneous
access. Room keys in Apple Wallet is an easy, convenient
and secure option when guests travel.”
CASE FACTS
Customer: Hyatt.
Solution implemented:
Room keys in Apple Wallet and
ASSA ABLOY Global Solutions
Vostio Access Management.
Result: Seamless and secure
tap to unlock experience with
room keys on iPhone and Apple
Watch.
QQ What solution was ASSA ABLOY Global Solutions able to
provide for Hyatt?
AA – Hyatt’s approach to technology is rooted in listening
to guests and members, and Hyatt heard that guests want
access to be near-instantaneous. So we were able to work
together to provide another convenient room key option
with industry-leading speed and ease of use, and more
control and flexibility during a guest’s stay.
QQ How does this solution work?
AA – Hyatt room keys in Apple Wallet are supported by
ASSA ABLOY Global Solutions door locks and the Vostio
Access Management cloud-based solution. Vostio Access
Management provides the digital key information that is
securely delivered to guest devices. Room keys in Apple
Wallet are stored on the device and take full advantage of
the privacy and security built into iPhone and Apple Watch.
When or where a World of Hyatt guest uses a room key in
Apple Wallet is never shared with Apple or stored on Apple
servers. If an iPhone or Apple Watch is misplaced, the guest
can promptly use the Find My app to lock the device and
help locate it.
QQ How are room keys in Apple Wallet used by guests?
AA – Room keys in Apple Wallet are provisioned from the
World of Hyatt app, so members can add their room key to
Apple Wallet after completing a reservation. If they need
to change rooms, extend a stay or access late checkout,
the hotel can update the guest’s room key in Apple Wallet
remotely – bypassing the need to visit the front desk.
QQ What are the main benefits of the new feature?
AA – As the first hotel brand to offer room keys in Apple
Wallet, World of Hyatt guests at participating locations can
seamlessly and securely tap their iPhone or Apple Watch
to unlock guestrooms and key card-protected common
areas like gyms, pools, and elevators – no need to open an
app or handle a traditional plastic room key. This marks an
important milestone as Hyatt continues to reimagine the
guest experience through digital innovations.
JULIA VANDER PLOEG, SENIOR VICE PRESIDENT AND
GLOBAL HEAD OF DIGITAL & TECHNOLOGY, HYATT
Photo: © Hyatt
27
ANNUAL REPORT 2021 | ASSA ABLOY
ASSA ABLOY
in your daily life
28
ASSA ABLOY | ANNUAL REPORT 2021
Strategic objective #3
Cost-efficiency in
everything we do
Cost-efficiency is an enabler for profitable growth. In 2021
we continued to work with operational excellence including
sustainable operations throughout the ASSA ABLOY
organization, from strengthening our sourcing through
cross-divisional collaboration to consolidating sites through
our manufacturing footprint program. The improvements
we make today will enable us to fuel our investments for
innovation and future growth.
MSEK 700
efficiency savings
from MFP programs
in 2021.
10
factories have been
closed over the
past three years.
–7%
the number of direct ma-
terial suppliers has been
reduced by -7% over the
past three years.
How we operate | Strategic objectives
29
ANNUAL REPORT 2021 | ASSA ABLOY
Strategic objectives | How we operate
Operational excellence throughout
We apply lean principles to every stage of the value chain
and work with an operational excellence structure that
enables us to target costs for direct labor, direct material,
fixed and variable production costs. This structure includes
clearly defined target stages linked to productivity perfor-
mance. We measure sustainability, quality, delivery, and cost
performance across the Group through key performance
indicators (KPIs).
This year, all our major sites completed individual assess-
ments and drafted improvement roadmaps to increase our
benchmarking and improve operational excellence. Focusing
on customer needs, working with continuous improvement,
and empowering our employees are among the other day-to-
day operational activities that are helping us to improve cost
efficiency.
Exploring automation
Our operational excellence structure and assessments
provide an overview that helps us identify and target
opportunities for automation, such as where we can best
deploy robots and automated systems within operations.
We are currently focusing on pilot cases in European and
American sites, particularly related to data analysis and
machine learning, to increase efficiency within production.
We are, for example, gathering data from our automated
cylinder assembly machines that will help predict the need
for maintenance.
Manufacturing footprint programs
There is a constant need to target savings and find synergies,
due in part to our frequent acquisitions. Since 2006, we
have been working with Manufacturing Footprint Programs
(MFP) to capture cost savings within our operations. Since
ASSA ABLOY’s first MFP, annual savings have been more than
SEK 5.5 bn. MFP8, which was launched in late 2020, is a two-
year program designed to increase our efficiency by closing
ten production plants and about 30 offices and lead to
total savings of about SEK 1 bn. In 2021, a dedicated council
focused particularly on consolidating offices in major cities,
targeting sites where leases are expiring. MFP8 is our largest
program to date and has delivered savings of about SEK 600
M until and including 2021.
Value Analysis and Value Engineering
Each of our divisions is working with Value Analysis (VA) and
Value Engineering (VE). VA is a structured process for op-
timizing cost while maximizing customer value in existing
products. VE is part of the development process and focuses
on new and existing products. Both processes systematical-
ly reduce costs while taking into account a product’s design,
components and production methods in order to enhance
customer value with improved quality. We are, for example,
applying VA and VE in our product innovation process to
ensure that each product is designed using the right materi-
als and resources, and developed at the right cost.
Cost-efficiency through sustainability
Cost-efficiency and sustainability go hand in hand in our
efforts to reduce our environmental footprint. During the
year, our work with VA and VE focused on sustainability by,
for example, looking at ways to reduce the steel content in
our safety doors. This also alleviated the impact from sharp
price hikes on raw materials in 2021.
We are also reducing our environmental footprint
through our MFPs as we consolidate offices and operations.
These efforts have led to lower consumption of materials,
energy, water and waste, along with lower greenhouse gas
emissions from our production processes. We continue to
increase the use of renewable energy, sourcing renewable
energy where it is available, and practice kaizen methodol-
ogy within all of our operations to address daily energy
MSEK
0
100
200
300
400
500
600
700
800
2120191817
Annual MFP savings
The MFP savings have
resulted in SEK 2.8bn annual
savings during 2017-2021
30
ASSA ABLOY | ANNUAL REPORT 2021
How we operate | Strategic objectives
saving activities. These energy measures have contributed
to an energy intensity reduction of -9.1% compared to the
base year 2019.
Our health and safety culture, which includes proactively
identifying risks and implementing safety improvements to
minimize the risk of injury has an impact on our opera-
tional performance and cost efficiency. The injury rate has
decreased by 20% since 2019.
Supply chain and logistics
We continue to target improvements in global logistics
to capture cost savings, improve delivery performance
and lower our environmental footprint. By consolidating
platforms, phasing out old legacy products and reducing
complexity, as well as having more standardized digital
processes, we are able to achieve further efficiencies in our
supply chain. We also continue to optimize and consolidate
our warehouse locations through our MFP.
Our logistics were impacted by supply availability issues
caused by the Covid-19 pandemic in 2021, along with tariffs
and increasing uncertainty in China. When it comes to sup-
ply, we believe in “best cost” rather than “low cost” and are
building new alliances and shifted some of our focus to, for
example, Eastern Europe and Mexico in 2021.
Professional sourcing is key
We are constantly reviewing our supply base and streamlin-
ing our component assortment to leverage volumes. We
practice multi-tendering, benchmarking and Group-wide
contracts. We are guided by the sourcing principles in
our sourcing policy and apply “should-cost” analysis and
e-auctions to ensure the best cost, quality and performance
of our supply base. Professional sourcing and strategic part-
nerships help us to reduce costs and ensure we are more
competitive.
Throughout the year, we continued to consolidate and
discontinue stock-keeping units (SKUs) that are no longer
integral to our customer offering. Through our top sup-
plier sourcing program and our Group-wide “Together
we” concept, we were able to increase our cross-divisional
collaboration and approach about 100 of our common top
suppliers in a collective way. This resulted in substantial sav-
ings on our direct material spending in 2021. The savings are
particularly notable in a year when we faced extremely high
price hikes for direct material such as steel. We will continue
to strengthen our sourcing teams by commodity, work
cross-divisionally and focus on pricing.
The Manufacturing
Footprint Programs
generated MSEK
700 in savings in
2021 and during
the year we closed
two production
plants.
The Manufacturing Footprint Program (MFP)
applies not only to manufacturing sites, but also
to other operations such as offices, warehouses
and service centers. In this photo, for example,
employees from three different business units,
previously situated in different locations, now
work at the same site in Stockholm, Sweden. This
has not only reduced complexity and cost, but
Consolidation of sites
also increased cooperation between the divisions
and functions.
ASSA ABLOY has about 1,000 different sites
with offices, warehouses and service centers
globally, of which several are located in the same
cities or close to each other. The ambition is to
use shared sites for manufacturing, warehousing
and offices whenever possible and beneficial.
31
ANNUAL REPORT 2021 | ASSA ABLOY
Strategic objective #4
Evolution through
people
Our mission is to be a world-leading organization where
people succeed. This is best achieved by creating a culture
where employees feel empowered, are encouraged to learn
and collaborate, have internal mobility and can develop
careers. Through our “Evolution through people” strategic
objective and its seven strategic initiatives, we are foster-
ing an environment where employees contribute to ASSA
ABLOY’s future growth and success. In 2021, we continued
to deliver on our strategic initiatives while tackling the im-
mediate challenges caused by the Covid-19 pandemic.
Strategic objectives | How we operate
32
nationalities in leading
positions.
22%
increase in internal
applications since
2017.
–20%
reduced injuries
per million working
hours since 2019.
32
ASSA ABLOY | ANNUAL REPORT 2021
How we operate | Strategic objectives
Common culture
“Together we” is our Group-wide initiative that encompass-
es our identity, purpose, vision and mission. It also defines
our common culture, which comprises core values, beliefs
and behaviors. Throughout the organization we advocate
for three core values: empowerment, innovation and
integrity. Our common culture has an impact on all strategic
initiatives and processes and guides us in everything we do.
It helps align our diverse and global workforce so we can
grow in the same direction. Having a common culture also
helps employees – and potential employees – understand
what our Group stands for.
Employee experience
We have an agile and inclusive organization and recognize
the value in an adaptable approach to work routines. We
have learned that meetings and travel can be replaced by
digital solutions, leading to reduced costs and balanced
schedules. Our aim is to offer our increasingly diverse work-
force different ways of working.
By offering various ways of working within an agreed
framework, we can increase staff motivation, build better
relationships between the organization and its employees,
increase the rate of staff retention, reduce absenteeism,
attract new talent, promote work-life balance and reduce
employee stress. In doing so, we improve the Group’s ef-
ficiency, productivity and competitiveness.
Our employee engagement survey is an important tool
in continuing to make ASSA ABLOY a great place to work.
It helps us see where we are today and where we want the
company to be tomorrow. At ASSA ABLOY, everyone’s voice
matters. Experience has shown that colleagues, who feel
their voice is heard, are more empowered to perform their
best work. Global participation in our 2021 employee survey
was 83%. High marks were given to, among other areas, the
Group’s managing of the pandemic situation and the vast
majority agrees that safety is a priority for the leadership.
Talent management
How we attract, develop, engage and retain talent is crucial
for our success. We aim for longevity when hiring and focus
on talent retention by prioritizing internal candidates. Our
people are encouraged to develop and change roles within
the Group, and we focus on facilitating a personalized devel-
opment journey tailored to the needs of the individual. We
encourage our people to develop transferable skills that will
allow them to take on roles in other functions, divisions, or
countries. This has been more limited during the pandemic,
but flexible work arrangements are helping make it possible.
In 2021 we established an internal talent acquisition func-
tion and launched a talent assessment process to identify
the development needs of future successors. We have also
piloted an employee referral program to further boost
internal mobility.
Thousands of employees participated in this year’s pilot
of our new and global performance process, with people
development at the forefront. Every employee has at least
one personal development goal that is tied to the goals and
objectives of the organization as well as to our competency
framework and leadership behaviors. We offer digital courses,
an internal leadership program, and programs in collabora-
tion with external partners, but we strongly believe that the
best way to learn is on the job and through stretched assign-
ments that go beyond one’s present expertise.
Leadership
Leadership development for us is not only about how we
lead, but also about how we help others become leaders.
We have implemented Leadership Dimensions that form
the basis for how our leaders should act. These have
been embedded into all of our people processes such
as in the employee performance process, assessments
of executive search positions and employer branding.
Leadership behaviors should incorporate our values and
develop our business.
Our people are
encouraged to
develop and change
roles within the
Group, and we
focus on facilitating
a personalized
development
journey tailored to
the needs of the
individual.
33
ANNUAL REPORT 2021 | ASSA ABLOY
Strategic objectives | How we operate
How to lead from a distance was at the top of the agenda
in 2021 due to circumstances caused by the Covid-19 pan-
demic. Leaders were provided with guiding principles on the
topic and webinars were held on how to conduct activities
virtually instead of face to face. For our 120 top leaders we
continued the work with our Group leaders network, where
we focus on people development and collaboration.
Ethical and social responsibility
The ASSA ABLOY Code of Conduct is our framework for daily
operations and it applies to all employees and suppliers. We
have mandatory compliance training programs and policies
to address anti-corruption, antitrust, export control and
data protection, among others. Any concerns or suspected
breaches of our Code of Conduct can be reported through a
whistleblowing process.
ASSA ABLOY does not tolerate any form of discrimination
or harassment in the workplace and we actively promote
diversity and inclusion by continuing to educate, advocate
and communicate. During the year we further aligned the
branding on our career website, templates and recruitment
materials for a more inclusive tone of voice to increase the
diversity.
The reporting of gender diversity is a part of our sustain-
ability reporting with a Group objective to have at least 30%
females in high-level leadership roles by 2025. In 2021 we
reached 27%. We also report on diversity at a divisional level,
with each division identifying local challenges to overcome,
such as those related to age, ethnicity, and disability.
Health and safety
The health and safety of our employees is a top priority that
we have been working on systematically for a long time.
Today, the biggest health and safety risks tend to be in envi-
ronments beyond our full control, for example, ergonomic
or weather challenges that service engineers and installers
face in the field. We are working to mitigate health and
safety risks and apply disciplinary actions when needed. We
believe that safety is a precondition of doing business and
have zero tolerance when it comes to unsafe behaviors and
environments.
We continued to address and promote health and
safety internally through “Together we are safe” workshops,
procedures, dialogue, and leadership engagement. We also
addressed the emotional wellbeing of employees with the
“mental health first aiders” support program. We promoted
Covid-19 vaccinations and had onsite clinics at many locations
to offer employees a convenient way to get vaccinated.
Digital workplace
Our digital processes enable us to work from anywhere and
this has been particularly valuable throughout the Covid-19
pandemic. A communications and learning campaign, with
continuous communication on our intranet and virtual
team “get-togethers,” helped us stay connected. We contin-
ued to put a lot of effort into helping people work, learn and
lead virtually.
The Group’s digital workplace is adopting new software,
and a project has been underway to support its implemen-
tation and provide training. While we now have the digital
tools in place to work remotely and will continue to enable
flexible work depending on the local organization’s business
and employee needs, we look forward to bringing people
together again in person. We strongly believe this will enrich
our collaboration, innovation and the building of ASSA
ABLOY’s culture.
Assessments of acquisitions
With our deep experience in acquiring companies, we have
learned how important it is to take a proactive and inclusive
approach. Our integration work is led by dedicated integra-
tion project managers, and we put emphasis on creating a
common understanding. We engage both current and new
employees by creating an identity and culture of belonging.
Our common
culture has an
impact on all
strategic initiatives
and processes
and guides us in
everything we do.
It helps align our
diverse and global
workforce so we can
grow in the same
direction.
What we
offer
Regional divisions
Mechanical locks, lock
systems and fittings, 48%
Electromechanical and
electronic, 36%
Security doors and
hardware, 16%
Mechanical locks, lock
systems and fittings, 42%
Electromechanical and
electronic, 26%
Security doors and
hardware, 32%
Mechanical locks, lock
systems and fittings, 49%
Electromechanical and
electronic, 25%
Security doors and
hardware, 26%
Share of sales
Share of sales
Share of sales
Share of operating income
Share of operating income
Share of operating income
Sales by product group Sales by product group Sales by product group
The regional divisions manufacture and sell mechanical and electromechanical locks, digital door locks and smart home access solutions,
high-security doors, fire doors and hardware adapted to the local market’s standards and security requirements.
21% 20% 22% 3%8%
Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific
28%
Financials in brief 2021
• Sales: SEK 20,522 M (18,982) with +13% organic growth.
• Operating income (EBIT): SEK 2,916 M (2,263).
1
• Operating margin: 14.2% (11.9).
1
Financials in brief 2021
• Sales: SEK 20,507 M (19,013) with +14% organic growth.
• Operating income (EBIT): SEK 4,200 M (3,698).
1
• Operating margin: 20.5% (19.4).
1
Financials in brief 2021
• Sales: SEK 8,719 M (8,841) with +2% organic growth.
• Operating income (EBIT): SEK 499 M (396).
1
• Operating margin: 5.7% (4.5).
1
Sales, SEK M Operating income
1
, SEK M
0
2,000
4,000
6,000
8,000
10,000
12,000
2120191817
Sales
0
250
500
750
1,000
1,250
1,500
Operating income
1
1
Excluding items affecting comparability.
Sales, SEK M Operating income
1
, SEK M
12,000
14,000
16,000
18,000
20,000
22,000
24,000
2120191817
Sales
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Operating income
1
1
Excluding items affecting comparability.
Sales, SEK M Operating income
1
, SEK M
10,000
12,000
14,000
16,000
18,000
20,000
22,000
2120191817
Sales
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Operating income
1
1
Excluding items affecting comparability.
34
ASSA ABLOY | ANNUAL REPORT 2021
Divisions overview
Products, 72%
Service, 28%
Share of sales Share of operating income
Global divisions
Access solutions, 78%
Hotel locks, 15%
Service, 7%
Share of sales Share of operating income
Sales by product group Sales by product group
15% 34%15% 34%
The global divisions manufacture and sell access solutions, identification products and entrance auto-
mation in the global market.
Global Technologies Entrance Systems
Financials in brief 2021
• Sales: SEK 14,604 M (14,158) with +5% organic growth.
• Operating income (EBIT): SEK 2,253 M (2,023).
1
• Operating margin: 15.4% (14.3).
1
Sales, SEK M Operating income
1
, SEK M
0
3,000
6,000
9,000
12,000
15,000
18,000
2120191817
Sales
0
500
1,000
1,500
2,000
2,500
3,000
Operating income
1
1
Excluding items affecting comparability.
Financials in brief 2021
• Sales: SEK 32,690 M (28,323) with +14% organic growth.
• Operating income (EBIT): SEK 4,988 M (4,083).
1
• Operating margin: 15.3% (14.4).
1
Sales, SEK M Operating income
1
, SEK M
2,000
8,400
14,800
21,200
27,600
34,000
2120191817
Sales
1,000
1,800
2,600
3,400
4,200
5,000
Operating income
1
1
Excluding items affecting comparability.
Divisions | What we offer
35
ANNUAL REPORT 2021 | ASSA ABLOY
Opening Solutions EMEIA
Strong post-pandemic
recovery
Overview
EMEIA is organized into 12 market regions with divisional
headquarters located in Woking in the UK. In 2021, India
was transferred from Asia Pacific to EMEIA. The market
regions are responsible for manufacturing and selling
mechanical and electromechanical locks, hardware and
security doors adapted to the standards and requirements
of local markets. The products for the commercial market
are sold under the master brand ASSA ABLOY or brands
endorsed by ASSA ABLOY, while Yale is the master brand for
the residential market. EMEIA has about 11,800 employees.
The largest market region is Scandinavia, followed by the UK
and DACH (Germany, Austria, and Switzerland).
Financial development
Although restrictions and lockdowns related to the
Covid-19 pandemic impacted 2021, sales in EMEIA
recovered well and reached pre-pandemic levels driven
by continued strong residential demand and a sequential
improvement in the commercial segment. For the full year,
the organic growth was 13%, with the UK, France and Finland
growing very strongly. Net acquired growth was -2%, primar-
ily driven by the CERTEGO divestment. Operating income
increased 29% and the operating margin was 14.2% (11.9%).
Cash flow continued to be strong, but the conversion rate
declined slightly to 106% of EBIT, driven by higher receiva-
bles and inventory levels. To maintain our competitive
advantage in technology we continued to invest in R&D. The
share of new products introduced over the past three years
was 24% of total sales.
Acquisitions
Two acquisition and two divestments were completed
during the year. MR Group’s hardware division was acquired.
This is a leading supplier of aluminum profile hardware and
locks in Portugal. We also acquired Malkowski-Martech,
a Polish producer of fire-rated curtains and gates. We
divested the Nordic locksmith business CERTEGO and the
Italian manufacturer of residential security doors, Gardesa.
These divestments reinforce the strategic focus on the core
security solutions business. Furthermore, the acquisition of
Arran Isle was announced, a leading door and window hard-
ware manufacturer in the UK and Ireland. The acquisition is
expected to be completed in 2022.
What we offer | Divisions
Neil Vann
Executive Vice President and
Head of EMEIA division
Markets
EMEIA has a leading posi-
tion in Europe, the Middle
East, India and Africa for
locks, access solutions,
high security doors and
hardware. The region has
unique local standards
and regulations creating
a diverse environment to
operate in. Commercial
and institutional custom-
ers are the largest end-
customer segment and
account for about 60% of
sales, while the residen-
tial segment accounts for
about 40%. Products are
sold primarily through
several distribution chan-
nels, but also directly to
end-users.
Comments by
Divisional Head
What are the recent trends in your market?
– We have seen good recovery in most countries
back to pre-pandemic levels. The Covid-19
pandemic has also brought us new opportunities,
specifically with new types of commercial activi-
ties that require more flexible access control and
touchless solutions. This will help accelerate our
digitalization process to give people more flex-
ibility with their products.
What activities are you working with to
accelerate profitable growth?
– We have built a clear strategic framework which
is built around three key growth drivers. Firstly,
maximising sales in our core products from both
organic and acquired geographical and range ex-
pansion. Secondly, capture the big opportunities
in digitalization, by converting our huge installed
base. Finally, we have a great opportunity in
several emerging markets with strong pipeline
development driven through project specifica-
tion and local product variations.
Why was India moved to the EMEIA division
in 2021?
– This was done to support our efforts to drive
growth in emerging markets and enable us to
capture the strong synergies between the Middle
East, Africa, and India regions. Our approach
in India will be driven through focused project
specification using tools and processes that have
We have seen good
recovery in most
countries back
to pre-pandemic
levels.
proved successful in the Middle East and Africa,
coupled with a strong local product presence.
How is sustainability impacting the EMEIA
division?
– We have seen an unprecedented increase in the
number of specification projects for ‘green’ build-
ings. These projects now account for 20% of the
total value we specify. This has been supported by
the development of a green specification guide
that provides guidelines and tools for specifica-
tion delivery on green projects and the growing
focus and use of our environmental product
declarations.
36
ASSA ABLOY | ANNUAL REPORT 2021
Opening Solutions Americas
Strong operational
execution
Overview
The Americas division, headquartered in New Haven in the
US, is organized into 13 business areas and market regions.
Opening Solutions in the US, the largest market, is organized
by product category, while the other regions are organized
in a country structure. The business areas and market re-
gions are responsible for manufacturing and selling mechan-
ical and electromechanical locks, hardware, secure lockers,
access control devices and security doors adapted to the
standards and requirements of local markets. ASSA ABLOY
and Yale are the master brands, with a strong portfolio of
endorsed brands. Institutional and commercial customers
are the largest end-customer segments and account for 75%
of sales, while the residential segment accounts for 25% of
sales. The Americas division has about 9,300 employees.
Financial development
Americas reported strong organic growth, with sales exceed-
ing pre-pandemic levels. Renovation trends during Covid-19
boosted residential sales and the commercial segment also
recovered during the year, primarily thanks to high activity
on the institutional side. Latin America, with Brazil and Chile
as the main drivers, reported strong growth during the year.
Organic growth increased by 14%. Supported by agile price
management and cost savings measures, the operating mar-
gin was strong at 20.5% (19.4%), despite significant steel price
increases in the US. Cash flow was strong, and the conversion
rate was 89% of EBIT. New products introduced in the past
three years accounted for 25% of sales.
Acquisitions
Three acquisitions were announced in 2021. Sure-Loc, a re-
gional supplier of residential locks and associated hardware in
the US; Pucon, a leading commercial high security company
in Peru; and SimpleK, the software division of Prosystech, of-
fering a strong master key system management tool in the US
and Canada. Also, we announced the acquisition of Spectrum
Brands’ Hardware and Home Improvement (HHI), subject to
customary regulatory clearance processes, with an expected
close in 2022. HHI is a leading provider of security, plumb-
ing and builders’ hardware products to the North American
residential segment.
Divisions | What we offer
Lucas Boselli
Executive Vice President and
Head of Americas division
Markets
Americas has a leading
position in the US,
Canada, Mexico, Central
America and South
America for locks, access
solutions, high-security
doors and hardware.
Institutional and com-
mercial customers are
the largest end-customer
segments and account
for about 75% of sales,
while the residential
segment accounts for
25%. Sales in South
America and Mexico are
primarily focused on
the residential segment,
although several verticals
in the commercial area
have grown significantly
in recent years.
Comments by
Divisional Head
What are the recent trends in your market?
– The demand for faster delivery times continued
to increase in 2021. We also continued to see a
strong migration from mechanical to digital solu-
tions across the division with digital access control
moving beyond the perimeter and penetrating
deeper into buildings and homes.
What activities are you working with to
accelerate profitable growth?
– We are continuing to invest in robotics and
automation across all our facilities, with over 50
new robots and automated systems added in
2021. We are seeing benefits from the roll out of
additive manufacturing in some of our locations,
enabling us to prototype faster and streamline
new product development. We have also focused
heavily on optimizing our supply chain and
transportation processes and have implemented
strategic pricing initiatives to help mitigate supply
chain headwinds.
How will the acquisition of HHI change the
Americas division?
– It is a strong complement to our existing com-
mercial business in North America. HHI adds
well-known brands to our residential portfolio and
supports access to new channels which accelerates
the adoption of digital locks to consumers. HHI’s
manufacturing footprint also provides us with alter-
native production capabilities in key regions.
We continue to see
a strong migration
from mechanical
to digital solutions
with digital access
control moving
beyond the
perimeter and
penetrating deeper
into buildings and
homes.
How is sustainability impacting the Americas
division?
– We already have a deep history with driving
sustainability initiatives in the Americas division,
from Environmental Product Declarations to im-
plementing innovative sustainability solutions in
our production facilities, and are now focused on
setting new goals based on science-based targets.
Of note, our EcoFlex mortise lock from SARGENT
was recently awarded a Living Product Challenge
Certification and became one of only 24 products
in the world to be recognized as a living product.
37
ANNUAL REPORT 2021 | ASSA ABLOY
Opening Solutions Asia Pacific
New organization
established
Overview
As of January 2021, the division has been organized into two
business units: Greater China & Southeast Asia and Pacific
& Northeast Asia. The local organization in China is divided
by market segment and the other regions in Asia and Pacific
are organized according to market segments or region/
country structures. The business areas and market regions
are responsible for manufacturing and selling mechanical
and electromechanical locks, hardware and security doors
adapted to the standards and requirements of local markets.
ASSA ABLOY is the master brand for products in commercial
markets and Yale is the master brand for the residential
market and its endorsed brands. The Asia Pacific division has
about 8,300 employees across the region. The largest mar-
ket by sales is China followed by Australia and South Korea.
Financial development
Restrictions and lockdowns in many markets were challeng-
ing for Asia Pacific. During the first quarter, China saw posi-
tive organic growth. However, as the year progressed, higher
steel prices put the construction industry under financial
strain. This, in combination with strict covid-19 pandemic
policies dampened the activity level and negatively affected
the demand in China and Pacific during the second half of
the year. Despite the lockdowns in several other Asia Pacific
countries, activity remained relatively stable. Organic sales
grew by 2% with net acquired growth of -2%, primarily driven
by the transfer of India to EMEIA. We continue to focus
on our business plan for China, where we are working to
increase operational stability while improving margins. The
operating margin was 5.7% (4.5%), as positive effects from
efficiency measures were offset by higher raw material costs
and lockdowns in the second half of the year. Cash flow
was lower than last year due to increased working capital.
Demand for electromechanical products and solutions grew
and several new products were launched during the year.
Acquisitions
One acquisition was conducted during the year: NZ Fire
Doors, a manufacturer of fire-rated and specialty doors in
New Zealand.
Simon Ellis
Executive Vice President
and Head of Pacific & North
East Asia
Martin Poxton
Executive Vice President and
Head of Greater China &
South East Asia
Comments by Divisional Heads
What are the recent trends in your market?
– We have seen a significant impact from Covid-19,
but it has also led to increased demand in
detached dwellings in the Pacific region, while
urbanization remains an important trend in the
emerging markets. Announcements for invest-
ments in government infrastructure have raised
expectations of increased commercial activity in
the coming years. The growing e-commerce trend
is also likely to result in increased demand for
digital access solutions.
What activities are you working with to
accelerate profitable growth?
– In the residential segments, we have invested in
brand-building activities, and continued to invest
in both our digital access solutions and smart
residential markets. We have also developed our
Building Information Modeling (BIM) competen-
cies to support architects to drive more sticky
specification and focused on commercial projects
in key verticals with higher profitability.
How has the implementation of the new organi-
zation progressed?
– The organizational development has progressed
well. We are well underway to realizing the ben-
efits from the change. We are seeing the benefits
of bringing South Korea, being a more mature
economy, into the Pacific region. The focus has
Markets
Asia Pacific has a leading
position in Australia
and New Zealand as
well as in some Asian
countries for locks, access
solutions, high security
doors and hardware. The
Pacific region is a mature
market with established
standards and regula-
tions, while most Asian
countries are emerging
markets. Urbanization
is a driver for growth in
Asia and sales for new
construction account
for most of the business.
Through a combination
of organic growth and
acquisitions we are build-
ing a stronger position
in the fast-growing Asian
markets. The commercial
and institutional seg-
ments and the residential
segment each account
for about half of the total
sales.
What we offer | Divisions
We have
focused more
on commercial
projects in key
verticals with higher
profitability and
growth potential
such as healthcare,
travel, and
transportation.
also been on sharing best practices in specification
and new product development to continue to
develop our digital access solutions.
How is sustainability impacting the Asia Pacific
division?
– We are seeing increased demand from custom-
ers and are assisting them with their overall
sustainability footprint, particularly in commercial
construction projects. Sustainability is taking an
increasing role in how we are developing new
products and servicing our customers. We work
with locally manufactured and imported products
having green tag certification, removing packaging
where not required and in some cases we deliver
products in reusable bulk containers. We have also
developed more energy efficient solutions such as
improved sealing on windows and doors to limit
temperature transfer.
38
ASSA ABLOY | ANNUAL REPORT 2021
Divisions | What we offer
Global Technologies – HID Global
Strong organic growth
and margin improvement
Overview
HID Global is organized into six business areas with the
business unit headquarters located in Austin, Texas in the
US. The business areas are responsible for global sales and
product development in their product area. HID Global
powers the trusted identities of the world’s people, places,
and things. Our trusted identity solutions give people secure
and convenient access to physical and digital places and
connect things that can be accurately identified, verified,
and tracked digitally. The products and solutions are sold
under the master HID brand or by brands endorsed by HID.
Institutional and commercial customers are the main end-
customer segments. HID Global has about 4,400 employees
worldwide. The largest business area is Physical Access
Control Solutions. HID Global accounts for some 70% of the
Global Technologies division.
Financial development
Continued restrictions in many markets held back develop-
ment during the first half of the year. With vaccine rollouts,
increased mobility and a return to offices, growth gradually
improved during the second half of the year. However, the
component shortage dampened the growth for Physical
Access Control particularly in the second half of the year.
Secure Issuance and Identification Technologies posted
the strongest growth during the year. Tight control and
operational efficiencies contributed to improved profitabil-
ity and operating leverage during the year. We continued to
invest in R&D and several new products and solutions were
launched. New products introduced over the past three
years accounted for 21% of sales.
Acquisitions
Four acquisitions were completed in 2021: Invengo in
France and InvoTech in the US, both which are real-time
inventory management platforms to identify, track and
monitor linen and textile assets; Technology Solutions in the
UK, a global provider of RFID handheld readers; and Omni
ID, a manufacturer of RFID tags and industrial IoT hardware
devices based in the US. We also invested in Paravision, a
provider of advanced facial recognition solutions.
Markets
HID Global has a
market presence in all
continents, with a global
leading market position
in access control solu-
tions. Every day millions
of people worldwide use
our products, for billions
of things that need to be
identified, verified, and
tracked. We work with
governments, universi-
ties, hospitals, financial
institutions, and some
of the most innovative
companies on the planet.
Through a combina-
tion of innovative new
products and solutions
as well as acquisitions we
have a leading position in
trusted identities.
Comments by
Divisional Head
What are the recent trends in your market?
– The market continues to be dynamic, and we
have seen demand for mobile, location services,
and access solutions accelerate, especially as
employees return to the office. Semiconductor
shortages posed a challenge and required us to be
agile. Partnerships and mergers and acquisitions
activity have been robust as new players, including
large technology companies, become increasingly
involved in the identity ecosystem.
What activities are you working with to
accelerate profitable growth?
– Our organic growth and M&A priorities, comple-
mented by our innovation focus, will allow us to
achieve our ambition to double HID’s sales in a few
years. We are investing in sales capabilities across
businesses to drive growth in current and new
markets, while continuing to create value through
M&As. Mobile solutions, biometrics, and location
services represent a few of the key product areas
where we are driving innovation.
How did the demand for our office-related
access solutions develop in 2021?
– The pandemic has accelerated the adoption of
digital and touchless access solutions to assist with
contact tracing and social distancing. End-user or-
ganizations also focused on upgrading their access
solutions from legacy to modern technologies to
prepare for the new, mobile-first normal.
Björn Lidefelt
Executive Vice President and
Head of Global Technologies
business unit HID Global
The pandemic has
accelerated the
adoption of digital
and touchless
access solutions to
assist with contact
tracing and social
distancing.
How is sustainability impacting HID?
– Sustainability serves as a key part of our growth
strategy. We have enhanced sustainability in
manufacturing by using fewer physical resources
and reducing waste. To further minimize our
carbon footprint, we are creating digital solutions
that reduce our dependency on plastics and lessen
the need to ship physical products globally.
39
ANNUAL REPORT 2021 | ASSA ABLOY
Global Technologies – Global Solutions
Digital access
on the rise
Overview
Global Solutions is a global organization comprising eight
verticals, Hospitality, Marine, Senior Care, Education, Critical
Infrastructure, Construction, Key and Asset Management,
and Self Storage. Each vertical is responsible for its own
manufacturing, sales, and solutions developments. Global
Solutions’ products include electronic locks, safes, access
management, credentials, and software services. Its in-
novative solutions are sold under the ASSA ABLOY master
brand and the Traka and Abloy brands. The division has
around 2,100 employees worldwide. The largest vertical is
Hospitality, offering advanced electronic locking solutions
in combination with a range of tailored services for guest
convenience. Global Solutions accounts for some 30% of the
Global Technologies division.
Financial development
Mobility remained at low levels globally during most of the
year, which had a significant negative effect on Hospital-
ity and Marine. A gradual increase in travel volumes was
noted from the second quarter of the year. The trend with
hotels upgrading to mobile key solutions continued. Critical
Infrastructure, Construction and Key and Asset Management
reported very strong growth during the year, positively
affected by the removal of many restrictions. Senior Care
also grew strongly as more customers are appreciating the
advantages with our digital access offering. We continued
to invest in new, innovative solutions and launched several
new solutions. New products introduced over the past three
years accounted for 26% of total sales.
Acquisitions
One acquisition was conducted in 2021: Traka Iberia, a
distributor of Key and Asset Management Solutions in Spain
and Portugal.
Markets
ASSA ABLOY Global Solu-
tions has a presence in all
continents, with leading
market positions in the
hospitality and marine
segments for access solu-
tions. Our systems and
products are installed in
hotel rooms and cruise
ships worldwide. Through
a combination of acquisi-
tions and innovative
solutions utilizing Group
technology, we continue
to increase our footprint
in verticals like senior
care facilities, education,
construction sites, key
and asset management
and critical infrastructure.
Comments by
Divisional Head
What are the recent trends in your market?
– The most pressing trend is for seamless and mo-
bile access, with greater awareness of how they
can contribute to more hygienic environments.
This is matched by continued interest in devices
connected by IoT networks and cloud control.
Furthermore, we see a stronger demand for new
business models such as service and recurring
revenue. The drive for digital and mobile access
can also be seen across our verticals.
What activities are you working with to
accelerate profitable growth?
– There are four key growth drivers. Firstly, we are
moving forward with digitalization across several
industries. Secondly, we are using the recent
success of key products to drive geographic
expansion. Thirdly, in line with this we are always
scanning the market for relevant acquisitions.
Fourthly, we continue to improve user experi-
ences, so customer interactions are as seamless
as possible. Moreover, we are introducing cloud-
based access control management platforms,
investing in new products as well as developing
service centers closer to our customers.
What will your priorities be in 2022 as a new
leader for Global Solutions?
– The world is gradually opening up and I see
Global Solutions playing a big role in that. Several
products such as mobile access are now seen as
Stephanie Ordan
Stephanie Ordan was
appointed Executive Vice
President and Head of Global
Solutions from September
2021. She succeeds Chris-
tophe Sut, who left ASSA
ABLOY for a new position
outside the Group.
What we offer | Divisions
Several products
such as mobile
access are now seen
as essential for safe
re-opening of our
societies.
essential for safe re-opening of our societies. We
also plan to expand by showcasing the benefits of
these products in new regions and are assessing
new verticals as well.
How is sustainability impacting Global
Solutions?
Improving sustainability is of real importance to
us and our customers. Innovation in our product
range is a key focus, particularly around reducing
energy usage where we are working on ultra
low-power locks. We are designing with sustain-
ability in mind and looking to give clients as much
information and transparency on our products
as possible.
40
ASSA ABLOY | ANNUAL REPORT 2021
Divisions | What we offer
Entrance Systems
Record-high
organic growth
Overview
Entrance systems is a global organization with four business
segments: Pedestrian, Industrial, Residential and Perimeter
Security. The business segments are responsible for sales,
manufacturing and product development in their specific
product areas. The divisional headquarters are located
in Switzerland. Entrance Systems manufactures and sells
entrance automation products, services and perimeter se-
curity. The route to market is both direct and indirect, with
the master brand ASSA ABLOY and the brand, agta record,
in the direct channel, and a number of brands in the indirect
channel. Entrance Systems has about 14,700 employees
worldwide. The largest business segment is Industrial fol-
lowed by Pedestrian.
Financial development
There was very strong sales growth during the year driven
primarily by a continued strong e-commerce market and
residential renovations. This resulted in positive demand for
our Perimeter Security, Residential and Industrial segments.
Sales growth was also positively impacted by price increases
as a result of higher raw material prices, which contributed
to strong organic sales growth of 14% for the division.
Despite the higher raw material costs, the operating margin
improved to 15.3% (14.4%). Synergies realized from the in-
tegration of agta record contributed to the positive margin.
Investments in our service organization continued and sales
development was positive. Cash flow was strong with a con-
version rate of 80%. The share of new products introduced
over the past three years was 19% of sales.
Acquisitions
Two acquisitions were completed. Capitol Door Service, a
leading pedestrian door distributor and service company
based in the US and B&B Roadway and Security Solutions, a
manufacturer of roadway safety, traffic control and perim-
eter security solutions in the US.
Markets
Entrance Systems
is a global leader in
automated entrance
solutions. The product
portfolio includes
automatic, industrial, and
commercial, high perfor-
mance, residential garage
and hangar doors. It also
includes loading dock
equipment, perimeter
security, maintenance,
and service. The entrance
solutions are sold both
directly to end-users as
well as through several
distribution channels.
About 20% of sales are
in the residential sector
and 80% are in the com-
mercial and institutional
segments.
Comments by
Divisional Head
What are the recent trends in your market?
– The pandemic has continued to accelerate
e-commerce adoption which has led to increased
demand from logistical centers and warehouses.
To meet the increased demand for hygiene, we
have developed services and solutions such as
door operators for touchless entry and exit into a
building. There is also an ongoing trend towards
consumers improving their living spaces, which
is particularly evident in our residential garage
business.
What activities are you working with to
accelerate profitable growth?
– A key pillar of growth is our increased focus on
service and the aftermarket, where we invest
in our service organization to create additional
customer value. Our customers demand con-
nectivity and real-time information, and we can
provide them with this through our Docking
Management System. This connects our products,
providing real-time data to our customers and our
service teams for better management, control and
maintenance of their fleet operations.
What will your priorities be in 2022 as a new
leader for ASSA ABLOY Entrance Systems?
– Apart from safety, service excellence is at the
core of our business and will continue to be a key
pillar of our strategy. Customers are demand-
ing intelligent solutions so our focus will be on
Massimo Grassi
Massimo Grassi was
appointed Executive Vice
President and Head of the
Entrance Systems division
from September 2021.
He succeeds Christopher
Norbye, who left ASSA ABLOY
for a new position outside
the Group.
A key pillar of
growth is our
increased focus
on service and the
aftermarket, where
we invest in our
service organization
to create additional
customer value.
customer-led product innovation in connectivity.
We also continue to see opportunities in emerg-
ing markets and are focused on increasing our
presence through greater penetration in these
markets.
How is sustainability impacting the Entrance
Systems division?
– Sustainability is changing our division for the
better and employees are becoming more aware
that they can make a difference as an individual.
An example of this is our initiative to reduce
waste generation where we are working with
our vendors on pallet return programs instead
of crushing them along with other waste in our
compactors. Our engineering team is also excited
about designing and investing in automation that
is more efficient in terms of energy consumption.
For example, moving away from hydraulic air solu-
tions to electromechanical solutions to reduce the
energy need. Furthermore, many of our products
improve energy efficiency.
41
ANNUAL REPORT 2021 | ASSA ABLOY
Report of the Board of Directors
and Financial statements
Contents
Report of the Board of Directors
Significant risks and risk management 46
Corporate governance 49
Board of Directors 54
Executive Team 56
Internal control – financial reporting 59
Guidelines for remuneration to senior executives 60
Consolidated financial statements
Sales and income 62
Consolidated income statement 63
Consolidated statement of comprehensive income 63
Comments by division 64
Reporting by division 65
Financial position 66
Consolidated balance sheet 67
Cash flow 68
Consolidated statement of cash flows 69
Changes in consolidated equity 70
Parent company financial statements
Income statement – Parent company 71
Statement of comprehensive income – Parent company 71
Balance sheet – Parent company 72
Cash flow statement – Parent company 73
Change in equity – Parent company 73
Notes
1 Significant accounting and valuation principles 74
2 Sales 79
3 Auditors’ fees 80
4 Other operating income and expenses 80
5 Share of earnings in associates 80
6 Recognition of leases for the Parent company 80
7 Expenses by nature 81
8 Depreciation and amortization 81
9 Exchange differences in the income statement 81
10 Financial income 81
11 Financial expenses 81
12 Tax on income 81
13 Earnings per share 81
14 Intangible assets 82
15 Property, plant and equipment 84
16 Right-of-use assets 84
17 Shares in subsidiaries 85
18 Investments in associates 85
19 Deferred tax 86
20 Other financial assets 86
21 Inventories 86
22 Trade receivables 86
23 Parent company’s equity and proposed
distribution of earnings
86
24 Share capital, number of shares and dividend
per share
87
25 Post-employment employee benefits 87
26 Other provisions 89
27 Other current liabilities 89
28 Accrued expenses and deferred income 89
29 Assets pledged against liabilities to credit
institutions
89
30 Contingent liabilities 89
31 Cash flow items 89
32 Reserves 90
33 Business combinations 90
34 Employees 91
35 Financial risk management and financial
instruments
93
Five years in summary 99
Comments on five years in summary 100
Definitions of key ratios 101
Board of Directors and CEO assurance 102
Auditor’s report 103
42
ASSA ABLOY | ANNUAL REPORT 2021
Significant events
Sales and income
Business operations performed positively during the year,
with gradual recovery of demand on most markets, primar-
ily in North and South America and Europe. However, recov-
ery was slower in Asia overall and for travel-related verticals
in general on account of continued restrictions during the
Covid-19 pandemic.
Sales increased by 8 percent for the full year and
amounted to SEK 95,007 M (87,649). Organic growth was
11 percent (–8) and net acquired and divested growth
was 2 percent (4). The exchange rate effect on sales was
–5 percent (–3).
Operating income (EBIT) excluding items affecting
comparability increased by 19 percent to SEK 14,181 M
(11,916), equivalent to an operating margin of 14.9 percent
(13.6). The improvement in income is primarily due to the
strong sales growth, driven by improved global demand dur-
ing the year. However, high price rises for raw materials of
importance to the Group, combined with a general scarcity
of certain materials and components in the latter part of the
year, had a negative impact on income.
There were no items affecting comparability in 2021.
Corresponding items for 2020 consisted of a positive revalu-
ation to fair value of the former shareholding in agta record
(shareholdings in associates) of SEK 1,909 M and costs for
the restructuring program totaling SEK 1,366 M before tax.
Net financial items were SEK –643 M (–782). Income
before tax excluding items affecting comparability totaled
SEK13,538 M (11,133), an increase of 19 percent. The effec-
tive tax rate on income excluding items affecting compara-
bility was 19.5 percent (24.8). The lower effective tax rate is
primarily due to non-recurring positive tax effects related to
an intra-Group brand transfer. Earnings per share after full
dilution, excluding items affecting comparability, increased
30 percent to SEK 9.81 (7.54).
Operating cash flow remained very strong and amounted
to SEK 13,265 M (14,560), corresponding to cash conver-
sion of 0.98 (1.31).
Restructuring
The restructuring program, launched at year-end 2020, pro-
ceeded well during 2021, with good savings effects. These
activities are part of ASSA ABLOY’s continuous cost savings
and efficiency enhancements. Ten plant closures and around
thirty office closures are planned during a two-year period.
The total cost of the program, which is estimated at SEK
1,366 M before tax, was fully expensed in 2020. The payback
period is expected to be about two years.
In 2021, just over 1,100 employees left the Group in
conjunction with changes in the production and office
organization. Two plant closures were implemented during
the year, along with a number of other restructuring activi-
ties, including conversion from production to final assembly
in production units.
In recent years, the Group has increasingly concentrated
production on its own plants in Asia, Central Europe and
Eastern Europe, as well as outsourcing to external suppliers
in low-cost countries.
Payments for the restructuring programs totaled
SEK563M (747) for the year. At year-end 2021, the remain-
ing provisions for restructuring measures amounted to
SEK658M (1,224).
Organization
A new organizational structure was implemented begin-
ning in 2021 in the Asia Pacific division aimed at facilitating
improved opportunities for long-term robust sales growth.
Two new business units are being organized within the divi-
sion: Opening Solutions Greater China and South East Asia
and Opening Solutions Pacific and North East Asia.
In connection with the new organizational structure,
operations in India, which was previously part of the Asia
Pacific division, were moved to the EMEIA division with the
aim of creating new growth opportunities. Sales on an
annual basis for the operations that were transferred to
EMEIA from Asia Pacific totaled about SEK 400 M. The trans-
fer of operations has been recognized, from the time of the
transfer, as internal acquisitions/divestments between the
divisions without any retroactive financial translation.
Acquisition of HHI
In September 2021, ASSA ABLOY signed a definitive agree-
ment to acquire the Hardware and Home Improvement
(HHI) division of Spectrum Brands. HHI is a leading provider
of security, plumbing, and builders’ hardware products to
the North American residential segment, with a diversified
product offering of locksets, faucets, and builders’ hardware.
HHI is headquartered in California, US, with some 7,500
employees worldwide. The company has manufacturing fa-
cilities in the US, Mexico, Taiwan, China, and the Philippines.
HHI will become part of the Americas division.
The total consideration for the acquisition of HHI
amounts to USD 4,300 M on a cash and debt free basis. The
acquisition will be fully funded by existing cash and new
debt.
For the fiscal year ending in September 2020, HHI’s net
sales were USD 1,342 M, with an adjusted EBITDA margin of
approximately 19 percent. The operating margin effect for
ASSA ABLOY is initially expected to be dilutive. The acquisi-
Report of the Board of Directors
Report of the Board of Directors
The Annual Report of ASSA ABLOY AB (publ.), corporate identity
number 556059-3575, contains the consolidated financial state-
ments for the fiscal year 1 January through 31 December 2021,
including the nature and focus of the business. ASSA ABLOY is the
global leader in access solutions, dedicated to satisfying end-user
needs for security, safety and convenience.
43
ANNUAL REPORT 2021 | ASSA ABLOY
tion will be accretive to earnings per share from the start.
The acquisition is conditional upon regulatory approval
and customary closing conditions, and is expected to close
during 2022. ASSA ABLOY has agreed to pay the seller a
termination fee of USD 350 M in certain circumstances if the
transaction agreement is terminated and required regula-
tory approvals would not have been obtained.
Other acquisitions
In March 2021 ASSA ABLOY completed the acquisition of
the Textile Services business unit of Invengo Information
Technology Co, Ltd’s, a leading real-time inventory manage-
ment platform combining software, RFID tags, equipment
and services to efficiently identify, track and monitor linen
and textile assets. The company is headquartered in La
Ciotat, France.
In May 2021 ASSA ABLOY acquired Sure-Loc, a leading
supplier of residential locks and associated hardware in the
US. The company is headquartered in Salt Lake City, US.
In August 2021 ASSA ABLOY acquired Capitol Door
Service, a leading pedestrian door distributor and service
company in the US. The company is headquartered in
Sacramento, US.
In August 2021 ASSA ABLOY acquired Omni-ID, a leading
manufacturer of RFID tags and industrial IoT hardware
devices for passive and active tagging, tracking, monitoring
and alerting applications, based in the US. The company is
headquartered in Rochester, US.
In October 2021 ASSA ABLOY acquired MR Group’s
hardware division, a leading supplier of aluminum profile
hardware and locks in Portugal. The company is headquar-
tered in Águeda, Portugal.
In December 2021 ASSA ABLOY acquired B&B Roadway
and Security Solutions, a manufacturer of roadway safety,
traffic control and perimeter security solutions in the US.
The company is headquartered in Texas, US.
In December 2021 ASSA ABLOY acquired Małkowski-
Martech, a Polish producer of fire-rated curtains and gates.
The company is listed on the Warsaw Stock Exchange. The
company is headquartered in Czołowo, Poland.
In September 2021, ASSA ABLOY signed an agreement
to acquire Arran Isle, a leading designer, manufacturer and
distributor of door and window hardware in the UK. The
company has some 560 employees and has manufacturing
and distribution sites in the UK, Ireland, the rest of Europe
and China. The acquisition is subject to regulatory approval
and customary closing conditions and is expected to close
during 2022.
The total purchase price of the 13 businesses acquired
during the year, including adjustments for acquisitions from
previous years, was SEK 1,887 M. The preliminary acquisi-
tion analyses indicate that goodwill and other intangible
assets with an indefinite useful life amount to SEK 1,276 M.
Estimated deferred considerations relating to acquisitions
for the year totaled SEK 150 M.
No additional acquisitions of non-controlling interests
occurred during the year.
Divestments
In September 2021 ASSA ABLOY divested CERTEGO, a
market-leading locksmith and security solutions installation
business in the Nordic region. It provides planning, installa-
tion and managing of mechanical, electro-mechanical and
electronic security solutions for customers across multiple
verticals. CERTEGO has a network of around 70 locations and
with some 1,200 employees in Sweden, Finland, Norway and
Denmark. The impact from the divestment on ASSA ABLOY’s
external sales is approximately SEK 1,500 M on an annual
basis and will have a positive effect on the consolidated
operating margin going forward. The divestment resulted in
a capital loss before tax of SEK 196 M.
At the end of 2020, ASSA ABLOY sold its Italian residential
door business within Gardesa. At the start of 2021, Gardesa’s
Italian shutter business was also divested. This divestment
resulted in a small capital gain.
Research and development
ASSA ABLOY’s expenditure on research and development
during the year totaled SEK 3,936 M (3,902), equivalent to
4.1 percent (4.5) of sales.
The pace of innovation remained high during the year
thanks to the continued commitment to invest in research
and development. The number of employees in research
and development at year-end was just over 2,800, which is
comparable to the previous year.
Sustainable development
A number of ASSA ABLOY units outside Sweden carry on
licensable activities and hold equivalent licenses under
local legislation. ASSA ABLOY’s units worldwide are working
systematically and purposefully to reduce their environmen-
tal impact.
In accordance with the Swedish Annual Accounts Act,
Chapter 6, Section 11, ASSA ABLOY opted to prepare the
Sustainability Report as a separate report from the Annual
Report. The Sustainability Report has been submitted to the
auditor at the same time as the Annual Report.
The 2021 Sustainability Report, reporting on the Group’s
targets for 2021, and providing details of the 2025 sustain-
ability program and other information about sustainable
development, is available on the company’s website,
assaabloy.com.
Internal control and financial reporting
ASSA ABLOY’s internal audit and internal control functions
have dedicated internal auditors employed in all divisions.
The internal audit function increased staff numbers during
the year to enhance internal control and compliance in
the company in general. The number of reviews was also
increased in the past year, with a particular focus on financial
reporting, including continuous reconciliation of balance
sheets.
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
The war in Ukraine could have a negative business impact on
ASSA ABLOY, both short- and long-term. The impact on the
business is very difficult to predict due to the uncertainty of
market conditions, but the health and safety of our employ-
ees is our first priority.
Report of the Board of Directors
44
ASSA ABLOY | ANNUAL REPORT 2021
Report of the Board of Directors
Proposed distribution of earnings
The following earnings are at the disposal of the Annual
General Meeting:
Share premium reserve: SEK 787,314,216
Retained earnings carried forward: SEK 11,384,265,521
Net income for the year: SEK 6,631,244,591
Total: SEK 18,802,824,328
The Board of Directors proposes that these earnings be
appropriated as follows:
A dividend to the shareholders of
SEK 4.20 per share SEK 4,665,260,603
Be carried forward to the new
financial year SEK 14,137,563,725
Total: SEK 18,802,824,328
1
The Board of Directors’ proposal for a dividend of SEK 4.20
(3.90) per share corresponds to an increase of 8 percent. In
order to facilitate a more efficient cash management, the
dividend is proposed to be paid in two equal installments,
the first with the record date 29 April 2022 and the second
with the record date 22 November 2022. If the proposal is
adopted by the Annual General Meeting, the first install-
ment is estimated to be paid on 4 May 2022 and the second
installment on 25 November 2022.
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 ASSA ABLOY’s strong posi-
tion will accelerate growth and increase profitability.
Organic sales growth is expected to continue at a good
rate. The operating margin (EBIT) and operating cash flow
are expected to develop well.
1
The dividend and retained earnings to be carried forward to the new financial
year are calculated on the number of outstanding shares at 3 February 2022.
No dividend is payable on ASSA ABLOY AB’s holding of treasury shares, the
exact number of which is determined on each record date for payment of
dividend. ASSA ABLOY AB’s holding of treasury shares amounted to 1,800,000
Series B shares at 3 February 2022.
45
ANNUAL REPORT 2021 | ASSA ABLOY
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
geographical spread, involving exposure to various forms of
strategic, operational and financial risks. Strategic risks refer
to changes in the business environment with potentially
significant effects on ASSA ABLOY’s operations and business
objectives. Operational risks comprise risks directly 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.
Organization
ASSA ABLOY’s Board of Directors has overall responsibility
for risk management within the Group and determines the
Group’s strategic focus based on recommendations from
the Executive Team. In view of the decentralized structure of
ASSA ABLOY, and to keep risk analysis and risk management
as close as possible to the actual risks, a large proportion
of operational risk management takes place at division and
business unit levels.
Responsibility
ASSA ABLOY’s Board of Directors has overall responsibil-
ity for the Group’s strategic direction in close consultation
with the Executive Team. Divisions and business units have
overall responsibility for management of operational risks,
in accordance with ASSA ABLOY’s decentralized approach
to organization, responsibility and authority. In the case of
financial risks, allocation of responsibilities and control of the
Group’s financing activities are regulated in a financial policy
adopted by the Board of Directors. A centralized Treasury
function then has the main responsibility for financial risks
within the framework established in the financial policy, with
the exception of credit risks relating to operational business
activities, which are managed locally at company level and
monitored at division level.
Review process
Strategic risks, such as competitors, brand positioning and
so on, are regularly reviewed at ASSA ABLOY AB’s board
meetings. The Group’s operational risk management is
continuously monitored by the Executive Team through
divisional reporting and divisional board meetings.
Financial operations are centralized in a Treasury function,
which manages most financial transactions as well as finan-
cial risks with a Group-wide focus. ASSA ABLOY’s Treasury
monitors the Group’s short- and long-term financing,
financial cash management, currency risk and other financial
risk management.
Strategic risks
The risks of this nature encountered by ASSA ABLOY
include various forms of business environment risks with an
impact on the security market in general, mainly changes
in customer behavior, competitors, brand positioning and
country-specific risks. It has recently also been clarified that
worldwide health risks posed by pandemics (Covid-19) can
significantly impact societies and global demand around
the world. ASSA ABLOY has therefore dedicated great effort
to protecting the health of its employees. The business has
also been negatively impacted by the pandemic. While it is
difficult to predict the continued impact of the pandemic
on business in 2022 due to the uncertainty in market
conditions, the health and safety of ASSA ABLOY employees
continues to be our highest priority.
Country-specific risks
ASSA ABLOY has global market penetration, with sales and
production in a large number of countries. The emphasis
is on western Europe and North America, but the propor-
tion of sales in Asia and in central and eastern Europe has
increased in recent years. Consequently, the Group has
increased exposure to the emerging markets, which may en-
tail a higher risk profile for country-specific risks in the form
of inadequate compliance, policy decisions, overall changes
in regulations and more.
Customer behavior
Changes in customer behavior in general and the actions of
competitors affect demand for different products and their
profitability. Customers and suppliers, including the Group’s
relationships with them, are subject to continuous local
review.
Competitors
As regards competitors, risk analyses are carried out both
centrally and locally.
Brand positioning
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.
Reputational risk
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
for employees and the Code of Conduct for business part-
ners. These codes express the Group’s values with regard to
matters such as business ethics, human rights and working
conditions, as well as the environment, health and safety.
Operational risks
Operational risks comprise risks directly attributable to
business operations, with a potential impact on the Group’s
financial position and performance. They include legal and
environmental risks, tax risks, acquisition of new businesses,
46
ASSA ABLOY | ANNUAL REPORT 2021
Report of the Board of Directors | Significant risks and risk management
restructuring measures, availability and price fluctuations of
raw materials, and credit losses. This category also includes
risks relating to compliance with laws and regulations, as
well as to information technology (IT), internal control and
financial reporting. See page 48 for a more detailed descrip-
tion of the management of these risks.
Financial risks
The Group’s financial risks mainly comprise financing risk,
currency risk, interest rate risk, credit risk, and risks associ-
ated with the Group’s pension obligations. A large number
of financial instruments are used to manage these risks. Ac-
counting principles, risk management and risk exposure are
described in more detail in Notes 1 and 35, as well as Note
25, Post-employment employee benefits.
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
solid 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
transaction exposure, i.e. the relative values of exports and
imports of goods, is expected to increase over time due to
rationalization of production and sourcing. In accordance
with financial policy, the Group only hedged a very limited
part of current currency flows in 2021. As a result, currency
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.
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 27,071 M (29,755) at year-end 2021. Debt
was mainly denominated in 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 swaps are used to
adjust interest rate sensitivity.
Credit risk
Credit risk arises in ordinary business activities and as a
result of financial transactions. Trade receivables are spread
across a large number of customers, which reduces credit
risk. Credit risks relating to operational business activities
are managed locally at company level and monitored at
division level.
Financial risk management exposes ASSA ABLOY to 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 2021, ASSA ABLOY had obligations for pen-
sions and other post-employment benefits of SEK 9,717
M (9,549). The Group manages pension assets valued at
SEK 6,981 M (6,035). Provisions in the balance sheet for
defined benefit and defined contribution plans and post-
employment medical benefits totaled SEK 2,736 M (3,514).
Changes in the value of assets and liabilities from year to
year are due partly to the development of equity and inter-
est rate markets and partly to the actuarial assumptions
made. Significant remeasurement of obligations and plan
assets is recognized on a current basis in the balance sheet
and in other comprehensive income. The assumptions made
include discount rates and anticipated inflation and salary
increases.
ASSA ABLOY’s risks
Strategic risks
Changes in the business environment
with potentially significant effects on
operations and business objectives.
• Country-specific risks
• Customer behavior
• Competitors
• Brand positioning
• Reputational risk
• Pandemics and other global health risks
Operational risks
Risks directly attributable to business
operations with a potential impact on
financial position and performance.
• Legal and environmental risks
• Tax risks
• Acquisition of new businesses
• Restructuring measures
• Price fluctuations and availability of raw
materials
• Credit losses
• Insurance risks
• Risks relating to internal control
• Risks relating to IT
Financial risks
Financial risks with a potential impact on
financial position and performance.
• Financing risk
• Currency risk
• Interest rate risk
• Credit risk
• Risks associated with pension
obligations
47
ANNUAL REPORT 2021 | ASSA ABLOY
Significant risks and risk management | Report of the Board of Directors
ASSA ABLOY’s operational risks and risk management
Operational risks Risk management Comments
Legal risks The Group continuously monitors anticipated and
implemented changes in legislation in the coun-
tries in which it operates. Ongoing and potential
disputes and other legal matters are reported
regularly to the Group’s central legal function.
Policies and guidelines on compliance with
applicable competition, export control, anti-
corruption and data protection legislation have
been implemented.
At year-end 2021, there are considered to be
no outstanding legal disputes that may lead to
significant costs for the Group.
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.
Tax risks Ongoing and potential tax cases are regularly
reported to the Group’s central tax function.
At year-end 2021, there are considered to be no
ongoing tax cases with a significant impact on the
Group’s earnings.
Acquisition of new businesses Acquisitions are carried out by a number of people
with considerable acquisition experience and with
the support of, for example, legal and financial
consultants. Acquisitions are carried out according
to a uniform and predefined Group-wide process.
This consists of four documented phases: strategy,
evaluation, implementation and integration.
ASSA ABLOY maintained a high acquisition rate
during the year, acquiring 13 businesses, and
signing a contract for the acquisition of HHI, the
largest acquisition in the history of the Group.
The Group’s acquisitions in 2021 are reported in
greater detail in the Report of the Board of Direc-
tors and in Note 33, Business combinations.
Restructuring measures
The restructuring programs mainly entail some
production units being closed or changing
their focus to mainly performing final assembly,
combined with office closures.
The restructuring programs are carried on as a
series of projects with stipulated activities and
schedules. The various projects in the respective
restructuring program are systematically moni-
tored on a regular basis.
The most recent restructuring program was
launched at the end of 2020 involving the closure
of about ten factories and about thirty offices
over a two-year period. The level of activity in the
program was high during the year. The scope,
costs and savings of the restructuring programs
are presented in more detail in the Report of the
Board of Directors.
Price fluctuations and availability
of raw materials
Raw materials are purchased and handled primar-
ily at division and business unit level. Regional
committees coordinate these activities with the
help of senior coordinators for selected material
components.
The market prices of raw material components,
for example steel, that are important to the Group
rose sharply during the year. For further informa-
tion about procurement of materials, see Note 7,
Expenses by nature.
Credit losses Trade receivables are spread across a large number
of customers in many markets. No individual
customer in the Group accounts for more than
two percent of sales.
Commercial credit risks are managed locally at
company level and monitored at division level.
Receivables from each customer are relatively
small in relation to total trade receivables. The
risk of significant credit losses for the Group
is considered to be limited, but credit risk has
been assessed to have increased in the past two
years, given the global Covid-19 pandemic and its
impact on global demand.
Insurance risks A Group-wide insurance program is in place,
mainly relating to property, business interruption
and liability risks. This program covers all business
units. The Group’s exposure to the risk areas listed
above is regulated by means of its own captive
insurance company.
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 The organization is considered to be relatively
transparent, with a clear allocation of responsibili-
ties. A well-established Controller organization at
both division and Group level monitors financial
reporting quality.
Instructions on the allocation of responsibilities,
authorization and procedures for orders, sourcing,
etc., are laid out in an internal control guide with
rules and regulations that were updated during
the year. Compliance is evaluated annually for all
operating companies. An annual internal audit
of financial reporting is performed for selected
Group companies on a rotating basis.
ASSA ABLOY’s internal audit and internal control
functions have dedicated internal auditors
employed in all divisions. More reviews were
conducted during the year. Internal control and
other related issues are reported in more detail in
the Report of the Board of Directors, section on
Corporate governance.
Further information on risk management relating
to financial reporting can be found in the Report
of the Board of Directors, section on Corporate
governance. See also the section “Basis of prepara-
tion” in Note 1.
Risks relating to Information technology (IT) Preventive measures are in place to protect
business-critical information from unauthorized
individuals and organizations.
IT security is a high priority area at ASSA ABLOY
through constant efforts to maintain and
strengthen the level of security for the Group’s
business information.
48
ASSA ABLOY | ANNUAL REPORT 2021
Report of the Board of Directors | Significant risks and risk management
Corporate governance
with registered office in Stockholm, Sweden , whose Series B
share is listed on Nasdaq Stockholm.
ASSA ABLOY’s corporate governance is based on the
Swedish Companies Act, the Annual Accounts Act, Nas-
daq Stockholm’s Rule Book for Issuers and the Swedish
Corporate Governance Code (the Code), as well as other
applicable external laws, rules and regulations, and internal
rules and regulations.
This Corporate Governance Report has been prepared as
part of ASSA ABLOY’s application of the Code. ASSA ABLOY
follows the Code’s principle to “comply or explain” and in
2021 ASSA ABLOY has one deviation to explain. The Nomi-
nation Committee deviates from the Code’s Rule 2.4 to
the extent that, prior to the 2022 Annual General Meeting,
1
Shareholders
At year-end 2021, ASSA ABLOY had 45,698 sharehold-
ers. ASSA ABLOY’s principal shareholders are Investment AB
Latour (9.5 percent of the share capital and 29.4 percent of
the votes) and Melker Schörling AB (3.1 percent of the share
capital and 10.9 percent of the votes). Foreign shareholders
accounted for 67.3 percent of the share capital and 45.9
percent of the votes. The ten largest shareholders accounted
for 36.1 percent of the share capital and 56.4 percent of the
votes. For further information on shareholders, see page 110.
board member Johan Hjertonsson (Investment AB Latour)
is Chairman of the Nomination Committee and, prior to the
2021 Annual General Meeting, the Vice Chairman of the
Board of Directors, Carl Douglas (Investment AB Latour),
was Chairman of the Nomination Committee. The reason
for this deviation is that the major shareholders consider it
important to have the representative from the largest share-
holder as Chairman of the Nomination Committee.
The Corporate Governance Report is examined by ASSA
ABLOY’s auditor.
ASSA ABLOY’s objective is that its operations should gener-
ate 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.
Corporate governance structure
1
Shareholders
2
General Meeting
4
Board of Directors
3
Nomination Committee
5
Remuneration Committee
9
Auditor
6
Audit Committee
7
CEO
7
Executive Team
8
Divisions
Important external rules and regulations
• Swedish Companies Act
• Annual Accounts Act
• Nasdaq Stockholm’s Rule Book for Issuers
• Swedish Corporate Governance Code
(www.bolagsstyrning.se)
Important internal rules and regulations
• Articles of Association
• Board of Directors’ rules of procedure
• Financial Policy
• Accounting Manual
• Communication Policy
• Insider Policy
• Internal control procedures
• Code of Conduct and Anti-Corruption Policy
ASSA ABLOY’s Articles of Association contain a pre-emp-
tion clause for owners of Series A shares regarding shares
of Series A. A shareholders’ agreement exists between the
Douglas and Schörling families and their related companies
that 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’ agree-
ments or other agreements between shareholders in ASSA
ABLOY.
49
ANNUAL REPORT 2021 | ASSA ABLOY
Corporate governance | Report of the Board of Directors
Share capital and voting rights
ASSA ABLOY’s share capital at the end of 2021 amounted
to SEK 370,858,778 distributed among a total of
1,112,576,334 shares, comprising 57,525,969 Series A
shares and 1,055,050,365 Series B shares. The total number
of votes amounted to 1,630,310,055. Each Series A share
carries ten votes and each Series B share one vote. All shares
have a par value of around SEK 0.33 and give shareholders
equal rights to the company’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 Series B shares. The
aim has been, among other things, to secure the company’s
undertakings in connection with its long-term incentive
programs (LTI). The 2021 Annual General Meeting author-
ized the Board of Directors to acquire, 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 1,800,000 Series B shares
after repurchase. The cost for these shares amounts to
SEK 103 M. The shares account for around 0.2 percent of
the share capital and each share has a par value of around
SEK 0.33. No shares were repurchased in 2021.
Share and dividend policy
ASSA ABLOY’s Series B share is listed on the Nasdaq Stock-
holm Large Cap. At the end of 2021, ASSA ABLOY’s market
capitalization amounted to SEK 307,294 M, calculated on
both Series A and Series B shares. The Board of Directors’
objective is that, in the long term, the dividend should be
equivalent to 33–50 percent of income after standard tax,
but always taking into account ASSA ABLOY’s long-term
financing requirements.
2
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 intent to attend are entitled to
take part in the General Meeting, either in person or by 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 support-
ed by a higher majority. Individual shareholders who wish to
submit a matter for consideration at the General Meeting
can send such request 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. Mat-
ters considered at the Annual General Meeting include:
dividend; adoption of the income statement and balance
sheet; discharge of the members of the Board of Direc-
tors and the CEO from liability; election of members of the
Board of Directors, Chairman of the Board of Directors and
auditor; and fees for the Board of Directors and auditor. An
Extraordinary General Meeting may be held if the Board of
Directors considers this necessary or if ASSA ABLOY’s audi-
tor or shareholders holding at least 10 percent of the shares
so request.
2021 Annual General Meeting
At the Annual General Meeting on 28 April 2021, sharehold-
ers representing 52.5 percent of the share capital and 67.6
percent of the votes participated. In light of the Covid-19
pandemic, the Annual General Meeting was carried out
solely through advance voting (postal voting) pursuant to
temporary legislation. The Annual General Meeting’s resolu-
tions included the following.
• Dividend of SEK 3.90 per share, paid in two equal
installments.
• Lars Renström, Carl Douglas, Eva Karlsson, Lena Olving,
Sofia Schörling Högberg and Joakim Weidemanis were
re-elected as members of the Board of Directors. Birgitta
Klasén and Jan Svensson decided not to stand for
re-election.
• Johan Hjertonsson and Susanne Pahlén Åklundh were
elected as new members of the Board of Directors.
• Lars Renström was re-elected as Chairman of the Board
of Directors, and Carl Douglas was re-elected as Vice
Chairman.
• The audit firm Ernst & Young AB was re-elected as the
company’s auditor.
• Remuneration of the Board of Directors.
• Approval of the Board of Directors’ report on remunera-
tion as per Chapter 8, Section 53 a, of the Swedish
Companies Act (remuneration report).
• Authorization to the Board of Directors regarding
repurchase and transfers of own Series B shares.
• A long-term incentive program for senior executives
and other key employees in the Group (LTI 2021).
For more information about the Annual General Meeting,
including the minutes, see ASSA ABLOY’s website
assaabloy.com.
2022 Annual General Meeting
ASSA ABLOY’s next Annual General Meeting will be held on
27 April 2022 in Stockholm, Sweden.
3
Nomination Committee
The 2018 Annual General Meeting adopted in-
structions for the Nomination Committee, comprising a
procedure for appointing the Nomination Committee, which
apply until further notice. According to these instructions,
the Nomination Committee shall be composed of repre-
sentatives of the five largest shareholders in terms of voting
rights registered in the shareholders’ register maintained
by Euroclear Sweden AB as of 31 August the year before the
Annual General Meeting. Where a shareholder declines to
participate in the Nomination Committee, a representative
from the largest shareholder in turn shall be appointed.
The Nomination Committee prior to the 2022 Annual
General Meeting comprises Johan Hjertonsson (Investment
AB Latour), Mikael Ekdahl (Melker Schörling AB), Marianne
50
ASSA ABLOY | ANNUAL REPORT 2021
Report of the Board of Directors | Corporate governance
Nilsson (Swedbank Robur Fonder), Liselott Ledin (Alecta)
and Yvonne Sörberg (Handelsbanken Fonder). Johan
Hjertonsson is the Chairman of the Nomination Committee.
The Nomination Committee has the task of preparing, on
behalf of the shareholders, proposals regarding the election
of Chairman of the General Meeting; members of the Board
of Directors, Chairman of the Board, Vice Chairman of the
Board; auditor; fees for the board members including divi-
sion between the Chairman, Vice Chairman and the other
board members, as well as fees for committee work; fees
to the company’s auditor, and any changes of the instruc-
tions for the Nomination Committee. The Audit Committee
assists the Nomination Committee in work associated with
the proposal regarding appointment of the external auditor.
Prior to the 2022 Annual General Meeting, the Nomi-
nation Committee makes an assessment of whether the
current Board of Directors is appropriately composed and
fulfills the requirements imposed on the Board of Directors
by the company’s present situation and future direction. The
annual evaluation of the Board of Directors and its work is
part of the basis for this assessment. Moreover, the Nomina-
tion Committee applies ASSA ABLOY’s diversity policy for
the Board of Directors, which is based on Rule 4.1 of the
Code, when preparing its proposal for election of members
of the Board of Directors. The search for suitable board
members is carried on throughout the year and proposals
for new board members are based in each individual case
on a profile of requirements established by the Nomination
Committee.
Shareholders wishing to submit proposals to the Nomina-
tion Committee can do so by e-mailing:
nominationcommittee@assaabloy.com.
The Nomination Committee’s proposals for the 2022 An-
nual General Meeting are published, at the latest, in conjunc-
tion with the formal notification of the Annual General Meet-
ing, which is expected to be issued around 23 March 2022.
4
Board of Directors
In accordance with the Swedish Companies Act, the
Board of Directors is responsible for the organization and
administration of the Group and for ensuring satisfactory
control of bookkeeping, asset management and other
financial circumstances. The Board of Directors decides on
the Group’s overall objectives, strategies, Group policies,
acquisitions and divestments as well as investments of major
importance. Acquisitions and divestments with a value (on
a debt-free basis) exceeding SEK 200 M are decided by the
Board of Directors. The threshold amount presumes that the
matter relates to acquisitions or divestments in accordance
with the strategy agreed by the Board of Directors. The Board
of Directors approves documents such as the Annual Report
and Interim Reports, proposes a dividend to the Annual Gen-
eral Meeting, and makes decisions concerning the Group’s
financial structure.
The Board of Directors’ other ongoing duties include:
• appointing, evaluating and if necessary, dismissing
the CEO,
• approving the CEO’s significant assignments outside
the company,
• identifying how sustainability issues impact risks to,
and business opportunities for, the company,
• establishing appropriate guidelines to govern the
company’s conduct in society with the aim of ensuring
long-term value-creating capability,
• ensuring that appropriate systems are in place for follow-
ing up and controlling the company’s operations and the
risks for the company associated with its operations,
• ensuring that there is satisfactory control of the
company’s compliance with laws and other regulations
relevant to the company’s operations, and its compliance
with internal guidelines, and
• ensuring that external information provided by the
company is transparent, accurate, relevant and reliable.
Each year, the Board of Directors reviews and adopts the
Board of Directors’ rules of procedure, which is the docu-
ment that governs the work of the Board and the distribu-
tion of duties between the Board of Directors and the CEO.
The rules of procedure include instructions for the CEO,
instructions relating to financial reporting and internal
control, and instructions to the Remuneration Committee
and the Audit Committee.
Included in the rules of procedure is a description of the
role of Chairman of the Board. In addition to organizing and
leading the work of the Board of Directors, the Chairman’s
duties include maintaining contact with the CEO to continu-
ously monitor the Group’s operations and development,
consulting with the CEO on strategic issues, representing
the company in matters concerning the ownership struc-
ture, ensuring that the Board receives satisfactory informa-
tion and data on which to base decisions and ensuring that
Board decisions are implemented. In addition, the Chairman
should ensure that the work of the Board of Directors is
evaluated annually.
The Board of Directors has at least four ordinary meetings
and one statutory meeting per year. An ordinary Board
meeting is always held in connection with the company’s
publication of its Year-end Report and Interim Reports.
At least once a year the Board of Directors visits one of
the Group’s operations, combined with a Board meeting.
In addition, extraordinary Board meetings are held when
necessary. All meetings follow an approved agenda. Prior to
each meeting, a draft agenda, including documentation, is
provided to all members of the Board of Directors.
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 members
of the Committees are appointed annually by the Board of
Directors at the statutory Board meeting.
Board of Directors’ composition
The Board of Directors, including the Chairman and Vice
Chairman of the Board, 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 of six and a maxi-
mum of ten members elected by the Meeting. The Board
of Directors also has two members who are appointed by
employee organizations in accordance with Swedish law.
The employee organizations also appoint two deputies. The
51
ANNUAL REPORT 2021 | ASSA ABLOY
Corporate governance | Report of the Board of Directors
Ordinary Board meeting
Year-end results
Proposal dividend
Annual Report
Auditor’s report
Sustainability Report
Proposals to Annual General
Meeting
Evaluation Executive Team
Acquisitions
Ordinary Board meeting
Interim Report Q1
Acquisition strategy
Acquisitions
Remuneration Committee
meeting
Audit Committee meeting
Extraordinary Board
meeting (per capsulam)
Notice Annual General
Meeting
Audit Committee meeting
Statutory Board meeting (per capsulam)
Appointment committee members
Adoption Board of Directors’ rules
of procedure and Group policies
Signatory powers
Remuneration Committee
meeting
Report of the Board of Directors | Corporate governance
Board of Directors has consisted of eight elected members
and two employee representatives since the 2021 Annual
General Meeting. No board members are included in the
Executive Team. For a presentation of the Board of Directors,
see pages 54–55.
The diversity policy that ASSA ABLOY applies with respect
to the company’s Board of Directors is based on Rule 4.1 of
the Code. The objective is that the composition of the Board
of Directors, taking into account the company’s opera-
tions, stage of development and other circumstances, shall
be appropriate, characterized by versatility and breadth
regarding qualifications, experience and background of the
elected members, and strive to achieve gender equality. In
2021 the Nomination Committee has taken the diversity
policy into account when preparing its proposal for election
of members of the Board of Directors prior to the Annual
General Meeting. After the election at the 2021 Annual
General Meeting, the composition of the members of the
Board of Directors elected by the Annual General Meeting
is such that 50 percent are women and 50 percent are men,
which is in line with the Swedish Corporate Governance
Board’s aspiration for each gender to represent a share of
at least 40 percent of the Board of Directors. In addition, an
in-depth review of the operations of the EMEIA division was
conducted during the year to broaden the expertise of the
Board of Directors within ASSA ABLOY.
Board of Directors’ work in 2021
The Board of Directors held eight meetings during the year
(of which two were per capsulam). At the ordinary Board
meetings the President and CEO reported on the Group’s
performance and financial position, including the outlook
for the coming quarters. Acquisitions and divestments were
also discussed to the extent they arose.
Major issues addressed by the Board of Directors during
the year include the Group’s strategy and the impact and
consequences of the Covid-19 pandemic. The Board of
Directors also focused on the acquisition strategy and
addressed the acquisition of the Hardware and Home
Improvement division of Spectrum Brands. The Board of
Directors also addressed a number of other acquisitions,
including those of Capitol Door Service, Arran Isle and B&B
Roadway and Security, and the divestment of the Nordic
locksmith business CERTEGO as well as the divestments
of the Italian residential door business within Gardesa and
Gardesa’s Italian shutter business. The Board of Directors
visited the EMEIA division’s operations in the Czech Republic
during the year. The Board of Directors’ work is summarized
in the timeline on pages 52–53.
An evaluation of the Board of Directors’ work is con-
ducted annually in the form of a web-based survey, which
each board member responds to individually. A summary
of the results is presented to the Board of Directors. Board
members who wish can access the complete results of the
evaluation. The Secretary to the Board of Directors presents
the complete results of the evaluation to the Nomination
Committee.
5
Remuneration Committee
Since the statutory Board meeting after the 2021 An-
nual General Meeting, the Remuneration Committee has con-
sisted of Lars Renström (Chairman) and Johan Hjertonsson.
The Remuneration Committee has the task of drawing
up guidelines for remuneration to senior executives, which
the Board of Directors proposes to the Annual General
Meeting for resolution. The Board of Directors shall prepare
a proposal for new guidelines at least every fourth year. For
information about ASSA ABLOY’s current guidelines for
remuneration to senior executives that were adopted at
the 2020 Annual General Meeting, see Note 34. The Board
of Directors’ proposal for new guidelines prior to the 2022
Annual General Meeting is set out on pages 60–61.
The Remuneration Committee also prepares, monitors
and evaluates matters regarding salaries, bonus, pension,
severance pay and incentive programs for the CEO and other
senior executives. The Committee has no decision-making
powers.
The Committee held two meetings in 2021. Its work
included preparing a proposal for the remuneration report,
preparing a proposal for the remuneration of the Executive
Team, evaluating existing incentive programs, and prepar-
ing a proposal for a new long-term incentive program.
Remuneration Committee meetings are minuted; a copy of
the minutes is enclosed with the materials provided to the
Board and a verbal report is given at Board meetings.
January February March April May June
Summary of Board of
Directors’ work and
committee meetings
in 2021
At the ordinary Board meetings the President and CEO also reported on the Group’s performance and financial position, including the outlook for the coming quarters.
52
ASSA ABLOY | ANNUAL REPORT 2021
Ordinary Board meeting
Interim Report Q2
Acquisitions
Ordinary Board meeting
and visit to operations
Visit EMEIA
Ordinary Board meeting
Interim Report Q3
Strategy
Evaluation Board of Directors
Ordinary Board meeting
Acquisitions
Audit Committee meeting Audit Committee meetingRemuneration Committee
meeting
Corporate governance | Report of the Board of Directors
6
Audit Committee
Since the statutory Board meeting after the 2021
Annual General Meeting, the Audit Committee has consisted
of Lars Renström (Chairman), Johan Hjertonsson and Lena
Olving.
The duties of the Audit Committee include continuous
monitoring and quality assurance of ASSA ABLOY’s financial
reporting. Regular communication is maintained with the
company’s external auditor, including on the focus and scope
of the audit. The Audit Committee is also responsible for
evaluating the audit assignment and obtaining the results
of the Swedish Inspectorate of Auditors’ quality control of
the auditor, as well as informing the Board of Directors of the
results of the evaluation. The Audit Committee also has the
task of supporting the Nomination Committee in providing
a proposal for the appointment of external auditor. Further-
more, the Audit Committee shall review and monitor the im-
partiality and independence of the auditor, paying particular
attention to whether the auditor provides the company with
services other than auditing services. The Audit Committee
establishes guidelines for procurement of services other than
audit services from ASSA ABLOY’s auditors, and, if applicable,
it approves such services according to these guidelines, and
establishes guidelines for the appointment of new local audit
firms. Otherwise, the Committee has no decision-making
powers.
The Committee held four meetings in 2021. The com-
pany’s external auditor and representatives from senior
management also participated at these meetings. More
important matters dealt with by the Audit Committee dur-
ing the year included internal control, financial statements
and valuation matters, tax matters, insurance and risk
management matters and legal risk areas. Audit Committee
meetings are minuted; a copy of the minutes is enclosed
with the materials provided to the Board and a verbal report
is given at Board meetings.
Remuneration of the Board of Directors
The General Meeting passes a resolution on the remu-
neration to be paid to board members. The 2021 Annual
General Meeting passed a resolution on Board fees totaling
SEK 8,500,000 (excluding remuneration for committee
work) to be allocated between the members as follows:
SEK 2,700,000 to the Chairman, SEK 1,000,000 to the Vice
July August September October November December
Chairman, and SEK 800,000 to each of the other members
elected by the Annual General Meeting. As remuneration for
committee work, the Chairman of the Audit Committee is
to receive SEK 325,000, the Chairman of the Remuneration
Committee SEK 150,000, members of the Audit Committee
(except the Chairman) SEK 225,000 each, and member of
the Remuneration Committee (except the Chairman)
SEK 75,000.
The Chairman and other board members have no pension
benefits or severance pay agreements. The employee repre-
sentatives do not receive board fees. For further information
on the remuneration of board members in 2021, see Note 34.
Attendance at Board and Committee meetings in 2021
Board members Board
Audit
Committee
Remuneration
Committee
Lars Renström
1
8 2 2
Carl Douglas 8
Johan Hjertonsson
2
5 2 1
Sofia Schörling Högberg
3
8 2
Eva Karlsson 8
Birgitta Klasén
4
3 2
Lena Olving
5
8 2
Jan Svensson
6
3 2 1
Joakim Weidemanis 8
Susanne Pahlén Åklundh
7
5
Rune Hjälm 8
Mats Persson 8
Total number of meetings 8 4 2
1
Appointed Chairman of the Audit Committee on 28 April 2021.
2
Elected as a new member of the Board at the Annual General Meeting on 28
April 2021 and appointed a member of the Audit Committee and the Remu-
neration Committee on the same day.
3
Resigned as member of the Audit Committee on 28 April 2021.
4
Resigned as member of the Board at the Annual General Meeting on 28 April
2021 and thus also resigned as member of the Audit Committee.
5
Appointed a member of the Audit Committee on 28 April 2021.
6
Resigned as member of the Board at the Annual General Meeting on 28 April
2021 and thus also resigned as Chairman of the Audit Committee and member
of the Remuneration Committee.
7
Elected as a new member of the Board at the Annual General Meeting on
28 April 2021.
53
ANNUAL REPORT 2021 | ASSA ABLOY
Board of Directors
Elected by the 2021 Annual General Meeting
1
Lars Renström
Chairman.
Board member since 2008.
Born 1951.
Master of Science in Engineering and Master
of Science in Business and Economics.
President and CEO of Alfa Laval AB
2004–2016. President and CEO of Seco
Tools AB 2000–2004. President and Head of
Division of Atlas Copco Rock Drilling Tools
1997–2000. Previously a number of senior
positions at ABB and Ericsson.
Other appointments: Chairman of Tetra
Laval Group.
Shareholdings (including through compa-
nies and related natural parties): 30,000
Series B shares.
2
Carl Douglas
Vice Chairman.
Board member since 2004.
Born 1965.
BA (Bachelor of Arts) and D. Litt (h.c.)
(Doctor of Letters).
Self-employed.
Other appointments: Board member of
Investment AB Latour.
Shareholdings (including through
companies and related natural parties):
41,595,729 Series A shares and 63,900,000
Series B shares through Investment AB
Latour.
3
Johan Hjertonsson
Board member since 2021.
Born 1968.
Master of Science in Business and
Economics.
President and CEO of Investment AB Latour
since 2019. Previously President and CEO of
AB Fagerhult and Lammhults Design Group
AB and various management positions
within the Electrolux Group.
Other appointments: Chairman of
Nederman Holding AB, Swegon Group AB,
Hultafors Group AB, Nord-Lock International
AB, Caljan AS, Alimak Group AB and Latour
Industries AB. Board member of Investment
AB Latour and Sweco AB.
Shareholdings (including through compa-
nies and related natural parties): 10,000
Series B shares.
4
Sofia Schörling Högberg
Board member since 2017.
Born 1978.
BSc (Bachelor of Science) in Business
Administration.
Other appointments: Board member
of Melker Schörling AB, Securitas AB and
Hexagon AB.
Shareholdings (including through
companies and related natural parties):
15,930,240 Series A shares and 18,120,992
Series B shares through Melker Schörling AB
as well as 325,800 Series B shares through
Edeby-Ripsa Skogsförvaltning AB.
5
Eva Karlsson
Board member since 2015.
Born 1966.
Master of Science in Engineering.
CEO of Sjöson Industri & Teknik since July
2021. CEO and Vice President Product Supply
Arcam EBM 2020-2021. President and CEO of
Armatec AB 2014-2019. CEO of SKF Sverige
AB and Global Manufacturing Manager
2011-2013. Director of Industrial Marketing
& Product Development Industrial Market
AB SKF 2005-2010. Various positions in the
SKF Group primarily within Manufacturing
Management.
Other appointments: Board member of Ratos
AB, Modvion AB and Sjöson AB.
Shareholdings (including through compa-
nies and related natural parties): 500 Series
B shares.
6
Lena Olving
Board member since 2018.
Born 1956.
Master of Science in Mechanical Engineering.
President and CEO of Mycronic AB 2013–2019.
COO and Deputy CEO of Saab AB 2008–2013.
Various positions within Volvo Car Corpora-
tion 1980–1991 and 1995–2008 of which
seven years in the Executive Management
Team. CEO of Samhall Högland AB 1991–1994.
Other appointments: Chairman of the Royal
Swedish Opera, ScandiNova Systems AB and
Academic Work. Board member of Investment
AB Latour, Munters Group AB, NXP Semicon-
ductor N.V. and Stena Metall AB. Fellow of
the Royal Swedish Academy of Engineering
Sciences (IVA).
Shareholdings (including through compa-
nies and related natural parties): 600 Series
B shares.
7
Joakim Weidemanis
Board member since 2020.
Born 1969.
Master of Science in Business and Economics.
Executive Vice President and Corporate Officer
of Danaher Corporation since 2017.
Previously various management positions
within Danaher 2011–2017. Head of Product
Inspection and Corporate Officer of Mettler
Toledo 2005–2011. Previously various operat-
ing and corporate development roles within
ABB 1995–2005.
Other appointments: –
Shareholdings (including through compa-
nies and related natural parties): –
8
Susanne Pahlén Åklundh
Board member since 2021.
Born 1960.
Master of Science in Engineering.
President of the Energy Division of Alfa Laval
AB 2017-August 2021. Previoulsy various
positions in the Alfa Laval Group Management
since 2009.
Other appointments: Chairman of Alfdex AB.
Shareholdings (including through com-
panies and related natural parties): 2,500
Series B shares.
Appointments and shareholdings at 31 December 2021 unless stated otherwise.
Report of the Board of Directors | Board of Directors
1
2
3
5
6
8
4
7
54
ASSA ABLOY | ANNUAL REPORT 2021
Appointed by employee organizations
9
Rune Hjälm
Board member since 2017.
Born 1964.
Employee representative, IF Metall. Chair-
man of European Works Council (EWC) in
the ASSA ABLOY Group.
Shareholdings (including through compa-
nies and related natural parties): –
10
Mats Persson
Board member since 1994.
Born 1955.
Employee representative, IF Metall.
Shareholdings (including through compa-
nies and related natural parties): –
11
Bjarne Johansson
Deputy board member since 2015.
Born 1966.
Employee representative, IF Metall.
Shareholdings (including through compa-
nies and related natural parties): –
12
Nadja Wikström
Deputy board member since 2017.
Born 1959.
Employee representative, Unionen.
Shareholdings (including through compa-
nies and related natural parties): –
Independence of the Board of Directors
Name Position
Independent of the company
and its management
Independent of the company’s
major shareholders
Lars Renström Chairman Yes Yes
Carl Douglas Vice Chairman Yes No
Johan Hjertonsson Board member Yes No
Sofia Schörling Högberg Board member Yes No
Eva Karlsson Board member Yes Yes
Lena Olving Board member Yes No
Joakim Weidemanis Board member Yes Yes
Susanne Pahlén Åklundh Board member Yes Yes
The Board of Directors’ composition and shareholdings
Name Position Elected Born
Remuneration
Committee Audit Committee Series A shares
1
Series B shares
1
Lars Renström Chairman 2008 1951 Chairman Chairman – 30,000
Carl Douglas Vice Chairman 2004 1965 – – 41,595,729 63,900,000
Johan Hjertonsson Board member 2021 1968 Member Member – 10,000
Sofia Schörling Högberg Board member 2017 1978 – – 15,930,240 18,446,792
Eva Karlsson Board member 2015 1966 – – – 500
Lena Olving Board member 2018 1956 – Member – 600
Joakim Weidemanis Board member 2020 1969 – – – –
Susanne Pahlén Åklundh Board member 2021 1960 – – – 2,500
Rune Hjälm Board member, employee representative 2017 1964 – – – –
Mats Persson Board member, employee representative 1994 1955 – – – –
Bjarne Johansson Deputy, employee representative 2015 1966 – – – –
Nadja Wikström Deputy, employee representative 2017 1959 – – – –
1
Through companies and related natural parties.
Appointments and shareholdings at 31 December 2021 unless stated otherwise.
ASSA ABLOY’s Board of Directors ful-
fills the requirements for independ-
ence in accordance with the Swedish
Corporate Governance Code.
Board of Directors | Report of the Board of Directors
9 11
10 12
55
ANNUAL REPORT 2021 | ASSA ABLOY
Executive Team
1
Nico Delvaux
President and CEO since 2018, Head of
Global Technologies division since 2018 and
of the Asia Pacific division since 2021.
Born 1966.
Master of Engineering in Electromechanics
and executive MBA.
Previous positions: President and CEO of
Metso Corporation August 2017–February
2018. Previously various positions in the
Atlas Copco Group, including Business Area
President Compressor Technique 2014–
2017, Business Area President Construction
Technique 2011–2014, and various positions
in sales, marketing, service, acquisition inte-
gration management and General Manager
in markets including Benelux, Italy, China,
Canada, and the United States 1991–2011.
Shareholdings (including through compa-
nies and related natural parties): 122,534
Series B shares and 94,787 call options.
2
Erik Pieder
Executive Vice President and Chief Financial
Officer (CFO) since 2019.
Born 1968.
MBA and Master of Laws.
Previous positions: Various positions in the
Atlas Copco Group 1996–2019, including
Vice President Business Control Compressor
Technique.
Shareholdings: 4,700 Series B shares.
3
Lucas Boselli
Executive Vice President and Head of
Americas division since 2018.
Born 1976.
Bachelor of Science in Industrial
Engineering.
Previous positions: Various positions in
the ASSA ABLOY Group, including President
of ASSA ABLOY Central and South America
2014–2018 and President of Yale Latin
America 2012–2014. Previously various posi-
tions in Ingersoll Rand 2000–2010.
Shareholdings: 32,078 Series B shares.
4
Simon Ellis
Executive Vice President and Head of Asia
Pacific business unit ASSA ABLOY Opening
Solutions Pacific and North East Asia since
2021.
Born 1974.
MBA.
Previous positions: Various positions in
the ASSA ABLOY Group, including President
of Opening Solutions Pacific Region and
Japan 2016–2020 and President of Opening
Solutions New Zealand 2013–2016, Gen-
eral Manager Security Merchants Australia
2010–2013. Previously various positions in
the ASSA ABLOY Group 1997–2010.
Shareholdings: 6,999 Series B shares.
5
Maria Romberg Ewerth
Executive Vice President and Chief Human
Resources Officer (CHRO) since 2019.
Born 1978.
Bachelor’s degree in Human Resources and
MBA.
Previous positions: Senior Vice President
Human Resources ASSA ABLOY AB 2013–
2019, Vice President Human Resources
ASSA ABLOY Entrance Systems 2011–2013.
HR manager and HR director ASSA ABLOY
Entrance Systems 2008–2011. Previously HR
positions in various companies: JELD-WEN
Sverige AB, VALEO Engine Cooling AB and
Swedish Meats 2003–2008.
Shareholdings: 11,618 Series B shares.
6
Massimo Grassi
Executive Vice President and Head of
Entrance Systems division since 2021.
Born 1961.
Master of Engineering.
Previous positions: Divisional Manag-
ing Director, IMI Precision Engineering
2015–2020. Various positions within Stanley
Black & Decker Group, including President
Stanley Security Europe 2012–2015,
Global President Industrial Automotive
Repair 2010–2012 and President in Europe
2007–2010. Previously various positions in
Pentair Inc., BWT AG and Pirelli.
Shareholdings: –
Appointments and shareholdings at 31 December 2021 unless stated otherwise.
1
3
5
2
4
6
56
ASSA ABLOY | ANNUAL REPORT 2021
Report of the Board of Directors | Executive Team
7
Björn Lidefelt
Executive Vice President and Head of Global
Technologies business unit HID Global since
2020.
Born 1981.
Master of Science in Industrial Engineering
and Management.
Previous positions: Various positions in
the ASSA ABLOY Group, including Chief
Commercial Officer 2017–2020, and Gen-
eral Manager ASSA ABLOY China (security
products) 2013–2016.
Shareholdings: 10,544 Series B shares.
8
Stephanie Ordan
Executive Vice President and Head of Global
Technologies business unit Global Solutions
since 2021.
Born 1976.
Master of Business Administration and
Engineering Diploma.
Previous positions: Vice President Digital
and Access Solutions, ASSA ABLOY EMEIA
2018–2021, Head of Energy Storage Busi-
ness and Head of Marketing and Communi-
cation, Eaton 2014–2018. Strategic Market-
ing/New Products Development Director,
General Electric 2013–2014. Previously,
Application Engineer, Field Sales Engineer,
Head of Strategy and Product Management,
STMicroelectronics 1999–2013.
Shareholdings: 2,536 Series B shares.
9
Martin Poxton
Executive Vice President and Head of Asia
Pacific business unit ASSA ABLOY Opening
Solutions Greater China and South East Asia
since 2021.
Born 1972.
HND in Mechanical and Manufacturing
Engineering.
Previous positions: Vice President Opera-
tions ASSA ABLOY Opening Solutions Asia
Pacific 2017–2020, Operations Director
Adient China, 2013–2017, Business Unit
General Manager and Launch Director
Johnsons Controls China 2008–2012. Vari-
ous positions in Faurecia China 2004–2008.
Previously various positions in Keiper,
Johnsons Controls and Flowform B’ham UK,
1992–2004.
Shareholdings: 1,142 Series B shares.
10
Neil Vann
Executive Vice President and Head of EMEIA
division since 2018.
Born 1971.
Degree in Manufacturing Engineering.
Previous positions: Various positions in the
ASSA ABLOY Group, including Market Region
Manager ASSA ABLOY UK 2014–2018,
Market Region Manager Italy and Greece
2012–2014 and Vice President Operations
EMEIA 2011–2012. Previously various posi-
tions within ASSA ABLOY, Yale and Chubb
1987–2001.
Shareholdings: 20,335 Series B shares.
Changes in the Executive Team
Mogens Jensen, Executive Vice President and Head of the Resi-
dential business segment within Entrance Systems division, left
the Executive Team on 30 June 2021 to enter retirement.
Massimo Grassi was appointed Executive Vice President and
Head of Entrance Systems division on 13 September 2021. He
succeeded Christopher Norby, who left ASSA ABLOY on 30 June
2021.
Stephanie Ordan was appointed Executive Vice President and
Head of the Global Technologies business unit Global Solutions
on 13 September 2021. She succeeded Christophe Sut, who
left ASSA ABLOY on 30 September 2021.
On 27 October 2021, ASSA ABLOY announced that Maria
Romberg Ewerth, Executive Vice President and Chief Human
Resources Officer, had decided to leave ASSA ABLOY.
Appointments and shareholdings at 31 December 2021 unless stated otherwise.
7 9
8
10
57
ANNUAL REPORT 2021 | ASSA ABLOY
Executive Team | Report of the Board of Directors
7
Organization
CEO and Executive Team
The Executive Team consists of the CEO, the Heads of the
Group’s divisions, the Heads of the business units HID Global,
Global Solutions, Opening Solutions Greater China and
South East Asia and Opening Solutions Pacific and North East
Asia, the Chief Financial Officer and the Chief Human Re-
sources Officer. For a presentation of the CEO and the other
members of the Executive Team, see pages 56–57.
8
Divisions – decentralized organization
ASSA ABLOY’s operations are decentralized. Opera-
tions are organizationally divided into five divisions: EMEIA,
Americas, Asia Pacific, Global Technologies and Entrance
Systems. The fundamental principle is that the divisions
should be responsible, as far as possible, for business opera-
tions, while various functions at ASSA ABLOY’s Group Center
are responsible for coordination, monitoring, policies and
guidelines at an overall level. Decentralization is a deliberate
strategic choice based on the industry’s local nature and a
conviction of the benefits of a divisional control model. The
Group’s structure results in a geographical and strategic
spread of responsibility ensuring short decision-making
paths.
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 five divisions are
divided into around 55 business units. These consist in turn
of a large number of sales and production units, depending
on the structure of the business unit concerned. Apart from
monitoring by unit, monitoring of products and markets is
also carried out.
Policies and guidelines
Significant policies and guidelines in the Group include
financial control, communication issues, insider issues, in-
formation security and data protection, sustainability issues,
business ethics and export control. ASSA ABLOY’s financial
policy and accounting manual provide the framework for
financial control and monitoring. ASSA ABLOY’s communi-
cation policy aims to ensure that information is provided
at the right time and in compliance with applicable rules
and regulations. ASSA ABLOY has adopted an insider policy
to complement applicable insider legislation. This policy
applies to individuals in managerial positions at ASSA
ABLOY AB (including subsidiaries) as well as certain other
categories of employees. Information security policies and
guidelines are in place to protect business-critical informa-
tion from unauthorized individuals and organizations.
ASSA ABLOY has adopted a Code of Conduct for em-
ployees and a separate ASSA ABLOY Code of Conduct for
business partners. The Codes, which are based on a set of
internationally accepted conventions, define the values and
guidelines that should apply both within the Group and for
ASSA ABLOY’s business partners with regard to matters such
as business ethics, human rights and working conditions, as
well as the environment, health and safety.
Moreover, ASSA ABLOY has adopted policies and guide-
lines on compliance with competition, export control,
anti-corruption and data protection legislation applicable
to the Group.
9
Auditor
At the 2021 Annual General Meeting, Ernst & Young
AB (EY) was re-elected as the external auditor until the end
of the 2022 Annual General Meeting. Authorized public
accountant Hamish Mabon is the auditor in charge. Hamish
Mabon was born in 1965 and holds other significant audit
assignments for Skanska AB, Essity AB and SEB. He has been a
member of FAR, the institute for the accountancy profession
in Sweden, since 1992 and is a FAR Certified Financial Institu-
tion Auditor. He holds no shares in ASSA ABLOY AB.
EY submits the audit report for ASSA ABLOY AB, the Group
and a large majority of the subsidiaries worldwide. The audit
of ASSA ABLOY AB also includes the administration by the
Board of Directors and the CEO. The auditor in charge at-
tends the 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 Inter-
national Standards in Auditing (ISA), and generally accepted
auditing standards in Sweden. The audit of the financial
statements for legal entities outside Sweden is conducted
in accordance with statutory requirements and other appli-
cable rules in each country. For information about the fees
paid to auditors and other assignments carried out in the
Group in the past three financial years, see Note 3 and the
Annual Report for 2020, Note 3.
58
ASSA ABLOY | ANNUAL REPORT 2021
Report of the Board of Directors | Corporate governance
Internal control – financial reporting
ASSA ABLOY’s internal control process for financial report-
ing is designed to provide reasonable assurance of reliable
financial reporting, which is in compliance with generally
accepted accounting principles, applicable laws and regula-
tions, and other requirements for listed companies.
Control environment
The Board of Directors is responsible for effective internal
control and has therefore established fundamental docu-
ments of significance for financial reporting. These docu-
ments include the Board of Directors’ rules of procedure
and instructions to the CEO, the Code of Conduct, financial
policy, an annual financial evaluation plan etc. Regular meet-
ings are held with the Audit Committee. The Group has an
internal audit function whose primary objective is to ensure
reliable financial reporting and good internal control.
All units in the Group apply uniform accounting and
reporting instructions. Internal control guidelines have
been established and are reviewed annually through a
self-assessment regarding internal controls. These Group-
wide guidelines have a relatively broad scope and concern
business-critical processes.
A major focus has been on auditing the reconciliation
between various accounts and consolidated reporting in
recent years. The entire Group uses a financial reporting
system with pre-defined report templates.
Risk assessment
Risk assessment is built in to the processes in question and
a variety of methods are used to assess and limit risk, as
well as to ensure that risks are managed in compliance with
established policies and guidelines. A number of previously
established documents govern the procedures to be used
for accounting, finalizing accounts, financial reporting and
review. Risk assessment includes identifying and evaluating
the risk of material errors in accounting and financial report-
ing at Group, division and local levels. The specific material
risks that ASSA ABLOY has identified associated with finan-
cial reporting are errors in business-critical processes such
as sales, purchases, financial statements, inventories, facili-
ties management, taxes, legal issues, occupational injuries
and the risk of fraud, loss or embezzlement of assets.
Control activities
The Group’s controller and accounting organization at both
central and division levels 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 accord-
ance with the plan annually adopted by the Audit Commit-
tee. The results of the financial evaluations are submitted to
the Audit Committee and the auditors.
Each division has employed full-time internal auditors
who audit the companies and monitor internal control.
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 analysis
of financial outcomes is carried out at both business unit and
division levels and as part of the established operating Board
structure. The Group also has established procedures for
external communication of financial information, in accord-
ance 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 conform to a structure in which
sales, earnings, cash flow, capital employed and other impor-
tant 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 business
planning process and regular forecasts.
The Group-wide internal control guidelines are reviewed
during the year through self-assessment regarding internal
control and continuous follow-up of internal audit reports.
59
ANNUAL REPORT 2021 | ASSA ABLOY
Internal control – financial reporting | Report of the Board of Directors
The Board of Directors’ proposal of guidelines
for remuneration to senior executives
Scope
The Board of Directors proposes that the Annual General
Meeting adopts the following guidelines for the remunera-
tion and other employment conditions of the President and
CEO and other members of the ASSA ABLOY Executive Team
(the “Executive Team”).
These guidelines are applicable to remuneration agreed,
and amendments to remuneration already agreed, after
adoption of the guidelines by the 2022 Annual General
Meeting. These guidelines do not apply to any remuneration
decided or approved by the General Meeting.
Employment conditions of a member of the Executive
Team that is employed or resident outside Sweden or that is
not a Swedish citizen, may be duly adjusted for compliance
with mandatory rules or established local practice, taking
into account, to the extent possible, the overall purpose of
these guidelines.
Promotion of ASSA ABLOY’s business strategy,
long-term interests and sustainability
One of the strategies for value creation followed by ASSA
ABLOY is Evolution through people. With the objective that
ASSA ABLOY shall continue to be able to recruit and retain
competent employees, the basic principle being that remu-
neration and other employment conditions shall be offered
on market conditions and be competitive, taking into ac-
count both global remuneration practice and practice in the
home country of each member of the Executive Team. These
guidelines enable ASSA ABLOY to offer the Executive Team
a total remuneration that is on market conditions and com-
petitive. Prerequisites are thereby established for successful
implementation of the Group’s business strategy, which on
overall level is to lead the trend towards the world’s most
innovative and well-designed access solutions, as well as
safeguarding ASSA ABLOY’s long-term interests, including
its sustainability. More information about ASSA ABLOY’s
business strategy and ASSA ABLOY’s sustainability report is
available on ASSA ABLOY’s website assaabloy.com.
ASSA ABLOY has on-going share-based long-term incen-
tive programs in place that have been resolved by the
General Meeting and which are therefore excluded from
these guidelines. Future share-based long-term incentive
programs proposed by the Board of Directors and submit-
ted to the General Meeting for approval will be excluded
for the same reason. The purpose of the share-based
long-term incentive program is to strengthen ASSA ABLOY’s
ability to recruit and retain competent employees, to
contribute to ASSA ABLOY providing a total remuneration
that is on market conditions and competitive, and to align
the interests of the shareholders with the interests of the
employees concerned. Through a share-based long-term
incentive program, the employees’ remuneration is tied to
ASSA ABLOY’s future earnings and value growth. At present
the performance criteria used is linked to earnings per share.
The programs are further conditional upon the participant’s
own investment and holding period of several years. More
information about these programs is available on ASSA
ABLOY’s website assaabloy.com.
Types of remuneration
The total yearly remuneration to the members of the Execu-
tive Team shall be on market conditions and be competitive
and also reflect each member of the Executive Team’s re-
sponsibility and performance. The total yearly remuneration
shall consist of fixed base salary, variable cash remuneration,
pension benefits and other benefits (which are specified
below excluding social security costs). Additionally, the
General Meeting may – and irrespective of these guidelines
– resolve on, among other things, share-related or share
price-related remuneration.
The variable cash remuneration shall be linked to
predetermined and measurable targets, which are further
described below, and may amount to not more than 75
percent of the yearly base salary. In order to ensure that the
remuneration levels are in line with market conditions and
competitive, taking into account the current market condi-
tions in the US, the variable cash remuneration for members
of the Executive Team employed in the US may amount to
not more than 100 percent of the yearly base salary.
Additional variable cash remuneration may be paid
in specific cases in the form of remuneration with lump
sums, provided that such remuneration is only provided
at an individual basis for the purpose of recruiting senior
executives. Such remuneration may not exceed an amount
corresponding to 100 percent of the yearly base salary and
the maximum variable cash remuneration, and may not be
paid more than once per year and individual.
The members of the Executive Team shall be covered by
defined contribution pension plans, for which pension pre-
miums are based on each member’s yearly base salary and
is paid by ASSA ABLOY during the period of employment.
The pension premiums shall amount to not more than 35
percent of the yearly base salary.
Other benefits, such as company car, life insurance, extra
health insurance or occupational healthcare, should be pay-
able to the extent this is considered to be in line with market
conditions in the market concerned for each member of the
Executive Team. Premiums and other costs relating to such
benefits may totally amount to not more than 10 percent
of the yearly base salary. Furthermore, housing allowance
benefit may be added in line with ASSA ABLOY’s policies
and costs relating to such benefit may totally amount to not
more than 25 percent of the yearly base salary. Premiums
and other costs relating to other benefits and housing allow-
ance benefit may, however, totally amount to not more than
30 percent of the yearly base salary.
Criteria for awarding variable cash remuneration
The variable cash remuneration shall be linked to predeter-
mined and measurable financial targets, such as earnings
per share (EPS), earnings before interest and taxes (EBIT),
cash flow and organic growth and can also be linked to
strategical and/or functional targets individually adjusted on
the basis of responsibility and function. These targets shall
be designed so as to contribute to ASSA ABLOY’s business
strategy and long-term interests, including its sustainabil-
ity, by for example being linked to the business strategy or
60
ASSA ABLOY | ANNUAL REPORT 2021
Report of the Board of Directors | Guidelines for remuneration to senior executives
promote the senior executive’s long-term development
within ASSA ABLOY.
The Remuneration Committee shall for the Board of
Directors prepare, monitor and evaluate matters regarding
variable cash remuneration to the Executive Team. Ahead
of each yearly measurement period for the criteria for
awarding variable cash remuneration the Board of Directors
shall, based on the work of the Remuneration Committee,
establish which criteria that are deemed to be relevant for
the upcoming measurement period. To which extent the
criteria for awarding variable cash remuneration has been
satisfied shall be determined when the measurement period
has ended. Evaluations regarding fulfilment of financial
targets shall be based on determined financial basis for the
relevant period.
Variable cash remuneration can be paid after the meas-
urement period has ended or be subject to deferred pay-
ment. Paid variable cash remuneration can be claimed back
when such right follows from general principles of law.
Duration of employment and termination
of employment
The members of the Executive Team shall be employed until
further notice. If notice of termination is made by ASSA
ABLOY, the notice period may not exceed 12 months for the
CEO and 6 months for the other members of the Executive
Team. If the CEO is given notice, ASSA ABLOY is liable to pay,
including severance pay and remuneration under the notice
period, the equivalent of maximum 24 months’ base salary
and other employment benefits. If any other member of the
Executive Team is given notice, ASSA ABLOY is liable to pay a
maximum of 6 months’ base salary and other employment
benefits plus severance pay amounting to a maximum of an
additional 12 months’ base salary. If notice of termination is
made by a member of the Executive Team, the notice period
may not exceed 6 months, with no right to severance pay.
A member of the Executive Team may, for such time when
the member is not entitled to severance pay, be compen-
sated for non-compete undertakings. Such compensation
shall amount to not more than 60 percent of the monthly
base salary at the time of the termination and shall only be
paid as long as the non-compete undertaking is applicable,
at longest a period of 12 months.
Remuneration and employment conditions for
employees
In the preparation of the Board of Directors’ proposal
for these remuneration guidelines, remuneration and
employment conditions for employees of ASSA ABLOY have
been taken into account by including information on the
employees’ total remuneration, the components of the
remuneration and increase and growth rate over time in
the Remuneration Committee’s and the Board of Directors’
basis of decision when evaluating whether the guidelines
and the limitations set out herein are reasonable.
The decision-making process to determine, review
and implement the guidelines
The Remuneration Committee’s tasks include preparing the
Board of Directors’ decision to propose guidelines for remu-
neration to the Executive Team. The Board of Directors shall
prepare a proposal for new guidelines at least every fourth
year and submit it to the Annual General Meeting. The
guidelines shall be in force until new guidelines are adopted
by the General Meeting. The Remuneration Committee shall
also monitor and evaluate programs for variable remunera-
tion to the Executive Team, the application of the guidelines
for remuneration to the Executive Team as well as the ap-
plicable remuneration structures and remuneration levels in
ASSA ABLOY. The members of the Remuneration Commit-
tee are independent of the company and its management.
The CEO and other members of the Executive Team do not
participate in the Board of Directors’ processing of and reso-
lutions regarding remuneration-related matters in so far as
they are affected by such matters.
Deviation from the guidelines
The Board of Directors may temporarily resolve to deviate
from the guidelines, in whole or in part, if in a specific case
there is special cause for the deviation and a deviation is
necessary to serve ASSA ABLOY’s long-term interests, in-
cluding its sustainability, or to ensure ASSA ABLOY’s financial
viability. As set out above, the Remuneration Committee’s
tasks include preparing the Board of Directors’ resolutions in
remuneration-related matters. This includes any resolutions
to deviate from the guidelines.
Description of material changes of the guidelines and
how the views of shareholders’ have been taken into
consideration
These guidelines, which are proposed for the 2022 Annual
General Meeting, correspond to a large extent with the
guidelines resolved upon by the 2020 Annual General
Meeting. However, in the guidelines now proposed, an op-
tion to pay additional variable cash remuneration has been
introduced and, in addition, the maximum level for variable
cash remuneration for members of the Executive Team
employed in the US has been adjusted. Please be referred to
the section “Types of remuneration” above.
No comments or questions on the remuneration guide-
lines have emerged in connection with general meeting
proceedings.
61
ANNUAL REPORT 2021 | ASSA ABLOY
Guidelines for remuneration to senior executives | Report of the Board of Directors
Sales and income
• Net sales increased by 8 percent to SEK 95,007 M
(87,649). Organic growth was 11 percent (–8), while
net growth from acquisitions and divestments
amounted to 2 percent (4).
• Operating income (EBIT) excluding items affecting
comparability increased by 19 percent to SEK 14,181 M
(11,916), equivalent to an operating margin of 14.9
percent (13.6).
• Earnings per share after full dilution and excluding
items affecting comparability increased by 30 percent
to SEK 9.81 (7.54).
Sales
The Group’s sales for 2021 amounted to SEK 95,007 M (87,649), cor-
responding to a change in sales of 8 percent (–7). Organic growth was
11 percent (–8), while the net contribution from acquisitions and
divestments was 2 percent (4). The exchange rate impact on sales
was –5 percent (–3).
Change in sales
% 2020 2021
Organic growth –8 11
Acquisitions and divestments 4 2
Exchange rate effects –3 –5
Total –7 8
Sales by product group
Mechanical locks, lock systems and fittings accounted for 23 percent
(24) of total sales. Electromechanical and electronic locks accounted
for 30 percent (31) of sales, while entrance automation increased to
31 percent (29). Security doors and hardware accounted for 16 per-
cent (16) of sales.
Cost structure
The Group’s total wage costs, including social security expenses and
pension expenses, amounted to SEK 27,921 M (27,170), equivalent
to 29 percent (31) of sales. The average number of employees was
50,934 (48,471).
Material costs amounted to SEK 33,873 M (30,830), equivalent to
36 percent (35) of sales and other purchasing costs totaled SEK
14,833 M (15,087), equivalent to 16 percent (17) of sales.
Depreciation and amortization of non-current assets amounted to
SEK 3,841 M (3,776), equivalent to 4 percent (4) of sales.
Operating income
Consolidated operating income (EBIT) for 2021 amounted to SEK
14,181 M (12,458). Operating income excluding items affecting
comparability increased by 19 percent to SEK 14,181 M (11,916),
equivalent to an operating margin of 14.9 percent (13.6). The
improvement in income was primarily attributable to improvement
in global demand and continued efficiency enhancements and cost
savings. High price rises for raw materials of importance to the Group,
combined with a scarcity of certain material components in the latter
part of the year, had a negative impact on operating income.
Items affecting comparability
No items affecting comparability were recognized for 2021, while
there were two items affecting comparability for 2020. The Group
launched a new restructuring program in 2020 with a total estimated
cost before taxes of SEK 1,366 M, which was expensed in its entirety in
2020. In conjunction with the acquisition of agta record in 2020, the
previous shareholding in the associate company was also remeasured
at market value through profit or loss. The operating income, which
did not affect cash flow, amounted to SEK 1,909 M, with no effect on
taxes.
Income before tax
Consolidated income before tax was SEK 13,538 M (11,676). The
exchange rate effect before taxes amounted to SEK –539 M (–510).
Net financial items totaled SEK –643 M (–782), mainly because of
lower net interest as a result of lower net debt compared with the
previous year. The profit margin was 14.2 percent (13.3).
The Parent company’s operating income for 2021 totaled SEK
1,053 M (868), mainly because of higher intra-Group operating
income compared with the previous year.
Tax on income
The Group’s tax expense totaled SEK 2,638 M (2,504), equivalent to
an effective tax rate excluding items affecting comparability of 19.5
percent (24.8). The reduced tax rate was due to a positive one-time
effect from an intra-Group transfer of trademark. The effective
income tax rate 2021 excluding the one-time tax effect was 24.4 per-
cent. The reported effective tax rate overall amounted to 19.5 per-
cent (21.4).
Earnings per share
Consolidated earnings per share before and after full dilution and
excluding items affecting comparability amounted to SEK 9.81 (7.54),
an increase of 30 percent.
Sales and operating income
Sales
Operating income
1
1
Excluding items affecting
comparability.
Sales by product group, 2021
Mechanical locks, lock systems
and fittings, 23% (24)
Entrance automation, 31% (29)
Electromechanical and elec-
tronic locks, 30% (31)
Security doors and hardware,
16% (16)
SEK M SEK M
0
20,000
40,000
60,000
80,000
100,000
2120191817
Omsättning
Rörelseresultat
1
0
3,000
6,000
9,000
12,000
15,000
Earnings per share before and after dilution
SEK
0
2
4
6
8
10
2120191817
Earnings per share before
and after dilution
1
1
Excluding items affecting
comparability.
62
ASSA ABLOY | ANNUAL REPORT 2021
Consolidated financial statements
Consolidated income statement
Consolidated statement of comprehensive
income
SEK M Note 2020 2021
Sales 2 87,649 95,007
Cost of goods sold –53,336 –57,231
Gross income 34,313 37,777
Selling expenses –14,743 –14,374
Administrative expenses 3 –4,882 –4,928
Research and development costs –3,902 –3,936
Other operating income and expenses 4 1,415 –377
Share of earnings in associates 5 257 19
Operating income 7–9, 25, 34 12,458 14,181
Financial income 10 10 6
Financial expenses 9, 11, 25 –792 –649
Income before tax 11,676 13,538
Tax on income 12 –2,504 –2,638
Net income 9,172 10,901
Net income attributable to:
Parent company’s shareholders 9,171 10,900
Non-controlling interests 1 1
Earnings per share
Before and after dilution, SEK 13 8.26 9.81
Before and after dilution and excluding items affecting comparability, SEK 13 7.54 9.81
SEK M Note 2020 2021
Net income 9,172 10,901
Other comprehensive income:
Items that will not be reclassified to profit or loss
Actuarial gain/loss on post-employment benefit obligation 25 –319 917
Deferred tax from actuarial gain/loss on post-employment benefit obligations 56 –211
Total –262 705
Items that may be reclassified subsequently to profit or loss
Share of other comprehensive income of associates –70 –6
Cash flow hedges 0 5
Net investment hedges –3 –
Exchange rate differences reclassified to profit or loss –318 –
Exchange rate differences –4,560 3,468
Tax attributable to items that may be reclassified subsequently to profit or loss 16 –23
Total –4,935 3,444
Total comprehensive income 3,975 15,050
Total comprehensive income attributable to:
Parent company’s shareholders 3,975 15,049
Non-controlling interests 0 1
63
ANNUAL REPORT 2021 | ASSA ABLOY
Consolidated financial statements
Comments by division
ASSA ABLOY is organized into five divisions. EMEIA
(Europe, Middle East, India and Africa), Americas (North
and South America) and Asia Pacific (Asia and Oceania)
manufacture and sell mechanical and electromechanical
locks, security doors and hardware in their respective
geographic markets. Global Technologies operates world-
wide in the product areas of access control systems,
secure card issuance, identification technology and hotel
locks. Entrance Systems is a global supplier of entrance
automation products and service.
Opening Solutions EMEIA
Sales totaled SEK 20,522 M (18,982), with organic growth of 13 per-
cent (–8). Net growth from acquisitions, divestments and internal
segment transfers was –2 percent (–1). Operating income excluding
items affecting comparability amounted to SEK 2,916 M (2,263), with
an operating margin (EBIT) of 14.2 percent (11.9). Return on capital
employed was 16.2 percent (11.9). Operating cash flow before non-
cash items and interest paid was SEK 3,089 M (2,939).
Demand recovered strongly for most market regions in EMEIA
compared with the previous year, despite the continued impact of
the Covid-19 pandemic. Growth remained high in the private resi-
dential market, combined with gradual recovery in commercial and
institutional segments. Business operations in India were transferred
to EMEIA from Asia Pacific at the start of the year. Certego, a locksmith
chain in the Nordics, was divested during the year.
Opening Solutions Americas
Sales totaled SEK 20,507 M (19,013), with organic growth of 14 per-
cent (–7). Net growth from acquisitions, divestments and internal
segment transfers was 1 percent (–9). Operating income excluding
items affecting comparability amounted to SEK 4,200 M (3,698), with
an operating margin (EBIT) of 20.5 percent (19.4). Return on capital
employed was 30.0 percent (24.4). Operating cash flow before non-
cash items and interest paid was SEK 3,722 M (4,837).
There was very strong growth, and sales reached a higher level
than before the pandemic. Growth in North America was very strong
in the private residential market, while there was gradual recovery in
commercial customer segments. Demand in Latin America contin-
ued to develop very well. The division maintained a good level of
profitability. A contract was signed during the year to acquire HHI, a
leading supplier to the North American residential market.
Opening Solutions Asia Pacific
Sales totaled SEK 8,719 M (8,841), with organic growth of 2 percent
(–16). Net growth from acquisitions, divestments and internal seg-
ment transfers was –2percent (1). Operating income excluding items
affecting comparability amounted to SEK 499 M (396), with an oper-
ating margin (EBIT) of 5.7 percent (4.5). Return on capital employed
was 5.9 percent (4.4). Operating cash flow before non-cash items and
interest paid was SEK 285 M (762).
Continued restrictions on account of the pandemic led to gradu-
ally weaker demand for Asia Pacific during the year, primarily in China
and South east Asia. Pacific and South Korea reported growth. A new
organization was introduced at the start of the year to achieve long-
term growth and improved profitability. The division reported posi-
tive organic growth despite challenging market conditions, and the
operating margin improved following continued efficiency enhance-
ments and staff reductions.
Global Technologies
Sales totaled SEK 14,604 M (14,158), with organic growth of 5 per-
cent (–15). Net growth from acquisitions, divestments and internal
segment transfers was 3 percent (10). Operating income excluding
items affecting comparability amounted to SEK 2,253 M (2,023), with
an operating margin (EBIT) of 15.4 percent (14.3). Return on capital
employed was 10.4 percent (8.9). Operating cash flow before non-
cash items and interest paid was SEK 3,179 M (2,509).
The division continued to be negatively affected by both the pan-
demic and the scarcity of certain components in most business units.
Continued investments in R&D and several acquisitions strengthened
the market position in various areas. Efficiency enhancements and
cost savings boosted the operating margin, and cash flow was main-
tained at a high level.
Entrance Systems
Sales totaled SEK 32,690 M (28,323), with organic growth of 14 per-
cent (–2). Net growth from acquisitions, divestments and internal
segment transfers was 7 percent (15). Operating income excluding
items affecting comparability amounted to SEK 4,988 M (4,083), with
an operating margin (EBIT) of 15.3 percent (14.4). Return on capital
employed was 15.8 percent (13.9). Operating cash flow before non-
cash items and interest paid was SEK 3,971 M (4,974).
Demand was strong in all business segments. Perimeter Security
and Residential performed particularly well. The integration of the
previous year’s acquisition, agta record, developed well. The expan-
sion of the service organization continued to proceed as planned. The
division’s operating margin improved further on the previous year.
Other
The costs of Group-wide functions, such as the Executive Team,
accounting and finance, supply management and Group-wide prod-
uct development, totaled SEK 675 M (547). Elimination of sales
between the Group’s segments is included in “Other”.
EMEIA, 21% (21)
Americas, 22% (22)
Asia Pacific, 8% (9)
Global Technologies, 15% (16)
Entrance Systems, 34% (32)
External sales, 2021
Average number of employees, 2021
EMEIA, 23% (21)
Americas, 19% (18)
Asia Pacific, 16% (21)
Global Technologies, 13% (13)
Entrance Systems, 29% (27)
Operating income, 2021
1, 2
EMEIA, 20% (18)
Americas, 28% (30)
Asia Pacific, 3% (3)
Global Technologies, 15% (16)
Entrance Systems, 34% (33)
1
“Other” is not included in the calculation. See section Comments
by division for what is included in “Other”.
2
Excluding items affecting comparability.
64
ASSA ABLOY | ANNUAL REPORT 2021
Consolidated financial statements
Reporting by division
SEK M
EMEIA Americas Asia Pacific
Global
Technologies
Entrance
Systems
Other Total
2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021
Sales, external 18,563 20,040 18,907 20,356 7,916 7,549 14,054 14,495 28,210 32,568 – – 87,649 95,007
Sales, internal 418 483 107 151 926 1,170 105 109 113 123 –1,668
1
–2,036
1
– –
Sales 18,982 20,522 19,013 20,507 8,841 8,719 14,158 14,604 28,323 32,690 –1,668 –2,036 87,649 95,007
Organic growth –8% 13% –7% 14% –16% 2% –15% 5% –2% 14% – – –8% 11%
Acquisitions and divestments –1% –2% –9% 1% 1% –2% 10% 3% 15% 7% – – 4% 2%
Exchange rate effects –1% –3% –2% –7% –2% –1% –3% –5% –2% –6% – – –3% –5%
Share of earnings in associates – – – – 9 18 9 1 239 –1 – – 257 19
Operating income, excluding items
affecting comparability 2,263 2,916 3,698 4,200 396 499 2,023 2,253 4,083 4,988 –547 –675 11,916 14,162
Operating margin, excluding items
affecting comparability 11.9% 14.2% 19.4% 20.5% 4.5% 5.7% 14.3% 15.4% 14.4% 15.3% – – 13.6% 14.9%
Restructuring costs –448 – –51 – –303 – –195 – –220 – –150 – –1,366 –
Revaluation of associate shareholding – – – – – – – – 1,909 – – – 1,909 –
Operating income (EBIT) 1,815 2,916 3,647 4,200 93 499 1,828 2,253 5,772 4,988 –697 –675 12,458 14,181
Operating margin (EBIT) 9.6% 14.2% 19.2% 20.5% 1.1% 5.7% 12.9% 15.4% 20.4% 15.3% – – 14.2% 14.9%
Net financial items –782 –643
Tax on income –2,504 –2,638
Net income 9,172 10,901
Operating income (EBIT) 1,815 2,916 3,647 4,200 93 499 1,828 2,253 5,772 4,988 –697 –675 12,458 14,181
Reversal, items affecting comparability 448 – 51 – 303 – 195 – –1,689 – 150 – –542 –
Depreciation and amortization 925 969 471 493 355 306 917 923 1,078 1,114 30 37 3,776 3,841
Net capital expenditure –407 –475 –267 –351 –192 –182 –430 –250 –330 –361 –47 –10 –1,674 –1,629
Amortization of lease liabilities –318 –306 –132 –148 –108 –92 –144 –144 –559 –537 –14 –15 –1,275 –1,242
Change in working capital 476 –14 1,067 –471 311 –247 144 397 702 –1,233 –94 73 2,606 –1,496
Operating cash flow by division 2,939 3,089 4,837 3,722 762 285 2,509 3,179 4,974 3,971 –673 –591 15,349 13,656
Non-cash items –95 178 –95 178
Interest paid and received –694 –569 –694 –569
Operating cash flow 14,560 13,265
Capital employed 16,849 17,063 13,201 15,908 8,191 8,653 21,044 22,326 30,231 32,787 –883 –74 88,634 96,663
– of which goodwill 10,475 10,949 10,444 11,700 3,884 4,028 14,881 16,164 18,660 19,662 – – 58,344 62,502
– of which other intangible assets/property,
plant and equipment 3,485 3,516 2,713 2,977 2,375 2,483 5,100 5,059 8,362 8,461 99 90 22,134 22,587
– of which right-of-use assets 998 937 387 430 264 243 457 512 1,390 1,270 17
44 3,513 3,436
– of which investments in associates 1 1 – – 589 602 28 32 20 17 – – 637 652
Return on capital employed 11.9% 16.2% 24.4% 30.0% 4.4% 5.9% 8.9% 10.4% 13.9% 15.8% – – 12.5% 15.2%
Average number of employees 10,281 11,848 8,787 9,298 9,892 8,259 6,374 6,556 12,883 14,604 254 369 48,471 50,934
1
Of which eliminations SEK –2,036 M (–1,668).
The segments have been determined on the basis of reporting to the
President and CEO, who monitors the overall performance and makes
decisions on resource allocation.
The different segments generate their revenue from the manufac-
ture and the sale of mechanical, electromechanical and electronic
locks, lock systems and fittings, and security doors and hardware.
The breakdown of sales is based on customer sales in the respec-
tive country. Sales between segments are carried out at arm’s length.
For further information on sales, see Note 2.
65
ANNUAL REPORT 2021 | ASSA ABLOY
Consolidated financial statements
Financial position
• Capital employed amounted to SEK 96,663 M (88,634).
• Return on capital employed was 15.2 percent (12.5).
• The net debt/EBITDA ratio was 1.5 (1.9).
SEK M 2020 2021
Capital employed 88,634 96,663
– of which goodwill 58,344 62,502
Net debt 29,755 27,071
Equity 58,879 69,582
– of which non-controlling interests 9 9
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 96,663 M (88,634). Return on capital
employed was 15.2 percent (12.5).
Intangible assets amounted to SEK 76,336 M (72,452). The
increase is mainly due to currency effects and completed acquisi-
tions. During the year, goodwill and other intangible assets with an
indefinite useful life arose to a preliminary value of SEK 1,276 M
(8,325) as a result of completed acquisitions and adjustments of
acquisitions made in previous years. A valuation model, based on dis-
counted future cash flows, is used for impairment testing of goodwill
and other intangible assets with an indefinite useful life.
Property, plant and equipment amounted to SEK 8,753 M (8,026).
Capital expenditure on property, plant and equipment and intangible
assets, less sales of property, plant and equipment and intangible
assets, totaled SEK 1,629 M (1,674). Total depreciation, amortization
and impairment amounted to SEK 3,841 M (3,776).
Trade receivables amounted to SEK 15,844 M (13,665) and inven-
tories totaled SEK 13,933 M (10,079) on the reporting date. The aver-
age collection period for trade receivables was 51 days (55). Material
throughput time averaged 99 days (97). The Group is making system-
atic efforts to increase capital efficiency.
Net debt
Net debt amounted to SEK 27,071 M (29,755), of which pension
commitments and other post-employment benefits accounted for
SEK 2,736 M (3,514).
Net debt decreased during the year because of the strong operat-
ing cash flow in combination with exchange rate effects.
External financing
The Group’s long-term loan financing mainly consists of a GMTN Pro-
gram of SEK 15,793 M (16,189), of which SEK 14,862 M (15,047) is
long-term, a Private Placement Program in the US totaling USD 225
M, of which USD 75 M (225) is long-term, and loans from financial
institutions such as the European Investment Bank (EIB) of EUR 0 M
(18) and USD 349 M (366) and the Nordic Investment Bank of EUR
135 M (190). During the year there were no new issues under the
GMTN Program and no new long-term loans were raised. Other
changes in long-term loans are mainly due to some of the originally
long-term loans now having less than 1 year to maturity. The size of
the loans was also affected by currency fluctuations, especially
regarding the USD.
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, however, the out-
standing balance under the Commercial Paper programs was SEK 0 M
(0). In addition, substantial credit facilities are available, mainly in the
form of a Multi-Currency Revolving Credit Facility of EUR 1,200 M
(1,200).
Fixed interest terms decreased somewhat during the year, with an
average term of 29 months (32) at year-end.
Cash and cash equivalents amounted to SEK 4,325 M (2,756) and
are invested in banks with high credit ratings.
Some of the Group’s main financing agreements contain a cus-
tomary Change of Control clause. This clause means that lenders have
the right in certain circumstances to demand the renegotiation of
conditions or to terminate the agreements should control of the
company change.
Equity
Consolidated equity totaled SEK 69,592 M (58,879) at year-end.
Return on equity was 17.0 percent (15.5) and the debt/equity ratio,
calculated as net debt divided by equity, was 0.39 (0.51). The equity
ratio was 53.5 percent (50.1) at year-end.
Capital employed and return on capital employedNet debt
Net debt
Net debt/EBITDA
Capital employed
Return on capital
employed
SEK M
0
10,000
20,000
30,000
40,000
2120191817
0
1
2
3
4
SEK M %
0
20,000
40,000
60,000
80,000
100,000
2120191817
0
5
10
15
20
25
66
ASSA ABLOY | ANNUAL REPORT 2021
Consolidated financial statements
Consolidated balance sheet
SEK M Note 2020 2021
ASSETS
Non-current assets
Intangible assets 14 72,452 76,336
Property, plant and equipment 15 8,026 8,753
Right-of-use assets 16 3,513 3,436
Investments in associates 18 637 652
Other financial assets 20 212 267
Deferred tax assets 19 1,338 1,264
Total non-current assets 86,178 90,707
Current assets
Inventories 21 10,079 13,933
Trade receivables 22 13,665 15,844
Current tax receivables 1,060 1,231
Other current receivables 1,542 1,720
Prepaid expenses and accrued income 2 1,675 1,945
Derivative financial instruments 35 426 262
Short-term investments 35 46 8
Cash and cash equivalents 35 2,756 4,325
Total current assets 31,250 39,267
TOTAL ASSETS 117,428 129,975
EQUITY AND LIABILITIES
Equity
Parent company’s shareholders
Share capital 24 371 371
Other contributed capital 9,675 9,675
Reserves 32 1,794 5,237
Retained earnings including net income for the year 47,030 54,299
Equity attributable to the Parent company’s shareholders 58,870 69,582
Non-controlling interests 9 9
Total equity 58,879 69,592
Non-current liabilities
Long-term loans 35 22,381 20,195
Non-current lease liabilities 35 2,477 2,433
Deferred tax liabilities 19 2,868 2,581
Pension provisions 25 3,514 2,736
Other non-current provisions 26 616 460
Other non-current liabilities 2 828 703
Total non-current liabilities 32,683 29,108
Current liabilities
Short-term loans 35 3,514 5,042
Current lease liabilities 35 1,085 1,082
Derivative financial instruments 35 172 347
Trade payables 7,027 9,527
Current tax liabilities 1,341 1,598
Current provisions 26 1,159 794
Other current liabilities 2, 27 3,880 3,840
Accrued expenses and deferred income 2, 28 7,687 9,045
Total current liabilities 25,865 31,276
TOTAL EQUITY AND LIABILITIES 117,428 129,975
67
ANNUAL REPORT 2021 | ASSA ABLOY
Consolidated financial statements
Cash flow
• Operating cash flow remained strong and amounted
to SEK 13,265 M (14,560).
• Cash flow from acquisitions and divestments of subsidi-
aries totaled SEK –1,422 M (–5,068).
Operating cash flow
SEK M 2020 2021
Operating income (EBIT) 12,458 14,181
Restructuring costs 1,366 –
Revaluation of previously owned shares in associates –1,909 –
Depreciation and amortization 3,776 3,841
Net capital expenditure –1,674 –1,629
Change in working capital 2,606 –1,496
Amortization of lease liabilities –1,275 –1,242
Interest paid and received –694 –569
Non-cash items –95 178
Operating cash flow 14,560 13,265
Cash conversion 1.31 0.98
The Group’s operating cash flow amounted to SEK 13,265 M
(14,560), equivalent to 98 percent (131) of income before tax
excluding items affecting comparability.
Net capital expenditure
Net capital expenditure on intangible assets and property, plant and
equipment totaled SEK 1,629 M (1,674), equivalent to 63 percent
(68) of depreciation and amortization on intangible assets and
property, plant and equipment.
Change in working capital
SEK M 2020 2021
Inventories 687 –2,943
Trade receivables 1,331 –1,289
Trade payables –370 1,959
Other working capital 958 778
Change in working capital 2,606 –1,496
Material throughput time averaged 99days (97). Capital tied up in
working capital increased during the year, which had an impact on
cash flow of SEK –1,496 M (2,606) overall.
Relationship between cash flow from operating activities and
operating cash flow
SEK M 2020 2021
Cash flow from operating activities 13,658 12,456
Restructuring payments 747 563
Net capital expenditure –1,674 –1,629
Amortization of lease liabilities –1,275 –1,242
Reversal of tax paid 3,104 3,117
Operating cash flow 14,560 13,265
Investments in subsidiaries
Cash flow from investments in subsidiaries totaled SEK 2,121 M
(–6,238), while divestments of subsidiaries generated a positive cash
flow of SEK 699 M (1,170). The cash flow effect from acquisitions and
divestments was therefore SEK –1,422 M (–5,068). Acquired cash and
cash equivalents totaled SEK 180 M (2,239).
Change in net debt
Net debt was mainly affected by the strong positive operating cash
flow, the dividend to shareholders, acquisitions and exchange rate
differences.
SEK M 2020 2021
Net debt at 1 January 33,050 29,755
Operating cash flow –14,560 –13,265
Restructuring payments 747 563
Tax paid on income 3,104 3,117
Acquisitions and divestments 5,504 1,201
Dividend 4,277 4,333
Actuarial gain/loss on post-employment benefit obl. 319 –917
Change in lease liabilities –106 –86
Exchange rate differences, etc. –2,580 2,370
Net debt at 31 December 29,755 27,071
Capital expenditureIncome before tax and operating cash flow
Income before tax
1
Operating cash flow
Net capital expenditure
Depreciation and amorti-
zation
Net capital expenditure as
% of sales
SEK M
0
3,000
6,000
9,000
12,000
15,000
2120191817
SEK M %
0
1,000
2,000
3,000
4,000
2120191817
0
1
2
3
4
1
Excluding items affecting
comparability.
68
ASSA ABLOY | ANNUAL REPORT 2021
Consolidated financial statements
Consolidated statement of cash flows
SEK M Note 2020 2021
OPERATING ACTIVITIES
Operating income 12,458 14,181
Depreciation and amortization 8 3,776 3,841
Revaluation of previously owned shares in associates –1,909 –
Restructuring costs 1,366 –
Other non-cash items 31 –95 178
Restructuring payments –747 –563
Cash flow before interest and tax 14,850 17,638
Interest paid –699 –564
Interest received 5 –5
Tax paid on income –3,104 –3,117
Cash flow before changes in working capital 11,052 13,952
Change in working capital 31 2,606 –1,496
Cash flow from operating activities 13,658 12,456
INVESTING ACTIVITIES
Investments in property, plant and equipment and intangible assets 14, 15 –1,806 –1,713
Sales of property, plant and equipment and intangible assets 14, 15 133 84
Investments in subsidiaries 33 –6,238 –2,121
Divestments of subsidiaries 31 1,170 699
Other investments and divestments 0 –43
Cash flow from investing activities –6,741 –3,094
FINANCING ACTIVITES
Dividend –4,277 –4,333
Long-term loans raised 35 5,806 8
Long-term loans repaid 35 –3,252 –2,473
Amortization of lease liabilities –1,275 –1,242
Purchase of shares in subsidiaries from non-controlling interest –16 –
Stock purchase plans –22 –54
Change in short-term loans, etc. –1,522 282
Cash flow from financing activities –4,558 –7,813
CASH FLOW 2,359 1,549
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at 1 January 442 2,756
Cash flow 2,359 1,549
Effect of exchange rate differences in cash and cash equivalents –45 20
Cash and cash equivalents at 31 December 35 2,756 4,325
69
ANNUAL REPORT 2021 | ASSA ABLOY
Consolidated financial statements
Changes in consolidated equity
SEK M
Parent company’s shareholders
Total
Share
capital
Other
contribut-
ed capital Reserves
Retained
earnings
incl. net
income for
the year
Non-con-
trolling
interests
Opening balance 1 January 2020 371 9,675 6,728 42,369 11 59,154
Net income 9,171 1 9,172
Other comprehensive income –4,934 –262 –1 –5,197
Total comprehensive income –4,934 8,909 0 3,975
Dividend –4,276 –1 –4,277
Stock purchase plans 28 – 28
Total contributions by and distributions to
Parent company’s shareholders –4,249 –1 –4,249
Change in non-controlling interest 1 –1 0
Total transactions with shareholders –4,248 –2 –4,249
Closing balance 31 December 2020 371 9,675 1,794 47,030 9 58,879
Opening balance 1 January 2021 371 9,675 1,794 47,030 9 58,879
Net income 10,900 1 10,901
Other comprehensive income 3,444 705 1 4,150
Total comprehensive income 3,444 11,605 1 15,050
Dividend –4,332 –2 –4,333
Stock purchase plans –5 – –5
Total contributions by and distributions to
Parent company’s shareholders –4,337 –2 –4,338
Change in non-controlling interest – – –
Total transactions with shareholders –4,337 –2 –4,338
Closing balance 31 December 2021 371 9,675 5,237 54,299 9 69,592
Dividend and earnings per shareEquity per share after dilution and return on equity
Dividend per share
Earnings per share before and
after dilution
1
Equity per share after
dilution, SEK
Return on equity, %
SEK %
0
10
20
30
40
50
60
70
2120191817
0
5
10
15
20
25
30
35
SEK
0
2
4
6
8
10
2120191817
1
Excluding items affecting
comparability
70
ASSA ABLOY | ANNUAL REPORT 2021
Consolidated financial statements
Income statement – Parent company
Statement of comprehensive income
– Parent company
SEK M Note 2020 2021
Administrative expenses 3, 6, 8, 9 –2,279 –2,327
Research and development costs 6, 8, 9 –1,441 –2,004
Capitalized work for own account 8 0
Other operating income and expenses 4 4,580 5,384
Operating income 9, 34 868 1,053
Financial income 10 5,197 6,271
Financial expenses 9, 11 –703 –603
Income before appropriations and tax 5,363 6,721
Group contributions 663 636
Change in excess depreciation and amortization –214 –481
Tax on income 12 –259 –245
Net income 5,552 6,631
SEK M 2020 2021
Net income 5,552 6,631
Other comprehensive income – –
Total comprehensive income 5,552 6,631
71
ANNUAL REPORT 2021 | ASSA ABLOY
Parent company financial statements
Balance sheet – Parent company
SEK M Note 2020 2021
ASSETS
Non-current assets
Intangible assets 14 2,498 5,495
Property, plant and equipment 15 50 40
Shares in subsidiaries 17 35,821 40,339
Other financial assets 20 592 561
Total non-current assets 38,961 46,435
Current assets
Receivables from subsidiaries 20,534 17,701
Other current receivables 514 488
Prepaid expenses and accrued income 21 42
Cash and cash equivalents 35 0 0
Total current assets 21,069 18,231
TOTAL ASSETS 60,030 64,666
EQUITY AND LIABILITIES
Equity 23
Restricted equity
Share capital 24 371 371
Revaluation reserve 275 275
Statutory reserve 8,905 8,905
Fund for development expenses 184 127
Non-restricted equity
Share premium reserve 787 787
Retained earnings including net income for the year 15,664 18,016
Total equity 26,186 28,481
Untaxed reserves 1,125 1,606
Non-current liabilities
Long-term loans 35 15,677 14,577
Total non-current liabilities 15,677 14,577
Current liabilities
Short-term loans 35 1,594 1,852
Trade payables 154 199
Current liabilities to subsidiaries 14,862 17,531
Other current liabilities 7 9
Accrued expenses and deferred income 28 425 411
Total current liabilities 17,042 20,002
TOTAL EQUITY AND LIABILITIES 60,030 64,666
72
ASSA ABLOY | ANNUAL REPORT 2021
Parent company financial statements
Cash flow statement – Parent company
Change in equity – Parent company
SEK M Note 2020 2021
OPERATING ACTIVITIES
Operating income 868 1,053
Depreciation and amortization 8 745 1,244
Other non-cash items 50 49
Cash flow before interest and tax 1,663 2,346
Interest paid and received –258 –281
Dividends received 3,704 3,293
Tax paid and received –505 –189
Cash flow before changes in working capital 4,603 5,169
Change in working capital 751 616
Cash flow from operating activities 5,355 5,785
INVESTING ACTIVITIES
Investments in property, plant and equipment and intangible assets –164 –4,231
Investments in subsidiaries –1,472 –5,703
Divestments of subsidiaries – 3,757
Cash flow from investing activities –1,636 –6,178
FINANCING ACTIVITES
Dividend –4,276 –4,332
Loans raised 3,080 6,373
Loans repaid –2,500 –1,594
Stock purchase plans –22 –54
Cash flow from financing activities –3,718 393
CASH FLOW 0 0
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at 1 January 0 0
Cash flow 0 0
Cash and cash equivalents at 31 December 0 0
SEK M
Restricted equity Non-restricted equity
Total
Share
capital
Reval-
uation
reserve
Statutory
reserve
Fund for
devel-
opment
expenses
Share
premium
reserve
Retained
earnings
Opening balance 1 January 2020 371 275 8,905 219 787 14,326 24,883
Net income 5,552 5,552
Total comprehensive income 5,552 5,552
Dividend –4,276 –4,276
Stock purchase plans 28 28
Reclassifications –35 35 –
Total transactions with shareholders –35 –4,213 –4,249
Closing balance 31 December 2020 371 275 8,905 184 787 15,664 26,186
Opening balance 1 January 2021 371 275 8,905 184 787 15,664 26,186
Net income 6,631 6,631
Total comprehensive income 6,631 6,631
Dividend –4,332 –4,332
Stock purchase plans –5 –5
Reclassifications –57 57 –
Total transactions with shareholders –57 –4,279 –4,336
Closing balance 31 December 2021 371 275 8,905 127 787 18,016 28,481
73
ANNUAL REPORT 2021 | ASSA ABLOY
Parent company financial statements
Notes
NOTE 1 Significant accounting and valuation principles
Group
ASSA ABLOY applies International Financial Reporting Standards (IFRS) as adopted 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 31/12/2021 and have been
applied to all years presented, unless stated otherwise. This Note describes the most sig-
nificant accounting principles that have been applied in the preparation of the financial
statements, which comprise the information provided on pages 42–98.
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 pre-
pared in accordance with the cost method, except for financial assets and liabilities
(including derivative instruments) measured at fair value through profit or loss.
Totals quoted in tables and statements may not always be the exact sum of the indi-
vidual items because of rounding differences. The aim is that each line item should cor-
respond to its source and rounding differences may therefore arise.
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 state-
ment and balance sheet as well as the supplementary information provided in the finan-
cial statements. Consequently, changes in estimates and assessments 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 liabilities in acquisitions, in impairment testing of goodwill and
other assets, as well as in determining actuarial assumptions for calculating employee
benefits. Estimates and assessments also affect valuation of deferred taxes, other provi-
sions and deferred considerations, as well as valuation of right-of-use assets and lease
liabilities where the Group, when estimating the term of a lease, assesses the likelihood
that any extension options will be exercised. 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 intangible 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
determined by calculating their values in use. The calculations are based on certain
assumptions about the future which, for the Group, are associated with the risk of mate-
rial adjustments in carrying amounts during the next financial year. Material assump-
tions and the effects of reasonable changes in them are described in Note14.
The actuarial assumptions made when calculating post-employment employee ben-
efits also have material importance for the consolidated financial statements. For infor-
mation on these actuarial assumptions, see Note25.
New and revised standards applied by the Group
As of 1 January 2021, the Group has applied the changes to IFRS 9, IAS 39, IFRS 4, IFRS 7
and IFRS 16 as a consequence of the reference rate reform, phase 2. These changes have
not had a material impact on the Group’s financial statements. No other new or
amended standards with material impact on the Group’s financial statements were
applied for the first time in 2021.
New and revised IFRS not yet effective
No new standards or interpretations that have been published but have not come into
force as of the closing date are expected to have a material impact on future financial
reports.
Consolidated financial statements
The consolidated financial statements include ASSA ABLOY AB (the Parent company)
and all companies over which the Group has control. The Group controls an entity when
the Group is exposed to, or has the rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity.
Companies acquired during the year are included in the consolidated financial state-
ments with effect from the date when a controlling 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 prepared in accordance with the
purchase method, which means that the cost of shares in subsidiaries was eliminated
against their equity at the acquisition date. In this context, equity in subsidiaries is
determined on the basis of the fair value of assets, liabilities and contingent liabilities at
the acquisition date. Consequently, only that part of the equity in subsidiaries that has
arisen after the acquisition date is included in consolidated equity. The Group deter-
mines on an individual basis for each acquisition whether a non-controlling interest in
the acquired company shall be recognized at fair value or at the interest’s proportional
share of the acquired company’s net assets. Any negative difference, negative goodwill,
is recognized as revenue immediately after determination.
Deferred considerations are classified as financial liabilities and revalued through
profit or loss in operating income. Significant deferred considerations are discounted to
present value. Acquisition-related transaction costs are expensed as incurred.
Intra-Group transactions and balance sheet items, and unrealized profits on transac-
tions between Group companies are eliminated in the consolidated financial state-
ments.
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 sepa-
rately in consolidated equity. Transactions with non-controlling interests are recog-
nized as transactions with the Group’s shareholders in equity.
Associates
Associates are defined as companies which are not subsidiaries but in which the Group
has a significant (but not a controlling) 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’ earnings after the acqui-
sition date. Dividends from associates are recognized as a reduction in the carrying
amount of the holdings. The share of associates’ earnings is recognized in the consoli-
dated income statement in operating income as the holdings are related to business
operations.
Segment reporting
Operating segments are reported in accordance with internal reporting to the chief
operating decision maker. The chief operating decision maker is the Group’s President
and CEO, who is responsible for allocating resources and assessing the performance of
the operating segments. The divisions form the operational structure for internal con-
trol and reporting and also constitute the Group’s segments for external financial
reporting. The Group’s business is divided into five divisions. Three divisions are based
on products sold in local markets in the respective division: EMEIA, 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 com-
panies operate. Transactions in foreign currencies are translated to functional currency
by application of the exchange rates prevailing on the transaction date. Foreign
exchange gains and losses arising from the settlement of such transactions are normally
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 transac-
tions relating to qualifying cash flow hedges, which are recognized in other comprehen-
sive income. Receivables and liabilities are measured at the year-end rate.
In translating the accounts of foreign subsidiaries prepared in functional currencies
other than the Group’s presentation currency, all balance sheet items except net
income are translated at the year-end rate and net income is translated at the average
rate. The income statement is translated at the average rate for the period. Exchange dif-
ferences arising from the translation of foreign subsidiaries are recognized as translation
differences in other comprehensive 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
Average rate Closing rate
2020 2021 2020 2021
United Arab Emirates AED 2.50 2.33 2.23 2.46
Argentina ARS 0.13 0.09 0.10 0.09
Australia AUD 6.35 6.43 6.27 6.56
Brazil BRL 1.81 1.59 1.57 1.59
Canada CAD 6.84 6.82 6.40 7.07
Switzerland CHF 9.78 9.40 9.27 9.86
Chile CLP 0.012 0.011 0.012 0.011
China CNY 1.33 1.33 1.25 1.42
Czech Republic CZK 0.40 0.39 0.38 0.41
Denmark DKK 1.41 1.36 1.35 1.38
Euro zone EUR 10.49 10.15 10.05 10.24
Notes
74
ASSA ABLOY | ANNUAL REPORT 2021
Country Currency
Average rate Closing rate
2020 2021 2020 2021
United Kingdom GBP 11.82 11.77 11.08 12.19
Hong Kong HKD 1.18 1.10 1.06 1.16
Hungary HUF 0.030 0.028 0.028 0.028
Israel ILS 2.67 2.65 2.55 2.91
India INR 0.124 0.116 0.112 0.121
Kenya KES 0.087 0.078 0.075 0.080
South Korea KRW 0.0078 0.0075 0.0075 0.0076
Mexico MXN 0.43 0.42 0.41 0.44
Malaysia MYR 2.19 2.07 2.03 2.17
Norway NOK 0.98 1.00 0.95 1.03
New Zealand NZD 5.99 6.06 5.88 6.17
Poland PLN 2.36 2.22 2.21 2.23
Romania RON 2.17 2.06 2.06 2.07
Thailand THB 0.29 0.27 0.27 0.27
Turkey TRY 1.33 0.98 1.12 0.72
US USD 9.18 8.57 8.19 9.05
South Africa ZAR 0.57 0.58 0.56 0.57
Revenue
The Group recognizes revenue from contracts with customers based on the five-step
model described in IFRS 15. Revenue is recognized when the entity satisfies a perfor-
mance obligation by transferring a promised good or service to a customer. The good or
service is transferred when the customer acquires control over the asset, which may
happen either over time or at a particular point in time.
Under the five-step model an entity must complete the following steps before reve-
nue can be recognized: Identify contracts with customers, identify performance obliga-
tions, determine the transaction price, allocate the transaction price to each of the sep-
arate performance obligations, and finally recognize the revenue attributable to each
performance obligation.
At the beginning of the customer contract ASSA ABLOY determines whether the
goods and/or services that are promised in the agreement comprise one performance
obligation or several separate performance obligations.
A performance obligation is defined as a distinct promise to transfer a good or a ser-
vice to the customer. A promised good or service is distinct if both of the following crite-
ria are met:
a) the customer can benefit from the good or service separately or together with other
resources that are readily available to the customer and
b) the Group’s promise to transfer the good or service to the customer is separately
identifiable from other promises in the contract.
When determining the transaction price, which is the amount of consideration prom-
ised in the contract, the Group takes into account any variable considerations, such as
cash discounts, volume-based discounts, and right of returns. The transaction price
includes variable considerations only if it is highly probable that a significant reversal of
the revenue is not expected to occur in a future period.
ASSA ABLOY receives payment in advance from customers to a limited extent. No cus-
tomer contracts within the Group relating to the sale of goods or services are assessed to
contain a significant financing component. The Group does not recognize any contract
costs since the Group applies the practical expedient permitted by the standard, under
which incremental costs of obtaining a contract are recognized as an expense when
incurred if the amortization period of the asset that the Group otherwise would have rec-
ognized is one year or less.
ASSA ABLOY allocates the transaction price for each performance obligation on the
basis of a stand-alone selling price. The stand-alone selling price is the price for which the
Group would sell the good or service separately to a customer. In cases where a stand-
alone selling price is not directly observable, it is usually calculated based on the adjusted
market assessment approach or the expected cost plus a margin approach.
Any discounts are allocated proportionately to all performance obligations in the
contract, provided there is not observable evidence that the discount does not relate to
all performance obligations.
ASSA ABLOY recognizes revenue when the Group satisfies a performance obligation
by transferring a good or service to a customer, i.e. as the customer gains control over
the asset. A performance obligation is met either over time or at a particular point in
time. ASSA ABLOY recognizes revenue over time if any of the following criteria are met:
a) the customer simultaneously receives and consumes the benefits provided by the
Group’s performance as the Group performs an obligation
b) the Group’s performance creates or enhances an asset that the customer controls as
the asset is created or enhanced
c) the Group’s performance does not create an asset with an alternative use to the Group
and the Group has an enforceable right to payment for performance completed to date.
Revenue that is not recognized over time is recognized at a given point in time, i.e. the
point in time when the customer gains control over the asset.
The Group’s revenue mainly consists of product sales. Service related to products
sold represents a limited share of revenue. Revenue for the sale of the Group’s products
is recognized at a given point in time when the customer gains control over the product,
usually at the time of delivery. ASSA ABLOY also carries out installation services, which
are recognized over time. For shorter installation jobs, revenue is recognized in practice
upon completion of installation. Revenue from service contracts is recognized over
time.
For product sales, a receivable is recognized when the goods have been delivered, since
this is usually the point in time when the consideration becomes unconditional. Payment
terms for trade receivables differ among geographic markets.
Intra-Group sales
Transactions between Group companies are carried out at arm’s length and thus at mar-
ket 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 assurance that the company will comply with the conditions
attaching to the grant and that the grant will be received. Grants relating to assets are
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.
Expenditure 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 attributable 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 state-
ment. The tax effects of items recognized directly against equity or in other comprehen-
sive income are themselves recognized against equity or in other comprehensive
income. The liability method is used in accounting for deferred tax. This means that
deferred tax is recognized on all temporary differences between the carrying amounts
of assets and liabilities and their respective tax bases. Deferred tax assets relating to tax
losses carried forward or other future tax allowances are 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 company
can control the time at which the temporary differences are reversed, and it is not con-
sidered likely that such reversal will occur in the foreseeable future. Deferred tax assets
and deferred tax liabilities are offset when there is a legal right to do so and when
deferred taxes relate to the same tax authority.
The Group measures each uncertain tax position using either the most likely amount
or the expected value, based on the method expected to reflect the outcome in the best
way. Assessments are reconsidered when there is new information that affects earlier
judgments.
Cash flow statement
The cash flow statement has been prepared according to the indirect method. The rec-
ognized 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 and are subject to
a negligible risk of fluctuation in value.
Note 1 continued
Notes
75
ANNUAL REPORT 2021 | ASSA ABLOY
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 acqui-
sition date, and is recognized at cost less accumulated impairment losses. Goodwill is
allocated to cash generating units and is tested annually to identify any impairment loss.
Cash generating units are subject to systematic annual impairment testing using a valua-
tion 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 uti-
lized. Other acquisition-related intangible assets consist chiefly of various types of intel-
lectual property rights, such as brands, technology and customer relationships. Identifia-
ble acquisition-related intangible assets are initially recognized at fair value at the
acquisition date and subsequently at cost less accumulated amortization and impair-
ment losses. Amortization is on a straight-line basis over the estimated useful life and
amounts to 5–12 years for technology and 8–15 years for customer relationships. Acqui-
sition-related intangible assets with an indefinite useful life are tested for impairment
annually in the same way as goodwill.
Other intangible assets
An intangible asset that is not acquisition-related is recognized 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 estimated useful life, usually between three and five years. The carrying
amount is the cost less accumulated amortization and impairment losses.
Property, plant and equipment
Property, plant and equipment are recognized at cost less accumulated depreciation
and impairment losses. Cost includes expenditure directly attributable to acquisition of
the asset. Subsequent expenditure is capitalized if it is probable that economic benefits
associated with the asset will flow to the Group, and if the cost can be reliably measured.
Expenditure on repairs and maintenance is expensed as incurred. Depreciable amount
is the cost of an asset less its estimated residual 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 reporting date and
adjusted when necessary. Gain or loss on the disposal of property, plant and equipment 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.
Leases
Within the Group there are a large number of current leases for which the Group is the
lessee, mostly relating to offices, premises and vehicles. The Group recognizes a right-of-
use asset and a lease liability corresponding to the present value of future lease pay-
ments in the balance sheet on the day the leased asset is made available for use. In calcu-
lating the present value, the Group’s incremental borrowing rate by currency is used.
When measuring right-of-use and lease liability, the Group made estimates and assump-
tions such as whether any options to extend or terminate a lease agreement will be
exercised.
The right-of-use asset is depreciated on a straight-line basis over the lease term, or
over the period of use of the underlying asset if the lease transfers ownership of the
underlying asset to the Group by the end of the lease term. Depreciation is recognized as
an expense in profit or loss, while interest expense attributable to the lease liability is rec-
ognized in net financial items.
In the statement of cash flows the lease payments are split between interest paid in
cash flow from operating activities and amortization of lease liabilities in financing activ-
ities. Operating cash flow includes amortization of lease liabilities as an operating com-
ponent.
The Group does not recognize any right of use or lease liability regarding obligations
for short-term leases and low-value leases. Lease payments relating to such leases are
reported as operating expenses over the lease term.
For periods before 2019 the Group recognizes leases in accordance with IAS 17
which means that 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 and when events or circumstances indicate that the carrying amount
may not be recoverable. For impairment testing purposes, assets are grouped at the
lowest organizational level where there are separate identifiable cash flows, so-called
cash generating units (CGU).
For assets that are depreciated/amortized, impairment testing is carried out when
events or circumstances indicate that the carrying amount may not be recoverable.
Impairment losses are recognized in the amount by which the carrying amount of
the asset exceeds the recoverable amount. The recoverable amount is the higher of an
asset’s fair value less selling expenses and its value in use.
Inventories
Inventories are valued in accordance with the ‘first in, first out’ principle at the lower of
cost and net realizable value at the reporting date. 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 effective interest method.
Regarding provisions for expected credit losses on trade receivables, see the section
Impairment of financial assets. The year’s change in expected credit losses is recognized
in the income statement as selling expenses.
Financial assets
Financial assets include cash and cash equivalents, trade receivables, short-term invest-
ments, derivatives and other financial assets.
Under IFRS 9, the Group classifies financial assets in the categories financial assets at
amortized cost, financial assets at fair value through profit or loss, or financial assets at
fair value through other comprehensive income.
Financial assets at amortized cost
Financial assets at amortized cost mainly comprise trade receivables and cash and cash
equivalents. A financial asset is measured at amortized cost if the asset is held within a
business model whose objective is to hold financial assets to collect their contractual
cash flows, and the contractual terms of the financial asset give rise, on specified dates,
to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
Financial assets in this category are initially recognized at fair value plus transaction
costs that are directly related to the purchase and then at amortized cost.
Financial assets at fair value through other comprehensive income
A financial asset is measured at fair value through other comprehensive income if the
asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets, and also the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of prin-
cipal and interest on the principal amount outstanding.
Financial assets in this category are initially recognized at fair value plus transaction
costs that are directly related to the purchase and then at fair value through other com-
prehensive income. As of the reporting date the Group has no financial assets in this cat-
egory.
Financial assets at fair value through profit or loss
Financial assets that are not recognized in any of the other categories are measured at
fair value through profit or loss. Financial assets in this category are initially recognized
at fair value. Transaction costs related to financial assets recognized in this category are
expensed directly in the income statement. As of the reporting date, this category com-
prises shares and participations.
Impairment of financial assets
The Group applies the IFRS 9 simplified approach to measuring expected credit losses
for trade receivables. Under this approach, a provision is made for lifetime expected
credit losses for the trade receivable. For calculation of expected credit losses, the trade
receivables are grouped based on the number of days past due. Expected credit losses
on trade receivables that are not past due are primarily based on actual credit losses
from recent years.
Impairment that would be considered for other financial assets that are within the
scope of expected credit losses have been assessed to be immaterial.
Financial liabilities
Financial liabilities include deferred considerations, loan liabilities, trade payables and
derivatives. Recognition depends on how the liability is classified. The Group classifies
financial liabilities in the categories: financial liabilities at amortized cost and financial
liabilities at fair value through profit or loss.
Financial liabilities are initially measured at fair value less, for a financial liability that is
not measured at fair value through profit or loss, transaction costs that are directly
related to the acquisition or issue of the financial liability. After initial recognition, finan-
Note 1 continued
Notes
76
ASSA ABLOY | ANNUAL REPORT 2021
cial liabilities are recognized either at amortized cost or at fair value through profit or
loss, depending on the classification of the financial liability.
Financial liabilities at fair value through profit or loss
This category includes derivatives with a negative fair value that are not used for hedge
accounting and deferred considerations. Liabilities are measured at fair value on a con-
tinuous basis and changes in value are recognized in the income statement.
Loan liabilities
Loan liabilities are initially valued at fair value, net of transaction costs, and subsequently
at amortized cost. Amortized cost is determined based on the effective interest rate cal-
culated when the loan was raised. Accordingly, surplus values and negative surplus val-
ues as well as direct issue expenses are allocated over the term of the loan. Non-current
loan liabilities have an anticipated term of more than one year, while current loan liabili-
ties have a term of less than one year.
Trade payables
Trade payables are initially valued at fair value, and subsequently 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 or loss where the transaction cost is recognized through profit or
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 tech-
niques 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. 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 finan-
cial liability is derecognized from the balance sheet when the obligation is fulfilled, can-
celled or expires, see above.
Financial assets and liabilities are offset against each other and the net amount is recog-
nized in the balance sheet when there is a legal right of set-off and there is an intention to
settle the items by a net amount. See note 35 for disclosures about offsetting of financial
assets and liabilities.
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
recognizing 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
designated as hedging instruments, changes in value are recognized on a continuous
basis through profit or loss under financial items, either as income or expense.
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 documents 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 effective 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 meas-
ured by estimating future discounted cash flows.
For information on the fair value of derivative instruments, see Note 35, ‘Financial risk
management and financial instruments’. Derivatives at fair value, with a maturity of
more than 12 months, are classified as non-current interest-bearing liabilities or receiv-
ables. Other derivatives are classified as current interest-bearing liabilities and invest-
ments 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 recognized 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 accumulated gains or losses relating to the hedge are recog-
nized in equity, these gains/losses remain in equity and are taken to income, while the
forecast transaction is finally recognized in the income statement. When a forecast trans-
action 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 recognized directly under financial items.
Net investment hedges
For derivatives that are designated and qualify as net investment hedges, the portion of
value changes in fair value designated as effective is recognized in other comprehensive
income. The ineffective portion of the gain or loss is recognized directly in profit or loss for
the period under financial items. Accumulated gain or loss in other comprehensive
income is recognized in the income statement when the foreign operation, or part
thereof, is sold.
Provisions
A provision is recognized when the Group has a legal or constructive obligation result-
ing from a past event and it is probable that an outflow of resources will be required to
settle the obligation, and that a reliable estimate 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 disposal group classified as held for sale
Assets and liabilities are classified as held for sale when their carrying amounts will prin-
cipally 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.
As of the reporting date the Group had no assets or liabilities classified as held for sale.
Remuneration of employees
The Group operates both defined contribution and defined benefit pension plans. Com-
prehensive defined benefit plans are found chiefly in the US, the UK and Germany.
Post-employment medical benefits are also provided, mainly in the US, 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 num-
ber of actuarial assumptions such as discount rate, future inflation and salary increases.
Obligations are valued on the reporting date at their discounted value. For funded plans,
obligations are reduced by the fair value of the plan assets. Where a funded plan has a
surplus, the net asset is measured at the lower of i) the surplus in the defined benefit
plan and ii) the asset ceiling, i.e. the present value of available economic benefits in the
form of refunds from the plan or in the form of reductions in future contributions to the
plan.
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 calculate tax on pen-
sion costs based on the difference between pension expense determined in accordance
with IAS 19 and pension expense determined in accordance with the regulations appli-
cable in the legal entity.
Equity-based incentive programs
The Group has equity-based remuneration plans in the form of ASSA ABLOY’s long-term
incentive program presented for the first time at the 2010 Annual General Meeting.
Detailed information about the structure of the various programs can be found in Note
34 Employees. For the long-term incentive program, personnel costs during the vesting
period are recognized based on the shares’ fair value on the allotment date, that is,
when the company and the employees entered into an agreement on the terms and
conditions for the program. The long-term incentive program through 2017 comprised
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 pro-
gram and that the latter remains employed in the ASSA ABLOY Group. Beginning in
2018, no matching portion is included in the long-term incentive programs.
Fair value is based on the share price on the allotment date; a reduction in fair value
relating to the anticipated dividend has not been made as the participants are compen-
Note 1 continued
Notes
77
ANNUAL REPORT 2021 | ASSA ABLOY
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 personnel costs are 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 tar-
gets 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 allocating
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 recog-
nized as a provision for social security contributions.
The long-term incentive programs are essentially equity settled and an amount
equivalent to the personnel cost is recognized against retained earnings in equity. In the
income statement, the personnel cost is allocated to the respective function.
Earnings per share
Earnings per share before dilution is calculated by dividing the net income attributable to
the Parent company’s shareholders by the weighted average number of outstanding
shares (less treasury shares). Earnings per share after dilution is calculated by dividing the
net income attributable to the Parent company’s shareholders by the sum of the weighted
average number of ordinary shares and potential ordinary shares that may give rise to a
dilutive effect. The dilutive effect of potential ordinary shares is only recognized if their
conversion to ordinary shares would lead to a reduction in earnings per share after dilu-
tion.
Dividend
Dividend is recognized as a liability after the General Meeting has approved the
dividend.
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 franchise and royalty revenues. The significant balance sheet items consist of
shares in subsidiaries, intra-Group receivables and liabilities, and external borrowing.
The Parent company has prepared its annual accounts in accordance with the Swedish
Annual Accounts Act (1995:1554) and 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) adopted 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 franchise 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.
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, with the exception of large
product development projects, which have been capitalized.
Intangible assets
Intangible assets comprise patented technology and other intangible assets. They are
amortized over 5–10 years.
Property, plant and equipment
Property, plant and equipment owned by the Parent company are recognized at cost
less accumulated depreciation and any impairment losses in the same way as for the
Group. They are depreciated over their estimated useful life, which entails 5–10 years for
equipment and 3–5 years for IT equipment.
Trade receivables
Trade receivables are recognized initially at fair value and subsequently measured at
amortized cost using the effective interest method. The Parent company applies the
IFRS 9 simplified approach to measuring expected credit losses for trade receivables.
However, the expected credit losses attributable to the Parent company’s trade receiva-
bles have been assessed to be immaterial.
Pension obligations
The Parent company’s pension obligations are accounted for in accordance with FAR
RedR 1 and are covered by taking out insurance with an insurance company.
Leases
The Parent company recognizes leases in accordance with RFR 2, which means that
lease payments are expensed in a straight line over the lease term.
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. Impairment losses are recognized in Financial expenses
in the income statement.
Financial instruments
Derivative instruments are recognized at fair value. Changes in the value of derivative
instruments are recognized in profit or loss.
Group contributions
The Parent company recognizes Group contributions in accordance with RFR 2. Group
contributions received and paid are recognized under appropriations in the income
statement. The tax effect of Group contributions is recognized in accordance with IAS
12 in the income statement.
Contingent liabilities
The Parent company has guarantees on behalf of its subsidiaries. Such an obligation is
classified as a financial guarantee in accordance with IFRS. For these guarantees, the Par-
ent company applies the alternative rule in RFR 2, reporting these guarantees as a con-
tingent liability.
Note 1 continued
Notes
78
ASSA ABLOY | ANNUAL REPORT 2021
NOTE 2 Sales
Disaggregation of revenue from contracts with customers
Sales by product group
SEK M
EMEIA Americas Asia Pacific Global Technologies Entrance Systems Other Group
2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021
Mechanical locks, lock systems and fittings 9,012 9,814 7,892 8,562 4,357 4,289 291 294 7 8 –638 –703 20,921 22,264
Electromechanical and electronic locks 6,335 6,757 4,860 5,347 1,916 2,077 13,844 14,283 738 1,016 –800 –1,065 26,892 28,415
Security doors and hardware 3,131 3,392 6,224 6,560 2,497 2,240 24 27 2,364 2,930 –101 –127 14,139 15,023
Entrance automation 504 559 38 39 70 113 – – 25,214 28,737 –129 –141 25,697 29,306
Total 18,982 20,522 19,013 20,507 8,841 8,719 14,158 14,604 28,323 32,690 –1,668 –2,036 87,649 95,007
Sales by continent
SEK M
EMEIA Americas Asia Pacific Global Technologies Entrance Systems Other Group
2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021
Europe 16,881 17,760 64 92 506 624 3,759 4,247 12,126 14,750 –751 –887 32,584 36,587
North America 426 434 17,354 18,288 797 1,073 6,795 6,790 14,160 15,803 –593 –734 38,939 41,653
Central and South America 64 75 1,436 1,994 43 63 424 430 60 70 –41 –35 1,986 2,597
Africa 665 909 40 12 15 11 386 288 56 49 –23 –34 1,139 1,234
Asia 835 1,213 109 114 5,155 4,503 2,070 2,070 1,126 1,068 –146 –201 9,149 8,767
Oceania 111 131 10 8 2,326 2,445 724 779 794 951 –113 –144 3,852 4,170
Total 18,982 20,522 19,013 20,507 8,841 8,719 14,158 14,604 28,323 32,690 –1,668 –2,036 87,649 95,007
Customer sales by country
SEK M
Group
2020 2021
US 34,659 36,728
France 4,046 5,503
Sweden 4,767 5,009
United Kingdom 3,843 4,611
Germany 3,616 4,074
China 4,077 3,724
Australia 3,124 3,377
Canada 2,885 3,354
Netherlands 2,179 2,335
Finland 1,999 1,869
Belgium 1,424 1,587
Mexico 1,395 1,571
Norway 1,541 1,497
Denmark 1,400 1,382
Switzerland 1,064 1,308
Spain 1,052 1,217
South Korea 1,355 1,151
Poland 974 1,142
Brazil 788 1,037
Italy 811 898
New Zealand 695 773
Austria 663 736
India 418 607
Ireland 483 566
South Africa 480 554
Czech Republic 440 461
SEK M
Group
2020 2021
Chile 355 438
United Arab Emirates 399 437
Singapore 263 339
Saudi Arabia 414 331
Israel 268 294
Hong Kong 281 288
Hungary 243 277
Colombia 171 267
Japan 303 248
Turkey 221 241
Portugal 224 230
Estonia 229 217
Romania 199 214
Egypt 98 212
Russia 169 202
Philippines 159 180
Taiwan 115 174
Thailand 198 166
Malaysia 134 148
Croatia 125 146
Guatemala 125 136
Slovakia 119 119
Slovenia 74 111
Latvia 92 104
Other countries 2,493 2,416
Total 87,649 95,007
Notes
79
ANNUAL REPORT 2021 | ASSA ABLOY
Contract assets and contract liabilities
The Group recognizes the following revenue-related contract assets and contract
liabilities:
Contract assets
SEK M
Group
2020 2021
Accrued revenue 679 831
Total 679 831
Contract liabilities
SEK M
Group
2020 2021
Non-current advances from customers and deferred revenue 44 48
Current advances from customers and deferred revenue 1,789 2,195
Total 1,833 2,243
Contract assets increased by SEK 152 M during the year, of which acquired companies
contributed SEK 16 M. Contract liabilities have increased by SEK 410 M. Acquired and
discontinued companies resulted in a net increase in contract liabilities of SEK 18 M
during the year. The total contract liability at 31 December 2020 of SEK 1,833 M was to
a large extent recognized as income in 2021.
Remaining performance obligations
The total transaction price allocated to unsatisfied performance obligations at the
reporting date amounts to SEK 22,851 M. Of this amount, SEK 21,194 M is expected to
be recognized as revenue in 2021, while an estimated SEK 1,657 M will be recognized as
revenue in 2022 or later.
At 31 December 2020 the total transaction price allocated to unsatisfied perfor-
mance obligations was SEK 14,505 M.
NOTE 3 Auditors’ fees
SEK M
Group Parent company
2020 2021 2020 2021
Audit assignment
EY 61 64 7 8
Others 29 22 – –
Audit-related services in addition to audit
assignment
EY 1 2 1 2
Tax advice
EY 2 3 0 –
Others 19 14 6 9
Other services
EY 2 2 1 1
Others 7 33 1 –
Total 121 141 16 20
The auditors’ fee for EY in Sweden during the year was SEK 11 M (11) and the fee for
extra services was SEK 2 M (1).
NOTE 4 Other operating income and expenses
SEK M
Group
2020 2021
Restructuring costs –54 –
Revaluation of previously owned shares in associates 1,909 –
Remeasurement of deferred considerations 203 184
Profit/loss on sales of non-current assets 3 15
Profit/loss on sales of subsidiaries –46 –190
Business-related taxes –22 –50
Transaction expenses from acquisitions –233 –207
Exchange rate differences –97 –99
Other, net –248 –30
Total 1,415 –377
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
Group
2020 2021
Agta record AG 231 –
Goal Co., Ltd 9 18
Saudi Crawford Doors Ltd 6 2
PT Jasuindo Arjo Wiggins Security 9 1
SARA Loading Bay Ltd 2 –2
Total 257 19
On 20 August 2020 a majority stake was acquired in agta record AG and the company
transitioned from associate to subsidiary. The company was consolidated from this
date.
NOTE 6 Recognition of leases for the Parent company
The Parent company recognizes leases in accordance with RFR 2, which means that
lease payments are expensed in a straight line over the lease term. Leases in the Parent
company mainly relate to rented premises and cars.
SEK M
Parent company
2020 2021
Lease payments during the year 15 14
Total 15 14
Nominal value of agreed future lease payments:
Due for payment in:
(2021) 2022 6 12
(2022) 2023 3 12
(2023) 2024 3 5
(2024) 2025 3 1
(2025) 2026 1 –
Total 16 31
Note 2 continued
Notes
80
ASSA ABLOY | ANNUAL REPORT 2021
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
Group
2020 2021
Remuneration of employees (note 34) 27,170 27,921
Direct material costs 30,830 33,873
Depreciation and amortization (notes 8, 14, 15) 3,776 3,841
Other purchase expenses 15,087 14,833
Total 76,863 80,468
NOTE 8 Depreciation and amortization
SEK M
Group Parent company
2020 2021 2020 2021
Intangible assets 1,201 1,285 733 1,231
Machinery 617 609 – –
Equipment 420 436 12 14
Buildings 221 236 – –
Land improvements 9 10 – –
Right-of-use assets 1,307 1,265 – –
Total 3,776 3,841 745 1,244
NOTE 9 Exchange differences in the income statement
SEK M
Group Parent company
2020 2021 2020 2021
Exchange differences recognized in operating
income –97 –99 –17 –4
Exchange differences recognized in financial
expenses 2 25 –128 –1
Total –95 –74 –145 –5
NOTE 10 Financial income
SEK M
Group Parent company
2020 2021 2020 2021
Dividends received from subsidiaries – – 3,667 3,290
Dividends received from associates – – 37 3
Capital gain/loss on sale of subsidiaries – – – 2,573
Fair value adjustments shares and interests – – 1,201 –
Intra-Group interest income – – 292 255
External interest income and similar items 3 2 – –
Other financial income 7 5 – 149
Total 10 6 5,197 6,271
NOTE 11 Financial expenses
SEK M
Group Parent company
2020 2021 2020 2021
Intra-Group interest expenses – – –251 –279
Interest expenses, other liabilities
1
–569 –555 –297 –259
Interest expenses, interest rate swaps –55 54 – –
Interest expenses, currency derivatives –122 –91 – –
Exchange rate differences on financial items 2 25 –128 –1
Other financial expenses –48 –82 –28 –64
Total –792 –649 –703 –603
1
Of which SEK –234 M (103) is fair value adjustments on derivative instruments, non-hedge account-
ing, for the Group.
NOTE 12 Tax on income
SEK M
Group Parent company
2020 2021 2020 2021
Current tax –2,713 –3,042 –219 –209
Tax attributable to prior years 220 –108 –8 –1
Withholding tax –28 –29 –11 –3
Deferred tax 18 541 –22 –32
Total –2,504 –2 638 –259 –245
Explanation for the difference between nominal Swedish tax rate and effective tax rate
based on income before tax:
Percent
Group Parent company
2020 2021 2020 2021
Swedish income tax rate 21 21 21 21
Effect of foreign tax rates 3 4 – –
Non-taxable income/non-deductible expenses 1 0 –17 –17
Exercised/new, not yet measured tax loss
carryforwards 3 1 – –
Non-taxable revaluation of shares in associates –4 – – –
Effect of internal sale of brand – –5 – –
Other –3 –1 – –
Effective tax rate in income statement 21 20 4 4
NOTE 13 Earnings per share
Earnings per share before and after dilution
SEK M
Group
2020 2021
Earnings attributable to the Parent company’s shareholders 9,171 10,900
Net profit 9,171 10,900
Weighted average number of outstanding shares (thousands) 1,110,776 1,110,776
Earnings per share (SEK) 8.26 9.81
None of the Group’s outstanding long-term incentive programs are expected to result
in significant dilution in the future.
Earnings per share before and after dilution and excluding items affecting
comparability
SEK M
Group
2020 2021
Earnings attributable to the Parent company’s shareholders 9,171 10,900
Items affecting comparability
Revaluation of shares in associates 1,909 –
Restructuring costs –1,366 –
Tax effect restructuring costs 255 –
Total items affecting comparability after tax 797 –
Net profit excluding items affecting comparability 8,374 10,900
Weighted average number of outstanding shares (thousands) 1,110,776 1,110,776
Earnings per share excluding items affecting comparability (SEK) 7.54 9.81
Notes
81
ANNUAL REPORT 2021 | ASSA ABLOY
NOTE 14 Intangible assets
2021, SEK M
Group Parent company
Goodwill Brands
Other intangible
assets Total Intangible assets
Opening accumulated acquisition cost 62,392 8,701 13,820 84,914 7,727
Purchases – 1 228 228 4,228
Acquisitions of subsidiaries 1,276 0 152 1,428 –
Divestments of subsidiaries –775 – –40 –815 –
Sales, disposals and adjustments – –63 –389 –452 –
Reclassifications – 0 16 16 –
Exchange rate differences 4,190 512 738 5,439 –
Closing accumulated acquisition cost 67,084 9,151 14,525 90,759 11,955
Opening accumulated amortization and impairment –4,048 –1,194 –7,219 –12,462 –5,229
Divestments of subsidiaries
– – 31 31 –
Sales, disposals and adjustments – 63 387 450 –
Depreciation, amortization and impairment – –2 –1,282 –1,285 –1,231
Impairment recognized in restructuring reserve – – –32 –32 –
Exchange rate differences –533 –149 –444 –1,126 –
Closing accumulated amortization and impairment –4,582 –1,282 –8,559 –14,423 –6,460
Carrying amount 62,502 7,869 5,966 76,336 5,495
2020, SEK M
Group Parent company
Goodwill Brands
Other intangible
assets Total Intangible assets
Opening accumulated acquisition cost 61,970 7,410 12,817 82,197 7,604
Purchases – 1 389 390 122
Acquisitions of subsidiaries 6,421 1,904 1,377 9,703 –
Divestments of subsidiaries –882 –95 –25 –1,002 –
Sales, disposals and adjustments – 0 –32 –32 –
Reclassifications – 1 8 9 –
Exchange rate differences –5,116 –520 –714 –6,350 –
Closing accumulated acquisition cost 62,392 8,701 13,820 84,914 7,727
Opening accumulated amortization and impairment –4,309 –1,263 –6,270 –11,842 –4,496
Divestments of subsidiaries – 4 6 10 –
Sales, disposals and adjustments – – 6 6 –
Reclassifications – – –2 –2 –
Depreciation and amortization – –3 –1,199 –1,201 –733
Impairment – – –69 –69 –
Exchange rate differences 260 68 308 637 –
Closing accumulated amortization and impairment –4,048 –1,194 –7,219 –12,462 –5,229
Carrying amount 58,344 7,506 6,601 72,452 2,498
Other intangible assets consist mainly of customer relations and technology. The carry-
ing amount of intangible assets with an indefinite useful life, excluding goodwill,
amounts to SEK 7,830 M (7,467) and relates to brands.
Useful life has been defined as indefinite where the time period, during which an
asset is deemed to contribute economic benefits, cannot be determined.
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 tests goodwill and intangible assets with an
indefinite useful life for impairment annually and when events or circumstances indi-
cate that the carrying amount may not be recoverable. Recoverable amounts for Cash
Generating Units have been determined by calculating value in use. These calculations
are based on estimated future cash flows, which in turn are based on financial forecasts
for a six-year period. Cash flows beyond the forecasted period are extrapolated using
estimated growth rates according to the information below.
Material assumptions used to calculate values in use:
• Forecasted operating margin.
• Growth rate for extrapolating cash flows beyond the forecasted period.
• Discount rate after tax used for estimated future cash flows.
Management has determined the forecasted operating margin based on previous
results and expectations of future market development. A growth rate of 3 percent (3)
has been used for all CGUs to extrapolate cash flows beyond the forecasted period. This
growth rate is considered to be a conservative estimate. Further, an average discount
rate in local currency after tax has been used in the calculations. The difference in value
compared with using a discount rate before tax is not deemed to be material. The dis-
count rate has been determined by calculating the weighted average cost of capital
(WACC) for each division.
Notes
82
ASSA ABLOY | ANNUAL REPORT 2021
2021
Overall, the discount rate after tax used varied between 8.0 and 9.0 percent (EMEIA 8.0
percent, Americas 8.0 percent, Asia Pacific 9.0 percent, Global Technologies 8.0 percent
and Entrance Systems 8.0 percent).
2020
Overall, the discount rate after tax used varied between 8.0 and 9.0 percent (EMEIA 8.0
percent, Americas 8.0 percent, Asia Pacific 9.0 percent, Global Technologies 8.0 percent
and Entrance Systems 8.0 percent).
Goodwill and intangible assets with an indefinite useful life were allocated to the Cash
Generating Units as summarized in the following table:
Goodwill and intangible assets with an indefinite useful life were allocated to the Cash
Generating Units as summarized in the following table:
2021, SEK M EMEIA Americas Asia Pacific
Global
Technologies
Entrance
Systems Total
Goodwill 10,949 11,700 4,028 16,164 19,662 62,502
Intangible assets with indefinite useful life 141 793 842 880 5,173 7,830
Total 11,090 12,494 4,870 17,044 24,835 70,332
2020, SEK M EMEIA Americas Asia Pacific
Global
Technologies
Entrance
Systems Total
Goodwill 10,475 10,444 3,884 14,881 18,660 58,344
Intangible assets with indefinite useful life 136 718 788 811 5,015 7,467
Total 10,610 11,162 4,672 15,692 23,675 65,811
Sensitivity analysis
A sensitivity analysis has been carried out for each Cash Generating Unit. The results of
this analysis are summarized below.
2021
If the estimated operating margin after the end of the forecasted period had been one
percentage point lower than the management’s estimate, the total recoverable amount
would be 5 percent lower (EMEIA 5 percent, Americas 4 percent, Asia Pacific 8 percent,
Global Technologies 4 percent, and Entrance Systems 5 percent).
If the estimated growth rate used to extrapolate cash flows beyond the forecasted
period had been one percentage point lower than the basic assumption of 3 percent,
the total recoverable amount would be 13 percent lower (EMEIA 13 percent, Americas
13 percent, Asia Pacific 11 percent, Global Technologies 13 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 8.0 to 9.0 percent,
the total recoverable amount would be 17 percent lower (EMEIA 17 percent, Americas
17 percent, Asia Pacific 16 percent, Global Technologies 17 percent, and Entrance
Systems 17 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 there-
fore be interpreted with caution.
None of the hypothetical cases above would lead to an impairment of goodwill in an
individual Cash Generating Unit.
2020
If the estimated operating margin after the end of the forecasted period had been one
percentage point lower than the management’s estimate, the total recoverable amount
would be 5 percent lower (EMEIA 5 percent, Americas 4 percent, Asia Pacific 8 percent,
Global Technologies 4 percent, and Entrance Systems 5 percent).
If the estimated growth rate used to extrapolate cash flows beyond the forecasted
period had been one percentage point lower than the basic assumption of 3 percent,
the total recoverable amount would be 13 percent lower (EMEIA 13 percent, Americas
13 percent, Asia Pacific 10 percent, Global Technologies 13 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 8.0 to 9.0 percent,
the total recoverable amount would be 17 percent lower (EMEIA 17 percent, Americas
17 percent, Asia Pacific 15 percent, Global Technologies 17 percent, and Entrance
Systems 17 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 there-
fore be interpreted with caution.
None of the hypothetical cases above would lead to an impairment of goodwill in an
individual Cash Generating Unit.
Note 14 continued
Notes
83
ANNUAL REPORT 2021 | ASSA ABLOY
NOTE 15 Property, plant and equipment
2021, SEK M
Group Parent company
Buildings
Land and land
improvements Machinery Equipment
Construction in
progress Total Equipment
Opening accumulated acquisition cost 6,150 1,139 10,153 4,511 616 22,569 127
Purchases 75 65 229 279 836 1,485 4
Acquisitions of subsidiaries 35 13 43 12 2 105 –
Divestments of subsidiaries – – –28 –121 – –149 –
Sales and disposals –52 –11 –479 –159 –8 –708 –
Reclassifications 77 49 297 121 –560 –16 –
Exchange rate differences 463 73 886 349 48 1,819 –
Closing accumulated acquisition cost 6,747 1,329 11,101 4,992 935 25,103 130
Opening accumulated depreciation and impairment –3,448 –138 –7,582 –3,375 – –14,541 –77
Divestments of subsidiaries 0 – 27 105 – 132 –
Sales and disposals 46 0 454 130 – 630 –
Depreciation, amortization and impairment –236 –10 –609 –436 – –1,292 –14
Impairment recognized in restructuring reserve –16 –4 11 –3 – –12 –
Reclassifications –1 – 6 –5 – – –
Exchange rate differences –264 –9 –703 –289 – –1,265 –
Closing accumulated depreciation and impairment –3,920 –162 –8,395 –3,873 – –16,350 –90
Carrying amount 2,828 1,166 2,706 1,118 935 8,753 40
2020, SEK M
Group Parent company
Buildings
Land and land
improvements Machinery Equipment
Construction in
progress Total Equipment
Opening accumulated acquisition cost 6,301 1,215 11,226 4,203 692 23,635 85
Purchases 76 1 296 338 706 1,417 42
Acquisitions of subsidiaries 274 60 80 246 3 664 –
Divestments of subsidiaries –343 –19 –290 –82 –8 –742 –
Sales and disposals –104 –49 –393 –314 –36 –895 –
Reclassifications 157 22 248 246 –681 –9 –
Exchange rate differences –212 –91 –1,014 –126 –60 –1,502 –
Closing accumulated acquisition cost 6,150 1,139 10,153 4,511 616 22,569 127
Opening accumulated depreciation and impairment –3,321 –150 –8,395 –3,272 – –15,137 –65
Divestments of subsidiaries 112 – 248 73 – 433 –
Sales and disposals 48 14 377 297 – 736 –
Depreciation and amortization –221 –9 –617 –420 – –1,268 –12
Impairment incl. reversals –74 – –40 –4 – –118 –
Reclassifications –6 –1 96 –87 – 2 –
Exchange rate differences 13 9 749 38 – 810 –
Closing accumulated depreciation and impairment –3,448 –138 –7,582 –3,375 – –14,541 –77
Carrying amount 2,703 1,001 2,572 1,135 616 8,026 50
NOTE 16 Right-of-use assets
The following amounts regarding right-of-use assets are recognized in the balance
sheet.
SEK M
Group
2020 2021
Buildings 2,763 2,720
Machinery 22 17
Vehicles 676 614
Other equipment 52 85
Total 3,513 3,436
Additions to right-of-use assets for 2021 amounted to SEK 1,225 M (1,164).
The following amounts related to leases are recognized in the income statement:
SEK M
Group
2020 2021
Amortization attributable to right-of-use assets:
Buildings –912 –887
Machinery –11 –10
Vehicles –354 –334
Other equipment –31 –34
Operating expenses attributable to:
Short-term leases –62 –53
Leases of low-value assets –14 –12
Variable lease payments are not included in lease liabilities –18 –21
Interest expenses relating to:
Lease liabilities –85 –72
Total –1,486 –1,423
The total cash flow attributable to leases in 2021 was SEK 1,314 M (1,360).
Notes
84
ASSA ABLOY | ANNUAL REPORT 2021
NOTE 17 Shares in subsidiaries
Company name Corporate identity number, Registered office
Parent company
Number of shares Share of equity, %
Carrying amount,
SEK M
ASSA Sverige AB 556061-8455, Eskilstuna 70 100 197
ASSA ABLOY Entrance Systems AB 556204-8511, Landskrona 1,000 100 287
ASSA ABLOY Global Solutions AB 556666-0618, Stockholm 1,306,891 100 475
ASSA ABLOY Kredit AB 556047-9148, Stockholm 400 100 6,036
ASSA ABLOY Holding AB 559180-8646, Stockholm 6,500 100 6,279
ASSA ABLOY Försäkrings AB 516406-0740, Stockholm 60,000 100 185
ASSA ABLOY Asia Holding AB 556602-4500, Stockholm 1,000 100 189
ASSA ABLOY OY 1094741-7, Joensuu 800,000 100 4,257
ASSA ABLOY Norge A/S 979207476, Moss 150,000 100 538
ASSA ABLOY Danmark A/S CVR 10050316, Herlev 60,500 100 376
ASSA ABLOY Deutschland GmbH HR B 66227, Berlin 1 100 1,086
ASSA ABLOY Nederland Holding B.V. 52153924, Raamsdonksveer 180 100 771
ASSA ABLOY France SAS 412140907, R.C.S. Versailles 15,184,271 100 1,964
HID Global Switzerland S.A. CH-232-0730018-2, Granges 2,500 100 47
ASSA ABLOY Entrance Systems Austria GmbH A-2320 Schwechat 1 100 109
ASSA ABLOY Ltd 2096505, Willenhall 1,330,000 100 3,091
HID Global Ireland Teoranta 364896, Galway 501,000 100 293
Mul-T-Lock Ltd 520036583, Yavne 13,787,856 100 901
ASSA ABLOY Holdings (SA) Ltd
1948/030356/06, Roodepoort 100,220 100 217
ASSA ABLOY Inc 039347-83, Oregon 100 100 3,627
ABLOY Canada Inc. 1148165260, Montreal 1 100 0
ASSA ABLOY of Canada Ltd 104722749 RC0003, Ontario 9,621 100 138
ASSA ABLOY Australia Pacific Pty Ltd ACN 095354582, Oakleigh, Victoria 48,190,000 100 844
Cerramex, S.A de C.V CER8805099Y6, Mexico 4 0
1
0
ASSA ABLOY Mexico, S.A de CV AAM961204CI1, Mexico 50,108,549 100 762
Cerraduras y Candados Phillips S.A de C.V CCP910506LK2, Mexico 112 0
1
0
ASSA ABLOY Colombia S.A.S 860009826-8, Bogota 3,115,080 100 203
WHAIG Limited EC21330, Bermuda 100,100 100 303
ASSA ABLOY Asia Pacific Ltd 53451, Hong Kong 1,000,000 100 72
ASSA ABLOY Entrance Systems IDDS AB 556071-8149, Landskrona 25,000,000 100 5,323
ASSA ABLOY Portugal, Unipessoal, Lda (Portugal) PT500243700, Alfragide 1 100 0
ASSA ABLOY Holding Italia S.p.A.
IT01254420597, Rome 650 000 100 974
HID SA (Argentina) CUIT 30-61783980-2, Buenos Aires 2,400 2
1
0
HID Global SAS FR21341213411, Nanterre 1,000,000 100 679
ASSA ABLOY East Africa Ltd C.20402, Nairobi 13,500 100 90
Omni-ID Ltd
6163600, Bristol 2,200,000 100 26
Total
40,339
1
The Group’s holdings amount to 100 percent.
NOTE 18 Investments in associates
Company name Country of registration
Group
Number of shares
Share of equity
2020, %
Share of equity
2021, %
Carrying amount
2020, SEK M
Carrying amount
2021, SEK M
Goal Co., Ltd Japan 2,778,790 46 46 589 602
PT Jasuindo Arjo Wiggins Security Indonesia 1,533,412 49 49 28 32
SARA Loading Bay Ltd United Kingdom 4,990 50 50 15 12
Saudi Crawford Doors Ltd Saudi Arabia 800 40 40 5 5
Others 1 1
Total 637 652
Notes
85
ANNUAL REPORT 2021 | ASSA ABLOY
NOTE 19 Deferred tax
SEK M
Group
2020 2021
Deferred tax assets
Non-current assets 70 611
Pension provisions 470 345
Tax loss carryforwards etc. 174 118
Other deferred tax assets 766 786
Offset deferred tax assets –142 –597
Deferred tax assets 1,338 1,264
Deferred tax liabilities
Non-current assets 2,386 2,452
Pension provisions 56 6
Other deferred tax liabilities 568 720
Offset deferred tax liabilities –142 –597
Deferred tax liabilities 2,868 2,581
Deferred tax assets, net –1,531 –1,317
Change in deferred tax
SEK M
Group
2020 2021
Opening balance –1,163 –1,531
Acquisitions and divestments –546 –38
Recognized in income statement 18 541
Actuarial gain/loss on post-employment benefit obligation 56 –211
Exchange rate differences 104 –78
Closing balance –1,531 –1,317
The Group’s total tax loss carryforwards amount to SEK 5,728 M, of which SEK 5,154 M
(4,545) are tax loss carryforwards for which deferred tax assets have not been meas-
ured, as it is uncertain that future taxable profit will be available against which the tax
loss carryforwards can be utilised. Of the total tax loss carryforwards and other tax
credits, SEK 2,649 M is due within five years, while SEK 3,079 M has no due date.
NOTE 20 Other financial assets
SEK M
Group Parent company
2020 2021 2020 2021
Investments in associates – – 461 461
Other shares and interests 6 52 – –
Non-current interest-bearing receivables 159 170 – –
Other non-current receivables 47 46 131 99
Total 212 267 592 561
NOTE 21 Inventories
SEK M
Group
2020 2021
Materials and supplies 3,057 4,729
Work in progress 2,164 2,789
Finished goods 4,790 6,264
Advances paid 68 151
Total 10,079 13,933
Impairment of inventories during the year amounted to SEK 333 M (474).
NOTE 22 Trade receivables
SEK M
Group
2020 2021
Trade receivables 14,990 17,382
Loss allowance –1,325 –1,537
Total 13,665 15,844
Trade receivables by currency
SEK M
Group
2020 2021
USD 4,496 6,244
EUR 3,457 3,646
CNY 1,184 1,210
GBP 766 757
SEK 613 661
AUD 430 509
CAD 338 377
KRW 274 230
Other currencies 2,107 2,210
Total 13,665 15,844
Maturity analysis
SEK M
Group
2020 2021
Current trade receivables 10,475 12,220
Trade receivables due:
< 3 months 2,908 3,306
3–12 months 922 1,114
>12 months 685 741
4,515 5,161
Impaired trade receivables:
Not yet due –272 –308
Trade receivables due:
< 3 months –155 –188
3–12 months –226 –270
>12 months –671 –771
–1,325 –1,537
Total 13,665 15,844
Change in loss allowance for trade receivables
SEK M
Group
2020 2021
Opening balance 898 1,325
Acquisitions and divestments of subsidiaries 123 –37
Actual losses –174 –293
Reversal of unused amounts –49 –70
Provision for bad debts 646 495
Exchange rate differences –119 118
Closing balance 1,325 1,537
NOTE 23 Parent company’s equity and proposed distribution of earnings
The Parent company’s equity is split between restricted and non-restricted equity.
Restricted equity consists of share capital, revaluation reserve, statutory reserve and the
fund for development expenses. The statutory reserve contains premiums (amounts
received from share issues that exceed the nominal value of the shares) relating to
shares issued up to 2005. Non-restricted equity consists of share premium reserves,
retained earnings and net income for the year.
At the disposal of the Annual General Meeting is SEK 18,802,824,328. The Board of
Directors proposes that a dividend of SEK 4.20 per share, a total of SEK 4,665,260,603,
be distributed to the shareholders and that the remainder, SEK 14,137,563,725, be
carried forward to the new financial year.
Notes
86
ASSA ABLOY | ANNUAL REPORT 2021
NOTE 24 Share capital, number of shares and dividend per share
Number of shares, thousands
Share
capital,
SEK K
Series A
shares
Series B
shares Total
Opening balance at 1 January 2020 57,525 1,055,052 1,112,576 370,859
Closing balance at 31 December 2020 57,525 1,055,052 1,112,576 370,859
Number of votes, thousands 575,259 1,055,052 1,630,311
Opening balance at 1 January 2021 57,525 1,055,052 1,112,576 370,859
Closing balance at 31 December 2021 57,525 1,055,052 1,112,576 370,859
Number of votes, thousands 575,259 1,055,052 1,630,311
All shares have a par value of around SEK 0.33 (0.33) 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 1,110,776 (1,110,776) during the year.
None of the Group’s outstanding long-term incentive programs are expected to result
in significant dilution in the future. The total number of treasury shares at 31 December
2021 amounted to 1,800,000. No shares have been repurchased during the year.
The dividend paid during the financial year totaled SEK 4,332 M (4,276), equivalent
to SEK 3.90 (3.85) per share.
NOTE 25 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. Pen-
sion obligations in the balance sheet mainly relate to defined benefit plans. ASSA ABLOY
has defined benefit pension plans in a number of countries. The most comprehensive
defined benefit plans are found in the US, the UK and Germany.
The defined benefit plans in the US and the UK are secured by assets in pension funds,
while the plans in Germany are chiefly unfunded. In the US, 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 according to the nature of the local
pension obligation, particularly the remaining term and the breakdown between active
members and pensioners. The Group has not changed the processes used for managing
these risks compared 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 produce the best long-term return
at an acceptable risk level. The total allocation to shares should not, however, exceed
60 percent 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 aver-
age term of these is normally somewhat shorter than the term of the underlying liability.
Bonds should not account for less than 30 percent of assets. A small proportion of assets
is also invested in real estate and alternative investments, mainly hedge funds.
At 31 December 2021, shares accounted for 45 percent (44) and fixed income secu-
rities for 28 percent (29) of plan assets, while other assets accounted for 27 percent
(27). The actual return on plan assets in 2021 was SEK 618 M (345).
Amounts recognized in the income statement
Pension costs, SEK M 2020 2021
Defined contribution pension plans 877 758
Defined benefit pension plans 188 185
Post-employment medical benefit plans 25 21
Total 1,091 964
of which, included in:
Operating income 1,030 911
Net financial items 61 53
Amounts recognized in the balance sheet
Pension provisions, SEK M 2020 2021
Provisions for defined benefit pension plans 2,925 2,121
Provisions for post-employment medical benefit plans 586 606
Provisions for defined contribution pension plans 3 9
Total 3,514 2,736
Pensions with Alecta
Commitments for old-age pensions and family pensions for salaried employees in Swe-
den are secured in part through insurance with Alecta. According to UFR 10, this is a
defined benefit plan that covers many employers. For the 2021 financial year, the com-
pany has not had access to information making it possible to report this plan as a
defined benefit 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 (29), of which SEK 11 M (13)
relates to the Parent company. Pension contributions are expected to remain largely
unchanged in 2022.
Alecta’s surplus can be distributed to policyholders and/or the insured. At 31 Decem-
ber 2021, Alecta’s surplus expressed as the collective consolidation level amounted pre-
liminarily to 172 percent (148 percent at 31 December 2020). The collective consolida-
tion level consists of the market value of Alecta’s assets as a percentage of its insurance
commitments calculated according to Alecta’s actuarial calculation assumptions, which
do not comply with IAS 19. The collective consolidation level is normally allowed to vary
between 125 and 175 percent. If the consolidation level deviates from this range, meas-
ures 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
Specification of defined benefits, SEK M
United Kingdom Germany US Other countries Total
2020 2021 2020 2021 2020 2021 2020 2021 2020 2021
Present value of funded obligations 3,206 3,332 99 92 2,095 2,170 2,055 1,974 7,455 7,568
Fair value of plan assets –2,796 –3,317 –21 –21 –1,842 –2,225 –1,376 –1,418 –6,035 –6,981
Net value of funded plans 410 16 78 71 254 –56 679 556 1,420 587
Present value of unfunded obligations – – 779 745 – – 726 789 1,506 1,533
Present value of unfunded medical benefits – – – – 582 603 3 4 586 606
Net value of defined benefit pension plans 410 16 857 816 836 547 1,408 1,348 3,511 2,727
Provisions for defined contribution pension plans – – – – – 4 3 5 3 9
Total 410 16 857 816 836 551 1,412 1,353 3,514 2,736
Key actuarial assumptions
Key actuarial assumptions (weighted average), %
United Kingdom Germany US
2020 2021 2020 2021 2020 2021
Discount rate 1.4 1.8 0.9 1.2 2.5 2.8
Expected annual salary increases n/a n/a 2.8 2.8 n/a n/a
Expected annual pension increases 1.9 2.1 1.5 1.5 n/a n/a
Expected annual medical benefit increases n/a n/a n/a n/a 5.8 5.8
Expected annual inflation 2.2 2.7 1.5 1.5 3.0 3.0
Notes
87
ANNUAL REPORT 2021 | ASSA ABLOY
Movement in obligations
2021, SEK M
Post-employment
medical benefits
Defined benefit
pension plans Plan assets Total
Opening balance 1 January 2021 586 8,960 –6,035 3,511
Acquisitions and divestments – 2 – 2
Recognized in the income statement:
Current service cost 6 152 – 158
Past service cost – –5 – –5
Interest expense/income 15 131 –93 53
Total recognized in the income statement 21 278 –93 206
Recognized in other comprehensive income:
Return on plan assets, excluding amounts included above – – –525 –525
Gain/loss from change in demographic assumptions – –107 – –107
Gain/loss from change in financial assumptions –33 –175 – –208
Experience-based gains/losses 0 –77 – –77
Actuarial gain/loss on post-employment benefit obligations –33 –359 –525 –917
Exchange rate differences 59 654 –577 136
Total recognized in other comprehensive income 26 294 –1,101 –781
Contributions and payments:
Employer contributions – – –108 –108
Employee contributions – 57 –57 –
Payments –27 –490 413 –104
Total payments –27 –433 249 –211
Closing balance 31 December 2021 606 9,102 –6,981 2,727
2020, SEK M
Post-employment
medical benefits
Defined benefit
pension plans Plan assets Total
Opening balance 1 January 2020 615 8,901 –6,184 3,332
Acquisitions and divestments – 411 –271 140
Recognized in the income statement:
Current service cost 6 139 – 145
Past service cost – 7 – 7
Interest expense/income 19 167 –125 61
Total recognized in the income statement 25 313 –125 213
Recognized in other comprehensive income:
Return on plan assets, excluding amounts included above – – –220 –220
Gain/loss from change in demographic assumptions 53 245 – 298
Gain/loss from change in financial assumptions – 295 – 295
Experience-based gains/losses – –54 – –54
Actuarial gain/loss on post-employment benefit obligations 53 486 –220 319
Exchange rate differences –81 –743 604 –219
Total recognized in other comprehensive income –27 –257 384 99
Contributions and payments:
Employer contributions – – –178 –178
Employee contributions – 32 –32 –
Payments –27 –439 369 –96
Total payments –27 –407 160 –274
Closing balance 31 December 2020 586 8,960 –6,035 3,511
Plan assets allocation
Plan assets 2020 2021
Publicly traded shares 2,630 3,169
Government bonds 666 762
Corporate bonds 892 1,017
Inflation-linked bonds 176 168
Property 325 444
Cash and cash equivalents 55 82
Alternative investments 50 51
Insurance contracts and other assets 1,242 1,286
Total 6,035 6,981
Sensitivity analysis of defined benefit obligations and post-employment medical
benefits
The effect on defined benefit obligations and post-employment medi-
cal benefits of a 0.5 percentage change in some actuarial assumptions,
change in percent +0.5% –0.5%
Discount rate –7.6% 8.3%
Expected annual medical benefit increases 4.2% –3.5%
Note 25 continued
Notes
88
ASSA ABLOY | ANNUAL REPORT 2021
Notes
89
ANNUAL REPORT 2021 | ASSA ABLOY
NOTE 26 Other provisions
SEK M
Group
Restruc-
turing
reserve Other Total
Opening balance at 1 January 2021 1,224 551 1,775
Provisions for the year – 68 68
Acquisitions of subsidiaries – 21 21
Divestments of subsidiaries –2 – –2
Reversal of non-utilized amounts – –5 –5
Payments –563 –57 –620
Utilized during the year, without cash flow impact –44 – –44
Exchange rate differences 44 17 61
Closing balance at 31 December 2021 658 595 1,254
SEK M
Group
Restruc-
turing
reserve Other Total
Opening balance at 1 January 2020 778 573 1,351
Provisions for the year 1,366 175 1,542
Acquisitions of subsidiaries _ 19 19
Reversal of non-utilized amounts – –138 –138
Payments –747 –74 –822
Utilized during the year, without cash flow impact –105 – –105
Exchange rate differences –68 –4 –72
Closing balance at 31 December 2020 1,224 551 1,775
Balance sheet breakdown:
Group
2020 2021
Other non-current provisions 616 460
Other current provisions 1,159 794
Total 1,775 1,254
The restructuring reserve at year-end relates mainly to the ongoing restructuring pro-
gram launched during the year and the previous year. The restructuring reserve is
expected to be used over the next two years. The non-current part of the reserve
totaled SEK 58 M. For further information on the restructuring programs, see the Report
of the Board of Directors.
Other provisions mainly relate to legal obligations including future environment-
related measures.
NOTE 27 Other current liabilities
SEK M
Group
2020 2021
VAT and excise duties 653 704
Employee withholding tax 143 130
Advances received 1,224 1,492
Social security contributions and other taxes 110 92
Current deferred considerations 781 346
Other current liabilities 970 1,076
Total 3,880 3,840
NOTE 28 Accrued expenses and deferred income
SEK M
Group Parent company
2020 2021 2020 2021
Personnel-related expenses 3,407 3,819 252 273
Customer-related expenses 1,236 1,772 – –
Deferred income 565 703 – –
Accrued interest expenses 126 111 83 82
Other 2,353 2,640 90 56
Total 7,687 9,045 425 411
NOTE 29 Assets pledged against liabilities to credit institutions
SEK M
Group Parent company
2020 2021 2020 2021
Real estate mortgages – 12 – –
Other mortgages and collateral 137 94 – –
Total 137 106 – –
NOTE 30 Contingent liabilities
SEK M
Group Parent company
2020 2021 2020 2021
Guarantees on behalf of subsidiaries – – 9,190 9,485
Other guarantees and contingent liabilities 139 223 – –
Total 139 223 9,190 9,485
In addition to the guarantees shown in the table above, the Group has a large number of
minor bank guarantees for performance of obligations in operating activities. No mate-
rial liabilities are expected as a result of these guarantees.
Maturity profile – guarantees, SEK M
Group
2020 2021
<1 year 123 204
>1 <2 years 7 11
>2 <5 years 4 3
>5 years 5 4
Total 139 223
NOTE 31 Cash flow items
SEK M
Group
2020 2021
Adjustments for non-cash items
Profit/loss on sales of non-current assets –3 –15
Profit/loss on sales of subsidiaries 46 190
Change in pension provisions 152 153
Share of earnings in associates –257 –19
Dividend from associates 40 5
Remeasurement of deferred considerations –203 –184
Other 131 49
Adjustments for non-cash items –95 178
Change in working capital
Inventories increase/decrease (–/+) 687 –2,943
Trade receivables increase/decrease (–/+) 1,331 –1,289
Trade payables increase/decrease (+/–) –370 1,959
Other working capital increase/decrease (–/+) 958 778
Change in working capital 2,606 –1,496
Divestments of subsidiaries
Purchase prices received, net 1,206 720
Cash and cash equivalents in divested subsidiaries –37 –21
Change in consolidated cash and cash equivalents due to divestments 1,170 699
Notes
90
ASSA ABLOY | ANNUAL REPORT 2021
NOTE 32 Reserves
SEK M
Hedging reserve
Exchange rate
differences Total
Net
investment
hedges
Cash flow
hedges
Opening balance 1 January 2020 –247 – 6,975 6,728
Other comprehensive income
in associates – – –70 –70
Reclassified to profit or loss –5 – –313 –318
Net investment hedges –3 – – –3
Cash flow hedges – 0 – 0
Exchange rate differences – – –4,559 –4,559
Tax attributable to reserves 1 – 16 16
Closing balance 31 December 2020 –255 0 2,049 1,794
Opening balance 1 January 2021 –255 0 2,049 1,794
Other comprehensive income
in associates – – –6 –6
Cash flow hedges – 5 – 5
Exchange rate differences – 0 3,467 3,467
Tax attributable to reserves – – –23 –23
Closing balance 31 December 2021 –255 5 5,487 5,237
Of the item Net investment hedges, the entire amount relates to closed hedge relation-
ships for which hedged objects remain.
NOTE 33 Business combinations
Consolidated acquisitions, 2021
Company acquired (country) Division
Number of
employees
2020 sales
(SEK M)
Consolida-
tion month
Traka Iberia (ES) Global Technolog. <50 <50 Feb
Technology Solutions (UK) Global Technolog. 25 30 Feb
Invengo Textile Services (FR) Global Technolog. 45 110 Mar
Prosystech/SimpleK (CA) Americas <50 <50 Apr
Sure-Loc (US) Americas 45 120 May
Pucon (PE) Americas <50 <50 Jun
New Zealand Fire Door (NZ) Asia Pacific 53 66 Aug
Capitol Door Service (US) Entrance Systems 50 150 Aug
Omni-ID (US) Global Technolog. 170 110 Aug
MR Group (PT) EMEIA 380 230 Oct
B&B Roadway and Security Sol. (US) Entrance Systems 60 120 Dec
Malkowski-Martech (PL) EMEIA 150 110 Dec
InvoTech Systems (US) Global Technolog. <50 <50 Dec
See below for an account of some of the major acquisitions completed in 2021 and
2020. See the Report of the Board of Directors for further information about acquisitions.
2021
MR Group
MR Group’s hardware division, a leading supplier of aluminium profile hardware and
locks in Portugal, was acquired in October 2021. The company is headquartered in
Águeda, Portugal.
On the reporting date the acquisition analysis is preliminary with respect to
valuation of intangible assets.
B&B Roadway and Security Solutions
US company B&B Roadway and Security Solutions, a manufacturer of road safety,
traffic control and perimeter security solutions, was acquired in December 2021.
The company is headquartered in Texas, US.
On the reporting date the acquisition analysis is preliminary with respect to
valuation of intangible assets.
2020
agta record
On 20 August 2020 ASSA ABLOY, previously a 39% shareholder in the Swiss company agta
record, announced that it had completed the indirect acquisition of the 54% shareholding in
agta record from the shareholders of Agta Finance. agta record is a well-established manu-
facturer and service organization for entrance automation. It is headquartered in Fehraltorf,
Switzerland.
ASSA ABLOY then launched a public offer for the acquisition of all remaining out-
standing shares in agta record at a price of EUR 70.58 per share. As at 31 December 2020
ASSA ABLOY owns 99.7% of agta record.
agta record was fully consolidated into ASSA ABLOY on 31 August 2020. Intangible
assets in the form of technology, brands and customer relationships have been dis-
closed in the purchase price allocation. Residual goodwill mainly relates to synergies
and other intangible assets that do not meet the criteria for separate reporting.
AM Group
On 28 February 2020 ASSA ABLOY acquired 100 percent of the share capital in AM Group,
an Australian industrial door company within entrance automation.
The acquisition of AM Group complements the product offering and geographic
coverage in Australia. AM Group has its headquarters in Sydney, Australia.
Intangible assets in the form of technology, brands and customer relationships have
been disclosed in the purchase price allocation. Residual goodwill mainly relates to syner-
gies and other intangible assets that do not meet the criteria for separate reporting.
Other acquisitions
Other noteworthy acquisitions in 2020 were Biosite (UK) and Access-IS (UK).
SEK M 2020 2021
Purchase prices
Cash paid for acquisitions during the year 8,058 1,743
Holdbacks and conditional considerations for acquisitions during the year 318 150
Fair value previously owned shares in associates 3,752 –
Adjustment of purchase prices for acquisitions in prior years 5 –6
Total 12,134 1,887
Acquired assets and liabilities at fair value
Intangible assets 3,281 151
Property, plant and equipment 664 105
Right-of-use assets 265 13
Deferred tax assets 132 3
Other financial assets 4 1
Inventories 646 233
Current receivables and investments 1,062 332
Cash and cash equivalents 2,239 180
Deferred tax liabilities –706 –17
Pension provisions –189 –2
Other non-current liabilities –462 –23
Current liabilities –1,223 –363
Total 5,713 611
Goodwill 6,421 1,276
Cash paid for acquisitions during the year 8,058 1,743
Cash and cash equivalents in acquired subsidiaries –2,239 –180
Consideration paid relating to acquisitions from previous year 418 557
Change in cash and cash equivalents due to acquisitions 6,238 2,121
Net sales from acquisition date 2,091 445
EBIT from acquisition date 175 –13
Net income from acquisition date 138 –9
The table above includes fair value adjustments of acquired net assets from acquisitions
made in previous years.
Purchase price allocations have been prepared for all acquisitions in 2021. The net
sales of acquired units for 2021 totaled SEK 1,182 M (4,801) and net income amounted
to SEK 72 M (453). Acquisition-related costs for 2021 totaled SEK 207 M (233) and have
been reported as other operating expenses in the income statement.
Notes
91
ANNUAL REPORT 2021 | ASSA ABLOY
NOTE 34 Employees
Salaries, wages, other remuneration and social security costs
SEK M
Group Parent company
2020 2021 2020 2021
Salaries, wages and other remuneration 21,462 21,699 295 285
Social security costs 5,708 6,222 158 176
– of which pensions 1,029 911 51 44
Total 27,170 27,921 454 460
Remuneration and other benefits of the Executive Team in 2021, SEK thousands
Name
Fixed
salary
Variable
salary
Stock-
related
benefits
Other
benefits
Pension
costs
Nico Delvaux, President and CEO 19,338 14,250 9,301 152 6,747
Other members of the Executive
Team (10 positions) 52,713 19,324 8,705 3,728 8,730
Total remuneration and benefits 72,051 33,574 18,007 3,880 15,477
Total remuneration and other benefits of the Executive Team amounted to SEK 102.6 M in 2020.
Fees to Board members in 2021 (including committee work), SEK thousand
Name and post
Board of
Directors
Remu-
neration
Committee
Audit
Committee Total
Lars Renström, Chairman 2,700 150 325 3,175
Carl Douglas, Vice Chairman 1,000 – – 1,000
Johan Hjertonsson, Board member 800 75 225 1,100
Eva Karlsson, Board member 800 – – 800
Lena Olving, Board member 800 – 225 1,025
Susanne Pahlén Åklundh, Board member 800 – – 800
Sofia Schörling Högberg, Board member 800 – – 800
Joakim Weidemanis, Board member 800 – – 800
Employee representatives (4) – – – –
Total 8,500 225 775 9,500
Total fees to Board members amounted to SEK 8.3 M in 2020.
Salaries and remuneration for the Board of Directors and the Parent company’s
Executive Team
Salaries and other remuneration for the Board of Directors and the Parent company’s
Executive Team for 2021 totaled SEK 66 M (49), excluding pension costs and social secu-
rity costs. Pension costs amounted to SEK 9 M (10). Pension obligations for several sen-
ior executives are secured through pledged endowment insurances.
Guidelines for remuneration to senior executives
Scope
The 2020 Annual General Meeting adopted the following guidelines for the remunera-
tion and other employment conditions of the President and CEO and other members of
the ASSA ABLOY Executive Team (the “Executive Team”).
These guidelines are applicable to remuneration agreed, and amendments to remu-
neration already agreed, after adoption of the guidelines by the 2020 Annual General
Meeting. These guidelines do not apply to any remuneration decided or approved by
the General Meeting.
Employment conditions of a member of the Executive Team that is employed or resi-
dent outside Sweden, or that is not a Swedish citizen, may be duly adjusted for compli-
ance with mandatory rules or established local practice, taking into account, to the
extent possible, the overall purpose of these guidelines.
Promotion of ASSA ABLOY’s business strategy, long-term interests and sustainability
One of the strategies for value creation followed by ASSA ABLOY is Evolution through
people. With the objective that ASSA ABLOY shall continue to be able to recruit and
retain competent employees, the basic principle being that remuneration and other
employment conditions shall be offered on market conditions and be competitive,
taking into account both global remuneration practice and practice in the home coun-
try of each member of the Executive Team. These guidelines enable ASSA ABLOY to offer
the Executive Team a total remuneration that is on market conditions and competitive.
Prerequisites are thereby established for successful implementation of the Group’s
business strategy, which on an overall level is to lead the trend toward the world’s most
innovative and well-designed access solutions, as well as safeguarding ASSA ABLOY’s
long-term interests, including its sustainability. More information about ASSA ABLOY’s
business strategy and ASSA ABLOY’s sustainability report is available on ASSA ABLOY’s
website assaabloy.com.
ASSA ABLOY has ongoing share-based long-term incentive programs in place that
have been resolved by the General Meeting and which are therefore excluded from
these guidelines. Future share-based long-term incentive programs proposed by the
Board of Directors and submitted to the General Meeting for approval will be excluded
for the same reason. The purpose of the share-based long-term incentive program is to
strengthen ASSA ABLOY’s ability to recruit and retain competent employees, to contrib-
ute to ASSA ABLOY providing a total remuneration that is on market conditions and
competitive, and to align the interests of the shareholders with the interests of the
employees concerned. Through a share-based long-term incentive program, the
employees’ remuneration is tied to ASSA ABLOY’s future earnings and value growth. At
present the performance criteria used is linked to earnings per share. The programs are
further conditional upon the participant’s own investment and holding period of sev-
eral years. More information about these programs is available on ASSA ABLOY’s web-
site assaabloy.com.
Types of remuneration
The total yearly remuneration to the members of the Executive Team shall be on market
conditions and be competitive and also reflect each member of the Executive Team’s
responsibility and performance. The total yearly remuneration shall consist of fixed base
salary, variable cash remuneration, pension benefits and other benefits (which are spec-
ified below excluding social security costs). Additionally, the General Meeting may – and
irrespective of these guidelines – resolve on, among other things, share-related or share
price-related remuneration.
The variable cash remuneration shall be linked to predetermined and measurable tar-
gets, which are further described below, and may amount to not more than 75 percent of
the yearly base salary.
The members of the Executive Team shall be covered by defined contribution pen-
sion plans, for which pension premiums are based on each member’s yearly base salary
and are paid by ASSA ABLOY during the period of employment. The pension premiums
shall amount to not more than 35 percent of the yearly base salary.
Other benefits, such as company car, life insurance, extra health insurance or occupa-
tional healthcare, should be payable to the extent this is considered to be in line with
market conditions in the market concerned for each member of the Executive Team.
Premiums and other costs relating to such benefits may totally amount to not more
than 10 percent of the yearly base salary. Furthermore, housing allowance benefit may
be added in line with ASSA ABLOY’s policies and costs relating to such benefit may
totally amount to not more than 25 percent of the yearly base salary. Premiums and
other costs relating to other benefits and housing allowance benefit may, however,
totally amount to not more than 30 percent of the yearly base salary.
Criteria for awarding variable cash remuneration
The variable cash remuneration shall be linked to predetermined and measurable finan-
cial targets, such as earnings per share (EPS), earnings before interest and taxes (EBIT),
cash flow and organic growth and can also be linked to strategical and/or functional tar-
gets individually adjusted on the basis of responsibility and function. These targets shall
be designed so as to contribute to ASSA ABLOY’s business strategy and long-term inter-
ests, including its sustainability, by for example being linked to the business strategy or
promoting the senior executive’s long-term development within ASSA ABLOY.
The Remuneration Committee shall for the Board of Directors prepare, monitor and
evaluate matters regarding variable cash remuneration to the Executive Team. Ahead of
each yearly measurement period for the criteria for awarding variable cash remunera-
tion, the Board of Directors shall, based on the work of the Remuneration Committee,
establish which criteria are deemed to be relevant for the upcoming measurement
period. To which extent the criteria for awarding variable cash remuneration has been
satisfied shall be determined when the measurement period has ended. Evaluations
regarding fulfillment of financial targets shall be based on determined financial basis for
the relevant period.
Variable cash remuneration can be paid after the measurement period has ended or
be subject to deferred payment. Paid variable cash remuneration can be claimed back
when such right follows from general principles of law.
Duration of employment and termination of employment
The members of the Executive Team shall be employed until further notice. If notice of ter-
mination is made by ASSA ABLOY, the notice period may not exceed 12 months for the
CEO and 6 months for the other members of the Executive Team. If the CEO is given notice,
ASSA ABLOY is liable to pay, including severance pay and remuneration under the notice
period, the equivalent of maximum 24 months’ base salary and other employment bene-
fits. If any other member of the Executive Team is given notice, ASSA ABLOY is liable to pay
a maximum of 6 months’ base salary and other employment benefits plus severance pay
amounting to a maximum of an additional 12 months’ base salary. If notice of termination
is made by a member of the Executive Team, the notice period may not exceed 6 months,
with no right to severance pay.
A member of the Executive Team may, for such time when the member is not entitled
to severance pay, be compensated for non-compete undertakings. Such compensation
shall amount to not more than 60 percent of the monthly base salary at the time of the
Notes
92
ASSA ABLOY | ANNUAL REPORT 2021
termination and shall only be paid as long as the non-compete undertaking is applica-
ble, at longest a period of 12 months.
Remuneration and employment conditions for employees
In the preparation of the Board of Directors’ proposal for these remuneration guide-
lines, remuneration and employment conditions for employees of ASSA ABLOY have
been taken into account by including information on the employees’ total remunera-
tion, the components of the remuneration and increase and growth rate over time in
the Remuneration Committee’s and the Board of Directors’ basis of decision when
evaluating whether the guidelines and the limitations set out herein are reasonable.
The decision-making process to determine, review and implement the guidelines
The Remuneration Committee’s tasks include preparing the Board of Directors’ deci-
sion to propose guidelines for remuneration to the Executive Team. The Board of Direc-
tors shall prepare a proposal for new guidelines at least every fourth year and submit it
to the Annual General Meeting. The guidelines shall be in force until new guidelines are
adopted by the General Meeting. The Remuneration Committee shall also monitor and
evaluate programs for variable remuneration to the Executive Team, the application of
the guidelines for remuneration to the Executive Team as well as the applicable remu-
neration structures and remuneration levels in ASSA ABLOY. The members of the Remu-
neration Committee are independent of the company and its management. The CEO
and other members of the Executive Team do not participate in the Board of Directors’
processing of and resolutions regarding remuneration-related matters in so far as they
are affected by such matters.
Deviation from the guidelines
The Board of Directors may temporarily resolve to deviate from the guidelines, in whole
or in part, if in a specific case there is special cause for the deviation and a deviation is nec-
essary to serve ASSA ABLOY’s long-term interests, including its sustainability, or to ensure
ASSA ABLOY’s financial viability. As set out above, the Remuneration Committee’s tasks
include preparing the Board of Directors’ resolutions in remuneration-related matters
including decisions regarding departures from the guidelines
Transitional provisions applicable for the 2020 Annual General Meeting
The total expensed remuneration of the Executive Team, including previous commitments not
yet due for payment is reported in the Annual Report 2019 in Note 34.
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 employees in the Group. The
purpose was to create the prerequisites for retaining and recruiting qualified employees
for the Group, to contribute to providing a total remuneration that is on market condi-
tions and competitive and align the interests of the shareholders with the interests of
the employees concerned.
At the 2011 to 2021 Annual General Meetings, it was decided to implement further
long-term incentive programs for senior executives and other key employees in the
Group. The incentive programs were named LTI 2011 to LTI 2021. LTI 2011 to LTI 2017
were based on similar terms to LTI 2010. LTI 2018 to LTI 2021 were based on similar prin-
ciples as the earlier programs, but with an extended measurement period of three years
for the performance-based condition and removal of matching shares.
For each Series B share acquired by the CEO within the framework of LTI 2019, LTI
2020 and LTI 2021, the company has awarded six performance-based share awards. For
each Series B share acquired by other members of the Executive Team, the company has
awarded five performance-based share awards. For other participants, the company has
awarded four performance-based share awards.
In accordance with the terms of the three programs (LTI 2019–LTI 2021), employees
have acquired a total of 362,659 Series B shares in ASSA ABLOY AB, of which 103,110
Series B shares were acquired in 2021 within the framework of LTI 2021.
Each performance-based share award for LTI 2019, LTI 2020 and LTI 2021 entitles the
holder to receive one Series B share in the company free of charge three years after allot-
ment, provided that the holder, with certain exceptions, at the time of the release of the
interim report for the first quarter 2022 (LTI 2019), first quarter 2023 (LTI 2020) and first
quarter 2024 (LTI 2021) is still employed by the Group and has maintained the shares
acquired within the framework of the respective program. In addition to these condi-
tions, the number of performance-based share awards that entitle the holder to Series B
shares in the company depends on the annual development of ASSA ABLOY’s earnings
per share based on the target levels, as defined by the Board of Directors, during the
measurement period 1 January 2019 – 31 December 2021 (LTI 2019), the measurement
period 1 January 2020 – 31 December 2022 (LTI 2020) and the measurement period 1
January 2021 – 31 December 2023 (LTI 2021), where each year during the measurement
period is compared to the previous year. The outcomes are calculated yearly, whereby
one third of the performance-based share awards is measured against the outcome for
the first year in the measurement period, one third is measured against the outcome for
the second year in the measurement period and one third is measured against the out-
come for the third year in the measurement period. The outcome for each year is meas-
ured linearly. Unless the minimum target level in the interval is achieved for the year,
none of the relevant performance-based share awards will give the right to any Series B
shares. If the maximum target level in the interval is achieved, each performance-based
share award linked to the relevant year entitles the holder to one Series B share at the end
of the three-year vesting period, provided that the other conditions are met.
The performance-based condition was fulfilled to 64 percent for LTI 2019. Fulfillment
of the performance-based condition for LTI 2020 and LTI 2021, respectively, is intended
to be presented in the Annual Report for the financial years 2022 and 2023, respectively.
Outstanding performance-based share awards for LTI 2021 total 418,308. The total
number of outstanding performance-based share awards for LTI 2019, LTI 2020 and LTI
2021 amounted to 1,277,820 on the reporting date of 31 December 2021.
Fair value is based on the share price on the respective allotment date. The present
value calculation is based on data from an external party. Fair value is also adjusted for
performance-based share awards not expected to be realized at the end of the vesting
period of the respective program. The company further 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 allotment date for LTI 2021, 9
June 2021, was SEK 259.86. The fair value of ASSA ABLOY’s Series B share on the allot-
ment date for LTI 2020, 28 May 2020, was SEK 196.25. The fair value of ASSA ABLOY’s
Series B share on the allotment date for LTI 2019, 24 May 2019, was SEK 194.23.
The total cost of the Group’s long-term incentive programs (LTI 2018–LTI 2021)
excluding social security costs amounted to SEK 49 M (50) in 2021. In April 2021 vesting
of LTI 2018 took place equivalent to 221,196 Series B shares (126,551) at a total market
value at the time of vesting of SEK 54 M (22). The payment referred to above for the
vested shares in LTI 2018 was recognized in equity.
Notice and severance pay
If the CEO is given notice, the company is liable to pay the equivalent of a maximum of 24
months’ base salary and other employment benefits. If one of the other members of the
Executive Team is given notice, the company is liable to pay a maximum six months’ base
salary and other employment benefits plus an additional twelve months’ base salary.
Average number of employees per country, broken down by gender
Group
2020 2021
Total
of which
women
of which
men Total
of which
women
of which
men
US 11,112 3,047 8,065 11,663 3,333 8,330
China 7,625 3,412 4,213 6,891 2,635 4,256
France 2,034 592 1,442 2,777 732 2,045
United Kingdom 2,139 536 1,603 2,500 694 1,806
Sweden 2,386 632 1,754 2,351 649 1,701
Mexico 1,765 539 1,227 1,901 542 1,359
Germany 1,556 459 1,097 1,791 471 1,320
Brazil 1,550 465 1,084 1,663 526 1,137
India 1,491 133 1,357 1,594 132 1,462
Poland 1,232 340 891 1,457 402 1,055
Australia 1,250 322 929 1,331 355 976
Czech Republic 1,081 381 701 1,261 458 803
Netherlands 1,151 210 941 1,202 241 961
Finland 1,194 322 872 1,177 327 850
Canada 820 255 565 858 199 658
Malaysia 793 399 395 829 407 422
Romania 744 295 449 826 314 512
Switzerland 640 169 470 690 137 553
Belgium 711 143 568 667 144 522
South Africa 620 253 367 655 265 390
Spain 573 153 420 647 195 452
South Korea 634 176 458 548 151 396
Norway 646 122 524 545 98 447
Denmark 544 117 427 498 106 393
Italy 418 118 301 483 187 295
New Zealand 355 100 254 403 110 294
Thailand 360 249 111 352 245 107
United Arab Emirates 347 37 310 334 37 297
Hungary 297 57 240 317 67 250
Chile 245 68 177 274 78 196
Ireland 228 81 147 244 89 155
Israel 217 68 149 239 76 163
Vietnam 52 14 38 220 136 85
Austria 200 29 171 213 29 185
Others 1,461 425 1,036 1,534 428 1,106
Total 48,471 14,718 33,753 50,934 14,996 35,939
Note 34 continued
Notes
93
ANNUAL REPORT 2021 | ASSA ABLOY
Parent company
2020 2021
Total
of which
women
of which
men Total
of which
women
of which
men
Sweden 281 85 196 251 80 171
Total 281 85 196 251 80 171
Gender distribution of Board of Directors and Executive Team
2020 2021
Total
of which
women
of which
men Total
of which
women
of which
men
Board of Directors
1
8 4 4 8 4 4
Executive Team 10 1 9 10 2 8
– of which Parent company’s
Executive Team 3 1 2 3 1 2
Total 18 5 13 18 5 13
1
Excluding employee representatives.
NOTE 35 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 management for ASSA ABLOY’s units has been implemented
in accordance with the ASSA ABLOY Group’s financial policy. The principles for financial
risk management are described below.
Organization and activities
ASSA ABLOY’s financial policy, which is determined by the Board of Directors, provides
a framework of guidelines and regulations for the management of financial risks and
financial activities.
ASSA ABLOY’s financial activities are coordinated centrally and the majority of finan-
cial transactions are conducted by the subsidiary ASSA ABLOY Financial Services AB,
which is the Group’s internal bank. External financial transactions are conducted by
Treasury. Treasury achieves significant economies of scale when negotiating borrowing
agreements, using interest rate derivatives and managing currency flows.
Capital structure
The objective of the Group’s capital structure is to safeguard its ability to continue as a
going concern, and to generate good returns for shareholders and benefits for other
stakeholders. Maintaining an optimal capital structure enables the Group to keep capi-
tal costs at a low level. The Group can adjust the capital structure based on the require-
ments that arise by varying the dividend paid to shareholders, returning capital to share-
holders, issuing new shares or selling assets to reduce debt. The capital requirement is
assessed on the basis of factors such as the net debt/equity ratio.
Net debt is defined as interest-bearing liabilities, including negative market values of
derivatives, plus pension provisions and lease obligations, less cash and cash equiva-
lents, and other interest-bearing investments including positive market values of deriva-
tives. The table ‘Net debt and equity’ shows the position as at 31 December.
Net debt and equity
SEK M
Group
2020 2021
Non-current interest-bearing receivables –159 –170
Short-term investments –46 –8
Derivative instruments – Positive market values –426 –262
Cash and cash equivalents –2,756 –4,325
Long-term loans 22,381 20,195
Short-term loans 3,514 5,042
Lease liabilities 3,562 3,515
Pension provisions 3,514 2,736
Derivative instruments – negative market values 172 347
Total
29,755 27,071
Equity 58,879 69,592
Debt/equity ratio 0.51 0.39
Rating
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. When the acquisition of HHI was announced, Standard & Poor’s issued a
Credit Watch with a negative outlook. Standard & Poor’s sees a risk of the long-term
credit rating being downgraded when the acquisition is completed.
Agency Short-term Outlook Long-term Outlook
Standard & Poor’s A2 Stable A – Neg Credit Watch
Moody’s P2 Stable n/a
Maturity profile – financial instruments
1
SEK M
2
31 December 2020 31 December 2021
<1 year >1 <2 years >2 <5 years >5 years <1 year >1 <2 years >2 <5 years >5 years
Long-term bank loans –1,368 –1,089 –1,160 –3,257 –1,110 –424 –2,208 –2,139
Long-term capital market loans –1,462 –2,417 –9,101 –6,582 –2,608 –3,178 –7,276 –6,048
Short-term bank loans –1,179 –2,042
Derivatives (outflow) –13,960 –20 –55 –33 –21,062 –22 –51 –24
Total by period –17,969 –3,526 –10,315 –9,871 –26,822 –3,624 –9,535 –8,212
Cash and cash equivalents incl. interest-bearing receivables 3,174 4,333
Non-current interest-bearing receivables 44 155 2 1 208
Derivatives (inflow) 14,049 60 166 98 20,883 65 145 74
Deferred considerations –781 –157 –6 –346 –53 –5
Trade receivables 13,665 15,844
Trade payables –7,028 –9,527
Lease liabilities
–1,145 –874 –1,259 –408 –1,141 –859 –1,212 –438
Net total 3,966 –4,453 –11,415 –10,027 3,226 –4,470 –10,607 –8,368
Confirmed credit facilities 12,058 –12,058 50,736 –38,454 –12,282
Adjusted maturity profile
1
16,024 –4,453 –23,472 –10,027 53,962 –42,924 –22,889 –8,368
1
For maturity profile of guarantees, see Note 30.
2
The amounts in the table are undiscounted and include future known interest payments. The exact amounts are therefore not found in the balance sheet.
Note 34 continued
Notes
94
ASSA ABLOY | ANNUAL REPORT 2021
Financing risk and maturity profile
Financing risk is defined as the risk of being unable to meet payment obligations as a
result of inadequate liquidity or difficulties in obtaining external financing. ASSA ABLOY
manages financing risk at Group level. Treasury is responsible for external 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 availa-
ble loan facilities, including available cash and cash equivalents, should include a reserve
(facilities available but not utilized) equivalent to at least 10 percent of the Group’s total
annual sales.
Maturity profile
The table ‘Maturity profile’ above shows the maturities for ASSA ABLOY’s financial
instruments, including confirmed credit facilities. The maturities are not concentrated
to a particular date in the immediate future. An important component of liquidity plan-
ning is the Group’s Multi-Currency Revolving Credit Facility totaling EUR 1,200 M. The
maturity for EUR 1,116 M was extended in 2021 and is now in April 2026. A smaller por-
tion, EUR 84 M will still mature in April 2024. This credit facility was wholly unutilized at
year-end. To secure the financing of the HHI acquisition, two new loan agreements were
entered into during the year: a Bridge Facility of USD 3,750 M and an agreement for a
credit facility of USD 500 M. Both facilities mature in 2023, but the financing depends
on completion of the HHI acquisition.
Moreover, existing financial assets are also taken into account in the table. The table
shows cash flows and known future interest payments relating to the Group’s financial
instruments at the reporting date, and these amounts are therefore not found in the
balance sheet.
Cash and cash equivalents and other interest-bearing receivables
Current interest-bearing investments totaled SEK 1,643 M (46) at year-end. In addition,
ASSA ABLOY has long-term interest-bearing receivables of SEK 170 M (159) and finan-
cial derivatives with a positive market value of SEK 262 M (426) which, in addition to
cash and cash equivalents, are included in the definition of net financial debt. Cash and
cash equivalents are mainly invested in bank accounts, deposits in banks or inter-
est-bearing instruments with high liquidity from issuers with a credit rating of at least
A– according to Standard & Poor’s or a similar rating agency. The average term for cash
and cash equivalents was 7 days (4) at year-end 2021.
The Parent company’s cash and cash equivalents are held in a sub-account to the
Group account.
SEK M
Group Parent company
2020 2021 2020 2021
Cash and bank balances 2,756 2,690 0 0
Short-term investments with maturity less
than 3 months 0 1,635 – –
Cash and cash equivalents 2,756 4,325 0 0
Short-term investments with maturity more
than 3 months 46 8 – –
Non-current interest-bearing receivables 159 170 – –
Positive market value of derivatives 426 262 – –
Total 3,388 4,764 0 0
Interest rate risks in interest-bearing assets
Treasury manages interest rate risk in interest-bearing assets. Derivative instruments
such as interest rate swaps and FRAs (Forward Rate Agreements) may be used to man-
age interest rate risk. These interest-bearing assets are mostly short-term. Maturity for
the investments has risen during the year. The fixed interest term for such short-term
investments was 8 days (164) at year-end 2021. A downward change in the yield curve
of one percentage point would reduce the Group’s interest income by around SEK 0 M
(0) and consolidated equity by SEK 0 M (0).
Interest-bearing liabilities
The Group’s long-term loan financing mainly consists of a GMTN Program of SEK 15,793
M (16,189), of which SEK 14,862 M (15,047) is long-term, a Private Placement Program
in the US totaling USD 225 M, of which USD 75 M (225) is long-term, and loans from
financial institutions such as the European Investment Bank (EIB) of EUR 0 M (18) and
USD 349 M (366) and the Nordic Investment Bank of EUR 135 M (190). During the year
there were no new issues under the GMTN Program and no new long-term loans were
raised. Other changes in long-term loans are mainly due to some of the originally long-
term loans now having less than 1 year to maturity. The size of the loans was also
affected by currency fluctuations, especially regarding the USD.
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, however, the outstanding balance under the Commercial Paper Programs
was SEK 0 M (0). In addition, substantial credit facilities are available, mainly in the form
of a Multi-Currency Revolving Credit Facility of EUR 1,200 M (1,200). At year-end the
average time to maturity for the Group’s interest-bearing liabilities, excluding the pen-
sion provision and lease obligations, was 45 months (53).
Some of the Group’s main financing agreements contain a customary Change of
Control clause. This clause means that lenders have the right in certain circumstances to
demand the renegotiation of conditions or to terminate the agreements should control
of the company change.
Note 35 continued
Notes
95
ANNUAL REPORT 2021 | ASSA ABLOY
External financing/net debt
Credit lines/facilities Amount, SEK M Maturity
Carrying amount,
SEK M Currency
Amount
2020
Amount
2021
Of which Parent
company, SEK M
US Private Placement Program 679 Aug 2024 679 USD 75 75 –
Multi-Currency RCF 860 Apr 2024 – EUR 84 84 –
Multi-Currency RCF 11,423 Apr 2026 – EUR 1,116 1,116 –
Bridge loan facility 33,930 Oct 2023 – USD – 3,750 –
Term loan facility 4,524 Oct 2023 – USD – 500 –
Bank loan EIB 621 Oct 2024
2
621 USD 86 69 –
Bank loan EIB 2,382 Mar 2027
2
2,382 USD 263 263 –
Bank loan NIB 690 Jun 2026 690 EUR 68 68 –
Bank loan NIB
690 Jun 2028 690 EUR 68 68 –
Global MTN Program 24,658 Feb 2023 500 SEK 500 500 500
Mar 2023 154 EUR 15 15 154
Oct 2023 205 EUR 20 20 205
Nov 2023 233
1
USD 25 25 –
Nov 2023 913
1
USD 100 100 905
Dec 2023 905 USD 100 100 905
Jan 2024 307 EUR 30 30 307
Apr 2024 550 SEK 550 550 550
May 2024 181 USD 20 20 181
Jul 2024 271 USD 30 30 271
Sep 2024 1,021 EUR 100 100 1,021
Oct 2024 181 USD 20 20 181
Feb 2025 512 EUR 50 50 512
Mar 2025 329
1
EUR 30 30 307
Jun 2025 905 USD 100 100 905
Jun 2025 511 EUR 50 50 511
Jun 2025 271 USD 30 30 271
Dec 2025 468
1
USD 50 50 452
Mar 2026 205 EUR 20 20 205
Nov 2026 489
1
CHF 50 50 493
Feb 2027 307 EUR 30 30 307
Feb 2027 510 EUR 50 50 510
Jun 2027 307
1
NOK 300 300 307
Sep 2027 509 EUR 50 50 509
Oct 2027 207
1
NOK 200 200 205
May 2029 152 EUR 15 15 152
Jun 2029 90 USD 10 10 90
Aug 2029 102 EUR 10 10 102
Oct 2029 303
1
EUR 28 28 284
Oct 2029 265 EUR 26 26 265
Dec 2029 908
1
USD 100 100 895
Mar 2030 306 EUR 30 30 306
Apr 2030 712 EUR 70 70 712
Feb 2031 102 EUR 10 10 102
Aug 2034 1,011 EUR 100 100 1,011
Other long-term loans 234 234 –12
Total long-term loans/facilities 80,690 20,195 14,577
US Private Placement Program 1 361 1,361 USD 150 150 –
Global MTN Program 931 931 SEK 1,142 931 931
Global CP Program
9,048 – SEK – – –
Swedish CP Program 5 000 – SEK – – –
Other bank loans 2,334 2,334 921
Overdraft facility 3,372 416 –
Total short-term loans/facilities 22,045 5,042 1,852
Total loans/facilities 102,734 25,237 16,430
Cash and cash equivalents –4,325
Non-current and current interest-bearing investments –177
Derivative financial instruments 86
Pension provisions 2,736
Lease liabilities 3,515
Net debt 27,071
1
The loans are subject to hedge accounting, in whole or in part.
2
The loans are amortizing. In the table the average dates of maturity of the loans have been stated.
Note 35 continued
Notes
96
ASSA ABLOY | ANNUAL REPORT 2021
Change in loans
SEK M
Long-term
loans
Short-term
loans Total
Opening balance 1 January 2021 22,381 3,514 25,895
Cash flow from financing activities
Long-term loans raised 8 – 8
Long-term loans repaid – –2,473 –2,473
Net change in short-term loans – 682 682
Total 8 –1,791 –1,783
Changes without cash flow impact
Acquisitions of subsidiaries 9 98 107
Divestments of subsidiaries – –245 –245
Reclassifications –3,177 3,177 –
Unrealized exchange rate differences 959 200 1,159
Other changes 12 – 12
Exchange rate differences 3 90 93
Total –2,194 3,320 1,125
Closing balance 31 December 2021 20,195 5,042 25,237
SEK M
Long-term
loans
Short-term
loans Total
Opening balance 1 January 2020 21,100 5,460 26,560
Cash flow from financing activities
Long-term loans raised 5,806 – 5,806
Long-term loans repaid – –3,252 –3,252
Net change in short-term loans – –1,522 –1,522
Total 5,806 –4,774 1,032
Changes without cash flow impact
Acquisitions of subsidiaries 182 43 225
Divestments of subsidiaries – –66 –66
Reclassifications –3,181 3,181 –
Unrealized exchange rate differences –1,631 –319 –1,950
Other changes 105 –11 94
Total –4,525 2,828 –1,697
Closing balance 31 December 2020 22,381 3,514 25,895
Interest rate risks in borrowing
Changes in interest rates have a direct impact on ASSA ABLOY’s net interest expense.
Treasury is responsible for identifying and managing the Group’s interest rate exposure.
Treasury analyzes the Group’s interest rate exposure and calculates the impact on
income of changes in interest rates on a rolling 12-month basis. The Group strives for a
mix of fixed rate and variable rate borrowings in the loan portfolio, and uses interest rate
swaps to adjust the fixed interest term. The financial policy stipulates that the average
fixed interest term should normally be within the interval of 12 to 36 months. At year-
end, the average fixed interest term on gross debt, excluding pension liabilities and
lease commitments, was around 29 months (32). An upward change in the yield curve
of one percentage point would increase the Group’s interest expense by around
SEK 53 M (89) and reduce consolidated equity by SEK 39 M (65).
Change in lease liabilities
SEK M
Group
2020 2021
Opening balance 3,739 3,562
Acquisitions of subsidiaries 265 13
Divestments of subsidiaries –37 –181
New and terminated leases 1,169 1,156
Amortization of lease liabilities –1,275 –1,242
Exchange rate differences –299 207
Closing balance 3,562 3,515
Balance sheet breakdown:
Group
2020 2021
Non-current lease liabilities 2,477 2,433
Current lease liabilities 1,085 1,082
Total 3,562 3,515
Currency composition
The currency composition of ASSA ABLOY’s borrowing depends on the currency com-
position 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.
Net debt by currency
SEK M
31 December 2020 31 December 2021
Net debt
excl. deriva-
tives
Net debt
incl. deriva-
tives
Net debt
excl. deriva-
tives
Net debt
incl. deriva-
tives
USD 11,201 12,311 11,494 12,133
EUR 13,525 11,783 12,356 10,879
GBP 493 2,120 114 1,600
CNY 577 1,868 1,000 2,854
AUD 64 1,340 85 1,443
NOK 612 656 560 354
CZK 124 628 100 655
PLN 62 554 66 630
KRW 234 505 312 475
SEK 1,477 –1,968 –603 –2,596
CHF 748 –1,616 675 –2,648
Other 636 1,574 911 1,292
Total 29,755 29,755 27,071 27,071
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 business units. The main principle is to allow currency fluctuations to have
an impact on the business as quickly as possible. As a result of this strategy, current
currency flows are not normally hedged.
Transaction flows relating to major currencies (import + and export –)
Currency, SEK M
Currency exposure
2020 2021
AUD 679 742
CAD 852 857
CHF –772 –609
CNY –1,653 –1,688
CZK –389 –461
EUR 1,523 1,761
GBP 589 1,133
HKD –820 –572
SEK –2,223 –663
USD 1,120 1,259
Translation exposure in income
The table below shows the impact on the Group’s income before tax of a reasonably
possible change, in this case a 10 percent weakening of the Swedish krona (SEK) in rela-
tion to the major currencies, with all other variables constant.
Impact on income before tax of a 10 percent weakening of SEK
Currency, SEK M 2020 2021
AUD 44 61
CAD 22 34
CHF 41 49
DKK 12 14
EUR 188 265
HKD 66 50
MXN 12 16
NOK
17 23
NZD 15 16
USD 753 853
Note 35 continued
Notes
97
ANNUAL REPORT 2021 | ASSA ABLOY
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. When-
ever 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 individ-
ual 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 96 shows the use of forward exchange con-
tracts 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 investment of surplus cash as well as from investment in
debt instruments and derivative instruments.
ASSA ABLOY’s policy is to minimize the potential credit risk relating to surplus cash
by using cash flow from subsidiaries to repay the Group’s loans. This is primarily
achieved through cash pools put in place by Treasury. Around 97 percent (96) of the
Group’s sales were settled through cash pools in 2021. Smaller amounts may be held in
other local banks for shorter time periods depending on how customers choose to pay.
The Group can also invest surplus cash in the short term in banks to match borrowing
and cash flow. The banks in which surplus cash is deposited have a high credit rating. In
light of this and the short terms of the investments the effect of the calculated credit risk
is assessed to be negligible.
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 deriva-
tive contracts with banks that have a high 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 98 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 customer accounts for more than 2 percent of the Group’s
sales. The concentration of credit risk associated with trade receivables is considered to
be limited, but credit risk has been assessed to have increased in the past two years,
given the global Covid-19 pandemic and its impact on global demand. 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. For
more information see Note 22 and the section ‘Impairment of financial assets’ in the
information on accounting principles.
Commodity risk
The Group is exposed to price risks relating to purchases of certain commodities (pri-
marily metals) used in production. Forward contracts are not used to hedge commodity
purchases.
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 lim-
ited to reducing exposure to financial risks.
The positive and negative fair values in the table ‘Outstanding derivative financial
instruments’ on page 98 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 equivalent to the gross value of the contracts.
For accounting purposes, financial instruments are classified into measurement cate-
gories in accordance with IFRS 9. The table ‘Financial instruments’ on page 98 provides an
overview of financial assets and liabilities, measurement category, and carrying amount
and fair value per item.
Risk management through hedge accounting
During the year the Group used hedge accounting in its financial risk management.
Hedges can be divided into cash flow hedges, fair value hedges and net investment
hedges. Changes in these hedges can be seen in the table below. For information regard-
ing the effects of net investment hedges in other comprehensive income, see Note 32.
Net investment hedges are used to manage currency risk that arises through invest-
ments in foreign subsidiaries. Fair value hedges are used to manage interest rate risk
that arises when the Group takes out loans at a fixed interest rate. Cash flow hedges for
interest rate risk in loans with variable interest rates are used to adjust the interest rate
risk for variable interest rates.
Interest rate risk related to the long-term loans are hedged through hedge account-
ing using interest rate swaps. In cases where the loans are denominated in a currency
other than SEK, currency risk is not included in the applied hedge accounting. For risks
related to net investments in foreign subsidiaries, hedge accounting is only applied to
manage currency risk; no other related risks are managed by the hedges that are
applied.
ASSA ABLOY does not hedge 100% of its long-term loans or its net investments.
Instead, the decision on when hedge accounting is appropriate is taken on a case-by-
case basis, in accordance with the risk levels described in the financial policy.
For fair value hedges the Group uses interest rate swaps with critical terms that are
equivalent to the hedged object, such as reference rate, settlement days, maturity date
and nominal amounts. This approach ensures an economic relationship between the
hedging objects and the hedging instruments. Hedging relationship effectiveness is
tested through periodic forward-looking evaluation to ensure that an economic rela-
tionship still exists. Examples of identified sources of ineffectiveness in the hedging rela-
tionship include if a credit risk adjustment in the interest rate swap is not matched by an
equivalent adjustment to the loan, or if for some reason differences in the critical terms
between the interest rate swap and the loan should arise. All critical terms matched dur-
ing the year. For this reason, the economic relationship has been 100% effective. The
changes that have occurred to date following the reference rate reform (IBOR reform)
had no significant impact on the Group’s hedge relationships in 2021. For USD, most
maturities for LIBOR do not end before 30 June 2023.
Hedging instruments
SEK M
Interest
rate
hedging
2020
Interest
rate
hedging
2021
Net in-
vestments
2020
Net in-
vestments
2021
Carrying amount of hedged item – fair value 2,609 2,803 – –
Carrying amount of hedged item – cash flow 432 1,907
Nominal amount of hedging instrument 3,041 4,711 – –
Maturity 2021 to
2029
2022 to
2029 – –
Hedge ratio 1:1 1:1 – –
Total effect of hedging on hedged item –187 –75 – –
Accrued remaining amount for terminated
hedges –20 –11 –255 –255
Change in value, hedging instruments since 1
January 99 –107 –3 –
Change in value, hedge item –99 107 3 –
Ineffectiveness recognized in profit or loss 0 0 0 –
Changes in the value of fair value hedged items are recognized against long-term loans,
changes in value of hedging instruments are recognized against accrued revenue or
expenses, respectively; ineffectiveness, if any, is recognized against interest income or
expenses, respectively. Changes in value of hedge instruments in net investment hedges
are recognized in the hedging reserve in equity. Changes in value of hedge instruments
in cash flow hedges of interest rate risk are recognized in Other comprehensive income.
Any ineffectiveness is recognized against interest income or interest expenses.
Note 35 continued
Notes
98
ASSA ABLOY | ANNUAL REPORT 2021
Disclosures of offsetting of financial assets and liabilities
SEK M
2020 2021
Gross
amount
Amounts
netted in the
balance sheet
Net amounts
in the balance
sheet
Amount
covered by
netting agree-
ment but not
offset
Net
amount
Gross
amount
Amounts
netted in the
balance sheet
Net amounts
in the balance
sheet
Amount cov-
ered by netting
agreement but
not offset
Net
amount
Financial assets 426 – 426 76 350 262 – 262 135 128
Financial liabilities 172 – 172 76 96 347 – 347 135 212
Netted financial assets and financial liabilities only consist of derivative instruments.
Outstanding derivative financial instruments at 31 December
Instrument, SEK M
31 December 2020 31 December 2021
Positive fair
value
2
Negative fair
value
2
Nominal value
Positive fair
value
2
Negative fair
value
2
Nominal value
Foreign exchange forwards, funding 240 –172 7,923 179 345 9,246
Interest rate derivatives
1
, fair value hedges 187 – 2,609 79 3 2,803
Interest rate derivatives
1
, cash flow hedges – 0 432 5 0 1,907
Total 426 –172 10,963 262 348 13,957
1
For Interest rate derivatives, only one leg is included in nominal value.
2
Assets are recognized against accrued revenue and liabilities against accrued expenses.
Financial instruments: carrying amounts and fair values by measurement category
SEK M
2020 2021
Carrying amount Fair value Carrying amount Fair value
Financial assets at amortized cost
Trade receivables 13,665 13,665 15,844 15,844
Other financial assets at amortized cost 252 252 223 223
Cash and cash equivalents 2,756 2,756 4,325 4,325
Financial assets at fair value through profit or loss
Shares and interests 6 6 52 52
Derivative financial instruments
Hedge accounting 187 187 84 84
Held for trading 240 240 179 179
Total financial assets 17,106 17,106 20,706 20,706
Financial liabilities at amortized cost
Trade payables 7,027 7,027 9,527 9,527
Lease liabilities 3,562 3,562 3,515 3,515
Long-term loans – hedge accounting 2,781 2,781 2,864 2,864
Long-term loans – non-hedge accounting 19,600 20,157 17,331 17,519
Short-term loans – hedge accounting – – – –
Short-term loans – non-hedge accounting
3,514 3,515 5,042 5,052
Financial liabilities at fair value through profit or loss
Deferred considerations 944 944 403 403
Derivative financial instruments
Hedge accounting 0 0 3 3
Held for trading 171 171 345 345
Total financial liabilities 37,600 38,158 39,027 39,228
Financial instruments: measured at fair value
SEK M
2020 2021
Carrying
amounts
Quoted prices
(level 1)
Observable data
(level 2)
Non-observable
data (level 3)
Carrying
amounts
Quoted prices
(level 1)
Observable data
(level 2)
Non-observable
data (level 3)
Financial assets
Derivative financial instruments 426 – 426 – 262 – 262 –
Financial liabilities
Derivative financial instruments 172 – 172 – 347 – 347 –
Deferred considerations 944 – – 944 403 – – 403
Note 35 continued
The fair value of long-term borrowing is based on observable data by discounting cash
flows to market rate, which is deemed to correspond with level 2 according to the fair
Measurement at fair value is classified hierarchically in three different levels based on
input data used in measurement of the instruments. Deferred considerations relate to
additional payments for acquired companies. The size of a deferred consideration is
usually linked to the earnings and sales trend in an acquired company during a specific
period of time. Deferred consideration is measured on the day of acquisition based on
value hierarchy. The fair value of current receivables and current liabilities is considered
to correspond to the carrying amount.
the best judgment of management regarding future outcomes. Discounting takes place
in the case of significant amounts. Belongs to level 3 in the hierarchy.
For derivatives, the present value of future cash flows is calculated based on observa-
ble yield curves and exchange rates on the balance sheet date. Belongs to level 2 in the
hierarchy.
Five years in summary
Amounts in SEK M unless stated otherwise 2017 2018 2019 2020 2021
Sales and income
Sales 76,137 84,048 94,029 87,649 95,007
Organic growth, % 4 5 3 –8 11
Acquisitions and divestments, % 2 2 3 4 2
Operating income (EBIT) excluding items affecting comparability 12,341 12,909 14,920 11,916 14,181
Operating income (EBIT) 12,341 6,096 14,608 12,458 14,181
Income before tax (EBT) 11,673 5,297 13,571 11,676 13,538
Net income 8,635 2,755 9,997 9,172 10,901
Cash flow
Cash flow from operating activities 9,248 9,225 12,665 13,658 12,456
Cash flow from investing activities –8,661 –6,427 –5,464 –6,741 –3,094
Cash flow from financing activities –861 –2,728 –7,301 –4,558 –7,813
Cash flow –274 70 –100 2,359 1,549
Operating cash flow 10,929 11,357 14,442 14,560 13,265
Capital employed and financing
Capital employed 75,932 81,146 92,204 88,634 96,663
– of which goodwill 50,330 53,413 57,662 58,344 62,502
– of which other intangible assets and property, plant and
equipment 19,144 19,518 21,191 22,134 22,587
– of which right-of-use assets – 119 3,731 3,513 3,436
– of which shares and interests in associates 2,243 2,434 2,595 637 652
Net debt 25,275 29,246 33,050 29,755 27,071
Non-controlling interests 9 10 11 9 9
Shareholders’ equity, excluding non-controlling interest 50,648 51,890 59,143 58,870 69,582
Data per share, SEK
Earnings per share before and after dilution 7.77 2.48 9.00 8.26 9.81
Earnings per share before and after dilution and excluding items
affecting comparability 7.77 8.09 9.22 7.54 9.81
Shareholders’ equity per share after dilution 45.60 46.71 53.25 53.00 62.64
Dividend per share 3.30 3.50 3.85 3.90
4.20
1
Price of Series B share at year-end 170.40 158.15 219.00 202.50 276.20
Key figures
Operating margin (EBIT), % excluding items affecting
comparability 16.2 15.4 15.9 13.6 14.9
Operating margin (EBIT), % 16.2 7.3 15.5 14.2 14.9
Profit margin (EBT), % 15.3 6.3 14.4 13.3 14.2
Cash conversion 0.94 0.94 1.04 1.31 0.98
Return on capital employed, % 16.6 15.9 16.2 12.5 15.2
Return on equity, % 17.6 5.4 18.0 15.5 17.0
Equity ratio, % 50.9 48.7 50.1 50.1 53.5
Net debt/Equity ratio 0.50 0.56 0.56 0.51 0.39
Net debt/EBITDA 1.8 2.0 1.8 1.9 1.5
Total number of shares, thousands 1,112,576 1,112,576 1,112,576 1,112,576 1,112,576
Number of outstanding shares, thousands 1,110,776 1,110,776 1,110,776 1,110,776 1,110,776
Weighted average number of outstanding shares,
before and after dilution, thousands 1,110,776 1,110,776 1,110,776 1,110,776 1,110,776
Average number of employees 47,426 48,353 48,992 48,471 50,934
1
Dividend proposed by the Board of Directors.
%
0
5
10
15
20
2120191817
Number
0
10,000
20,000
30,000
40,000
50,000
60,000
2120191817
%
0
5
10
15
20
2120191817
Return on capital employed
Operating margin (EBIT)
2
Average number of employees
2
Excluding items affecting
comparability.
99
ANNUAL REPORT 2021 | ASSA ABLOY
Five years in summary
Comments on five years in summary
2017
Sales growth continued to be robust during the year.
Organic growth was 4 percent, driven by growing demand
for electromechanical and digital door opening solutions.
For ASSA ABLOY, the mature markets primarily in Europe
and the US demonstrated continued robust growth, while
the trend in the emerging markets was weaker, especially
in China, Brazil and the Middle East. Growth in Asia outside
China continued to be robust.
Product development continues to focus on areas such
as digital and mobile technologies, which are believed to
provide substantial potential for robust profitable growth
for some time to come. ASSA ABLOY also has a growing
selection of products with environmental product declara-
tions as part of its sustainable solutions initiative.
Operating income for the year, excluding items affect-
ing comparability, increased by 10 percent compared with
2016, and cash flow remained strong. Earnings per share
after full dilution, excluding items affecting comparability,
increased 10 percent.
A total of 16 acquisitions were consolidated during the
year, which strengthened the market position in areas such
as smart door locks, physical access management and iden-
tity solutions. ASSA ABLOY divested its project operation
within HID Global, AdvanIDe, in its entirety.
2018
Growth was strong during the year, with organic growth
of 5 percent driven by continued successes for electrome-
chanical and digital solutions, as well as strong growth in
North and South America. The mature markets continued
to demonstrate a favorable trend, with the US and Europe
demonstrating strong and robust growth, respectively, dur-
ing the year. The trend in the emerging markets was weaker,
especially in Asia and the Middle East.
A new restructuring program was launched during the
year. About fifty production plants and offices are set to
close over a three-year period, with an estimated payback
period of less than three years.
Product development continued at a high level with large
investments in R&D, as reflected by 27 percent of sales for
the year which relate to products that are less than three
years old.
Operating income for the year, excluding items affecting
comparability, increased by 5 percent and cash flow re-
mained strong. Earnings per share after full dilution, exclud-
ing items affecting comparability, increased 4 percent. An
impairment charge of SEK 6 billion was taken during the year
for goodwill, other intangible assets and operating assets.
A total of 19 acquisitions were consolidated during the
year, which strengthened the market position for HID in
secure identity solutions. ASSA ABLOY sold its wood door
business within the Americas division during the year.
2019
Organic growth was 3 percent, driven by good growth in
the Americas and Global Technologies divisions. Growth
was particularly strong in the US on robust demand for
smart locks in the private residential market, as well as the
commercial business segments. Growth in Europe and Asia
was generally mixed. The trend for the emerging markets
continued to be relatively weak.
The product development initiative accelerated during
the year with large investments in R&D, as reflected by the
27 percent of sales which relate to products that are less
than three years old.
Operating income for the year, excluding items affecting
comparability, increased by 12 percent and cash flow re-
mained strong. Earnings per share after full dilution, exclud-
ing items affecting comparability, increased 14 percent.
Acquisition activity continued to be high during the year;
at the same time, an agreement was also signed for the
acquisition of agta record, the largest acquisition since 2011.
2020
Demand was negatively impacted during the year by the
Covid-19 pandemic. Organic growth was
–8 percent for the
Group, with a negative sales trend in all divisions. Cost-saving
measures and staff cuts have largely offset the negative
impact on earnings from lower sales. A new restructuring
program was also launched at the end of the year, with
plans to close about ten plants and about thirty offices for a
two-year period. The operating cash flow remained strong
thanks to, among other things, cost reductions and reduced
working capital.
Demand was generally more stable in the more mature
markets in Europe and the US compared with the trend in
the emerging markets, especially in Asia, the Middle East and
Africa. The focus on product development and innovation
continued with undiminished strength. Major investments
were made in R&D, where the full workforce was kept intact
during the year.
Operating income for the year, excluding items affecting
comparability, decreased by 20 percent. Cash flow remained
strong. Acquisition activity continued to be high during
the year; for example, the acquisition of agta record was
completed.
2021
The mature markets in the US and Europe gradually
recovered during the year despite the continuation of the
Covid-19 pandemic and restrictions in many countries.
The continued restrictions in Asia meant weaker recovery
of demand. Organic growth was very strong for the Group
as a whole at 11 percent, with a positive sales trend in all
divisions.
However, rising material costs and scarcity of certain
components presented an operational challenge and had a
negative impact on sales and income. Operating income ex-
cluding items affecting comparability increased overall by 19
percent, and the operating margin was 14.9 percent (13.6).
Operating cash flow remained strong during the year.
Acquisition activity was high, with thirteen businesses
acquired, primarily in the US and Europe. Additional acquisi-
tion contracts were signed during the year, primarily for HHI,
a leading provider in the North American residential seg-
ment. The Nordic locksmith and security solution installer
CERTEGO was divested.
The focus on product development and innovation contin-
ued at a high level during the year, including the launch of
more than 400 new products on the market.
Sustainability remains a priority area for ASSA ABLOY. New
initiatives were introduced during the year in our effort to
meet the Group’s sustainability targets for 2025, with contin-
ued reductions in emissions, waste and water consumption.
100
ASSA ABLOY | ANNUAL REPORT 2021
Five years in summary
Definitions of key ratios
Organic growth
Change in sales for comparable units after adjustments for
acquisitions, divestments and exchange rate effects.
Operating margin (EBITDA)
Operating income before depreciation, amortization and
impairment as a percentage of sales.
Operating margin (EBITA)
Operating income before amortization of intangible assets
recognized in business combinations, 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.
Items affecting comparability
Restructuring costs and significant non-recurring operating
expenses such as revaluation of previously owned shares in
associates and goodwill impairment.
Operating cash flow
Cash flow from operating activities excluding restructur-
ing payments and tax paid on income minus net capital
expenditure and repayment of lease liabilities. See the table
on operating cash flow for detailed information.
Cash conversion
Operating cash flow in relation to income before tax exclud-
ing items affecting comparability.
Net capital expenditure
Investments in, less sales of, intangible assets and property,
plant and equipment.
Capital employed
Total assets less interest-bearing assets and non-interest-
bearing liabilities including deferred tax liability.
Average adjusted capital employed
Average capital employed excluding restructuring reserves
for the last twelve months.
Net debt
Interest-bearing liabilities less interest-bearing assets. See
the table on net debt for detailed information.
Net debt/EBITDA
Net debt at the end of the period in relation to EBITDA for
the last twelve months.
Debt/equity ratio
Net debt in relation to equity.
Equity ratio
Shareholders’ equity as a percentage of total assets.
Shareholders’ equity per share
Equity excluding non-controlling interests in relation to
number of outstanding shares after any potential dilution.
Return on equity
Net income attributable to parent company’s shareholders
for the last twelve months as a percentage of average parent
company’s shareholders’ equity for the same period.
Return on capital employed
Operating Income (EBIT), excluding items affecting com-
parability, for the last twelve months as a percentage of aver-
age adjusted capital employed.
Earnings per share before and after dilution
Net income attributable to parent company’s shareholders
divided by weighted average number of outstanding shares.
None of the Group’s outstanding long-term incentive
programs are expected to result in significant dilution in the
future.
Earnings per share before and after dilution, excluding
items affecting comparability
Net income attributable to parent company’s shareholders,
excluding items affecting comparability, net of tax, divided
by weighted average number of outstanding shares. None of
the Group’s outstanding long-term incentive programs are
expected to result in significant dilution in the future.
101
ANNUAL REPORT 2021 | ASSA ABLOY
Definitions
Board of Directors and CEO assurance
The Board of Directors and the President and CEO declare that the consolidated accounts have been prepared in accord-
ance 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 ac-
cepted 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, 2 March 2022
Lars Renström
Chairman
Carl Douglas
Vice Chairman
Nico Delvaux
President and CEO
Johan Hjertonsson
Board member
Sofia Schörling Högberg
Board member
Eva Karlsson
Board member
Lena Olving
Board member
Joakim Weidemanis
Board member
Susanne Pahlén Åklundh
Board member
Rune Hjälm
Board member
Employee representative
Mats Persson
Board member
Employee representative
Our audit report was issued on 4 March 2022
Ernst & Young AB
Hamish Mabon
Authorized Public Accountant
Auditor in charge
102
ASSA ABLOY | ANNUAL REPORT 2021
Board of Directors and CEO assurance
Auditor’s report
Opinions
We have audited the annual accounts and consolidated
accounts of ASSA ABLOY AB (publ) except pages 49–61 and
the statutory sustainability report for the year 2021. The
annual accounts and consolidated accounts of the company
are included on pages 42–98 in this document.
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 2021 and its financial perfor-
mance and cash flow for the year then ended in accordance
with the Annual Accounts Act. The consolidated accounts
have been prepared in accordance with the Annual Accounts
Act and present fairly, in all material respects, the financial
position of the group as of 31 December 2021 and their
financial performance and cash flow for the year then ended
in accordance with International Financial Reporting Stand-
ards (IFRS), as adopted by the EU, and the Annual Accounts
Act. Our opinions do not cover the corporate governance
statement on pages 49–61. The statutory administration
report is consistent with the other parts of the annual
accounts and consolidated accounts.
We therefore recommend that the general meeting of
shareholders adopts the income statement and balance
sheet for the parent company and the group.
Our opinions in this report on the annual accounts and
consolidated accounts are consistent with the content of
the additional report that has been submitted to the parent
company’s audit committee in accordance with the Audit
Regulation (537/2014) Article 11.
Basis for Opinions
We conducted our audit in accordance with International
Standards on Auditing (ISA) and generally accepted auditing
standards in Sweden. Our responsibilities under those stand-
ards are further described in the Auditor’s Responsibilities
section. We are independent of the parent company and the
group in accordance with professional ethics for account-
ants in Sweden and have otherwise fulfilled our ethical
responsibilities in accordance with these requirements. This
includes that, based on the best of our knowledge and belief,
no prohibited services referred to in the Audit Regulation
(537/2014) Article 5.1 have been provided to the audited
company or, where applicable, its parent company or its con-
trolled companies within the EU.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinions.
Key Audit Matters
Key audit matters of the audit are those matters that, in our
professional judgment, were of most significance in our
audit of the annual accounts and consolidated accounts of
the current period. These matters were addressed in the
context of our audit of, and in forming our opinion thereon,
the annual accounts and consolidated accounts as a whole,
but we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the
Auditor’s responsibilities for the audit of the financial state-
ments section of our report, including in relation to these
matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the
risks of material misstatement of the financial statements.
The results of our audit procedures, including the proce-
dures performed to address the matters below, provide the
basis for our audit opinion on the accompanying financial
statements.
S
To the general meeting of the shareholders of ASSA ABLOY AB (publ),
corporate identity number 556059-3575
Report on the annual accounts and consolidated accounts
103
ANNUAL REPORT 2021 | ASSA ABLOY
Auditor’s report
Other Information than the annual accounts and consolidated accounts
This document also contains other information than the
annual accounts and consolidated accounts and is found on
pages1–41, 99–101 and 108–113. The Board of Directors
and the Managing Director are responsible for this other
information.
Our opinion on the annual accounts and consolidated
accounts does not cover this other information and we do
not express any form of assurance conclusion regarding this
other information.
In connection with our audit of the annual accounts and
consolidated accounts, our responsibility is to read the infor-
mation identified above and consider whether the informa-
tion is materially inconsistent with the annual accounts and
consolidated accounts. In this procedure we also take into
account our knowledge otherwise obtained in the audit and
assess whether the information otherwise appears to be
materially misstated.
If we, based on the work performed concerning this infor-
mation, conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Goodwill and other intangible assets with indefinite use of life
Description
How our audit addressed this key audit matter
The value of goodwill and other intangibles with an indef-
inite useful life as of 31 December 2021 amounted to
70,3 billion SEK. The Company performs an annual
impairment test as well as whenever impairment indica-
tors are identified. The recoverable amount for each
cash-generating unit is determined as the value in use,
which is calculated based on the discounted present
value of future cash flows. Key assumptions in these cal-
culations include forecast operating results, growth rates
to extrapolate future cash flows and discount rates to be
applied on future estimated cash flows. Applied discount
rate (also referred to as” WACC- Weighted Average Cost
of Capital”) is presented in note 14.
An impairment test is a complex process and contains
a high degree of judgment regarding future cash flows
and other assumptions, not least because it is based on
estimates of how the Company´s business will be affected
by future market developments and by other economic
events. Therefore, we have assessed valuation of goodwill
and other intangibles assets with an indefinite useful life
to be a key audit matter.
In our audit we have evaluated and reviewed key assumptions,
the application of recognized valuation practices, discount rate
(and other source data that the Company has applied. Our eval-
uation has included comparing to external data sources, such
as forecasts of inflation or assessment of future market growth
and by evaluating the sensitivity in the Company´s valuation
model. We have specifically focused on the sensitivity in the
calculations and have made an independent evaluation of
whether there is a risk that reasonably probable events would
give rise to a situation where the value in use would be lower
than the carrying amount. In this assessment, we have also
compared the company’s historical forecasts in the impair-
ment tests with the amounts that is the actual outcome, in
order to assess the company’s historical precision in its esti-
mates and assessments. We have included valuation experts
with appropriate skills in the team performing our review.
Finally, we have evaluated disclosures provided in note 14, spe-
cifically with regards to the disclosure of which of the stated
assumptions that are most sensitive in calculating the value in
use and the sensitivity analysis for those key assumptions.
Description
How our audit addressed this key audit matter
The restructuring program is described in the Report of
Board of Directors in the annual report in note 26. The
outgoing balance as per December 31, 2021 amounts to
0,7 billion SEK. A provision for restructuring measures is
recognized when the Group has established a detailed
plan and either implementation has begun, or the main
features of the measures have been communicated to
the parties involved. In our audit we have focused on the
recognition in the proper period and valuation of the
restructuring provision as they require management’s
judgment and estimates. Because of the significant
amount and considerable estimates involved, we have
assessed restructuring provision to be a key audit matter.
We have reviewed the company´s process for identifying
restructuring projects and the estimated costs for these pro-
jects. Our audit procedures include evaluating if the restructur-
ing programs in all material respects are in line with the
accounting principles for provisions, i.e. IAS 37. We have evalu-
ated if there is an obligation that represent future obligations.
We have challenged management´s assumptions that there are
basis for the restructuring provisions with the aim of assessing
the reasonability of the provisions. Based on risk and material-
ity, we have reconciled the parameters in the calculation
against supporting documentation. This includes, among other
things, the examination of minutes, agreements, calculations
and communication with employees. We have evaluated
management´s assessments of remaining cashflows by review-
ing their quarterly project updates. Finally, we have evaluated
the disclosures provided regarding restructuring activities in
note 26.
Provisions – Restructuring programs
104
ASSA ABLOY | ANNUAL REPORT 2021
Auditor’s report
Responsibilities of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are
responsible for the preparation of the annual accounts and
consolidated accounts and that they give a fair presentation
in accordance with the Annual Accounts Act and, concern-
ing the consolidated accounts, in accordance with IFRS as
adopted by the EU. The Board of Directors and the Managing
Director are also responsible for such internal control as they
determine is necessary to enable the preparation of annual
accounts and consolidated accounts that are free from
material misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated
accounts, The Board of Directors and the Managing Director
are responsible for the assessment of the company’s and the
group’s ability to continue as a going concern. They disclose,
as applicable, matters related to going concern and using the
going concern basis of accounting. The going concern basis of
accounting is however not applied if the Board of Directors
and the Managing Director intends to liquidate the company,
to cease operations, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board
of Director’s responsibilities and tasks in general, among other
things oversee the company’s financial reporting process.
Auditor’s responsibility
Our objectives are to obtain reasonable assurance about
whether the annual accounts and consolidated accounts as
a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that
includes our opinions. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs and generally accepted auditing stand-
ards in Sweden will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggre-
gate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
annual accounts and consolidated accounts.
As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the annual accounts and consolidated accounts, whether
due to fraud or error, design and perform audit proce-
dures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our
opinions. The risk of not detecting a material misstate-
ment resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, inten-
tional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of the company’s internal con-
trol relevant to our audit in order to design audit proce-
dures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effective-
ness of the company’s internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by the Board of Directors and
the Managing Director.
• Conclude on the appropriateness of the Board of Direc-
tors’ and the Managing Director’s use of the going con-
cern basis of accounting in preparing the annual accounts
and consolidated accounts. We also draw a conclusion,
based on the audit evidence obtained, as to whether any
material uncertainty exists related to events or conditions
that may cast significant doubt on the company’s and the
group’s ability to continue as a going concern. If we con-
clude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related dis-
closures in the annual accounts and consolidated
accounts or, if such disclosures are inadequate, to modify
our opinion about the annual accounts and consolidated
accounts. Our conclusions are based on the audit evi-
dence obtained up to the date of our auditor’s report.
However, future events or conditions may cause a com-
pany and a group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of
the annual accounts and consolidated accounts, including
the disclosures, and whether the annual accounts and con-
solidated accounts represent the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient and appropriate audit evidence regard-
ing the financial information of the entities or business
activities within the group to express an opinion on the
consolidated accounts. We are responsible for the direc-
tion, supervision and performance of the group audit. We
remain solely responsible for our opinions.
We must inform the Board of Directors of, among other mat-
ters, the planned scope and timing of the audit. We must
also inform of significant audit findings during our audit,
including any significant deficiencies in internal control that
we identified.
We must also provide the Board of Directors with a state-
ment that we have complied with relevant ethical require-
ments regarding independence, and to communicate with
them all relationships and other matters that may reasona-
bly be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or related safe-
guards applied.
From the matters communicated with the Board of Direc-
tors, we determine those matters that were of most signifi-
cance in the audit of the annual accounts and consolidated
accounts, including the most important assessed risks for
material misstatement, and are therefore the key audit mat-
ters. We describe these matters in the auditor’s report unless
law or regulation precludes disclosure about the matter.
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ANNUAL REPORT 2021 | ASSA ABLOY
Auditor’s report
The auditor’s examination of the ESEF report
Opinion
In addition to our audit of the annual accounts and consoli-
dated accounts, we have also examined that the Board of
Directors and the Managing Director have prepared the
annual accounts and consolidated accounts in a format that
enables uniform electronic reporting (the Esef report) pur-
suant to Chapter 16, Section 4(a) of the Swedish Securities
Market Act (2007:528) for ASSA ABLOY AB (publ) for the
financial year 2021.
Our examination and our opinion relate only to the statu-
tory requirements.
In our opinion, the ESEF report #[checksum] has been pre-
pared in a format that, in all material respects, enables uni-
form electronic reporting.
Basis for opinion
We have performed the examination in accordance with
FAR’s recommendation RevR 18 Examination of the ESEF
report. Our responsibility under this recommendation is
described in more detail in the Auditors’ responsibility sec-
tion. We are independent of ASSA ABLOY AB (publ) in
accordance with professional ethics for accountants in Swe-
den and have otherwise fulfilled our ethical responsibilities
in accordance with these requirements.
We believe that the evidence we have obtained is suffi-
cient and appropriate to provide a basis for our opinion.
Report on other legal and regulatory requirements
Report on the audit of the administration and the proposed appropriations of the company’s profit or loss
Opinions
In addition to our audit of the annual accounts and consoli-
dated accounts, we have also audited the administration of
the Board of Directors and the Managing Director of ASSA
ABLOY AB (publ) for the year 2021 (the financial year 2021-
01-01-2021-12-31) and the proposed appropriations of the
company’s profit or loss.
We recommend to the general meeting of shareholders
that the profit be appropriated (loss be dealt with) in accord-
ance with the proposal in the statutory administration
report and that the members of the Board of Directors and
the Managing Director be discharged from liability for the
financial year.
A separate list of loans and collateral has been prepared in
accordance with the provisions of the Companies Act.
Basis for opinions
We conducted the audit in accordance with generally
accepted auditing standards in Sweden. Our responsibilities
under those standards are further described in the Auditor’s
Responsibilities section. We are independent of the parent
company and the group in accordance with professional eth-
ics for accountants in Sweden and have otherwise fulfilled
our ethical responsibilities in accordance with these require-
ments.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinions.
Responsibilities of the Board of Directors and the Managing
Director
The Board of Directors is responsible for the proposal for
appropriations of the company’s profit or loss. At the pro-
posal of a dividend, this includes an assessment of whether
the dividend is justifiable considering the requirements
which the company’s and the group’s type of operations, size
and risks place on the size of the parent company’s and the
group’s equity, consolidation requirements, liquidity and
position in general.
The Board of Directors is responsible for the company’s
organization and the administration of the company’s affairs.
This includes among other things continuous assessment of
the company’s and the group’s financial situation and ensur-
ing that the company’s organization is designed so that the
accounting, management of assets and the company’s finan-
cial affairs otherwise are controlled in a reassuring manner.
The Managing Director shall manage the ongoing adminis-
tration according to the Board of Directors’ guidelines and
instructions and among other matters take measures that
are necessary to fulfill the company’s accounting in accord-
ance with law and handle the management of assets in a
reassuring manner.
Auditor’s responsibility
Our objective concerning the audit of the administration,
and thereby our opinion about discharge from liability, is to
obtain audit evidence to assess with a reasonable degree of
assurance whether any member of the Board of Directors or
the Managing Director in any material respect:
• has undertaken any action or been guilty of any omission
which can give rise to liability to the company, or
• in any other way has acted in contravention of the Compa-
nies Act, the Annual Accounts Act or the Articles of Associ-
ation.
Our objective concerning the audit of the proposed appro-
priations of the company’s profit or loss, and thereby our
opinion about this, is to assess with reasonable degree of
assurance whether the proposal is in accordance with the
Companies Act.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
generally accepted auditing standards in Sweden will always
detect actions or omissions that can give rise to liability to
the company, or that the proposed appropriations of the
company’s profit or loss are not in accordance with the Com-
panies Act.
As part of an audit in accordance with generally accepted
auditing standards in Sweden, we exercise professional judg-
ment and maintain professional skepticism throughout the
audit. The examination of the administration and the pro-
posed appropriations of the company’s profit or loss is based
primarily on the audit of the accounts. Additional audit pro-
cedures performed are based on our professional judgment
with starting point in risk and materiality. This means that we
focus the examination on such actions, areas and relation-
ships that are material for the operations and where devia-
tions and violations would have particular importance for
the company’s situation. We examine and test decisions
undertaken, support for decisions, actions taken and other
circumstances that are relevant to our opinion concerning
discharge from liability. As a basis for our opinion on the
Board of Directors’ proposed appropriations of the compa-
ny’s profit or loss we examined whether the proposal is in
accordance with the Companies Act.
106
ASSA ABLOY | ANNUAL REPORT 2021
Auditor’s report
The auditor’s examination of the ESEF report, continued
Responsibilities of the Board of Directors and the Managing
Director
The Board of Directors and the Managing Director are
responsible for the preparation of the Esef report in accord-
ance with Chapter 16, Section 4(a) of the Swedish Securities
Market Act (2007:528), and for such internal control that the
Board of Directors and the Managing Director determine is
necessary to prepare the Esef report without material mis-
statements, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to obtain reasonable assurance whether
the Esef report is in all material respects prepared in a format
that meets the requirements of Chapter 16, Section 4(a) of
the Swedish Securities Market Act (2007:528), based on the
procedures performed.
RevR 18 requires us to plan and execute procedures to
achieve reasonable assurance that the Esef report is pre-
pared in a format that meets these requirements.
Reasonable assurance is a high level of assurance, but it is
not a guarantee that an engagement carried out according
to RevR 18 and generally accepted auditing standards in
Sweden will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the Esef report.
The audit firm applies ISQC 1 Quality Control for Firms
that Perform Audits and Reviews of Financial Statements,
and other Assurance and Related Services Engagements and
accordingly maintains a comprehensive system of quality
control, including documented policies and procedures
regarding compliance with professional ethical require-
ments, professional standards and legal and regulatory
requirements.
The examination involves obtaining evidence, through
various procedures, that the Esef report has been prepared
in a format that enables uniform electronic reporting of the
annual and consolidated accounts. The procedures selected
depend on the auditor’s judgment, including the assessment
of the risks of material misstatement in the report, whether
due to fraud or error. In carrying out this risk assessment, and
in order to design audit procedures that are appropriate in
the circumstances, the auditor considers those elements of
internal control that are relevant to the preparation of the
Esef report by the Board of Directors and the Managing
Director, but not for the purpose of expressing an opinion on
the effectiveness of those internal controls. The examination
also includes an evaluation of the appropriateness and rea-
sonableness of assumptions made by the Board of Directors
and the Managing Director.
The procedures mainly include a technical validation of
the Esef report, i.e. if the file containing the Esef report meets
the technical specification set out in the Commission’s Dele-
gated Regulation (EU) 2019/815 and a reconciliation of the
Esef report with the audited annual accounts and consoli-
dated accounts.
Furthermore, the procedures also include an assessment
of whether the Esef report has been marked with iXBRL
which enables a fair and complete machine-readable version
of the consolidated statement of financial performance,
financial position, changes in equity and cash flow.
The auditor’s examination of the corporate governance statement
The Board of Directors is responsible for that the corporate
governance statement on pages 49–61 has been prepared in
accordance with the Annual Accounts Act.
Our examination of the corporate governance statement
is conducted in accordance with FAR´s standard RevR 16 The
auditor´s examination of the corporate governance state-
ment. This means that our examination of the corporate gov-
ernance statement is different and substantially less in scope
than an audit conducted in accordance with International
Standards on Auditing and generally accepted auditing
standards in Sweden. We believe that the examination has
provided us with sufficient basis for our opinions.
A corporate governance statement has been prepared.
Disclosures in accordance with chapter 6 section 6 the sec-
ond paragraph points 2-6 of the Annual Accounts Act and
chapter 7 section 31 the second paragraph the same law are
consistent with the other parts of the annual accounts and
consolidated accounts and are in accordance with the
Annual Accounts Act.
The auditor´s opinion regarding the statutory sustainability report
The Board of Directors is responsible for the statutory sus-
tainability report and that it is prepared in accordance with
the Annual Accounts Act.
Our examination has been conducted in accordance with
FAR’s auditing standard RevR 12 The auditor’s opinion
regarding the statutory sustainability report. This means that
our examination of the statutory sustainability report is dif-
ferent and substantially less in scope than an audit con-
ducted in accordance with International Standards on Audit-
ing and generally accepted auditing standards in Sweden.
We believe that the examination has provided us with suffi-
cient basis for our opinion.
A statutory sustainability report has been prepared.
Ernst & Young AB with Hamish Mabon as auditor in charge, Box 7850, 103 99 Stockholm was appointed auditor of ASSA
ABLOY AB (publ) by the general meeting of the shareholders on the 28 April 2021 and has been the company’s auditor since
the 29 April 2020.
Stockholm 4 Mars 2022
Ernst & Young AB
Hamish Mabon
Authorized Public Accountant
107
ANNUAL REPORT 2021 | ASSA ABLOY
Auditor’s report
ASSA ABLOY as an investment
We are the global leader in access solutions. Since ASSA ABLOY was founded in 1994, we have
created significant customer and shareholder value by continuously optimizing our produc-
tion and developing new, innovative products that meet our customers’ needs and demands.
Below are the main reasons why we create customer and shareholder value.
Good industry to be in – Strong underlying trends
are driving increased demand for access solutions,
including meeting the individual’s most basic need for safety
and security. The digitalization of the industry is enabling us
to offer more convenient solutions and also shift to more ser-
vice-based solutions offerings. At the same time, the demand
for more sustainable and resilient ASSA ABLOY products is
fuelled by the strong growth in green buildings and more
sustainable urban environments around the world.
Leading market position – We have the largest in-
stalled base and the deepest know-how of locks and
different access solutions in the world. This is continuously
maintained and upgraded with new solutions. Two-thirds
of our revenue is generated from the aftermarket, which
provides us with a stable customer and revenue base. Our
steady aftermarket makes us less vulnerable to the cyclical
demand affecting many other industries.
4
Consistent profitable growth – Our revenue has
grown by more than 9 percent annually during the
last ten years, and the adjusted EBIT margin has been stable
at above 16 percent, when excluding the years of the pan-
demic. We continue to focus on growing through customer
relevance and being cost efficient in everything we do, which
enables us to deliver consistent profitable growth. The shift
to electromechanical products also allows us to grow in a
profitable way long-term.
Investing in innovation – We invest about 4 percent
of our revenue in R&D. Given the size of our business,
this gives us a strong competitive advantage, both short and
long term. Our innovation capacity is based on our common
platforms and our global reach but also relies on the local
competence of our innovation organization. The target for
products launched in the past three years is to be 25 percent
of our total sales.
Strong acquisition record – We have acquired more
than 300 companies globally since ASSA ABLOY
was established in 1994. In many cases, the businesses are
leading access providers in their respective markets with
well-established customer bases and brands. After realizing
synergies, we grow the businesses and increase their profit-
ability and margins. This strategy has proven successful, and
our acquired businesses have generated significant value
following integration. In 2021 we announced the acquisi-
tion of the Hardware and Home Improvement business unit
from Spectrum Brands, which adds about 15 percent in sales
to ASSA ABLOY and constitutes an important strategic step
in developing our residential business in North America.
Our trusted brands set us apart – We use multiple
brands to make the most of our global and local
strengths. Our Group and employer brand is ASSA ABLOY,
and it is fast becoming the leading commercial brand for
doors, locks, and related services. We also have strong mas-
ter brands across our core businesses. These include Yale,
one of the world’s best-known residential lock brands, and
HID Global, which leads the way in secure identities. In total,
there are 130 endorsed brands within the Group that help
us create and keep loyal customers across different markets
and regions.
Operational efficiency – Our production is struc-
tured around local assembly lines close to the cus-
tomer, adapted according to the local standards, with some
strategic components concentrated to larger plants. This
enables us to quickly supply our products efficiently to our
customers. We also continue to optimize our supply chain,
product setup, and footprint and work with lean processes
and automation.
Leading sustainable solutions – We committed
to science-based targets in 2020. This will further
improve our competitiveness and provide sound business
production and product development incentives. When we
develop new products, our ambition is to minimize their
environmental impact and embodied carbon footprint,
while maximizing sustainability attributes, such as energy
efficiency during the products’ in-use phase and recycling
once they reach their end of life.
+139%
EPS growth in 10 years
+127%
sales growth in 10 years
SEK M SEK M
0
20,000
40,000
60,000
80,000
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2120191817
Omsättning
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0
3,000
6,000
9,000
12,000
15,000
SEK
0
2
4
6
8
10
2120191817
Utdelning per aktie
Vinst per aktie efter
utspädning
1
%
0
5
10
15
20
25
30
2120191817
Sales
Operating income
1
Dividend per share
Earnings per share after
dilution
1
Sales and operating income Dividend and earnings per share New product ratio
1
Excluding items affecting
comparability.
1
Excluding items affecting
comparability.
4
5
1
2
6
7
8
3
SEK 31 bn
dividend in 10 years
108
ASSA ABLOY | ANNUAL REPORT 2021
Shareholder information
Share price and turnover 2012–2021
Dividend per share 2012–2021
The ASSA ABLOY share
Share price trend
Despite the negative impact of the Covid-19 pandemic for
much of 2021, the stock market developed positively during
most parts of the year. The peak of the stock market during
the year was reached in December, when OMX Stockholm PI
index had increased 35 percent.
The ASSA ABLOY share also had a positive develop-
ment, reaching an all-time high on August 17. The markets
contracted in September following uncertainties relating
to supply reliability and higher raw material costs. After
almost two months of a positive development, the markets
turned negative again in late November due to uncertainties
related to the new corona virus variant, Omicron, which put
pressure on the stock markets. The stock market ended the
year in a positive trend.
For the full year, the OMX Stockholm PI index increased
35 percent, while ASSA ABLOY’s share price closed at SEK
276.20, an increase of 36 percent.
The highest closing price for ASSA ABLOY Series B during
the year was SEK 288.20 recorded on 17 August 2021 and
the lowest price of SEK 200.20 was recorded on 5 January
2021. At year-end, market capitalization amounted to SEK
307 294 M (225,297), calculated on both Series A and Series
B shares.
Listing and trading
ASSA ABLOY’s Series B share has been listed on Nasdaq
Stockholm, Large Cap since November 8, 1994 under the
code ASSA-B.ST. Turnover of the Series B share on Nasdaq
Stockholm in 2021 amounted to 425 million shares (623),
equivalent to a turnover rate of 40 percent (59).
The implementation of the EU’s Markets in Financial In-
struments Directive (MiFID) in 2007 has changed the struc-
ture of equity trading in Europe and trading now takes place
on both regulated markets and other trading platforms.
Share price and turnover 2021
0
20,000
40,000
60,000
80,000
100,000
120,000
2021202020192018201720162015201420132012
SEK No. of shares traded, thousands
0
50
100
150
200
250
300
350
0
10,000
20,000
30,000
40,000
50,000
60,000
DNOSAJJMAMFJ
150
170
190
210
230
250
270
290
310
SEK No. of shares traded, thousands
SEK
0
1
2
3
4
5
21201918171615141312
2021 proposed dividend
ASSA ABLOY B OMX Stockholm PI No. of shares traded, thousands (incl. after hours)
ASSA ABLOY B, total return SIX Return Index Source: Nasdaq and Bloomberg
ASSA ABLOY B OMX Stockholm PI No. of shares traded, thousands (incl. after hours)
Source: Nasdaq and Bloomberg
109
ANNUAL REPORT 2021 | ASSA ABLOY
Shareholder information
Ownership structure (share capital) Ownership structure (votes)
Ownership structure
The number of shareholders at the end of 2021 was 45,698
(43,734) and the ten largest shareholders accounted for
36.1 percent (34.9) of the share capital and 56.4 percent
(55.5) of the votes. Shareholders with more than 50,000
shares, a total of 395 shareholders, accounted for 98
percent (97) of the share capital and 98 percent (98) of the
votes. Investors outside Sweden owned 67.3 percent (66.8)
of the share capital, accounted for 45.9 percent (45.6) of the
votes, and were mainly in the US and the UK.
ASSA ABLOY’s ten largest shareholders
Based on the share register at 31 December 2021.
Shareholders Series A shares Series B shares Total number of shares Share capital
1
, % Votes
1
, %
Investment AB Latour 41,595,729 63,900,000 105,495,729 9.5 29.4
Melker Schörling AB 15,930,240 18,120,992 34,051,232 3.1 10.9
Fidelity Investments 45,795,967 45,795,967 4.1 2.8
Capital Group 43,026,179 43,026,179 3.9 2.6
BlackRock 39,383,656 39,383,656 3.5 2.4
Vanguard 28,682,299 28,682,299 2.6 1.8
Swedbank Robur Funds 27,292,102 27,292,102 2.5 1.7
Norges Bank 27,143,780 27,143,780 2.4 1.7
Alecta Pension Insurance 25,822,000 25,822,000 2.3 1.6
Handelsbanken Funds 24,542,409 24,542,409 2.2 1.5
Other shareholders 711,340,981 711,340,981 63.9 43.6
Total number 57,525,969 1,055,050,365 1,112,576,334 100.0 100.0
1
Based on the number of outstanding shares and votes of 1,110,776,334 and 1,628,510,055 respectively, excluding shares held by ASSA ABLOY.
Source: Modular Finance AB and Euroclear Sweden AB.
Legend
Legend
Legend
Legend
Legend
Legend
Legend
Legend
Legend
Legend
Legend
Legend
Latour, 29.4%
Melker Schörling AB, 10.9%
Fidelity Investments,2.8%
Capital Group, 2.6%
BlackRock, 2.4%
Vanguard, 1.8%
Swedbank Robur Funds, 1.7%
Norges Bank, 1.7%
Alecta Pension Insurance, 1.6%
Handelsbanken Funds, 1.5%
Other shareholders, 43.6%
Latour, 9.5%
Fidelity Investments, 4.1%
Capital Group, 3.9%
BlackRock, 3.5%
Melker Schörling AB, 3.1%
Vanguard, 2.6%
Swedbank Robur Funds, 2.5%
Norges Bank, 2.4%
Alecta Pension Insurance, 2.3%
Handelsbanken Funds, 2.2%
Other shareholders, 63.9%
Data per share
SEK/share
1
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Earnings after tax and dilution 4.66 4,95
2
5.79 6.93 7.09
2
7.77 8.09
2
9.22
2
7.54
2
9.81
Dividend 1.70 1.90 2.17 2.65 3.00 3.30 3.50 3.85 3.90 4.20
3
Dividend yield, %
4
2.1 1.7 1.6 1.5 1.8 1.9 2.2 1.8 1.9 1.5
Dividend, %
5
36.8 38.4 37.4 38.2 42.3 42.5 43.3 41.8 51.7 42.8
Share price at year-end 80.97 113.27 138.27 178.00 169.10 170.40 158.15 219.00 202.50 276.20
Highest share price 81.60 114.07 139.17 189.00 190.10 197.10 193.90 231.40 246.50 288.20
Lowest share price 57.23 79.33 105.63 135.00 148.40 163.80 155.85 154.45 159.35 200.20
Equity 23.29 25.94 32.50 37.43 42.51 45.60 46.71 53.25 53.00 62.64
Number of shares, millions
6
1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6
1
Adjustments made for new issues and stock split (3:1) in 2015 for all historical
periods prior to 2015.
2
Excluding items affecting comparability 2011, 2013, 2016, 2018-2020.
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.
110
ASSA ABLOY | ANNUAL REPORT 2021
Shareholder information
Share capital and voting rights
The share capital amounted to SEK 370,858,778 at year-end
2021, distributed among a total of 1,112,576,334 shares,
comprising 57,525,969 Series A shares and 1,055,050,365
Series B shares. All shares have a par value of around SEK
0.33 and give shareholders equal rights to the company’s
assets and earnings. The total number of votes amounted
to 1,630,310,055. Each Series A share carries ten votes and
each Series B share one vote.
Repurchase of own shares
Since 2010, the Board of Directors has requested and
received a mandate from the Annual General Meeting to
repurchase and transfer ASSA ABLOY Series B shares. The
aim has been, among other things, to secure the company’s
undertakings in connection with its long-term incentive
programs (LTI). The 2021 Annual General Meeting autho-
rized the Board of Directors to acquire, during the period
until 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 1,800,000 Series B shares
after repurchase. The cost for these shares amounts to SEK
103 M. The shares account for around 0.2 percent of the
share capital and each share has a par value of around SEK
0.33. No shares were repurchased in 2021.
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, while always taking into account
ASSA ABLOY’s long-term financing requirements.
The Board of Directors proposes a dividend to share-
holders of SEK 4.20 per share (3.90) for 2021. In order to
facilitate a more efficient cash management, it is proposed
that the dividend be paid in two equal installments, the first
with the record date 29 April 2022 and the second with the
record date 22 November 2022. If the proposal is adopted
at the Annual General Meeting, the first installment is esti-
mated to be paid on 4 May 2022 and the second installment
on 25 November 2022.
The proposal is equivalent to a total dividend yield on the
Series B share of 1.5 percent (1.9). In 2021 the total return
on the ASSA ABLOY share, defined as market price move-
ment plus reinvested dividends, was 38.5 percent compared
with the reinvested SIX Return Index in Stockholm, which
was up 39.3 percent. Over the ten-year period 2012–2021,
the total return on ASSA ABLOY’s Series B share was 471
percent, compared with the reinvested SIX Return Index in
Stockholm, which increased by 372 percent.
Changes in share capital
Year Transaction
Series A
shares
Series C
shares
Series B
shares
Share capital,
SEK
1
1989 20,000 2,000,000
1994 Split 100:1 2,000,000 2,000,000
1994 Bonus issue
1994 Non-cash issue 1,746,005 1,428,550 50,417,555 53,592,110
1996 New share issue 2,095,206 1,714,260 60,501,066 64,310,532
1996 Conversion of Series C shares into Series A shares 3,809,466 60,501,066 64,310,532
1997 New share issue 4,190,412 66,541,706 70,732,118
1998 Converted debentures 4,190,412 66,885,571 71,075,983
1999 Converted debentures before split 4,190,412 67,179,562 71,369,974
1999 Bonus issue
1999 Split 4:1 16,761,648 268,718,248 285,479,896
1999 New share issue 18,437,812 295,564,487 314,002,299
1999 Converted debentures after split and new share issues 18,437,812 295,970,830 314,408,642
2000 Converted debentures 18,437,812 301,598,383 320,036,195
2000 New share issue 19,175,323 313,512,880 332,688,203
2000 Non-cash issue 19,175,323 333,277,912 352,453,235
2001 Converted debentures 19,175,323 334,576,089 353,751,412
2002 New share issue 19,175,323 344,576,089 363,751,412
2002 Converted debentures 19,175,323 346,742,711 365,918,034
2010 Converted debentures 19,175,323 347,001,871 366,177,194
2011 Converted debentures 19,175,323 349,075,055 368,250,378
2012 Converted debentures 19,175,323 351,683,455 370,858,778
2015 Split 3:1 57,525,969 1,055,050,365 370,858,778
1
SEK 1 per share before split in 2015 – number of shares at the end of the period and around SEK 0.33 per share after split in 2015. Number of shares at the end of the
period 1,112,576,334 (including repurchase of own shares).
111
ANNUAL REPORT 2021 | ASSA ABLOY
Shareholder information
Information for shareholders
Annual General Meeting
The ASSA ABLOY 2022 Annual General Meeting will be
held on 27 April 2022 in Stockholm, Sweden. The notice to
convene the Annual General Meeting will be made in the
prescribed manner.
Nomination Committee
The Nomination Committee has the task of preparing, on
behalf of the shareholders, proposals regarding the elec-
tion of Chairman of the General Meeting, members of the
Board of Directors, Chairman of the Board, Vice Chairman
of the Board, auditor, fees for the board members including
division between the Chairman, the Vice Chairman, and
the other board members, as well as fees for committee
work, fees to the company’s auditor and any changes of the
instructions for the Nomination Committee.
The Nomination Committee prior to the 2022 Annual
General Meeting comprises Johan Hjertonsson (Investment
AB Latour), Mikael Ekdahl (Melker Schörling AB), Marianne
Nilsson (Swedbank Robur Fonder), Liselott Ledin (Alecta)
and Yvonne Sörberg (Handelsbanken Fonder). Johan
Hjertonsson is Chairman of the Nomination Committee.
Dividend
The Board of Directors proposes a dividend to shareholders
of SEK 4.20 per share for the 2021 financial year. In order to
facilitate a more efficient cash management, the dividend
is proposed to be paid in two equal installments, the first
with the record date 29 April 2022 and the second with the
record date 22 November 2022. If the proposal is adopted
by the Annual General Meeting, the first installment is esti-
mated to be paid on 4 May 2022 and the second installment
on 25 November 2022.
112
ASSA ABLOY | ANNUAL REPORT 2021
Shareholder information
Financial calendar and contact details
Further information
Lina Bonnevier
Telephone +46 (0)8 506 485 51
lina.bonnevier@assaabloy.com
Annual General Meeting and dividend
Annual General Meeting 27 April 2022
Shares traded excluding right
to dividend of SEK 2.10 28 April 2022
Record day for dividend 29 April 2022
Payment of dividend 4 May 2022
Shares traded excluding right
to dividend of SEK 2.10 21 November 2022
Record day for dividend 22 November 2022
Payment of dividend 25 November 2022
Financial reporting
Interim Report January–March 2022 27 April 2022
Half-year Report January–June 2022 19 July 2022
Interim Report January–September 2022 26 October 2022
Year-end Report 2022 3 February 2023
Reports can be ordered from
ASSA ABLOY AB
• Website assaabloy.com
• Telephone +46 (0)8 506 485 00
• Email info@assaabloy.com
• Mail ASSA ABLOY AB
Box 70340
SE-107 23 Stockholm
Sweden
113
ANNUAL REPORT 2021 | ASSA ABLOY
Shareholder information
Production: ASSA ABLOY in cooperation with Narva.
Photo: Peter Hoelstad and ASSA ABLOY’s own photographic library, among others.
Printing: Print Run, Stockholm, 2022.
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Printed matter
3041 0701
Box 70340
SE-107 23 Stockholm
Visiting address:
Tel +46 (0)8 506 485 00
Fax +46 (0)8 506 485 85
Reg. No. 556059-3575
assaabloy.com
© ASSA ABLOY
About ASSA ABLOY
The ASSA ABLOY Group is the
global leader in access solutions.
The Group operates worldwide
with 51,000 employees and
sales of SEK 95 billion. The Group
has leading positions in areas
such as efficient door openings,
trusted identities and entrance
automation. ASSA ABLOY’s
innovations enable safe, secure
and convenient access to
physical and digital places. Every
day, we help billions of people
experience a more open world.