20% - Assa Abloy

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Report of the Board of Directors 40 SEK 1,675 M. Goodwill and other intangible assets with an indefinite useful life amounted to approximately SEK 1,200 M. Acquisitions in 2008 In 2008, ASSA ABLOY has signed an agreement to acquire Valli&Valli, a leading Italian producer of designer door handles. An agreement has also been signed to acquire the German company SimonsVoss Technologies, a leading player in the wireless digital locking and access control systems segment. This acquisition is subject to regulatory approval and the transaction is expected to be finalized during the first half of the year. The companies have combined annual sales of just over SEK 700 M and are together expected to be EPS-accretive in 2008. Changes in the Executive Team During the year, Joe Grillo left his post as Head of Global Technologies division at his own request and consequently also left the Executive Team. Denis Hébert, Executive Vice President and Head of the HID Group business unit, and Tim Shea, Executive Vice President and Head of the ASSA ABLOY Hospitality business unit, were appointed new members of the Executive Team. These business units make up Global Technologies division, which is headed by Johan Molin. Incentive program for employees A global incentive program, Incentive 2007, for employees in the Group was implemented during the year, whereby employees were offered an opportunity to share in any increase in value of the ASSA ABLOY share. Just over 1,400 employees in some 15 countries took part in this program, which was fully subscribed. The program is issued at market price and amounts to EUR 100 M, with a maturity date of June 2012. The maximum dilutive effect of the program is estimated at 1.2 percent of share capital and 0.8 percent of the total number of votes. Research & Development ASSA ABLOY’s expenditure on Research & Development during the year amounted to SEK 776 M (719), which is equivalent to 2.3 percent (2.3) of sales. ASSA ABLOY has a central function, Shared Technologies, with responsibility for the standardization of electronics for the Group’s common platforms. The objective is that this standardization should result in lower development costs and a shorter development period for new products. Sustainable development Two of ASSA ABLOY’s subsidiaries in Sweden carry on licensable activities in accordance with the Swedish Environmental Code. The Group’s licensable and notifiable activities have an impact on the external environment mainly through the subsidiaries ASSA AB and ASSA OEM AB. These companies operate machine shops, foundries and associated surface-coating plants, which have an impact on the external environment through emissions to water and air as well as solid waste. The subsidiaries ASSA AB and ASSA OEM AB are actively addressing environmental issues and are certified in accordance with ISO 14001. The majority of units outside Sweden carry on licensable activities and hold equivalent licenses under local legislation. During the year, ASSA ABLOY decided on a 20-point program for sustainable development, to be implemented during the period 2007 to 2010. This program covers the phasing out of certain chemicals used in production; energy consumption; workplace conditions; and other social and ethical issues governed by the company’s Code of Conduct. The objectives also involve the integration of work on sustainable development into the company’s existing processes. One of the major successes during the year was the phasing out of chlorinated solvents, which went very well. Consumption was reduced by 40 percent in 2007 and the remainder will be phased out in 2008. The results of this program will be reported in the Group’s annual Sustainability Report. Current information on sustainable development is published on the Group’s website. Outlook Organic sales growth is expected to continue at a good rate. The operating margin (EBIT) and operating cash flow are expected to develop well. Long term, ASSA ABLOY expects an increase in security-driven demand. Focus on end-user value and innovation as well as leverage on ASSA ABLOY’s strong position will accelerate growth and increase profitability.
End Corporate governance report ASSA ABLOY is a Swedish public limited liability company with registered office in Stockholm, Sweden and headquarters at Klarabergsviadukten 90. The Group’s corporate governance is based on, among other things, its articles of association, the Swedish Companies Act and the rules and regulations of the OMX Nordic Exchange Stockholm (Stockholm Stock Exchange). ASSA ABLOY applies the Swedish Code of Corporate Governance, which forms part of the rules of the Stockholm Stock Exchange. This Code is based on the principle of �comply or explain� and primarily deals with the organization and working methods of the Annual General Meeting, the board of directors and the management, as well as the interaction between these bodies. ASSA ABLOY deviates from two of the Code’s provisions and an explanation for these deviations is to be found on page 50. In other respects, ASSA ABLOY is considered to comply with the provisions of the Code at year-end 2007. ASSA ABLOY’s objective is that its activities should generate good long-term returns for its shareholders and other stakeholders. An effective scheme of corporate governance for ASSA ABLOY can be summarized in a number of interacting components, which are described below. Financial Reporting Owners Annual General Meeting Nomination Committee Board of Directors Audit Committee Remuneration Committee External Audit Executive Management �� Decentralized Organization Shareholders At year-end, ASSA ABLOY had 23,961 shareholders. ASSA ABLOY’s principal shareholders are Investment AB Latour and SäkI AB (9.8 percent of the capital and 29.7 percent of the votes) and Melker Schörling AB (4.0 percent of the capital and 11.6 percent of the votes). Foreign shareholders accounted for 49 percent of the share capital and 33 percent of the votes. The ten largest shareholders accounted for 40 percent of the share capital and 59 percent of the votes. Share capital and voting rights ASSA ABLOY’s share capital at year-end amounted to SEK 365,918,034, distributed among 19,175,323 Series A shares and 346,742,711 Series B shares. Each Series A share carries ten votes and each Series B share one vote. All shares give the shareholders equal rights to the company’s assets and earnings. Corporate governance report 41 Share and dividend policy ASSA ABLOY’s Series B share is quoted on the Large Cap list of the Stockholm Stock Exchange. A trading lot comprises 200 shares. ASSA ABLOY’s market capitalization at year-end amounted to SEK 47,203 M. The goal of the Board of Directors is that, in the long term, the dividend should correspond to 33–50 percent of earnings after standard tax of 28 percent, but always taking into account ASSA ABLOY’s long-term financing requirements. Annual General Meeting Shareholders’ rights to decide on the affairs of ASSA ABLOY are exercised at the Annual General Meeting. Shareholders who are recorded in the share register on the record day and have duly notified their intention to attend are entitled to take part in the Annual General Meeting, either in person or via a proxy. Resolutions at the General Meeting are normally passed by simple majority. However, on certain matters the Swedish Companies Act prescribes that a proposal should be supported by a higher majority. Individual shareholders who wish to have an issue raised at the Annual General Meeting can apply to ASSA ABLOY’s Board of Directors at a special address published on the company’s website in good time before the Meeting. The Annual General Meeting should be held within six months of the end of the company’s financial year. Matters considered at the Annual General Meeting include: a dividend; adoption of the income statement and balance sheet; discharge of the Board Aktieägare of Directors and the CEO from liability; election of Bolagsstämma board members and Chairman Valberedning of the Board; appointment of the Nomination Committee and auditors; and determination Styrelse of fees for the Board of �� Directors and auditors. An Extraordinary General Meeting �� may be held if the Board of Directors considers this necessary or if ASSA ABLOY’s VD och koncernledning auditors or shareholders hold- �� ing at least 10 percent �� of the shares so request. Decentraliserad organisation The 2007 Annual General Meeting The Annual General Meeting in April 2007 was attended by shareholders representing 37.9 percent of the company’s capital and 58.7 percent of the votes. At the Meeting, Gustaf Douglas, Melker Schörling, Carl-Henric Svanberg, Carl Douglas, Per-Olof Eriksson, Lotta Lundén, Sven-Christer Aktieägare Nilsson and Johan Molin were re-elected as members Bolagsstämma of the Board. Gustaf Douglas Valberedning was re-elected as Chairman of the Board. Melker Schörling and Carl-Henric Svanberg Styrelse were re-elected as Vice Chairmen. Further, it was �� noted that the 2006 Annual �� General Meeting had appointed PricewaterhouseCoopers as auditors, with authorized VD och koncernledning public accountant Peter �� Nyllinge as Auditor �� in Charge, for the four-year period up to the 2010 Annual General Meeting. The Meeting approved a dividend of SEK 3.25 per share, in accordance with the proposal of the Board and the CEO. In addition, the Meeting passed a resolution on the fees payable to the Board and the auditors and appointed the members of the Nomination Committee Finansiell rapportering Finansiell rapportering Extern revision Extern revision
Page 1 and 2: Annual Report 2007 The global leade
Page 3 and 4: Significant events Financials in br
Page 5: ASSA ABLOY is the global leader in
Page 8: CEO’s statement 4 innovative prod
Page 11 and 12: 1 Excluding restructuring costs. 2
Page 13 and 14: Presence and strong relationships t
Page 15 and 16: In the security market today, manuf
Page 17 and 18: HID’s Crescendo Smart Card allows
Page 19 and 20: Check in with your cellphone Signat
Page 21 and 22: ASSA ABLOY worked closely with the
Page 23 and 24: The division manufactures and sells
Page 25 and 26: Security a top concern at new biote
Page 27 and 28: Woodside in Australia is one of the
Page 29 and 30: The division sells electronic secur
Page 31 and 32: “In today’s turbulent times, bu
Page 33 and 34: In 2007 ASSA ABLOY Entrance Systems
Page 35 and 36: More information about sustainable
Page 37 and 38: Open House in Brazil Sustainable de
Page 39 and 40: Tom Devine from ASSA ABLOY Australi
Page 41 and 42: Report of the Board of Directors, C
Page 43: Report of the Board of Directors Th
Page 47 and 48: CEO reported on the Group’s perfo
Page 49 and 50: Gustaf Douglas Melker Schörling Ca
Page 51 and 52: Operational management and internal
Page 53 and 54: The Board’s proposed guidelines f
Page 55 and 56: The Executive Team From left: Ulf S
Page 57 and 58: Income statement - Group ASSA ABLOY
Page 59 and 60: Results by division ASSA ABLOY Annu
Page 61 and 62: Balance sheet - Group ASSA ABLOY An
Page 63 and 64: Cash flow statement - Group ASSA AB
Page 65 and 66: Income statement Parent company Bal
Page 67 and 68: Financial risk management ASSA ABLO
Page 69 and 70: Maturity - financial liabilities an
Page 71 and 72: Note 1 Notes Note 1 Significant acc
Page 73 and 74: Note 1 cont. benefits can be reliab
Page 75 and 76: Note 1 cont. USA, which are reporte
Page 77 and 78: Notes 9-12 Note 9 Employee benefits
Page 79 and 80: Note 15 cont. ASSA ABLOY Annual Rep
Page 81 and 82: Notes 17 -18 Note 17 Shares in subs
Page 83 and 84: Notes 24-25 Note 24 Cash and cash e
Page 85 and 86: Note 29 cont. A) Specification of a
Page 87 and 88: Notes 30-35 Note 30 Other provision
Page 89 and 90: Note 36 Adams Rite On 24 March 2006
Page 91 and 92: Five years in summary 2003 Business
Page 93 and 94: Quarterly information ASSA ABLOY An
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Proposed disposition of earnings Th
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The ASSA ABLOY share Share price tr
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Convertible debentures for personne
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Production: Hallvarsson & Halvarsso
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20% - Assa Abloy

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