Prospectus • Oct 26, 2018
Prospectus
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(incorporated with limited liability in the Kingdom of Sweden)
(incorporated with limited liability in the Kingdom of Sweden)
unconditionally and irrevocably guaranteed in the case of Notes issued by ASSA ABLOY Financial Services AB (publ) by ASSA ABLOY
On 20 September 2001 ASSA ABLOY AB (publ) (AA) established this €2,500,000,000 Global Medium Term Note Programme (the Programme). On 24 May 2007 ASSA ABLOY Financial Services AB (publ) (AAFS) acceded as an issuer under the Programme. This Offering Circular supersedes all previous offering circulars. Any Notes (as defined below) issued under the Programme on or after the date of this Offering Circular are issued subject to the provisions described herein. This does not affect any Notes already in issue. Pursuant to the Programme, AA and AAFS (each an Issuer and together the Issuers) may from time to time issue notes (the Notes) denominated in any currency agreed between the relevant Issuer and the relevant Dealer (as defined below). The payments of all amounts owing in respect of the Notes issued by AAFS (Guaranteed Notes) will be unconditionally and irrevocably guaranteed by AA (the Guarantor).
Notes may be issued in bearer or registered form (respectively Bearer Notes and Registered Notes). The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed €2,500,000,000 (or its equivalent in other currencies calculated as described herein), subject to increase as described herein. The Notes may be issued on a continuing basis to one or more of the Dealers specified under "Overview of the Programme" and any additional Dealer appointed under the Programme from time to time by AA (each a Dealer and together the Dealers), which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the relevant Dealer shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agree ing to purchase such Notes.
An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks see "Risk Factors".
Application has been made to the Financial Conduct Authority in its capacity as competent authority (the UK Listing Authority) for Notes issued under the Programme during the period of 12 months from the date of this Offering Circular to be admitted to the official list of the UK Listing Authori ty (the Official List) and to the London Stock Exchange plc (the London Stock Exchange) for such Notes to be admitted to trading on the London Stock Exchange's Regulated Market.
References in this Offering Circular to Notes being listed (and all related references) shall mean that such Notes have been admitted to trading on the London Stock Exchange's Regulated Market and have been admitted to the Official List. The London Stock Exchange's Regulated Market is a regulated market for the purposes of Directive 2014/65/EU (as amended, MiFID II).
The requirement to publish a prospectus under the Prospectus Directive (as defined under "Important Information" below) only applies to Notes which are to be admitted to trading on a regulated market in the European Economic Area and/or offered to the public in the European Economic Area other than in circumstances where an exemption is available under Article 3.2 of the Prospectus Directive. References in this Offering Circular to Exempt Notes are to Notes for which no prospectus is required to be published under the Prospectus Directive. The UK Listing Authority has neither approved nor reviewed information contained in the Offering Circular in connection with Exempt Notes. Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and certain other information which is applicable to each Tranche (as defined under "Terms and Conditions of the Notes") of Notes will (other than in the case of Exempt Notes, as defined above) be set out in a final terms document (the Final Terms) which, with respect to Notes to be listed on the London Stock Exchange will be delivered to the UK Listing Authority and the London Stock Exchange. Copies of Final Terms in relation to Notes to be listed on the London Stock Exchange will also be published on the website of the London Stock Exchange through a regulatory information service. In the case of Exempt Notes, notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and certain other information which is applicable to each Tranche will be set out in a pricing supplement document (the Pricing Supplement).
Application may also be made to have certain Series of Notes accepted for trading in the Private Offerings, Resales and Tradi ng through Automated Linkages System (PORTAL) of the National Association of Securities Dealers, Inc.
Neither the Notes nor the Guarantee have been or will be registered under the U.S. Securities Act of 1933, as amended (the Securities Act), or with any securities regulatory authority of any state or other jurisdiction of the United States, and the Notes may include Bearer Notes that are subject to U.S. tax law requirements. The Notes may not be offered or sold or, in the case of Bearer Notes, delivered in the United States or to, or for the benefit of, U.S. persons (as defined in Regulation S under the Securities Act (Regulation S)) unless the Notes are registered under the Securities Act or an exemption from the registration requirements of the Securit ies Act is available. See "Form of the Notes" for a description of the manner in which Notes will be issued. Registered Notes are subject to certain restrictions on transfer, see "Subscription and Sale and Transfer and Selling Restrictions".
AA has been rated A2 (short-term rating) and A- (long-term rating) by S&P Global Ratings Europe Limited (S & P) and P2 (short-term rating) by Moody's Investors Service Limited (Moody's). The Programme has been rated A-by S & P. For the purposes of any credit ratings included and referred to in this Offering Circular and/or the applicable Final Terms (or applicable Pricing Supplement, in the case of Exempt Notes), each of Moody's and S & P is established in the European Union and is registered under Regulation (EC) No. 1060/2009 (as amended) (the CRA Regulation). Notes issued under the Programme may be rated or unrated by either of the rating agencies referred to above. Where a Tranche of Notes is rated, such rating will be disclosed in the applicable Final Terms (or applicable Pricing Supplement, in the case of Exempt Notes) and will not necessarily be the same as the rating assigned to the Programme by the relevant rating agency. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency.
Barclays Commerzbank ING NatWest Markets SEB Standard Chartered Bank
Citigroup Danske Bank Mizuho Securities Nordea Société Générale Corporate and Investment Banking Swedbank
The date of this Offering Circular is 26 October 2018
This Offering Circular comprises a base prospectus in respect of all Notes other than Exempt Notes issued under the Programme for the purposes of Article 5.4 of the Prospectus Directive. When used in this Offering Circular, Prospectus Directive means Directive 2003/71/EC (as amended), and includes any relevant implementing measure in a relevant Member State of the European Economic Area. Each Issuer and the Guarantor accept(s) responsibility for the information contained in this Offering Circular and the Final Terms for each Tranche of Notes issued under the Programme. To the best of the knowledge of each of the Issuers and the Guarantor (each having taken all reasonable care to ensure that such is the case) the information contained in this Offering Circular is in accordance with the facts and does not omit anything likely to affect the import of such information.
Copies of Final Terms will be available from the registered office of the relevant Issuer and the specified office set out below of each of the Paying Agents (as defined below). In addition, copies of each Final Terms relating to Notes which are admitted to trading on the London Stock Exchange 's Regulated Market will be available at the website of the Regulatory News Service operated by the London Stock Exchange. Copies of each Final Terms relating to Notes which are admitted to trading on any other regulated market in the European Economic Area or offered in any other Member State of the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive will be available for viewing in accordance with Article 14(2) of the Prospectus Directive and the rules and regulations of the relevant regulated market.
This Offering Circular is to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see "Documents Incorporated by Reference" below). This Offering Circular shall be read and construed on the basis that such documents are incorporated and form part of this Offering Circular.
Save for the Issuers, no other party has separately verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Dealers as to the accuracy or completeness of the information contained or incorporated in this Offering Circular or any other information provided by the relevant Issuer and (in the case of Guaranteed Notes) the Guarantor in connection with the Programme. No Dealer accepts any liability in relation to the information contained or incorporated by reference in this Offering Circular or any other information provided by any of the Issuers or the Guarantor in connection with the Programme.
No person is or has been authorised by any of the Issuers or the Guarantor to give any information or to make any representation not contained in or not consistent with this Offering Circular or any other information supplied in connection with the Programme or the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by any Issuer, the Guarantor or any of the Dealers.
Neither this Offering Circular nor any other information supplied in connection with the Programme or any Notes (i) is intended to provide the basis of any credit or other evaluation or (ii) should be considered as a recommendation by any of the Issuers, the Guarantor or any of the Dealers that any recipient of this Offering Circular or any other information supplied in connection with the Programme or any Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness of the relevant Issuer and (in the case of Guaranteed Notes) the Guarantor. Neither this Offering Circular nor any other information supplied in connection with the Programme or the issue of any Notes constitutes an offer or invitation by or on behalf of the relevant Issuer and (in the case of Guaranteed Notes) the Guarantor or any of the Dealers to any person to subscribe for or to purchase any Notes.
The Notes may not be a suitable investment for all investors. Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor may wish to consider, either on its own or with the help of its financial and other professional advisers, whether it:
Legal investment considerations may restrict certain investments. The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.
Neither the delivery of this Offering Circular nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning any of the Issuers or the Guarantor is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. The Dealers expressly do not undertake to review the financial condition or affairs of any of the Issuers or the Guarantor during the life of the Programme or to advise any investor in the Notes of any information coming to their attention. Investors should review, inter alia, the most recently published documents incorporated by reference into this Offering Circular when deciding whether or not to purchase any Notes.
IMPORTANT – EEA RETAIL INVESTORS – If the Final Terms in respect of any Notes (or Pricing Supplement, in the case of Exempt Notes) includes a legend entitled "Prohibition of Sales to EEA Retail Investors", the Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the EEA). For these purposes, a "retail investor" means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive 2002/92/EC (as amended or superseded, the Insurance Mediation Directive), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Directive. Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the PRIIPs Regulation) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
MiFID II PRODUCT GOVERNANCE / TARGET MARKET – The Final Terms in respect of any Notes (or Pricing Supplement, in the case of Exempt Notes) will include a legend entitled "MiFID II product governance" which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a distributor) should take into consideration the target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels.
A determination will be made in relation to each issue about whether, for the purpose of the Product Governance rules under EU Delegated Directive 2017/593 (the MiFID Product Governance Rules), any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MIFID Product Governance Rules.
This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Offering Circular and the offer or sale of Notes may be restricted by law in certain jurisdictions. Each of the Issuers, the Guarantor and the Dealers do not represent that this Offering Circular may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or off ering. In particular, no action has been taken by any of the Issuers, the Guarantor or the Dealers which is intended to permit a public offering of any Notes or distribution of this Offering Circular in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Offering Circular nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Offering Circular or any Notes may come must inform themselves about, and observe, any such restrictions on the distribution of this Offering Circular and the offering and sale of Notes. In particular, there are restrictions on the distribution of this Offering Circular and the offer or sale of Notes in the United States, the European Economic Area (including the United Kingdom, the Kingdom of Sweden (Sweden) and Belgium) and Japan, see "Subscription and Sale".
In making an investment decision, investors must rely on their own examination of the relevant Issuer and (in the case of Guaranteed Notes) the Guarantor and the terms of the Notes being offered, including the merits and risks involved. Neither the Notes nor the Guarantee have been approved or disapproved by the United States Securities and Exchange Commission or any other securities commission or other regulatory authority in the United States, nor have the foregoing authorities approved this Offering Circular or confirmed the accuracy or determined the adequacy of the information contained in this Offering Circular. Any representation to the contrary is unlawful.
None of the Dealers, the Issuers or the Guarantor makes any representation to any investor in the Notes regarding the legality of its investment under any applicable laws. Any investor in the Notes should be able to bear the economic risk of an investment in the Notes for an indefinite period of time.
Amounts payable on Floating Rate Notes may, if so specificed in the Final Terms (or Pricing Supplement, in the case of Exempt Notes), be calculated by reference to a Reference Rate . As at the date of this Offering Circular, the administrator of LIBOR is included in ESMA's register of administrators under Article 36 of the Regulation (EU) No. 2016/1011 (the Benchmarks Regulation).
As far as the Issuers and the Guarantor are aware, the transitional provisions in Article 51 of the Benchmarks Regulation apply, such that each of the European Money Markets Institute (as administrator of EURIBOR), the Swedish Bankers' Association (as administrator of STIBOR), Norske Finansielle Referanser AS (as administrator of NIBOR), Finance Denmark (as administrator of CIBOR), Ippan Shadan Hojin JBA TIBOR Administration (as administrator of TIBOR), Magyar Nemezeti Bank (as administrator of BUBOR), The Czech Financial Benchmark Facility (as administrator of PRIBOR), The Warsaw Stock Exchange (as administrator of WIBOR), the Banks Association of Turkey (as administrator of TRYIBOR), National Bank of Romania (as administrator of ROBOR), ABS Benchmarks Administration Co Pte Ltd. (as administrator of SIBOR), the Treasury Markets Association (as administrator of HIBOR), The People's Bank of China (as administrator of SHIBOR), the Johannesburg Stock Exchange (as administrator of JIBAR) and Banco de México (as administrator of TIIE) are not currently required to obtain authorisation or registration (or, if located outside the European Union, recognition, endorsement or equivalence).
The Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to United States persons, except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code and the regulations promulgated thereunder.
This Offering Circular is being submitted on a confidential basis in the United States to a limited number of "qualified institutional buyers" within the meaning of Rule 144A under the Securities Act (QIBs) and "accredited investors" (as defined in Rule 501(a)(l), (2), (3) or (7) under the Securities Act) that are institutions (Institutional Accredited Investors) for informational use solely in connection with the consideration of the purchase of certain Notes issued under the Programme. Its use for any other purpose in the United States is not authorised. It may not be copied or reproduced in whole or in part nor may it be distributed or any of its contents disclosed to anyone other than the prospective investors to whom it is originally submitted.
Registered Notes may be offered or sold within the United States only to QIBs or to Institutional Accredited Investors, in either case in transactions exempt from registration under the Securities Act. Each U.S. purchaser of Registered Notes is hereby notified that the offer and sale of any Registered Notes to it may be being made in reliance upon the exemption from the registration requirements of Section 5 of the Securities Act provided by Rule 144A under the Securities Act (Rule 144A).
Purchasers of Definitive IAI Registered Notes will be required to execute and deliver an IAI Investment Letter (as defined under "Terms and Conditions of the Notes"). Each purchaser or holder of Definitive IAI Registered Notes, Notes represented by a Rule 144A Global Note or any Notes issued in registered form in exchange or substitution therefor (together Legended Notes) will be deemed, by its acceptance or purchase of any such Legended Notes, to have made certain representations and agreements intended to restrict the resale or other transfer of such Notes as set out in "Subscription and Sale and Transfer and Selling Restrictions". Unless otherwise stated, terms used in this paragraph have the meanings given to them in "Form of the Notes".
To permit compliance with Rule 144A in connection with any resales or other transf ers of Notes that are "restricted securities" within the meaning of the Securities Act, each Issuer and the Guarantor (in the case of Guaranteed Notes) has undertaken in a deed poll dated 12 November 2013 (the Deed Poll) to furnish, upon the request of a holder of its Notes or any beneficial interest therein, to such holder or to a prospective purchaser designated by him, the information required to be delivered under Rule 144A(d)(4) under the Securities Act if, at the time of the request, any of the relevant Notes remain outstanding as "restricted securities" within the meaning of Rule 144(a)(3) of the Securities Act and the Guarantor is neither a reporting company under Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act) nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder.
Each Issuer and the Guarantor are corporations organised under the laws of Sweden. The majority of the officers and directors of each Issuer and the Guarantor (in the case of Guaranteed Notes) reside outside the United States and all or a substantial portion of the assets of each of the Issuers and the Guarantor and of such officers and directors are located outside the United States. As a result, it may not be possible for investors to effect service of process outside Sweden upon the relevant Issuer, the Guarantor (in the case of Guaranteed Notes) or such persons, or to enforce judgments against them obtained in courts outside Sweden predicated upon civil liabilities of the relevant Issuer, the Guarantor (in the case of Guaranteed Notes) or such directors and officers under laws other than Swedish law, including any judgment predicated upon United States federal securities laws. Each of the Issuers and the Guarantor (in the case of Guaranteed Notes) has been advised by Mannheimer Swartling Advokatbyrå AB, their Swedish counsel, that there is doubt as to the enforceability in Sweden in original actions or in actions for enforcement of judgments of United States courts of civil liabilities.
AAFS maintains its financial books and records and prepares its financial statements in SEK and in accordance with generally accepted accounting principles in Sweden.
AA maintains its financial books and records and prepares its financial statements in SEK and its consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union.
All references in this document to "U.S. dollars", "U.S.\$", "USD" and "\$" refer to United States dollars and to "Swedish krona" and "SEK" refer to the currency of Sweden. In addition, references to "Sterling", "GBP" and "£" refer to pounds sterling and to "EUR", "euro" and "€" refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union, as amended.
| Page | |
|---|---|
| OVERVIEW OF THE PROGRAMME 8 |
|
| RISK FACTORS |
13 |
| DOCUMENTS INCORPORATED BY REFERENCE | 24 |
| FORM OF THE NOTES | 25 |
| FORM OF FINAL TERMS |
30 |
| FORM OF PRICING SUPPLEMENT | 38 |
| TERMS AND CONDITIONS OF THE NOTES |
48 |
| USE OF PROCEEDS |
80 |
| ASSA ABLOY AB (publ) |
81 |
| ASSA ABLOY FINANCIAL SERVICES AB (publ) |
92 |
| BOOK-ENTRY CLEARANCE SYSTEMS |
93 |
| TAXATION | 97 |
| SUBSCRIPTION AND SALE AND TRANSFER AND SELLING RESTRICTIONS |
99 |
| GENERAL INFORMATION | 105 |
| Appendix I – ANNUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2016 OF ASSA ABLOY |
|
|---|---|
| FINANCIAL SERVICES AB (publ) |
108 |
| Appendix II – ANNUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2017 OF ASSA ABLOY FINANCIAL SERVICES AB (publ) |
131 |
| ________________ |
In connection with the issue of any Tranche of Notes, one or more relevant Dealers (if any) acting as the Stablisation Manager(s) (the Stabilisation Manager(s)) (or persons acting on behalf of any Stabilisation Manager(s)) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilisation Manager(s) (or person(s) acting on behalf of any Stabilisation Manager(s)) in accordance with all applicable laws and rules.
The following overview does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Offering Circular and, in relation to the terms and conditions of any particular Tranche of Notes, the applicable Final Terms (or, in the case of Exempt Notes, the applicable Pricing Supplement). The relevant Issuer, the Guarantor (in the case of Guaranteed Notes) and any relevant Dealer may agree that Notes shall be issued in a form other than that contemplated in the Terms and Conditions, in which event, in the case of Notes other than Exempt Notes and, if appropriate, a new Offering Circular will be published.
This Overview constitutes a general description of the Programme for the purposes of Article 22.5(3) of Commission Regulation (EC) No 809/2004 implementing Directive 2003/71/EC (the Prospectus Regulation).
Words and expressions defined in "Form of the Notes" and "Terms and Conditions of the Notes" shall have the same meanings in this Overview.
| Issuers: | ASSA ABLOY AB (publ) ASSA ABLOY Financial Services AB (publ) |
|---|---|
| Issuers Legal Entity Identifiers (LEI): |
In the case of ASSA ABLOY AB (publ), 549300YECS8HKCIMMB67 In the case of ASSA ABLOY Financial Services AB (publ), 549300Z8OG67W8DBH881 |
| Guarantor: | ASSA ABLOY AB (publ) (in respect of Guaranteed Notes) |
| Risk Factors: | There are certain factors that may affect AA's and/or AAFS's ability to fulfil its obligations under Notes issued under the Programme or the Guarantor's ability to fulfil its obligations under the Guarantee. In addition, there are certain factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme, see "Risk Factors". |
| Description: | Global Medium Term Note Programme |
| Arranger: | NatWest Markets Plc |
| Dealers: | Barclays Bank PLC Citigroup Global Markets Limited Commerzbank Aktiengesellschaft Danske Bank A/S ING Bank N.V. Mizuho International plc NatWest Markets Plc Nordea Bank Abp Skandinaviska Enskilda Banken AB (publ) Société Générale Standard Chartered Bank Swedbank AB (publ) and any other Dealers appointed in accordance with the Programme Agreement. |
| Certain Restrictions: | Each issue of Notes denominated in a currency in respect of which particular laws, guidelines, regulations, restrictions or reporting requirements apply will only be issued in circumstances which comply with such laws, guidelines, regulations, restrictions or reporting requirements from time to time (see "Subscription and Sale and Transfer and Selling Restrictions") including the following restrictions applicable at the date of this Offering Circular. |
| Notes having a maturity of less than one year | |
| Notes having a maturity of less than one year will, if the proceeds of the issue are accepted in the United Kingdom, constitute deposits for the purposes of |
the prohibition on accepting deposits contained in section 19 of the Financial
| Services and Markets Act 2000 unless they are issued to a limited class of professional investors and have a denomination of at least £100,000 or its equivalent, see "Subscription and Sale and Transfer and Selling Restrictions". |
|
|---|---|
| Issuing and Principal Paying Agent: |
Citibank, N.A., London Branch |
| Registrar: | Citigroup Global Markets Europe AG |
| Programme Size: | Up to €2,500,000,000 (or its equivalent in other currencies calculated as described in the Programme Agreement) outstanding at any time. The Issuers and the Guarantor may increase the amount of the Programme in accordance with the terms of the Programme Agreement. |
| Distribution: | Notes may be distributed by way of private or public placement and in each case on a syndicated or non-syndicated basis. |
| Currencies: | Notes may be denominated in euro, Sterling, U.S. dollars, yen and subject to any applicable legal or regulatory restrictions, any other currency agreed between the relevant Issuer, the Guarantor (in the case of Guaranteed Notes) and the relevant Dealer. |
| Maturities: | The Notes will have such maturities as may be agreed between the relevant Issuer and the relevant Dealer, subject to such minimum or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Issuer or the relevant Specified Currency. |
| Issue Price: | Notes may be issued on a fully-paid or, in the case of Exempt Notes, a partly paid basis and at an issue price which is at par or at a discount to, or premium over, par. |
| Form of Notes: | The Notes will be issued in bearer or registered form as described in "Form of the Notes". Registered Notes will not be exchangeable for Bearer Notes and vice versa. |
| Fixed Rate Notes: | Fixed interest will be payable on such date or dates as may be agreed between the relevant Issuer and the relevant Dealer (as indicated in the applicable Final Terms, or, in the case of Exempt Notes, the Pricing Supplement) and, on redemption, will be calculated on the basis of such Day Count Fraction as may be agreed between the relevant Issuer and the relevant Dealer. |
| Floating Rate Notes: | Floating Rate Notes will bear interest at a rate determined: |
| (i) on the same basis as the floating rate under a notional interest rate swap transaction in the relevant Specified Currency governed by an agreement incorporating the 2006 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc., and as amended and updated as at the Issue Date of the first Tranche of the Notes of the relevant Series); or |
|
| (ii) on the basis of a reference rate set out in the applicable Final Terms (or, in the case of Exempt Notes, Pricing Supplement). |
|
| The margin (if any) relating to such floating rate will be agreed between the relevant Issuer and the relevant Dealer for each Series of Floating Rate Notes. |
Floating Rate Notes may also have a maximum interest rate, a minimum interest rate or both.
Interest on Floating Rate Notes in respect of each Interest Period, as agreed prior to issue by the relevant Issuer and the relevant Dealer, will be payable on such Interest Payment Dates, and will be calculated on the basis of such Day Count Fraction, as may be agreed between the relevant Issuer and the relevant Dealer.
If Floating Rate Notes provide for a rate of interest (or any component part thereof) to be determined by reference to a reference rate and such reference rate is no longer being calculated or administered or the agreed screen page is not available as a result of the discontinuation of such reference rate, then the Issuer may appoint an Independent Adviser (as defined in the Terms and Conditions of the Notes) who is permitted to substitute such reference rate and/or screen page (as applicable) with a successor or alternative reference rate and/or screen page (as applicable) and to determine an adjustment margin (if any). If the Issuer is unable to appoint an Independent Adviser or the Independent Adviser fails to determine a successor or alternative reference rate and/or screen page (as applicable) and to determine an adjustment margin (if any), then the Issuer (acting in good faith and in a commercially reasonable manner) is permitted to make such determinations. See Condition 6(b)(iv) for further information.
Zero Coupon Notes: Zero Coupon Notes will be offered and sold at a discount to their nominal amount and will not bear interest.
Exempt Notes: The relevant Issuer may issue Exempt Notes which may for example be Index Linked Notes or Dual Currency Notes.
Index Linked Notes: Payments of principal in respect of Index Linked Redemption Notes or of interest in respect of Index Linked Interest Notes will be calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the relevant Issuer and the relevant Dealer may agree.
Dual Currency Notes: Payments (whether in respect of principal or interest and whether at maturity or otherwise) in respect of Dual Currency Notes will be made in such currencies, and based on such rates of exchange, as the relevant Issuer and the relevant Dealer may agree.
The relevant Issuer may agree with any Dealer that Exempt Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes, in which event the relevant provisions will be included in the applicable Pricing Supplement.
Redemption: The applicable Final Terms (or, in the case of Exempt Notes, the applicable Pricing Supplement) will indicate either that the relevant Notes cannot be redeemed prior to their stated maturity (other than for taxation reasons or following an Event of Default) or that such Notes will be redeemable at the option of the relevant Issuer and/or the Noteholders upon giving notice to the Noteholders or the relevant Issuer, as the case may be, on a date or dates specified prior to such stated maturity and at a price or prices and on such other terms as may be agreed between the relevant Issuer, the Guarantor (in the case of Guaranteed Notes) and the relevant Dealer.
Notes having a maturity of less than one year may be subject to restrictions on their denomination and distribution, see "Certain Restrictions – Notes having a maturity of less than one year" above.
Denomination of Notes: The Notes will be issued in such denominations as may be agreed between
| the relevant Issuer, the Guarantor (in the case of Guaranteed Notes) and the relevant Dealer save that the minimum denomination of each Note will be such as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Specified Currency, see "Certain Restrictions – Notes having a maturity of less than one year" above and save that the minimum denomination of each Note will be €100,000 (or, if the Notes are denominated in a currency other than euro, the equivalent amount in such currency). |
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| Unless otherwise stated in the applicable Final Terms, the minimum denomination of each Definitive IAI Registered Note will be U.S.\$500,000 or its approximate equivalent in other Specified Currencies. |
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| Taxation: | All payments in respect of the Notes will be made without deduction for or on account of withholding taxes imposed by any Tax Jurisdiction, subject as provided in Condition 9. In the event that any such deduction is made, the relevant Issuer or, as the case may be, the Guarantor (in the case of Guaranteed Notes) will, save in certain limited circumstances provided in Condition 9, be required to pay additional amounts to cover the amounts so deducted. |
| Negative Pledge: | The terms of the Notes will contain a negative pledge provision as further described in Condition 4. |
| Cross Default: | The terms of the Notes will contain a cross default provision as further described in Condition 11. |
| Status of the Notes: | The Notes will constitute direct, unconditional, unsubordinated and, subject to the provisions of Condition 4, unsecured obligations of the relevant Issuer and will rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the relevant Issuer, from time to time outstanding. |
| Status of the Guarantee: | Only Notes issued by AAFS will be unconditionally and irrevocably guaranteed by the Guarantor. |
| The obligations of AAFS and the Guarantor under the Guaranteed Notes will constitute direct, unconditional, unsubordinated and, subject to the provisions of Condition 4, unsecured obligations of AAFS and the Guarantor and will rank pari passu amongst themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of AAFS and the Guarantor, from time to time outstanding. |
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| Rating: | AA has been rated A2 (short-term rating) and A- (long-term rating) by S & P. The Programme has been rated A- by S & P. Series of Notes issued under the Programme may be rated or unrated. Where a Series of Notes is rated, such rating will be disclosed in the applicable Final Terms (or applicable Pricing Supplement, in the case of Exempt Notes) and will not necessarily be the same as the ratings assigned to the Programme. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. |
| Listing and admission to trading: |
Application has been made for Notes issued under the Programme to be listed on the London Stock Exchange. |
| Notes may be listed or admitted to trading, as the case may be, on such other |
Notes may be listed or admitted to trading, as the case may be, on such other or further stock exchange(s) or market(s) as may be agreed between the
| relevant Issuer, the Guarantor (in the case of Guaranteed Notes) and the relevant Dealer in relation to the Series. |
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| In particular, whilst it is not their intention to do so concurrently with the approval of this Offering Circular, the Issuers and the Guarantor may request that the UKLA provide a certificate of approval to the competent authorities in Luxembourg and Sweden, which (subject to compliance with any requirements in connection with such listing) will permit Notes to be listed on the regulated markets in Luxembourg and Sweden. |
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| The applicable Final Terms (or applicable Pricing Supplement, in the case of Exempt Notes) will state whether or not the relevant Notes are to be listed and, if so, on which stock exchange(s). |
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| Governing Law: | The Notes and any non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance with, English law. |
| Selling Restrictions: | There are restrictions on the offer, sale and transfer of the Notes in the United States, the European Economic Area (including the United Kingdom, Sweden and Belgium) and Japan and such other restrictions as may be required in connection with the offering and sale of a particular Tranche of Notes, see "Subscription and Sale and Transfer and Selling Restrictions". |
| United States Selling Restrictions: |
Regulation S, Category 2 – TEFRA C or D/TEFRA not applicable, as specified in the applicable Final Terms (or applicable Pricing Supplement, in the case of Exempt Notes). |
Each of AA and AAFS believes that the following factors may affect its ability to fulfil its obligations under Notes issued under the Programme. All of these factors are contingencies which may or may not occur and neither AA nor AAFS is in a position to express a view on the likelihood of any such contingency occurring.
In purchasing Notes, investors assume the risk that AA and AAFS may become insolvent or otherwise be unable to make all payments due in respect of the Notes. There is a wide range of factors which individually or together could result in AA and AAFS becoming unable to make all payments due in respect of the Notes. It is not possible to identify all such factors or to determine which factors are most likely to occur, as AA and AAFS may not be aware of all relevant factors and certain factors which they currently deem not to be material may become material as a result of the occurrence of events outside their control. AA and AAFS have identified in this Offering Circular a number of factors which could materially adversely affect their businesses and ability to make payments due under the Notes.
Each of AA and AAFS believes that the factors described below represent the principal risks inherent in investing in Notes issued under the Programme, but the inability of the relevant Issuer or the Guarantor (in the case of Guaranteed Notes) to pay interest, principal or other amounts on or in connection with any Notes may occur for other reasons and none of the Issuers nor the Guarantor represents that the statements below regarding the risk s of holding any Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Offering Circular (including the documents incorporated by reference) and reach their own views prior to making any investment decision.
AAFS is responsible for interest-bearing assets and liabilities, currency trading, derivatives and borrowing within the Group (as defined in the business description of AA). AAFS operations are carried out according to centrally determined risk mandates and limits, intended to limit the currency, interest rate, financing and credit risks in relation to financial instruments to which the Group is exposed.
In conducting its operations, AAFS is exposed to various types of financial risks (as further described under the heading "Financial risks" on pages 16 to 17 of this Offering Circular). One of the risks that can affect AAFS's obligations under the Programme is credit risk; a counterparty's failure to fulfil its contractual obligations under loan agreements and/or derivative contracts. Other risks that can be encountered are currency risk, interest rate risk, financing risk and risk related to financial instruments.
As an international group with a wide geographic spread, the Group is exposed to various forms of strategic, operational and financial risks. Strategic risks refer to changes in the business environment with potentially significant effects on the Group's operations and business objectives. Operational risks comprise risks directly attributable to business operations. Financial risks mainly comprise currency risk, interest rate risk, financing risk, credit risk, and risk associated with the Group's pension obligations. Strategic risks, operational risks as well as financial risks entail a potential impact on the Group's financial position and performance.
AA cannot guarantee that the Group can meet all local environmental laws, controls and regulations or that all such laws, controls and regulations have been met in the past. In the event of changes to environmental laws, regulations, enforcement policies or of the legal environment or in case of accidental environmental pollution or violations of environmental laws, controls or regulations, there can be no assurance that increased costs and
liabilities will not be incurred, which could have an adverse effect on the Group's business, operational results and financial position and performance as well as reputation and brand.
Actions of competitors may affect demand for different products and their profitability, which may have an adverse effect on the Group's business, operational results and financial position and performance. Some segments are subject to low-price competition, mainly from Asia. Quality features, total solutions and breadth of product range have become natural responses to reduce such risks. As regards competitors, risk analyses are carried out both centrally and locally.
The Group regularly engages in the acquisition of companies operating in the same or adjacent line of business. Growth by acquisition is a risk factor due to the difficulties of integrating different businesses and employees. From time to time the Group may also divest parts that do not, in the long-term, fit the Group's operations. The Group may encounter large administrational cost as well as restructuring costs connected with acquisitions and divestments. AA cannot guarantee that acquisitions or divestments are successful or that the Group will succeed in integrating acquired businesses or that they will perform as expected once acquired. As a result, failings in this respect may have an adverse effect on the Group's business, operational results and financial position and performance.
The Group implements specific restructuring programs, which entail some production units changing focus, mainly to final assembly, while certain units are closed. The restructuring programs are carried out as a series of projects with stipulated activities and schedules. The various projects are systematically monitored on a regular basis. However, there can be no assurances that these measures will generate the level of cost savings that the Group has estimated going forward.
The Group is exposed to scarcity and price risk related to purchases of certain raw materials and components in its business. Unanticipated availability or increases in the prices of raw material or components could have an adverse effect on the Group's business, operational results and financial position and performance.
The Group owns or otherwise has rights to a number of patents and trademarks, relating to the products it manufactures, which have been obtained over a period of years. These patents and trademarks have been of value in the growth of the Group's business and may continue to be of value in the future. Although the Group has a large number of patents and trademarks, there can be no assurance that the Group's intellectual property rights will not be challenged, invalidated, or circumvented and that the Group will be able to detect unauthorised use or take appropriate and timely steps to establish and enforce its intellectual proprietary rights. Further, there can be no assurance that third parties will not assert claims against the Group alleging infringement of their intellectual property rights. The inability to protect intellectual property and the Group's involvement in any intellectual property infringement litigation could have an adverse effect on the Group's business, operational results and financial position and performance, as well as reputation and brand.
The Group's business operations involve areas that are vulnerable to cyber security incidents such as data breaches, intrusions, espionage, know how and data privacy infringements and leakage. Examples of these areas include, amongst others, research and development, managed services, usage of cloud solutions, software development, product engineering, IT, human resources and finance operations. Any cyber security incident including unintended use, involving its operations, product development, services, its third party providers or installed product base, could cause harm to the Group and could have an adverse effect on the Group's business, operational results and financial condition and performance as well as reputation and brand. The Group relies substantially on third parties to whom it has outsourced significant aspects of its IT infrastructure, product development and engineering services. While it has taken precautions relating to the selection, integration and ongoing management of these third parties, any event or attack that is caused as a result of vulnerabilities in their operations or products supplied to the Group could have a an adverse effect upon the Group's business, operational results and financial condition and performance as well as reputation
The Group has insurance programmes with respect to, among other things, the Group's property, business interruption and product liability risks. As a natural part of the Group's different activities, measures to limit the effects of damages are continually taken, often in co-operation with external insurance advisors. In such context, standards for desired safeguard levels are established in order to reduce the probability of material damage and to guarantee deliveries to the customers. While the Group holds property insurance, including business interruption, and product liability insurance, in amounts AA believes to be appropriate, there can be no assurances that the Group will be able to fully recover such amounts or that recovered amounts will be sufficient to cover the Group's losses.
The Group continuously monitors anticipated and implemented changes in legislation in the countries in which it operates. From time to time the Group is involved in legal proceedings. These proceedings include such matters as product liability, claims regarding intellectual property rights, antitrust, tax, the environment, and the interpretation of supplier, distribution and employment contracts. Where it is considered necessary, local legal expertise is engaged to deal with these matters. With the aim of charting and controlling legal risks, there are systems of regular Group-wide reporting of outstanding matters, which are managed and coordinated by the Group centrally. At present there are no legal proceedings that it is believed could have a significant impact on the Group's earnings. However, there can be no assurance that the Group will not become subject to legal proceedings that may have an adverse effect on the Group's business, operational results and financial position and performance as well as reputation and brand.
The Group has a global market presence, and its operations are subject to multiple jurisdictions and complex regulatory environments at a time of stricter legislation and increased enforcement activity and initiatives worldwide in areas such as competition law, data privacy law and anti-corruption. Further, the Group faces the risk of fraud or other illegal acts by its employees or relevant business partners. The Group's compliance and governance processes comprise the Group's "Code of Conduct", anti-corruption policy, handbook for internal control as well as other polices and guidelines to support that its operations are performed in accordance with applicable laws and governance standards. Internal controls are important for the Group to ensure reliable financial reports and effectively prevent and detect fraud and other illegal acts. Although the Group's governance and compliance processes are designed to provide reasonable assurance of compliance and the Group strives for continuous improvements, there can be no assurance that the Group's governance and compliance processes will prevent violations of applicable law or governance standards in its operations. Failure to comply with applicable laws and other standards could have an adverse effect on the Group's business and operational results by subjecting it to, including but not limited to, fines, loss of operating licenses and reputational harm.
Notwithstanding anything in this risk factor, this risk factor should not be taken as implying that either Issuer will be unable to comply with its obligations as a company with securities admitted to the Official List of the FCA.
The Group has a global market presence, with sales and production in a large number of countries, and is subject to the effects of general global economic conditions as well as conditions unique to a specific country or region. The emphasis is on West Europe and North America, but the Group has been focusing for several years on increased market presence in emerging markets and the proportion of sales in Asia and in Central and East Europe has increased in recent years. Its business operations in emerging markets may to a greater extent be subject to various political, economic and social conditions which may include nationalisation of assets, social, political or economic instability, volatility in currency exchange rates and restrictions on repatriation of profits and transfers of cash which all could have an adverse effect on the Group's business, operational results and financial position and performance.
Changes in regulatory requirements, tariffs and other trade barriers, price or exchange controls or other governmental policies in the countries where the Group is doing business could limit its operations and make the repatriation of profits difficult. In addition, the uncertainty of the legal environment in some regions could limit the Group's ability to enforce its rights. In addition the Group must comply with applicable export control regulations, sanctions and trade embargoes in force. Although the Group seeks to comply with all such regulations, sanctions and embargoes, there can be no assurance that the Group will be compliant with all relevant regulations, sanctions and embargoes at all times and such violations, even unintentional violations, could have an adverse effect on its business, operational results and financial position and performance as well as reputation and brand.
On 23 June 2016, the United Kingdom voted in a national non-binding referendum to withdraw from the European Union. The United Kingdom Government invoked article 50 of the Lisbon Treaty relating to withdrawal on 29 March 2017. Under article 50, the Treaty on the European Union and the Treaty on the Functioning of the European Union cease to apply in the relevant state from the date of entry into force of a withdrawal agreement, or, failing that, two years after the notification of intention to withdraw, although this period may be extended in certain circumstances. Depending on the terms of the United Kingdom's exit from the European Union (Brexit), if any, the United Kingdom could also lose access to the single EU market and to the global trade deals negotiated by the European Union on behalf of its members. The Brexit vote and the perceptions as to the impact of the withdrawal of the United Kingdom may adversely affect business activity and economic conditions in the United Kingdom and the European Union. The economic outlook could be further adversely affected by the risk that one or more countries could come under increasing pressure to leave the European Union as well. Any of these developments, or the perception that any of these developments are likely to occur, could have a material adverse effect on economic growth or business activity in the United Kingdom and the European Union, result in the relocation of businesses, cause business interruptions, lead to economic recession or depression, and impact the stability of the financial markets or financial institutions and the financial and monetary system. While there is no certainty at this stage, given that the Group conducts a substantial portion of its business in the European Union and the United Kingdom, any of these developments could have a material adverse effect on the Group's business, operational results and financial position and performance.
Since the Group sells its products in countries worldwide and has companies in a large number of countries, the Group is exposed to the effects of exchange rate fluctuations. Such fluctuations affect Group earnings when the income statements of foreign subsidiaries are translated to Swedish krona (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 U.S. dollars and euro. 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 rationalisation in production and sourcing. In accordance with the financial policy, the Group in principle only hedges a very limited part of its currency flows. As a result exchange rate fluctuations will have a direct impact on the Group's business, operational results and financial position and performance.
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 Swedish krona leads to an increase in net debt, but at the same time increases the Group's equity.
Interest rate fluctuations have a direct impact on the Group's net interest expense. The net interest expense is also impacted by the size of the Group's net debt and its currency composition.
The Group manages its exposure to changes in interest rates through a mix of fixed rate debt and variable rate debt in its debt portfolio. In addition to raising variable rate and fixed rate loans, interest rate derivatives are used to adjust interest rate sensitivity. Interest rate fluctuations will have a direct impact on the Group's financial position and performance.
16 Financing risk refers to the risk that financing the Group's capital requirements and refinancing outstanding loans become more difficult or more expensive. Financing risk can be reduced by maintaining an even maturity profile for loans and a solid credit rating. The Group strives to have access, on every occasion, to both short- term and long-term loan facilities. However, there can be no guarantee that the Group would be able to obtain external credit or at prices acceptable to the Group. The Group's access to funding is dependent upon conditions in the financial markets as well as the Group's credit rating and may decrease or become more expensive as a result of the Group's operational and financial condition or market conditions in general.
Credit risk arises in ordinary business operations and as a result of financial transactions. Accounts receivable are spread across a large number of customers, which reduces the credit risk. Credit risks relating to operational business activities are managed locally at company level and monitored at division level.
Financial risk management exposes the Group to certain counterparty risks. Such exposure may arise, for example, from the placement of surplus cash, borrowings and derivative financial instruments.
The Group's policy is to limit the potential credit risk from cash surplus by having limited cash in local bank accounts and by using cash available from subsidiaries to amortise external debt. Credit risk in derivative financial instruments is monitored and calculated according to risk factors set in the Group policy to limit counterparty risk.
Derivative financial instruments such as currency forwards and interest-rate swaps are used to the extent necessary. Derivative financial instruments are used to reduce financial risks. Derivative financial instruments are not used with speculative intent.
The value of goodwill and other intangible assets of the Group as well as other fixed assets is evaluated regularly to determine whether events or circumstances indicate that the value of the fixed assets are impaired. These evaluations include judgments made by management. For example, in the second quarter of 2018, the Group reported a write-down of SEK 5,595 million in Asia Pacific for impairment of goodwill and other intangible assets. Future events could cause the Group to conclude that impairment indicators exist and that a fixed asset is impaired. Any resulting impairment loss could have a material adverse impact on the Group's business, operational results and financial position and performance.
As at 31 December 2017 the Group had provisions for defined benefit and defined contribution pension plans and post-employment medical benefits of SEK 2,933 million. Calculating pension and similar obligations require management to make assumptions of discount rate, anticipated inflation, expected return on plan assets and rate of compensation increase. Actual results could differ from the assumptions made. Contribution of additional amounts to the Group's pension schemes may be required which could have a negative effect on the Group's operational results and financial position and performance.
A range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common such features, distinguishing between factors which may occur in relation to any Notes and those which might occur in relation to certain types of Exempt Notes:
If the relevant Issuer has the right to redeem any Notes at its option, this may limit the market value of the Notes concerned and an investor may not be able to reinvest the redemption proceeds in a manner which achieves a similar effective return
An optional redemption feature is likely to limit the market value of Notes. During any period when the relevant Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period.
The relevant Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.
Fixed/Floating Rate Notes are Notes which bear interest at a rate that converts from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Such a feature to convert the interest basis, and any conversion of the interest basis, may affect the secondary market in, and the market value of, such Notes as the change of interest basis may result in a lower interest return for Noteholders. Where the Notes convert from a fixed rate to a floating rate, the spread on the Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. Where the Notes convert from a floating rate to a fixed rate, the fixed rate may be lower than then prevailing rates on those Notes and could affect the market value of an investment in the relevant Notes.
The market values of securities issued at a substantial discount (such as Zero Coupon Notes) or premium to their nominal amount tend to fluctuate more in relation to general changes in interest rates than do prices for more conventional interest-bearing securities. Generally, the longer the remaining term of such securities, the greater the price volatility as compared to more conventional interest-bearing securities with comparable maturities.
Interest rates and indices which are deemed to be "benchmarks" are the subject of recent national and international regulatory guidance and proposals for reform. Some of these reforms are already effective whilst others are still to be implemented. These reforms may cause such benchmarks to perform differently than in the past, to disappear entirely, or have other consequences which cannot be predicted. Any such consequence could have a material adverse effect on any Notes linked to or referencing such a "benchmark". Regulation (EU) 2016/1011 (the Benchmarks Regulation) was published in the Official Journal of the EU on 29 June 2016 and came into effect on 1 January 2018. The Benchmarks Regulation applies to the provision of benchmarks, the contribution of input data to a benchmark and the use of a benchmark within the EU. It will, among other things, (i) require benchmark administrators to be authorised or registered (or, if non-EU-based, to be subject to an equivalent regime or otherwise recognised or endorsed) and (ii) prevent certain uses by EU supervised entities of "benchmarks" of administrators that are not authorised or registered (or, if non-EU based, not deemed equivalent or recognised or endorsed).
The Benchmarks Regulation could have a material impact on any Notes linked to or referencing a "benchmark", in particular, if the methodology or other terms of the "benchmark" are changed in order to comply with the requirements of the Benchmarks Regulation. Such changes could, among other things, have the effect of reducing, increasing or otherwise affecting the volatility of the published rate or level of the "benchmark".
More broadly, any of the international or national reforms, or the general increased regulatory scrutiny of "benchmarks", could increase the costs and risks of administering or otherwise participating in the setting of a "benchmark" and complying with any such regulations or requirements. Such factors may have the following effects on certain "benchmarks": (i) discourage market participants from continuing to administer or contribute to the "benchmark"; (ii) trigger changes in the rules or methodologies used in the "benchmark" or (iii) lead to the disappearance of the "benchmark". Any of the above changes or any other consequential changes as a result of international or national reforms or other initiatives or investigations, could have a material adverse effect on the value of and return on any Notes linked to or referencing a "benchmark".
Investors should consult their own independent advisers and make their own assessment about the potential risks imposed by the Benchmarks Regulation reforms in making any investment decision with respect to any Notes linked to or referencing a "benchmark".
Future discontinuance of certain benchmark rates (for example, LIBOR or EURIBOR) may adversely affect the value of Floating Rate Notes which are linked to or which reference any such benchmark rate
On 27 July 2017, the Chief Executive of the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it does not intend to continue to persuade, or use its powers to compel, panel banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021. The announcement indicates that the continuation of LIBOR on the current basis is not guaranteed after 2021. It is not possible to predict whether, and to what extent, panel banks will continue to provide LIBOR submissions to the administrator of LIBOR going forwards. This may cause LIBOR to perform differently than it did in the past and may have other consequences that cannot be predicted.
Investors should be aware that, if a benchmark rate were discontinued or otherwise unavailable, the rate of interest on Floating Rate Notes which are linked to or which reference such benchmark rate will be determined for the relevant period by the fallback provisions applicable to such Notes. The Terms and Conditions of the Notes provide for certain fallback arrangements in the event that a published benchmark (including any page on which such benchmark may be published (or any successor service)), such as LIBOR or EURIBOR, becomes unavailable.
If the circumstances described in the preceding paragraph occur and Screen Rate Determination is specified in the applicable Final Terms (or applicable Pricing Supplement, in the case of Exempt Notes) as the manner in which the rate of interest is to be determined (any such Notes, Relevant Notes), such fallback arrangements will include the possibility that:
in any such case, acting in good faith and in a commercially reasonable manner as described more fully in the Terms and Conditions of the Relevant Notes.
In addition, the relevant Independent Adviser or the relevant Issuer (as applicable) may also determine (acting in good faith and in a commercially reasonable manner) that other amendments to the Terms and Conditions of the Relevant Notes are necessary in order to follow market practice in relation to the relevant successor rate or alternative reference rate (as applicable) and to ensure the proper operation of the relevant successor rate or alternative reference rate (as applicable).
No consent of the Noteholders shall be required in connection with effecting any relevant successor rate or alternative reference rate (as applicable) or any other related adjustments and/or amendments described above.
In certain circumstances, the ultimate fallback of interest for a particular Interest Period may result in the rate of interest for the last preceding Interest Period being used. This may result in the effective application of a fixed rate for Floating Rate Notes based on the rate which was last observed on the Relevant Screen Page. In addition, due to the uncertainty concerning the availability of successor rates and alternative reference rates and the involvement of an Independent Adviser, the relevant fallback provisions may not operate as intended at the relevant time.
Any such consequences could have a material adverse effect on the value of and return on any such Notes. Moreover, any of the above matters or any other significant change to the setting or existence of any relevant rate could affect the ability of the relevant Issuer to meet its obligations under the Floating Rate Notes or could have a material adverse effect on the value or liquidity of, and the amount payable under, the Floating Rate Notes. Investors should note that, in the case of Relevant Notes, the relevant Independent Adviser or the relevant Issuer (as applicable) will have discretion to adjust the relevant successor rate or alternative reference rate (as applicable) in the circumstances described above. Any such adjustment could have unexpected commercial consequences and there can be no assurance that, due to the particular circumstances of each Noteholder, any such adjustment will be favourable to each Noteholder.
Investors should consider all of these matters when making their investment decision with respect to the relevant Floating Rate Notes.
There are particular risks associated with an investment in certain types of Exempt Notes, such as Index Linked Notes and Dual Currency Notes. In particular, an investor might receive less interest than expected or no interest in respect of such Notes and may lose some or all of the principal amount invested by it.
The relevant Issuer may issue Notes with principal or interest determined by reference to an index or formula, to changes in the prices of securities or commodities, to movements in currency exchange rates or other factors (each, a Relevant Factor). In addition, the relevant Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that:
The historical experience of an index or other Relevant Factor should not be viewed as an indication of the future performance of such Relevant Factor during the term of any Notes. Accordingly, each potential investor should consult its own financial and legal advisers about the risk entailed by an investment in any Notes linked to a Relevant Factor and the suitability of such Notes in light of its particular circumstances.
The relevant Issuer may issue Notes where the issue price is payable in more than one instalment. Any failure by an investor to pay any subsequent instalment of the issue price in respect of his Notes could result in such investor losing all of his investment.
Notes which are issued with variable interest rates or which are structured to include a multiplier or other leverage factor are likely to have more volatile market values than more standard securities.
Notes with variable interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors, or caps or floors, or any combination of those features or other similar related features, their market values may be even more volatile than those for securities that do not include those features.
Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate such as LIBOR. The market values of those Notes typically are more volatile than market values of other conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, which further adversely affects the market value of these Notes.
Set out below is a description of material risks relating to the Notes generally:
The conditions of the Notes contain provisions which may permit their modification without the consent of all investors
The conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.
The conditions of the Notes also provide that the Agent, the relevant Issuer and (in the case of Guaranteed Notes) the Guarantor may agree, without the consent of the Noteholders or Couponholders, to:
Any such modification shall be binding on the Noteholders and the Couponholders.
The conditions of the Notes are based on English law in effect as at the date of this Offering Circular. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the date of this Offering Circular and any such change could materially adversely impact the value of any Notes affected by it.
In relation to any issue of Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts in excess of the minimum Specified Denomination that are not integral multiples of such minimum Specified Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system would not be able to sell the remainder of such holding without first purchasing a principal amount of Notes at or in excess of the minimum Specified Denomination such that its holding amounts to a Specified Denomination. Further, a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a definitive Note in respect of such holding (should definitive Notes be printed) and would need to purchase a nominal amount of Notes at or in excess of the minimum Specified Denomination such that its holding amounts to a Specified Denomination.
If such Notes in definitive form are issued, holders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade.
Notes issued under the Programme will be represented on issue by one or more Global Notes that may be deposited with a common depositary or common safekeeper for Euroclear and Clearstream, Luxembourg or may be deposited with a nominee for DTC (each as defined under "Form of the Notes"). Except in the circumstances described in each Global Note, investors will not be entitled to receive Notes in definitive form. Each of DTC, Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants will maintain records of the beneficial interests in each Global Note held through it. While the Notes are represented by a Global Note, investors will be able to trade their beneficial interests only through the relevant clearing systems and their respective participants.
While the Notes are represented by Global Notes, the relevant Issuer will discharge its payment obligation under the Notes by making payments through the relevant clearing systems. A holder of a beneficial interest in a Global Note must rely on the procedures of the relevant clearing system and its participants to receive payments under the Notes. The relevant Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in any Global Note.
Holders of beneficial interests in a Global Note will not have a direct right to vote in respect of the Notes so represented. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant clearing system and its participants to appoint appropriate proxies.
The United Kingdom (the UK) is due to leave the European Union (the EU) on 29 March 2019. The UK and the EU are currently negotiating a withdrawal agreement, the published draft of which proposes a transitional period, from 30 March 2019 to 31 December 2020 during which EU law would continue to apply to the UK. If no new reciprocal agreement on civil justice is agreed at the end of such a transition period (or if no such withdrawal agreement or transition period is agreed), there will be a period of uncertainty concerning the enforcement of English court judgments in Sweden as the current regulation concerning the recognition and enforcement of judgments that apply between the UK and EU Member States, namely the Recast Brussels Regulation (Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012) (the Recast Regulation) would cease to apply to the UK (and UK judgments). Further the UK would no longer be a party to the Lugano Convention under which judgments from the courts of contracting states (currently the EU, plus Switzerland, Iceland and Norway) are recognised and enforced in other contracting states. As a result, a judgment entered against the Issuer in a UK court may not be recognised or enforceable in Sweden as a matter of law without a re-trial on its merits (but will be of persuasive authority as a matter of evidence before the courts of law, arbitral tribunals or executive or other public authorities in Sweden).
The draft withdrawal agreement provides that judgments issued by UK courts in proceedings instituted before the end of the transition period will continue to be recognised and enforced in the EU pursuant to the Recast Regulation. Further, in its White Paper from July 2018, the UK Government states that it will seek to participate in the Lugano Convention on leaving the EU, which would mean English judgments would continue to be recognised and enforced in Sweden (and other contracting states). In the same White Paper, the UK Government also stated it will seek a new bilateral agreement with the EU27 concerning cooperation in the area of civil justice including arrangements for the continued mutual recognition and enforcement of judgments.
Set out below is a description of material market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:
Notes may have no established trading market when issued, and one may never develop. If a market for the Notes does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks.
The relevant Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the Investor's Currency) other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to the Specified Currency would decrease (1) the Investor's Currency-equivalent yield on the Notes, (2) the Investor's Currency equivalent value of the principal payable on the Notes and (3) the Investor's Currency equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate or the ability of the relevant Issuer to make payments in respect of the Notes. As a result, investors may receive less interest or principal than expected, or no interest or principal.
Investment in Fixed Rate Notes involves the risk that if market interest rates subsequently increase above the rate paid on the Fixed Rate Notes, this will adversely affect the value of the Fixed Rate Notes.
One or more independent credit rating agencies may assign credit ratings to the relevant Issuer, the Guarantor or the Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised, suspended or withdrawn by its assigning rating agency at any time.
In general, European regulated investors are restricted under the CRA Regulation from using credit ratings for regulatory purposes, unless such ratings are issued by a credit rating agency established in the EU and registered under the CRA Regulation (and such registration has not been withdrawn or suspended), subject to transitional provisions that apply in certain circumstances. Such general restriction will also apply in the case of credit ratings issued by non-EU credit rating agencies, unless the relevant credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating agency is certified in accordance with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended, subject to transitional provisions that apply in certain circumstances). The list of registered and certified rating agencies published by the European Securities and Markets Authority (ESMA) on its website in accordance with the CRA Regulation is not conclusive evidence of the status of the relevant rating agency included in such list, as there may be delays between certain supervisory measures being taken against a relevant rating agency and the publication of the updated ESMA list. Certain information with respect to the credit rating agencies and ratings is set out on the cover of this Offering Circular.
The following documents, which have previously been filed with the Financial Conduct Authority, shall be incorporated in and form part of the Offering Circular:
The financial statements, auditors reports and Interim Reports referred to in (i), (ii), (iii) and (iv) above constitute direct and accurate English translations of the original documents.
For the avoidance of doubt, information, documents or statements expressed to be incorporated by reference into any, or expressed to form part of any, of the documents referred to above do not form part of this Offering Circular.
Certain information contained in the documents listed above has not been incorporated by reference in this Offering Circular. Such information is either (i) not considered by the Issuer to be relevant for prospective investors in the Notes to be issued under the Programme or (ii) is covered elsewhere in this Offering Circular.
Following the publication of this Offering Circular a supplement may be prepared by the Issuers and (in the case of Guaranteed Notes) the Guarantor and approved by the UK Listing Authority in accordance with Article 16 of the Prospectus Directive. Statements contained in any such supplement (or contained in any document incorporated by reference therein) shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Offering Circular or in a document which is incorporated by reference in this Offering Circular. Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Offering Circular.
Copies of documents incorporated by reference in this Offering Circular are available for viewing at, and copies may be obtained from, the registered office of the relevant Issuer and the specified office of the Paying Agents in London. In addition, copies of the documents will be available at the website of the Regulatory News Service operated by the London Stock Exchange at http://www.londonstockexchange.com/exchange/news/marketnews/market-news-home.html.
Any non-incorporated parts of a document referred to herein are either deemed not relevant for an investor or are otherwise covered elsewhere in this Offering Circular.
The Issuers and (in the case of Guaranteed Notes) the Guarantor will, in the event of any significant new factor, material mistake or inaccuracy relating to information included in this Offering Circular which is capable of affecting the assessment of any Notes, prepare a supplement to this Offering Circular or publish a new Offering Circular for use in connection with any subsequent issue of Notes.
The Notes of each Series will either be in bearer form, with or without interest coupons attached, or registered form, without interest coupons attached. Bearer Notes will be issued outside the United States in reliance on Regulation S under the Securities Act (Regulation S) and Registered Notes will be issued both outside the United States in reliance on Regulation S and within the United States in reliance on Rule 144A or otherwise in private transactions that are exempt from the registration requirements of the Securities Act.
Each Tranche of Bearer Notes will be initially issued in the form of either a temporary bearer global note (a Temporary Bearer Global Note) or a permanent bearer global note (a Permanent Bearer Global Note and together with a Temporary Bearer Global Note, each a Bearer Global Note) as indicated in the applicable Final Terms, which, in either case, will (i) if the Bearer Global Notes are intended to be issued in new global note (NGN) form, as stated in the applicable Final Terms, be delivered on or prior to the original issue date of the Tranche to a common safekeeper (the Common Safekeeper) for Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, S.A. (Clearstream, Luxembourg) and (ii) if the Bearer Global Notes are not intended to be issued in NGN form, be delivered on or prior to the original issue date of the Tranche to a common depositary (the Common Depositary) for Euroclear and Clearstream, Luxembourg.
Where the Global Notes issued in respect of any Tranche are in NGN form, the applicable Final Terms will also indicate whether or not such Global Notes are intended to be held in a manner which would allow Eurosystem eligibility.
Any indication that the Global Notes are to be so held does not necessarily mean that the Notes of the relevant Tranche will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any times during their life as such recognition depends upon satisfaction of the Eurosystem eligibility criteria.
The Common Safekeeper for NGNs will either be Euroclear or Clearstream, Luxembourg or another entity approved by Euroclear and Clearstream, Luxembourg.
Whilst any Bearer Note is represented by a Temporary Bearer Global Note, payments of principal, interest (if any) and any other amount payable in respect of the Notes due prior to the Exchange Date (as defined below) will be made (against presentation of the Temporary Bearer Global Note if the Temporary Bearer Global Note is not intended to be issued in NGN form) only to the extent that certification (in a form to be provided) to the effect that the beneficial owners of interests in such Temporary Bearer Global Note are not U.S. persons or persons who have purchased for resale to any U.S. person, as required by U.S. Treasury regulations, has been received by Euroclear and/or Clearstream, Luxembourg and Euroclear and/or Clearstream, Luxembourg, as applicable, has given a like certification (based on the certifications it has received) to the Principal Paying Agent.
On and after the date (the Exchange Date) which is 40 days after a Temporary Bearer Global Note is issued, interests in such Temporary Bearer Global Note will be exchangeable (free of charge) upon a request as described therein either for (i) interests in a Permanent Bearer Global Note of the same Series or (ii) for definitive Bearer Notes of the same Series with, where applicable, interest coupons and talons attached (as indicated in the applicable Final Terms and subject, in the case of definitive Bearer Notes, to such notice period as is specified in the applicable Final Terms, provided that the applicable Final Terms may not specify the option described in paragraph (ii) above if the Specified Denominations of the Notes consists of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount), in each case against certification of beneficial ownership as described above unless such certification has already been given, provided that purchasers in the United States and certain U.S. persons will not be able to receive definitive Bearer Notes. The holder of a Temporary Bearer Global Note will not be entitled to collect any payment of interest, principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of the Temporary Bearer Global Note for an interest in a Permanent Bearer Global Note or for definitive Bearer Notes is improperly withheld or refused.
Payments of principal, interest (if any) or any other amounts on a Permanent Bearer Global Note will be made through Euroclear and/or Clearstream, Luxembourg (against presentation or surrender (as the case may be) of the Permanent Bearer Global Note if the Permanent Bearer Global Note is not intended to be issued in NGN form) without any requirement for certification.
The applicable Final Terms will specify that a Permanent Bearer Global Note will be exchangeable (free of charge), in whole but not in part, for definitive Bearer Notes with, where applicable, interest coupons and talons attached upon either (i) not less than 60 days' written notice from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Permanent Bearer Global Note) to the Principal Paying Agent as described therein or (ii) only upon the occurrence of an Exchange Event, provided that the applicable Final Terms may not specify the option described in paragraph (i) above if the Specified Denominations of the Notes consists of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount. For these purposes, Exchange Event means that (i) an Event of Default (as defined in Condition 11) has occurred and is continuing, (ii) the relevant Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no successor clearing system is available or (iii) the relevant Issuer has or will become subject to adverse tax consequences as a result of legislative changes in the domicile of the relevant Issuer which would not be suffered were the Notes represented by the Permanent Bearer Global Note in definitive form. The relevant Issuer will promptly give notice to Noteholders in accordance with Condition 15 if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, Euroclear and/or Clearstream, Luxembourg or the common depositary or the common safekeeper for Euroclear and Clearstream, Luxembourg, as the case may be, on their behalf (acting on the instructions of any holder of an interest in such Permanent Bearer Global Note) may give notice to the Principal Paying Agent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the relevant Issuer may also give notice to the Principal Paying Agent requesting exchange. Any such exchange shall occur not later than 45 days after the date of receipt of the first relevant notice by the Principal Paying Agent.
The exchange of a Permanent Bearer Global Note for definitive Bearer Notes upon notice from Euroclear and/or Clearstream (acting on the instructions of any holder) or at any time at the request of the Issuer should not be expressed to be applicable in the applicable Final Terms if the Notes are issued with a minimum Specified Denomination such as €100,000 (or its equivalent in another currency) plus one or more higher integral multiples of another smaller amount such as €1,000 (or its equivalent in another currency). Furthermore, such Specified Denomination construction is not permitted in relation to any issue of Bearer Notes which is to be represented on issue by a Temporary Bearer Global Note exchangeable for definitive Bearer Notes.
The following legend will appear on all Bearer Notes (other than Temporary Bearer Global Notes) where TEFRA D is specified in the applicable Final Terms and on all interest coupons relating to such Bearer Notes:
"ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE."
The sections referred to provide that United States holders, with certain exceptions, will not be entitled to deduct any loss on Bearer Notes or interest coupons and will not be entitled to capital gains treatment in respect of any gain on any sale, disposition, redemption or payment of principal in respect of such Notes or interest coupons.
Notes which are represented by a Bearer Global Note will only be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg, as the case may be.
The Registered Notes of each Tranche offered and sold in reliance on Regulation S, which will be sold to non-U.S. persons outside the United States, will initially be represented by a global note in registered form (a Regulation S Global Note). Prior to expiry of the distribution compliance period (as defined in Regulation S) applicable to each Tranche of Notes, beneficial interests in a Regulation S Global Note may not be offered or sold to, or for the account or benefit of, a U.S. person save as otherwise provided in Condition 2 and may not be held otherwise than through Euroclear or Clearstream, Luxembourg and such Regulation S Global Note will bear a legend regarding such restrictions on transfer.
The Registered Notes of each Tranche may only be offered and sold in the United States or to U.S. persons in private transactions (i) QIBs or (ii) Institutional Accredited Investors and who execute and deliver an IAI Investment Letter (as defined under "Terms and Conditions of the Notes") in which they agree to purchase the Notes for their own account and not with a view to the distribution thereof. The Registered Notes of each Tranche sold to QIBs will be represented by a global note in registered form (a Rule 144A Global Note and, together with a Regulation S Global Note, each a Registered Global Note).
Registered Global Notes will either (i) be deposited with a custodian for, and registered in the name of a nominee of, The Depository Trust Company (DTC) for its own account or for the accounts of Euroclear and Clearstream, Luxembourg or (ii) be deposited with a common depositary or, if the Registered Global Notes are to be held under the new safe-keeping structure (the NSS), a common safekeeper, as the case may be, for Euroclear and Clearstream, Luxembourg, and registered in the name of a nominee for the Common Depositary of Euroclear and Clearstream, Luxembourg or in the name of a nominee of the common safekeeper, as specified in the applicable Final Terms. Persons holding beneficial interests in Registered Global Notes will be entitled or required, as the case may be, under the circumstances described below, to receive physical delivery of definitive Notes in fully registered form.
The Registered Notes of each Tranche sold to Institutional Accredited Investors will be in definitive form, registered in the name of the holder thereof (Definitive IAI Registered Notes). Unless otherwise set forth in the applicable Final Terms, Definitive IAI Registered Notes will be issued only in minimum denominations of U.S.\$500,000 and integral multiples of U.S.\$1,000 in excess thereof (or the approximate equivalents in the applicable Specified Currency). Definitive IAI Registered Notes will be subject to the restrictions on transfer set forth therein and will bear the restrictive legend described under "Subscription and Sale and Transfer and Selling Restrictions". Institutional Accredited Investors that hold Definitive IAI Registered Notes may not elect to hold such Notes through DTC, Euroclear or Clearstream, Luxembourg, but transferees acquiring such Notes in transactions exempt from Securities Act registration pursuant to Regulation S or Rule 144A under the Securities Act (if available) may do so upon satisfaction of the requirements applicable to such transfer as described under "Subscription and Sale and Transfer and Selling Restrictions". The Registered Global Notes and the Definitive IAI Registered Notes will be subject to certain restrictions on transfer set forth therein and will bear a legend regarding such restrictions.
Where the Registered Global Notes issued in respect of any Tranche is intended to be held under the NSS, the applicable Final Terms will indicate whether or not such Registered Global Notes are intended to be held in a manner which would allow Eurosystem eligibility. Any indication that the Registered Global Notes are to be so held does not necessarily mean that the Notes of the relevant Tranche will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any time during their life as such recognition depends upon satisfaction of the Eurosystem eligibility criteria. The common safekeeper for a Registered Global Note held under the NSS will either by Euroclear or Clearstream, Luxembourg or another entity approved by Euroclear and Clearstream, Luxembourg.
Payments of principal, interest and any other amount in respect of the Registered Global Notes will, in the absence of provision to the contrary, be made to the person shown on the Register (as defined in Condition 7(d)) as the registered holder of the Registered Global Notes. None of the Issuers, the Guarantor (in the case of Guaranteed Notes) any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the records relating to or payments or deliveries made on account of beneficial ownership interests in the Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
Payments of principal, interest or any other amount in respect of the Registered Notes in definitive form will, in the absence of provision to the contrary, be made to the persons shown on the Register on the relevant Record Date (as defined in Condition 7(d)) immediately preceding the due date for payment in the manner provided in that Condition.
Interests in a Registered Global Note will be exchangeable (free of charge), in whole but not in part, for definitive Registered Notes without interest coupons or talons attached only upon the occurrence of an Exchange Event. For these purposes, Exchange Event means that (i) an Event of Default has occurred and is continuing, (ii) in the case of Notes registered in the name of a nominee for DTC, either DTC has notified the relevant Issuer that it is unwilling or unable to continue to act as depository for the Notes and no alternative clearing system is available or DTC has ceased to constitute a clearing agency registered under the Exchange Act and no alternative clearing system is available, (iii) in the case of Notes registered in the name of a nominee for a common depositary for Euroclear and Clearstream, Luxembourg or in the name of a nominee of the common safekeeper, as the case may be, the relevant Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and, in any such case, no successor clearing system is available or (iv) the relevant Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Registered Global Note in definitive form. The relevant Issuer will promptly give notice to Noteholders in accordance with Condition 15 if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, DTC, Euroclear and/or Clearstream, Luxembourg or any person acting on their behalf (acting on the instructions of any holder of an interest in such Registered Global Note) may give notice to the Registrar requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iv) above, the relevant Issuer may also give notice to the Registrar requesting exchange. Any such exchange shall occur not later than 10 days after the date of receipt of the first relevant notice by the Registrar.
Euroclear and Clearstream, Luxembourg will be notified by or on behalf of the relevant Issuer whether or not Registered Global Notes are intended to be held in a manner which would allow Eurosystem eligibility.
Any indication that the Registered Global Notes are to be so held does not necessarily mean that the Notes of the relevant Tranche will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any times during their life as such recognition depends upon satisfaction of the Eurosystem eligibility criteria.
Interests in a Registered Global Note may, subject to compliance with all applicable restrictions, be transferred to a person who wishes to hold such interest in another Registered Global Note or in the form of a Definitive IAI Registered Note and Definitive IAI Registered Notes may, subject to compliance with all applicable restrictions, be transferred to a person who wishes to hold such Notes in the form of an interest in a Registered Global Note. No beneficial owner of an interest in a Registered Global Note will be able to transfer such interest, except in accordance with the applicable procedures of DTC, Euroclear and Clearstream, Luxembourg, in each case to the extent applicable. Registered Notes are also subject to the restrictions on transfer set forth therein and will bear a legend regarding such restrictions, see "Subscription and Sale and Transfer and Selling Restrictions".
Pursuant to the Agency Agreement (as defined under "Terms and Conditions of the Notes"), the Principal Paying Agent shall arrange that, where a further Tranche of Notes is issued which is intended to form a single Series with an existing Tranche of Notes at a point after the Issue Date of the further Tranche, the Notes of such further Tranche shall be assigned a common code and ISIN and, where applicable, a CUSIP and CINS number which are different from the common code, ISIN, CUSIP and CINS assigned to Notes of any other Tranche of the same Series until such time as the Tranches are consolidated and form a single Series, which shall not be prior to the expiry of the distribution compliance period (as defined under Regulation S) applicable to the Notes of such Tranche.
For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear and/or Clearstream, Luxembourg each person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the relevant Issuer, the Guarantor (in the case of Guaranteed Notes) and their respective agents as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such nominal amount of such Notes, for which purpose the bearer of the relevant Bearer Global Note or the registered holder of the relevant Registered Global Note shall be treated by the relevant Issuer, the Guarantor (in the case of Guaranteed Notes) and their respective agents as the holder of such nominal amount of such Notes in accordance with and subject
to the terms of the relevant Global Note and the expressions Noteholder and holder of Notes and related expressions shall be construed accordingly.
So long as DTC or its nominee is the registered owner or holder of a Registered Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Registered Global Note for all purposes under the Agency Agreement and such Notes except to the extent that in accordance with DTC's published rules and procedures any ownership rights may be exercised by its participants or beneficial owners through participants.
Any reference herein to Euroclear and/or Clearstream, Luxembourg and/or DTC shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in the applicable Final Terms.
A Note may be accelerated by the holder thereof in certain circumstances described in Condition 11. In such circumstances, where any Note is still represented by a Global Note and the Global Note (or any part thereof) has become due and repayable in accordance with the Terms and Conditions of such Notes and payment in full of the amount due has not been made in accordance with the provisions of the Global Note then holders of interests in such Global Note credited to their accounts with Euroclear and/or Clearstream, Luxembourg and/or DTC, as the case may be, will become entitled to proceed directly against the relevant Issuer on the basis of statements of account provided by Euroclear, Clearstream, Luxembourg and DTC on and subject to the terms of a deed of covenant (the Deed of Covenant) dated 4 November 2016 and executed by each of the Issuers. In addition, holders of interests in such Global Note credited to their accounts with DTC may require DTC to deliver definitive Notes in registered form in exchange for their interest in such Global Note in accordance with DTC's standard operating procedures.
The relevant Issuer and, in the case of Guaranteed Notes, the Guarantor, may agree with any Dealer that Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes, in which event, other than where such Notes are Exempt Notes, a new Offering Circular will be made available which will describe the effect of the agreement reached in relation to such Notes.
Set out below is the form of Final Terms which will be completed for each Tranche of Notes, which are not Exempt Notes, issued under the Programme.
[PROHIBITION OF SALES TO EEA RETAIL INVESTORS – The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the EEA). For these purposes, a "retail investor" means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4( 1) of Directive 2014/65/EU (as amended, MiFID II); (ii) a customer within the meaning of Directive 2002/92/EC (as amended or superseded, the Insurance Mediation Directive), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive 2003/71/EC (as amended or superseded, the Prospectus Directive). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the PRIIPs Regulation) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.]1
[MIFID II PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPS ONLY TARGET MARKET – Solely for the purposes of [the/each] manufacturer's product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients only, each as defined in [Directive 2014/65/EU (as amended, MiFID II)][MiFID II]; and (ii) all channels for distribution of the Notes t o eligible counterparties and professional clients are appropriate. [Consider any negative target market]. Any person subsequently offering, selling or recommending the Notes (a distributor) should take into consideration the manufacturer['s/s'] target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer['s/s'] target market assessment) and determining appropriate distribution channels.]2
[Date]
[Terms used herein shall be deemed to be defined as such for the purposes of the conditions set forth in the Offering Circular dated 26 October 2018 ([the Offering Circular together with the supplement[s] to it dated [date] [and [date]], ]the Offering Circular). The Offering Circular constitutes a base prospectus for the purposes of the Prospectus Directive. This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with the Offering Circular. Full information on the Issuer and the Guarantor (in the case of Guaranteed Notes) and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Offering Circular. The Offering Circular has been published on the website of the London Stock Exchange through a regulatory information service (www.londonstockexchange.com/exchange/news/market-news/market-news-home.html).]
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act) or any U.S. state securities laws and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) unless an
1 Legend to be included on front of the Final Terms if the Notes potentially constitute " packaged" products and no key informat ion document will be prepared or the relevant Issuer wishes to prohibit offers to EEA retail investors for any other reason, in which case the selling restriction should be specified to be " Applicable".
30 2 Legend to be included on front of the Final Terms if following the ICMA 1 "all bonds to all professionals" target market approach.
exemption from the registration requirements of the Securities Act is available and in accordance with all applicable securities laws of any state of the United States and any other jurisdiction.
[Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the Conditions) set forth in the Offering Circular dated [original date] [and the supplement[s] to it dated [date] which are incorporated by reference in the Offering Circular dated 26 October 2018. This document constitutes the Final Terms of the Notes described herein for the purpose of Article 5.4 of the Prospectus Directive and must be read in conjunction with the Offering Circular dated 26 October 2018, [and the supplement[s] to it dated [date] [and [date]]] (the Offering Circular) which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive, including the Conditions incorporated by reference in the Offering Circular. Full information on the Issuer and the Guarantor (in the case of Guaranteed Notes) and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Offering Circular. The Offering Circular has been published on the website of the London Stock Exchange through a regulatory information service (www.londonstockexchange.com/exchange/news/market-news/market-news-home.html).]
| 1. | (i) | Issuer: | [ASSA ABLOY AB (publ)/ASSA ABLOY Financial Services AB (publ)] |
||
|---|---|---|---|---|---|
| (ii) | [Guarantor: | [ASSA ABLOY AB (publ)]] | |||
| 2. | (i) | Series Number: | [ | ] | |
| (ii) | Tranche Number: | [ | ] | ||
| (iii) | Date on which the Notes will be consolidated and form a single Series: |
40 | The Notes will be consolidated and form a single Series with [ ] on [the Issue Date/the date that is days after the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph 21 below, which is expected to occur on or about [ ]][Not Applicable] |
||
| 3. | Specified Currency or Currencies: | [ | ] | ||
| 4. | Aggregate Nominal Amount: | ||||
| (i) | Series: | [ | ] | ||
| (ii) | Tranche: | [ | ] | ||
| 5. | Issue Price of Tranche: | [ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [ ]] |
|||
| 6. | (i) | Specified Denominations: | [ | ] | |
| (ii) | Calculation Amount (in relation to calculation of interest in global form see the Conditions): |
[ | ] | ||
| 7. | (i) | Issue Date: | [ | ] | |
| (ii) | Interest Commencement Date: | [[ | ]/Issue Date/Not Applicable] |
||
| 8. | Maturity Date: | [ [ |
] / [Interest Payment Date falling in or nearest to ]] |
||
| 9. | Interest Basis: | [[ [[ |
] per cent. Fixed Rate] ] +/– [ ] per cent. Floating Rate] [Zero Coupon] (see paragraph 13/14/15 below) |
||
| 10. | Redemption Basis: | Subject to any purchase and cancellation or early redemption, the Notes will be redeemed on the |
| Maturity Date at [ ] per cent. of their nominal amount |
||
|---|---|---|
| 11. | Change of Interest Basis: | [Not Applicable][For the period from (and including) the Interest Commencement Date, up to (but excluding) [ ] paragraph [13/14] applies and for the period from (and including) [ ], up to (and including) the Maturity Date, paragraph [13/14] applies] |
| 12. | Put/Call Options: | [Investor Put] [Issuer Call] [Make-whole Redemption by Issuer] [(see paragraph [16/17/18] below)] |
| 13. | Fixed Rate Note Provisions | [Applicable/Not Applicable] | |||
|---|---|---|---|---|---|
| (i) | Rate(s) of Interest: | [ ] per cent. per annum payable in arrear on each Interest Payment Date |
|||
| (ii) | Interest Payment Date(s): | [ ] in each year up to and including the Maturity Date |
|||
| (iii) | Fixed Coupon Amount(s) for Notes in definitive form (and in relation to Notes in global form see the Conditions): |
[ ] per Calculation Amount |
|||
| (iv) | Broken Amount(s) for Notes in definitive form (and in relation to Notes in global form see the Conditions): |
[[ ] per Calculation Amount, payable on the Interest Payment Date falling [in/ on][ ]][Not Applicable] |
|||
| (v) | Day Count Fraction: | [30/360] [Actual/ Actual (ICMA)] |
|||
| (vi) | Determination Date(s): | [[ ] in each year] [Not Applicable] |
|||
| 14. | Floating Rate Note Provisions | [Applicable/Not Applicable] | |||
| (i) | Specified Period(s)/Specified Interest Payment Dates: |
[ ][, subject to adjustment in accordance with the Business Day Convention set out in (ii) below /, not subject to adjustment, as the Business Day Convention in (ii) below is specified to be Not Applicable] |
|||
| (ii) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/ Preceding Business Day Convention/Not Applicable] |
|||
| (iii) | Additional Business Centre(s): | [ ] |
|||
| (iv) | Manner in which the Rate of Interest and Interest Amount is to be determined: |
[Screen Rate Determination/ISDA Determination] | |||
| (v) | Party responsible for calculating the Rate of Interest and Interest Amount (if not the Principal Paying Agent): |
[ ] |
|||
| (vi) | Screen Rate Determination: | ||||
| - Reference Rate, Specified 32 |
Reference Rate: [ ] month |
| Time and Relevant Financial Centre: |
[LIBOR/EURIBOR/STIBOR/NIBOR/CIBOR /TIBOR/BUBOR/PRIBOR/WIBOR/TRYIBOR/ ROBOR/SIBOR/HIBOR/SHIBOR/JIBAR/TIIE] |
||||
|---|---|---|---|---|---|
| Specified Time: [ ] |
|||||
| Relevant Financial Centre: [London/Brussels/Stockholm/Oslo/Copenhagen/ Tokyo/Budapest/Prague/Warsaw/Istanbul/Bucharest/ Singapore/Hong Kong/Shanghai/Johannesburg/ Mexico City] |
|||||
| - | Interest Determination Date(s): |
[ | ] | ||
| - | Relevant Screen Page: | [ | ] | ||
| (vii) | ISDA Determination: | ||||
| - | Floating Rate Option: | [ | ] | ||
| - | Designated Maturity: | [ | ] | ||
| - | Reset Date: | [ | ] | ||
| (viii) | Linear Interpolation: | for each |
[Not Applicable/Applicable – the Rate of Interest the [long/short] [first/last] Interest Period shall be calculated using Linear Interpolation (specify for short or long Interest Period)] |
||
| (ix) | Margin(s): | [+/-] | [ ] per cent. per annum |
||
| (x) | Minimum Rate of Interest: | [ | ] per cent. per annum |
||
| (xi) | Maximum Rate of Interest: | [ | ] per cent. per annum |
||
| (xii) | Day Count Fraction: | [Actual/Actual (ISDA)][Actual/Actual] [Actual/365 (Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360][360/360][Bond Basis] [30E/360][Eurobond Basis] [30E/360 (ISDA)] |
|||
| 15. | Zero | Coupon Note Provisions | [Applicable/Not Applicable] | ||
| (i) | Accrual Yield: | [ | ] per cent. per annum |
||
| (ii) | Reference Price: | [ | ] | ||
| (iii) | Day Count Fraction in relation to Early Redemption Amounts: |
[30/360] [Actual/360] [Actual/365] |
|||
| PROVISIONS RELATING TO REDEMPTION | |||||
| 16. | Issuer Call: | [Applicable/Not Applicable] | |||
| (i) | Optional Redemption Date(s): | [ | ] | ||
| (ii) | Optional Redemption Amount: | [ | ] per Calculation Amount | ||
| (iii) | If redeemable in part: | ||||
| (a) | Minimum Redemption Amount: |
[ | ] | ||
| (b) | Maximum Redemption Amount: |
[ | ] |
| 17. | Make-whole Redemption by the Issuer: | [Applicable/Not Applicable] | ||||||
|---|---|---|---|---|---|---|---|---|
| (i) Make-whole Redemption Date(s): |
[ | ] | ||||||
| (ii) | Make-whole Redemption Margin: | [[ | ] basis points/Not Applicable] | |||||
| (iii) | Reference Bond: | [CA Selected Bond/[ ]] |
||||||
| (iv) | Quotation Time: (v) Reference Rate Determination Date: |
[5.00 p.m. [Brussels/London/[ ]] time/Not Applicable |
||||||
| [The [ ] Business Day preceding the relevant Make-whole Redemption Date/Not Applicable] |
||||||||
| (vi) | If redeemable in part: | |||||||
| (a) | Minimum Amount: |
Redemption | [ | ] | ||||
| (b) | Maximum Amount: |
Redemption | [ | ] | ||||
| 18. | Investor Put: | [Applicable/Not Applicable] | ||||||
| (i) | Optional Redemption Date(s): | [ | ] | |||||
| (ii) | Optional Redemption Amount: | [ | ] per Calculation Amount |
|||||
| 19. | Final Redemption Amount: | [ | ] per Calculation Amount |
|||||
| 20. | Early Redemption Amount payable on redemption for taxation reasons or on event of |
[ | ] per Calculation Amount |
default:
| 21. | Form of Notes: | [Bearer Notes: | ||
|---|---|---|---|---|
| (i) | Form: | [Temporary Bearer Global Note exchangeable for a Permanent Bearer Global Note which is exchangeable for Definitive Notes [on 60 days' notice given at any time/only upon an Exchange Event]] |
||
| [Temporary Bearer Global Note exchangeable for Definitive Notes on and after the Exchange Date] |
||||
| [Permanent Bearer Global Note exchangeable for Definitive Notes [on 60 days' notice given at any time/only upon an Exchange Event]]] |
||||
| [Notes shall not be physically delivered in Belgium, except to a clearing system, a depository or other institution for the purpose of their immobilisation in accordance with article 4 of the Belgian Law of 14 December 2005.] |
||||
| [Registered Notes: [Regulation S Global Note (U.S.\$[ ] nominal amount) registered in the name of a nominee for [DTC/a common depositary for Euroclear and Clearstream, Luxembourg/a common safekeeper for Euroclear and Clearstream, Luxembourg]]/[Rule 144A Global Note (U.S.\$[ ] nominal amount) registered in the name of a nominee for [DTC/a common depositary for Euroclear and Clearstream, |
| Luxembourg/a common safekeeper for Euroclear and Clearstream, Luxembourg]]/[Definitive IAI Registered Notes]] |
|||
|---|---|---|---|
| (ii) New Global Note: |
[Yes] [No] | ||
| 22. | Additional Financial Centre(s): | [Not Applicable/[ ]] |
|
| 23. | Talons for future Coupons to be attached to Definitive Bearer Notes: |
[Yes, as the Notes have more than 27 coupon payments, Talons may be required if, on exchange into definitive form, more than 27 coupon payments are still to be made /No.] |
[[Relevant third party information] has been extracted from [specify source]. [Each of the][The] Issuer [and the Guarantor] confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by [specify source], no facts have been omitted which would render the reproduced information inaccurate or misleading.]
Signed on behalf of [ASSA ABLOY AB (publ)/ASSA ABLOY Financial Services AB (publ)]:
By: ______________________
Duly authorised
Signed on behalf of [ASSA ABLOY AB (publ)/ASSA ABLOY Financial Services AB (publ)]:
By: ______________________
Duly authorised
[ ]
Ratings: [Not Applicable / The Notes to be issued [[have been]/[are expected to be]] rated:][The following rating[s] reflect[s] ratings assigned to Notes of this type issued under the Programme generally:]
| [Moody's: | [ | ]] |
|---|---|---|
| [S & P: |
[ | ]] |
[Save for any fees payable to the [Managers/Dealers], so far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer. The [Managers/Dealers] and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform other services for, the Issuer and its affiliates in the ordinary course of business.]
Indication of yield: [ ]
The yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield.
36
[Yes. Note that the designation "yes" simply means that the Notes are intended upon issue to be deposited with one of the ICSDs as common safekeeper[, and registered in the name of a nominee of the ICSDs acting as common safekeeper] and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem either
upon issue or at any or all times during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]/
[No. Whilst the designation is specified as "no" at the date of this Final Terms, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with one of the ICSDs as common safekeeper[, and registered in the name of a nominee of the ICSDs acting as common safekeeper]. Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]]
| (i) | U.S. Selling Restrictions: | [Reg. S Compliance Category 2; TEFRA D/TEFRA C/TEFRA not applicable] |
|---|---|---|
| (ii) | Prohibition of Sales to EEA Retail Investors: |
[Applicable/Not Applicable] |
| (iii) | Prohibition of Sales to Belgian Consumers: |
[Applicable/Not Applicable] |
Set out below is the form of Pricing Supplement which will be completed for each Tranche of Exempt Notes issued under the Programme.
[PROHIBITION OF SALES TO EEA RETAIL INVESTORS – The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the EEA). For these purposes, a "retail investor" means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, MiFID II); (ii) a customer within the meaning of Directive 2002/92/EC (as amended or superseded, the Insurance Mediation Directive), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive 2003/71/EC (as amended or superseded, the Prospectus Directive). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the PRIIPs Regulation) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.] 1
[MIFID II Product Governance / Target Market – [appropriate target market legend to be included]]
NO PROSPECTUS IS REQUIRED IN ACCORDANCE WITH DIRECTIVE 2003/71/EC FOR THE ISSUE OF NOTES DESCRIBED BELOW. THE UK LISTING AUTHORITY HAS NEITHER APPROVED NOR REVIEWED INFORMATION CONTAINED IN THIS PRICING SUPPLEMENT IN CONNECTION WITH EXEMPT NOTES.
[Date]
[Any person making or intending to make an offer of the Notes may only do so in circumstances in which no obligation arises for the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or to supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer.] 2
This document constitutes the Pricing Supplement for the Notes described herein. This document must be read in conjunction with the Offering Circular dated 26 October 2018 [as supplemented by the supplement[s] dated [date[s]]] (the Offering Circular). Full information on the Issuer and the Guarantor (in the case of Guaranteed Notes) and the offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the Offering Circular. The Offering Circular has been published on the website of the London Stock Exchange through a regulatory information service (www.londonstockexchange.com/exchange/news/marketnews/market-news- home.html).
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the Conditions) set forth in the Offering Circular [dated [original date] [and the supplement[s] dated [date]] which are incorporated by reference in the Offering Circular]3 . Any reference in the Conditions to "relevant Final Terms" shall be deemed to include a reference to "relevant Pricing Supplement", where relevant.
1. Legend to be included on front of the Pricing Supplement if the Notes potentially constitute " packaged" products and no key information document will be prepared or the relevant Issuer wishes to prohibit offers to EEA retail investors for any other reason, in which case the selling restriction should be specified to be " Applicable".
2 Do not include if the "Prohibition of Sales to EEA Retail Investors" legend is included (because the Notes potentially constitute "packaged" products and no key information document will be prepared) and the related selling restriction is specified to be "Applicable".
38 3. Only include this language for a fungible issue and the original trance was issued under an Offering Circular with a different date.
[Include whichever of the following apply or specify as "Not Applicable". Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or subparagraphs. Italics denote directions for completing the Pricing Supplement.]
[If the Notes have a maturity of less than one year from the date of their issue, the minimum denomination [must/may need to] be £100,000 or its equivalent in any other currency.]
| 1. | (i) | Issuer: | [ASSA ABLOY AB (publ)/ASSA ABLOY Financial Services AB (publ)] |
|---|---|---|---|
| (ii) | [Guarantor: | [ASSA ABLOY AB (publ)]] | |
| 2. | (i) | Series Number: | [ ] |
| (ii) | Tranche Number: | [ ] |
|
| (iii) | Date on which the Notes will be consolidated and form a single Series: |
The Notes will be consolidated and form a single Series with [identify earlier Tranches] on [the Issue Date/the date that is 40 days after the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph 23 below, which is expected to occur on or about [date]][Not Applicable] |
|
| 3. | Specified Currency or Currencies: | [ ] |
|
| 4. | Aggregate Nominal Amount: | ||
| (i) | Series: | [ ] |
|
| (ii) | Tranche: | [ ] |
|
| 5. | Issue Price | of Tranche: | [ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date] (if applicable)] |
| 6. | (i) | Specified Denominations: | [ ] |
| (ii) | Calculation Amount (in relation to calculation of interest in global form see the Conditions): |
[ ] (If only one Specified Denomination, insert the Specified Denomination. If more than one Specified Denomination, insert the highest common factor. Note: There must be a common factor in the case of two or more Specified Denominations.) |
|
| 7. | (i) | Issue Date: | [ ] |
| (ii) | Interest Commencement Date: | [specify/Issue Date/Not Applicable] | |
| (N.B. An Interest Commencement Date will not be relevant for certain Notes, for example Zero Coupon Notes.) |
|||
| 8. | Maturity Date: | [Fixed rate - specify date/or for Floating rate notes - Interest Payment Date falling in or nearest to [specify month and year]] |
|
| 9. | Interest Basis: 39 |
[[ ] per cent. Fixed Rate] [[specify Reference Rate] +/- [ ] per cent. Floating Rate] [Zero Coupon] [Index Linked Interest] [Dual Currency Interest] [specify other] (further particulars specified below) |
| 10. | Redemption/Payment Basis: | [Redemption at par] [specify other] |
|---|---|---|
| 11. | Change of Interest Basis or Redemption/Payment Basis: |
[Specify details of any provision for change of Notes into another Interest Basis or Redemption/Payment Basis][Not Applicable] |
| 12. | Put/Call Options: | [Not Applicable] [Investor Put] [Make-whole Redemption by the Issuer] [Issuer Call] [(further particulars specified below)] |
| 13. | Fixed Rate Note Provisions | [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph) |
||||
|---|---|---|---|---|---|---|
| (i) | Rate(s) of Interest: | [ ] per cent. per annum payable in arrear on each Interest Payment Date |
||||
| (ii) | Interest Payment Date(s): | [ ] in each year up to and including the Maturity Date (Amend appropriately in the case of irregular coupons) |
||||
| (iii) | Fixed Coupon Amount(s) for Notes in definitive form (and in relation to Notes in global form see the Conditions): |
[ ] per Calculation Amount |
||||
| (iv) | Broken Amount(s) for Notes in definitive form (and in relation to Notes in global form see the Conditions): |
[[ ] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [ ]][Not Applicable] |
||||
| (v) | Day Count Fraction: | [30/360/Actual/Actual (ICMA)/specify other] | ||||
| (vi) | Determination Date(s): | [[ ] in each year][Not Applicable] (Only relevant where Day Count Fraction is Actual/Actual (ICMA). In such a case, insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon) |
||||
| (vii) | Other terms relating to the method of calculating interest for Fixed Rate Notes which are Exempt Notes: |
[None/Give details] | ||||
| 14. | Floating Rate Note Provisions | [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph) |
||||
| (i) | Specified Period(s)/Specified Interest Payment Dates: |
[ ][, subject to adjustment in accordance with the Business Day Convention set out in (ii) below /, not subject to any adjustment, as the Business Day Convention in (ii) below is specified to be Not Applicable] |
||||
| (ii) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/Modified Following |
| Business Day Convention/ Preceding Business Day Convention/[specify other]/Not Applicable] |
||
|---|---|---|
| (iii) | Additional Business Centre(s): | [ ] |
| (iv) | Manner in which the Rate of Interest and Interest Amount is to be determined: |
[Screen Rate Determination/ISDA Determination/specify other] |
| (v) | Party responsible for calculating the Rate of Interest and Interest Amount (if not the Principal Paying Agent): |
[ ] |
| (vi) | Screen Rate Determination: | |
| Reference Rate, Specified Time and Relevant Financial |
Reference Rate: [ ] month [LIBOR/EURIBOR/specify other Reference Rate]. |
|
| Centre: | Specified Time: [ ] |
|
| Relevant Financial Centre: [London/Brussels/specify other] |
||
| Interest Determination Date(s): |
[ ] (Second London business day prior to the start of each Interest Period if LIBOR (other than Sterling or euro LIBOR), first day of each Interest Period if Sterling LIBOR and the second day on which the TARGET2 |
|
| System is open prior to the start of each Interest Period if EURIBOR or euro LIBOR) |
||
| Relevant Screen Page: |
[ ] (In the case of EURIBOR, if not Reuters EURIBOR01 ensure it is a page which shows a composite rate or amend the fallback provisions appropriately) |
|
| (vii) | ISDA Determination: | |
| Floating Rate Option: |
[ ] |
|
| Designated Maturity: |
[ ] |
|
| Reset Date: |
[ ] (In the case of a LIBOR or EURIBOR based option, the first day of the Interest Period) |
|
| (viii) | Linear Interpolation: |
[Not Applicable/Applicable – the Rate of Interest for the [long/short] [first/last] Interest Period shall be calculated using Linear Interpolation (specify for each short or long Interest Period)] |
| (ix) | Margin(s): | [+/-] [ ] per cent. per annum |
| (x) | Minimum Rate of Interest: | [ ] per cent. per annum |
| (xi) | Maximum Rate of Interest: | [ ] per cent. per annum |
(xii) Day Count Fraction: [Actual/Actual (ISDA)][Actual/Actual] [Actual/365 (Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360][360/360][Bond Basis] [30E/360][Eurobond Basis] [30E/360 (ISDA)] [Other] (See Condition 6 for options) (xiii) Fallback provisions, rounding provisions and any other terms relating to the method of calculating interest on Floating Rate Notes which are Exempt Notes, if different from those set out in the Conditions: [ ] 15. Zero Coupon Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph) (i) Accrual Yield: [ ] per cent. per annum (ii) Reference Price: [ ] (iii) Any other formula/basis of determining amount payable for Zero Coupon Notes which are Exempt Notes: [ ] (iv) Day Count Fraction in relation to Early Redemption Amounts: [30/360] [Actual/360] [Actual 365] 16. Index Linked Interest Note [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph) (i) Index/Formula: [give or annex details] (ii) Calculation Agent [give name] (iii) Party responsible for calculating the Rate of Interest (if not the Calculation Agent) and Interest Amount (if not the Principal Paying Agent): [ ] (iv) Provisions for determining Coupon where calculation by reference to Index and/or Formula is impossible or impracticable: [need to include a description of market disruption or settlement disruption events and adjustment provisions] (v) Specified Period(s)/Specified Interest Payment Dates: [ ] (vi) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/ Preceding Business Day Convention/specify other] (vii) Additional Business Centre(s): [ ]
| (viii) | Minimum Rate of Interest: | [ | ] per cent. per annum | ||||||
|---|---|---|---|---|---|---|---|---|---|
| (ix) | Maximum Rate of Interest: | [ ] per cent. per annum |
|||||||
| (x) | Day Count Fraction: | [ ] |
|||||||
| 17. | Dual Currency Interest Note Provisions | [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph) |
|||||||
| (i) | Rate | of Exchange/method calculating Rate of Exchange: |
of | [give or annex details] | |||||
| (ii) | Party, calculating interest Paying |
if any, the principal due (if not Agent): |
responsible for and/or the Principal |
[ | ] | ||||
| (iii) | Provisions Exchange |
applicable calculation by reference to Rate of impossible impracticable: |
where or |
settlement | [need to include a description of market disruption or disruption events and adjustment provisions] |
||||
| (iv) | Person at whose option Specified Currency(ies) is/are payable: |
[ | ] | ||||||
| PROVISIONS RELATING TO REDEMPTION | |||||||||
| 18. | Issuer Call: | [Applicable/Not Applicable] | |||||||
| (If not applicable, delete the remaining subparagraphs of this paragraph) |
|||||||||
| (i) | Optional Redemption Date(s): | [ | ] | ||||||
| (ii) | Optional Redemption Amount and method, if any, of calculation of such amount(s): |
[[ ] per Calculation Amount/specify other/see Appendix] |
|||||||
| (iii) | If redeemable in part: | ||||||||
| (a) | Minimum Amount: |
Redemption | [ | ] | |||||
| (b) | Maximum Amount: |
Redemption | [ | ] | |||||
| (iv) | Notice periods (if other than as set out | [ | ] | ||||||
| in the Conditions: | (N.B. When setting notice periods, the Issuer is advised to consider the practicalities of distribution of information through intermediaries, for example, clearing systems (which require a minimum of 5 clearing system business days' notice for a call) and custodians, as well as any other notice requirements which may apply, for example, as between the Issuer and the Agent) |
||||||||
| 19. | Make-whole Redemption by the Issuer: | [Applicable/Not Applicable] | |||||||
| (i) | Make-whole Redemption Date(s): | [ | ] | ||||||
| (ii) | Make-whole Redemption Margin: | [[ | ] basis points/Not Applicable] | ||||||
| (iii) | Reference Bond: | [CA Selected Bond/[ ]] |
|||||||
| (iv) | Quotation Time: | [5.00 p.m. [Brussels/London/[ ]] time/Not |
Applicable (v) Reference Rate Determination Date: [The [ ] Business Day preceding the relevant Make-whole Redemption Date/Not Applicable] (vi) If redeemable in part: (a) Minimum Redemption Amount: [ ] (b) Maximum Redemption Amount: [ ] (vii) Notice periods (if other than as set out in the Conditions: [ ] 20. Investor Put: [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph) (i) Optional Redemption Date(s): [ ] (ii) Optional Redemption Amount and method, if any, of calculation of such amount(s): [[ ] per Calculation Amount/specify other/see Appendix] (iii) Notice periods (if other than as set out in the Conditions: [ ] (N.B. When setting notice periods, the Issuer is advised to consider the practicalities of distribution of
Final Redemption Amount: [[ ] per Calculation Amount/specify other/see
Early Redemption Amount payable on redemption for taxation reasons or on event of default and/or the method of calculating the same (if required):
[[ ] per Calculation Amount/specify other/see Appendix] (N.B. If the Final Redemption Amount is 100 per cent. of the nominal value (i.e. par), the Early Redemption Amount is likely to be par (but consider). If, however,
information through intermediaries, for example, clearing systems (which require a minimum of 15 clearing system business days' notice for a put) and custodians, as well as any other notice requirements which may apply, for example, as between the Issuer
the Final Redemption Amount is other than 100 per cent. of the nominal value, consideration should be given as to what the Early Redemption Amount should be.)
and the Agent)
Appendix]
(i) Form: [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes [on 60 days' notice given at any time/only upon an Exchange Event]]
[Temporary Global Note exchangeable for Definitive Notes on and after the Exchange Date]
[Permanent Global Note exchangeable for Definitive Notes [on 60 days' notice given at any time/only upon
an Exchange Event] ((N.B.: this option may only be used where "TEFRA not applicable" has been specified below.)]]
[Notes shall not be physically delivered in Belgium except to a clearing system, a depositary or other institution for the purpose of their immobilisation in accordance with article 4 of the Belgium Law of 14 December 20054 ]
[Registered Notes:
[Regulation S Global Note (U.S.\$[ ] nominal amount) registered in the name of a nominee for [DTC/a common depositary for Euroclear and Clearstream, Luxembourg/a common safekeeper for Euroclear and Clearstream, Luxembourg]]/[Rule 144A Global Note (U.S.\$[ ] nominal amount) registered in the name of a nominee for [DTC/a common depositary for Euroclear and Clearstream, Luxembourg/a common safekeeper for Euroclear and Clearstream, Luxembourg]]/[Definitive IAI Registered Notes]]
| (ii) | New Global Note: | [Yes][No] | |
|---|---|---|---|
| 24. | Additional Financial Centre(s): | [Not Applicable/give details] (Note that this paragraph relates to the date of payment and not the end dates of Interest Periods for the purposes of calculating the amount of interest to which sub-paragraphs 14(iii) and 16(vii) relate) |
|
| 25. | Talons for future Coupons to be attached to Definitive Notes (and dates on which such Talons mature): |
[Yes, as the Notes have more than 27 coupon payments, Talons may be required if, on exchange into definitive form, more than 27 coupon payments are still to be made/No] |
|
| 26. | Other terms | or special conditions: | [Not Applicable/give details] |
The Issuer [and the Guarantor] accept[s] responsibility for the information contained in this Pricing Supplement. [[Relevant third party information] has been extracted from [specify source]. [Each of the][The] Issuer [and the Guarantor] confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by [specify source], no facts have been omitted which would render the reproduced information inaccurate or misleading.
Signed on behalf of [ASSA ABLOY AB (publ)/ASSA ABLOY Financial Services AB (publ)]:
By: ______________________
Duly authorised
Signed on behalf of [ASSA ABLOY AB (publ)/ASSA ABLOY Financial Services AB (publ)]:
By: ______________________
4
Duly authorised
Include for Notes that are to be offered in Belgium
1. LISTING [Application [has been made/is expected to be made] by the Issuer (or on its behalf) for the Notes to be listed on [specify market - note this must not be a regulated market in the European Economic Area] with effect from [ ].] [Not Applicable]
Ratings: [Not Applicable / The Notes to be issued [[have been]/[are expected to be]] rated:][The following rating[s] reflect[s] ratings assigned to Notes of this type issued under the Programme generally:]
[Moody's: [ ]] [S & P: [ ]]
(The above disclosure should reflect the rating allocated to Notes of the type being issued under the Programme generally or, where the issue has been specifically rated, that rating)
[Save for any fees payable to the [Managers/Dealers], so far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer. The [Managers/Dealers] and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform other services for, the Issuer and its] affiliates in the ordinary course of business - Amend as appropriate if there are other interests]
Use of Proceeds: [ ]] (Only required if the use of proceeds is different to that stated in the Offering Circular)
| (i) | ISIN: | [ ] |
|---|---|---|
| (ii) | Common Code: | [ ] |
| (iii) | Any clearing system(s) other than Euroclear and Clearstream Luxembourg and the relevant identification number(s): |
[Not Applicable/give name(s) and number(s)] |
| (iv) | Delivery: | Delivery [against/free of] payment |
| (v) | Names and addresses of additional Paying Agent(s) (if any): |
[ ] |
| (vi) | CFI: | [[ ]/Not Applicable] |
| (vii) | FISN: | [[ ]/Not Applicable] |
| (If the CFI and/or FISN is not required, requested or available, it/they should be specified to be "Not Applicable") |
||
| (viii) | Intended to be held in a manner which | [Yes. Note that the designation "yes" simply means |
would allow Eurosystem eligibility: that the Notes are intended upon issue to be deposited with one of the ICSDs as common safekeeper[, and registered in the name of a nominee of the ICSDs acting as common safekeeper] and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]/
[No. Whilst the designation is specified as "no" at the date of this Pricing Supplement, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with one of the ICSDs as common safekeeper[, and registered in the name of a nominee of the ICSDs acting as common safekeeper]. Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]]
| (i) | Method of distribution: | [Syndicated/Non-syndicated] | ||
|---|---|---|---|---|
| (ii) | If syndicated, names of Managers: | [Not Applicable/give names] | ||
| (iii) | Stabilisation Manager(s) (if any): | [Not Applicable/give name] | ||
| (iv) | If non-syndicated, name of relevant Dealer: |
[Not Applicable/give name] |
||
| (v) | U.S. Selling Restrictions: | [Reg. S Compliance Category 2; TEFRA D/TEFRA C/TEFRA not applicable] |
||
| (vi) | Prohibition of Sales to EEA Retail | [Applicable/Not Applicable] | ||
| Investors: | (If the Notes clearly do not constitute "packaged" products or the Notes do constitute "packaged" products and a key information document will be prepared, "Not Applicable" should be specified. If the Notes may constitute "packaged" products and no key information document will be prepared, "Applicable" should be specified.) |
|||
| (vii) | Prohibition of Sales to Belgian |
[Applicable/Not Applicable] | ||
| Consumers: | (N.B. advice should be taken from Belgian counsel before disapplying this selling restriction) |
The following are the Terms and Conditions of the Notes which will be incorporated by reference into each Global Note (as defined below) and each definitive Note, in the latter case only if permitted by the relevant stock exchange (if any) and agreed by the Issuer, (in the case of Guaranteed Notes) the Guarantor and the relevant Dealer at the time of issue but, if not so permitted and agreed, such definitive Note will have endorsed thereon or attached thereto such Terms and Conditions. The applicable Pricing Supplement in relation to any Tranche of Exempt Notes may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the following Terms and Conditions for the purpose of such Notes. The applicable Final Terms (or the relevant provisions thereof) will be endorsed upon, or attached to, each Global Note and definitive Note. Reference should be made to "Form of Final Terms" for a description of the content of Final Terms which will specify which of such terms are to apply in relation to the relevant Notes.
This Note is one of a Series (as defined below) of Notes issued by the Issuer named in the applicable Final Terms (as defined below) (the Issuer) pursuant to the Agency Agreement (as defined below).
References herein to the Notes shall be references to the Notes of this Series and shall mean:
The Notes and the Coupons (as defined below) have the benefit of an Amended and Restated Agency Agreement dated 26 October 2018 (as amended and/or supplemented and/or restated from time to time, the Agency Agreement) each made between ASSA ABLOY Financial Services AB (publ) (AAFS) as an issuer, ASSA ABLOY AB (publ) (AA) as an issuer and as a guarantor of Notes issued by AAFS (in its capacity as such, the Guarantor), Citibank, N.A., London Branch as issuing and principal paying agent and agent bank (the Principal Paying Agent, which expression shall include any successor principal paying agent) and the other paying agents named therein (together with the Principal Paying Agent, the Paying Agents, which expression shall include any additional or successor paying agents) and Citibank, N.A., London Branch as exchange agent (the Exchange Agent, which expression shall include any successor exchange agent) and as transfer agent (the Transfer Agent, which expression shall include any additional or successor transfer agents) and Citigroup Global Markets Europe AG as registrar (the Registrar, which expression shall include any successor registrar).
Interest bearing definitive Bearer Notes have interest coupons (Coupons) and, in the case of Notes which, when issued in definitive form, have more than 27 interest payments remaining, talons for further Coupons (Talons) attached on issue. Any reference herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons or talons. Registered Notes and Global Notes do not have Coupons or Talons attached on issue.
The final terms for this Note (or the relevant provisions thereof) are set out in Part A of the Final Terms attached to or endorsed on this Note which supplement these Terms and Conditions (the Conditions) or, if this Note is a Note which is neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive (an Exempt Note), the final terms (or the relevant provisions thereof) are set out in Part A of the Pricing Supplement and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the Conditions, replace or modify the Conditions for the purposes of this Note. References to the applicable Final Terms are, unless otherwise stated, to Part A of the Final Terms (or the relevant provisions thereof) attached to or endorsed on this Note. Any reference in the Conditions to applicable Final Terms shall be deemed to include a reference to applicable Pricing Supplement where relevant. The expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive) to the extent implemented in the relevant Member State of the
European Economic Area and includes any relevant implementing measure in the relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU.
If this Note is issued by AA, references in these Terms and Conditions to Guarantor and Guarantee, and related expressions, are not applicable.
Notes issued by AAFS (Guaranteed Notes) will be unconditionally and irrevocably guaranteed by the Guarantor pursuant to a guarantee (such guarantee as modified and/or supplemented and/or restated from time to time, the Guarantee) dated 26 October 2018 and executed by the Guarantor. The original of the Guarantee is held by the Principal Paying Agent on behalf of the Noteholders and the Couponholders at its specified office.
Any reference to Noteholders or holders in relation to any Notes shall mean (in the case of Bearer Notes) the holders of the Notes and (in the case of Registered Notes) the persons in whose name the Notes are registered and shall, in relation to any Notes represented by a Global Note, be construed as provided below. Any reference herein to Couponholders shall mean the holders of the Coupons and shall, unless the context otherwise requires, include the holders of the Talons.
As used herein, Tranche means Notes which are identical in all respects (including as to listing and admission to trading) and Series means a Tranche of Notes together with any further Tranche or Tranches of Notes which (i) are expressed to be consolidated and form a single series and (ii) have the same terms and conditions or terms and conditions which are the same in all suspects save for the amount and date of first payment on interest thereon and the date from which interest starts to accrue.
The Noteholders and the Couponholders are entitled to the benefit of the Deed of Covenant (such Deed of Covenant as modified and/or supplemented and/or restated from time to time, the Deed of Covenant) dated 4 November 2016 and made by, inter alia, the Issuer. The original of the Deed of Covenant is held by the common depositary for Euroclear (as defined below) and Clearstream, Luxembourg (as defined below).
Copies of the Agency Agreement, the Guarantee, a deed poll (the Deed Poll) dated 12 November 2013 and made by the Issuer and the Deed of Covenant are available for inspection during normal business hours at the registered office of each of the Principal Paying Agents, the Registrar and the other Paying Agents and Transfer Agent (such Agents and the Registrar being together referred to as the Agents). If the Notes are to be admitted to trading on the regulated market of the London Stock Exchange the applicable Final Terms will be published on the website of the London Stock Exchange through a regulatory information service. If this Note is neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive, the applicable Final Terms will only be obtainable by a Noteholder holding one or more unlisted Notes of that Series and such Noteholder must produce evidence satisfactory to the Issuer and the relevant Agent as to its holding of such Notes and identity. In addition, copies of each Final Terms relating to the Notes which are either admitted to trading on the London Stock Exchange's Regulated Market or offered in the United Kingdom in circumstances where a prospectus is required to be published under the Prospectus Directive will be available at the website of the Regulatory News Service operated by the London Stock Exchange. Copies of each Final Terms relating to Notes which are admitted to trading on any other regulated market in the European Economic Area or offered in any other Member State of the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive will be available for viewing in accordance with Article 14(2) of the Prospectus Directive and the rules and regulations of the relevant regulated market. The Noteholders and the Couponholders are deemed to have notice of, and are entitled to the benefit of, all the provisions of the Agency Agreement, the Guarantee, the Deed Poll, the Deed of Covenant and the applicable Final Terms which are applicable to them. The statements in these Terms and Conditions include summaries of, and are subject to, the detailed provisions of the Agency Agreement.
Words and expressions defined in the Agency Agreement or used in the applicable Final Terms shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and the applicable Final Terms, the applicable Final Terms will prevail.
In these Terms and Conditions, euro means the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union, as amended.
The Notes are in bearer form or in registered form as specified in the applicable Final Terms and, in the c ase of definitive Notes, serially numbered, in the currency (the Specified Currency) and the denominations (the Specified Denomination(s)) specified in the applicable Final Terms. Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination and Bearer Notes may not be exchanged for Registered Notes and vice versa.
Unless this Note is an Exempt Note, this Note may be a Fixed Rate Note, a Floating Rate Note or a Zero Coupon Note or a combination of any of the foregoing, depending upon the Interest Basis shown in the applicable Final Terms.
If this Note is an Exempt Note, this Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked Interest Note, a Dual Currency Interest Note or a combination of any of the foregoing, depending upon the Interest Basis shown in the applicable Pricing Supplement.
Definitive Bearer Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to Coupons and Couponholders in these Terms and Conditions are not applicable.
Subject as set out below, title to the Bearer Notes and Coupons will pass by delivery and title to the Registered Notes will pass upon registration of transfers in accordance with the provisions of the Agency Agreement. The Issuer, the Guarantor and any Agent will (except as otherwise required by law) deem and treat the bearer of any Bearer Note or Coupon and the registered holder of any Registered Note as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any Global Note, without prejudice to the provisions set out in the next succeeding paragraph.
For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear Bank SA/NV (Euroclear) and/or Clearstream Banking, S.A. (Clearstream, Luxembourg), each person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Guarantor and the Agents as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such nominal amount of such Notes, for which purpose the bearer of the relevant Bearer Global Note or the registered holder of the relevant Registered Global Note shall be treated by the Issuer, the Guarantor and any Agent as the holder of such nominal amount of such Notes in accordance with and subject to the terms of the relevant Global Note and the expressions Noteholder and holder of Notes and related expressions shall be construed accordingly.
For so long as the Depository Trust Company (DTC) or its nominee is the registered owner or holder of a Registered Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Registered Global Note for all purposes under the Agency Agreement and the Notes except to the extent that in accordance with DTC's published rules and procedures any ownership rights may be exercised by its participants or beneficial owners through participants.
Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time being of DTC, Euroclear and Clearstream, Luxembourg, as the case may be. References to DTC, Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in Part B of the applicable Final Terms.
Transfers of beneficial interests in Registered Global Notes will be effected by DTC, Euroclear or Clearstream, Luxembourg, as the case may be, and, in turn, by other participants and, if appropriate, indirect participants in such clearing systems acting on behalf of beneficial transferors and transferees of such interests. A beneficial interest in a Registered Global Note will, subject to compliance with all applicable legal and regulatory restrictions, be transferable for Notes in definitive form or for a beneficial interest in another Registered Global Note only in the authorised denominations set out in the applicable Final Terms and only in accordance with the rules and operating procedures for the time being of DTC, Euroclear or Clearstream, Luxembourg, as the case may be, and in accordance with the terms and conditions specified in the Agency Agreement. Transfers of a Registered Global Note registered in the name of a nominee for DTC shall be limited to transfers of such Registered Global Note, in whole but not in part, to another nominee of DTC or to a successor of DTC or such successor's nominee.
Subject as provided in paragraphs (e), (f) and (g) below, upon the terms and subject to the conditions set forth in the Agency Agreement, a Registered Note in definitive form may be transferred in whole or in part (in the authorised denominations set out in the applicable Final Terms). In order to effect any such transfer (i) the holder or holders must (A) surrender the Registered Note for registration of the transfer of the Registered Note (or the relevant part of the Registered Note) at the specified office of the Registrar or any Transfer Agent, with the form of transfer thereon duly executed by the holder or holders thereof or his or their attorney or attorneys duly authorised in writing and (B) complete and deposit such other certifications as may be required by the Registrar or, as the case may be, the relevant Transfer Agent and (ii) the Registrar or, as the case may be, the relevant Transfer Agent must, after due and careful enquiry, be satisfied with the documents of title and the identity of the person making the request and that the transfer is in compliance with the transfer restrictions set forth in such Registered Note. Any such transfer will be subject to such reasonable regulations as the Issuer and the Registrar may from time to time prescribe (the initial such regulations being set out in Schedule 10 to the Agency Agreement). Subject as provided above, the Registrar or, as the case may be, the relevant Transfer Agent will, within three business days (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar or, as the case may be, the relevant Transfer Agent is located) of the request (or such longer period as may be required to comply with any applicable fiscal or other laws or regulations), authenticate and deliver, or procure the authentication and delivery of, at its specified office to the transferee or (at the risk of the transferee) send by uninsured mail, to such address as the transferee may request, a new Registered Note in definitive form of a like aggregate nominal amount to the Registered Note (or the relevant part of the Registered Note) transferred. In the case of the transfer of part only of a Registered Note in definitive form, a new Registered Note in definitive form in respect of the balance of the Registered Note not transferred will be so authenticated and delivered or (at the risk of the transferor) sent to the transferor.
In the event of a partial redemption of Notes under Condition 8, the Issuer shall not be required to register the transfer of any Registered Note, or part of a Registered Note, called for partial redemption.
(d) Costs of registration
Noteholders will not be required to bear the costs and expenses of effecting any registration of transfer as provided above, except for any costs or expenses of delivery other than by regular uninsured mail and except that the Issuer may require the payment of a sum sufficient to cover any stamp duty, tax or other governmental charge that may be imposed in relation to the registration.
Prior to expiry of the applicable Distribution Compliance Period, transfers by the holder of, or of a beneficial interest in, a Regulation S Global Note to a transferee in the United States or who is a U.S. person will only be made:
(A) to a person whom the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A; or
(B) to a person who is an Institutional Accredited Investor, together with, in the case of (B), a duly executed investment letter from the relevant transferee substantially in the form set out in the Agency Agreement (an IAI Investment Letter); or
and, in each case, in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.
In the case of (A) above, such transferee may take delivery through a Legended Note in global or definitive form and, in the case of (B) above, such transferee may take delivery only through a Legended Note in definitive form. After expiry of the applicable Distribution Compliance Period (i) beneficial interests in Regulation S Global Notes registered in the name of a nominee for DTC may be held through DTC directly, by a participant in DTC, or indirectly through a participant in DTC and (ii) such certification requirements will no longer apply to such transfers.
Transfers of Legended Notes or beneficial interests therein may be made:
and, in each case, in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.
Notes transferred by Institutional Accredited Investors to QIBs pursuant to Rule 144A or outside the United States pursuant to Regulation S will be eligible to be held by such QIBs or non-U.S. investors through DTC, Euroclear or Clearstream, Luxembourg, as appropriate, and the Registrar will arrange for any Notes which are the subject of such a transfer to be represented by the appropriate Registered Global Note, where applicable.
Upon the transfer, exchange or replacement of Legended Notes, or upon specific request for removal of the Legend, the Registrar shall deliver only Legended Notes or refuse to remove the Legend, as the case may be, unless there is delivered to the Issuer such satisfactory evidence as may reasonably be required by the Issuer, which may include an opinion of U.S. counsel, that neither the Legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act.
(g) Exchanges and transfers of Registered Notes generally
Holders of Registered Notes in definitive form, other than Institutional Accredited Investors, may exchange such Notes for interests in a Registered Global Note of the same type at any time.
In this Condition, the following expressions shall have the following meanings:
Distribution Compliance Period means the period that ends 40 days after the completion of the distribution of each Tranche of Notes, as certified by the relevant Dealer (in the case of a non-syndicated issue) or the relevant Lead Manager (in the case of a syndicated issue);
Institutional Accredited Investor means accredited investors (as defined in Rule 501(a)(l), (2), (3) or (7) under the Securities Act) that are institutions;
Legended Notes means Registered Notes in definitive form that are issued to Institutional Accredited Investors and Registered Notes (whether in definitive form or represented by a Registered Global Note) issued to QIBs which bear certain legends regarding U.S. restrictions on transfer;
QIB means a qualified institutional buyer within the meaning of Rule 144A;
Regulation S means Regulation S under the Securities Act;
Regulation S Global Note means a Registered Global Note representing Notes sold outside the United States in reliance on Regulation S;
Rule 144A means Rule 144A under the Securities Act;
Rule 144A Global Note means a Registered Global Note representing Notes sold in the United States to QIBs in reliance on Rule 144A or otherwise in private transactions exempt from the registration requirements of the Securities Act; and
Securities Act means the United States Securities Act of 1933, as amended.
(a) Status of the Notes
The Notes and any relative Coupons are direct, unconditional, unsubordinated and (subject to the provisions of Condition 4) unsecured obligations of the Issuer and rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding.
(b) Status of the Guarantee
The obligations of the Guarantor under the Guarantee in respect of the Notes are direct, unconditional, unsubordinated and (subject to the provisions of Condition 4) unsecured obligations of the Guarantor and rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Guarantor, from time to time outstanding.
So long as any of the Notes remains outstanding (as defined in the Agency Agreement):
without, in any such case, at the same time (i) securing the outstanding Notes or procuring that the outstanding Notes are secured equally and rateably therewith by the same security or by such other security as the Noteholders may by Extraordinary Resolution (as defined in the Agency Agreement) approve or (ii) according to the Guarantee or causing to be accorded to the Guarantee the same security or such other security as the Noteholders may by Extraordinary Resolution (as defined in the Agency Agreement) approve.
In these Conditions:
an encumbrance shall be construed as a reference to (a) a mortgage, charge, pledge, lien or other encumbrance securing any obligation of any person or (b) any other type of preferential arrangement (including title transfer and retention arrangements) having a similar effect;
Group means at any time the Issuer and its Subsidiaries or (in the case of Guaranteed Notes) the Guarantor and its Subsidiaries;
a Permitted Securitisation means any transaction or series of transactions where the Debt Obligations are incurred by a member of the Group in connection with a Securitisation and:
Subsidiary means a subsidiary within the meaning of the Swedish Companies Act (2005:551); and
Debt Obligations means any indebtedness, which is in the form of, or represented by, notes, bonds or other securities which are, or are to be, or are capable of being, quoted, listed or dealt in or on any stock exchange or over-the-counter market.
This Condition 5 has been deleted intentionally.
(a) Interest on Fixed Rate Notes
Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year up to (and including) the Maturity Date.
If the Notes are in definitive form, except as provided in the applicable Final Terms, the amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.
As used in these Terms and Conditions, Fixed Interest Period means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date.
Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms, interest shall be calculated in respect of any period by applying the Rate of Interest to:
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by
which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding.
Day Count Fraction means, in respect of the calculation of an amount of interest, in accordance with this Condition 6(a):
In these Terms and Conditions:
Determination Period means each period from (and including) a Determination Date to but excluding the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date);
sub-unit means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, one cent.; and
Relevant Notes means all Notes where the applicable Final Terms provide for a minimum Specified Denomination in the Specified Currency which is equivalent to at least €100,000 and which are admitted to trading on a regulated market in the European Economic Area.
Each Floating Rate Note bears interest from (and including) the Interest Commencement Date and such interest will be payable in arrear on either:
Such interest will be payable in respect of each Interest Period. In these Terms and Conditions, Interest Period means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date.
If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no numerically corresponding day on the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is:
In these Terms and Conditions, Business Day means a day which is both:
The Rate of Interest payable from time to time in respect of Floating Rate Notes will be determined in the manner specified in the applicable Final Terms.
(A) ISDA Determination for Floating Rate Notes
56 Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this sub-paragraph (A), ISDA Rate for an Interest Period means a rate equal to the Floating Rate that would be
determined by the Principal Paying Agent under an interest rate swap transaction if the Principal Paying Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as at the Issue Date of the first Tranche of the Notes (the ISDA Definitions) and under which:
For the purposes of this sub-paragraph (A), Floating Rate, Calculation Agent, Floating Rate Option, Designated Maturity and Reset Date have the meanings given to those terms in the ISDA Definitions.
If no Minimum Rate of Interest is specified in the applicable Final Terms (or Pricing Supplement, in the case of Exempt Notes) the Minimum Rate of Interest shall be deemed to be zero.
(B) Screen Rate Determination for Floating Rate Notes
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either:
(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page (or such replacement page on that service which displays the information) as at the Specified Time in the Relevant Financial Centre on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Principal Paying Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Principal Paying Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.
If the Relevant Screen Page is not available or if, in the case of (1) above, no offered quotation appears or, in the case of (2) above, fewer than three offered quotations appear, in each case as at the Specified Time in the Relevant Financial Centre, the Issuer and (in the case of Guaranteed Notes) the Guarantor shall appoint a Determination Agent (as defined in the Agency Agreement) and the Determination Agent shall request each of the Reference Banks to provide the Determination Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate at approximately the Specified Time in the Relevant Financial Centre on the Interest Determination Date in question. If two or more of the Reference Banks provide the Determination Agent with offered quotations, the Rate of Interest for the Interest Period shall be the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Determination Agent.
If on any Interest Determination Date one only or none of the Reference Banks provides the Determination Agent with an offered quotation as provided in the preceding paragraph, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Determination Agent determines as being the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the rates, as communicated to (and at the request of) the Determination Agent by the Reference Banks or any two or more of them, at which such banks were offered, at approximately the Specified Time in the Relevant Financial Centre on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in the London inter-bank market (if the Reference Rate is LIBOR) or the Euro-zone interbank market (if the Reference Rate is EURIBOR) or the Stockholm inter-bank market (if the Reference Rate is STIBOR) or the Oslo inter-bank market (if the Reference Rate is NIBOR) or the Copenhagen inter-bank market (if the Reference Rate is CIBOR) or the Tokyo inter-bank market (if the Reference Rate is TIBOR) or the Budapest interbank market (if the reference rate is BUBOR) or the Prague inter-bank market (if the reference rate is PRIBOR) or the Warsaw inter-bank market (if the reference rate is WIBOR) or the Istanbul inter-bank market (if the reference rate is TRYIBOR) or the Bucharest inter-bank market (if the reference rate is ROBOR) or the Singapore interbank market (if the reference rate is SIBOR) or the Hong Kong inter-bank market (if the reference rate is HIBOR) or the Shanghai inter-bank market (if the reference rate is SHIBOR) or the Johannesburg inter-bank market (if the Reference Rate is JIBAR) or the Mexico City inter-bank market (if the reference rate is TIIE) plus or minus (as appropriate) the Margin (if any) or, if fewer than two of the Reference Banks provide the Determination Agent with offered rates, the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, or the arithmetic mean (rounded as provided above) of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at which, at approximately the Specified Time in the Relevant Financial Centre on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the Issuer and (in the case of Guaranteed Notes) the Guarantor suitable for the purpose) informs the Determination Agent it is quoting to leading banks in the London inter-bank market (if the Reference Rate is LIBOR) or the Euro-zone inter-bank market (if the Reference Rate is EURIBOR) or the Stockholm inter-bank market (if the Reference Rate is STIBOR) or the Oslo inter-bank market (if the Reference Rate is NIBOR) or the Copenhagen interbank market (if the Reference Rate is CIBOR) or the Tokyo inter-bank market (if the Reference Rate is TIBOR) or the Budapest inter-bank market (if the reference rate is BUBOR) or the Prague inter-bank market (if the reference rate is PRIBOR) or the Warsaw inter-bank market (if the reference rate is WIBOR) or the Istanbul inter-bank market (if the reference rate is TRYIBOR) or the Bucharest inter-bank market (if the reference rate is ROBOR) or the Singapore inter-bank market (if the reference rate is SIBOR) or the Hong Kong inter-bank market (if the reference rate is HIBOR) or the Shanghai inter-bank market (if the reference rate is SHIBOR) or the Johannesburg inter-bank market (if the Reference Rate is JIBAR) or the Mexico City inter-bank market (if the reference rate is TIIE) plus or minus (as appropriate) the Margin (if any), provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period in place of the Margin relating to that last preceding Interest Period).
In these Terms and Conditions:
Interest Determination Date means the date specified as such in the Final Terms or if none is so specified:
(2) if the Reference Rate is Sterling LIBOR, the first day of each Interest Period;
(3) if the Reference Rate is Euro LIBOR or the Euro-zone interbank offered rate (EURIBOR), the second day on which the TARGET2 System is open prior to the start of each Interest Period;
Reference Banks means (i) in the case of a determination of LIBOR, the principal London office of four major banks in the London inter-bank market, (ii) in the case of a determination of EURIBOR, the principal Euro-zone office of four major banks in the Euro-zone inter-bank market, (iii) in the case of a determination of STIBOR, the principal Stockholm office of four major banks in the Stockholm inter-bank market, (iv) in the case of a determination of NIBOR, the principal Oslo office of four major banks in the Oslo inter-bank market, (v) in the case of a determination of CIBOR, the principal Copenhagen office of four major banks in the Copenhagen inter-bank market, (vi) in the case of a determination of TIBOR, the principal Tokyo office of ten major banks in the Tokyo inter-bank market, (vii) in the case of a determination of BUBOR, the principal Budapest office of four major banks in the Budapest inter-bank market, (viii) in the case of a determination of PRIBOR, the principal Prague office of four major banks in the Prague inter-bank market, (ix) in the case of a determination of WIBOR, the principal Warsaw office of five major banks in the Warsaw inter-bank market, (x) in the case of a determination of TRYIBOR, the principal Istanbul office of five major banks in the Istanbul inter-bank market, (xi) in the case of a determination of ROBOR, the principal Bucharest office of four major banks in the Bucharest interbank market, (xii) in the case of a determination of SIBOR, the principal Singapore
office of four major banks in the Singapore inter-bank market, (xiii) in the case of a determination of HIBOR, the principal Hong Kong office of four major banks in the Hong Kong inter-bank market, (xiv) in the case of a determination of SHIBOR, the principal Shanghai office of four major banks in the Shanghai inter-bank market, (xv) in the case of a determination of JIBAR, the principal Johannesburg office of four major banks in the Johannesburg inter-bank market and (xvi) in the case of a determination of TIIE, the principal Mexico City office of four major banks in the Mexico City inter-bank market, in each case selected by the Determination Agent;
Reference Rate means (i) LIBOR, (ii) EURIBOR, (iii) STIBOR, (iv) NIBOR, (v) CIBOR, (vi) TIBOR, (vii) BUBOR, (viii) PRIBOR, (ix) WIBOR, (x) TRYIBOR, (xi) ROBOR, (xii) SIBOR, (xiii) HIBOR, (xiv) SHIBOR, (xv) JIBAR or (xvi) TIIE, in each case for the relevant period, as specified in the applicable Final Terms;
Relevant Financial Centre means (i) London, in the case of a determination of LIBOR, (ii) Brussels, in the case of a determination of EURIBOR, (iii) Stockholm, in the case of a determination of STIBOR, (iv) Oslo, in the case of a determination of NIBOR, (v) Copenhagen, in the case of a determination of CIBOR, (vi) Tokyo, in the case of a determination of TIBOR, (vii) Budapest, in the case of a determination of BUBOR, (viii) Prague, in the case of a determination of PRIBOR, (ix) Warsaw, in the case of a determination of WIBOR, (x) Istanbul, in the case of a determination of TRYIBOR, (xi) Bucharest, in the case of a determination of ROBOR, (xii) Singapore, in the case of a determination of SIBOR, (xiii) Hong Kong, in the case of a determination of HIBOR, (xiv) Shanghai, in the case of a determination of SHIBOR, (xv) Johannesburg, in the case of a determination of JIBAR and (xvi) Mexico City, in the case of a determination of TIIE, as specified in the applicable Final Terms; and
Specified Time means (i) in the case of LIBOR, 11.00 a.m., (ii) in the case of EURIBOR, 11.00 a.m., (iii) in the case of STIBOR, 11.00 a.m., (iv) in the case of NIBOR, 12.00 noon, (v) in the case of CIBOR, 11.00 a.m., (vi) in the case of TIBOR, 11.00 a.m., (vii) in the case of BUBOR, 12.30 p.m., (viii) in the case of PRIBOR, 11.00 a.m., (ix) in the case of WIBOR, 11.00 a.m., (x) in the case of TRYIBOR, 11.15 a.m., (xi) in the case of ROBOR, 11.00 a.m., (xii) in the case of SIBOR, 11.00 a.m., (xiii) in the case of HIBOR, 11.00 a.m., (xiv) in the case of SHIBOR, 11.30 a.m., (xv) in the case of JIBAR, 11.00 a.m. and (xvi) in the case of TIIE, 11.00 a.m., as specified in the applicable Final Terms.
If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest.
If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest.
In addition, notwithstanding the provisions above in this Condition 6(b), if the Issuer determines that the relevant Reference Rate specified in the applicable Final Terms has ceased to be published on the Relevant Screen Page as a result of such benchmark ceasing to be calculated or administered when any Rate of Interest (or the relevant component part thereof) remains to be determined by such Reference Rate, then the following provisions shall apply:
(A) the Issuer shall use reasonable endeavours to appoint, as soon as reasonably practicable, an Independent Adviser to determine (acting in good faith and in a commercially reasonable manner), no later than 5 Business Days prior to the relevant Interest Determination Date relating to the next succeeding Interest Period (the IA Determination Cut-off Date), a Successor Rate or, alternatively, if there is no Successor Rate, an Alternative Reference Rate for purposes of determining the Rate of Interest (or the relevant component part thereof) applicable to the Notes;
For the purposes of this Condition 6(b)(iv):
Adjustment Spread means a spread (which may be positive or negative) or formula or methodology for calculating a spread, which the Independent Adviser (in consultation with the Issuer) or the Issuer (as applicable), determines is required to be applied to the Successor Rate or the Alternative Reference Rate (as applicable) in order to reduce or eliminate, to the extent
reasonably practicable in the circumstances, any economic prejudice or benefit (as applicable) to Noteholders and Couponholders as a result of the replacement of the Reference Rate with the Successor Rate or the Alternative Reference Rate (as applicable) and is the spread, formula or methodology which:
Alternative Reference Rate means the rate that the Independent Adviser or the Issuer (as applicable) determines has replaced the relevant Reference Rate in customary market usage in the international debt capital markets for the purposes of determining rates of interest in respect of bonds denominated in the Specified Currency and of a comparable duration to the relevant Interest Period, or, if the Independent Adviser or the Issuer (as applicable) determines that there is no such rate, such other rate as the Independent Adviser or the Issuer (as applicable) determines in its discretion (acting in good faith and in a commercially reasonable manner) is most comparable to the relevant Reference Rate;
Independent Adviser means an independent financial institution of international repute or other independent financial adviser experienced in the international debt capital markets, in each case appointed by the Issuer at its own expense;
Relevant Nominating Body means, in respect of a reference rate:
Successor Rate means the rate that the Independent Adviser or the Issuer (as applicable) determines is a successor to or replacement of the Reference Rate which is formally recommended by any Relevant Nominating Body.
(v) Determination of Rate of Interest and calculation of Interest Amounts
The Principal Paying Agent will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period.
The Principal Paying Agent will calculate the amount of interest (the Interest Amount) payable on the Floating Rate Notes for the relevant Interest Period by applying the Rate of Interest to:
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate Note in definitive form is a multiple of the Calculation Amount, the Interest Amount payable in respect of such Note shall be the product of the amount (determined in the manner provided above) for each Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding.
Day Count Fraction means, in respect of the calculation of an amount of interest in accordance with this Condition 6(b):
Day Count Fraction =
$$
\frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}
$$
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;
"M2 is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless such number is 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
(vi) if "30E/360" or "Eurobond Basis" is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction =
$$
\frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}
$$
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31, in which case D2 will be 30;
(vii) if "30E/360 (ISDA)" is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction = 360 [360 (Y Y )] [30 (M M )] (D D ) 2 1 2 1 2 1
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30.
Where Linear Interpolation is specified as applicable in respect of an Interest Period in the applicable Final Terms, the Rate of Interest for such Interest Period shall be calculated by the Principal Paying Agent by straight line linear interpolation by reference to two rates based on:
one of which shall be determined as if the Designated Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period and the other of which rates are available next longer than the length of the relevant Interest Period provided however that if there is no rate available for the period of time next shorter or, as the case may be, next longer, then the Principal Paying Agent shall determine such rate at such time and by reference to such sources as it determines appropriate.
For the purposes of this Condition 6(b)(vi) Designated Maturity means, in relation to Screen Rate Determination, the period of time designated in the Reference Rate.
(vii) Notification of Rate of Interest and Interest Amounts
The Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer, (in the case of Guaranteed Notes) the Guarantor and any stock exchange on which the relevant Floating Rate Notes are for the time being listed and notice thereof to be published in accordance with Condition 15 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to each stock exchange on which the relevant Floating Rate Notes are for the time being listed and to the Noteholders in accordance with Condition 15. For the purposes of this paragraph, the expression London Business Day means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for general business in London.
(viii) Certificates to be final
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 6(b) by the Principal Paying Agent, the Determination Agent or (in the circumstances described in Condition 6(b)(iv)) an Independent Adviser or the Issuer shall (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, (in the case of Guaranteed Notes) the Guarantor, the Principal Paying Agent, the other Agents and all Noteholders and Couponholders and (in the absence as aforesaid) no liability to the Issuer, (in the case of Guaranteed Notes) the Guarantor, the Noteholders or the Couponholders shall attach to the Principal Paying Agent, the Determination Agent, an Independent Advisor or the Issuer in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.
(c) Exempt Notes
In the case of Exempt Notes which are also Floating Rate Notes where the applicable Pricing Supplement identifies that Screen Rate Determination applies to the calculation of interest, if the Reference Rate from time to time is specified in the applicable Pricing Supplement as being other than LIBOR, EURIBOR, STIBOR, NIBOR, CIBOR, TIBOR, BUBOR, PRIBOR, WIBOR, TRYIBOR, ROBOR, SIBOR, HIBOR, SHIBOR, JIBAR or TIIE, the Rate of Interest in respect of such Exempt Notes will be determined as provided in the applicable Pricing Supplement.
The rate or amount of interest payable in respect of Exempt Notes which are not also Fixed Rate Notes or Floating Rate Notes shall be determined in the manner specified in the applicable Pricing Supplement, provided that where such Notes are Index Linked Interest Notes the provisions of Condition 6(b) shall, save to the extent amended in the applicable Pricing Supplement, apply as if the references therein to Floating Rate Notes and to the Principal Paying Agent were references to Index Linked Interest Notes and the Calculation Agent, respectively, and provided further that the Calculation Agent will notify the Principal Paying Agent of the Rate of Interest for the relevant Interest Period as soon as practicable after calculating the same.
(d) Accrual of interest
Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date for its redemption unless payment of principal is improperly withheld or refused. In such event, interest will continue to accrue until whichever is the earlier of:
(1) the date on which all amounts due in respect of such Note have been paid; and
(2) five days after the date on which the full amount of the moneys payable in respect of such Note has been received by the Principal Paying Agent or the Registrar, as the c ase may be, and notice to that effect has been given to the Noteholders in accordance with Condition 15.
(a) Method of payment
Subject as provided below:
Payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 9 and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
(b) Presentation of definitive Bearer Notes and Coupons
Payments of principal in respect of definitive Bearer Notes will (subject as provided below) be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of definitive Bearer Notes, and payments of interest in respect of definitive Bearer Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia and its possessions)).
Fixed Rate Notes in definitive bearer form (other than Long Maturity Notes (as defined below ) and save as provided in Condition 7(f)) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 9) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 10) or, if later, five years from the date on which such Coupon would otherwise have become due, but in no event thereafter.
Upon any Fixed Rate Note in definitive bearer form becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof.
Upon the date on which any Floating Rate Note or Long Maturity Note in definitive bearer form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof. A Long Maturity Note is a Fixed Rate Note (other than a Fixed Rate Note which on issue had a Talon attached) whose nominal amount on issue is less than the aggregate interest payable thereon provided that such Note shall cease to be a Long Maturity Note on the Interest Payment Date on which the aggregate amount of interest remaining to be paid after that date is less than the nominal amount of such Note.
66 If the due date for redemption of any definitive Bearer Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Bearer Note.
Payments of principal and interest (if any) in respect of Notes represented by any Global Note in bearer form will (subject as provided below) be made in the manner specified above in relation to definitive Bearer Notes or otherwise in the manner specified in the relevant Global Note, where applicable against presentation or surrender, as the case may be, of such Global Note at the specified office of any Paying Agent outside the United States. A record of each payment made, distinguishing between any payment of principal and any payment of interest, will be made either on such Global Note by the Paying Agent to which it was presented or in the records of Euroclear and Clearstream, Luxembourg, as applicable.
Payments of principal in respect of each Registered Note (whether or not in global form) will be made against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the Registered Note at the specified office of the Registrar or any of the Paying Agents. Such payments will be made by transfer to the Designated Account (as defined below) of the holder (or the first named of joint holders) of the Registered Note appearing in the register of holders of the Registered Notes maintained by the Registrar (the Register) (i) where in global form, at the close of the business day (being for this purpose a day on which Euroclear and Clearstream, Luxembourg are open for business) before the relevant due date, and (ii) where in definitive form, at the close of business on the third business day (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar is located) before the relevant due date. Notwithstanding the previous sentence, if (i) a holder does not have a Designated Account or (ii) the nominal amount of the Notes held by a holder is less than U.S.\$250,000 (or its approximate equivalent in any other Specified Currency), payment will instead be made by a cheque in the Specified Currency drawn on a Designated Bank (as defined below). For these purposes, Designated Account means the account (which, in the case of a payment in Japanese yen to a non-resident of Japan, shall be a non-resident account) maintained by a holder with a Designated Bank and identified as such in the Register and Designated Bank means (in the case of payment in a Specified Currency other than euro) a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Auckland, respectively) and (in the case of a payment in euro) any bank which processes payments in euro.
Payments of interest in respect of each Registered Note (whether or not in global form) will be made by a cheque in the Specified Currency drawn on a Designated Bank and mailed by uninsured mail on the business day in the city where the specified office of the Registrar is located immediately preceding the relevant due date to the holder (or the first named of joint holders) of the Registered Note appearing in the Register (i) where in global form, at the close of the business day (being for this purpose a day on which Euroclear and Clearstream, Luxembourg are open for business) before the relevant due date, and (ii) where in definitive form, at the close of business on the fifteenth day (whether or not such fifteenth day is a business day) before the relevant due date (the Record Date) at his address shown in the Register on the Record Date and at his risk. Upon application of the holder to the specified office of the Registrar not less than three business days in the city where the specified office of the Registrar is located before the due date for any payment of interest in respect of a Registered Note, the payment may be made by transfer on the due date in the manner provided in the preceding paragraph. Any such application for transfer shall be deemed to relate to all future payments of interest (other than interest due on redemption) in respect of the Registered Notes which become payable to the holder who has made the initial application until such time as the Registrar is notified in writing to the contrary by such holder. Payment of the interest due in respect of each Registered Note on redemption will be made in the same manner as payment of the nominal amount of such Registered Note.
Holders of Registered Notes will not be entitled to any interest or other payment for any delay in receiving any amount due in respect of any Registered Note as a result of a cheque posted in accordance with this Condition arriving after the due date for payment or being lost in the post. No commissions or expenses shall be charged to such holders by the Registrar in respect of any payments of principal or interest in respect of the Registered Notes.
All amounts payable to DTC or its nominee as registered holder of a Registered Global Note in respect of Notes denominated in a Specified Currency other than U.S. dollars shall be paid by transfer by the Registrar to an account in the relevant Specified Currency of the Exchange Agent on behalf of DTC or its nominee for conversion into and payment in U.S. dollars in accordance with the provisions of the Agency Agreement.
None of the Issuer, (in the case of Guaranteed Notes) the Guarantor or the Agents will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
(e) Specific provisions in relation to payments in respect of certain types of Exempt Notes
Upon the date on which any Dual Currency Note or Index Linked Note in definitive form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof.
(f) General provisions applicable to payments
The holder of a Global Note shall be the only person entitled to receive payments in respect of Notes represented by such Global Note and the Issuer or, as the case may be, the Guarantor will be discharged by payment to, or to the order of, the holder of such Global Note in respect of each amount so paid. Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or DTC as the beneficial holder of a particular nominal amount of Notes represented by such Global Note must look solely to Euroclear, Clearstream, Luxembourg or DTC, as the case may be, for his share of each payment so made by the Issuer to, or to the order of, the holder of such Global Note.
Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or interest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in the United States if:
If the date for payment of any amount in respect of any Note or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, Payment Day means any day which (subject to Condition 10) is:
(ii) if TARGET2 System is specified as an Additional Financial Centre in the applicable Final Terms, a day on which the TARGET2 System is open;
(iii) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which if the Specified Currency is Australian dollars or New Zealand dollars shall be Sydney and Auckland, respectively) or (2) in relation to any sum payable in euro, a day on which the TARGET2 System is open; and
Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:
Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 9.
(a) Redemption at maturity
Unless previously redeemed or purchased and cancelled as specified below, each Note will be redeemed by the Issuer at its Final Redemption Amount specified in the applicable Final Terms in the relevant Specified Currency on the Maturity Date specified in the applicable Final Terms.
(b) Redemption for tax reasons
Subject to Condition 8(f), the Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if this Note is not a Floating Rate Note) or on any Interest Payment Date (if this Note is a Floating Rate Note), on giving not less than 30 nor more than 60 days' notice to the Principal Paying Agent and, in accordance with Condition 15, the Noteholders (which notice shall be irrevocable), if:
provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor would be obliged to pay such additional amounts were a payment in respect of the Notes then due.
Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Principal Paying Agent to make available at its specified office to the Noteholders (i) a certificate signed by two Directors of the Issuer or, as the case may be, the Guarantor stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and (ii) an opinion of independent legal advisers of recognised standing to the effect that the Issuer or, as the case may be, the Guarantor has or will become obliged to pay such additional amounts as a result of such change or amendment.
Notes redeemed pursuant to this Condition 8(b) will be redeemed at their Early Redemption Amount referred to in paragraph (f) below together (if appropriate) with interest accrued to (but excluding) the date of redemption.
(c) Redemption at the option of the Issuer (Issuer Call)
If Issuer Call is specified as being applicable in the applicable Final Terms, the Issuer may, having given not less than 15 nor more than 30 days' notice to the Noteholders in accordance with Condition 15 (which notice shall be irrevocable and shall specify the date fixed for redemption), redeem all or (if redemption in part is specified as being applicable in the applicable Final Terms) some only of the Notes then outstanding on any Optional Redemption Date and at the Optional Redemption Amount(s) specified in the applicable Final Terms together, if appropriate, with interest accrued to (but excluding) the relevant Optional Redemption Date. If redemption in part is specified as being applicable in the applicable Final Terms, any such redemption must be of a nominal amount not less than the Minimum Redemption Amount and not more than the Maximum Redemption Amount in each case as may be specified in the applicable Final Terms.
In the case of a partial redemption of Notes, the Notes to be redeemed (Redeemed Notes) will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, and in accordance with the rules of Euroclear and/or Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduc tion in nominal amount, at their discretion) and/or DTC, in the case of Redeemed Notes represented by a Global Note, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the Selection Date). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 15 not less than 15 days prior to the date fixed for redemption. No exchange of the relevant Global Note will be permitted during the period from (and including) the Selection Date to (and including) the date fixed for redemption pursuant to this paragraph (c) and notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 15 at least five days prior to the Selection Date.
(d) If Make-whole Redemption by the Issuer is specified as being applicable in the applicable Final Terms, the Issuer may, having given not less than 15 nor more than 30 days' notice to the Noteholders in accordance with Condition 15 (which notice shall be irrevocable and shall specify the date fixed for redemption (the Make-whole Redemption Date)), redeem all or (if redemption in part is specified as being applicable in the applicable Final Terms) some only of the Notes then outstanding on any Makewhole Redemption Date and at the Make-whole Redemption Amount specified in the applicable Final Terms together, if appropriate, with interest accrued to (but excluding) the relevant Make-whole Redemption Date. If redemption in part is specified as being applicable in the applicable Final Terms, any such redemption must be of a nominal amount not less than the Minimum Redemption Amount and not more than the Maximum Redemption Amount in each case as may be specified in the applicable Final Terms.
In the case of a partial redemption of Notes, the Redeemed Notes will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, and in accordance with the rules of Euroclear and/or Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion) and/or DTC, in the case of Redeemed Notes represented by a Global Note, on a Selection Date not more than 30 days prior to the Make-whole Redemption Date. In the case of Redeemed Notes represented by
definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 15 not less than 15 days prior to the Make-whole Redemption Date. No exchange of the relevant Global Note will be permitted during the period from (and including) the Selection Date to (and including) the Make-whole Redemption Date pursuant to this paragraph (d) and notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 15 at least five days prior to the Selection Date.
In this Condition 8(d), Make-whole Redemption Amount means:
(A) the outstanding principal amount of the relevant Note or (B) if higher, the sum, as determined by the Calculation Agent, of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including any portion of such payments of interest accrued to the date of redemption) discounted to the Make-whole Redemption Date on an annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Reference Rate plus the Make-whole Redemption Margin specified in the applicable Final Terms, where:
CA Selected Bond means a government security or securities (which, if the Specified Currency is euro, will be a German Bundesobligationen) selected by the Calculation Agent as having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes;
Calculation Agent means a leading investment, merchant or commercial bank appointed by the relevant Issuer for the purposes of calculating the Make-whole Redemption Amount, and notified to the Noteholders in accordance with Condition 15;
Reference Bond means (A) if CA Selected Bond is specified in the applicable Final Terms, the relevant CA Selected Bond or (B) if CA Selected Bond is not specified in the applicable Final Terms, the security specified in the applicable Final Terms, provided that if the Calculation Agent advises the Issuer that, for reasons of illiquidity or otherwise, the relevant security specified is not appropriate for such purpose, such other central bank or government security as the Calculation Agent may, with the advice of Reference Market Makers, determined to be appropriate;
Reference Bond Price means (i) the average of five Reference Market Maker Quotations for the relevant Make-whole Redemption Date, after excluding the highest and lowest Reference Market Maker Quotations, (ii) if the Calculation Agent obtains fewer than five, but more than one, such Reference Market Maker Quotations, the average of all such quotations, or (iii) if only one such Reference Market Maker Quotation is obtained, the amount of the Reference Market Maker Quotation so obtained;
Reference Market Maker Quotations means, with respect to each Reference Market Maker and any Make-whole Redemption Date, the average, as determined by the Calculation Agent, of the bid and asked prices for the Reference Bond (expressed in each case as a percentage of its principal amount) quoted in writing to the Calculation Agent at the Quotation Time specified in the applicable Final Terms on the Reference Rate Determination Day specified in the applicable Final Terms;
Reference Market Makers means five brokers or market makers of securities such as the Reference Bond selected by the Calculation Agent or such other five persons operating in the market for securities such as the Reference Bond as are selected by the Calculation Agent in consultation with the relevant Issuer; and
Reference Rate means, with respect to any Make-whole Redemption Date, the rate per annum equal to the equivalent yield to maturity of the Reference Bond, calculated using a price for the Reference Bond (expressed as a percentage of its principal amount) equal to the Reference Bond Price for such Makewhole Redemption Date. The Reference Rate will be calculated on the Reference Rate Determination Day specified in the applicable Final Terms.
(e) Redemption at the option of the Noteholders (Investor Put)
If Investor Put is specified as being applicable in the applicable Final Terms, upon the holder of any Note giving to the Issuer in accordance with Condition 15 not less than 15 nor more than 30 days' notice the Issuer will, upon the expiry of such notice, redeem such Note on the Optional Redemption
Date and at the Optional Redemption Amount together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date. Registered Notes may be redeemed under this Condition 8(e) in any multiple of their lowest Specified Denomination.
To exercise the right to require redemption of this Note the holder of this Note must, if this Note is in definitive form and held outside Euroclear and Clearstream, Luxembourg and (in the case of Registered Notes) DTC, deliver, at the specified office of any Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) at any time during normal business hours of such Paying Agent or, as the case may be, the Registrar falling within the notice period, a duly completed and signed notice of exercise in the form (for the time being current) obtainable from any specified office of any Paying Agent or, as the case may be, the Registrar (a Put Notice) and in which the holder must specify a bank account (or, if payment is required to be made by cheque, an address) to which payment is to be made under this Condition and, in the case of Registered Notes, the nominal amount thereof to be redeemed and, if less than the full nominal amount of the Registered Notes so surrendered is to be redeemed, an address to which a new Registered Note in respect of the balance of such Registered Notes is to be sent subject to and in accordance with the provisions of Condition 2(b), accompanied by this Note or evidence satisfactory to the Paying Agent concerned that this Note will, following delivery of the Put Notice, be held to its order or under its control. If this Note is represented by a Global Note or is in definitive form and held through Euroclear or Clearstream, Luxembourg or (in the case of Registered Notes) DTC, to exercise the right to require redemption of this Note, the holder of this Note must, within the notice period, give notice to the Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) of such exercise in accordance with the standard procedures of Euroclear and Clearstream, Luxembourg or DTC (as the case may be) (which may include notice being given on his instruction by Euroclear or Clearstream, Luxembourg or any common depositary or common safekeeper, as the case may be, for them or by DTC (as the case may be) to the Agent or the Registrar (as the case may be) by electronic means) in a form acceptable to Euroclear and Clearstream, Luxembourg or DTC (as the case may be) from time to time and, if this Note is represented by a Global Note the terms of which require presentation for recording changes to its nominal amount, at the same time present or procure the presentation of the relevant Global Note to the Agent or the Registrar (as the case may be) for notation accordingly.
Any Put Notice or other notice given in accordance with the standard procedures of Euroclear and Clearstream, Luxembourg given by a holder of any Note pursuant to this paragraph (e) shall be irrevocable except where prior to the due date of redemption an Event of Default shall have occurred and be continuing in which event such holder, at its option, may elect by notice to the Issuer to withdraw the notice given pursuant to this paragraph and instead to declare such Note forthwith due and payable pursuant to Condition 11.
For the purpose of paragraph (b) above and Condition 11:
Early Redemption Amount = RP x (1 + AY) y
where:
RP means the Reference Price; and
AY means the Accrual Yield expressed as a decimal; and
y is the Day Count Fraction specified in the applicable Final Terms which will be either (i) 30/360 (in which case the numerator will be equal to the number of days (calculated on the basis of a 360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator
(f) Early Redemption Amounts
will be 360) or (ii) Actual/360 (in which case the numerator will be equal to the actual number of days from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 360) or (iii) Actual/365 (in which case the numerator will be equal to the actual number of days from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 365).
The Issuer, the Guarantor or any Subsidiary of the Issuer or the Guarantor may at any time purchase Notes (provided that, in the case of definitive Bearer Notes, all unmatured Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise. All Notes so purchased will be surrendered to a Paying Agent for cancellation.
All Notes which are redeemed will forthwith be cancelled (together with all unmatured Coupons and Talons attached thereto or surrendered therewith at the time of redemption). All Notes so cancelled and the Notes purchased and cancelled pursuant to paragraph (g) above (together with all unmatured Coupons and Talons cancelled therewith) shall be forwarded to the Principal Paying Agent and cannot be reissued or resold.
(i) Late payment on Zero Coupon Notes
If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c) or (e) above or upon its becoming due and repayable as provided in Condition 11 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in paragraph (f)(ii) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of:
All payments of principal and interest in respect of the Notes and Coupons by or on behalf of the Issuer or by the Guarantor (in the case of Guaranteed Notes) will be made without withholding or deduction for or on account of any present or future taxes or duties of whatever nature imposed or levied by or on behalf of any Tax Jurisdiction unless such withholding or deduction is required by law. In such event, the Issuer or the Guarantor, as the case may be, will pay such additional amounts as shall be necessary in order that the net amounts received by the holders of the Notes or Coupons after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes or Coupons, as the case may be, in the absence of such withholding or deduction; except that no such additional amounts shall be payable with respect to any Note or Coupon:
Notwithstanding any other provision of these Conditions, in no event will the Issuer or the Guarantor (in the case of Guaranteed Notes) be required to pay any additional amounts in respect of the Notes and Coupons for, or on account of, any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, or any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
As used herein:
The Notes (whether in bearer or registered form) and Coupons will become void unless claims in respect of principal and/or interest are made within a period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 9) therefor.
There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 7(b) or any Talon which would be void pursuant to Condition 7(b).
If any one or more of the following events (each an Event of Default) shall occur and be continuing:
(iv) Insolvency and Rescheduling: the Issuer, the Guarantor (in the case of Guaranteed Notes) or any Principal Subsidiary of the Issuer or (in the case of Guaranteed Notes) the Guarantor is unable to pay its debts as they fall due, commences negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling of its indebtedness or makes a general assignment for the benefit of or a composition with its creditors; or
(v) Winding-up: save in connection with a Permitted Merger, the Issuer, the Guarantor (in the case of Guaranteed Notes) or any Principal Subsidiary of the Issuer or (in the case of Guaranteed Notes) the Guarantor takes any corporate action or other steps are taken or legal proceedings are started for its winding-up, dissolution, administration or re-organisation or for the appointment of a liquidator, receiver, administrator, administrative receiver, conservator, custodian, trustee or similar officer of it or of all or a substantial part of its revenues and assets; or
then any Note may, by written notice addressed by the holder thereof to the Issuer and delivered to the Issuer and (in the case of Guaranteed Notes) the Guarantor or the Principal Paying Agent, effective upon the date of receipt thereof by the Issuer or the Guarantee, as the case may be or the Principal Paying Agent, be declared immediately due and payable, whereupon it shall become immediately due and payable at the Early Redemption Amount (as described in Condition 8(f)), together with accrued interest (if any) to the date of repayment, without presentment, demand, protest or other notice of any kind.
(b) Definitions
For the purposes of this Condition:
a Principal Subsidiary of the Issuer or the Guarantor at any time shall mean a Subsidiary of the Issuer or the Guarantor:
(i) whose total assets (excluding intra-Group items) (consolidated in the case of a Subsidiary which itself has Subsidiaries) represent at least 5 per cent. of the total assets (being the total of fixed assets and current assets), of the Group (as shown in the then latest audited consolidated financial statements of the Group); or
in the case of a Subsidiary of the Issuer or the Guarantor, as calculated from the then latest financial statements (consolidated or, as the case may be, unconsolidated), audited if prepared, of that Subsidiary and, if that Subsidiary has been acquired after the period with respect to which the then latest published audited consolidated financial statements of the Group were drawn up, such statements shall be adjusted as if such Subsidiary had been a member of the Group during such period.
A report by two of the Directors of the Issuer or, as the case may be, the Guarantor that, in their opinion, a Subsidiary of the Issuer or, as the case may be the Guarantor is or is not or was or was not at any particular time or throughout any specified period a Principal Subsidiary, shall, in the absence of manifest error, be conclusive and binding on the Noteholders.
Net Worth means the aggregate, immediately prior to a Permitted Merger, of the amounts paid up or credited as paid up on the issued share capital of the Group (other than any redeemable shares) and the aggregate amount of the reserves of the Group including:
and so that no amount shall be included or excluded more than once; and
Swedish Business Day means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in Stockholm.
Should any Note, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Principal Paying Agent (in the case of Bearer Notes or Coupons) or the Registrar (in the case of Registered Notes) upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Coupons or Talons must be surrendered before replacements will be issued.
The names of the initial Agents and their initial specified offices are set out below. If any additional Paying Agents are appointed in connection with any Series, the names of such Paying Agents will be specified in Part B of the applicable Final Terms.
The Issuer is entitled to vary or terminate the appointment of any Agent and/or appoint additional or other Agents and/or approve any change in the specified office through which any Agent acts, provided that:
(c) so long as any of the Registered Global Notes payable in a Specified Currency other than U.S. dollars are held through DTC or its nominee, there will at all times be an Exchange Agent with a specified office in New York City.
In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in Condition 7(f). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days' prior notice thereof shall have been given to the Noteholders in accordance with Condition 15.
In acting under the Agency Agreement, the Agents act solely as agents of the Issuer and the Guarantor and do not assume any obligation to, or relationship of agency or trust with, any Noteholders or Couponholders. The Agency Agreement contains provisions permitting any entity into which any Agent is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor agent.
On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Principal Paying Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 10.
All notices regarding the Bearer Notes will be deemed to be validly given if published in a leading English language daily newspaper of general circulation in London. It is expected that any such publication will be made in the Financial Times. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules of any stock exchange (or any other relevant authority) on which the Bearer Notes are for the time being listed or by which they have been admitted to trading. Any such notice will be deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper, on the date of the first publication in all required newspapers.
All notices regarding the Registered Notes will be deemed to be validly given if sent by first class mail or (if posted to an address overseas) by airmail to the holders (or the first named of joint holders) at their respective addresses recorded in the Register and will be deemed to have been given on the fourth day after mailing and, in addition, for so long as any Registered Notes are listed on a stock exchange and the rules of that stock exchange (or any other relevant authority) so require, such notice will be published in a daily newspaper of general circulation in the place or places required by those rules.
Until such time as any definitive Notes are issued, there may, so long as any Global Notes representing the Notes are held in their entirety on behalf of Euroclear and/or Clearstream, Luxembourg and/or DTC, be substituted for such publication in such newspaper(s) or such mailing the delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or DTC for communication by them to the holders of the Notes and, in addition, for so long as any Notes are listed on a stock exchange or admitted to trading by another relevant authority and the rules of that stock exchange (or any other relevant authority) so require, such notice will be published in a daily newspaper of general circulation in the place or places required by those rules. Any such notice shall be deemed to have been given to the holders of the Notes on the third day after the day on which the said notice was given to Euroclear and/or Clearstream, Luxembourg and/or DTC.
Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the case of any Note in definitive form) with the relative Note or Notes, with the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes). Whilst any of the Notes are represented by a Global Note, such notice may be given by any holder of a Note to the Principal Paying Agent or the Registrar through Euroclear and/or Clearstream, Luxembourg and/or DTC, as the case may be, in such manner as the Principal Paying Agent, the Registrar and Euroclear and/or Clearstream, Luxembourg and/or DTC, as the case may be, may approve for this purpose.
The Agency Agreement contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes, the Coupons or any of the provisions of the Agency Agreement or the Guarantee. Such a meeting may be convened by the Issuer or the Guarantor (in the case of Guaranteed Notes) or Noteholders holding not less than 5 per cent. in nominal amount of the Notes for the time being remaining outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing not less than 50 per cent. in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Notes or the Coupons (including modifying the date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes or the Coupons), the quorum shall be one or more persons holding or representing not less than two-thirds in nominal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons holding or representing not less than one-third in nominal amount of the Notes for the time being outstanding. The Agency Agreement provides that (i) a resolution passed at a meeting duly convened and held in accordance with the Agency Agreement by a majority consisting of not less than 75 per cent. of the persons voting on the resolution upon a show of hands or if, a poll was duly demanded, by a majority consisting of not less than 75 per cent.% of the votes given on the poll , (ii) a resolution in writing signed by or on behalf of the holders of not less than 75 per cent. in nominal amount of the Notes for the time being outstanding or (iii) consent given by way of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Principal Paying Agent) by or on behalf of the holders of not less than 75 per cent. in nominal amount of the Notes for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolution of the Noteholders. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting, and on all Couponholders.
The Principal Paying Agent and the Issuer may agree, without the consent of the Noteholders or Couponholders, to:
Any such modification shall be binding on the Noteholders and the Couponholders and any such modification shall be notified to the Noteholders in accordance with Condition 15 as soon as practicable thereafter.
The Issuer shall be at liberty from time to time without the consent of the Noteholders or the Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and the date from which interest starts to accrue and so that the same shall be consolidated and form a single Series with the outstanding Notes.
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act.
The Agency Agreement, the Guarantee, the Deed of Covenant, the Deed Poll, the Notes and the Coupons (and any non-contractual obligations arising out of or in connection with any of the aforementioned) are governed by, and shall be construed in accordance with, English law.
The Issuer and (in the case of Guaranteed Notes) the Guarantor agree, for the exclusive benefit of the Noteholders and the Couponholders, that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with the Notes and/or the Coupons or the Guarantee (including a dispute relating to any non-contractual obligations arising out of or in connection with the Notes and/or the Coupons or the Guarantee) and that accordingly any suit, action or proceedings (together referred to as Proceedings) arising out of or in connection with the Notes and the Coupons or the Guarantee may be brought in such courts.
The Issuer and (in the case of Guaranteed Notes) the Guarantor hereby irrevocably waive any objection which it may have now or hereafter to the laying of the venue of any such Proceedings in any such court and any claim that any such Proceedings have been brought in an inconvenient forum and hereby further irrevocably agrees that a judgment in any such Proceedings brought in the English courts shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction.
To the extent allowed by law, nothing contained in this Condition shall limit any right to take Proceedings against the Issuer or the Guarantor in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.
The Issuer and (in the case of Guaranteed Notes) the Guarantor appoint ASSA ABLOY Limited at its registered office at School Street, Willenhall, West Midlands WV13 3PW as its agent for service of process, and undertake that, in the event of ASSA ABLOY Limited ceasing so to act or ceasing to be registered in England, they will appoint another person as their respective agent for service of process in England in respect of any Proceedings. Nothing herein shall affect the right to serve proceedings in any other manner permitted by law.
(d) Other documents
The Issuer has in the Agency Agreement, the Deed of Covenant and the Deed Poll and (in the case of Guaranteed Notes) the Guarantor has in the Agency Agreement and the Guarantee submitted to the jurisdiction of the English courts and appointed an agent for service of process in terms substantially similar to those set out above.
The net proceeds from each issue of Notes will be applied by the relevant Issuer for its general corporate purposes which include making a profit.
AA was formed in 1994 as a public limited liability company through the merger of the lock companies of ASSA AB (formerly owned by Securitas AB, Sweden) and ABLOY OY (formerly owned by Metra Oyj Abp, Finland). On 8 November 1994, AA was listed on the Stockholm Stock Exchange (now Nasdaq Stockholm). Since then, AA and its subsidiaries (together the Group) have expanded both organically and by further acquisitions.
AA was incorporated as a legal entity on 2 April 1954 under the Swedish Companies Act (2005:551) for an indefinite period of time and its Corporate Organisation number is 556059-3575. AA's registered office is located at P.O. Box 70340 (Klarabergsviadukten 90), SE-107 23 Stockholm, Sweden. Its telephone number is +46 (0)8 506 485 00.
The Group is an international manufacturer and supplier of door opening solutions dedicated to satisfying enduser needs for security, safety and convenience. Organic growth and acquisitions, product leadership through innovation and sustainability and cost-efficiency have transformed the company from a traditional regional company into a modern, multinational group in innovative door opening solutions. Since its formation in 1994 the Group's sales have grown from around SEK 3,600 million in the year ended 31 December 1994 to SEK 76,137 million in the year ended 31 December 2017. In 2017 the Group had around 47,500 employees, compared with 4,700 employees in 1994. The growth in Group profit has been in line with the growth in sales.
The Group is represented in both mature and emerging markets worldwide, with a leading position in much of Europe, North and South America, Asia and Oceania. The Group is focusing on increased market presence in emerging markets, which offer high growth potential. Since 2007, emerging markets share of the Group's total sales has increased from 13 to 23 per cent. in 2017. The mature markets of North America, Europe and Australia account for around three-quarters of the Group's sales.
The Group provides a range of door opening solutions and services for institutional and commercial customers, as well as for the residential market.
The Group offers mechanical and electromechanical locks, digital door locks, security doors, entrance automation, hotel security and secure identity solutions primarily in identity and access management as well as a number of other related products and services. Demand is shifting rapidly from mechanical to electromechanical solutions with higher value content. The Group is an innovator and product developer in the technology shift toward increasingly electromechanical, digital and mobile technology. Important initiatives include the Groupwide development platforms for products and solutions. One example is Seos, a complete ecosystem for the use of digital keys on smartphones and other mobile devices. The Seos platform is also a growing integral part of solutions for the world of the "Internet of Things" and "digital homes", where people have connected devices in the home and at work. Another example is wireless Aperio technology, which is being launched globally and enables cost-efficient connection of many doors in an existing access control system. Platforms are also increasingly important in factory production of physical lock products. With digital and mobile technology, the Group is spearheading development in third generation door opening solutions. In an increasingly digital world, the Group is developing standardised and open software, combined with physical lock solutions, providing increased customer benefit with custom features. Selling digital-based functionality, software, licenses and virtual keys opens up a large aftermarket with shorter life cycles. Smart door opening solutions is yet another digital and mobile technology that is undergoing rapid development. More and more homes are being equipped with smart door locks for improved safety, security and convenience in the home. Here the Group develops solutions that are also compatible with other vendors' smart home products and solutions.
Apart from the security provided by a lock, new digital technology is about secure identification and authentication, how people prove their identity and right to access. This aspect is not limited to physical access to buildings, but also includes "logical access" to computers and other connected devices with virtual identification through cloud services. The Group develops systems for secure transactions, ID documents and national passport systems, where the Group provides complete components such as cards, card readers, printers and equipment for physical production of identification documents.
Entrance automation is a fast-growing business within the Group. The technology is usually described as
automatic as it is based on sensors, electronics and electric motors that open and close doors without direct user involvement. Security doors are a segment in which the Group has expanded strongly, and it provides a global range of products and services.
Sustainability is integrated into the Group's product development from the concept stage to materials recycling. Customer demand is strong for climate-smart security solutions ranging from energy efficient, intelligent and sustainable doors to large systems solutions for buildings. The Group is developing entire eco-product ranges that focus on energy consumption and provide substantial materials and operational savings.
The Group's main customer segment is the commercial segment comprising institutional and commercial customers, such as education, health care, public administration, private offices, shopping centers, stores and warehouses. This commercial segment accounts for around 75 per cent. of Group sales, while the residential segment accounts for around 25 per cent. Two-thirds of the Group's sales are to the aftermarket. The aftermarket, which is more stable than new construction consists of renovations, remodeling and additions, and also replacements and upgrades of existing door opening solutions, as well as service. The aftermarket is increasing in importance as the electronics content of the Group's products increases. The transition to digital and mobile door openings and access control solutions with shorter technology life cycles is driving a higher growth. The Group's software platforms for flexible solutions enable customers to constantly upgrade their security with more and new features. Connected products, service products, subscription services and licenses contribute to stronger customer relationships, as well as to increased recurring revenue streams based on supply and service collaborations.
The Group has a large number of end-customers with very varied requirements. The Group's products mainly reach the end-customer through a variety of distribution channels at various stages in the supply chain depending on the customer's needs, the product and solution, and national and loc al requirements and standards. The distribution channels are mainly security systems integrators, locksmiths and security installers, building and lock wholesalers, retailers, DIY, hardware and security stores, OEMs (original equipment manufacturer), door and window manufacturers. The Group is increasingly becoming a supplier of integrated concepts for total door environments. This takes place in close collaboration with customers and their advisers in distribution.
Demand for the Group's products is driven by the increasing need for safety, security and convenience as prosperity rises and urbanisation continues. In addition, the demand for sustainable door opening solutions is growing, at the same time that technology developments increase the demand for electromechanical, digital, mobile and connected door opening solutions.
The Group's overall strategic direction is to spearhead the trend towards increased security with a productdriven offering centred on the customer.
The strategic action plans of the Group are focused on three areas: market presence, product leadership and costefficiency.
A leading market presence is achieved by increasing customer value and expanding into new markets and segments through organic growth and acquisitions. Customer value is supported by an efficient segmentation of sales channels and the strength of the brand portfolio, which includes the global ASSA ABLOY master brand and many of the industry's strongest brands.
The Group's strategy to increase its market presence is based on three areas:
Leveraging the strength of the brand portfolio
The Group has considerable value in its well known brands, several of which have been added through the Group's many acquisitions. To optimise benefit from the Group's brand portfolio locally and globally, the brands are continually consolidated in parallel with market and customer segmentation. ASSA ABLOY is the global master brand, which is often combined with individual brands well established in local knowledge, regulations and security standards. Around 70 per cent. of Group sales are under the ASSA ABLOY master brand or a combination of the master brand and local brands. The ASSA ABLOY master brand is complemented by global brands, which are among the leaders in their respective market segments: HID in secure identity and access management, Yale in the residential market, Mul-T-Lock for locksmiths, and ABLOY in high-security locks. The Group also has brands that are not associated with ASSA ABLOY. These brands represent expertise in specialty products and service, such as Entrematic in entrance solutions.
Increasing growth in the core business
Customer relevance is strengthened through segmentation where specialised marketing and sales teams focus on different markets and customer segments to gain the industry's best understanding of customer needs, build relationships and generate demand. The aspiration is to be an expert on total door opening solutions adapted to each segment. The Group offers solutions to meet customer requirements for safety, security, convenience and sustainability, special local requirements, rules and standards, as well as the need for integration into new or existing security systems. The market organisation works closely with architects, security consultants, large end users and distributors. A substantial portion of the business processes are digitised, including product information, design and configuration, order management, logistics and payments. For example, the Group supports the customers with digital drawings and configurations of door opening solutions, as well as objects for building information modeling (BIM).
The Group's market strategies aim to continually enhance customer value. Through the Group-wide initiative to improve sales processes, the Group is developing and streamlining its processes for pricing, brand positioning, marketing and sales, with an increased focus on sales processes.
Distribution is an important part of the Group's value creation for the customers. Depending on customer needs, the product and solution, and national and local requirements and standards, the Group reaches its endcustomers through a variety of distribution channels at various stages in the supply chain. The number of customer-facing staff has increased substantially over a number of years. The Group has a competitive edge due to its well-developed cooperation with distribution players thanks to the Group's specialist advisers, known as "the specifiers". The aim is to increase knowledge and demand by offering competence and digital tools as early as possible in the planning, specification and design of door opening solutions.
Expanding into new markets and segments
Acquisitions are an important part of the strategy to increase market presence. Since 2006 and up to the date of this Offering Circular, the Group has made some 180 acquisitions, with a focus on expanding in emerging markets, complementing existing operations, and increasing its offering of electromechanical, digital and mobile solutions. Geographical expansion is mainly achieved through acquisitions of leading local companies with well-known brands, in order to build a strong platform on emerging markets in Asia, Eastern Europe, the Middle East, Africa and South America.
Product leadership is achieved through innovation and continuous product development to enhance customer value and quality and reduce product costs. Customer benefits are developed in close cooperation with endusers in a constant process consisting of many small steps. The objective is to meet or exceed customer expectations. A constant flow of new, innovative and sustainable products to the market is the most important driver for achieving organic growth. The Group's vision is to be the most successful and innovative supplier of total door opening solutions in order to deliver trouble-free, secure and well-designed security solutions that give true added value to customers. The strategy is based on an innovation process with technological development of Group-wide global platforms, with competence centers close to the customers and focused product development work in all divisions. Investments in R&D have increased substantially since 2007. The Group's innovation strength has been noted by the U.S. business magazine "Forbes" and in 2018, for the fourth time, the Group was ranked as one of the world's 100 most innovative companies.
The main driver for innovation and product development is the rapid growth of digital and mobile technologies. Mechanical products continue to increase, but electromechanical products are growing considerably faster. More electronics means increased sales growth per door with rapid technological developments that require more frequent replacements and upgrades, while recurring service and maintenance revenues also increase. With digital and mobile technology, the Group is leading the trend toward third generation door opening solutions. These intelligent connected and networked products and solutions controlled by in-house developed software and cloud-based systems solutions provide further growth opportunities. Human needs in the new digital and connected service society serve as an important point of departure for the Group's innovation and product development. Secure, convenient and intelligent door opening solutions that interact with people and products play a major role in the continued development of successful e-commerce, the Internet of Things, home services and the sharing economy. Expertise related to identification and authentication - how people prove their right to access – is a key part of technology development. ASSA ABLOY's Global Technologies division is a leader for products and solutions that provide secure identification and control of physical access to buildings and areas, as well as logical access to computers and other connected devices. The products include access cards, both physical and mobile, readers and complex systems services for identity management for physical and logical access.
Another important driver for product development is the sharply rising demand for sustainable solutions. Investments in sustainable buildings are increasing worldwide, with requirements for energy savings, lower material consumption and renewable or recycled materials becoming increasingly important. The Group offers a growing selection of products with environmental declarations and saves energy for customers in a variety of ways, while also reducing consumption of materials and other resources used in production.
The strategy for product leadership is based on four points; 1) developing and exploiting the advantages of a Group-wide, structured innovation process, 2) applying 'Lean' technologies in product development based on product management and customer insight, 3) developing and using common technology platforms and common technologies, and 4) continuing to expand the number of R&D competence centres close to customers.
A prerequisite for the Group's product leadership and sharply rising innovation rate is the focus on an increasingly effective Group-wide innovation process. Guiding principles are insight into customer needs, product development based on a long-term plan, active management of product portfolios, and costeffectiveness. Each new product and product solution should create as much customer value as possible through improved function and lower costs. The Group works systematically to gain a deep understanding of customers and their expressed but also their long-term, non-expressed needs. Cost-savings are achieved through improved designs, new materials and components as well as continuous improvement of the development and production process. Sustainable performance is a prerequisite for successful product development. The Group's sustainability program is integrated into the development process from the concept stage to recycling of wornout products. The Group has a unit for development of industrial design and a common design language. A Group-wide design center is one step in the development, to create an even clearer expression of the Group's basic values and the physical experience of products with common guidelines for design, location of brand names, colors and visuals. Product management is a critical component in the Group's innovation system. It ensures that each product group has a vision-based long-term plan founded on market insight, technology development, customer value and each product's strengths. These plans form the basis for the portfolio balancing that must then take place across all product groups within each unit. The projects are planned and run on Lean principles where a clear vision and a visual presentation are important components. Product development is continuous and has three phases: pre-development projects, new product development and development of products already on the market. Successful development builds on knowledge and reuse. A modular approach provides an opportunity to reuse designs, make improvements and substitute parts of a product or solution. Shared Technologies, the Group's joint development center for global product platforms, plays a key role in the innovation process. A modular approach to both hardware and software is the basis for the joint solutions. The Group continually invests in improvements to make the innovation process more efficient by expanding its IT support with common platforms for collaboration, project management and product data management.
The Group aims to radically reduce its cost base through cost-efficiency and sustainable operations. This is achieved by applying 'Lean' methods in manufacturing, professional sourcing and outsourcing. Production combines final assembly close to the customer with the transfer of standard production to low-cost countries. The Group focuses on cost-efficiency in the production structure, in professional sourcing and in process development. The efforts towards common product platforms and common product development have been covered above.
The strategy for radically reducing costs and increasing efficiency is fundamental to continue to drive profitable growth by investing in market presence and innovation, while simultaneously achieving the operating margin target. The work includes recurring programs to streamline production and enhance efficiency in all processes within the Group along the entire chain from product development and purchasing through production and administration, to marketing, sales and distribution. Initiatives to improve efficiency through digitisation and automation of production and administrative flows are a top priority. The Group's production structure is continually evolving with recurring multiyear structural programs. The purpose of these programs is to concentrate assembly and customisation close to the major customer markets and to relocate component production to low-cost countries. One strong driving force is the Group's acquisition strategy, with an average of one acquisition per month. A significant part of the synergy effects on acquisition are the streamlining of manufacturing and modernisation of production, efficiencies in the organisation and global logistics that result in lower costs, increased flexibility, improved service to customers and a better work environment. The restructuring programs have since 2006, at year-end 2017, led to 77 production plants being closed, more than 26 plants being converted into assembly plants and about 60 office units being closed. The majority of the remaining production units in high- cost countries have switched to mainly final assembly and customisation. In 2016, the sixth Group-wide manufacturing footprint program was launched for the period through 2018. The goal is to close ten production plants and about 40 offices. On 19 October 2018 it was announced that the planning of a new restructuring program continues. The launch is scheduled for the fourth quarter of 2018 and the program is expected to take place over a period of three years. The total estimated cost of the restructuring program is in line with previous programs, with an expected payback time of around three years. The restructuring cost will be expensed over two years.
One important long-term change in the Group's cost structure is the switch from manufacturing standard components in-house to an increased share of sourcing, as well as final assembly and customisation. Purchasing accounts for a very large proportion of total costs, and is significant for reducing costs. Purchasing has increased substantially over the past decade and at the same has concentrated on fewer and more qualified suppliers, which has entailed significant cost reductions. The Group's professional sourcing should ens ure high quality at a low cost. This occurs in processes that drive a number of activities for development and management of purchases, where the Group's suppliers become strategic partners. They participate to a greater extent in product development and grow in close collaboration with the Group to be able to deliver not only components, but entire subsystems and products based on supplier agreements with category and quality management.
A constant effort is underway to apply and develop methods and processes in all stages of the value chain to improve cost efficiency and customer benefit. The overall Lean methodology includes all processes and provides increased added value for customers using fewer resources due to reduced materials consumption and on-demand production. Value Analysis and Value Engineering (VA/VE) involves in-depth analyses of products and production processes to identify cost savings in existing and new products. The focus on "Seamless Flow" is intensifying to streamline and automate all the Group's administrative flows. Many of the Group companies have followed these principles for some years, resulting in greater efficiency.
The Group aims to achieve organic growth through intensive development of mature as well as new markets. In addition, organic growth can be made through cross-selling among Group companies to expand and enhance product portfolios. In markets where the Group is well established, organic growth is achieved through increased sales to existing customers whereas in new markets, where there are no strong local providers, new Group companies are established in order to achieve growth. In both mature and new markets, the foundation for long-term successful organic growth for the Group is a continuous flow of innovative products, with enhanced customer value and lower costs.
A large part of the Group's historical growth and present size is explained by acquisitions. Since 2006 and up to the date of this Offering Circular, the Group has acquired some 180 companies. The Group has a focused acquisition strategy in three areas: (i) expanding in emerging markets, (ii) complementing existing operations, and (iii) increasing technological breadth and depth.
In September 2018, the HID division acquired Crossmatch, a leader in biometric identity management and secure authentication solutions with its headquarter in Florida. The company had annual sales of USD 120 million in its financial year 2017.
In June 2018, the EMEA division acquired HKC, a leading manufacturer of alarms and cloud based monitoring solutions, based in Ireland. The company had annual sales of EUR 17 million in its financial year 2017.
In November 2017, the Americas division acquired August Home, a leading smart lock business in the US. August Home had annual sales of USD 15 million in its financial year 2016.
In October 2017, the HID Global division acquired Mercury Security, a leading OEM supplier of controllers
for physical access control, headquartered in the US. Mercury Security had annual sales of USD 52 million in its financial year 2016.
In August 2017, the HID Global division sold the business and assets of AdvanIDe to a new holding company based in Singapore with the majority shareholder being the Japan South East Asia Growth Fund L.P. AdvanIDe had annual sales of USD 143 million in its financial year 2016.
In July 2017, the HID Global division acquired the French company Arjo Systems SAS, a leading provider of physical and digital identity solutions for secure government ID applications. The company had annual sales of EUR 54 million in its financial year 2016.
A total of 14 acquisitions were consolidated during the first nine months of 2018. A total of 16 acquisitions were consolidated during 2017.
Although consolidation is underway, the global door opening solutions market remains fragmented with a large number of smaller regional and local businesses, particularly in emerging markets.
On the global market, the Group's closest competitors are Dormakaba (Germany-Switzerland), Allegion (USA) and Hörmann (Germany).
The Group owns around 9,000 patents throughout the world. Patents play a vital role for the Group not only to protect its own technologies and keyways, but also end users' assets and distributors' businesses. In addition to the Group's vast number of patents around cylinder technologies, the Group's latest patents cover a wide range of development for mechanical and electromechanical security, safety and convenience. With the increasing amount of virtual keys used in the Group's solutions, the Group's patent portfolio also covers areas related to software, firmware and their applications. In respect of trademarks, the Group owns a variety of well- known brands, examples which are referred to under "Strategy – Market presence" above.
AA's Annual General Meeting 2018 resolved to implement a Long-Term Incentive Programme for senior executives and other key personnel in the Group (LTI 2018). LTI 2018 entails that the participants will invest in Series B shares in AA at market price. Such personal investment will thereafter be matched free of charge by AA through granting of so called performance awards. Similar Long-Term Incentive Programmes for senior executives and other key personnel in the Group have been implemented each year since 2010.
AA's share capital at 30 September 2018 amounted to SEK 370,858,778 divided into two classes of which 57,525,969 shares were Series A and 1,055,050,365 were Series B. All of AA's shares have a par value of approximately SEK 0.33 and provide each holder with an equal right to share in AA's assets and earnings. Each Series A share carries ten votes and each Series B share carries one vote. As at 30 September 2018, AA's authorised share capital was SEK 800,000,000. The market capitalisation at year-end (2017) was SEK 189,276 million.
As at 31 December 2017, AA had 33,811 shareholders. AA's principal shareholders as at 30 September 2018 are Investment AB Latour (9.5 per cent. of the capital and 29.5 per cent. of the votes) and Melker Schörling AB (3.4 per cent. of the capital and 11.1 per cent. of the votes). The ten largest shareholders as at 30 September 2018 account for 36.9 per cent. of the share capital and 57.0 per cent. of the votes. As at 30 September 2018, AA holds a total of 1,800,000 Series B shares after repurchases to secure its undertakings in connection with the Long-Term Incentive Programmes.
A shareholders' agreement that includes pre-emption rights in the event of sale of Series A shares by any party exists between Gustaf Douglas, Melker Schörling and companies closely related to them. Apart from this, AA is not aware of any shareholders' agreements or other arrangements between shareholders of AA.
The Group consists of around 400 legal entities located in over 70 countries. AA is the holding company of all the companies in the Group, directly or indirectly, and its assets are substantially comprised of shares in those companies. AA does not conduct business itself and is accordingly dependent on the Group companies and the revenues received by them.
The Group's operations are decentralised, a deliberate strategic choice based on the local nature of the lock industry and a conviction of the benefits of a divisional control model. Another contributing factor is that the Group has been built up over a relatively short period through a large number of acquisitions.
The Group's operating structure is designed to create maximum transparency, to facilitate financial and operational monitoring and to promote the flow of information and communication across the Group. The Group consists of five divisions (three regional and two global), which are divided into some 50 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.
The Group consists of the following five divisions, which are further described below:
The Executive Team of the Group consists of the CEO, the heads of the Group's divisions, the CFO and the CTO. In principle the five divisions should be responsible, as far as possible, for business operations, while various functions at Group Centre are responsible for coordination, monitoring, policies and guidelines at an overall level. The Group's structure results in a geographical and strategic spread of responsibility ensuring short decision-making paths.
In accordance with the Swedish Companies Act, the AA Board of Directors is responsible for the organisation 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, significant policies, acquisitions and divestments, as well as investments of major importance.
The Americas division manufactures and sells mechanical and electromechanical locks, digital door locks, cylinders, door fittings, security doors, door frames and industrial high-security fencing and gates in the US, Canada, Mexico, Central America and South America. The majority of the division's sales are in the US and Canada where the division has an extensive sales organisation and sells its products through distributors. The two largest end-user segments are the institutional and commercial segments while the residential segment accounts for only a minor part of sales. Sales in South America and Mexico take place mainly through distributors, wholesalers and home improvement stores and are more evenly distributed between the nonresidential and residential segments in these markets.
The EMEA division manufactures and sells mechanical and electromechanical locks, digital door locks, security- and fire doors as well as hardware in Europe, the Middle East and Africa. The commercial segment accounts for around 60 per cent. of sales and the residential segment for around 40 per cent. The EMEA division consists of a number of Group companies which have good knowledge of their local and in many respects diversified markets. Products are sold primarily through a number of distribution channels but also directly to end users.
The Asia Pacific division manufactures and sells mechanical and electromechanical locks, digital door locks, high-security- and fire doors and hardware. The Asian countries are emerging markets without established security standards. New construction accounts for around three-quarters of sales. In China, the same types of lock, handle and hardware are often used in both homes and workplaces. The production units in China also supply the Group's other divisions. The markets in Australia and New Zealand are mature markets, with established lock standards. The majority of sales are for renovations and upgrades.
The Global Technologies division consists of two business units, HID Global and ASSA ABLOY Hospitality. HID Global is a leader in trusted identity solutions. Customers comprise companies, healthcare, educational and financial institutions as well as government and state institutions. ASSA ABLOY Hospitality manufactures and sells electronic lock systems, safes and minibars for hotels and cruise ships under the Vingcard and Elsafe product brands. During 2018, the business has expanded from offering solutions for hotels and cruise ships into solutions for other verticals such as elderly care, student accommodation and logistics. As a result of this transformation, it was announced on 19 October 2018 that the Hospitality organisation will now evolve under a new name, ASSA ABLOY Global Solutions, where it will develop the existing business and look for new opportunities to build global solutions for customers.
The Entrance Systems division is a supplier of products, service and components in entrance automation. The product range includes automatic swing, sliding and revolving doors, industrial doors, garage doors, highperformance doors, docking solutions, hangar doors, gate automation, components for overhead sectional doors and sensors. The division has sales worldwide. Service operations account for nearly one-third of sales. The products are sold through three channels. In the direct channel, new equipment and comprehensive service are sold directly to end-customers under the ASSA ABLOY brand. The indirect channel caters mainly to large and medium sized distributors under the Entrematic brand. The third channel, Cardo, sells components and fittings for industrial doors in the industrial and residential segments and sensors for the door and elevator industries.
The Board of Directors consists of eight members, two employee representatives and two deputy employee representatives. Set out below are brief details of the members of AA's Board of Directors:
Mr Renström was appointed to the Board of Directors in 2008. He was the President and CEO of Alfa Laval AB 2004-2016. He was President and CEO of Seco Tools AB 2000-2004. He was President and Head of Division of Atlas Copco Rock Drilling Tools 1997-2000. Prior to that, he held a number of senior positions at ABB and Ericsson. Other appointments: Chairman of Tetra Laval Group. Mr Renström holds a Master of Science in Engineering and a Master of Science in Business and Economics.
Mr Douglas was appointed to the Board of Directors in 2004. He is self-employed. Other appointments: Vice Chairman of Securitas AB. Board member of Investment AB Latour. Mr Douglas holds a Bachelor of Arts and D. Litt (h.c.) (Doctor of Letters).
Mr Ewaldsson was appointed to the Board of Directors in 2016. He has been advisor to the President and CEO of Ericsson since 1 February 2018. He has previously held various managerial positions within the Ericsson Group since 1990, including Senior Vice President and Head of Business Area Digital Services (April 2017-January 2018), Chief Technology Officer, Head of Strategy and Head of Group Function Strategy and Technology (September 2016-March 2017), Chief Technology Officer and Head of Group Function Technology (2012-September 2016) and Head of Product Area Radio within Business Unit Networks (2007- 2012). Mr Ewaldsson has worked internationally for over 11 years (China, Japan and Eastern Europe). Other appointments: Chairman of KTH Royal Institute of Technology and a member of the Royal Swedish Academy of Engineering Sciences (IVA). Mr Ewaldsson holds a Master of Science in Engineering and Business Management.
Mrs Karlsson was appointed to the Board of Directors in 2015. She has been the President and CEO of Armatec AB since 2014. She was CEO of SKF Sverige AB and Global Manufacturing Manager 2011-2013, Director of Industrial Marketing & Product Development Industrial Market of AB SKF 2005-2010. Prior to that she held various positions within the SKF Group primarily within Manufacturing Management. Other appointments: Board member of Bräcke diakoni. Mrs Karlsson holds a Master of Science in Engineering.
Mrs Klasén was appointed to the Board of Directors in 2008. She is an Independent IT consultant (Senior IT
Advisor). She was Chief Information Officer (CIO) and Head of Information Management at EADS (European Aeronautics Defence and Space Company) 2004-2005. She was CIO and Senior Vice President of Pharmacia 1996-2001 and prior to that, CIO at Telia. She held various positions at IBM 1976-1994. Other appointments: Board member of Avanza. Mrs Klasén holds a Master of Science in Engineering and a degree in Business and Economics.
Mrs Olving was appointed to the Board of Directors in 2018. She has been President and CEO of Mycronic AB since 2013. She was COO and Deputy CEO of SAAB AB (2008-2013). She held various positions within Volvo Car Corporation (1980-1991 and 1995-2008) of which she spent five years as President of Volvo Cars Asia Pacific and seven years in the Executive Management Team. She was CEO of Samhall Högland AB (1991-1995). Other appointments: Board member of Investment AB Latour, Munters Group AB, the Association of Swedish Engineering Industries (Teknikföretagen), the Swedish Corporate Governance Board (Kollegiet för svensk bolagsstyrning), a member of the Royal Swedish Academy of Engineering Sciences (IVA) and board member of IVA's Business Executives Council (IVA:s Näringslivsråd). Mrs Olving holds a Master of Science in Mechanical Engineering.
Mrs Schörling Högberg was appointed to the Board of Directors in 2017. Other appointments: Board member of Melker Schörling AB, Securitas AB and Hexagon AB. Mrs Schörling Högberg holds a BSc (Bachelor of Science) in Business Administration.
Mr Svensson was appointed to the Board of Directors in 2012. He has been the President and CEO of Investment AB Latour since 2003. He was CEO of AB Sigfrid Stenberg 1986-2002. Other appointments: Chairman of AB Fagerhult, Nederman Holding AB, Troax Group AB, Tomra Systems ASA; and a Board member of Loomis AB, Oxeon AB, Alimak Group AB and Investment AB Latour. Mr Svensson holds a degree in Mechanical Engineering and a Master of Science in Business and Economics.
Employee representatives (appointed by employee organisations)
Mr Hjälm was appointed to the Board of Directors as board member in 2017. He is an employee representative.
Mr Persson was appointed to the Board of Directors as board member in 1994. He is an employee representative.
Deputy members – employee representatives
Mr Johansson was appointed to the Board of Directors as deputy member in 2015. He is an employee representative.
Mrs Wikström was appointed by to the Board of Directors as deputy member in 2017. She is an employee representative.
Set out below are brief details of the members of AA's Executive Team:
President a CEO and Head of Global Technologies division since 15 March 2018. Mr Delvaux holds a Master of Science in Electromechanics and a MBA. Previous positions: President and CEO of Metso Corporation August 2017-February 2018 and 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-integration management and general manager in markets including Benelux, Italy, China, Canada, and the United States 1991-2011.
Executive Vice President and Chief Financial Officer since 2012. Mrs Dybeck Happe holds a Master of Science in Business and Economics. Previous positions: CFO of Trelleborg AB 2011–2012. Previously held various positions in the Group, including CFO of ASSA ABLOY EMEA 2007–2011 and ASSA ABLOY Central Europe 2002–2006. Previous to that, Mrs Dybeck Happe held various positions in finance at EF Education First. Other appointments: Board member of the Supervisory Board of E.ON. On 20 June 2018 it was announced that Mrs Dybeck Happe has decided to leave the Group at the end of 2018. On 28 September 2018 it was announced that Mr. Erik Pieder has been appointed Chief Financial Officer and Executive Vice President of the Group. He will join the Group on 14 January 2019. Mr. Pieder is currently Vice President Business Control at Atlas Copco Compressor Technique and has previously held various management positions in the Atlas Copco group.
Executive Vice President and Chief Technology Officer (CTO) since 2018. Mr Bone holds a degree in Industrial Management and Electrical Engineering. Previous positions: Vice President of Digital and Access Solutions, ASSA ABLOY EMEA 2010-2017, various positions in Honeywell Inc. globally, including District General Manager Honeywell Building Solutions London and South East UK 2008-2010, Honeywell Security Systems Group Marketing Director 2005-2008 and various product management and technical roles with Honeywell as well as 8 years in the Royal Australian Army.
Executive Vice President and Head of Americas division since 2018. Mr Boselli holds a 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 held various positions in Ingersoll Rand 2000 – 2010.
Executive Vice President and Head of Entrance Systems division since 2018. Mr Jensen holds a Master of Science in Mechanical Engineering and Master of Business Administration. Previous positions: Various positions in the ASSA ABLOY Group, including BA President Industrial Door and Docking Solutions, Entrance Systems division 2016-2017, Market Region Manager Scandinavia, EMEA division 2006–2016 and Managing Director Ruko A/S Denmark.
Executive Vice President and Head of Asia Pacific division since 2017. Mr Maltesen holds a Bachelor's degree in Marketing and Bachelor's degree in Financial and Management Accounting. Previous positions: Regional General Manager and President, Asia Pacific, GE Energy, Power Services 2015- 2017, Managing Director, Asia Pacific, Alstom Thermal Services 2014-2015, Vice President, East Asia, Alstom Thermal Services 2011-2014, General Manager, board member, Tianjin Alstom Hydro Co., Ltd. 2003-2011. Previously various positions within Alstom.
Executive Vice President and Head of the Global Technologies business unit ASSA ABLOY Global Solutions (previously ASSA ABLOY Hospitality) since 2016. Mr Sut holds a Master of Science in Business and Marketing and a Bachelor of Science in Language and Mathematics. Born 1973. Previous positions: Various positions in the Group, 2001-2010 and 2012-2014, including CTO and Vice President Business Development ASSA ABLOY Hospitality and Platform Director for ASSA ABLOY AB. Previously held positions at Niscayah Group 2010-2012, SPIT France (ITW group) 1999– 2001 and SAM Outillage 1997-1999.
Executive Vice President and Head of EMEA division since 2018. Mr Vann holds a 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 EMEA 2011-2012. Previously held various positions within ASSA ABLOY, Yale and Chubb 1987-2001.
Executive Vice President and Head of the Global Technologies business unit HID Global since 2015. Mr Widing holds a Master of Science in Applied Physics and Electrical Engineering and a Bachelor of Social Science in Business Administration. Born 1977. Previous positions: Various positions in the Group, including Director of Product Management and General Manager of Shared Technologies Unit 2006–2015. Previously held various positions in the Saab Group 2001–2006.
The business address of each of the board members and the executive officers is P.O. Box 70340, (Klarabergsviadukten 90), 107 23 Stockholm, Sweden.
AA is not aware of any potential conflicts of interest between the duties to AA of the members of the Board of Directors and the Management and their private interests or other duties.
AAFS is, indirectly, a wholly owned subsidiary of AA and was incorporated on 8 September 1986. AAFS is registered as a public limited liability, company under the Swedish Companies Act (2005:551) for an indefinite period of time and its Corporate Organisation number is 556283-0264. AAFS's registered office is located at P.O. Box 70340 (Klarabergsviadukten 90), SE-107 23 Stockholm, Sweden. Its telephone number is +46 (0)8 506 485 00. As at 30 September 2018, the issued share capital of AAFS amounted to SEK 1,000,000 divided into ten shares, and the authorised share capital amounted to SEK 4,000,000.
AAFS acts as an internal bank for the Group. It supports the Group with services related to treasury, cash management and derivatives. AAFS conducts external financial transactions and internal financial transactions within the Group, handles transactions involving foreign currencies and interest rates and acts as master account holder in the Group's cash pooling arrangements.
In addition to being an issuer under the Global Medium Term Note Programme, AAFS is among other things, a party to the Group's syndicated loan facility agreement, a party to term loan agreements with the European Investment Bank, a party to a term loan agreement with the Nordic Investment Bank, and is the issuer under a "Global Commercial Paper Programme", a Swedish "Commercial Paper Programme" as well as under a "Master Note and Guarantee Agreement" in connection with private placements in the U.S. All debt obligations of AAFS under the above mentioned facilities have the benefit of a guarantee from AA. AAFS is also a party to a number of ISDA Master Agreements. All the financing raised by AAFS is used for general corporate purposes of the Group.
AAFS is a wholly owned subsidiary of ASSA ABLOY OY (Finland), Filial (a branch of ASSA ABLOY OY registered in Sweden), and is, indirectly, a wholly owned subsidiary of AA. AAFS is part of the Group's treasury organisation and, in its role as internal bank of the Group, it is dependent on the performance of the other Group companies to which it provides finance.
The Board of Directors consists of three members. Set out below are brief details of the members of AAFS Board of Directors:
Mrs Dybeck Happe was appointed to the Board of Directors in 2012. She is the Executive Vice President and Chief Financial Officer of the Group as well as member of the Executive Team. On 20 June 2018 it was announced that Mrs Dybeck Happe has decided to leave the Group at the end of 2018. On 28 September 2018 it was announced that Mr. Erik Pieder has been appointed Chief Financial Officer and Executive Vice President of the Group. He will join the Group on 14 January 2019.
Mr Gårdmark was appointed to the Board of Directors in 2008. He is the Corporate Treasurer of the Group.
Mr Ahlgren was appointed to the Board of Directors in 2016. He is the General Counsel of the Group.
CEO of AAFS and Head of Treasury Operations. She was appointed CEO of AAFS in 2017.
The business address of the above mentioned persons is P.O. Box 70340 (Klarabergsviadukten 90), 107 23 Stockholm, Sweden.
AAFS is not aware of any potential conflicts of interest between the duties to AAFS of the members of the Board of Directors and the Management and their private interests or other duties.
The information set out below is subject to any change in or reinterpretation of the rules, regulations and procedures of DTC, Euroclear or Clearstream, Luxembourg (together, the Clearing Systems) currently in effect. The information in this section concerning the Clearing Systems has been obtained from sources that each of the Issuers and the Guarantor believe to be reliable, but none of the Issuers, the Guarantor, nor any Dealer takes any responsibility for the accuracy thereof. Investors wishing to use the facilities of any of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations and procedures of the relevant Clearing System. None of the Issuers, the Guarantor, nor any other party to the Agency Agreement will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Notes held through the facilities of any Clearing System or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
DTC has advised each of the Issuers and the Guarantor that it is a limited purpose trust company organised under the New York Banking Law, a "banking organisation" within the meaning of the New York Banking Law, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC holds securities that its participants (Direct Participants) deposit with DTC. DTC also facilitates the settlement among Direct Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerised book-entry changes in Direct Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC System is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (Indirect Participants and, together with Direct Participants, Participants).
Under the rules, regulations and procedures creating and affecting DTC and its operations (the Rules), DTC makes book-entry transfers of Registered Notes among Direct Participants on whose behalf it acts with respect to Notes accepted into DTC's book-entry settlement system (DTC Notes) as described below and receives and transmits distributions of principal and interest on DTC Notes. The Rules are on file with the Securities and Exchange Commission. Direct Participants and Indirect Participants with which beneficial owners of DTC Notes (Owners) have accounts with respect to the DTC Notes similarly are required to make book-entry transfers and receive and transmit such payments on behalf of their respective Owners. Accordingly, although Owners who hold DTC Notes through Direct Participants or Indirect Participants will not possess Registered Notes, the Rules, by virtue of the requirements described above, provide a mechanism by which Direct Participants will receive payments and will be able to transfer their interest in respect of the DTC Notes.
Purchases of DTC Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the DTC Notes on DTC's records. The ownership interest of each actual purchaser of each DTC Note (Beneficial Owner) is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the DTC Notes are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in DTC Notes, except in the event that use of the book-entry system for the DTC Notes is discontinued.
To facilitate subsequent transfers, all DTC Notes deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of DTC Notes with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the DTC Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such DTC Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the DTC Notes within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to DTC Notes. Under its usual proc edures, DTC mails an Omnibus Proxy to the relevant Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the DTC Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the DTC Notes will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the due date for payment in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the due date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such Participant and not of DTC or the relevant Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the relevant Issuer, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Under certain circumstances, including if there is an Event of Default under the Notes, DTC will exchange the DTC Notes for definitive Registered Notes, which it will distribute to its Participants in accordance with their proportionate entitlements and which, if representing interests in a Rule 144A Global Note, will be legended as set forth under "Subscription and Sale and Transfer and Selling Restrictions".
Since DTC may only act on behalf of Direct Participants, who in turn act on behalf of Indirect Participants, any Owner desiring to pledge DTC Notes to persons or entities that do not participate in DTC, or otherwise take actions with respect to such DTC Notes, will be required to withdraw its Registered Notes from DTC as described below.
Euroclear and Clearstream, Luxembourg each holds securities for its customers and facilitates the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders. Euroclear and Clearstream, Luxembourg provide various services including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several countries through established depository and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective participants may settle trades with each other.
Euroclear and Clearstream, Luxembourg customers are world-wide financial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Euroclear and Clearstream, Luxembourg is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system.
94 The relevant Issuer may apply to DTC in order to have any Tranche of Notes represented by a Registered Global Note accepted in its book-entry settlement system. Upon the issue of any such Registered Global Note, DTC or its custodian will credit, on its internal book-entry system, the respective nominal amounts of the individual beneficial interests represented by such Registered Global Note to the accounts of persons who have accounts with DTC. Such accounts initially will be designated by or on behalf of the relevant Dealer. Ownership of beneficial interests in such a Registered Global Note will be limited to Direct Participants or Indirect Participants, including, in the case of any Regulation S Global Note, the respective depositaries of
Euroclear and Clearstream, Luxembourg. Ownership of beneficial interests in a Registered Global Note accepted by DTC will be shown on, and the transfer of such ownership will be effected only through, records maintained by DTC or its nominee (with respect to the interests of Direct Participants) and the records of Direct Participants (with respect to interests of Indirect Participants).
Payments in U.S. dollars of principal and interest in respect of a Registered Global Note accepted by DTC will be made to the order of DTC or its nominee as the registered holder of such Note. In the case of any payment in a currency other than U.S. dollars, payment will be made to the Exchange Agent on behalf of DTC or its nominee and the Exchange Agent will (in accordance with instructions rec eived by it) remit all or a portion of such payment for credit directly to the beneficial holders of interests in the Registered Global Note in the currency in which such payment was made and/or cause all or a portion of such payment to be converted into U.S. dollars and credited to the applicable Participants' account.
The relevant Issuer expects DTC to credit accounts of Direct Participants on the applicable payment date in accordance with their respective holdings as shown in the records of DTC unless DTC has reason to believe that it will not receive payment on such payment date. The relevant Issuer also expects that payments by Participants to beneficial owners of Notes will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers, and will be the responsibility of such Participant and not the responsibility of DTC, the Principal Paying Agent, the Registrar or the relevant Issuer. Payment of principal, premium, if any, and interest, if any, on Notes to DTC is the responsibility of the relevant Issuer.
Transfers of any interests in Notes represented by a Registered Global Note within DTC, Euroclear and Clearstream, Luxembourg will be effected in accordance with the customary rules and operating procedures of the relevant clearing system. The laws in some States within the United States require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer Notes represented by a Registered Global Note to such persons may depend upon the ability to exchange such Notes for Notes in definitive form. Similarly, because DTC can only act on behalf of Direct Participants in the DTC system who in turn act on behalf of Indirect Participants, the ability of a person having an interest in Notes represented by a Registered Global Note accepted by DTC to pledge such Notes to persons or entities that do not participate in the DTC system or otherwise to take action in respect of such Notes may depend upon the ability to exchange such Notes for Notes in definitive form. The ability of any holder of Notes represented by a Registered Global Note accepted by DTC to resell, pledge or otherwise transfer such Notes may be impaired if the proposed transferee of such Notes is not eligible to hold such Notes through a direct or indirect participant in the DTC system.
Subject to compliance with the transfer restrictions applicable to the Registered Notes desc ribed under "Subscription and Sale and Transfer and Selling Restrictions", cross-market transfers between DTC, on the one hand, and directly or indirectly through Clearstream, Luxembourg or Euroclear accountholders, on the other, will be effected by the relevant clearing system in accordance with its rules and through action taken by the Registrar, the Principal Paying Agent and any custodian (Custodian) with whom the relevant Registered Global Notes have been deposited.
On or after the Issue Date for any Series, transfers of Notes of such Series between accountholders in Clearstream, Luxembourg and Euroclear and transfers of Notes of such Series between participants in DTC will generally have a settlement date three business days after the trade date (T+3). The customary arrangements for delivery versus payment will apply to such transfers.
Cross-market transfers between accountholders in Clearstream, Luxembourg or Euroclear and DTC participants will need to have an agreed settlement date between the parties to such transfer. Because there is no direct link between DTC, on the one hand, and Clearstream, Luxembourg and Euroclear, on the other, transfers of interests in the relevant Registered Global Notes will be effected through the Registrar, the Principal Paying Agent and the Custodian receiving instructions (and, where appropriate, certification) from the transferor and arranging for delivery of the interests being transferred to the credit of the designated account for the transferee. In the case of cross-market transfers, settlement between Euroclear or Clearstream, Luxembourg accountholders and DTC participants cannot be made on a delivery versus payment basis. The securities will be delivered on a free delivery basis and arrangements for payment must be made separately.
DTC, Clearstream, Luxembourg and Euroclear have each published rules and operating procedures designed to facilitate transfers of beneficial interests in Registered Global Notes among participants and accountholders of DTC, Clearstream, Luxembourg and Euroclear. However, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued or changed at any time. None of the Issuers, the Guarantor, the Agents or any Dealer will be responsible for any performance by DTC, Clearstream, Luxembourg or Euroclear or their respective direct or indirect participants or accountholders of their respective obligations under the rules and procedures governing their operations and none of them will have any liability for any aspect of the records relating to or payments made on account of beneficial interests in the Notes represented by Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial interests.
Prospective purchasers of Notes are advised to consult their tax advisers as to the consequences, under the tax laws of the countries of their respective citizenship, residence or domicile, of a purchase of Notes, including, but not limited to, the consequences of receipt of payments under the Notes and their disposal or redemption.
The following summary outlines certain Swedish income tax consequences of the acquisition, ownership and disposition of Notes and is based on the Swedish tax laws in force as of the date of this Offering Circular. The summary does not address all potential aspects of Swedish taxation that may be applicable to a potential investor in the Notes and the summary is neither intended to be, nor should be construed as, legal or tax advice. A potential investor in the Notes should therefore consult with its own tax advisor as to the Swedish or foreign tax consequences of the acquisition, ownership and disposition of the Notes. Certain categories of investors may also be exempt from income tax and/or subject to other specific tax regimes.
As used herein, a Non-resident Holder means a holder of Notes who is (a) an individual who is not a resident of Sweden for tax purposes and who has no connection to Sweden other than his/her investment in the Notes, or (b) an entity not organised under the laws of Sweden.
Under Swedish tax law, payments of principal or interest to a Non-resident Holder of Notes will not be subject to Swedish income tax unless such Non-resident Holder of Notes carries on a trade or business through a permanent establishment in Sweden to which the payment of principal or interest is attributable.
Swedish tax law does not impose withholding tax on payments of principal or interest to a Non-resident Holder of Notes.
Under Swedish tax law, a capital gain on a sale of Notes by a Non-resident Holder will not be subject to Swedish income tax unless the Non-resident Holder of Notes carries on a trade or business in Sweden through a permanent establishment to which the capital gain is attributable.
Private individuals who are not resident in Sweden for tax purposes may be liable to capital gains taxation in Sweden upon disposal or redemption of certain financial instruments, depending on the classification of the particular financial instrument for Swedish income tax purposes, if they have been resident in Sweden or have lived permanently in Sweden at any time during the calendar year of disposal or redemption or the ten calendar years preceding the year of disposal or redemption. This liability may, however, be limited by tax treaties between Sweden and other countries.
As used herein, a Resident Holder means a holder of Notes who is (a) an individual who is a resident of Sweden for tax purposes, or (b) an entity organised under the laws of Sweden.
In general, payment of any amount that is considered to be interest for Swedish tax purposes to a Resident Holder of Notes will be subject to Swedish income tax. A Resident Holder of Notes will also be subject to Swedish income tax on any capital gain on the sale of Notes. Redemption of Notes is treated as a sale of Notes. Amortisation of principal is not otherwise subject to Swedish income tax.
Swedish tax law does not impose withholding tax on payments of principal or interest to a Resident Holder of Notes. However, preliminary income tax is withheld on payments of interest to individuals and estates of deceased individuals.
Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as FATCA, a foreign financial institution (as defined by FATCA) may be required to withhold on certain payments it makes (foreign passthru payments) to persons that fail to meet certain certification, reporting or related requirements. AA and AAFS may be foreign financial institutions for these purposes. A number of jurisdictions (including Sweden) have entered into, or have agreed in substance to, intergovernmental agreements with the United States to implement FATCA (IGAs), which modify the way in which FATCA applies in their jurisdictions. Under the provisions of IGAs as currently in effect, a foreign financial institution in an IGA jurisdiction would generally not be required to withhold under FATCA or an IGA from payments that it makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as Notes, including whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments such as Notes, are uncertain and may be subject to change. Even if withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments such as Notes, such withholding would not apply prior to 1 January 2019 and Notes issued on or prior to the date that is six months after the date on which final regulations defining foreign passthru payments are filed with the U.S. Federal Register generally would be grandfathered for purposes of FATCA withholding unless materially modified after such date. However, if additional Notes (as described under "Terms and Conditions of the Notes — Further Issues") that are not distinguishable from previously issued Notes are issued after the expiration of the grandfathering period and are subject to withholding under FATCA, then withholding agents may treat all Notes, including the Notes offered prior to the expiration of the grandfathering period, as subject to withholding under FATCA. Holders should consult their own tax advisers regarding how these rules may apply to their investment in Notes.
On 14 February 2013, the European Commission published a proposal (the Commission's Proposal) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the participating Member States). However, Estonia has since stated that it will not participate.
The Commission's Proposal has very broad scope and could, if introduced, apply to certain dealings in Notes (including secondary market transactions) in certain circumstances. Primary market transactions referred to in Article 5(c) of Regulation (EC) No 1287/2006 are exempt.
Under the Commission's Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, "established" in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State.
However, the FTT proposal remains subject to negotiation between the participating Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate.
Prospective holders of Notes are advised to seek their own professional advice in relation to the FTT.
The Dealers have, in an amended and restated programme agreement (such amended and restated programme agreement as further modified and/or supplemented and/or restated from time to time, the Programme Agreement) dated 26 October 2018, agreed with the Issuers and the Guarantor a basis upon which they or any of them may from time to time agree to purchase Notes. Any such agreement will extend to those matters stated under "Form of the Notes" and "Terms and Conditions of the Notes". In the Programme Agreement, the Issuers (failing which, the Guarantor (in the case of Guaranteed Notes)) have agreed to reimburse the Dealers for certain of their expenses in connection with the update of the Programme and the issue of Notes under the Programme and to indemnify the Dealers against certain liabilities incurred by them in connection therewith.
Each purchaser of Registered Notes (other than a person purchasing an interest in a Registered Global Note with a view to holding it in the form of an interest in the same Global Note) or person wishing to transfer an interest from one Registered Global Note to another or from global to definitive form or vice versa, will be required to acknowledge, represent and agree, and each person purchasing an interest in a Registered Global Note with a view to holding it in the form of an interest in the same Global Note will be deemed to have acknowledged, represented and agreed, as follows (terms used in this paragraph that are defined in Rule 144A or in Regulation S are used herein as defined therein):
"THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE U.S. STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (A) REPRESENTS THAT (1) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QUALIFIED INSTITUTIONAL BUYERS OR (2) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR"); (B) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT IN ACCORDANCE WITH THE AGENCY AGREEMENT AND, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE LAST ISSUE DATE FOR THE SERIES AND THE LAST DATE ON WHICH THE ISSUER OR AN AFFILIATE OF THE ISSUER WAS THE OWNER OF SUCH SECURITIES OTHER THAN (1) TO THE ISSUER OR ANY AFFILIATE THEREOF, (2) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (4) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND ANY OTHER JURISDICTION; AND (C) IT AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144A FOR RESALES OF THE SECURITY.
THIS SECURITY AND RELATED DOCUMENTATION (INCLUDING, WITHOUT LIMITATION, THE AGENCY AGREEMENT REFERRED TO HEREIN) MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, WITHOUT THE CONSENT OF, BUT UPON NOTICE TO, THE HOLDERS OF SUCH SECURITIES SENT TO THEIR REGISTERED ADDRESSES, TO MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS SECURITY TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY SHALL BE DEEMED, BY ITS ACCEPTANCE OR PURCHASE HEREOF, TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT (EACH OF WHICH SHALL BE CONCLUSIVE AND BINDING ON THE HOLDER HEREOF AND ALL FUTURE HOLDERS OF THIS SECURITY AND ANY SECURITIES ISSUED IN EXCHANGE OR SUBSTITUTION THEREFOR, WHETHER OR NOT ANY NOTATION THEREOF IS MADE HEREON).";
(vii) if it is outside the United States and is not a U.S. person, that if it should resell or otherwise transfer the Notes prior to the expiration of the distribution compliance period (defined as 40 days after the later of the commencement of the offering and the closing date with respect to the original issuance of the Notes), it will do so only (a)(i) outside the United States in compliance with Rule 903 or 904 under the Securities Act or (ii) to a QIB in compliance with Rule 144A and (b) in accordance with all applicable U.S. state securities laws; and it acknowledges that the Regulation S Global Notes will bear a legend to the following effect unless otherwise agreed to by the relevant Issuer:
"THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE U.S. STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE AGENCY AGREEMENT AND PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT. THIS LEGEND SHALL CEASE TO APPLY UPON THE EXPIRY OF THE PERIOD OF 40 DAYS AFTER THE COMPLETION OF THE DISTRIBUTION OF ALL THE NOTES OF THE TRANCHE OF WHICH THIS NOTE FORMS PART."; and
(viii) that the relevant Issuer and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that if any of such acknowledgements, representations or agreements made by it are no longer accurate, it shall promptly notify the relevant Issuer; and if it is acquiring any Notes as a fiduciary or agent for one or more accounts it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account.
Institutional Accredited Investors who purchase Registered Notes in definitive form offered and sold in the United States in reliance upon the exemption from registration provided by the Securities Act are required to execute and deliver to the Registrar an IAI Investment Letter. Upon execution and delivery of an IAI Investment Letter by an Institutional Accredited Investor, Notes will be issued in definitive registered form, see "Form of the Notes".
The IAI Investment Letter will state, among other things, the following:
No sale of Legended Notes in the United States to any one purchaser will be for less than U.S.\$100,000 (or its foreign currency equivalent) nominal amount or, in the case of sales to Institutional Accredited Investors, U.S.\$500,000 (or its foreign currency equivalent) nominal amount and no Legended Note will be issued in connection with such a sale in a smaller nominal amount. If the purchaser is a non-bank fiduciary acting on behalf of others, each person for whom it is acting must purchase at least U.S.\$100,000 (or its foreign currency equivalent) or, in the case of sales to Institutional Accredited Investors, U.S.\$500,000 (or its foreign currency equivalent) nominal amount of Registered Notes.
The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
The Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 and Treasury regulations promulgated thereunder. The applicable Final Terms (or Pricing Supplement, in the case of Exempt Notes) will identify whether TEFRA C rules or TEFRA D rules apply or whether TEFRA is not applicable.
In connection with any Notes which are offered or sold outside the United States in reliance on an exemption from the registration requirements of the Securities Act provided under Regulation S (Regulation S Notes), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it will not offer, sell or deliver such Regulation S Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Regulation S Notes are a part, within the United States or to, or for the account or benefit of, U.S. persons. Each Dealer has further agreed, and each further Dealer appointed under the Programme will be required to agree, that it will send to each dealer to which it sells any Regulation S Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Regulation S Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
Until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of such Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act.
Dealers may arrange for the resale of Notes to QIBs pursuant to Rule 144A and each such purchaser of Notes is hereby notified that the Dealers may be relying on the exemption from the registration requirements of the Securities Act provided by Rule 144A. The minimum aggregate nominal amount of Notes which may be purchased by a QIB pursuant to Rule 144A is U.S.\$100,000 (or the approximate equivalent thereof in any other currency). Each of the Issuers and (in the case of Guaranteed Notes) the Guarantor agree that, for so long as any of the Notes are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, to the extent that the relevant Issuer and the Guarantor are not subject to or do not comply with the reporting requirements of Section 13 or 15(d) of the Exchange Act or the information furnishing requirements of Rule 12g3-2(b) thereunder, the relevant Issuer and (in the case of Guaranteed Notes) the Guarantor will furnish to holders of Notes and to prospective purchasers designated by such holders, upon request, such information as may be required by Rule 144A(d)(4).
Each issuance of Exempt Notes which are also Index Linked Notes or Dual Currency Notes shall be subject to such additional U.S. selling restrictions as the Issuer and the relevant Dealer may agree as a term of the issuance and purchase of such Notes, which additional selling restrictions shall be set out in the applicable Pricing Supplement.
Unless the Final Terms in respect of any Notes (or Pricing Supplement, in the case of any Exempt Notes) specifies "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Final Terms (or Pricing Supplement, as the case may be) in relation thereto to any retail investor in the European Economic Area. For the purposes of this provision:
(i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, MiFID II); or
(ii) a customer within the meaning of Directive 2002/92/EC (as amended or superseded, the Insurance Mediation Directive), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or
If the Final Terms in respect of any Notes (or Pricing Supplement, in the case of any Exempt Notes) specifies "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the final terms in relation thereto to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State:
provided that no such offer of Notes referred to in (a) to (c) above shallrequire the relevant Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision:
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that:
(c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.
Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it will not, directly or indirectly, offer for subscription or purchase or issue invitations to subscribe for or buy or sell any Notes or distribute any draft or definitive document in relation to any such offer, invitation or sale in Sweden except in circumstances that will not result in a requirement to prepare a prospectus pursuant to the provisions of the Swedish Financial Instruments Trading Act (lag (1991:980) om handel med finansiella instrument) and otherwise in compliance with the laws of Sweden.
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended; the FIEA) and each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it will not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Act (Act No. 228 of 1949, as amended)), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelines of Japan.
Other than in respect of Notes for which "Prohibition of Sales to Belgian Consumers" is specified as "Not Applicable" in the applicable Final Terms (or Pricing Supplement, in the case of Exempt Notes), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that an offering of Notes may not be advertised to any individual in Belgium qualifying as a consumer within the meaning of Article I.1 of the Belgian Code of Economic Law, as amended from time to time (a Belgian Consumer) and that it has not offered, sold or resold, transferred or delivered, and will not offer, sell, resell, transfer or deliver, the Notes, and that it has not distributed, and will not distribute, any prospectus, memorandum, information circular, brochure or any similar documents in relation to the Notes, directly or indirectly, to any Belgian Consumer.
Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributes this Offering Circular and will obtain any consent, approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales or deliveries and neither the Issuers, the Guarantor nor any of the other Dealers shall have any responsibility therefor.
None of the Issuers, the Guarantor and the Dealers represents that Notes may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating such sale.
The current update of the Programme, the issue of Notes thereunder and the giving of the Guarantee in respect of Guaranteed Notes have been duly authorised by resolutions of the Board of Directors of AA dated 3 October 2018 and the Board of Directors of AAFS dated 3 October 2018.
It is expected that each Tranche of Notes which is to be admitted to the Official List and to trading on the London Stock Exchange's Regulated Market will be admitted separately as and when issued, subject only to the issue of one or more Global Notes initially representing the Notes of such Tranche. Application has been made to the UK Listing Authority for Notes issued under the Programme to be admitted to the Official List and to the London Stock Exchange for such Notes to be admitted to trading on the London Stock Exchange's Regulated Market. The listing of the Programme in respect of Notes is expected to be granted on or around 1 November 2018.
For the period of 12 months following the date of this Offering Circular, copies of the following documents will, when published, be available for inspection only from the registered office of the Issuers and (in the case of Guaranteed Notes) the Guarantor and from the specified office of the Paying Agent for the time being in London:
In addition, copies of this Offering Circular, each Final Terms relating to Notes which are admitted to trading on the London Stock Exchange's Regulated Market and each document incorporated by reference are available at the website of the Regulatory News Service operated by the London Stock Exchange.
The English translations of the audit reports and financial statements referred to in (ii) and (iii) above are direct and accurate translations of the original documents.
The Notes in bearer form have been accepted for clearance through Euroclear and Clearstream, Luxembourg which are the entities in charge of keeping the records. The appropriate Common Code and ISIN for each Tranche of Bearer Notes allocated by Euroclear and Clearstream, Luxembourg will be specified in the applicable Final Terms. In addition, the relevant Issuer may make an application for any Notes in registered form to be accepted for trading in book-entry form by DTC. The CUSIP and/or CINS numbers for each Tranche of Registered Notes, together with the relevant ISIN and common code, will be specified in the applicable Final Terms (or Pricing Supplement, in the case of Exempt Notes). If the Notes are to clear through an additional or alternative clearing system the appropriate information will be specified in the applicable Final Terms.
The address of Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels, the address of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855 Luxembourg and the address of DTC is 55 Water Street, New York, New York 10041, United States of America.
The price and amount of Notes to be issued under the Programme will be determined by the relevant Issuer and each relevant Dealer at the time of issue in accordance with prevailing market conditions.
There has been no significant change in the financial or trading position of AA or the Group since 30 September 2018 and there has been no material adverse change in the prospects of AA since 31 December 2017.
There has been no significant change in the financial or trading position of AAFS since 31 December 2017 and there has been no material adverse change in the prospects of AAFS since 31 December 2017.
There have been no governmental, legal or arbitration proceedings (including such proceedings which are pending or threatened of which either AA or AAFS is aware) in the 12 months preceding the date of this document which may have or have in such period had a significant effect on the financial position or profitability of AA, AAFS or the Group.
The consolidated financial statements of AA for the two financial years ended on 31 December 2016 and 2017 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and audited in accordance with generally accepted auditing standards in Sweden with unqualified opinions reported thereon by PricewaterhouseCoopers AB. The unaudited consolidated financial statements of AA for the six months ended 30 June 2018 contained within the Interim Report of AA dated 30 June 2018 have been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act and reviewed in accordance with the International Standard on Review Engagements ISRE 2410 with a review report thereon by PricewaterhouseCoopers AB. The Interim Report of AA dated 30 September 2018 has not been audited by PricewaterhouseCoopers AB. PricewaterhouseCoopers AB is associated with FAR in Sweden, the institute for the accounting profession in Sweden.
The annual financial statements of AAFS for the two financial years ended on 31 December 2016 and 2017 have been prepared in accordance with generally accepted accounting principles in Sweden and audited in accordance with generally accepted auditing standards in Sweden with unqualified opinions reported thereon by PricewaterhouseCoopers AB. PricewaterhouseCoopers AB is associated with FAR in Sweden, the institute for the accounting profession in Sweden.
Certain of the Dealers and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform other services for, the Issuers, the Guarantor and their respective affiliates in the ordinary course of business. Certain of the Dealers and their affiliates may have positions, deal or make markets in the Notes issued under the Programme, related derivatives and reference obligations, including (but not limited to) entering into hedging strategies on behalf of the Issuers, the Guarantor and their respective affiliates, investor clients, or as principal in order to manage their exposure, their general market risk, or other trading activities.
In addition, in the ordinary course of their business activities, the Dealers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of the Issuers or the Guarantor or their respective affiliates. Certain of the Dealers or their affiliates that have a lending relationship with the Issuers or the Guarantor routinely hedge their credit exposure to the Issuers and/or the Guarantor consistent with their customary risk management policies. Typically, such Dealers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in securities, including potentially the Notes issued under the Programme. Any such positions could adversely affect future trading prices of Notes issued under the Programme. The Dealers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
556283-0264
for
2016-01-01 -- 2016-12-31
This document has been accurately translated from Swedish to English. Stockholm
;}~~KMIB,on
556283-0264
The Board of Directors and the Managing Director for ASSA ABLOY Financial Services AB submit the following administration report for the fiscal year 2016.
The company carries out internal banking operations within the ASSA ABLOY group.
The company is a wholly-owned subsidiary of ASSA ABLOY OY, Joensuu, Finland, which, in its turn, Is wholly owned by ASSA ABLOY AB, org. no. 556059-3575, Stockholm, Sweden.
The year has not brought about any significant changes in the business. Total assets have increased somewhat as a result of increased lending volumes. A new long-term loan of 154 MUSD has been entered into with the European Investment Bank.
No major changes in the business are expected during the upcoming year. The result and balance sheet are primarily influenced by the financing needs by Group companies. The financing needs are partly driven by the general development of the Group but also affected by the Group's acquisition activities.
Uncertainty about future developments and the course of events is a natural risk for any business. Risk-taking in itself provides opportunities for continued economic growth, but naturally the risks may also have a negative impact on business operations and company goals. It is therefore essential to have a systematic and efficient risk assessment process and an effective risk management program in general. The purpose of risk management is not to avoid risks, but to take a controlled approach to identifying, managing and reducing the effects of these risks.
Group Treasury at ASSA ABLOY is responsible for the Group's short- and long-term financing, financial cash management, currency risk and other financial risk management. Financial operations are centralized In a Treasury function, which manages most financial transactions as well as financial risks with a group-wide focus.
A financial policy, which is approved by the Board, regulates the allocation of responsibilities and control of the Group's financing activities. Group Treasury has the main responsibility for financial risks within the framework established in the financial policy. A large number of financial instruments are used in this work. Accounting principles, risk management and risk exposure are described in more detail in Notes 1 and 9, as wel l as Note 12. The company's financial risks mainly comprise financing risk, currency risk, interest rate risk and credit risk in financial transactions.
556283-0264
Financing risk refers to the risk that financing the company's capital requirements and refinancing outstanding loans become more difficult or more expensive. It can be reduced by maintaining an even maturity profile for borrowing and a high credit rating. The risk is further reduced by substantial unutilized confirmed credit facilities.
Since ASSA ABLOY has companies in a large number of countries, internal lending creates exposure to different currencies which leads to the effects from exchange rate fluctuations. These fluctuations may affect the company's earnings. The company may also be affected when it manages the currency exposure arising when handling the Group's cash flows, created when products are exported and sold in countries outside the country of production, so called transaction exposure. The company carries out continous follow-up and hedging of exchange positions and normally has at best limited net positions in foreign currency. Further information regarding financial risk management and financial instruments is found in Note 12.
With respect to interest rate risks, interest rate changes have a direct impact on ASSA ABLOY Financial Services AB's interest income and expense. The net interest expense is also impacted by the size of the company's net debt, its currency composition and interest duration. Group Treasury analyzes the Group's interest rate exposure and calculates the impact on income of interest rate changes on a rolling 12-month basis. In addition to raising variable-rate and fixed-rate loans, various interest rate derivatives are used to adjust interest rate sensitivity.
Credit risk arises as a result of the financial transactions carried out by Group Treasury. Financial risk management exposes ASSA ABLOY Financial Services AB to certain counterparty risks. Such exposure may arise, for example, as a result of the investment of surplus cash, borrowings and derivative financial Instruments. Counterparty limits are set and continuously monitored.
556283-0264
The development of the result of the company has improved somewhat. The result is affected positively by an increase in financing volumes during the period but negatively the very low interest rate levels, in particular the negative SEK interest rates. The negative interest rates resulted in significantly lower lending margins In many currencies.
External financing: The company's long-term loan financing mainly consists of issuance under a Private Placement Program in the USA totaling USO 442 M (542), GMTN program of EUR 35 M (35) and USO 25 M (25), two loans from the European Investment Bank of EUR 73 M (92) and EUR 154 M (0) repectlvely, and a loan from the Nordic Investment Bank of EUR 110 M (110).
The company's short-term loan financing mainly consists of two Commercial Paper Programs for a maximum USO 1 000 M (1 000) and SEK 5 000 M (5 000) respectively. At year-end, SEK 455 M (1 240) of the Commercial Paper Programs had been utilized . In addition, substantial credit facilities are available, mainly in the form of a Multi-Currency Revolving Credit Facility of EUR 900 M (900), which was wholly unutilized at year-end. The maturity of this facility is in June 2020.
Additional financing Is primarily internal within the ASSA ABLOY Group. Average interest fixing period on financial assets was 1,9 months (1,8) and 16,4 months (16,0) for financial liabilities at closing day.
Cash and cash equivalents amounted to SEK 152 M (25) and are invested in banks with high credit ratings.
Some of the company'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.
Equity : The company's equity totaled SEK 3 363 M (3 324) at year-end. The return on equity was 1 percent (2). The equity/asset ratio was 9 percent (9).
| ~ ~ | 2014 | 2013 | 2012 | ||
|---|---|---|---|---|---|
| Operating profit (MSEK) | 402 | 262 | 292 | 240 | 925 |
| Total assets (MSEK) | 38 459 | 35 713 | 32 291 | 31 272 | 33 093 |
| Return on shareholders' equity (%) | 1 | 2 | 1 | 13 | 29 |
| Equity (MSEK) | 3 363 | 3 324 | 3 261 | 3 246 | 2 991 |
| Net debt (MSEK) Ca> | - 3 128 - 4 097 | - 3 122 - 3 447 | - 3 683 | ||
| External gross debt (MSEK) | 9 755 | 9 654 | 10 096 | 9 569 | 8 527 |
(a) In the financial statements for 2012-2013 incorrect figures were reported, therefore the comparative figures have been adjusted.
| 3 330 023 239 | |
|---|---|
| 32 091 116 | |
| SEK | 3 362 114 355 |
The Board of Directors and the Managing Director propose available earnings to be allocated as follows:
| Carried forward to new financial year | 3 362 114 355 | |
|---|---|---|
| Total | SEK | 3 362 114 355 |
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The financial statement means that a group contribution of kSEK 361 138 was paid to ASSA ABLOY Kredit AB.
The proposed value transfer in the form of group contribution has only a limited effect on the company's solidity. The solidity is comforting given the company's business continue to be run profitably.
It Is the opinion of the Board that the dividend paid, in the form of group contribution, will neither prevent the company from meeting its commitments in the short and long term, nor from making the required investments. The transfer of value Is therefore justiflble in view of the provisions of chapter 17 section 3 paragraph 2-3 of the Swedish Companies Act.
The company applies the fair value principle in accordance with the Annual Accounts Act chapter 4 section 14 for the valuation of financial instruments, which has affected equity with 894 MSEK (165).
The Board of Directors propose available earnings to be carried forward to the new financial year.
Concerning the company's result and position in general, the following income statement and balance sheet including notes and comments, are referred to.
556283-0264
| kSEK | Note | 2 0 16 | 2015 |
|---|---|---|---|
| 1 | |||
| Operating income | |||
| Interest from group companies | 870 309 | 739 615 | |
| External interest | 321 | 3 988 | |
| Exchange rate differences from group companies | 76 | 937 | |
| External exchange rate differences | 1 624 157 | 2 346 820 | |
| Other operating income | 3 | 3 876 | 1 457 |
| Total operating income | 2 498 739 | 3 092 819 | |
| Operating expenses | |||
| Interest to group companies | - 92 960 | - 102 301 | |
| External interest | - 387 838 | - 364 720 | |
| Exchange rate differences to group companies | - 676 284 | -1 850 170 | |
| External exchange differences | - 910 189 | - 482 139 | |
| Administrative expenses | 4 | - 19 907 | - 21 631 |
| Other operating expenses | - 9 279 | - 10 210 | |
| Total operating expenses | - 2 096 457 | 3 1172 -2 8 |
|
| Operating profit | 4 02 282 | 261 646 | |
| Appropriations | 5 | - 361 138 | - 190 242 |
| Tax | 6 | - 9 053 | - 15 713 |
| Net result for the year | 3 2 0 9 1 | 55 690 |
556283-0264
| Balance Sheet | |||
|---|---|---|---|
| ASSETS | |||
| kSEK | Note | 2016-12-31 | 2015-12-31 |
| 1 | |||
| Financial fixed assets | |||
| Receivables from group companies | 4 540 848 | 4 343 036 | |
| Total financial fixed assets | 4 540 848 | 4 343 036 | |
| Total fixed assets | 4 540 848 | 4 343 036 | |
| Current assets | |||
| Receivables from group companies | 32 840 653 | 31 146 412 | |
| Current tax assets | 4 124 | 831 | |
| Other receivables | 7 | 65 | 12 |
| Deferred expenses and | |||
| accrued income | 8 | 921 695 | 197 721 |
| Cash and bank | 151 685 | 25 336 | |
| Total current assets | 33 918 222 | 31 370 310 | |
| Total assets | 38 459 070 | 35 713 347 |
556283-0264
| EQUITY AND LIABILITIES | |
|---|---|
| ------------------------ | -- |
| kSEK | Not | 2016-12-31 | 2015-12-31 |
|---|---|---|---|
| 1 | |||
| Equity | |||
| Restricted equity | |||
| Share capital | 1 000 | 1 000 | |
| Statutory reserve | 200 | 200 | |
| Total restricted equity | 1 200 | 1 200 | |
| Unrestricted equity | |||
| Balanced earnings | 3 330 024 | 3 267 228 | |
| Net profit for the year | 32 091 | 55 690 | |
| Total unrestricted equity | 3 362 115 | 3 322 918 | |
| Total equity | 3 363 315 | 3 324 118 | |
| Long-term liabilities | |||
| Liabilities to external institutions | 7 866 033 | 7 012 159 | |
| Liabilities to group companies | 7 965 206 | 6 842 802 | |
| Total Long-term liabilities | 9 | 15 831 239 | 13 854 961 |
| Current liabilities | |||
| Liabilities to external institutions | 1 889 869 | 2 641 480 | |
| Liabil ities to group companies | 17 046 982 | 15 114 246 | |
| Accrued expenses and | |||
| deferred income | 10 | 327 665 | 778 543 |
| Total current liabilities | 19 264 516 | 18 534 269 | |
| Total equity and liabilities | 38 459 070 | 35 713 347 |
556283-0264
| ~ Restricted eguit}'. |
Unrestricted eguit}'. | ||||
|---|---|---|---|---|---|
| ti!tU Q~ | dg~ | Other un- | Total | ||
| kSEK | ~i! l2iti!I | r~il ~rv~ | r~il ~rv~ r~il tri~t d ~gyit~ |
~gyit~ | |
| Equity 2014- 12-31 | 1 000 | 200 | - 24 344 | 3 284 053 | 3 260 909 |
| Hedge reserve | 7 519 | 7 519 | |||
| Group contribution | 0 | 0 | |||
| Distribution of profit | 0 | 0 | |||
| Tax effect of group contribution | 0 | 0 | |||
| Year-end result | 55 690 | 55 690 | |||
| Equity 2015-12-31 | 1 000 | 200 | - 16 824 | 3 339 743 | 3 324 118 |
| Hedge reserve | 7 106 | 7 106 | |||
| Group contribution | 0 | 0 | |||
| Distribution of profit | 0 | 0 | |||
| Tax effect of group contribution | 0 | 0 | |||
| Year-end result | 32 091 | 32 091 | |||
| Equity 2016-12-31 | l 000 | 200 | - 9 718 | 3 371 835 | 3 363 315 |
The share capital consists of 10 shares with a par value of 100 000 SEK.
556283-0264
| em ent ASSA ABLOY Financial Services cash flow stat |
||
|---|---|---|
| kSEK | ||
| Operating activities | ||
| Operating profit | 402 282 | 261 646 |
| Paid tax | - 12 346 | - 12 182 |
| Cash flow from operating activities | ||
| before changes in working capital | 389 936 | 249 464 |
| Increase (-) decrease ( +) current receivables | -2 420 931 | -2 686 411 |
| Increase ( +) decrease (-) current operating liabilities | 569 121 | 792 316 |
| Cash flow from operating activities | -1 461 874 | -1 644 631 |
| Investing activities | ||
| Investments other financial fixed assets | - 197 812 | - 744 722 |
| Cash flow from investing activities | - 197 812 | - 744 722 |
| Financing activities | ||
| External loans raised | 853 873 | |
| I nternal loans raised | 1 122 404 | 3 220 528 |
| External loans repaid | - 563 139 | |
| Group contribution | - 190 242 | - 270 237 |
| Cash flow from financing activities | 1 786 036 | 2 387 152 |
| Cash flow for the year | 126 349 | - 2 202 |
| Liquid funds at beginning of year | 25 336 | |
| Exchange rate difference on liquid funds | 27 538 | |
| Liquid funds at end of year | 151 685 | 25 336 |
| Disclosure to the cash flow statement: | ||
| Interest received | 870 630 | 743 603 |
| Interest paid | - 480 798 | - 467 021 |
The financial statement for ASSA ABLOY Financial Services AB Is prepared applying the statements of the Annual Accounts Act and the Swedish Accounting Standards Council's recommendation BFNAR 2012:1 Financial statement and consolidated accounts (K3). The company's accounting principles are unchanged from previous years.
Receivables and liabilities In foreign currencies are valued at closing rate. The forward rate has been used for hedging of accounts receivable and accounts payable while hedging of borrowing and lending to subsidiaries Is made at spot rate. Transactions In foreign currencies are translated at the rate current on the transaction date.
Interest Income Is accounted for In accordance with effective yield.
Reported tax Includes tax that Is to be paid or received for the current year, adjustments relating to tax due for previous years, and changes In deferred tax.
Tax amounts have been calculated as nominal amounts In accordance with the tax regulations and In accordance with tax rates that have either been decided or have been notified and can confidently be expected to be confirmed.
For Items reported In the Income statement, associated tax effects are also reported In the Income statement. The tax effect of Items reported directly against shareholders' equity are themselves reported against shareholders' equity.
Deferred tax Is accounted for under the balance sheet method. This means that deferred tax Is accounted for on all temporary differences between the book values of assets and llabllltles and their taxable values.
Deferred tax receivables relating to tax losses carryforward or other future tax allowances are reported to the extent that It Is probable that the allowance can be set against taxable Income In future taxation.
Receivables are valued at the amounts that after Individual assessment are expected to be received.
The cash flow statement has been prepared according to the Indirect method. The reported cash flow Includes only transactions Involving cash payments.
The companly carries out Internal banking operations within the ASSA ABLOY group.
Financial assets Include cash and cash equivalents, trade receivables, short-term Investments and derivatives, and are classified In the following categories: financial assets at fair value through profit and loss, available-for-sale financial assets, and loans and receivables. Management determines the classification of financial assets at Initial recognition.
This category Is divided Into two sub-categories: financial assets held for trading, and those classified on acquisition as financial assets at fair value through profit and loss. A financial asset Is classified in this category If acquired principally for the purpose of selling In the short term or lf classified as such by management. Derivatives are also classified as held for trading provided they are not defined as hedges. Assets In this category are classified as current assets.
Available-for-sale financial assets are non-derivative assets that have been Identified as available for sale or assets that have not been classified In any other category. They are Included In noncurrent assets, unless management Intends to sell the asset within 12 months of the end of the reporting period. Changes In fair value are recognized In the Income statement as a financial Item.
Trade receivables and short-term Investments are non derivative financial assets with fixed or determinable payment streams, which are not quoted In an active market. They are recognized In current assets, except for receivables maturing more than 12 months after the reporting date, which are classified as non-current assets.
Financial llabllltles Include deferred considerations, loan liabilities, trade payables and derivative Instruments. Recognition depends on how the liability Is classified.
This category Includes derivatives with negative fair value that are not used for hedging and financial llabllltles held for trading. Llabllltles are measured at fair value on a continuous basis and changes In value are recognized In the Income statement as a financial Item.
Loan llablllties 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 calculated when the loan was raised. Accordingly, premiums and discounts as well a direct Issue expenses are allocated over the term of the loan. Non-current loan llabllltles have an anticipated term of more than one year, while current loan llabllltles have a term of less than one year.
Trade payables are Initially valued at fair value, and subsequently at amortized cost using the effective Interest method.
Acquisitions and sales of financial assets are recognized on the trade date, the date on which the company commits to purchase or sell the asset. Transaction costs are Initially Included In fair value for all financial Instruments, except for those recognized at fair value through profit and loss where the transaction cost Is recognized through profit and loss. The fair value of quoted Investments Is based on current bid prices. In the absence of an active market for an Investment, the company applies various measurement techniques to determine fair value. These Include use of available Information on current arm's length transactions, comparison with equivalent assets and analysis of discounted cash flows. The company assesses at each reporting date whether there Is any objective evidence that a financial asset or a group of financial assets Is Impaired. A financial asset Is derecognlzed 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 r!sks and benefits associated with the asset to the other party. A flnanclal llablllty Is de recognized from the balance sheet when the obligation Is fulfilled, cancelled or expires, see above.
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.
I} Fair value hedge: a hedge of the fair value of an Identified llablllty;
II} Cash flow hedge: a hedge of a certain risk associated with a forecast cash flow for a certain transaction
When entering Into the hedge transaction, the relationship between the hedging Instrument and hedged Items are documented, as well as Its risk management strategy for the hedge. The company 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 prevalllng forward rates on the reporting date, while Interest rate swaps are measured by estimating future discounted cash flows. For Information on the fair value of derivative Instruments, see Note 12.
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 finked 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 now 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 the Hedge reserve 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 recognized in equity, these gains/losses remain In equity and are taken to Income, whlle the forecast transaction Is finally recognized In the Income statement. When a forecast transaction Is no longer expected to occur, the accumulated gain or loss recognized In equity Is Immediately transferred to the Income statement as a financial Item. When a forecast transaction Is no longer expected to occur, the gain or loss recognized In the Hedge reserve Is recognized directly under financial Items.
The company applies the fair value principle In accordance with the Annual Accounts Act chapter 4 section 14 for the valuation of financial Instruments.
Financial Instruments recorded In the balance sheet Include financial assets, other financial assets, accounts receivable, accounts payable and loan debts. The fair value of the financial Instruments are calculated using market quotations on the balance sheet day. Market Interest rates form the basis for the calculation of market values of long term loans. For other financial Instruments, primarily short term loans and deposits where market quotations are not available, t he fair value Is set at book value.
All transactions with financial assets are recorded on the business day.
Loans are lnltlally recorded at the amount received alter deduction of transactional costs. If the booked amount Is different from the amount that has to be repaid at maturity the difference Is amortized as Interest cost over the duration of the loan. By doing so the booked amount Is equal to the amount that has to repaid at maturity. The booking of financial llabllltles Is discontinued only alter the debts have been repaid In full or forgiven by the lender.
The company uses derivative Instruments to cover risks related to foreign exchange movements and to hedge Its Interest rate exposure.
The company's pension obllgatlons are accounted for In accordance with FAR SRS RedR4. The pension obllgatlons are covered by external Insurance companies.
Return on shareholders' equity as shown In the multi-year summary Is calculated as: net profit alter tax, divided by shareholders' equity at year-end.
The net debt comprise all Internal and external Interest-bearing flnanclal Instruments, Including positive and negative market values of derivatives.
External gross debt consists of all Interest-bearing external loans Including negative market values of derivatives.
No material accounting estimations or assumptions which could have had an significant effect on the carrying amounts have been made.
| kSEK | 2016 | 2015 |
|---|---|---|
| Change market value Interest rate swaps | 3 869 | 92 |
| Exchange rate differences trade receivables/payables | 7 | l 365 |
| Total | 3 876 | 1 457 |
| Note 4 Administrative expenses |
||
| Audit fees | ||
| kSEK | 2016 | 2015 |
| PrlcewaterhouseCoopers AB | ||
| Audit assignment | 388 | 668 |
| Audit other than the audit assignment | 0 | 0 |
| Tax consultancy | 0 | 0 |
| Other services | 0 | 0 |
| Total | 388 | 668 |
The fees for audit and audit related services performed by PrlcewaterhouseCoopers AB amount to 388 kSEK (668 kSEK). The company has not had any other costs related to services performed by PrlcewaterhouseCoopers AB. No services has been purchased from other auditing firms.
There has been no remuneration to the board of directors.
| kSEK | 2016 | 2015 | |||
|---|---|---|---|---|---|
| Salaries and other benefits |
Social costs (of which pension costs) |
Salaries and other benefits |
Social costs (of which pension costs) |
||
| Managing Director | 0 | 0 (0) | 492 | 200 (45) | |
| Employees | 5 753 | 3 559 (1 375) | 5 180 | 3 088 (1 134) | |
| Total | 5 753 | 3 559 (1 375) | 5 672 | 3 288 (1179) |
The company has a new managing director as of 2015-03-09. The managing director Is employed In another company.
Average number of employees per country and gender
| Country | 2016 | 2015 | ||
|---|---|---|---|---|
| Women | Men | Women | Men | |
| Sweden | 3 | 5 | 4 | - 4 |
| Country | 2016 | 2015 | ||
|---|---|---|---|---|
| Women | Men | Women | Men | |
| Sweden | 1 | 3 | l | 3 |
| kSEK | 2016 | 2015 |
|---|---|---|
| Group contributions paid | - 361 138 | - 190 242 |
| Total | - 361 138 | - 190 242 |
| Note 6 Tax |
||
| kSEK | 2016 | 2015 |
| Current tax | - 9 053 | - 15 713 |
| Total | - 9 053 | - 15 713 |
| Nominal tax rate(%) | 22,0 | 22,0 |
| Effective tax rate (%) | 2,3 | 6,0 |
| Operating profit | 402 282 | 261 646 |
| Tax at nominal tax rate | - 88 502 | - 57 562 |
| Tax attributable to prior year | 0 | 0 |
| Effect of non-deductible expense | - 3 | - 5 |
| Effect of non-taxable Income | 1 | 0 |
| Tax effect of group contribution paid | 79 450 | 41 853 |
| Tax on operating profit | ||
| as In Income statement | - 9 053 | - 15 713 |
| kSEK | 2016- 12-31 | 2015- 12-31 |
|---|---|---|
| Short term deposit | 1 | |
| VAT recoverable | 58 | 4 |
| Other receivables | 6 | 6 |
| Total | 65 | 12 |
| kSEK | 2016- 12-31 | 2015- 12-31 |
|---|---|---|
| Accrued Interest Income group companies | 27 406 | 31477 |
| Market value Interest rate derivatives | 98 575 | 140 489 |
| Market value currency forwards | 795 215 | 24 881 |
| Miscellaneous | 499 | 874 |
| Total | 921 695 | 197 721 |
| kSEK | 2016- 12-31 | 2015-12-31 |
|---|---|---|
| Llabllltles to credit Institutions | 7 866 033 | 7 012 159 |
| Liabilities to group companies | 7 965 206 | 6 842 802 |
| Total | 15 831 239 | 13 854 961 |
| kSEK | Year | 2016- 12-31 | 2015- 12-31 |
|---|---|---|---|
| US Private Placement C•> | 2017 | 0 | 836 6S6 |
| Other long-term loan C•l | 2017 | 0 | 842 lSS |
| US Private Placement | 2018 | 1 109 933 | 1 019 727 |
| Other long-term loan | 2018 | 8S7 278 | 81S 011 |
| us Private Placement | 2019 | 227 710 | 208 763 |
| Loan NIB | 2019 | S26 281 | S02 174 |
| Other long-term loan | 2019 | 1 1S9 99S | 1 080 443 |
| US Private Placement | 2020 | 637 468 | S8S 076 |
| Global MTN Program | 2020 | 3S4 984 | 340 710 |
| Loan EIB C•l Cc> | 2020 | 702 37S | 838 123 |
| Other long-term loan | 2020 | l S82 074 | l 38S 990 |
| Loan NIB | 2021 | S26 181 | S02 174 |
| Other long-term loan | 2021 | 1 121 323 | 966 71S |
| US Private Placement | 2022 | 1 404 27S | 1 279 677 |
| Loan EIB (b) | 2022 | 1 40S 781 | 0 |
| Other long-term loan | 20 22 | 136 709 | 130 S04 |
| Global MTN Program | 2023 | 238 887 | 223 063 |
| US Private Placement | 2024 | 683 030 | 626 089 |
| Other long-term loan | 2024 | 9Sl 788 | 0 |
| Other long-term loan | 202S | 1 2S4 631 | 764 SlS |
| Other long-term loan | 2027 | 287 33S | 274 29S |
| Other long-term loan | 2030 | 663 201 | 633 102 |
| Total | 15 831 239 | 13 854 961 |
(•)The loans are classified as current llabllltles.
(b) The loans amortizes starting November 2017. The dates In the table refers to the average amortization dates.
(c) Last year the loan was recorded with a maturity date In 2021 which Is the final date for the amortizations.
| kSEK | 2016- 12-31 | 2015-12-31 |
|---|---|---|
| Accrued Interest expenses group companies | 40 748 | 4S 471 |
| Accrued Interest expenses credit Institutions | 3S 061 | 30 S46 |
| Market value currency forwards | 173 S39 | 634 1S7 |
| Market value Interest derivatives and FRA | 6S S9S | SS 877 |
| Mlscellaneous | 12 722 | 12 492 |
| Total | 327 665 | 778 543 |
Parent company for ASSA ABLOY Financial Services AB Is ASSA ABLOY Oy, Finland. Parent company In the largest group of which ASSA ABLOY Financial Services AB Is a subsidiary, and where consolidated annual accounts are established, Is ASSA ABLOY AB, SS6059·3S7S, from where the Group's Annual Report can be obtained.
Currency risks affect ASSA ABLOY Financial Services AB mainly through translation of capital employed and net debt. To neutralize the translation and transaction exposure arising between net debt and Internal needs currency forward contracts a re used.
Average Interest fixing period on financial assets was 1,9 months and 16,4 months for financial llablllties at closing day.
The company's Interest rate duration and distribution of fixed rates In relation to floating Is dependent on the Group's overall Interest rate policy and funding. At year end, 6% of the assets had fixed rates and 22% of the llabllltles. Interest rate swaps are used to adjust the Interest rate duration and Interest rate risk to the Group's desired level.
Financing and liquidity risks are defined as the risks of being unable to meet payment obligations as a result of Inadequate liquidity or difficulties In obtaining credit from external sources. ASSA ABLOY Financial Services AB strives to have access, on every occasion, to both short-term and long-term loan facilities.
Financial risk management exposes ASSA ABLOY Financial Services AB to certain counterparty risk. This exposure arises, for Instance, from the placement of surplus cash and through the use of derivative Instruments. ASSA ABLOY's policy Is to minimize the potential credit risk by using cash available from subsidiaries to amortize external debt. This objective Is mainly controlled through the cash pool network for which ASSA ABLOY Financial Services AB Is responsible. Nevertheless the Group may deposit surplus funds on a short-term basis with banks to match maturities. Derivative Instruments are allocated to banks according to risk factors set In the Treasury Policy to llmlt counterparty risk.
| 2016-12-31 | 2015- 12-3 1 | |||||
|---|---|---|---|---|---|---|
| Instrument | Positive market value |
Negative market value |
Nominal value | Positive market | Negative value market value |
Nominal value |
| Currency forwards - funding | 795 215 | - 173 539 | 19 262 718 | 24 881 | -634 157 | 19 232 193 |
| Interest rate derivatives | 98 590 | -27 797 | 2 113 275 | 140 469 | -32 386 | 2 882 698 |
| Cross currency swaps | -15 | - 37 798 | 519 420 | 20 | - 23 491 | 507 192 |
| Total | 893 790 | - 239 134 | 21 895 413 | 165 370 | - 690 034 | 22 622 083 |
Disclosures of off setting of financial assets and llabllltles 2016-12-31 (kSEK)
| Gross amount |
Amounts netted In the balance sheet |
Net amounts In the balance sheet |
Amount covered by netting agreement but not offset |
Net amount |
|
|---|---|---|---|---|---|
| 2016-12-31 | |||||
| Financial assets | 893 790 | 893 790 | 76 597 | 817 193 | |
| Financial liabilities | - 239 134 | -239 134 | -76 597 | -162 537 | |
| 2015-12-31 | |||||
| Financial assets | 165 370 | 165 370 | 38 055 | 127 315 | |
| Financial llabllltles | - 690 034 | -690 034 | -38 055 | -651 979 |
Nened r1nanclal assets and rlnanclal liabilities only consist of derivative Instruments.
Financial Instruments: carrying amounts and fair values by measurement category
| 2015- 12-31 | |||||||
|---|---|---|---|---|---|---|---|
| orles* Cate |
Carrying amount |
Farr value | Carrying amount |
Fair value | |||
| Financial assets | |||||||
| Derivative Instruments - hedge accounting | 4 | 98 575 | 98 575 | 139 912 | 139 912 | ||
| Derivative Instruments - held for trading | 2 | 795 215 | 795 215 | 25 458 | 25 458 | ||
| Cash and cash equivalents | 151 685 | 151 685 | 25 336 | 25 336 | |||
| Financial llabllltles | |||||||
| Long-term loans - hedge accounting | 3 | 593 871 | 593 871 | 1 009 199 | 1 009 199 | ||
| Long-term loans - not hedge accounting | 3 | 15 237 368 | 15 298 525 | 12 845 762 | 13 000 722 | ||
| Long-term loans, total | 15 831 239 | 15 892 396 | 13 854 961 | 14 009 921 | |||
| Short-term loans - hedge accounting | 3 | 0 | 0 | 0 | 0 | ||
| Short-term loans - not hedge accounting | 3 | 18 936 850 | 18 936 850 | 17 755 726 | 17 755 726 | ||
| Derivative Instruments - hedge accounting | 4 | 27 797 | 27 797 | 32 129 | 32 129 | ||
| Derivative Instruments - held for trading | 2 | 211 337 | 211 337 | 657 905 | 657 905 |
* Applicable categories:
1 ~ Loans and receivables.
2 ~ Financial Instruments at fair
value through profit or loss.
3 e Financial llabllltles at amortized
cost.
4 ~ Derivative hedge accounting.
The fair value of long-term borrowing Is based on observable data by discounting cash flows to market rate, while the fair value of current receivables and current llabllltles rs considered to correspond to the carrying amount.
The company has no pledged assets or contingent llablllties
No events which could have a material significance for the company has occurred after the fiscal year.
| Balanced earnings Year-end result |
3 330 023 239 32 091 116 |
|
|---|---|---|
| Total | SEK | 3 362 114 355 |
The Board of Directors and the Managing Director propose available earnings to be allocated as follows:
| Carried forward to new financial year | 3 362 114 355 | |
|---|---|---|
| Total | SEK | 3 362 114 355 |
The Income statement and Balance sheet shall be presented at the Shareholders' meeting.
J nas Gardmark
Our audit report has been submitted 2017-f!i.f.b
PricewaterhouseCoopers AB
~:f~
To the general meeting of the shareholders of Assa Abloy Financial Services AB, corporate identity number 556283-0264
We have audited the annual accounts of Assa Abloy Finacial Services AB for the year 2016.
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 Assa Abloy Financial Services AB as of 31 December 2016 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet.
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. \"le are independent of Assa Abloy Financial Services AB in accordance with professional ethics for accountants in Sweden and have othenvise fulfilled our ethical responsibilities in accordance \Tith these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and that they give a fair presentation in accordance •vith the Annual Accounts Act. 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 that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company'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 intend to liquidate the company, to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the annual 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 standards in Sweden ""ill always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We must inform the Board of Directors of, among other matters, 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.
In addition to our audit of the annual accounts, we have also audited the administration of the Board of Directors and the Managing Director of Assa Abloy Financial Services AB for the year 2016 and the proposed appropriations of the company's profit or loss.
We recommend to the general meeting of shareholders that the profit be appropriated in accordance ''~th 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.
We conducted the audit in accordance >vi th generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of Assa Abloy Financial Services AB in accordance >vith professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance \~th these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the
requirements which the company's type of operations, size and risks place on the size of the company'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 financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration 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 accordance with law and handle the management of assets in a reassuring manner.
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:
Our objective concerning the audit of the proposed appropriations 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 Companies Act.
As part of an audit in accordance with generally accepted auditing sta ndards in Sweden, we exercise professional judi::,rment and maintain professional scepticism throughout the audit. The examination of the administration and the proposed appropriations of the company's profit or loss is based primarily on the audit of the accounts. Additional audit procedures 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 relationships that are material for the operations and where deviations and violations would have particular importance for the company's situa tion. 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 company's profit or loss we examined whether the proposal is in accordance with the Companies Act.
Stockholm 26 April 2017
PricewaterhouseCoopers AB
Bo Ka rlsson Authorized Public Accountant
556283-0264
for
2017-01-01 -- 2017-12-31
This docwnent has been accurately translated from Swedish to English. Stockholm
·~ Pric lr ouseCoopers AB/ Bo Karlsson
The Board of Directors and the Managing Director for ASSA ABLOY Financial Services AB submit the following administration report for the fiscal year 2017.
The company carries out internal banking operations within the ASSA ABLOY group.
The company is a wholly-owned subsidiary of ASSA ABLOY OY, Joensuu, Finland, which, in its turn, is wholly owned by ASSA ABLOY AB, org. no. 556059-3575, Stockholm, Sweden.
The year has not brought about any significant changes in the business.
No major changes in the business are expected during the upcoming year. The result and balance sheet are primarily influenced by the financing needs by Group companies. The financing needs are partly driven by the general development of the Group but also affected by the Group's acquisition activities.
Uncertainty about future developments and the course of events is a natural risk for any business. Risk-taking in itself provides opportunities for continued economic growth, but naturally the risks may also have a negative impact on business operations and company goals. It is therefore essential to have a systematic and efficient risk assessment process and an effective risk management program in general. The purpose of risk management is not to avoid risks, but to take a controlled approach to identifying, managing and reducing the effects of these risks.
Group Treasury at ASSA ABLOY is responsible for the Group's short- and long-term financing, financial cash management, currency risk and other financial risk management. Financial operations are centralized in a Treasury function, which manages most financial transactions as well as financial risks with a group-wide focus.
A financial policy, which is approved by the Board, regulates the allocation of responsibilities and control of the Group's financing activities. Group Treasury has the main responsibility for financial risks within the framework established in the financial policy. A large number of financial instruments are used in this work. Accounting principles, risk management and risk exposure are described in more detail in Notes 1 and 9, as well as Note 12. The company's financial risks mainly comprise financing risk, currency risk, interest rate risk and credit risk in financial transactions.
556283-0264
Financing risk refers to the risk that financing the company's capital requirements and refinancing outstanding loans become more difficult or more expensive. It can be reduced by maintaining an even maturity profile for borrowing and a high credit rating. The risk is further reduced by substantial unutilized confirmed credit facilities.
Since ASSA ABLOY has companies in a large number of countries, internal lending creates exposure to different currencies which leads to the effects from exchange rate fluctuations. These fluctuations may affect the company's earnings. The company may also be affected when it manages the currency exposure arising when handling the Group's cash flows, created when products are exported and sold in countries outside the country of production, so called transaction exposure. The company carries out continous follow-up and hedging of exchange positions and normally has at best limited net positions in foreign currency. Further information regarding financial risk management and financial instruments is found in Note 12.
With respect to interest rate risks, interest rate changes have a direct impact on ASSA ABLOY Financial Services AB's interest income and expense. The net interest expense is also impacted by the size of the company's net debt, its currency composition and interest duration. Group Treasury analyzes the Group's interest rate exposure and calculates the impact on income of interest rate changes c:.in a rolling 12-month basis. In addition to raising variable-rate and fixed-rate loans, various interest rate derivatives are used to adjust interest rate sensitivity.
Credit risk arises as a result of the financial transactions carried out by Group Treasury. Financial risk management exposes ASSA ABLOY Financial Services AB to certain counterparty risks. Such exposure may arise, for example, as a result of the investment of surplus cash, borrowings and derivative financial instruments. Counterparty limits are set and continuously monitored.
556283-0264
The development of the result of the company has improved. The result is affected positively by somewhat increased financing volumes during the period and a slightly increasing interest rates. In general, the negative interest rates have resulted in low lending margins in many currencies.
External financing: The company's long-term loan financing mainly consists of issuance under a Private Placement Program in the USA totaling USD 320 M ( 442), GMTN program of EUR 35 M (35) and USD 25 M (25), two loans from the European Investment Bank of EUR 55 M (73) and EUR 137 M (154) repectively, and a loan from the Nordic Investment Bank of EUR 110 M (110).
The company's short-term loan financing mainly consists of two Commercial Paper Programs for a maximum USD 1 000 M (1 000) and SEK 5 000 M (5 000) respectively. At year-end, SEK 1 307 M ( 455) of the Commercial Paper Programs had been utilized. In addition, substantial credit facilities are available, mainly in the form of a Multi-Currency Revolving Credit Facility of EUR 900 M (900), which was wholly unutilized at year-end. The maturity of this facility is in June 2020.
Additional financing is primarily internal within the ASSA ABLOY Group. Average interest fixing period on financial assets was 1,3 months (1,9) and 16,4 months (16,4) for financial liabilities at closing day.
Cash and cash equivalents amounted to SEK 6 M (152) and are invested in banks with high credit ratings.
Some of the company'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.
Equity: The company's equity totaled SEK 3 408 M (3 363) at year-end. The return on equity was 1 percent (1). The equity/asset ratio was 9 percent (9).
| 2017 | 2016 | 2015 | 2014 | 2013 | |
|---|---|---|---|---|---|
| Operating profit (MSEK) | 480 | 402 | 262 | 292 | 240 |
| Total assets (MSEK) | 38 399 | 38 459 | 35 713 | 32 291 | 31 272 |
| Return on shareholders' equity (%) | 1 | 1 | 2 | 1 | 13 |
| Equity (MSEK) | 3 408 | 3 363 | 3 324 | 3 261 | 3 246 |
| Net debt (MSEK) (al | - 3 956 | - 3 128 - 4 097 | - 3 122 - 3 447 | ||
| External gross debt (MSEK) | 9 822 | 9 755 | 9 654 | 10 096 | 9 569 |
(a) In the financial statements for 2012-2013 incorrect figures were reported, therefore the comparative figures have been adjusted.
| Profit proposal | ||
|---|---|---|
| -- | -- | ----------------- |
| Balanced earnings | 3 370 014 965 | |
|---|---|---|
| Year-end result | 36 952 840 | |
| Total | SEK | 3 406 967 805 |
The Board of Directors and the Managing Director propose available earnings to be allocated as follows:
| Carried forward to new financial year | 3 406 967 805 | |
|---|---|---|
| Total | SEK | 3 406 967 805 |
556283-0264
The financial statement means that a group contribution of kSEK 432 450 was paid to ASSA ABLOY Kredit AB.
The proposed value transfer in the form of group contribution has only a limited effect on the company's solidity. The solidity is comforting given the company's business continue to be run profitably.
It is the opinion of the Board that the dividend paid, in the form of group contribution, will neither prevent the company from meeting its commitments in the short and long term, nor from making the required investments. The transfer of value is therefore justifible in view of the provisions of chapter 17 section 3 paragraph 2-3 of the Swedish Companies Act.
The company applies the fair value principle in accordance with the Annual Accounts Act chapter 4 section 14 for the valuation of financial instruments, which has affected equity with 341 MSEK (894).
The Board of Directors propose available earnings to be carried forward to the new financial year.
Concerning the company's result and position in general, the following income statement and balance sheet including notes and comments, are referred to.
556283-0264
| kSEK | Note | 2017 | 2016 |
|---|---|---|---|
| 1 | |||
| Operating income | |||
| Interest from group companies | 955 919 | 870 309 | |
| External interest | 22 579 | 321 | |
| Exchange rate differences from group companies | 351 181 | 76 | |
| External exchange rate differences | 922 693 | 1624157 | |
| Other operating income | 3 | 6 468 | 3 876 |
| Total operating income | 2 258 841 | 2 498 739 | |
| Operating expenses | |||
| Interest to group companies | - 141 646 | - 92 960 | |
| External interest | - 362 259 | - 387 838 | |
| Exchange rate differences to group companies | - 6 949 | - 676 284 | |
| External exchange differences | -1 239 540 | - 910 189 | |
| Administrative expenses | 4 | - 18 387 | - 19 907 |
| Other operating expenses | - 10 234 | - 9 279 | |
| Total operating expenses | -1 779 015 | -2 096 457 | |
| Operating profit | 479 826 | 402 282 | |
| Appropriations | 5 | - 432 450 | - 361 138 |
| Tax | 6 | - 10 423 | - 9 053 |
| Net result for the year | 36 953 | 32 091 |
556283-0264
| Balance Sheet | |||
|---|---|---|---|
| ASSETS | |||
| kSEK | Note | 2017-12-31 | 2016-12-31 |
| 1 | |||
| Financial fixed assets | |||
| Receivables from group companies | 4 921 744 | 4 540 848 | |
| Total financial fixed assets | 4 921 744 | 4 540 848 | |
| Total fixed assets | 4 921 744 | 4 540 848 | |
| Current assets | |||
| Receivables from group companies | 33 094 501 | 32 840 653 | |
| Current tax assets | 4 123 | 4 124 | |
| Other receivables | 7 | 67 | 65 |
| Deferred expenses and | |||
| accrued income | 8 | 371 806 | 921 695 |
| Cash and bank | 6 436 | 151 685 | |
| Total current assets | 33 476 933 | 33 918 222 | |
| Total assets | 38 398 677 | 38 459 070 |
556283-0264
| kSEK | Not | 2017-12-31 | 2016-12-31 |
|---|---|---|---|
| 1 | |||
| Equity | |||
| Restricted equity | |||
| Share capital | 1 000 | 1 000 | |
| Statutory reserve | 200 | 200 | |
| Total restricted equity | 1 200 | 1 200 | |
| Unrestricted equity | |||
| Balanced earnings | 3 370 015 | 3 330 024 | |
| Net profit for the year | 36 953 | 32 091 | |
| Total unrestricted equity | 3 406 968 | 3 362 115 | |
| Total equity | 3 408 168 | 3 363 315 | |
| Long-term liabilities | |||
| Liabilities to external institutions | 6 035 912 | 7 866 033 | |
| Liabilities to group companies | 10 147 138 | 7 965 206 | |
| Total Long-term liabilities | 9 | 16 183 050 | 15 831 239 |
| Current liabilities | |||
| Liabilities to external institutions | 3 786 884 | 1 889 869 | |
| Liabilities to group companies | 14 530 332 | 17 046 982 | |
| Accrued expenses and | |||
| deferred income | 10 | 490 243 | 327 665 |
| Total current liabilities | 18 807 459 | 19 264 516 | |
| Total equity and liabilities | 38 398 677 | 38 459 070 |
556283-0264
| Restricted eguit~ | Unrestricted eguit~ | ||||
|---|---|---|---|---|---|
| Share | atutor~ | Hedge | Other un- | Total | |
| kSEK | caRital | reserve | reserve restricted eguit~ | eguity | |
| Equity 2015-12-31 | 1000 | 200 | - 16 824 | 3 339 743 | 3 324 118 |
| Hedge reserve | 7 106 | 7 106 | |||
| Group contribution | 0 | 0 | |||
| Distribution of profit | 0 | 0 | |||
| Tax effect of group contribution | 0 | 0 | |||
| Year-end result | 32 091 | 32 091 | |||
| Equity 2016-12-31 | 1000 | 200 | - g 718 | 3 371 835 | 3 363 315 |
| Hedge reserve | 7 901 | 7 901 | |||
| Group contribution | 0 | 0 | |||
| Distribution of profit | 0 | 0 | |||
| Tax effect of group contribution | 0 | 0 | |||
| Year-end result | 36 953 | 36 953 | |||
| Equity 2017-12-31 | 1000 | 200 | - 1 817 | 3 408 787 | 3 408 168 |
The share capital consists of 10 shares with a par value of 100 000 SEK.
556283-0264
| ASSA ABLOY Financial Services cash flow statement | ||
|---|---|---|
| kSEK | ||
| Operating activities | ||
| Operating profit | 479 826 | 402 282 |
| Paid tax | - 10 425 | - 12 346 |
| Cash flow from operating activities | ||
| before changes in working capital | 469 400 | 389 936 |
| Increase (-) decrease ( +) current receivables | 293 364 | -2 420 931 |
| Increase ( +) decrease (-) current operating liabilities | - 517 791 | 569 121 |
| Cash flow from operating activities | 244 974 | -1 461 874 |
| Investing activities | ||
| Investments other financial fixed assets | - 380 896 | - 197 812 |
| Cash flow from investing activities | - 380 896 | - 197 812 |
| Financing activities | ||
| External loans raised | 853 873 | |
| Internal loans raised | 2 181 932 | 1 122 404 |
| External loans repaid | -1 830 120 | |
| Group contribution | - 361 138 | - 190 242 |
| Cash flow from financing activities | - 9 327 | 1 786 036 |
| Cash flow for the year | - 145 249 | 126 349 |
| Liquid funds at beginning of year | 151 685 | 25 336 |
| Exchange rate difference on liquid funds | ||
| Liquid funds at end of year | 6 436 | 151 685 |
| Disclosure to the cash flow statement: | ||
| Interest received | 978 499 | 870 630 |
| Interest paid | - 503 905 | - 480 798 |
The financial statement for ASSA ABLOY Financial Services AB is prepared applying the statements of the Annual Accounts Act and the Swedish Accounting Standards Council's recommendation BFNAR 2012: 1 Financial statement and consolidated accounts (K3). The company's accounting principles are unchanged from previous years.
Receivables and liabilities in foreign currencies are valued at closing rate. The forward rate has been used for hedging of accounts receivable and accounts payable while hedging of borrowing and lending to subsidiaries is made at spot rate. Transactions in foreign currencies are translated at the rate current on the transaction date.
Interest Income is accounted for in accordance with effective yield.
Reported tax includes tax that is to be paid or received for the current year, adjustments relating to tax due for previous years, and changes in deferred tax .
Tax amounts have been calculated as nominal amounts in accordance with the tax regulations and in accordance with tax rates that have either been decided or have been notified and can confidently be expected to be confirmed.
For items reported in the Income statement, associated tax effects are also reported in the income statement. The tax effect of Items reported directly against shareholders' equity are themselves reported against shareholders' equity.
Deferred tax is accounted for under the balance sheet method. This means that deferred tax Is accounted for on all temporary differences between the book values of assets and liabilities and their taxable values.
Deferred tax receivables relating to tax losses carryforward or other future tax allowances are reported to the extent that it Is probable that the allowance can be set against taxable income in future taxation.
Receivables are valued at the amounts that after individual assessment are expected to be received.
The cash flow statement has been prepared according to the indirect method . The reported cash flow includes only transactions involving cash payments.
The companiy carries out internal banking operations within the ASSA ABLOY group.
Financial assets include cash and cash equivalents, trade receivables, short-term investments and derivatives, and are classified in the following categories : financial assets at fair value through profit and loss, available-for-sale financial assets, and loans and receivables. Management determines the classification of financial assets at initial recognition.
This category is divided into two sub-categories: financial assets held for trading, and those classified on acquisition as financial assets at fair value through profit and loss. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if classified as such by management. Derivatives are also classified as held for trading provided they are not defined as hedges. Assets In this category are classified as current assets.
Available-for-sale financial assets are non-derivative assets that have been identified as available for sale or assets that have not been classified in any other category. They are included in noncurrent assets, unless management intends to sell the asset within 12 months of the end of the reporting period. Changes in fair value are recognized in the income statement as a financial item.
Trade receivables and short-term investments are non derivative financial assets with fixed or determinable payment streams, which are not quoted in an active market. They are recognized In current assets, except for receivables maturing more than 12 months after the reporting date, which are classified as non-current assets.
Financial liabilities include deferred considerations, loan liabilities, trade payables and derivative instruments. Recognition depends on how the liability is classified.
This category includes derivatives with negative fair value that are not used for hedging and financial liabilities held for trading. Liabilities are measured at fair value on a continuous basis and changes in value are recognized In the income statement as a financial item.
Loan liabilities 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 calculated when the loan was raised. Accordingly, premiums and discounts as well a 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 liabilities have a term of less than one year.
Trade payables are initially valued at fair value, and subsequently at amortized cost using the effective interest method.
Acquisitions and sales of financial assets are recognized on the trade date, the date on which the company commits to purchase or sell the asset. Transaction costs are initially Included in fair value for all financial Instruments, except for those recognized at fair value through profit and loss where the transaction cost is recognized through profit and loss. The fair value of quoted investments Is based on current bid prices. In the absence of an active market for an investment, the company applies various measurement techniques to determine fair value. These include use of available information on current arm's length transactions, comparison with equivalent assets and analysis of discounted cash flows. The company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset is derecognized from the balance sheet when the right to receive cash flows from the asset expires or is transferred to another party through the transfer of all the risks and benefits associated with the asset to the other party. A financial liability is derecognized from the balance sheet when the obligation is fulfilled, cancelled or expires, see above.
Derivative instruments 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.
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
When entering into the hedge transaction, the relationship between the hedging instrument and hedged items are documented, as well as its risk management strategy for the hedge. The company 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 measured by estimating future discounted cash flows. For information on the fair value of derivative instruments, see Note 12.
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 the Hedge reserve 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 recognized 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 transaction is no longer expected to occur, the accumulated gain or loss recognized in equity is immediately transferred to the income statement as a financial item. When a forecast transaction is no longer expected to occur, the gain or loss recognized in the Hedge reserve is recognized directly under financial Items.
The company applies the fair value principle in accordance with the Annual Accounts Act chapter 4 section 14 for the valuation of financial instruments.
Financial instruments recorded in the balance sheet include financial assets, other financial assets, accounts receivable, accounts payable and loan debts. The fair value of the financial instruments are calculated using market quotations on the balance sheet day. Market interest rates form the basis for the calculation of market values of long term loans. For other financial instruments, primarily short term loans and deposits where market quotations are not available, the fair value is set at book value.
All transactions with financial assets are recorded on the business day.
Loans are initially recorded at the amount received after deduction of transactional costs. If the booked amount is different from the amount that has to be repaid at maturity the difference is amortized as interest cost over the duration of the loan. By doing so the booked amount is equal to the amount that has to repaid at maturity. The booking of financial liabilities is discontinued only after the debts have been repaid in full or forgiven by the lender.
The company uses derivative instruments to cover risks related to foreign exchange movements and to hedge its interest rate exposure.
The company's pension obligations are accounted for in accordance with FAR SRS RedR4. The pension obligations are covered by external insurance companies.
Return on shareholders' equity as shown in the multi-year summary is calculated as: net profit after tax, divided by shareholders' equity at year-end.
The net debt comprise all internal and external interest-bearing financial instruments, including positive and negative market values of derivatives.
External gross debt consists of all interest-bearing external loans including negative market values of derivatives.
No material accounting estimations or assumptions which could have had an significant effect on the carrying amounts have been made.
| kSEK | 2017 | 2016 |
|---|---|---|
| Change market value Interest rate swaps | 6 468 | 3 869 |
| Exchange rate differences trade receivables/payables | 0 | 7 |
| Total | 6 468 | 3 876 |
| Note 4 Administrative expenses |
||
| Audit fees | ||
| kSEK | 2017 | 2016 |
| PricewaterhouseCoopers AB | ||
| Audit assignment | 458 | 388 |
| Audit other than the audit assignment | 0 | 0 |
| Tax consultancy | 0 | 0 |
| Other services | 0 | 0 |
| Total | 458 | 388 |
The fees for audit and audit related services performed by PricewaterhouseCoopers AB amount to 458 kSEK (388 kSEK). The company has not had any other costs related to services performed by PricewaterhouseCoopers AB. No services has been purchased from other auditing firms.
There has been no remuneration to the board of directors.
| kSEK | 2017 | 2016 | ||||
|---|---|---|---|---|---|---|
| Salaries and other benefits |
Social costs (of which pension costs) |
Salaries and other Socia I costs (of benefits |
which pension costs) |
|||
| Managing Director | 415 | 216 (86) | 0 | 0 (0) | ||
| Employees | 5 439 | 3 285 (1 215) | 5 753 | 3 559 (1 375) | ||
| Total | 5 854 | 3 501 (1 301) | 5 753 | 3 559 (1 375) |
The company has a new managing director as of 2017-07-13. The former managing director was employed In another company.
Average number of employees
Average number of employees per country and gender
| 2017 | 2016 | |||
|---|---|---|---|---|
| Country | Women | Men | Women | Men |
| Sweden | 3 | 5 | 3 | 5 |
Gender distribution in the Board of Directors
| 2017 | 2016 | |||
|---|---|---|---|---|
| Country | Women | Men | Women | Men |
| Sweden | 2 | 2 | 1 | 3 |
556283-0264
| kSEK | 2017 | 2016 |
|---|---|---|
| Group contributions paid | - 432 450 | - 361 138 |
| Total | - 432 450 | - 361138 |
| Note 6 Tex |
||
| kSEK | 2017 | 2016 |
| Current tax | - 10 423 | - 9 053 |
| Total | - 10 423 | - 9 053 |
| Nominal tax rate (%) | 22,0 | 22,0 |
| Effective tax rate (%) | 2,2 | 2,3 |
| Operating profit | 479 826 | 402 282 |
| Tax at nominal tax rate | - 105 562 | - 88 502 |
| Tax attributable to prior year | 3 | 0 |
| Effect of non-deductible expense | - 3 | - 3 |
| Effect of non-taxable income | 0 | 1 |
| Tax effect of group contribution paid | 95 139 | 79 450 |
| Tax on operating profit | ||
| as in Income statement | - 10 423 | - 9 053 |
| kSEK | 2017-12-31 | 2016-12-31 |
|---|---|---|
| Short term deposit | 1 | 1 |
| VAT recoverable | 65 | 58 |
| Other receivables | 1 | 6 |
| Total | 67 | 65 |
| kSEK | 2017-12-31 | 2016-12-31 |
|---|---|---|
| Accrued interest income group companies | 30 452 | 27 406 |
| Market value interest rate derivatives | 82 344 | 98 575 |
| Market value currency forwards | 258 318 | 795 215 |
| Miscellaneous | 693 | 499 |
| Total | 371807 | 921695 |
| kSEK | 2017-12-31 | 2016-12-31 |
|---|---|---|
| Liabilities to credit institutions | 6 035 912 | 7 866 033 |
| Liabilities to group companies | 10 147 138 | 7 965 206 |
| Total | 16 183 050 | 15 831 239 |
556283-0264
| kSEK | Year | 2017-12-31 | 2016-12-31 |
|---|---|---|---|
| US Private Placement <•l | 2018 | 0 | 1 109 933 |
| Other long-term loan <•l | 2018 | 0 | 857 278 |
| US Private Placement | 2019 | 206 641 | 227 710 |
| Loan NIB | 2019 | 542 059 | 526 281 |
| Other long-term loan | 2019 | 1 600 778 | 1159 995 |
| US Private Placement | 2020 | 577 250 | 637 468 |
| Global MTN Program | 2020 | 359 727 | 354 984 |
| Loan EIB (b) | 2020 | 542 272 | 702 375 |
| Other long-term loan | 2020 | 1 604 845 | 1 582 074 |
| Loan NIB | 2021 | 541 917 | 526 181 |
| Other long-term loan | 2021 | 1 086 393 | 1 121 323 |
| US Private Placement | 2022 | 1 265 039 | 1 404 275 |
| Loan EIB (bl | 2022 | 1 131 655 | 1 405 781 |
| Other long-term loan | 2022 | 1 250 398 | 136 709 |
| Global MTN Program | 2023 | 212 811 | 238 887 |
| US Private Placement | 2024 | 618 142 | 683 030 |
| Other long-term loan | 2024 | 1 392 196 | 951 788 |
| Other long-term loan | 2025 | 1 239 580 | 1 254 631 |
| Other long-term loan | 2027 | 796 238 | 287 335 |
| Other long-term loan | 2029 | 532 409 | 0 |
| Other long-term loan | 2030 | 682 700 | 663 201 |
| Total | 16 183 050 | 15 831 239 |
(a) The loans are classified as current llabilltles.
(b) The loans amortizes starting November 2017. The dates in the table refers to the average amortization dates.
| kSEK | 2017-12-31 | 2016-12-31 |
|---|---|---|
| Accrued interest expenses group companies | 53 257 | 40 748 |
| Accrued interest expenses credit institutions | 29 037 | 35 061 |
| Market value currency forwards | 320 302 | 173 539 |
| Market value interest derivatives and FRA | 74 672 | 65 595 |
| Miscellaneous | 12 976 | 12 722 |
| Total | 490 243 | 327 665 |
Parent company for ASSA ABLOY Financial Services AB is ASSA ABLOY Oy, Finland. Parent company In the largest group of which ASSA ABLOY Financial Services AB is a subsidiary, and where consolidated annual accounts are established, is ASSA ABLOY AB, 556059-3575, from where the Group's Annual Report can be obtained .
Currency risks affect ASSA ABLOY Financial Services AB mainly through translation of capital employed and net debt. To neutralize the translation and transaction exposure arising between net debt and internal needs currency forward contracts are used.
Average interest fixing period on financial assets was 1,3 months and 16,4 months for financial liabilities at closing day.
The company's interest rate duration and distribution of fixed rates in relation to floating is dependent on the Group's overall interest rate policy and funding . At year end, 6% of the assets had fixed rates and 20% of the liabilities. Interest rate swaps are used to adjust the Interest rate duration and interest rate risk to the Group's desired level.
Financing and liquidity risks are defined as the risks of being unable to meet payment obligations as a result of inadequate liquidity or difficulties in obtaining credit from external sources. ASSA ABLOY Financial Services AB strives to have access, on every occasion, to both short-term and long-term loan facllltles.
Financial risk management exposes ASSA ABLOY Financial Services AB to certain counterparty risk. This exposure arises, for instance, from the placement of surplus cash and through the use of derivative Instruments. ASSA ABLOY's policy is to minimize the potential credit risk by using cash available from subsidiaries to amortize external debt. This objective is mainly controlled through the cash pool network for which ASSA ABLOY Financial Services AB is responsible. Nevertheless the Group may deposit surplus funds on a short-term basis with banks to match maturities . Derivative instruments are allocated to banks according to risk factors set in the Treasury Policy to limit counterparty risk.
Outstanding derivative instruments at 2017-12-31 (kSEK)
| 2017-12-31 | 2016-12-31 | |||||
|---|---|---|---|---|---|---|
| Instrument | Positive market value |
Negative market value |
Nominal value | Positive market | Negative value market value |
Nominal va lue |
| Currency forwards - funding | 258 318 | -320 302 | 20 778 441 | 795 215 | -173 539 | 19 262 718 |
| Interest rate derivatives | 82 350 | -20 032 | 2 709 652 | 98 590 | -27 797 | 2 113 275 |
| Cross currency swaps | -6 | - 54 640 | 527 343 | -15 | - 37 798 | 519 420 |
| Total | 340 662 | - 394 974 | 24 015 436 | 893 790 | - 239 134 | 21 895 413 |
Disclosures of off setting of financial assets and liabilities 2017-12-31 (kSEK)
| -- -- |
Gross amount |
Amounts netted In the balance sheet |
Net amounts in the balance sheet |
Amount covered by netting agreement but not __Qffs_g_t |
Net amount |
|---|---|---|---|---|---|
| 2017-12-31 | |||||
| Financial assets | 340 662 | 340 662 | 39 061 | 301 601 | |
| Financial liabilities | - 394 974 | -394 974 | -39 061 | -355 913 | |
| 2016-12-31 | |||||
| Financial assets | 893 790 | 893 790 | 76 597 | 817 193 | |
| Financial liabilities | - 239 134 | -239 134 | -76 597 | -162 537 |
Netted financial assets and financial liabilities only consist of derivative instruments.
556283-0264
Financial instruments: carrying amounts and fair values by measurement category
| 2017-12-31 | 2016-12-31 | ||||
|---|---|---|---|---|---|
| Categories* | Carrying amount |
Fair value | Carrying amount |
Fair value | |
| Financial assets | |||||
| Derivative instruments - hedge accounting | 4 | 82 350 | 82 350 | 98 575 | 98 575 |
| Derivative instruments - held for trading | 2 | 258 312 | 258 312 | 795 21S | 7qs ?15 |
| Cash and cash equivalents | 1 | 6 436 | 6 436 | 151 685 | 151 685 |
| Financial liabilities | |||||
| Long-term loans - hedge accounting | 3 | 572 538 | 572 538 | 593 871 | 593 871 |
| Long-term loans - not hedge accountina | 3 | 15 610 512 | 15 610 608 | 15 237 368 | 15 298 525 |
| Long-term loans, total | 16 183 050 | 1.6 183 146 | 15 831 239 | 15 892 396 | |
| Short-term loans - hedge accounting | 3 | 0 | 0 | 0 | 0 |
| Short-term loans - not hedge accounting | 3 | 18 317 216 | 18 317 216 | 18 936 850 | 18 936 850 |
| Derivative instruments - hedge accounting | 4 | 20 046 | 20 046 | 27 797 | 27 797 |
| Derivative instruments - held for trading | 2 | 374 942 | 374 942 | 211 337 | 2.11 337 |
* Applicable categories:
1 = Loans and receivables.
2 = Financial Instruments at fair
value through profit or loss. 3 = Financial liabilities at amortized
cost.
4 = Derivative hedge accounting.
The fair value of long-term borrowing is based on observable data by discounting cash flows to market rate, while the fair value of current receivables and current liabilities is considered to correspond to the carrying amount.
The company has no pledged assets or contingent liabilities
No events which could have a material significance for the company has occurred after the fiscal year.
| Total | SEK | 3 406 967 805 |
|---|---|---|
| Year-end result | 36 952 840 | |
| Balanced earnings | 3 370 014 965 | |
| Profit proposal |
The Board of Directors and the Managing Director propose available earnings to be allocated as follows:
| Carried forward to new financial year | 3 406 967 805 | |
|---|---|---|
| Total | SEK | 3 406 967 805 |
556283-0264
The Income statement and Balance sheet shall be presented at the Shareholders' meeting.
Stockholm 2018-.C!:.l-..U?
Lena Bernhardsson
Managing Director
~ Chairman
Our audit repo1t has been submitted 2018-ill-.2f9
4'wate hpu r___ lss l Author llc Accountant
To the general meeting of the shareholders of ASSA ABLOY Financial Services AB, corporate identity number 556283-0264
We have audited the annual accounts of ASSA ABLOY Financial Services AB for the year 2017.
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 ASSA ABLOY Financial Services AB as of 31 December 2017 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for ASSA ABLOY Financial Services AB.
We conducted our audit ln accordance With Interiuiticirial Standards cin Auditing (iSA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of ASSA ABLOY Financial Services AB in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and that they give a fair presentation in accordance with the Annual Accounts Act. 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 that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company'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 intend to liquidate the company, to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the annual 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 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts.
A further description of our responsibility for the audit of the annual accounts is available on Revisorsinspektionen's website: www.revisorsinspektionen.se/revisornsansvar. This description is part of the auditor's report.
In addition to our audit of the annual accounts, we have also audited the administration of the Board of Directors and the Managing Director of ASSA ABLOY Financial Services AB for the year 2017 and the proposed appropriations of the company's profit or loss.
We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.
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 ASSA ABLOY Financial Services AB in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the i·equiiements which the company's type of operations, size and "risks place on the size cifthe company'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 financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. [The Managing Director shall manage the ongoing administration 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 accordance with law and handle the management of assets in a reassuring manner.]
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:
Our objective concerning the audit of the proposed appropriations 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 Companies Act.
A further description of our responsibility for the audit of the administration is available on Revisorsinspektionen's website: www.revisorsinspektionen.se/revisornsansvar. This description is part of the auditor's report.
Stockholm 25 April 2018 rh~::::-
Bo ~~·l st' Authorize ublic Accountant
P.O. Box 70340 P.O. Box 70340 Sweden Sweden
Klarabergsviadukten 90 Klarabergsviadukten 90 107 23 Stockholm 107 23 Stockholm
Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom
Reuterweg 16 60323 Frankfurt am Main Germany
Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom
To the Issuers and the Guarantor as to Swedish law Mannheimer Swartling P.O. Box 4291 Carlsgatan 3
SE-203 14 Malmö Sweden
To the Dealers as to English law
Allen & Overy LLP One Bishops Square London El 6AD United Kingdom
To the Issuers PricewaterhouseCoopers AB Torsgatan 21 113 97 Stockholm Sweden
5 The North Colonnade Citigroup Centre Canary Wharf Canada Square London E14 4BB Canary Wharf United Kingdom London E14 5LB
Kaiserstraße 16 (Kaiserplatz) 2-12 Holmens Kanal 60311 Frankfurt am Main DK-1092 Copenhagen K Germany Denmark
Foppingadreef 7 Mizuho House 1102 BD Amsterdam 30 Old Bailey
106 40 Stockholm 75009 Paris
London EC2V 5DD Sweden United Kingdom
United Kingdom
The Netherlands London EC4M 7AU United Kingdom
250 Bishopsgate Satamaradankatu 5 London EC2M 4AA FI-00020 Nordea, Helsinki United Kingdom Finland
Kungsträdgårdsgatan 8 29 boulevard Haussmann Sweden France
One Basinghall Avenue SE-105 34 Stockholm
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