Annual Report (ESEF) • Mar 17, 2025
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Download Source File549300YECS8HKCIMMB672024-01-012024-12-31549300YECS8HKCIMMB672023-01-012023-12-31549300YECS8HKCIMMB672023-12-31549300YECS8HKCIMMB672024-12-31549300YECS8HKCIMMB672022-12-31549300YECS8HKCIMMB672022-12-31ifrs-full:IssuedCapitalMember549300YECS8HKCIMMB672022-12-31ifrs-full:AdditionalPaidinCapitalMember549300YECS8HKCIMMB672022-12-31ifrs-full:OtherReservesMember549300YECS8HKCIMMB672022-12-31ifrs-full:RetainedEarningsMemberiso4217:SEKiso4217:SEKxbrli:shares549300YECS8HKCIMMB672022-12-31ifrs-full:NoncontrollingInterestsMember549300YECS8HKCIMMB672023-01-012023-12-31ifrs-full:RetainedEarningsMember549300YECS8HKCIMMB672023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember549300YECS8HKCIMMB672023-01-012023-12-31ifrs-full:OtherReservesMember549300YECS8HKCIMMB672023-12-31ifrs-full:IssuedCapitalMember549300YECS8HKCIMMB672023-12-31ifrs-full:AdditionalPaidinCapitalMember549300YECS8HKCIMMB672023-12-31ifrs-full:OtherReservesMember549300YECS8HKCIMMB672023-12-31ifrs-full:RetainedEarningsMember549300YECS8HKCIMMB672023-12-31ifrs-full:NoncontrollingInterestsMember549300YECS8HKCIMMB672024-01-012024-12-31ifrs-full:RetainedEarningsMember549300YECS8HKCIMMB672024-01-012024-12-31ifrs-full:NoncontrollingInterestsMember549300YECS8HKCIMMB672024-01-012024-12-31ifrs-full:OtherReservesMember549300YECS8HKCIMMB672024-12-31ifrs-full:IssuedCapitalMember549300YECS8HKCIMMB672024-12-31ifrs-full:AdditionalPaidinCapitalMember549300YECS8HKCIMMB672024-12-31ifrs-full:OtherReservesMember549300YECS8HKCIMMB672024-12-31ifrs-full:RetainedEarningsMember549300YECS8HKCIMMB672024-12-31ifrs-full:NoncontrollingInterestsMember Annual Report 2024 Experience a safer and more open world B ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements download a printable pdf here Securing sustainable, profitable growth Our vision is to be the global leader in providing innovative access solutions that help people feel safe and secure so that they can experience a more open world. By investing in product innovation, efficient production processes and a world-leading market presence, we have created substantial value for our stakeholders during the last 30 years. We are committed to continuing our long-term value creation for all our stakeholders and securing a sustainable, profitable future. Profitability Injury rate Carbon footprint Growth Innovation Annual growth through a combination of organic and acquired growth over a business cycle 10% Sales from products launched in the last three years 25% Number of injuries per million hours worked reduction to 2025 vs 2019 Absolute Scope 1 & 2 carbon emission reduction to 2025 vs 2019 –33% –25% Operating margin over a business cycle 16–17% Our goals 1 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements download a printable pdf here Contents Report of the Board of Directors Report of the Board of Directors ......................................... 45 Significant risks and risk management ............................... 47 Corporate governance .......................................................... 50 Board of Directors ..................................................................... 54 Executive Team ........................................................................... 56 Internal control – financial reporting ................................. 59 Sustainability statement ...................................................... 60 General disclosures ................................................................... 65 Environmental information ................................................... 81 Social information ..................................................................... 94 Governance information ..................................................... 103 Financial statements Financial reports .................................................................. 111 Notes ..................................................................................... 123 Five years in summary ......................................................... 147 Comments on five years in summary ............................... 148 Definitions of key ratios ...................................................... 149 Board of Directors and CEO assurance ............................. 150 Auditor’s report ................................................................... 151 Auditor’s limited assurance report of the voluntary sustainability statement ............................. 156 Shareholder information ................................................... 158 The ASSA ABLOY share .......................................................... 158 Information for shareholders ............................................. 161 Financial calendar and contact details ............................ 161 Introduction The year in brief .................................................................................... 2 Statement from our CEO .................................................................. 4 Highlights in 2024 ............................................................................... 6 Who we are The global leader in access solutions ..................................... 8 ASSA ABLOY in your daily life ................................................11 Value-creating busisness model ...........................................13 People .......................................................................................14 Sustainability ...........................................................................15 30 years of innovation and growth ......................................16 ASSA ABLOY as an investment Good industry to be in .......................................................... 20 A leading market position ..................................................... 22 A well-proven strategy ..........................................................24 Financial targets ......................................................................29 Divisions overview Overview highlights .............................................................. 33 Opening Solutions EMEIA ..................................................... 34 Opening Solutions Americas ............................................... 36 Opening Solutions Asia Pacific ............................................ 38 Global Technologies ............................................................... 40 Entrance Systems ................................................................... 42 CEO statement page 4 Our strategy page 24-28 How we create value page 13 2 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction • The year in brief Statement from our CEO Highlights in 2024 Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements The year in brief | Introduction Margin in line with the financial target • Sales increased by 7% to SEK 150,162 M (140,716) driven by strong acquired growth of 8% while organic sales declined 1%. • Operating income increased strongly by 10% to SEK 24,296 M (22,185) with an operating margin of 16.2% (15.8). • Earnings per share grew by 4% to SEK 14.09 (13.54). Acquisitions during the year • 26 acquisitions were completed and contributed to net acquired sales growth of 8% for the year. • HHI, acquired in 2023, developed in accordance with our implementation plan and contributed to 5% acquired growth. Product innovation • We launched more than 550 new products and solutions. • More than 250 new patents were registered. • About 23% of sales was generated by products launched over the last three years. Sustainability • The implementation of our 2025 sustainability program proceeded and delivered in line with or ahead of plan. • Scope 1 & 2 carbon emissions decreased by 20% versus last year where 2% is due to focused energy efficiency improvements and 18% is linked with implementing the most recent emission factors. Since 2019 Scope 1 & 2 emissions have been reduced by 36%. • Scope 3 emissions decreased by 3% and have been reduced by 10% since 2019. • The injury rate was unchanged versus last year and is down 17% since 2019. Key figures 2023 2024 Change Sales, SEK M 140,716 150,162 +7% of which: Organic growth, % +3 -1 of which: Acquired growth, net total, % +8 +8 of which: Exchange rate effects, % +5 0 Operating income (EBIT), SEK M 1 22,185 24,296 +10% Operating margin, % 1 15.8 16.2 +40bps Income before tax (EBT), SEK M 1 19,654 20,914 +6% Operating cash flow, SEK M 25,232 23,052 -9% Return on capital employed, % 1 15.6 14.4 –120bps Dividend, SEK/share 5.40 5.90 2 +9% 2 1 Excluding items affecting comparability. 2 As proposed by the Board of Directors. The year in brief SALES AND OPERATING INCOME (EBIT) 1 EARNINGS PER SHARE 1,2 1 Earnings per share has been restated due to the 3:1 share split in 2015. 2 Excluding items affecting comparability. SEK 0 3 6 9 12 15 24232221201918171615 1 Excluding items affecting comparability. 0 30,000 60,000 90,000 120,000 150,000 24232221201918171615 0 5,000 10,000 15,000 20,000 25,000 Sales, SEK M EBIT, SEK M Sales Operating income (EBIT) Sales grew by 7% and the EBIT-margin increased by 40bps to 16.2% due to strong operational execution. 3 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Injury rate The injury rate was unchanged in 2024 compared to last year and has decreased by 17% since 2019. The Group continued to introduce systematic actions throughout the organization and especially in new acquisitions with initiatives and awareness campaigns to reduce the injury rate. Carbon footprint Our absolute Scope 1 & 2 carbon emissions decreased by 20% versus last year where 2% is due to focused energy efficiency improvements and 18% is linked with implementing the most recent emission factors. These emissions have decreased by 36% compared to the 2019 base year. Scope 3 emissions decreased by 3% during the year and are down 10% since 2019. Innovation The new product ratio, which represents sales from products launched during the last three years was about 23%, up 100bps versus last year. The ratio increased in all divisions. Global Technologies has the highest ratio, which is driven by its technology focused product portfolio. In 2024, we launched over 20% more products than the prior year. Injury rate Absolute carbon footprint Innovation TARGET 2025 VS. 2019 (BASE YEAR) –33% –25% 25% Goals and outcomes We have set ambitious financial and sustainability goals. The finan- cial targets are set to balance growth with a return rate that can generate substantial and sustainable value. The sustainability targets set for 2025 are a step on the way to achieving the net zero emission target no later than 2050. Growth Sales grew by 7% in 2024, fueled by strong acquired growth of 8% from the HHI, Integrated Warehouse Solutions and Evolis acquisitions. Organic sales declined slightly by -1% with good growth in Americas, stable growth in EMEIA, and organic sales decline in Entrance Systems, Global Technologies, and Asia Pacific. Margin The adjusted operating margin reached 16.2% (15.8), in line with our financial target driven by strong operating leverage due to lower direct material costs and efficiency measures. The margin was diluted by 20bps due to acquisitions during the year and the 2023 HHI acquisition. Annual growth through a combination of organic and acquired growth Operating margin 1 1 Excluding items affecting comparability. 1 Number of injuries per million hours worked. OVER A BUSINESS CYCLE 10% 16–17% SEK M 0 40,000 80,000 120,000 160,000 24232221201918171615 % 10 12 14 16 18 20 24232221201918171615 Injury rate 1 0 1 2 3 4 2423222120 ’000 tons 0 100 200 300 2423222120 SEK M 0 5 10 15 20 25 2423222120 The year in brief | Introduction Introduction • The year in brief Statement from our CEO Highlights in 2024 Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Margin within the target range We can look back at a successful year in which ASSA ABLOY reached several milestones. In a challenging market we delivered record earnings with the operating margin in line with our financial target. We achieved our Scope 1 & 2 carbon emission reduction target one year ahead of plan. During the year, we also celebrated the 30th anniversary of ASSA ABLOY and its remarkable journey. ASSA ABLOY is the global leader in the industry and with continued focus and investments in innovation, we have a favorable position from which we will continue to lead our industry going forward. In 2024, total sales grew by 7%, driven by strong net acquired growth of 8% and a small organic sales decline of 1%. More than 550 product launches and 2% price realization supported our organic sales in a challenging market environment with weak residential demand and low activity in the logistics vertical. The small organic sales decline was more than compen- sated by a record year for acquisitions. In total 26 businesses were acquired. In the last five years, we have acquired 96 businesses, which have contributed in a significant way to our financial result. Through the acquisitions, we have also obtained technology that is widening our product offering. The operating income grew by 10% to a record SEK 24,296 M with a margin of 16.2%. We are back within our target margin range despite challenging market conditions and the dilution from the recent integration of acquisitions like HHI, SKIDATA, Integrated Warehouse Solutions and Level Lock. Operating cash flow was strong at SEK 23,052 M (25,232) with a conversion rate of 110%. ASSA ABLOY is a strong cash generating business and over the last five years the accumulated operating cash flow has been SEK 91,917 M with a conversion rate of 111%. Divisional performance Our divisions delivered strong earnings in challenging market conditions. Organic sales growth was highest in the Americas division with 2%, driven by a robust demand in the North America Non-Residential seg- ment and stable development in the North America Residential segment. The operating margin reached 18.5%, despite dilution from the acquisition of HHI. HHI’s margin improved throughout the year thanks to the realization of synergies. In EMEIA the organic sales growth was stable. The residential segment was weak, but thanks to strong performance in the non-residential segments and emerging markets, the division reported stable growth combined with a 60bps improvement of the operating margin to 14.2%. Organic sales growth in Entrance Systems was slightly down by 1%. The Pedestrian and Perimeter Security segments grew strongly, while a slowdown in the demand for loading docks and weak residential demand for garage doors in the US impacted the growth negatively. Our service business continues to grow strongly and contributed to the division deliv- ering a strong margin of 17.2% despite dilution from acquisitions of 50bps. Global Technologies organic sales declined by 2% due to very strong comparable sales figures from a catch-up of a backlog in the Physical Access Control business area in 2023. The operating margin reached 17.5%. Finally, the construc- tion market in China continued to be very weak and was the main reason for the negative organic sales development in Asia Pacific of 6%. Thanks to strong cost control, the margin improved by 40bps to 6.8% during the year. MSEK 24,296 operating income MSEK 150,162 total sales MSEK 23,052 operating cash flow 4 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction The year in brief • Statement from our CEO Highlights in 2024 Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Statement from our CEO | Introduction A well-proven strategy finetuned As the access market evolves, we reviewed and fine- tuned our strategy during the year. The main pieces of the strategy remain unchanged, such as our mission and vision, our financial targets and the strategic objectives that guide us in our daily operation, but we have clarified our growth focus via our nine Priorities discussed in more detail on pages 26–28 in this report. While the need for safety and security is the funda- mental driver for our business, our strongest growth driver is the transition to electromechanical products and solutions. In 2024, electromechanical products and solutions grew currency adjusted by 8% in our regional divisions, with a compounded annual growth rate of 9% in the last ten years. Going forward, we ex- pect this to continue to be our single fastest growing product area and we continue to make important investments in product innovation to accelerate this growth. Our innovation efforts around sustainability enable us to grow faster in a market where focus on sustainability is increasing. Successful implementation of our sustainability program An important achievement during the year was the reduction of our absolute Scope 1 & 2 carbon emissions that now are 36% below the level in 2019. However, Scope 3 emissions represent a bigger challenge and account for 96% of our total carbon emissions. In recent years we have methodically identified these emissions and in 2024 initiated concrete actions to reduce future emissions. As these mainly are incurred by our suppliers, we are working together with them to achieve the targets. Finally, our efforts to ensure that ASSA ABLOY is a safe working environment is bearing fruit and our injury rate is down 17% since our 2019 base year. We are now working on launching our next sustainability program as our program for 2020–2025 will soon end. 30 years and more to come ASSA ABLOY celebrated its 30th anniversary in 2024. We have grown from a regional Nordic lock com- pany to the global leader in access solutions. Over the 30 years, our compounded annual growth rate has been 13% and we have paid almost SEK 58bn in dividends and our share price has increased by more than 17,800%. This has been achieved thanks to our dedicated employees around the world. Thank you to all of you who have contributed to this remarkable journey! Our decentralized organizational setup permits us to make decisions close to the customer with deep local knowledge. As our business dynamics are very ASSA ABLOY has made significant achievements over the last 30 years, but we have many more opportunities ahead of us. local, this gives us the agility to react fast to specific market conditions and has proven to be a strong competitive advantage. Our global footprint also permits us to realize important scale advantages. This is translated in higher innovation output and strong operational efficiencies. ASSA ABLOY has made significant achievements over the last 30 years, but we have many more opportunities ahead of us. By staying humble, curious and eager, our strategy will continue to deliver great value in the future. Thank you for your trust in ASSA ABLOY over the years. Stockholm, 12 March 2025 Nico Delvaux President and CEO Nico Delvaux at our Traka factory in Olney, the UK, during a visit in 2024. 5 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction The year in brief • Statement from our CEO Highlights in 2024 Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Statement from our CEO | Introduction 6 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction The year in brief Statement from our CEO • Highlights in 2024 Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Highlights in 2024 | Introduction Highlights in 2024 Product leadership is one of the most important drivers for organic growth. In 2024, about 23% of our sales was generated by products launched in the past three years. We have been focusing on electromechanical products and solutions, a fast developing and dynamic product category. In 2024, our sales of electromechanical products and solu- tions grew currency adjusted by 8% in the regional divisions. More than 550 products were launched during the year. For example, Level Lock, that offers an 'invisible' smart lock without the need for a bulky hardware, announced the new Level Lock+ with Matter. This model introduces support for Apple Home Key, Bluetooth compatibility, and Matter support in a single product, making it compatible with HomeKit, Google Assistant, Amazon Alexa, and Samsung SmartThings. In a partnership with Boston Dynamics, we un- veiled a new access control solution with the Spot ® robot. With embedded digital access credentials that now can communicate via Bluetooth with Signo readers from HID, Spot can freely pass through compatible automated doors to patrol the exterior of facilities or to transit interior secured openings. More product innovations and product launches are described throughout this annual report. We also registered more than 250 new patents. Product innovation Manufacturing Footprint Program Integration of HHI We realized SEK 684 M in savings from our existing Manufacturing Footprint Programs (MFP). Actions during the year included the closure of twelve factories and six warehouses and administration offices. Since the initial program in 2006, we have realized MSEK 7,823 in savings. HHI was purchased in 2023 and is our largest-ever acquisition. The integration of HHI has continued according to plan. For example, the number of product launches of electromechanical locks in- creased about 50% during the year as a result of our investments in product innovation, including the next generation of Halo Select, which is a connected smart lock that offers a range of advanced features designed to enhance security and convenience for homeowners. In addition, Kwikset and Baldwin were integrated into our specification software and all specifiers were trained on the products. We also have begun integration of HHI’s patented Smart- • In 2024, we reached our Scope 1 & 2 emissions target to reduce emissions by 25% to 2025 one year ahead. • For the first time, in this report, we are disclosing sustainability information according to the Corporate Sustainability Reporting Directive (CSRD). Please see our sustainability statement on pages 60–109. • Our net zero target by no later than 2050 was ratified by the Science Based Targets initiative. • We implemented the Sustainable Portfolio Planning Tool which helps us identify and reduce the large carbon emissions contributors in our product portfolios. Strong financial outcome 16.2% EBIT-margin 30% electro- mechanical sales 25% mechanical sales Sustainability Key Security functionality with our fenestration team, serving some of the largest window and door customers. In Canada, we leveraged ASSA ABLOY’s sales team on HHI’s Weiser brand and started cross- selling. Similar initiatives have been initiated in the Pacific and South America. Operationally, amongst others, we started to use mutual steel suppliers in Asia to gain economies of scale and are making commercial hinges for the North America non-residential segment at our factory in Asia. We have also consolidated some office buildings with the rest of the Group to reduce costs and increase internal collaboration. Epero culla sit re modi od eumquia voluptis Equipped with our readers the Spot ® robot opens an automated door at the 2024 Global Security Exchange (GSX) in Orlando. The ASSA ABLOY team in Canada celebrating our 30th anniversary. Together we celebrated ASSA ABLOY's 30th anniversary throughout the year locally and through a webcast that connected the Group. 30 year anniversary 7 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are The global leader in access solutions ASSA ABLOY in your daily life Value-creating business model People Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements 7 ASSA ABLOY | ANNUAL REPORT 2024 Who we are ASSA ABLOY was founded in 1994 and is the global leader in access solutions. We are 63,000 employees in more than 70 countries around the world with a uniquely decentralized business model. We have leading positions in areas such as efficient door openings, trusted identities and entrance automation. Our innovative access solutions help people feel safe and secure so that they can experience a more open world. Strong brands We use a multi-brand strategy to make the most of our global and local presence. The brands play an important role in our strategy and in building trust, loyalty and differentiation in the markets where we operate. ASSA ABLOY is our company and employer brand and our main business brand. We also have strong global and regional brands such as Yale and Kwikset, covering the residential market, and HID for identifi- cation and access management solutions. The strength of our more than 200 global, regional and local brands helps us make ASSA ABLOY the global leader in access solutions. Company and employer brand Some of our soft-endorsed brands Some of our strong-endorsed brands The global leader in access solutions ASSA ABLOY is the global leader in access solutions. Every day, we help billions of people experience a more open world with innovative solutions that enable safe, secure and convenient access to physical and digital places. Access solutions for every need ASSA ABLOY offers the largest range of access solutions in the world. Our portfolio includes a complete range of solutions in areas such as me- chanical and electromechanical locking, access control, identification technology, entrance auto- mation, security doors, hotel security and mobile access. Our offerings are delivered separately or combined to form a complete, full-service access solution. Through continuous and sustainable innovation, we make sure that our products and solutions meet our customers’ needs. Regional divisions Global divisions Opening Solutions EMEIA Global Technologies Opening Solutions Americas Entrance Systems Opening Solutions Asia Pacific A decentralized organization We are a global company with a uniquely decentralized and customer- focused business model. It enables us to adapt and be agile in our response to market changes and quickly meet customer needs and implement solutions tailored to different markets and segments. Our business units know local standards inside-out and optimize resources and products according to the local conditions and demand. The regional divisions manufacture and sell mechanical and electro- mechanical locks, and security doors, adapted to the local market’s standards and security requirements which often differ from country to country. The global divisions manufacture and sell access solutions, iden- tification products and entrance automation that are more standardized across continents or have a global reach. Read more on pages 32–43. Services Solutions Entrance automation Openings Identities Master key systems Access control Authentications Location services Data and analytics 8 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are • The global leader in access solutions ASSA ABLOY in your daily life Value-creating business model People Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements The global leader in access solution | Who we are ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here 9 We are truly global and uniquely local ASSA ABLOY has operations in more than 70 countries and sales in over 180 countries. Our operations extend across more than 1,000 sites, including 195 R&D sites and more than 200 production facilities 1 . Other sites include distribution centers and offices. In many countries, our operations are built on one of the close to 400 acquisitions we have made of leading access businesses over the past 30 years. 63,000 Employees 195 R&D centers >70 Countries 31% Europe sales 7% Asia sales 1% Africa sales 4% Oceania sales 54% North America sales 3% South America sales 1 Production and configuration facilities larger than 1,000 m 2 . Introduction Who we are • The global leader in access solutions ASSA ABLOY in your daily life Value-creating business model People Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements The global leader in access solutions | Who we are 10 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here The global leader in access solutions | Who we are Our sustainability journey Next sustainability program Our next sustainability program with targets to 2030 will be launched in 2025. Science Based Targets ASSA ABLOY has set science-based targets, limiting global temperature rise to 1.5°C, by halving emissions by 2030. Net zero ASSA ABLOY has committed to reaching net zero no later than 2050. 2025 2030 2050 0 25,000 50,000 75,000 100,000 125,000 150,000 24232221201918171615 SEK M k tons Sales CO 2 emissions 0 100,000 200,000 300,000 400,000 500,000 600,000 Sales (MSEK) vs CO 2 emissions (k metric tons) between 2015–2024 1st sustainability program First sustainability program and annual sustainability report launched in 2007. The program focused on integration of procedure for quality and environmental management and introduced structures that allowed every- day operations to continuously improve their sustainability performance. 2nd sustainability program Second sustainability program launched for 2010–2015 with measurable targets for water consumption, energy efficiency, greenhouse gas emissions, chemical handling and health & safety. 3rd sustainability program Third sustainability program for the 2015–2020 period with more ambitious targets. The program was extended to include audits of suppliers with focus on low cost countries. Sustainability Compass The Sustainability Compass was introduced in our product development processes. Science Based Targets We committed to set science- based targets. 4th sustainability program Fourth sustainability program with targets to 2025. The program focuses on the most material areas, ensuring we have the biggest impact where it is needed most. 2007 2010 2015 2016 2020 Sustainability is integrated in everything we do and is a driver throughout our value chain. By growing our sustainable product offering and reducing our environmental footprint while ensuring a safe and healthy work- place, we contribute to creating a better world at the same time as we drive sales and optimize our operations. Introduction Who we are • The global leader in access solutions ASSA ABLOY in your daily life Value-creating business model People Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements 11 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are The global leader in access solutions • ASSA ABLOY in your daily life Value-creating business model People Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements ASSA ABLOY in your daily life | Who we are Enterprise 1 At the perimeter of buildings our bollards, high- security fences and other safety devices protect pedestrians from motor vehicles. These models can be permanently installed, portable, or retractable, and can be seamlessly integrated into security and alarm systems. 2 We provide automatic sliding and revolving doors that are particularly suitable for entrances and indoor areas with high pedestrian traffic, allowing people to enter buildings conveniently without having to manually open doors. 3 We have a complete range of services for the maintenance and upgrading of automatic entrances and loading docks to enable a more seamless customer experience. 4 On the inside or outside of the building electrome- chanical locks and other hardware such as security- rated doors, frames and delivery lockers, work together with physical access control systems (including readers and controllers) to manage access and the delivery of packages. We also have systems and solutions for secure issuance and management of identities with specific security requirements, such as employee ID cards. 5 We offer mobile keys and physical access control systems, including readers and controllers, to efficiently manage access in buildings. Multi-family housing 6 We provide complete solutions for multi-family housing, ranging from mechanical locks to sophisticated, customized access control systems and garage doors. Our digital door locks can easily be opened using a code or a mobile app. The app enables convenient remote control to unlock doors for authorized people. Hotel/retail 7 We provide complete access solutions for retail and hotel establishments. For the hospitality industry, our offerings include mobile access solutions, access management systems, staff safety, in-room safes, and energy control. 8 With our mobile access solutions, hotel guests can book a room directly from their smartphones. Secure Seos technology sends a digital key to the guest’s mobile phone, enabling the guest to bypass the front desk and go directly to the room to unlock the door. 9 Our revolving doors create spacious entrances and are ideal for areas where climate control is a priority. Advanced sensor technology ensures smooth functionality, safe traffic flows, and superior separation of indoor and outdoor climates. Side doors are added for increased accessibility and faster evacuation. 10 We offer safe and simple-to-connect garage doors and gates that integrate seamlessly with the building’s access control system. In addition, ASSA ABLOY offers access solutions using a range of different mechanical and digital technologies for senior care, construction, stadiums and events, data centers, critical infrastructure, high security authorities and other customers. ASSA ABLOY in your daily life Around the globe, billions of people come across our products in their daily lives. We provide access solutions from the perimeter to the core of buildings. Our products and solutions can be found in the home, at work or school, and when you shop or travel. Some products are readily visible like keys, locks, and doors, while other products are embedded in solutions such as identity solutions and mobile access solutions. 2 5 Outside 6 Inside Door closersDelivery lockers Hinges Air louvers Key pads, push but- tons, key switches, touch bars Electric strikes Panic bars Kick plates Door operators Floor closers Wireless locks Cabinet locks Glass door hardware Power supplies Mechanical & electro-mechanical locks & keys Steel doors & frames 1 2 4 8 7 10 9 3 6 Enterprise Hotel/retail Multi-family building 12 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Case | Who we are Next DC S3 Data centre, Sydney QQ What was the challenge for this project? AA – The main challenge for the locks and door hard- ware at each access point on this project was to with- stand the construction period and then transition into servicing the life of the project. For Electronic Access, one of the key challenges for stage two was maintaining operations for everyone working in the opened stage one section of the building while construction and some significant equipment lifts were completed for stage two. Some of the highest security locks within the project are unique to ASSA ABLOY – no-one else has an equivalent lock in Australia with that level of security. QQ Why do you choose to work with ASSA ABLOY? AA – When we specify products like the ones ASSA ABLOY supplied on this project, firstly and most importantly we need to know that the products will work. We choose ASSA ABLOY products due to their security, durability and reliability. The second aspect that makes working with ASSA ABLOY a top choice for us is the knowledge and advice from ASSA ABLOY. Our contact at ASSA ABLOY has over 25 years in the industry and is our go to expert in advising us on which product will meet each specific need of any of our projects. QQ Would you recommend working with ASSA ABLOY? AA – Yes, absolutely. We know that whenever security is at the forefront for a project, ASSA ABLOY is the leader with unique products that no other suppliers can match. One of these products is a high security electric lock used in many top-security projects, like military facilities and data centres. QQ How did ASSA ABLOY contribute to solving the challenge? AA – During construction, electronic access could be adjusted as needed, remotely, to cater to the 350 different workers on site daily during construction and still retain the highest levels of security, reliability and flexibility which was critical to the division of zones between operations and construction. Post construction, we had solid, reliable security for the long-term needs of the facility. In the end, with ASSA ABLOY's products on the doors, we know that they have the best available option on the project. CASE FACTS Project: Next DC S3 Data centre, Sydney, Australia. ASSA ABLOY products and solutions: Lockwood electric and mechanical mortice locks, electric strikes, brass door furniture, and door closers. In Australia, as in most countries given current and predicted technological advances, data centres are a mega upwards trend in construction. NEXTDC is Australia's largest data centre owner/operator and ASSA ABLOY products were specified and installed in both stages of their recently completed S3 Data Centre. ASSA ABLOY in your daily life GERARD PAGE, DIRECTOR OF ARCHITECTURE, GREENBOX In the end, with ASSA ABLOY's products on the doors, we know that they have the best available option on the project. Introduction Who we are The global leader in access solutions • ASSA ABLOY in your daily life Value-creating business model People Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements 13 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Value-creating business model | Who we are Introduction Who we are The global leader in access solutions ASSA ABLOY in your daily life • Value-creating business model People Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Our resources Our business model and how we operate Together we are guided by our core values and beliefs Empowerment We have trust in people Integrity We stand up for what’s right Innovation We have the courage to change We operate globally with a decentralized business model that allows us to quickly and ef- ficiently deliver local access solutions according to customer specifications and local standards. We have a unique local footprint of more than 1,000 sites and manufacture and sell access products and solutions through a multi-channel distribution network. With more than 4,100 product developers we lead the industry with the most innovative ac- cess solutions. Acquiring relevant businesses is a key growth driver that also contributes to our innovation resources and our market presence. We use a multi-brand strategy to leverage our global and local strengths to address different markets and customer segments. Our strategy (page 24) is executed locally and guides us in our vision to be the global leader in providing innovative access solutions. Sustainability Sustainability is part of everything we do throughout ASSA ABLOY’s value chain. 63,000 employees in more than 70 countries around the world. We are truly global, uniquely local 4,100 employed in R&D working with our sus tain able innovations >200 strong brands and diversified product portfolio How we create value Electromechanical products Security doors and hardware Entrance automation Mechanical locks Our aim is to deliver safety, security and convenience. We offer a complete range of unique and innovative access solutions. Our offering 30% 15% 30% 25% Value creation to stake holders in 2024 Shareholders and investors • Dividends and capital appreciation Employees • Professional development • Safe and stable workplace • Inclusive workplace with equal opportunities Customers • Increased security and competitiveness for our customers • Sustainable products with Environmental Product Declarations (EPDs) A more open world ~10,500 patents 200 efficient production and assembly facilities ~50,000 suppliers for direct material and indirect services. We have strategic and cost- efficient suppliers SEK 107 bn in shareholder equity Scope 1 & 2, 1% Scope 3, 99% Suppliers and partners • Technological development • Stable partner Society • Increased safety and security • Reduced environ- mental impact • Paid taxes and employment Priorities Strategic objectives Growth through customer relevance Product leadership through innovation Cost-efficiency in everything we do Evolution through people Growth accelerators • Actively upgrade installed base • Increase service penetration • Generate more recurring revenue • Grow in emerging markets • Pricing excellence • Continue with successful acquisitions Growth enablers • Consolidate footprint and focus on value added • Optimize logistics • Reduce product cost 10 % growth / business cycle 16 –17 % EBIT / business cycle Financial targets 14 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are The global leader in access solutions ASSA ABLOY in your daily life Value-creating business model • People Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements People | Who we are People make it happen As a decentralized organization with 63,000 employees in more than 70 countries, we embrace autonomy while leveraging our collective size to collaborate and realize synergies. This allows us to be agile and utilize scale. We are committed to our people, knowing that when they develop and grow, we will too. At ASSA ABLOY, we pride ourselves on our people, who are our most important asset. Our collective competency is the driving force behind our innovative solutions and consistent growth. We operate across various regions in a decentralized organization with a mix of local products and central platforms. We encourage collaboration to optimize and successfully leverage our skills, share best practices, and innovate across divisional borders to be able to offer our cus- tomers the best access solutions in the world. Success- ful collaboration builds on a strong common culture. This is why we have developed “Together we”. In this program, we define our common culture, rooted in the values of empowerment, innovation, and integrity. This serves as the compass that aligns our diverse and global workforce, ensuring we progress in unison. It is crucial that our people feel safe in the work- place. One of the cornerstones of our commitment to a safe and productive workplace is our Health and Safety program. This initiative is designed to ensure that all our workplaces adhere to the highest safety standards, protecting our most valuable asset – our people. Through rigorous training, preventive improvement processes and focus on behavior and culture, we strive to create the safest possible working conditions. Moreover, we foster a culture where our people feel empowered and have the opportunity to develop within ASSA ABLOY. We have extraordinary people, and that is why we are so focused on internal mobility and identifying personal potential development opportunities. We believe retaining and developing existing competence is crucial for our future growth and success. Richardo Thompson is a Finisher and Stewart Thompson is a Primary Press Operator and both have worked at our Sargent factory in New Haven, Connecticut since 1988. The way we integrate acquisitions is an example of our focus on autonomy and empowerment. Welcom- ing and integrating new colleagues into ASSA ABLOY is key to a successful acquisition. Many company founders continue their journey in ASSA ABLOY which is something we take great pride in. Throughout the integration process, we encourage our new col- leagues to continue working with their products and customers in their successful way. We strive to em- power them through investments and economies of scale, as well as providing a greater network and new career paths. This also allows individuals to advance and diversify their professional journeys. Together, these efforts enhance the performance and scope of our company and ensure that our employees are empowered, motivated, and engaged in their roles. This strategy drives our performance: to build a customer focused, resilient, innovative, and responsible organization poised for long-term success. Average number of employees by region Europe, 22,105 North America, 21,002 South America, 3,507 Africa, 856 Asia, 13,561 Pacific, 1,795 Pacific Asia Africa South America North America Europe Africa Australia, New Zealand South America North America Europe Asia Europe, 22,105 North America, 21,002 South America, 3,507 Africa, 856 Asia, 13,561 Pacific, 1,795 Pacific Asia Africa South America North America Europe Africa Australia, New Zealand South America North America Europe Asia +27% internal applications per open position vs 2022 29% females in management positions 29 nationalities in leading positions 15 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability | Who we are Introduction Who we are The global leader in access solutions ASSA ABLOY in your daily life Value-creating business model People • Sustainability 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Sustainability in everything we do ASSA ABLOY is at the forefront of driving our industry towards a more sustainable future. By prioritizing sustainability, we not only reduce costs and mitigate risks, but also foster product development that delivers innovative and sustainable products and solutions, making us more relevant to our customers. Sustainability is key to our long-term profitability and success. We are in our fourth sustainability program and are making strong progress towards our targets for water consumption, energy efficiency, CO2 emissions, chemical handling, health and safety, and audits of suppliers between 2020-2025. As we work to com- plete the present program that will end in 2025, we are concurrently developing our fifth sustainability program to 2030 where we again will raise our ambition level. These programs complement our existing long-term climate commitment to science-based targets. Scope 1 & 2 emissions reduction pathway For emissions that are within our own operation, we utilize a four-pronged strategy that is consistently implemented across all divisions, business units, and factories (see page 85). This method establishes and illustrates the essential levers needed to reach our 50% reduction target for Scope 1 & 2 greenhouse gas emissions by 2030, compared to the 2019 base year. By applying this uniform strategy throughout ASSA ABLOY, and monitoring progress on a quarterly basis, we ensure that we stay on track to meet our climate goals. ASSA ABLOY's science based target committment Scope 3 emissions reduction pathway Our Scope 3 greenhouse gas emissions account for about 96% of our total footprint. More than 70% of our Scope 3 footprint is upstream in our supply chain, coming from purchased goods and materials. Through- out the year we have continued to realize results from our our action plans that support our ambition to reduce our Scope 3 emissions by 28% in absolute terms compared to the 2019 base year. –20% Scope 1 & 2 emissions reduction –10% Water intensity reduction –10% Energy intensity reduction 0% Injury rate reduction 267 Environmental Product Declarations (EPDs) +45% Green specification sales growth i EMEIA 701 Supplier sustainability audits –50% by 2030 –28% by 2030 Scope 1 & 2 Scope 3 READ MORE ON PAGES 85-89 Change in 2024 vs 2023 2024 16 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here 30 years of innovation and growth | Who we are The merger between ASSA and Abloy in 1994 brought together people with extensive knowledge of the lock market. Our first ten years were characterized by rapid growth and consolidation. We acquired strong and leading businesses and brands in many markets. We built “The World’s Leading Lock Group”. In our second phase, we continued to grow organically and through acquisitions. This phase was characterized by combining our products and solutions, offering customers total door opening solutions that were seamlessly connected to their buildings. We became "The global leader in door opening solutions". August Stenman founded the company that would become known as ASSA in the late 19th century. Stenman was a pioneer in the use of automation, as well as an advocate for the employment of women and better working conditions for employees. Emil Henriksson, a young Finnish man with a keen interest in precision engineering, invented the revolutionary disc tumbler lock. The company he founded was named Abloy. 1994 ASSA and Abloy merged. The ASSA ABLOY Series B share was listed on the Stockholm Stock Ex- change on November 8, 1994 at SEK 1.82. 1996 American Essex was acquired, bringing Sargent and other brands with it. 1997 the French lock group Vachette was acquired, bringing in Vachette, JPM, Laperche and Bezault in France as well as Litto in Belgium. 2000 Yale was acquired. ASSA ABLOY doubled in size and became the world’s leading lock company almost overnight. 2002 the acquisition of Besam added automatic doors, a new category, to our product portfolio. 1999 expansion into Australia with the acquisition of Lockwood 2000 CLIQ-technology, a security locking system with programmable keys and cylinders, was introduced. 2000 Acquisition of HID world leader in identification technology for access control. 2007 acquisition of iRevo, a major player in digital door locks in South Korea. 2007 we launched our first sustainability program. 2010 for the first time ever, hotel guests received their door keys and entered their rooms via their phones. 2011 acquisition of Crawford strengthens our offering in industrial doors, docking solutions and garage doors. We now provide complete solutions for entrance automation. 2012 Seos, the world’s first commercial ecosystem for digital keys, was launched. 2013 acquisition of Ameristar, leading US manufacturer of perimeter security consisting of high-security fencing and gates. 1994 2004 2014 1881 August Stenman founded ASSA 1921 Emil Henriksson founded Abloy Phase 1 1994-2004 Phase 2 2005-2018 The global leader in door opening solutions 2008 Aperio, a new technology to complement existing electronic access control systems was launched. 30 years of innovation and growth Clear and consistently implemented strategies have been the corner- stones in ASSA ABLOY’s journey from a regional lock company founded in 1994 to the global leader in access solutions. Introduction Who we are The global leader in access solutions ASSA ABLOY in your daily life Value-creating business model People Sustainability • 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements SEE MORE ON THE BACK COVER ASSA ABLOY 30 years! Stenman and Henriksson gave our company its name. They are two of the many entrepreneurs who have contributed to the success of ASSA ABLOY. 17 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here 30 years of innovation and growth | Who we are Our successful journey continues! 2024 2023 acquisition of HHI, a North American leader in residential security and builders’ hardware. 2023 acquisition of Evolis, a leading French manufacturer of ID card printers and consumables. 2018 ASSA ABLOY was named to Forbes’ list of the top 100 innovators for the fourth time. 2018 we acquired Phoniro, ex- panding into a new vertical with digital key management and alarm solutions for elderly care. 2018 acquisition of US package locker leader, Luxer One. 2020 acquisition of agta record, a leading manufacturer of automatic pedestrian entrance systems. 2020 acquisition of Olimpia, a a leading glass hardware and accessories brand in Latin America and the Caribbean. 2020 we committed to science- based targets and launched our fourth sustainability program. 2022 acquisition of Arran Isle, a leading manufacturer and distributor of door and window hardware in the UK and Ireland. 2017 acquisition of Mercury Security which considerably enhanced our position within physi- cal access control through adding controllers to HID's product portfolio. 2018 Every day, we help billions of people experience a more open world with innovative solutions that enable safe, secure and convenient access to physical and digital places. Building on our legacy and using our combined strengths and expertise, we will continue to develop pioneering solutions to advance the access, security and safety around the world. Today, we are "The global leader in access solutions". Phase 3 2018- 2009 – 2017 Expansion into emerging markets through acquisitions of major players in several geographies: Panpan, China’s largest high security steel door manufacturer in 2009; Mercor in Poland 2013; ODIS in Chile, 2014; Papaiz and Udinese in Brazil 2015; SMI in India and LOB in Poland 2017. 2019 we acquired LUX-IDent, a leading provider of radio frequency identification (RFID). 2019 The “Together we” campaign launched, featuring Together We Grow for Group strategy and “Together we are” for Group identity. 2019 Apple wallet began allowing HID- enabled Student IDs, then hotel keys in 2021 and employee badges in 2022. The global leader in access solutions Strong value creation 3.6 bn sales, SEK 150 bn sales, SEK 4.3% EBIT-margin 4,700 Emplolyees 16.2% EBIT-margin 63,000 Employees 1994 2024 2024 acquisition of SKIDATA, an international leading provider of access management solutions. Introduction Who we are The global leader in access solutions ASSA ABLOY in your daily life Value-creating business model People Sustainability • 30 years of innovation and growth ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements ASSA ABLOY 30 years! See more on the back cover. 18 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements download a printable pdf here 18 ASSA ABLOY | ANNUAL REPORT 2024 ASSA ABLOY as an investment Founded in 1994, ASSA ABLOY is the global leader in access solutions. We create significant customer and shareholder value by continuously optimizing our production and developing new, innovative products that meet our customers’ needs and demands. SEK M SEK M 0 25,000 50,000 75,000 100,000 125,000 150,000 2423222120 Sales Operating income 1 0 5,000 10,000 15,000 20,000 25,000 30,000 Sales Operating income 1 Sales and operating income 1 Excluding items affecting comparability. SEK 0 2 4 6 8 10 12 14 24 1 23222120 Utdelning per aktie Vinst per aktie efter utspädning 1 Dividend per share Earnings per share after dilution 2 Dividend and earnings per share 1 Dividend proposed by the Board of Directors. 2 Excluding items affecting comparability. +164% sales growth in 10 years +143% EPS growth in 10 years SEK 41 b n dividend last 10 years 19 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements download a printable pdf here ASSA ABLOY as an investment 19 ASSA ABLOY | ANNUAL REPORT 2024 The ever-evolving global access solutions industry, which we estimate to be worth more than USD 100 billion, is subject to strong underlying trends that support long-term demand for our products and solutions. The demand for safe and secure access solutions is constantly increasing driven by rising security threats, public safety concerns, an increased regulatory environ- ment, demographic changes and increased focus on sustainability. The ongoing shift to electromechanical and digital access solu- tions brings many opportunities to develop new, more convenient access solutions, while supporting recurring revenue. We are part of a good industry with strong fundamental growth drivers How we create customer and shareholder value 1 READ MORE ON PAGES 20–21 We have a leading position in our industry with the largest installed base of products and solutions and solid commitment to customer excellence, which comes with many competitive advantages. We have the greatest innovation resources in the industry, the deepest know-how of locks and access solutions, strong relationships with our customers and channel partners, and well-known brands. This helps us lead the transition to electromechanical products and solutions. The aftermarket accounts for about 2/3 of our sales, giving us resilience over a business cycle. Our leading position in this industry makes the difference 2 READ MORE ON PAGES 22–23 ASSA ABLOY has a well-proven strategy that gives clear direction and guidance to our employees. It enables us to take advantage of the various opportunities generated by being a leader in a good industry. The strategy has helped us deliver consistent profitable growth. Our currency adjusted revenue growth has been close to 9% annually during the last 15 years, and our adjusted EBIT margin has, over the same period, been stable at about 16%. Within our strategy, we have nine priorities that will help us continue to deliver profitable growth in line with our financial targets. A well-proven strategy that has delivered consistent profitable growth 3 READ MORE ON PAGES 24–28 download a printable pdf here 20 Good industry to be in | ASSA ABLOY as an investmentASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment • Good industry to be in A leading market position A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements Trends driving our industry Market overview We estimate the global access solution industry to be worth more than USD 100 billion annually. It has a history of stable growth, characterized by a large and stable aftermarket, and driven by the development of more secure and innovative access solutions that focus on convenience and improving the sustainability performance of buildings. Humans have always had the need to protect themselves. As welfare and societal systems have evolved, access solutions have also undergone continuous evolution and adapted to the unique requirements of each local market. As a result, a diverse range of local standards has emerged, contributing to a fragmented market, especially evident in emerging markets. ASSA ABLOY is the world’s largest provider of access solutions, but due to market fragmentation, our global market share is still low, meaning that we have significant potential to grow. Growing trends There are many favorable trends driving an increased demand for access solutions, with the fundamental need for safety and security as the main underlying driver. Digitalization enables us to provide more convenient solutions and shift towards service-based offerings. At the same time, the demand for more sustainable and resilient products is fueled by the strong growth in green buildings and more sustainable urban environments around the world. The security industry is subject to strong underlying trends that support long-term demand for our products. The need for safety and security is a fundamental driver for this and further opportunities arise from customers’ need for convenient and efficient access solutions and an increasing emphasis on energy efficiency in buildings. These are projected to be key drivers for our industry towards continuous and profitable growth in the foreseeable future. Demand for safety and security The demand for safe and secure access solutions is constantly increasing mainly driven by four key issues. Rising security threats – there is an increased need for enhanced security measures to protect buildings and their occupants. Public safety concerns – public emergency events, natural disasters, and other emergencies have escalated the importance of implementing effective physical security measures in public buildings. An increased regulatory environment – compliance with regulations regarding access control systems, sur- veillance, and emergency response protocols, is driving the demand for robust physical security solutions. A changing work environment – the shift towards remote work, flexible office arrangements and coworking spaces has increased the need for security solutions adapted for different occupancy and access requirements. ASSA ABLOY’s response: ASSA ABLOY provides state-of-the-art products and services related to openings and entrance auto- mation as well as trusted identities with the safety and security of our customers in mind. Our offering enables people to experience a safer and more open world. Movement of people and demographic changes As people move and demographics change, the demand for buildings and access solutions increases. For example, it is estimated that 75% of the buildings required for use in 2050 have not yet been built. Urbanization is taking place all around the world and the United Nations predicts that the urban population will grow by 2.5 billion people by 2050. The most apparent shifts are occurring in the emerging markets, where an increased need for housing, workplaces and commercial buildings is driving demand for access solutions. At the same time, we also see a deurbaniza- tion trend in some developed markets. This generates a need for new housing and commercial buildings in more rural areas. Other demographic trends generat- ing demand for our products and solutions include an aging population, migration, millennials entering the housing market, and the transition to smarter cities. ASSA ABLOY’s response: Increased movement is a key driver for growth in access solutions. With our local organizations and strong regional knowledge, we can be agile and pro- actively invest in markets and access solutions where we see the movement of people and demographic changes taking place. Growth in our senior care segment is driven by an aging population, while the digitalization of homes and demand for our electromechanical solutions is boosted by millennials entering the housing market. Strong and long-term underlying growth trends support the industry. At ASSA ABLOY we develop access solutions that make life easier for our customers. download a printable pdf here 21 Good industry to be in | ASSA ABLOY as an investmentASSA ABLOY | ANNUAL REPORT 2024 Digitalization and new technologies The rapid development of digital solutions is continu- ing in all areas of society and increasing the impor- tance of new technologies in access solutions. We see the shift towards more electromechanical products continuing and bringing with it many business opportunities to develop new, more convenient and secure access solutions, while supporting recurring revenue. We also see the emergence of new business models such as the shared economy, everything as a service (XaaS), and ecosystems, which provide further opportunities for our products. ASSA ABLOY’s response: With our sizeable R&D organization, we are at the forefront of developing new solutions to meet the ever-changing needs for secure and safe access solu- tions. Our electromechanical products and solutions in the regional divisions has had a compounded annual growth rate of about 9% in the last ten years. To be able to benefit from new business models, we are investing in strategic products and solutions as well as entering partnerships specifically targeting these new business models. Sustainability As concerns for the environment grow, customers are increasingly looking for sustainable products and solutions. This increases the demand for green buildings and access systems. About 50% of all new commercial buildings are now expected to be cer- tified according to green building standards. There is increased demand for transparency regarding the impact of products and production on people and the environment. There is also increasing regulation for more energy-efficient buildings and access solutions. ASSA ABLOY’s response: We continuously innovate and develop new products to help our customers reduce their environmental impact. One example of how we meet customer demand is by offering Environmental Product Declarations (EPDs). EPDs make our products more attractive as they help our customers achieve higher ratings in their green building certifications. Our efforts within sustainability are paying off, particularly in Europe where the demand for green specifications has increased by more than 200% since 2020. Local regulations The regulations for access solutions vary between markets. This diversity, combined with constantly changing regulations, standards, and requirements generates great complexity in our industry. ASSA ABLOY’s response: We are one of the few global players in the industry capable of supplying access solutions that comply with the constantly changing regulations in local markets. We have a strong local presence with local operations and product development in both mature and emerging markets. Having a decentralized organization with operations in more than 70 countries enables us to quickly deliver and respond to local customer needs. This fosters good customer relations and increases market demand for our products and services. Introduction Who we are ASSA ABLOY as an investment • Good industry to be in A leading market position A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements Working with brands that are part of ASSA ABLOY means a strong partnership. For us, it is important to know that this company is in it for the long haul. Quote from 2024 customer interviews 22 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here A leading market position | ASSA ABLOY as an investment Introduction Who we are ASSA ABLOY as an investment Good industry to be in • A leading market position A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements A leading market position Market leadership with strong customer relationships ASSA ABLOY has a strong global leadership and a unique local market presence in over 70 countries. We have the deepest knowledge of locks and access solutions in the world, and the largest installed base, which is continuously maintained and upgraded with new solutions. We segment our customers and end users into specific vertical markets to better under- stand their unique needs and provide customized and targeted products and solutions. Institutional and commercial customers represent about 2/3 of total sales, while the residential market constitutes about 1/3 of sales. Smart home security solutions, such as digital locks, drive growth in the residential sector. Our large installed base is important in our efforts to transition to electromechanical products and solutions. The aftermarket represents 2/3 of our sales and ensures greater stability in demand over a business cycle. Renovations, replacements, upgrades, and ser- vices continue to generate revenue irrespective of the economic environment. This reduces ASSA ABLOY’s exposure to the cyclical demand that impact many other companies and industries. We have a long-standing history of strong rela- tionships with our channel partners, working with the best to an extensive global and local network of distributors and other sales partners. Our network en- ables us to reach customers quickly and distribute our products and solutions with exceptional efficiency. Building on our legacy of innovation, successful acquisitions, the largest installed base, solid commitment to customer excellence, and unique local expertise, ASSA ABLOY is truly the global leader in access solutions. Together, these strengths create a strong competitive advantage, driving our long-term profitable growth. Sales channels To be the brand of choice and have loyal cus- tomers we must offer world-class customer ex- periences. Our goal is to improve the customer experience across all touchpoints with our brands, and we are dedicating resources and directing investments to better understand our customers’ journeys with us and to identify op- portunities for improvement. For example, we have assessed our customer e-business journey in the hospitality segment, identifying ways to improve the ordering experience. We have also continued to invest in better understanding the B2C customer journey, and projects are generating both new business and product opportunities for the Yale brand. We continuously engage in partner feedback dialogues. These conversations help us focus on what matters most to customers and allow us to remain one of the most attractive part- ners in our industry. ASSA ABLOY OEM Integrators, installers, lock smiths and retailers Distributors/ wholesalers End-customer Create demand through management of sales channels and channel partners Create demand-pull through specifications, brand loyalty and recurring revenue Truly global and uniquely local brands We design products, services, and solutions for creating access and help people feel safe and secure. Growing strong, trusted brands is essential to retain and attract new customers. Our company and employer brand is ASSA ABLOY, which is also our leading commercial brand. We also have over 200 other strong brands across our core businesses and markets, for example Yale, Kwikset and Panpan covering the residential market, HID in identity and access solutions and Vingcard in the hospitality segment. Using our well-known local product brands under- pinned by our global, industry-leading ASSA ABLOY brand enables us to stay close to our customers and their unique needs and deliver the long-term reliability and peace of mind ASSA ABLOY is renowned for. Our brands carry a distinctive value in the market, and we have a robust process in place to protect the intellectual property and integrity of our brands. We collaborate with local and regional authorities to mon- itor the use of our trademarks on a global scale. These unique assets help us to deliver our vision of being the global leader in providing innovative access solutions that help people feel safe and secure so that they can experience a more open world. Investing in sustainable innovation to secure long-term growth The access solutions industry is transforming through digitalization, sustainability, changes in regulatory requirements and shifting customer needs. These transformations generate opportunities to create new and greater customer value and thus secure resilient growth. To be successful in this endeavor, we invest in innovation. In 2024, we invested around 4% of our revenue in R&D. This represents an increase of SEK 2.2bn com- pared to 2020. During the same period, the number of R&D employees increased by more than 1,300. We leverage technology to ensure that our offer- ings maximize customer relevance now and in the future. Core technologies include energy-efficient 23 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here A leading market position | ASSA ABLOY as an investment solutions, sustainable materials, wireless connectivity, artificial intelligence and biometrics. We have well-established processes for defining what products we should develop and how they should be developed. Product development is conducted in close cooperation with end users and customers to ensure the most relevant products are made. An agile approach to innovation enables us to respond quickly to change, innovate more effectively and maximize value delivery and outcome. We enable the organization to successfully deliver breakthrough solutions by promoting exploration of new opportunities and embrace a “fail fast – learn fast” approach for higher potential return. We contin- ue to drive growth programs that systematically iden- tify and accelerate business opportunities outside of daily processes through a fast-track approach. In late 2024, one of these acceleration programs launched an AI-based solution for energy savings called “eco- LOGIC”, a subscription-based service for automatic doors that combines door data, weather data and pedestrian traffic data to optimize door behavior and minimize unnecessary open time. AI algorithms can save up to 14,000 kWh per year for a medium sized street-facing shop and also helps reduce wear and tear on the door by 2–7%. Another advantage is an enhanced end user experience, with a more com- fortable indoor climate and fewer instances of doors closing unexpectedly in front of customers. Buildings account for a significant share of the world’s CO 2 emissions and climate change has created a need for circularity and sustainable cities. Therefore, sustainable solutions are a cornerstone of our innovation efforts. Our solutions should be sustainable by design, so that energy efficiency and circularity is integrated into every aspect of our product portfolios. This will guide our industry, cus- tomers, partners and end users to a more sustainable future. We minimize the environmental impact and embodied carbon footprint of new products, while maximizing sustainability attributes, such as energy efficiency. Our Sustainability Compass directs us towards taking a lifecycle approach and raises the profile of sustainability-related design criteria during the development of new products. Given our global reach, the local nature of our industry, and our broad portfolio, we have an inno- vation organization that includes 195 R&D sites to ensure that we maximize customer value in each market where we are present. At the same time, we leverage the Group’s size and broad expertise and are organized to facilitate cross-divisional collaboration as well as ensure that we capture synergies between different local entities and divisions. While we expect more long-term competitive advantages from some of our investments, there are also visible short-term effects. During the last three years, we launched more than 1,400 new products, corresponding to a new product ratio of 23% and we registered 750 new patents. An example of one product launch in 2024 is the Yale Durus smart lock where both the lock housing and battery pack are pre-assembled and hidden inside the door leaf. Completely invisible from both inside and outside, it still maintains all the features of any of our smart door locks like WiFi connectivity, auto-unlock and mobile access. Durus can be opened with a mechanical key and since it comes with a wide variety of door handles it is the perfect choice for those who appreciate a solution that fits the aesthet- ics of the home. Product leadership is and will continue to be critical in our efforts to secure profitable, long-term growth. Yale Durus, launched in 2024, with both the lock case and battery pre-installed and concealed inside the door leaf. Introduction Who we are ASSA ABLOY as an investment Good industry to be in • A leading market position A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements P a c k a g i n g R a w m a t e r i a l E n e r g y i n u s e R e c y c l a b i l i t y R e c y c l e d c o n t e n t R e u s e C a r b o n f o o t p r i n t C o s t R e c y c l e R e u s e R e d u c e Sustainability compass ASSA ABLOY’s Sustainability Compass Our Sustainability Compass is integrated into our product development process. The goal is to make our product portfo- lio more competitive and sustainable. Vision Empowerment We have trust in people Innovation We have the courage to change Integrity We stand up for what’s right To be the global leader in providing innovative access solutions that help people feel safe and secure so that they can experience a more open world Building sustainable shareholder value Providing added value to our customers, partners and end-users Being a world leading organization where people succeed Conducting business in an ethical, compliant and sustainable way Sustainability Financial targets Priorities Core values and beliefs Mission Strategic objectives Growth through customer relevance Product leadership through innovation Cost-efficiency in everything we do Evolution through people Growth accelerators • Actively upgrade installed base • Increase service penetration • Generate more recurring revenue • Grow in emerging markets • Pricing excellence • Continue with successful acquisitions Growth enablers • Consolidate footprint and focus on value added • Optimize logistics • Reduce product cost 10 % growth / business cycle 16 –17 % EBIT / business cycle 24 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here A well-proven strategy | ASSA ABLOY as an investment Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position • A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements A well-proven strategy that is delivering consistent profitable growth ASSA ABLOY has a strong position in an attractive industry and a well-proven strategy. The ASSA ABLOY strategy house is our common strategic framework. It contains all the building blocks of our strategy, providing a great foundation from which we can accelerate our profitable growth to further deliver shareholder value. 25 download a printable pdf here ASSA ABLOY | ANNUAL REPORT 2024 A well-proven strategy | ASSA ABLOY as an investment Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position • A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements Vision and mission Our vision provides us with direction and describes what we want to achieve as an organization – to be the global leader in providing innovative access solu- tions that help people feel safe and secure so they can experience a more open world. Our mission describes our role as a company, our reason for being, and how we aim to serve our key stakeholders. Financial targets Our financial targets are what we are aiming to achieve financially over the business cycle. Our sales growth target of 10% per year is based on 5% organic growth and 5% growth through acquisitions. Our target for the operating margin is 16-17%. On page 29 we show what ASSA ABLOY might look like in 2028 if we achieve the targets. Priorities Our priorities are the key value-adding activities for us as a Group. They are divided into growth acceler- ators and growth enablers. The priorities are further described on pages 26–28. Strategic objectives Our four strategic objectives guide us in running the company. “Growth through customer relevance” is about understanding the ever-shifting needs of our customers so that we can provide them with the most appropriate solutions. “Product leadership through innovation” is a key driver of differentiation and organic growth. “Cost-efficiency in everything we do” is our continuous focus on how we can improve our cost efficiency to fuel investments for innovation and future growth. “Evolution through people” is our mission to be a world-leading organization where people succeed. Sustainability Sustainability is integrated in everything we do. We view sustainability as a journey of continuous improvement, built on a foundation of transparency and integrity. As the industry leader, we take responsibility to mitigate climate change and ensure the health and safety of our employees. Our commitment to science-based targets demonstrates our willingness to further improve our competitiveness with sustainable products, solutions, operations, and lead the industry. Supporting cus- tomers in fulfilling their sustainability agenda is essen- tial to accelerate growth through customer relevance. Core values and beliefs Our core values are empowerment, innovation, and integrity. They communicate what we stand for as an organization and are the foundation for how we treat each other and work with our stakeholders. Our values foster a sense of security and trust, as well as a feeling of community and collaboration. They guide our daily decisions and inspire us to act, enabling opportunities for all employees to develop and grow. Our values and beliefs are reflected in the “Together We” program. A well-proven strategy | ASSA ABLOY as an investment 26 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here A well-proven strategy | ASSA ABLOY as an investment Priorities We have nine priorities that accelerate and enable our profitable growth. Growth accelerators To accelerate our profitable growth, we focus on six growth accelerators across the organization. These accelerators form the foundation for our growth, efficiency, and sustainability. Actively upgrade our installed base The ongoing shift from mechanical to electro- mechanical and digital solutions is well underway and gaining momentum in various end markets and segments. This, combined with our large installed base, presents an opportunity to deliver more con- venient solutions and further accelerate profitable growth. With prevailing penetration rates still low, the shift to electromechanical solutions continues to be a long-term driver of profitable growth. We actively support this shift by investing in development of our electromechanical products and solutions to offer customers more flexible and efficient solutions than their current products. The transition to electromechanical solutions is mainly driven by a demand for safety and security as well as efficiency and convenience. Our electro- mechanical solutions offer a high level of security thanks to advanced authentication methods, unique encryption technologies, the enablement of remote monitoring and control, as well as the provision of audit trails and access logs. All our recent solutions are end-to-end tested for physical and digital threats to provide our customers with the highest level of security. They also offer opportunities for efficiency gains and a higher level of convenience and flexibility for our customers. In response to growing demand for energy-efficient technologies, we are also expanding innovations in advanced technologies like energy harvesting and management, reducing or eliminating battery dependency to enhance customer experience and sustainability. Customer upgrades are also driven by our specifi- cation and technical advisory teams which actively engage with end customers to address their needs. For instance, Vasamuseet in Stockholm, Scandinavia's most visited museum, replaced its mechanical master- key system with a digital solution using programmable keys and wireless cylinders from ASSA ABLOY to solve problems with lost and misplaced keys. Similarly, Hippodrome Côte d’Azur in France resolved issues with unrestricted key duplication and lock replacements through our SMARTair system, delivering a flexible and cost-effective solution. In 2024, our electromechanical currency adjusted sales growth was 8% in the regional divisions. Increase service penetration We focus on growing our service business, primarily within our Entrance Systems division. Our culture of proactive engagement across the product and build- ing lifecycle leads to increased service penetration and customer satisfaction. Our teams collaborate with customers from plan- ning and installation to operation and renovation, delivering durable, reliable systems that meet evolving requirements and support sustainability goals. From high-quality installations and preventive mainte- nance to responsive on-site and remote support, we minimize downtime and disruption while extending product lifecycles through upgrades and moderniza- tion. This further reduces our carbon footprint. With our global reach and local expertise, we effec- tively service most doors and brands. The scale of our operations allows for the development of innovative solutions utilizing cloud-enabled tools, AI, and GenAI, empowering teams to deliver efficient service. Our commitment to digitalization and sustainability is reflected in key innovations such as spare part refurbishing, door upgrade packages, and data-driven solutions for remote monitoring, assistance, and predictive maintenance. Our connected solution, ASSA ABLOY Insight, exemplifies how we enhance door intelligence and efficiency through features like remote control, real-time monitoring, service planning, and critical in- sights designed to save time and money. For example, it streamlines distribution by assigning trucks to the correct docking doors in a distribution facility, trans- forming our role from door maintenance providers into strategic partners. Our @your service program guides technicians through recruitment and career development, in accordance with our vision and strategy. By expanding our service capacity through recruiting new techni- cians, acquiring service and distribution providers, and enhancing our overall service efficiency, we ensure sustainable, long-term growth. Vostio enhances hotel guests experiences Vostio is a cloud-based guest access management solution for hotels. It enhances the guest experience with features like keyless entry via mobile wallets, while keeping costs predictable and data secure for the hotels. We are transitioning Vostio from traditional revenue streams to a subscription-based approach. This shift not only modernizes our service offering but also presents a growth opportunity as we can upgrade our global installed base from on-premises systems to a cloud- based model. Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position • A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements Service sales SEK M 0 5,000 10,000 15,000 20,000 2423222120 Electromechanical sales SEK M 0 10,000 20,000 30,000 40,000 50,000 2423222120 compounded annual growth rate since 2020 compounded annual growth rate since 2020 14% 16% 27 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here A well-proven strategy | ASSA ABLOY as an investment Generate more recurring revenue The shift toward digital products and services and our extensive installed base present significant opportuni- ties to unlock recurring revenue streams. By expand- ing our offering with innovative new products and solutions that integrate seamlessly with our existing systems, we can encourage customers to upgrade their current installation. The integration of SaaS further enhances this potential. We design complete solutions that fit seamlessly into a subscription-based model. This involves a concerted effort to enhance our training programs, sales, pricing, and marketing initiatives, but we also invest in the necessary infrastructure, tools and processes to support and sustain growth within this area. Through connected platforms and cloud- based solutions, we can provide ongoing value to our customers and end-users. To grow recurring revenue from service agree- ments, we develop customer segment-specific prod- ucts and solutions. We are leveraging value-based pricing and adding services that utilize IoT and connected technologies to improve conversion rates. Guaranteeing uptime and extending the lifespan of our products adds significant value for our customers. This not only boosts sales and profitability but also increases customer loyalty and sustainability. Emerging markets Emerging markets offer significant growth potential. Representing about 13% of ASSA ABLOY sales, emerg- ing markets has had an average annual growth rate of 10% per annum in the past ten years excluding China. Our strategy consists of finding suitable acquisi- tions as a base to enter a market while also launching products and solutions specifically tailored to their local needs and requirements. We continue to invest in people to build local footprints and knowledge. For example, this includes setting up local assembly points and manufacturing facilities to better serve local needs, specifying prod- ucts from multiple divisions to offer our customers full solutions, and setting up local installation and service teams. Currency adjusted sales generated in emerging markets grew by 10% in 2024 excluding China. Pricing excellence Our pricing strategy reflects our position as a leading company in many markets, emphasizing our com- mitment to innovation and customer satisfaction. Our approach is decentralized and close to each local market, designed to ensure competitive advantage while meeting the diverse needs of our customer base. We continuously monitor and adjust our pricing strategy to align with strategic objectives and deliver value to customers and shareholders. By understanding what our customers value most, we set prices that align with these benefits, enhancing customer satisfaction and profitability. Thus, we use a value-based pricing strategy, ensuring that our prices reflect the unique benefits and high quality of our products and solutions. Continue with successful acquisitions We have acquired almost 400 companies globally since ASSA ABLOY was established in 1994. In many cases, the businesses are leading access providers in their respective markets with a well-established cus- tomer base, channels to market and brands. We aim to realize synergies while growing the businesses and increasing their profitability. The strategic rationale for each acquisition falls into one of four areas with well-defined investment criteria: • Grow the core – to expand geographically or access an installed base in an existing market • Extend the core – by finding suitable adjacent businesses or increasing our offering to maximize customer relevance • Access new technologies – to complement our offering and open doors to new end-market verticals and segments • Grow our service and distribution offering – to obtain direct channel and aftermarket presence Our well-structured acquisition strategy ensures a seamless process from target identification to integration and follow-up. Key elements include our decentralized operating model, where each division has its own M&A team to enable many parallel pro- cesses and to leverage their strong local knowledge. We also have standardized procedures for agile and efficient decision- making. Clear criteria for business characteristics and financial conditions, paired with Subscription-based sales SEK M 0 2,000 4,000 6,000 8,000 10,000 2423222120 Acquired growth % 0 2 4 6 8 10 2423222120 Daniel Ukazu is a Production Technician and building a locker at our Traka factory in Olney, UK. Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position • A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements solid integration plans, enable us to realize strong synergies. Recognizing the importance of people, we prioritize cultural and competence alignment to ensure successful integration. Our acquired businesses have generated significant value following integration. In 2024, we completed 26 acquisitions, adding sales of approximately SEK 8 bn. With our target pipeline of more than 900 potential acquisitions globally, and a solid financial position with a strong balance sheet and cash flow, we are well positioned to continue our successful acquisition journey. compounded annual growth rate since 2020 acquired sales since 2020 27% SEK 29 bn 28 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Growth enablers To accelerate our profitable growth through the growth accelerators, we focus on three growth enablers across the organization. These enablers form the foundation for our growth, efficiency, and sustainability. Consolidate footprint Since 2006, we have optimized our manufacturing footprint by consolidating and improving our produc- tion structure and overall manufacturing efficiency. We have launched a series of Manufacturing Footprint Programs (MFP), which have contributed with total accumulated savings of SEK 7.8 bn. Our restructur- ing programs in 2024 contributed with efficiency improvements of SEK 684 M and a net employee reduction of 885. We normally produce key components, such as cylinders, rim locks, door closers, and electro- mechanical products, in our own production plants, while sourcing other components from trusted external partners. Our strategy focuses on assembly operations to sophisticated plants close to customers, primarily in mature markets to better adapt products to local requirements. Where suitable, we are also investing in automation and robotics to help improve manufacturing efficiency. Our future MFP programs will further improve our operating efficiency and strengthen our competitive- ness. We will further streamline our production plat- form, warehouses and office footprint. By optimizing resources and facilities, we increase the efficiency in our operations, reduce redundancies, and improve coordination across ASSA ABLOY. Optimize logistics Optimizing our logistics network is also important for cost efficiency, improving delivery times, strength- ening supply chain resilience and ultimately the cus- tomer experience. Our global logistics strategies are designed to foster collaboration across regions while accommodating the specific needs of each division. In 2024, we advanced our ocean transportation strategy through the implementation of a 2+ partner model. This approach ensures supply chain reliability A well-proven strategy | ASSA ABLOY as an investment SEK M 0 200 400 600 800 1,000 2423222120 Annual MFP savings Annual MFP savings 2020–2024. Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position • A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements and cost control by leveraging an agile and resilient framework. At the core of the strategy is a partnership structure comprising one direct and two indirect partners, providing flexibility, risk mitigation through dual sourcing, and robust coverage. The strategy delivers end-to-end visibility and control, acceler- ating inventory flow and optimizing consolidation for the best cost per kilogram. In 2024, this strategy delivered more than SEK 100 M in savings. By encour- aging internal collaboration, we maximize spending efficiency and streamline our logistics footprint. Reduce product cost Professional sourcing is a crucial aspect in reducing the cost and environmental impact of our products. Through our global sourcing activities we ensure improved quality, competitiveness, better delivery times, and lower costs. We are constantly reviewing our supply base and streamlining our component assortment to leverage volumes. Through practices such as multi-tendering, should-cost analysis, bench- marking, and Group-wide contracts, we evaluate competitiveness as well as optimize processes. For example, we have established a global team that developed a Group-wide electronics semiconduc- tor strategy to utilize the strength of our scale, and collaborate efficiently with R&D to ensure supply chain continuity. Sourced goods make up a significant share of our cost base, and sourcing is an important element to achieve cost efficiency. Value analysis and value engineering (VA/VE) methodology optimizes costs for our products and components. Value engineering is applied to products not yet launched to examine where costs can be reduced or value can be added, without compromising quality or functionality. After the product is launched, we continuously conduct value Cost-efficiency is an enabler for profitable growth. analysis for continued optimization. Through product reengineering, material standardization and opti- mization, and scrap optimization, we systematically reduce costs and improve resource utilization while increasing customer value. 29 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Financial targets | ASSA ABLOY as an investment ASSA ABLOY in 2028 Over a business cycle, we target sales growth of 10% per year, equally split between organic growth and growth through acquisitions, with an EBIT margin of 16–17%. Over the last 15 years, sales have grown with a compounded annual growth rate of approximately 9%. This is despite external challenges including the pandemic, supply chain issues, geopolitical unrest and war in Europe. During the same period, we have had an average adjusted EBIT margin close to 16%. Being a market leader with a well-proven strategy, in an industry with strong fundamental growth driv- ers, puts us in a strong position to reach our financial targets. As we execute on our strategy and ambitions, we will expand our electromechanical product portfolio, we will have a bigger presence in emerging markets, and a larger service business. Further- more, this entails that we will have a larger share of recurring revenue driven by an increased demand for mobile access solutions and other software solutions supporting access control. We will also grow through acquisitions that will contribute to the success of ASSA ABLOY. Finally, if we deliver on our strategy and in line with our financial targets, ASSA ABLOY’s sales should reach about SEK 220 bn in 2028 with an operating profit of about SEK 35 bn. We have set ambitious financial targets, aimed at balancing growth with a profitability level which can create substantial value. Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position A well-proven strategy • Financial targets Divisions overview Report of the Board of Directors Financial statements • Actively upgrade installed base • Increase service penetration • Generate more recurring revenue • Grow in emerging markets • Pricing excellence • Continue with successful acquisitions ...if we deliver according to our financial targets 5%5% 16 –17% • Consolidate foot- print and focus on value added • Optimize logistics • Reduce product cost Organic growth Growth accelerators Growth enablers Sales of SEK ~220 bn 2028 EBIT of SEK ~35 bn M&A growth EBIT-margin 30 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements download a printable pdf here Case | ASSA ABLOY as an investment Erste Group elevates banking experience QQ What is the project/challenge. AA – Each country had its own version of George, and due to local compliance, language nuances, and customer service expectations, managing multiple authentication vendors across these markets made it difficult to ensure a unified and streamlined authenti- cation process. – We needed a solution that could meet compli- ance standards and provide a seamless digital banking experience for millions of users. QQ What is the solution/product? AA – HID Approve, powered by HID’s cloud-based Authentication Platform, was seamlessly integrated into George, making the banking app consistent across markets. Combined, the solutions enabled fast, secure user authentication and transaction verification through a scalable cloud model. The platform’s flexibility met diverse Strong Customer Authentication (SCA) needs, supporting methods like one-time password (OTP) and biometrics. During the phased migration, HID’s Professional Services collaborated with Erste to ensure a smooth transition. – We selected HID’s solution for its scalability, compliance with the Payment Services Directive Two and Open Banking with dynamic linking – a true mobile-first approach. The ability to log in and move money must work every time, so we needed to per- form the rollout in small groups to avoid a roll-back situation. QQ Why did Erste Group choose ASSA ABLOY and how did we solve the challenges? AA – The collaboration with HID to deliver a well- designed solution throughout the journey was crucial. HID was with us every step of the way and not only offered great technical solutions but also highly valuable services that enabled the digital onboarding journey in George to be reliable and user friendly for all our customers. CASE FACTS Project: Erste Group, Central and Eastern Europe ASSA ABLOY products and solutions: HID Approve Erste Group is one of the largest major banking groups in Central and Eastern Europe, aiming to provide a seamless and secure digital banking experience while maintaining local compliance requirements across multiple markets and maintaining a consistent user experience for their banking platform, George. ASSA ABLOY in your daily life HID was with us every step of the way and not only offered great technical solutions but also highly valuable services 31 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Good industry to be in A leading market position A well-proven strategy Financial targets Divisions overview Report of the Board of Directors Financial statements download a printable pdf here Case | ASSA ABLOY as an investment Tailored solutions to meet sustainability goals in BREEAM certified logistics center QQ Tell us about the project! AA – The goal was to construct a 20,000 sqm BREEAM-certified logistics center with minimal embodied carbon and operational carbon footprint while still meeting traditional warehouse require- ments like free clearance height, floor load-bearing capacity, number of dockings, column grid, etc. We also put a strong emphasis on the building's architecture, biodiversity, and the well-being of the people who will be using it. QQ What were your specific needs? AA – Our primary challenge was finding products that were not only certified and approved according to relevant standards but had also undergone rigor- ous full-scale testing. Many suppliers offering new sustainable alternatives are start-ups whose products have not yet been extensively tested. Therefore, it is challenging to ensure that these materials can be used effectively and reliably. That is why we turned to ASSA ABLOY – they could provide the products we needed. QQ Which solutions did you choose? AA – For this project, ASSA ABLOY provided 17 complete loading docks, including dock levelers, weather protection, and overhead sectional doors. Together with ASSA ABLOY, we also developed wooden-based load houses with inflatable shelters to meet our specific needs. QQ In what ways has ASSA ABLOY contributed to your sustainability goals? AA – ASSA ABLOY constructed optimized loading docks that significantly reduced the amount of steel used, which directly lowered the product's carbon footprint. By focusing on reducing embodied carbon, their solutions aligned perfectly with our goals and ambitions. With their help, we balanced operational efficiency and environmental responsibility in this project. CASE FACTS Project: Bålsta, Stockholm, Sweden ASSA ABLOY products and solutions: Dock levelers, inflatable shelters, overhead sectional doors, and the development of wooden- based load houses with inflatable shelters. ASSA ABLOY Entrance Systems delivered custom industrial door and docking solutions to support Logicenter's ambitious sustainability targets in the construction of a BREEAM-certified logistics center in Bålsta, Stockholm, Sweden. ASSA ABLOY in your daily life EVA STERNER, HEAD OF DEVELOPMENT LOGICENTERS, NREP ASSA ABLOY constructed optimized loading docks that significantly reduced the amount of steel used, which directly lowered the product's carbon footprint. 32 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific Global Technologies Entrance Systems Report of the Board of Directors Financial statements download a printable pdf here 32 ASSA ABLOY | ANNUAL REPORT 2024 Divisions overview ASSA ABLOY has a decentralized organization with empowered local businesses that quickly can take action in response to developments in the local market. Our businesses are organized in three regional and two global divisions. The global divisions manufacture and sell access solutions, identification products and entrance automation in the global market. Global Technologies accounts for about 16% of the Group sales and Entrance Systems for about 33%. 33 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Overview highlights | Divisions overview Introduction Who we are ASSA ABLOY as an investment Divisions overview • Overview highlights Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific Global Technologies Entrance Systems Report of the Board of Directors Financial statements Opening Solutions EMEIA • Sales: SEK 25,098 M (24,831) with 0% organic growth. • Operating income (EBIT): SEK 3,552 M (3,388). 1 • Operating margin: 14.2% (13.6). 1 n Mechanical locks, lock systems and fittings, 47% n Electromechanical and electronic, 34% n Security doors and hardware, 19% 16% 14% 1 Excluding items affecting comparability. The regional divisions manufacture and sell mechanical and electromechanical locks, digital door locks and smart home access solutions, high-security doors, fire doors and hardware adapted to the local market’s standard and security requirements. The regional divisions account for about 50% of Group sales, with Americas being the largest division followed by EMEIA, and Asia Pacific. Share of sales Financials in brief 2024 Share of operating income Sales by product group Regional divisions Share of sales Financials in brief 2024 Share of operating income Sales by product group Global divisions n Mechanical locks, lock systems and fittings, 49% n Electromechanical and electronic, 24% n Security doors and hardware, 26% 29% 33% Opening Solutions Americas • Sales: SEK 44,340 M (38,009) with +2% organic growth. • Operating income (EBIT): SEK 8,207 M (7,186). 1 • Operating margin: 18.5% (18.9). 1 Opening Solutions Asia Pacific • Sales: SEK 9,120 M (10,284) with –6% organic growth. • Operating income (EBIT): SEK 619 M (662). 1 • Operating margin: 6.8% (6.4). 1 n Mechanical locks, lock systems and fittings, 57% n Electromechanical and electronic, 18% n Security doors and hardware, 25% 5% 2% Global Technologies • Sales: SEK 24,179 M (23,099) with -2% organic growth. • Operating income (EBIT): SEK 4,224 M (3,996). 1 • Operating margin: 17.5% (17.3). 1 n Access solutions, 79% n Hotel locks, 17% n Service, 4% 16% 17% Entrance Systems • Sales: SEK 49,451 M (46,665) with -1% organic growth. • Operating income (EBIT): SEK 8,493 M (7,807). 1 • Operating margin: 17.2% (16.7). 1 n Products, 71% n Service, 29% 33% 34% 34 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Opening Solutions EMEIA | Divisions overview Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights • Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific Global Technologies Entrance Systems Report of the Board of Directors Financial statements Opening Solutions EMEIA The shift to electromechanical and digital solutions is gaining momentum Financial development EMEIA ended 2024 with stable organic development after gradually recovering from a weak start of the year due to low activity in the res- idential construction segment. Central Europe delivered good sales growth driven by strong growth in Eastern Europe and the Middle East/ India/Africa and the Nordics had stable growth. South Europe was stable while sales declined in the UK and Ireland due to weak residential demand. Acquired growth for the year was 1%. Through pricing efforts, Manufacturing Footprint Program (MFP) initiatives, and a strong cost focus, EMEIA managed to improve the operating income by 5% and the corresponding margin was 14.2% (13.6%). The cash flow was SEK 3,872 M with a conversion rate of 109%. We have continued to invest in R&D as it is a long-term enabler for future growth, and it will support our competitive advantage. New products introduced over the past three years accounted for 23% of sales. Acquisitions Two acquisitions were completed during 2024. We acquired Amecor, a South African manufacturer of security communication equipment, and Roger, a Polish manufacturer of on-premise electronic access control systems and related hardware. • Divisional headquarters located in Woking, UK. • EMEIA is organized into five market regions: the Nordics (Scandinavia and Finland); Central Europe (Germany, Austria, Switzerland, Benelux and East Europe); UK/Ireland; South Europe (France, Iberia, Italy and Greece); and MEIAI (Middle East, Africa, India and Israel). • Products include mechanical and electro- mechanical locks, hardware and security doors, adapted to the standards and requirements of local markets. • The commercial and residential products are sold under the ASSA ABLOY brand and brands endorsed by ASSA ABLOY, such as Yale, ABLOY, Vachette and TESA. • EMEIA has leading market positions in Europe, the Middle East, India, and Africa. • EMEIA has about 12,200 employees. Overview EMEIA Proportion of commercial/institutional vs residential Through pricing efforts, MFP initiatives, and a strong cost focus, we managed to improve the operating margin by 60bps to 14.2% Yale Smart Keypad 2 upgrades Yale smart products with fingerprint and code entry. n Commercial/Institutional, 60% n Residential, 40% Sales, SEK M Operating income 1 , SEK M 10,000 15,000 20,000 25,000 2423222120 Sales 1,000 2,000 3,000 4,000 Operating income 1 1 Excluding items affecting comparability. 35 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Opening Solutions EMEIA | Divisions overview Comments by Divisional Head What was your main focus in 2024? – Our focus was to continue navigating the tough economic conditions, particularly in the residential space due to high inflation and interest rates which had a clear impact on both new builds and renovations. Digitalization of the market has continued, with a shift from mechanical to digital solutions in both the commercial and residential space. Our focus on providing a complete access manage- ment eco system is fueling growth as it brings all elements of the door environment together and allows us to deliver the best solutions for our customers. Providing Environmental Product Declarations (EPDs) increases our probability of securing a tender, as demand for green certifications grows due to the industry’s decarbonization efforts. What are your key priorities to accelerate EMEIA’s profitable growth? – The first priority is the mechanical core, with focus on products such as cylinder platforms, lock cases, and seals. The second is about capturing the digitalization of the residential sector through, for exam- ple, focusing on our Yale Smart Security Ecosystem. We are constantly focusing on growing our offering in the commercial space, including digital and electromechanical solutions, to win important projects with our complete access portfolio. Staying close to our customers remains a priority. We achieve this through our business areas, which are dedicated to developing strong customer relationships and satisfaction, supported by clear, coordinated product strategies. Where are you in the transition from mechanical to electro- mechanical and how are you increasing the speed of adoption? – While our product portfolio is more interconnected than ever, and we are helping our customers to digitalize and future-proof their buildings with a wide range of access solutions, we are still in the early phase of the transition from mechanical to electromechanical products and solutions. Our solution-focused approach connects our portfolio and simplifies our customers’ choices, and this is seen through high adoption rates in the Nordics and in Central Europe. A couple of years ago, EMEIA acquired Arran Isle, which is your biggest acquisition in more than 20 years. How has this integration worked? – As a market leader in the architectural, decorative, functional door and window hardware categories, Arran Isle’s product range is exciting and complementary to our offering. They have a truly excellent go- to-market approach and great reputation for high levels of customer service, which our OEM channel demands. Our integration activities have gone according to plan, and it is great to see colleagues from both Arran Isle and the ASSA ABLOY UK/Ireland business working together to deliver both growth and efficiency benefits. Neil Vann Executive Vice President and Head of EMEIA division The ongoing shift from mechanical to electro- mechanical and digital solutions is underway and gaining momentum in various end markets and segments across the EMEIA region. This, combined with our large installed base presents an opportunity to offer more convenient solutions and further accel- erate our profitable growth. Recognizing the demand for energy-efficient solutions, we have focused on advanced technologies like energy harvesting and management to eliminate or extend battery use. With the transition to electromechanical, recurring Strategic priorities Highlights revenue continues to be a key strategic action. We have increased our offering with a variety of subscrip- tion models across EMEIA. We offer annual service contracts and maintenance agreements that provide peace of mind to our customers. We continued our growth in emerging markets. In the Middle East, we have collaborated cross- divisionally at our new state-of-the-art regional head- quarters to provide customers with a holistic ASSA ABLOY product offering, resulting in many project wins particularly in the multi-residential space. Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights • Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific Global Technologies Entrance Systems Report of the Board of Directors Financial statements Sustainability • Published 13 new EPDs, reaffirming our commitment to transparency and sustainability, and helping our customers contribute towards green building certifications such as BREEAM and LEED • Accelerated solar installations in multiple countries resulting in 82% of the electricity used in 2024 coming from renewable sources • Completed a strategic energy overhaul at two of our main production sites in France, contributing to a total energy saving of 370 metric tons of CO 2 and approximately 2,100 MWh Costs • Materials price inflation continued to provide a chal- lenging environment, and we countered much of this through strong procurement actions to leverage our supply base and price management, and accelerated value engineering • Development of a linked network of distribution centers across Europe to drive efficiency and improved service throughout our supply chain Market activities • Participation at many high-profile exhibi- tions across EMEIA such as BAU 2024 in Germany • Achievement of over 1 million Yale Doorman smart door locks sold in the Nordics since its introduction in 2011 • Continued to shift our product mix towards the opportunities that digital and cloud based solutions provide Innovation We continued to shift our product mix towards the opportunities that digital and cloud-based solutions provide. We launched 43 new prod- ucts, for example: • Yale Linus L2 Smart Lock, Smart Keypad 2 with fingerprint access and a variety of new smart residential products compatible with the Yale Smart Ecosystem • A new electro- magnetic door that secures classified data and military, government and diplomatic facilities • Extension of the Aperio product family, with the Aperio cabinet lock 36 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Opening Solutions Americas | Divisions overview Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA • Opening Solutions Americas Opening Solutions Asia Pacific Global Technologies Entrance Systems Report of the Board of Directors Financial statements Opening Solutions Americas The integration of HHI is well underway Financial development Americas reported good sales growth of 2%, primarily driven by strong sales growth in Latin America, good growth in the North America Non-Residential segment and stable in the North America Residential segment. The non-residential market has held up well during the year, whereas the residential market stabilized and partly grew following a downturn in the activity level in the prior year. Excluding items affecting comparability, the operating income increased 14% with a margin of 18.5%. Cash flow was SEK 7,581 M and the conversion rate 92%. New products introduced over the past three years accounted for 25% of sales. Acquisitions Five acquisitions were completed during the year. We acquired Wesko Locks, a Canadian manufacturer and supplier of electronic and specialty locks; Cole Kepro, a US recognized leader in gaming cabinets, kiosks, mailbox and personal storage equipment; Level Lock, a US technology solutions business; Premier Steel Doors and Frames, a US manufacturer of hollow metal doors and frames, metal building door systems, and aluminum windows; and Norshield Security Products, a US manufacturer of high-security openings and enclosures. • Divisional headquarters in New Haven, Connecticut, US. • Americas is organized into three business segments: North America Non-Residential, North America Residential and Latin America. • Products include mechanical and electro- mechanical locks, hardware, secure lockers, access control devices, security doors and plumbing. • The Americas has a strong brand portfolio consisting of strong-endorsed and soft- endorsed brands. In North America, we have strong residential brands such as Kwikset, Baldwin, and Weiser, and manage strong commercial brands like Sargent, Curries, and NortonRixson. We use strong local brands in South America, like Papaiz, Odis, Philips, as well as Yale. • Americas has leading positions in the US, Canada, Mexico and South America. • Americas has about 17,900 employees. n Commercial/ Institutional, 55% n Residential, 45% Overview Americas Proportion of commercial/institutional vs residential We continue to see significant growth in our businesses focused on electromechanical products and solutions across residential and commercial markets. Kwikset UNITE™ delivers a simple yet comprehensive solution for managing multifamily properties. Sales, SEK M Operating income 1 , SEK M 15,000 25,000 35,000 45,000 2423222120 Sales 3,000 5,000 7,000 9,000 Operating income 1 1 Excluding items affecting comparability. 37 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Opening Solutions Americas | Divisions overview Comments by Divisional Head What was your main focus in 2024? – The integration of HHI into the North America Residential segment remains a significant focus for the Americas division, and it continues to be a positive experience. We also emphasized the commercializa- tion of new products across the division, ensuring we get innovations into the hands of our customers as quickly as possible. In connection to that, we are focused on expanding our footprint to be closer to the customer. What are your key priorities to accelerate profitable growth? – Focusing on operational efficiency has always been the cornerstone of our success in the Americas division. We remain committed to opti- mizing this as much as possible through robust logistics, strong supply chain management, and maintaining good delivery lead times for our customers. On top of this, we have three main priorities for acceler- ating growth: on the residential side, we need to continue investing in our operational and supply chain network and launch innovative products for the US and Canadian markets. In Latin America, our top priority is to grow in the commercial and access control market. Speed to customers is critical in this market, so we continue to focus on our local footprint. Finally, in the commercial segment, we remain committed to growing the electromechanical business and fully sup- porting our customers with the transition from mechanical to digital. Where are you in the transition from mechanical to electro- mechanical and how are you increasing the speed of adoption? – The journey from traditional mechanical to electromechanical products is progressing well. We continue to see significant growth in our businesses focused on electromechanical products and solutions across residential and commercial markets. To support an easier transition to electromechanical, we are focused on expanding our product portfolio to encompass different price points and feature sets or capabilities. Also, leveraging our Level Lock acquisition will enable us to bring new technologies with a premium design faster to market across several brands and vertical markets. What synergies have you realized with the 2023 HHI acquisition, and what are the key priorities for the coming years? – The acquisition of HHI was the largest in ASSA ABLOY history, and the integration of this business is going very well. The residential team’s values mirror those of ASSA ABLOY perfectly, which has been extremely beneficial to the integration process. Their involvement in many of our divisional programs has been seamless. We see several growth opportunities in multi-family housing, specifications, and technology sharing across segments. On the cost side, we are realizing significant savings in raw materials, office consolidation, insource of categories, and transportation. Lucas Boselli Executive Vice President and Head of Americas division We continued strengthening our core business, expanding into new markets, and developing our technology portfolio with a strong acquisition pipe- line. During the year, we completed five acquisitions that reflect our strategic ambitions to grow the core in mature markets while creating a stronger presence in adjacent markets. To further differentiate our product offering, we are getting closer to our customers in both resi- dential and commercial markets. We opened a new Door Service Center in Orlando that services the Strategic priorities Highlights southwestern region of the US, and a new FlashShip location was opened in the San Francisco Bay Area to provide quick-ship services to our growing customer network on the west coast. We enhanced our digital offerings with solutions like Centrios, a mobile-first platform for small businesses with a dedicated app offering different subscriptions based on end-user needs. Similarly, we launched Kwikset UNITE™, a smart, mobile-enabled platform that offers seamless access control to multi- family properties in North America. Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA • Opening Solutions Americas Opening Solutions Asia Pacific Global Technologies Entrance Systems Report of the Board of Directors Financial statements Sustainability We continue to implement multiple sustainability initiatives across the division, including carbon footprint reduction, water intensity improvements, and safety measures, for example: • Implementation of water recirculation systems at various sites significantly reduced consumption • Improvements made through air compres- sors, electroplating, and heaters to reduce emissions • Multisite safety initiatives launched to proactively prevent incident occurrences Costs • We have realised several synergies relating to the HHI acquisition • Continued focus on cost efficiency from targeted lean initiatives, kaizen events, value analysis, and value engineering events • Dual sourcing and supplier negotiations generated good savings • Several businesses focused on logistics and supply chain opti- mization initiatives • Cost savings activities related to robotics deployment, auto- mation, smart factory initiatives, and quality improvement Market activities • Control iD expanded its biometrics and facial recognition offering throughout the Latin America region • At GSX 2024 in Orlando, a new access control solution was showcased that allows Spot security patrol robots from Boston Dynamics to unlock and open access- controlled automated doors autonomously • The geographical expansion in Latin America continued with the opening of two new warehouses to improve service levels in the region Innovation During the year, we collaborated with the University of Connecticut to reduce the carbon footprint in door con- struction and researched sustainable materials for new products. We also launched 265 new products, including: • Control iD UHF Reader for gates and iDFace biometric reader • Corbin Russwin and Sargent's new electric bored lock solutions use EcoFlex technology • Norton Rixon low en- ergy 4500 and 5200 series operators • New Grammercy, Briarcrest and Nashville design levers from Baldwin 38 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Opening Solutions Asia Pacific | Divisions overview Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA Opening Solutions Americas • Opening Solutions Asia Pacific Global Technologies Entrance Systems Report of the Board of Directors Financial statements Opening Solutions APAC Improved margin despite very weak demand in China Financial development APAC posted an organic sales decline of 6% in 2024, due to a continued very weak Chinese construction market as well as continued soft residential demand in South Korea and Australia/ New Zealand. South-East Asia held up well but faced high comparable sales figures from the previous year that led to negative sales growth in the second half of 2024. Despite sales declining, APAC managed to improve the operating margin by 40bps to 6.8% and the operating income reached SEK 619 M (662). Cash flow was SEK 997 M (1,213) with a conversion rate of 161%. New products introduced over the past three years accounted for 27% of sales. Acquisitions No acquisitions were completed during the year. • The division is organized into two business units: Greater China & Southeast Asia and Pacific & North-East Asia. The largest market by sales is China, followed by Australia and South Korea. • The local organization in China is divided by market segment and the other regions in Asia and Pacific are organized according to market segments or region/country structures. • Products include mechanical and electro- mechanical locks, hardware, and security doors adapted to the standards and requirements of local markets. • ASSA ABLOY is the main brand for products in commercial markets. The residential products are sold under various strong local and global brands such as Yale, PanPan, Gateman and Lockwood. • Asia Pacific has a leading position in Australia and New Zealand, as well as in some Asian countries. • Asia Pacific has about 6,800 employees. n Commercial/ Institutional, 50% n Residential, 50% Overview APAC Proportion of commercial/institutional vs residential One key priority is to grow the core, building on sustainability and a constantly changing regulatory environment. The new Yale Unity Smart Lock launched in Australia this year. Sales, SEK M Operating income 1 , SEK M 0 4,000 8,000 12,000 2423222120 Sales 0 500 1,000 1,500 Operating income 1 1 Excluding items affecting comparability. 39 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Opening Solutions Asia Pacific | Divisions overview Comments by business unit heads What was your main focus in 2024? – While macroeconomic conditions have affected residential sectors in our markets, there has been growth in commercial with good government investment in health and education, along with strong growth in data centers. Our number one priority continues to be on volume growth. We still see many expansion opportunities in our core business with a specific focus on the specification business and the window business in the US. Our specification business has grown in all markets with especially strong demand in New Zealand and South Korea. We have also concentrated on driving growth in Commercial Solutions China and prioritizing our cross-regional cooperation and export capabilities within our production company, which has resulted in a notable growth in sales points. What are your key priorities to accelerate APAC’s profitable growth? – One key priority is to grow the core, building on sustainability and a con- stantly changing regulatory environment and the accelerating adoption of electromechanical products in the commercial and smart residential segments. Another priority is growing replacements in the residential segment. By expanding the points-of-sale network, we come closer to our local customers. Leveraging new sales channels and delivering good customer service are also key to our growth in the replacement market. Where is APAC in the transition from mechanical to electromechanical and how are you increasing the speed of adoption? – The transition to electromechanical solutions is still at an initial phase. To accelerate this adoption, we are prioritizing the modernization of our commercial solutions by integrating access control systems into tradi- tional mechanical locks and push bars, unlocking substantial potential for growth. In the residential market, we are raising awareness of the Yale brand to promote the shift from mechanical to digital locks. The market is moving to connected locks at a higher adoption rate, increasing the importance of our Yale Home App. Which areas are in focus to stimulate a turnaround in China? – We are focused on maintaining profitability despite market shrinkage by increasing sales points, and on improving individual store performance. We are controlling costs through value analysis and value engineering projects, lean manufacturing, and refining our organizational structure to enhance efficiency. We focus on further strengthening our position in the commercial segment. It’s been about two years since you acquired Caldwell and D&D Technologies; how has the integration of these two companies been? – We completed a successful integration of Caldwell, which is now trading as a single entity. The consolidated entity offers one of the most comprehensive window product ranges in the US market for both projecting and sliding windows. The business is well positioned to continue the growth journey after experiencing strong volume growth in 2024. The D&D Technologies integration has also been completed with continued growth during the year. 2025 looks bright with exciting new products soon to be launched. Simon Ellis Executive Vice President and Head of business unit Pacific & North East Asia Martin Poxton Executive Vice President and Head of business unit Greater China & South East Asia The transition to electromechanical and digital solutions is a key factor for growth, and we have expanded our product offering and support platforms to harness the accelerated transition. For example, we launched a dedicated customer portal for our distributors of Aperio, driving ease of adoption and preference of use. We also focus on growth in the core business through specification, with many of our core mechanical, electromechanical and smart residential products and solutions being selected for major Strategic priorities Highlights projects like the Olympic Park Foreon Project, the largest residential apartment complex ever built in South Korea. During the year, we targeted data centers in emerging markets and public transportation in China, among other segments. Additionally, we have entered into the new energy automobile sector in China to capitalize on industry trends. We also established a door closer factory in Vietnam, strengthening our manufacturing capabilities and enhancing our strategic footprint in the region. Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA Opening Solutions Americas • Opening Solutions Asia Pacific Global Technologies Entrance Systems Report of the Board of Directors Financial statements Sustainability • Enhanced Environ- mental Product Declaration program with a key focus on commercial applications • Optimized energy mix and reduced carbon footprint through installation of solar panels at two plants in China • Conducted an extensive project in South Korea to ensure many of our commonly specified products meet ANSI and other international sustainability standards Costs • Delivered value analysis and value engineering (VA/VE) savings via product design and redesign, material substitu- tion and utilization improvements, pack- aging optimization and carbon emission reduction initiatives • Continued our foot- print consolidation process with office consolidation projects executed cross- divisionally • Realized efficiency gains through material efficiency strategies, including material cost reduction in China by means of strategic category sourcing Market activities • Restructured the sales and marketing organization as part of the Fenestration business integration to maximize the sales opportunities availa- ble in the consolidated product ranges • Enhanced brand visibility and Yale sales through interactive kiosks, live demos in high-traffic malls, engaging retail staff, influencer-driven social media cam- paigns, and exclusive in-mall promotions for the Yale Home app • Implemented strong pricing controls, including onboarding a new pricing tool in the Pacific region Innovation During the year, we continued investing in digital and electrome- chanical solutions to drive the transition to electromechancial. We launched 126 new products, for example: • The TwinX special keying system, which re-established key control on our heritage Lockwood Twin keying system via application of the Group FP2 patent • New smart gate lock with dual fingerprint sensor module • The smart-enabled Aeron awning window actuator in Australia, that simplifies instal- lation and gives access to window control via a mobile app or a panel on the wall 40 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Global Technologies | Divisions overview Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific • Global Technologies Entrance Systems Report of the Board of Directors Financial statements Global Technologies Busy year for acquisitions Financial development Global Technologies had a weak first half of the year, driven by high comparable sales figures due to a backlog catchup in Physical Access Control. While Global Technologies had good growth in the second half of the year, the organic sales declined by 2% for the full year. Despite lower sales, the operating margin increased to 17.5% (17.3%), due to a positive mix in the second half of the year and improvement in Global Solutions. Cash flow was strong with a conversion rate of 109% due to improved earnings and improvements in working capital. As a result of our continued investments in R&D, new products introduced over the past three years accounted for 31% of sales. Acquisitions Nine acquisitions were completed in 2024. We acquired Cemoel, a Spanish system integrator specializing in security solutions for critical infrastructure; Kadex, a Dutch designer and manufacturer of electronics; Axxess Industries, an innovator of electronics and smart technologies for hotel and residential environments; Messerschmitt Systems, a German developer and manufacturer of access control hardware and software solutions for hospitality; US-based Nomadix and UK-based Global Reach, providers of Wi-Fi access and engagement platform solutions for the hospitality and commercial industry; Vizzia Technologies, a provider of hardware-agnostic, full-service real-time location systems platforms for healthcare applications; Sewio, a provider of Ultra-Wideband real-time location systems platforms for asset management, intralogistics, and overall equipment effectiveness; IXLA, an Italian manufacturer of advanced laser and color personalization systems for cards and pass- ports; and 9Solutions, a Finnish provider of integrated AI-powered real time locating healthcare solutions. • The division comprises HID (about 65%) and Global Solutions (about 35%). • HID is organized into six business areas, with the largest being Physical Access Control Solutions. HID has leading market positions in trusted identity solutions providing secure and convenient access to physical and digital places and connecting things that can be accurately identified, verified and tracked digitally. • Global Solutions comprises seven business areas globally, with the largest being Hospitality. Global Solutions has a leading market position in the Hospitality, Marine, Senior Care, Construction, Key and Asset Management, Critical Infrastructure, and Self-Storage segments. • Global Technologies has about 8,700 employees and a presence on all continents. n Commercial/ Institutional, 100% n Residential, 0% Overview Global Technologies Proportion of commercial/institutional vs residential We have worked diligently to enable and drive the adoption of mobile credentials, especially within access control. VingCard has introduced Google Wallet compatibility for mobile hotel room keys. Sales, SEK M Operating income 1 , SEK M 10,000 15,000 20,000 25,000 2423222120 Sales 2,000 3,000 4,000 5,000 Operating income 1 1 Excluding items affecting comparability. 41 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Global Technologies | Divisions overview Comments by business unit heads What was your main focus in 2024? – The year brought macroeconomic headwinds with market uncer- tainty, but long-term underlying industry drivers remain robust. Our focus for 2024 was on key growth initiatives from both a commercial and product perspective. On the commercial side, we have worked diligently to enable and drive the adoption of mobile credentials, especially within access control. Parallel to this, building up our sales capability remains a priority. For example, we have strengthened sever- al sales teams with a dedicated, market-specific focus. We have also launched a high-quality facial recognition offering including a camera, module, and software that we are now scaling for additional use cases. Operationally, cost efficiency initiatives have been deployed during the year. Focusing on cost improvements and automation has enhanced scalability in capabilities, allowing us to expand geographically and integrate acquisitions seamlessly. This strategic approach ensures efficient operations and supports sustainable growth. What are your key priorities to accelerate Global Technologies’ profitable growth? – One key priority is to continue to increase the share of recurring revenue and subscription-based business models. By introducing new and innovative solutions tailored to meet the evolving needs of our customers, we can enhance our market position, increase customer satisfaction, and increase our addressable market. We also aim to grow across a few key market areas, including access control, extended access readers, RFID components, biometrics, real-time location ser- vices, and public key infrastructure. Additionally, to complement our organic growth, we continue to remain focused on M&A to acquire capabilities, expand the portfolio, and extend our reach. Which areas do you focus your product development efforts on? – Our efforts are concentrated on several key areas to enhance user experience and security. We focus on mobile access, particularly inte- grating our hotel keycards with mobile wallets, to provide seamless and secure access. Across businesses, we are leveraging a common credential services backbone for our mobile credential ecosystem across access control and non-access control use cases. Additionally, we have focused on developing and scaling our embedded platform for next generation readers and IoT devices. Björn Lidefelt Executive Vice President and Head of Global Technologies business unit HID Global Global Technologies continues to invest in acquisitions that strategically strengthen our product portfolio, technologies and expertise, and we completed nine acquisitions during the year. We expanded our product offering by launching close to 80 new competitive products and solutions during the year. For example, the integration of our VingCard hotel key cards into Google Wallet show- cases how mobile access is revolutionizing a seamless guest experience. We have also developed solutions with recurring revenue through services and subscrip- tions. HID’s recurring revenue continues to grow at a double-digit pace. Over the past four years, Identity Strategic priorities Highlights and Access Management Solutions, the key software- oriented business for HID, has undergone a transforma- tion to subscription-based sales. Our focus on mobile access has also moved towards subscription-based sales with mobile credentials and value-added services. Another priority of the growth strategy is to expand geographically, including in emerging markets. We are investing in emerging market sales and product initia- tives across, for example, access control, extended access and personalization. To gain efficiency in operations and serve our customers as locally as possible, we are moving our production footprint closer to customers. Stephanie Ordan Executive Vice President and Head of Global Technologies business unit Global Solutions Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific • Global Technologies Entrance Systems Report of the Board of Directors Financial statements Sustainability • At HID’s largest factory in Malaysia, solar panels were installed during the year, generating 12% on-site renewable energy • ASSA ABLOY’s KEYper created sturdy steel racking for wall boards and cabinet door shipments, reducing packaging, pallet use and freight space needed • HID initiated carbon factor studies across strategic product lines to identify improve- ment opportunities and assess Scope 3 emissions • Launched paper-based physical access card for visitor manage- ment, enhancing eco-friendly practices Costs • Expanded product cost savings across HID’s portfolio, with key initiatives includ- ing synergy realization with newly acquired Evolis and increased use of value analysis and value engineering • Continued leverage of common technology assets to improve R&D productivity by short- ening time to market, boosting performance, and reducing costs • Reviewed supplier contracts, rental agreements, energy, freight and other third-party costs Market activities • Accelerated the sales footprint of HID’s facial biometrics offering through a vertical sales focus • Expanded marketing focus, including vertical- specific capa- bilities and industry partner ecosystem development • Attended multiple trade shows such as ISC West, Seatrader and HITEC to strengthen customer relationships Innovation During the year, we continued to invest in mobile credential applications. We also further developed our access control portfolio, including expansion of the reader range. We launched 78 new products, for example: • The first-ever hotel mobile access card in Google Wallet, provid- ing a flexible mobile key solution that is app free • Mobile credentials in Apple Wallet and Google Wallet for access control and extended access use, such as for elevators, turnstiles, and electric vehicle charging • The next-generation Mercury MP controller 42 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific Global Technologies • Entrance Systems Report of the Board of Directors Financial statements Entrance Systems | Divisions overview Entrance Systems Record-high margin Financial development Entrance Systems reported an organic sales decline of 1%, but with strong growth in the Pedestrian and Perimeter Security business segments, that was offset by sales decline in the Industrial and Residential business segments. The Industrial business segment was negatively impacted by weaker demand for loading docks and the continued weak US residential market impacted sales for the Residential business segment. The operating margin continued to improve to 17.2% (16.7%), primarily driven by solid service growth and very strong operational leverage. Cash flow was strong with a conversion rate of 118%. The share of new products introduced over the past three years was 17% of sales. Acquisitions Ten acquisitions were completed in 2024. We acquired Integrated Warehouse Solutions, a US manufacturer of loading dock equipment; Industrial Door Company, a large independent full-service dock and door dealer-distributor; Spaltabdichtung, a German producer of patent protected seals primarily for overhead sectional doors, docking levers, and pedestrian doors; G-MAC, Elite Entrances, and Modern Entrance Systems, three independent automatic door dealer- distributors in the US; SKIDATA, an international leading provider of access management solutions based in Austria; Beyron Door, a Swedish manufacturer of industrial doors; Lawrence Doors, a US manufacturer of coiling steel doors, grilles, and counter shutters; and Door-Team, a Finnish full- service company within doors, gates, fences, and service. We also sold PACA, an elevator maintenance business in France. • Entrance Systems manufactures and sells entrance automation products, services, and perimeter security. • Divisional headquarters in Switzerland. • Entrance Systems is a global organization with four business segments: Pedestrian, Industrial, Residential and Perimeter Security. Industrial is the largest business segment. • The route to market is both direct and indirect, with ASSA ABLOY as the main brand in the direct channel and a number of additional brands in the indirect channel. • Entrance Systems has about 17,000 employees. n Commercial/ Institutional, 80% n Residential, 20% Overview Entrance Systems Proportion of commercial/institutional vs residential Service continues to be one of Entrance Systems' fastest growing areas. ecoLOGIC, an AI-powered smart system that optimizes door behavior to save energy and reduce costs. Sales, SEK M Operating income 1 , SEK M 20,000 30,000 40,000 50,000 2423222120 Sales 3,000 5,000 7,000 9,000 Operating income 1 1 Excluding items affecting comparability. 43 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Entrance Systems | Divisions overview Comments by Divisional Head What was your main focus in 2024? – We focused on service growth by enhancing our offerings to ensure exceptional delivery at every touchpoint. Through our @yourservice program, we have continued to improve staff retention and improve technical skills, ensuring an excellent service experience for our customers. We also concentrated on maximizing our market presence through a multi-channel, multi-brand approach. This strategy empha- sizes the growth of our indirect channel and sales efforts in emerging markets like India and Brazil, while expanding our geographical presence in North America. Additionally, we focused on expanding in key sectors such as security entrance control, healthcare, and airports, which offer significant growth opportunities and align with our vision for future growth. What are your key priorities to accelerate Entrance Systems’ profitable growth? – We are expanding our market presence and upgrading our service offerings. We are introducing solution platforms connected to our offerings and intelligent technology to meet market needs. Addi- tionally, we are developing sustainable products and solutions that minimize environmental impact and promote energy efficiency for our customers. Operationally, we are improving our manufacturing footprint and executing cost-saving initiatives by scaling operations and relocating products to match order trends. Strategic acquisitions, such as SKIDATA with parking, sports and entertainment solutions, Integrated Warehouse Solutions, and several distribution businesses, will also strengthen our market position and broaden our capabilities. Connected doors are a focus area for you within R&D. What opportunities do they offer? – Connected doors are equipped with intelligent technology that allows real-time monitoring and data collection, improving security and operational efficiency for our customers’ businesses. The adoption of connected doors is progressing well, with increasing customer interest across various sectors. Connected doors provide valuable insights into usage patterns and maintenance needs, enabling us to offer proactive service solutions and reduce downtime. They open new revenue streams through service contracts and upgrades, ensur- ing continuous engagement with our customers. Understanding the behavior and performance of their doors is crucial for our customers. It helps them optimize their operations to run smoothly, plan mainte- nance more effectively, and make sure their doors last. This approach aligns with our strategy to drive service growth and ensure exceptional value in every customer interaction. Massimo Grassi Executive Vice President and Head of Entrance Systems division Increasing our service penetration continues to be a key strategic priority. During the year, we enhanced our digital services to enable remote operation, monitoring, and control of doors, and improved our upgrade packages to modernize doors with the latest technology. We continued to acquire pedestrian door distributors in North America to strengthen our service offering. Service continues to be one of Entrance Systems’ fastest-growing areas. We have also invested further in our e-business and digital transformation. In 2024, we introduced customer-centric platforms such as ecoLOGIC, which integrates sustainability and utilizes intelligent sensor Strategic priorities Highlights technology to meet market needs. The ecoLOGIC solution is one technological advancement that enables us to generate subscription-based recurring revenue and build long-lasting relationships with our customers. During the year, we strengthened our market position and expanded capabilities through strategic acquisitions, including SKIDATA. This acquisition allows us to offer a full range of visitor management solutions and provide opportunities for synergy realization. It aligns with our strategy of growing our business in mature markets by integrating complementary products and solutions to our core and growing into adjacencies. Introduction Who we are ASSA ABLOY as an investment Divisions overview Overview highlights Opening Solutions EMEIA Opening Solutions Americas Opening Solutions Asia Pacific Global Technologies • Entrance Systems Report of the Board of Directors Financial statements Sustainability • Continued implement- ing the “Together we are safe” health and safety training and engage- ment program for all employees • Increased collaboration with suppliers to identify and support activities to reduce emissions • Introduced a new energy-efficient garage door operator to meet future power consumption require- ments • Advanced the develop- ment of a fully sustainable high- performance door Costs • Expanded our man- ufacturing footprint program (MFP) to enhance operational efficiency, including moving airtight door production from Germany to the Netherlands and merging two manufac- turing sites in France • Implemented short- term cost-saving measures across regions in response to reduced volumes • Achieved cost savings on both indexed and non-indexed products through strategic pro- curement initiatives Market activities • Enhanced collabora- tion on specification processes with other divisions • Acceleration of our growth in emerging markets through, for example, the locali- zation of pedestrian products adjusted to meet the demand in these markets • Grew our prod- uct portfolio and geographical reach through strategic acquisitions such as Integrated Warehouse Solutions, SKIDATA, and North American distributors Innovation During the year, we revamped the range of revolving doors with updated designs and technological features. We launched 40 new products, for example: • The new ASSA ABLOY SG Expression speed gate which also won several awards, includ- ing the Red Dot Award for Product Design • Ditec Air, and Normstahl and Crawford Spark garage door openers, which seamlessly integrate with the Yale eco- system • Digital tools to enhance customer experience, including the IDD Part app, Ditec Gate Connect, and the Amarr Quality app download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors • Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements 44 ASSA ABLOY | ANNUAL REPORT 2024 Report of the Board of Directors 45 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors • Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Report of the Board of Directors Report of the Board of Directors Significant events Sales and income Organic sales were stable in North America and Europe, affected by weaker demand for the residential market in general. Organic growth was strong for Latin America and Africa, while it was negative for Asia and Oceania. Sales increased by 7 percent for the full year 2024 and amounted to SEK 150,162 M (140,716). Organic growth was –1 percent (3) and net acquired and divested growth was 8 percent (8). The exchange rate effect on sales was 0 percent (5). Operating income (EBIT) increased by 11 percent to SEK 24,275 M (21,785), equivalent to an operating margin of 16.2 percent (15.5). The increase in income was mainly attributable to strong growth in fixed currency, good leverage from sales price in relation to material costs, and continuous efficiency enhance- ments and savings. Net financial items were SEK –3,382 M (-2,531), largely owing to higher interest expenses during the year. Income before tax was SEK 20,893 M (19,254), an increase of 9 percent. The effective tax rate amounted to 25.2 (29.4) percent. The effective tax rate for the comparative period was strongly affected by items affecting comparability. Earnings per share after full dilution increased by 15 percent to SEK 14.08 (12.27). Earnings per share after full dilution, excluding items affecting comparability, increased 4 percent to SEK 14.09 (13.54). Operating cash flow for the year remained very strong and amounted to SEK 23,052 M (25,232), corresponding to cash conversion of 1.10 (1.28). Items affecting comparability Items affecting comparability for 2024 and 2023 are presented below: 2024: Divestment effects. Emtek and the Smart Resi- dential business in the US and Canada were divested in 2023. Adjusted purchase price and exit costs in 2024, related to the divestment, amounted to a cost of SEK 21 M. The corresponding cost after income tax amounted to SEK 15 M. 2023: Divestment effects. Emtek and the Smart Resi- dential business in the US and Canada were divested in 2023. The operating income from the divestment, including exit costs, amounted to SEK 3,588 M. The corresponding income after income tax amounted to SEK 2,066 M. 2023: Impairment of intangible assets. Impairment of goodwill and other intangible assets in 2023 amount- ed to SEK 2,271 M, mainly attributable to Citizen ID in the Global Technologies division. The corresponding cost after tax was SEK 2,129 M. 2023: Restructuring costs. A new restructuring program was launched in the first quarter of 2023. Operating expenses amounted to SEK 1,250 M. The corresponding cost after tax was SEK 997 M. 2023: Inventory revaluations. Inventory acquired for HHI was revalued at fair value as a result of the acquisition analysis. The non-recurring inventory revaluation amounted to SEK 466 M before tax and was expensed in 2023. The corresponding cost after tax amounted to SEK 350 M. Restructuring The latest restructuring program was launched in 2023. Plants and offices are expected to be closed over a two-year period in the program. The operat- ing expenses of the program are expected to be SEK 1,250 M and were fully expensed 2023. The expected payback period including investments is around two years. All ongoing restructuring programs progressed well in 2024 with very good savings effects. Around 900 employees left the Group during the year in con- junction with changes in the production and office organization. 12 plant closures and a number of office closures were implemented during the year, along with a number of other activities, including conver- sion from production to final assembly in production units. In recent years, the Group has increasingly concen- trated production to its own plants in Asia, Central Europe and Eastern Europe. Payments for all restructuring programs totaled SEK 748 M (613) for the year. At year-end 2024, the remaining provisions for restructuring measures amounted to SEK 39 M (767). Organization No material operations were transferred between divisions during the year. Any transfers of operations are recognized from the time of the transfer as inter- nal acquisitions/divestments between the divisions without any retroactive financial translation. Acquisitions In January 2024, Integrated Warehouse Solutions, a US manufacturer of loading dock equipment, was acquired. The company is headquartered in Burleson, US. Sales in 2023 totaled about SEK 1,850 M. In April 2024, Nomadix and Global Reach, leading providers of Wi-Fi access and engagement platform solutions for the hospitality and commercial real estate industry, were acquired in the US and UK. The companies offer a comprehensive tech platform of hardware, software and analytics tools to securely connect and engage with customers and devices via Wi-Fi networks. The respective headquarters are located in Los Angeles, US, and London, UK. Sales in 2023 totaled about SEK 300 M. In April 2024, Messerschmitt Systems, a well-estab- lished German developer and manufacturer of access control hardware and software solutions for the hos- pitality market including products for access control and in-room control, was acquired. The company is headquartered in Schwaig, Germany. Sales in 2023 totaled about SEK 130 M. In May 2024, Amecor, a South African manufacturer of security communication equipment in the South African security market, was acquired. The company is headquartered in Johannesburg, South Africa. Sales in 2023 totaled about SEK 150 M. In June 2024, Wesko Locks, a Canadian manufactur- er and supplier of electronic and specialty locks, was acquired. The company is headquartered in Toronto, Canada. Sales in 2023 totaled about SEK 170 M. In September 2024, Skidata, an international lead- ing provider of access management solutions, was acquired. The company is headquartered in Salzburg, Austria. Sales in 2023 totaled about SEK 3,500 M. In September 2024, Level Lock, a US technology solutions business, was acquired. The company is headquartered in Redwood City, US. Sales in 2023 totaled about SEK 170 M. In November 2024, Lawrence Doors, a US man- ufacturer of coiling steel doors, grilles and counter shutters, was acquired. The company is headquar- tered in Baldwin Park, US. Sales in 2023 totaled about SEK 320 M. In November 2024, IXLA, an Italian manufacturer of advanced laser and color personalization systems for cards and passports, was acquired. The company The Annual Report of ASSA ABLOY AB (publ.), corporate identity number 556059-3575, contains the consolidated financial statements for the fiscal year 1 January through 31 December 2024, including the nature and focus of the business. ASSA ABLOY is the global leader in access solutions, dedicated to satisfying end-user needs for security, safety and convenience. 46 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors • Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Report of the Board of Directors is headquartered in Romano Canavese, Italy. Sales in 2023 totaled about SEK 150 M. In December 2024, Premier Steel Doors and Frames, a US manufacturer of hollow metal doors and frames, metal building door systems, and aluminium windows, was acquired. The company is headquar- tered in Monroe, US. Sales in 2023 totaled about SEK 420 M. In December 2024, 9Solutions, a Finnish provider of highly integrated AI-powered real time locating healthcare solutions for critical communication and collaboration, with a focus on senior care, was acquired. The company is headquartered in Oulu, Finland. Sales in 2023 totaled about SEK 110 M. In December 2024, Roger, a Polish manufacturer of on-premise electronic access control systems and related hardware, was acquired. The company is headquartered in Gosciszewo, Poland. Sales in 2023 totaled about SEK 110 M. In December 2024, Norshield Security Products, a US manufacturer of high-security openings and enclosures, was acquired. The company is headquar- tered in Montgomery, US. Sales in 2023 totaled about SEK 170 M. The total purchase price of the 26 companies acquired during the year, including adjustments for acquisitions from previous years, was SEK 12,957 M. The preliminary acquisition analyses indicate that goodwill and other intangible assets with an indefi- nite useful life amounted to SEK 9,820 M. Estimated deferred considerations for acquisitions for the year totaled SEK 678 M. Additional acquisitions of non-controlling interests totaled SEK 33 M (38). Divestments In October 2024, ASSA ABLOY signed an agreement to sell the Citizen ID business to TOPPAN. Citizen ID manufactures, designs, and implements physical and mobile identity solutions for government to citizen programs around the globe. Citizen ID employs around 450 people with manufacturing facilities in Ireland, Malta and the US. Sales in 2024 totaled about SEK 1,400 M. The divestment requires the fulfillment of custom- ary conditions, regulatory approvals, and employee consultations. The transaction will have a slightly positive effect on ASSA ABLOY’s operating margin going forward. In February 2024, ASSA ABLOY divested its elevator maintenance business in France, PACA ascenseur, to KONE. Sales in 2023 totaled about SEK 300 M. The capital gain before tax totaled SEK 45 M. Research and development ASSA ABLOY’s expenditure on research and develop- ment during the year totaled SEK 6,101 M (5,712), equivalent to 4.1 percent (4.1) of sales. The pace of innovation remained high during the year thanks to the continued commitment to invest in research and development. The number of research and development posts increased during the year as a result of both recruitment and acquisitions. The number of posts was around 4,100 (3,500) at year-end. Sustainable development A number of ASSA ABLOY units outside Sweden carry on licensable activities and hold equivalent licenses under local legislation. ASSA ABLOY’s units worldwide are working systematically and purposefully to reduce their environmental impact. ASSA ABLOY has chosen to prepare the sustain- ability statement as an integrated part of the annual report from 2024. For more detailed information on the year’s sustain- ability activities, see the sustainability statement in the Report of the Board of Directors. Internal control and financial reporting ASSA ABLOY’s internal audit and internal control func- tions have dedicated internal auditors employed in all divisions. The internal audit function continued its work to enhance financial reporting, internal control in relation to the financial reporting and compliance in the company in general. The number of audits remained high during the year. Transactions with related parties There were no transactions between ASSA ABLOY and related parties that materially affected the company’s financial position and earnings, other than ordinary transactions in operating activities such as the pay- ment of dividends to shareholders. Significant events after the financial year-end ASSA ABLOY divested most of its Citizen ID business to TOPPAN at the end of January 2025. Divestment of the remainder of Citizen ID’s business to TOPPAN is subject to the fulfillment of customary conditions and regulatory approvals. Proposed distribution of earnings The following earnings are at the disposal of the Annual General Meeting: Share premium reserve: SEK 787,314,216 Retained earnings carried forward: SEK 8,744,090,215 Net income for the year: SEK 7,548,053,618 Total: SEK 17,079,458,049 The Board of Directors proposes that these earnings be appropriated as follows: A dividend to the sharehold- ers of SEK 5.90 per share SEK 6,553,580,371 Be carried forward to the new financial year SEK 10,525,877,679 Total: SEK 17,079,458,049 1 The Board of Directors’ proposal for a dividend of SEK 5.90 (5.40) per share corresponds to an increase of 9 percent. The dividend is proposed to be paid in two equal installments, the first with the record date 25 April 2025 and the second with the record date 11 November 2025. If the proposal is adopted by the Annual General Meeting, the first installment is estimated to be paid on 30 April 2025 and the second installment on 14 November 2025. Outlook Long-term outlook The war in Ukraine and the conflict in the Middle East may have a negative business impact on ASSA ABLOY in both short and long term, but the direct business impact is deemed to be limited. ASSA ABLOY anticipates an increase in demand for security solutions in the long term. A focus on customer value and innovations as well as leverage on the Group’s strong position will accelerate growth and increase profitability. Organic sales growth is expected to continue at a good rate. The operating margin (EBIT) and operating cash flow are expected to develop well. 1 The dividend and retained earnings to be carried forward to the new financial year are calculated on the number of outstanding shares at 4 February 2025. No dividend is payable on ASSA ABLOY AB’s holding of treasury shares, the exact number of which is determined on each record date for payment of dividend. ASSA ABLOY AB’s holding of treasury shares amounted to 1,800,000 Series B shares at 4 February 2025. 47 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Significant risks and risk management | Report of the Board of Directors Significant risks and risk management Risk management Uncertainty about future developments and the course of events is a natural risk for any business. Risk-taking in itself provides opportunities for contin- ued economic growth, but 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 at ASSA ABLOY is not to avoid risks, but to take a controlled approach to identifying, managing and minimizing the effects of these risks. This work is based on an assessment of the probability of the risks and their potential impact on the Group. ASSA ABLOY is an international Group with a wide geographical spread, involving exposure to various forms of strategic, operational and financial risks. Strategic risks refer to changes in the business environment with potentially significant effects on ASSA ABLOY’s operations and business objectives. Operational risks comprise risks directly attributable to business operations, entailing a potential impact on the Group’s financial position and performance. Fi- nancial risks mainly comprise financing risk, currency risk, interest rate risk, credit risk, and risks associated with the Group’s pension obligations. Organization ASSA ABLOY’s Board of Directors has overall respon- sibility for risk management within the Group and determines the Group’s strategic focus based on recommendations from the Executive Team. In view of the decentralized structure of ASSA ABLOY, and to keep risk analysis and risk management as close as possible to the actual risks, a large proportion of operational risk management takes place at division and business unit levels. Responsibility ASSA ABLOY’s Board of Directors has overall respon- sibility for the Group’s strategic direction in close consultation with the Executive Team. Divisions and business units have overall responsibility for management of operational risks, in accordance with ASSA ABLOY’s decentralized approach to organiza- tion, responsibility and authority. In the case of finan- cial risks, allocation of responsibilities and control of the Group’s financing activities are regulated in a financial policy adopted by the Board of Directors. A centralized Treasury function then has the main responsibility for financial risks within the framework established in the financial policy, with the exception of credit risks relating to operational business activi- ties, which are managed locally at company level and monitored at division level. Review process Strategic risks, such as competitors, brand positioning and so on, are regularly reviewed at ASSA ABLOY AB’s Board meetings. The Group’s operational risk man- agement is continuously monitored by the Executive Team through divisional reporting and divisional Board meetings. Financial operations are centralized in a Treasury function, which manages most financial transactions as well as financial risks with a Group- wide focus. ASSA ABLOY’s Treasury monitors the Group’s short- and long-term financing, financial cash management, currency risk and other financial risk management. Strategic risks The risks of this nature encountered by ASSA ABLOY include various forms of business environment risks with an impact on the security market in general, mainly changes in customer behavior, competitors, brand positioning, reputational risks, geopolitical risks and country-specific risks. In recent years, it has also become clear that worldwide health risks posed by pandemics can significantly impact societies and global demand around the world. Geopolitical risks ASSA ABLOY manufactures and supplies access solu- tions, secure identities and other goods and services in a large number of countries around the world. Various geopolitical risks, such as military conflicts and wars, terrorist threats, trade conflicts etc. can af- fect the global economy and demand for the Group’s goods and services. Country-specific risks ASSA ABLOY has global market penetration, with sales and production in a large number of countries. The focus is on North America and Western Europe. The Group has some exposure to emerging markets, which may entail a higher risk profile for country-spe- cific risks in the form of inadequate compliance, pol- icy decisions, overall changes in regulations and more. Customer behavior Changes in customer behavior in general and the actions of competitors affect demand for different products and their profitability. Customers and sup- pliers, including the Group’s relationships with them, are subject to continuous local review. Competitors As regards competitors, risk analyses are carried out both centrally and locally. Brand positioning The Group owns a number of the strongest brands in the industry, including several global brands that complement the ASSA ABLOY master brand. Local product brands are gradually being linked increasing- ly to the master brand. Reputational risk Activities to maintain and further strengthen ASSA ABLOY’s good reputation are constantly ongoing. These include ensuring compliance with ASSA ABLOY’s Code of Conduct for employees and the Code of Conduct for business partners. These codes express the Group’s values with regard to matters such as business ethics, human rights and working conditions, as well as the environment, health and safety. Operational risks Operational risks comprise risks directly attributable to business operations, with a potential impact on the Group’s financial position and performance. They include legal and environmental risks, tax risks, ac- quisition of new businesses, restructuring measures, price fluctuations and availability of raw materials, and credit losses. This category also includes risks relating to compliance with laws and regulations, information technology (IT), internal control and financial reporting. See page 49 for a more detailed description of the management of these risks. Financial risks The Group’s financial risks mainly comprise financing risk, currency risk, interest rate risk, credit risk, and risks associated with the Group’s pension obligations. A large number of financial instruments are used to manage these risks. Accounting principles, risk management and risk exposure are described in more detail in Notes 1 and 36, as well as Note 25, Post-em- ployment employee benefits. Financing risk Financing risk refers to the risk that financing the Group’s capital requirements and refinancing outstanding loans become more difficult or more expensive. It can be reduced by maintaining an even maturity profile for borrowing and a solid credit rating. The risk is further reduced by substantial unuti- lized confirmed credit facilities. Currency risk Since ASSA ABLOY sells its products in countries worldwide and has companies in a large number of countries, the Group is exposed to the effects of exchange rate fluctuations. These fluctuations affect Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors • Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements 48 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Significant risks and risk management | Report of the Board of Directors Group earnings when the income statements of foreign subsidiaries are translated to Swedish kronor (translation exposure), and when products are exported and sold in countries outside the country of production (transaction exposure). Translation exposure is primarily related to earnings in USD and EUR. This type of exposure is not hedged. Currency risk in the form of transaction exposure, i.e. the value of exports and imports, respectively, of goods, is expected to increase over time due to rationaliza- tion of production and sourcing. In accordance with financial policy, the Group only hedged a very limited part of current currency flows in 2024. As a result, currency fluctuations had a direct impact on business operations. Exchange rate fluctuations also affect the Group’s debt-equity ratio and equity. The difference between the assets and liabilities of foreign subsidiaries in the respective foreign currency is affected by exchange rate fluctuations and causes a translation difference, which affects the Group’s comprehensive income. A general weakening of the Swedish krona leads to an increase in net debt, but at the same time increases the Group’s equity. At year-end, the largest foreign net assets were denominated in USD and EUR. Interest rate risk With respect to interest rate risks, interest rate chang- es have a direct impact on ASSA ABLOY’s net interest expense. The net interest expense is also impacted by the size of the Group’s net debt and its currency com- position. Net debt was SEK 70,253 M (64,109) at year- end 2024. Operating cash flow remained very strong, positively affecting net debt, but the level of debt was also affected by continued high acquisition activity and currency effects. Debt was mainly denominated in USD, EUR and SEK. Group Treasury analyzes the Group’s interest rate exposure and calculates the impact on income of interest rate changes on a rolling 12-month basis. In addition to raising variable-rate and fixed-rate loans, various interest rate swaps are used to adjust interest rate sensitivity. Credit risk Credit risk arises in ordinary business activities and as a result of financial transactions. Trade receivables are spread across a large number of customers, which reduces credit risk. Credit risks relating to operational business activities are managed locally at company level and monitored at division level. Financial risk management exposes ASSA ABLOY to certain counterparty risks. Such exposure may arise, for example, as a result of the placement of surplus cash, borrowings and derivative financial instruments. Counterparty limits are set for each financial counter- party and are continuously monitored. Pension obligations At year-end 2024, ASSA ABLOY had obligations for pensions and other post-employment benefits of SEK 9,800 M (9,177). The Group manages pension ASSA ABLOY’s risks Strategic risks Changes in the business environment with potentially significant effects on operations and business objectives. • Geopolitical risks • Country-specific risks • Customer behavior • Competitors • Brand positioning • Reputational risk • Pandemics and other global health risks Operational risks Risks directly attributable to business oper- ations with a potential impact on financial position and performance. • Legal risks and environmental risks • Tax risks • Acquisition and divestment of companies • Restructuring measures • Price fluctuations and availability of raw materials • Credit losses • Insurance risks • Risks relating to internal control • Risks relating to IT Financial risks Financial risks with a potential impact on financial position and performance. • Financing risk • Currency risk • Interest rate risk • Credit risk • Risks associated with pension obligations assets valued at SEK 8,322 M (7,742). Provisions in the balance sheet for defined benefit and defined contribution plans and post-employment medical benefits totaled SEK 1,478 M (1,435). Changes in the value of assets and liabilities from year to year are due partly to the development of equity and interest rate markets and partly to the actuarial assumptions made. Significant remeasurement of obligations and plan assets is recognized on a current basis in the balance sheet and in other comprehensive income. The assumptions made include discount rates and anticipated inflation and pension increases. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors • Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements 49 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Significant risks and risk management | Report of the Board of Directors ASSA ABLOY’s operational risks and risk management Operational risks Risk management Comments Legal risks The Group continuously monitors anticipated and implemented changes in legislation in the countries in which it operates. Ongoing and potential disputes are regularly reported to the Group’s central legal function. Policies and guidelines on compliance with applicable competition, anti-corruption, export control/sanc- tion and data protection legislation have been implemented. At year-end 2024, there are considered to be no ongoing legal disputes with a material impact on the Group’s earnings. Environmental risks Ongoing and potential environmental risks are regularly monitored in the operations. External expertise is brought in for environmental assessments when necessary. Prioritized environmental activities and other information on sustainable development are reported in the sustainability statement in the Report of the Board of Directors. Tax risks Ongoing and potential tax cases are regularly reported to the Group’s central tax function. At year-end 2024, there are considered to be no ongoing tax cases with a significant impact on the Group’s earnings. Acquisition and divestment of companies Acquisitions and divestments are carried out by a number of people with considerable experience in the field and with the support of, for example, legal and financial consultants. Acquisitions are carried out according to a uniform and predefined Group-wide process. This consists of four documented phases: strategy, evaluation, implementation and integration. During the year, acquisition activity remained high at ASSA ABLOY, with 26 (24) acquisitions of businesses. Two divestments were also agreed. The Group’s acquisitions and divestments in 2024 are reported in greater detail in the Report of the Board of Directors and, where acquisitions are concerned, in Note 34, Business combinations. Restructuring measures The restructuring programs mainly entail some production units being closed or changing their focus to mainly performing final assembly, combined with office closures. The restructuring programs are carried on as a series of projects with stipulated activities and schedules. The various projects in the respective restructuring program are systematically monitored on a regular basis. The latest restructuring program was launched in 2023. A number of plants and offices are expected to be closed over a two-year period. The level of activity in all ongoing programs continued to be high during the year. The scope, costs and savings of the programs are presented in more detail in the Report of the Board of Directors. Price fluctuations and availability of raw materials Raw materials are purchased and handled primarily at division and business unit level. Regional commit- tees coordinate these activities with the help of senior coordinators for selected material components. The market prices of raw material components, for example steel, that are important to the Group varied during the year. For further information about procurement of materials, see Note 7, Expenses by nature and function. Credit losses Trade receivables are spread across a large number of customers in many markets. However, customer concentration increased somewhat within the Group as a result of the acquisition of HHI in 2023. Commercial credit risks are managed locally at company level and monitored at division level. Receivables from each customer are relatively small in relation to total trade receivables. The risk of significant credit losses for the Group is deemed to be limited. Insurance risks A Group-wide insurance program is in place, mainly relating to property, business interruption and liability risks. This program covers all business units. The Group’s exposure to the risk areas listed above is regulated by means of its own captive insurance company. The Group’s insurance cover is considered to be generally adequate, providing a reasonable balance between assessed risk exposure and insurance costs. Risks relating to internal control The organization is considered to be relatively transparent, with a clear allocation of responsibilities. A well-established controller organization at both division and Group level monitors financial reporting quality. To establish a structured process for implementing and maintaining reliable financial reporting and inter- nal controls over critical business processes and to minimize risks, ASSA ABLOY previously implemented an internal control framework. An annual self-assessment is carried out at selected companies to ensure compliance. The internal audit function plays an important role in reviewing companies’ processes and managing risks. It conducts risk-based audits to ensure compliance with the internal control framework. ASSA ABLOY’s internal audit and internal control functions have dedicated internal auditors employed in all divisions. The number of audits remained high during the year. Internal control and other related issues are reported in more detail in the Report of the Board of Directors, section on Corporate governance. Further information on risk management relating to financial reporting can be found in the Report of the Board of Directors, section on Corporate governance. See also the section Key estimates and assessments for accounting purposes in Note 1. Risks relating to information technology (IT) Preventive measures are in place to protect business-critical information from unauthorized individuals and organizations. IT security is a high priority area at ASSA ABLOY through constant efforts to maintain and strengthen the level of security for the Group’s business information. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors • Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements 50 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Corporate governance | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management • Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Corporate governance ASSA ABLOY AB is a Swedish public limited liabil- ity company with registered office in Stockholm, Sweden, whose Series B share is listed on Nasdaq Stockholm. ASSA ABLOY’s corporate governance is based on the Swedish Companies Act, the Annual Accounts Act, the Nasdaq Nordic Main Market Rulebook for Issuers of Shares, the EU Market Abuse Regulation, and the Swedish Corporate Governance Code (the Code), as well as other applicable external laws, rules and regulations, and internal rules and regulations. This Corporate Governance Report has been prepared as part of ASSA ABLOY’s application of the Code. ASSA ABLOY had no deviations from the Code in 2024. The report is examined by ASSA ABLOY’s auditor. ASSA ABLOY’s objective is that its operations should generate good long-term returns for its shareholders and other stakeholders. An effective scheme of corpo- rate governance for ASSA ABLOY can be summarized in a number of interacting components, which are described to the right. 1 Shareholders At year-end 2024, ASSA ABLOY had 59,699 shareholders. The principal shareholders are Invest- ment AB Latour (9.5 percent of the share capital and 29.4 percent of the votes) and Melker Schörling AB (3.1 percent of the share capital and 10.9 percent of the votes). Foreign shareholders accounted for 64.1 percent of the share capital and 43.7 percent of the votes. The ten largest shareholders accounted for 35.1 percent of the share capital and 55.7 percent of the votes. For further information on shareholders, see page 159. ASSA ABLOY’s Articles of Association contain a pre-emption clause for owners of Series A shares re- garding shares of Series A. A shareholders’ agreement exists between the Douglas and Schörling families and their related companies that includes an agree- ment on right of first refusal if any party disposes of Corporate governance structure 1 Shareholders 2 General Meeting 4 Board of Directors 3 Nomination Committee 5 Remuneration Committee 9 Auditor 6 Audit Committee 7 CEO 7 Executive Team 8 Divisions Important external rules and regulations • Swedish Companies Act • Annual Accounts Act • Nasdaq Nordic Main Market Rulebook for Issuers of Shares • EU Market Abuse Regulation • Swedish Corporate Governance Code (www.bolagsstyrning.se) Important internal rules and regulations • Articles of Association • Board of Directors’ rules of procedure • Financial policy • Accounting manual • Communication policy • Insider policy • Internal control framework • Code of Conduct and anti-corruption policy 51 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Corporate governance | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management • Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Series A shares. The Board of Directors of ASSA ABLOY is not aware of any other shareholders’ agreements or other agreements between shareholders in ASSA ABLOY. Share capital and voting rights At year-end 2024, ASSA ABLOY’s share capital amounted to SEK 370,858,778, distributed among a total of 1,112,576,334 shares, comprising 57,525,969 Series A shares and 1,055,050,365 Series B shares. All shares have a par value of around SEK 0.33 and give shareholders equal rights to the company’s assets and earnings. The total number of votes amounted to 1,630,310,055. Each Series A share carries ten votes and each Series B share one vote. Repurchase of own shares Since 2010, the Board of Directors has requested and received a mandate from the Annual General Meeting to repurchase and transfer ASSA ABLOY Series B shares. The aim has been, among other things, to secure the company’s undertakings in connection with its long-term incentive programs (LTI). The 2024 Annual General Meeting authorized the Board of Directors to acquire, during the period until the next Annual General Meeting, a maximum number of Series B shares so that after each repurchase ASSA ABLOY holds a maximum 10 percent of the total number of shares in the company. ASSA ABLOY holds a total of 1,800,000 Series B shares after repurchase. The cost of these shares amounts to SEK 103 M. The shares account for around 0.2 percent of the share capital and each share has a par value of around SEK 0.33. No shares were repur- chased in 2024. Share and dividend policy ASSA ABLOY’s Series B share is listed on Nasdaq Stockholm, Large Cap list. At year-end 2024, ASSA ABLOY’s market capitalization amounted to SEK 363,590 M, calculated on both Series A and Series B shares. The Board of Directors’ objective is that, in the long term, the dividend should be equivalent to 33–50 percent of income after standard tax, but tak- ing into account ASSA ABLOY’s long-term financing requirements. 2 General Meeting Shareholders’ rights to decide on the affairs of ASSA ABLOY are exercised at the General Meeting. Shareholders who are registered in the share register on the record date and have duly notified their intent to attend are entitled to take part in the General Meeting, either in person or by proxy. Resolutions at the General Meeting are normally passed by simple majority. For certain matters, however, the Swedish Companies Act prescribes that a proposal should be supported by a higher majority. Individual sharehold- ers who wish to submit a matter for consideration at the General Meeting can send such request to ASSA ABLOY’s Board of Directors at a special address published on the company’s website well before the Meeting. The Annual General Meeting should be held within six months of the end of the company’s financial year. Matters considered at the Annual General Meeting include: dividend, adoption of the income statement and balance sheet; discharge of the members of the Board of Directors and the CEO from liability; election of members of the Board of Directors, Chairman of the Board of Directors and auditor; and fees for the Board of Directors and auditor. An Extraordinary General Meeting may be held if the Board of Directors considers this necessary or if ASSA ABLOY’s auditor or shareholders holding at least 10 percent of the shares so request. 2024 Annual General Meeting At the Annual General Meeting on 24 April 2024, shareholders representing 60.1 percent of the share capital and 72.8 percent of the votes participated. The Annual General Meeting’s resolutions included the following. • Dividend of SEK 5.40 per share, paid in two equal installments. • Johan Hjertonsson, Carl Douglas, Erik Ekudden, Sofia Schörling Högberg, Lena Olving, Victoria Van Camp, Joakim Weidemanis and Susanne Pahlén Åklundh were re-elected as members of the Board of Directors. • Johan Hjertonsson was re-elected as Chairman of the Board of Directors, and Carl Douglas was re-elected as Vice Chairman. • The audit firm Ernst & Young AB was re-elected as the company’s auditor. • Remuneration of the Board of Directors. • Approval of the Board of Directors’ report on remuneration as per Chapter 8, Section 53 a, of the Swedish Companies Act (remuneration report). • Authorization to the Board of Directors regarding repurchase and transfers of own Series B shares. • A long-term incentive program for senior execu- tives and other key employees in the Group (LTI 2024). For more information about the Annual General Meeting, including the minutes, see ASSA ABLOY’s website assaabloy.com. 2025 Annual General Meeting ASSA ABLOY’s next Annual General Meeting will be held on 23 April 2025 in Stockholm, Sweden. More information will be available in the notice of the An- nual General Meeting and on ASSA ABLOY’s website assaabloy.com. 3 Nomination Committee The 2023 Annual General Meeting adopted the current instructions for the Nomination Committee, comprising a procedure for appointing the Nomi- nation Committee, which apply until further notice. According to the instructions, the Nomination Committee shall be composed of representatives of the five largest shareholders in terms of voting rights registered in the shareholders’ register maintained by Euroclear Sweden AB as of 31 August the year before the Annual General Meeting. Where a shareholder declines to participate in the Nomination Commit- tee, a representative from the largest shareholder in turn shall be appointed. If a member resigns from the Nomination Committee before the work is complet- ed and the Nomination Committee finds it suitable, a substitute shall be appointed. Such a substitute shall be appointed from the same shareholder or, if that shareholder no longer is among the largest share- holders in terms of voting rights, from the largest shareholder next in turn. The Nomination Committee prior to the 2025 Annual General Meeting comprises Johan Menckel (Investment AB Latour), Mikael Ekdahl (Melker Schörling AB), Marianne Nilsson (Swedbank Robur Fonder), Yvonne Sörberg (Handelsbanken Fonder) and Carina Silberg (Alecta). Johan Menckel is the Chair- man of the Nomination Committee. The Chairman of the company’s Board of Directors, Johan Hjertonsson, is co-opted to the Nomination Committee. The Nomination Committee has the task of prepar- ing, on behalf of the shareholders, proposals regard- ing the election of Chairman of the General Meeting, members of the Board of Directors, Chairman of the Board, Vice Chairman of the Board; auditor; fees for the board members including division between the Chairman, Vice Chairman and the other board members, as well as fees for committee work; fees to the company’s auditor, and any changes of the instructions for the Nomination Committee. The Audit Committee assists the Nomination Commit- tee in work associated with the proposal regarding appointment of the external auditor. Prior to the 2025 Annual General Meeting, the Nomination Committee makes an assessment of whether the current Board of Directors is appropri- ately composed and fulfills the requirements imposed on the Board of Directors by the company’s present situation and future direction. The annual evaluation of the Board of Directors and its work is part of the basis for this assessment. Moreover, the Nomination Committee applies ASSA ABLOY’s diversity policy for the Board of Directors, which is based on Rule 4.1 of the Code, when preparing its proposal for election of members of the Board of Directors. The search for suitable board members is carried on throughout the year and proposals for new board members are based in each individual case on a profile of requirements established by the Nomination Committee. Shareholders wishing to submit proposals to the Nomination Committee can do so by e-mailing: [email protected]. The Nomination Committee’s proposals for the 2025 Annual General Meeting are published, at the latest, in conjunction with the formal notice of the Annual General Meeting, which is expected to be issued around 19 March 2025. 52 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Corporate governance | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management • Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements 4 Board of Directors In accordance with the Swedish Companies Act, the Board of Directors is responsible for the organization and administration of the Group and for ensuring satisfactory control of bookkeeping, asset management and other financial circumstances. The Board of Directors decides on the Group’s overall objectives and strategies, Group policies, acquisitions and divestments as well as investments of major im- portance. Acquisitions and divestments with a value (on a debt-free basis) exceeding SEK 200 M are decid- ed by the Board of Directors. The threshold amount presumes that the matter relates to acquisitions or divestments in accordance with the strategy agreed by the Board of Directors. The Board of Directors approves documents such as the Annual Report and Interim Reports, proposes a dividend to the Annual General Meeting, and makes decisions concerning the Group’s financial structure. The Board of Directors’ other ongoing duties include: • appointing, evaluating and if necessary, dismissing the CEO, • approving the CEO’s significant assignments out- side the company, • identifying how sustainability issues impact risks to, and business opportunities for, the company, • establishing appropriate guidelines to govern the company’s conduct in society with the aim of ensuring long-term value-creating capability, • ensuring that appropriate systems are in place for following up and controlling the company’s opera- tions and the risks for the company associated with its operations, • ensuring that there is satisfactory control of the company’s compliance with laws and other regula- tions relevant to the company’s operations, and its compliance with internal guidelines, and • ensuring that external information provided by the company is transparent, accurate, relevant and reliable. Each year, the Board of Directors reviews and adopts the Board of Directors’ rules of procedure, which is the document that governs the work of the Board and the distribution of duties between the Board of Directors and the CEO. The rules of procedure include instructions for the CEO, instructions relating to financial reporting, sustainability reporting and in- ternal control, and instructions to the Remuneration Committee and the Audit Committee. Included in the rules of procedure is a description of the role of Chairman of the Board. In addition to organizing and leading the work of the Board of Directors, the Chairman’s duties include maintaining contact with the CEO to continuously monitor the Group’s operations and development, consulting with the CEO on strategic issues, representing the company in matters concerning the ownership struc- ture, ensuring that the Board receives satisfactory information and data on which to base decisions and ensuring that Board decisions are implemented. In addition, the Chairman should ensure that the work of the Board of Directors is evaluated annually. The Board of Directors has at least four ordinary meetings and one statutory meeting per year. An ordinary Board meeting is always held in connection with the company’s publication of its Year-end Report and Interim Reports. At least once a year the Board of Directors visits one of the Group’s operations, combined with a Board meeting. In addition, extraor- dinary Board meetings are held when necessary. All meetings follow an approved agenda. Prior to each meeting, a draft agenda, including documentation, is provided to all members of the Board of Directors. The Board of Directors has a Remuneration Committee and an Audit Committee. The purpose of these Committees is to deepen and streamline the work of the Board of Directors and to prepare matters in these areas. The members of the Committees are appointed annually by the Board of Directors at the statutory Board meeting. Board of Directors’ composition The Board of Directors, including the Chairman and Vice Chairman of the Board, is elected annually at the Annual General Meeting for the period until the end of the next Annual General Meeting and shall, according to the Articles of Association, comprise a minimum of six and a maximum of ten members elected by the Meeting. The Board of Directors also has two members who are appointed by employee organizations in accordance with Swedish law. The employee organizations also appoint two deputies. The Board of Directors consisted of eight elected members and two employee representatives in 2024. No board members are included in the Executive Team. For a presentation of the Board of Directors, see pages 54–55. The diversity policy that ASSA ABLOY applies with respect to the company’s Board of Directors is based on Rule 4.1 of the Code. The objective is that the com- position of the Board of Directors, taking into account the company’s operations, stage of development and other circumstances, shall be appropriate, charac- terized by versatility and breadth regarding qualifi- cations, experience and background of the elected members, and strive to achieve gender equality. In 2024 the Nomination Committee has taken the diver- sity policy into account when preparing its proposal for election of members of the Board of Directors pri- or to the Annual General Meeting. After the election at the 2024 Annual General Meeting, the composition of the members of the Board of Directors elected by the Annual General Meeting is such that 50 percent are women and 50 percent are men, which is in line with the Swedish Corporate Governance Board’s aspiration for each gender to represent a share of at least 40 percent of the Board of Directors. In addition, there were in-depth reviews of operations in the Asia Pacific division’s business unit Opening Solutions Pacific and North East Asia, the Americas division and the Global Technologies division’s business unit Global Solutions during the year, with the partial aim of expanding the expertise of the Board of Directors in ASSA ABLOY. Board of Directors’ work in 2024 The Board of Directors held nine meetings during the year (of which two were by correspondence). At the ordinary Board meetings the CEO reported on the Group’s performance and financial position, including the outlook for the coming quarters. Key issues addressed by the Board during the year include the Group’s strategy and sustainability issues, including new regulations on sustainability reporting. The Board also discussed a number of acquisitions, including Nomadix and Global Reach, Wesko Locks, Skidata, Level Lock, Lawrence Doors, IXLA, Premier Steel Doors and Frames, 9Solutions and Norshield Security Products. The Board also discussed the divestment of the Citizen ID business to TOPPAN. During the year, the Board also met with divisions op- erating in Europe in the context of a Board meeting in France, which also included a visit to one of the Global Technologies division’s HID business unit’s operations in France. The Board of Directors’ work is summarized in the timeline on page 53. An evaluation of the Board of Directors’ work is conducted annually in the form of a web-based survey, which each board member responds to individually. A summary of the results is presented to the Board of Directors. Board members who wish can access the complete results of the evaluation. The Chairman of the Board of Directors presents the complete results of the evaluation to the Nomination Committee. 5 Remuneration Committee In 2024 the Remuneration Committee comprised Johan Hjertonsson (Chairman) and Erik Ekudden. The Remuneration Committee has the task of drawing up guidelines for remuneration to senior executives, which the Board of Directors proposes to the Annual General Meeting for resolution. The Board of Directors shall prepare a proposal for new guide- lines at least every fourth year. For information about ASSA ABLOY’s current guidelines for remuneration to senior executives that were adopted at the 2022 Annual General Meeting, see Note 35. The Remuneration Committee also prepares, mon- itors and evaluates matters regarding salaries, bonus, pension, severance pay and incentive programs for the CEO and other senior executives. The Committee has no decision-making powers. The Committee held one meeting in 2024. Its work included preparing a proposal for the remuneration report, preparing a proposal for the remuneration of the Executive Team, evaluating existing incentive pro- grams, and preparing a proposal for a new long-term incentive program. Remuneration Committee meet- ings are minuted; a copy of the minutes is enclosed with the materials provided to the Board and a verbal report is given at Board meetings. 53 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Corporate governance | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management • Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Ordinary Board meeting and visit to operations Visit to France Acquisitions Ordinary Board meeting Interim Report Q3 Report from Audit Committee Strategy, including sustainability issues Presentation Global Solutions Acquisitions Audit Committee meeting Ordinary Board meeting Interim Report Q2 Report from Audit Committee Acquisitions Extraordinary Board meeting Acquisitions Ordinary Board meeting Presentation Americas Acquisitions Audit Committee meeting 6 Audit Committee The Audit Committee comprised Susanne Pahlén Åklundh (Chairman), Victoria Van Camp and Lena Olving in 2024. The duties of the Audit Committee include con- tinuous monitoring and quality assurance of ASSA ABLOY’s financial reporting and sustainability report- ing. Regular communication is maintained with the company’s external auditor, including on the focus and scope of the audit and review of the sustainability statement. The Audit Committee must inform the Board of the results of the audit and the review of the sustainability statement. The Audit Committee is also responsible for evaluating the audit assignment and obtaining the results of the Swedish Inspectorate of Auditors’ quality control of the auditor, as well as informing the Board of Directors of the results of the evaluation. The Audit Committee also has the task of supporting the Nomination Committee in providing a proposal for the appointment of external auditor. Furthermore, the Audit Committee must review and monitor the impartiality and independence of the auditor, paying particular attention to whether the auditor provides the company with services other than auditing services and reviews of sustainability reports. The Audit Committee establishes guidelines for procurement of services other than audit services from ASSA ABLOY’s auditors, and, if applicable, it approves such services according to these guidelines, and establishes guidelines for the appointment of new local audit firms. Otherwise, the Committee has no decision-making powers. The Committee held four meetings in 2024. The company’s external auditor and representatives from senior management also participated at these meet- ings. Key matters discussed by the Audit Committee during the year included internal control and internal audit, accounting rules, new regulations for sustain- ability reporting, financial statement and valuation matters, tax matters, insurance and risk management matters, financial matters, information security, and legal risks. Audit Committee meetings are minuted; a copy of the minutes is enclosed with the materials provided to the Board and a verbal report is given at Board meetings. Remuneration of the Board of Directors The General Meeting passes a resolution on the re- muneration to be paid to board members. The 2024 Annual General Meeting passed a resolution on Board fees totaling SEK 9,945,000 (excluding remuneration for committee work) to be allocated between the members as follows: SEK 3,160,000 to the Chairman, SEK 1,175,000 to the Vice Chairman, and SEK 935,000 to each of the other members elected by the Annual General Meeting. As remuneration for committee work, the Chairman of the Audit Committee is to receive SEK 440,000, the Chairman of the Remunera- tion Committee SEK 180,000, members of the Audit Committee (except the Chairman) SEK 300,000 each, and the member of the Remuneration Committee (except the Chairman) SEK 90,000. The Chairman and other board members have no pension benefits or severance pay agreements. The employee representatives do not receive Board fees. For further information on the remuneration of board members in 2024, see Note 35. Attendance at Board and Committee meetings in 2024 Board members Board of Directors Audit Committee Remuneration Committee Johan Hjertonsson 9 1 Carl Douglas 8 Erik Ekudden 8 1 Sofia Schörling Högberg 8 Lena Olving 9 4 Victoria Van Camp 9 4 Joakim Weidemanis 9 Susanne Pahlén Åklundh 9 4 Rune Hjälm 9 Bjarne Johansson 9 Total number of meetings 9 4 1 Ordinary Board meeting Year-end results Dividend proposal Annual Report Sustainability Report Report from Audit Committee Report from Remuneration Committee Proposals to Annual General Meeting Evaluation of Executive Team Evaluation Board of Directors Acquisitions Ordinary Board meeting Interim Report Q1 Report from Audit Committee HR strategy Sustainability issues Presentation Pacific and North East Asia Acquisitions Remuneration Committee meeting Audit Committee meeting Extraordinary Board meeting (by correspondence) Notice of Annual General Meeting Audit Committee meeting Statutory Board meeting (by correspondence) Appointment committee members Adoption Board of Directors’ rules of procedure and Group policies Signatory powers January February March April May June July August September October November December Summary of Board of Directors’ work and Committee meetings in 2024 At the ordinary Board meetings the CEO also reported on the Group’s performance and financial position, including the outlook for the coming quarters. 54 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Board of Directors | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance • Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Board of Directors 1 Johan Hjertonsson Chairman of the Board since 2023. Board member since 2021. Born 1968. Master of Science in Business and Economics. President and CEO of Investment AB Latour since 2019. Previously President and CEO of AB Fagerhult and Lammhults Design Group AB and various management positions within the Electrolux Group. Other appointments: Chairman of Alimak Group AB and Tomra Systems ASA. Board member of Investment AB Latour and Sweco AB. Shareholdings (including through companies and related natural parties): 10,000 Series B shares. 2 Carl Douglas Vice Chairman of the Board since 2012. Board member since 2004. Born 1965. BA (Bachelor of Arts) and D. Litt (h.c.) (Doctor of Letters). Self-employed. Other appointments: Board member of Investment AB Latour. Shareholdings (including through companies and related natural parties): 41,595,729 Series A shares and 63,864,435 Series B shares through Investment AB Latour. 3 Erik Ekudden Board member since 2022. Born 1968. Master of Science in Electrical Engineering. Senior Vice President, Chief Technology Officer and Head of Group Function Technology at Telefonaktiebolaget LM Ericsson since 2018. Previously a number of management positions within the Ericsson Group since 1993. Other appointments: Fellow and vice Chair of the Presidium of the Royal Swedish Academy of Engineering Sciences (IVA) as well as member of the Broadband Commission for Sustainable Development. Shareholdings (including through companies and related natural parties): – Elected by the 2024 Annual General Meeting 4 Sofia Schörling Högberg Board member since 2017. Born 1978. BSc (Bachelor of Science) in Business Administration. Other appointments: Vice Chairman of Melker Schörling AB. Board member of Securitas AB and Hexagon AB. Shareholdings and holdings in other financial instruments (including through companies and related parties): 15,930,240 Series A shares and 18,106,557 Series B shares through Melker Schörling AB as well as 310,600 Series B shares through Edeby-Ripsa Skogsförvaltning AB. ASSA ABLOY AB bonds of SEK 200 M through Melker Schörling AB. 5 Lena Olving Board member since 2018. Born 1956. Master of Science in Mechanical Engineering. President and CEO of Mycronic AB 2013–2019. COO and Deputy CEO of Saab AB 2008–2013. Various positions within Volvo Car Corporation 1980–1991 and 1995–2008 of which seven years in the Executive Management Team. CEO of Samhall Högland AB 1991–1994. Other appointments: Chairman of Nodica Group AB. Board member of Investment AB Latour, NXP Semiconductor N.V., Stena Metall AB and Vestas A/S. Fellow of the Royal Swedish Academy of Engineering Sciences (IVA). Shareholdings (including through companies and related natural parties): 600 Series B shares. 6 Victoria Van Camp Board member since 2023. Born 1966. Master of Science in Mechanical Engineering and Doctor of Technology in machine elements. Runs her own consulting firm Axa Consulting since 2002 with focus on advising within technology development in order to accelerate green transition. Previously a number of manage- ment positions within AB SKF 1996–2022. Other appointments: Board member of Billerud AB, Alleima AB, SR Energy AB, LumenRadio AB and the Chalmers foundation. Adjunct professor in machine elements at Luleå University of Technology. Fellow of the Royal Swedish Academy of Engineering Sciences (IVA). Shareholdings (including through companies and related natural parties): 6,800 Series B shares. 1 2 4 3 5 6 8 7 7 Joakim Weidemanis Board member since 2020. Born 1969. Master of Science in Business and Economics. Executive Vice President and Corporate Officer of Danaher Corporation 2017–2024. Previously various management positions within Danaher 2011–2017. Head of Product Inspection and Corporate Officer of Mettler Toledo 2005–2011. Previously various operating and corporate development roles within ABB 1995–2005. Other appointments: – Shareholdings (including through companies and related natural parties): – 8 Susanne Pahlén Åklundh Board member since 2021. Born 1960. Master of Science in Engineering. President of the Energy Division of Alfa Laval AB 2017–August 2021. Previously various positions in the Alfa Laval Group Management since 2009. Other appointments: Chairman of Alfdex AB. Board member of Alleima AB and Sweco AB. Shareholdings (including through companies and related natural parties): 2,500 Series B shares. Appointments and shareholdings at 31 December 2024 unless stated otherwise. 55 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Board of Directors | Report of the Board of Directors Appointed by employee organizations 9 Rune Hjälm Board member since 2017. Born 1964. Employee representative, IF Metall. Chairman of European Works Council (EWC) in the ASSA ABLOY Group. Shareholdings (including through companies and related natural parties): – 10 Bjarne Johansson Board member since 2023. Born 1966. Employee representative, IF Metall. Shareholdings (including through companies and related natural parties): – 9 10 Independence of the Board of Directors Name Position Independent of the company and its management Independent of the company’s major shareholders Johan Hjertonsson Chairman Yes No Carl Douglas Vice Chairman Yes No Erik Ekudden Board member Yes Yes Sofia Schörling Högberg Board member Yes No Lena Olving Board member Yes No Victoria Van Camp Board member Yes Yes Joakim Weidemanis Board member Yes Yes Susanne Pahlén Åklundh Board member Yes Yes The Board of Directors’ composition and shareholdings Name Position Elected Born Remuneration Committee Audit Committee Series A shares 1 Series B shares 1 Johan Hjertonsson Chairman 2021 1968 Chairman – – 10,000 Carl Douglas Vice Chairman 2004 1965 – – 41,595,729 63,864,435 Erik Ekudden Board member 2022 1968 Member – – – Sofia Schörling Högberg Board member 2017 1978 – – 15,930,240 18,417,157 Lena Olving Board member 2018 1956 – Member – 600 Victoria Van Camp Board member 2023 1966 – Member – 6,800 Joakim Weidemanis Board member 2020 1969 – – – – Susanne Pahlén Åklundh Board member 2021 1960 – Chairman – 2,500 Rune Hjälm Board member, employee representative 2017 1964 – – – – Bjarne Johansson Board member, employee representative 2023 1966 – – – – Fredrik Bergvall Deputy, employee representative 2024 1988 – – – 10 Annika Åkerblom Deputy, employee representative 2023 1981 – – – – 1 Through companies and related natural parties. ASSA ABLOY’s Board of Directors fulfills the requirements for independence in accordance with the Swedish Corporate Governance Code. Appointments and shareholdings at 31 December 2024 unless stated otherwise. 11 Fredrik Bergvall Deputy board member since 2024. Born 1988. Employee representative, Unionen. Shareholdings (including through companies and related natural parties): 10 Series B shares. 12 Annika Åkerblom Deputy board member since 2023. Born 1981. Employee representative, Sveriges Ingenjörer. Shareholdings (including through companies and related natural parties): – Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance • Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements 11 12 56 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Executive Team | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors • Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Executive Team 1 3 2 5 6 1 Nico Delvaux President and CEO since 2018, Head of the Global Technologies division since 2018 and of the Asia Pacific division since 2021. Born 1966. Master of Engineering in Electromechanics and executive MBA. Previous positions: President and CEO of Metso Corporation August 2017–February 2018. Previously various positions in the Atlas Copco Group, including Business Area President Compressor Technique 2014–2017, Business Area President Construction Technique 2011–2014, and various positions in sales, marketing, service, acquisition integration and general management in markets including Benelux, Italy, China, Canada, and the United States 1991–2011. Shareholdings (including through companies and related natural parties): 392,686 Series B shares and 44,787 call options. 2 Erik Pieder Executive Vice President and Chief Financial Officer (CFO) since 2019. Born 1968. MBA and Master of Laws. Previous positions: Various positions in the Atlas Copco Group 1996–2019, including Vice President Business Control Compressor Technique. Shareholdings: 20,239 Series B shares. 3 Lucas Boselli Executive Vice President and Head of Americas division since 2018. Born 1976. Bachelor of Science in Industrial Engineering. Previous positions: Various positions in the ASSA ABLOY Group, including President of ASSA ABLOY Central and South America 2014–2018 and President of Yale Latin America 2012–2014. Previously various positions in Ingersoll Rand 2000–2010. Shareholdings: 111,858 Series B shares. 4 Allan Cooper Executive Vice President and Chief Human Resources Officer (CHRO) since 2024. Born 1968. Master’s in Human Resources Development. Fellow of the Chartered Institute of Personnel & Development. Previous positions: Various positions within the ASSA ABLOY Group including SVP and Head of HR EMEIA 2017–2024 and HR Director UK, Africa & Middle East 2007–2017. Previously HR Director Hozellock 2003–2007, HR Manager JCB 2000–2003 and HR Manager Amada 1990–2000. Shareholdings: 6,129 Series B shares. 5 Simon Ellis Executive Vice President and Head of Asia Pacific business unit ASSA ABLOY Opening Solutions Pacific and North East Asia since 2021. Born 1974. MBA. Previous positions: Various positions in the ASSA ABLOY Group, including President of Opening Solutions Pacific Region and Japan 2016–2020 and President of Opening Solutions New Zealand 2013–2016, General Manager Security Merchants Australia 2010–2013. Previously various positions in the ASSA ABLOY Group 1997–2010. Shareholdings: 8,156 Series B shares. 6 Massimo Grassi Executive Vice President and Head of Entrance Systems division since 2021. Born 1961. Master of Engineering. Previous positions: Divisional Managing Director, IMI Precision Engineering 2015–2020. Various positions within the Stanley Black & Decker Group, including President Stanley Security Europe 2012–2015, Global President Industrial Automotive Repair 2010–2012 and President in Europe 2007–2010. Previously various positions in Pentair Inc., BWT AG and Pirelli. Shareholdings: 15,228 Series B shares. Appointments and shareholdings at 31 December 2024 unless stated otherwise. 4 57 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Executive Team | Report of the Board of Directors 7 9 8 10 7 Björn Lidefelt Executive Vice President and Head of Global Technologies business unit HID since 2020. Born 1981. Master of Science in Industrial Engineering and Management. Previous positions: Various positions in the ASSA ABLOY Group, including Chief Commercial Officer 2017–2020, and General Manager ASSA ABLOY China (security products) 2013–2016. Shareholdings: 44,339 Series B shares. 8 Stephanie Ordan Executive Vice President and Head of Global Technologies business unit Global Solutions since 2021. Born 1976. Master of Business Administration and Engineering Diploma. Previous positions: Vice President Digital and Access Solutions ASSA ABLOY EMEIA 2018–2021, Head of Energy Storage Business and Head of Marketing and Communication Eaton 2014–2018. Strategic Marketing/New Products Development Director General Electric 2013–2014. Previously, Application Engineer, Field Sales Engineer, Head of Strategy and Product Management STMicroelectronics 1999–2013. Shareholdings: 8,825 Series B shares. 9 Martin Poxton Executive Vice President and Head of Asia Pacific business unit ASSA ABLOY Opening Solutions Greater China and South East Asia since 2021. Born 1972. HND in Mechanical and Manufacturing Engineering. Previous positions: Vice President Operations ASSA ABLOY Opening Solutions Asia Pacific 2017–2020, Operations Director Adient China 2013–2017, Business Unit General Manager and Launch Director Johnson Controls China 2008–2012. Various positions in Faurecia China 2004–2008. Previously various positions in Keiper, Johnson Controls and Flowform B’ham UK 1992–2004. Shareholdings: 6,759 Series B shares. 10 Neil Vann Executive Vice President and Head of EMEIA division since 2018. Born 1971. Degree in Manufacturing Engineering. Previous positions: Various positions in the ASSA ABLOY Group, including Market Region Manager ASSA ABLOY UK 2014–2018, Market Region Manager Italy and Greece 2012–2014 and Vice President Operations EMEA 2011–2012. Previously various positions within ASSA ABLOY, Yale and Chubb 1987–2001. Shareholdings: 41,233 Series B shares. Executive Team, cont. Appointments and shareholdings at 31 December 2024 unless stated otherwise. Changes in the Executive Team Allan Cooper took up the position of Executive Vice President and Chief Human Resources Officer on 1 No- vember 2024, having been in the position on an interim basis since 1 September 2024. He succeeded Helle Bay, who left ASSA ABLOY on 31 August 2024. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors • Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements 58 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Corporate governance | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management • Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements 7 Organization CEO and Executive Team The Executive Team consists of the CEO, the Heads of the Group’s divisions, the Heads of the business units HID, Global Solutions, Opening Solutions Greater China and South East Asia and Opening Solutions Pacific and North East Asia, the Chief Financial Officer and the Chief Human Resources Officer. For a presentation of the CEO and the other members of the Executive Team, see pages 56–57. 8 Divisions – decentralized organization ASSA ABLOY’s operations are decentralized. Operations are organizationally divided into five divisions: EMEIA, Americas, Asia Pacific, Global Technologies and Entrance Systems. The fundamental principle is that the divisions should be responsible, as far as possible, for business operations, while various functions at ASSA ABLOY’s Group Center are responsible for coordination, monitoring, policies and guidelines at an overall level. Decentralization is a deliberate strategic choice based on the industry’s local nature and a conviction of the benefits of a divisional control model. The Group’s structure results in a geographical and strategic spread of responsibility ensuring short decision-making paths. ASSA ABLOY’s operating structure is designed to create maximum transparency, to facilitate financial and operational monitoring, and to promote the flow of information and communication across the Group. The five divisions are divided into business units. These consist in turn of a large number of sales and production units, depending on the structure of the business unit concerned. Apart from monitoring by unit, monitoring of products and markets is also carried out. Policies and guidelines Significant policies and guidelines in the Group include financial control, communication issues, insider issues, information security and data protection, sustainability issues, business ethics, competition law and trade compliance. ASSA ABLOY’s financial policy and accounting manual provide the framework for financial control and monitoring. ASSA ABLOY’s communication policy aims to ensure that information is provided at the right time and in compliance with applicable rules and regulations. ASSA ABLOY has adopted an insider policy to complement applicable insider legislation. This policy applies to individuals in managerial positions at ASSA ABLOY AB (including subsidiaries) as well as certain other categories of employees. Information security policies and guidelines are in place to protect business-critical information from unauthorized individuals and organizations. ASSA ABLOY has adopted a Code of Conduct for employees and a separate ASSA ABLOY Code of Conduct for business partners. The Codes, which are based on a set of internationally accepted conven- tions, define the values and guidelines that should apply both within the Group and for ASSA ABLOY’s business partners with regard to matters such as business ethics, human rights and working condi- tions, as well as the environment, health and safety. Moreover, ASSA ABLOY has adopted policies and guidelines on compliance with competition, anti-corruption, export control/sanctions and data protection legislation applicable to the Group. Each division has dedicated staff who monitor compliance with these policies. 9 Auditor At the 2024 Annual General Meeting, Ernst & Young AB (EY) was re-elected as the external auditor until the end of the 2025 Annual General Meeting. Authorized public accountant Hamish Mabon is the auditor in charge. Hamish Mabon was born in 1965 and performs other significant audit assignments for SEB and Northvolt AB. He has been a member of FAR, the institute for the accountancy profession in Sweden, since 1992 and is a FAR Certified Financial Institution Auditor. He holds no shares in ASSA ABLOY AB. EY submits the audit report for ASSA ABLOY AB, the Group and a large majority of the subsidiaries worldwide. The audit of ASSA ABLOY AB also includes the administration by the Board of Directors and the CEO. The auditor in charge attends the Audit Commit- tee meetings as well as the February Board meeting, at which he reports his observations and recommen- dations concerning the Group audit for the year. The external audit is conducted in accordance with International Standards in Auditing (ISA), and generally accepted auditing standards in Sweden. The audit of the financial statements for legal entities outside Sweden is conducted in accordance with statutory requirements and other applicable rules in each country. For information about the fees paid to auditors and other assignments carried out in the Group in the past three financial years, see Note 3 and the Annual Report for 2023, Note 3. 59 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Internal control – financial reporting | Report of the Board of Directors ASSA ABLOY’s internal control process for financial re- porting is designed to provide reasonable assurance of reliable financial reporting, which is in compliance with generally accepted accounting principles, appli- cable laws and regulations, and other requirements for listed companies. Control environment The Board of Directors holds ultimate responsibil- ity for effective internal control and has therefore established fundamental documents of significance for financial reporting. These documents include the Board of Directors’ rules of procedure and instruc- tions to the CEO, the Code of Conduct, financial policy, an annual financial evaluation plan etc. Regular meetings are held with the Audit Committee. The Group has an internal audit function whose primary objective is to ensure reliable financial reporting and good internal control. Financial reporting is governed by the ASSA ABLOY Accounting and Reporting Manual. It contains detailed instructions on accounting policies and procedures for financial reporting that must be applied by all units. The entire Group uses a financial reporting system with pre-defined report templates. ASSA ABLOY has an internal control framework containing business-critical parts defining a minimum of mandatory control activities that help reduce the level of risk. The framework must be applied by all companies in the Group, and compliance with con- trols is reviewed annually by means of self-assessment at selected companies. Risk assessment Risk assessment is built in to the processes in ques- tion and a variety of methods are used to assess and limit risk, as well as to ensure that risks are man- aged in compliance with established policies and guidelines. Risk assessment includes identifying and evaluating the risk of material errors in accounting and financial reporting at Group, division and local levels. The specific material risks that ASSA ABLOY has identified associated with financial reporting are errors in business-critical processes such as sales, purchases, financial statements, inventories, facilities management, taxes, legal issues, occupational injuries and the risk of fraud, loss or embezzlement of assets. Control activities The Group’s controller and accounting organization at both central and division levels plays a significant role in ensuring reliable financial information. It is re- sponsible for complete, accurate and timely financial reporting. An internal audit function has been estab- lished and carries out audits in accordance with the plan annually adopted by the Audit Committee. The results of the audits are communicated to the Audit Committee and the external auditors. Each division has employed full-time internal auditors who audit the companies and monitor internal control. Information and communication Reporting and accounting manuals as well as other financial reporting guidelines are available to all employees concerned on the Group’s intranet. A regular review and analysis of financial outcomes is carried out at both business unit and division levels and as part of the established operating Board struc- ture. The Group also has established procedures for external communication of financial information, in accordance with the rules and regulations for listed companies. Review process The Board of Directors and the Audit Committee evaluate and review the Annual Report and Interim Reports prior to publication. The Audit Committee monitors the financial reporting and other related issues, and regularly discusses these issues with the external auditors. All business units report their financial results monthly in accordance with the Group’s accounting principles. This reporting serves as the basis for Interim Reports and a monthly legal and operating review. Operating reviews conform to a structure in which sales, earnings, cash flow, capital employed and other important key figures and trends for the Group are compiled, and form the basis for analysis and actions by management and control- lers at different levels. Financial reviews take place quarterly at divisional Board meetings, monthly in the form of performance reviews and through more informal analysis. Other important Group-wide com- ponents of internal control are the annual business planning process and regular forecasts. Divisions, local company management teams and process owners are responsible for ongoing testing of internal controls by means of annual self-assessment in accordance with the requirements in ASSA ABLOY’s internal control framework. The results of the self-as- sessment and action plans are monitored annually and reported to the Audit Committee. The divisions, management of local companies and process owners are responsible for ensuring that agreed measures are implemented. Internal audit The internal audit function is part of the Group’s financial organization, and the head of the internal audit function reports to the Chief Financial Officer. Each division has employed full-time internal auditors who audit the companies and monitor internal control. The aim of these audits is to evaluate internal processes, systems and controls and ensure that they are effective and comply with ASSA ABLOY’s policies and guidelines. Detailed audit reports are issued to the local company management team, process own- ers and divisions after each audit. The reports contain observations and recommendations with a view to improving operations and reducing potential risks. The internal audit function also provides regular updates on the status of the audit plan, agreed measures and compliance with internal control to management and the Audit Committee. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team • Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Internal control – financial reporting 60 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting • Sustainability statement General information Environmental information Social information Governance information Financial statements Sustainability statement | Report of the Board of Directors Sustainability statement Sustainability is central to our business strategy, enabling us to minimize our environmental and carbon footprint while continuing to drive business growth. Our long- term commitment to sustainability will unlock significant opportunities to reduce costs, mitigate climate risks, and develop more sustainable solutions to meet the needs of our customers. Sustainability is inte- grated into everything we do. When executed effectively, sustainability is a key business enabler. p 65 p 81 p 85 p 94 p 102p 98 p 103 General information Environmental information Environmental information Climate change Social information Own workforce Social information Consumers and end-users Social information Workers in the value chain Governance information Business conduct ESRS 2 Taxonomy E1 S1 S4S2 G1 p 90 Environmental information Water and marine resources E3 p 92 E5 Environmental information Resource use and circular economy Sustainability statement | Report of the Board of Directors 61 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting • Sustainability statement General information Environmental information Social information Governance information Financial statements Sustainability statement | Report of the Board of Directors Highlights 2024 Dow Jones Sustainability Index Europe ASSA ABLOY is a constituent of the Dow Jones Sustainability Index Europe for the fourth year in a row. The index tracks the performance of the top 20 percent of the 600 largest European companies in the S&P Global Broad Market IndexSM that lead the field in terms of sustaina- bility. Reduced carbon footprint In 2024, the Group has reduced its absolute Scope 1 & 2 carbon footprint by 36 percent, against the 2019 baseline. Reduced water consumption During 2024, water intensity reduced by 56 percent, against the 2019 baseline. Reduced waste In 2024, non-hazardous waste intensity in the Group decreased by 29 percent, against the 2019 baseline. Our injury rate remained flat vs. 2023. The Group’s Scope 1 & 2 absolute greenhouse gas emissions decreased by 20 percent vs. 2023. Our water intensity has decreased by 10 percent vs. 2023. The Group carried out 701 sustainability audits of direct material suppliers during 2024. Our energy intensity has decreased by 10 percent vs. 2023. By the end of 2024 the Group had 267 Environmental Product Declarations verified and published. INJURY RATE CARBON FOOTPRINT WATER INTENSITY ENVIRONMENTAL PRODUCT DECLARATIONS ENERGY INTENSITY SUSTAINABILITY AUDITS 10% 701 10% 267 0% 20% Recognition and memberships ASSA ABLOY is included in FTSE4Good, the OMX GES Sustaina- bility Sweden PI Index, and in the Kempen SNS SRI Universe. In 2017, ASSA ABLOY became an official regional partner in the World Green Building Council’s Europe Regional Network. The Network represents a confederation of over 20 Green Building Councils, eight Regional Partners and close to 5,000 company members. Other important main memberships include: The Confederation of Swedish Enterprise (Svenskt Näringsliv), The Royal Swedish Academy ofEngineering Sciences (IVA), The Connectivity Standards Alliance (CSA), FiRa Consortium, and Security Industry Association (SIA). Sustainability statement | Report of the Board of DirectorsASSA ABLOY | ANNUAL REPORT 2024 62 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting • Sustainability statement General information Environmental information Social information Governance information Financial statements Sustainability statement | Report of the Board of Directors 1 Acquisitions will be given 3 years to become certified . Throughout the year, we made significant advancements towards most of our 2025 goals, based on our 2019 baseline, though we aim to achieve even more moving forward. In particular, we made strong improvements in our water and energy intensity. Performance and 2025 targets Carbon footprint (Scope 1 & 2, ’000 metric tons absolute) 2025 TARGET DEVELOPMENT 2019–2024 COMMENTS ON 2024 VS. 2023 25% In 2024, there was a 20 percent decrease in Scope 1 & 2 absolute carbon emissions. Where 2 percent is due to focused energy efficiency improvements and 18 percent is linked with implementing the most recent emission factors. Energy intensity (MWh/SEK M) 25% Energy intensity reduced in 2024 by 10 percent, due to continued focus of energy effectiveness and efficiency initiatives and increased produc- tion output resulting in higher value added. Hazardous waste intensity (kg/SEK M) Non-hazardous waste intensity (kg/SEK M) 25% 25% In 2024, hazardous waste intensity reduced by 5 percent. This was accomplished through waste reduction efforts, where production methods were further refined to minimize waste hazardous waste. Non-hazardous waste intensity reduced by 8 percent in 2024. All locations adhere to the waste hierarchy, prior- itizing waste prevention as much as possible, followed by maximizing reuse and recycling. Water intensity (m 3 /SEK M) 25% Water intensity reduced by 10 percent in 2024. This stemmed from on- going efforts to enhance water efficiency across the Group and contin- ued improvements in water infrastructure. Organic solvents intensity (kg/SEK M) 50% In 2024, organic solvents intensity reduced by 5 percent. This is a result the continued effort to convert to water-based paint in our door oper- ations. ISO 14001 – percent of sites certified in reporting scope 100% In 2024, 77 percent of our sites defined as requiring ISO 14001 were certified. We continue to roll-out ISO 14001 to all relevant sites. Operations 0 100 200 300 25242322212019 ’000 tons 0 5 10 15 20 25242322212019 MWh/SEK M 0 10 20 30 40 50 25242322212019 m 3 /SEK M 0 25 50 75 100 25242322212019 kg/SEK M 0 200 400 600 800 25242322212019 kg/SEK M 0 5 10 15 20 25242322212019 kg/SEK M 0 25 50 75 100 25242322212019 % 40% 56% 42% 29% 69% 1p.p 1 36% LINKED SDGs LINKED SDGs 63 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting • Sustainability statement General information Environmental information Social information Governance information Financial statements Sustainability statement | Report of the Board of Directors 1 Spend in identified risk countries. Supply management People 2025 TARGET 2025 TARGET DEVELOPMENT 2019–2024 DEVELOPMENT 2019–2024 COMMENTS ON 2024 VS. 2023 COMMENTS ON 2024 VS. 2023 LINKED SDGs LINKED SDGs Supplier sustainability audits (percent of direct material spend 1 ) 95% Code of Conduct for Business Partners (percent of direct & indirect material spend) 95% In 2024, 92 percent of our relevant direct material suppliers by spend have been audited with our supplier sustainability audit. In 2024, 86 percent of our direct and indirect material suppliers by spend have signed our Code of Conduct for Business Partners. We are continuing to roll this out to our indirect suppliers. 0 25 50 75 100 25242322212019 % 0 25 50 75 100 25242322212019 % 18p.p 5p.p 1 Injury rate (number of injuries per million hours worked) 33% 0 1 2 3 4 25242322212019 Injury rate 0 20 40 60 80 25242322212019 Injury lost day rate 0 10 20 30 40 25242322212019 % -17% -2% 5p.p Our injury rate remained flat in 2024. Our injury lost day rate remained flat in 2024. Diversity and inclusion is a key focus for the Group. The portion of females in management positions increased to 29 percent in 2024. Injury lost day rate (number of lost days related to injuries per million hours worked) 33% Gender diversity (percent of females in management positions) 30% Performance and 2025 targets, continued LINKED SDGs 64 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting • Sustainability statement General information Environmental information Social information Governance information Financial statements Sustainability statement | Report of the Board of Directors Performance against targets Sustainability program to 2025 progress: Area 2019 2020 2021 2022 2023 2024 1 Target 2019–2025 Change 2019–2024 Linked SDGs Environmental KPI ISO 14001 – % of sites certified in reporting scope 2, 4 76% 77% 77% 76% 73% 77% 100% ● +1 p.p. Carbon footprint – Scope 1 & 2 greenhouse gas emissions (metric tons absolute) 3, 4 293,508 240,604 249,482 237,209 236,065 189,230 –25% ● –36% Energy intensity (MWh/SEK M) 4 15.7 14.9 13.7 11.8 10.5 9.4 –25% ● –40% Water intensity (m 3 /SEK M) 4 42.2 37.5 30.9 25.1 20.8 18.8 –25% ● –56% Hazardous waste intensity (kg/SEK M) 4 89.7 79.0 73.6 66.1 54.4 51.6 –25% ● –42% Non-hazardous waste intensity (kg/SEK M) 4 559 530 557 490 432 399 –25% ● –29% Organic solvents intensity (kg/SEK M) 4 16.9 9.1 8.3 6.0 5.6 5.3 –50% ● –69% Social KPI Injury rate (number of injuries per million hours worked) 4 3.0 2.8 3.1 3.2 2.5 2.5 –33% ●● –17% Injury lost day rate (number of lost days related to injuries per million hours worked) 4 60.0 65.5 75.0 73.9 58.5 58.8 –33% ●● –2% Portion of spend in identified risk countries represented by sustainability audited direct material suppliers 97% 91% 86% 93% 94% 92% 95% ● –5 p.p. Portion of spend of direct and indirect material suppliers who have signed the Group's Code of Conduct for Business Partners 68% 68% 73% 76% 81% 86% 95% ● + 18 p.p. Gender equality Portion of females in management positions Level 2: Level 3: Level 4: Level 5: Level 2–5: 20% 17% 20% 25% 24% 9% 21% 21% 26% 25% 9% 12% 25% 28% 27% 18% 11% 26% 30% 29% 18% 14% 26% 30% 29% 9% 16% 27% 30% 29% 30% ● –11 p.p. 0 p.p. +7 p.p. +5 p.p. +5 p.p. 1 For comparable units in 2024, defined as all legal entities acquired up to (June 30, 2023), excluding HHI. 2 Acquisitions will be given 3 years to become certified. 3 Scope 1 & 2 greenhouse gas emissions related to energy consumption and industrial processes, not including Scope 1 fleet. 4 The historical numbers have been adjusted with proforma data. ●● KPI is on track ●● KPI is at risk 65 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information • ESRS 2 Double materiality assessment and stakeholder engagement Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors Sustainabilty Council's reporting process Sustainable Innovation Supply chain integrity Environmental Social and ethical Health and safety General basis for preparation The sustainability statement has been prepared in accordance with the European Sustainability Reporting Standards (ESRS) meeting all mandatory requirements, issued by the European Financial Reporting Advisory Group (EFRAG). This report func- tions as ASSA ABLOY's statutory Sustainability Report under the Swedish Annual Accounts Act, clarifying that it addresses the Swedish Annual Accounts Act's requirements as they were prior to July 1, 2024, while also incorporating the new CSRD (Corporate Sustain- ability Reporting Directive) requirements following the implementation of the directive. As this is the first time of adoption, there are gaps between ESRS and ASSA ABLOY disclosures. Please refer to page 105 for the ESRS index and page 106 for the data points that derive from other EU legislations. Our disclosures in Environment, Social and Governance are a result of our double materiality assessment. Our Scope 1, 2 and 3 greenhouse gas (GHG) emissions have been calculated according to the Greenhouse Gas Protocol. We have set near-term (2030) and long-term (2050) carbon emission reduction targets, which have been ratified by the Science Based Targets initiative (SBTi). We evaluated our innovation policy, processes, and results, and chose to omit sensitive details that could compromise our competitive advantage, in line with ESRS 1, section 7.7. We will continually monitor our disclosure practices and reassess the need for omis- sions as our business and regulatory landscape evolve, maintaining our commitment to transparency while protecting our intellectual property. The accounting policies are aligned with financial reporting, for the financial year. The data is consolidated on a Group level, consistent with the same financial principles as the financial statements., except for the acquisitions mentioned in Note 34 of the Annual Report with an acquisition date from July 2024 onwards, as they are still in the process of being integrated into our sustainability reporting. The units not included in 2024 are not deemed to have a significant impact on the consolidated numbers with the exception of what is stated, if any, at each disclosure in this report. Our sustainability statement provides an overview of our practices and performance, covering both upstream and downstream value chains. This approach ensures we address impacts and opportunities throughout the product lifecycle. ASSA ABLOY engages with suppliers from a sustaina- bility perspective, requiring adherence to the Code of Conduct and conducting audits. We prefer suppliers focused on resource efficiency, waste minimization, and emissions reduction. We collaborate with suppliers to develop sustainable solutions, reducing our value chain's emissions footprint. We also engage with customers to understand their sustainability needs, developing solutions to reduce their emissions through energy efficiency, product transparency, and extended product life. Our products are designed us- ing our Sustainability Compass tool to optimize their footprint and maximize recyclability at end of life. To measure and report on our sustainability performance, we track key metrics. For upstream, we measure the percentage of suppliers signing our Code of Conduct for Business Partners and conduct sustainability audits of 92 percent of direct suppliers in identified risk countries. For downstream, we assess the energy efficiency of our solutions using national grid mix emission factors. We plan to develop metrics for sustainable innovation as part of our next Sustain- ability Program to 2030. We are committed to improving our sustainability performance across the value chain by setting ambi- tious targets, reviewing progress, and engaging with Board of Directors CEO Executive Team Opening Solutions EMEA Opening Solutions Americas Opening Solutions APAC Global Technologies Entrance Systems Divisional Boards Manufacturing Sales Unit Manufacturing Sales Unit Manufacturing Sales Unit Manufacturing Sales Unit Manufacturing Sales Unit Organizational responsibility General information ESRS 2 66 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information • ESRS 2 Double materiality assessment and stakeholder engagement Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors stakeholders. Our sustainability statement will be updated annually to reflect our efforts and achieve- ments. By addressing sustainability in both upstream and downstream value chains, we aim to positively impact the environment, society, and the economy, contributing to carbon emissions reduction, resource conservation, and social well-being throughout our products' lifecycle. We have reported according to the Global Report- ing Initiative (GRI) since 2010, which provides the foundation for our sustainability accounting frame- work and aligns to the disclosure requirements of the CSRD. We use verified data from our onsite meters and our utility providers where possible, using aver- age proxy data for smaller entities where direct data is not available. Our Scope 3 emissions are calculated using both spend-based and average-data methods, to increase our reporting accuracy. We are working towards capturing direct data from our supply base, to further increase data accuracy. As ASSA ABLOY continues to grow through acqui- sition, new acquisitions are required to report their sustainability data within six months of being in the Group. Usually this means companies acquired in the first six months of the year will be included in the full year data, while companies acquired in the second half of the year will be included the following year. For larger acquisitions it may take longer than six months to get their sustainability data into our system. The reason for this is the companies acquired by ASSA ABLOY typically do not possess a mature corporate structure and, consequently, lack formal sustainability reporting processes. ASSA ABLOY conducts training sessions and collaborates closely with local manage- ment to ensure alignment with the Group's policies. Our sustainability statement and related data has been verified as part of a limited assurance, per- formed by ASSA ABLOY’s auditor EY. Governance Our divisions have operational responsibility for their sustainability work, including business conduct. The work and progress is overseen by the Executive Team, led by the CEO, and ultimately by the Board of Direc- tors of ASSA ABLOY AB. Our strategy, sustainability objectives, the Code of Conduct and the Code of Con- duct for Business Partners form the foundation for our ESRS 2 Board composition 1, 2 Name Position Background Independent of the company and its management Independent of the company's major shareholders Gender Johan Hjertonsson Chairman President and CEO of Investment AB Latour since 2019. Previously President and CEO of AB Fagerhult and Lammhults Design Group AB and various management positions within the Electrolux Group. Other appointments: Chairman of Alimak Group AB and Tomra Systems ASA. Board member of Investment AB Latour and Sweco AB. Yes No Male Carl Douglas Vice Chairman Self-employed. Other appointments:Board member of Investment AB Latour. Yes No Male Erik Ekudden Board member Senior Vice President, Chief Technology Officer and Head of Group Function Technology at Telefonaktiebolaget LM Ericsson since 2018. Previously a number of management positions within the Ericsson Group since 1993. Other appointments: Fellow and vice Chair of the Presidium of the Royal Swedish Academy of Engineering Sciences (IVA) as well as member of the Broadband Commission for Sustainable Development. Yes Yes Male Sofia Schörling Högberg Board member Other appointments:Vice Chairman of Melker Schörling AB. Board member of Securitas AB and Hexagon AB. Yes No Female Lena Olving Board member President and CEO of Mycronic AB 2013-2019. COO and Deputy CEO of Saab AB 2008- 2013. Various positions within Volvo Car Corporation 1980-1991 and 1995–2008 of which seven years in the Executive Management Team. CEO of Samhall Högland AB 1991–1994. Other appointments: Chairman of Nodica Group AB. Board member of Investment AB La- tour, NXP Semiconductor N.V., Stena Metall AB and Vestas A/S. Fellow of the Royal Swedish Academy of Engineering Sciences (IVA). Yes No Female Victoria Van Camp Board member Runs her own consulting firm Axa Consulting since 2022 with focus on advising within technology development in order to accelerate green transition. Previously a number of management positions within AB SKF 1996–2022. Other appointments: Board member of Billerud AB, Alleima AB, SR Energy AB, LumenRadio AB and the Chalmers foundation. Adjunct professor in machine elements at Luleå University of Technology. Fellow of the Royal Swedish Academy of Engineering Sciences (IVA). Yes Yes Female Joakim Weidemanis Board member Executive Vice President and Corporate Officer of Danaher Corporation 2017-2024. Previously various management positions within Danaher 2011–2017. Head of Product Inspection and Corporate Officer of Mettler Toledo 2005–2011. Previously various operat- ing and corporate development roles within ABB 1995–2005. Yes Yes Male Susanne Pahlén Åklundh Board member President of the Energy Division of Alfa Laval AB 2017–August 2021. Previously various positions in the Alfa Laval Group Management since 2009. Other appointments: Chairman of Alfdex AB. Board member of Alleima AB and Sweco AB. Yes Yes Female Gender diversity ratio (male:female) 4:4 Gender diversity (percentage of females represented) 50% 1 The Board also consists of two employee representatives with one deputy each, who are appointed by the unions. 2 Appointments at 31 December 2024. 67 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information • ESRS 2 Double materiality assessment and stakeholder engagement Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors sustainability work. Related Group policies, adopted by the Board of Directors, as well as other guidelines, processes and tools as set out in the sustainability statement provide further guidance. Sustainability goals and targets are set at Group level and are not performed on a divisional level. The responsibility for overseeing the management of sustainability-related Impacts, Risks, and Opportunities is clearly defined within our governance structure. The CEO and Board of Directors ensure sustainability is integrated into the company's decision-making processes, opera- tions, governance structure, risk management pro- cesses, and strategic decision-making. This approach ensures transparency and accountability in managing sustainability risks and opportunities. The Board of Directors and the CEO are responsible for the reported information in the sustainability statement in accordance with the CSRD. They oversee the preparation of the sustainability statement and review its content, and the Board of Directors ulti- mately approves the sustainability statement. The Audit Committee of the Board of Directors is responsible for the preparation of the Board of Directors’ work regarding sustainability disclosures. Sustainability is an integrated part of the report submitted to the Audit Committee ahead of each quarterly Audit Committee meeting. The Chair- person of the Audit Committee reports from each Audit Committee meeting to the Board of Directors at every subsequent Board meeting. Sustainability matters including material impacts, risks and oppor- tunities, implementation of due diligence, and results and effectiveness of policies, actions, metrics and targets adopted to address them, and sustainability disclosures are addressed by the Board of Directors as needed and at least annually. Within the Board of Directors and the Audit Committee the members are professionals with long experience from different senior positions, including CEO and other senior management positions, in global industrial companies and as such they have extensive experience from managing the topics generally cov- ered by the sustainability concept, including business conduct. The Board of Directors is supported by rele- vant functions within the Group, such as the Group’s Head of Sustainability, on sustainability issues. Our sustainability issues are managed in a sys- our logistics footprint, prioritizing low-carbon trans- port options. Our diverse customer base is served through multiple routes to market, including distrib- utors and direct sales. Our products are designed to ensure the safety and security of our customers and their assets, with sustainability embedded through energy efficiency, low-carbon materials, extended product life, and recyclability at the end of life. Our sustainability targets are designed to support the long-term strategic goals of the company, ensur- ing alignment with our vision to help people feel safe, secure, and experience a more open world. As well as create value for stakeholders while addressing global sustainability challenges. These targets focus on areas where our operations, products, and value chain have the most significant impacts and opportunities. The following sustainability-related targets have been established. Our science-based targets are our cli- mate action goals where our near-term target Reduce Scope 1 & 2 greenhouse gas emissions (GHG) by 50 percent, and reduce Scope 3 emissions by 28 percent by 2030, against our 2019 baseline. Our long-term target is to realize net-zero greenhouse gas emissions no later than 2050, which is to reduce all scopes by 90 percent. This supports our transition to a low-carbon economy and aligns with the Paris Agreement to limit global warming to 1.5°C. This also supports our stra- tegic objective of cost-efficiency in everything we do. Our focus on resource efficiency includes reducing energy, water, non-hazardous waste and hazardous waste intensity by 25 percent by 2025. Reduce organ- ic solvents intensity by 50 percent by 2025. Achieve 100 percent ISO 14001 certification for relevant manufacturing sites by 2025. This supports waste reduction and optimization of resource use, as well as supporting our strategic objective of cost-efficiency in everything we do. Diversity and inclusion are an im- portant part of our sustainability targets. To increase the representation of women in leadership roles to 30 percent by 2025. This helps to advance social equity and reflects our commitment to creating an inclusive workplace. Our targets are informed by stakeholder engage- ment, double materiality assessments, and industry benchmarks. Our climate action targets are ratified by the Science Based Targets initiative. Our social targets are benchmarked against leading practic- tematic and consistent way, at divisional level. Each division is responsible for managing our sustaina- bility agenda, identifying and addressing risks and opportunities in the context of their business, as well as governing the Code of Conduct and related policies. Managers for environmental sustainability, supply, and innovation at the Group and divisional levels ensure that the necessary policies, processes and tools for managing environmental issues exist and are implemented. The Human Resources (HR) functions at the Group and divisional levels have the corresponding responsibility for managing social and ethical matters. Every factory or business unit has the operational responsibility within each division. Each division is also responsible for ensuring that current and new suppliers understand and comply with our requirements. To drive the agenda, five functional sustainability councils have been defined. The Group intranet includes two sections that focus on sustainability; one offering general information for all employees, while the other supports sustainability managers and includes tools, best practices, and access to the sustainability reporting database. ASSA ABLOY operates a complex supply chain, sourcing raw materials, components, and finished goods. This supply chain significantly impacts our value chain, particularly in terms of greenhouse gas emissions and resource consumption. As with all supply chains, there are risks related to fair labor prac- tices, which we work to systematically mitigate by requiring all suppliers to sign and adhere to our Code of Conduct for Business Partners and conducting sup- plier sustainability audits. Positive opportunities arise from collaboration and innovation, aiming to reduce sustainability impacts through the use of low-carbon materials and improved resource efficiency. In our operations and manufacturing sites, the health and safety of our employees is our number one priority. We ensure fair treatment and equal opportunities for all employees. We work to reduce our carbon footprint, waste generation, and the use of water and potentially hazardous materials. Our governance structure and Group sustainability goals and targets provide a clear framework to help us minimize our impact. We collaborate with logistics partners to optimize es in our sector and are aligned to international standards such as the UN Sustainable Development Goals (SDGs). Progress is tracked quarterly using key performance indicators and reported annually in our CSRD sustainability statement. Our cross-divisional sustainability council reviews progress and ensures alignment with overall business objectives. Example KPIs include annual GHG emissions (metric tons CO 2 eq), percentage of recycled materials used, and gender diversity metrics. All metrics are disclosed in our sustainability statement. As per our governance structure responsibility for achieving targets lies with the CEO and Board of Directors. We are unable to present revenue per ESRS sector due to disaggregation of the Groups revenue however as seen in Note 2, revenue broken down by geography/product group. As we continue to improve our visibility of sustainability impacts on a financial level, we will review the possibility to implement ESRS mapping to revenue where practicable. ASSA ABLOY has not assessed the financial impacts of material risks and opportunities on financial position, financial performance and cash flows and material risks and opportunities; for which there is significant risk of material adjustment within the next annual reporting period to carrying amounts of assets and liabilities reported in related financial statements due to limitation of data. Consumers and end-users of ASSA ABLOY are included in reporting of S4. ASSA ABLOY does not have a full set of internal controls in place for ESRS reporting, this will be developed during 2025. Executive remuneration Climate and other sustainability-related targets are factored into the variable remuneration of all mem- bers of the Executive Team reporting to the CEO, as well as management teams throughout the divisions. These targets are usually linked with decreasing our energy consumption, which is a key driver for our Scope 1 & 2 emissions; the reduction targets are aligned to our annual emissions reduction as part of our science-based targets. This and other sustainabil- ity-related targets, such as health and safety and peo- ple strategy, are typically in the form of short-term variable remuneration and usually 3 to 5 percent of the total short-term variable remuneration target. 68 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 • Double materiality assessment and stakeholder engagement Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements ASSA ABLOY has adopted the Organization for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Business Conduct. The OECD requirement to “embed respon- sible business conduct into policies and management systems” is described in the governance and policy matrix. The requirement to “identify and assess adverse impacts in operations, supply chains and business relationships” is described in the double materiality analysis. The requirements to “cease, prevent or mitigate adverse impacts” and to “track implementation and results” are covered in the environmental and social sections. This publication forms part of how we meet the requirement to “communicate how impacts are addressed.” Due diligence process and supporting measures Identify & assess adverse impacts In operations, supply chains and business relationships Communicate How impacts are addressed Track Implementation and results Cease, prevent or mitigate Adverse impacts Embed responsible business conduct Into policies & management systems Provide for or cooperate In remediation when appropriate In preparation for the CSRD, we carried out a double materiality assessment during 2023 and 2024. In the past, we have conducted single materiality assess- ments in the form of an impact materiality assess- ment, which provides an inside-out perspective to assess ASSA ABLOY’s impact on the world. An impact materiality assessment forms one part of the double materiality assessment. The second part is a financial materiality assessment. This provides an outside-in perspective to assess the financial implica- tions that potential material topics may have on the Group. We have reported according to the Task Force on Climate-related Financial Disclosures (TCFD) since 2021, which acts as a solid foundation when prepar- ing our financial materiality assessment. Double materiality assessment process The following key activities take place during the double materiality assessment process, all of which help to inform the analysis. • Stakeholder survey • Workshop 1: Impact materiality • Workshop 2: Financial materiality • Analysis of survey, workshops and written documents • Workshop 3: Validation of draft list of material matters Impact materiality factors Severity factors and likelihood are graded as follows: • Scale: Large or small (how grave the negative impact is or how beneficial the positive impact is) • Scope: Large or small (how widespread the impact is, for example geographical extent, number of people) • Irremediability: High or low (to what extent a negative impact could be remediated) • Likelihood: High or low (for potential impact or actual impact) Impact materiality threshold A sustainability matter is determined as material when: • There is an actual impact or a potential impact with a high likelihood • With a value of large/high for at least two out of three negative severity factors (scale, scope, irremediability), and/or • With a value of large for at least one out of the two positive factors (scale, scope) Other impacts are scrutinized individually to see if scale, scope or irremediable character alone makes a negative impact severe enough to qualify as material. Financial materiality factors The likelihood and potential magnitude of financial effects are graded as follows: • Likelihood: High or low • Magnitude: Large or small Financial materiality threshold A sustainability matter is determined as material when: • It has a value of high likelihood and large magni- tude in terms of either being a risk or an opportu- nity, or both For financially-material matters, the material sub- topics match the sub-topics that are material from an impact perspective. Due diligence Identify & assess adverse impacts Double Materiality Assessment (DMA) and Stakeholder Engagement 69 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Double materiality assessment outcome Following our double materiality assessment process we have identified the following ESRS topics as being materially relevant: E1 Climate Change, E3 Water and Marine Resources, E5 Resource Use and Circular Economy, S1 Own Workforce, S2 Workers in the Value Chain, S4 Consumers and End-users, G1 Business Conduct. The identified material topics are closely aligned to our overall business strategy, where sustainability is integrated into everything we do. We identified the following topics as not being materially relevant from a CSRD perspective: E2 Pollution, E4 Biodiversity and Ecosystems, S3 Affected Communities. Our stakeholders did not identify the topics as materially relevant to ASSA ABLOY operations and our value chain. Although the topics were not identified as materially relevant in our assessment, they are still important to ASSA ABLOY, and we take the necessary steps to mitigate the risk of pollution or biodiversity loss and we support affected communities where we operate locally and in our value chain. Minimal / Informative / Important Significant / Crucial Minimal / Informative / Important Significant / Crucial FINANCIALLY MATERIAL TOPICS IMMATERIAL TOPICS IMPACT AND FINANCIALLY MATERIAL TOPICS IMPACT MATERIAL TOPICS Climate Change Pollution Biodiversity and Ecosystems Water and Marine Resources Circular Economy Business Conduct Own Workforce Workers in the Value Chain Affected Communities Consumers and End-users IMPACT MATERIALITY FINANCIAL MATERIALITY Material sustainability matters Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 • Double materiality assessment and stakeholder engagement Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 70 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Double materiality assessment methodology We followed the steps outlined by the ESRS to conduct our double materiality assessment: 1. Stakeholder engagement: We conducted stakeholder surveys with over 500 stakeholders to understand the concerns and priorities of various stakeholders, including employees, customers, suppliers, investors, industry associations and NGOs. 2. Materiality workshops: We carried out work- shops to discuss both impact materiality (the sig- nificance of the social and environmental impact of the company) and financial materiality (the importance of sustainability issues to enterprise value). 3. Preliminary findings: We compiled the prelim- inary results from the workshops and surveys to identify the sustainability matters that are materi- al to the company. 4. Validation process: We established a verification team made up of function heads and subject mat- ter experts to validate the preliminary findings, where feedback was collected and incorporated. 5. Reporting: Our sustainability statement and An- nual Report have been prepared in alignment with the CSRD reporting metrics and requirements, ensuring that it includes the updated materiality analysis. 6. Continuous improvement: We will use the outcomes of the materiality assessment to continuously improve sustainability practices and reporting. Process steps – Impact materiality We followed the five process steps for impact materiality as defined by the CSRD: 1. Engagement of stakeholders: We engaged internal subject matter experts, representatives from each division and all functional heads across the Group to attend and provide input during the impact materiality workshop. We ran a series of education and awareness sessions before the impact materiality workshop with all internal stakeholders to bring them up to speed on what disclosing to CSRD would entail. We developed a standardized survey for our wider stakeholders and received over 500 responses from stakehold- ers; including employees, customers, suppliers, investors, industry associations and NGOs. The output from the stakeholders was aggregated into focus areas to ensure the stakeholder input from the surveys was taken into account during the impact materiality workshop. 2. Scoping of impacts: We reviewed our previous materiality assessments and sustainability focus areas as a reference point, to determine if we have been addressing the materially relevant topics. This provided a stable foundation to build upon, factoring in the additionality required by the CSRD. 3. Assessment of individual impacts: As outlined earlier in the report we evaluated the significance of each impact, considering factors such as scale, scope, irremediability and likelihood. 4. Calibration of material impacts: We used the in- put from our stakeholder surveys, internal subject matter experts and functional heads to assess and verify the outcome from the double materiality assessment process. This ensured that the identi- fied material topics are relevant and there were no gaps or missed relevant topics. 5. Stakeholder and management review: The findings from our double materiality assessment process were presented to our Executive Team and the Board of Directors. This step ensured that the assessment accurately reflects ASSA ABLOY’s sus- tainability impacts and material issues. This result- ed in the identification of fifteen negative impact material sub-topics. The findings from our double materiality assessment process were assessed with our existing business model and Group strategy, where it was clear there are no wholesale changes required for either our business model or Group strategy. Our current business model and strategy are sufficient to ensure we can disclose to CSRD as well as progress towards our sustainabili- ty goals and objectives. Process steps – Financial materiality We followed the five process steps for financial materiality as defined by the CSRD: 1. Engagement of stakeholders: We engaged internal subject matter experts, including risk management and all functional heads across the Group to attend and provide their input during the financial materiality workshop. 2. Scoping of impacts: We reviewed our previous disclosures to TCFD and scenario analyses as a reference point, to determine if we have been addressing the materially relevant financial topics. This provided a stable foundation to build upon, factoring in the additionality required by the CSRD. 3. Assessment of individual impacts: As outlined earlier in the report we evaluated the significance of each risk, considering factors such as likelihood and magnitude. 4. Calibration of material impacts: We used the input from our internal subject matter experts and functional heads to assess and verify the outcome from the double materiality assessment process. This ensured the identified material topics are rel- evant and there were no gaps or missed relevant topics. 5. Stakeholder and management review: The findings from our double materiality assessment process were presented to our Executive Team and the Board of Directors. This step ensured that the assessment accurately reflects ASSA ABLOY´s sustainability impacts and material issues. This resulted in the identification of twelve financial material sub-topics. The findings from our double materiality assessment process were assessed with our existing business model and Group strategy, where it was clear there are no wholesale changes required for either our business model or Group strategy. Our current business model and strategy are sufficient to ensure we can disclose to all CSRD Minimum Disclosure Requirements (MDR) as well as progress towards our sustainabil- ity goals and objectives. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 • Double materiality assessment and stakeholder engagement Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 71 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements Environment E1 Climate Change Material for Impact Financial Subtopic Material impact or risk Description Mitigation/action Value Chain Own Operations Positive Negative Opportunity Risk Reference to policy Climate change mitigation Greenhouse gas emissions from operations, suppliers, transport, employee commut- ing and more. Our own operations & value chain do not decarbonise to succeed in limiting global warming to 1.5 °C. Science Based Targets commitment and actions. Sustainability Compass. Supplier sustainability audits. Upstream & Downstream Environmental sustainability policy. Reducing emissions (mirroring the negative impact). Our own operations & value chain need to decarbonise to succeed in limiting global warming to 1.5 °C. Science Based Targets commitment and actions. Sustainability Compass. Supplier sustainability audits. Upstream & Downstream Environmental sustainability policy. Climate change with high likelihood and magnitude. Factories at risk due to physical changes such as higher water levels. Supply chain risks, policy changes, in both 1.5° and 3.7° scenarios. Electricity/utility risk in 3.7° scenario. Science Based Targets commitment and actions. Sustainability Compass. Supplier sustainability audits. Upstream Environmental sustainability policy. Climate change with high magnitude. Move to circular business model & develop new products that meet policy requirements. Circular economy. Sustainability Compass. Downstream Environmental sustainability policy. Energy Energy consumption in operations and supply chain. High rate of energy consump- tion, where energy availability and cost is volatile. Science Based Targets commitment and actions. Sustainability Compass. Supplier sustainability audits. Upstream Environmental sustainability policy. Products increase energy efficiency and reduce energy use for customers. Driving change in building codes. Increased energy effectiveness and efficiency to reduce cus- tomers' energy consumption. Science Based Targets commitment and actions. Sustainability Compass. Supplier sustainability audits. Downstream Environmental sustainability policy. Material sustainability-related Impacts, Risks and Opportunities Due diligence Identify & assess adverse impacts We have summarized our material impacts, risks and opportunities into a set of tables per material topic, based on the outcome of our double materiality assessment process including key stakeholder's input. Timeframes considered are medium-term to 2030 and long-term to 2030. ASSA ABLOY does not consid- er short-term timeframes e.g. twelve months. The ta- bles detail identified positive and negative impacts, as Opportunities/risks as a % of annual sales Low <1 % Medium 2–5% High 6–10% Very high is >10% well as risks and opportunities for our own operations and value chain; including a description, mitigation actions and referencing policies where relevant. 72 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Environment E3 Water and Marine Resources Material for Impact Financial Subtopic Material impact or risk Description Mitigation/action Value Chain Own Operations Positive Negative Risk Opportunity Reference to policy Water Water consumption in own operations. Our own operations need to reduce water consumption, improve processes and efficien- cy, increase water reuse and recirculation. Sustainability program and actions, best practice sharing Sustainability Compass, Supplier sustainability audit, Green Team Playbook, mon- itoring systems, ISO 14001 implementation, overhaul (infrastructure investments), consultations with affected communities; senior man- agement, third-party and key stakeholder engagement. Environmental sustainability policy. Water Water consumption in supply chain operations. Reduction of water in the value chain, improve processes and efficiency, increase water reuse and recirculation. Sustainability program and actions, best practice sharing, Sustainability Compass Supplier sustainability audit, Green Team Playbook, mon- itoring systems, ISO 14001 implementation, overhaul (infrastructure investments), consultations with affected communities; senior man- agement, third-party and key stakeholder engagement. Upstream Environmental sustainability policy. Opportunities/risks as a % of annual sales Low <1 % Medium 2–5% High 6–10% Very high is >10% Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 73 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Environment E5 Resource Use and Circular Economy Material for Impact Financial Subtopic Material impact or risk Description Mitigation/action Value Chain Own Operations Positive Negative Opportunity Risk Reference to policy Resource inflows, including resource use High usage of primary/ virgin material. Amount of raw material use, especially using virgin raw materials in production and in the supply chain. For the upstream phase (suppliers) we have a guideline to ensure that the right suppliers are selected from a sustainability point of view. Using the same data sets for environ- mental data both in development and in supplier material is key to be able to steer the sustainability optimization throughout the lifecycle of a product. By doing this during development we sim- plify the calculation of the carbon footprint of the products as well as calculating the carbon footprint from purchased material. Upstream Innovation policy. Resource outflows related to products and services Life time of the products. Unnecessary consump- tion of resources through lack of serviceability and upgradeability. New products and solutions are designed for serviceability and upgradeability where possible, to extend the useful life of the product. Downstream Innovation policy. Resource outflows related to products and services Prolonged life time of the products. Potential positive impact through better product lifecycle management. Re-use and repurpose materials. In the downstream value chain, we control the service of the products (if products need service) by trained employees and subcontractors who are obliged to maintain compliance to existing standards. This is of particular importance for safety and emergency-related products. The validation on site needs to be done by a trained service technician. By having these processes in place we ensure that our products are com- pliant regardless of whether they are linear or circular products. This will also make it possible to initiate reverse logistics on selected circular components, because we have control over the status of the product. Downstream Innovation policy. Waste generation in operations and supply chain Waste generation in operations and supply chain. Excessive generation of waste due to inefficient manufacturing opera- tions. In our own operations we maximize our resource efficiency to minimize the genera- tion of waste. This is done by implementing efficiency by design in R&D, as well as reducing waste in operations through lean manufacturing and quality. We support our suppliers to increase their maturity in lean manufacturing and quality, in order to reduce their waste generation. Upstream Environmental sustainability policy. Opportunities/risks as a % of annual sales Low <1 % Medium 2–5% High 6–10% Very high is >10% Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 74 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Social S1 Own Workforce Material for Impact Financial Subtopic Material impact or risk Description Mitigation/action Value Chain Own Operations Positive Negative Opportunity Risk Reference to policy Working conditions Health and safety risks for all employees and non-employees in our operations. Work related injuries and illnesses. Health and safety program that focuses on prevention, behavior and culture for all employees and non-employees in our operations. Code of Conduct. People, safety and human rights policy. Equal treatment and opportunities for all Risk of lack of diversity and inclusion, human rights for all employees and non-employees in our operations. Diverse workforce and diversity of thought, harassment, discrimination. Whistleblowing process (for all employees and non-employees in our operations), Voice of the Employee with action planning on all levels, third-party social compliance audits. Code of Conduct. People, safety and human rights policy. Whistleblowing directive. Working conditions Health and safety, employment with adequate wages for all employees and non-employees in our operations. We raise safety standards in our acquisitions. Employment and fair wages ensuring a good standard of living. Health and safety program implementation as part of inte- gration. Ensure proper working conditions for all employees and non-employees in our operations. Code of Conduct. People, safety and human rights policy. Opportunities/risks as a % of annual sales Low <1 % Medium 2–5% High 6–10% Very high is >10% Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 75 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Social S2 Workers in the Value Chain Material for Impact Financial Subtopic Material impact or risk Description Mitigation/action Value Chain Own Operations Positive Negative Opportunity Risk Reference to policy Working conditions Improper treatment of value chain workers. Suppliers not providing adequate wages or working conditions. Audit suppliers in high-risk countries (optionally do sample checks in low-risk countries, if deemed necessary) and follow up on any whistleblowing reports. Upstream Code of Conduct for Business Partners. Sustainability audits. Whistleblowing directive. Other work-related rights Improper treatment of value chain workers. Risk of suppliers not respecting human rights. Audit suppliers in high-risk countries (optionally do sample checks in low-risk countries, if deemed necessary) and follow up on any whistleblowing reports. Upstream Code of Conduct for Business Partners. Sustainability audits. Whistleblowing directive. Working conditions A better life for value chain workers and their families. Employment and living wages to ensure a good quality of life. Aim to raise standards at our suppliers. Audit suppliers and drive improvement work to address poor-performing or non- improving suppliers. Upstream Code of Conduct for Business Partners. Supplier sustainability audits. Other work-related rights Improved situation for value chain workers. Aim to raise standards at our suppliers. Audit suppliers and drive improvement work to address poor-performing or non- improving suppliers. Upstream Code of Conduct for Business Partners. Supplier sustainability audits. Opportunities/risks as a % of annual sales Low <1 % Medium 2–5% High 6–10% Very high is >10% Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 76 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Social S4 Consumers and End-users Material for Impact Financial Subtopic Material impact or risk Description Mitigation/action Value Chain Own Operations Positive Negative Opportunity Risk Reference to policy Information- related impact for consum-ers and/ or end-users Can feedback freely regarding our products and services. Regardless of what feedback customers have they can use our channels to describe how they perceive our products. Providing personal data protection and whistleblower functions ensures that cus- tomer and end-users can freely report any issues with product or services. Downstream Innovation policy. Personal safety of consumers and/ or end-users People can be hit by doors, for example. Defective products or not serviced products could have a negative safety impact on people. By following the innovation policy and being compliant with applicable standards from development we ensure that the products are safe. Using the service provided by ASSA ABLOY the products will contin- ue to stay safe over its lifetime. Downstream Innovation policy. Personal safety of consumers and/ or end-users Enables a safe and secure en- vironment for consumers and end-users. Our products and solutions provide safety to consumers, providing both social and customer value. By developing products that comply to relevant safety and security standards as well as following our Innovation policy we ensure privacy for our con- sumers and end-users. Downstream Innovation policy. Social inclusion of consumers and/ or end-users Provide equal access to prod- ucts and services. The median age globally is increasing leading to an aging population with impairment or disabilities. Accessibility and inclusive product design is therefore key in ensuring that buildings can be accessed and used by everyone. By incorporating our customer and end-user needs and requirement to the develop- ment process we ensure that our products supports social inclusion. Downstream Innovation policy. Opportunities/risks as a % of annual sales Low <1 % Medium 2–5% High 6–10% Very high is >10% Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 77 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Governance G1 Business Conduct Material for Impact Financial Subtopic Material impact or risk Description Mitigation/action Value Chain Own Operations Positive Negative Opportunity Risk Reference to policy Corruption and bribery Low risk but high magnitude. Not conducting ourselves in the right way could mean litigation, fines, reputation damage and loss of market share. Being a decentralized organization, could increase misconduct risk in newly acquired entities. We need to ensure ethical business practices in line with the Code of Conduct and the anti-corruption policy. Relevant policies in place. Internal audit controls. Anti-corruption reviews. Training on Code of Conduct and anti-corruption. Third-party due diligence pro- cess and the Code of Conduct for Business Partners. Code of Conduct. Anti-corruption policy. Third party due diligence process. Code of Conduct for Business Partners. Whistleblowing directive. Payment practices Fines, reputation, shortages, loss of sales. Potential negative impact if failing to implement the Code of Conduct and responsible business practices. It is recommended to always pay on time, but not formally a part of any currently existing policy or directive. – Payment practices Suppliers keen to continue investing in their relationship with us. Good business conduct can have positive effects through the value chain. Negotiate reasonable payment terms, pay invoices on time. Upstream – Opportunities/risks as a % of annual sales Low <1 % Medium 2–5% High 6–10% Very high is >10% Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 78 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Task Force on Climate-Related Financial Disclosures In 2024, ASSA ABLOY continued to explore and understand the requirements of the TCFD. We are gradually developing the process of reporting to the TCFD, to ensure it is meaningful and helpful in guiding our organization to make informed decisions based on climate-related risk and opportunity. We are firmly convinced the TCFD framework will enable us to identify and navigate climate-related financial risks and opportunities. We carried out our third climate scenario analysis during the year. The analysis reviewed the risks and opportunities of market and technology, reputation, policy and regulation, and physical risks, to 2030 and 2050. The two different climate scenarios we reviewed were developed by the UN International Panel on Climate Control (IPCC): RCP 6 and RCP 2.6. The two scenario analyses were used to identify and assess transition risks and opportunities over the short and medium term to 2030, as well as the long- term to 2050. RCP 2.6, called Realizing the Paris Agreement, is a scenario where emissions decline rapidly over the coming decades, resulting in a temperature increase up to 2.3°C warmer by the end of the century. RCP 6, called The Rocky Road, is a scenario where emissions are declining at an insufficient rate and not to the level required, resulting in a temperature in- crease up to 3.7°C warmer by the end of the century. Scenario analysis During the scenario analysis we added more context, where we tried to understand both the qualitative and quantitative aspects, especially for climate-relat- ed risk. We developed the process to be able to quan- tify our climate-related risk, in terms of percentage of sales from low risk to very high risk. Depending on the level of risk (from low to very high), the financial risk is then determined as percentage impact on total annu- al sales. The analysis reviewed risks and opportunities relating to two different climate scenarios and how they could impact ASSA ABLOY’s business in 2030 and 2050. The outcomes are summarized in the blocks to the right. The Rocky Road – RCP 6 Temperature increases between 2 – 3.7°C Increased extreme weather events Fossil fuel-generated energy, poor air quality Forced migration Increased areas of water stress Ocean levels rising Opportunities/risks as a % of annual sales Low <1 % Medium 2–5% High 6–10% Very high is >10% Opportunities • Producing locally, a competitive advantage • Increased solution requirements • Technology will be a solution enabler • New markets • Increased focus on security Risks: Physical Risk (PR), Transition Risk (TR) • Coastal factories at risk of flooding (PR) • Supply chain uncertainty (TR) • Materials availability (TR) • Customer expectation (TR) • Ability to get insurance (TR) • Higher costs for emissions (TR) Realizing the Paris Agreement – RCP 2.6 Temperature increases between 0.9 – 2.3°C Lower frequency of extreme weather events Large-scale installed renewable energy Robust energy legislation and carbon taxes High energy effectiveness and efficiency Opportunities • New solutions reducing customers’ environmental footprint • Transition to circular economy • Local production will be an advantage • Increased resource efficiency Risks: Physical Risk (PR), Transition Risk (TR) • Availability of low-carbon materials (TR) • Need to upgrade and retrofit older sites (PR & TR) • Carbon taxes and market regulations (TR) • Customer expectation (TR) • M&A in higher risk geographies (TR) • Energy quality and availability (TR) Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 79 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here For the climate scenarios we have applied two time horizons (2030) and (2050) which is in line with the Paris Agreement. However, for greenhouse gas reduc- tion targets the time horizon is 2030. When conducting the scenario analyses, we reviewed several parameters to determine our resil- ience, both for RCP 6 and RCP 2.6. For both scenarios we reviewed the potential impact on our supply chain, our own operations and our market and our customers; as well as assets and business activities. The focus areas were based on material financial risk and opportunity across the value chain. This included assessing countries where we operate, source from and markets where we are present. For example, by 2030 for our factories we assessed locations that are potentially exposed to acute risk such as flooding, sea-level rise and exposure to cyclones in regions that are at and close to sea-level; as well as locations that are exposed to chronic risk such as prolonged extreme heat and drought in countries such as United Arab Emirates and India. To perform the analysis, we assembled a cross-func- tional internal team with deep knowledge and global sector expertise for their function, to represent the stakeholders in our value chain. Based on their knowl- edge and expertise, we determined what the financial risk or opportunity was likely to be for the assessed categories of market and technology, reputation, policy and regulation, and physical risks. Our strategy and business model, coupled with our focus to in- crease our sustainability maturity in our supply chain, our own operations and innovation, through our sustainability target commitments and objectives, will ensure our company is resilient to the potential risks presented by both RCP 6 and RCP 2.6. There are no obvious uncertainties resulting from our analysis. For both scenarios, there is potential physical risk in our supply chain and own operations. Our operations have very limited exposure to acute and chronic risks, while our agile supply chain and innovation strategy will enable us to adapt to and/or mitigate risks as well as realize opportunities. We have implemented a process for upgrading facilities with lower energy efficiency to reach a higher energy efficiency and reduce our emissions in the coming five years. We will review the potential for trainings and ongoing learning opportunities for our personnel to make sure that our workforce remains resilient for future climate change challenges. The output and results from the scenario analysis RCP 6 and RCP 2.6 are presented graphically in the TCFD table on page 78. ASSA ABLOY has not identified which assets and business activities are incompatible with or need significant efforts to be compatible with transition to climate-neutral economy. Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement • Material sustainability-related impacts and risks Policy matrix Environmental information Social information Governance information Financial statements 80 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Policy Description Intention Owner Actions/mitigation/risks connected People, safety and human rights policy Includes references to Code of Conduct, UN Guiding Principles on Business and Human Rights at work and connected UN Conventions. UN Global Compact, ILO Declaration on Fundamen- tal Principles and Rights at work, ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, OECD Guidelines for Multinational Enterprises. Promote safe, equal and fair working conditions. Own workforce (employees and non-employees), value chain workers, people safety and human rights policy. Identify impacts and risks and address those. Accident prevention. Elimination of discrimination including grounds of discrimination. Employee en- gagement through Voice of the Employee – employ- ee survey. Whistleblowing/ grievance mechanism. Board of Directors/Chief Human Resources Officer. Code of Conduct. Whistleblowing. Social compliance audits. Supplier sustainability audits. Health & Safety program. Voice of the Employee. Environmental sustainability policy Obligatory and available for all divisions, entities, employees within the ASSA ABLOY Group and third parties; defines the commitment, roles and respon- sibilities regarding environmental impact and KPIs (energy, water, waste, solvents, CO 2 emissions, etc.); if the local/third parties standard is more restrictive we follow it. Includes references to Code of Conduct, Code of Conduct for Business Partners materiality analyses, ASSA ABLOY Supplier sustainability audit, Green Team Playbook. The policy factors in the require- ments of all stakeholders. The policy is available to all stakeholders and is located on our intranet and ASSA ABLOY’s website. The policy does not specifically address climate change adaptation, energy efficiency renewable energy deployment or detail exactly how climate change will be mitigated. Mitigating the environmental footprint from own operations, value chain, logistics, products and solutions. Board of Directors/Executive Team. Code of Conduct. Sustainability audits. Lifecycle assessment. Sustainability Compass. Science Based Targets and actions. Green Team Playbook. Due diligence process. Sustainability program (targets). Innovation policy. Double materiality assessment and consultations. Following local laws and regulations (considered as third parties standard). Trade compliance policy Policy to prevent and counter illegal or unacceptable activities, such as breaches of international law, hu- man rights violations, internal repression, terrorism, and proliferation of weapons. To act in a responsible manner and always comply with applicable export control and sanctions regulations. Board of Directors/Chief Financial Officer. Supplier selection/ termination. Use of appropriate contract clauses. Whistleblower directive Includes references to Code of Conduct; Code of Conduct Case Management process; and Investiga- tion Guideline. Describes how whistleblowing reports are handled and which the reporting channels are, (including that all corruption reports are to be treated as high risk). Chief Human Resources Officer. All employees are expected to report all suspected Code of Conduct violations. No retaliation policy. Third-party due diligence process Step-by-step guide for the divisions to use, in order to appropriately apply adequate, consistent and rea- sonable due diligence, when vetting and partnering with business representatives. Includes references to: Code of Conduct. Code of Conduct for Business Partners. Business representatives must be carefully reviewed and used only for a legitimate business purpose, on arms-length commercially reasonable terms. Group Legal. Actions needed: 1. Define business need. 2. Who can fill need? 3. Are they reputable? 4. Written agreement. 5. Divisional requirements. 6. Sign Code of Conduct for Business Partners. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information ESRS 2 Double materiality assessment and stakeholder engagement Material sustainability-related impacts and risks • Policy matrix Environmental information Social information Governance information Financial statements Policy matrix 81 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information • EU Taxonomy E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors Environmental information During 2024, we conducted several reviews of the established and emerging legislation of the EU Taxon- omy classification system. In the Taxonomy Report Technical Annex 1, under Climate Change Mitigation, we interpret our relevance in section 3.5, Manufac- ture of energy efficiency equipment for buildings; relating to doors with U-value lower or equal to 1.2 (W/m 2 K). We deem our sales from doors, where insu- lation is relevant, to be Taxonomy eligible. In 2024, we measured the percentage of our eligible revenue. It is important to note a thermal efficiency U-value of 1.2 W/m 2 K is not achievable for all types of doors. For example, industry best in class revolving doors have a U-value of around 4 W/m 2 K. Despite having a U-value higher than 1.2 W/m 2 K, this does not mean a revolving door is not a more sustainable solution for a building compared to another door type. It is more important to have the right door for the right applica- tion. Taking the application and how people interact with a door into consideration has a much bigger overall environmental impact, than just measuring the thermal efficiency of a door in isolation. Due to uncertainties and limitations required of achieving the criteria required for Taxonomy alignment, it will be challenging to align our economic activities (Turnover, CapEx, OpEx) with the criteria established in Commission Delegated Regulation 2021/2139. We will prioritize our focus and resources to realizing Definitions: 1 The Taxonomy Turnover equals the Group's revenue, which mainly consists of product sales. Service related to products sold represents a limited share of revenue. Revenue for the sale of the Group’s products is recognized at a given point in time when the customer gains control over the product, usually at the time of delivery. ASSA ABLOY also carries out installation services, which are recognized over time. Refer also to note 2 of the consolidated financial statements. 2 The Taxonomy Capital Expenditures (CapEx) is determined on the basis of investments and acquisitions of leased assets, tangible assets and intangible assets excluding good- will, that are included in the consolidated financial statements as of 31 December 2024. Refer also to notes 14, 15 and 16 of the consolidated financial statements. 3 The Taxonomy Operational Expenditures (OpEx) are calculated on the basis of non-capitalized research and development costs, costs for building renovation measures, costs for repairs and maintenance of plant, machinery, equipment as well as expenses that are attributable to short-term leases (<12 months) and not recognized as right-of-use assets in the balance sheet as of 31 December 2024. EU Taxonomy our science-based targets, which will have a material impact on our total greenhouse gas emissions. Due to the updated requirements in the EU Taxon- omy, we do not meet the criteria required to disclose aligned percentage. The change of requirements in Do No Significant Harm (DNSH) Appendix C is ambiguous; we will require more guidance from the EU to ascertain how we can apply and interpret these new requirements. We have reviewed the technical screening criteria for the four remaining EU Taxonomy objectives. We did not identify ASSA ABLOY economic activities in the screening criteria. CapEx decreased in magnitude between 2023 and 2024 due to capitaliza- tion of acquisitions in 2023, while turnover and OpEx remain at the same level as in 2023. The EU Taxonomy is an evolving legislation, and we will continue to monitor its development and prepare to disclose in alignment with the Taxonomy accordingly. 2024 EU Taxonomy KPI results Total (SEK M) Eligible % Non-eligible % Turnover 1 150,162 18% 82% CapEx 2 8,236 10% 90% OpEx 3 7,267 2% 98% Nuclear energy and fossil gas related activities Nuclear energy related activitiex 2024 1. The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. No 2. The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear instal- lations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. No 3. The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. No Fossil gas related activities 4. The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. No 5. The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/ cool and power generation facilities using fossil gaseous fuels. No 6. The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. No 82 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information • EU Taxonomy E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors 2024 – Turnover Year Substantial contribution criteria DNSH criteria (‘Does Not Significantly Harm’) ECONOMIC ACTIVITIES (1) Code (2) Turnover (3) Proportion of turnover (4) Climate change mitigation (5) Climate change adaptation (6) Water (7) Pollution (8) Circular economy (9) Biodiversity (10) Climate change mitigation (11) Climate change adaptation (12) Water (13) Pollution (14) Circular economy (15) Biodiversity (16) Minimum safeguards (17) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) turnover, year N-1 (18) Category enabling activity (19) Category transitional activity (20) SEK M Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Manufacture of energy efficiency equipment for buildings CCM 3.5 E Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional A.2 Taxonomy-eligible but not environmentally sustainable activites (not Taxonomy- aligned activities) EL Manufacture of energy efficiency equipment for buildings CCM 3.5 26,965 18% 18% 19% Turnover of Taxonomy- eligible but not environmentally sustainable activites (not Taxonomy-aligned activities) (A.2) CCM 3.5 26,965 18% 18% Turnover of Taxonomy- eligible activities (A.1+A.2) 26,965 18% 18% 19% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non- eligible activities (B) 123,197 82% Total 150,162 100% EU Taxonomy tables 83 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information • EU Taxonomy E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors 2024 – Capital expenditures (CapEx) Year Substantial contribution criteria DNSH criteria (‘Does Not Significantly Harm’) ECONOMIC ACTIVITIES (1) Code (2) CapEx (3) Proportion of CapEx (4) Climate change mitigation (5) Climate change adaptation (6) Water (7) Pollution (8) Circular economy (9) Biodiversity (10) Climate change mitigation (11) Climate change adaptation (12) Water (13) Pollution (14) Circular economy (15) Biodiversity (16) Minimum safeguards (17) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) Capex, year N-1 (18) Category enabling activity (19) Category transitional activity (20) SEK M Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Manufacture of energy efficiency equipment for buildings CCM 3.5 E Capex of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional A.2 Taxonomy-eligible but not environmentally sustainable activites (not Taxonomy- aligned activities) EL Manufacture of energy efficiency equipment for buildings CCM 3.5 814 10% 10% 2% Capex of Taxonomy- eligible but not environmentally sustainable activites (not Taxonomy-aligned activities) (A.2) CCM 3.5 814 10% 10% Capex of Taxonomy- eligible activities (A.1+A.2) 814 10% 10% 2% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Capex of Taxonomy-non- eligible activities (B) 7,422 90% Total 8,236 100% 84 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information • EU Taxonomy E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors 2024 – Operational Expenditure (OpEx) Year Substantial contribution criteria DNSH criteria (‘Does Not Significantly Harm’) ECONOMIC ACTIVITIES (1) Code (2) OpEx (3) Proportion of OpEx (4) Climate change mitigation (5) Climate change adaptation (6) Water (7) Pollution (8) Circular economy (9) Biodiversity (10) Climate change mitigation (11) Climate change adaptation (12) Water (13) Pollution (14) Circular economy (15) Biodiversity (16) Minimum safeguards (17) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) Opex, year N-1 (18) Category enabling activity (19) Category transitional activity (20) SEK M Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Manufacture of energy efficiency equipment for buildings CCM 3.5 E Opex of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional A.2 Taxonomy-eligible but not environmentally sustainable activites (not Taxonomy- aligned activities) EL Manufacture of energy efficiency equipment for buildings CCM 3.5 145 2% 2% 2% Opex of Taxonomy- eligible but not environmentally sustainable activites (not Taxonomy-aligned activities) (A.2) CCM 3.5 145 2% 2% Opex of Taxonomy- eligible activities (A.1+A.2) 145 2% 2% 2% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Opex of Taxonomy-non- eligible activities (B) 7,081 98% Total 7,226 100% 85 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy • E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements ASSA ABLOY Scope 1 & 2 emissions reduction waterfall Our 4-pronged strategic approach to achieving a 50 percent reduction by 2030 CO 2 eq (kTons) 323 2019 Baseline MFP (Manufacturing Footprint Program) Industrial CO 2 elimination Strategic sites energy overhaul Continuous improvement 2030 Target state 161 MFP (Manufacturing Footprint Program) Growth through acquisitions can result in a duplication of production processes. Our MFP program consolidates sites to eliminate unnecessary duplication and maximizes our operational efficiency. Industrial CO 2 elimination In the past, a limited number of sites used freon as a blowing agent in the door insulation process. Freon is a potent source of greenhouse gas emissions. By eliminating the use of Freon in our operations, we have dramatically reduced our Scope 1 emissions. Strategic sites energy overhaul ASSA ABLOY operates over 1,000 sites in 70 countries. The top 25 most energy- intensive sites account for more than 60 percent of Scope 1 & 2 emissions. Our workstream focuses on improving energy effectiveness and efficiency to significantly reduce the energy consumption of these sites. Continuous improvement In our revised Operational Excellence strategy, sustainability is one of the four key pillars. Sustainability is a key part of our global operational excellence maturity assessment, ensuring a focus on sustainability, and energy reduction is an organic part of how we operate every day. This results in hundreds of little ideas for improvement, which add up to a big impact. 1 3 2 4 Visualizing our Scope 1 & 2 emissions reduction pathway We use a standardized approach to identify and visualize the key levers required to enable the Group to achieve its 50 percent Scope 1 & 2 reduction target to 2030. The four-pronged strategic approach is replicated in all divisions, all business units and at the factory level. This standardized approach is applied throughout the Group and tracked on a quarterly basis, ensuring we are on track to achieving our climate targets. The investments needed to realize this plan are related to lever three and four. We do not have a separate investment vehicle to realize the plan, all investments are made through our capital expenditure process and follow the same rules as all other capital investments. Due to difference in the definition of CapEx and OpEx between EU Taxonomy and our financial statements, and the fact all capital invest- ments must follow the same rules, our financial statement CapEx and OpEx does not tally with investments in carbon improvements. –50% Due diligence Cease, prevent or mitigate ASSA ABLOY has made a long-term commitment to address climate change by setting both near-term and net-zero science-based targets consistent with the Science Based Targets initiative. Our targets are aligned to a 1.5°C trajectory, the most ambitious aims of the Paris Agreement. We are fully committed to delivering on our am- bitious science-based targets, to halve our absolute Scope 1 & 2 carbon emissions and reduce absolute Scope 3 emissions by 28 percent by 2030, as well as achieving net-zero no later than 2050. Our four- pronged strategic approach to Scope 1 & 2 emissions is delivering positive results. We have reduced our Scope 1 & 2 emissions by 36 percent, against our 2019 baseline. We have reduced our Scope 3 emis- sions by 10 percent, against our 2019 baseline. Our Scope 3 emissions make up the vast majority of our total emissions and represent the carbon footprint of our wider value chain. Our Scope 3 target is challenging. To address this, we have assembled cross-functional science-based targets teams who are dedicated to driving the most important activities in our Scope 3 action plan to deliver on our targets. We have set up a science-based targets governance structure, which includes our Chief Financial Officer, to ensure we are on the right path to achieving our goals. Our environmental sustainability policy is aligned with our climate commitment. There are potential locked-in greenhouse gas emissions in our own operations in the form of our operations infrastructure such as heating, ventilation and air conditioning (HVAC) systems, space heating equipment, compressors, transformers, heating and electrical process equipment. When this plant comes E1 Climate Change 1 2 3 4 86 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors High level approach to reduce Scope 3 emissions by 28% by 2030 During 2024, we identified key levers to reduce emissions and help meet our Scope 3 target. We engage in value analysis/value engineering in product development to increase material effectiveness, choose low-car- bon materials for our new products as much as possible, and prioritize the use of low-carbon transport and logistics. Together, these help us to develop energy-efficient products and solutions with a lower carbon footprint throughout their lifecycle compared with their predecessors. to its end of life, we will work to upgrade with low- carbon and increased energy efficiency alternatives to mitigate future locked-in emissions. We calculated our greenhouse gas inventory across our entire value chain for the first time, including our Scope 3 footprint, in 2022. Our Scope 3 footprint makes up 96 percent of our total footprint. More than 70 percent of our Scope 3 footprint is upstream in our supply chain, coming from purchased goods and materials. Some of our largest purchasing categories, which include steel, electronics, aluminum, brass, zinc and other metals and materials, are traditionally carbon intensive. This year we have made a significant change to our calculation methodology, moving from spend-based to a mix of spend-based method and average-data method, predominantly item weight data, but also material information. We have also expanded the list of possible materials from 20 to 190. Materials used more seldom may only appear once in this list, but for common materials like steel, we have many different types of steel, many different geographies for the origin of the material, all with individual emission fac- tors. Further, the emission factors have been revised. In general, the methodology is that we use item quantity multiplied with item weight multiplied with the emission factor for the material in scope. If either the item weight and/or the material is unknown, we have methods to estimate these. Weight is estimated using a median value for the weight of other items within the same item category and the material is estimated by applying a default material, which we have done for all our category codes. These default materials are the most conservative option, meaning the one with the highest emission factor of the rele- vant options, available, in order not to underestimate. For the spend-based component, that we still use if we don’t know the item weight, we have a much larg- er sample size, causing the conversion factors to be far more accurate than in the past. All these changes combined have led to significantly lower numbers than we have presented before. It is, however, worth ASSA ABLOY Scope 3 emissions reduction waterfall Our 4-pronged strategic approach to achieving a 28 percent reduction by 2030 CO 2 eq (MTons) 5,593 2019 Baseline Supply Chain Decarbonization Sustainable Innovation Value Analysis Value Engineering Logistics 2030 Target state –28% 4,027 1 2 3 4 Supply Chain Decarbonization Our supply chain is the most material source of our Scope 3 emissions. We work systematically with our supply chain partners to identify and implement effective initiatives to reduce our Scope 3 footprint, such as sourcing materials with higher recycled content or low-carbon alternatives. In addition, we support them to reduce their Scope 1 & 2 emissions, which has a knock-on benefit for our Scope 3 footprint. Sustainable Innovation All new products and solutions are developed using our Sustainability Compass, which ensures sustainability is embedded into all new products launched. We have developed a sustainability portfolio planning tool, which enables our pro- duct management teams to have a targeted approach to driving improvements on the most carbon intensive product portfolios couple with the highest sales volumes. Value Analysis / Value Engineering Value analysis / value engineering is a mature continuous improvement process that enables us to design waste out of our product and manufacturing processes. We leverage this process to do more with less, reducing waste and lowering our products’ greenhouse gas emissions footprint. Logistics We work with our logistics partners to optimize both inbound and outbound transport, enabling us to service our customers in a faster way while reducing our Scope 3 footprint. We prioritize low-carbon transport methods such as sea, rail and road. 1 3 2 4 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy • E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements 87 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors emphasizing that almost the entire reduction is due to a change in methodology and not actual reduc- tions. Further, it is important to understand that the methodology is, despite being far more accurate than previously, still based on assumptions and simplifi- cations in certain places and the emissions may still go up or down when even more accurate data will be available. Another important aspect to raise is the fact that even if we base the emission calculation on actual item weight or actual material information, this information is often not verified and could theo- retically be incorrect. We believe our suppliers have a thorough understanding and correct data regarding the items they sell to us. Although we use a science-based and data driven approach, there is a degree of uncertainty where estimates are utilized. This presents a risk to the ac- curacy of our Scope 3 footprint. We are continuously working to improve our data accuracy across our Scope 3 categories, while benchmarking with other complex organizations. We will also stay abreast of the development of the new GHG Protocol Scope 3 carbon accounting standard, which is due for release in 2026, to ensure our methodology is aligned. ASSA ABLOY has included 100 percent of subsidi- aries' emissions under operational or financial in the target boundary, as required per the GHG Protocol Corporate Standard; which has been verified and ratified by the Science Based Targets initiative. ASSA ABLOY does not have any significant joint ventures. Our Scope 3 data has been restated to include ac- quisitions, where the data is available. Our Scope 1 & 2 data will be restated to include acquisitions during 2025. We anticipate the inclusion of Hardware and Home Improvement (HHI) will have a material impact on our baseline across all three emission scopes, when the data becomes available for us to restate. We do not anticipate significant risk or impact from acquisitions made in 2024. Our Scope 1 emissions are generated from energy burned on site in our operations such as oil and gas, CO 2 eq from industrial processes and fleet emissions. Reported normalized KPIs are based on cur- rency-neutral monetary values and value added rather than sales – to minimize the effect of currency fluctuations and the ongoing restructuring of the Group. As a result, value added for intensity met- rics is restated each year. By using value added as a measure, the normalized values are also not affected by the outsourcing of manufacturing. We believe this provides a more accurate picture of what is going on in the Group. Electricity emission factors are based on data on electricity production for 2010, as published by the International Energy Agency (IEA, 2012). These emission factors are used for calculation of emissions until end of 2016. In 2017 and again in 2024 ASSA ABLOY updated the emission factors used to calculate greenhouse gases from electricity consumption. The emission factors are based on the most recent data published by the IEA and the International Panel on Climate Change (IPCC), and are expressed in CO 2 equivalents (CO 2 eq). Our transition plan to realize our long-term climate commitment is approved by the Board of Directors, our highest governing body with overall responsibility for sustainability. Sustainability is part of everything we do and is or- ganically integrated into our overall business strategy; the transition plan is aligned to our business strategy and financial plans. The progress towards our transi- tion plan can be seen in our carbon data table E1-6 gross scopes 1, 2, 3 and total GHG emissions on page 89. We have excluded Scope 3 categories that are not relevant to our organization; for example, upstream/ downstream leased assets, as well as excluding categories which represent less than 0.2 percent of Scope 3, for example, capital goods, as approved by the Science Based Targets initiative. ASSA ABLOY is not taking any other actions besides that to mitigate negative effects on the environment and/or affected communities. We are working towards using primary data from suppliers, though to date we do not utilize primary data. We do not have a carbon pricing scheme at ASSA ABLOY. We do not have carbon removal projects in place and do not utilize carbon credits or offsets. There are no changes in target and corresponding metrics or underlying measurement methodologies, significant assumptions, limitations, sources and adopted pro- cesses to collect data. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy • E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements 88 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Sustainable operations Energy and carbon emissions Scope 1 & 2 emissions 2019 2020 2021 2022 2023 2024 3 t CO 2 eq Scope 1 CO 2 emissions related to fleet 1 29,591 26,423 31,232 32,184 27,864 26,560 Scope 1 Greenhouse gas emission related to substances in industrial processes 4, 5 34,860 1,149 731 1,184 748 680 CO 2 emissions related to energy consumption Location-based reporting: Scope 1 CO 2 emissions related to direct energy consumption 2 69,192 61,426 63,067 60,832 60,917 58,237 Scope 2 CO 2 emissions related to indirect energy consumption 189,456 178,029 185,684 175,193 174,401 130,314 Total Scope 1 & 2 emissions, Location-based reporting 323,099 267,027 280,714 269,393 263,930 215,790 Market-based reporting: Scope 1 CO 2 emissions related to direct energy consumption 2 69,192 61,426 63,067 60,832 60,917 58,237 Scope 2 CO 2 emissions related to indirect energy consumption 183,730 165,752 177,990 173,618 171,165 129,124 Total Scope 1 & 2 emissions, Market-based reporting 317,373 254,750 273,020 267,818 260,694 214,600 1 Fleet data is best estimate due to limitation of data. Plan to improve process during 2025. 2 Biogenic emissions are not included in the Scope 1 and 2 disclosure. 3 For comparable units, defined as all legal entities acquired up to (June 30, 2023), excluding HHI. Total location-based greenhouse gas emissions related to energy consumption for 2024reached 262,206 metric tons. This figure includes units acquired during the year up to (30 April 2024), with HHI being the primary contributor to the increase. Total market-based greenhouse gas emissions related to energy consumption for 2024reached 182,319 metric tons. This figure includes units acquired during the year up to (30 April 2024), with HHI being the primary contributor to the increase. Emission factors based on loca- tion-based data, and AIB and Green-e for market-based residual emissions for Europe and US respectively. Emission factors for Scope 2 were updated during the year for 2024, using the latest available emission factors from the International Energy Agency (IEA); where the majority of the reduction between 2023 and 2024 comes from this methodology update 4 Emission factors are based on data published by the United Nations Intergovernmental Panel on Climate Change (IPCC, 2007). This indicator is the CO 2 eq sum measurement of SOx, NOx, HFC-245fa, HCFC-141b, HCFC134a (R134a), CH4, VOCs and CO 2 . 5 For comparable units. Total calculated CO 2 emissions related to substances in industrial processes amounted to 777 metric tons, including units acquired during the year where data is available. 6 ASSA ABLOY follows the Greenhouse Gas Protocol for carbon accounting across Scopes 1, 2 & 3. We do not carbon account according to ISO 14064. Thirteen percent of market-based Scope 2 emissions are covered by contractual instruments such as Renewable Energy Certificates (RECs) or Guarantees of Origin (GoOs). ASSA ABLOY does not purchase unbundled contractual instruments. E1-5 Energy consumption and mix 2019 2020 2021 2022 2023 2024 1 Energy consumption and mix Direct energy – oil (MWh) 15,054 9,707 9,056 7,620 5,854 4,699 – gas (MWh) 290,130 269,869 283,234 282,454 292,663 280,502 – coal (MWh) 10,093 61 49 – 0 0 – biofuel/biomass (MWh) 9,737 13,786 10,919 5,466 591 911 Total 325,015 293,423 303,258 295,540 299,108 286,111 Indirect energy – electricity (MWh) 345,248 327,561 346,465 331,901 330,629 331,558 – district heat (MWh) 38,990 32,404 24,717 19,938 18,363 15,150 Total 384,238 359,966 371,182 351,839 348,993 346,708 Total Energy Consumption 2 709,253 653,388 674,440 647,379 648,100 632,819 Portion of renewable energy purchased (%) 12.3% 14.3% 20.2% 20.7% 19.6% 19.4% Portion of renewable energy generated onsite (%) 3 1% Portion of renewable energy generated onsite (MWh) 3 6,328 1 For comparable units, defined as all legal entities acquired up to (June 30, 2023), excluding HHI. Total energy consumption for 2024 reached 850,436 MWh. This figure includes units acquired during the year up to (30 April 2024), with HHI being the primary contributor to the increase. 2 This historical numbers have been adjusted with proforma data for comparable units. 3 Reporting for this data point only started in 2024. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy • E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements 89 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors E1-6 gross scopes 1, 2, 3 and total GHG emissions Retrospective Milestones and target years 2019 2023 2024 2024 vs. 2023 (%) 2025 2030 (2050) Annual % target / Base year Scope 1 GHG emissions Gross Scope 1 GHG emissions (tCO 2 eq) 133643 89529 85476 –4.5% 100,206 72,341 13,364 4.17% Percentage of Scope 1 GHG emissions from regulated emission trading schemes (%) – – – – – – – – Scope 2 GHG emissions Gross location-based Scope 2 GHG emissions (tCO 2 eq) 189,456 174,401 130,314 –25.3% 142,054 102,553 18,946 4.17% Gross market-based Scope 2 GHG emissions (tCO 2 eq) 183,730 171,165 129,124 –24.6% 137,761 99,453 18,373 4.17% Significant scope 3 GHG emissions Total Gross indirect (Scope 3) GHG emissions (tCO 2 eq) 1 5,592,879 5,203,980 5,045,014 –3.1% 4,738,693 4,026,873 559,288 2.54% 5 1 Purchased goods and services 2 4,152,197 3,894,411 3,763,353 –3.4% 3,518,043 2,989,582 415,220 2.54% 5 [Optional sub-category: Cloud computing and data center services] – – – – – – – – 2 Capital goods – – – – – – – – 3 Fuel and energy-related Activities (not included in Scope 1 or Scope 2) 58,167 55,793 54,808 –1.8% 49,284 41,881 5,817 2.54% 5 4 Upstream transportation and distribution 65,489 69,800 100,879 44.5% 55,487 47,152 6,549 2.54% 5 5 Waste generated in operations 24,395 23,355 23,249 –0.5% 20,669 17,565 2,440 2.54% 5 6 Business travel 25,217 30,792 30,903 0.4% 21,366 18,156 2,522 2.54% 5 7 Employee commuting 42,061 49,063 54,298 10.7% 35,637 30,284 4,206 2.54% 5 8 Upstream leased assets – – – – – – – – 9 Downstream transportation 85,379 89,505 129,883 45.1% 72,339 61,473 8,538 2.54% 5 10 Processing of sold products – – – – – – – – 11 Use of sold products 3 986,187 834,907 665,062 –20.3% 835,569 710,055 98,619 2.54% 5 12 End-of-life treatment of sold products 4 153,785 156,355 222,578 42.4% 130,298 110,725 15,379 2.54% 5 13 Downstream leased assets – – – – – – – – 14 Franchises – – – – – – – – 15 Investments – – – – – – – – Total GHG emissions Total GHG emissions (location-based) (tCO 2 eq) 5,915,978 5,467910 5,260,804 –3.8% Total GHG emissions (market-based) (tCO 2 eq) 5,910,252 5,464,675 5,259,615 –3.8% 1 Scope 3 data has been restated to include acquisitions, where the data is available. 2 Purchased goods and services has been recalculated in a significant way moving from only using the spend-based method to both spend-based and average-data method, with more granular assessment of materials and more accurate emission factors. Previous 2023 value 15,240,417 tCO2eq. 3 Use of sold products has been recalculated due to an error identified in the grid energy mix emissions factor used for the US, applies 2019–2023. 4 End of Life Treatment of Sold Products has been recalculated due to an error found in the formula used in previous years. 5 Near-term Scope 3 target is aligned to well-below 2°C, annual target reduction rate will increase in line with ASSA ABLOY's net-zero target requirements from 2030. GHG intensity per net revenue 2023 2024 2024 vs. 2023 (%) Total GHG emissions (location-based) per net revenue (tCO 2 eq/Monetary unit) 42.04 36.41 –13.4% Total GHG emissions (market-based) per net revenue (tCO 2 eq/Monetary unit) 42.00 36.39 –13.4% GHG intensity Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy • E1 Climate change E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements 90 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy E1 Climate change • E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements Due diligence Cease, prevent or mitigate Minimizing our environmental footprint in terms of water and marine resources, across our own opera- tions and the entire value chain, is an integral part of ASSA ABLOY’s sustainability program. We identified water and marine resources as mate- rial for ASSA ABLOY, considering impact materiality. We assessed this based on our own operations and our value chain. For our own operations we have a process to determine our dependencies, impacts, risks and opportunities. We do not have water-inten- sive processes in areas with low water quality, which may jeopardize the quality of our products. We have a systematic process in place to mitigate the environ- mental impact and water risk of our operations in high water-stress areas and downstream value chain. Use of water is seen as material regarding our own operations, but does not impact on oceans and seas. We take necessary steps to make sure the water we use and dispose to the municipalities from our opera- tional processes such as painting, plating and cleaning is of the same quality level as water withdrawn it to mitigate any potential negative impact and risk to water bodies. The double materiality assessment outcomes, including water and marine resources, have been presented and consulted with our Board of Directors, stakeholders and other affected communities to engage them in the process and establish their views. Suggestions, opinions and comments regarding water and marine resources were taken into account in the final double materiality assessment. We continue to upgrade the infrastructure at our sites e.g. piping, additional meters to reduce leaks and implement monitoring systems at top water consuming sites, as well as introducing principles and processes to improve water efficiency. During 2024, water withdrawal decreased by two percent and water intensity by ten percent as a result of improve- ment activities and infrastructure upgrades. Considering our own operations, the most water-intensive processes are the painting, plating and cleaning processes. There are 20 such entities, located mainly in the US, Europe and Asia, accounting for more than 60 percent of our total water consump- tion. In factories with electroplating facilities, the water is used in the different process baths as well as for cleaning. In factories producing doors, the water is typically used for cleaning. An increasing portion of the water is recirculated and used again after purification. A wide range of purification methods are used across the Group, such as filtration, sedimenta- tion, flocculation, ion exchange and reverse osmosis. The actions we take to improve our water efficiency and reduce consumption are applicable for each site which operates within the ASSA ABLOY Group in- cluding entities located in areas at water risk. In 2024 the total amount of recycled water amounted to 19 percent of the total water consumption. An important part of our water management is to prevent water pollution across our sites. We are obliged to follow the local laws and the Group policy, to conduct regular audits and host third-party inspections. All entities across the Group are required to report known or potential site contamination map- ping on an annual basis in our sustainability reporting system. The outcome of the report is being reviewed by a third party and relevant actions including remediations regarding historical contamination are being implemented and followed up. Site contami- nation verification is also a part of our due diligence process in regard to new acquisitions. We ensure that any work with hazardous substances is organized to the highest standards, with wastewater being regularly disposed of and stored in designated areas, and secondary containment provided to contain and control potential spills. Risk mitigation in our own operations includes work to ensure that all factories with significant environmental impact and significant water-demanding processes are ISO 14001 certified. In the event that we do have a chemical spill, we have all the requisite equipment in place and spill kit to perform a cleanup immediately to remedy the incident. In the event the groundwater or local water body is contaminated, we will liaise with the relevant authorities to agree a remediation plan to remedy the contamination to the local legal level at a minimum. ASSA ABLOY’s long-term risk-management strategy covers sustainability aspects throughout our value chain, including water and marine resources. Within our supply chain, we carry out the same assessment as for our own operations. We review our suppliers’ production processes, taking into account environ- mental dependencies, impacts, risks and opportuni- ties. We ensure our suppliers have the same diligent controls as we do in our own operations. Our target is to reduce water consumption by 25 percent across all entities we operate in by the end of 2025, against our 2019 baseline year. Since we set up the target in 2020 there are no changes regarding measurement methodologies, significant assump- tions, limitations, sources or adopted processes in data collection. The target is not mandatory based on legislation, but it is mandatory internally, which means all the divisions are required to contribute to realize the target. In 2024, against our baseline year 2019, we reduced our water intensity by 56 percent. For reference, please see the double materiality assessment results (pages 68–72) and material sustainability-related impacts and risks (E3 Water and Marine Resources). E3 Water and Marine Resources 91 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Water balance Total water withdrawal (1,000 m 3 ): 1,261 Total water discharge (1,000 m 3 ): 1,261 3 Whereof, total water discharge in areas of water stress 194 (1,000m 3 ) 4 Other recipients untreated (4.7%) 2 Other recipients pretreated (2.4%) 1 Municipal untreated (38.0%) 1 Municipal pretreated (54.9%) 1 Water from local wells (3.1%) Water purchased (96.3%) Water withdrawal Water usage Water discharge Sanitary and drinking (37.4%) Industrial processes (51.6%) Cooling (5.2%) Other (5.8%) Recirculated (19.5%) Rain and surface water (0.6%) ¹ Third-party water. ² Surface water. 3 Other water (>1,000 mg/L Total Dissolved Solids). 4 Water discharge to areas with water stress based on World Resources Institute ‘Aqueduct Water Risk Atlas’ 0 10 20 30 40 50 25242322212019 m 3 /SEK M 56% 2025 TARGET DEVELOPMENT 2019–2024 COMMENTS ON 2024 VS. 2023 Water intensity (m 3 /SEK M) 25% Water intensity reduced by 10% in 2024. This stemmed from ongoing efforts to enhance water efficiency across the Group and continued improvements in water infrastructure. Performance against targets Due diligence Track 2019 2020 2021 2022 2023 2024 Purchased water (1,000 m³) 1,692 1,521 1,398 1,280 1,236 1,214 Water from on-site wells (1,000 m³) 210 117 110 86 40 40 Rainwater (1,000 m³) 9 9 10 11 9 8 Surface water (1,000 m³) 0 0 0 0 0 0 Total water withdrawal (1,000 m³) 2 1,911 1,647 1,517 1,377 1,285 1,261 1 KPI, water intensity (m³/SEK M) 2 42.2 37.5 30.9 25.1 20.8 18,8 1 ¹ For comparable units, defined as all legal entities acquired up to (June 30, 2023), excluding HHI. Total water consumption for 2024 reached 2,121 (1,000 m 3 ). This figure includes units acquired during the year up to (30 April 2024), with HHI being the primary contributor to the increase; while the balance of acquisitions have a negligible impact. ² The historical numbers have been adjusted with proforma data for comparable units. Water management Water performance Water withdrawl m 3 % Purchased water 1,214 96% Water from on-site wells 40 3% Rainwater 8 1% Surface water 0 0% Total 1,261 Water usage m 3 % Sanitary and drinking 472 37% Cooling 66 5% Industrial processes 651 52% Other 73 6% Total 1,261 Water discharge m 3 % Municipal pretreated 692.1 55% Municipal untreated 479.6 38% Other recipient pretreated 30.5 2% Other recipient untreated 59.0 5% Total 1,261 Total water consumption in areas of water stress (1,000 m 3 ) 1 ¹ Water withdrawal = usage = discharge. Water balance 1 We do not currently collect the data for the water storage and do not monitor water storage changes e.g. sprinklers, firefighting purposes, rainwater har- vesting etc. In 2025 we are planning to add additional data points to our sustainability reporting system to be able to disclose the data. Our sustainability reporting system collects high-quality data to track and analyze the perfor- mance of individual entities and divisions. Water withdrawal and discharge is managed in accordance with local rules and regulations. Water discharge is measured, calculated or estimated depending on available sources of information and requirements. Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy E1 Climate change • E3 Water and marine resources E5 Resource use and circular economy Social information Governance information Financial statements 92 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy E1 Climate change E3 Water and marine resources • E5 Resource use and circular economy Social information Governance information Financial statements Due diligence Cease, prevent or mitigate The purpose of a circular economy is to ensure that resources and products stay in closed loops of usage that eliminate waste, rather than eventually ending up in landfill. Utilizing circular practices to optimize resource management is a key strategy to reduce the environmental impact of our products. Typically, a significant share of greenhouse gas emissions from a product’s lifecycle is derived from material extraction. The impact is allocated to the primary product usage. We see a trend that demand for sustainable solutions is increasing, and that more customers are eager to embrace circular options. Some customers are willing to pay a premium price for circular products. The most effective resource management strategy involves maximizing utilization and the product’s longevity. We believe that sustainable design prac- tices and design for repairability and durability, with high-quality components and regular service and maintenance is the best option for extended life ex- pectancy of our products. Our approach to circularity also includes more advanced strategies like reuse, refurbishment, remanufacturing and increasing the share of recycled materials and parts. We believe that the processes, tools and methods that are covered later in this section cover all vital steps in the value chain so that we can eliminate the risk of sharing in- accurate data. If a person is harmed, nearly harmed or assets are damaged due to a product failure, we have the requisite knowledge and infrastructure to carry out a product recall to investigate the root cause and take the necessary steps to remediate the issue. This ensures there will not be a repeated instance and the product can be used safely. Circularity will be a key enabler for reaching our sustainability goals and will help drive progress to- wards the 2030 goal of 28 percent reduction of Scope 3 carbon footprint in absolute values from 2019 baseline. To reach our 2050 net-zero goal, it will be fundamental to have adopted circular practices. Upstream – resource inflows We source material and components based on low Global Warming Potential (GWP), as well as on high grade of recycled content. We utilize the same environmental data sets for our internal develop- ment phase as we do when sourcing material and components. This simplifies calculations and allows us to steer sustainability optimization throughout the life cycle of a product. During 2025 we will build up the measures for recycled content in our internal systems to support reporting and awareness which is currently not possible for either products, material or packaging material. Going forward, our environmental data will be made more granular thanks to Environmental Product Declaration (EPD) based data for our most developed suppliers. ASSA ABLOY does not currently collect data regarding the absolute weight of secondary reused or recycled components, secondary intermediary products and secondary materials used. For the total weight of products, the technical and biological materials used during the reporting period is 745,000 tons and divided between technical 99.97 percent and biological 0.03 percent. Our operations We utilize a sustainability reporting platform to col- lect data related to waste management, energy con- sumption and material usage. In circumstances where we lack actual data, we make calculations with proxy data, based on average figures for similar sites in our organization. Waste data from our twelve waste streams, disclosed on page 93 waste management ta- ble, is obtained directly from our waste management providers. In our operations ASSA ABLOY employs advanced manufacturing methodologies such as lean manufacturing, value analysis and value engineering, and error-proofing techniques such as poka yoke to minimize waste generation and maximize resource efficiency. ASSA ABLOY has targets to 2025 compared to baseline year 2019 to reduce non-hazardous waste and hazardous waste intensity by 25 percent. During 2024 non-hazardous waste intensity reduced by eight percent, while hazardous waste intensity reduced by five percent. The targets are related to layer one in the waste hierarchy, prevention and minimization. The targets are not required by legislation. We do not currently have targets related to increase of circular product design, increase of circular material use rate, minimization of primary raw material, sustainable sourcing and use. ASSA ABLOY does not have the information to determine materials sourced from by-products or waste streams. Metal for recycling is our single largest waste stream. ASSA ABLOY does not generate radioactive waste. Innovation Our handbook for circular economy practices gives guidance and recommendations on how to make circularity an integral part of our product innovation process. P a c k a g i n g R a w m a t e r i a l E n e r g y i n u s e R e c y c l a b i l i t y R e c y c l e d c o n t e n t R e u s e C a r b o n f o o t p r i n t C o s t R e c y c l e R e u s e R e d u c e Sustainability compass E5 Resource Use and Circular Economy ASSA ABLOY Sustainability Compass 93 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Non-hazardous waste – disposal method Hazardous waste – disposal method Recycling/incineration, 54% Landfill, 46% Recycling, 6% Waste to be processed and disposed by authorized companies, 94% Recycled metal 2019 2020 2021 2022 2023 2024 1 Waste metal for recycling (metric tons) 57,363 54,614 57,606 54,240 56,286 55,477 1 For comparable units, defined as all legal entities acquired up to (June 30, 2023), excluding HHI. Total amount of metal for recycling amounted to 74,381 tons. This figure includes units acquired during the year up to (30 April 2024), with HHI being the primary contributor to the increase. Hazardous waste 2019 2020 2021 2022 2023 2024 Metal sludge (metric tons) 914 704 936 809 600 740 Oil for recycling (metric tons) 331 244 232 193 191 193 Electrical and electronic waste (metric tons) 89 118 137 129 171 154 Other types of toxic waste (metric tons) 2,724 2,405 2,310 2,489 2,393 2,382 Total hazardous waste (metric tons) 4,058 3,471 3,615 3,619 3,355 3,470 1 KPI, hazardous waste intensity (kg/SEK M) 90 79 74 66 54 52 1 F or comparable units, defined as all legal entities acquired up to (June 30, 2023), excluding HHI. Total amount of hazardous waste was 5,189 metric tons. This figure includes units acquired during the year up to (30 April 2024), with HHI being the primary contributor to the increase. Waste management Non-hazardous waste 2019 2020 2021 2022 2023 2024 Household incinerated/recycled (metric tons) 2,762 2,660 3,302 3,490 4,086 4,216 Household deposited (metric tons) 10,341 9,797 11,470 11,139 10,362 9,965 Paper and cardboard for recycling (metric tons) 4,523 4,326 4,839 4,915 4,278 4,487 Plastic waste for recycling (metric tons) 869 855 1,364 1,435 1,540 1,350 Wood waste for recycling (metric tons) 5,061 4,194 4,082 3,788 4,037 4,317 Glass for recycling (metric tons) 236 144 210 178 230 207 Other types of waste (metric tons) 1,519 1,329 2,091 1,886 2,093 2,251 Total (metric tons) 25,310 23,305 27,358 26,832 26,626 26,792 1 KPI, non-hazardous waste intensity (kg/SEK M) 559 530 557 490 432 399 1 For comparable units, defined as all legal entities acquired up to (June 30, 2023), excluding HHI. Total amount of non-hazardous waste was 33,970 metric tons. This figure includes units acquired during the year up to (30 April 2024), with HHI being the primary contributor to the increase. Due diligence Track The ASSA ABLOY Sustainability Compass visualizes sustainability aspects in every new project. The Sus- tainability Compass is our own sustainable innovation tool, based on lifecycle thinking and circularity prin- ciples. It helps minimize footprint, create awareness, and offer the ability to easily compare the sustaina- bility implications of different designs. Durability of our products is both calculated and tested during development and then incorporated into our manu- als. Since we develop so many products, we will not disclose this here on product basis. In many cases the durability is driven from regulations and thereby we follow the industry standard. The Sustainability Com- pass supports circularity in development with the sections of reuse, recycled content and recyclability that ensures that we from the start design products with circularity in mind. Meeting the challenges of transitioning to a circular economy As a company where linear operations have been the norm, introducing circular practices calls for an ad- justment of procedures related to logistics, repair and testing. To maintain the level of safety and security compliance we will test our products after installation to ensure intended operation and compliance with standards like the CE marking. If any issues occur with the products, we follow the procedures described in ESRS S4 Consumers and End-Users. Transitioning to a circular economy also requires a sufficient and reliable inflow of products and compo- nents to our circularity repair centers to ensure that we can satisfy market demand. We will have to further improve the quality of sustainability related data in our entire value chain as new and more strict regulations are published. In turn, this implies new requirements for our internal data governance process, for both linear and circular products. Plans and actions to implement circularity at ASSA ABLOY The transformation to circular economy will be an iterative process where we first document internal best practice from the sites where we currently apply circular business models. Based on these best practices, we will develop our circularity strategy that will define the basis and starting point for our circular journey. This will also clarify resource allocation, and the funding needed going forward. Our approach will be guided by newly developed circular economy standards like ISO 59004, ISO 59010 and ISO 59020. Offering core principles and actionable steps, these new standards include assess- ing circularity performance as well as guides on how to implement circular business models. Circularity will not be a universal process for all products, but rather a modular, and customizable approach. As an example, we expect that some entities will target recyclability, while others will focus on supporting customers with refurbished parts and components. ASSA ABLOY has joined a circularity development program, a collaborative effort aimed at accelerat- ing the implementation of circular products in the construction industry. Driven by external experts and connecting us with construction industry peers, the program conducts in-depth sharing in focus areas and provides best practices. Based on these insights with internal stakeholders, we will further develop our policy, strategies, and measurements for circularity during 2025 and onwards. ASSA ABLOY does not have a circular economy policy; this will be developed during 2025. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information EU Taxonomy E1 Climate change E3 Water and marine resources • E5 Resource use and circular economy Social information Governance information Financial statements 94 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information • S1 Own workforce S2 Workers in the value chain S4 Consumers and end-users Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors Social information Due diligence Cease, prevent or mitigate Human rights and engagement In the Code of Conduct, we have committed to re- spect human rights; making sure that our employees are treated with respect and fairness, and upholding high ethical standards in our operations. Our code of conduct addresses forced or bonded labor, children and young workers, prisoners and illegal workers. All our employees and non-employees (as defined in the ESRS) in our operations need to comply with that commitment as described in the Code of Conduct and the people, safety and human rights policy that is based on International Labor Organization (ILO) conventions and OECD guidelines. During 2024 we updated our people and safety policy and to emphasize human rights the policy was renamed to the people, safety and human rights policy. The human rights section was expanded; the policy was also made public. Our internal control includes relevant controls on human rights, and we conduct third-party social com- pliance audits at select locations every year. In our own operations we engage our workforce continuously through the Voice of the Employee sur- vey that is conducted annually. The employee survey gives us insights if there are any vulnerable groups that have specific impacts or being marginalized. The employee survey process includes a debrief session and triggers improvement activities to all teams within the organization. ASSA ABLOY is committed to directly engaging our workforce and workforce rep- resentatives in identifying lessons and improvements as a result of the company's performance. Through surveys, consultations, and continuous improvement programs, we ensure that employee insights are val- ued and integrated into our sustainability initiatives. This collaborative approach not only enhances our performance but also strengthens our relationship with our workforce and fosters a culture of contin- uous improvement. We engage with trade union representatives from the Board of Directors, where we have union representatives giving their perspec- tive on decisions, the ASSA ABLOY targets and how we track against our targets. For our local business, we have a country coordination network to ensure consultation is made. ASSA ABLOY do not currently use quantitative measures to assess the effectiveness of our processes engaging our own workforce. The risk that there is forced labor, child labor, and trafficking in any of our locations is addressed in the Code of Conduct and monitored through internal controls, Voice of the Employee and whistle-blowing process. The main human right-related risk to our em- ployees and non-employees in our operations relates to health and safety; this is also where most of our remedy work is focused, for instance when it comes to rehabilitation, which is also part of our processes. Any potential human rights or Code of Conduct vio- lations can be reported in multiple ways, from directly to a manager to our whistle-blower process which is also available for external parties so that we can take action. Retaliation against any reporter in good faith is prohibited in the Code of Conduct. Employees are trained on the Code of Conduct and ethical business practices and how to report any violations on a regu- lar basis. With the Voice of the Employee and through our dialogue with trade unions, we can gain a better S1 Own Workforce 95 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information • S1 Own workforce S2 Workers in the value chain S4 Consumers and end-users Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors understanding about the current culture, organiza- tion-wide issues and trends, as well how we progress. The more severe Code of Conduct issues and Code of Conduct oversight, including effectiveness of reporting is governed by the ASSA ABLOY Code of Conduct Committee which is chaired by our Chief Human Resources Officer and where union represent- atives from the Board of Directors are represented. Whistleblowing cases are followed up in a tool to be able to track and monitor the cases. During 2024, 105 cases were reported in the whistleblower tool, no se- vere human-rights incidents were substantiated, and no incidents of discrimination were substantiated. ASSA ABLOY do not have a process to capture fines, penalties and compensation relating to human rights, discrimination, and harassment issues. ASSA ABLOY is not aware of any complaints filed to National Contact Points for OECD Multinational Enterprises. Health and safety Our ambition and vision is to be an injury-free workplace. We continuously improve our work envi- ronment by enhancing our processes and removing hazards and risks. We identify our risks locally and also from a Group and divisional perspective. Our health and safety scope and metrics include both employees and non-employees under our direct control. Our health and safety directive describes the health and safety management system that is based on ISO45001 that are mandatory for all ASSA ABLOY units and covers all employees. The health and safety directive includes the requirement of a yearly internal or external audit, and it is part of our internal controls. To succeed, we work with behaviors and attitudes that collectively form our safety culture, which is grounded in our values. We build this with engage- ment and involvement through, for example, the roll out of workshops in our operations, focusing on risks and behaviors. Our Group-wide health and safety tool provides us with insights to risks and deeper insights into trends to further improve the safety of our people. This work has helped us reduce our injury rate by 17 percent since 2019. In 2024 our injury rate was 2.5. Typically, our biggest risks are employees who are working outside our premises with activities that can range from driving, business travel or work at our customer sites. The Group is very active in acquisitions. Often, the acquired companies exhibit a poorer safety perfor- mance than ASSA ABLOY. To succeed with our safety agenda, we ensure that acquired companies are onboard with our health and safety program with the implementation of the health and safety directive and activities to establish a safety culture. We typically see significant improvements once the program is in place keeping employees and non-employees of the acquisitions safer than they were before the acquisition. As we become more mature from a safety perspec- tive, we are broadening our scope to develop the well-being aspects in our health and safety agenda. For example, we have launched mental health first-aid programs to cater to local needs. Talent management Our recruitment and selection directive held by our Chief Human Resource Officer ensures that we use best practices when we recruit the candidates with the right qualifications, skills and experience and equal employment practices. In 2024 we conducted multiple workshops on biases to promote non-dis- criminatory recruitment practices in line with the purpose of our recruitment and selection directive. We encourage everyone to develop transferable skills that will allow them to move between roles in other functions, divisions or countries, with the goal of increasing seniority, broadening experience or digging deeper into an area of expertise. In 2024 our employee turnover was 17.5 percent. The total num- ber of leavers was 9,136 for comparable units, while 10,751 for all units including acquisitions. Our graduate programs and diversity networks nurture the next generation of talent and contribute to a more inclusive future. We provide everyone with an extensive range of digital courses. Internal lead- ership programs and programs in collaboration with external partners is also offered. Even with this, we strongly believe that the best way to learn is on the job and through stretch assignments that go beyond one’s present expertise. Diversity and inclusion In 2024 we conducted a global inclusion and allyship awareness campaign that included webinars and training sessions. We want our people to come together to discuss topics that matter to them. Connecting with others increases the awareness of diversity, equity, inclusion, and belonging-related challenges and drives positive change. We are focused on increasing the diversity and inclusion capabilities of managers and leaders to build inclusive teams, departments and organizations so that our products and community will benefit from our diverse perspectives. We understand that we are only at the beginning of our diversity and inclusion journey, and still have work to do to achieve our goals. We have diversity and inclusion as a part within our people strategy. As a global organization, ASSA ABLOY is naturally diverse. ASSA ABLOY has operations in over 70 coun- tries and serve customers in more than 180 countries. Our global environment fosters diversity of thought and inclusive open communication. We have set specific objectives to make sure we recruit widely and give people the right opportunities to succeed. For example, we measure how many of our senior manager roles are held by women, and this increases every year. We reached 24 percent in 2019, 29 percent in 2024, and we aim to reach 30 percent by 2025. To support such efforts, we have an internal women’s network and encourage a 50-50 gender balance in our graduate programs. We take a diverse approach to hiring, being aware of diversity issues and overcoming biases. 96 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information • S1 Own workforce S2 Workers in the value chain S4 Consumers and end-users Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors Data-driven approach The key metrics are followed-up on a regular basis, where both the development of the metric is discussed, and activities carried out to improve the metric. We share learnings and best practices between our divisions and business units on activities that show the effectiveness of improving our metrics and mitigating risks and impacts. In general, we use our governance model (Board of Directors, Executive Team, functional councils) for follow up; but if we discover specific issues, we are flexible in creating forums for hot-spot management. Our divisions and business units may have different focus areas depend- ent on where they have challenges that have been identified in their data. We set targets by benchmarking; the health and safety targets were set against the best performing industrial companies with similar activities while for example employee turnover we use benchmarks from Mercer with a country breakdown. Targets are set to fulfill our People strategies and policies. Exter- nal targets are typically set with a five year horizon. We do not have a separate investment vehicle to realize the targets, all investments are made through our capital expenditure process and follow the same rules as all other capital investments. ASSA ABLOY utilizes temporary workers to manage various operational needs effectively. Temporary em- ployment allows the company to address fluctuations in workload, cover for permanent employees who may be on leave, and bring in specialized skills for short-term projects. This approach provides flexibility in workforce management, ensuring that the com- pany can maintain productivity and meet business demands without the long-term commitment of permanent hires. S 1-6 Number of employees per country, data is disclosed in Note 35 of the financial statement; there is no data available for table Employees by contract type, broken down by gender due to limitation of 0 1 2 3 4 25242322212019 Injury rate 0 20 40 60 80 25242322212019 Injury lost day rate 0 10 20 30 40 25242322212019 % -17% -2% 5p.p 2025 TARGET DEVELOPMENT 2019–2024 COMMENTS ON 2024 VS. 2023 Injury rate (number of injuries per million hours worked) 33% Our injury rate remained flat in 2024. 2025 TARGET 2025 TARGET DEVELOPMENT 2019–2024 DEVELOPMENT 2019–2024 COMMENTS ON 2024 VS. 2023 COMMENTS ON 2024 VS. 2023 Injury lost day rate (number of lost days related to injuries per million hours worked) Gender diversity (% of females in management positions) 33% 30% Our injury lost day rate remained flat in 2024. Diversity and inclusion is a key focus for the Group. The portion of females in management positions increased to 29% in 2024. Due diligence Track data. There is no data available for 2024 S1-7, S1-8, S1-10,S1-11, S1-12, S1-13, S1-15, S1-16 and S1-14 relating to work related ill-health and total recorda- bles. Lost days has traditionally been reported as lost working days and we will report both lost days work- ing days and lost days calendar days until 2025 due to the 2025 target of injury lost (working) day rate. 97 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information • S1 Own workforce S2 Workers in the value chain S4 Consumers and end-users Governance information Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors Number of employees by employment contract, employment type and gender Women at different levels of the organization Employees by contract type, broken down by region % of total Permanent 92% Temporary 8% Total 100% Percentage of women Level, % 2019 2020 2021 2022 2023 2024 2 – reports to CEO 9 9 9 18 18 9% 3 – reports to level 2 21 19 12 11 14 16% 4 – reports to level 3 21 25 25 26 26 27% 5 – reports to level 4 26 28 28 30 30 30% Level 2–5 24 27 27 29 29 29% All employees 1 29 29 29 30 30 32% 1 Employees are defined as headcount. 2024 Europe North America South America Africa Asia Pacific Total Number of employees (headcount) 1 22,437 17,368 3,335 851 9,884 1,853 55,728 Number of permanent employees (headcount) 1 21,024 16,083 3,031 782 8,233 1,725 50,878 Number of temporary employees (headcount) 1 1,413 1,285 304 69 1,651 128 4,850 1 For comparable units, not including acquisitions made during the year. Own workforce Average number of employees by region Europe, 22,105, 28% women North America, 21,002, 31% women South America, 3,507, 33% women Africa, 856, 41% women Asia, 13,561, 38% women Pacific, 1,795, 33% women Pacific Asia Africa South America North America Europe Africa Australia, New Zealand South America North America Europe Asia Europe, 22,105, 28% women North America, 21,002, 31% women South America, 3,507, 33% women Africa, 856, 41% women Asia, 13,561, 38% women Pacific, 1,795, 33% women Pacific Asia Africa South America North America Europe Africa Australia, New Zealand South America North America Europe Asia Lost days per injury 1,2 1 Lost days per injury calculated as total number of lost days in relation to total number of injuries. 2 For comparable units. The total lost days per injury was 23.5 including units acquired during the year. 0 5 10 15 20 25 24 2 2322212019 Lost days per injury 1,2 Injuries 1 Injury lost day rate in lost days per million hours worked. 2 Injury rate in injuries per million hours worked. 3 For comparable units. The total injury lost day rate was 50.5, total injury rate was 2.2 including units acquired during the year. 0 25 50 75 100 24 3 2322212019 0 2 4 6 8 Injury lost day rate 1,3 Injury rate 2,3 Average number of employees Number 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 242322212019 n Women n Men Health and Safety 2024 1 Fatalities 1 Lost time injuries 256 Lost days (working days) 5,971 Lost days (calendar days) 8,457 1 For comparable units. The total lost time injuries was 270, the total lost working days was 6,128 and the total lost calendar days was 8,644 including units acquired during the year. Age distribution of workforce % <30 years 14 30–49 years 55 50– years 31 Turnover rate of employees who left the undertaking % Total 17.5 1 1 The number of regular employees who terminated the employment during the period. Gender Number of employees (headcount) 1 Male 40,853 Female 19,003 Other 224 Not reported 7 Total Employees 60,087 1 Not comparable to financial statement, headcount defined as acutal number of people employed at the end of the reporting period. Gender Number of employees Percentage Male 134 85 Female 24 15 Other 0 0 Not reported 0 0 1 Reporting level 1–3. Gender – Top management 1 Nationalities – ASSA ABLOY’s management teams Europe excl. Sweden, 32.9% Sweden, 8.9% North America, 36.1% Asia, 10.1% Africa and Middle East, 0.6% South America, 5.7% Pacific, 5.7% Pacific South America Africa ME Asia North America Sweden Europe 98 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information S1 Own workforce • S2 Workers in the value chain S4 Consumers and end-users Governance information Financial statements Due diligence Cease, prevent or mitigate Our suppliers must commit to and fulfill the require- ments in the Code of Conduct for Business Partners, which stipulates what we believe are necessities in terms of sustainable, legally compliant and fair busi- ness. It covers business ethics, human rights and labor standards, environment, and health and safety. This is in line with our people, safety and human rights policy (see policy matrix) which promotes safe, equal and fair working conditions and to combat human rights violations. The Code of Conduct for Business Partners ap- plies to all partners that provide ASSA ABLOY with products or services, such as suppliers, consultants, distributors, agents and other representatives, and it provides a structured approach to integrating new acquisitions. The above means that all workers at upstream tier 1 suppliers are included in the scope. It also applies to the suppliers’ subcontractors while they are engaging with ASSA ABLOY. Further, agents, distributors and similar on the downstream side are also included. The objective is to cover over 95 percent of all direct and indirect material suppliers by 2025. By the end of 2024, 86 percent of all direct material and indirect spend suppliers had signed the Code of Con- duct for Business Partners, which is an improvement of 5 percent since 2023. For indirect spend, we are currently focused on improving the number of signed Code of Conduct for Business Partners from indirect suppliers to achieve the same results we deliver with direct material suppliers. We also conduct supplier sustainability audits in identified risk countries on a regular basis. Follow-up audits depend on the total score and whether there any particular findings were made that require measures to be taken. If so, a new audit is needed for verification. If there are vital gaps, the supplier is at risk of being put on hold or can be immediately and permanently prohibited from conducting business with any ASSA ABLOY entity. By pursuing a regular audit program like this, sustainability is always in focus and the supplier is expected to constantly maintain a high level of per- formance regarding ethics, human rights and health and safety. The vulnerable worker groups that the Code of Conduct for Business Partners particularly focuses on are children and young workers. It also covers forced or bonded labor, prisoners and illegal workers. Parental rights are also covered. The Code of Conduct for Business Partners states that no discrimination is tolerated regarding race, ethnicity, nationality, sexual orientation, gender, religion, age, disabilities, political views or other factors that could be in scope. Sustainability audits coverage went from 94 per- cent by spend in 2023 to 92 percent in 2024. ASSA ABLOY currently does not have any global framework agreements in place. Supply chain risk management Material risks include unethical labor practices like poor working conditions, inadequate wages, lack of worker rights, which may lead to reputational dam- age, fines and operational disruptions. Other material risks are those related to health and safety, causing injuries and possibly loss of life, and worker well-being like mental health and work-life balance, which may impact productivity. Actions to mitigate such risks include enforcing our Code of Conduct for Business Partners program, which outlines our demands and expectations on how the supplier should act, and our sustainability audit program, where we regularly conduct audits to verify the supplier is compliant with what they have agreed to by signing the Code of Conduct for Business Partners. We currently do not have any form training for suppliers, but auditors guide and support individu- al suppliers as part of the audit action plan follow-up. When necessary, we provide suppliers with informa- tion decks around topics like environment, health and safety. We currently do not have an incident reporting system for addressing health and safety incidents at our suppliers and the situation is the same for worker well-being. Regarding fair compensation, this is followed up upon in our sustainability audits. Tracking the effectiveness of mitigation actions is primarily done through key metrics as the compliance rate (share of suppliers that have signed our Code of Conduct for Business Partners) and audit scores and ratings. We do not have metrics in place for incident rates, worker satisfaction or engagement. We manage supply chain risks and challenges by continuing to roll out the Code of Conduct for Busi- ness Partners to improve the monitoring of supplier compliance. The supplier sustainability audit program complements our Code of Conduct for Business Partners and focuses on direct material suppliers in identified risk countries. ASSA ABLOY uses a model to identify high-risk coun- tries based on publicly available and annually updated indices covering topics like freedom of expression, freedom of association, political stability, government effectiveness, regulatory quality, rule of law, corruption, human development level and anti-trafficking laws. In this way we are able to rate every country and define them as high-risk or low-risk countries. High-risk coun- tries are predominantly found in South and Central America, Eastern Europe, Africa and Asia. Our list of high-risk countries covers all countries described as hotspots for child labor according to the International Labor Organization and for forced labor according to the United States Department of State and its Office to Monitor and Combat Trafficking in Persons. Our sustainability audits are in place to monitor the compliance of our suppliers to the requirements of Code of Conduct for Business Partners, which is refer- ring to our people, safety and human rights policy. High-risk countries are perceived as being at a higher risk of not complying with the Code of Conduct for Busi- ness Partners. The list of high-risk countries is reviewed and updated annually or as needed and based on input from World Bank Worldwide Governance Indicators WGI, United Nations Human Development Index HDI, Transparency International Corruption Perception Index CPI and the US Department of State Trafficking report. We conduct our own supplier audits with internally trained and certified auditors and use due diligence processes to verify compliance. Each division and its supplier development manager are responsible for planning their resources and activities to have suppliers, corresponding to reaching our target of at least 95 percent of the total spend in identified risk countries, audited before the due date of the audit. All audits are carried out by an ASSA ABLOY auditor who visits the supplier’s operations and meets with both management and workers. The auditor follows an established set of tasks and questions. Any identified concerns are documented and made clear in the audit report. Once finished, the audit report is sent to the supplier, which in turn has to carry out any corrective actions and report back to the auditor. The audit reports are stored and available in the ASSA ABLOY business intelligence tool. This input is gathered during every audit, which oc- curs every six to 36 months, depending on the score and rating of the audits; the worse the score the more frequently we carry out audits and vice versa. The effectiveness of gathering the workers’ input is evaluated by looking at the improvement rate during the following re-audit. It is, however, not something that we have a numerical metric for. The efficiency of the action plans and identified activities can be seen by the evolution of a supplier’s audit scores and ratings. Poor ratings in several con- secutive audits could be an indicator of inadequate action plans, but also that the supplier is not willing to improve for any reason. However, the above is not common and in most cases we notice that the suppliers improve their performance, which can be seen as an indicator of the S2 Workers in the Value Chain 99 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors efficiency of the audit process. The entire audit process is a long-term activity to gradually improve the entire supplier landscape. The overall audit ratings of suppliers that ASSA ABLOY has partnered with for a long time indicate that this is working well. Currently the largest concerns come from the supply chains of recent acquisitions, where the ASSA ABLOY audit program has not been applied at all or only for a limited period of time. The audits are carried out by our own auditors and managed by a supplier development function within each division, and this function reports to the divisional Procurement Director, who has the overall responsibility for ensuring that engagement takes place and that the views of the value chain workers are being respected. The number of resources for this topic varies from division to division, but in many cases it is dozens of auditors and supplier developers per division. For the time being, ASSA ABLOY does not have any Audit process and traffic-light system Long term Direct material supplier development and consolidation Targets and measurementsMid term Supplier risk assessment Ongoing Sustainability Supplier quality Supplier self-assessment Exit Supplier development Fix Grow On-site audits Scoring principles Traffic-light system Follow-up audits The traffic-light system We use a traffic-light system to rate individual direct material suppliers on how theyconform to our Code of Conduct for Business Partners. Suppliers are rated on the following five color-coded system: Green – The supplier is approved. A re-audit is done after three years to verify com- pliance. Once suppliers achieve a green rating, our focus is on improving the supplier’s abilities to become even better. Yellow, orange, and purple – The supplier is approved on the condition that it resolves the issues identified in a recent audit within an agreed time frame. Yellow signifies the fewest number of non-conformities and purple the most. A follow-up audit is typically done after one year. Red – The supplier has severe sustainability problems, so the immediate focus is to solve those issues as soon as possible and following this, raise the supplier to an acceptable level with the help of ASSA ABLOY’s expertise and experience. The supplier is re-audited after six months. In the interim the supplier is put on “new business hold.” If the supplier fails to improve during follow-up audits, the supplier is phased out. Red, yellow, orange and purple statuses can be revised based on evidence of a corrective action plan, well-documented progress, and firm commitment from the supplier. Contracts with suppliers may be terminated in the case of a non- compliance that is not remedied within an agreed time frame. The contract is automatically termi- nated if a supplier is rated ‘red’ for longer than six months. figures to provide regarding current and future finan- cial, or other, resources allocated to the continued improvement of the situation for workers in the value chain. At ASSA ABLOY, we do not accept any form of re- taliation against someone who speaks up, expressing concerns or opinions in good faith. This is outlined in the Code of Conduct for Business Partners and our whistleblower directive. If whistleblowers choose to remain anonymous, neither ASSA ABLOY nor our external online reporting tool provider can track or identify the reporting individuals. The supplier is given an audit score based on the outcome of the report. The score is then converted to one of five ratings: green, yellow, orange, purple and red. We have a set of actions based on the rating, de- scribed in the information box above. The robustness of our auditing program is one key success factor, as it creates a framework to refer to in situations that might be difficult to assess properly. One example of this might be the addition of completely new supply chains due to ASSA ABLOY’s acquisition-heavy nature. An auditor might suddenly come across a new problem, but given the global team of auditors, the thousands of previously conducted audits, and the strict rules that apply, we are in a good position to assess the situation properly. Supply chain risks and challenges ASSA ABLOY operates globally, and this is reflected in our supplier base, which is scattered over large parts of the world. At ASSA ABLOY, we need to deal with a variety of local legislation, cultures and ways of working. According to our business intelligence audit data, the most common reasons for suppliers’ severe sustainability problems are health and safety, and environmental issues. Examples of health and safety issues are unsatisfactory risk documentation, evacuation drills, or information about how to act in emergency situations. Inadequate accident statistics, security objectives or machine safety instructions are also common deficiencies. These findings primarily refer to upstream activities as we have much less insights into the downstream flow. It is reasonable to believe, based on the value chain flow, that upstream is more prone to have severe human rights issues and incidents. We often find immaterial deviations at many suppli- ers, but the material negative impacts are rare and if they occur, the supplier gets the chance to remediate it. ASSA ABLOY strives to improve the supplier’s per- formance and aim to help identify the best solution. If the supplier does not do this despite significant efforts from ASSA ABLOY’s side they will eventually be put on the prohibited list and stopped from further business with ASSA ABLOY. Severe negative impacts, like child labor, have been very rare with none to a couple of cases found each year among close to 9,400 suppliers (excluding recent acquisitions). If and when any deviation is found, it is noted in Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information S1 Own workforce • S2 Workers in the value chain S4 Consumers and end-users Governance information Financial statements 100 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors the audit report, with a necessity for the supplier to mitigate the problem. What the solution is may vary, depending on the nature of the problem, but most often it is related to improve the conditions for the workers in terms of potential hazards (material, machines, noise, heavy lifting, etc.). Some criteria in the audit checklist are of such significance that they are identified as stoppers, for example, child labor. We do not tolerate child labor in our own operations, or among our business partners. The Code of Conduct for Business Partners does not accept any form of forced or bonded labor, or illegal workers. In addition, the code reinforces our support for the right to freedom of association and collective bargaining, as well as other working conditions, such as contracts, working hours and fair salary compen- sation. If a supplier fails to comply with these labor standards, they are placed on the list of prohibited suppliers and their relationship with ASSA ABLOY is terminated immediately. Other stoppers, such as forced labor and remuneration that is not aligned with legislation, results in the supplier being put on “new-business hold”. If the supplier fails to improve within an agreed time frame, they are placed on the list of prohibited suppliers. An increasing number of stoppers have been added to the auditing process in recent years, and more are expected in the coming years as our sustainability measures increase. The audits carried out at our suppliers aim at identi- fying and mitigating problems or potential problems. In many cases, this removes or reduces hazards like dangerous work environments and raises the stand- ards at the supplier site. This can include removing or modifying processes that could jeopardize the safety of the workers; requiring proper safety equip- ment; requiring access to emergency exits; limiting exposure of hazardous materials; reducing noise; and improving lighting and ergonomics through better equipment. Such non-conformities with a critical safety or environmental impact are classified as major and those are prioritized during action plan fol- low-ups. There are, however, no formal guidelines on what constitutes major or minor non-conformities, but this is up to the individual assessor’s judgement. It can also include working hour management as well as comfort and equipment at dormitories. All the above relates primarily to blue-collar workers, while dormitories and related things outside of the actual workplace targets workers that are far away from their home and hence are in a more vulnerable position. These activities have a positive impact on all workers at our suppliers, but in particular blue-collar workers, including all sub-groups that might have difficulties attaining these improvements on their own. Although positive, ASSA ABLOY can put more emphasis on not only improving things that are not good enough, but also more on improving things that are already at a sufficient level from a compliance point of view. Apart from our own audits, everyone is able to submit reports of suspected violations. Any potential human rights violations can be reported in multiple ways from direct manager to our whistle blower pro- cess which is also available for external parties. One of the subsections of the audit protocol includes instructions to the auditor to look for evidence of “regular communications and feedback channels with workers to hear their issues and bring appropriate resolutions.” It is, however, difficult for ASSA ABLOY to assess that all value chain workers are familiar with, and trust, the structures to address concerns or violations. We currently do not conduct employee surveys at our suppliers to get additional insights regarding job satisfaction, safety, equality, wages or similar and neither do we have formal feedback channels like anonymous digital platforms or committees. Instead, we refer to our Whistle- blowing function. Further, we also investigate in our sustainability audits whether the suppliers have a whistleblowing program of their own and that their workers and stakeholders are informed about how to use it. This step also includes making sure there is an identity protection scheme in place and verifying that everything is at an acceptable level in interviews with supplier employees. Currently, ASSA ABLOY does not have any out- come-oriented targets related to measuring progress in number of material negative impacts and/or advancing positive impacts on value chain workers. Hence there is also no involvement with value chain workers in such a target setting, nor is there any involvement in identifying improvements as a result of ASSA ABLOY’s performance. For the same reason, we cannot state a baseline value or year, or the methodologies and stakeholder involvement behind the targets and similarly and changes in targets. In our sustainability audits we check for forced labor, but have not had any such cases. We currently do not have any formal guidelines on compensation for damages due to forced labor practices. In a similar way, we have no formal training programs or materi- als we share with suppliers regarding human rights. In 2023, we updated the trade compliance policy. The policy and related procedures and guidelines serve to identify and mitigate risks to avoid involve- ment in activities considered unacceptable by ASSA ABLOY, our communities and stakeholders. ASSA ABLOY has thus taken the decision to conduct risk as- sessments of its own operations to identify prevent- able export control and sanctions risks in all direct and indirect domestic and cross-border trade, and to prioritize risk mitigating measures and resources to address risk. For ASSA ABLOY, this means that trade with a specific supplier could be prohibited if the party, or its owner(s), is designated in a sanctions list. The UN, EU, UK, US, and many other regions, impose different types of economic sanctions. Most sanctions programs contain lists with names of individuals, companies, organizations or other entities, and in most cases, all forms of economic interaction with such listed parties is prohibited. ASSA ABLOY has im- plemented a procedure and a restricted countries list, and countries are divided into risk categories of red, yellow or green. For certain red countries, all trade is prohibited. For yellow countries there is a screening procedure, and for green countries all new business relationships need to be screened. The restricted country list is updated as and when justified based on changes in country risk from an export control or sanctions perspective, and is also periodically reviewed. Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information S1 Own workforce • S2 Workers in the value chain S4 Consumers and end-users Governance information Financial statements 101 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Key audit findings in 2024 ASSA ABLOY has close to 9,400 external direct material suppliers (excluding recent acquisitions). By the end of 2024, 1,158 of the 1,167 suppliers audited had satisfied our minimum sustainability require- ments – equivalent to 92 percent of our total spend in identified risk countries. During 2024 the Group added 487 new suppliers to the audit scope. During the year, 13 percent of those new suppliers were audited. One supplier was added to the list of prohibited suppliers and prevented from doing business with us, and 12 were put on “new-business hold” by the Group, while awaiting re-audit where previously identified issues should have been handled. Supply chain management governance Our supply chain management is led by the Sustaina- bility Procurement Council, which includes represent- atives from each division. The council sets supplier sustainability targets, coordinates activities and follows up on progress. Each division is responsible for ensuring its suppliers meet our requirements. Divisions submit their supplier audit reports to our business intelligence tool, which allows us to assess and analyze the performance of our suppliers. The system is used as a basis for procurement decisions to identify preferred suppliers and enables us to monitor several supply chain key performance indicators (KPIs). Sustainability risk management: ASSA ABLOY’s supplier audit program covers sustain- ability aspects throughout our value chain. Our direct material supplier audit program helps to manage risks related to suppliers, with a particular focus on high-risk suppliers. With new acquisitions, we have established a process that comprehensively reviews sustainability-related issues to mitigate the risks associated with integrating new companies and their supply chains. Distribution of direct material supplier spend n Asia, 35.1% (35.8) n Europe, 24.1% (25.1) n North America, 36.3% (36.5) n South America, 1.2% (1.2) n Oceania, 2.8% (1.1) n Africa, 0.5% (0.4) Number 0 200 400 600 800 1,000 1,200 242322212019 Sustainability audits of direct material suppliers in identified risk countries In 2024, ASSA ABLOY conducted 701 (765) sustainability audits. Number of direct material suppliers Number 0 2,000 4,000 6,000 8,000 10,000 242322212019 In 2024 we had 9,365 direct material suppliers. Due diligence Track Material KPI Area 2019 2020 2021 2022 2023 2024 Portion of spend in identified risk countries represented by sustainability audited direct material suppliers 97% 91% 86% 93% 94% 92% Number of sustainability audits of direct material suppliers in identified risk countries 1,175 940 861 874 765 701 Supply chain management Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information S1 Own workforce • S2 Workers in the value chain S4 Consumers and end-users Governance information Financial statements 102 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Sustainability statement | Report of the Board of Directors Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information S1 Own workforce S2 Workers in the value chain • S4 Consumers and end-users Governance information Financial statements Due diligence Cease, prevent or mitigate Every day, we help billions of people move through a saf- er, more open world with ease. The median age globally is increasing leading to an aging population with impair- ment or disabilities. Accessibility and inclusive product design is therefore key in ensuring that buildings can be accessed and used by everyone. The correct design of a door environment makes a dramatic difference to individuals with reduced muscle or grip strength, or for those utilizing a pushchair, or a wheelchair. Our revolving doors create spacious entrances, ensures smooth functionality and safe traffic flows with advanced sensor technology. Side doors are added for increased accessibility and faster evacua- tion. Our doors can operate at low speeds to ensure safe passage for those with limited mobility. We also consider the weight of the door, fittings that can be easily gripped and reached, visual considerations and the distance a door needs to be clear of any obstruc- tions when opening. Governed by the Chief Technology Officer, our innovation policy mandates customer relevance and compliance as overarching priorities for all our products and solutions. The innovation policy does not reference any other external standard, only internal standards. There is no human rights policy related to consumers and end-users. The innovation policy is not aligned with internationally recognized instruments. We actively participate in relevant or- ganizations to drive the development of standards in our industry. Our user and service manuals offer clear instructions that help customers maintain products together with support by our service organization so that durability and longevity can be maximized, reducing the risk of malfunction, and ensuring safety and security. Due to this, accidents occur on a low and individual frequency. We are committed to the Science Based Targets initiative (SBTi), and we aim to reduce our Scope 3 carbon footprint by 28 percent by 2030, based on a 2019 baseline. We utilize regular customer feedback as a basis for design changes and, depending on severity of issues, this feedback can result in product recalls or pro- duction halts. Our product development process is designed to continuously track customer satisfaction and compliance with standards and regulatory require- ments, to mitigate negative impact on end-users. Changes to the products are done with the use of development personnel. Targets related to product development are for internal steering only and not set or followed up by customers or end users to keep the steps of development as our internal property. Our Voice of the Customer (VOC) program owned by the Chief Commercial Officer includes the Net Pro- moter Score (NPS) research metric, and all divisions are expanding their use of the NPS®; supplemented with qualitative customer experience research. The result and the base year of calculation is kept only as internal matrix only. User experience (UX) is another focus area with several initiatives to improve UX maturity and leverage design systems across the Group. Our goal is to improve the customer experi- ence across all touchpoints with our brands, and we are dedicating resources and directing investments to better understand our customers’ journeys with us and to identify opportunities for improvement. As the VOC covers both technical and commercial aspects of customer demands, we take a cross-func- tional approach and include product managers, sales, and marketing teams as well as R&D in the process. The input from the VoC can be used to explore any type of questions for example to enable wheelchair accessibility to building as described in beginning of this section. Customers can reach us through our commercial organizations and online channels if any issues occur S4 Consumers and End-users with our products. We adhere to the Code of Conduct to acknowledge customer input and comply to Gen- eral Data Protection Regulation (GDPR) to ensure safe handling of personal data. We also facilitate a whis- tle-blower function for anonymous feedback, which can be accessed through various media such as ASSA ABLOY’s website. Regarding human rights severe is- sues connected to customers and end consumer refer to section S1 Own workforce. If our products have a material impact effecting our customers, we address the issue promptly and solve this in best possible way for our customer or end-user. We will not reference to customer or end user specific material impacts in the report. 103 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information • G1 Business conduct Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors Corruption and bribery Anti-corruption policy In addition to the Code of Conduct, which covers a broad scope of business conduct-related topics, we also have a specific anti-corruption policy which supplements and builds on the Code of Conduct. This policy emphasizes a zero-tolerance policy on bribery and corruption and describes our processes for identi- fying and managing bribery and corruption risks in our operations. Like all our Group policies, it is approved by the Board of Directors, and it applies to all employees. Corruption is fundamentally unethical, leading to greater inequality, higher cost of doing business and decreased efficiency. We work actively to prevent corruption in our business. Our anti-corruption policy adheres to international standards, consistent with the UN Convention against Corruption, to prevent, detect and respond to potential corruption; it is regu- larly evaluated and updated when needed. Key stake- holders include employees, suppliers and business representatives. Gifts and entertainment, political and charitable contributions, risk assessments, em- ployee training, conflicts of interest; third-party due diligence, and reporting are some of its essential com- ponents. Thus, the key stakeholders' interests relating to our compliance with laws and regulations and our conducting of our business in an ethically sustainable manner were considered in our policy decisions. During 2024 the anti-corruption policy was revised to further strengthen our ways of working with these matters. The anti-corruption policy is available on ASSA ABLOY’s website, together with the Code of Conduct and the Code of Conduct for Business Partners and can be found at: www.assaabloy.com/group/en/ sustainability/sustainability-governance/anti-corrup- tion-compliance. All relevant ASSA ABLOY employees, including the Executive Team, receive information on the anti-cor- ruption policy and the Code of Conduct. This is en- sured, for instance, by posting the policies and other related information on our intranet and mandatory training requirements as described below. Anti-corruption risk prevention and detection In our organization, certain functions and regions pose elevated risks for corruption and bribery and, in a risk-based approach, we aim to focus our efforts accordingly. We conduct business worldwide and consequently operate in some countries where corruption risks are perceived to be high, according to the Corruption Perceptions Index published by Transparency International. A large part of our sales is further handled through third parties, such as distributors, and a substantial part of our anti-cor- ruption work is therefore used to ensure that such third parties acting on behalf of us comply with ASSA ABLOY’s standards. We have established a third-party due diligence process setting out requirements to be followed when engaging with new business representatives. Regions where the risk of corruption is perceived to be higher, such as emerging markets and countries with a low score on Transparency International’s latest Corruption Perception Index, are primarily in focus for heightened diligence measures. According to our policies all business representa- tive relationships must be formally memorialized in a written agreement including our standard compli- ance clauses or equivalent. We also strive to ensure that all business representatives sign the Code of Con- duct for Business Partners. During 2024 we were not convicted for violations of anti-corruption and anti- bribery laws and consequently no fines were paid. We also have a mergers and acquisitions compli- ance process as part of the acquisition process. The aim of this process is to put any potential issues on the agenda from the outset of the acquisition to be able to determine the level of risk at an early stage, as well as to mitigate specific areas of concern. The implementation of the Code of Conduct and related policies is reviewed through our established process for internal control in all operating compa- nies and internal audits. Further, in 2024 we con- ducted targeted anti-corruption reviews on entities operating in Asia, the Middle East, South America, Africa, North America and Europe. Reporting Our commitment to responsible social and ethical behavior includes our whistleblower process, which encompasses several reporting channels and serves both internal and external stakeholders. Employees are expected to report concerns to either their man- ager, divisional compliance officer or HR represent- ative, via e-mail or regular post, or online through a third-party managed reporting tool. At ASSA ABLOY, we do not accept any form of re- taliation against someone who speaks up, expressing concerns or opinions in good faith. This is outlined in the Code of Conduct and our whistleblower directive. If whistleblowers choose to remain anonymous, neither ASSA ABLOY nor our external online reporting tool provider can track or identify the reporting individuals. In addition, we have established a standard oper- ating procedure encompassing, in addition to the whistleblower directive, a more detailed case man- agement process describing how incoming reports and subsequent investigations are handled. This is to ensure that allegations are rigorously and objectively investigated. In most cases the investigations are carried out by internal resources (from the HR, legal and internal audit departments depending on the matter at hand), but if needed external investigators and expertise are also engaged. The ASSA ABLOY Code of Conduct Committee, headed by the Chief Human Resources Officer, main- tains oversight of both the overall procedure and all high-risk allegations to ensure appropriate and timely resolution. This also ensures that the Executive Team is informed about the outcomes. Anti-corruption training All our employees are required to participate in an e-learning course on the Code of Conduct as part of their onboarding process, and like all our other com- pliance training the course must be repeated every three years. The course covers a wide range of topics, providing a good understanding of our policies on business conduct, including anti-corruption and ethical guidelines. In addition, we have a separate anti-corruption and bribery e-learning course based on the anti-cor- ruption policy, including ethical business practices, that is mandatory for selected target groups, again with a three-year repetition interval. The target groups are based on selected functions relevant to the training and include, for example, managers as well as sales, purchasing and sourcing personnel. As a consequence, we believe that all functions at risk are covered by anti-corruption training requirements. These e-learning courses are global and available in a multitude of languages. Governance information G1 Business Conduct 104 ASSA ABLOY | ANNUAL REPORT 2024 Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information • G1 Business conduct Financial statements download a printable pdf here Sustainability statement | Report of the Board of Directors Due diligence Cease, prevent or mitigate Management of relationships with suppliers and payment practices ASSA ABLOY fosters a collaborative and ethical part- nership with our suppliers, ensuring mutual respect and adherence to shared values. It goes both ways in creating a sustainable business relationship. Ethical standards: Both parties to adhere to high standards of integrity and fair dealing, including compliance with laws and regulations. Sustainability and responsibility: Mutual long-term sustainability and social responsibility, aiming to build sustainable relationships. Human rights and labor standards: Mutual respect for human rights and labor standards and health and safety. Environmental responsibility: There is a strong focus on environmental responsibility, with suppliers expected to comply with environmental laws and strive for continuous improvement in their environ- mental performance. Our ethical business practices in the Code of Con- duct includes the timely payment of suppliers. ASSA ABLOY is committed to ensuring that suppliers are paid on time, reflecting their broader commitment to fair and responsible business practices. ASSA ABLOY therefore shall pay within the payment term agreed, assuming the supplier is providing the correct and complete invoice documentation. This is valid for all suppliers, including SMEs. We currently do not track any of the following metrics: • Average number of days to pay invoice from date when contractual or statutory term of payment starts to be calculated. • Percentage of payments aligned with standard payment terms. • Number of outstanding legal proceedings for late payments. Due to business sensitivity and limitation of data, we are unable to disclose the following for 2024: • Description of undertakings standard payment terms in number of days by main category of supplier. We are currently not able to share the below, as this is missing in formal directives or similar: • Disclosure of contextual information regarding payment practices, the invoice shall be paid within the payment term agreed, subject to correct and complete invoice documentation. • Description of policy to prevent late payments, especially to SMEs. Due diligence Track Training table Training Code of Conduct Anti-corruption Percentage completion 87% 88% * Code of Conduct – Percentage of all employees, that are required to undertake the course in e-learning. In-person courses are excluded. Anti-corruption –percentage of functions-at-risk covered by training programmes = Number of regular employees who have completed the assigned course / total number of regular employees assigned the course in the recent 3 years. 105 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements ESRS-index Section Disclosure Requirement Section Page Paragraph number (where relevant) Additional Information General information ESRS 2: General disclosures BP-1 General basis for preparation of sustainability statements SS 65-66 BP-2 Disclosures in relation to specific circumstances SS 65-66 GOV-1 Role of the administrative, management and supervisory bodies SS 66-67 GOV-2 Information provided to and sustainability matters addressed by administrative, management and supervisory bodies SS 66-67 GOV-3 Integration of sustainability-related performance in incentive schemes SS 67 12 GOV-4 Statement on due diligence SS 68-70 GOV-5 Risk management and internal controls over sustainability reporting SS 67 1, 11 SBM-1 Strategy, business model and value chain SS 67 6-8 SBM-2 Interests and views of stakeholders - general SS 68, 70 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model SS 71-77 IRO-1 Description of process to identify and assess material impacts, risks and opportunities SS 71-77 IRO-2 Disclosure Requirements in ESRS covered by sustainability statements SS 105-109 MDR-P Minimum disclosure requirement SS 66, 67, 80 MDR-A Minimum disclosure requirement SS 64, 71-77, 85, 90, 91, 93-104 MDR-M Minimum disclosure requirement SS 64, 85, 90, 91, 93-104 MDR-T Minimum disclosure requirement SS 64, 85, 90, 91, 93-104 Environmental ESRS E1: Climate change Climate change mitigation & Energy E1-1 Transition plan for climate change mitigation SS 85-89 E1-2 Policies related to climate change mitigation and adaptation SS 80, 85 E1-3 Actions and resources in relation to climate change policies SS 85-89 E1-4 Targets related to climate change mitigation and adaptation SS 64, 85-89 E1-5 Energy consumption and mix SS 88 E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions SS 89 E1-7 GHG removals and GHG mitigation projects financed through carbon credits SS 87 9 E1-8 Internal carbon pricing SS 87 8 E1-9 Anticipated financial effects from material physical and transition risks and potential climate-related opportunities SS 71, 78 ESRS E3: Water and marine resources Water E3-1 Policies related to water and marine resources SS 80, 90 E3-2 Actions and resources related to water and marine resources SS 64, 90 E3-3 Targets related to water and marine resources SS 64, 91 E3-4 Water consumption SS 91 E3-5 Anticipated financial effects from material water and marine resources-related risks and opportunities SS 72 ESRS E5: Resource use and circular economy Resource inflows, including resource use Resource outflows related to products and services Waste E5-1 Policies related to resource use and circular economy SS 80, 93 7 E5-2 Actions and resources related to resource use and circular economy SS 64, 93 E5-3 Targets related to resource use and circular economy SS 64, 92, 93 E5-4 Resource inflows SS 92 5-7 E5-5 Resource outflows SS 93 E5-6 Potential financial effects from resource use and circular economy-related impacts, risks and opportunities SS 73 SS = Sustainability statement FS = Financial statement 106 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Section Disclosure Requirement Section Page Paragraph number (where relevant) Additional Information Social ESRS S1: Own workforce Working conditions Other work-related rights S1-1 Policies related to own workforce SS 80, 94-95 S1-2 Processes for engaging with own workers and workers’ representatives about impacts SS 94 S1-3 Processes to remediate negative impacts and channels for own workforce to raise concerns SS 94-95, 103 S1-4 Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions SS 74, 94-97 S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities SS 64, 96-97 S1-6 Characteristics of undertaking’s employees SS. FS 97, 141 P141, Note 35 S1-7 Characteristics of non-employees in undertaking’s own workforce SS 96 No data available in 2024 S1-8 Collective bargaining coverage and social dialogue SS 96 No data available in 2024 S1-9 Diversity metrics SS 64, 95-97 S1-10 Adequate Wages SS 96 No data available in 2024 S1-11 Social protection SS 96 No data available in 2024 S1-12 Persons with disabilities SS 96 No data available in 2024 S1-13 Training and skills development metrics SS 96 No data available in 2024 S1-14 Health and safety metrics SS 64, 95-97 S1-15 Work-life balance metrics SS 96 No data available in 2024 S1-16 Remuneration metrics (pay gap and total remuneration) - general SS 96 No data available in 2024 S1-17 Incidents, complaints and severe human rights impacts -general SS 94-95 ESRS S2: Workers in the value chain Working conditions Other work-related rights S2-1 Policies related to value chain workers SS 80, 98 S2-2 Processes for engaging with value chain workers about impacts SS 98-100 S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns SS 98-100 S2-4 Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those actions SS 98-100 S2-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities SS 64, 98, 100 ESRS S4: Consumers and end-users Personal safety of consumers and/ or end-users S4-1 Policies related to consumers and end-users SS 80, 102 S4-2 Processes for engaging with consumers and end-users about impacts SS 102 S4-3 Processes to remediate negative impacts and channels for consumers and end-users to raise concerns SS 102 S4-4 Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions SS 102 S4-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities (consumers and end-users) SS 102 Governance ESRS G1: Business conduct Corporate culture Protection of whistle-blowers Management of relationships with suppliers including payment practices Corruption and bribery G1-1 Business conduct policies and corporate culture SS 80, 103 G1-2 Management of relationships with suppliers SS 104 G1-3 Prevention and detection of corruption or bribery SS 103 G1-4 Incidents of corruption or bribery SS 103 G1-5 Political influence and lobbying activities SS 103 G1-6 Payment practices SS 104 SS = Sustainability statement FS = Financial statement 107 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Page Additional information ESRS 2 GOV-1 Board's gender diversity paragraph 21 (d) ● ● 66 ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e) ● 66 ESRS 2 GOV-4 Statement on due diligence paragraph 30 ● 68-70 ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i ● ● ● Not Applicable ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii ● ● Not Applicable ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii ● ● Not Applicable ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv ● Not Applicable ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14 ● 85-86 ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g) ● ● Not Applicable ESRS E1-4 GHG emission reduction targets paragraph 34 ● ● ● 64, 85-86 ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38 ● Not Applicable ESRS E1-5 Energy consumption and mix paragraph 37 ● 88 ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43 ● Not Applicable ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44 ● ● 88-89 ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55 ● ● ● 89 ESRS E1-7 GHG removals and carbon credits paragraph 56 ● 87 ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks paragraph 66 ● 71, 78 ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a) ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c) ● 78 Appendix B: List of datapoints in cross-cutting and topical standards that derive from other EU legislation This appendix is an integral part of the ESRS 2. The table below illustrates the datapoints in ESRS 2 and topical ESRS that derive from other EU legislation. 108 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Page Additional information ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c) ● Not Applicable ESRS E1-9 Degree of exposure of the portfolio to climate- related opportunities paragraph 69 ● 71, 73 ESRS E2-4 Amount of each pollutant listed in Annex II of the E- PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, paragraph 28 ● Not Applicable ESRS E3-1 Water and marine resources paragraph 9 ● 90, 91 ESRS E3-1 Dedicated policy paragraph 13 ● 80 ESRS E3-1 Sustainable oceans and seas paragraph 14 ● 90 ESRS E3-4 Total water recycled and reused paragraph 28 (c) ● 91 ESRS E3-4 Total water consumption in m3 per net revenue on own operations paragraph 29 ● 91 ESRS 2- IRO 1 - E4 Paragraph 16 (a) i ● Not Applicable ESRS 2- IRO 1 - E4 Paragraph 16 (b) ● Not Applicable ESRS 2- IRO 1 - E4 Paragraph 16 (c) ● Not Applicable ESRS E4-2 Sustainable land / agriculture practices or policies paragraph 24 (b) ● Not Applicable ESRS E4-2 Sustainable oceans / seas practices or policies paragraph 24 (c) ● Not Applicable ESRS E4-2 Policies to address deforestation paragraph 24 (d) ● Not Applicable ESRS E5-5 Non-recycled waste paragraph 37 (d) ● 93 ESRS E5-5 Hazardous waste and radioactive waste paragraph 39 ● 93 ESRS 2- SBM3 - S1 Risk of incidents of forced labour paragraph ● 94-96 ESRS 2- SBM3 - S1 Risk of incidents of child labour paragraph 14 (g) ● 94-96 ESRS S1-1 Human rights policy commitments paragraph 20 ● 94-95 ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21 ● 80, 94, 98 ESRS S1-1 Processes and measures for preventing trafficking in human beings paragraph 22 ● 94-95 ESRS S1-1 Workplace accident prevention policy or management system paragraph 23 ● 80, 94 ESRS S1-3 Grievance/complaints handling mechanisms paragraph 32 (c) ● 80 ESRS S1-14 Number of fatalities and number and rate of work-related accidents paragraph 88 (b) and (c) ● ● 97 109 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Report of the Board of Directors Significant risks and risk management Corporate governance Board of Directors Executive Team Internal control – financial reporting Sustainability statement General information Environmental information Social information Governance information Financial statements Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Page Additional information ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e) ● 97 ESRS S1-16 Unadjusted ge der pay gap paragraph 97 (a) ● ● Not Applicable ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b) ● Not Applicable ESRS S1-17 Incidents of discrimination paragraph 103 (a) ● 95 ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD paragraph 104 (a) ● ● 94-95 ESRS 2- SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b) ● 98-101 ESRS S2-1 Human rights policy commitments paragraph 17 ● 80, 98-101 ESRS S2-1 Policies related to value chain workers paragraph 18 ● 80, 98-101 ESRS S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19 ● ● 68 ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19 ● 80 ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36 ● 98-100 ESRS S3-1 Human rights policy commitments paragraph 16 ● Not Applicable ESRS S3-1 Non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines paragraph 17 ● ● Not Applicable ESRS S3-4 Human rights issues and incidents paragraph 36 ● Not Applicable ESRS S4-1 Policies related to consumers and end-users paragraph 16 ● 102 ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17 ● ● 102 ESRS S4-4 Human rights issues and incidents paragraph 35 ● 102 ESRS G1-1 United Nations Convention against Corruption paragraph 10 (b) ● 103 ESRS G1-1 Protection of whistle- blowers paragraph 10 (d) ● 103 ESRS G1-4 Fines for violation of anti-corruption and anti-bribery laws paragraph 24 (a) ● ● 103-104 ESRS G1-4 Standards of anti- corruption and anti- bribery paragraph 24 (b) ● 103-104 110 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details 110 ASSA ABLOY | ANNUAL REPORT 2024 Financial statements 111 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Sales and income • Net sales increased by 7 percent to SEK 150,162 M (140,716). Organic growth was –1 percent (3), while net growth from acquisitions and divest- ments amounted to 8 percent (8). • Operating income (EBIT) increased by 11 percent to SEK 24,275 M (21,785), an operating margin of 16.2 percent (15.5). • Earnings per share before and after full dilution increased by 15 percent till SEK 14.08 (12.27). Sales The Group’s sales for 2024 amounted to SEK 150,162 M (140,716), corresponding to an increase of 7 percent (16). Organic growth was –1 percent (3), while the net contribu- tion from acquisitions and divestments was 8 percent (8). The exchange rate impact on sales was 0 percent (5). Change in sales % 2023 2024 Organic growth 3 -1 Acquisitions and divestments 8 8 Exchange rate effects 5 0 Total 16 7 Sales by product group Mechanical locks, lock systems and fittings accounted for 25 percent (23) of total sales. Electromechanical and electronic locks accounted for 30 percent (30) of sales, while entrance automation accounted for 30 percent (30). Security doors and hardware accounted for 15 percent (17) of sales. Cost structure The Group’s total wage costs, including social security expenses and pension expenses, were SEK 45,184 M (40,783), equivalent to 30 percent (29) of sales. The average number of employees was 62,825 (56,845). Material costs amounted to SEK 50,542 M (50,364), equiv- alent to 34 percent (36) of sales, and other purchasing costs totaled SEK 24,602 M (22,350), equivalent to 16 percent (16) of sales. Depreciation, amortization and impairment of non-current assets was SEK 5,645 M (7,646), equivalent to 4 percent (5) of sales. Operating income The Group’s operating income (EBIT) for 2024 amounted to SEK 24,275 M (21,785), an increase of 11 percent. This corre- sponds to an operating margin of 16.2 percent (15.5). The increase in income was mainly attributable to strong growth in fixed currency, good leverage from sales price in relation to material costs, and efficiency enhancements and cost savings. The restructuring program launched in 2023 also made a sig- nificant contribution to good savings during the year. The parent company’s operating income for 2024 was SEK 2,138 M (2,951). The change in income for the year is mainly on account of lower intra-Group operating income. Items affecting comparability Items affecting comparability were recognized for both 2024 and 2023, as shown below. Amounts are given before income tax. 2024 • Adjusted purchase price and exit costs related to the 2023 divestment of Emtek and Smart Residential in the US and Canada, SEK -21 M. 2023 • Capital gain on divestment of Emtek and Smart Residential in the US and Canada, SEK 3,588 M. • Impairment of intangible assets in the Global Technologies division, SEK -2,271 M. • Restructuring program, SEK -1,250 M. • Inventory revaluation related to company acquisitions, SEK -466 M. Income before tax Consolidated income before tax was SEK 20,893 M (19,254). The exchange rate effect before taxes amounted to SEK –23 M (883). Net financial items amounted to SEK –3,382 M (–2,531); the increase for the year is mainly on account of higher interest expenses. The profit margin was 13.9 percent (13.7). Tax on income The Group’s tax expense totaled SEK 5,272 M (5,615), equiva- lent to an effective tax rate of 25.2 percent (29.2). The effec- tive tax rate for the comparative year was significantly affected by items affecting comparability, mainly related to capital gains from divestments and impairment of intangible assets. The effective tax rate excluding items affecting comparability was 25.2 percent (23.4). Earnings per share Consolidated earnings per share before and after full dilution amounted to SEK 14.08 (12.27), an increase of 15 percent. The increase in earnings per share was 4 percent excluding items affecting comparability. Sales and operating income Sales Operating income¹ ¹ Excluding items affecting comparability. SEK M SEK M 0 30,000 60,000 90,000 120,000 150,000 2423222120 Omsättning Rörelseresultat 1 0 5,000 10,000 15,000 20,000 25,000 Earnings per share before and after dilution SEK 0 2 4 6 8 10 12 14 2423222120 Earnings per share before and after dilution ¹ ¹ Excluding items affecting comparability. Sales by product group, 2024 Mechanical locks, lock systems and fittings, 25% (23) Entrance automation, 30% (30) Electromechanical and elec- tronic locks, 30% (30) Security doors and hardware, 15% (17) 112 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Consolidated income statement SEK M Note 2023 2024 Sales 2 140,716 150,162 Cost of goods sold –84,212 –87,434 Gross income 56,504 62,728 Selling expenses –21,397 –24,105 Administrative expenses 3 –7,551 –8,334 Research and development costs –5,712 –6,101 Other operating income and expenses 4 –1,393 17 Impairment of goodwill and other acquisition-related intangible assets 14 –2,271 – Capital gain on divestment of subsidiaries 3,588 24 Share of earnings in associates 5 18 45 Operating income 7–9, 25, 35 21,785 24,275 Financial income 10 157 133 Financial expenses 9, 11, 25 –2,687 –3,515 Income before tax 19,254 20,893 Tax on income 12 –5,615 –5,272 Net income 13,639 15,621 Net income attributable to: Parent company’s shareholders 13,633 15,639 Non-controlling interests 7 –18 Earnings per share Before and after dilution, SEK 13 12.27 14.08 Before and after dilution and excluding items affecting comparability, SEK 13 13.54 14.09 Consolidated statement of comprehensive income SEK M Note 2023 2024 Net income 13,639 15,621 Other comprehensive income: Items that will not be reclassified to profit or loss Actuarial gain/loss on post-employment benefit obligation 25 –8 22 Deferred tax from actuarial gain/loss on post-employment benefit obligations 7 48 Total –1 70 Items that may be reclassified subsequently to profit or loss Share of other comprehensive income of associates –63 –1 Cash flow hedges –66 94 Hedging cost –23 –8 Exchange rate differences reclassified to profit or loss – – Exchange rate differences –2,537 5,663 Tax attributable to items that may be reclassified subsequently to profit or loss 5 –3 Total –2,684 5,745 Total other comprehensive income –2,685 5,814 Total comprehensive income 10,954 21,435 Total comprehensive income attributable to: Parent company’s shareholders 10,953 21,459 Non-controlling interests 2 –24 113 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Comments by division ASSA ABLOY is organized into five divisions. EMEIA (Europe, Middle East, India and Africa), Americas (North and South America) and Asia Pacific (Asia and Oceania) manufacture and sell mechanical and electromechanical locks, security doors and hard- ware in their respective geographic markets. Global Technologies operates worldwide in the product areas of access control systems, secure card issu- ance, identification technology and hotel locks. Entrance Systems is a global supplier of entrance automation products and service. Opening Solutions EMEIA Sales totaled SEK 25,098 M (24,831), with organic growth of 0 percent (–2). Growth from acquisitions, divestments and internal segment transfers was 1 percent (6). Operating income excluding items affecting comparability amounted to SEK 3,552 M (3,388), with an operating margin (EBIT) of 14.2 percent (13.6). The return on capital employed excluding items affecting comparability was 15.9 percent (14.8). Oper- ating cash flow before non-cash items and interest paid was SEK 3,872 M (4,183). Organic sales remained stable for EMEIA during the year, affected by a continued weak private residential market. Effi- ciency enhancements and savings contributed to an increased operating margin during the year, while cash flow remained strong. Opening Solutions Americas Sales totaled SEK 44,340 M (38,009), with organic growth of 2 percent (6). Growth from acquisitions and divestments was 16 percent (22). Operating income excluding items affecting comparability amounted to SEK 8,207 M (7,186), with an operating margin (EBIT) of 18.5 percent (18.9). The return on capital employed excluding items affecting comparability was 12.7 percent (16.3). Operating cash flow before non-cash items and interest paid was SEK 7,581 M (8,181). Organic growth for Americas was good for the commercial customer segments in North America. Sales were stable for the private residential market. Growth was strong in Latin America, particularly in Brazil. The operating margin and cash flow remained at high levels. Opening Solutions Asia Pacific Sales totaled SEK 9,120 M (10,284), with organic growth of -6 percent (–2). Net growth from acquisitions, divestments and internal segment transfers was –3 percent (5). Operating income excluding items affecting comparability amounted to SEK 619 M (662), with an operating margin (EBIT) of 6.8 per- cent (6.4). The return on capital employed excluding items affecting comparability was 5.8 percent (5.8). Operating cash flow before non-cash items and interest paid was SEK 997 M (1,213). The division’s sales declined during the year, affected by a generally weak private residential market. Organic sales were stable in South Korea, but sales declined in China and Southeast Asia. The operating margin increased during the year owing to continued efficiency enhancements and cost savings. Global Technologies Sales totaled SEK 24,179 M (23,099), with organic growth of –2 percent (9). Net growth from acquisitions and internal seg- ment transfers was 7 percent (5). Operating income exclud- ing items affecting comparability amounted to SEK 4,224 M (3,996), with an operating margin (EBIT) of 17.5 percent (17.3). The return on capital employed excluding items affect- ing comparability was 14.8 percent (15.2). Operating cash flow before non-cash items and interest paid was SEK 4,585 M (4,145). Organic sales declined for Global Technologies, mainly owing to high comparative figures in the Physical Access Con- trol business unit. Organic growth was strong for the Global Solutions business unit. The operating margin increased thanks to efficiency enhancements and good cost control, and cash flow was further improved. Entrance Systems Sales totaled SEK 49,451 M (46,665), with organic growth of –1 percent (1). Growth from acquisitions and divestments was 7 percent (2). Operating income excluding items affect- ing comparability amounted to SEK 8,493 M (7,807), with an operating margin (EBIT) of 17.2 percent (16.7). The return on capital employed excluding items affecting comparability was 20.1 percent (20.3). Operating cash flow before non-cash items and interest paid was SEK 10,017 M (10,391). Growth for Entrance Systems was strong in the Pedestrian and Perimeter Security business segments, while the other segments were negatively affected by weaker demand in North America. Growth in services was good during the year. The division’s operating margin improved and cash flow remained very strong. Other The costs of Group-wide functions, such as corporate man- agement, accounting and finance, supply management and Group-wide product development, totaled SEK 799 M (854). Elimination of sales between the Group’s segments is included in “Other”. EMEIA, 16% (17) Americas, 29% (27) Asia Pacific, 5% (6) Global Technologies, 16% (16) Entrance Systems, 33% (33) External sales, 2024 Average number of employees, 2024 EMEIA, 19% (22) Americas, 29% (24) Asia Pacific, 11% (13) Global Technologies, 14% (14) Entrance Systems, 27% (28) Operating income, 2024¹ EMEIA, 14% (15) Americas, 33% (31) Asia Pacific, 2% (3) Global Technologies, 17% (17) Entrance Systems, 34% (34) ¹ “Other” is not included in the calculation. See section Comments by division for what is included in “Other”. 114 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Reporting by division Global EMEIA Americas Asia Pacific Technologies Entrance Systems Other Total SEK M 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 Sales, external 24,214 24,447 37,867 44,213 9,133 8,200 22,930 23,955 46,570 49,347 – – 140,716 150,162 Sales, internal 617 651 141 128 1,151 920 169 224 95 104 –2,173¹ –2,027¹ – – Sales 24,831 25,098 38,009 44,340 10,284 9,120 23,099 24,179 46,665 49,451 –2,173 –2,027 140,716 150,162 Organic growth –2% 0% 6% 2% –2% –6% 9% –2% 1% –1% – – 3% –1% Acquisitions and divestments 6% 1% 22% 16% 5% –3% 5% 7% 2% 7% – – 8% 8% Exchange rate effects 5% 0% 6% –1% 2% –2% 5% 0% 6% 0% – – 5% 0% Operating income (EBIT) excluding items affecting comparability 3,388 3,552 7,186 8,207 662 619 3,996 4,224 7,807 8,493 –854 –799 22,185 24,296 Operating margin (EBIT) 13.6% 14.2% 18.9% 18.5% 6.4% 6.8% 17.3% 17.5% 16.7% 17.2% – – 15.8% 16.2% Operating cash flow Operating income (EBIT) excluding items affecting comparability 3,388 3,552 7,186 8,207 662 619 3,996 4,224 7,807 8,493 –854 –799 22,185 24,296 Depreciation, amortization and impairment 1,055 989 1,154 1,604 424 401 1,013 1,006 1,484 1,592 44 53 5,174 5,645 Net capital expenditure –627 –434 –631 –740 –202 63 –378 –440 –576 –483 –6 –29 –2,419 –2,063 Amortization of lease liabilities –276 –280 –255 –342 –129 –130 –188 –202 –675 –812 –21 –30 –1,543 –1,797 Change in working capital 643 44 726 –1,148 457 45 –298 –3 2,352 1,228 –44 43 3,836 208 Operating cash flow by division 4,183 3,872 8,181 7,581 1,213 997 4,145 4,585 10,391 10,017 –881 –763 27,232 26,289 Non-cash items 123 14 123 14 Interest paid and received –2,122 –3,251 –2,122 –3,251 Operating cash flow 25,232 23,052 Capital employed Goodwill 13,232 14,552 32,382 36,524 5,379 5,582 18,989 21,504 22,891 28,711 – – 92,873 106,874 Other intangible assets 1,366 1,498 21,652 22,753 1,937 1,863 2,968 3,848 6,876 8,531 32 39 34,831 38,531 Property, plant and equipment 3,166 3,287 3,037 3,487 1,398 1,331 1,556 1,763 2,260 2,740 43 45 11,460 12,653 Right-of-use assets 976 831 1,598 1,606 295 309 553 768 1,858 2,671 17 110 5,296 6,295 Other capital employed 2,120 2,256 2,875 3,636 1,324 1,399 1,827 2,136 3,830 3,180 84 412 12,060 13,019 Adjusted capital employed 20,860 22,423 61,544 68,006 10,332 10,485 25,891 30,018 37,715 45,833 177 607 156,520 177,373 Restructuring reserve –298 –60 –150 –22 –43 9 –89 74 –182 –35 –5 –5 –767 –39 Capital employed 20,562 22,363 61,395 67,984 10,289 10,494 25,802 30,093 37,533 45,798 172 602 155,753 177,333 Return on capital employed excluding items affecting comparability 14.8% 15.9% 16.3% 12.7% 5.8% 5.8% 15.2% 14.8% 20.3% 20.1% – – 15.6% 14.4% Average adjusted capital employed 22,872 22,353 44,025 64,462 11,396 10,656 26,295 28,510 38,502 42,249 – – 142,611 168,363 Average number of employees 12,188 12,212 13,358 17,889 7,099 6,758 7,895 8,651 16,028 17,035 276 279 56,845 62,825 ¹ Of which eliminations SEK -2,027 M (-2,173). The segments have been determined on the basis of reporting to the President and CEO, who monitors the overall perfor- mance and makes decisions on resource allocation. The differ- ent segments generate their revenue from the manufacture and the sale of mechanical, electromechanical and electronic locks, lock systems and fittings, and security doors and hard- ware. The breakdown of sales is based on customer sales in the respective country. Sales between segments are carried out at arm’s length. For further information on sales, see Note 2. 115 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Financial position Capital employed was SEK 177,333 M (155,753) at the year- end. The increase during the year was mainly an effect of com- pleted acquisitions and currency effects. The return on capital employed excluding items affecting comparability was 14.4 percent (15.6). Net debt/EBITDA amounted to a quota of 2.3 (2.3) at the year-end. SEK M 2023 2024 Capital employed 155,753 177,333 – of which goodwill 92,873 106,874 Net debt 64,109 70,253 Equity 91,644 107,080 – of which non-controlling interests 16 10 Capital employed Capital employed in the Group, defined as total assets less interest-bearing assets and non-interest-bearing liabilities including deferred tax liabilities, amounted to SEK 177,333 M (155,753). The return on capital employed excluding items affecting comparability was 14.4 percent (15.6). Intangible assets amounted to SEK 145,405 M (127,704). The increase is mainly due to completed acquisitions and cur- rency effects. During the year, goodwill and other intangible assets with an indefinite useful life arose to a preliminary value of SEK 9,820 M (42,549) as a result of completed acqui- sitions and adjustments of acquisitions made in previous years. A valuation model, based on discounted future cash flows, is used for impairment testing of goodwill and other intangi- ble assets with an indefinite useful life. There were no impair- ments of intangible assets during the year. Intangible assets were impaired in the Global Technologies division in 2023 at an operating expense of SEK 2,271 M. Property, plant and equipment amounted to SEK 12,653 M (11,460). Capital expenditure on property, plant and equip- ment and intangible assets, less sales of property, plant and equipment and intangible assets, totaled SEK 2,063 M (2,419). Total depreciation, amortization and impairment excluding items affecting comparability amounted to SEK 5,645 M (5,174). Trade receivables amounted to SEK 23,444 M (20,934) and inventories totaled SEK 21,020 M (18,603) at the year-end. The average collection period for trade receivables was 50 days (49). Material throughput time averaged 108 days (114). Working capital, adjusted for acquisitions and divestments and currency effects, was stable during the year. Net debt Net debt was SEK 70,253 M (64,109) at the year-end. The increase during the year is mainly due to a continued high rate of acquisitions and currency effects. Operating cash flow remained very strong during the year thanks to good earnings and efficient use of working capital. External financing The financing mainly consists of a GMTN Program of SEK 42,657 M (38,365), of which SEK 38,688 M (35,679) is long- term, a bilateral bank loan of USD 500 M (500) and loans from financial institutions such as the European Investment Bank (EIB) totaling USD 641 M, of which USD 571 M (641) is long- term, and the Nordic Investment Bank of EUR 235 M (235). Eight new issues under the GMTN Program for a total of SEK 5,518 M with maturities of 3.2 to 8 years were made during the year. A new bilateral bank loan of CAD 200 M was also raised to diversify the loan portfolio. Other changes in long- term loans are mainly due to some of the originally long-term loans now having less than 1 year to maturity. The size of the loans was affected by currency fluctuations, mainly due to a stronger USD, which increased the volume of loans. The Group’s short-term loan financing mainly consists of two Commercial Paper Programs for a maximum USD 1,000 M (1,000) and SEK 5,000 M (5,000) respectively. At the year- end, the outstanding balance under the Commercial Paper Programs was SEK 6,177 M (4,906). In addition, substantial credit facilities are available, mainly in the form of a Multi- Currency Revolving Credit Facility of EUR 1,116 M (1,200). At year-end the average time to maturity for the Group’s inter- est-bearing liabilities, excluding pension provisions and lease obligations, was 44 months (52). Cash and cash equivalents amounted to SEK 4,504 M (1,466) and are invested in banks with high credit ratings. Some of the Group’s main financing agreements contain a customary Change of Control clause. This clause means that lenders have the right in certain circumstances to demand the renegotiation of conditions or to terminate the agreements should control of the company change. Equity Consolidated equity totaled SEK 107,080 M (91,644) at year- end. Return on equity was 15.7 percent (15.3) and the debt/ equity ratio, calculated as net debt divided by equity, was 0.66 (0.70). The equity ratio was 47.9 percent (46.7) at year-end. Capital employed and return on capital employed Net debt Net debt Net debt/EBITDA Capital employed Return on capital employed SEK M 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2423222120 0 0.2 0.4 0.6 0.8 1.0 SEK M % 0 40,000 80,000 120,000 160,000 200,000 2423222120 0 5 10 15 20 116 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Consolidated balance sheet SEK M Note 2023 2024 ASSETS Non-current assets Intangible assets 14 127,704 145,405 Property, plant and equipment 15 11,460 12,653 Right-of-use assets 16 5,296 6,295 Investments in associates 18 622 710 Other financial assets 20 412 698 Deferred tax assets 19 1,863 2,097 Total non-current assets 147,357 167,859 Current assets Inventories 21 18,603 21,020 Trade receivables 22 20,934 23,444 Current tax receivables 2,022 1,385 Other current receivables 1,898 1,942 Prepaid expenses and accrued income 2 2,908 3,008 Derivative financial instruments 36 926 419 Short-term investments 36 236 25 Cash and cash equivalents 36 1,466 4,504 Total current assets 48,994 55,747 TOTAL ASSETS 196,351 223,605 SEK M Note 2023 2024 EQUITY AND LIABILITIES Equity Parent company’s shareholders Share capital 24 371 371 Other contributed capital 9,675 9,675 Reserves 33 9,455 15,206 Retained earnings including net income for the year 72,128 81,819 Equity attributable to the Parent company’s shareholders 91,629 107,071 Non-controlling interests 16 10 Total equity 91,644 107,080 Non-current liabilities Long-term loans 36 49,917 54,989 Non-current lease liabilities 36 4,001 4,817 Deferred tax liabilities 19 2,991 3,322 Pension provisions 25 1,435 1,478 Other non-current provisions 26 891 527 Other non-current liabilities 2, 36 897 922 Total non-current liabilities 60,131 66,056 Current liabilities Short-term loans 36 9,833 11,958 Current lease liabilities 36 1,443 1,737 Derivative financial instruments 36 331 445 Trade payables 11,320 12,593 Current tax liabilities 1,744 1,470 Current provisions 26 736 431 Other current liabilities 2, 27, 36 5,017 6,302 Accrued expenses and deferred income 2, 28 14,152 15,532 Total current liabilities 44,576 50,469 TOTAL EQUITY AND LIABILITIES 196,351 223,605 117 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Cash flow Cash flow Operating cash flow for 2024 was very strong in relation to earnings for the year, corresponding to cash conversion of 110 percent (128). Cash flow remained at a high level, thanks to good earnings combined with efficient use of working capital. Acquisition activity remained high during the year and net cash flow from acquisitions and divestments of subsidiaries amounted to SEK –11,676 M (–45,453). Operating cash flow SEK M 2023 2024 Operating income (EBIT) 21,785 24,275 Restructuring costs 1,250 – Inventory revaluation attributable to com- pany acquisitions 466 – Capital gains from divestments –3,588 21 Impairment of intangible assets 2,271 – Depreciation, amortization and other impairment 5,174 5,645 Net capital expenditure –2,419 –2,063 Change in working capital 3,836 208 Amortization of lease liabilities –1,543 –1,797 Interest paid and received –2,122 –3,251 Non-cash items 123 14 Operating cash flow 25,232 23,052 Cash conversion 1.28 1.10 The Group’s operating cash flow amounted to SEK 23,052 M (25,232), equivalent to 110 percent (128) of income before tax excluding items affecting comparability. Net capital expenditure Net capital expenditure on intangible assets and property, plant and equipment totaled SEK 2,063 M (2,419), equivalent to 1.4 percent (1.7) of Group sales. Change in working capital SEK M 2023 2024 Inventories 2,380 –60 Trade receivables –49 –280 Trade payables –214 153 Other working capital 1,720 395 Change in working capital 3,836 208 Material throughput time decreased during the year to an average of 108 days (114). Capital tied up in working capital was stable overall during the year, which had a positive impact on cash flow of SEK 208 M (3,836) overall. Relationship between cash flow from operating activities and operating cash flow SEK M 2023 2024 Cash flow from operating activities 21,294 21,391 Restructuring payments 613 748 Net capital expenditure –2,419 –2,063 Amortization of lease liabilities –1,543 –1,797 Reversal of tax paid 7,289 4,772 Operating cash flow 25,232 23,052 Investments in subsidiaries Cash flow from investments in subsidiaries totaled SEK –12,136 M (-53,566), while divestments of subsidiaries gener- ated positive cash flow of SEK 460 M (8,114). The cash flow effect from acquisitions and divestments therefore totaled SEK –11,676 M (–45,453). The rate of acquisitions remained high during the year with a total of 26 acquisitions completed. Acquired cash and cash equivalents totaled SEK 532 M (1,175). Change in net debt Net debt was mainly affected by the strong positive operating cash flow, acquisition payments, tax payments, dividend to shareholders, and exchange rate effects. The increase in net debt during the year is mainly an effect of a continued high rate of acquisitions and currency effects. SEK M 2023 2024 Net debt at 1 January 31,732 64,109 Operating cash flow –25,232 –23,052 Restructuring payments 613 748 Tax paid on income 7,289 4,772 Acquisitions and divestments 46,826 13,108 Dividend 5,332 5,999 Actuarial gain/loss on post-employment benefit obligations 8 –22 Change in lease liabilities 628 241 Exchange rate differences, etc. –3,085 4,349 Net debt at 31 December 64,109 70,253 Capital expenditure Income before tax and operating cash flow Income before tax¹ Operating cash flow Net capital expenditure Depreciation and amor- tization Net capital expenditure as % of sales SEK M 0 5,000 10,000 15,000 20,000 25,000 2423222120 SEK M % 0 1,000 2,000 3,000 4,000 5,000 6,000 2423222120 0 1 2 3 4 5 ¹ Excluding items affecting comparability. 118 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Consolidated statement of cash flows SEK M Note 2023 2024 OPERATING ACTIVITIES Operating income 21,785 24,275 Reversal of Depreciation, amortization and impairment 8 5,174 5,645 Items affecting comparability 13 400 21 Other non-cash items 31 123 14 Restructuring payments 26 –613 –748 Change in working capital 31 3,836 208 Cash flow before interest and tax 30,704 29,415 Interest paid –2,136 –3,366 Interest received 14 115 Tax paid on income –7,289 –4,772 Cash flow from operating activities 21,294 21,391 INVESTING ACTIVITIES Investments in property, plant and equipment and intangible assets 14, 15 –2,639 –2,562 Sales of property, plant and equipment and intangible assets 14, 15 220 499 Investments in subsidiaries 34 –53,566 –12,136 Divestments of subsidiaries 31 8,114 460 Other investments and divestments –27 –186 Cash flow from investing activities –47,899 –13,925 FINANCING ACTIVITES Dividend –5,332 –5,999 Long-term loans raised 36 33,129 7,044 Long-term loans repaid 36 –3,659 –3,736 Amortization of lease liabilities –1,543 –1,797 Purchase of shares in subsidiaries from non-controlling interest –38 –33 Stock purchase plans –79 –112 Change in short-term loans, etc. 2,247 185 Cash flow from financing activities 24,726 –4,447 CASH FLOW –1,880 3,019 CASH AND CASH EQUIVALENTS Cash and cash equivalents at 1 January 3,417 1,466 Cash flow –1,880 3,019 Effect of exchange rate differences in cash and cash equivalents –71 20 Cash and cash equivalents at 31 December 36 1,466 4,504 119 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Changes in consolidated equity Parent company’s shareholders Retained earnings incl. Other contrib- Reserves net income for Non-controlling SEK M Share capital uted capital (see Note 33) the year interests Total Opening balance 1 January 2023 371 9,675 12,133 63,835 12 86,026 Net income 13,633 7 13,639 Other comprehensive income –2,679 –1 –5 –2,685 Total comprehensive income –2,679 13,632 2 10,954 Dividend –5,332 – –5,332 Stock purchase plans –7 – –7 Total contributions by and distributions to Parent company’s shareholders –5,338 – –5,338 Change in non-controlling interest – 2 2 Total transactions with shareholders –5,338 2 –5,336 Closing balance 31 December 2023 371 9,675 9,455 72,128 16 91,644 Opening balance 1 January 2024 371 9,675 9,455 72,128 16 91,644 Net income 15,639 –18 15,621 Other comprehensive income 5,751 70 –6 5,814 Total comprehensive income 5,751 15,708 –24 21,435 Dividend –5,998 –1 –5,999 Stock purchase plans –19 – –19 Total contributions by and distributions to Parent company’s shareholders –6,017 –1 –6,017 Change in non-controlling interest – 18 18 Total transactions with shareholders –6,017 18 –5,999 Closing balance 31 December 2024 371 9,675 15,206 81,819 10 107,080 Dividend and earnings per share Equity per share after dilution and return on equity Dividend per share Earnings per share before and after dilution¹ Equity per share after dilution, SEK Return on equity, % SEK % 0 20 40 60 80 100 2423222120 0 5 10 15 20 SEK 0 2 4 6 8 10 12 14 2423222120 ¹ Excluding items affecting comparability 120 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Income statement – Parent company Statement of comprehensive income – Parent company SEK M Note 2023 2024 Administrative expenses 3, 6, 8, 9 –3,141 –3,316 Research and development costs 6, 8, 9 –2,396 –2,187 Other operating income and expenses 4 8,488 7,641 Operating income 9, 35 2,951 2,138 Financial income 10 1,848 7,500 Financial expenses 9, 11 –1,990 –3,117 Income before appropriations and tax 2,809 6,520 Group contributions 1,008 1,406 Change in excess depreciation and amortization 244 203 Tax on income 12 –696 –581 Net income 3,365 7,548 SEK M 2023 2024 Net income 3,365 7,548 Other comprehensive income – – Total comprehensive income 3,365 7,548 Balance sheet – Parent company SEK M Note 2023 2024 ASSETS Non-current assets Intangible assets 14 2,775 1,695 Property, plant and equipment 15 33 27 Shares in subsidiaries 17 49,412 51,938 Other financial assets 20 503 505 Total non-current assets 52,722 54,165 Current assets Receivables from subsidiaries 40,566 45,441 Other current receivables 79 145 Prepaid expenses and accrued income 85 74 Cash and cash equivalents 36 0 2 Total current assets 40,730 45,662 TOTAL ASSETS 93,452 99,827 EQUITY AND LIABILITIES Equity 23 Restricted equity Share capital 24 371 371 Revaluation reserve 275 275 Statutory reserve 8,905 8,905 Fund for development expenses 58 31 Non-restricted equity Share premium reserve 787 787 Retained earnings including net income for the year 14,734 16,292 Total equity 25,130 26,661 Untaxed reserves 1,021 818 Non-current liabilities Long-term loans 36 35,550 39,129 Total non-current liabilities 35,550 39,129 Current liabilities Short-term loans 36 2,687 3,969 Trade payables 187 135 Current liabilities to subsidiaries 28,204 28,441 Other current liabilities 45 8 Accrued expenses and deferred income 28 629 665 Total current liabilities 31,751 33,219 TOTAL EQUITY AND LIABILITIES 93,452 99,827 121 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Cash flow statement – Parent company SEK M Note 2023 2024 OPERATING ACTIVITIES Operating income 2,951 2,138 Depreciation, amortization and impairment 8 1,226 1,105 Other non-cash items 72 93 Cash flow before interest and tax 4,250 3,336 Interest paid and received –1,158 –1,599 Dividends received 1,139 6,011 Tax paid and received –442 –678 Cash flow before changes in working capital 3,789 7,070 Change in working capital –6 937 Cash flow from operating activities 3,783 8,007 INVESTING ACTIVITIES Investments in property, plant and equipment and intangible assets –8 –20 Investments in subsidiaries –6,103 –2,731 Divestments of subsidiaries – 205 Cash flow from investing activities –6,110 –2,546 FINANCING ACTIVITES Dividend –5,332 –5,998 Loans raised 10,929 3,408 Loans repaid –3,192 –2,756 Stock purchase plans –79 –112 Cash flow from financing activities 2,327 –5,459 CASH FLOW 0 2 CASH AND CASH EQUIVALENTS Cash and cash equivalents at 1 January 0 0 Cash flow 0 2 Cash and cash equivalents at 31 December 0 2 122 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Accounts | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements • Accounts Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Change in equity – Parent company SEK M Restricted equity Non-restricted equity TotalShare capital Revaluation reserve Statutory reserve Fund for development expenses Share premium reserve Retained earnings Opening balance 1 January 2023 371 275 8,905 140 787 16,626 27,104 Net income 3,365 3,365 Total comprehensive income 3,365 3,365 Dividend –5,332 –5,332 Stock purchase plans –7 –7 Reclassifications –82 82 – Total transactions with shareholders –82 –5,257 –5,339 Closing balance 31 December 2023 371 275 8,905 58 787 14,734 25,130 Opening balance 1 January 2024 371 275 8,905 58 787 14,734 25,130 Net income 7,548 7,548 Total comprehensive income 7,548 7,548 Dividend –5,998 –5,998 Stock purchase plans –19 –19 Reclassifications –27 27 – Total transactions with shareholders –27 –5,990 –6,017 Closing balance 31 December 2024 371 275 8,905 31 787 16,292 26,661 123 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Notes NOTE 1 Significant accounting and valuation principles Group The Annual Report of ASSA ABLOY AB (publ.), corporate iden- tity number 556059-3575, contains the consolidated finan- cial statements for the fiscal year 1 January through 31 December 2024, including the nature and focus of the busi- ness. The annual report is prepared in Swedish kronor and all amounts are in millions of kronor, unless otherwise stated. ASSA ABLOY is a Swedish public limited company and a world leader in access solutions, with innovations that enable safe, secure, convenient access solutions for both physical and digital locations. The company is a limited company regis- tered in Sweden, with its registered office in Stockholm, Swe- den, and is listed on Nasdaq Stockholm. The address of the head office, where the company conducts its main activities, is Klarabergsviadukten 90, 111 64 Stockholm. ASSA ABLOY applies International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), the Swedish Annual Accounts Act and the Swedish Corporate Reporting Board’s RFR 1 Supplementary Accounting Rules for Corporate Groups. The accounting principles are based on IFRS as endorsed by 31 December 2024 and have been applied to all years presented, unless stated otherwise. This Note describes the most significant accounting principles that have been applied in the preparation of the financial statements, which comprise the information provided on pages 44–59 and 110–146. The presentation currency is Swedish kronor (SEK), and the financial statements are pre- sented in millions of SEK, unless stated otherwise. Basis of preparation ASSA ABLOY’s consolidated financial statements have been prepared in accordance with IFRS as endorsed by the EU. The consolidated financial statements have been prepared in accordance with the cost method, except for financial assets and liabilities (including derivative instruments) measured at fair value through profit or loss. Totals quoted in tables and statements may not always be the exact sum of the individual items because of rounding dif- ferences. The aim is that each line item should correspond to its source and rounding differences may therefore arise. Key estimates and assessments for accounting purposes Estimates and assessments are continually evaluated and are based on both historical experience and reasonable expecta- tions about the future. The Group considers that estimates and assessments relat- ing to impairment testing of goodwill and other intangible assets with indefinite useful life are of material importance to the consolidated financial statements. The Group tests carry- ing amounts for impairment on an annual basis and where there is an indication of a need for impairment. The recover- able amounts of cash generating units are determined by cal- culating their values in use. The calculations are based on cer- tain assumptions about the future. Material assumptions and the effects of reasonable changes in them are described in Note 14. The actuarial assumptions made when calculating post-employment employee benefits also have material importance for the consolidated financial statements. For information on the actuarial assumptions, see Note 25. New and revised standards applied by the Group The Group has applied the following standards and amend- ments for the first time for the financial year beginning 1 Janu- ary 2024: • Disclosure of Non-current Liabilities with Covenants and Classification of Liabilities as Current or Non-current, amendments to IAS 1 • Supplier Finance Arrangements, amendments to IAS 7 and IFRS 7 • Lease Liability in a Sale and Leaseback, amendments to IFRS 16 The amendments noted above had no impact on the amounts recognized in the comparative period and have had no mate- rial effect on the current period. New and revised IFRS not yet effective IFRS 18 Presentation and Disclosure in Financial Statements is effective from 1 January 2027, with retrospective application. IFRS 18 introduces new requirements for presentation in the income statement, aggregation and disaggregation of finan- cial information and presentation of management-defined performance measures. In addition, there are consequential amendments to several standards, such as IAS 7 Statement of Cash Flows. The Group is currently working to identify all the effects that the amendments will have on the financial state- ments and their notes. Consolidated financial statements The consolidated financial statements include ASSA ABLOY AB (the Parent company) and all companies over which the Group has control. Non-controlling interests The Group determines on an individual basis for each acquisi- tion whether a non-controlling interest in the acquired com- pany shall be recognized at fair value or at the interest’s pro- portional share of the acquired company’s net assets. Segment reporting The most senior executive decision-maker is the President and CEO of the Parent company. The divisions form the opera- tional structure for internal control and reporting and also constitute the Group’s segments for external financial report- ing. No segments have been aggregated in the Group’s reporting. The Group’s business is divided into five divisions. Three divisions are based on products sold in local markets in the respective division: EMEIA, Americas and Asia Pacific. Global Technologies and Entrance Systems consist of products sold worldwide. F oreign currency translation Functional currency corresponds to local currency in each country where Group companies operate. Transactions in for- eign currencies are translated to functional currency by appli- cation of the exchange rates prevailing on the transaction date. Foreign exchange gains and losses arising from the set- tlement of such transactions are normally recognized in the income statement, as are those arising from translation of monetary balance sheet items in foreign currencies at the year-end rate. Exceptions are transactions relating to qualify- ing cash flow hedges, which are recognized in other compre- hensive income. Receivables and liabilities are measured at the year-end rate. In translating the accounts of foreign subsidiaries prepared in functional currencies other than the Group’s presentation currency, all balance sheet items except net income are trans- lated at the year-end rate and net income is translated at the average rate. The income statement is translated at the aver- age rate for the period. Exchange differences arising from the translation of foreign subsidiaries are recognized as transla- tion differences in other comprehensive income. IAS 29 has been applied since 2023 for ASSA ABLOY’s oper- ations in Turkey, as a business in Turkey was acquired at the end of 2022. The index applied is the consumer price index with base period 2002 from the Turkish Statistical Institute. The revaluation of periods before 2023 is recognized in the translation difference within equity. The application of IAS 29 has not had a material impact on the consolidated financial statements. The table below shows the weighted average rate and the closing rate for important currencies used in the Group, rela- tive to the Group’s presentation currency (SEK). Average rate Closing rate Country Currency 2023 2024 2023 2024 United Arab Emirates AED 2.88 2.87 2.72 2.99 Argentina ARS 0.040 0.009 0.011 0.009 Australia AUD 7.02 6.96 6.83 6.86 Brazil BRL 2.12 1.96 2.06 1.78 Canada CAD 7.83 7.70 7.55 7.64 Switzerland CHF 11.77 12.01 11.88 12.19 Chile CLP 0.013 0.011 0.011 0.011 China CNY 1.49 1.47 1.41 1.51 Czech Republic CZK 0.48 0.45 0.45 0.45 Denmark DKK 1.54 1.53 1.48 1.54 Euro zone EUR 11.44 11.41 11.06 11.46 United Kingdom GBP 13.15 13.49 12.74 13.83 Hong Kong HKD 1.35 1.35 1.28 1.42 Hungary HUF 0.030 0.029 0.029 0.028 Israel ILS 2.87 2.86 2.76 3.00 India INR 0.128 0.126 0.120 0.129 Kenya KES 0.076 0.078 0.064 0.085 South Korea KRW 0.0081 0.0077 0.0077 0.0075 Mexico MXN 0.60 0.58 0.59 0.54 Malaysia MYR 2.32 2.32 2.18 2.46 Norway NOK 1.01 0.98 0.98 0.97 New Zealand NZD 6.50 6.39 6.34 6.23 Poland PLN 2.52 2.65 2.55 2.69 Romania RON 2.31 2.29 2.22 2.30 Thailand THB 0.30 0.30 0.29 0.32 Turkey TRY 0.46 0.32 0.34 0.31 US USD 10.57 10.55 9.99 10.99 South Africa ZAR 0.58 0.58 0.54 0.59 Income statement In the income statement costs are broken down by function. Revenue The Group’s revenue mainly consists of product sales. Service related to products sold represents a limited share of revenue. Revenue for the sale of the Group’s products is recognized at a given point in time when the customer gains control over the 124 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details product, usually at the time of delivery. ASSA ABLOY also car- ries out installation services, which are recognized over time. For shorter installation jobs, revenue is recognized in practice upon completion of installation. Revenue from service con- tracts is recognized over time. For product sales, a receivable is recognized when the goods have been delivered, since this is usually the point in time when the consideration becomes unconditional. The payment terms for trade receivables differ between geo- graphical markets, types of goods or services, and different customers. ASSA ABLOY allocates the transaction price for each perfor- mance obligation on the basis of a stand-alone selling price. The stand-alone selling price is the price for which the Group would sell the good or service separately to a customer. In cases where a stand-alone selling price is not directly observ- able, it is usually calculated based on the adjusted market assessment approach or the expected cost plus a margin approach. Any discounts are allocated proportionately to all perfor- mance obligations in the contract, provided there is not observable evidence that the discount does not relate to all performance obligations. Outstanding performance obligations for contracts with an original expected term of one year or less at the reporting date are recognized at the amount that ASSA ABLOY is enti- tled to invoice. This is because the Group is entitled to pay- ment from a customer in the amount that directly corre- sponds to the value to the customer of the entity’s performance achieved at the reporting date. ASSA ABLOY receives payment in advance from customers to a limited extent. No customer contracts within the Group relating to the sale of goods or services are assessed to con- tain a significant financing component. The Group does not recognize any contract costs since the Group applies the prac- tical expedient permitted by the standard, under which incre- mental costs of obtaining a contract are recognized as an expense when incurred if the amortization period of the asset that the Group otherwise would have recognized is one year or less. Compensation from insurance and litigation is recognized when it is virtually certain that an inflow of resources will occur. Intra-group sales Transactions between Group companies are carried out at arm’s length and thus at market prices. Government grants Grants relating to assets are recognized after reducing the carrying amount of the asset by the amount of the grant. Operating expenses Operating expenses are recognized in their respective func- tions as follows. • Cost of goods sold corresponds to direct and indirect costs attributable to sales, such as expenses for merchandise, personnel and consultants, and depreciation of non- current assets in the production process. • Selling expenses include sales and marketing efforts. The expenses also include personnel and hired consultants, depreciation, travel and marketing and PR-related activi- ties. • Administrative expenses include expenses that are not directly attributable to sales, manufacturing or purchasing. The expenses include administrative premises and legal and financial functions. • Research and development costs include costs for the development and production of products that are not capitalizable. ASSA ABLOY has an established process with well-defined steps to define the research and development phases of the Group’s product development. The process also serves as a tool to assess when expenditure should be expensed or capitalized. Research expenditure is expensed as incurred and consists of feasibility studies, requirements definition and specification. Development expenditure is recognized in the balance sheet to the extent that it is expected to generate future economic benefits and pro- vided such benefits can be reliably measured. The development phase includes product and process design, industrialization and market preparation. Capital- ized expenditure is amortized on a straight-line basis over its estimated useful life, usually 3–5 years. Only expendi- ture on the development of new products is capitalized, while expenditure on the further development of existing products is expensed as incurred. Tax on income Deferred tax liabilities for temporary differences relating to investments in subsidiaries are not recognized in the consoli- dated financial statements, since the Parent company can control the time at which the temporary differences are reversed, and it is not considered likely that such reversal will occur in the foreseeable future. The Group measures each uncertain tax position using either the most likely amount or the expected value, based on the method expected to reflect the outcome in the best way. Assessments are reconsidered when there is new information that affects earlier judgments. Cash flow statement The cash flow statement has been prepared according to the indirect method. Cash and cash equivalents Cash and cash equivalents include cash and bank balances, and short-term financial investments that mature within three months of the acquisition date and are subject to a neg- ligible risk of fluctuation in value. Goodwill and other acquisition-related intangible assets Goodwill is allocated to cash-generating units (CGUs), which consist of the Group’s five divisions except for Global Technol- ogies, whose two business units, HID and Global Solutions, each constitute a CGU. The Group’s CGUs are tested for impairment annually and where there is an indication of a need for impairment. Cash generating units are subject to systematic annual impairment testing using a valuation model based on discounted future cash flows. Other acquisition-related intangible assets consist chiefly of various types of intellectual property rights, such as brands, technology and customer relationships. Identifiable acquisition-related intellectual property rights are initially recognized at fair value at the acquisition date and subse- quently at cost less accumulated amortization and impair- ment losses. Amortization is on a straight-line basis over the estimated useful life and amounts to 5–12 years for technol- ogy and 8–15 years for customer relationships. Acquisi- tion-related intangible assets with an indefinite useful life are tested for impairment annually, and where there is an indica- tion of a need for impairment, in the same way as goodwill. Other intangible assets An intangible asset that is not acquisition-related is initially recognized at cost and is amortized over its estimated useful life, usually between three and five years. Property, plant and equipment Property, plant and equipment are recognized at cost less accumulated depreciation and impairment losses. Land is not depreciated. For other assets, cost is depreciated on a straight-line basis over the estimated useful life, which for the Group results in the following average depreciation periods: • Buildings 25–50 years • Land improvements 10–25 years • Machinery 7–10 years • Equipment 3–6 years Gain or loss on the disposal of property, plant and equipment is recognized in the income statement as ‘Other operating income’ or ‘Other operating expenses’. Leases Within the Group there are a large number of current leases for which the Group is the lessee, mostly relating to offices, premises and vehicles. The Group recognizes a right-of-use asset and a lease liability corresponding to the present value of future lease payments in the balance sheet on the day the leased asset is made available for use. In calculating the pres- ent value, the Group’s incremental borrowing rate by cur- rency is used. When measuring right-of-use and lease liability, the Group made estimates and assumptions such as whether any options to extend or terminate a lease agreement will be exercised. After the initial date, the right-of-use asset is measured at cost and depreciated on a straight-line basis over the lease term, or over the period of use of the underlying asset if the lease transfers ownership of the underlying asset to the Group by the end of the lease term. Depreciation is recognized as an expense in profit or loss, while interest expense attributable to the lease liability is recognized in net financial items. In the statement of cash flows the lease payments are split between interest paid in cash flow from operating activities and amortization of lease liabilities in financing activities. Operating cash flow includes amortization of lease liabilities as an operating component. The Group does not recognize any right of use or lease liability regarding obligations for short-term leases and low- value leases. Lease payments relating to such leases are reported as operating expenses over the lease term. Inventories Inventories are valued in accordance with the ‘first in, first out’ principle at the lower of cost and net realizable value at the reporting date. Financial assets at amortized cost Financial assets at amortized cost mainly comprise trade receivables and cash and cash equivalents. Financial assets at fair value through profit or loss At the reporting date, this category consists of shares and par- ticipations and derivatives with a positive fair value that are not used for hedge accounting. Financial liabilities at fair value through profit or loss This category includes derivatives with a negative fair value that are not used for hedge accounting and deferred consid- erations. Liabilities are measured at fair value on a continuous basis and changes in value are recognized in the income state- ment. Significant deferred considerations are discounted to pres- ent value. Acquisition-related transaction costs are expensed as incurred. Financial liabilities at amortized cost Amortized cost is determined based on the effective interest rate calculated when the loan was raised. Accordingly, surplus values and negative surplus values as well as direct issue expenses are allocated over the term of the loan. Non-current loan liabilities have an anticipated term of more than one year, while current loan liabilities have a term of less than one year. Note 1 continued 125 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Recognition and measurement of financial assets and liabilities Acquisitions and sales of financial assets are recognized on the trade date, the date on which the Group commits to pur- chase or sell the asset. Impairment of financial assets The Group applies the IFRS 9 simplified approach to measur- ing expected credit losses for trade receivables. Under this approach, a provision is made for lifetime expected credit losses for the trade receivable. For calculation of expected credit losses, the trade receivables are grouped based on the number of days past due. Expected credit losses on trade receivables that are not past due are primarily based on actual credit losses from recent years. Impairment that would be considered for other financial assets that are within the scope of expected credit losses has not been assessed to be material. Derivative instruments and hedging Derivative instruments are recognized in the balance sheet at the transaction date and are measured at fair value, both ini- tially and in subsequent revaluations. The method for recog- nizing profit or loss depends on whether the derivative instru- ment is designated as a hedging instrument, and if so, the nature of the hedged item. For derivatives not designated as hedging instruments, changes in value are recognized on a continuous basis through profit or loss under financial items, either as income or expense. The 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 esti- mating future discounted cash flows. For information on the fair value of derivative instruments, see Note 36, ‘Financial risk management and financial instru- ments’. Derivatives at fair value, with a maturity of more than 12 months, are classified as non-current interest-bearing loans or receivables. Other derivatives are classified as current interest-bearing liabilities and investments respectively. Fair value hedges For derivatives that are designated and qualify as fair value hedges, changes in value of both the hedged item and the hedging instrument are recognized on a continuous basis in the income statement (under financial items). Fair value hedges are used to hedge interest rate risk in borrowing linked to fixed interest terms. If the hedge would no longer qualify for hedge accounting, the fair value adjustment of the carrying amount is dissolved through profit or loss over the remaining term using the effective interest method. Cash flow hedges For derivatives that are designated and qualify as cash flow hedges, changes in value of the hedging instrument are recog- nized on a continuous basis in other comprehensive income for the part relating to the effective portion of the hedges. Gain or loss arising from ineffective portions of derivatives is recognized directly in the income statement under financial items. When a hedging instrument expires, is sold or no lon- ger 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 other comprehensive income in the income statement. When a forecast transaction is no lon- ger expected to occur, the gain or loss recognized in other comprehensive income is recognized directly under financial items. Net investment hedges For derivatives that are designated and qualify as net invest- ment hedges, the portion of value changes in fair value desig- nated as effective is recognized in other comprehensive income. The ineffective portion of the gain or loss is recog- nized directly in profit or loss for the period under financial items. Accumulated gain or loss in other comprehensive income is recognized in the income statement when the foreign operation, or part thereof, is sold. Financial guarantees Financial guarantees are recognized as financial liabilities when they are issued. The liability is recognized initially at fair value and subsequently at the higher of: • The amount calculated using the model for expected credit losses in accordance with IFRS 9 Financial Instru- ments, and • The amount originally recognized less accumulated accruals, where applicable. The fair value of financial guarantee contracts is calculated as the present value of the difference between future contrac- tual net cash flows (as per the debt instrument) and the pay- ments that would be demanded without the guarantee. Alter- natively, the guarantee contract is measured at the estimated amount that would be paid to a third party for the third party to assume the liability. Assets and liabilities of disposal group classified as held for sale Assets and liabilities are classified as held for sale when their carrying amounts will principally be recovered through a sale and when such a sale is considered highly probable. They are recognized at the lower of carrying amount and fair value less selling expenses. As of the reporting date, the Group had no assets or liabilities held for sale. Equity-based incentive programs The Group has equity-based remuneration plans in the form of ASSA ABLOY’s incentive program. Detailed information about the structure of the various programs can be found in Note 35 Employees. For the long-term incentive program, personnel costs during the vesting period are recognized based on the shares’ fair value on the allotment date, that is, when the company and the employees entered into an agree- ment on the terms and conditions for the program. Fair value is based on the share price on the allotment date; a reduction in fair value relating to the anticipated dividend has not been made as the participants are compensated for this. The employees pay a price equivalent to the share price on the investment date. The vesting terms are not stock mar- ket based and affect the number of shares that ASSA ABLOY will give to the employee on allotment. If an employee stops investing in the program, all remaining personnel costs are recognized in the income statement. Personnel costs for shares relating to the performance-based program are calcu- lated on each accounting date based on an assessment of the probability of the performance targets being achieved. The costs are calculated based on the number of shares that ASSA ABLOY expects to need to settle at the end of the vesting period. When allocating shares, social security costs must be paid in some countries to the value of the employee’s benefit. This value is based on fair value on each accounting date and recognized as a provision for social security costs. The long-term incentive programs are essentially equity settled and an amount equivalent to the personnel cost is rec- ognized against retained earnings in equity. In the income statement, the personnel cost is allocated to the respective function. Climate-related issues ASSA ABLOY has analyzed its climate-related risks and oppor- tunities through two of the scenarios identified by the UN Intergovernmental Panel on Climate Change (IPCC): • RCP 2.6 – Greenhouse gas emissions decrease radically in the coming decades. • RCP 6 – Greenhouse gas emissions decrease at an insuffi- cient rate. See more information on sustainability in the Report of the Board of Directors. The risks identified include supply chain uncertainty and material shortages. In preparing the consolidated financial information, ASSA ABLOY analyzed the impact of these sce- narios on the estimates and assumptions used. The assess- ment included: • The impact of climate change on the analysis of impair- ment indicators and the cash flow projections used in the impairment testing of goodwill and intangible assets with indefinite useful lives. See Note 14 for information about the assumptions used. • The impact of climate change on the recognition of provi- sions for environmental commitments. For 2024, climate change was not assessed as having a mate- rial impact on the financial statements or on the estimates and assumptions made in the preparation of the annual report. Parent company accounting policies The Group’s Parent company, ASSA ABLOY AB, is responsible for Group management and provides Group-wide functions. The Parent company’s revenue consists of intra-group fran- chise and royalty revenues. The significant balance sheet items consist of shares in subsidiaries, intra-group receivables and liabilities, and external borrowing. The Parent company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act (1995:1554) and the Swedish Corporate Reporting Board’s RFR 2 Accounting for Legal Entities. RFR 2 requires the Parent company, in its annual accounts, to apply all the International Financial Reporting Standards (IFRS) adopted by the EU in so far as this is possible within the framework of the Annual Accounts Act and with regard to the relationship between accounting and taxation. The recommendation states which exceptions from and addi- tions to IFRS should be made. Revenue The Parent company’s revenue consists of intra-group fran- chise and royalty revenues. These are recognized in the income statement as ‘Other operating income’ to make clear that the Parent company has no product sales like other Group companies with external operations. Dividend Dividend revenue is recognized when the right to receive payment is considered certain. Research and development costs Research and development costs are expensed as incurred, with the exception of large product development projects, which have been capitalized. Intangible assets Intangible assets comprise patented technology and other intangible assets. Intangible assets are amortized over a maxi- mum of five years, except for acquisition-related intangible assets, which are amortized over 5–10 years. Note 1 continued 126 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Property, plant and equipment Property, plant and equipment owned by the Parent company are recognized at cost less accumulated depreciation and any impairment losses in the same way as for the Group. They are depreciated over their estimated useful life, which entails 5–10 years for equipment and 3–5 years for IT equipment. Trade receivables Trade receivables are recognized initially at fair value and sub- sequently measured at amortized cost using the effective interest method. The Parent company applies the IFRS 9 sim- plified approach to measuring expected credit losses for trade receivables. However, the expected credit losses attributable to the Parent company’s trade receivables have been assessed to be immaterial. Pension obligations The Parent company’s pension obligations are recognized in accordance with the simplification rule in RFR2, which means that defined benefit pensions are recognized as a defined con- tribution plan, and are covered by taking out insurance with an insurance company. Leases The Parent company recognizes leases in accordance RFR 2, which means that lease payments are expensed in a straight line over the lease term. Shares in subsidiaries Shares in subsidiaries are recognized at cost less impairment plus acquisition costs. When there is an indication that the value of shares and interests in subsidiaries or associates has fallen, the recoverable amount is calculated. If this is lower than the carrying amount, an impairment loss is recognized. Impairment losses are recognized in Financial expenses in the income statement. Group contributions The Parent company recognizes Group contributions in accordance with RFR 2. Group contributions received and paid are recognized under appropriations in the income statement. The tax effect of Group contributions is recog- nized in accordance with IAS 12 in the income statement. Contingent liabilities The Parent company has provided guarantees to the benefit of its subsidiaries. Such an obligation is classified as a financial guarantee in accordance with IFRS. For these guarantees, the Parent company applies the alternative rule in RFR 2, report- ing these guarantees as a contingent liability. NOTE 2 Revenue from contracts with customers and segment information Disaggregation of revenue from contracts with customers Sales by product group EMEIA Americas Asia Pacific Global Technologies Entrance Systems Other Group SEK M 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 Mechanical locks, lock systems and fittings 11,653 11,518 15,691 21,769 5,286 5,135 416 443 9 7 –780 –874 32,275 37,999 Electromechanical and electronic locks 8,002 8,401 9,281 10,740 2,193 1,636 22,510 23,708 1,304 1,231 –1,128 –853 42,161 44,864 Security doors and hardware 4,722 4,774 12,953 11,718 2,606 2,257 173 28 3,984 4,359 –150 –182 24,288 22,955 Entrance automation 454 405 84 113 200 92 – – 41,369 43,852 –114 –119 41,992 44,344 Total 24,831 25,098 38,009 44,340 10,284 9,120 23,099 24,179 46,665 49,451 –2,173 –2,027 140,716 150,162 Sales by continent EMEIA Americas Asia Pacific Global Technologies Entrance Systems Other Group SEK M 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 Europe 21,211 21,475 85 87 568 686 6,243 6,844 18,395 19,166 –841 –1,000 45,661 47,257 North America 691 681 34,201 39,951 2,436 2,122 11,089 11,377 25,136 26,765 –871 –541 72,682 80,354 Central and South America 99 106 3,448 3,891 48 52 900 793 159 284 –37 –55 4,617 5,071 Africa 973 1,045 10 7 14 7 662 932 68 75 –36 –42 1,691 2,025 Asia 1,689 1,641 249 372 4,284 3,518 2,894 3,013 1,509 1,647 –226 –239 10,399 9,952 Oceania 168 150 17 32 2,934 2,736 1,310 1,221 1,399 1,514 –162 –150 5,666 5,503 Total 24,831 25,098 38,009 44,340 10,284 9,120 23,099 24,179 46,665 49,451 –2,173 –2,027 140,716 150,162 Customer sales by country Group Group Group SEK M 2023 2024 SEK M 2023 2024 SEK M 2023 2024 US 64,522 71,151 Norway 1,341 1,310 Japan 284 344 France 7,409 7,077 India 1,163 1,252 Hungary 282 311 United Kingdom 6,410 6,676 South Korea 1,290 1,238 Croatia 228 306 Canada 5,540 6,440 Austria 886 1,046 Romania 262 305 Germany 5,380 5,743 New Zealand 976 1,044 Taiwan 311 303 Sweden 5,018 5,035 Ireland 925 903 Estonia 268 285 Australia 4,646 4,392 United Arab Emirates 664 879 Kenya 142 272 Netherlands 3,051 3,121 South Africa 637 771 Thailand 266 259 Mexico 2,620 2,763 Czech Republic 643 617 Guatemala 206 253 China 3,165 2,582 Saudi Arabia 669 566 Costa Rica 185 239 Brazil 2,218 2,291 Turkey 579 566 Philippines 330 219 Switzerland 1,674 1,957 Singapore 491 504 Nigeria 116 176 Spain 1,599 1,876 Chile 492 482 Malaysia 186 170 Belgium 1,924 1,876 Hong Kong 380 452 Malta 162 157 Finland 1,859 1,840 Colombia 401 397 Other countries 3,610 3,809 Denmark 1,619 1,741 Portugal 378 389 Total 140,716 150,162 Poland 1,521 1,557 Israel 360 382 Italy 1,236 1,464 Peru 191 374 Note 1 continued 127 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Revenue recognition Of the Group’s revenue in 2024, SEK 22,197 M (19,365) has been recognized over time, while SEK 127,965 M (121,351) related to commitments transferred at a certain point in time. Contract assets and contract liabilities The Group recognizes the following revenue-related contract assets and contract liabilities: Contract assets Group SEK M 2023 2024 Accrued revenue 974 1,104 Total 974 1,104 Contract liabilities Group SEK M 2023 2024 Non-current advances from customers and deferred revenue 70 78 Current advances from customers and deferred revenue 3,474 3,982 Total 3,543 4,060 Contract assets increased by SEK 130 M during the year, of which acquired companies contributed SEK 5 M. Contract liabilities have increased by SEK 517 M. Acquired and discon- tinued companies resulted in a net increase in contract liabili- ties of SEK 592 M during the year. The total contract liability at 31 December 2023 of SEK 3,543 M was to a large extent rec- ognized as income in 2024. Remaining performance obligations The total transaction price allocated to unsatisfied perfor- mance obligations at the reporting date amounts to SEK 25,885 M. Of this amount, SEK 24,017 M is expected to be rec- ognized as revenue in 2024, while an estimated SEK 1,868 M will be recognized as revenue in 2025 or later. At 31 December 2023 the total transaction price allocated to unsatisfied performance obligations was SEK 22,974 M. Segment assets and liabilities EMEIA Americas Asia Pacific Global Technologies Entrance Systems Other Group SEK M 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 Segment assets 27,179 29,023 74,774 78,466 12,074 11,661 31,487 36,418 47,870 58,342 2,514 4,738 195,898 218,648 - of which goodwill 13,232 14,552 32,382 36,524 5,379 5,582 18,989 21,504 22,891 28,711 – – 92,873 106,874 Unallocated assets 453 4,957 Total assets 196,351 223,605 Segment liabilities 7,476 7,472 12,705 12,877 3,237 2,757 6,111 7,159 11,395 14,435 61,466 68,679 102,388 113,379 Unallocated liabilities 2,319 3,146 Total 104,707 116,525 Note 2 continued NOTE 3 Auditors’ fees Group Parent company SEK M 2023 2024 2023 2024 Audit assignment EY 90 83 11 15 Others 33 52 – – Audit-related services in addition to audit assign- ment EY 0 0 0 0 Tax advice EY 3 4 – – Others 27 27 3 3 Other services EY 6 9 4 5 Others 7 70 2 1 Total 166 245 20 23 The auditors’ fee for EY in Sweden during the year was SEK 22 M (14) and the fee for extra services was SEK 0 M (0). NOTE 4 Other operating income and expenses Group SEK M 2023 2024 Change in insurance reserve 66 75 Remeasurement of deferred considerations 30 46 Profit/loss on sales of non-current assets 59 107 Restructuring costs –42 – Business-related taxes –65 –29 Transaction expenses from acquisitions –923 –307 Exchange differences –113 –107 Other, net –405 231 Total –1,393 17 In addition to the above, the significant item Capital gain on divestment of subsidiaries is recognized separately in the income statement. Parent company Other operating income in the Parent company consists mainly of franchise and royalty revenues from subsidiaries. 128 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 5 Share of earnings in associates SEK M Group 2023 2024 Goal Co., Ltd 7 22 PT Jasuindo Arjo Wiggins Security 11 12 Saudi Crawford Doors Ltd – 6 Skidata Parking System Ltd – 2 Others – 4 Total 18 45 NOTE 6 Recognition of leases for the Parent company The Parent company recognizes leases in accordance RFR 2, which means that lease payments are expensed in a straight line over the lease term. Leases in the Parent company mainly relate to rented premises and cars. SEK M Parent company 2023 2024 Lease payments during the year 19 19 Total 19 19 Nominal value of agreed future lease payments: Due for payment in: (2024) 2025 18 25 (2025) 2026 18 23 (2026) 2027 5 15 (2027) 2028 – 11 (2028) 2029 – 11 Total 41 85 NOTE 7 Expenses by nature and function In the income statement, expenses are broken down by func- tion, except for significant items that have been recognized separately: Impairment of goodwill and other acquisition-re- lated intangible assets is attributable to the Selling expenses function, which amounts to SEK 24,105 M (23,668), including these impairments. The expenses per function broken down into the main natures are shown below. Group SEK M 2023 2024 Remuneration of employees (Note 35) 40,783 45,184 Direct material costs 50,364 50,542 Depreciation, amortization and impairment (Notes 8, 14, 15) 7,646 5,645 Other purchase expenses 22,350 24,602 Total 121,144 125,974 NOTE 8 Depreciation, amortization and impairment Group Parent company SEK M 2023 2024 2023 2024 Intangible assets 4,195 1,865 1,210 1,089 Machinery 905 917 – – Equipment 544 606 16 17 Buildings 393 350 – – Land improvements 3 7 – – Right-of-use assets 1,606 1,900 – – Total 7,646 5,645 1,226 1,105 NOTE 9 Exchange differences in the income statement Group Parent company SEK M 2023 2024 2023 2024 Exchange differences recognized in operating income –102 –82 48 19 Exchange differences recognized in financial expenses 30 29 2 –3 Total –72 –53 50 16 NOTE 10 Financial income Group Parent company SEK M 2023 2024 2023 2024 Dividends received from subsidiaries – – 1,136 6,008 Dividends received from associates – 0 3 3 Capital gain/loss on sale of subsidiaries – – 0 0 Fair value adjustments shares and interests – – – – Intra-Group interest income – – 709 1,489 External interest income and similar items 139 119 – 0 Other financial income 17 13 0 0 Total 157 133 1,848 7,500 NOTE 11 Financial expenses Group Parent company SEK M 2023 2024 2023 2024 Interest expenses¹ –2,289 –3,136 –1,849 –3,091 Interest expenses on lease liabilities –183 –275 – – Interest expenses on pension provisions, net –52 –56 – – Exchange differences on financial items 30 29 2 –3 Other financial expenses –194 –77 –143 –23 Total –2,687 –3,515 –1,990 –3,117 ¹ Of which SEK -244 M (253) is attributable to changes in value of derivative instruments, not hedge accounting, for the Group. NOTE 12 Tax on income Group Parent company SEK M 2023 2024 2023 2024 Current tax –6,321 –4,919 –676 –580 Tax attributable to prior years 118 –206 2 0 Withholding tax –15 –46 –1 –3 Deferred tax 604 –102 –22 2 Total –5,615 –5,272 –696 –581 Explanation for the difference between nominal Swedish tax rate and effective tax rate based on income before tax: Group Parent company Percent 2023 2024 2023 2024 Swedish income tax rate 21 21 21 21 Effect of foreign tax rates 3 3 – 1 Non-taxable income/non-deductible expenses 1 1 –9 –15 Exercised/new, not yet measured tax loss carryforwards 1 1 – – Tax attributable to prior years –1 –1 – – Items affecting comparability (see Note 13) 6 0 – – Other –1 0 – – Effective tax rate in income statement 29 25 12 7 OECD Pillar Two model rules ASSA ABLOY is subject to the OECD Pillar Two model rules. The legislation requires the Group to pay an additional tax on the difference between their GloBE effective tax rate per jurisdiction and the minimum tax rate of 15 percent. Pillar Two legislation has entered into force in Sweden, the jurisdiction where ASSA ABLOY is registered. The Group applies the exemption to recognize and disclose deferred tax assets and tax lia- bilities related to income taxes from Pillar Two, as set out in the amendments to IAS 12 issued in May 2023. ASSA ABLOY has evaluated its exposure to Pillar Two legislation for the 2024 financial year. Based on this, the total additional tax levied for the 2024 financial year will be insignificant. A majority of the entities in the Group have an effective tax rate exceeding 15 percent, for which reason ASSA ABLOY is only subject to additional tax on operations in a few jurisdictions. These jurisdictions are mostly jurisdictions with a nominal corporate tax rate below 15 percent, or jurisdictions with a nominal corporate tax rate of around 15 percent. This is on account of the effect of specific adjustments resulting from Pillar Two legislation, which give rise to differ- ent effective tax rates from those calculated in accordance with paragraph 86 of IAS 12. 129 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 13 Earnings per share Earnings per share before and after dilution Group SEK M 2023 2024 Earnings attributable to the Parent company’s shareholders 13,633 15,639 Net profit 13,633 15,639 Weighted average number of outstanding shares (thousands) 1,110,776 1,110,776 Earnings per share (SEK) 12.27 14.08 None of the Group’s outstanding long-term incentive programs are expected to result in significant dilution in the future. Earnings per share before and after dilution and excluding items affecting comparability Group SEK M 2023 2024 Earnings attributable to the Parent company’s shareholders 13,633 15,639 Items affecting comparability Impairment of goodwill and other acquisition-related intangible assets 2,271 – Tax effect of the impairment of goodwill and other acquisition-related intangible assets –143 – Capital gain/loss from the divestment of Emtek and Smart Residential, including exit costs –3,588 21 Tax effect of the capital gain/loss from the divestment of Emtek and Smart Residential, including exit costs 1,522 –5 Restructuring costs 1,250 – Tax effect of restructuring costs –253 – Recognition of fair value measurement in the acquisition of HHI 466 – Tax effect of recognition of fair value measurement in the acquisition of HHI –117 – Total items affecting comparability after tax 1,409 15 - of which items affecting comparability before tax 400 21 - of which tax effect of items affecting comparability 1,009 –5 Net profit excluding items affecting comparability 15,042 15,654 Weighted average number of outstanding shares (thousands) 1,110,776 1,110,776 Earnings per share excluding items affecting comparability (SEK) 13.54 14.09 NOTE 14 Intangible assets Group Parent company Other intangible 2024, SEK M Goodwill Brands assets Total Intangible assets Opening accumulated acquisition cost 99,092 25,433 21,675 146,200 11,962 Purchases – 0 278 279 9 Acquisitions of subsidiaries 8,474 1,436 1,293 11,203 – Divestments of subsidiaries –151 – – –151 – Sales, disposals and adjustments – – –353 –353 – Reclassifications – 1 34 35 – Exchange rate differences 6,177 2,086 1,420 9,683 – Closing accumulated acquisition cost 113,593 28,958 24,346 166,896 11,971 Opening accumulated amortization and impairment –6,219 –1,322 –10,956 –18,496 –9,187 Acquisitions of subsidiaries –30 –3 –64 –98 Divestments of subsidiaries – – – – – Sales, disposals and adjustments – 0 225 225 – Depreciation and amortization – –1 –1,857 –1,859 –1,089 Impairment – – –6 –6 – Impairment recognized in restructuring reserve – – – – – Reclassifications – 0 5 5 – Exchange rate differences –469 –95 –699 –1,263 – Closing accumulated amortization and impairment –6,719 –1,421 –13,351 –21,491 –10,275 Carrying amount 106,874 27,537 10,995 145,405 1,695 Group Parent company Other intangible 2023, SEK M Goodwill Brands assets Total Intangible assets Opening accumulated acquisition cost 80,728 10,217 15,285 106,230 11,959 Purchases – 1 270 270 3 Acquisitions of subsidiaries 25,464 16,625 7,250 49,340 – Divestments of subsidiaries –3,218 –253 –255 –3,725 – Sales, disposals and adjustments – –3 –175 –178 – Reclassifications – 28 –8 20 – Exchange rate differences –3,882 –1,182 –693 –5,756 – Closing accumulated acquisition cost 99,092 25,433 21,675 146,200 11,962 Opening accumulated amortization and impairment –4,854 –1,323 –9,155 –15,333 –7,976 Divestments of subsidiaries – – 135 135 – Sales, disposals and adjustments – – 135 135 – Depreciation and amortization – –2 –1,624 –1,626 –1,135 Impairment –1,741 –86 –660 –2,487 –75 Impairment recognized in restructuring reserve – 0 –82 –82 – Exchange rate differences 376 89 297 762 – Closing accumulated amortization and impairment –6,219 –1,322 –10,956 –18,496 –9,187 Carrying amount 92,873 24,112 10,719 127,704 2,775 130 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Other intangible assets consist mainly of customer relations and technology. The carrying amount of intangible assets with an indefinite useful life, excluding goodwill, amounts to SEK 27,456 M (24,077) and relates to brands. Useful life has been defined as indefinite where the time period, during which an asset is deemed to contribute eco- nomic benefits, cannot be determined. Impairment testing of goodwill and intangible assets with indefinite useful life Goodwill and intangible assets with an indefinite useful life are allocated to the Group’s Cash Generating Units (CGUs). Since 2023, the Group has had six CGUs, equivalent to the Group’s five divisions except for Global Technologies, whose two business units, HID and Global Solutions, each constitute a CGU. As a result of the acquisitions and strategy in recent years, Global Solutions and HID have started to differ in terms of business model and technology, and their cash flows have become more distinct from each other. For each cash-generating unit, the Group tests goodwill and intangible assets with an indefinite useful life for impair- ment annually and when events or circumstances indicate that the carrying amount may not be recoverable. Recover- able amounts for Cash Generating Units have been deter- mined by calculating value in use. These calculations are based on estimated future cash flows, which in turn are based on financial forecasts for a five-year period. Cash flows beyond the forecast period are extrapolated using estimated growth rates according to the information below. Material assumptions used to calculate values in use: • Forecast operating margin. • Growth rate for extrapolating cash flows beyond the forecast period. • Discount rate after tax used for estimated future cash flows. Management has determined the forecast operating margin based on previous results and expectations of future market development. A growth rate of 3 percent (3) has been used for all CGUs to extrapolate cash flows beyond the forecast period. This growth rate is considered to be a conservative estimate. Further, an average discount rate in local currency after tax has been used in the calculations. The difference in value compared with using a discount rate before tax is not deemed to be material. The discount rate has been deter- mined by calculating the weighted average cost of capital (WACC) for each cash generating unit. The impact of climate-related risks on future cash flows has also been considered at CGU level, including commitments Note 14 continued for capital and operating expenditure. No significant financial impact on the current year’s impairment assessment was identified. 2024 A discount rate after tax of 8.0 percent has been used for all cash-generating units. No impairment was recognized for goodwill and other intangible assets during the year. Goodwill and intangible assets with an indefinite useful life were allocated to the Cash Generating Units as summarized in the table below: Global Entrance 2024, SEK M EMEIA Americas Asia Pacific HID Solutions Systems Total Goodwill 14,552 36,524 5,582 17,154 4,350 28,711 106,874 Intangible assets with indefinite useful life 469 17,335 1,277 1,356 273 6,746 27,456 Total 15,021 53,859 6,860 18,510 4,623 35,457 134,330 2023 Overall, the discount rate after tax used varied between 8.0 and 9.0 percent (EMEIA 8.0 percent, Americas 8.0 percent, Asia Pacific 9.0 percent, HID 8.0 percent, Global Solutions 8.0 percent and Entrance Systems 8.0 percent). In 2023, goodwill and other intangible assets were impaired in the amount of SEK 2,271 M, mainly attributable to Citizen ID in the Global Technologies division. Goodwill and intangible assets with an indefinite useful life were allocated to the Cash Generating Units as summarized in the table below: Global Entrance 2023, SEK M EMEIA Americas Asia Pacific HID Solutions Systems Total Goodwill 13,232 32,382 5,379 16,179 2,810 22,891 92,873 Intangible assets with indefinite useful life 409 15,743 1,238 939 125 5,624 24,077 Total 13,642 48,125 6,617 17,118 2,935 28,514 116,950 Sensitivity analysis A sensitivity analysis has been carried out for each Cash Generating Unit. The results of this analysis are summarized below. 2024 If the estimated operating margin after the end of the forecast period had been one percentage point lower than the man- agement’s estimate, the total recoverable amount would have been 5 percent lower (EMEIA 6 percent, Americas 4 per- cent, Asia Pacific 9 percent, HID 5 percent, Global Solutions 5 percent, and Entrance Systems 5 percent). If the estimated growth rate used to extrapolate cash flows beyond the forecast period had been one percentage point lower than the basic assumption of 3 percent, the total recov- erable amount would have been 13 percent lower (EMEIA 13 percent, Americas 13 percent, Asia Pacific 13 percent, HID 13 percent, Global Solutions 13 percent, and Entrance Systems 13 percent). If the estimated weighted capital cost used for the Group’s discounted cash flows had been one percentage point higher than the basic assumption of 8.0 percent, the total recover- able amount would have been 17 percent lower (EMEIA 17 percent, Americas 17 percent, Asia Pacific 17 percent, HID 17 percent, Global Solutions 17 percent, and Entrance Systems 17 percent). These calculations are hypothetical and should not be viewed as an indication that these factors are any more or less likely to change. The sensitivity analysis should therefore be interpreted with caution. None of the hypothetical cases above would lead to an impairment of goodwill in an individual Cash Generating Unit. 2023 If the estimated operating margin after the end of the forecast period had been one percentage point lower than the man- agement’s estimate, the total recoverable amount would have been 5 percent lower (EMEIA 5 percent, Americas 4 per- cent, Asia Pacific 8 percent, HID 4 percent, Global Solutions 5 percent, and Entrance Systems 5 percent). If the estimated growth rate used to extrapolate cash flows beyond the forecast period had been one percentage point lower than the basic assumption of 3 percent, the total recov- erable amount would have been 13 percent lower (EMEIA 13 percent, Americas 13 percent, Asia Pacific 10 percent, HID 13 percent, Global Solutions 13 percent, and Entrance Systems 13 percent). If the estimated weighted capital cost used for the Group’s discounted cash flows had been one percentage point higher than the basic assumption of 8.0 to 9.0 percent, the total recoverable amount would have been 17 percent lower (EMEIA 17 percent, Americas 17 percent, Asia Pacific 15 per- cent, HID 17 percent, Global Solutions 17 percent, and Entrance Systems 17 percent). These calculations are hypothetical and should not be viewed as an indication that these factors are any more or less likely to change. The sensitivity analysis should therefore be interpreted with caution. None of the hypothetical cases above would lead to an impairment of goodwill in an individual Cash Generating Unit. 131 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 15 Property, plant and equipment Group Parent company Land and land Construction in 2024, SEK M Buildings improvements Machinery Equipment progress Total Equipment Opening accumulated acquisition cost 8,369 1,284 12,949 6,007 1,456 30,066 151 Purchases 100 0 412 499 1,273 2,283 11 Acquisitions of subsidiaries 239 21 444 230 8 942 – Divestments of subsidiaries – – –2 –42 – –43 – Sales and disposals –387 –14 –794 –613 –64 –1,871 –6 Reclassifications 412 23 823 189 –1,484 –37 – Exchange rate differences 549 91 973 372 77 2,062 – Closing accumulated acquisition cost 9,282 1,405 14,805 6,641 1,266 33,400 155 Opening accumulated depreciation and impairment –4,616 –127 –9,354 –4,508 – –18,606 –118 Acquisitions of subsidiaries –95 –1 –238 –150 – –484 – Divestments of subsidiaries 0 – 2 28 – 30 – Sales and disposals 271 0 759 578 – 1,609 6 Depreciation and amortization –345 –7 –898 –571 – –1,821 –17 Impairment –5 – –21 –33 – –59 – Impairment recognized in restructuring reserve 0 – 2 –2 – 0 – Reclassifications –1 –2 –12 12 – –3 – Exchange rate differences –318 –6 –756 –333 – –1,413 – Closing accumulated depreciation and impairment –5,109 –143 –10,515 –4,980 – –20,747 –128 Carrying amount 4,173 1,262 4,290 1,662 1,266 12,653 27 Group Parent company Land and land Construction in 2023, SEK M Buildings improvements Machinery Equipment progress Total Equipment Opening accumulated acquisition cost 7,787 1,258 12,205 5,664 1,232 28,146 147 Purchases 310 1 363 407 1287 2,369 5 Acquisitions of subsidiaries 524 79 530 214 75 1,422 – Divestments of subsidiaries –83 –16 –156 –53 –30 –339 – Sales and disposals –103 –19 –227 –190 –45 –585 –2 Reclassifications 144 14 693 146 –1,018 –20 – Exchange rate differences –209 –33 –459 –181 –45 –927 – Closing accumulated acquisition cost 8,369 1,284 12,949 6,007 1,456 30,066 151 Opening accumulated depreciation and impairment –4,431 –128 –9,145 –4,336 – –18,040 –104 Divestments of subsidiaries 24 2 118 38 – 182 – Sales and disposals 69 – 225 169 – 463 2 Depreciation and amortization –289 –3 –797 –525 – –1,613 –16 Impairment –23 – –84 –4 – –111 – Impairment recognized in restructuring reserve –81 – –24 –16 – –120 – Reclassifications – – – – – – – Exchange rate differences 114 2 352 165 – 633 – Closing accumulated depreciation and impairment –4,616 –127 –9,354 –4,508 – –18,606 –118 Carrying amount 3,753 1,157 3,596 1,499 1,456 11,460 33 NOTE 16 Right-of-use assets The following amounts regarding right-of-use assets are recognized in the balance sheet. Group SEK M 2023 2024 Buildings 4,253 4,807 Machinery 32 31 Vehicles 894 1,302 Other equipment 117 155 Total 5,296 6,295 Additions to right-of-use assets for 2024 amounted to SEK 2,689 M (3,440). The following amounts related to leases are recognized in the income statement: Group SEK M 2023 2024 Amortization attributable to right-of-use assets: Buildings –1,164 –1,352 Machinery –11 –12 Vehicles –396 –491 Other equipment –34 –45 Operating expenses attributable to: Short-term leases –54 –66 Leases of low-value assets –23 –12 Variable lease payments are not included in lease liabilities –30 –23 Interest expenses relating to: Lease liabilities –183 –275 Total –1,896 –2,275 The total cash flow attributable to leases in 2024 was SEK 2,072 M (1,726). 132 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 17 Shares in subsidiaries Parent company Carrying Corporate identity number, Number of Share of amount, Company name Registered office shares equity, % SEK M ASSA Sverige AB 556061-8455, Eskilstuna 70 100 197 ASSA ABLOY Entrance Systems AB 556204-8511, Landskrona 1,000 100 287 ASSA ABLOY Global Solutions AB 556666-0618, Stockholm 1,306,891 100 475 ASSA ABLOY Kredit AB 556047-9148, Stockholm 400 100 6,036 ASSA ABLOY Holding AB 559180-8646, Stockholm 6,500 100 7,813 ASSA ABLOY Försäkrings AB 516406-0740, Stockholm 60,000 100 185 ASSA ABLOY Asia Holding AB 556602-4500, Stockholm 1,000 100 2,001 ASSA ABLOY OY 1094741-7, Joensuu 800,000 100 4,257 ASSA ABLOY Norge A/S 979207476, Moss 150,000 100 538 ASSA ABLOY Danmark A/S CVR 10050316, Herlev 60,500 100 376 ASSA ABLOY Deutschland GmbH HR B 66227, Berlin 1 100 1,086 ASSA ABLOY Nederland Holding B.V. 52153924, Raamsdonksveer 180 100 771 ASSA ABLOY France SAS 412140907, R.C.S. Versailles 15,184,271 100 1,964 HID Global Switzerland S.A. CH-232-0730018-2, Granges 2,500 100 47 ASSA ABLOY Entrance Systems Austria GmbH A-2320 Schwechat 1 100 109 ASSA ABLOY Ltd 2096505, Willenhall 1,330,000 100 3,091 Mul-T-Lock Ltd 520036583, Yavne 13,787,856 100 901 ASSA ABLOY Holdings (SA) Ltd 1948/030356/06, Roodepoort 100,220 100 447 ASSA ABLOY Inc 039347-83, Oregon 100 100 9,157 ABLOY Canada Inc. 1148165260, Montreal 1 100 0 ASSA ABLOY of Canada Ltd 104722749 RC0003, Ontario 9,621 100 511 ASSA ABLOY Australia Pacific Pty Ltd ACN 095354582, Oakleigh, Victoria 48,190,000 100 844 Cerramex, S.A de C.V CER8805099Y6, Mexico City 4 0¹ 0 ASSA ABLOY Mexico, S.A de CV AAM961204CI1, Mexico City 50,108,549 100 1,329 Cerraduras y Candados Phillips S.A de C.V CCP910506LK2, Mexico City 112 0¹ 0 ASSA ABLOY Colombia S.A.S 860009826-8, Bogota 3,115,080 100 203 ASSA ABLOY Asia Pacific Ltd 53451, Hong Kong 999,999 99¹ 72 ASSA ABLOY Entrance Systems IDDS AB 556071-8149, Landskrona 25,000,000 100 5,323 ASSA ABLOY Portugal, Unipessoal, Lda (Portugal) PT500243700, Alfragide 1 100 23 ASSA ABLOY Holding Italia S.p.A. IT01254420597, Rome 650,000 100 1,019 HID SA (Argentina) CUIT 30-61783980-2, Buenos Aires 240 2¹ 0 HID Global SAS FR21341213411, Nanterre 1,000,000 100 2,672 ASSA ABLOY East Africa Ltd C.20402, Nairobi 13,500 100 90 Omni-ID Ltd 6163600, Bristol 2,200,000 100 26 ASSA ABLOY Industrietore GmbH 574125b, Schwechat 1,000 100 0 HID Ireland Limited 752101, Galway 1,000,000 100 88 HID Global Tanzania 140894, Dar Es Salaam 459 100 0 Total 51,938 ¹ The Group’s holdings amount to 100 percent. NOTE 18 Investments in associates Group Share Share Carrying Carrying Number of of equity of equity amount amount Company name Country of registration shares 2023, % 2024, % 2023, SEK M 2024, SEK M Goal Co., Ltd Japan 2,778,790 46 46 557 571 PT Jasuindo Arjo Wiggins Security Indonesia 1,533,412 49 49 46 61 Skidata (India) Private Ltd India 9,608 – 49 – 22 Skidata Parking System Ltd United Kingdom 2,600 – 26 – 30 SARA Loading Bay Ltd United Kingdom 4,990 50 50 13 14 Saudi Crawford Doors Ltd Saudi Arabia 800 40 40 5 5 Others 1 7 Total 622 710 NOTE 19 Deferred tax Group SEK M 2023 2024 Deferred tax assets Non-current assets 288 274 Pension provisions 232 297 Tax loss carryforwards etc. 84 75 Other deferred tax assets 2,345 2,894 Offset deferred tax assets –1,087 –1,444 Deferred tax assets 1,863 2,097 Deferred tax liabilities Non-current assets 2,197 2,155 Pension provisions 192 161 Other deferred tax liabilities 1,689 2,451 Offset deferred tax liabilities –1,087 –1,444 Deferred tax liabilities 2,991 3,322 Deferred tax assets, net –1,128 –1,225 The items Other deferred tax assets and Other deferred tax liabilities include deferred tax on right-of-use assets and lease liabilities from leases amounting to SEK 1,402 M (1,034) and SEK 1,341 M (1,004) respectively. Change in deferred tax Group SEK M 2023 2024 Opening balance –1,472 –1,128 Acquisitions and divestments –276 27 Recognized in income statement 604 –102 Actuarial gain/loss on post-employment benefit obligation 7 48 Exchange differences 9 –70 Closing balance –1,128 –1,225 The Group’s total tax loss carryforwards amount to SEK 7,743 M, of which SEK 7,102 M (5,757) are tax loss carryforwards for which deferred tax assets have not been measured, as the extent to which it is likely that future taxable profit will be available against which the tax loss carryforwards can be uti- lized is deemed uncertain. The unmeasured losses relate to companies in the following countries: SEK M 2024 SEK M 2024 Angola 3 Netherlands 91 Australia 3 Nigeria 3 Belgium 3 Portugal 49 Brazil 841 Switzerland 21 Chile 66 Slovakia 80 Denmark 56 St Lucia 2 Philippines 4 United Kingdom 326 Finland 1 South Africa 73 France 1,020 Tanzania 16 Indonesia 8 Thailand 17 India 79 Czech Republic 19 Ireland 1 Turkey 41 Israel 41 Germany 64 Italy 470 Uganda 34 China 3,308 Vietnam 10 Malaysia 11 Austria 286 Mexico 55 Total 7,102 Of the total tax loss carryforwards and other tax credits, SEK 3,909 M is due within five years, while SEK 3,834 M has no due date. 133 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 20 Other financial assets Group Parent company SEK M 2023 2024 2023 2024 Investments in associates – – 461 462 Other shares and interests 115 325 – – Non-current interest-bearing receivables 223 224 – – Other non-current receivables 75 148 41 44 Total 412 698 503 505 NOTE 21 Inventories Group SEK M 2023 2024 Materials and supplies 5,777 5,939 Work in progress 3,689 4,051 Finished goods 8,981 10,875 Advances paid 156 155 Total 18,603 21,020 Impairment of inventories during the year amounted to SEK 534 M (1,434). NOTE 22 Trade receivables Group SEK M 2023 2024 Trade receivables 23,844 26,307 Loss allowance –2,910 –2,864 Total 20,934 23,444 Trade receivables by currency Group SEK M 2023 2024 USD 9,446 11,020 EUR 4,711 5,279 GBP 1,058 1,092 CAD 743 729 SEK 717 720 AUD 603 513 CNY 592 466 BRL 324 316 Other currencies 2,740 3,310 Total 20,934 23,444 Maturity analysis Group SEK M 2023 2024 Current trade receivables 16,759 18,862 Trade receivables due: < 3 months 4,719 4,927 3–12 months 1,136 1,269 >12 months 1,230 1,250 7,085 7,445 Impaired trade receivables: Not yet due –767 –788 Trade receivables due: < 3 months –639 –596 3–12 months –275 –232 >12 months –1,228 –1,247 –2,910 –2,864 Total 20,934 23,444 Change in loss allowance for trade receivables Group SEK M 2023 2024 Opening balance 2,145 2,910 Acquisitions and divestments of subsidiaries 743 29 Actual losses –351 –288 Reversal of unused amounts –211 –362 Provision for bad debts 727 365 Exchange rate differences –143 211 Closing balance 2,910 2,864 NOTE 23 Parent company’s equity and proposed distribution of earnings The Parent company’s equity is split between restricted and non-restricted equity. Restricted equity consists of share capi- tal, revaluation reserve, statutory reserve and the fund for development expenses. The statutory reserve contains premi- ums (amounts received from share issues that exceed the nominal value of the shares) relating to shares issued up to 2005. Non-restricted equity consists of share premium reserves, retained earnings and net income for the year. Earnings of SEK 17,079,458,049 are at the disposal of the Annual General Meeting. The Board of Directors proposes a dividend for the 2024 financial year of SEK 5.90 per share, SEK 6,553,580,371 in total, and that the remainder, SEK 10,525,877,679, be carried forward to the new financial year. NOTE 24 Share capital, number of shares and dividend per share Number of shares, thousands Series A shares Series B shares Total Share capital, SEK K Opening balance at 1 January 2023 57,525 1,055,052 1,112,576 370,859 Closing balance at 31 December 2023 57,525 1,055,052 1,112,576 370,859 Number of votes, thousands 575,259 1,055,052 1,630,311 Opening balance at 1 January 2024 57,525 1,055,052 1,112,576 370,859 Closing balance at 31 December 2024 57,525 1,055,052 1,112,576 370,859 Number of votes, thousands 575,259 1,055,052 1,630,311 All shares have a par value of around SEK 0.33 (0.33) and give shareholders equal rights to the company’s assets and earn- ings. All shares are entitled to dividends subsequently deter- mined. Each Series A share carries ten votes and each Series B share one vote. All issued shares are fully paid. The weighted average number of shares was 1,110,776 (1,110,776) during the year. None of the Group’s outstanding long-term incentive programs are expected to result in signifi- cant dilution in the future. The total number of treasury shares at 31 December 2024 amounted to 1,800,000. No shares have been repurchased during the year. The dividend paid during the financial year totaled SEK 5,998 M (5,332), equivalent to SEK 5.40 (4.80) per share. 134 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 25 Post-employment employee benefits Post-employment employee benefits include pensions and medical benefits. Pension plans are classified as either defined benefit plans or defined contribution plans. Pension obliga- tions in the balance sheet mainly relate to defined benefit plans. ASSA ABLOY has defined benefit pension plans in a number of countries. The most comprehensive defined bene- fit plans are in the US, the UK and Switzerland. The defined benefit plans in the US, the United Kingdom and Switzerland are backed by pension fund assets. Unfunded plans for post-employment medical benefits also exist in the US, and are recognized in the same way as defined benefit pension plans. The operations of pension funds are regulated by national regulations and practice. The responsibility for monitoring the pension plans and their assets rests mainly with the boards of the pension funds, but can also rest more directly with the company. The Group has an overall policy for the lim- its within which asset allocation should be made. Each pen- sion fund adjusts its local asset allocation according to the nature of the local pension obligation, particularly the remaining term and the breakdown between active members and pensioners. The Group has not changed the processes used for managing these risks. Specification of defined benefit pension plans, post-employment medical benefits and plan assets by country United Kingdom Switzerland US Other countries Total Specification of defined benefits, SEK M 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 Present value of funded obligations 3,506 3,545 1,619 1,808 1,831 1,870 638 742 7,595 7,964 Fair value of plan assets –4,171 –4,235 –1,358 –1,522 –2,061 –2,315 –153 –251 –7,742 –8,322 Net value of funded plans –665 –690 261 287 –230 –445 486 491 –147 –358 Present value of unfunded obligations – – – – – – 1,082 1,302 1,082 1,302 Present value of unfunded medical benefits – – – – 479 506 3 3 483 510 Net value of defined benefit pension plans –665 –690 261 287 250 61 1,571 1,797 1,418 1,454 Provisions for defined contribution pension plans – – – – 6 3 11 20 17 24 Total –665 –690 261 287 255 65 1,583 1,817 1,435 1,478 Key actuarial assumptions United Kingdom Switzerland US Key actuarial assumptions (weighted average), % 2023 2024 2023 2024 2023 2024 Discount rate 4.8 5.5 1.7 1.1 4.9 5.5 Expected annual salary increases n/a n/a 1.1 1.1 4.0 4.0 Expected annual pension increases 3.6 3.7 0.0 0.0 1.5 1.5 Expected annual medical benefit increases n/a n/a n/a n/a 5.0 5.0 Expected annual inflation 3.0 3.2 1.3 1.0 n/a n/a The investments are well diversified so that depreciation of an individual investment should not have any material impact on the plan assets. The majority of assets are invested in shares as the Group considers that shares produce the best long-term return at an acceptable risk level. The total alloca- tion to shares should not, however, exceed 60 percent of total assets. Fixed income assets are invested in a combination of ordinary government bonds and corporate bonds but also in inflation-indexed bonds. The average term of these is nor- mally somewhat shorter than the term of the underlying lia- bility. Bonds should not account for less than 30 percent of assets. A small proportion of assets is also invested in real estate and alternative investments, mainly hedge funds. At 31 December 2024, shares accounted for 23 percent (25) and fixed income securities for 38 percent (43) of plan assets, while other assets accounted for 39 percent (32). The actual return on plan assets in 2024 was SEK 214 M (427), while the effect of changes in assumptions of pension liabili- ties totaled SEK –177 M (27). Swedish Group companies calculate tax on pension costs based on the difference between pension expense deter- mined in accordance with IAS 19 and liability in accordance with the regulations applicable in the legal entity. Amounts recognized in the income statement Pension costs, SEK M 2023 2024 Defined contribution pension plans 957 1,064 Defined benefit pension plans 171 173 Post-employment medical benefit plans 30 28 Total 1,158 1,264 of which, included in: Operating income 1,106 1,209 Net financial items 52 56 Amounts recognized in the balance sheet Pension provisions, SEK M 2023 2024 Provisions for defined benefit pension plans 935 944 Provisions for post-employment medical benefit plans 483 510 Provisions for defined contribution pension plans 17 24 Total 1,435 1,478 Pensions with Alecta Commitments for old-age pensions and family pensions for salaried employees in Sweden are secured in part through insurance with Alecta. According to UFR 10, this is a defined benefit plan that covers many employers. For the 2024 finan- cial year, the company has not had access to information mak- ing it possible to report this plan as a defined benefit plan. Pension plans in accordance with ITP secured through insur- ance with Alecta are therefore reported as defined contribu- tion plans. The year’s pension contributions that are con- tracted to Alecta total SEK 14 M (14), of which SEK 8 M (8) relates to the Parent company. Pension contributions are expected to remain largely unchanged in 2025. Alecta’s surplus can be distributed to policyholders and/or the insured. As at 31 December 2024, Alecta’s surplus expressed as the collective consolidation level amounted pre- liminarily to 162 percent (159 percent as at 31 December 2023). The collective consolidation level consists of the mar- ket value of Alecta’s assets as a percentage of its insurance commitments calculated according to Alecta’s actuarial cal- culation assumptions, which do not comply with IAS 19. The collective consolidation level is normally allowed to vary between 125 and 175 percent. If the consolidation level devi- ates from this range, measures in the form of an adjustment of the premium level should be taken to return to the normal range. 135 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Movement in obligations Post-employ- Post-employ- ment medical Defined benefit ment medical Defined benefit 2024, SEK M benefits pension plans Plan assets Total 2023, SEK M benefits pension plans Plan assets Total Opening balance 1 January 2024 482 8,677 –7,742 1,418 Opening balance 1 January 2023 524 8,535 –7,717 1,343 Acquisitions and divestments – 92 – 92 Acquisitions and divestments – 62 33 95 Recognized in the income statement: Recognized in the income statement: Current service cost 3 136 – 139 Current service cost 4 122 – 126 Past service cost – 6 – 6 Past service cost – 18 – 18 Interest expense/income 24 360 –329 56 Interest expense/income 26 361 –336 52 Total recognized in the income statement 28 502 –329 201 Total recognized in the income statement 30 501 –336 196 Recognized in other comprehensive income: Recognized in other comprehensive income: Return on plan assets, excluding amounts included above – – 114 114 Return on plan assets, excluding amounts included above – – –91 –91 Gain/loss from change in demographic assumptions – 46 – 46 Gain/loss from change in demographic assumptions – –128 – –128 Gain/loss from change in financial assumptions –10 –212 – –222 Gain/loss from change in financial assumptions –16 171 – 155 Experience-based gains/losses – 41 – 41 Experience-based gains/losses 0 72 – 72 Actuarial gain/loss on post-employment benefit obligations –10 –125 114 –21 Actuarial gain/loss on post-employment benefit obligations –16 115 –91 8 Exchange rate differences 48 560 –600 7 Exchange rate differences –23 17 –23 –29 Total recognized in other comprehensive income 37 435 –486 –13 Total recognized in other comprehensive income –39 131 –114 –21 Contributions and payments: Contributions and payments: Employer contributions – – –97 –97 Employer contributions – – –103 –103 Employee contributions 0 74 –74 0 Employee contributions 0 104 –96 8 Payments –38 –513 406 –145 Payments –33 –657 590 –100 Total payments –38 –439 234 –243 Total payments –33 –553 391 –196 Closing balance 31 December 2024 510 9,267 –8,322 1,454 Closing balance 31 December 2023 482 8,677 –7,742 1,418 Plan assets allocation Plan assets 2023 2024 Publicly traded shares 1,900 1,897 Government bonds 896 1,582 Corporate bonds 2,003 1,412 Inflation-linked bonds 458 147 Property 421 409 Cash and cash equivalents 93 400 Alternative investments – – Insurance policies and other assets 1,971 2,475 Total 7,742 8,322 Sensitivity analysis of defined benefit obligations and post-employment medical benefits The effect on defined benefit obligations and post-employment medical benefits of a 0.5 percentage point change in significant actuarial assumptions, change in percent +0.5% -0.5% Discount rate –5.3 6.2 Inflation 2.3 –2.1 Pension increases 2.8 –1.6 Expected annual medical benefit increases 3.1 –2.9 Sensitivity analyses for the main assumptions affecting the recognized pension liability are presented above. Note how- ever that the sensitivity analysis is not intended to express an opinion by ASSA ABLOY on the likelihood of these occurring. For 2025, ASSA ABLOY's assessment of the effects of future cash flows is that only minor contributions to the pension plans will be required. Note 25 continued 136 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 26 Other provisions Group Restruc- turing SEK M reserve Other Total Opening balance at 1 January 2024 767 860 1,627 Provisions for the year – 213 213 Acquisitions of subsidiaries – 31 31 Divestments of subsidiaries – –2 –2 Reversal of non-utilized amounts – –69 –69 Payments –748 –100 –848 Utilized without cash flow effect 0 – 0 Exchange rate differences 21 –14 7 Closing balance at 31 December 2024 39 919 958 Group Restruc- turing SEK M reserve Other Total Opening balance at 1 January 2023 294 650 944 Provisions for the year 1,250 253 1,503 Acquisitions of subsidiaries 57 46 103 Divestments of subsidiaries – –4 –4 Reversal of non-utilized amounts – –15 –15 Payments –613 –70 –683 Utilized without cash flow effect –202 – –202 Exchange rate differences –20 0 –20 Closing balance at 31 December 2023 767 860 1,627 Group Balance sheet breakdown: 2023 2024 Other non-current provisions 891 527 Other current provisions 736 431 Total 1,627 958 The restructuring reserve relates mainly to the ongoing restructuring program launched in 2023. The restructuring reserve is expected to be used during the coming year. The non-current part of the reserve totaled SEK 0 M. For further information on the restructuring programs, see the Report of the Board of Directors. Other provisions relate in part to legal obligations includ- ing future environment-related measures. NOTE 27 Other current liabilities Group SEK M 2023 2024 VAT and excise duties 1,033 1,325 Employee withholding tax 187 195 Advances received 2,048 2,468 Social security contributions and other taxes 120 135 Current deferred considerations 789 1,109 Other current liabilities 841 1,070 Total 5,017 6,302 NOTE 28 Accrued expenses and deferred income Group Parent company SEK M 2023 2024 2023 2024 Personnel-related expenses 5,218 5,971 194 188 Customer-related expenses 2,093 2,534 – – Deferred income 1,426 1,513 – – Accrued interest expenses 500 432 340 405 Other 4,915 5,082 95 72 Total 14,152 15,532 629 665 NOTE 29 Assets pledged against liabilities to credit institutions Group Parent company SEK M 2023 2024 2023 2024 Real estate mortgages 8 6 – – Other mortgages and collateral 69 72 – – Total 77 78 – – NOTE 30 Contingent liabilities Group Parent company SEK M 2023 2024 2023 2024 Guarantees to the benefit of subsidiaries – – 16,015 17,575 Other guarantees and contingent liabilities 103 77 – – Total 103 77 16,015 17,575 In addition to the guarantees shown in the table above, the Group has a large number of minor bank guarantees for per- formance of obligations in operating activities. No material liabilities are expected as a result of these guarantees. Group Maturity profile – guarantees, SEK M 2023 2024 <1 year 76 64 >1 <2 years 2 5 >2 <5 years 18 1 >5 years 7 8 Total 103 77 NOTE 31 Cash flow items Group SEK M 2023 2024 Adjustments for non-cash items Profit/loss on sales of non-current assets –59 –107 Profit/loss on sales of subsidiaries 0 –45 Change in pension provisions 144 137 Share of earnings in associates –18 –45 Dividend from associates 3 3 Remeasurement of deferred considerations –30 –46 Other 82 118 Adjustments for non-cash items 123 14 Change in working capital Inventories increase/decrease (–/+) 2,380 –60 Trade receivables increase/decrease (–/+) –49 –280 Trade payables increase/decrease (+/–) –214 153 Other working capital increase/decrease (–/+) 1,720 395 Change in working capital 3,836 208 Divestments of subsidiaries Purchase prices received, net 8,294 473 Cash and cash equivalents in divested subsidiaries –180 –13 Change in consolidated cash and cash equivalents due to divestments 8,114 460 NOTE 32 Significant events after the financial year-end ASSA ABLOY divested most of its Citizen ID business to TOPPAN at the end of January 2025. Divestment of the remainder of Citizen ID’s business to TOPPAN is subject to the fulfillment of customary conditions and regulatory approvals. 137 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 33 Reserves Hedging reserve Exchange rate SEK M Cash flow hedges Fair value hedges differences Total Opening balance 1 January 2023 –249 – 12,383 12,133 Other comprehensive income in associates – – –63 –63 Cash flow hedges –66 – – –66 Net investment hedges – – – – Hedging cost –21 –2 – –23 Exchange rate differences 0 – –2,532 –2,532 Tax attributable to reserves – – 5 5 Closing balance 31 December 2023 –335 –2 9,793 9,455 Opening balance 1 January 2024 –335 –2 9,793 9,455 Other comprehensive income in associates – – –1 –1 Cash flow hedges 94 – – 94 Net investment hedges – – – – Hedging cost 6 –14 – –8 Exchange rate differences – – 5,669 5,669 Tax attributable to reserves – 3 –6 –3 Closing balance 31 December 2024 –235 –14 15,454 15,206 Cash flow hedges include net investment hedges. Of the closing balance, SEK 255 M represents amounts related to closed hedging relationships for net investments where the hedged item remains. NOTE 34 Business combinations Consolidated acquisitions, 2024 Number of Acquired business Division employees 2023 sales (SEK M) Consolidation month Integrated Warehouse Solutions Entrance Systems 550 1,850 2024-01 Cemoel Global Technologies 60 70 2024-02 Kadex Global Technologies <50 50 2024-03 Axxess Industries Global Technologies <50 <50 2024-04 Industrial door Entrance Systems <50 90 2024-04 Messerschmitt Systems Global Technologies 100 130 2024-04 Nomadix & Global Reach Global Technologies 120 300 2024-04 Spaltabdichtung Entrance Systems <50 <50 2024-04 Amecor EMEIA 120 150 2024-05 Vizzia Global Technologies <50 90 2024-06 Wesko Locks Americas 70 170 2024-06 G-mac Entrance Systems <50 <50 2024-07 Cole Kepro Americas 65 160 2024-08 Elite Entrances Entrance Systems <50 80 2024-08 Modern Entrance Systems <50 60 2024-08 Sewio Global Technologies <50 <50 2024-08 Level Lock Americas 70 170 2024-09 Skidata Entrance Systems 1,280 3,500 2024-09 Beyron Door Entrance Systems <50 60 2024-10 IXLA Global Technologies 50 150 2024-11 Lawrence Doors Entrance Systems 120 320 2024-11 Premier Steel Doors and Frames Americas 90 420 2024-11 9Solutions Global Technologies <50 110 2024-12 Door Team Entrance Systems <50 <50 2024-12 Roger EMEIA 100 110 2024-12 Norshield Security Products Americas 70 170 2024-12 A description of some of the major acquisitions made in 2024 is given below, followed by some of the Group’s major acquisi- tions in 2023. See the Report of the Board of Directors for fur- ther information about acquisitions. 2024 Integrated Warehouse Solutions In January 2024, Integrated Warehouse Solutions, a US manu- facturer of loading dock equipment, was acquired. The com- pany is headquartered in Burleson, US. Intangible assets in the form of brands, technology and cus- tomer relationships were recognized separately in the acqui- sition analysis. Residual goodwill mainly relates to synergies and other intangible assets that do not meet the criteria for separate reporting. Nomadix and Global Reach In April 2024, Nomadix and Global Reach, leading providers of Wi-Fi access and engagement platform solutions for the hos- pitality and commercial real estate industry, were acquired in the US and UK. The respective headquarters are located in Los Angeles, US, and London, UK. Intangible assets in the form of brands, technology and customer relationships were recognized separately in the acquisition analysis. Residual goodwill mainly relates to syner- gies and other intangible assets that do not meet the criteria for separate reporting. 138 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Intangible assets in the form of brands and customer relation- ships have been disclosed in the purchase price allocation. Residual goodwill mainly relates to synergies and other intangi- ble assets that do not meet the criteria for separate reporting. Amecor In May 2024, Amecor, a South African manufacturer of secu- rity communication equipment in the South African security market, was acquired. The company is headquartered in Johannesburg, South Africa. Note 34 continued 2023 2024 SEK M Total Total Purchase prices Cash paid for acquisitions during the year 54,292 12,796 Holdbacks and conditional considerations for acquisitions during the year 508 678 Adjustment of purchase prices for acquisitions in prior years 10 –517 Total 54,810 12,957 Acquired assets and liabilities at fair value Intangible assets 24,422 2,662 Property, plant and equipment 1,480 476 Right-of-use assets 1,166 617 Pension assets – 1 Deferred tax assets 301 202 Other financial assets 193 72 Inventories 4,098 1,420 Current receivables and investments 2,305 1,556 Cash and cash equivalents 1,175 532 Deferred tax liabilities –550 –180 Pension provisions –101 –118 Other non-current liabilities –1,794 –1,014 Current liabilities –3,350 –1,686 Total 29,346 4,541 Non-controlling interests in acquired businesses – 27 Goodwill 25,464 8,443 Cash paid for acquisitions during the year 54,292 12,796 Cash and cash equivalents in acquired subsidiaries –1,175 –532 Consideration paid relating to acquisitions from previous year 449 –127 Change in cash and cash equivalents due to acquisitions 53,566 12,136 Net sales from acquisition date 9,499 4,010 EBIT from acquisition date 891 337 Net income from acquisition date 331 407 The table above includes fair value adjustments of acquired net assets from acquisitions made in previous years. Acquisi- tion analyses were prepared for all acquisitions in 2024, some of which are preliminary and will be completed within one year of the acquisition date. The net sales of acquired units for Skidata In September 2024, Skidata, an international leading provider of access management solutions, was acquired. The company is headquartered in Salzburg, Austria. On the reporting date the acquisition analysis is preliminary with respect to valua- tion of intangible assets, and will be concluded within one year of the acquisition date. Level Lock In September 2024, Level Lock, a US technology solutions business, was acquired. The company is headquartered in Redwood City, US. On the reporting date the acquisition analysis is preliminary with respect to valuation of intangible assets, and will be concluded within one year of the acquisi- tion date. Lawrence Doors In November 2024, Lawrence Doors, a US manufacturer of coiling steel doors, grilles and counter shutters, was acquired. The company is headquartered in Baldwin Park, US. On the reporting date the acquisition analysis is preliminary with respect to valuation of intangible assets, and will be con- cluded within one year of the acquisition date. Premier Steel Doors and Frames In December 2024, Premier Steel Doors and Frames, a US manufacturer of hollow metal doors and frames, metal build- ing door systems, and aluminium windows, was acquired. The company is headquartered in Monroe, US. On the reporting date the acquisition analysis is prelimi- nary with respect to valuation of intangible assets, and will be concluded within one year of the acquisition date. 9Solutions In December 2024, 9Solutions, a Finnish provider of highly integrated AI-powered real time locating healthcare solutions for critical communication and collaboration, with a focus on senior care, was acquired. The company is headquartered in Oulu, Finland. On the reporting date the acquisition analysis is prelimi- nary with respect to valuation of intangible assets, and will be concluded within one year of the acquisition date. Roger In December 2024, Roger, a Polish manufacturer of on-prem- ise electronic access control systems and related hardware, was acquired. The company is headquartered in Gosciszewo, Poland. On the reporting date the acquisition analysis is pre- liminary with respect to valuation of intangible assets, and will be concluded within one year of the acquisition date. 2023 Mottura Serrature Mottura Serrature, a manufacturer of high security residential armored lock cases and security cylinders, was acquired in May 2023. The company is headquartered near Turin, Italy. Intangible assets in the form of brands and customer relation- ships have been disclosed in the purchase price allocation. Residual goodwill mainly relates to synergies and other intangi- ble assets that do not meet the criteria for separate reporting. Hardware and Home Improvement (HHI) The acquisition of the Hardware and Home Improvement (HHI) division of Spectrum Brands was completed in June 2023. Headquartered in California, US, the business is a lead- ing supplier of security, plumbing, and builders’ hardware products to the North American residential segment. Intangi- ble assets in the form of technology, customer relationships, and brands were recognized separately in the acquisition analysis. See also the 2023 Annual Report. Evolis Evolis, a manufacturer of ID card printers and consumables, was acquired in September 2023. The company is headquar- tered in Angers, France. Intangible assets in the form of brands, technology and customer relationships were recog- nized separately in the acquisition analysis. Residual goodwill mainly relates to synergies and other intangible assets that do not meet the criteria for separate reporting. Ghost Controls Ghost Controls, a supplier of automated residential gate openers, was acquired in December 2023. The company is headquartered in Florida, US. Intangible assets in the form of brands and customer relationships were recognized sepa- rately in the acquisition analysis. Residual goodwill mainly relates to synergies and other intangible assets that do not meet the criteria for separate reporting. Leone Fence Leone Fence, a manufacturer, distributor and installer of fenc- ing products for commercial and residential applications, was acquired in December 2023. The company is headquartered in Ontario, Canada. Intangible assets in the form of brands and customer relationships were recognized separately in the acquisition analysis. Residual goodwill mainly relates to syner- gies and other intangible assets that do not meet the criteria for separate reporting. 2024 totaled SEK 7,782 M (19,276) and net income amounted to SEK 271 M (810). Acquisition-related costs for 2024 totaled SEK 307 M (923) and have been reported as other operating expenses in the income statement. 139 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details NOTE 35 Employees Salaries, wages, other remuneration and social security costs Group Parent company SEK M 2023 2024 2023 2024 Salaries, wages and other remuneration 32,097 35,189 316 343 Social security costs 8,686 9,995 178 190 – of which pensions 1,125 1,209 56 60 Total 40,783 45,184 493 533 Remuneration and other benefits of the Executive Team in 2024, SEK thousands Stock-related Name Fixed salary Variable salary benefits Other benefits Pension costs Nico Delvaux, President and CEO 25,870 18,967 10,240 195 8,815 Other members of the Executive Team (9 positions) 78,604 40,352 18,806 4,040 10,723 Total remuneration and benefits 104,473 59,318 29,045 4,235 19,538 Total remuneration and other benefits of the Executive Team amounted to SEK 190.7 M in 2023. Fees to Board members in 2024 (including committee work), SEK thousand Board of Remuneration Audit Name and post Directors Committee Committee Total Johan Hjertonsson, Chairman 3,160 180 – 3,340 Carl Douglas, Vice Chairman 1,175 – – 1,175 Erik Ekudden, Board member 935 90 – 1,025 Sofia Schörling Högberg, Board member 935 – – 935 Lena Olving, Board member 935 – 300 1,235 Victoria Van Camp, Board member 935 – 300 1,235 Joakim Weidemanis, Board member 935 – – 935 Susanne Pahlén Åklundh, Board member 935 – 440 1,375 Employee representatives (4) – – – – Total 9,945 270 1,040 11,255 Total fees to Board members amounted to SEK 10.5 M in 2023. Salaries and remuneration for the Board of Directors and the Parent company’s Executive Team Salaries and other remuneration for the Board of Directors and the Parent company’s Executive Team for 2024 totaled SEK 78 M (70), excluding pension costs and social security costs. Pension costs amounted to SEK 11 M (10). Pension obligations for several senior executives are secured through pledged endowment insurances. Guidelines for remuneration to senior executives The current guidelines for remuneration to senior executives that were adopted at the 2022 Annual General Meeting are shown below. The Board has not proposed any new guidelines for the 2025 Annual General Meeting. Scope The Board of Directors proposes that the Annual General Meeting adopts the following guidelines for the remunera- tion and other employment conditions of the President and CEO and other members of the ASSA ABLOY Executive Team (the ‘Executive Team’). These guidelines are applicable to remuneration agreed, and amendments to remuneration already agreed, after adoption of the guidelines by the 2022 Annual General Meet- ing. These guidelines do not apply to any remuneration decided or approved by the General Meeting. Employment conditions of a member of the Executive Team that is employed or resident outside Sweden or that is not a Swedish citizen, may be duly adjusted for compliance with mandatory rules or established local practice, taking into account, to the extent possible, the overall purpose of these guidelines. Promotion of ASSA ABLOY’s business strategy, long-term interests and sustainability One of the strategies for value creation followed by ASSA ABLOY is Evolution through people. With the objective that ASSA ABLOY shall continue to be able to recruit and retain competent employees, the basic principle being that remu- neration and other employment conditions shall be offered on market conditions and be competitive, taking into account both global remuneration practice and practice in the home country of each member of the Executive Team. These guide- lines enable ASSA ABLOY to offer the Executive Team a total remuneration that is on market conditions and competitive. Prerequisites are thereby established for successful imple- mentation of the Group’s business strategy, which at the over- all level is to lead the trend towards the world’s most innova- tive and well-designed access solutions, as well as safe- guarding ASSA ABLOY’s long-term interests, including its sus- tainability. More information about ASSA ABLOY’s business strategy and ASSA ABLOY’s sustainability report is available on ASSA ABLOY’s website assaabloy.com. ASSA ABLOY has ongoing share-based long-term incentive programs in place that have been resolved by the General Meeting and which are therefore excluded from these guide- lines. Future share-based long-term incentive programs pro- posed by the Board of Directors and submitted to the General Meeting for approval will be excluded for the same reason. The purpose of the share-based long-term incentive program is to strengthen ASSA ABLOY’s ability to recruit and retain competent employees, to contribute to ASSA ABLOY provid- ing a total remuneration that is on market conditions and competitive, and to align the interests of the shareholders with the interests of the employees concerned. Through a share-based long-term incentive program, the employees’ remuneration is tied to ASSA ABLOY’s future earnings and value growth. At present the performance criteria used is linked to earnings per share. The programs are further condi- tional upon the participant’s own investment and holding period of several years. More information about these pro- grams is available on ASSA ABLOY’s website assaabloy.com. Types of remuneration The total yearly remuneration to the members of the Execu- tive Team shall be on market conditions and be competitive and also reflect each member of the Executive Team’s respon- sibility and performance. The total yearly remuneration shall consist of fixed base salary, variable cash remuneration, pen- sion benefits and other benefits (which are specified below excluding social security costs). Additionally, the General Meeting may – and irrespective of these guidelines – resolve on, among other things, share-related or share price-related remuneration. The variable cash remuneration shall be linked to predeter- mined and measurable targets, which are further described below, and may amount to not more than 75 percent of the yearly base salary. In order to ensure that the remuneration levels are in line with market conditions and competitive, tak- ing into account the current market conditions in the US, the variable cash remuneration for members of the Executive Team employed in the US may amount to no more than 100 percent of the yearly base salary. Additional variable cash remuneration may be paid in spe- cific cases in the form of remuneration with lump sums, pro- vided that such remuneration is only provided on an individ- ual basis for the purpose of recruiting senior executives. Such remuneration may not exceed an amount corresponding to 100 percent of the yearly base salary and the maximum vari- able cash remuneration, and may not be paid more than once per year per individual. The members of the Executive Team shall be covered by defined contribution pension plans, for which pension premi- ums are based on each member’s yearly base salary and are paid by ASSA ABLOY during the period of employment. The pension premiums shall amount to not more than 35 percent of the yearly base salary. Other benefits, such as company car, life insurance, extra health insurance or occupational healthcare, should be pay- able to the extent this is considered to be in line with market conditions in the market concerned for each member of the Executive Team. Premiums and other costs relating to such benefits may totally amount to not more than 10 percent of the yearly base salary. Furthermore, housing allowance bene- fit may be added in line with ASSA ABLOY’s policies and costs relating to such benefit may totally amount to not more than 25 percent of the yearly base salary. Premiums and other costs relating to other benefits and housing allowance benefit may, however, totally amount to not more than 30 percent of the yearly base salary. Criteria for awarding variable cash remuneration The variable cash remuneration shall be linked to predeter- mined and measurable financial targets, such as earnings per share (EPS), earnings before interest and taxes (EBIT), cash flow and organic growth and can also be linked to strategical and/or functional targets individually adjusted on the basis of responsibility and function. These targets shall be designed so as to contribute to ASSA ABLOY’s business strategy and long- term interests, including its sustainability, by for example being linked to the business strategy or promoting the senior executive’s long-term development within ASSA ABLOY. The Remuneration Committee shall for the Board of Direc- tors prepare, monitor and evaluate matters regarding variable cash remuneration to the Executive Team. Ahead of each yearly measurement period for the criteria for awarding vari- able cash remuneration the Board of Directors shall, based on the work of the Remuneration Committee, establish the crite - 140 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details ria that are deemed to be relevant for the upcoming measure- ment period. To which extent the criteria for awarding vari- able cash remuneration has been satisfied shall be determined when the measurement period has ended. Evalu- ations regarding fulfillment of financial targets shall be based on the determined financial basis for the relevant period. Variable cash remuneration can be paid after the measure- ment period has ended or be subject to deferred payment. Paid variable cash remuneration can be claimed back when such right follows from general principles of law. Duration of employment and termination of employment The members of the Executive Team shall be employed until further notice. If notice of termination is made by ASSA ABLOY, the notice period may not exceed 12 months for the CEO and 6 months for the other members of the Executive Team. If the CEO is given notice, ASSA ABLOY is liable to pay, including severance pay and remuneration under the notice period, the equivalent of maximum 24 months’ base salary and other employment benefits. If any other member of the Executive Team is given notice, ASSA ABLOY is liable to pay a maximum of 6 months’ base salary and other employment benefits plus severance pay amounting to a maximum of an additional 12 months’ base salary. If notice of termination is made by a member of the Executive Team, the notice period may not exceed 6 months, with no right to severance pay. A member of the Executive Team may, for such time when the member is not entitled to severance pay, be compensated for non-compete undertakings. Such compensation shall amount to not more than 60 percent of the monthly base salary at the time of the termination and shall only be paid as long as the non-compete undertaking is applicable, at longest a period of 12 months. Remuneration and employment conditions for employees In the preparation of the Board of Directors’ proposal for these remuneration guidelines, remuneration and employ- ment conditions for employees of ASSA ABLOY have been taken into account by including information on the employ- ees’ total remuneration, the components of the remunera- tion and increase and growth rate over time in the Remunera- tion Committee’s and the Board of Directors’ basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable. The decision-making process to determine, review and implement the guidelines The Remuneration Committee’s tasks include preparing the Board of Directors’ decision to propose guidelines for remu- neration to the Executive Team. The Board of Directors shall prepare a proposal for new guidelines at least every fourth year and submit it to the Annual General Meeting. The guide- lines shall be in force until new guidelines are adopted by the General Meeting. The Remuneration Committee shall also monitor and evaluate programs for variable remuneration to the Executive Team, the application of the guidelines for remuneration to the Executive Team as well as the applicable remuneration structures and remuneration levels in ASSA ABLOY. The members of the Remuneration Committee are independent of the company and its management. The CEO and other members of the Executive Team do not participate in the Board of Directors’ processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters. Deviation from the guidelines The Board of Directors may temporarily resolve to deviate from the guidelines, in whole or in part, if in a specific case there is special cause for the deviation and a deviation is nec- essary to serve ASSA ABLOY’s long-term interests, including its sustainability, or to ensure ASSA ABLOY’s financial viability. As set out above, the Remuneration Committee’s tasks include preparing the Board of Directors’ resolutions in remu- neration-related matters. This includes any resolutions to deviate from the guidelines. Description of material changes to the guidelines and how the views of shareholders have been taken into consideration These guidelines, which are proposed for the 2022 Annual General Meeting, correspond to a large extent to the guide- lines resolved upon by the 2020 Annual General Meeting. However, in the guidelines now proposed, an option to pay additional variable cash remuneration has been introduced and, in addition, the maximum level for variable cash remu- neration for members of the Executive Team employed in the US has been adjusted. See also the section ‘Types of remuner- ation’ above. No comments or questions on the remuneration guidelines have emerged in connection with general meeting proceedings. Long-term incentive programs At the 2010 Annual General Meeting, it was decided to launch a long-term incentive program (LTI 2010) for senior execu- tives and other key employees in the Group. The purpose was to create the prerequisites for retaining and recruiting quali- fied employees to the Group, to contribute to providing a total remuneration that is on market conditions and competi- tive and align the interests of the shareholders with the inter- ests of the employees concerned. At the 2011 to 2024 Annual General Meetings, it was decided to implement further long-term incentive programs for senior executives and other key employees in the Group. The incentive programs were named LTI 2011 to LTI 2024. LTI 2011 to LTI 2017 were based on similar terms to LTI 2010. LTI 2018 to LTI 2024 were based on similar principles as the earlier programs, but with an extended measurement period of three years for the performance-based condition and removal of matching shares. For each Series B share acquired by the CEO within the framework of LTI 2022, LTI 2023 and LTI 2024, the company has awarded six performance-based share awards. For each Series B share acquired by other members of the Executive Team, the company has awarded five performance-based share awards. For other participants, the company has awarded four performance-based share awards. In accordance with the terms of the three programs (LTI 2022–LTI 2024), employees have acquired a total of 514,676 Series B shares in ASSA ABLOY AB, of which 181,515 Series B shares were acquired in 2024 within the framework of LTI 2024. Each performance-based share award for LTI 2022, LTI 2023 and LTI 2024 entitles the holder to receive one Series B share in the company free of charge three years after allotment, pro- vided that the holder, with certain exceptions, at the time of the release of the interim report for the first quarter 2025 (LTI 2022), first quarter 2026 (LTI 2023) and first quarter 2027 (LTI 2024) is still employed by the Group and has maintained the shares acquired within the framework of the respective pro- gram. In addition to these conditions, the number of perfor- mance-based share awards that entitle the holder to Series B shares in the company depends on the annual development of ASSA ABLOY’s earnings per share based on the target levels, as defined by the Board of Directors, during the measurement period 1 January 2022 – 31 December 2024 (LTI 2022), the measurement period 1 January 2023 – 31 December 2025 (LTI 2023) and the measurement period 1 January 2024 – 31 December 2026 (LTI 2024), where each year during the measurement period is compared to the previous year. The outcomes are calculated yearly, whereby one third of the per- formance-based share awards is measured against the out- come for the first year in the measurement period, one third is measured against the outcome for the second year in the measurement period and one third is measured against the outcome for the third year in the measurement period. The outcome for each year is measured linearly. Unless the mini- mum target level in the interval is achieved for the year, none of the relevant performance-based share awards will give the right to any Series B shares. If the maximum target level in the interval is achieved, each performance-based share award linked to the relevant year entitles the holder to one Series B share at the end of the three-year vesting period, provided that the other conditions are met. The performance-based condition was fulfilled to 100 per- cent for LTI 2022. Fulfillment of the performance-based condi- tion for LTI 2023 and LTI 2024, respectively, is intended to be presented in the Annual Report for the financial years 2025 and 2026, respectively. Outstanding performance-based share awards for LTI 2024 total 764,882. The total number of outstanding perfor- mance-based share awards for LTI 2022, LTI 2023 and LTI 2024 amounted to 2,055,687 on the reporting date of 31 Decem- ber 2024. Fair value is based on the share price on the respective allotment date. The present value calculation is based on data from an external party. Fair value is also adjusted for perfor- mance-based share awards not expected to be realized at the end of the vesting period of the respective program. The com- pany further assesses the probability of the performance tar- gets being met when calculating the compensation expense. The fair value of ASSA ABLOY’s Series B share on the allot- ment date for LTI 2024 of 13 June 2024 was SEK 311.30. The fair value of ASSA ABLOY’s Series B share on the allotment date for LTI 2023 of 9 June 2023 was SEK 255.90. The fair value of ASSA ABLOY’s Series B share on the allotment date for LTI 2022 of 2 June 2022 was SEK 242.70. The total cost of the Group’s long-term incentive programs (LTI 2021–LTI 2024) excluding social security costs and financ- ing costs and before income tax amounted to SEK 93 M (72) in 2024. In April 2024, vesting of the long-term incentive pro- gram LTI 2021 took place equivalent to 363,694 Series B shares (314,857) at a total market value at the time of vesting of SEK 112 M (79). The payment referred to above for the vested shares in LTI 2021 was recognized in equity . Notice and severance pay If the CEO is given notice, the company is liable to pay the equivalent of a maximum of 24 months’ base salary and other employment benefits. If one of the other members of the Executive Team is given notice, the company is liable to pay a maximum six months’ base salary and other employment benefits plus an additional twelve months’ base salary. Note 35 continued 141 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Average number of employees per country, broken down by gender Group 2023 2024 of which of which Total women of which men Total women of which men US 13,615 4,081 9,534 15,261 4,419 10,842 China 5,793 2,227 3,566 6,193 2,539 3,654 Mexico 3,396 1,169 2,227 4,423 1,716 2,708 France 3,053 808 2,244 3,024 868 2,156 United Kingdom 2,831 805 2,027 2,878 796 2,082 Brazil 2,144 790 1,354 2,372 799 1,573 Sweden 2,244 668 1,576 2,282 681 1,601 India 1,917 201 1,715 2,011 216 1,795 Germany 1,919 528 1,391 1,933 474 1,459 Philippines 945 520 425 1,811 848 963 Poland 1,469 364 1,104 1,496 400 1,097 Netherlands 1,294 265 1,028 1,375 287 1,088 Australia 1,385 389 996 1,375 467 909 Czech Republic 1,283 494 789 1,331 516 815 Canada 977 239 738 1,318 370 947 Finland 952 275 677 967 277 691 Malaysia 912 423 489 888 409 479 Spain 637 167 470 766 195 571 Romania 785 292 493 753 289 464 Belgium 725 144 581 722 156 566 Switzerland 686 137 548 714 143 571 South Africa 647 273 374 702 292 410 Italy 483 124 359 548 151 397 South Korea 540 140 400 522 141 381 Denmark 419 78 340 453 90 363 Austria 228 31 196 451 78 373 Peru 140 49 90 447 145 302 Ireland 385 136 250 435 151 284 Portugal 380 222 158 430 248 182 New Zealand 428 121 307 420 123 297 Taiwan 220 108 112 419 233 186 Turkey 440 221 219 415 196 220 Thailand 422 310 112 394 287 107 United Arab Emirates 383 54 329 381 46 335 Others 2,767 916 1,853 2,913 902 2,011 Total 56,845 17,771 39,073 62,825 19,949 42,875 Parent company 2023 2024 of which of which Total women of which men Total women of which men Sweden 263 103 160 266 104 163 Total 263 103 160 266 104 163 Gender distribution of Board of Directors and Executive Team 2023 2024 of which of which Total women of which men Total women of which men Board of Directors¹ 8 4 4 8 4 4 Executive Team 10 2 8 10 1 9 – of which Parent company’s Executive Team 2 0 2 2 0 2 Total 18 6 12 18 5 13 ¹ Excluding employee representatives. Note 35 continued NOTE 36 Financial risk management and financial instruments Financial risk management ASSA ABLOY is exposed to a variety of financial risks due to its international business operations. Financial risk management is carried out in accordance with the Group’s financial policy. The principles for financial risk management are described below. Organization and activities ASSA ABLOY’s financial policy, which is determined by the Board of Directors, provides a framework of guidelines and regulations for the management of financial risks and financial activities. ASSA ABLOY’s financial activities are coordinated centrally and the majority of financial transactions are conducted by the subsidiary ASSA ABLOY Financial Services AB, which is the Group’s internal bank. External financial transactions are con- ducted by Treasury. Treasury achieves significant economies of scale when negotiating agreements for borrowing, interest risk management and management of currency flows. Capital structure The objective of the Group’s capital structure is to safeguard its ability to continue as a going concern, and to generate good returns for shareholders and benefits for other stake- holders. Maintaining an optimal capital structure enables the Group to keep capital costs at a low level. The Group can adjust the capital structure based on the requirements that arise by varying the dividend paid to shareholders, returning capital to shareholders, issuing new shares or selling assets to reduce debt. The capital requirement is assessed on the basis of factors such as the net debt/equity ratio. Net debt is defined as interest-bearing liabilities, including negative market values of derivatives, plus pension provisions and lease obligations, less cash and cash equivalents, and other interest-bearing investments including positive market values of derivatives. The table ‘Net debt and equity’ shows the position as at 31 December. Net debt and equity Group SEK M 2023 2024 Non-current interest-bearing receivables –223 –224 Short-term investments –236 –25 Derivative instruments – Positive market values –926 –419 Cash and cash equivalents –1,466 –4,504 Long-term loans 49,917 54,989 Short-term loans 9,833 11,958 Lease liabilities 5,443 6,554 Pension provisions 1,435 1,478 Derivative instruments – negative market values 331 445 Total 64,109 70,253 Equity 91,644 107,080 Debt/equity ratio 0.70 0.66 Rating Another important variable in the assessment of the Group’s capital structure is the credit rating assigned by credit rating agencies to the Group’s debt. It is essential to maintain a solid credit rating in order to have access to both long-term and short-term financing from the capital markets. ASSA ABLOY maintains both long-term and short-term credit ratings from S & P Global and a short-term rating from Moody’s. Neither rating changed in 2024. Agency Short-term Outlook Long-term Outlook Standard & Poor’s A2 Stable A – Stable Moody’s P2 Stable n/a 142 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Maturity profile – financial instruments¹ 31 December 2023 31 December 2024 SEK M² <1 year >1 <2 years >2 <5 years >5 years <1 year >1 <2 years >2 <5 years >5 years Long-term bank loans –1,005 –6,454 –5,736 –4,144 –1,670 –9,691 –5,784 –2,103 Long-term capital market loans –4,569 –4,811 –15,677 –21,180 –5,375 –9,461 –13,778 –21,621 Short-term bank loans –1,730 –1,373 Commercial papers and short-term capital market loans –4,951 –6,205 Derivatives (outflow) –29,059 –25,391 Derivatives, hedge accounting (outflow) –910 –902 –7,949 –1,140 –952 –7,901 –1,147 –748 Total by period –42,224 –12,167 –29,363 –26,464 –40,966 –27,053 –20,709 –24,472 Cash and cash equivalents incl. interest-bearing receivables 1,783 4,715 Non-current interest-bearing receivables 39 7 199 0 72 176 2 Derivatives (inflow) 29,059 25,208 Derivatives, hedge accounting (inflow) 743 743 8,051 1,088 776 7,336 1,145 850 Deferred considerations –789 –233 –23 –1,109 –206 –47 0 Trade receivables 20,934 23,444 Trade payables –11,320 –12,594 Lease liabilities –1,622 –1,287 –1,947 –1,510 –1,987 –1,535 –2,412 –1,790 Net total –3,396 –12,936 –23,083 –26,886 –2,513 –21,385 –21,847 –25,410 Confirmed credit facilities 10,336 –12,340 12,794 –12,794 Adjusted maturity profile¹ 6,940 –12,936 –35,423 –26,886 10,281 –34,180 –21,847 –25,410 ¹ For maturity profile of guarantees, see Note 30. ² The amounts in the table are undiscounted and include future known interest payments. The exact amounts are therefore not all found in the balance sheet. Interest-bearing liabilities The financing mainly consists of a GMTN Program of SEK 42,657 M (38,365), of which SEK 38,688 M (35,679) is long- term, a bilateral bank loan of USD 500 M (500) and loans from financial institutions such as the European Investment Bank (EIB) totaling USD 641 M, of which USD 571 M (641) is long- term, and the Nordic Investment Bank of EUR 235 M (235). Eight new issues under the GMTN Program for a total of SEK 5,592 M with maturities of 3.2 to 8 years were made during the year. A new bilateral bank loan of CAD 200 M was also raised to diversify the loan portfolio. Other changes in long- term loans are mainly due to some of the originally long-term loans now having less than 1 year to maturity. The size of the loans was affected by currency fluctuations, mainly due to a stronger USD, which increased the volume of loans. The Group’s short-term loan financing mainly consists of two Commercial Paper Programs for a maximum USD 1,000 M (1,000) and SEK 5,000 M (5,000) respectively. At the year- end, the outstanding balance under the Commercial Paper Programs was SEK 6,177 M (4,906). In addition to the credit facilities described under the Maturity profile section, sub- stantial credit commitments exist, mainly in the form of a Multi-Currency Revolving Credit Facility of EUR 1,116 M (1,200). At year-end the average time to maturity for the Group’s interest-bearing liabilities, excluding pension provi- sions and lease obligations, was 44 months (52). Some of the Group’s main financing agreements contain a customary Change of Control clause. This clause means that lenders have the right in certain circumstances to demand the renegotiation of conditions or to terminate the agreements should control of the company change. Financing risk and maturity profile Financing risk is defined as the risk of being unable to meet payment obligations as a result of inadequate liquidity or diffi- culties in obtaining external financing. ASSA ABLOY manages financing risk at Group level. Treasury is responsible for exter- nal borrowings and external investments. ASSA ABLOY strives to have access to both short-term and long-term loan facili- ties at all times. In accordance with the financial policy, the available loan facilities, including available cash and cash equivalents, should include a reserve (facilities available but not utilized) equivalent to at least 10 percent of the Group’s total annual sales. Maturity profile The ‘Maturity profile’ table above shows the maturities for ASSA ABLOY’s financial instruments, including confirmed credit facilities. The maturities are not concentrated to a par- ticular date in the immediate future. An important compo- nent of liquidity planning is the Group’s Multi-Currency Revolving Credit Facility totaling EUR 1,116 M. The term is until April 2026. This credit facility was wholly unutilized at year-end. Moreover, existing financial assets are also taken into account in the table. The table shows cash flows and known future interest payments relating to the Group’s financial instru- ments at the reporting date, and these amounts are therefore not found in the balance sheet. Cash and cash equivalents and other interest-bearing receivables Current interest-bearing investments totaled SEK 939 M (2) at year-end. In addition to cash and cash equivalents, ASSA ABLOY has interest-bearing receivables of SEK 249 M (459) with a maturity of more than three months and financial derivatives with a positive market value of SEK 419 M (926) which are included in the definition of net financial debt. Cash and cash equivalents are mainly invested in bank accounts, deposits in banks or interest-bearing instruments with high liquidity from issuers with a credit rating of at least A– accord- ing to S&P Global or a similar rating agency. The average term for cash and cash equivalents was 3 days (5) at year-end 2024. The Parent company’s cash and cash equivalents are held in a sub-account to the Group account. Group Parent company SEK M 2023 2024 2023 2024 Cash and bank balances 1,463 3,565 0 2 Short-term investments with maturity less than 3 months 2 939 – – Cash and cash equivalents 1,466 4,504 0 2 Short-term investments with maturity more than 3 months 236 25 – – Non-current interest-bearing receivables 223 224 – – Positive market value of deriva- tives 926 419 – – Total 2,851 5,172 0 2 Interest rate risks in interest-bearing assets Treasury manages interest rate risk in interest-bearing assets. Derivative instruments such as interest rate swaps and FRAs (Forward Rate Agreements) may be used to manage interest rate risk. These interest-bearing assets are mostly short-term. The fixed interest term for such short-term investments was 7 days (90) at year-end 2024. A downward change in the yield curve of one percentage point would reduce the Group’s interest income by around SEK 0 M (0) and consolidated equity by SEK 0 M (0). Note 36 continued 143 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details External financing/net debt Amount, Carrying Amount Amount Of which Parent Credit lines/facilities SEK M Maturity amount, SEK M Currency 2023 2024 company, SEK M Multi-Currency RCF 12,794 Apr 2026 – EUR 1,116 1,116 Term loan facility 5,496 Oct 2025 5,496 USD 500 500 Bank loans 1,526 Sep 2026 1,526 CAD – 200 Bank loan EIB 2,506 Aug 2027³ 2,506 USD 263 228 Bank loan EIB 3,770 Aug 2030³ 3,770¹ USD 343 343 Bank loan NIB 773 Jun 2026 773 EUR 68 68 Bank loan NIB 774 Jun 2028 774 EUR 68 68 Bank loan NIB 1,146 Jun 2029 1,146 EUR 100 100 Global MTN Program 110,692 Mar 2026 229 EUR 20 20 229 Sep 2026 6,905¹ ² EUR 600 600 6,856 Oct 2026 275 SEK 275 275 275 Oct 2026 150 SEK 150 150 150 Nov 2026 621² CHF 50 50 609 Feb 2027 343 EUR 30 30 343 Feb 2027 573 EUR 50 50 573 Mar 2027 2,997¹ SEK 2,500 3,000 2,997 Jun 2027 282² NOK 300 300 290 Sep 2027 572 EUR 50 50 572 Oct 2027 182² NOK 200 200 194 Oct 2027 1,099 USD 100 100 1,099 Feb 2028 824¹ USD – 75 824 Apr 2028 1,201 SEK – 1,200 1,201 May 2029 171 EUR 15 15 171 Jun 2029 110 USD 10 10 110 Aug 2029 114 EUR 10 10 114 Aug 2029 999¹ SEK – 1,000 999 Oct 2029 301² EUR 28 28 319 Oct 2029 297 EUR 26 26 297 Dec 2029 1,062² USD 100 100 1,092 Mar 2030 343 EUR 30 30 343 Apr 2030 799 EUR 70 70 799 Jun 2030 1,099 USD 100 100 1,099 Sep 2030 6,937² EUR 600 600 6,836 Feb 2031 114 EUR 10 10 114 Sep 2031 1,098 USD – 100 1,098 Mar 2032 963² NOK – 1,000 967 Aug 2034 1,135 EUR 100 100 1,135 Sep 2035 6,972² EUR 600 600 6,810 Other long-term loans 229 229 Total long-term loans/facilities 139,707 54,989 38,517 Bank loan EIB 768 Mar 2025³ 768 USD 17 70 Global MTN Program 3,953 3,953 SEK 3,953 3,953 Amount, Carrying Amount Amount Of which Parent Credit lines/facilities SEK M Maturity amount, SEK M Currency 2023 2024 company, SEK M Global CP Program 10,994 2,141 USD 109 195 1,249 EUR 170 109 Swedish CP Program 5,000 2,787 SEK 1,934 2,787 Other bank loans 785 785 Overdraft facility 3,702 276 Total short-term loans/facilities 25,202 11,958 3,953 Total loans/facilities 164,909 66,948 3,953 Cash and cash equivalents -4,504 -2 Non-current and current interest-bearing investments -249 Derivative financial instruments 26 Pension provisions 1,478 Lease liabilities 6,554 109 Net debt 70,253 42,577 ¹ The loan is subject to cash flow hedging, in whole or in part. ² The loan is subject to fair value hedging, in whole or in part. ³ The loans are amortizing. In the table the average dates of maturity of the loans have been stated. Note 36 continued Change in loans SEK M Long-term loans Short-term loans Total Opening balance 1 January 2024 49,918 9,833 59,750 Cash flow from financing activities Long-term loans raised 7,044 – 7,044 Long-term loans repaid – –3,736 –3,736 Net change in short-term loans – 929 929 Total 7,044 –2,808 4,236 Changes without cash flow impact Acquisitions of subsidiaries – – – Divestments of subsidiaries – – – Reclassifications –4,748 4,748 – Unrealized exchange differences 2,790 267 3,057 Other changes –24 –16 –40 Exchange rate differences 11 –66 56 Total –1,972 4,932 2,961 Closing balance 31 December 2024 54,989 11,958 66,948 144 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Note 36 continued Interest rate risks in borrowing Changes in interest rates have a direct impact on ASSA ABLOY’s net interest expense. Treasury is responsible for iden- tifying and managing the Group’s interest rate exposure. Trea- sury analyzes the Group’s interest rate exposure and calcu- lates the impact on income of changes in interest rates on a rolling 12-month basis. The Group strives for a mix of fixed rate and variable rate borrowings in the loan portfolio, and uses interest rate swaps and cross currency swaps to adjust the fixed interest term. The financial policy stipulates that the average fixed interest term should normally be within the interval of 12 to 36 months. At year-end, the average fixed interest term on gross debt, excluding pension liabilities and lease commitments, was around 28 months (31). An upward change in the yield curve of one percentage point would increase the Group’s interest expense by around SEK 350 M (291) and reduce consolidated equity by SEK 262 M (218). Net debt by currency 31 December 2023 31 December 2024 Net debt excl. Net debt incl. Net debt excl. Net debt incl. SEK M derivatives derivatives derivatives derivatives USD 21,050 33,770 23,674 39,335 EUR 34,125 7,919 32,363 12,444 SEK 5,851 9,616 8,249 5,870 AUD 200 2,490 145 2,787 CAD 134 2,109 1,576 1,747 GBP –577 2,075 –546 1,586 CNY 346 1,534 243 1,434 PLN 42 588 4 1,097 BRL 812 812 676 676 CHF 748 810 788 580 KRW 380 600 268 503 Other 998 1,786 2,813 2,192 Total 64,109 64,109 70,253 70,253 SEK M Long-term loans Short-term loans Total Opening balance 1 January 2023 20,523 9,304 29,826 Cash flow from financing activities Long-term loans raised 33,129 – 33,129 Long-term loans repaid – –3,659 –3,659 Net change in short-term loans – 608 608 Total 33,129 –3,052 30,078 Changes without cash flow impact Acquisitions of subsidiaries 2 3 4 Divestments of subsidiaries – – – Reclassifications –3,727 3,727 – Unrealized exchange differences –269 –77 –347 Other changes 421 – 421 Exchange rate differences –151 –71 –232 Total –3,735 3,581 –154 Closing balance 31 December 2023 49,917 9,833 59,750 Change in lease liabilities Group SEK M 2023 2024 Opening balance 3,907 5,443 Acquisitions of subsidiaries 1,155 534 Divestments of subsidiaries –62 –16 New and terminated leases 2,177 2,059 Amortization of lease liabilities –1,543 –1,797 Exchange rate differences –191 330 Closing balance 5,443 6,554 Group Balance sheet breakdown: 2023 2024 Non-current lease liabilities 4,001 4,817 Current lease liabilities 1,443 1,737 Total 5,443 6,554 Currency composition The currency composition of ASSA ABLOY’s borrowing depends on the currency composition of the Group’s assets and other liabilities. Currency swaps and cross currency swaps are used to achieve the desired currency composition. Currency risk Currency risk affects ASSA ABLOY mainly through translation of capital employed and net debt, translation of the income of foreign subsidiaries, and the impact on income of flows of goods between countries with different currencies. Transaction exposure Currency risk in the form of transaction exposure, or exports and imports of goods respectively, is relatively limited in the Group, even though it can be significant for individual busi- ness units. The main principle is to allow currency fluctuations to have an impact on the business as quickly as possible. As a result of this strategy, current currency flows are not normally hedged. Transaction flows relating to major currencies (import + and export –) Currency exposure Currency, SEK M 2023 2024 AUD 676 658 CAD 1,227 1,665 CHF –795 –899 CNY –2,712 –2,909 CZK –910 –1,064 EUR 2,208 989 GBP 1,185 1,142 MXN –1,031 –1,151 SEK –1,312 –1,470 USD 4,204 4,108 Translation exposure in income The table below shows the impact on the Group’s income before tax of a reasonably possible change, in this case a 10 percent weakening of the Swedish krona (SEK) in relation to the major currencies, with all other variables constant. Impact on income before tax of a 10 percent weakening of SEK Currency, SEK M 2023 2024 AUD 83 66 BRL 25 30 CAD 66 78 CHF 72 75 DKK 22 20 EUR 298 359 HKD 48 36 MXN 28 27 NOK 24 26 USD 1,544 1,676 Translation exposure in the balance sheet The impact of translation of equity is limited by the fact that a large part of financing is in local currency. The capital structure in each country is optimized based on local legislation. Whenever possible, according to local condi- tions, gearing per currency should generally aim to be the same as for the Group as a whole to limit the impact of fluctu- ations in individual currencies. Treasury uses currency deriva- tives and loans to achieve appropriate financing and to elimi- nate undesirable currency exposure. The ‘Net debt by currency’ table on page 144 shows the use of currency derivatives in relation to financing in major cur- 145 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details rencies. Forward exchange contracts are used to neutralize the exposure arising between external debt and internal requirements. Financial credit risk Financial risk management exposes ASSA ABLOY to certain counterparty risks. Such exposure may arise from the invest- ment of surplus cash as well as from investment in debt instru- ments and derivative instruments. ASSA ABLOY’s policy is to minimize the potential credit risk relating to surplus cash by using cash flow from subsidiaries to repay the Group’s loans. This is primarily achieved through cash pools put in place by Treasury. Around 96 percent (97) of the Group’s sales were settled through cash pools in 2024. Smaller amounts may be held in other local banks for shorter time periods depending on how customers choose to pay. The Group can also invest surplus cash in the short term in banks to match borrowing and cash flow. The banks in which surplus cash is deposited have a high credit rating. In light of this and the short terms of the investments the effect of the calculated credit risk is assessed to be negligible. Derivative instruments are allocated between banks based on risk levels defined in the financial policy, in order to limit counterparty risk. Treasury only enters into derivative con- tracts with banks that have a high credit rating. ISDA agreements (full netting of transactions in case of counterparty default) have been entered into with respect to interest rate and currency derivatives. The table on page 145 shows the impact of this netting. Commercial credit risk The Group’s trade receivables are distributed across a large number of customers who are spread globally. No single cus- tomer accounts for more than 2 percent of the Group’s sales. The concentration of credit risks associated with trade receiv- ables is considered to be limited, but the concentration of credit risks increased through the acquisition of HHI, which has a more concentrated customer base. The fair value of trade receivables is equivalent to the carrying amount. Credit risks relating to operating activities are managed locally at company level and monitored at division level. For more infor- mation see Note 22 and the section ‘Impairment of financial assets’ in the information on accounting principles. Commodity risk The Group is exposed to price risks relating to purchases of certain commodities (primarily metals) used in production. Forward contracts are not used to hedge commodity pur- chases. Fair value of financial instruments Derivative financial instruments such as forward exchange contracts and forward rate agreements are used to the extent necessary. The use of derivative instruments is limited to reducing exposure to financial risks. The positive and negative fair values in the ‘Outstanding derivative financial instruments’ table on page 146 show the fair values of outstanding instruments at year-end, based on available fair values, and are the same as the carrying amounts in the balance sheet. The nominal value is equivalent to the gross value of the contracts. For accounting purposes, financial instruments are classi- fied into measurement categories in accordance with IFRS 9. The table ‘Financial instruments’ on page 146 provides an overview of financial assets and liabilities, measurement cate- gory, and carrying amount and fair value per item. Risk management through hedge accounting During the year the Group used hedge accounting in its finan- cial risk management. Hedges can be divided into cash flow hedges, fair value hedges and net investment hedges. Changes in these hedges can be seen in the table below. For information regarding the effects of cash flow hedging, which includes net investment hedging, in other comprehensive income, see Note 33. Fair value hedges are used to manage interest rate risk that arises when the Group takes out loans at a fixed interest rate. Cash flow hedges for interest rate risk in loans with variable interest rates are used to adjust the inter- est rate risk for variable interest rates. Net investment hedges are used to manage currency risk that arises through invest- ments in foreign subsidiaries. Interest rate risk related to the long-term loans is hedged using interest rate swaps. For a number of loans, cross currency swaps are also used to hedge both interest rate and currency exposures related to the borrowing. For risks related to net investments in foreign subsidiaries, hedge accounting is only applied to manage currency risk; no other related risks are managed by the hedges that are applied. ASSA ABLOY does not hedge 100% of its long-term loans or its net investments. Instead, the decision on when hedge accounting is appropriate is taken on a case-by-case basis, in accordance with the risk levels described in the financial policy. For fair value hedges the Group mainly uses interest rate swaps with critical terms that are equivalent to the hedged item, such as reference rate, settlement days, maturity date and nominal amounts. This approach ensures an economic relationship between the hedging items and the hedging instruments. Hedging relationship effectiveness is tested through periodic forward-looking evaluation to ensure that an economic relationship still exists. Examples of identified sources of ineffectiveness in the hedging relationship include if a credit risk adjustment in the interest rate swap is not matched by an equivalent adjustment to the loan, or if for some reason differences in the critical terms between the interest rate swap and the loan should arise. As the Group also uses cross currency swaps, there may also be results if the cur- rency basis spread between different currencies changes. The currency basis spread is recognized in other comprehensive income. All critical terms matched during the year. No ineffi- ciencies occurred due to non-compliance with the critical terms. The changes that have occurred to date following the reference rate reform (IBOR reform) had no significant impact on the Group’s hedge relationships in 2024. Hedging instruments Cash flow hedges Cash flow hedges Fair value hedges Fair value hedges SEK M 2023 2024 2023 2024 Carrying amount of hedged item – fair value – – 12,336 13,138 Carrying amount of hedged item – cash flow 12,219 14,724 – – Nominal amount of hedging instrument 12,219 14,724 12,336 13,138 Maturity 2026 to 2033 2026 to 2033 2025 to 2035 2025 to 2035 Hedge ratio 1:1 1:1 1:1 1:1 Total effect of hedging on hedged item – – –542 –76 Accrued remaining amount for terminated hedges (interest rate hedges) – – 83 71 Accrued remaining amount for terminated hedges (net investment hedges) –255 –255 – – Change in value, hedging instruments since 1 January 554 –514 86 137 Change in value of hedged items – – –88 –152 Hedging cost for currency basis spread –21 6 –2 –14 Ineffectiveness recognized in profit or loss 0 0 0 0 Changes in the value of fair value hedged items are recognized against long-term loans; changes in value of hedging instru- ments are recognized against derivative instruments; ineffec- tiveness, if any, is recognized against interest income or expenses, respectively. Changes in value of hedge instruments in cash flow hedges of interest rate risks and currency risks are recognized in Other comprehensive income. Any ineffective- ness is recognized against interest income or interest expenses or currency gains or losses, respectively. Changes in value of net investment hedges are recognized in the hedging reserve in equity. Changes in value from changes in the cur- rency basis spread are recognized as a hedging cost in other comprehensive income. Disclosures of offsetting of financial assets and liabilities 2023 2024 Amount Amount covered by covered by Amounts Net amounts netting Amounts Net amounts netting Gross netted in the in the balance agreement Gross netted in the in the balance agreement but SEK M amount balance sheet sheet but not offset Net amount amount balance sheet sheet not offset Net amount Financial assets 926 – 926 311 615 419 – 419 231 188 Financial liabilities 331 – 331 311 20 445 – 445 231 214 Netted financial assets and financial liabilities only consist of derivative instruments . Note 36 continued 146 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Notes | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Accounts • Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Outstanding derivative financial instruments at 31 December 31 December 2023 31 December 2024 Positive Negative Nominal Positive Negative Nominal Instrument, SEK M market value² market value² value market value² market value² value Forward exchange contracts 293 170 19,857 103 224 17,288 Interest rate derivatives¹, fair value hedges 326 94 6,808 274 87 7,405 Interest rate derivatives¹, cash flow hedges – 67 4,677 42 27 6,495 Currency interest rate derivatives, fair value hedges – 310 5,529 – 127 5,732 Currency interest rate derivatives, cash flow hedges 617 – 7,542 20 – 8,228 Total 1,236 643 44,412 439 465 45,150 ¹ For interest rate derivatives, only one leg is included in nominal value. ² Assets are recognized against accrued revenue and liabilities against accrued expenses. Financial instruments: carrying amounts and fair values by measurement category 2023 2024 Carrying Carrying SEK M amount Fair value amount Fair value Financial assets at amortized cost Trade receivables 20,934 20,934 23,444 23,444 Other financial assets at amortized cost 534 534 397 397 Cash and cash equivalents 1,466 1,466 4,504 4,504 Financial assets at fair value through profit or loss Shares and interests 115 115 325 325 Derivative financial instruments Hedge accounting 633 633 316 316 Held for trading 293 293 103 103 Total financial assets 23,975 23,975 29,089 29,089 Financial liabilities at amortized cost Trade payables 11,320 11,320 12,594 12,594 Lease liabilities¹ 5,443 5,443 6,554 6,554 Long-term loans – hedge accounting 19,222 19,222 19,902 19,902 Long-term loans – non-hedge accounting¹ 30,695 29,988 35,088 35,072 Short-term loans – hedge accounting – – 877 877 Short-term loans – non-hedge accounting¹ 9,834 9,781 11,081 11,103 Financial liabilities at fair value through profit or loss Deferred considerations 1,045 1,045 1,362 1,362 Derivative financial instruments Hedge accounting 161 161 221 221 Held for trading 170 170 224 224 Total financial liabilities 77,890 77,129 87,902 87,909 ¹ Last year’s figures have been corrected as they contained incomplete data. The fair value of long-term borrowing is based on observable data by discounting cash flows to market rate, which is deemed to correspond with level 2 according to the fair value hierarchy. The fair value of current receivables and current lia- bilities is considered to correspond to the carrying amount. Financial instruments: measured at fair value 2023 2024 Quoted Non-observ- Quoted Non-observ- Carrying prices Observable able data Carrying prices Observable able data SEK M amounts (level 1) data (level 2) (level 3) amounts (level 1) data (level 2) (level 3) Financial assets Derivative financial instru- ments 926 – 926 – 419 – 419 – Financial liabilities Derivative financial instru- ments 331 – 331 – 445 – 445 – Deferred considerations 1,045 – – 1,045 1,362 – – 1,362 Measurement at fair value is classified hierarchically in three different levels based on input data used in measurement of the instruments. Deferred considerations relate to additional payments for acquired companies. The size of a deferred con- sideration is usually linked to the earnings and sales trend in an acquired company during a specific period of time. Deferred consideration is measured on the day of acquisition based on the best judgment of management regarding future outcomes. Discounting takes place in the case of significant amounts. Belongs to level 3 in the hierarchy. For derivatives, the present value of future cash flows is cal- culated based on observable yield curves and exchange rates on the balance sheet date. Belongs to level 2 in the hierarchy . Note 36 continued 147 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes • Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Five years in summary | Financial statements Five years in summary Amounts in SEK M unless stated otherwise 2020 2021 2022 2023 2024 Sales and income Sales 87,649 95,007 120,793 140,716 150,162 Organic growth, % –8 11 12 3 –1 Acquisitions and divestments, % 4 2 2 8 8 Operating income (EBIT) excluding items affecting comparability 11,916 14,181 18,532 22,185 24,296 Operating income (EBIT) 12,458 14,181 18,532 21,785 24,275 Income before tax (EBT) 11,676 13,538 17,521 19,254 20,893 Net income 9,172 10,901 13,296 13,639 15,621 Cash flow Cash flow from operating activities 13,658 12,456 14,357 21,294 21,391 Cash flow from investing activities –6,741 –3,094 –10,561 –47,899 –13,925 Cash flow from financing activities –4,558 –7,813 –4,699 24,726 –4,447 Cash flow 2,359 1,549 –904 –1,880 3,019 Operating cash flow 14,560 13,265 15,808 25,232 23,052 Capital employed and financing – Goodwill 58,344 62,502 75,873 92,873 106,874 – Other intangible assets 14,108 13,834 15,024 34,831 38,531 – Property, plant and equipment 8,026 8,753 10,106 11,460 12,653 – Right-of-use assets 3,513 3,436 3,804 5,296 6,295 – Other capital employed 5,867 8,796 13,244 12,060 13,019 Adjusted capital employed 89,858 97,321 118,052 156,520 177,373 – Restructuring reserve –1,224 –658 –294 –767 –39 Capital employed 88,634 96,663 117,758 155,753 177,333 Non-controlling interests 9 9 12 16 10 Shareholders’ equity, excluding non-controlling interest 58,870 69,582 86,014 91,629 107,071 Data per share, SEK Earnings per share before and after dilution 8.26 9.81 11.97 12.27 14.08 Earnings per share before and after dilution and excluding items affecting comparability 7.54 9.81 11.97 13.54 14.09 Shareholders’ equity per share after dilution 53.00 62.64 77.44 82.49 96.39 Dividend per share 3.90 4.20 4.80 5.40 X.X 1 Price of Series B share at year-end 202.50 276.20 223.70 290.30 326.80 Amounts in SEK M unless stated otherwise 2020 2021 2022 2023 2024 Key figures Operating margin (EBIT), % excluding items affecting comparability 13.6 14.9 15.3 15.8 16.2 Operating margin (EBIT), % 14.2 14.9 15.3 15.5 16.2 Profit margin (EBT), % 13.3 14.2 14.5 13.7 13.9 Cash conversion 1.31 0.98 0.90 1.28 1.10 Return on capital employed, % 12.5 15.2 16.9 15.6 14.4 Return on equity, % 15.5 17.0 17.1 15.3 15.7 Equity ratio, % 50.1 53.5 55.7 46.7 47.9 Debt/equity ratio 0.51 0.39 0.37 0.70 0.66 Net debt/EBITDA 1.9 1.5 1.4 2.3 2.3 Total number of shares, thousands 1,112,576 1,112,576 1,112,576 1,112,576 1,112,576 Number of outstanding shares, thousands 1,110,776 1,110,776 1,110,776 1,110,776 1,110,776 Weighted average number of outstanding shares, before and after dilution, thousands 1,110,776 1,110,776 1,110,776 1,110,776 1,110,776 Average number of employees 48,471 50,934 52,463 56,845 62,825 1 Dividend proposed by the Board of Directors. Return on capital employed Operating margin (EBIT) 2 Average number of employees 2 Excluding items affecting comparability. 148 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Comments on five years in summary | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary • Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Comments on five years in summary 2020 Demand was negatively impacted during the year by the Covid-19 pandemic. Organic growth was –8 percent for the Group, with a negative sales trend in all divisions. Cost-saving measures and staff cuts have largely offset the negative impact on earnings from lower sales. A new restructuring program was also launched at the end of the year, with plans to close about ten plants and about thirty offices for a two- year period. The operating cash flow remained strong thanks to, among other things, cost reductions and reduced working capital. Demand was generally more stable in the more mature markets in Europe and the US compared with the trend in the emerging markets, especially in Asia, the Middle East and Africa. The focus on product development and innovation continued with undi- minished strength. Major investments were made in R&D, where the full workforce was kept intact during the year. Operating income for the year, excluding items af- fecting comparability, decreased by 20 percent. Cash flow remained strong. Acquisition activity continued to be high during the year; for example, the acquisi- tion of agta record was completed. 2021 The mature markets in the US and Europe gradually recovered during the year despite the continuation of the Covid-19 pandemic and restrictions in many countries. The continued restrictions in Asia meant weaker recovery of demand. Organic growth was very strong for the Group as a whole at 11 percent, with a positive sales trend in all divisions. However, rising material costs and scarcity of cer- tain components presented an operational challenge and had a negative impact on sales and income. Oper- ating income excluding items affecting comparability increased overall by 19 percent, and the operating margin was 14.9 percent (13.6). Operating cash flow remained strong during the year. Acquisition activity was high, with thirteen busi- nesses acquired, primarily in the US and Europe. Addi- tional acquisition agreements were signed during the year, primarily for HHI, a leading provider in the North American residential segment. The Nordic locksmith and security solution installer CERTEGO was divested. The focus on product development and innovation continued at a high level during the year, including the launch of more than 400 new products on the market. Sustainability remains a priority area for ASSA ABLOY. New initiatives were introduced during the year in our effort to meet the Group’s sustainability targets for 2025, with continued reductions in emis- sions, waste and water consumption. 2022 Demand was strong in most major market regions apart from Asia during the year. The markets in both the Americas and Europe developed well. Demand remained weak in Asia, primarily in respect of China. Organic growth was very strong for the Group as a whole at 12 percent. Growth in electromechanical products continued to develop well. Business operations were affected negatively by rising inflation, high material costs and supply chain disruption. However, it was possible to manage these challenges successfully thanks to the excellent engagement of our employees. Operating income in- creased by 31 percent, and the operating margin was 15.3 percent (14.9). Operating cash flow remained strong. Acquisition activity was very high during the year, with 21 businesses acquired, primarily in the US and Europe. The focus on product development and innovation continued undiminished during the year, partly in the form of major recruitment initiatives. Sustainability remains a priority area for ASSA ABLOY. Among other things, the Group had its sustainability targets confirmed by the Science Based Targets initiative (SBTi) during the year. 2023 Organic growth was good during the year, despite gradually weaker demand from the private residen- tial market in general. The North American market continued to develop well during the year in the commercial business segments. In Europe, demand was stable. Demand remained weak in Asia. Overall, organic growth amounted to 3 percent. Growth in electromechanical products continued to develop well. Operating income improved owing to strong growth in fixed currency, good leverage from sales price in relation to material costs combined with continuous efficiency enhancements and cost savings. A new restructuring program was launched early in the year. Operating income excluding items affecting comparability increased by 20 percent, and the equivalent operating margin was 15.8 percent (15.3). Operating cash flow remained very strong thanks to good earnings and a reduction in working capital tied up. Acquisition activity was very high during the year, with 24 businesses acquired, primarily in the US and Europe. The acquisition of HHI was the largest acquisition in ASSA ABLOY’s history and significantly strengthens its presence in the private residential market in North America. In connection with the acquisition of HHI, Emtek and the Smart Residential business in the US and Canada were divested. Earnings per share, excluding items affecting com- parability, increased by 13 percent compared with the previous year. 2024 In North America and Europe, organic sales were stable for the year. Organic growth was strong for Latin America and Africa, while it was negative for Asia and Oceania. Organic growth totaled to –1 percent. Growth from acquisitions and divestments remained strong, totaling 8 percent. Operating income rose by 11 percent to SEK 24,275 M (21,785), primarily attributable to strong growth in fixed currency and good leverage from sales price in relation to material costs combined with continuous efficiency enhancements and cost savings. The oper- ating margin amounted to 16.2 percent (15.5), which is in line with the Group’s long-term margin target. Operating cash flow also remained very strong thanks to good earnings and stable working capital tied up. Acquisition activity remained very high during the year, with 26 businesses acquired, primarily in the US and Europe. Two divestment agreements were signed during the year, including the sale of the Citizen ID business unit in the Global Technologies division. Earnings per share before and after full dilution increased by 15 percent compared with the previous year. 149 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Definitions of key ratios | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary • Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Definitions of key ratios Organic growth Change in sales for comparable units after adjust- ments for acquisitions, divestments and exchange rate effects. Operating margin (EBITDA) Operating income before depreciation, amortization and impairment as a percentage of sales. Operating margin (EBITA) Operating income before amortization of intangible assets recognized in business combinations, as a percentage of sales. Operating margin (EBIT) Operating income as a percentage of sales. Profit margin (EBT) Income before tax as a percentage of sales. Items affecting comparability Restructuring costs and significant non-recurring operating expenses such as revaluation of previously owned shares in associates and goodwill impairment. Operating cash flow Cash flow from operating activities excluding restruc- turing payments and tax paid on income minus net capital expenditure and repayment of lease liabilities. See the table on operating cash flow for detailed information. Cash conversion Operating cash flow in relation to income before tax excluding items affecting comparability. Net capital expenditure Investments in, less sales of, intangible assets and property, plant and equipment. Capital employed Total assets less interest-bearing assets and non- interest-bearing liabilities, including deferred tax liability. Average adjusted capital employed Average capital employed excluding restructuring reserves for the last twelve months. Net debt Interest-bearing liabilities less interest-bearing assets. See the table on net debt for detailed information. Net debt/EBITDA Net debt at the end of the period in relation to EBITDA for the last twelve months. Debt/equity ratio Net debt in relation to equity. Equity ratio Shareholders’ equity as a percentage of total assets. Shareholders’ equity per share Equity excluding non-controlling interests in relation to number of outstanding shares. Return on equity Net income attributable to parent company’s share- holders for the last twelve months as a percentage of average parent company’s shareholders’ equity for the same period. Return on capital employed Operating income (EBIT), excluding items affecting comparability, for the last twelve months as a per- centage of average adjusted capital employed. Earnings per share before and after dilution Net income attributable to parent company’s shareholders divided by weighted average number of outstanding shares. None of the Group’s outstanding long-term incentive programs are expected to result in significant dilution in the future. Earnings per share before and after dilution, excluding items affecting comparability Net income attributable to parent company’s share- holders, excluding items affecting comparability, net of tax, divided by weighted average number of outstanding shares. None of the Group’s outstanding long-term incentive programs are expected to result in significant dilution in the future. 150 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Board of Directors and CEO assurance | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios • Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Board of Directors and CEO assurance The Board of Directors and the President and CEO declare that the consolidated accounts have been prepared in accordance with Interna- tional Financial Reporting Standards, IFRS, as adopted by the EU and give a true and fair view of the Group’s financial position and results. The parent company’s annual accounts have been prepared in accordance with generally accepted accounting principles in Sweden and give a true and fair view of the parent company’s financial position and results. The Report of the Board of Directors for the Group and the parent company gives a true and fair view of the development of the Group’s and the parent company’s business operations, financial position and results, and describes material risks and uncertainties to which the parent company and the other companies in the Group are exposed. The Board of Directors and the CEO also certify that the consolidated accounts and the annual accounts have been prepared in accordance with the European Sustainability Reporting Standards (ESRS) and the specifications adopted under the EU Taxonomy Regulation. Stockholm, 12 March 2025 Johan Hjertonsson Chairman Carl Douglas Vice Chairman Nico Delvaux President and CEO Erik Ekudden Board member Sofia Schörling Högberg Board member Lena Olving Board member Victoria Van Camp Board member Joakim Weidemanis Board member Susanne Pahlén Åklundh Board member Rune Hjälm Board member Employee representative Bjarne Johansson Board member Employee representative Our auditor’s report was issued on 14 March 2025 Ernst & Young AB Hamish Mabon Authorized Public Accountant Auditor in charge 151 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Auditor’s report | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance • Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details This is a translation from the Swedish original. To the general meeting of the shareholders of ASSA ABLOY AB (publ), corporate identity number 556059-3575. Report on the annual accounts and consolidated accounts Auditor’s report Opinions We have audited the annual accounts and consoli- dated accounts of ASSA ABLOY AB (publ) for the yeat 2024, except the corporate governance statement on the pages 50–59 and the sustainability statement on pages 60–109. The annual accounts and consolidat- ed accounts of the company are included on pages 43–146 in this document. In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2024 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2024 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 50–59 or the sustainability statement on pages 60–109. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group. Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company’s audit committee in accordance with the Audit Regulation (537/2014) Article 11. Basis for Opinions We conducted our audit in accordance with Inter- national Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsi- bilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these require- ments. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled com- panies within the EU. We believe that the audit evidence we have ob- tained is sufficient and appropriate to provide a basis for our opinions. Key Audit Matters Key audit matters of the audit are those matters that, in our professional judgment, were of most signifi- cance in our audit of the annual accounts and consol- idated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. 152 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Auditor’s report | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance • Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Goodwill and other intangible assets with indefinite use of life Description How our audit addressed this key audit matter The value of goodwill and other intangibles with an indefinite useful life as of 31 December 2024 amount- ed to 134.3 billion SEK. The Company performs an an- nual impairment test as well as whenever impairment indicators are identified. The recoverable amount for each cash-generating unit is determined as the value in use, which is calculated based on the discounted present value of future cash flows. Key assumptions in these calculations include forecast operating results, growth rates to extrapolate future cash flows and discount rates to be applied on future estimated cash flows. Applied discount rate (also referred to as” WACC- Weighted Average Cost of Capital”) is present- ed in note 14. An impairment test is a complex process and con- tains a high degree of judgment regarding future cash flows and other assumptions, not least because it is based on estimates of how the Company’s business will be affected by future market developments and by other economic events. Therefore, we have assessed valuation of goodwill and other intangibles assets with an indefinite useful life to be a key audit matter. In our audit we have evaluated and reviewed key assumptions, the application of recognized valua- tion practices, discount rate (and other source data that the Company has applied. We have made an independent evaluation of whether there is a risk that reasonably probable events would give rise to a situation where the value in use would be lower than the carrying amount. In this assessment, we have also compared the company’s historical forecasts in the impairment tests with the amounts that is the actual outcome, in order to assess the company’s historical precision in its estimates and assessments. We have included valuation experts with appropriate skills in the team performing our review. Finally, we have evaluated disclosures provided in note 14, specifically with regards to the disclosure of which of the stated assumptions that are most sensitive in calculating the value in use and the sensitivity analysis for those key assumptions. Provisions – Restructuring programs Description How our audit addressed this key audit matter The restructuring program is described in the Report of Board of Directors in the annual report in note 26. The outgoing balance as per December 31, 2024 amounts to 0.04 billion SEK. A provision for restruc- turing measures is recognized when the Group has established a detailed plan and either implementa- tion has begun, or the main features of the measures have been communicated to the parties involved. In our audit we have focused on the recognition in the proper period and valuation of the restructuring provision as they require management’s judgment and estimates. Because of the significant amount and considerable estimates involved, we have assessed restructuring provision to be a key audit matter. . We have reviewed the company’s process for identi- fying restructuring projects and the estimated costs for these projects. Our audit procedures include evaluating if the restructuring programs in all material respects are in line with the accounting principles for provisions, i.e. IAS 37. We have evaluated if there is an obligation that represent future obligations. We have challenged management’s assumptions that there are basis for the restructuring provisions with the aim of assessing the reasonability of the provisions. Based on risk and materiality, we have reconciled the parame- ters in the calculation against supporting documenta- tion. This includes, among other things, the exam- ination of minutes, agreements, calculations and communication with employees. We have evaluated management’s assessments of remaining cashflows by reviewing their quarterly project updates. Finally, we have evaluated the disclosures provided regarding restructuring activities in note 26. 153 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Auditor’s report | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance • Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Other Information than the annual accounts and consolidated accounts This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1–42, 60–109, 147–149 and 158–161. The other information also consists of the compensation report that we obtained prior to the date of this auditor’s report. The Board of Directors and the Managing Director are responsible for this other information. Our opinion on the annual accounts and consoli- dated accounts does not cover this other information and we do not express any form of assurance conclu- sion regarding this other information. In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated ac- counts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated. If we, based on the work performed concerning this information, conclude that there is a material mis- statement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error. In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, mat- ters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so. The Audit Committee shall, without prejudice to the Board of Director’s responsibilities and tasks in general, among other things oversee the company’s financial reporting process. Auditor’s responsibility Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstate- ment, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reason- able 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 and consolidated accounts. As part of an audit in accordance with ISAs, we exer- cise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstate- ment of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of the company’s internal control relevant to our audit in order to design audit procedures that are appropriate in the cir- cumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting esti- mates and related disclosures made by the Board of Directors and the Managing Director. • Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any material un- certainty exists related to events or conditions that may cast significant doubt on the company’s and the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and consolidated accounts. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated accounts. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions. 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. We must also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions tak- en to eliminate threats or related safeguards applied. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the annual accounts and consolidated accounts, including the most important assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation precludes disclosure about the matter. 154 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Auditor’s report | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance • Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Report on other legal and regulatory requirements Report on the audit of the administration and the proposed appropriations of the company’s profit or loss Opinions In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of ASSA ABLOY AB (publ) for the year 2024 and the proposed appropriations of the company’s profit or loss. We recommend to the general meeting of share- holders that the profit be appropriated (loss be dealt with) 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 Basis for opinions We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsi- bilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical re- sponsibilities in accordance with these requirements. We believe that the audit evidence we have ob- tained is sufficient and appropriate to provide a basis for our opinions. Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss. At the proposal of a dividend, this includes an assess- ment of whether the dividend is justifiable consider- ing the requirements which the company’s and the group’s type of operations, size and risks place on the size of the parent company’s and the group’s equity, consolidation requirements, liquidity and position in general. The Board of Directors is responsible for the company’s organization and the administration of the company’s affairs. This includes among other things continuous assessment of the company’s and the group’s financial situation and ensuring that the company’s organization is designed so that the accounting, management of assets and the com- pany’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 neces- sary to fulfill the company’s accounting in accordance with law and handle the management of assets in a reassuring manner. Auditor’s responsibility Our objective concerning the audit of the administra- tion, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect: • has undertaken any action or been guilty of any omission which can give rise to liability to the company, or • in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. 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 ac- cordance 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 standards in Sweden, we exercise professional judgment and maintain professional skepticism 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 pro- cedures performed are based on our professional judgment with starting point in risk and materiality. This means that we focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company’s situation. We examine and test decisions undertaken, support for decisions, actions taken and other cir- cumstances that are relevant to our opinion concern- ing 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. The auditor’s examination of the ESEF report Opinion In addition to our audit of the annual accounts and consolidated accounts, we have also examined that the Board of Directors and the Managing Director have prepared the annual accounts and consolidated accounts in a format that enables uniform electronic reporting (the Esef report) according to the Swedish Securities Market Act (2007:528) for ASSA ABLOY AB (publ) for the financial year 2024. Our examination and our opinion relate only to the statutory requirements. In our opinion, the ESEF report has been prepared in a format that, in all material respects, enables uniform electronic reporting. Basis for opinion We have performed the examination in accordance with FAR’s recommendation RevR 18 Examination of the ESEF report. Our responsibility under this recom- mendation is described in more detail in the Auditors’ responsibility section. We are independent of ASSA ABLOY AB (publ) 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 evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the Esef report in accordance with Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), and for such internal control that the Board of Directors and the Managing Director determine is necessary to pre- pare the Esef report without material misstatements, whether due to fraud or error. Auditor’s responsibility Our responsibility is to obtain reasonable assurance whether the Esef report is in all material respects prepared in a format that meets the requirements of Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), based on the procedures performed. RevR 18 requires us to plan and execute procedures to achieve reasonable assurance that the Esef report is prepared in a format that meets these requirements. Reasonable assurance is a high level of assurance, but it is not a guarantee that an engagement carried out according to RevR 18 and generally accepted auditing standards in Sweden will always detect a ma- terial misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Esef report. The audit firm applies ISQM 1 Quality Management for Firms that Perform Audits and Reviews of Financial Statements, and other Assurance and Related Servic- es Engagements which requires the firm to design, implement and operate a system of quality manage- ment, including policies and procedures regarding compliance with professional ethical requirements, 155 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Auditor’s report | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance • Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details professional standards and legal and regulatory requirements. The examination involves obtaining evidence, through various procedures, that the Esef report has been prepared in a format that enables uniform electronic reporting of the annual and consolidat- ed accounts. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement in the report, whether due to fraud or error. In carrying out this risk assessment, and in order to design audit procedures that are appropriate in the circumstances, the auditor considers those elements of internal control that are relevant to the preparation of the Esef report by the Board of Directors and the Managing Director, but not for the purpose of expressing an opinion on the effec- tiveness of those internal controls. The examination also includes an evaluation of the appropriateness and reasonableness of assumptions made by the Board of Directors and the Managing Director. The procedures mainly include a technical valida- tion of the Esef report, i.e. if the file containing the Esef report meets the technical specification set out in the Commission’s Delegated Regulation (EU) 2019/815 and a reconciliation of the Esef report with the audit- ed annual accounts and consolidated accounts. Furthermore, the procedures also include an as- sessment of whether the Esef report has been marked with iXBRL which enables a fair and complete ma- chine-readable version of the consolidated statement of financial performance, financial position, changes in equity and cash flow. The auditor’s examination of the corporate governance statement The Board of Directors is responsible for that the corporate governance statement on pages 50–59 has been prepared in accordance with the Annual Accounts Act. Our examination of the corporate governance statement is conducted in accordance with FAR’s standard RevR 16 The auditor’s examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with Internation- al Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions. A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2–6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consoli- dated accounts and are in accordance with the Annual Accounts Act. The auditor’s opinion regarding the statutory sustainability report The Board of Directors is responsible for the statutory sustainability report on pages 60–109, and that it is prepared in accordance with the Annual Accounts Act according to the previous wording in the Annual Accounts Act that applied before July 1, 2024. Our examination has been conducted in accord- ance with FAR’s auditing standard RevR 12 The auditor’s opinion regarding the statutory sustain- ability report. This means that our examination of the statutory sustainability report is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinion. A statutory sustainability report has been prepared. Ernst & Young AB with Hamish Mabon as auditor in charge, Box 7850, 103 99 Stockholm was appointed auditor of ASSA ABLOY AB (publ) by the general meeting of the shareholders on 24 April 2024 and has been the company’s auditor since the 29 April 2020. Stockholm March 14 2025 Ernst & Young AB Hamish Mabon Authorized Public Accountant 156 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Auditor’s limited assurance report of ASSA ABLOY AB (publ)’s voluntary sustainability statement | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report • Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Conclusion We have been appointed by the Board of Directors to conduct a limited assurance engagement of the sustainability statement for ASSA ABLOY AB (publ) for the financial year 2024. The sustainability statement is included on page 60 to 109 in this document. Based on our limited assurance engagement as de- scribed in the section Auditor's responsibility, nothing has come to our attention that causes us to believe that the sustainability statement does not, in all material respects, meet the requirements of Chapter 6, Sections 12–12f of the Swedish Annual Accounts Act which includes, • whether the sustainability statement complies with the requirements of the ESRS; • whether the process the company has carried out to identify reported sustainability information has beenconducted as described in the sustainability statement; • compliance with the reporting requirements of the EU Green Taxonomy Regulation Article 8. Basis for conclusion We have conducted the limited assurance engage- ment in accordance with FAR's recommendation RevR 19 Revisorns översiktliga granskning av den lag- stadgade hållbarhetsrapporten. Our responsibility ac- cording to this recommendation is further described in the section Auditor's Responsibility. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Other Matter The comparative information included in the sustain- ability statement of ASSA ABLOY AB (publ) for the financial year 1 January – 31 December 2023 was not subject to an assurance engagement. Our conclusion is not modified in respect of this matter. Other information than the sustainability statement This document also contains other information than the sustainability statement and is found on pages 21 to 59, 110 to 150 and 157 to 161. The Board of Directors and the Managing Director are responsible for this other information. Our conclusion on the sustainability statement does not cover this other information and we do not express any form of assurance conclusion regarding this other information. In connection with our limited assurance engage- ment on the sustainability statement, our respon- sibility is to read the information identified above and consider whether the information is materially inconsistent with the sustainability statement. In this procedure we also take into account our knowledge otherwise obtained in the limited assurance engage- ment and assess whether the information otherwise appears to be materially misstated. If we, based on the work performed concerning this information, conclude that there is a materieal mis- statement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the sustainability statement in accordance with Chapter 6, Sections 12–12f of the Swedish Annual Accounts Act, and for such internal control as they determine is necessary to enable the preparation of the sustainability statement that is free from material misstatements, whether due to fraud or error. Auditor’s responsibilities Our responsibility is to express a conclusion on whether the sustainability statement has been pre- pared in accordance with Chapte 6, Sections 12–12f of the Swedish Annual Accounts Act based on our review. The limited assurance engagement has been conducted in accordance with FAR’s recommenda- tion RevR 19 Revisorns översiktliga granskning av den lagstadgade hållbarhetsrapporten. This recommenda- tion requires that we plan and perform our proce- dures to obtain limited assurance that the sustaina- bility statement is prepared in accordance with these requirements. The procedures in a limited assurance engagege- ment vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a limited assurance engagement been per- formed. This means that it is not possible for us to obtain such assurance that we become aware of all significant matters that could have been identified if a reasonable assurance engagement had been performed. Our firm applies ISQM 1 (International Standard on Quality Management), which requires the firm to de- sign, implement and operate a quality management system, including policies and procedures regarding compliance with ethical requirements, profession- al standards, and applicable legal and regulatory requirements. We are independent of ASSA ABLOY AB (publ) in accordance with professionalethics for accountantsin Sweden and have otherwise fulfilled our ethical re- sponsibilities in accordance with these requirements. A limited assurance engagement involves per- forming procedures to obtain evidence to support sustainability information. The auditor selects the procedures to be performed, including assessing the risks of material misstatements in the sustainability statement, whether due to fraud or error. In this risk assessment, the auditor considers the parts of the internal control that are relevant to how the Board of Directors and the Managing Director prepare the sustainability statement, in order to design proce- dures that are appropriate under the circumstances, but not for the purpose of providing a conclusion on the effectiveness of the company's internal control. The review consists of making inquiries, primarily of persons responsible for the preparation of the sustainability statement, performing analytical review and conducting other limited review procedures. Auditor’s limited assurance report of ASSA ABLOY AB (publ)’s voluntary sustainability statement This is the translation of the auditor’s report in Swedish To the company ASSA ABLOY AB, org.nr 556059-3575 157 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report • Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information The ASSA ABLOY share Information for shareholders Financial calendar and contact details Stockholm on 14 March 2025 Ernst & Young AB Hamish Mabon Authorized Public Accountant Appointed by the Board of Directors of ASSA ABLOY Our review procedures regarding the process the company has undertaken to identify sustainability information to report included, but were not limited to, the following: • Obtain an understanding of the process by: • Performing inquiries to understand the sources of imformation used by management (e.g. stake- holders dialogues, business plans, and strategy documents), and • Review the company's internal documents of its process; and • Evaluate whether the information obtained from our procedures about the process implemented by the Company is consistent with the description of the process in the sustainability statement. Our review procedures regarding the sustainability statement included, but were not limited to, the following: • Through inquiries, obtain a general understanding of the internal control environment, reporting processes, and information systems relevant to the preparation of the information in the sustainability statement. • Evaluate whether information identified as material through the process that the company has carried out to identify the content of the sustainability statement, is also included. • Evaluate whether the structure and presentation of the sustainability statement are in accordance with the requirements of the ESRS; • Obtain, through inquiries and analytical review procedures, support for the methods used for preparing material estimates and forward-looking information and on how these methods were applied; • Obtain an understanding of the process of identify- ing economic activities that are eligible in accord- ance with EU Green Taxonomy and the correspond- ing disclosures in the sustainability statement. Inherent limitations in preparing the sustainability statement In reporting forward-looking information in accord- ance with ESRS, the Board of Directors and the Man- aging Director of ASSA ABLOY AB (publ) are required to prepare the forward-looking information on the basis of disclosed assumptions about events that may occur in the future and possible future actions by ASSA ABLOY AB (publ). Actual outcomes are likely to be different since anticipated events frequently do not occur as expected. Auditor’s limited assurance report of ASSA ABLOY AB (publ)’s voluntary sustainability statement | Financial statements 158 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Shareholder information | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information • The ASSA ABLOY share Information for shareholders Financial calendar and contact details The ASSA ABLOY share Share price trend The stock market decreased at the beginning of the year but started to increase from the second half of January. Higher than expected inflation in key markets through March and April had a negative effect on the stock market, but it continued thereafter to develop positively and the OMX Stockholm PI index was up by 8.0 percent at the end of June as inflation slowed down and expectations of interest rate cuts grew. The ASSA ABLOY share price had a stable devel- opment in the beginning of the year and started to increase in February. It was up by 3.2 percent at the end of June. Share price and turnover 2015–2024 0 20,000 40,000 60,000 80,000 100,000 120,000 2024202320222021202020192018201720162015 0 50 100 150 200 250 300 350 400 SEK No. of shares traded, thousands ASSA ABLOY B OMX Stockholm PI ASSA ABLOY B, total return SIX Return Index No. of shares traded, thousands (incl. after hours) Source: Nasdaq and Infront Dividend per share 2015–2024Share price and turnover 2024 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 DNOSAJJMAMFJ 250 270 290 310 330 350 SEK No. of shares traded, thousands SEK 0 1 2 3 4 5 6 24232221201918171615 2024 proposed dividend ASSA ABLOY B OMX Stockholm PI No. of shares traded, thousands (incl. after hours) Source: Nasdaq and Infront In the first half of August, the global stock exchang- es fell by about 10 percent due to concerns over weaker economies. However, by the end of August, markets had recovered. From the end of September to the end of the year, the OMX Stockholm PI index fell by 6.0 percent as concerns grew over slower interest rate cuts. For the full year, OMX Stockholm PI increased 5.7 percent, while ASSA ABLOY’s share price closed at SEK 326.80, an increase of 12.6 percent. The highest closing price for the ASSA ABLOY Series B share in 2024 was SEK 346.80, recorded on 6 De- cember. The lowest price of SEK 278.10 was recorded on 5 January. At year-end, market capitalization amounted to SEK 363,590 M (322,981), calculated on both Series A and Series B shares. Listing and trading ASSA ABLOY’s Series B share has been listed on Nasdaq Stockholm, Large Cap list, since 8 November 1994, under the ISIN code SE 0007100581. On 8 November 2024, the share price had grown by 18,069 percent versus the closing price on 8 November 1994. Turnover of the Series B share on Nasdaq Stockholm in 2024 amounted to 358 million shares (400), equiv- alent to a turnover rate of 34 percent (38). Trading now takes place on both regulated markets and other trading platforms with a large proportion of shares traded on markets other than Nasdaq Stockholm. 159 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Shareholder information | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information • The ASSA ABLOY share Information for shareholders Financial calendar and contact details Ownership structure The number of shareholders at the end of 2024 was 59,699 (57,080) and the ten largest shareholders accounted for 35.1 percent (35.7) of the share capital and 55.7 percent (56.1) of the votes. Shareholders with more than 50,000 shares, a total of 285 share- holders, accounted for 97 percent (97) of the share capital and 98 percent (98) of the votes. Investors outside Sweden, owning 64.1 percent (64.5) of the share capital, accounted for 43.7 percent (44.0) of the votes, and were mainly in the US and the UK. Data per share SEK/share 1 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Earnings after tax and dilution 6.93 7.09 2 7.77 8.09 2 9.22 2 7.54 2 9.81 11.97 13.54 2 14.09 2 Dividend 2.65 3.00 3.30 3.50 3.85 3.90 4.20 4.80 5.40 5.90 3 Dividend yield, % 4 1.5 1.8 1.9 2.2 1.8 1.9 1.5 2.1 1.9 1.8 Dividend, % 5 38.2 42.3 42.5 43.3 41.8 51.7 42.8 40.1 39.9 41.9 Share price at year-end 178.00 169.10 170.40 158.15 219.00 202.50 276.20 223.70 290.30 326.80 Highest share price 189.00 190.10 197.10 193.90 231.40 246.50 288.20 281.80 290.50 346.80 Lowest share price 135.00 148.40 163.80 155.85 154.45 159.35 200.20 203.70 226.10 278.10 Equity 37.43 42.51 45.60 46.71 53.25 53.00 62.64 77.44 82.49 96.39 Number of shares, millions 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1,112.6 1 Adjustments made for new issues and stock split (3:1) in 2015 for all historical periods prior to 2015. 2 Excluding items affecting comparability. 3 Dividend proposed by the Board of Directors. 4 Dividend as percentage of share price at year-end. 5 Dividend as percentage of earnings per share after tax and dilution, excluding items affecting comparability. Ownership structure (share capital) Investment AB Latour, 9.5% Melker Schörling AB, 3.1% BlackRock, 4.0% Vanguard, 3.9% Swedbank Robur Fonder, 3.7% Capital Group, 2.9% Handelsbanken Fonder, 2.4% Fidelity Investments (FMR), 2.2% Alecta Tjänstepension, 2.1% Norges Bank Investment Management, 1.5% Other shareholders, 64.9% Ownership structure (votes) Investment AB Latour, 29.4% Melker Schörling AB, 10.9% BlackRock, 2.7% Vanguard, 2.6% Swedbank Robur Fonder, 2.5% Capital Group, 2.0% Handelsbanken Fonder, 1.7% Fidelity Investments (FMR), 1.5% Alecta Tjänstepension, 1.4% Norges Bank Investment Management, 1.0% Other shareholders, 44.3% ASSA ABLOY’s ten largest shareholders Based on the share register at 31 December 2024. Shareholders Series A shares Series B shares Total number of shares Share capital 1 , % Votes 1 , % Investment AB Latour 41,595,729 63,864,435 105,460,164 9.5 29.4 Melker Schörling AB 15,930,240 18,106,557 34,036,797 3.1 10.9 BlackRock 44,025,745 44,025,745 4.0 2.7 Vanguard 42,958,768 42,958,768 3.9 2.6 Swedbank Robur Fonder 40,699,175 40,699,175 3.7 2.5 Capital Group 32,010,731 32,010,731 2.9 2.0 Handelsbanken Funds 26,910,014 26,910,014 2.4 1.7 Fidelity Investments 24,597,457 24,597,457 2.2 1.5 Alecta Tjänstepension 22,924,073 22,924,073 2.1 1.4 Norges Bank 16,989,122 16,989,122 1.5 1.0 Other shareholders 721.964,288 721.964,288 64.9 44.3 Total number 57,525,969 1,055,050,365 1,112,576,334 100.0 100.0 1 Based on the number of outstanding shares and votes of 1,112,576,334 and 1,630,310,055 respectively. Source: Modular Finance AB and Euroclear Sweden AB. 160 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Shareholder information | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report Auditor’s limited assurance report of the voluntary sustainability statement Shareholder information • The ASSA ABLOY share Information for shareholders Financial calendar and contact details Share capital and voting rights The share capital amounted to SEK 370,858,778 at year-end 2024, distributed among a total of 1,112,576,334 shares, comprising 57,525,969 Series A shares and 1,055,050,365 Series B shares. All shares have a par value of around SEK 0.33 and give shareholders equal rights to the company’s assets and earnings. The total number of votes amounted to 1,630,310,055. Each Series A share carries ten votes, and each Series B share one vote. Repurchase of own shares Since 2010, the Board of Directors has requested and received a mandate from the Annual General Meeting to repurchase and transfer ASSA ABLOY Series B shares. The aim has been, among other things, to secure the company’s undertakings in connection with its long-term incentive programs (LTI). The 2024 Annual General Meeting authorized the Board of Directors to acquire, during the period until the next Annual General Meeting, a maximum number of Series B shares so that after each repurchase ASSA ABLOY holds a maximum 10 percent of the total number of shares in the company. ASSA ABLOY holds a total of 1,800,000 Series B shares after repurchase. The cost for these shares amounts to SEK 103 M. The shares account for around 0.2 percent of the share capital and each share has a par value of around SEK 0.33. No shares were repurchased in 2024. Dividend and dividend policy The objective of the dividend policy is that, in the longterm, the dividend should be equivalent to 33-50 percent of income after standard tax while taking into account ASSA ABLOY’s long-term financing require- ments. The Board of Directors proposes a dividend to shareholders of SEK 5.90 per share (5.40) for the 2024 financial year. The dividend is proposed to be paid in two equal installments, the first with the record date of 25 April 2025 and the second with the record date of 11 November 2025. If the proposal is adopted at the Annual General Meeting, the first installment is estimated to be paid on 30 April 2025 and the second installment on 14 November 2025. The proposal is equivalent to a total dividend yield on the Series B share of 1.8 percent (1.9). In 2024 the total return on the ASSA ABLOY share, defined as market price movement plus reinvested dividends, was 14.5 percent compared with the rein- vested SIX Return Index in Stockholm, which was up 8.6 percent. Over the ten-year period 2015–2024, the total return on ASSA ABLOY’s Series B share was 180 percent, compared with the reinvested SIX Return Index in Stockholm, which increased by 155 percent. Changes in share capital Year Transaction Series A shares Series C shares Series B shares Share capital, SEK 1 1989 20,000 2,000,000 1994 Split 100:1 2,000,000 2,000,000 1994 Bonus issue 1994 Non-cash issue 1,746,005 1,428,550 50,417,555 53,592,110 1996 New share issue 2,095,206 1,714,260 60,501,066 64,310,532 1996 Conversion of Series C shares into Series A shares 3,809,466 60,501,066 64,310,532 1997 New share issue 4,190,412 66,541,706 70,732,118 1998 Converted debentures 4,190,412 66,885,571 71,075,983 1999 Converted debentures before split 4,190,412 67,179,562 71,369,974 1999 Bonus issue 1999 Split 4:1 16,761,648 268,718,248 285,479,896 1999 New share issue 18,437,812 295,564,487 314,002,299 1999 Converted debentures after split and new share issues 18,437,812 295,970,830 314,408,642 2000 Converted debentures 18,437,812 301,598,383 320,036,195 2000 New share issue 19,175,323 313,512,880 332,688,203 2000 Non-cash issue 19,175,323 333,277,912 352,453,235 2001 Converted debentures 19,175,323 334,576,089 353,751,412 2002 New share issue 19,175,323 344,576,089 363,751,412 2002 Converted debentures 19,175,323 346,742,711 365,918,034 2010 Converted debentures 19,175,323 347,001,871 366,177,194 2011 Converted debentures 19,175,323 349,075,055 368,250,378 2012 Converted debentures 19,175,323 351,683,455 370,858,778 2015 Split 3:1 57,525,969 1,055,050,365 370,858,778 1 SEK 1 per share before split in 2015 – number of shares at the end of the period and around SEK 0.33 per share after split in 2015. Number of shares at the end of the period 1,112,576,334 (including repurchase of own shares). 161 ASSA ABLOY | ANNUAL REPORT 2024 download a printable pdf here Shareholder information | Financial statements Introduction Who we are ASSA ABLOY as an investment Divisions overview Report of the Board of Directors Financial statements Financial statements Notes Five years in summary Comments on five years in summary Definitions of key ratios Board of Directors and CEO assurance Auditor’s report The auditor’s audit report of the voluntarily prepared sustainability report Shareholder information The ASSA ABLOY share • Information for shareholders • Financial calendar and contact details Information for shareholders Annual General Meeting The 2025 Annual General Meeting of ASSA ABLOY AB will be held on Wednesday 23 April 2025 at 3.30 p.m., at 7A Post huset, Vasagatan 28, 111 20 Stockholm, Sweden. Right to participate and notification A person has the right to participate at the Annual General Meeting if the person: • is recorded as a shareholder in the share register kept by Euroclear Sweden AB on Friday 11 April 2025, and • has given notice of its participation to ASSA ABLOY AB no later than Tuesday 15 April 2025. Notice of participation shall be given on the company’s web- site assaabloy.com/general-meeting, by telephone +46 8-402 90 71 or in writing by mail to ASSA ABLOY AB, “2025 Annual General Meeting”, c/o Euroclear Sweden AB, P.O. Box 191, SE-101 23 Stockholm, Sweden. The notification must state name, personal or corporate identification number, address, telephone number and names of any assistants attending. Proxy If the shareholder is represented by proxy, a written and dated power of attorney signed by the sharehold- er must be enclosed to the notification and be pre- sented in original at the latest at the Annual General Meeting. Proxy form is available upon request and will be available on the company’s website assaabloy. com/general-meeting. If the proxy is issued by a legal entity, a certificate of incorporation or equivalent authorization document must be enclosed. Nominee registered shares Shareholders whose shares are nominee registered through a bank or other nominee must, in addition to giving notice of participation, request that their shares be temporarily registered in their own name in the share register kept by Euroclear Sweden AB (so called voting right registration) in order to be entitled to participate in the Annual General Meeting. The shareholders’ register for the General Meeting as of the record date Friday 11 April 2025 will take into account voting right registrations completed no later than Tuesday 15 April 2025. Shareholders concerned must, in accordance with each nominee’s routines, request that the nominee makes such voting right registration well in advance of that date. Nomination Committee The Nomination Committee has the task of preparing, on behalf of the shareholders, proposals regarding the election of Chairman of the General Meeting, members of the Board of Directors, Chairman of the Board, Vice Chairman of the Board, auditor, fees for the board members including division between the Chairman, the Vice Chairman, and the other board members, as well as fees for committee work, fees to the company’s auditor and any changes of the instructions for the Nomination Committee. The Nomination Committee prior to the 2025 An- nual General Meeting comprises Johan Menckel (In- vestment AB Latour), Mikael Ekdahl (Melker Schörling AB), Marianne Nilsson (Swedbank Robur Fonder), Yvonne Sörberg (Handelsbanken Fonder) and Carina Silberg (Alecta). Johan Menckel is Chairman of the Nomination Committee. Dividend The Board of Directors proposes a dividend to share- holders of SEK 5.90 per share for the 2024 financial year. The dividend is proposed to be paid in two equal installments, the first with the record date 25 April 2025 and the second with the record date 11 Novem- ber 2025. If the proposal is adopted by the Annual General Meeting, the first installment is estimated to be paid on 30 April 2025 and the second installment on 14 November 2025. Financial calendar and contact details Annual General Meeting and dividend Annual General Meeting 23 April 2025 Shares traded excluding right to dividend of SEK 2.95 24 April 2025 Record day for dividend 25 April 2025 Payment of dividend 30 April 2025 Shares traded excluding right to dividend of SEK 2.95 10 November 2025 Record day for dividend 11 November 2025 Payment of dividend 14 November 2025 Financial reporting Interim Report January–March 2025 23 April 2025 Half-year Report January–June 2025 17 July 2025 Interim Report January–September 2024 21 October 2025 Year-end Report 2025 February 2026 Further information Christiane Belfrage Corporate Communications Telephone +46 (0)8 506 485 10 [email protected] Björn Tibell Investor Relations Telephone +46 (0)8 506 485 73 [email protected] Reports can be ordered from ASSA ABLOY AB Website assaabloy.com Telephone +46 (0)8 506 485 00 Email [email protected] Mail ASSA ABLOY AB Box 70340 SE-107 23 Stockholm Sweden ASSA ABLOY's annual report for the financial year 1 January–31 December 2024 is dated on 12 March 2025. This copy of the annual financial reporting of ASSA ABLOY AB (publ) for the year ended 31 December 2024 is not presented in the ESEF format as specified in the Regulatory Technical Standards on ESEF (Delegated Regulation (EU) 2019/815). The ESEF reporting package is available at ASSA ABLOY’s website assaabloy.com Production: ASSA ABLOY in cooperation with Narva. Photo: ASSA ABLOY’s own photographic library, among others. Printing: By Wind, Stockholm, 2025. ASSA ABLOY AB Box 70340 SE-107 23 Stockholm Sweden Visiting address: Klarabergsviadukten 90 Tel +46 (0)8 506 485 00 Fax +46 (0)8 506 485 85 Reg. No. 556059-3575 assaabloy.com © ASSA ABLOY Celebrating 30 years of innovation ASSA ABLOY was founded in 1994 when the Swedish company Assa and the Finnish company Abloy merged. Over the past 30 years, ASSA ABLOY has grown from a lock company with 4,700 employes and SEK 3,6bn in sales in 1994 into the global leader in access solutions with 63,000 employees and SEK 150 bn in sales. Clear and consistent strategies together with successful integration of close to 400 acquisitions in a decentralized organization have paved the path for this incredible journey. Read more on pages 16–17. ASSA ABLOY 30 years!
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