ASSA ABLOY

Quarterly Report • Oct 18, 2019

• Net sales increased by 13% to SEK 24,034 M (21,191), with organic growth of 4% (5) and acquired net growth of 4% (2)
• Strong growth in Global Technologies and Americas and good growth in EMEA and Entrance Systems, while sales declined in Asia Pacific
• Five acquisitions signed with combined expected annual sales of about SEK 1,000 M
• Operating income (EBIT) increased by 14% and amounted to SEK 3,894 M (3,424), corresponding to an operating margin of 16.2% (16.2)
• Net income amounted to SEK 2,697 M (2,384)
• Earnings per share amounted to SEK 2.43 (2.15)
• Operating cash flow increased by 47% to SEK 4,401 M (3,004)

Operating income (EBIT)¹

Operating margin (EBITA)¹

Income before tax¹

Earnings per share¹

Net income¹

Operating margin (EBIT)¹

1 Excluding impairment of goodwill and other intangible assets in Q2 2018, totaling SEK –5,595 M before
tax, corresponding to SEK –5,268 M after tax.

Organic growth 960 807 4% 2,620 2,505 4% Acquisitions and divestments 446 825 4% 1,079 2,303 4% Exchange-rate effects 1,286 1,211 5% 1,154 3,393 5%

Operating cash flow, SEK M 3,004 4,401 47% 6,435 9,208 43%

, SEK M 3,424 3,894 14% 9,164 10,873 19%

, % 16.6% 16.7% 15.5% 16.2%

, SEK M 3,221 3,645 13% 8,595 10,104 18%

, SEK M 2,384 2,697 13% 6,396 7,477 17%

, % 16.2% 16.2% 15.1% 15.7%

, SEK 2.15 2.43 13% 5.76 6.73 17%

Third quarter January-September 2018 2019 Δ 2018 2019 Δ Sales, SEK M 21,191 24,034 13% 60,881 69,082 13% Of which:

Strong performance in the third quarter

The positive earnings development continued during the third quarter. Total sales grew by 13% with an improved underlying operating margin. Sales growth in the quarter was driven by organic growth of 4%, acquired net growth of 4% and positive currency movements of 5%. Organic growth was strong in Americas (6%) and Global Technologies (6%). Entrance Systems and EMEA reported good growth (3%), while sales in Asia Pacific declined (-1%).

Operating income increased by 14% to SEK 3,894 M, driven by good operating leverage. The operating margin was unchanged at 16.2%, but if adjusted for acquisition costs of SEK 55 M related to agta record, the margin increased by 20 basis points. The underlying improvement was driven by lower raw material costs, prices increases and operational improvements.

Operating cash flow was very strong and improved by 47% to SEK 4,401 M, driven by the improved earnings and working capital reductions. Our cash conversion in the quarter was 113%.

Good execution in the quarter

Overall, the underlying growth slowed somewhat in the quarter. As new construction indices continue to trend down in some of our more important markets and geopolitical challenges remain, the market conditions have become more challenging and uncertain.

Against that background I am pleased with our strong operational execution. It is encouraging to see that the mitigating actions we initiated last year to compensate for higher raw material costs, have resulted in strong improvements in operating leverage generally and for Entrance Systems, Americas and EMEA in particular.

The negative organic sales growth in Asia Pacific during the quarter was mainly driven by a weak South Korean market and negative growth in China. We are continuing the implementation of our new Chinese business plan where margins are now stabilizing and where we are seeing the first small results from the actions initiated.

Our restructuring programs also continued to advance well and generated savings of around SEK 200 M in the quarter. Due to the high speed of implementation of the most recent program, this level will slow down from the next quarter and in 2020 we expect the savings to be about SEK 300 M.

Acquisitions will add growth

With the acquisitions already announced, and assuming the consolidation of agta record, we have reached our acquisition target of 5% for 2020. Nevertheless, we will continue to work actively on our acquisition pipeline.

Finally, I would like to thank you for your interest in ASSA ABLOY and take this opportunity to inform you that we will host our next Capital Markets Day on 13 May 2020 in London.

Stockholm, 18 October 2019

Nico Delvaux President and CEO

Sales by quarter and last 12 months

The Group's sales increased by 13% to SEK 24,034 M (21,191). Organic growth amounted to 4% (5). Acquisitions and divestments were 4% (2), of which 4% (4) were acquisitions and 0% (–2) were divestments. Exchange-rates affected sales by 5% (8).

The Group's operating income (EBIT) amounted to SEK 3,894 M (3,424) an increase of 14%. The corresponding operating margin was 16.2% (16.2). Exchange-rates had an impact of SEK 192 M (165) on EBIT. Operating income before amortizations from acquisitions (EBITA) amounted to SEK 4,010 M (3,516). The corresponding EBITA margin was 16.7% (16.6).

Net financial items amounted to SEK –250 M (–203). The Group's income before tax was SEK 3,645 M (3,221), an increase of 13% compared with last year. Exchange-rates had an impact of SEK 180 M (166) on income before tax. The profit margin was 15.2% (15.2).

The estimated effective tax rate on an annual basis was 26% (26), excluding impairment of goodwill in 2018. Earnings per share amounted to SEK 2.43 (2.15), an increase of 13% compared with last year. Operating cash flow totaled SEK 4,401 M (3,004).

The Group's sales for the first nine months of 2019 totaled SEK 69,082 M (60,881), representing an increase of 13%. Organic growth was 4% (5). Acquisitions and divestments were 4% (2), of which 4% (4) were acquisitions and 0% (–2) were divestments. Exchange-rate effects affected sales by 5% (2).

The Group's operating income (EBIT) in 2019 amounted to SEK 10,873 M (9,164²), an increase of 19% compared with last year. The corresponding operating margin was 15.7% (15.1). Operating income before amortizations from acquisitions (EBITA) in 2019 amounted to SEK 11,213 M (9,444²). The corresponding EBITA margin was 16.2% (15.5).

Earnings per share in 2019 amounted to SEK 6.73 (5.76²), an increase of 17% compared with last year. Operating cash flow totaled SEK 9,208 M (6,435).

Payments related to all restructuring programs amounted to SEK 181 M (103) in the quarter. The restructuring programs proceeded according to plan and led to a reduction in personnel of 343 people during the quarter and 16,083 people since the projects began in 2006. At the end of the quarter provisions of SEK 762 M remained in the balance sheet for carrying out the programs.

No restructuring costs were reported during the quarter. Additional restructuring costs of about SEK 300 M for the seventh manufacturing footprint program launched in 2018 are expected to be reported in the fourth quarter of 2019.

² Excluding impairment of goodwill and other intangible assets in Q2 2018, totaling SEK –5,595 M before tax, corresponding to SEK –5,268 M after tax.

Chris Bone has decided to leave his position as Executive Vice President and Technical Director at ASSA ABLOY and will return to the UK.

Sales for the quarter in EMEA totaled SEK 5,120 M (4,872), with organic growth of 3% (2). The growth was very strong in the Middle East, strong in East Europe and good in Benelux, Scandinavia and Germany. Sales growth was stable in France and Africa but negative in Finland, the UK and South Europe. Acquired growth net was –1%. Operating income totaled SEK 822 M (774), which represents an operating margin (EBIT) of 16.1% (15.9). Return on capital employed amounted to 15.9% (17.4). Operating cash flow before interest paid totaled SEK 838 M (627).

Sales for the quarter in Americas totaled SEK 6,099 M (5,211), with organic growth of 6% (10). Sales growth continued to be very strong for US Smart Residential and for Architectural Hardware, and was strong for Access & High Security, Electromechanical Solutions, Security Doors and US Residential Group. Sales growth was good in Canada and stable in Latin America. Sales growth for Perimeter Security in the US was negative. Acquired growth net was 2%. Operating income totaled SEK 1,249 M (1,046), which represents an operating margin (EBIT) of 20.5% (20.1). Return on capital employed amounted to 24.1% (23.8). Operating cash flow before interest paid totaled SEK 1,854 M (1,203).

Sales for the quarter in Asia Pacific totaled SEK 2,874 M (2,627), with organic growth of –1% (1). The sales growth was strong in South Asia and stable in Pacific. For China, India, South Korea and Japan growth was negative. Acquired growth net was 6%. Operating income totaled SEK 274 M (242), which represents an operating margin (EBIT) of 9.5% (9.2). Return on capital employed amounted to 11.6% (12.3). Operating cash flow before interest paid totaled SEK 337 M (120).

Sales for the quarter in Global Technologies totaled SEK 3,991 M (3,001), with organic growth of 6% (12). Sales growth was very strong for Secure Issuance and Global Solutions and stable for Physical Access Control and Citizen ID. For Extended Access, Identification Technology and Identity & Access Solutions growth was negative. Acquired growth net was 18%. Operating income totaled SEK 810 M (641), which represents an operating margin (EBIT) of 20.3% (21.4). Return on capital employed amounted to 14.7% (14.4). Operating cash flow before interest paid totaled SEK 775 M (674).

Sales for the quarter in Entrance Systems totaled SEK 6,427 M (5,909), with organic growth of 3% (4). Sales growth was strong for Pedestrian Doors and High Performance Doors and good for Industrial Doors and Logistics Solutions. Growth was stable for Door Components and US Residential Doors but negative for EU Residential Doors. Acquired growth net was 0%. Operating income totaled SEK 873 M (831), which represents an operating margin (EBIT) of 13.6% (14.1). Return on capital employed amounted to 14.3% (15.6). Operating cash flow before interest paid totaled SEK 949 M (593).

A total of four acquisitions were consolidated during the quarter. The combined acquisition price for the companies acquired during the year, including adjustments from prior year acquisitions, amounted to SEK 2,805 M. The acquisition price on a cash and debt free basis totaled SEK 3,525 M. Preliminary acquisition analyses indicate that goodwill and other intangible assets with indefinite useful life amount to SEK 2,707 M. Estimated deferred considerations amounted to SEK 190 M.

On September 4 it was announced that ASSA ABLOY had acquired LifeSafety Power, a leading US supplier of smart integrated access control power solutions for OEMs, integrators and end-users. The company has about 65 employees and its expected sales in 2019 amount to around SEK 290 M.

On September 30 it was announced that ASSA ABLOY had acquired Placard, Australia's largest manufacturer of secure cards. The company has about 170 employees and its expected sales in 2019 amount to around SEK 420 M.

On October 3 it was announced that ASSA ABLOY had signed an agreement to acquire Lux-IDent, a leading provider of radio frequency identification (RFID) components based in the Czech Republic. The company has about 145 employees and its expected sales in 2019 amount to around SEK 180 M. The acquisition is expected to close during the fourth quarter of 2019.

On 14 October, the acquisition of De La Rue was completed.

ASSA ABLOY is continuing its sustainability efforts. As an example, the new HID Global retransfer printer for ID card personalization is the first and only retransfer printing solution for ID card personalization that has GreenCircle® certification. The printer's power-efficient design enables users to reduce their annual energy cost and cuts the costs of consumables for printed and laminated cards by nearly half.

Other operating income for the Parent company ASSA ABLOY AB totaled SEK 3,197 M (2,965) for the first nine months of the year. Operating income for the same period amounted to SEK 540 M (829). Investments in tangible and intangible assets totaled SEK 33 M (89). Liquidity is good and the equity ratio is 36.0% (38.2).

ASSA ABLOY applies International Financial Reporting Standards (IFRS) as endorsed by the European Union. The same accounting and valuation principles as in the latest Annual Report have been applied, with the exception of new and changed standards and interpretations that came into force on 1 January 2019 and are described briefly on page 18. This Report was prepared in accordance with IAS 34 'Interim Financial Reporting' and the Annual Accounts Act. The Report for the Parent company was prepared in accordance with the Annual Accounts Act and RFR 2 'Reporting by a Legal Entity'.

From 1 January 2019 ASSA ABLOY is applying IFRS 16 'Leases' and IFRIC 23 'Uncertainty over Income Tax Treatments'. The financial effects of applying these standards are described in more detail on page 18.

ASSA ABLOY makes use of a number of financial performance measures that are not defined in the reporting rules that the company uses – so-called 'alternative performance measures'. For definitions of financial performance measures, refer to Page 19 of this Report and to the company's latest Annual Report. To check how the financial measurements have been calculated for current and earlier periods, refer to the tabulated figures in this Quarterly Report and to the company's Annual Report. The Annual Reports for the years 1994 to 2018 appear on the company's website www.assaabloy.com.

Totals quoted in tables and statements may not always be the exact sum of the individual items because of rounding differences. The aim is that each line item should correspond to its source, and rounding differences may therefore arise.

No transactions that significantly affected the company's position and income have taken place between ASSA ABLOY and related parties.

As an international Group with a wide geographic spread, ASSA ABLOY is exposed to a number of business, financial and tax-related risks. The business risks can be divided into strategic, operational and legal risks. The financial risks are related to such factors as exchange rates, interest rates, liquidity, the giving of credit, raw materials and financial instruments. Risk management in ASSA ABLOY aims to identify, control and reduce risks. This work begins with an assessment of the probability of risks occurring and their potential effect on the Group. For a more detailed description of particular risks and risk management, see the 2018 Annual Report.

The Company's Auditors have not carried out any review of this Report for the third quarter of 2019.

Stockholm, 18 October 2019

Nico Delvaux President and CEO

The Year-end Report and Quarterly Report for the fourth quarter will be published on 6 February 2020.

Nico Delvaux, President and CEO, tel. no: +46 8 506 485 82

Erik Pieder, Executive Vice President and CFO, tel.no: +46 8 506 485 72

ASSA ABLOY is holding a telephone and web conference at 09.30 on 18 October 2019

which can be followed on the Internet at www.assaabloy.com.

It is possible to submit questions by telephone on: +46 8–566 427 07, +44 333 300 9267 or +1 833 526 8383

This information is information that ASSA ABLOY AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 08.00 CEST on 18 October 2019.

CONDENSED INCOME STATEMENT		Q3		Q1-Q3
SEK M	2018	2019	2018	2019
Sales	21,191	24,034	60,881	69,082
Cost of goods sold	-12,799	-14,408	-36,773	-41,361
Gross income	8,392	9,625	24,108	27,721
Selling, administrative and R&D costs	-5,006	-5,774	-15,077	-16,951
Impairment of goodwill and other intangible assets	-	-	-5,595	-
Share of earnings in associates	38	43	132	103
Operating income	3,424	3,894	3,569	10,873
Finance net	-203	-250	-569	-769
Income before tax	3,221	3,645	3,000	10,104
Tax on income	-838	-948	-1,872	-2,627
Net income for the period	2,384	2,697	1,128	7,477
Net income for the period attributable to:
Parent company's shareholders	2,384	2,696	1,126	7,476
Non-controlling interests	0	1	2	0
Earnings per share
Before and after dilution, SEK	2.15	2.43	1.01	6.73
Before and after dilution and excluding items affecting comparability, SEK	2.15	2.43	5.76	6.73
CONDENSED STATEMENT OF COMPREHENSIVE INCOME	Q3		Q1-Q3
SEK M	2018	2019		2019
Net income for the period	2,384	2,697	2018 1,128	7,477
Other comprehensive income: Items that will not be reclassified to profit or loss
Actuarial gain/loss on post-employment benefit obligations, net after tax	-5	-214	6	-502
Total	-5	-214	6	-502
Items that may be reclassified subsequently to profit or loss
Share of other comprehensive income of associates	-40	64	66	166
Cashflow hedges and net investment hedges	21	-11	-8	-28
Exchange rate differences	-595	1,686	1,883	3,047
Total	-614	1,739	1,941	3,185
Total comprehensive income for the period	1,764	4,222	3,075	10,160
Total comprehensive income for the period attributable to:
Parent company's shareholders	1,764	4,221	3,073	10,158
Non-controlling interests	0	1	2	2

CONDENSED BALANCE SHEET	30 Sep 31 Dec
SEK M	2018	2018	2019
ASSETS
Non-current assets
Intangible assets	64,861	62,831	71,773
Property, plant and equipment	8,070	8,240	8,657
Right-of-use assets	119	149	3,746
Investments in associates	2,434	2,383	2,643
Other financial assets	152	148	104
Deferred tax assets	1,354	1,922	1,498
Total non-current assets	76,991	75,674	88,421
Current assets
Inventories	11,316	11,601	12,592
Trade receivables	14,496	14,613	16,115
Other current receivables and investments	3,227	4,149	4,719
Cash and cash equivalents	538	559	459
Total current assets	29,577	30,922	33,885
TOTAL ASSETS	106,568		106,596 122,306
EQUITY AND LIABILITIES
Equity
Equity attributable to Parent company's shareholders	51,890	50,030	57,946
Non-controlling interests	10	11	8
Total equity	51,900	50,040	57,954
Non-current liabilities
Long-term loans	19,398	19,005	21,179
Non-current lease liabilities	91	62	2,732
Deferred tax liabilities	1,764	2,267	2,199
Other non-current liabilities and provisions	5,030	5,519	5,603
Total non-current liabilities	26,283	26,852	31,713
Current liabilities
Short-term loans	7,594	10,139	8,764
Current lease liabilities	-	24	1,014
Trade payables	7,893	7,704	7,866
Other current liabilities and provisions	12,898	11,836	14,995
Total current liabilities	28,385	29,703	32,639
TOTAL EQUITY AND LIABILITIES	106,568		106,596 122,306

CHANGES IN EQUITY		Equity attributable to:
	Parent	Non
	company's	controlling	Total
SEK M	shareholders	interests	equity
Opening balance 1 January 2018	50,648	9	50,657
Net income for the period	1,126	2	1,128
Other comprehensive income	1,947	0	1,947
Total comprehensive income	3,073	2	3,075
Dividend	-3,666	-	-3,666
Stock purchase plans	-26	-	-26
Total transactions with shareholders	-3,692	-	-3,692
Closing balance 30 September 2018	50,030	11	50,040

Opening balance 1 January 2019 according to adopted Annual Report	51,890	10	51,900
Change in accounting policies	-234	-	-234
New opening balance 1 January 2019	51,656	10	51,666
Net income for the period	7,476	0	7,477
Other comprehensive income	2,682	1	2,683
Total comprehensive income	10,158	2	10,160
Dividend	-3,888	-	-3,888
Stock purchase plans	15	-	15
Change in non-controlling interest	5	-4	1
Total transactions with shareholders	-3,868	-4	-3,872
Closing balance 30 September 2019	57,946	8	57,954

CONDENSED STATEMENT OF CASH FLOWS		Q3		Q1-Q3
SEK M	2018	2019	2018	2019
OPERATING ACTIVITIES
Operating income	3,424	3,894	3,569	10,873
Depreciation and amortization	488	842	1,452	2,465
Impairment of goodwill and other intangible assets	-	-	5,595	-
Restructuring payments	-103	-181	-442	-465
Other non-cash items	-78	-37	-234	-300
Cash flow before interest and tax	3,731	4,518	9,940	12,573
Interest paid and received	-105	-179	-446	-636
Tax paid on income	-576	-577	-2,171	-2,222
Cash flow before changes in working capital	3,049	3,761	7,323	9,716
Changes in working capital	-296	591	-2,306	-1,215
Cash flow from operating activities	2,753	4,353	5,017	8,500
INVESTING ACTIVITIES
Net investments in intangible assets and property, plant and equipment	-429	-410	-1,195	-1,136
Investments in subsidiaries	-1,864	-1,049	-3,895	-2,979
Disposals of subsidiaries	-	38	382	75
Investments in and disposals of associates	-	0	0	16
Other investments and disposals	0	0	0	0
Cash flow from investing activities	-2,292	-1,421	-4,708	-4,025
FINANCING ACTIVITIES
Dividends	-	-	-3,666	-3,888
Acquisition of non-controlling interests	-10	-14	-229	-19
Repayment of lease liabilities	-3	-300	-13	-843
Net cash effect of changes in borrowings	-381	-2,521	3,686	183
Cash flow from financing activities	-394	-2,835	-221	-4,567
CASH FLOW FOR THE PERIOD	67	97	88	-92
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of period	496	355	459	538
Cash flow for the period	67	97	88	-92
Effect of exchange rate differences	-4	7	12	13
Cash and cash equivalents at end of period	559	459	559	459

KEY RATIOS	Year	Q1-Q3
	2018	2018	2019
Return on capital employed, %	7.6	8.3	16.2
Return on capital employed excluding items affecting comparability, %	16.2	15.4	16.2
Return on shareholders' equity, %	5.4	6.5	18.2
Equity ratio, %	48.7	46.9	47.4
Interest coverage ratio, times	8.0	6.4	14.8
Total number of shares, thousands		1,112,576 1,112,576 1,112,576
Number of shares outstanding, thousands		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
Average number of employees	48,353	48,273	49,136

CONDENSED INCOME STATEMENT	Year	Q1-Q3
SEK M	2018	2018	2019
Operating income	1,801	829	540
Income before appropriations and tax	3,951	1,888	1,504
Net income for the period	4,796	1,764	1,479

CONDENSED BALANCE SHEET	31 Dec	30 Sep
SEK M	2018	2018	2019
Non-current assets	39,554	39,661	39,785
Current assets	17,195	14,224	19,098
Total assets	56,749	53,885	58,883
Equity	23,610	20,567	21,215
Untaxed reserves	678	565	678
Non-current liabilities	13,821	12,804	16,083
Current liabilities	18,641	19,949	20,907
Total equity and liabilities	56,749	53,885	58,883

THE GROUP IN SUMMARY SEK M	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1-Q3 2018	Year 2018	Q1 2019	Q2 2019	Q3 2019		Q1-Q3 Last 12 2019 months
Sales	18,550	21,140	21,191	23,167	60,881	84,048	21,505	23,544	24,034	69,082	92,249
Organic growth	4%	5%	5%	6%	5%	5%	5%	3%	4%	4%
Gross income excluding items affecting comparability	7,372	8,345	8,392		9,134 24,108 33,243		8,596	9,500		9,625 27,721 36,855
Gross margin excluding items affecting comparability	39.7%	39.5%	39.6%	39.4%	39.6%	39.6%	40.0%	40.4%	40.0%	40.1%	40.0%
Operating income before depr. & amort. (EBITDA)
excluding items affecting comparability Operating margin (EBITDA)	3,297 17.8%	3,407 16.1%	3,912 18.5%	18.4%	4,256 10,616 14,872 17.4%	17.7%	4,034 18.8%	4,568 19.4%	19.7%	4,736 13,338 17,594 19.3%	19.1%
Depreciation and amortization excl. amortization
attributable to business combinations	-376	-400	-396	-397	-1,173	-1,570	-682	-716	-726	-2,125	-2,522
Operating income before amortization (EBITA)
excluding items affecting comparability Operating margin (EBITA)	2,921 15.7%	3,007 14.2%	3,516 16.6%	3,858 16.7%	15.5%	9,444 13,302 15.8%	3,352 15.6%	3,852 16.4%	16.7%	4,010 11,213 15,072 16.2%	16.3%
Amortization attributable to business combinations	-92	-97	-91	-113	-280	-393	-106	-120	-115	-341	-453
Operating income (EBIT)
excluding items affecting comparability Operating margin (EBIT)	2,829 15.3%	2,911 13.8%	3,424 16.2%	3,746 16.2%	15.1%	9,164 12,909 15.4%	3,246 15.1%	3,733 15.9%	16.2%	3,894 10,873 14,618 15.7%	15.8%
Items affecting comparability1)	-	-5,595	-	-1,218	-5,595	-6,813	-	-	-	-	-1,218
Operating income (EBIT)	2,829	-2,685	3,424	2,528	3,569	6,096	3,246	3,733		3,894 10,873 13,400
Operating margin (EBIT)		15.3% -12.7%	16.2%	10.9%	5.9%	7.3%	15.1%	15.9%	16.2%	15.7%	14.5%
Net financial items Income before tax (EBT)	-175 2,654	-191 -2,876	-203 3,221	-230 2,297	-569 3,000	-799 5,297	-248 2,997	-271 3,462	-250	-769 3,645 10,104 12,401	-999
Profit margin (EBT)		14.3% -13.6%	15.2%	9.9%	4.9%	6.3%	13.9%	14.7%	15.2%	14.6%	13.4%
Tax on income	-690	-344	-838	-670	-1,872	-2,542	-779	-900	-948	-2,627	-3,297
Net income for the period	1,964	-3,220	2,384	1,627	1,128	2,755	2,218	2,562	2,697	7,477	9,104
Net income attributable to:
Parent company's shareholders	1,964	-3,222	2,384	1,627	1,126	2,753	2,219	2,561	2,696	7,476	9,104
Non-controlling interests	0	2	0	0	2	2	-1	0	1	0	0
OPERATING CASH FLOW	Q1	Q2	Q3	Q4	Q1-Q3	Year	Q1	Q2	Q3		Q1-Q3 Last 12
SEK M	2018	2018	2018	2018	2018	2018	2019	2019	2019		2019 months
Operating income (EBIT) Restructuring costs	2,829 -	-2,685 -	3,424 -	2,528 1,218	3,569 -	6,096 1,218	3,246 -	3,733 -	3,894 -	10,873 -	13,400 1,218
Impairment of goodwill and other intangible assets	-	5,595	-	-	5,595	5,595	-	-	-	-	-
Depreciation and amortization	468	497	488	510	1,452	1,963	788	835	842	2,465	2,975
Net capital expenditure	-356	-411	-429	-124	-1,195	-1,319	-321	-406	-410	-1,136	-1,260
Change in working capital Interest paid and received	-2,136 -122	127 -220	-296 -105	1,229 -215	-2,306 -446	-1,076 -662	-2,048 -179	242 -277	591 -179	-1,215 -636	14 -851
Repayment of lease liabilities	-	-	-	-	-	-	-262	-281	-300	-843	-843
Non-cash items	-107	-49	-78	-224	-234	-458	-53	-210	-37	-300	-524
Operating cash flow Operating Cash flow/Income before tax excluding	575	2,855	3,004	4,923		6,435 11,357	1,171	3,636	4,401		9,208 14,130
items affecting comparability	0.22	1.05	0.93	1.40	0.75	0.94	0.39	1.05	1.21	0.91	1.04
CHANGE IN NET DEBT SEK M	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1-Q3 2018	Year 2018	Q1 2019	Q2 2019	Q3 2019	Q1-Q3 2019
Net debt at beginning of period	25,275	27,219	31,454	31,372	25,275	25,275	29,246	35,100	37,620	29,246
Impact from transition to IFRS 16	-	-	-	-	-	-	3,711	-	-	3,711
Operating cash flow	-575	-2,855	-3,004	-4,923		-6,435 -11,357	-1,171	-3,636	-4,401	-9,208
Restructuring payments Tax paid on income	173 609	166 986	103 576	351 487	442 2,171	793 2,658	161 703	123 942	181 577	465 2,222
Acquisitions and divestments	986	1,097	2,610	1,697	4,693	6,390	1,357	964	1,425	3,746
Dividend	-	3,666	-	-	3,666	3,666	-	3,888	-	3,888
Actuarial gain/loss on post-employment benefit obligations	-35	20	-21	-3	-36	-39	179	210	289	678
Change to lease liabilities Exchange rate differences, etc.	- 787	- 1,157	- -348	- 266	- 1,597	- 1,862	-127 1,039	-111 140	-51 1,203	-288 2,383
Net debt at end of period					27,219 31,454 31,372 29,246 31,372 29,246				35,100 37,620 36,843 36,843
Net debt/Equity	0.50	0.65	0.63	0.56	0.63	0.56	0.64	0.70	0.64	0.64
NET DEBT SEK M	Q1 2018	Q2 2018	Q3 2018	Q4 2018			Q1 2019	Q2 2019	Q3 2019
Interest-bearing assets	-218	-189	-181	-177			-168	-144	-113
Cash and cash equivalents	-551	-496	-559	-538			-414	-355	-459
Derivative financial instruments, net Pension provisions	32 2,971	40 3,102	8 2,873	0 2,880			43 3,105	-127 3,324	8 3,717
Lease liabilities	78	75	86	91			3,776	3,694	3,746
Interest-bearing liabilities	24,907	28,923	29,144	26,992			28,758	31,228	29,944
Total		27,219 31,454 31,372 29,246						35,100 37,620 36,843
CAPITAL EMPLOYED AND FINANCING	Q1	Q2	Q3	Q4			Q1	Q2	Q3
SEK M	2018	2018	2018	2018			2019	2019	2019
Capital employed	81,139	79,733	81,412	81,146			90,227	91,334	94,796
- of which goodwill - of which other intangible assets and	51,956	50,590	52,169	53,413			55,731	56,179	59,134
property, plant and equipment	19,878	18,873	18,903	19,518			19,911	20,386	21,296
- of which right-of-use assets	141	139	149	119			3,805	3,705	3,746
- of which investments in associates	2,385	2,391	2,383	2,434			2,510	2,534	2,643
Net debt Non-controlling interests	27,219 9	31,454 11	31,372 11	29,246 10			35,100 10	37,620 6	36,843 8
Equity attributable to the Parent company´s shareholders	53,911	48,268	50,030	51,890			55,117	53,708	57,946
DATA PER SHARE SEK	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1-Q3 2018	Year 2018	Q1 2019	Q2 2019	Q3 2019	Q1-Q3 2019
Earnings per share before and after dilution	1.77	-2.90	2.15	1.46	1.01	2.48	2.00	2.31	2.43	6.73
Earnings per share before and after dilution and
excluding items affecting comparability Shareholders' equity per share after dilution	1.77 48.53	1.84 43.45	2.15 45.04	2.33 46.71	5.76 45.04	8.09 46.71	2.00 49.62	2.31 48.35	2.43 52.17	6.73 52.17

1) Items affecting comparability consist of restructuring costs and impairment of goodwill and other intangible assets in 2018.

Q3 and 30 Sep	Opening Solutions							Global Entrance
		EMEA	Americas		Asia Pacific		Technologies			Systems		Other		Total
SEK M	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019
Sales, external	4,793	5,004	5,190	6,073	2,342	2,584	2,981	3,966	5,886	6,407	0	-		21,191 24,034
Sales, internal	79	117	21	26	285	289	20	25	23	20	-428	-478	-	-
Sales		4,872 5,120		5,211 6,099		2,627 2,874		3,001 3,991		5,909 6,427	-428		-478 21,191 24,034
Organic growth	2%	3%	10%	6%	1%	-1%	12%	6%	4%	3%	-	-	5%	4%
Acquisitions and disposals	5%	-1%	0%	2%	0%	6%	4%	18%	1%	0%	-	-	2%	4%
Exchange-rate effects	7%	3%	8%	9%	6%	4%	8%	9%	8%	6%	-	-	8%	5%
Share of earnings in associates	-	-	-	-	6	5	-	-	31	37	-	-	38	43
Operating income (EBIT) excl.
items affecting comparability	774	822		1,046 1,249	242	274	641	810	831	873	-111	-134		3,424 3,894
Operating margin (EBIT) excl.
items affecting comparability1)		15.9% 16.1%		20.1% 20.5%	9.2%	9.5%		21.4% 20.3%		14.1% 13.6%	-	-		16.2% 16.2%
Impairment of goodwill etc	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Operating income (EBIT)	774	822		1,046 1 249	242	274	641	810	831	873	-111	-134		3,424 3,894
Operating margin (EBIT)		15.9% 16.1%		20.1% 20.5%	9.2%	9.5%		21.4% 20.3%		14.1% 13.6%	-	-		16.2% 16.2%
Capital employed		17,414 20,114		17,533 20,431	7,650	9,154		18,783 22,494		21,110 23,762		-1,078 -1,159		81,412 94,796
- of which goodwill		10,330 11,267		11,876 14,982	3,751	4,349		13,966 15,646		12,246 12,890	-	-		52,169 59,134
- of which other intangible assets and
property, plant and equipment	3,896	4,163	3,796	4,441	2,406	2,473	4,263	5,566	4,393	4,499	148	154		18,903 21,296
- of which right-of-use assets	107	1,017	-	518	-	276	-	374	42	1,540	-	21	149	3,746
- of which investments in associates	9	0	-	-	568	672	17	19	1,788	1,952	-	-	2,383	2,643
Return on capital employed
excluding items affecting comparability		17.4% 15.9%		23.8% 24.1%		12.3% 11.6%		14.4% 14.7%		15.6% 14.3%	-	-		16.8% 16.5%
Operating income (EBIT)	774	822	1,046	1,249	242	274	641	810	831	873	-111	-134	3,424	3,894
Impairment of intangible assets	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Depreciation and amortization	114	199	97	144	67	96	129	189	75	205	5	9	488	842
Net capital expenditure	-148	-63	-78	-89	-52	-61	-81	-104	-64	-76	-5	-16	-429	-410
Repayment of lease liabilities	-	-74	-	-40	-	-25	-	-32	-	-125	-	-3	-	-300
Change in working capital	-113	-46	137	591	-137	53	-15	-88	-249	72	81	9	-296	591
Cash flow	627	838		1,203 1,854	120	337	674	775	593	949	-29	-135		3,187 4,617
Non-cash items											-78	-37	-78	-37
Interest paid and received											-105	-179	-105	-179
Operating cash flow														3,004 4,401

Q1-Q3 and 30 Sep

	Opening Solutions							Global		Entrance
	EMEA			Americas	Asia Pacific		Technologies		Systems		Other		Total
SEK M	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019		2018 2019
Sales, external		14,499 15,303		14,586 17,205	6,437	7,027		8,285 10,971		17,075 18,576	0	-		60,881 69,082
Sales, internal	217	317	57	68	757	986	64	74	71	84		-1,166 -1,528	-	-
Sales			14,716 15,620 14,644 17,272			7,193 8,013			8,349 11,045 17,146 18,660				-1,166 -1,528 60,881 69,082
Organic growth	2%	3%	7%	7%	2%	2%	8%	7%	5%	2%	-	-	5%	4%
Acquisitions and disposals	4%	1%	1%	1%	1%	5%	2%	17%	1%	1%	-	-	2%	4%
Exchange-rate effects	5%	2%	-1%	10%	3%	4%	1%	8%	3%	6%	-	-	2%	5%
Share of earnings in associates	-	-	-	-	19	15	-	-	113	88	-	-	132	103
Operating income (EBIT) excl.
items affecting comparability		2,345 2,513		2,913 3,491	228	659		1,671 2,090		2,360 2,526	-354	-407		9,164 10,873
Operating margin (EBIT) excl.
items affecting comparability1)		15.9% 16.1%		19.9% 20.2%	3.2%	8.2%		20.0% 18.9%		13.8% 13.5%	-	-		15.1% 15.7%
Impairment of goodwill etc	-	-	-	-	-5,595	-	-	-	-	-	-	-	-5,595	-
Operating income (EBIT)		2,345 2,513		2,913 3,491	-5,367	659		1,671 2,090		2,360 2,526	-354	-407		3,569 10,873
Operating margin (EBIT)		15.9% 16.1%		19.9% 20.2%	-74.6%	8.2%		20.0% 18.9%		13.8% 13.5%	-	-		5.9% 15.7%
Capital employed		17,414 20,114		17,533 20,431	7,650	9,154		18,783 22,494		21,110 23,762		-1,078 -1,159		81,412 94,796
- of which goodwill		10,330 11,267		11,876 14,982	3,751	4,349		13,966 15,646		12,246 12,890	-	-		52,169 59,134
- of which other intangible assets and
property, plant and equipment	3,896	4,163	3,796	4,441	2,406	2,473	4,263	5,566	4,393	4,499	148	154		18,903 21,296
- of which right-of-use assets	107	1,017	-	518	-	276	-	374	42	1,540	-	21	149	3,746
- of which investments in associates	9	-	-	-	568	672	17	19	1,788	1,952	-	-	2,383	2,643
Return on capital employed
excluding items affecting comparability		19.1% 17.6%		23.0% 23.8%		2.9% 10.2%		13.0% 13.5%		15.6% 14.9%	-	-		15.4% 16.2%
Operating income (EBIT)	2,345	2,513	2,913	3,491	-5,367	659	1,671	2,090	2,360	2,526	-354	-407		3,569 10,873
Impairment of intangible assets	-	-	-	-	5,595	-	-	-	-	-	-	-	5,595	-
Depreciation and amortization	344	594	275	418	226	285	375	557	217	585	15	27	1,452	2,465
Net capital expenditure	-361	-309	-239	-261	-156	-147	-214	-237	-203	-164	-23	-19		-1,195 -1,136
Repayment of lease liabilities	-	-218	-	-106	-	-73	-	-92	-	-348	-	-5	-	-843
Change in working capital	-832	-794	-261	109	-92	-249	-316	-219	-825	-31	20	-31		-2,306 -1,215
Cash flow		1,496 1,786		2,689 3,651	206	475		1,517 2,099		1,549 2,569	-342	-436		7,115 10,143
Non-cash items											-234	-300	-234	-300
Interest paid and received											-446	-636	-446	-636
Operating cash flow														6,435 9,208
Average number of employees		11,826 11,594	8,776	9,255		11,437 11,064	4,580	5,421		11,364 11,477	290	325		48,273 49,136

1) Items affecting comparability consist of impairment of goodwill and other intangible assets in 2018.

Q1-Q4 and 31 Dec

			Opening Solutions					Global		Entrance
	EMEA		Americas			Asia Pacific		Technologies		Systems		Other		Total
SEK M	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018		2017 2018
Sales, external		17,729 19,908		17,873 19,737	8,553	8,875		10,301 11,864		21,681 23,665	0	0		76,137 84,048
Sales, internal	351	293	67	79	658	1,074	72	87	100	97		-1,249 -1,631	-	-
Sales		18,081 20,201 17,940 19,817			9,211			9,949 10,373 11,951 21,781 23,762					-1,249 -1,630 76,137 84,048
Organic growth	4%	2%	4%	9%	0%	4%	7%	8%	4%	4%	-	-	4%	5%
Acquisitions and disposals	3%	5%	1%	1%	0%	1%	0%	4%	6%	1%	-	-	2%	2%
Exchange-rate effects	0%	5%	0%	0%	0%	3%	0%	3%	0%	4%	-	-	1%	3%
Share of earnings in associates	-	-	-	-	25	17	-	3	104	147	-	-	129	167
Operating income (EBIT) excl.
items affecting comparability		2,990 3,256		3,815 3,941	934	492		1,946 2,387		3,087 3,358	-432		-525 12,341 12,909
Operating margin (EBIT) excl.
items affecting comparability1)		16.5% 16.1%		21.3% 19.9%	10.1%	4.9%		18.8% 20.0%		14.2% 14.1%	-	-		16.2% 15.4%
Restructuring costs	-	-438	-	-225	-	-130	-	-218	-	-108	-	-100		- -1,218
Impairment of goodwill etc	-	-	-	-	-	-5,595	-	-	-	-	-	-		- -5,595
Operating income (EBIT)		2,990 2,818		3,815 3,716		934 -5,233		1,946 2,170		3,087 3,250	-432		-625 12,341 6,096
Operating margin (EBIT)		16.5% 13.9%		21.3% 18.8%		10.1% -52.6%		18.8% 18.2%		14.2% 13.7%	-	-	16.2%	7.3%
Capital employed		13,865 16,883		16,095 18,506	12,048	7,455		15,615 18,511		18,379 20,742	-71	-951		75,932 81,146
- of which goodwill		8,571 10,709		11,190 13,327	7,752	3,892		11,121 13,245		11,696 12,240	-	-		50,330 53,413
- of which other intangible assets and
property, plant and equipment	3,567	4,041	3,310	3,813	3,789	2,345	4,064	4,866	4,273	4,422	140	151		19,144 19,637
- of which investments in associates	9	9	-	-	519	587	17	19	1,699	1,819	-	-	2,243	2,434
Return on capital employed
excluding items affecting comparability 21.4% 20.1%				24.2% 22.5%	7.8%	4.8%		14.4% 14.0%		16.4% 16.9%	-	-		16.6% 16.2%
Operating income (EBIT)	2,990	2,818	3,815	3,716	934	-5,233	1,946	2,170	3,087	3,250	-432	-625	12,341	6,096
Restructuring costs	-	438	-	225	-	130	-	218	-	108	-	100	-	1,218
Impairment of intangible assets	-	-	-	-	-	5,595	-	-	-	-	-	-	-	5,595
Depreciation and amortization	421	464	333	367	310	292	353	522	255	294	15	24	1,688	1,963
Net capital expenditure	-571	-500	-466	-327	-337	-6	-297	-281	-273	-170	-30	-36		-1,975 -1,319
Change in working capital	136	-401	-191	-78	-48	33	-271	-165	-4	-709	30	244		-347 -1,076
Cash flow		2,977 2,819		3,491 3,903	859	811		1,732 2,463		3,065 2,772	-417		-293 11,706 12,477
Non-cash items											-221	-458	-221	-458
Interest paid and received											-557	-662	-557	-662
Operating cash flow														10,929 11,357
Average number of employees		11,033 11,717	8,836	8,768	11,756	11,492	4,328	4,624		11,211 11,463	264	288		47,426 48,353

1) Items affecting comparability consist of restructuring costs and impairment of goodwill and other intangible assets.

NOTE 1 DISAGGREGATION OF REVENUE

Sales by continent Q3				Opening Solutions			Global		Entrance
	EMEA		Americas		Asia Pacific		Technologies		Systems		Other		Total
SEK M	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019
Europe	4,231	4,427	12	9	132	133	709	900	2,696	2,810	-158	-177	7,622	8,103
North America	158	150	4,779	5,641	263	260	1,519	2,070	2,725	3,096	-193	-201		9,251 11,015
Central- and South America	26	29	394	420	14	12	129	155	22	28	-11	-8	574	635
Africa	211	220	3	5	5	6	78	96	11	14	-9	-7	299	333
Asia	215	261	20	24	1,742	1,821	498	676	322	339	-29	-51	2,768	3,069
Oceania	31	34	2	2	470	642	68	95	134	139	-27	-33	677	879
Total		4,872 5,120		5,211 6,099		2,627 2,874	3,001 3,991			5,909 6,427	-428		-478 21,191 24,034
Sales by continent Q1-Q3				Opening Solutions			Global		Entrance
	EMEA		Americas		Asia Pacific		Technologies		Systems		Other		Total
SEK M	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019
Europe		12,833 13,611	33	33	415	438	2,136	2,826	8,167	8,598	-497	-568		23,087 24,937
North America	440	437		13,353 15,941	634	861	4,030	5,559	7,574	8,632	-453	-683		25,578 30,748
Central- and South America	71	74	1,178	1,195	38	32	338	350	70	66	-28	-23	1,666	1,695
Africa	611	607	7	18	12	11	273	281	43	41	-20	-16	927	942
Asia	675	783	68	81	4,752	4,908	1,364	1,773	912	955	-95	-131	7,676	8,368
Oceania	86	108	5	4	1,342	1,763	209	256	380	368	-72	-107	1,948	2,393

Sales by product group Q3			Opening Solutions				Global		Entrance
	EMEA		Americas		Asia Pacific		Technologies		Systems		Other		Total
SEK M	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019
Mechanical locks, lock systems and fittings	2,426	2,483	2,011	2,307	1,298	1,329	-7	66	3	2	-172	-187	5,559	6,000
Electromechanical and electronic locks	1,597	1,544	1,009	1,333	632	612	3,006	3,843	250	184	-213	-241	6,282	7,275
Security doors and hardware	754	942	2,180	2,425	699	925	1	82	-	-	-19	-26	3,616	4,348
Entrance automation	95	152	11	34	-2	7	-	-	5,656	6,242	-25	-24	5,735	6,411
Total		4,872 5,120		5,211 6,099		2,627 2,874		3,001 3,991		5,909 6,427	-428		-478 21,191 24,034
Sales by product group Q1-Q3	EMEA		Opening Solutions Americas		Asia Pacific		Global Technologies		Entrance Systems		Other		Total
SEK M Mechanical locks, lock systems and fittings	2018 7,430	2019 7,643	2018 5,691	2019 6,543	2018 3,679	2019 3,741	2018 8	2019 102	2018 7	2019 6	2018 -514	2019 -538	2018	2019 16,302 17,496
Electromechanical and electronic locks	4,750	4,913	2,681	3,925	1,627	1,906		8,339 10,850	667	548	-521	-818		17,543 21,324
Security doors and hardware	2,256	2,706	6,215	6,736	1,879	2,351	1	94	-	-	-55	-79		10,295 11,809
Entrance automation	280	358	57	69	8	14	-	-		16,472 18,106	-76	-93		16,741 18,454

NOTE 2 BUSINESS COMBINATIONS

		Q3	Q1-Q3
SEK M	2018	2019	2018	2019
Purchase prices
Cash paid for acquisitions during the year	2,051	1,083	4,001	2,620
Holdbacks and deferred considerations for acquisitions during the year	24	155	766	191
Adjustment of purchase prices for acquisitions in prior years	-1	-2	-2	-6
Total		2,074 1,237		4,765 2,805
Acquired assets and liabilities at fair value
Intangible assets	296	294	726	852
Property, plant and equipment and right-of-use assets	59	88	145	208
Other non-current assets	7	0	219	81
Inventories	249	38	462	152
Current receivables and investments	253	168	500	353
Cash and cash equivalents	216	67	366	62
Non-current liabilities	-145	2	-305	-384
Current liabilities	-1,060	-523	-1,389	-940
Total	-125	135	724	385
Goodwill		2,199 1,102		4,041 2,420
Change in cash and cash equivalents due to acquisitions
Cash paid for acquisitions during the year	2,051	1,083	4,001	2,620
Cash and cash equivalents in acquired subsidiaries	-216	-67	-366	-62
Paid considerations for acquisitions in prior years	28	32	259	422
Total		1,864 1,049		3,895 2,979

Fair value adjustments of acquired net assets from acquisitions made in previous periods are included in the above table.

NOTE 3 FAIR VALUE AND CARRYING AMOUNT ON FINANCIAL ASSETS AND LIABILITIES

30 September 2019			Financial instruments at fair value
	Carrying	Fair
SEK M	amount	value	Level 1 Level 2 Level 3
Financial assets
Financial assets at amortized cost	16,738	16,738
Financial assets at fair value through profit and loss	6	6
Derivatives - hedge accounting	131	131	131
Derivatives - held for trading	171	171	171
Financial liabilities
Financial liabilities at amortized cost	41,556	42,044
Financial liabilities at fair value through profit and loss	1,422	1,422	1,422
Derivatives - hedge accounting	0	0	0
Derivatives - held for trading	310	310	310
31 December 2018			Financial instruments at fair value
	Carrying	Fair
SEK M	amount	value	Level 1 Level 2 Level 3
Financial assets
Loans and other receivables	15,248	15,248
Financial assets at fair value through profit and loss	8	8
Available-for-sale financial assets	68	68	68
Derivative instruments - hedge accounting	49	49	49
Financial liabilities
Financial liabilities at amortized cost	34,976	35,006
Financial liabilities at fair value through profit and loss	1,899	1,899	1,899
Derivatives - hedge accounting	18	18	18
Derivatives - held for trading	99	99	99

Within the Group there are a large number of current lease contracts, mostly relating to offices, premises and vehicles. The Group reports a right-of-use asset and a lease liability representing the present value of future lease payments in the balance sheet on the day that the leased asset is made available for use. In calculating the present value, the Group's incremental borrowing rate by currency is used.

to the lease liability are reported in finance net. costs within operating income while interest expenses relating The right-of-use asset is depreciated on a straight-line basis over the lease term, or over the period of use of the underlying asset if the lease transfers ownership of the underlying asset to the Group by the end of the lease term. The depreciations are reported as

The Group has chosen not to report any right-of-use asset and lease liability concerning obligations for short-term leases and leases of low value. Lease payments relating to such leases are reported as operating expenses over the lease term.

Financial effects of the transition to IFRS 16

of use recognized in accordance with IAS 17, amounted to SEK 3,837 M on 1 January 2019. The total value of the Group's right-of-use assets, including rights The Group applies IFRS 16 from 1 January 2019. For the transition to the new standard, the Group's liability arising from obligations for operating leases is SEK 3,718 M. Adjusted for advance lease payments, the liability is SEK 3,711 M. The Group's total lease liability at the beginning of 2019, including financial lease liability recognized in accordance with IAS 17, is SEK 3,802 M.

The new standard thus results in an increase in the Group's capital employed and a corresponding increase in net debt. The standard also has a slight positive effect on operating income because part of the lease payments are reported as interest expenses in finance net. The new standard had no significant effect on net income in the quarter and is not expected to have any significant effect on the year's net income going forward.

between interest paid in cash flow from operating activities and repayment of lease liabilities in financing activities. This means that the standard has a positive effect on the Group's cash flow In the statement of cash flows the lease payments are split from operating activities.

therefore continue to be comparable with earlier periods. In the operating cash flow, the Group has chosen to include repayment of lease liabilities as an operating component from 1 January 2019. The Group's operating cash flow will

any comparative information. However, the Group has chosen to report right-of-use assets and lease liabilities on separate lines in the balance sheet from 2019. As a result of this, assets and liabilities relating to finance leases accounted for in accordance with IAS 17 are being reclassified to the new balance sheet lines in the comparison periods. In the transition to IFRS 16, the Group has applied the cumulative catch-up approach as transition method and does not restate

31 December 2018. In ASSA ABLOY's Annual Report for 2018, under Note 6, there is a detailed explanation of how the lease liability on 1 January 2019 is derived from the Group's operating lease obligations on

IFRS 16 Leases IFRIC 23 Uncertainty over Income Tax Treatments

IFRIC 23 explains how an entity should determine the method with which a transaction should be measured and recognized when there is uncertainty over income tax treatments. The Group applies the new guidance commencing on 1 January 2019. In conjuction with the application, the Group reassessed its uncertain tax positions based on the new guidance, which resulted in an increased provision for uncertain income taxes of SEK 234 M. The Group has chosen a modified retrospective approach for initial application of the interpretation, in which comparative figures are not restated. The effect of initial application is recognized as an adjustment to equity in 2019.

Organic growth Net debt

Change in sales for comparable units after adjustments for Interest-bearing liabilities less interest-bearing assets. acquisitions and exchange rate effects. See the table on net debt for detailed information.

Operating margin (EBITDA) Capital employed

Operating income before depreciation and amortization as a Total assets less interest-bearing assets and non-interestpercentage of sales. bearing liabilities including deferred tax liability.

Operating margin (EBITA) Equity ratio

Operating income before amortization of intangible assets Shareholders' equity as a percentage of total assets. recognized in business combinations, as a percentage of sales.

Operating income as a percentage of sales.

Operating cash flow

Cash Flow from operating activities excluding restructuring Return on capital employed payments and tax paid on income minus net capital expenditure Income before tax plus net interest as a percentage of and repayment of lease liabilities. average capital employed excluding restructuring reserves.

Depreciation and amortization

Depreciation and amortization of intangible assets, property, plant and equipment and right-of-use assets.

Interest coverage ratio

Operating margin (EBIT) Income before tax plus net interest divided by net interest.

Return on shareholders' equity

Profit margin (EBT) Net income attributable to parent company's shareholders Income before tax as a percentage of sales. as a percentage of average parent company's shareholders equity.

Net capital expenditure Earnings per share after tax and dilution

Investments in, less disposals of, intangible assets and Net income excluding non-controlling interests divided by property, plant and equipment. weighted average number of outstanding shares after any potential dilution.