We - KappAhl

Note 18 EMPLOYEE BENEFITS
Pensions and other post-employment benefits
Defined benefit plans
Group
SEK m
1 Sept 2008
31 Aug 2009
1 Sept 2007
31 Aug 2008
present value of fully or partially funded
obligations 191.1 184.2
fair value of plan assets –126.0 –129.3
net of fully or partially funded obligations 65.1 54.9
present value of unfunded obligations – –
present value of net obligation 65.1 54.9
Unrecognised actuarial gains (+) and losses (–) – –
Net obligation for defined benefit plans 65.1 54.9
the net amount is reported in the following items on the balance sheet:
provisions for pensions 65.1 54.9
Provision for defined benefit obligations
the Group offers both defined contribution and defined benefit pension plans. in the
case of the defined contribution plans, the Group’s obligation is limited to fixed contributions
that are paid to a separate legal entity. the Group’s profits are charged as
the benefits are earned. in the defined benefit plans, the Group’s obligation is based
on the employee’s salary at the time he/she retires and the number of years of service.
the Group stands the risk associated with payment of the pledged benefits.
in the balance sheet the difference between the present value of the obligations
and the fair value of any plan assets is recorded as either a provision or a
long-term financial asset.
Defined benefit plans are calculated according to the projected Unit credit
method. this method distributes the cost of pensions as the employees carry
out services for the company that increase their right to future benefits. this calculation
is performed annually by independent actuaries. the company’s commitments
are recognised at the present value of the expected future payments.
a change in accounting policy has been made relating to iaS 19, employee
benefits. the policy change has meant that previously undisclosed actuarial
gains and losses for defined benefit pension obligations are credited or
charged to equity. the change in policy was preceded by a reorganisation of
major parts of the pension plans and consequently there will no longer be any
new accrual. the equity and balance sheet items for the comparative year
2007/2008 have been restated.
During the previous financial year a change took place in the Swedish operations,
which meant that defined contribution plans replaced the previous defined
benefit plans. this means that since 1 april 2008 pension benefits no longer
accrue within the defined benefit pension plans. in accordance with iaS 19 this
has had a one-off impact on the consolidated income statement in the form of a
reduction, which impacted operating expenses by SEK 20 million for 2007/2008.
Changes in net obligation for defined benefit plans as stated
in the balance sheet
Group
SEK m 31 Aug 2009 31 Aug 2008
net obligation for defined benefit plans as
at 1 September 54.9 61.6
opening effect of change in policy – –2.2
Benefits paid out –5.1 –4.5
contributions paid –2.8 –9.7
revenue ( – sign)/cost reported in the
income statement 4.1 –7.6
actuarial losses 14.1 17.3
translation differences –0.1 –
Net obligation for defined benefit plans
as at 31 August 65.1 54.9
Cost reported in the income statement
Group
SEK m
1 Sept 2008
31 Aug 2009
1 Sept 2007
31 Aug 2008
costs relating to service in current period 1.9 6.0
interest expense relating to obligation 7.6 7.4
recognised actuarial gains (+) and losses (–) – –
Expected yield on plan assets –5.4 –5.0
Effects of reductions and adjustments* – –16.0
Total net cost in the income statement 4.1 –7.6
* includes a non-recurring item in the form of income of SEK 20 million, arising in connection
with change in pension solution in Sweden, see further the comment in the introductory text
above in this note.
The cost is reported in the following lines in the income statement:
Group
SEK m
1 Sept 2008
31 Aug 2009
1 Sept 2007
31 Aug 2008
cost of goods sold 0.8 1.5
Selling expenses 1.0 –14.1
administrative expenses 0.0 0.1
financial expenses 2.3 4.9
4.1 –7.6
actual yield on plan assets 4.1 3.9
Assumptions for defined benefit obligations
the most significant actuarial assumptions as at the balance sheet date
(expressed as weighted averages)
Sweden and Norway respectively
Sweden Norway
Per cent 2009 2008 2009 2008
Discount rate as at den 31 august 3.92 % 4.1 % 4.85 % 4.5 %
future salary increases n/a n/a 4.5 % 4.5 %
future pension increases 2.0 % 2.0 % 1.75 % 1.75 %
Staff turnover n/a n/a – –
inflation 2.0 % 2.0 % – –
Expected yield 3.92 % 4.1 % 5.85 % 5.5 %
2008/2009 Kappahl financial information 61