Annual Report 2008 - Securitas

Employee benefits (IAS 19)
The Group operates or participates in a number of defined benefit and defined
contribution pension and other long-term employee benefit plans.
Other plans primarily relate to healthcare benefits. A defined contribution
plan is a pension plan under which the Group pays fixed contributions into
a separate entity. The Group has no legal or constructive obligations to pay
further contributions if the fund does not hold sufficient assets to pay all
employees the benefits relating to employee service in the current and prior
periods. Contributions are recognized as expenses when they fall due for
payment. Other pension plans are defined benefit plans.
Calculations for the defined benefit plans that exist within Securitas are
carried out by independent actuaries. Costs for defined benefit plans are
estimated using the so-called Projected Unit credit method in a way that
distributes the cost over the employee’s working life. Obligations are valued
at the present value of the expected future cash flows using a discount
interest rate corresponding to the interest rate on high quality corporate
bonds or government bonds with a remaining term that is approximately
the same as the obligations. Further information regarding the determination
of the discount rate is provided in Note 32. Plan assets are measured at fair
value. The expected return on plan assets is determined as a weighted
average of the expected long-term return for each of the asset categories in
each plan. The return on equity related instruments is based on a risk premium
that is added to a risk free return based on the yield of government bonds.
The return on bonds is determined based on the yield of government and
corporate bonds in accordance with each plan’s holding of these instruments.
The Group has adopted the amendment to IAS 19 Employee Benefits as
of January 1, 2006 regarding the principle for recognizing gains and losses
resulting from changes in actuarial assumptions, plan experience and investment
performance differing from that assumed. These actuarial gains
and losses are for all defined benefit plans relating to post-employment
benefits recognized in the period which they occur. Recognition is done via
the statement of recognized income and expense on the line actuarial gains
and losses net of tax. Actuarial gains and losses relating to defined benefit
plans for other long-term employee benefits are recognized immediately
via the statement of income.
If accounting for a defined benefit plan results in a balance sheet asset,
this is reported as a net asset in the consolidated balance sheet under other
long-term receivables. Otherwise it is reported as a provision under provisions
for pensions and similar commitments. Costs related to defined benefit
plans, including the interest element, are recognized in operating income.
Provisions for pensions and similar commitments are not included in net debt.
Share-based payments (IFRS 2)
IFrS 2 requires that the fair value of the equity settled schemes should be
accounted for as an expense in the statement of income with the corresponding
entry accounted for as equity. The expense should be accrued on
a linear basis over the vesting period. For cash settled schemes IFrS 2 also
requires that the fair value of the scheme should be recognized as an expense
in the statement of income on a linear basis over the vesting period, but
with the corresponding entry recognized as a liability rather than as equity.
Furthermore if the incentive scheme lapses without settlement this will
result in a reversal of the accrued cost for cash settled schemes only. For
equity settled schemes no reversal will occur since no adjustment to the
net assets is required.
Securitas has no equity settled or cash settled schemes that would fall
within the scope of this standard.
Provisions (IAS 37)
Annual report
Notes and comments to the consolidated financial statements
Provisions are recognized when the Group has a present obligation as a
result of a past event and it is more probable than not that an outflow of
resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions for restructuring are recognized when a detailed, formal plan for
measures has been established and valid expectations have been raised by
those affected by the measures. No provisions are recognized for future
operating losses.
claims reserves are calculated on the basis of a combination of case
reserves, which represent claims reported, and IBNr (incurred but not
reported) reserves. Actuarial calculations are performed quarterly to assess
the adequacy of the reserves based on open claims and historical IBNr.
Securitas Annual report 2008
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