Download - Intrum Justitia

NOTE 19 OTHER PROVISIONS
Group
SEK M 2005 2004
Opening balances 14.4 23.6
Provisions for the year 5.2 0.0
Release during the year –6.2 –9.1
Translation differences 0.5 –0.1
Closing balance 13.9 14.4
Provision for onerous contract, rent for premises,
Germany 8.7 14.4
Provision for refurbishment of premises, UK 5.2 –
Total 13.9 14.4
Long-term provisions 5.2 6.3
Short-term provisions 8.7 8.1
Total 13.9 14.4
NOTE 20 LIABILITIES TO CREDIT INSTITUTIONS
Group Parent Company
SEK M 2005 2004 2005 2004
Long-term loans 1,348.0 731.3 1,346.3 0.0
Current loans 7.0 53.9 2.0 0.0
Total 1,355.0 785.2 1,348.3 0.0
On February 11, 2005 Intrum Justitia signed a fi ve-year syndicated loan facility
of EUR 210 M with Danske Bank A/S, Svenska Handelsbanken AB and Nordea
Bank AB, each for EUR 70 M. The facility represents an increase and refi nancing
of the previous facility of EUR 150 M. Another difference is that the new facility is
centralized in the Parent Company, while the previous related to loans directly to a
number of subsidiaries. The loan limit of EUR 210 M can be utilized for borrowing
in a number of different currencies. As of December 31, 2005 the facility had
only been used for loans in SEK, totaling SEK 1,350 M. The unutilized portion
amounted to SEK 628.8 M. The loan carries a variable interest rate based on
the interbank rate in each currency plus a mark-up. The syndicated loan facility
contains a number of operations-related and fi nancial covenants, including limits
on certain fi nancial indicators. As of December 31, 2005 the Company was not in
breach of any such fi nancial covenants. In addition, the credit agreement includes
covenants that may restrict, condition or prohibit the Group from incurring
additional debt, making acquisitions, disposing of assets, making capital and
fi nance lease expenditures, allowing assets to be encumbered, changing the
scope of the Group’s business and entering into a merger agreement.
Group Parent Company
SEK M 2005 2004 2005 2004
Maturities of long-term bank borrowings
Between 1 and 2 years – 39.6 – –
Between 2 and 3 years – 39.6 – –
Between 3 and 4 years – 651.9 – –
Between 4 and 5 years 1,348.0 – 1,346.3 –
Total 1,348.0 731.1 1,346.3 –
Group Parent Company
SEK M 2005 2004 2005 2004
Unused lines of credit excluding guarantee facility
Expiring within one year – – – –
Expiring beyond one year 628.8 385.8 628.8 –
Total 628.8 385.8 628.8 –
NOTE 21 ACCRUED EXPENSES AND
PREPAID INCOME
Group Parent Company
SEK M 2005 2004 2005 2004
Accrued social security expenses 27.2 27.9 2.1 3.2
Accrued vacation pay 51.6 46.3 2.5 1.7
Accrued bonus cost 55.4 36.2 3.7 3.1
Prepaid subscription income
Provisions for losses on credit
54.4 53.2 – –
card guarantees 30.6 28.1 – –
Other accrued expenses 129.0 149.1 11.6 11.7
Total 348.2 340.8 19.9 19.7
NOTE 22 PLEDGED ASSETS, CONTINGENT
ASSETS AND CONTINGENT LIABILITIES
Group
SEK M 2005 2004
Pledged assets None None
Group
SEK M 2005 2004
Contingent assets None None
Group
SEK M
Contingent liabilities
2005 2004
Guarantees for credit card debts 945.9 833.4
Dispute with tax authority in Sweden 3.8 36.8
Dispute with tax authority in Norway 5.2 12.4
Other contingent liabilities 11.2 13.0
Total 966.1 895.6
Credit card guarantees
In combination with other services provided in Switzerland, the company has
issued guarantees for credit card debts totaling SEK 945.9 M (833.4). The
company’s main risk relates to those portions of the credit card debts that are
more than 30 days overdue, which amounted to SEK 12.3 M (9.8). The company
has booked an accrual for its anticipated loss according to calculations based on
historic experience and future expectations. Moreover, certain clients are no
longer active and therefore no longer use Intrum Justitia. Consequently, the
company does not consider that it has any guarantees in effect for these clients.
Tax disputes
Subsequent to tax audits in Sweden, Norway and Finland, these respective tax
authorities questioned the company’s deduction of certain costs for the period
1998–2003. The company has appealed and considers that the tax authorities’
claims will not result in any signifi cant expenses for the company.
On December 22, 2005 the County Administrative Court in Stockholm ruled
in favor of the Swedish subsidiary Intrum Justitia Sverige AB and against the tax
authority on a dispute regarding the deductibility of intra-Group licensing fees. The
tax authorities did not appeal and therefore the ruling gained legal force in February
2006. The company thereby avoided a tax reassessment of SEK 104.8 M,
corresponding to a tax expense of SEK 29.3 M. Intrum Justitia had not allocated
any provisions for additional tax expenses potentially resulting from this tax dispute,
and the judgment therefore does not affect earnings in the annual accounts for
2005. The tax dispute is still continuing with regard to SEK 3.8 M in interest,
among other items.
In October 2005 the subsidiary in Norway was reassessed for licensing fees
for the years 1998–2002, corresponding to an additional tax expense of SEK
13.3 M. The company was obligated to pay the entire amount in 2005 but
appealed to the tax authority in January 2006, and has only expensed SEK
8.1 M of the disputed tax amount.
The Finnish Tax Board ruled in favor of the subsidiary in Finland in 2004 in a
dispute concerning the deductibility of certain interest expenses and liquidation
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