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Effects of acquisitions
Acquisitions have the following effects on the Group’s assets and liabilities.
The acquired companies’ net assets upon acquisition:
Carrying amount in
Legal and Trade Fair value
Collections (Ireland) Ltd recognized
SEK M
before acquisition in the Group
Intangible fi xed assets 0.0 18.7
Tangible fi xed assets 0.7 0.7
Accounts receivable and other receivables 17.2 17.2
Liquid assets – –
Accounts payable and other liabilities –15.1 –15.1
Net identifi able assets and liabilities 2.8 21.5
Deferred tax on surplus value –2.4
Purchase price paid in cash 17.4
Capitalized acquisition costs 0.9
Exchange rate difference 0.8
Cash (acquired) 0.0
Net cash fl ow 3.1
Carrying amount
in Credit Express Fair value
Slovakia s.r.o. recognized
SEK M
before acquisition in the Group
Intangible fi xed assets 0.0 5.6
Tangible fi xed assets 0.3 0.3
Accounts receivable and other receivables 1.1 1.1
Liquid assets 0.6 0.6
Accounts payable and other liabilities –0.7 –0.7
Net identifi able assets and liabilities 1.3 6.9
Deferred tax on surplus value –1.0
Purchase price paid in cash 3.8
Liability to seller 2.1
Cash (acquired) 0.6
Net cash fl ow –3.2
Company acquisitions in 2004 totaling SEK 27.8 M, according the cash fl ow analysis,
refer to the fi nal payment of SEK 8.4 M for the company Stirling Park, which
was acquired in 2002, the acquisition of shares in Intrum á Íslandi for SEK 2.0 M
and a payment to the sellers of Legal & Trade Collections (Ireland) Ltd of SEK 17.4 M.
NOTE 34 TRANSACTIONS WITH RELATED
PARTIES
SEK M
Sales of services
Group
2005 2004
Dustin AB (sale of sales ledger services) 4.4 5.9
Total 4.4 5.9
Purchase of goods and services
Dustin AB (purchase of IT equipment) 0.3 0.2
Marcel van Es (rental of apartment)
Förvaltnings AB Kaven (purchase of
0.1 0.0
consulting services) 0.1 0.0
Total 0.5 0.2
Minority interest
Visegrad NV (minority interest in earnings of
Intrum Justitia Central Europe BV) –13.0 –10.3
Total –13.0 –10.3
In addition to associated companies and joint ventures, related parties include
the Board of Directors and senior executives, according to Note 26, as well as
close family members to these executives and other companies over which they
can exert a signifi cant infl uence.
Intrum Justitia sells sales ledger services to and buys IT equipment from Dustin
AB, a company in which Lennart Laurén, a regional manager at Intrum Justitia, is
a board member and co-owner.
Intrum Justitia has paid compensation for consulting services performed by
Björn Fröling, a Board member of Intrum Justitia AB, through payment to a company
he controls, Förvaltnings AB Kaven.
Marcel van Es, Intrum Justitia’s regional manager, has received rent for an
apartment in Amsterdam that the company has used.
Intrum Justitia Central Europe BV is the holding company for the Group’s
operating companies in Poland, the Czech Republic, Slovakia and Hungary. 40
percent of the shares in Intrum Justitia Central Europe BV are owned by Visegrad
NV, where Henning Bensland, Intrum Justitia’s regional manager, is a co-owner.
As a result, a minority interest has existed since April 2003.
All transactions with related parties were made on market terms, at arm’s length.
NOTE 35 CRITICAL ESTIMATES AND
ASSUMPTIONS
Management has discussed with the Audit Committee developments, choices
and disclosures regarding the Group’s critical accounting principles and estimates
as well as the application of these principles and estimates.
Certain critical accounting estimates have been made through the application
of the Group’s accounting principles described below.
Impairment testing of goodwill
As indicated in Note 9, an impairment test of goodwill was done prior to preparation
of the annual accounts, with the result that no impairment need was found.
For some cash-generating units, particularly in the UK and Norway, the impairment
test is based on an assumption that the operating margin will improve
signifi cantly in the years ahead in relation to the outcome for 2005. Based on the
size of these companies and the maturity of each market, it is considered likely
that Intrum Justitia’s operations in these two countries will eventually have the
opportunity to reach an operating margin that does not deviate signifi cantly from
the Group average.
Purchased debt
As indicated in Note 15, the recognition of purchased debt is based on the
company’s own forecast of future cash fl ows from acquired portfolios. Although
the company has historically had good forecast accuracy with regard to cash
fl ows, future deviations cannot be ruled out.
Tax disputes
As indicated in Note 22, the Group is involved in tax disputes in Finland, Norway
and Sweden. Provisions have only been allocated for the dispute in Norway, and
in that case not for the entire amount of the tax authority’s claim. The disputes will
be settled in court, and it cannot be determined with certainty what the outcomes
will be. The Group’s stance regarding provisions has been reached based on risk
assessments prepared in cooperation with tax advisers.
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