ANNUAL REPORT INTRUM JUSTITIA A N N U A L R EP O R T 2 0 ...

NOTE 1
SIGNIfICANT ACCOUNTING
AND VALUATION PRINCIPLES
Accounting standards applied
The annual report for Intrum Justitia AB (publ) is
prepared with respect to the consolidated accounts
in accordance with the International Financial
Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB) and
the interpretations of the International Financial
Reporting Interpretations Committee (IFRIC)
as approved by the EU. Further, recommendation
RFR 1 Supplementary Accounting Rules for
Groups from the Swedish Financial Reporting
Board has been applied.
The Parent Company applies the same accounting
principles as the Group except in the
cases noted below under the section on the Parent
Company’s accounting principles.
The financial reports were approved to be published
by the Board of the Parent Company on
March 7 2011.
Assumptions
The Parent Company’s functional currency is
Swedish kronor (SEK), which is also the reporting
currency for the Parent Company and for the
Group. The financial reports are therefore presented
in SEK. All amounts, unless indicated otherwise,
are rounded off to the nearest million, with
one decimal. Assets and liabilities are recognized
at historical cost, with the exception of certain financial
assets and liabilities, which are measured
at fair value.
The preparation of financial reports in accordance
with IFRS requires the Board of Directors
and Management to make estimates and assumptions
that affect the application of the accounting
principles and the carrying values of assets, liabilities,
revenue and expenses.
Estimates and assumptions are based on historical
experience and a number of other factors that
under current circumstances seem reasonable. The
result of these estimates and assumptions is then
used to determine the carrying values of assets and
liabilities that otherwise are not clearly indicated
by other sources. Actual outcomes may deviate
from these estimates and assumptions.
Estimates and assumptions are reviewed regularly.
Changes in estimates are recognized in the
period in which the change is made, provided it has
affected only this period, or the period the change
was made and future periods if the change affects
both current and future periods.
Estimates made by the company that have a
significant impact on the financial reports and estimates,
which could necessitate significant adjust-
ments in financial reports in subsequent years, are
described in more detail in Note 40.
The accounting principles described below for
the Group have been applied consistently for all
periods in the Group’s financial reports, unless
otherwise indicated. The accounting is based on
the Group’s opening balance sheet according to
IFRS as of January 1, 2004, which was included in
the annual report for 2005. The Group’s accounting
principles have been applied consistently in
the consolidation of the Parent Company, subsidiaries,
associated companies and joint ventures.
Changes in accounting principles
Changes that entered into force in 2010
Revised versions of IFRS 3 Business Combinations
and IAS 27 Consolidated and Separate Financial
Statements apply as of 2010, which means
that the definition of a ‘business’ has changed,
that transaction costs associated with a business
combination are to be expensed, that conditional
purchase prices must be set at fair value at the
point of acquisition and that effects of revaluation
of liabilities related to conditional purchase prices
must be recognized as income or an expense in the
profit/loss statement for the year. Changes have
also been introduced that affect the recognition
of acquisitions of companies without a controlling
interest, and the recognition of acquisitions
from owners without a controlling interest. The
changes are only applied prospectively for acquisitions
made in 2010 and onwards. Other changes
of IFRS that apply from 2010 have not had any
material impact on the Group’s reporting.
From 2010 onwards, the Parent Company will
be applying the new regulations in the Swedish Financial
Reporting Board’s recommendation RFR
2 Accounting for Legal Entities, which means that
the regulations in IAS 1 Presentation of Financial
Statements, including the statement of comprehensive
income, shall, where appropriate, also be
applied by the Parent Company.
Changes that enter into force in or after 2011
The Group has decided against early application
of any new or amended accounting recommendations
or interpretations that enter into force in or
after 2011.
As of 2013, IFRS 9 Financial Instruments replaces
IAS 39 Financial Instruments: Recognition
and Measurement. IASB has published the first
of at least three phases that will together comprise
IFRS 9. The first phase deals with the classification
and valuation of financial assets. The categories
for financial assets contained in IAS 39 will
be replaced by two categories, where valuation is
carried out at fair value or amortized cost. IFRS
9 also includes new rules for how changes of real
value on own liabilities shall be reported. Intrum
Justitia has not yet decided whether the new principles
will be applied as they have been approved
by the EU, prior to or as of 2013.
Notes
Classification issues
Fixed assets and long-term liabilities in the Parent
Company and the Group consist of amounts
that are expected to be recovered or paid more
than twelve months after the balance sheet date.
Current assets and current liabilities in the Parent
Company and the Group consist of amounts
that are expected to be recovered or paid within
twelve months of the balance sheet date.
Consolidation
Subsidiaries
The Group applies IFRS 3 Business Combinations.
The consolidated accounts include the annual
accounts of all subsidiaries, i.e., companies in
which the Parent Company, directly or indirectly,
holds more than 50 percent of the votes or otherwise
can exercise control over operations. Control
means, directly or indirectly, the right to shape a
company’s financial and operating strategies in order
to obtain economic benefits.
The consolidated accounts are prepared according
to the acquisition method, which means
that the acquisition of a subsidiary is treated as a
transaction where the Group indirectly acquires
the subsidiary’s assets and takes over its liabilities
and contingent liabilities. The Group’s equity
therefore includes only the portion of the subsidiary’s
equity added since acquisition. The Group’s
cost is determined through an acquisition analysis
in connection with the acquisition. The analysis
determines the cost of the shares or operations as
well as the fair value of acquired, identifiable assets
and assumed liabilities and contingent liabilities.
The cost of the subsidiary’s shares or operations
consists of the fair value of the compensation on
the transfer date and transaction expenses directly
attributable to the acquisition. In acquisitions
where the cost exceeds the net value of acquired assets
and assumed liabilities and contingent liabilities,
the difference is reported as goodwill. When
the difference is negative, it is recognized directly
through profit or loss.
Transaction costs associated with company
acquisitions are expensed as they arise, except for
acquisitions made before January 1, 2010, when
such costs were included in the cost of the shares.
Non-controlling interests arise in cases where
the acquisition does not relate to the entire subsidiary.
There are two options for recognizing
non-controlling interests. The two options are to
recognize the percentage of non-controlling interests
that makes up proportional net assets, or to
recognize non-controlling interests at fair value,
which means that non-controlling interests form a
percentage of goodwill. The method used for recognizing
non-controlling interests can be made on
a case by case basis.
The financial reports of subsidiaries are included
in the consolidated accounts from the acquisition
date until control ceases.
Intra-Group receivables and liabilities, revenue
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