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

76 Notes
Net assets of Nice Invest Nordic AB at the time of the acquisition:
SEK M
Carrying
amounts
before the
acquisition
Fair value
adjustment
Consolidated
fair
value
Intangible fixed assets – 101.4 101.4
Tangible fixed assets 1.8 – 1.8
Purchased Debt 102.8 75.6 178.4
Interest-bearing liabilities –99.6 – –99.6
Deferred tax – –30.0 –30.0
Current liabilities –1.0 – –1.0
Net assets 4.0 147.0 151.0
Goodwill 39.0
Cash consideration –190.0
Net impact on cash and bank –190.0
Acquisition costs charged against the operating result amounted to SEK 3.7 M.
The acquired company is consolidated from December 28 2010. It has not
contributetd to the Group’s revenues or result in 2010.
If the acquisition would have been executed by January 1 2010 it would have
contributed to the Group’s revenues with SEK 15.9 M and to the operating
result with SEK 7.3 M. The goodwill item is attributable to increased market
share on the market for mail-order and e-commerce.
Other
In October 2004 Intrum Justitia announced the acquisition of the Irish
company Legal & Trade (Ireland) Ltd.
In November 2004 Intrum Justitia announced that it no longer wished to
finalize the acquisition, since the financial grounds on which it had made its
decision no longer applied after the release of new information by the seller
Legal & Trade Financial Services Ltd. According to a ruling in June 2005,
the acquisition could not be rescinded, but Intrum Justitia was awarded a
repayment of SEK 3.0 M in 2005.
This ruling was appealed by Intrum Justitia, which received a partial victory
from the Irish Supreme Court, whereby the Group will receive an additional
credit of another SEK 2.1 M.
After the acquisition of the french companies Cronos Group and SSE in
2008, a discussion concering the acquired companies debt situation was held
in 2009. In the end of 2010 a final agreement had not yet been met why
the debt of SEK 5.7 M to the sellers remains per the 31 of December 2010.
NOTE 40
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 10, an impairment test of goodwill was done prior to the
preparation of the annual accounts. In previous years each country has been
considered a cash-generating unit in the impairment test, but the company is
now assessing that several groups of countries are integrated to such an extent
that they are to be considered cash-generating units. For the cash-generating
unit Poland, Czech Republic, Slovakia and Hungary the impairment testing is
based on the assumption that the operating margin will improve significantly
in the years ahead relative to the outcome for the past year.
The cash-flow in 2010 for these countries have been charged with extraordinary
high outlays for courtexpenses in the debt collection operation
as legal activities have increased. The company’s experience is that these kind
of outlays generates positive cash-flows with one or a few years backlog.
Purchased debt
As indicated in Note 16, the recognition of purchased debt is based on
the company’s own forecast of future cash flows from acquired portfolios.
Although the company has historically had good forecast accuracy with
regard to cash flows, future deviations cannot be ruled out.
Furthermore, the decision to amend a cash flow projection is preceded
by a discussion between the local management in the country in question
and the management of the Purchased Debt service line.
All changes in cash flow projections are ultimately decided on by a central
investment committee.
Reporting of Polish investment fund
The Group has operated in Poland since 2006 through an investment fund
designed to purchase and own portfolios of written-off receivables. Intrum
Justitia is the fund’s only owner, and from the Group’s perspective it essentially
operates like a subsidiary. Against this backdrop, Intrum Justitia has
resolved to consolidate the investment fund in the consolidated financial
statements as a subsidiary.
Going concern
In connection with the preparation of the year-end accounts, the Board of
Directors formally expressed its opinion of the company’s status as a going
concern, especially against the backdrop of the global financial turmoil and
limited global access to long-term credit. The Board stated that the Group
has had a positive cash flow for a number of years and that debt financing
is secured until March 2013 in the form of a syndicated loan according to
an agreement signed in December 2009. Against this backdrop, the Board
is confident that the annual accounts can be prepared on the basis of the
assumption that the company will continue to operate indefinitely.
NOTE 41
RELATED PARTIES
List of transactions with related parties
SEK M
GROUP
2010 2009
Purchase of services
Benno Oertig chairman in Stade de
Suisse (sponsring and conferences)
Intrum Iceland á Íslandi ehf, Reykja-
2.2 1.6
vik (Iceland) (purchase of collection
services)
0.4 0.9
Total 2.6 2.5
In addition to associated companies and joint ventures, related parties include
the Board of Directors and senior executives, according to Note 31, as well as
close family members to these executives and other companies over which they
can exert a significant influence.
Benno Oertig, former regional manager at Intrum Justitia, is Chairman of
Stade De Suisse Wankdorf Nationalstadion AG, Bern, which owns the football
club BSC Young Boys Betrieb AG, a team sponsored by Intrum Justitia
AG. In addition, the company arranges conferences and customer events on
behalf of Intrum Justitia.
Intrum á Íslandi ehf, Reykjavik (Iceland), which changed its name to Motus
ehf in 2011, manages international collection cases on Intrum Justitia’s
behalf and invoices a fee for its services.
All transactions with related parties were made on market terms at arm’s length.
The subsidiaries are related parties, see Note 12, but the Parent Company
has no transactions with other related parties.