BOOSTING OUR BUSINESS

Notes
Cont.Note
20
Other shareholders’ equity in the Parent Company
Statutory reserve
Refers to provisions to the statutory reserve and share premium reserve
prior to 2006. The statutory reserve is restricted equity and may not be
reduced through distributions of earnings.
Share premium reserve
When shares are issued at a premium, the amount exceeding their quota
value is transferred to the share premium reserve. Provisions to the share
premium reserve since 2006 are non-restricted equity.
Fair value reserve
Refers to unrealized exchange rate gains or losses on long-term monetary
transactions with subsidiaries as well as external loans in foreign
currency, which are intended to hedge the Group’s translation exposure
attributable to net assets in foreign subsidiaries. The fair value reserve
is non-restricted equity.
Earnings brought forward
Refer to retained earnings from the previous year less the dividend paid and
share repurchases. Retained earnings are non-restricted equity.
Capital structure
The company’s definition of capital corresponds to shareholders’ equity
including holdings without a controlling interest, which at year-end
totaled SEK 3,166 M (3,041).
The measure of the Group’s capital structure applied for control
purposes is consolidated net debt divided by earnings before interests,
taxes, depreciation, amortization and Purchased Debt revaluations
(EBITDA).
Net debt is defined as the sum of interest-bearing liabilities and pension
provisions less liquid funds and interest-bearing receivables.
The Board has set financial targets for the Group whereby net debt
divided by EBITDA, on a rolling 12-month basis, should be between
2.0 and 3.0.
On December 31, 2015, this key figure amounted to 1.8 (1.9), that
is, lower than the targeted interval
NOTE 21: Pensions
Employees in Intrum Justitia’s companies are covered by various pension
benefits, some of which are defined benefit plans and others defined
contribution plans. The Group applies IAS 19 Employee Benefits,
which contains, among other things, uniform regulations on the actuarial
calculation of provisions for pensions in defined benefit plans.
Group employees in Norway and Switzerland are covered by pension
plans funded through assets under the management of insurance companies
and are reported as defined benefit pension plans. Employees
in Germany are covered by an unfunded defined benefit pension plan
that can be paid out as a one-time sum or as monthly payments following
retirement. In France and Italy, the company makes provisions
for one-time payments made to employees on retirement, and these
provisions are also reported according to the rules for defined benefit
pension plans. In Belgium and Sweden, there are pension plans, funded
through insurance, which theoretically should have been reported as
defined benefit plans, but which are recognized as defined contribution
plans since the company lacks sufficient data to report them as defined
benefit plans. See also below regarding the ITP 2 plan.
Among other things, IAS 19 requires pension costs for service in the
current period to be reported in the operating earnings, while the calculated
interest expense on the pension liability and the interest income
from assets under management are reported in net financial items.
Actuarial revaluations are recognized in other comprehensive income.
Provisions for pensions reported in the balance sheet can be analyzed
as follows:
Group
SEK M 2015 2014
Present value of fully or partly funded obligations 338 269
Fair value of plan assets –233 –205
Deficit in the plan 105 64
Present value of unfunded obligations 69 69
Total provisions for pensions 174 133
Changes in net obligation:
Group
SEK M 2015 2014
Opening balance 133 102
Costs for employment in current period 20 12
Interest expense 3 3
Pensions paid –18 –14
Pension provisions in acquired operations 4 –
Remeasurements 33 24
Translation differences –1 6
Closing balance 174 133
Reconciliation of fair value of plan assets:
Group
SEK M 2015 2014
Opening balance 205 182
Fees paid 41 50
Compensation paid –33 –40
Interest revenue 4 4
Plan assets in acquired operations 11 –
Remeasurements 1 0
Translation differences 4 9
Closing balance 233 205
The pension cost recognized in the income statement can be specified
as follows:
Group
SEK M 2015 2014
Costs for employment in current period 20 12
Net interest income/expense 3 3
Total pension cost in earnings for the year 23 15
Costs for employment in the current period are reported in operating earnings.
Net interest income/expense is reported under net financial items.
Remeasurements of the pension liability are included in other comprehensive
income in the negative amount of SEK 33 M (24) before tax.
In calculating Provisions for pensions, the following assumptions are used:
Group
% 2015 2014
Discount rate 0.75–2.20 1.50–2.70
Assumed rate of increase in compensation 1.0–2.5 1.0–3.2
Assumed return on plan assets 1.0-1.9 2.0–2.7
Assumed pension increases 0.0–3.0 0.0–3.0
Future adjustment to social security base 2.25–4.20 3.0–4.5
The Group also finances a number of defined contribution plans, the
costs of which amounted to SEK 89 M (89).
Intrum Justitia Annual Report 2015
65