2,706 million at 31 December <strong>2006</strong>, from DKK 1,786 million at 31 December 2005. Additions of DKK 1,271 million from acquisitions were partly offset by DKK 18 million of foreign exchange adjustments and amortisation of DKK 333 million. Investment in associates Investment in associates decreased from DKK 132 million at 31 December 2005, to DKK 66 million at 31 December <strong>2006</strong>, primarily a result of the acquisition of the remaining shares in Tempo taking <strong>ISS</strong> <strong>Global</strong>’s stake from 49% in 2005 to 100% in <strong>2006</strong>. Trade receivables Trade receivables increased 23% from DKK 7,564 million at 31 December 2005 to DKK 9,281 million at 31 December <strong>2006</strong>. The increase was primarily due to organic growth and acquisitions in <strong>2006</strong>. Securities Securities were unchanged at DKK 59 million at 31 December <strong>2006</strong> compared to 31 December 2005. Cash and cash equivalents Cash and cash equivalents increased from DKK 1,231 million at 31 December 2005, to DKK 2,006 million at 31 December <strong>2006</strong>, of which DKK 1,120 million resided at Group level and the remainder resided at country level. The cash position was positively impacted by the working capital inflow in Q4 <strong>2006</strong>. The cash position during the month may fluctuate significantly as a result of frequency and timing of cash collection and salary payments. Total equity Total equity decreased from DKK 2,192 million at December 31 2005, to DKK 1,678 million at December 31 <strong>2006</strong>. Equity attributable to the equity holders of <strong>ISS</strong> <strong>Global</strong> amounted to DKK 1,620 million at 31 December <strong>2006</strong>, a decrease of DKK 517 million from DKK 2,137 million at 31 December 2005. The decrease was part of a planned increase of financial leverage, which was implemented through dividend payments of DKK 1,260 million in <strong>2006</strong>. Net income and expenses recognised directly in equity increased equity by DKK 23 million. This included negative currency adjustments relating to investments in foreign subsidiaries of DKK 104 million and realised and unrealised net gains on hedges of DKK 117 million. Actuarial gains, net on defined benefit pension schemes amounted to DKK 46 million. The gains were primarily related to the Group’s pension schemes in the Netherlands, Norway, Sweden, Switzerland and the United Kingdom. As described in note 1 to the consolidated financial statements, such gains are taken directly to equity. Reversal of fair value adjustments related to the sale of a PFI equity stake in the United Kingdom reduced equity by DKK 18 million, and share-based payments expensed in the income statement were ANNUAL REPORT <strong>2006</strong> / Financial Review offset by an increase in equity of DKK 14 million. The tax effect of entries recognised directly in equity was a decrease of DKK 32 million. Net profit for the year attributable to the equity holders of <strong>ISS</strong> <strong>Global</strong> was DKK 717 million. The equity ratio, defined as total equity relative to total assets, decreased from 6.9% at 31 December 2005, to 4.3% at 31 December <strong>2006</strong>, which was primarily due to capital structure adjustments through the payment of dividends of DKK 1,260 million. Pensions and similar obligations Pensions and similar obligations amounted to DKK 885 million at 31 December <strong>2006</strong>, against DKK 833 million at 31 December 2005. The majority of the Group’s pension plans are defined contribution plans. <strong>ISS</strong> <strong>Global</strong>’s contributions to such plans are accrued and expensed on an ongoing basis. In certain countries, mainly in France, Germany, the Netherlands, Norway, Sweden, Switzerland and the United Kingdom, <strong>ISS</strong> <strong>Global</strong> has defined benefit plans. As mentioned above, actuarial gains, net, of DKK 46 million were taken directly to equity. The net liability for the defined benefit plans amounted to DKK 844 million at 31 December <strong>2006</strong>, representing an increase from DKK 801 million at 31 December 2005, primarily due to additions from acquired companies, partly offset by actuarial gains. Based on the current discount rates ranging between 2.9% and 6.5%, pension costs related to defined benefit plans are expected to amount to approximately DKK 168 million in 2007. A simultaneous change in the discount rates of 0.5 percentage point is estimated to increase or decrease, as the case may be, these costs in 2007 to approximately DKK 169 million or approximately DKK 156 million, all other things being equal. For detailed information on pension obligations, please see note 26 to the consolidated financial statements. Other provisions Other provisions were DKK 745 million at 31 December <strong>2006</strong>, of which DKK 414 million had an estimated maturity of less than one year. Comparative figures at 31 December 2005, were DKK 715 million and DKK 476 million, respectively. Provisions related to acquisitions, mainly redundancy payments and termination of rental of properties, amounted to DKK 64 million against DKK 56 million at 31 December 2005. The remaining provisions comprise various obligations incurred in the ordinary course of business, e.g. labour related obligations, legal obligations, contract closures etc. Interest-bearing debt, net Interest-bearing debt amounted to DKK 20,011 million, an increase of DKK 4,326 million from DKK 15,685 million at 31 December 2005. Long- and short-term debt amounted to DKK 22,328 million, 38
including non-interest-bearing debt of DKK 232 million, which primarily related to unamortised net gains from settled interest rate swaps. Receivable from affiliates, securities and cash and cash equivalents amounted to DKK 2,085 million. The interestbearing debt, net, was mainly affected by the free cash flow of DKK 2,175 million, offset by interest payments of DKK 1,344 million, dividend payments of DKK 1,260 million and cash outflow related to acquisitions of DKK 3,537 million. ANNUAL REPORT <strong>2006</strong> / Financial Review 39
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