Note 26 Parent company's equity
The Parent company's equity is split between restricted and unrestricted equity. Restricted equity consists of share capital, the reserve fund and the premium reserve. Restricted funds must not be reduced by issue of dividends. Unrestricted equity consists of retained earnings and the year's net income.
The reserve fund contains premiums (amounts received from share issues that exceed the nominal value of the shares) relating to shares issued up to 1996.
The premium reserve contains premiums (amounts received from share issues that exceed the nominal value of the shares) relating to shares issued from 1997 onwards. In accordance with the transition rules relating to the new Swedish Companies Act that came into force on 1 January 2006, the full amount held in the premium reserve on 31 December 2005 has been moved to the reserve fund. From 1 January 2006 the premium reserve is transferred to form part of unrestricted equity.
Note 27 Share capital, number of shares and dividend per share
All shares have a par value of SEK 1.00 and provide the holders with equal rights to the Company's assets and earnings. All shares are entitled to dividends subsequently issued. Each Series A share carries 10 votes and each Series B share one vote. All issued shares are fully paid-up.
The average number of shares during the year, to the nearest thousand, was 365,918 thousand (365,918). The average number of shares after full conversion of outstanding convertible bonds, similarly rounded, was 378,718 thousand (375,103).
Dividend per share
The dividend paid out during the financial year amounted to a total sum of SEK 951 M (457), corresponding to SEK 2.60 (1.25) per share. At the Annual General Meeting on 25 April 2006, a
dividend of SEK 3.25 per share for the year 2005 – a total sum of SEK 1,189 M – will be proposed.
Note 28 Reserves
The hedging reserve consists of changes in the fair value of hedging instruments used to hedge cash flows.
The translation reserve consists of all currency translation
differences that arise in the translation of financial reports from foreign operations prepared in a currency other than Swedish
kronor, the currency used to present the Group's financial reports. Currency translation differences arising from the revaluation of liabilities originating from instruments used to hedge net capital expenditure in foreign operations are also carried to the translation reserve.
Note 29 Pensions
ASSA ABLOY has defined benefit plans in a number of countries, those in the USA and the UK being the most significant ones. In principle, the plans cover all employees and provide benefits based on an employee's service and remuneration at or near retirement. In the USA there are also obligations related to post-retirement medical benefits. The figures below include both defined benefit pension plans and post-retirement medical benefits.
The following amounts are recognized in
the income statement:
Pension cost for defined contribution plans is recognized in its entirety in the income statement.
Actuarial gains/losses resulting from changes in the actuarial assumptions for defined benefit pension plans are recognized to the extent that their accumulated amount exceeds the 'corridor', i.e.
10 percent of the higher of the obligation's present value or the fair value of plan assets. The surplus/deficit outside the 10 percent corridor is recognized as income/expense over the expected average remaining service period. Amortization of actuarial gains/losses that arose in 2005 will start in 2006.
The actual return on plan assets regarding defined benefit plans was SEK 282 M (148) in 2005.
The following amounts are recognized in the balance sheet:
There are no defined benefit plans with surpluses within the Group. Partly funded or unfunded pension plans are reported as provisions for pensions. Out of pension obligations for defined benefit plans, SEK 463 M (382) relates to post-retirement medical
* These actuarial assumptions have been used in calculating the defined benefit pension obligations.
Pensions with Alecta
Commitments for old-age pensions and family pensions for salaried employees in Sweden are guaranteed in part through insurance with Alecta. According to statement URA 42 from the Swedish Financial Accounting Standards Council's Emerging Issues Task Force, this is a defined benefit plan that covers many employers. For the 2005 financial year the company has not had access to information making it possible to report this plan as a defined benefit plan. Pension plans in accordance with ITP that are guaranteed through insurance with Alecta are therefore reported as defined contribution plans. The year's contributions that are contracted to Alecta amount to SEK 10 M (9), of which SEK 3 M (2) relates to the Parent company. Alecta's surplus may be distributed to the policy-holders and/or the persons insured. At the end of 2005 Alecta's surplus expressed as collective consolidation level amounted to 128.5 percent (128.0). Collective consolidation level consists of the market value of Alecta's assets as a percentage of its insurance commitments calculated according to Alecta's actuarial calculation assumptions, which do not comply with IAS 19.