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
  Number of shares (thousands) Share capital
  Series A Series B Total SEK (thousands)
Opening balance at 1 January 2004 19,175 346,743 365,918 365,918
Closing balance at 31 December 2004 19,175 346,743 365,918 365,918
Number of votes, thousands 191,753 346,743 538,496  
 
Opening balance at 1 January 2005 19,175 346,743 365,918 365,918
Closing balance at 31 December 2005 19,175 346,743 365,918 365,918
Number of votes, thousands 191,753 346,743 538,496  
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
Group Translation Hedging  
SEK M reserve reserve Total
Opening balance at 1 January 2004 0
Currency translation differences –479 –479
Closing balance at      
31 December 2004 –479 –479
Opening balance at 1 January 2005 –479 –479
Effect of changed accounting principle,      
IAS 39 4 4
Adjusted opening balance      
at 1 January 2005 –479 4 –475
Cash flow hedging instruments, fair value –3 –3
Currency translation differences 1,539 1,539
Closing balance at      
31 December 2005 1,060 1 1,061
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 (SEK M) 2005 2004
Defined benefit plans:
Current service costs 109 119
Interest cost 227 208
Expected return on plan assets –183 –154
Net actuarial losses (gains) 1
Past service costs –2 –5
Losses (gains) on curtailments/settlements 17 –7
Pension cost, defined benefit plans 169 161
of which, included in
Operating income 125 116
Net financial items 44 45
Pension cost, defined contribution plans 215 272
Total pension cost 384 433
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:
Pension obligations (SEK M) Dec 31 2005 Dec 31 2004
Provisions for defined benefit pension plans 1,560 1,609
Provisions for defined contribution pension plans   74 68
Provisions for pensions, total 1,634 1,677
Assets regarding defined contribution pension plans –22 –22
Pension obligations, net 1,612 1,655
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
benefits.
Specification of pension obligations (SEK M) 2005 2004
Present value of funded defined benefit obligations 4,166 3,294
Fair value of plan assets –3,009 –2,243
Net value of funded plans 1,157 1,051
Present value of unfunded defined benefit obligations 726 666
Unrecognized actuarial gains (losses), net –326 –111
Unrecognized past service cost 3 3
Provisions for defined benefit plans, net 1,560 1,609
Specification of movements in provision for pensions 2005 2004
Opening balance, provisions for defined benefit    
plans, net 1,609 1,887
Pension cost, defined benefit plans 169 161
Contributions –352 –384
Effect of acquisitions/disposals, net –1 –1
Curtailments –7 –47
Currency translation differences 142 –7
Closing balance, provisions for    
defined benefit plans, net 1,560 1,609
Key actuarial assumptions (weighted average)* 2005 2004
Discount rate 4.7% 5.2%
Expected return on plan assets 7.3% 6.9%
Future salary increases 3.0% 2.1%
Future pension increases 2.3% 1.5%
Future medical benefit increases 15.0% 8.0%
Expected inflation 2.3% 2.5%
* 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.