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

Legal outlays
The Group incurs outlays for court fees, legal representation,
bailiffs, etc., which can be charged
to and collected from debtors. In certain cases
Intrum Justitia has agreements with its clients
where any expenses that cannot be collected from
debtors are instead refunded by the client. The
amount that is expected to be recovered from a
solvent counterparty is recognized as an asset in
the balance sheet on the line, Other receivables.
Client funds
Client funds, which are reported as assets and
liabilities in the balance sheet, represent cash received
on collection of a specific debt on behalf of
a client and payable to the client within a specified
period. Client funds are liquid funds with a
restricted disposition right. The same amount is
reported as a liability.
Liquid assets
Liquid assets include cash and cash equivalents
as well as immediately available balances with
banks and similar institutions. Short-term investments
consist of investments with an insignificant
risk of fluctuating in value, which can
easily be converted to cash and have a maturity
of not more than three months from acquisition.
Liabilities
Liabilities are classified as other financial liabilities,
which means that they are initially recognized
at the amount received after deducting
transaction expenses. Subsequent to acquisition,
loans are carried at amortized cost according to
the effective rate method. Long-term liabilities
have an anticipated maturity of more than one
year, while short-term liabilities have a maturity
of less than one year. The Group’s long-term
loans generally have short fixed interest periods,
which means that the nominal loan amount plus
accrued interest is a good approximation of the
liability calculated according to the effective rate
model.
Accounts payable
Accounts payable are classified in the category
other financial liabilities. Accounts payable have
a short anticipated maturity and are carried without
discounting at nominal amount.
Derivatives
Derivatives consist of forward exchange contracts
used to reduce exchange rate risks attributable
to assets and liabilities in foreign currency. Derivatives
are also contractual terms embedded in
other agreements. Embedded derivatives are recognized
separately if they are not closely related to
the host agreement.
Hedge accounting is not needed for forward exchange
contracts because the hedged item and the
hedging instrument are carried at fair value with
changes in value recognized through profit or loss
as exchange rate differences. Changes in the value
of operations-related receivables and liabilities are
recognized in operating earnings, while changes in
the value of financial receivables and liabilities are
recognized in net financial items.
Hedge accounting with regard to exchange rate
risk in the net investment in foreign subsidiaries
Investments in foreign subsidiaries (net assets
including goodwill) have been hedged to some
extent since February 2009 through loans in foreign
currency or forward exchange contracts that
are translated on the closing date to the exchange
rate then in effect. Translation differences for
the period on financial instruments used to
hedge a net investment in a Group company are
recognized in the degree the hedge is effective in
total comprehensive income, while cumulative
changes are recognized in equity (translation
reserve). As a result, translation differences that
arise when Group companies are consolidated
are neutralized.
Intangible fixed assets
Capitalized expenses for IT development
The Group applies IAS 38 Intangible Assets. Expenditures
for IT development and maintenance
are generally expensed as incurred. Expenditures
for software development that can be attributed
to identifiable assets under the Group’s control
and with anticipated future economic benefits
are capitalized and recognized as intangible assets.
These capitalized costs include staff costs for the
development team and other direct and indirect
costs. Borrowing costs are included in the cost of
qualified fixed assets effective January 1, 2009.
Additional expenditures for previously developed
software, etc. are recognized as an asset in the
balance sheet if they increase the future economic
benefits of the specific asset to which they are attributable,
e.g., by improving or extending a computer
program’s functionality beyond its original
use and estimated period of use.
IT development costs that are recognized as intangible
assets are amortized using the straight-line
method over their useful lives (3–5 years). The asset
is recognized at cost less accumulated amortization
and impairment losses.
Costs associated with the maintenance of existing
computer software are expensed as incurred.
Client relationships
Client relationships that are recognized as fixed
assets relate to fair value revaluations recognized
upon acquisition in accordance with IFRS 3. They
are amortized on a straight-line basis over their estimated
period of use (5–10 years).
Other intangible fixed assets
Relate to other acquired rights are amortized on
a straight-line basis over their estimated period of
use (3–5 years).
Goodwill
Goodwill represents the difference between the cost
of an acquisition and the fair value of the acquired
assets, assumed liabilities and contingent liabilities.
If the Group’s cost of the acquired shares in a
subsidiary exceeds the market value of the subsidiary’s
net assets according to the acquisition analysis,
the difference is recognized as Group goodwill.
The goodwill that can arise through business
combinations implemented through other than a
purchase of shares is recognized in the same way.
For business combinations where the cost is less
than the net value of acquired assets and assumed
Notes
and contingent liabilities, the difference is recognized
directly through profit or loss.
Goodwill is recognized at cost less accumulated
impairment losses. The fair value of goodwill is determined
annually for each cash-generating unit in
relation to the unit’s performance and anticipated
future cash flow. If deemed necessary, goodwill is
written down on the basis of this evaluation.
Goodwill that arises from the acquisition of a company
outside Sweden is classified as an asset in the
local currency and translated in the accounts at the
balance sheet date rate.
For acquisitions that took place prior to January
1, 2004, goodwill is reported after impairment
testing at cost, which corresponds to recognized
value according to previous accounting principles.
The classification and accounting treatment
of acquisitions that took place prior to January 1,
2004 were not reassessed according to IFRS 3 in
the preparation of the Group’s opening balance according
to IFRS as of January 1, 2004.
Tangible fixed assets
The Group applies IAS 16 Property, Plant and
Equipment.
Tangible fixed assets are recognized at cost less
accumulated depreciation and impairment losses.
Cost includes the purchase price and costs directly
attributable to putting the asset into place
and condition to be utilized in the way intended.
Examples of directly attributable costs are delivery
and handling, installation, consulting services and
legal services. Borrowing costs are included in the
cost of qualified assets effective January 1, 2009.
Depreciation is booked on a straight-line basis
over the asset’s anticipated useful life (3–5 years).
The carrying value of a tangible fixed asset is
excluded from the balance sheet when the asset is
sold or disposed of or when no economic benefits
are expected from its use or disposal of the asset.
The gain or loss that arises on the sale or disposal
of an asset is comprised of the difference between
the sales price and the asset’s carrying value less
direct costs to sell. Gains and losses are recognized
as other operating earnings.
An annual determination is made of each asset’s
residual value and a period of use.
Tangible fixed assets are recognized as an asset
in the balance sheet if it is likely that the future
economic benefits will accrue to the company and
the cost of the asset can be reliably estimated.
Leasing
The Group applies IAS 17 Leases. Leasing is
classified in the consolidated accounts as either
finance or operating leasing.
When a lease means that the Group, as lessee,
essentially enjoys the economic benefits
and bears the economic risks attributable to the
leased asset, it is classified as a finance lease. The
leased asset is recognized in the balance sheet as
a fixed asset, while the estimated present value
of future lease payments is recognized as a liability.
The portion of the lease fee that falls due for
payment within one year is recognized as a current
liability, while the remainder is recognized
as a long-term liability. Minimum lease fees
for finance leases are divided between interest
expense and amortization of the outstanding liability.
Interest expense is divided over the lease
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