Volvo 2013 Annual Report Download - page 149

Information regarding shares (other) 2013 2012
Number of shares, December 31, in millions 2,028 2,028
Average number of shares before dilution
in millions 2,028 2,028
Average number of shares after dilution
in millions 2,030 2,030
Average share price, SEK 93.06 88.44
Net income attributable to Parent
Company shareholders 3,583 11,160
Basic earnings per share, SEK 1.77 5.61
Diluted earnings per share, SEK 1.76 5.61
The Volvo Group’s post-employment benefi ts, such as pensions, health-
care and other benefi ts are mainly settled by means of regular payments
to independent authorities or bodies that assume pension obligations and
administer pensions through defi ned-contribution plans.
The remaining post-employment benefi ts are defi ned-benefi t plans;
that is, the obligations remain within the Volvo Group or are secured by
proprietary pension foundations. The Volvo Group’s defi ned-benefi t plans
relate mainly to subsidiaries in the U.S. and comprise both pensions and
other benefi ts, such as healthcare. Other large-scale defi ned-benefi t plans
apply to white-collar employees in Sweden (mainly through the Swedish
ITP pension plan) and employees in France and Great Britain.
SOURCES OF ESTIMATION UNCERTAINTY
!
Assumptions when calculating pensions and other
post-employment benefi ts
Provisions and costs for post-employment benefi ts, mainly pensions and
health-care benefi ts, are dependent on assumptions used by actuaries
when calculating such amounts. The appropriate assumptions and actu-
arial calculations are made separately for the respective countries of the
Volvo Group’s operations which result in obligations for post-employment
benefi ts. The assumptions include discount rates, health care cost trends
rates, infl ation, salary growth, retirement rates, mortality rates and other
factors. Health care cost trend assumptions are based on historical cost
data, the near-term outlook, and an assessment of likely long-term trends.
Infl ation assumptions are based on an evaluation of external market indi-
cators. The salary growth assumptions refl ect the historical trend, the
near-term outlook and assumed infl ation. Retirement and mortality rates
are based primarily on offi cially available mortality statistics. The actuarial
assumptions are annually reviewed by the Volvo Group and modifi ed when
deemed appropriate to do so.
The following tables disclose information about defi ned-benefi t plans.
The Volvo Group recognizes the difference between the obligations and
the plan assets in the balance sheet. The disclosures refer to assumptions
applied for actuarial calculations, recognized costs during the fi nancial
year and the value of obligations and plan assets at year-end. The tables
also include a reconciliation of obligations and plan assets during the
year.
Summary of provision for
post–employment benefi ts 2013 2012
Obligations (39,954) (43,453)
Fair value of plan assets 27,653 24,618
Funded status (12,301) (18,835)
Net provision for post-employment benefi ts (12,301) (18,835)
ACCOUNTING POLICY
The Volvo Group applies IAS 19, Employee Benefi ts, for post-employment
benefi ts. Effective as from January 1, 2013 IAS 19 was revised. The
revised standard is applied retrospectively, hence the opening balance for
2012 is adjusted in accordance with the revised IAS 19. The reported
numbers for 2012 are restated accordingly for comparison purposes. In
accordance with IAS 19, actuarial calculations shall be made for all
defi ned-benefi t plans in order to determine the present value of obligation
for benefi ts vested by its current and former employees. The actuarial
calculations are prepared annually and are based upon actuarial assump-
tions that are determined at the balance-sheet date each year. Changes
in the present value of obligations due to revised actuarial assumptions
and experience adjustments constitute remeasurements.
Provisions for post-employment benefi ts in the Volvo Group’s balance
sheet correspond to the present value of obligations at year-end, less fair
value of plan assets. According to the revised IAS 19, discount rate is
used when calculating the net interest income or expense on the net
defi ned benefi t liability (asset). All changes in the net defi ned liability
(asset) are recognized when they occur. Service cost and net interest
income or expense are recognized in the income statement, while
remeasurements such as actuarial gains and losses are recognized in
other comprehensive income. Special payroll tax is included in the pension
liability, special payroll tax is applicable for pension plans in Sweden and
Belgium.
For defi ned contribution plans, premiums are recognized in the income
statement as incurred according to function.
NOTE 20 PROVISIONS FOR POST-EMPLOYMENT BENEFITS
Change in other reserves Hedge
reserve
Available-
for-sale
reserve Total
Balance as ofJanuary 1, 2013 (49) 607 558
Other changes 9 – 9
Fair value adjustments regarding
holdings in Japanese companies – 54 54
Fair value adjustments regarding
Eicher Motors Ltd. – 416 416
Balance as of December 31, 2013 (40) 1,077 1,037
The Volvo Group’s acumulative amount of exchange difference recognized in equity
relating to assets held for sale amounts to SEK 13 M (0).
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