Volvo 2015 Annual Report Download - page 141

GROUP PERFORMANCE 2015 NOTES
139
Information regarding shares 2015 2014
Number of outstanding shares,
December 31, in millions 2,031 2,029
Average number of shares
before dilution in millions 2,030 2,028
Average number of shares
after dilution in millions 2,032 2,031
Average share price, SEK 96.57 89.54
Net income attributable to Parent
Company shareholders 15,058 2,099
Basic earnings per share, SEK 7.42 1.03
Diluted earnings per share, SEK 7.41 1.03
The Volvo Group’s post-employment benefits, such as pensions, health-
care and other benefits are mainly settled by means of regular payments
to independent authorities or bodies that assume pension obligations and
administer pensions through defined-contribution plans.
The remaining post-employment benefits are defined-benefit plans;
that is, the obligations remain within the Volvo Group or are secured by
proprietary pension foundations. The Volvo Group’s defined-benefit plans
relate mainly to subsidiaries in the U.S. and comprise both pensions and
other benefits, such as healthcare. Other large-scale defined-benefit
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 benefits
Provisions and costs for post-employment benefits, mainly pensions and
health-care benefits, 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
benefits. The assumptions include discount rates, health care cost trends
rates, inflation, 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.
Inflation assumptions are based on an evaluation of external market indi-
cators. The salary growth assumptions reflect the historical trend, the
near-term outlook and assumed inflation. Retirement and mortality rates
are based primarily on officially available mortality statistics. The actuarial
assumptions are reviewed annually by the Volvo Group and modified when
deemed appropriate.
The following tables disclose information about defined-benefit 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 financial
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 benefits Dec 31, 2015 Dec 31, 2014
Obligations –49,038 –50,948
Fair value of plan assets 35,400 34,391
Net provision for post-employment benefits –13,638 –16,557
ACCOUNTING POLICY
Actuarial calculations shall be made for all defined-benefit plans in order
to determine the present value of obligation for benefits vested by its
current and former employees. The actuarial calculations are prepared
annually and are based upon actuarial assumptions that are determined
at the balance-sheet date each year. Changes in the present value of
obligations due to revised actuarial assumptions and experience adjust-
ments constitute remeasurements.
Provisions for post-employment benefits in the Volvo Group’s balance
sheet correspond to the present value of obligations at year-end, less fair
value of plan assets. Discount rate is used when calculating the net inter-
est income or expense on the net defined benefit liability (asset). All
changes in the net defined 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 defined 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
Opening balance 2015 –16 4,144 4,128
Other changes –32 – –32
Fair value adjustments regarding
holdings in Japanese companies – 25 25
Fair value adjustments regarding
Eicher Motors Ltd. – –3,995 –3,995
Fair value adjustments regarding
other companies – 133 133
Balance as of December 31, 2015 –48 307 259
The Volvo Group’s accumulated amount of exchange difference recog-
nized in equity relating to assets held for sale amounted to SEK 11 M (10).