Getinge 2022 Annual Report

Getinge 2022 Annual Report Note 1 cont. Introduction Strategy Corporate Governance Annual Report Sustainability Report Other information Contents for loss allowance, meaning that the reserve will correspond to the expected loss for the full lifetime of the receivable. Expected credit losses on accounts receivable are recognized under the item selling expenses in profit or loss. Financial liabilities measured at amortized cost The Group's other financial liabilities are initially measured at fair value, net after transaction costs. Other financial liabilities are sub- sequently measured at amortized cost using the effective interest method. Long-term liabilities have an expected term longer than one year while current liabilities have a term of less than 12 months. This category includes liabilities to credit institutions, issued bonds, accounts payable and other current liabilities. Cash and cash equivalents The major portion of cash and cash equivalents comprises cash funds held at financial institutions, and only a minor portion com- prises current liquid investments with a term from the acquisition date of less than three months, which are exposed to only an insig- nificant risk of value fluctuations. Cash and cash equivalents are recognized at nominal amounts, which are equivalent to fair value. Financial assets measured at fair value Financial assets in this category comprise derivatives. They are included in current assets if they are expected to be settled within 12 months of the end of the reporting period, otherwise, they are classified as non-current assets. All derivatives are measured at fair value in the balance sheet. Changes in fair value are recognized as a component of other comprehensive income insofar as they are part of a hedging relationship that qualifies as hedge accounting. They are reversed to profit or loss when the hedged transaction occurs. Derivatives that do not meet the requirements for hedge account- ing are measured at fair value through profit or loss. Hedge accounting For derivative instruments or other financial instruments that meet hedge accounting requirements under the cash flow hedging method or hedging of net investments in foreign operations method, the effective component of the value change is recognized in other comprehensive income. Accumulated value changes from cash flow hedges are reversed from equity to profit or loss at the same time as the hedged item impacts profit or loss. Accumulated value changes from the hedging of net investments in foreign operations are reversed from equity to profit or loss when the foreign operation is divested in full or in part. Interest-bearing liabilities to which hedge accounting has been applied in accordance with the method for fair value hedging are measured at fair value regarding the hedged risk. The effect of the hedge is recognized on the same line as the hedged item. Fair value The fair value of derivative instruments was calculated using the most reliable market prices available. This requires all instruments that are traded in an effective market, such as currency forward contracts, to be measured at market-to-market at current prices. In terms of instruments for which no reliable prices were available, such as interest-rate swaps, cash flows were discounted using deposit and interest-rate swaps for the currency in question. Translation to SEK is conducted at the closing day rate. Remuneration to employees Recognition of pensions Getinge has both defined-contribution and defined-benefit pension plans, of which some have assets in special funds or similar securi- ties. The plans are usually financed by payments from the respec- tive Group companies and the employees. The Group's Swedish companies are generally covered by the ITP plan, which does not require any payments from employees. Defined-benefit plans Pension expenses for defined-benefit plans are calculated using the Projected Unit Credit Method in a manner that distributes expenses over the employee's working life. The calculation is performed annually by independent actuaries. These commitments are measured at the present value of expected future payments, with consideration given to calculated future salary increases, and utilizing a discount rate corresponding to the interest rate of first- class company or government bonds with a remaining term that is almost equivalent to the actual commitments. The Group's net liabilities for each defined-benefit plan (which is also recognized in the balance sheet), comprises the present value of the obligation less the fair value of the plan assets. If the value of the plan assets exceeds the value of the obligation, a surplus arises, which is recognized as an asset. The recognized asset value is limited to the total of costs related to services rendered during previous periods and the present value of future repayments from the plan, or re- ductions in future contributions to the plan. The actuarial assump- tions constitute the company's best assessment of the different variables that determine the costs of providing the benefits. When actuarial assumptions are used, the actual results could differ from the estimated results, and actuarial assumptions change from one period to another. These differences are recognized as actuarial gains and losses. Actuarial gains and losses are recognized in other comprehensive income for the period in which they are incurred. Costs for defined-benefit pension plans in profit or loss comprise the total costs for service during the current and earlier years, interest on commitments and the expected return on plan assets. Costs for service during the current period and previous periods are recognized as employee costs. The interest component of pension expenses is recognized under financial expenses. Defined-contribution plans These are plans in which the company pays fixed fees to a separate legal entity and does not have any legal or informal obligation to pay additional fees. The Group's payments for defined-contribution plans are recognized as expenses during the period in which the employees perform the services that the fee covers. The part of the Swedish ITP plan concerning family pension, disability pension, and employment group life insurance financed by insurance with Alecta is a defined-benefit pension multi-employer plan. For this pension scheme, according to IAS 19, a company is primarily to recognize its proportionate share of the defined-benefit pension commitment and the plan assets and expenses associated with the pension plan. The financial statements are also to include disclosure required for 24 82

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