Calculation of t ax es and timin g of outfo ws Deferred t ax is calculated on tempor ar y diferences bet w een the carr yin g amounts and the t ax v alues of assets and liabilities Assumptions and assessments afect recogniz ed deferred t ax partly to determine the carr yin g amounts of the diferent assets and liabilities and partly related to forecas ts re gar din g future t axable profts where future utilization of deferred t ax assets depends on this Signifcant assessments and assumptions are also made re gar din g recognition of pro visions and contin g ent liabilities relatin g to t ax risks and the potential impact of on g oin g t ax audits T ax audits are often len g th y processes that g o on for se v er al y ear s It is thus not possible to dis close an y det ailed information re gar din g the timin g of outfo ws from t ax es The balance sheet includes deferred t ax assets which amounts to M SEK 1 5423 1 5111 and 1 3534 deferred t ax liabilities which amounts to M SEK 7190 6694 and 4321 and pro visions for t ax es which amounts to M SEK 1951 1950 and 1647 included in other lon g term pro visions note 32 which are all are subject to critical es timates and jud gments F urther information re gar din g t ax es is pro vided in note 15 note 32 and note 37 The impact on the Group s fnancial position of on g oin g litigations and the valuation of contin g ent liabilities Ov er the y ear s the Group has made a number of acquisitions in diferent countries As a result of such acquisitions cert ain contin g ent liabilities of the businesses acquired ha v e been assumed Companies within the Group are also in v olv ed in a number of other le gal proceedin g s and t ax audits arisin g out of the oper ations The accountin g for litigations le gal proceedin g s and t ax audits are subject to critical es timates and jud gments f urther informa tion is pro vided in note 32 note 35 and note 37 N O TE 5 E v ent s af t er the balance shee t dat e Appro v al of the Annual R eport and Consolidated Financial St atements for 2012 This Annual R eport includin g the Consolidated f inancial St atements w as appro v ed b y the Boar d of Director s of Securit as AB on M arch 15 2013 Acquisitions The follo win g acquisition has been completed after the balance sheet date but before the appro v al of the Annual R eport Selectron U rugua y All shares ha v e been acquired Enterprise v alue is es timated to M SEK 20 M UYU 60 Selectron has annual sales of appro ximately M SEK 27 M UYU 80 and 90 emplo y ees It is included in the business se gment Securit y Ser vices Ibero America Other signifcant e v ents after the balance sheet date There ha v e been no signifcant e v ents with efect on the fnancial reportin g after the balance sheet date e x cept the acquisition lis ted abo v e N O TE 6 Financi al risk management Financial risk factor s The Group s business activities create e xposure to fnancial risks such as interes t r ate risk foreign currenc y risk fnancin g and liquidit y risk and credit counterpart y risk as det ailed in the sections belo w The Group s o v er all fnancial risk mana g ement progr am focuses on the unpredict abilit y of the fnancial mark ets and aims to minimiz e potential adv er se efects on the fnancial per formance of the Group T reasur y or ganization and activities The aim of the treasur y or ganization in Securit as is to support business oper ations b y identif yin g quantif yin g and minimizin g fnancial risks and to the e xtent possible to t ak e adv ant a g e of economies of scale in the treasur y oper ations Business se gments T reasur y oper ations in the business se gments concentr ate on impro vin g cash fo w b y focusin g on proft abilit y in the business oper ations reducin g capit al tiedup in accounts receiv able and in the mos t efcient w a y handlin g both in v es tments and local cash mana g ement Countries In countries with e xtensiv e oper ations liquidit y surpluses and liquidit y defcits in local subsidiaries are matched at countr y le v el with the help of local cashpoolin g solutions In addition Securit as oper ates an o v er all cashpoolin g s tructure incorpor atin g countries in the Euro z one and the U SA All local lon g term fnancial requirements are fnanced directly from the Group s internal bank Group T reasur y Centre G T C in Dublin Group T reasur y Centre B y concentr atin g the fnancial risk mana g ement in a sin g le location the Group can readily monitor and control these risks and beneft from the e xpertise of dedicated treasur y per sonnel Also b y concentr atin g internal and e xternal fnancin g throug h G T C economies of scale can be used to obt ain the bes t possible pricin g of in v es tments and loans G T C also has responsibilit y for matchin g local liquidit y surpluses and defcits bet w een countries and cashpools G T C identifes e v aluates and hed g es fnancial risks in cooper ation with the oper atin g units The Boar d of Director s of Securit as AB es t ablishes policies for o v er all risk mana g ement as w ell as policies co v erin g specifc areas such as foreign e x chan g e risks interes t r ate risk credit risk use of deriv ativ e fnancial ins truments and in v es tin g e x cess liquidit y Deriv ativ es are used for the follo win g main purposes hed g in g the inter es t r ate element of e xternal debt and chan g in g its currenc y profle g earin g r atio hed g in g and hed g in g of internal borro win g s and in v es tments Interes t r ate risk Interes t r ate risk is the risk that the Group s net income will be afected b y chan g es in mark et interes t r ates The Group has r aised funds in mainly U SD E UR and SEK with both fx ed and foatin g interes t r ates Det ailed information on lon g term borro win g s is pro vided in note 30 The Group uses interes t r ate deriv ativ es in designated fair v alue and cash fo w hed g es to hed g e chan g es in the risk free r ate con v ertin g the interes t r ate profle of this debt Since income is tied to cus tomer contr acts with an annual price re view and this impact usually follo ws each countr y s economic de v elopment and infa tion r ate interes t r ate risks are mos t efectiv ely minimiz ed throug h short interes t r ate periods Stron g cash fo ws from oper ations reduce the Group s dependenc y on e xternal fnancin g and thereb y also minimiz e interes t r ate risk Other e xternal fnancin g requirements ma y arise from time to time in connection with acquisitions The interes t r ate e xposure on this acquisition fnancin g is mana g ed on a case b y case basis Information on the Group s debt profle is pro vided in the t able belo w as w ell as information on interes t r ate fxin g s The t ar g et for the free cash fo w to net debt r atio is alw a ys to e x ceed 020 F ree cash fo w to net debt as of December 31 2012 w as 021 008 and 024 The Group s interes t co v er a g e r atio a measure of its abilit y to pa y interes t cos ts w as 50 61 and 74 as of December 31 2012 85 Annual R eport Notes and comments to the consolidated fnancial s t atements Securit as Annual R eport 2012