Note 34 Valuation of financial assets and liabilities at fair value

Under IAS 39, Financial instruments, financial instruments are valued either at accrued acquisition value or fair value depending on which category they belong to. Classification largely depends on the purpose of the holding. Items which have been the object of valuation at fair value are listed shareholdings, different types of derivatives, unlisted funds and contingent consideration.

The fair value of listed shareholdings and share derivatives is calculated according to the closing price at the end of the accounting period. The fair value of the Group’s shares in unlisted funds is based on the valuation received from the managing institute. The valuation belongs to level 3 in the fair value hierarchy. However, the Group does not have access to the information about the input data used by the institute for the valuation and therefore no information about such data is given. The fair value of the contingent consideration is calculated at the discounted value of the anticipated future cash flow.

When calculating the fair value of interest-bearing receivables and liabilities and interest rate swaps, future cash flow were discounted to the listed market interest for the remaining terms of maturity. Spot rates on the balance sheet date were used to calculate the value of currency swaps. The booked value of non-interest-bearing asset and liability items such as accounts receivable and accounts payable with a remaining maturity of less than six months is believed to reflect the fair value. The adjacent tables show the reported values compared with the estimated fair value per type of financial asset and liability.

  Financial assets valued at fair value via the income statement Derivatives used in hedge accounting Financial assets available-for-sale Accounts and loan receivables Other financial liabilities Total recognized value Fair value
Group, MSEK 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
Financial assets
Other securities held as fixed assets 864 489 864 489 864 489
Interest-bearing long-term receivables 1,762 2,199 1,762 2,199 1,765 2,205
Other long-term receivables 158 90 158 90 158 90
Accounts receivable 8,221 6,435 8,221 6,435 8,221 6,435
Interest-bearing current receivables 336 210 336 210 336 211
Deferred expenses and accrued income 49 22 49 22 49 22
Other current receivables 12 5 198 287 210 292 210 292
Current holdings 8 8 8
Liquid funds 1,062 865 1,062 865 1,062 865
Total financial assets 12 5 864 489 11,786 10,116 12,662 10,610 12,665 10,617
Financial liabilities
Interest-bearing long-term liabilities 2,728 3,301 2,728 3,301 2,728 3,306
Other long-term liabilities 95 144 87 13 182 157 182 157
Interest-bearing current liabilities 2,294 3,099 2,294 3,099 2,296 3,099
Accounts payable 4,474 3,980 4,474 3,980 4,474 3,980
Accrued expenses and deferred income 14 98 14 98 14 98
Other current liabilities 1 96 114 96 115 96 115
Total financial liabilities 95 145 9,693 10,605 9,788 10,750 9,790 10,755
Unrealised profit/loss 1) 1 2

1) In those cases where there is a difference between booked value and fair value the disclosure concerning fair value belongs to level 3 in the fair value hierarchy.

The effect of valuing financial instruments at fair value was included in the Group’s income statement for a total of SEK 11 million (4). The effects stem from the market value of the outstanding currency swaps.

  Financial assets available-for-sale Accounts and loan receivables Other financial liabilities Total recognized value Fair value
Parent company, MSEK 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
Financial assets
Other securities held as fixed assets 480 310 480 310 480 310
Accounts receivable 1 1 1 1 1 1
Current receivables Group companies 2,444 1,263 2,444 1,263 2,444 1,263
Liquid funds 8 8 8
Total financial assets 480 310 2,445 1,272 2,925 1,582 2,925 1,582
Financial liabilities
Long-term liabilities Group companies 7,281 6,465 7,281 6,465 7,281 6,465
Accounts payable 28 24 28 24 28 24
Current liabilities Group companies 58 992 58 992 58 992
Total financial liabilities 7,367 7,481 7,367 7,481 7,367 7,481

Fair value

Measurement of fair value is based on a three-level hierarchy.

Level 1: prices that reflect quoted prices on an active market for identical assets
Level 2: based on direct or indirect observable inputs not included in level 1
Level 3: based on inputs unobservable to the market

The table below shows the allocated level of financial assets and financial liabilities recognized as fair value in the Group balance sheet.

  Level 1 Level 2 Level 3 Total
Group, MSEK 2016 2015 2016 2015 2016 2015 2016 2015
Financial assets
Other securities held as fixed assets 480 310 54 49 534 359
   Whereof shareholding in listed company 480  310         480  310
   Whereof investment in a unlisted fund         54  49 54  49
Other current receivables 12 5 12 5
   Whereof currency swaps     12  5     12  5
Total financial assets 480 310 12 5 54 49 546 364
Financial liabilities
Other long-term liabilities 95 144 23 118 144
   Whereof interest rate swaps     95  137     95  137
   Whereof commodity hedging with futures 7 7
   Whereof contingent consideration       23    23 
Other current liabilities 0 1 0 1
   Whereof currency swaps     1     1
Total financial liabilities 95 145 23 118 145

 

  Level 1 Level 2 Level 3 Total
Parent company, MSEK 2016 2015 2016 2015 2016 2015 2016 2015
Financial assets
Other securities held as fixed assets 480 310 480 310
   Whereof shareholding in listed company 480  310         480  310
Total financial assets 480 310 480 310

The table below is a reconciliation between the opening and closing balance for assets and liabilities included in level 3.

  Other securities held as fixed assets 1)
Group, MSEK 2016 2015
Opening balance 49  66
Investments during the year 38 13
Dividends received -51 -50
Reported in profit for the year 2) 22 28
Reported in other comprehensive income -4 -8
Closing balance 54 49

1) Refers in its entirety to an investment in a unlisted fund. The holding is classified as financial assets available-for-sale and is valued at fair value through other comprehensive income.
2) Reported in net financial items.

  Contingent consideration
Group, MSEK 2016 2015
Opening balance
Acquisitions for the year 24
Reported in profit for the year
   Other operating income -1
   Interest expense (discount) 1) 0
Closing balance 23

1) Reported in net financial items.

The contingent consideration will amount to at least SEK 0 million and at most SEK 30 million.