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 | 0 | 1 | 0 | 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.