Note 35 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, shares in 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 Group’s contingent considerations has been calculated as the current value of the amounts expected to be paid out according to the individual contracts. The single largest Group contingent consideration will be paid out if Peab receives a certain permit for quarry operations. The valuation of the purchase price is therefore dependent on how Peab judges the probability of receiving said permit. The value of this contingent consideration on the balance sheet date was SEK 22 million (22). Other contingent considerations are based on the level of orders received and the level of profit in the acquired businesses.

When calculating the fair value of interest-bearing receivables and liabilities and interest rate swaps, future cash flows 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 reported 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 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Financial assets
Other securities held as fixed assets 80 864 80 864 80 864
Interest-bearing long-term receivables 1,520 1,762 1,520 1,762 1,525 1,765
Other long-term receivables 2 108 158 110 158 110 158
Accounts receivable 8,709 8,221 8,709 8,221 8,709 8,221
Interest-bearing current receivables 411 336 411 336 411 336
Prepaid expenses and accrued income 28 49 28 49 28 49
Other current receivables 4 12 96 198 100 210 100 210
Liquid funds 595 1,062 595 1,062 595 1,062
Total financial assets 4 12 2 – 80 864 11,467 11,786 – – 11,553 12,662 11,558 12,665
Financial liabilities
Interest-bearing long-term liabilities 2,573 2,728 2,573 2,728 2,573 2,728
Other long-term liabilities 44 95 159 87 203 182 203 182
Interest-bearing current liabilities 1,169 2,294 1,169 2,294 1,169 2,296
Accounts payable 4,882 4,474 4,882 4,474 4,882 4,474
Accrued expenses and deferred income 14 14 14 14 14 14
Other current liabilities 2 152 96 154 96 154 96
Total financial liabilities – – 46 95 – – – – 8,949 9,693  8,995 9,788 8,995 9,790
Unrecognized profit/loss 1) 5 1

1) In those cases where there is a difference between recognized 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 -1 million (11). 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 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Financial assets
Other securities held as fixed assets 480 – 480 – 480
Accounts receivable 1 1 1 1 1 1
Current receivables Group companies 3,472 2,444 3,472 2,444 3,472 2,444
Total financial assets – 480 3,473 2,445 – – 3,473 2,925 3,473 2,925
Financial liabilities
Long-term liabilities Group companies 6,326 7,281 6,326 7,281 6,326 7,281
Accounts payable 25 28 25 28 25 28
Current liabilities Group companies 347 58 347 58 347 58
Total financial liabilities – – – – 6,698 7,367 6,698 7,367 6,698 7,367

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 2017 2016 2017 2016 2017 2016 2017 2016
Financial assets
Other securities held as fixed assets 480 59 54 59 534
   Whereof shareholding in listed company 480      – 480 
   Whereof investment in unlisted funds     59 54  59 54 
Other long-term receivables 2 2 –
   Whereof commodity hedging with futures 2 2 –
Other current receivables 4 12 4 12
   Whereof currency swaps   4 12    4 12 
Total financial assets – 480 6 12 59 54 65 546
Financial liabilities
Other long-term liabilities 44 95 23 23 67 118
   Whereof interest rate swaps   44 95    44 95 
   Whereof contingent consideration     23 23  23 23 
Other current liabilities 2 0 11 13 0
   Whereof currency swaps   2 0    2  0 
   Whereof contingent consideration 11 11 –
Total financial liabilities – – 46 95 34 23 80 118

 

  Level 1 Level 2 Level 3 Total
Parent company, MSEK 2017 2016 2017 2016 2017 2016 2017 2016
Financial assets
Other securities held as fixed assets 480 – 480
   Whereof shareholdings in listed company 480     – 480
Total financial assets – 480 – – – – – 480

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 2017 2016
Opening balance 54 49
Investments during the year 17 38
Repayment during the year -14 –
Dividends received -1 -51
Reported in profit/loss for the year 2) -2 22
Reported in other comprehensive income 5 -4
Closing balance 59 54

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

  Contingent consideration
Group, MSEK 2017 2016
Opening balance 23 –
Acquisitions for the year 11 24
Reported in profit/loss for the year
   Other operating income – -1
   Interest expense (discount) 1) 0 0
Closing balance 34 23

1) Reported in net financial items.

The contingent consideration will amount to at least SEK 3 million and at most SEK 38 million.