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|
|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|
|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|
|Total financial assets||4||12||2||–||80||864||11,467||11,786||–||–||11,553||12,662||11,558||12,665|
|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|
|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|
|Other securities held as fixed assets||480||–||480||–||480|
|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|
|Long-term liabilities Group companies||6,326||7,281||6,326||7,281||6,326||7,281|
|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|
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|
|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|
|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|
|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)|
|Investments during the year||17||38|
|Repayment during the year||-14||–|
|Reported in profit/loss for the year 2)||-2||22|
|Reported in other comprehensive income||5||-4|
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.
|Acquisitions for the year||11||24|
|Reported in profit/loss for the year|
|Other operating income||–||-1|
|Interest expense (discount) 1)||0||0|
1) Reported in net financial items.
The contingent consideration will amount to at least SEK 3 million and at most SEK 38 million.