Notes for P&L
All amounts in SEKm unless otherwise stated
Note 18 Financial assets and liabilities – categories and fair value
Carrying amounts on financial instruments are recognised in the balance sheet according to the following tables.
|2020-12-31||Financial assets/liabilities meassured at fair value through profit or loss||Financial assets/liabilities measuered at amortised cost||Total carrying amount|
|Cash and cash equivalents||-||216.0||216.0|
|Non-current interestbearing liabilities||65.2||34.4||99.6|
|Current interest-bearing liabilities||20.6||452.4||473.0|
|Other liabilities² ³||2.1||1.0||3.1|
|2019-12-31||Financial assets/liabilities meassured at fair value through profit or loss||Financial assets/liabilities measuered at amortised cost||Total carrying amount|
|Cash and cash equivalents||-||99.1||99.1|
|Non-current interestbearing liabilities||17.9||5.1||23.0|
|Current interest-bearing liabilities||-||657.6||657.6|
|Other liabilities² ³||1.0||1.0||2.0|
|¹ Part of other receivables in the consolidated balance sheet.
² Part of other liabilities in the consolidated balance sheet.
³ Includes derivatives measuered at fair value through profit or loss.
|Impact of financial instruments on net earnings||2020-12-31||2019-12-31|
|Carrying amount||Level 2||Level 3||Carrying amount||Level 2||Level 3|
|Derivatives measured at fair value through profit and loss||-||-||-||0.3||0.3||-|
|Total financial assets at fair value per level||-||-||-||0.3||0.3||-|
|Derivatives measured at fair value through profit or loss||2.0||2.0||-||1.0||1.0||-|
|Total financial liabilities at fair value per leve||87.8||2.0||85.8||18.9||1.0||17.9|
|The fair value and carrying amount are recognized in the balance sheet as shown in the table above. For currency contracts and embedded derivatives, the fair value is determined on the basis of observable market data, level 2. For conditional purchase considerations, cash flow analyses, which are not based on observable market data, are carried out, level 3. For the Group's other financial assets and liabilities fair value is estimated to be the same as the carrying amount.|
|Opening carrying amount||17.9||9.4|
|Acquisitions during the year||71.6||17.9|
|Revaluation through profit and loss||1.2||-|
|Reversed through profit and loss||-||-9.4|
|Currency exchange differences||-4.9||-|
|Closing carrying amount||85.8||17.9|
Financial assets and liabilities, recognition and derecognition
Financial instruments recognised among assets in the balance sheet include cash and cash equivalents, loan receivables, accounts receivable, financial investments and derivatives. The liabilities include accounts payable, loans payable, contingent considerations and derivatives. A financial asset or financial liability is recognised in the balance sheet when the Company becomes a party to the terms and conditions of the instrument. Accounts receivable are recognised in the balance sheet when an invoice has been sent. A liability is recognised when the counterparty has completed its undertaking and a contractual obligation to pay exists, even if no invoice has yet been received. A financial asset (or part thereof) is removed from the balance sheet when the rights in the contract are realised or expire or the Company loses control over them. A financial liability (or part thereof) is removed from the balance sheet when the obligation in the contract is fulfilled or in some other way ceases to exist. A financial asset and a financial liability are only offset and recognised at the net amount in the balance sheet when the Company is legally entitled to offset their amounts and the Company intends to settle the items with a net amount or simultaneously realise the asset and settle the liability.
Financial assets and liabilities, measurement and classification
Financial assets are classified based on the business model in which the asset is managed and the nature of the cash flows that the asset generates.
Instruments are classified as:
- Amortised cost
- Fair value through profit or loss, and
- Fair value through other comprehensive income
Financial assets are not reclassified after initial recognition, unless the Company changes the business model for management of the financial assets. The asset is classified at amortised cost if the financial asset is held within the framework of a business model whose aim is to collect contractual cash flows and the contractual terms of the financial asset at set points in time give rise to cash flows comprising only payments of the principal and interest on the outstanding principal. Assets that do not meet the criteria for amortised cost are measured at fair value through profit or loss. Gains or losses on a debt instrument after initial recognition are measured at fair value through profit or loss. The Group applies a business model that aims to collect contractual cash flows for intra-group receivables, accounts receivable, cash and cash equivalents, receivables from Group companies, accrued income and other receivables. The Group’s financial assets are recognised at amortised cost. The carrying amount of these assets is adjusted by any expected credit losses that have been recognised.
Financial assets and liabilities, measurement and classification
Financial liabilities are measured at fair value through profit or loss if they are a contingent consideration to which IFRS 3 has been applied, held for trading, or if they were initially identified as a liability at fair value through profit or loss. Other financial liabilities are measured at amortised cost. Accounts payable are measured at amortised cost. However, the expected maturity of the accounts payable is short, for which reason the liability is recognised at the nominal amount with no discount. Interest-bearing bank loans and liabilities to subsidiaries are measured at amortised cost according to the effective interest rate method. Any differences between loan amounts received (net after transaction costs) and repayment or amortisation of loans is recognised over the term of the loan.
Calculation of fair value on financial instruments
Financial instruments measured at fair value are classified in a hierarchy based on the origin of the inputs used in the evaluation. At level 1 are financial instruments with a price quoted in an active market. Level 2 comprises financial instruments whose value is determined based on observable market data, though not prices quoted in an active market. Level 3 includes using inputs, such as cash flow analyses, not based on observable market data. The Group has no financial instruments classified at level 1 at this time.
Financial assets and liabilities measured at fair value through profit or loss
This category consists of two subgroups: financial assets and liabilities held for trading, and other financial assets and liabilities that the Company initially chose to place in this category. The first group includes derivatives unless they are designated hedging instruments. The other group contains contingent considerations in conjunction with
acquisitions of subsidiaries.
Financial assets are recognised at amortised cost
Loan receivables and accounts receivable are financial assets that are not derivatives, with fixed payments or with payments that can be determined, and that are not quoted on an active market. Assets in this category are measured at amortised cost. Accounts receivable are recognised at the amount expected to be recovered, after deduction for doubtful receivables, assessed individually. The expected maturities of accounts receivable are short, so they are recognised at nominal amounts without discounting. Impairment losses on accounts receivable are recognised in operating expenses.
Cash and cash equivalents
Cash and cash equivalents consist of cash and funds immediately available in banks and equivalent institutions, as well as short-term liquid investments that mature within three months of the time of acquisition and are subject to only a negligible risk of fluctuation in value. Cash and cash equivalents are recognised at nominal amounts.
Equity instruments carried at amortised cost
A holding of unlisted shares in housing companies, whose fair value cannot be reliably calculated, is measured at cost and tested for impairment when an indication of impairment is observed.
Financial liabilities carried at amortised cost
Loans and other financial liabilities, such as accounts payable, are included in this category. These liabilities are measured at amortised cost. Accounts payable are measured at nominal amounts without discounting.
Derivatives and currency hedging
Foreign currency exposure related to future contractual and forecasted flows is hedged with forward exchange contracts, swaps and currency clauses in customer and supplier contracts. An embedded derivative, for example a currency clause, is disclosed separately unless closely related to its host contract. Derivatives are initially recognised at fair value, so transaction costs are charged to profit or loss for the period. After the initial recognition, the derivative instrument is measured at fair value.
Neither futures, swaps nor embedded derivatives in currency clauses are reported as hedging at this time. Increases and decreases in value are recognised as income or expense in operating profit.
Hedging of the Group's net investment in foreign operations
The Group has taken out loans denominated in foreign currency relating to the acquisition of foreign subsidiaries in order to manage the exposure in net investment. The Group applies the hedge accounting requirements of IFRS 9. The Group documents, at the inception of the hedge, the relationship between hedged items (net investments) and hedging instruments (loan in foreign currency), as well as its risk management objective and strategy for undertaking various hedge transactions. Hedge effectiveness is also documented on an ongoing basis regarding the financial relationship between the two items and the hedging ratio. Any gain or loss on the effective portion of the hedge (100%) is reported in equity through other comprehensive income. Gains and losses that have been accumulated in equity are taken to profit or loss when the foreign operation is divested as a portion of the gain or loss on disposal.To the top