E1. Financial instruments by category and measurement level

AP ACCOUNTING PRINCIPLES

Financial instruments recognized in the balance sheet include cash and cash equivalents, securities, other financial receivables, trade receivables, trade payables, loans and derivatives.

Current investments and derivatives are recognized on the trade date. Available-for-sale financial assets and loans are recognized on the settlement date. Trade receivables and trade payables are recognized in the balance sheet once the invoice has been sent or recieved, respectively.

Financial assets are initially recognized at cost, and transaction costs are included for certain instruments that are not measured at fair value. Financial assets are recognized in the balance sheet until the rights in the agreement have been realized or the company no longer has the rights to the asset. Impairment of financial assets takes place when there is objective proof of impairment, such as cessation of an active market or where it is probable that the debtors cannot meet their commitments.

Financial liabilities are recognized at amortized cost, except in cases where they are recognized at fair value using hedge accounting. Financial liabilities are derecognized from the balance sheet when SCA has met its commitments.

SCA recognizes financial instruments with a remaining maturity of less than 12 months as current assets and liabilities, and those that exceed 12 months as non-current assets and liabilities.

Fair value measurement

For the financial instruments for which market quotations are available, actual prices are used for fair value measurement (Level 1). In the absence of market quotations for the instruments, SCA determines fair values with the aid of common valuation models, using quoted prices of similar assets or liabilities in active markets (Level 2).

For disclosures in a note relating to non-current loans, current market interest rates are taken into account in fair value calculations. The fair value of short-term loans and investments is considered to correspond to the carrying amount, since a change in market interest rates does not have a significant effect on market value.

Classification and subsequent recognition

On the acquisition date, SCA classifies financial instruments into the following categories.

Financial assets measured at fair value through profit or loss

Assets are classified in this category when the intention is to sell in the short term and, if such is the case, they are recognized continuously at fair value through profit or loss.

This category also includes derivatives with positive market values not recognized using hedge accounting. Only financial derivatives were classified in this category during the year.

Held-to-maturity investments

Held-to-maturity investments are defined as financial assets that have determinable payments and that SCA intends to hold to maturity. Assets in this category are measured at amortized cost applying the effective interest method, which means they are accrued so that a constant return is obtained.

Loan and trade receivables

This category comprises loan receivables that have determinable payments and are not quoted in an active market, as well as trade receivables. Receivables arise when SCA provides money, goods or services directly to another party without any intention of conducting trading in the receivables. Assets in this category are measured at amortized cost less a potential provision for impairment.

Available-for-sale financial assets

This category includes assets that are available for sale or that have not been classified in any of the other categories. These assets are measured at fair value through other comprehensive income.

Financial liabilities measured at fair value through profit or loss

This category includes derivatives with negative fair values that are not used for hedge accounting and financial liabilities held for trading. Liabilities in this category are continuously measured at fair value and changes in value are recognized in profit or loss.

Financial liabilities measured at amortized cost

This category includes financial liabilities that are not held for trading. These are recognized initially at fair value, net after transaction costs, and subsequently at amortized cost according to the effective interest method.

Accounting for derivatives used for hedging purposes

All derivatives are initially and continuously recognized at fair value in the balance sheet. Gains and losses on remeasurement of derivatives used for hedging purposes are recognized in accordance with the accounting principles stated in Note E6 Derivatives and hedge accounting.

Financial instruments by category and measurement level

SEKm

Note

Measurement level

2016

2015

2014

Financial assets measured at fair value through profit or loss

 

 

 

 

 

Derivatives – Non-current financial assets

E2

2

52

41

Derivatives – Current financial assets

E2

2

169

465

761

Derivatives – Other current receivables

D5

2

92

70

64

Total

 

 

313

576

825

Financial liabilities measured at fair value through profit or loss

 

 

 

 

 

Non-current financial liabilities

E4

2

16,021

10,967

12,904

Current financial liabilities

E4

2

424

5,634

4,126

Derivatives – Non-current financial liabilities

E4

2

19

23

Derivatives – Current financial liabilities

E4

2

502

467

369

Derivatives – Other non-current liabilities

D6

2

12

2

Derivatives – Other current liabilities

D6

2

46

59

106

Total

 

 

17,012

17,139

17,530

Loans and receivables

 

 

 

 

 

Non-current financial assets

E2

24

233

252

Current financial assets

E2

385

42

286

Trade receivables

E3

17,811

16,829

16,827

Cash and cash equivalents

E2

4,482

5,042

3,815

Total

 

 

22,702

22,146

21,180

Available-for-sale financial assets

 

 

 

 

 

Non-current financial assets

E2

1

82

75

1,807

Current financial assets

E2

2

8

8

8

Total

 

 

90

83

1,815

Held-to-maturity investments

 

 

 

 

 

Non-current financial assets

E2

296

276

Financial liabilities measured at amortized cost

 

 

 

 

 

Non-current financial liabilities

E4

15,317

10,394

11,311

Current financial liabilities

E4

4,328

6,329

10,018

Trade payables

15,750

14,351

13,964

Total

 

 

35,395

31,074

35,293

Derivatives used for hedge accounting

 

 

 

 

 

Non-current financial assets

E2

2

556

379

794

Other non-current assets

2

154

2

2

Other current receivables

D5

2

222

6

Current financial assets

E2

2

14

268

213

Total

 

 

946

649

1,015

Non-current financial liabilities

E4

2

3

115

8

Other non-current liabilities

D6

2

2

96

55

Current financial liabilities

E4

2

103

21

304

Other current liabilities

D6

2

30

320

215

Total

 

 

138

552

582

These financial instruments are measured at fair value, with the exception of loans and trade receivables and financial liabilities measured at amortized cost. According to SCA’s assessment, the fair value essentially corresponds to the carrying amount, with the exception of non-current liabilities, the fair value of which is recognized in Note E4 Financial liabilities.

Measurement levels

Level 1: Quoted prices on an active market for identical assets or liabilities, such as shares or bonds quoted on the stock exchange.

Level 2: Other observable inputs for the asset or liability than quoted prices included in Level 1, either directly (price quotations) or indirectly (obtained from price quotations), such as forward contracts or interest rate swaps.

Financial instruments in other notes to the balance sheet

 

 

2016

 

2015

 

2014

SEKm

Note

Financial instruments

 

Of which derivatives

 

Financial instruments

 

Of which derivatives

 

Financial instruments

 

Of which derivatives

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets, cash and cash equivalents

E2

5,772

 

791

 

6,849

 

1,153

 

8,212

 

1,768

Other non-current assets

 

154

 

154

 

2

 

2

 

2

 

2

Trade receivables

E3

17,811

 

 

16,829

 

 

16,827

 

Other current receivables

D5

314

 

314

 

70

 

70

 

70

 

70

Total

 

24,051

 

1,259

 

23,750

 

1,225

 

25,111

 

1,840

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

E4

36,717

 

627

 

33,927

 

603

 

39,063

 

704

Other non-current liabilities

D6

2

 

2

 

108

 

108

 

57

 

57

Trade payables

 

15,750

 

 

14,351

 

 

13,964

 

Other current liabilities

D6

76

 

76

 

379

 

379

 

321

 

321

Total

 

52,545

 

705

 

48,765

 

1,090

 

53,405

 

1,082