5. VISIÓN DETALLADA DE LA ENTIDAD
5.3. Relaciones internas
15:3
Current customer-financing
receivables Dec 31, 2015 Dec 31, 2014
Installment credits 16,053 14,611
Financial leasing 12,948 14,617
Dealer financing 21,989 17,562
Other receivables 631 1,046
B/S Current customer financing
receivables 51,621 47,836
The effective interest rate for current customer-financing receiv- ables amounted to 4.74% (5.31) as of December 31, 2015.
15:4
Credit risk in customer-financing
receivables Dec 31, 2015
Dec 31, 2014 Customer-financing receivables gross 104,096 100,616 Valuation allowance for doubtful
customer-financing receivables –1,514 –1,450
Whereof specific reserve –365 –364
Whereof other reserve –1,149 –1,086
Customer-financing receivables,
net of allowance 102,583 99,166
15:5
Change of valuation allowance for doubt-
ful customer-financing receivables 2015 2014
Opening balance 1,450 1,179
New valuation allowance charged to income 745 1,081 Reversal of valuation allowance charged to income –56 –161 Utilization of valuation allowance related to
actual losses –549 –752
Translation differences –76 103
Valuation allowance for doubtful customer-
financing receivables as of December 31 1,514 1,450
Credit loss reserves
An allowance for account receivables is recognized as soon as it is prob- able that a credit loss has incurred, that is when there has been an event that has triggered the customer’s inability to pay. As of December 31, 2015, the total credit loss reserves for account receivables amounted to 4.02% (2.63) of total account receivables.
Refer to Note4 regarding credit risk.
SOURCES OF ESTIMATION UNCERTAINTY
!
NOTE16 RECEIVABLES
Receivables are recognized at amortized cost. Changes to the credit loss reserves as well as any interest and gain or loss upon divestment of receivables are recognized in Other operating income and expense.
Refer to Note 30 Financial Instruments in section Derecognition of financial assets, for receivables subject to cash enhancement activities.
ACCOUNTING POLICY
Concentration of credit risk
Customer concentration
The ten largest customers in Customer Finance account for 8.5% (7.0) of the total asset portfolio. The rest of the portfolio is pertinent to a large number of customers. Hence the credit risk is spread across many markets and customers.
Concentration by geographical market
The adjacent table discloses the concentration of the customer-financing portfolio divided into geographical markets.
Read more in Note 4 about goals and policies in financial risk management and description of credit risks.
Read more about Volvo Financial Services’ development during the year in the Board of Directors’ Report on Volvo Financial Services.
15:7
Customer-financing receivables total exposure
Dec 31, 2015 Dec 31, 2014
Not due 1–30 31–90 >90 Total Not due 1–30 31–90 >90 Total
Customer financing receivables 94,126 7,764 1,962 245 104,096 89,931 8,012 2,410 263 100,616
yet identified customer-financing receivables overdue, there were addi- tional reserves of 1,149 (1,086), included in table 15:4. The remaining exposure was secured by liens on the financed equipment and, in certain circumstances, other credit enhancements such as personal guarantees, credit insurance, liens on other property owned by the borrower etc.
Collaterals taken in possession that meet the criteria for recognition in the Balance sheet amounted to SEK 162 M (137) as of December 31, 2015.
The table above presents overdue payments within the customer-financ- ing operations in relation to specific reserves. It is not unusual for a receiv- able to be settled a couple of days after its due date, which impacts the age interval of 1–30 days. Valuation allowance presented within the inter- val not due, is mainly an effect of recognition of impairment on portions of contracts that have not yet been invoiced.
The total contractual amount to which the overdue payments pertain are presented in the table below. In order to provide for occurred but not
15:6
Overdues in relation to specific reserves for customer-financing receivables
Dec 31, 2015 Dec 31, 2014
Not
due 1–30 31–90 >90 Total Not due 1–30 31–90 >90 Total
Overdue amount – 477 268 292 1,037 – 468 323 232 1,023
Valuation allowance for doubtful customer-financing
receivables, specific reserve –94 –57 –90 –124 –365 –116 –105 –57 –86 –364
Customer-financing receivables, net book value –94 420 178 168 672 –116 363 266 146 659
Geographic market, percentage of customer-financing portfolio (%). Europe, 39.3% North America, 43.4% Asia, 7.1% South America, 10.2% 15:8
Credit risks in accounts receivable
Change of valuation allowance
for doubtful accounts receivable 2015 2014
Opening balance 834 606
New valuation allowance charged to income 695 415 Reversal of valuation allowance charged
to income –250 –123
Utilization of valuation allowance related
to actual losses –34 –65
Acquired and divested operations 0 –23
Translation differences –34 60
Reclassifications, etc 8 –36
Valuation allowance for doubtful accounts
receivables as of December 31 1,219 834
Refer to Note 8 Other operating income and expenses, for information regarding credit provisions for Volvo CE in China.
Refer to Note 15 for information regarding credit risk in customer financing receivables.
Refer to Note 30 for information regarding goals and policies for financial instruments.
Age analysis of portfolio value – Accounts receivable
Dec 31, 2015 Dec 31, 2014
Not Due 1–30 31–90 >90 Total Not Due 1–30 31–90 >90 Total
Accounts receivable gross 26,798 1,102 656 1,765 30,320 28,572 1,311 578 1,268 31,728
Provision for doubtful accounts receivable –381 –16 –108 –714 –1,219 –123 –35 –25 –650 –834
Accounts receivable net 26,417 1,086 548 1,051 29,101 28,449 1,275 553 617 30,895
Non-current receivables Dec 31, 2015
Dec 31, 2014 Other interest-bearing loans to external parties 1 739 602
Other receivables 2,644 2,826
Outstanding interest and currency risk derivatives 2 1,034 1,526
Non-current receivables 4,418 4,954
1 Non-current part of Other interest bearing receivables in table Carrying amounts and fair values in Note 30.
2 Non-current part of Outstanding interest and currency risk derivatives in table Carrying amounts and fair values in Note 30.
Current receivables Dec 31,
2015 Dec 31, 2014 Other interest-bearing receivables 1 743 374
Other interest-bearing financial receivables 61 61
Accounts receivable 29,101 30,895
Prepaid expenses and accrued income 2,906 2,854
VAT receivables 3,789 3,676
Outstanding interest and currency risk derivatives 2 1,588 1,351
Other receivables 6,615 7,463
Outstanding raw materials derivatives 5 3
Current receivables, after deduction of valuation
allowances for doubtful accounts receivable 44,809 46,677 1 Current part of Other interest bearing receivables in table Carrying amounts and
fair values in Note 30.
2 Current part of Outstanding interest and currency risk derivatives in table Carry- ing amounts and fair values in Note 30.
Inventories are recognized at the lower of cost and net realizable value. The cost is established using the first-in, first-out principle (FIFO) and is based on the standard cost method, including costs for all direct manu- facturing expenses and the attributable share of capacity and other manu facturing-related costs. The standard costs are tested regularly and adjustments are made based on current conditions. Costs for research and development, selling, administration and financial expenses are not in cluded. Net realizable value is calculated as the selling price less costs attributable to the sale.
Inventory Dec 31,
2015 Dec 31,2014
Finished products 27,496 28,368
Production materials, etc. 16,894 17,165
B/S Inventory 44,390 45,533
Inventories recognized as cost of sold products during the period amounted to SEK 216,778 M (199,872).
Increase (decrease) in allowance
for inventory obsolescence 2015 2014
Opening balance 3,394 2,641
Increase in allowance for inventory obsolescence
charged to income 675 734
Scrapping –435 –395
Translation differences –29 259
Reclassifications etc. 20 154
Allowance for inventory obsolescence
as of December 31 3,624 3,394
ACCOUNTING POLICY
Inventory obsolescence
If the net realizable value is lower than cost, a valuation allowance is established for inventory obsolescence. The total inventory value, net of inventory obsolescence allowance, was SEK 44,390 M (45,533) as of December 31, 2015.
SOURCES OF ESTIMATION UNCERTAINTY
!
NOTE17 INVENTORIES
GROUP PERFORMANCE 2015 NOTES
Cash and Cash equivalents include high liquid interest-bearing securities that are considered easily convertible to cash including marketable secu- rities, with a date of maturity within three months at the time for invest- ment. Interest bearing securities that fail to meet this definition are recog- nized as marketable securities.
Marketable securities Dec 31,
2015 Dec 31,2014
Government securities 1,586 789
Banks and financial institutions 1,090 5,037
Real estate financial institutions 668 1,485
B/S Marketable securities 3,344 7,312
Cash and cash equivalents Dec 31,
2015 Dec 31,2014
Cash in banks 18,474 25,627
Bank certificates 674 340
Time deposits in banks 1,900 276
B/S Cash and cash equivalents 21,048 26,242
Cash and cash equivalents as of December 31, 2015, include SEK 0.8 billion (0.2) that is not available for use by the Volvo Group and SEK 5.4 billion (6.1) where other limitations exist, mainly liquid funds in countries where exchange controls or other legal restrictions apply. Therefore it is not possible to immediately use the liquid funds in other parts of the Volvo Group, however normally there is no limitation for use for the Volvo Group’s operation in the respective country.
ACCOUNTING POLICY