Note 17 – Participations in joint ventures
BE Group owns 50 percent of ArcelorMittal BE Group SSC AB (company registration number 556192-8770, domiciled in Karlstad, Sweden). The interest in the joint venture company is reported in the consolidated accounts using the equity method, by which 50 percent of profit after tax for the joint venture company will be reported as a share in earnings included in the consolidated operating result of BE Group.
| Earnings in joint venture ArcelorMittal BE Group SSC AB |
2016 | 2015 |
| Profit/loss before tax | 19 | 4 |
| Tax | -4 | -1 |
| Profit after tax | 15 | 3 |
| Dividends received | – | – |
| Overview of income statements and balance sheets for the joint venture | 2016 | 2015 |
| Net sales | 611 | 550 |
| Operating result | 19 | 4 |
| Net financial items | 0 | 0 |
| Tax | -4 | -1 |
| Profit/loss for the year | 15 | 3 |
| 2016 | 2015 | |
| Non-current assets | 183 | 165 |
| Current assets | 228 | 168 |
| Total assets | 411 | 333 |
| 2016 | 2015 | |
| Equity | 267 | 252 |
| Provisions | 20 | 20 |
| Interest-bearing liabilities | 59 | 28 |
| Other non-interest-bearing liabilities | 65 | 33 |
| Total equity and liabilities | 411 | 333 |
| Participations in joint ventures | 2016 | 2015 |
| Opening balance, cost | 79 | 127 |
| Dividends received | – | – |
| Share in earnings of joint venture | 8 | 2 |
| Other | – | -50 |
| Carrying amount at year-end | 87 | 79 |
| Transactions with joint venture ArcelorMittal BE Group SSC AB |
2016 | 2015 |
| Receivables due from joint venture | – | – |
| Debts owed to joint venture | 8 | 3 |
| Sales to joint venture | 0 | 0 |
| Purchases from joint venture | 57 | 57 |
| Dividends received | – | – |
Transactions with the joint venture are conducted at market prices and terms.
Impairment testing 2015
In the third quarter 2015, it was noted that the Group’s joint venture ArcelorMittal BE Group SSC AB would not achieve the targets for the year. In light of this, an assessment was done of the development for the upcoming years. It was concluded that an impairment requirement existed. Through BE Group Sverige AB, the Group is the owner of 50 percent of the shares in ArcelorMittal BE Group SSC AB and the value of the company’s proportion was tested by the recoverable amount being compared with the carrying amount. The carrying amount consists of the book value.
The recoverable amount was estimated using a value in use based on cash flow forecasts for five years forward and an end value based on an annual rate of growth of 2 percent. Cash flows was present value calculated with a discount rate of 14.5 percent before tax. The discount rate was determined based on the same methodology as in the testing of Goodwill (see Note 13) with the difference that the capital structure in joint ventures was used to weight together capital and interest expenses. The comparison between the carrying amount and the recoverable amount has entailed a write-down of the Group’s participations in the joint venture ArcelorMittal BE Group SSC with an amount of SEK 50 M. After write-down the remaining value is SEK 79 M.