Group notes

Recognition and derecognition
Financial assets and liabilities include trade receivables, financial investments, derivatives and cash and cash equivalents and loan liabilities, trade payables and derivatives, respectively. Financial assets and liabilities are recognized when the Group becomes a party to the contractual provision of the instrument and the classification of measurement occur at the initial recognition. A financial asset is derecognized at maturity or when the Group has transferred risks and rewards to an external party and no longer has control over it.

Financial assets and liabilities at amortized cost
Financial assets such as trade receivables, financial investments and cash and cash equivalents are included in this category. Financial liabilities in this category include loan liabilities, trade payables and other liabilities. Financial assets and liabilities classified to amortized cost are initially recognized to fair value including transaction costs. Transaction costs stemming from new loans are amortized over the maturity period of the loan as financial costs. Assets in this category are subject to a loss allowance for expected credit losses.

Financial assets and liabilities classified to fair value through other comprehensive income (FVOCI)
Accounting policy for Hedge accounting, see note 30.

Financial assets and liabilities through profit or loss (FVTPL)
Fair value through profit or loss is all other debt instruments that are not valued to amortized cost or FVOCI. Derivatives are measured to FVTPL unless they are used as hedging instruments in cash flow or net investment hedges. As in the other categories, assets in this category are subject to a loss allowance for expected credit losses.

Impairment of financial assets
Financial assets not classified to FVTPL are subject to impairment for expected credit losses. Examples of such asset include trade receivables, debt instruments, contract assets, loan commitments and financial guarantees. Epiroc uses two impairment methods depending on the asset class. One of the methods uses historical data to reflect an unbiased and probability-weighted level of credit losses, while the other method is a three-step model with its base in both external and internally calculated credit ratings for the specific customer as well as its country. In simplified terms, the three-step model means that provisions are increased depending on the credit risk. Forward-looking analysis, including macroeconomic aspects that affect different customer segments and geographical areas, are treated separately for both models (in the case that it has not been treated in the rating model) and the level of impairment is adjusted to reflect the identified changes in the specific market, if necessary

Fair value of financial instruments
In the Group’s balance sheet, financial instruments are recorded to fair value or amortized cost. The fair value is decided according to the hierarchy of fair value. The fair value for financial assets is determined by prices from active markets if such exist. If prices from an active market does not exist, the fair value is determined by different valuation techniques. The majority of the Group’s financial instruments, such as currency future contracts, electricity derivatives, interest bearing debt, financial leasing agreements and other financial receivables are based on market interest rates and the present value of future cash flows,level 2 in the fair value hierarchy. The Group’s bonds are classified at level 1, meaning prices from active markets. In level 3, items such as earn-outs from acquisitions, where the valuation is built upon a valuation model with non-observable market data, exist.

Comments for the year
No changes have been made between the different levels in the fair value hierarchy and no material changes have been made to the valuation techniques, neither for used data nor the assumptions, compared to 2024.

The carrying amount of the Group’s financial instruments corresponds to the fair value in all categories except financing. See note 22.