14. Classification of financial instruments
The accounting classification of each class of the Group’s financial assets and their carrying values, is as follows:
| 2017 | 2016 | |||||||||||||||||||||||||||||||||||||||||||
| Fair value | Amortised cost |
Fair value | Amortised cost |
|||||||||||||||||||||||||||||||||||||||||
|
All figures in |
Notes | Available for sale |
Derivatives held for trading |
Derivatives in hedge relationship |
Loans and receivables |
Total carrying value |
Available for sale |
Derivatives held for trading |
Derivatives in hedge relationship |
Loans and receivables |
Total carrying value |
|||||||||||||||||||||||||||||||||
|
Investments in unlisted securities |
15 | 77 | — | — | — | 77 | 65 | — | — | — | 65 | |||||||||||||||||||||||||||||||||
|
Cash and cash equivalents |
17 | — | — | — | 518 | 518 | — | — | — | 1,459 | 1,459 | |||||||||||||||||||||||||||||||||
|
Cash and cash equivalents – within assets classified as held for sale |
32 | — | — | — | 127 | 127 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
|
Marketable securities |
8 | — | — | — | 8 | 10 | — | — | — | 10 | ||||||||||||||||||||||||||||||||||
|
Derivative financial instruments |
16 | — | 3 | 137 | — | 140 | — | 3 | 168 | — | 171 | |||||||||||||||||||||||||||||||||
|
Trade receivables |
22 | — | — | — | 760 | 760 | — | — | — | 982 | 982 | |||||||||||||||||||||||||||||||||
|
Trade receivables – within assets classified as held for sale |
— | — | — | 22 | 22 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Total financial assets |
85 | 3 | 137 | 1,427 | 1,652 | 75 | 3 | 168 | 2,441 | 2,687 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
The carrying value of the Group’s financial assets is equal to, or approximately equal to, the market value.
The accounting classification of each class of the Group’s financial liabilities, together with their carrying values and market values, is as follows:
| 2017 | 2016 | |||||||||||||||||||||||||||||||||||||||||||
| Fair value | Amortised cost |
Fair value | Amortised cost |
|||||||||||||||||||||||||||||||||||||||||
|
All figures in £ millions |
Notes | Derivatives held for trading |
Derivatives in hedge relationship |
Other liabilities |
Total carrying value |
Total market value |
Derivatives held for trading |
Derivatives in hedge relationship |
Other liabilities |
Total carrying value |
Total market value |
|||||||||||||||||||||||||||||||||
|
Derivative financial liabilities |
16 | — | (140 | ) | — | (140 | ) | (140 | ) | (7 | ) | (257 | ) | — | (264 | ) | (264 | ) | ||||||||||||||||||||||||||
|
Trade payables |
24 | — | — | (265 | ) | (265 | ) | (265 | ) | — | — | (333 | ) | (333 | ) | (333 | ) | |||||||||||||||||||||||||||
|
Trade payables – within liabilities classified as held for sale |
— | — | (20 | ) | (20 | ) | (20 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||||
|
Liability to purchase own shares |
24 | — | — | (151 | ) | (151 | ) | (151 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||||
|
Bank loans and overdrafts |
18 | — | — | (15 | ) | (15 | ) | (15 | ) | — | — | (39 | ) | (39 | ) | (39 | ) | |||||||||||||||||||||||||||
|
Other borrowings due within one year |
18 | — | — | (4 | ) | (4 | ) | (4 | ) | — | — | (5 | ) | (5 | ) | (5 | ) | |||||||||||||||||||||||||||
|
Borrowings due after more than one year |
18 | — | — | (1,066 | ) | (1,066 | ) | (1,070 | ) | — | — | (2,424 | ) | (2,424 | ) | (2,385 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Total financial liabilities |
— | (140 | ) | (1,521 | ) | (1,661 | ) | (1,665 | ) | (7 | ) | (257 | ) | (2,801 | ) | (3,065 | ) | (3,026 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Fair value measurement
As shown above, the Group’s derivative assets and liabilities, unlisted securities and marketable securities are held at fair value. Financial instruments that are measured subsequently to initial recognition at fair value are grouped into levels 1 to 3, based on the degree to which the fair value is observable, as follows:
Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group’s derivative assets valued at £140m (2016: £171m) and derivative liabilities valued at £140m (2016: £264m) are classified as level 2. The Group’s marketable securities valued at £8m (2016: £10m) are classified as level 2. The Group’s investments in unlisted securities are valued at £77m (2016: £65m) and are classified as level 3.
The following table analyses the movements in level 3 fair value remeasurements:
| 2017 | 2016 | |||||||
|
All figures in £ millions |
Investments in unlisted securities |
Investments in unlisted securities |
||||||
|
At beginning of year |
65 | 143 | ||||||
|
Exchange differences |
(4 | ) | 8 | |||||
|
Acquisition of investments |
3 | 6 | ||||||
|
Fair value movements |
13 | — | ||||||
|
Disposal of investments |
— | (92 | ) | |||||
|
|
|
|
|
|||||
|
At end of year |
77 | 65 | ||||||
|
|
|
|
|
|||||
The fair value of the investments in unlisted securities is determined by reference to the financial performance of the underlying asset, recent funding rounds and amounts realised on the sale of similar assets.