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FINANCIAL STATEMENTS Aer Lingus Group Plc
Annual Report 2011 81
Notes to the consolidated financial statements (continued)
3.3 Fair value estimation
Effective 1 January 2009, the Group adopted the amendment to IFRS 7 for financial instruments that are measured in the statement of
financial position at fair value, this requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
• Quoted prices (unadjusted) in active markets for identical assets of liabilities (level 1)
• Inputs other than quoted prices included within level 1 that are observable for the asset of liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2).
•Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3)
The following table presents the Group’s net assets and liabilities that are measured at fair value at 31 December 2011.
L
Le
ev
ve
el
l 1
1 L
Le
ev
ve
el
l 2
2L
Le
ev
ve
el
l 3
3T
To
ot
ta
al
l
¤
¤’
’0
00
00
0¤
¤’
’0
00
00
0¤
¤’
’0
00
00
0¤
¤’
’0
00
00
0
A
As
ss
se
et
ts
s
Derivative financial instruments - 36,929 - 36,929
L
Li
ia
ab
bi
il
li
it
ti
ie
es
s
Derivative financial instruments -9,600 -9,600
The following table presents the Group’s net assets and liabilities that are measured at fair value at 31 December 2010 (as restated).
L
Le
ev
ve
el
l 1
1 L
Le
ev
ve
el
l 2
2L
Le
ev
ve
el
l 3
3T
To
ot
ta
al
l
¤
¤’
’0
00
00
0¤
¤’
’0
00
00
0¤
¤’
’0
00
00
0¤
¤’
’0
00
00
0
A
As
ss
se
et
ts
s
Derivative financial instruments - 55,858 - 55,858
L
Li
ia
ab
bi
il
li
it
ti
ie
es
s
Derivative financial instruments -14,646 - 14,646
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by
using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little
as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included in level 2.
Specific valuation techniques used to value financial instruments include:
• The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield
curves.
• The fair value of forward foreign exchange contracts is determined using forward exchange rates at the statement of financial position
date, with the resulting value discounted back to present value
• The fair value of fuel price swaps is determined using forward fuel prices at the reporting date, with the resulting value discounted
back to present value.
4 Critical accounting estimates and judgements
The Group believes that of its significant accounting policies and estimates, the following may involve a higher degree of judgement and
complexity: