Unilever 2013 Annual Report Download - page 131
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Please find page 131 of the 2013 Unilever annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.18 FINANIAL INSTRUMENTS FAIR VALUE RISK CONTINUED
For assets and liabilities which are carried at fair value, the classification of fair value calculations by category is summarised below:
Notes
mllon
Level 1
2013
€ million
Level 1
2012
mllon
Level 2
2013
€ million
Level 2
2012
mllon
Level 3
2013
€ million
Level 3
2012
mllon
Total far
value
2013
€ million
Total fair
value
2012
Assets at far value
Other cash equivalents 17A ––91 139 ––91 139
Available-for-sale financial assets 17A 816 276 185 476 486 760 687
Financial assets at fair value
through profit or loss:
Derivatives 16C ––376 193 ––376 193
Other 17A 25 27 ––720 32 47
Labltes at far value
Bonds and other loans 15C ––(777) (1,556) ––(777) (1,556)
Derivatives 16C ––(395) (328) ––(395) (328)
There were no transfers from Level 1 to Level 3 (2012: €275 million), neither from Level 2 to Level 3 (2012: €197 million). The Group’s
policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the beginning of the period.
Reconciliation of Level 3 fair value measurements of financial assets is given below:
Reconclaton of movements n Level 3 valuatons
mllon
2013
€ million
2012
1 January 506 2
Gains and losses recognised in profit and loss 2(35)
Gains and losses recognised in other comprehensive income (5) 67
Purchases and new issues 29 –
Sales and settlements (49) –
Transfers into Level 3 –472
Transfers out of Level 3 ––
31 December 483 506
SINIFIANT UNOBSERVABLE INPUTS USED IN LEVEL 3 FAIR VALUES
The only individually material asset valued using Level 3 techniques is a particular unlisted investment with a carrying value at year end of
€190 million (2012: €197 million). A change in one or more of the inputs to reasonably possible alternative assumptions would not change
fair value significantly.
ALULATION OF FAIR VALUES
The fair values of the financial assets and liabilities are defined as being the amounts at which the instruments could be exchanged or
liability settled in an arm’s length transaction between knowledgeable, willing parties. The following methods and assumptions have
been used to estimate the fair values:
ASSETS AND LIABILITIES CARRIED AT FAIR VALUE
• The fair values of quoted investments falling into Level 1 are based on current bid prices.
• The fair values of unquoted available-for-sale financial assets are based on recent trades in liquid markets, observable market
rates, discounted cash flow analysis and statistical modelling techniques such as Monte Carlo simulation. If all significant inputs
required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is
not based on observable market data, the instrument is included in Level 3.
• Derivatives are valued using valuation techniques with market observable inputs. The models incorporate various inputs including
the credit quality of counter-parties, foreign exchange spot and forward rates, interest rate curves and forward rate curves of the
underlying commodities.
• For listed securities where the market is not liquid, and for unlisted securities, valuation techniques are used. These include the use of
recent arm’s length transactions, reference to other instruments that are substantially the same and discounted cash flow calculations.
OTHER FINANCIAL ASSETS AND LIABILITIES (FAIR VALUES FOR DISCLOSURE PURPOSES ONLY)
• Cash and cash equivalents, trade and other current receivables, bank loans and overdrafts, trade payables and other current
liabilities have fair values that approximate to their carrying amounts due to their short-term nature.
• The fair values of preference shares and listed bonds are based on their market value.
• Non-listed bonds, other loans, bank loans and non-current receivables and payables are based on the net present value of the
anticipated future cash flows associated with these instruments using rates currently available for debt on similar terms, credit risk
and remaining maturities.
• Fair values for finance lease creditors have been assessed by reference to current market rates for comparable leasing arrangements.
128 Unlever Annual Report and Accounts 2013Fnancal statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
UNILEVER GROUP CONTINUED