Unilever 2015 Annual Report Download - page 135

18 FINANIAL INSTRUMENTS FAIR VALUE RISK ONTINUED
The far value of trade recevables and payables s consdered to be equal to the carryng amount of these tems due to ther short-term
nature The nstruments that have a far value that s dfferent from the carryng amount are classfed as Level 2 for both 2014 and 2015
wth excepton of preference shares whch are classfed as Level 1 for both years
FAIR VALUE HIERARHY
The far values shown n notes 15 and 17A have been classfed nto three categores dependng on the nputs used n the valuaton
technque Thecategores used are as follows
• Level 1 quoted prces for dentcal nstruments
• Level 2 drectly or ndrectly observable market nputs, other than Level 1 nputs and
• Level 3 nputs whch are not based on observable market data
For assets and labltes whch are carred at far value, the classfcaton of far value calculatons by category s summarsed below
Notes
 mllon
Level 1
2015
 mllon
Level 1
2014
 mllon
Level 2
2015
 mllon
Level 2
2014
 mllon
Level 3
2015
 mllon
Level 3
2014
 mllon
Total far
value
2015
 mllon
Total far
value
2014
Assets at far value
Other cash equvalents 17A – – 100 221 – – 100 221
Avalable-for-sale fnancal assets 17A 14 15 180 158 447 498 641 671
Fnancal assets at far value
through proft or loss
Dervatves(a) 16 – – 303 417 – – 303 417
Other 17A 120 119 – – 3 3 123 122
Labltes at far value
Dervatves(b) 16 ––(194) (514) ––(194) (514)
(a) Includes 73 mllon (2014 121 mllon) dervatves, reported wthn trade recevables, that hedge tradng actvtes
(b) Includes 71 mllon (2014 (164) mllon) dervatves, reported wthn trade payables, that hedge tradng actvtes
There were no sgnfcant changes n classfcaton of far value of fnancal assets and fnancal labltes snce 31 December 2014
There were also no sgnfcant movements between the far value herarchy classfcatons snce 31 December 2014
The mpact n the 2015 ncome statement due to Level 3 nstruments s a loss of 46 mllon (2014 loss of 3 mllon)
Reconclaton of Level 3 far value measurements of fnancal assets s gven below
Reconclaton of movements n Level 3 valuatons
 mllon
2015
 mllon
2014
1 January 501 483
ans and losses recognsed n proft and loss (46) (3)
ans and losses recognsed n other comprehensve ncome 120 17
Purchases and new ssues 13 4
Sales and settlements (138) –
Transfers nto Level 3 – –
Transfers out of Level 3 – –
31 December 450 501
SINIFIANT UNOBSERVABLE INPUTS USED IN LEVEL 3 FAIR VALUES
The only ndvdually materal asset valued usng Level 3 technques s a partcular unlsted nvestment wth a carryng value at year end
of 62 mllon (2014 189 mllon, 2013 190 mllon), whch s recognsed as an avalable for sale fnancal asset Durng the year part
of ths asset was settled for 128 mllon and an addtonal mparment of 42 mllon has been recognsed wthn ‘Other ncome/(loss)
from non-current nvestments and assocates’ n the consoldated ncome statement The ‘ans and losses recognsed n other
comprehensve ncome’ nclude 51 mllon relatng to the value of the Unlever Venture companes and 40 mllon postve currency
retranslaton (manly relatng to the assets held n the US) A change n one or more of the nputs to reasonably possble alternatve
assumptons would not change the value sgnfcantly
ALULATION OF FAIR VALUES
The far values of the fnancal assets and labltes are defned as the prce that would be receved to sell an asset or pad to transfer
a lablty n an orderly transacton between market partcpants at the measurement date Methods and assumptons used to estmate
the far values are consstent wth those used n the year ended 31 December 2014
ASSETS AND LIABILITIES ARRIED AT FAIR VALUE
• The far values of quoted nvestments fallng nto Level 1 are based on current bd prces
• The far values of unquoted avalable-for-sale fnancal assets are based on recent trades n lqud markets, observable market
rates, dscounted cash flow analyss and statstcal modellng technques such as Monte arlo smulaton If all sgnfcant nputs
requred to far value an nstrument are observable, the nstrument s ncluded n Level 2 If one or more of the sgnfcant nputs
s not based on observable market data, the nstrument s ncluded n Level 3
128 Unilever Annual Report and Accounts 2015Financial statements
NOTES TO THE ONSOLIDATED FINANIAL STATEMENTS
UNILEVER ROUP ONTINUED