Carrying Value Purchase Price
2013 2012 2013 2012
Financial assets £m £m £m £m
Shares and other variable-yield securities and units in unit trusts
- designated at fair value through profit or loss upon initial recognition
1,129.9 1,079.8 947.3 961.4
Derivative financial instruments
- at fair value through profit or loss, held for trading
50.2 45.7 38.7 36.9
Financial assets at fair value through profit or loss 1,180.1 1,125.5 986.0 998.3
Debt securities and other fixed-income securities - Held- to-maturity, at amortised cost
1,028.7 982.4 987.1 941.3
Deposits with credit institutions - Loans and receivables
381.3 328.9 381.3 328.9
Total financial assets 2,590.1 2,436.8 2,354.4 2,268.5
FRS 29, 8
FRS 29 requires the carrying amounts of each of the following categories, as defined in FRS 26, to be disclosed either on the face of the balance sheet or in the notes:
FRS 29, 8 Sch3, 73(3)
FRS 29, 15 Where an entity holds collateral of financial or non-financial assets and is permitted to sell or re-pledge the
collateral in the absence of default by the owner of the collateral, the fair value of the collateral held should be disclosed, together with the fair value of any collateral sold or pledged and whether the entity has an obligation to return it and also the terms and conditions associated with its use of the collateral.
(a) Listed investments
Included in the carrying values above are amounts in respect of listed investments as follows:
2013 2012
£m £m
Shares and other variable-yield securities and units in unit trusts 930.7 907.4
Debt securities and other fixed-income securities 853.0 784.7
1,783.7 1,692.1
(b) Derivative financial instruments, at fair value through profit or loss
To match the expected liability of certain insurance contracts, the Group has purchased over-the-counter (‘OTC’) currency swap contracts to swap variable exchange rates of the backing assets to fixed exchange rates to meet foreign currency cash flows over the expected period to settlement of the related insurance contracts.
Fair value asset Contract/notional amount
2013 2012 2013 2012
£m £m £m £m
Currency swap contracts – held for trading 50.2 45.7 388.7 376.9
Derivatives
Sch3, 73 Where the fair value accounting rules have been used to value derivatives, Sch3 requires the following
disclosures:
the basis of the valuation adopted; the purchase price;
the assumptions used in valuation techniques;
the fair value and movements recorded in the profit and loss; and
Sch3, 74 for each class of derivatives, the extent and nature of the instrument, including significant terms and
conditions that may affect the amount, timing and uncertainty of future cash flows.
(c) Held-to-maturity financial assets, at amortised cost
Debt securities and other fixed-interest securities are valued at amortised cost. The fair value of these securities is £979.7m (2012: £1,063.2m). The fair value is based on market prices or broker/dealer price quotations. Where this information is not available, fair value has been estimated using quoted market prices for securities with similar credit, maturity and yield characteristics.
Sch3, 72
FRS 29, 31
Sch3, 24 FRS 29, 25 FRS 29, 27
The fair value of debt securities and other fixed-interest securities is £49.0 million below carrying value (2012: £80.8m above). At balance sheet date the Group assessed whether there was objective evidence to impair the carrying value of debt securities and other fixed-interest securities. An exercise was carried out to identify potential evidence to trigger impairment of the assets such as significant financial difficulties of issuers or debtors and disappearance of an active market for the securities and data indicating a measurable decrease in the future cash flow related to the assets in question. However, it was concluded that no objective evidence existed at balance sheet date to prompt impairment of the carrying value. It remains the Group’s intention to carry its debt and other fixed-interest securities to maturity.
The net excess of the amounts payable at maturity over the amortised cost is £42.1 million (2012: £37.2million). At the reporting date, there were no held-to-maturity assets that were either impaired or overdue.
Fair values
Sch3, 75 (2) FRS 29, 25, 27
The fair value of each class of financial assets and financial liabilities should be disclosed, together with the methods used in determining fair values (whether in whole or in part, directly by reference to published price quotations in an active market or estimated using a valuation technique). If there has been a change in valuation technique, the entity shall disclose that change and the reasons for making it.
Sch3, 75 (2) Where the market value of investments held at amortised cost is less than the carrying value, it is necessary to
explain why the carrying value had not been impaired.
FRS 29, 29 Disclosures of fair value are not required:
(a) when the carrying amount is a reasonable approximation of fair value, for example, for financial instruments such as short-term trade receivables and payables;
(b) for an investment in equity instruments that do not have a quoted market price in an active market, or derivatives linked to such equity instruments, that is measured at cost in accordance with FRS 26 because its fair value cannot be measured reliably; or
(c) for a contract containing a discretionary participation feature if the fair value of that feature cannot be measured reliably.
FRS 29, 30 In the cases described in (b) and (c) above, information is required to help users of the financial statements
make their own judgements about the extent of possible differences between the carrying amount of those financial assets or financial liabilities and their fair value, including:
(a) the fact that fair value information has not been disclosed for these instruments because their fair value cannot be measured reliably;
(b) a description of the financial instruments, their carrying amount, and an explanation of why fair value cannot be measured reliably;
(c) information about the market for the instruments;
Sch3, 75(2)
Sch3, 24(5) FRS 29, 20(e)