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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2014

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

		Carrying	Fair value
		value
			Total	Level 1	Level 2	Level 3
At September 30, 2014		$'M	$'M	$'M	$'M	$'M
		____________	____________	___________	___________	___________
Financial assets:
Available-for-sale securities⁽¹⁾		15.2	15.2	15.2	-	-
Contingent consideration receivable ⁽²⁾		19.1	19.1	-	-	19.1
Foreign exchange contracts		18.2	18.2	-	18.2	-

Financial liabilities:
Foreign exchange contracts		15.7	15.7	-	15.7	-
Contingent consideration payable⁽³⁾		642.0	642.0	-	-	642.0
		____________	____________	___________	___________	___________

			Total	Level 1	Level 2	Level 3
At December 31, 2013		$'M	$'M	$'M	$'M	$'M
		____________	____________	___________	___________	___________
Financial assets:
Available-for-sale securities⁽¹⁾		6.7	6.7	6.7	-	-
Contingent consideration receivable ⁽²⁾		36.1	36.1	-	-	36.1
Foreign exchange contracts		4.0	4.0	-	4.0	-

Financial liabilities:
Foreign exchange contracts		2.8	2.8	-	2.8	-
Contingent consideration payable⁽³⁾	1	405.9	405.9	-	-	405.9
		____________	____________	___________	___________	___________

(1) Available-for-sale securities are included within Investments in the consolidated balance sheet.

(2) Contingent consideration receivable is included within Prepaid expenses and other current assets and Other non-current assets in the consolidated balance sheet.

(3) Contingent consideration payable is included within Other current liabilities and Other non-current liabilities in the consolidated balance sheet.

Assets Measured at Fair Value on a Recurring Basis Using Significant Unobervable Inputs (Level 3)

Contingent consideration receivable
	2014	2013
	$'M	$'M
	____________	____________

Balance at January 1,	36.1	38.3
Initial recognition of contingent consideration receivable	33.6	-
Loss recognized in the income statement (within discontinued operations) due to change in fair value during the period	(33.6)	-
(Loss)/gain recognized in the income statement (within Gain on sale of product rights) due to change in fair value during the period	(4.1)	14.6
Reclassification of amounts to Other receivables within Other current assets	(14.9)	(13.9)
Amounts recorded to other comprehensive income (within foreign currency translation adjustments)	2.0	0.6

Balance at September 30,	19.1	39.6

Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobervable Inputs (Level 3)

Contingent consideration payable
	2014	2013
	$'M	$'M
	____________	____________

Balance at January 1,	405.9	136.4
Initial recognition of contingent consideration payable	226.7	451.4
Change in fair value during the period with the corresponding adjustment recognized as a loss in the income statement (within Integration and acquisition costs)	26.3	28.4
Reclassification of amounts to Other current liabilities	(12.4)	(11.1)
Change in fair value during the period with corresponding adjustment to the associated intangible asset	1.8	(7.3)
Amounts recorded to other comprehensive income (within foreign currency translation adjustments)	(6.3)	-

Balance at September 30,	642.0	597.8

Fair Value Inputs, Assets Quantitative Information Table

Financial assets:	Fair Value at the Measurement Date

At September 30, 2014	Fair value	Valuation Technique	Significant unobservable Inputs	Range
	$'M
	____________	___________	___________	___________
Contingent consideration receivable ("CCR")	19.1	Income approach (probability weighted discounted cash flow)	• Probability weightings applied to different sales scenarios • Future forecast consideration receivable based on contractual terms with purchaser • Assumed market participant discount rate	• 10 to 70% • $15 million to $120 million • 8% to 11.5%
	____________	____________	____________	____________

	Fair Value at the Measurement Date

At September 30, 2014	Fair value	Valuation Technique	Significant unobservable Inputs	Rate/date used
	$'M
	____________	___________	___________	___________
SHP602 IPR&D intangible asset	$nil	Income approach (discounted cash flow)	• Probability of regulatory approval being obtained • Expected commercial launch date • Assumed market participant discount rate	• 11 to 15% • 2021 • 11.3%
	____________	____________	____________	____________

Fair Value Inputs, Liabilities Quantitative Information Table

Financial liabilities:	Fair Value at the Measurement Date

At September 30, 2014	Fair value	Valuation Technique	Significant unobservable Inputs	Range
	$'M
	____________	___________	___________	___________
Contingent consideration payable	642.0	Income approach (probability weighted discounted cash flow)	• Cumulative probability of milestones being achieved • Assumed market participant discount rate • Periods in which milestones are expected to be achieved • Forecast quarterly royalties payable on net sales of relevant products	• 4 to 95% • 0.8 to 11.8% • 2015 to 2030 • $2.1 to $7.6 million
	____________	____________	____________	____________

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

+ References+ Details