14. Classification of financial instruments

The accounting classification of each class of the Group’s financial assets, and their carrying values, is as follows:


			2018										2017
			Fair value						Amortised cost				Fair value						Amortised cost
All figures in £ millions	Notes		FVOCI		FVTPL		Fair value – hedging instrument		Financial assets		Total carrying value		Available for sale		Derivatives held for trading		Derivatives in hedge relationship		Loans and receivables		Total carrying value
Investments in unlisted securities		15		93		—		—		—		93		77		—		—		—		77
Cash and cash equivalents		17		—		—		—		568		568		—		—		—		518		518
Cash and cash equivalents – within assets classified as held for sale		32		—		—		—		—		—		—		—		—		127		127
Marketable securities				—		—		—		—		—		8		—		—		—		8
Derivative financial instruments		16		—		4		64		—		68		—		3		137		—		140
Trade receivables		22		—		—		—		904		904		—		—		—		760		760
Trade receivables – within assets classified as held for sale				—		—		—		49		49		—		—		—		22		22

Total financial assets				93		4		64		1,521		1,682		85		3		137		1,427		1,652

The carrying value of the Group’s financial assets is equal to, or approximately equal to, the market value. Following the adoption of IFRS 9 in 2018 the terminology used to describe financial assets has been changed (see note 1c).

The accounting classification of each class of the Group’s financial liabilities, together with their carrying values and market values, is as follows:


			2018														2017
			Fair value					Amortised cost									Fair value					Amortised cost
All figures in £ millions	Notes		FVTPL		Fair value – hedging instrument			Other financial liabilities			Total carrying value			Total market value			Derivatives held for trading		Derivatives in hedge relationship			Other liabilities			Total carrying value			Total market value
Derivative financial instruments		16		—		(59	)		—			(59	)		(59	)		—		(140	)		—			(140	)		(140	)
Trade payables		24		—		—			(311	)		(311	)		(311	)		—		—			(265	)		(265	)		(265	)
Trade payables – within liabilities classified as held for sale				—		—			(22	)		(22	)		(22	)		—		—			(20	)		(20	)		(20	)
Liability to purchase own shares		24		—		—			—			—			—			—		—			(151	)		(151	)		(151	)
Bank loans and overdrafts		18		—		—			(43	)		(43	)		(43	)		—		—			(15	)		(15	)		(15	)
Other borrowings due within one year		18		—		—			(3	)		(3	)		(3	)		—		—			(4	)		(4	)		(4	)
Borrowings due after more than one year		18		—		—			(674	)		(674	)		(663	)		—		—			(1,066	)		(1,066	)		(1,070	)

Total financial liabilities				—		(59	)		(1,053	)		(1,112	)		(1,101	)		—		(140	)		(1,521	)		(1,661	)		(1,665	)

Following the adoption of IFRS 9 in 2018 the terminology used to describe financial liabilities has been changed (see note 1c).

Fair value measurement

As shown above, the Group’s derivative assets and liabilities, unlisted securities and marketable securities are held at fair value. Financial instruments that are measured subsequently to initial recognition at fair value are grouped into levels 1 to 3, based on the degree to which the fair value is observable, as follows:

Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 fair value measurements are those derived from inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Group’s derivative assets valued at £68m (2017: £140m) and derivative liabilities valued at £59m (2017: £140m) are classified as level 2. The Group’s marketable securities valued at £nil (2017: £8m) are classified as level 2. The Group’s investments in unlisted securities are valued at £93m (2017: £77m) and are classified as level 3.

The following table analyses the movements in level 3 fair value remeasurements:


	2018			2017
All figures in £ millions	Investments in unlisted securities			Investments in unlisted securities
At beginning of year		77			65
Exchange differences		4			(4	)
Acquisition of investments		13			3
Fair value movements		7			13
Disposal of investments		(8	)		—

At end of year		93			77

The fair value of the investments in unlisted securities is determined by reference to the financial performance of the underlying asset, recent funding rounds and amounts realised on the sale of similar assets.