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Classification of financial instruments
 12 Months Ended
Dec. 31, 2022
Text block [abstract]  
Classification of financial instruments
14. Classification of financial instruments
The accounting classification of each class of the Group’s financial assets, and their carrying values, is as follows:
 
         
           
2022
          
2021
  
                       
                         
Fair value
     
Amortised
cost
           
 
    
Fair value
    
 
    
Amortised
cost
        
                           
All figures in £ millions
   
Notes
     
Fair value
through other
comprehensive
income
     
  Fair value
through
profit and
loss
     
Fair value
– hedging
instrument
     
Financial
assets
     
Total
carrying
value
           
Fair value
through other
comprehensive
income
1
   
    Fair value
through
profit and
loss
1
   
Fair value
– hedging
       instrument
           
Financial
assets
    
Total
    carrying
value
  
                           
Investments in unlisted securities
   
 
15
 
   
 
24
 
   
 
109
 
   
 
–
 
   
 
–
 
   
 
133
  
          
 
28
 
  
 
85
 
  
 
–
 
          
 
–
 
  
 
113
 
                           
Cash and cash equivalents
   
 
17
 
   
 
–
 
   
 
40
 
   
 
–
 
   
 
518
 
   
 
558
 
          
 
–
 
  
 
84
 
  
 
–
 
          
 
853
 
  
 
937
  
                           
Derivative financial instruments
   
 
16
 
   
 
–
 
   
 
5
 
   
 
54
 
   
 
–
 
   
 
59
 
          
 
–
 
  
 
–
 
  
 
32
 
          
 
–
 
  
 
32
 
                           
Trade receivables
   
 
22
 
   
 
–
 
   
 
–
 
   
 
–
 
   
 
825
 
   
 
825
 
          
 
–
 
  
 
–
 
  
 
–
 
          
 
854
 
  
 
854
 
                           
Investment in finance lease receivable
   
 
22
 
   
 
–
 
   
 
–
 
   
 
–
 
   
 
121
 
   
 
121
 
          
 
–
 
  
 
–
 
  
 
–
 
          
 
115
 
  
 
115
 
                           
Other receivable
   
 
 
 
   
 
–
 
   
 
–
 
   
 
–
 
   
 
3
 
   
 
3
 
  
 
 
 
  
 
–
 
  
 
87
 
  
 
–
 
  
 
 
 
  
 
–
 
  
 
87
 
                           
Total financial assets
   
 
 
 
   
 
24
 
   
 
154
 
   
 
54
 
   
 
1,467
 
   
 
1,699
 
  
 
 
 
  
 
28
 
  
 
256
 
  
 
32
 
  
 
 
 
  
 
1,822
 
  
 
2,138
 
 
1.
  Comparative balances have been restated – see Note 1b.
The carrying value of the Group’s financial assets is equal to, or approximately equal to, the market value. The other receivable relates to the receivable which arose on the disposal of the US
K-12
business and was paid during the year.
The accounting classification of each class of the Group’s financial liabilities, together with their carrying values and market values, is as follows:
 
         
           
2022
           
2021
  
                         
                 
Fair value
    
Amortised
cost
                       
Fair value
    
 
     
Amortised
cost
              
                           
All figures in £ millions
   
Notes
     
Fair value
through
profit and
loss
    
Fair value
– hedging
instrument
    
Other
financial
liabilities
    
Total
  carrying
value
    
Total
  market
value
    
 
     
        Fair value
through profit
and loss
    
Fair value
– hedging
instrument
            
Other
financial
liabilities
    
Total
       carrying
value
    
Total
    market
value
  
                           
Derivative financial instruments
   
 
16
 
   
 
(2
) 
  
 
(63
) 
  
 
–
 
  
 
(65
) 
  
 
(65
) 
           
 
(12
) 
  
 
(22
) 
           
 
–
 
  
 
(34
) 
  
 
(34
) 
                           
Trade payables
   
 
24
 
   
 
–
 
  
 
–
 
  
 
(348
) 
  
 
(348
) 
  
 
(348
) 
           
 
–
 
  
 
–
 
           
 
(351
) 
  
 
(351
) 
  
 
(351
) 
                           
Deferred and contingent consideration
   
 
24
 
   
 
(79
) 
  
 
–
 
  
 
–
 
  
 
(79
) 
  
 
(79
) 
           
 
(44
) 
  
 
–
 
           
 
–
 
  
 
(44
) 
  
 
(44
) 
                           
Other borrowings due within one year
   
 
18
 
   
 
–
 
  
 
–
 
  
 
(86
) 
  
 
(86
) 
  
 
(86
) 
           
 
–
 
  
 
–
 
           
 
(155
) 
  
 
(155
) 
  
 
(155
) 
                           
Borrowings due after more than one year
   
 
18
 
   
 
–
 
  
 
–
 
  
 
(1,144
) 
  
 
(1,144
) 
  
 
(1,096
) 
  
 
 
 
   
 
–
 
  
 
–
 
  
 
 
 
   
 
(1,245
) 
  
 
(1,245
) 
  
 
(1,276
) 
                           
Total financial liabilities
   
 
 
 
   
 
(81
) 
  
 
(63
) 
  
 
(1,578
) 
  
 
(1,722
) 
  
 
(1,674
) 
  
 
 
 
   
 
(56
) 
  
 
(22
) 
  
 
 
 
   
 
(1,751
) 
  
 
(1,829
) 
  
 
(1,860
) 
The market value of leases has been stated at book value.
 
 
Fair value measurement
As shown above, the Group’s derivative assets and liabilities, unlisted securities, marketable securities and deferred and contingent consideration 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 bonds valued at £610m (2021: £767m) and money market funds of £40m (2021: £84m) included within cash and cash equivalents are classified as level 1. The Group’s derivative assets valued at £59m (2021: £32m) and derivative liabilities valued at £65m (2021: £34m) are classified as level 2. The Group’s investments in unlisted securities are valued at £133m (2021: £113m) and the other receivable that was repaid in the year £3m (2021: £87m) are classified as level 3.
The following table analyses the movements in level 3 fair value remeasurements:
 
           
                
2022
 
         
            2021
1
 
  
           
All figures in £ millions
   
Other
receivable
    
Investments
in unlisted
securities
    
          Total
          
Total
  
           
At beginning of year
   
 
87
 
  
 
113
 
  
 
200
 
  
 
   
 
234
 
           
Exchange differences
   
 
1
 
  
 
9
 
  
 
10
 
       
 
2
 
           
Acquisition of investments and other receivable
   
 
7
 
  
 
12
 
  
 
19
 
       
 
4
 
           
Repayments
   
 
(92
) 
  
 
–
 
  
 
(92
) 
       
 
(16
) 
           
Disposal of investments
   
 
–
 
  
 
(48
) 
  
 
(48
) 
       
 
(54
) 
           
Fair value movements - OCI
   
 
–
 
  
 
18
 
  
 
18
 
       
 
4
 
           
Fair value movements - income statement
   
 
–
 
  
 
29
 
  
 
29
 
  
 
   
 
26
 
           
At end of year
   
 
               3
 
  
 
           133
 
  
 
           136
 
  
 
   
 
           200
 
 
1.
  Comparative balances have been restated – see Note 1b.
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.
The other receivable at the beginning of the year arose on the disposal of the US
K-12
business, and was repaid in January 2022, following a £16m partial repayment in 2021.