Philips 2015 Annual Report Download - page 165

Group nancial statements 12.9
Annual Report 2015 165
Philips Group
Fair value hierarchy in millions of EUR
2015
level 1 level 2 level 3 total
Balance as of December 31, 2015
Available-for-sale nancial assets - non-current 76 68 55 199
Securities classied as assets held for sale (1) - - (1)
Financial assets designated at fair value through prot and
loss - non-current - 33 - 33
Derivative nancial instruments - assets - 161 - 161
Non-current loans and receivables - 88 - 88
Receivables - non-current - 191 - 191
Total nancial assets 75 541 55 671
Derivative nancial instruments - liabilities - (933) - (933)
Debt (4,084) (210) - (4,294)
Total nancial liabilities (4,084) (1,143) - (5,227)
Balance as of December 31, 2014
Available-for-sale nancial assets - non-current 17 105 21 143
Securities classied as assets held for sale 1 - 37 38
Financial assets designated at fair value through prot and
loss - non-current - 24 - 24
Derivative nancial instruments - assets - 207 - 207
Loans - current - 125 - 125
Non-current loans and receivables - 86 - 86
Receivables - non-current - 177 - 177
Total nancial assets 18 724 58 800
Derivative nancial instruments - liabilities - (857) - (857)
Debt (3,969) (195) - (4,164)
Total nancial liabilities (3,969) (1,052) - (5,021)
The table above represents categorization of
measurement of the estimated fair values of nancial
assets and liabilities.
Specic valuation techniques used to value nancial
instruments include:
Level 1
Instruments included in level 1 are comprised primarily
of listed equity investments classied as available-for-
sale nancial assets, investees and nancial assets
designated at fair value through prot and loss.
The fair value of nancial instruments traded in active
markets is based on quoted market prices at the
balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available from
an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices
represent actual and regularly occurring market
transactions on an arm’s length basis.
Level 2
The fair value of nancial instruments that are not
traded in an active market (for example, over-the-
counter derivatives or convertible bond instruments)
are determined by using valuation techniques. These
valuation techniques maximize the use of observable
market data where it is available and rely as little as
possible on entity-specic estimates. If all signicant
inputs required to fair value an instrument are based on
observable market data, the instrument is included in
level 2.
The fair value of derivatives is calculated as the present
value of the estimated future cash ows based on
observable interest yield curves, basis spread and
foreign exchange rates.
The valuation of convertible bond instruments uses
observable market quoted data for the options and
present value calculations using observable yield
curves for the fair value of the bonds.
Level 3
If one or more of the signicant inputs are not based on
observable market data, the instrument is included in
level 3.
Transfers between levels
At 31 December 2015, an available-for-sale equity
security with a carrying amount of EUR 51 million was
transferred from Level 2 to Level 1 due to its listing with
quoted prices in the market. An available-for-sale
equity security with a carrying amount of EUR 23 million
was transferred to Level 3 due to the updated fair value
from a private nancing round. The classications of fair
value hierarchies of nancial assets were restated for
2014.