Annual report and accounts 2008

Notes contentsNotes to consolidated financial statements

14. Classification of financial instruments

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

All figures in £ millions									2008
				Fair value			Amortised cost	Total carrying value	Total market value
	Notes	Available for sale	Derivatives deemed held for trading	Derivatives in hedging relationships		Loans and receivables	Other liabilities
Investments in unlisted securities	15	63	—	—		—	—	63	63
Cash and cash equivalents	17	—	—	—		685	—	685	685
Marketable securities		54	—	—		—		54	54
Derivative financial instruments	16	—	23	161		—	—	184	184
Trade receivables	22	—	—	—		1,030	—	1,030	1,030
Total financial assets		117	23	161		1,715	—	2,016	2,016
Derivative financial instruments	16	—	(20)	—		—	—	(20)	(20)
Trade payables	24	—	—	—		—	(450)	(450)	(450)
Bank loans and overdrafts	18	—	—	—		—	(228)	(228)	(228)
Borrowings due within one year	18	—	—	—		—	(248)	(248)	(247)
Borrowings due after more than one year	18	—	—	—		—	(1,887)	(1,887)	(1,620)
Total financial liabilities		—	(20)	—		—	(2,813)	(2,833)	(2,565)

All figures in £ millions									2007
				Fair value			Amortised cost	Total carrying value	Total market value
	Notes	Available for sale	Derivatives deemed held for trading	Derivatives in hedging relationships		Loans and receivables	Other liabilities
Investments in unlisted securities	15	52	—	—		—	—	52	52
Cash and cash equivalents	17	—	—	—		560	—	560	560
Marketable securities		40	—	—		—	—	40	40
Derivative financial instruments	16	—	16	35		—	—	51	51
Trade receivables	22	—	—	—		750	—	750	750
Total financial assets		92	16	35		1,310	—	1,453	1,453
Derivative financial instruments	16	—	(8)	(8)		—	—	(16)	(16)
Trade payables	24	—	—	—		—	(342)	(342)	(342)
Bank loans and overdrafts	18	—	—	—		—	(444)	(444)	(444)
Borrowings due within one year	18	—	—	—		—	(115)	(115)	(112)
Borrowings due after more than one year	18	—	—	—		—	(1,049)	(1,049)	(1,046)
Total financial liabilities		—	(8)	(8)		—	(1,950)	(1,966)	(1,960)

Certain of the Group’s derivative financial instruments are deemed to be held for trading either as they do not meet the hedge accounting criteria specified in IAS 39 or the Group has chosen not to seek hedge accounting for these instruments. None of these derivatives are held for speculative trading purposes. Transactions in derivative financial instruments are only undertaken to manage risks arising from underlying business activity, in accordance with the Group’s treasury policy as described in note 19.

The Group designates certain qualifying derivative financial instruments as hedges of the fair value of its bonds (fair value hedges). Changes in the fair value of these derivative financial instruments are recorded in the income statement, together with any change in the fair value of the hedged liability attributable to the hedged risk.

The Group also designates certain of its borrowings and derivative financial instruments as hedges of its investments in foreign operations (net investment hedges). Movements in the fair value of these financial instruments (to the extent they are effective) are recognised in equity.

None of the Group’s financial assets or liabilities are designated at fair value through the income statement upon initial recognition.

More detail on the Group’s accounting for financial instruments is included in the Group’s accounting policies. The Group’s approach to managing risks in relation to financial instruments is included in note 19: Financial instruments and risk management.