Financial Instruments

Carrying Amounts and Fair Values of Financial Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sep. 30, 2015

 

 

Carried at amortized cost

 

Carried at fair value

 

Non-financial assets / liabilities

 

 

 

 

 

 

 

Based on quoted prices in active markets (Level 1)

Based on observable market data (Level 2)

Based on unobservable inputs (Level 3)

 

 

 

 

 

 

Carrying amount Sep. 30, 2015

Fair value (for information)

 

Carrying amount

Carrying amount

Carrying amount

 

Carrying amount

 

Carrying amount in the statement of financial position

 

 

€ million

€ million

 

€ million

€ million

€ million

 

€ million

 

€ million

Trade accounts receivable

 

9,995

 

 

 

 

 

 

 

 

9,995

Loans and receivables

 

9,995

9,995

 

 

 

 

 

 

 

9,995

 

 

 

 

 

 

 

 

 

 

 

 

Other financial assets

 

1,041

 

 

857

671

43

 

 

 

2,612

Loans and receivables

 

947

947

 

 

 

 

 

 

 

947

Available-for-sale financial assets

 

29

 

 

857

 

9

 

 

 

895

Held-to-maturity financial assets

 

65

65

 

 

 

 

 

 

 

65

Derivatives

 

 

 

 

 

671

34

 

 

 

705

 

 

 

 

 

 

 

 

 

 

 

 

Other receivables

 

630

 

 

 

 

 

 

1,428

 

2,058

Loans and receivables

 

630

630

 

 

 

 

 

 

 

630

Non-financial assets

 

 

 

 

 

 

 

 

1,428

 

1,428

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

2,395

 

 

 

 

 

 

 

 

2,395

Loans and receivables

 

2,395

2,395

 

 

 

 

 

 

 

2,395

 

 

 

 

 

 

 

 

 

 

 

 

Total financial assets

 

14,061

 

 

857

671

43

 

 

 

15,632

of which loans and receivables

 

13,967

 

 

 

 

 

 

 

 

13,967

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

21,991

 

 

 

785

 

 

 

 

22,776

Carried at amortized cost

 

21,991

23,837

 

 

 

 

 

 

 

21,991

Derivatives

 

 

 

 

 

785

 

 

 

 

785

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts payable

 

5,048

 

 

 

 

 

 

81

 

5,129

Carried at amortized cost

 

5,048

5,048

 

 

 

 

 

 

 

5,048

Non-financial liabilities

 

 

 

 

 

 

 

 

81

 

81

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

705

 

 

 

167

46

 

1,985

 

2,903

Carried at amortized cost

 

705

705

 

 

 

 

 

 

 

705

Carried at fair value (non-derivative)

 

 

 

 

 

 

38

 

 

 

38

Derivatives

 

 

 

 

 

167

8

 

 

 

175

Non-financial liabilities

 

 

 

 

 

 

 

 

1,985

 

1,985

 

 

 

 

 

 

 

 

 

 

 

 

Total financial liabilities

 

27,744

 

 

 

952

46

 

 

 

28,742

of which carried at amortized cost

 

27,744

 

 

 

 

 

 

 

 

27,744

of which derivatives

 

 

 

 

 

952

8

 

 

 

960

The preceding table shows the carrying amounts and fair values of financial assets and liabilities by category of financial instrument and a reconciliation to the corresponding line item in the statements of financial position. Since the line items “Other receivables,” “Trade accounts payable” and “Other liabilities” contain both financial instruments and non-financial assets or liabilities (such as other tax receivables or advance payments for services to be received in the future), the reconciliation is shown in the column headed “Non-financial assets / liabilities.”

The loans and receivables reflected in other financial assets and the liabilities measured at amortized cost also include receivables and liabilities under finance leases in which Bayer is the lessor or lessee and which are therefore measured in accordance with IAS 17.

Because of the short maturities of most trade accounts receivable and payable, other receivables and liabilities, and cash and cash equivalents, their carrying amounts at the closing date did not significantly differ from the fair values.

The fair value stated for noncurrent receivables, loans, held-to-maturity financial investments and non-derivative financial liabilities is the present value of the respective future cash flows. This was determined by discounting the cash flows at a closing-date interest rate that takes into account the term of the assets or liabilities and the creditworthiness of the counterparty. Where a market price was available, however, this was deemed to be the fair value.

The fair values of available-for-sale financial assets correspond to quoted prices in active markets for identical assets (Level 1).

The fair values of derivatives for which no publicly quoted prices existed in active markets (Level 1) were determined using valuation techniques based on observable market data as of the end of the reporting period (Level 2). In applying valuation techniques, credit value adjustments were determined to allow for the contracting party’s credit risk. The respective currency and commodity forward contracts were measured individually at their forward rates or forward prices on the closing date. These depend on spot rates or prices including time spreads. The fair values of interest-rate hedging instruments and cross-currency interest-rate swaps were determined by discounting future cash flows over the remaining terms of the instruments at market rates of interest, taking into account any foreign currency translation as of the closing date.

Fair values measured using unobservable inputs are categorized within Level 3 of the fair value hierarchy. This applies in some cases to the fair values of embedded derivatives or to obligations for contingent consideration in business combinations.

Embedded derivatives were separated from their respective host contracts. Such host contracts are generally sales or purchase agreements relating to the operational business. The embedded derivatives cause the cash flows from the contracts to vary with fluctuations in exchange rates, commodity prices or other prices, for example. The internal measurement of embedded derivatives is mainly performed using the discounted cash flow method, which is based on unobservable inputs (Level 3). These included planned sales and purchase volumes, and prices derived from market data. Regular monitoring is carried out based on these fair values as part of quarterly reporting.

The changes in the net amount of financial assets and liabilities recognized at fair value based on unobservable inputs (Level 3) were as follows:

Changes in the Net Amount of Financial Assets and Liabilities Recognized at Fair Value Based on Unobservable Inputs

 

 

 

 

 

2015

 

 

€ million

Net carrying amounts, Jan. 1

 

(25)

Gains (losses) recognized in profit or loss

 

5

of which related to assets / liabilities recognized in the statement of financial position

 

(1)

Gains (losses) recognized outside profit or loss

 

1

Additions of assets / (liabilities)

 

1

Settlements of (assets) / liabilities

 

9

Reclassifications to “Liabilities directly related to assets held for sale and discontinued operations”

 

6

Net carrying amounts, Sep. 30

 

(3)

The changes recognized in profit or loss were included in other operating income or expenses.