Financial Instruments

Carrying Amounts and Fair Values of Financial Instruments

 

 

 

 

 

 

 

 

 

 

Sep. 30, 2016

 

 

Carried at amortized cost

 

Carried at fair value [Fair value for information1]

 

Nonfinancial 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

 

Carrying amount

Carrying amount

Carrying amount

 

Carrying amount

 

Carrying amount in the statement of financial position

 

 

€ million

 

€ million

€ million

€ million

 

€ million

 

€ million

1

Fair value of the financial instruments carried at amortized cost; the exemption provisions under IFRS 7.29a were applied for information on specific fair values.

Trade accounts receivable

 

10,762

 

 

 

 

 

 

 

10,762

Loans and receivables

 

10,762

 

 

 

 

 

 

 

10,762

Other financial assets

 

380

 

658

1,640

836

 

 

 

3,514

Loans and receivables

 

260

 

 

[252]

[18]

 

 

 

260

Available-for-sale financial assets

 

41

 

658

1,246

824

 

 

 

2,769

Held-to-maturity financial assets

 

79

 

 

[91]

 

 

 

 

79

Derivatives

 

 

 

 

394

12

 

 

 

406

Other receivables

 

560

 

 

 

52

 

2,032

 

2,644

Loans and receivables

 

560

 

 

[560]

 

 

 

 

560

Available-for-sale financial assets

 

 

 

 

 

52

 

 

 

52

Nonfinancial assets

 

 

 

 

 

 

 

2,032

 

2,032

Cash and cash equivalents

 

1,232

 

 

 

 

 

 

 

1,232

Loans and receivables

 

1,232

 

 

 

 

 

 

 

1,232

Total financial assets

 

12,934

 

658

1,640

888

 

 

 

16,120

of which loans and receivables

 

12,814

 

 

 

 

 

 

 

12,814

of which available-for-sale financial assets

 

41

 

658

1,246

876

 

 

 

2,821

Financial liabilities

 

18,665

 

 

564

 

 

 

 

19,229

Carried at amortized cost

 

18,665

 

[16,328]

[2,953]

 

 

 

 

18,665

Derivatives

 

 

 

 

564

 

 

 

 

564

Trade accounts payable

 

4,836

 

 

 

 

 

95

 

4,931

Carried at amortized cost

 

4,836

 

 

 

 

 

 

 

4,836

Nonfinancial liabilities

 

 

 

 

 

 

 

95

 

95

Other liabilities

 

820

 

 

165

27

 

2,345

 

3,357

Carried at amortized cost

 

820

 

 

[820]

 

 

 

 

820

Carried at fair value (nonderivative)

 

 

 

 

 

21

 

 

 

21

Derivatives

 

 

 

 

165

6

 

 

 

171

Nonfinancial liabilities

 

 

 

 

 

 

 

2,345

 

2,345

Total financial liabilities

 

24,321

 

 

729

27

 

 

 

25,077

of which carried at amortized cost

 

24,321

 

 

 

 

 

 

 

24,321

of which derivatives

 

 

 

 

729

6

 

 

 

735

Carrying Amounts and Fair Values of Financial Instruments

 

 

 

 

 

 

 

 

 

 

Dec. 31, 2015

 

 

Carried at amortized cost

 

Carried at fair value [Fair value for information1]

 

Nonfinancial 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

 

Carrying amount

Carrying amount

Carrying amount

 

Carrying amount

 

Carrying amount in the statement of financial position

 

 

€ million

 

€ million

€ million

€ million

 

€ million

 

€ million

1

Fair value of the financial instruments carried at amortized cost; the exemption provisions under IFRS 7.29a were applied for information on specific fair values.

Trade accounts receivable

 

9,933

 

 

 

 

 

 

 

9,933

Loans and receivables

 

9,933

 

 

 

 

 

 

 

9,933

Other financial assets

 

185

 

363

509

791

 

 

 

1,848

Loans and receivables

 

72

 

 

[64]

[18]

 

 

 

72

Available-for-sale financial assets

 

40

 

363

 

774

 

 

 

1,177

Held-to-maturity financial assets

 

73

 

 

[74]

 

 

 

 

73

Derivatives

 

 

 

 

509

17

 

 

 

526

Other receivables

 

506

 

 

 

59

 

1,882

 

2,447

Loans and receivables

 

506

 

 

[506]

 

 

 

 

506

Available-for-sale financial assets

 

 

 

 

 

59

 

 

 

59

Nonfinancial assets

 

 

 

 

 

 

 

1,882

 

1,882

Cash and cash equivalents

 

1,859

 

 

 

 

 

 

 

1,859

Loans and receivables

 

1,859

 

 

 

 

 

 

 

1,859

Total financial assets

 

12,483

 

363

509

850

 

 

 

14,205

of which loans and receivables

 

12,370

 

 

 

 

 

 

 

12,370

of which available-for-sale financial assets

 

40

 

363

 

833

 

 

 

1,236

Financial liabilities

 

19,169

 

 

765

 

 

 

 

19,934

Carried at amortized cost

 

19,169

 

[15,440]

[4,121]

 

 

 

 

19,169

Derivatives

 

 

 

 

765

 

 

 

 

765

Trade accounts payable

 

5,680

 

 

 

 

 

265

 

5,945

Carried at amortized cost

 

5,680

 

 

 

 

 

 

 

5,680

Nonfinancial liabilities

 

 

 

 

 

 

 

265

 

265

Other liabilities

 

606

 

 

117

45

 

1,831

 

2,599

Carried at amortized cost

 

606

 

 

[606]

 

 

 

 

606

Carried at fair value (nonderivative)

 

 

 

 

 

37

 

 

 

37

Derivatives

 

 

 

 

117

8

 

 

 

125

Nonfinancial liabilities

 

 

 

 

 

 

 

1,831

 

1,831

Total financial liabilities

 

25,455

 

 

882

45

 

 

 

26,382

of which carried at amortized cost

 

25,455

 

 

 

 

 

 

 

25,455

of which derivatives

 

 

 

 

882

8

 

 

 

890

The preceding two tables show 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 nonfinancial 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 “Nonfinancial 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 values of loans and receivables, held-to-maturity financial investments and financial liabilities carried at amortized cost that are given for information are the present values of the respective future cash flows. The present values were determined by discounting the cash flows at a closing-date interest rate, taking 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 (Level 1) or are the present values of the respective future cash flows, determined on the basis of unobservable inputs (Level 3).

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.

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 to certain available-for-sale debt or equity instruments, in some cases to the fair values of embedded derivatives, and to obligations for contingent consideration in business combinations. Credit risk is frequently the principal unobservable input used to determine the fair values of debt instruments classified as available-for-sale financial assets by the discounted cash flow method. Reference is made here to the credit spreads of comparable issuers. A significant increase in credit risk could result in a lower fair value, whereas a significant decrease could result in a higher fair value. However, a 10% relative change in the credit spread would not materially affect fair value.

Embedded derivatives are separated from their respective host contracts, which are generally sales or purchase agreements relating to the operational business, and cause the cash flows from the contracts to vary with fluctuations in exchange rates or prices, for example. The internal measurement of embedded derivatives is mainly performed using the discounted cash flow method, which is based on unobservable inputs. These include 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 amount of financial assets and liabilities recognized at fair value based on unobservable inputs (Level 3) for each individual financial instrument category were as follows:

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

 

 

2016

 

 

Available-for-sale financial assets

 

Derivatives (net)

 

Liabilities carried at fair value (non-derivative)

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

Carrying amounts of net assets (net liabilities), Jan. 1

 

833

 

9

 

(37)

 

805

Gains (losses) recognized in profit or loss

 

14

 

(3)

 

 

11

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

 

14

 

(3)

 

 

11

Gains (losses) recognized outside profit or loss

 

13

 

 

 

13

Additions of assets (liabilities)

 

39

 

 

 

39

Settlements of (assets) liabilities

 

(23)

 

 

16

 

(7)

Carrying amounts of net assets (net liabilities), Sep. 30

 

876

 

6

 

(21)

 

861

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