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Fair value estimation

12 Months Ended

Dec. 31, 2024

Fair value estimation

Fair value estimation

C6. Fair value estimation

All financial instruments held at fair value are classified by reference to the source of inputs used to derive the fair value. The following hierarchy is used:

Level 1 — unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 — inputs other than quoted prices that are observable for the asset or liability, either directly as prices or indirectly through modelling based on prices; and

Level 3 — inputs for the asset or liability that are not based on observable market data.

Financial instrument		Hierarchy level		Valuation method
Financial assets traded in active markets	​	1	​	Current bid price
Financial liabilities traded in active markets	​	1	​	Current ask price
Listed bonds	​	1	​	Quoted market prices
Money market funds	​	1	​	Quoted market prices
Interest rate/currency swaps	​	2	​	Discounted cash flow based on market swap rates
Forward foreign exchange contracts	​	2	​	Forward exchange market rates
Borrowings not traded in active markets (term loans and uncommitted facilities)	​	2	​	Nominal value
Money market deposits	​	2	​	Nominal value
Trade payables and receivables	​	2	​	Nominal value less estimated credit adjustments
Contingent consideration (including put option liability)	​	3	​	Discounted cash flow using weighted average cost of capital

​

​	​	​	​	​	​	​	​	​
​	​	Fair value	​	Fair value	​	Fair value	​	Fair value
​	​	assets	​	liabilities	​	assets	​	liabilities
​	​	2024	​	2024	​	2023	​	2023
​		£m		£m		£m		£m
Interest rate swaps (level 2):		​	​	​	​	​	​	​
– non-hedge		—		—		—		(1)
– net investment hedge		23		(19)		37		(27)
– cash flow hedge		1		(28)		24		(11)
Foreign exchange swaps (level 2):		​		​		​	​	​
– non-hedge		—		(3)		1		—
​		24		(50)		62		(39)
Analysed as follows:		​	​	​		​	​	​
Current portion		—		(3)		5		(23)
Non-current portion		24		(47)		57		(16)
Derivative financial instruments		24		(50)		62		(39)
Contingent consideration (including put option liability) (level 3)		—		(75)		—		(76)
Analysed as follows:		​		​	​	​	​	​
Current portion		—		(37)		—		(36)
Non-current portion		—		(38)		—		(40)
Other payables		—		(75)		—		(76)

​

Certain interest rate swaps have been bifurcated to manage different foreign exchange risks. The interest rate swaps are shown on the balance sheet as net derivative assets of £6m (2023: £71m) and net derivative liabilities of £32m (2023: £48m).

The effective nominal value of foreign exchange swaps is a £45m liability (2023: £27m asset).

Given the volume of acquisitions and the variety of inputs to the valuation of contingent consideration (depending on each transaction), there are not considered to be any changes in input that would have a material impact on the contingent consideration liability.

​

​	​	​	​	​
​		Contingent		Contingent
​	​	consideration	​	consideration
​	​	2024	​	2023
​	​	£m	​	£m
At 1 January		76		70
Exchange differences		(1)		(3)
Acquisitions		31		41
Payments		(25)		(28)
Unused amount reversed	​	(7)	​	—
Revaluation of put option through equity		1		(4)
At 31 December		75		76

​

Fair value is equal to carrying value for all other trade and other payables.

The table below analyses the Group’s undiscounted cash flows on borrowings and derivative financial instruments that will be settled on a gross basis, into relevant maturity groupings based on the remaining period to the contractual maturity date at the balance sheet date.

​

​	​	​	​	​	​	​	​	​
​		Less than		Between		More than		​
​	​	1 year	​	1 and 5 years	​	5 years	​	Total
​	​	£m	​	£m	​	£m	​	£m
At 31 December 2024	​	​	​	​	​	​	​	​
Non-derivative financial instruments	​	​	​	​	​	​	​	​
Borrowings	​	(1,225)	​	(1,848)	​	(978)	​	(4,051)
​	​	(1,225)	​	(1,848)	​	(978)	​	(4,051)
Derivative financial instruments	​	​	​	​	​	​	​	​
Cross-currency interest rate swaps:	​	​	​	​	​	​	​	​
– outflow		(47)		(1,695)		—		(1,742)
– inflow		25		1,623		—		1,648
Foreign exchange swaps:		​	​	​	​	​	​	​
– outflow		(363)		—		—		(363)
– inflow		360		—		—		360
Foreign exchange forwards:		​	​	​	​	​	​	​
– outflow		(11)		—		—		(11)
– inflow		11		—		—		11
​		(25)		(72)		—		(97)
Net outflow	​	(1,250)		(1,920)		(978)		(4,148)
At 31 December 2023		​	​	​	​	​	​	​
Non-derivative financial instruments	​	​	​	​	​	​	​	​
Borrowings	​	(1,209)	​	(2,601)	​	(1,003)	​	(4,812)
​	​	(1,209)	​	(2,601)	​	(1,003)	​	(4,812)
Derivative financial instruments	​	​	​	​	​	​	​	​
Cross-currency interest rate swaps:		​	​	​	​	​	​	​
– outflow		(454)		(1,707)		—		(2,162)
– inflow		400		1,703		—		2,103
Interest rate swaps:		​	​	​	​	​	​	​
– outflow		(21)		—		—		(21)
– inflow		31		—		—		31
Foreign exchange swaps:		​	​	​	​	​	​	​
– outflow		(140)		—		—		(140)
– inflow		140		—		—		140
​		(44)		(4)		—		(49)
Net outflow	​	(1,253)		(2,605)		(1,003)		(4,861)

​

X

- Definition

The entire disclosure for fair value measurement.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Name IFRS
-Number 13
-IssueDate 2024-01-01
-Section Disclosure
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-URIDate 2024-03-27

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- References

No definition available.

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