102 Financial statements continued
GVC Holdings PLC Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL
for the year ended 31 December 2016
25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
25.6 Fair values
The carrying amounts of the financial assets and liabilities, including deferred consideration in the Statement of Financial Position at 31 December 2016 and
2015 for the Group and Company are a reasonable approximation of their fair values.
Financial assets and financial liabilities measured at fair value in the Statement of Financial Position are grouped into three levels of a fair value hierarchy.
The three levels are defined based on the observability of significant inputs to the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
• Level 3: unobservable inputs for the asset or liability.
The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis at 31 December 2016
and 31 December 2015:
AT 31 DECEMBER 2016
Available for sale financial assets - 2.2 0.4 2.6
Deferred consideration - - 1.8 1.8
Contingent consideration - 0.6 4.0 4.6
Derivative financial assets - - 26.2 26.2
- 2.8 32.4 35.2
Contingent consideration - - (4.4) (4.4)
- - (4.4) (4.4)
AT 31 DECEMBER 2015
Available for sale financial assets - - 2.6 2.6
Derivative financial assets - - 3.8 3.8
- - 6.4 6.4
Derivative financial liabilities - (9.9) (0.7) (10.6)
- (9.9) (0.7) (10.6)
There were no transfers between levels in 2016 or 2015.
Measure of fair value of financial instruments:
The Group's finance team performs valuations of financial items for financial reporting purposes, including Level 3 fair values, in consultation with third party
valuation specialists for complex valuations. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of
maximising the use of market-based information.
The valuation techniques for the derivative financial assets and liabilities are described in further detail in note 12 above. The valuation technique for the
available for sale asset and the contingent and deferred consideration assets and liabilities were discounted cashflow forecasts using the weighted average
cost of capital and expected cashflows.