Setting new standards - Friends Life

FINANCIAL STATEMENTS
IFRS FINANCIAL STATEMENTS
EEV SUPPLEMENTARY INFORMATION
Notes to the consolidated accounts continued
21. Financial assets
The Group’s financial assets are summarised by measurement categories as follows:
2006 2005
£m £m
Fair value through the income statement 45,135 42,072
Loans 15 19
Total financial assets 45,150 42,091
(a) Financial assets at fair value through the income statement
2006 2005
£m £m
Listed
Shares and other variable yield securities 21,827 20,365
Debt securities and other fixed-income securities 16,138 16,815
Total listed financial assets 37,965 37,180
Unlisted
Shares and other variable yield securities 783 398
Units in unit trusts and shares in open-ended investment companies 5,335 3,501
Debt securities and other fixed-income securities 41 49
Participation in investment pools 136 141
Derivative financial instruments 212 239
Deposits with credit institutions 663 564
Total unlisted financial assets 7,170 4,892
Total financial assets at fair value through the income statement 45,135 42,072
For listed financial assets at fair value through the income statement, fair value is by reference to quoted bid-values.
If a quoted bid-value is not available a valuation technique is applied. The fair value of shares and other variable yield securities and of
derivative financial instruments, are estimated using pricing models or discounted cash flow techniques. Where pricing models are used,
inputs are based on market related data at the balance sheet date. Where discounted cash flow techniques are used, estimated future cash
flows are based on management’s best estimates and the discount rate used is a market related rate for a similar instrument.
For units in unit trusts and shares in open-ended investment companies, fair value is by reference to published bid-values.
Participation in investment pools mainly relates to property investments. Property is independently valued in accordance with the Royal
Institute of Chartered Surveyor’s guidelines on the basis of open market values as at each year end.
The fair value of floating rate and overnight deposits with credit institutions is their carrying value. The carrying value is the cost of the deposit
and accrued interest. The fair value of fixed-interest bearing deposits is estimated using discounted cash flow techniques. Expected cash
flows are discounted at current market rates for similar instruments at the balance sheet date.
The total amount of the change in fair value of investments estimated using a valuation technique that is recognised in the income statement
during the year is a charge of £98m (2005: credit of £143m).
128 Friends Provident Annual Report & Accounts 2006