Asset Buyout Partners Annual Report 2019

Information about fair value of financial instruments Trade and other receivables The fair value of trade and other receivables are assumed to be the same as the net book value. The fair value of cash and cash equivalents are assumed to be equal to the book value. Fair value hierarchy for financial instruments measured through profit and loss Financial derivatives recognized at fair value are interest rate swaps. The fair value of the interest rate swaps is calculated by banks and are determined based on the net present value of future cash flows using quoted interest rate curves at the balance sheet date. The cal- culations obtained from the banks have been tested for reasonable- ness by the Group’s management. The fair value of these derivatives is classified as Level 2 in the fair value hierarchy, ref. note 5. Fair value of financial instruments recognized at amortized cost Financial instruments recognized at amortized cost consist of liabil- ities with floating rates. Recognized value is assumed to be a good indication of fair value for these liabilities taking into consideration the current margin and market conditions. Note 4 Capital structure and capital management The main purpose of the Group’s capital management is to maintain a reasonable balance between debt and equity. The Group has defined a target for the loan to value ratio of approximately 65% over the economic cycle. This target is set with consideration to value development in the Group and the opportunity to obtain the necessary financing. There are covenants on existing financing related to; loan to value, interest cover ratio and debt to EBITDA levels. Both during 2019, and at 31 December 2019, the Group was in compliance with all financial covenants, and the Group expects to be in compliance going forward. The table below specifies the Groups interest bearing debt at 31 December 2019. The Group’s financing holds different maturities from 1-4 years. Consequently, a share of total debt will be due within 12 months. The Group continuously refinances debt and considers both bank and bond market as funding sources. Figures in NOK 2019 2018 Interest bearing long-term debt 4 108 060 548 3 480 594 502 Interest bearing short-term debt 354 000 000 784 009 708 Unamortized borrowing costs 55 123 551 59 169 776 Principal amount of interest bearing loans and borrowings 4 517 184 099 4 323 773 986 External valuation of investment property 8 447 770 000 7 065 500 000 Loan to value ratio 53,47 % 61,20 % Note 5 Critical accounting estimates and judgements Preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect reported amounts in the consolidated financial statements. Uncertainty about these assumptions could result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities affected in future periods. Management estimates include assumptions on future events which by definition hold a significant risk related to estimation uncertainty. The following sections present the judgements which have the most significant effect on the amounts recognized in the consolidated financial statements: Asset Buyout Partners | Annual Report 2019 27