Hexagon Annual Report 2019

The fair value of the bond loan is based on the latest observable transaction at Oslo Stock Exchange (HEX03). The other parts of the Group’s interest-bearing bank loans and finance leases are determined by using the DCF method using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period. The own non-performance risk as at 31.12.2019 and 31.12.2018 was assessed to be insignificant. The Group enters into foreign exchange contracts with various counterparties, principally financial institutions with investment grade credit ratings. Foreign exchange forward contracts are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing models using present value calculations. (NOK 1 000) 2019 2018 Level 1: Based on prices in an active market 0 0 Level 2: Observable market data 1 157 264 -4 294 Level 3: Other than observable market data 0 0 Total financial instruments at fair value 1 157 264 -4 294 FINANCIAL INSTRUMENTS APPRAISED AT FAIR VAUE WITH GAINS AND LOSSES IN THE INCOME STATEMENT (NOK 1 000) 2019 2018 Level 1: Based on prices in an active market 0 0 Level 2: Observable market data 0 0 Level 3: Other than observable market data 0 0 Total financial instruments at fair value 0 0 FINANCIAL INSTRUMENTS APPRAISED AT FAIR VAUE WITH GAINS AND LOSSES OVER OTHER INCOME AND EXPENSES IN TOTAL COMPREHENSIVE INCOME During the reporting period there were no financial assets or liabilities which were reclassified by changing the measurement method from amortized cost to fair value or vice versa, and there were no changes in the fair value measurement which caused transfers between level 1 and level 2, and no transfers to or from level 3 OTHER INFORMATION RELATING TO FINANCIAL INSTRUMENTS The main goal of the Group's capital structure management is to ensure it maintains a strong credit rating (and therefore reasonable borrowing terms from lenders) and a level of equity which is reasonable in relation to the Group's operations. (VI) CAPITAL STRUCTURE AND EQUITY By achieving a good debt/equity ratio, the Group will be able to support its operations and in doing so maximize the value of its shares. The Group’s shareholders shall receive a competitive return on their shares, mainly through price increases in the Group’s shares, but also in the form of dividends based on financial performance/investment needs. The Group manages and makes necessary changes to its capital structure by regularly assessing prevailing economic conditions and prospects of short and medium-term growth Capital structure management is largely dealt with by means of new share issues. No changes to guidelines in this area were made in 2018 or 2019. 55 141 2019 AT A GLANCE FROM THE BOARD ROOM FINANCIAL STATEMENTS