REC Silicon Annual Report 2019

74 Notes to the consolidated financial statements, REC Silicon Group REC Silicon Annual Report 2019 OTHER INFORMATION FINANCIAL INSTRUMENTS FAIR VALUES OF FINANCIAL INSTRUMENTS The estimated fair values of the Group’s financial instruments are based on market prices and the valuation methods described below. Financial instruments recognized at fair values (partially or in whole) 2019 2018 (USD INMILLION) ASSETS LIABILITIES ASSETS LIABILITIES Derivatives option related to RECWafer bankruptcy 0.0 1.4 0.0 1.5 Determining the categorization of fair value measurements in accordance with IFRS 13 involves judgment. Level 2 USD Convertible bonds: The Group accounted for these instruments at fair value. The convertible bonds were not listed on any exchange but was traded in limited markets. Quotations published by Bloomberg and actual trades were used to estimate fair value. At year-end, the value was adjusted to the tax assessment value published by Norges Fondsmeglerforbund. This value was an estimate of fair value. The USD Convertible bonds were extinguished on September 11, 2018. NOK bonds (REC03): The fair value adjustment recognized in the financial statements at December 31, 2017 was due to a fair value hedge from the fixed swap interest rate to the floating NIBOR rate. In November 2013, the hedging designation was revoked and the hedged part of the bonds is no longer adjusted to their fair values (see note 17). The NOK denominated bonds (REC03) were extinguished on May 3, 2018. Level 3 Option contract is part of the indemnification agreements in connection with the RECWafer Norway AS bankruptcy, and the estimated fair value is subject to change. Changes in estimated fair value, when they occur, are reported as part of the net gain on disposal of discontinued operations. There are no anticipated cash flows associated with this option until estimated maturity, the earliest of which was in February 2016. The option contract has not been settled as of the issue date of these financial statements. The option price is dependent on the share price of the Company and dividend payout from the RECWafer Norway AS’s bankruptcy estate. At yearend 2015, this option had matured, and the associated liability amounts became fixed with respect to changes in the Company’s share price. A ten percent change to the dividend payout fromRECWafer Norway AS’s bankruptcy estate would result in a corresponding change of NOK 1million (USD 0.1million at year end) in the fair value of the liability. Other financial liabilities and assets The USD Senior Secured bonds (REC04) are traded on the Oslo Stock Exchange. Although trading is limited, market values of the bonds were estimated using trades near year-end (level 2 in the fair value hierarchy). The NOK bonds (REC03) was traded on the Oslo Stock Exchange. Although trading was limited, market values of the bonds were estimated using trades near year-end (level 2 in the fair value hierarchy). The NOK denominated bonds (REC03) were extinguished on May 3, 2018. 2019 2018 (USD INMILLION) NOMINAL VALUE CARRYING VALUE ESTIMATED FAIR VALUE NOMINAL VALUE CARRYING VALUE ESTIMATED FAIR VALUE REC04 110.0 109.0 116.1 110.0 108.6 108.9 For all remaining financial assets and liabilities, the carry amounts represent a reasonable approximation of fair value. 30