CAHYA MATA SARAWAK ANNUAL REPORT 2016

183 Cahya Mata Sarawak Berhad A N N U A L R E P O R T 2 0 1 6 Section 07 Financial StatementS NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2016 40. FAIR VALUE MEASUREMENTS (CONT'D.) (c) Fair values of financial instruments not carried at fair value (cont'd.) The following tables provide an analysis of financial instruments not carried at fair values at the reporting date analysed by the various levels within the fair value hierarchy (cont'd.): Level 1 Level 2 Level 3 Total Company RM’000 RM’000 RM’000 RM’000 31 December 2016 Financial assets Investment in associates 81,965 - - 81,965 31 December 2015 Financial assets Investment in associates 100,993 - - 100,993 Investment properties - - 26,545 26,545 100,993 - 26,545 127,538 The methods and assumptions used to estimate the fair values of the financial instruments not carried at fair value are as follows: (i) Loans, advances and financing The fair values of fixed rate loans/financing with remaining maturity of less than one year and variable rate loans/financing are estimated to approximate their carrying amounts. For fixed rate loans/financing with remaining maturity of more than one year, the fair values are estimated based on discounted cash flows using prevailing market rates of loans/financing of similar credit risks and maturity. The fair values of impaired loans/financing are represented by their carrying amounts, net of any collective and individual assessment allowances, being the expected recoverable amount. (ii) Financial guarantees The fair value of financial guarantees is determined based on the probability weighted discounted cash flow method. The probability has been estimated and assigned for the following key assumptions: - The likelihood of the guaranteed party defaulting within the guaranteed period; - The exposure on the portion that is not expected to be recovered due to the guaranteed party’s default; - The estimated loss exposure if the party guaranteed were to default.