MSM Malaysia Holdings Berhad Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 4 FINANCIAL RISK MANAGEMENT (CONTINUED) (c) Fair value estimation (continued) Carrying amount Level 1 Level 2 Level 3 RM’000 RM’000 RM’000 RM’000 Company - Assets As at 31 December 2019 Derivatives used for hedging: - Islamic profit rate swap (4,968) - (4,968) - As at 31 December 2018 Derivatives used for hedging: - Islamic profit rate swap 561 - 561 - There were no transfers between levels 1 and 2 during the financial year. (i) Financial instruments in Level 1 The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial position date. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 comprise of commodity derivatives quoted on foreign commodity exchanges. (ii) Financial instruments in Level 2 The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. Instruments included in Level 2 comprise Islamic profit rate swap and foreign exchange forward contract. There are no offsetting financial assets and financial liabilities during the financial year. MSM Malaysia Holdings Berhad | Annual Report 2019 156