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Notes to the Financial Statements (cont’d) For the financial year ended 31 December 2011 39. Fair values of financial instruments (cont’d) (a) Fair value of financial instruments that are carried at fair value (cont’d) Fair value hierarchy The Group classified fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices), and Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs) There has been no transfer between Level 1 and Level 2 during the financial years ended 2011 and 2010. Determination of fair vale Quoted equity instruments: Fair value is determined directly by reference to their published market bid price at the reporting date. Unquoted equity instruments: These investments are valued using valuation models which use both observable and nonobservable data. The non-observable inputs to the models include assumptions regarding the future financial performance of the investee, its risk profile, and economic assumptions regarding the industry and geographical jurisdiction in which the investee operates. Derivatives: Foreign currency forward currency contracts and interest rate swap contracts are valued using a valuation technique with market observable inputs. These contracts are valued by financial institutions. Movements in Level 3 financial instruments measured at fair value The following table presents the reconciliation for all financial instruments measured at fair value based on significant unobservable inputs (Level 3). Assets measured at fair value based on Level 3 Group Available-for-sale financial asset Equity instrument (unquoted) RM’000 At 1 January 2010 – Addition 34,320 At 31 December 2010 34,320 Impairment loss recognised in profit or loss under Exceptional loss (Note 11) (16,602) At 31 December 2011 17,718 There has been no transfer from Level 1 and Level 2 to Level 3 during the financial year ended 2011. MALAYSIA SMELTING CORPORATION (43072-A) • ANNUAL REPORT 2011 163
Notes to the Financial Statements (cont’d) For the financial year ended 31 December 2011 39. Fair values of financial instruments (cont’d) 164 (a) Fair value of financial instruments that are carried at fair value (cont’d) Impact of changes to key assumptions on fair value of Level 3 financial instruments The following table shows the impact on fair value of Level 3 financial instruments by using reasonably possible alternative assumptions: Effect of reasonably possible alternative assumptions Carrying Effect of change in tin Effect of change in amount price discount rate Group and Company +1% -1% +0.5% -0.5% RM’000 RM’000 RM’000 RM’000 RM’000 Available-for-sale financial asset - Equity instrument (unquoted) 17,718 573 (562) (283) 302 For unquoted equity instruments, the fair value had been determined using a valuation technique based on assumptions of future tin price and discount rate. The valuation requires management to make estimates about expected future cash flows of the shares which are discounted at current market rates. The Group and the Company adjusted the future tin price and discount rate by 1% and 0.5% respectively from management’s estimates, which are considered by the Group to be within a range of reasonably possible alternatives. (b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments whose carrying amounts are reasonable approximation of fair value: Trade and other receivables (non-current) 24 Trade and other receivables (current) 24 Trade and other payables (current) 29 Borrowings (current) 28 Borrowings (non-current) 28 The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date. The carrying amounts of the non-current portion of borrowings are reasonable approximation of fair values due to the insignificant impact of discounting. Building on Success: Developing Resources for the Future Note
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ANNUAL REPORT 2011 Building on Succ
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viSion To be a successful world-cla
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Corporate Profile Malaysia Smelting
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Corporate Profile (cont’d) For of
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Notice of Annual General Meeting NO
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Group Financial Highlights 10 Build
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