Chemical Company of Malaysia Berhad Annual Report 2019

5. Investment properties (continued) 5.2 Fair value information (continued) Level 3 fair value (continued) The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the significant unobservable inputs used in the valuation models. Description of valuation technique Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement Comparison method of valuation which entails comparing the property with similar properties that were sold recently and those that are currently offered for sale in the vicinity. Recent transactions of similar properties at or near reporting period with similar land usage, land size and location. The characteristics, merits and disadvantages of these properties are noted and diligent adjustments thereof are then made by valuer to reflect the differences and to arrive at the value of the property. The estimated fair value would increase/(decrease) if recent transactions of similar properties at or near reporting period with similar land usage, land size and location were higher/(lower). Valuation processes applied by the Group for Level 3 fair value The fair value of investment properties is determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued. The valuation company provides the fair value of the Group’s investment property portfolio every twelve months. Changes in Level 3 fair values are analysed by the management every twelve months after obtaining valuation report from the valuation company. Highest and best use The Group’s investment properties are currently freehold and leasehold land, and buildings. The highest and best use of the property should be industrial land located nearby the Group’s investment property. BUSINESS OVERVIEW OTHER INFORMATION GOVERNANCE STRUCTURE 159 ANNUAL REPORT 2019 FINANCIAL STATEMENTS