GHL System Berhad Annual Report 2018

G H L S y s t e m S B e r h a d ( 2 9 3 0 4 0 - D ) 130 NOT ES TO THE F I NANC I A L STAT EMENTS 3 1 D e c e m b e r 2 0 1 8 C O N T ’ D 25. BORROWINGS (cont’d) (b) Term loans of the Group are: (i) secured by legal charge and negative pledge on the long term leasehold land and buildings of the Group as disclosed in Note 12 to the financial statements; and (ii) guaranteed by way of corporate guarantee by the Group. (c) Bankers’ acceptance and Islamic facility of the Group are: (i) secured by first party charge over deposits with licensed banks as disclosed in Note 22 to the financial statements; (ii) secured by first party charge over structured investment with licensed banks as disclosed in Note 17 to the financial statements in the previous financial year; and (iii) guaranteed by way of corporate guarantee by the Group. (d) The fair value of term loans, hire purchase creditors, bankers’ acceptance and Islamic facility are estimated by discounting expected future cash flows at current market interest rates available for similar financial instruments and of the same remaining maturities. The carrying values of these financial instruments other than hire purchase creditors approximate their fair values. The fair value of hire purchase creditors are as follows: 2018 2017 Carrying amount Fair value Carrying amount Fair value RM RM RM RM Group Hire purchase creditors 10,065,345 9,927,647 2,647,555 2,334,630 Company Hire purchase creditors 229,981 225,634 296,639 291,366 The fair values of borrowings are categorised into Level 2 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 fair value measurement during the financial year. (e) The weighted average effective interest rates of borrowings as at the end of each reporting period are as follows: Group Company 2018 2017 2018 2017 RM RM RM RM Term loans 5.93% 5.43% - - Hire purchase creditors 4.86% 5.73% 3.96% 4.29% Bankers’ acceptance 4.55% 4.55% - - Islamic facility 5.80% 5.80% - -