Yinson Annual Report 2018

40. FAIR VALUE MEASUREMENT (CONTINUED) (b) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value: Note Trade and other receivables 24 Loans and borrowings (current), excluding obligations under finance leases 32 Loans and borrowings (non-current), excluding obligations under finance leases and certain bank loans 32 Trade and other payables 36 The carrying amounts of financial 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 current portion of loans and borrowings excluding obligations under finance leases are reasonable approximation of fair values due to the insignificant impact of discounting. The fair values of non-current loans and borrowings excluding obligations under finance leases are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date. Financial guarantees Fair value is determined based on 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 guarantee period; - The exposure on the portion that is not expected to be recovered due to the guaranteed party’s default; and - The estimated loss exposure if the party guaranteed were to default. The Company has assessed the financial guarantee contracts and concluded that the financial impact of the guarantees is not material as the probability of crystallisation is remote. Corporate Overview Stewardship Governance Accountability 175 Yinson Holdings Berhad Annual Report 2018