Urban Renewal Authority 2018-19 Annual Report

142 (expressed in Hong Kong Dollars) NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management and fair value of financial instruments (Continued) (a) Financial risk factors (Continued) (v) Foreign exchange risk The Group has certain cash and bank balances and investments denominated in United States Dollars (“USD”), which are exposed to foreign currency risk. When the exchange rates of USD against the Hong Kong dollar fluctuate, the value of the USD-denominated cash and bank balances and investments translated into Hong Kong dollar will vary accordingly. Foreign exchange risk sensitivity There would have no significant effect on the surplus of the Group resulting from the foreign exchange gains/losses on translation of USD-denominated cash and bank balances and investments as the Group currently considered the risk of movements in exchange rates between the Hong Kong dollars and USD to be insignificant. (b) Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to promote urban renewal in Hong Kong by way of redevelopment, rehabilitation, revitalisation and heritage preservation. The Group’s working capital is mainly financed by the Government’s equity injection, accumulated surplus and debt securities issued. The Group also maintains committed credit facilities to ensure the availability of funding when needed. (c) Fair value measurement (i) Financial assets and liabilities measured at fair value The fair value of the Group’s financial instruments measured at the end of the reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS 13 “Fair value measurement” is set out in Note 12. (ii) Fair value of financial assets and liabilities carried at other than fair value The carrying amounts of the Group’s financial assets including amounts due from joint development projects, cash and bank balances, investments at amortised cost and trade and other receivables; and financial liabilities including amounts due to joint development projects and trade and other payables, approximate their fair values. The carrying amounts of the Group’s building rehabilitation loans and debt securities issued approximate their fair value as the impact of discounting is insignificant.