Urban Renewal Authority 2018-19 Annual Report

75 MANAGEMENT DISCUSSION AND ANALYSIS (d) Write back of provision for impairment on properties and committed projects Based on the accounting policy detailed in Notes 2(h) and 2(n) to the financial statements, write back of provision for impairment on properties and committed projects of $841 million was made in 2018/19 in view of rising property prices during the year. (e) Surplus for the year For the year 2018/19, the URA recorded a net surplus of $2,330 million, showing a decrease of $9,708 million as compared to $12,038 million for 2017/18. Major contributions to the 2018/19 net surplus were (a) the surplus from tendered projects, (b) the share of surplus sales proceeds from various joint development projects, and (c) the write back of provision for impairment on properties and committed projects on various projects previously made as a result of the rising property prices during the year. (II) Financial Position at 31 March 2019 (a) Properties under development Properties under development before provision for impairment of $29,609 million as at 31 March 2019 (31 March 2018: $25,769 million) reached record high level. This sum represented the acquisition and development costs of 18 projects under various states of implementation. The aforesaid value was off-set against the cumulative provision for impairment totalling $1,181 million (31 March 2018: $1,980 million), resulting in a net value of $28,428 million (31 March 2018: $23,789 million). The increase in the net value was mainly due to continued acquisition of Kowloon City projects during 2018/19 and the write back of provision for impairment. It was off-set by certain projects being tendered during the year. (b) Total liquidity As at 31 March 2019, the URA’s total liquidity, including cash, bank deposits and debt securities investments, was $18,107 million (31 March 2018: $21,221 million). The URA placed the surplus cash on deposits with a number of financial institutions, and also invested in fixed income products of the required credit rating in accordance with the investment guidelines as approved by the Financial Secretary with capital preservation as the priority. The liquidity position, off-set by the borrowings of $2,793 million (31 March 2018: $2,791 million) mentioned in paragraph II (c) below, resulted in the net liquidity position including the securities holdings at 31 March 2019 of $15,314 million (31 March 2018: $18,430 million).