Page 87 - URA Annual Report 2021-22

(d) 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, provision for impairment on properties and committed projects of $672 million was made in 2021/22 as a result of (a) the changes in the development plan and estimated cost of certain projects, and (b) downturn in the retail property market.
(e) Surplus for the Year
For the year 2021/22, the URA recorded a net surplus of $6,568 million, showing an increase of $6,418 million as compared to $150 million for 2020/21. The major contributing factors to the increase were (a) more projects tendered and awarded and (b) greater share of surplus from joint development projects.
(II) Financial Position at 31 March 2022
(a) Properties under Development
Properties under development before provision for impairment was $22,501 million as at 31 March 2022 (31 March 2021: $33,287 million). This sum represented the acquisition and development costs of 10 projects under various states of implementation, out of which Kowloon City Projects, Kwun Tong Town Centre Project and the Civil Servants’ Co-operative Building Society (CBS) project at Shing Tak Street accounted for 78% of the total value.
The aforesaid value was off-set against the cumulative provision for impairment totalling $654 million (31 March 2021: $724 million), resulting in a net value of $21,847 million (31 March 2021: $32,563 million). The decrease in the net value was mainly due to the removal of the development costs of the projects tendered out in 2021/22 as mentioned in paragraph I (a) above, after offsetting the costs incurred for property acquisitions for the CBS Project and the remaining Kowloon City Projects.
(b) Total Liquidity
As at 31 March 2022, the URA’s total liquidity, including cash, bank deposits and debt securities investments, was $26,943 million (31 March 2021: $9,618 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 $1,098 million (31 March 2021: $1,097 million) mentioned in paragraph II (c) below, resulted in the net liquidity position including the securities holdings as at 31 March 2022 of $25,845 million (31 March 2021: $8,521 million).
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Management Discussion and Analysis Projects at a Glance Corporate Governance