Construction Industry Council - Annual Report 2024

CONSTRUCTION INDUSTRY COUNCIL 228 For the year ended 31 December 2024 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 25. FINANCIAL INSTRUMENTS (a) Categories of financial instruments 2024 2023 HK$ HK$ Financial assets Financial assets at amortised costs (including cash and bank balances) 5,206,625,031 4,460,727,154 Equity instrument at FVTOCI 7,025,567 7,855,154 Financial liabilities Financial liabilities at amortised cost 1,856,491,113 1,913,150,589 (b) Financial risk management objectives and policies The Group’s financial instruments include equity and debt instruments, deposits, levy and other receivables, cash and bank balances and accounts and other payables. The risks associated with these financial instruments include credit risk, liquidity risk, interest rate risk and equity price risk. The policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. The Group’s overall strategy remains unchanged from prior year. Credit risk The Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the carrying amounts of the respective recognised financial assets as stated in the consolidated statement of financial position. In order to minimise credit risk, the Group has policies in place for the determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group performs impairment assessment under ECL model on levy receivables to ensure that adequate impairment losses are made. Levy receivables are assessed generally by using a provision matrix and the Group also actively monitors the outstanding amounts owed by each contractor and identifies any credit risks in a timely manner in order to reduce the risk of a credit related loss. In this regard, the Council members consider that the Group’s credit risk is significantly reduced. For deposits and other receivables, the Group performs impairment assessment under 12m ECL model. The credit risk on deposits and other receivables are limited because the counterparties are entities with good repayment history and credit ratings and/or exposure at default is low. In this regard, the Council members consider that the Group’s credit risk is significantly reduced.