Page 85 - Annual Report

HONG KONG ACADEMY OF MEDICINE
香港醫學專科學院
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

19. FINANCIAL INSTRUMENTS

The Group’s major financial instruments include investments in equity instruments designated
at FVTOCI, receivables, time deposits, cash and cash equivalents and accruals and other
payables. Details of the financial instruments are disclosed in the respective notes. The risk
associated with these financial instruments include credit risk, liquidity risk, currency risk,
interest rate risk and price risk. The policies on how to mitigate these risks are set out below.
The management manages and monitors these exposures to ensure appropriate measures
are implemented on a timely and effective manner.

a) Credit risk

The Group’s credit risk is primarily attributable to receivables, time deposits and cash
and cash equivalents. Management has a credit policy in place and the exposures to
these credit risks are monitored on an ongoing basis.

i) In respect of the receivables, in order to minimize risk, the management has a
credit policy in place and the exposures to these credit risks are monitored on an
ongoing basis. Credit evaluations of its debtor’s financial position and condition is
performed on each and every major debtor periodically. These evaluations focus
on the debtor’s past history of making payments when due and current ability to
pay, and take into account information specific to the debtor. The Group does not
require collateral in respect of its financial assets. The Group also takes into
account the economic environment in which the debtor operates.

ii) The investments in equity instruments designated at FVTOCI are liquid securities
listed on the recognised stock exchanges. Given their high credit standing,
management does not expect any investment counterparty to fail to meet its
obligations.

iii) The credit risk on liquid funds is limited because the counterparties are banks with
high credit ratings assigned by international credit - rating agencies.

iv) The Group does not provide any guarantees which would expose the Group to
credit risk.

b) Liquidity risk

The Group’s policy is to regularly monitor current and expected liquidity requirements to
ensure that it maintains sufficient reserves of cash and readily realisable marketable
securities and/or from other groups to meet its liquidity requirements in the short and
longer term.

The following liquidity tables show the remaining contractual maturities at the end of
reporting period of the Group’s non-derivative financial liabilities, which are based on
contractual undiscounted cash flows and the earliest date the Group can be required to
pay.

29

香港醫學專科學院 2021 年度報告 83