Page 97 - Annual Report

HONG KONG ACADEMY OF MEDICINE
香 港 醫 學 專 科 學 院
香港醫學專科學院
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

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 the 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.

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