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Financial Risk Management Objectives and Policies | 12 Months Ended
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Dec. 31, 2022
Financial Risk Management Objective And Policies [Abstract] |
Financial Risk Management Objectives and Policies |
32. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group has various financial assets and liabilities such as financial assets at fair value through profit or loss, accounts receivable, financial assets included in prepayments, deposits and other receivables, amount due from immediate holding company, other assets, restricted cash and cash and bank balances, accounts payable, financial liabilities included in other payables and accruals, bank borrowings, convertible bond and derivative financial liability which primarily arise directly from its operations. The main risks arising from the Group’s financial instruments are price risk, foreign currency risk, interest rate risk, credit risk and liquidity risk. Management manages and monitors these risks to ensure appropriate measures are implemented on a timely and effective manner. Price risk Equity price risk is the risk that the fair values of equity investments decrease as a result of changes in the levels of equity indices and the value of individual securities. The Group is exposed to equity securities price risk because certain investments held by the Group are classified in the consolidated statements of financial position as financial assets at fair value through profit or loss. Profit for the year would increase/decrease as a result of gains/losses on equity securities classified as financial assets at fair value through profit or loss. At December 31, 2021 and 2022, if there had been a 5% increase/decrease in the equity price of listed equity shares, included in financial assets at fair value through profit or loss, with all other variables held constant, the Group’s profit before tax would have been approximately HK$52,770,000 and HK$43,073,000 higher/lower. At December 31, 2021 and 2022, if there had been a 5% increase/decrease in the equity price of unlisted equity shares , included in financial assets at fair value through profit or loss, with all other variables held constant, the Group’s profit before tax would have been approximately HK$86,531,000 and HK$27,922,000 higher/lower. The Group had concentration risk in its strategic investments segment as 81% (2021: 100%) of listed equity shares at December 31, 2021 and 2022 were investments in listed equity shares in Investment A, and 0% (2021: 65%) and 97% (2021: 28%) of unlisted equity shares at December 31, 2021 and 2022 were investments in Investment F and Investment H, respectively. On April 1, 2019, the Group entered Agreements with the counterparty in relation to the movement of the share price of the entirety of the Underlying Assets to reduce the Group’s exposure the changes in fair value of financial assets. The Agreements were modified and renewed several times as disclosed in Note 14. The derivative financial asset is initially recognized at fair value and are subsequently remeasured at fair value. Any gains or losses arising from changes in fair value of derivative financial asset are taken directly to profit or loss. During the year ended December 31, 2021 and 2022, changes in the fair value of the derivative financial asset of HK$54,008,047 and HK$484,760,273, were charged to profit or loss. Foreign currency risk Certain transactions of the Group are denominated in foreign currencies which are different from the functional currency of group entities, and therefore the Group is exposed to foreign currency risk. The Group currently does not have a foreign currency hedging policy. However, management monitors foreign exchange exposure and will consider hedging significant foreign exchange exposure should the need arise. As HK$ is currently pegged to United States dollars (“US$”), management considers that there is no significant foreign currency risk arising from the Group’s monetary assets and the liability denominated in US$. The Group’s key currency risk exposure primarily arises from accounts receivable, payable and bank balances denominated in other currencies. As of December 2021 and 2022, the Group had no significant exposure to foreign currency risk. Consequently, no sensitivity analysis has been performed and disclosed. Interest rate risk The Group is exposed to fair value interest rate risk in relation to fixed-rate amount due from immediate holding company, convertible bond and bank borrowings. The Group cash flow interest rate risk is mainly concentrated on the fluctuation of interest rates on bank balance, and US$ denominated bank borrowings based on Wall Street Journal prime rate. The Group is also exposed to cash flow interest rate risk in relation to variable-rate bank balances and variable-rate bank borrowings. The Group aims at keeping borrowings at variable rates. The Group manages its interest rate exposures by assessing the potential impact arising from any interest rate movements based on interest rate level and outlook. The management will review the proportion of borrowings in fixed and floating rates and ensure they are within reasonable range. No sensitivity analysis has been presented for variable rate bank balances and variable rate bank borrowings as the bank deposit and bank borrowings as the cash flow interest rate risk exposure is insignificant. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure of its counterparties is continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management periodically. The Group has credit risk exposure in relation the Agreements entered into with a counterparty amounting to HK$969,894,519 and HK$1,305,256,317 as of December 31, 2021 and 2022, respectively (Note 14). As of December 31, 2021 and 2022, the market value of listed securities pledged to the Group in relation to the A greements amounted to approximately HK$3,089,570,978 and HK$3,781,638,616, respectively (Note 14). The carrying amount of financial assets recorded in the consolidated financial statements, grossed up for any allowances for losses, represents the Group’s maximum exposure to credit risk. Other than accounts receivable mentioned in Note 11, the credit risk on liquid funds is limited because the counterparties are mainly banks with sound credit. The directors of the Company consider the credit risk on amounts from immediate holding company and other receivables are not significant after considering counterparties’ financial background and creditability. Therefore, the directors of the Company concluded that no ECL impairment is recognized as the amount is not material. Maximum exposure and staging as of December 31, 2021 and 2022 As of December 31, 2021
|  | 12-month ECLs |  |  | Lifetime ECLs |  |  |  |
|  | Stage 1 HK$ |  |  | Stage 2 HK$ |  |  | Stage 3 HK$ |  |  | Simplified approach HK$ |  |  | HK$ |
Accounts receivable* |  |  | 21,545,865 |  |  |  | — |  |  |  | — |  |  |  | 64,968,815 |  |  |  | 86,514,680 |
Financial assets included in prepayments, deposits and other receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
—Normal** |  |  | 1,196,110 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,196,110 |
Due from immediate holding company |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
—Normal** |  |  | 2,144,975,230 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,144,975,230 |
Other assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
— Not yet past due |  |  | 136,065,738 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 136,065,738 |
Cash and bank balances |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
— Not yet past due |  |  | 526,206,108 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 526,206,108 |
|  |  | 2,829,989,051 |  |  |  | — |  |  |  | — |  |  |  | 64,968,815 |  |  |  | 2,894,957,866 |
* | For accounts receivable to which the Group applies the simplified approach for impairment, information based on the provision matrix and internal credit rating mentioned in Note 11 to the consolidated financial statements.
** | The credit quality of the financial assets included in prepayments, deposits and other receivables, and due from immediate holding company is considered to be “normal” when they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition; “doubtful” when there has been significant increase in credit risk since initial recognition through information developed internally or externally; “loss” when there is evidence indicating the asset is credit-impaired: and “ write-off ” when there is evidence indicating that the debtor is in severe financial difficulty and Group has no realistic prospect of recovery.
As of December 31, 2022
|  | 12-month ECLs |  |  | Lifetime ECLs |  |  |  |
|  | Stage 1 HK$ |  |  | Stage 2 HK$ |  |  | Stage 3 HK$ |  |  | Simplified approach HK$ |  |  | HK$ |
Accounts receivable* |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 187,673,616 |  |  |  | 187,673,616 |
Financial assets included in prepayments, deposits and other receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
—Normal** |  |  | 954,518,603 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 954,518,603 |
Due from immediate holding company |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
—Normal** |  |  | 2,239,358,702 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,239,358,702 |
Other assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
— Not yet past due |  |  | 9,620,468 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,620,468 |
Restricted cash |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
— Not yet past due |  |  | 3,239,362 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,239,362 |
Cash and bank balances |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
— Not yet past due |  |  | 1,078,411,335 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,078,411,335 |
|  |  | 4,285,148,470 |  |  |  | — |  |  |  | — |  |  |  | 187,673,616 |  |  |  | 4,472,822,086 |
* | For accounts receivable to which the Group applies the simplified approach for impairment, information based on the provision matrix and internal credit rating mentioned in Note 11 to the consolidated financial statements.
** | The credit quality of the financial assets included in prepayments, deposits and other receivables, and due from immediate holding company is considered to be “normal” when they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition; “doubtful” when there has been significant increase in credit risk since initial recognition through information developed internally or externally; “loss” when there is evidence indicating the asset is credit-impaired: and “ write-off ” when there is evidence indicating that the debtor is in severe financial difficulty and Group has no realistic prospect of recovery.
Liquidity risk The Group aims to maintain cash and credit lines to meet its liquidity requirements. The Group finances its working capital requirements through a combination of funds generated from operations, loans and equity financing. The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
|  | As of December 31, 2021 |
|  | Weighted average interest rate |  |  | On demand or less than 3 months |  |  | 3 months to 1 year |  |  | 1 to 5 years |  |  | Total |
|  | % |  |  | HK$ |  |  | HK$ |  |  | HK$ |  |  | HK$ |
Accounts payable |  |  | N/A |  |  |  | 155,020,918 |  |  |  | — |  |  |  | — |  |  |  | 155,020,918 |
Bank borrowings |  |  | 2.1 | % |  |  | 390,926,836 |  |  |  | 2,631,251 |  |  |  | — |  |  |  | 393,558,087 |
Financial liabilities included in other payables and accruals |  |  | N/A |  |  |  | 72,107,680 |  |  |  | — |  |  |  | — |  |  |  | 72,107,680 |
Convertible bond |  |  | 7.8 | % |  |  | — |  |  |  | — |  |  |  | 125,319,026 |  |  |  | 125,319,026 |
|  |  |  |  |  |  | 618,055,434 |  |  |  | 2,631,251 |  |  |  | 125,319,026 |  |  |  | 746,005,711 |
|  | As of December 31, 2022 |
|  | Weighted average interest rate |  |  | On demand or less than 3 months |  |  | 3 months to 1 year |  |  | 1 to 5 years |  |  | Total |
|  | % |  |  | HK$ |  |  | HK$ |  |  | HK$ |  |  | HK$ |
Accounts payable |  |  | N/A |  |  |  | 82,315,173 |  |  |  | — |  |  |  | — |  |  |  | 82,315,173 |
Bank borrowings |  |  | 6.3 | % |  |  | 158,011,249 |  |  |  | 622,237 |  |  |  | 3,614,825 |  |  |  | 162,248,311 |
Financial liabilities included in other payables and accruals |  |  | N/A |  |  |  | 102,788,191 |  |  |  | — |  |  |  | — |  |  |  | 102,788,191 |
|  |  |  |  |  |  | 343,114,613 |  |  |  | 622,237 |  |  |  | 3,614,825 |  |  |  | 347,351,675 |
Capital risk management The Group manages its capital to ensure that the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt which includes bank borrowings and equity attributable to equity holders of the Company, comprising share capital, treasury shares, retained profits, capital reserve and perpetual securities, as disclosed in consolidated statements of changes in equity. There were no changes on the Group’s approach to capital risk management during the years ended December 31, 2021 and 2022.

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- Definition The disclosure of the entity's financial risk management practices and policies. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Name IAS -Number 1 -IssueDate 2022-03-24 -Paragraph 10 -Subparagraph e -URI https://taxonomy.ifrs.org/xifrs-link?type=IAS&num=1&code=ifrs-tx-2022-en-r&anchor=para_10_e&doctype=Standard -URIDate 2022-03-24 + Details
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