NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
26
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
(d) Equity price risk (Countmort
If
At 31 December 2017, it is estimated that an increase/decrease of 10% (2016: 10%) in the market prices of the
investments in available-for-sale securities, with all other variables held constant would have increased/decreased the
securities revaluation reserve by approximately HK$17,631,000 (2016: HK$66,154,000).
At 31 December 2016, it is estimated that an increase/decrease of 10% in the market prices of the underlying investments of the financial assets designated at fair value through profit or loss, with all other variable held constant would have increased/decreased the profit after tax and retained profits by approximately HK$2,000,000. All financial assets designated at fair value have been disposed of during the year ended 31 December 2017.
The sensitivity analysis indicates the instantaneous change in the Group's profit after tax (and retained profits) and other components of consolidated equity that would arise assuming that the changes in the stock market index or other relevant risk variables had occurred at the end of the reporting period and had been applied to re-measure those financial instruments held by the Group which expose the Group to equity price risk at the end of the reporting period. It is also assumed that none of the Group's available-for-sale investments would be considered impaired as a
result of the decrease in the relevant stock market index or other relevant risk variables, and that all other variables
remain constant.
(e)
Fair value measurement
Fair value hierarchy
The following table presents the fair value of the Group's financial instruments measured at the end of the reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in HKFRS
13, Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:
Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date
Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available
Level 3 valuations: Fair value measured using significant unobservable inputs
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Hong Kong Ferry (Holdings) Company Limited
Annual Report 2017