New World Development Company Limited
NOTES TO CONDENSED ACCOUNTS
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2 Financial risk management and fair value estimation
(a) Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (interest rate risk, foreign exchange
risk and price risk), credit risk and liquidity risk.
The interim financial statements do not include all financial risk management information and disclosures
required in the annual financial statements, and should be read in conjunction with the Group’s 30 June 2015
annual financial statements.
There have been no changes in the Group’s financial risk management policies and procedures since the last
year end.
(b) Fair value estimation
The Group’s financial instruments that are measured at fair value are disclosed by levels of the following fair
value measurement hierarchy:
•
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
•
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
•
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(level 3).
The carrying amounts of the financial instruments of the Group are as follows:
(i) Listed investments are stated at market prices. The quoted market price used for financial assets held by
the Group is the bid price at the end of the reporting period. They are included in level 1.
Unlisted investments are stated at fair values which are estimated using other prices observed in recent
transactions or valuation techniques when the market price is not readily available. The fair value of
interest rate swaps is calculated as the present value of the estimated future cash flows. If all significant
inputs required to estimate the fair value of an instrument are observable, the instrument is included in
level 2. If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
