Annual Report 2021

ANNUAL REPORT 2021 185 37. FINANCIAL RISK MANAGEMENT (CONTINUED) 37.3 Fair value estimation (continued) (i) Fair value of financial instruments that are measured at fair value on a recurring basis (continued) In prior year, the fair value of the liabilities arising from the concession arrangements (see note 34(a)) that are accounted for as financial liabilities at FVTPL is valued at the present value of the expected future economic benefits that will flow out of the Group arising from such obligation by using discounted cash flow method. The significant unobservable inputs are the factor of inflation and probability-adjusted business volume. As at 31 December 2020, if factor of inflation was 5% higher/lower while all the other variables were held constant, the changes in fair value of the liabilities arising from the concession arrangements would be HK$165 million. As at 31 December 2020, if the probability-adjusted business volume was 5% higher/lower while all the other variables were held constant, the increase/decrease in fair value of the liabilities arising from the concession arrangements would be HK$132 million. There were no significant changes in the business or economic circumstances that affect the fair value of the Group’s financial assets or any reclassification of financial assets in the year. The following table presents the changes in level 3 instruments for the years ended 31 December 2021 and 2020: Financial Equity Financial assets at instruments liabilities FVTPL at FVTOCI at FVTPL HK$’million HK$’million HK$’million Year ended 31 December 2021 As at 1 January 2021 3 31 3,432 Exchange adjustments — 1 (118) Settlement — — (77) Fair value loss recognised in profit or loss — — 575 Extinguishment upon modification (note 34(a)) — — (3,812) As at 31 December 2021 3 32 —