Annual Report 2022

234 Transport International Holdings Limited 2022 Annual Report NOTES TO THE FINANCIAL STATEMENTS (Expressed in Hong Kong dollars unless otherwise indicated) 32 Financial risk management and fair values of financial instruments (continued) (e) Fuel price risk It is the Group’s policy to closely monitor fuel price movements. Certain subsidiaries of the Group have entered into price cap arrangements to limit the risk exposure in the event that oil prices rise above the cap level during the years ended 31 December 2022 and 2021. The Group had not entered into any fuel oil swap contract during the years ended 31 December 2022 and 2021. (f) Fair values measurement (i) Financial instruments measured at fair value 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 2022 2021 Fair value measurements categorised into Fair value measurements categorised into Fair value Level 1 Level 2 Level 3 Fair value Level 1 Level 2 Level 3 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Recurring fair value measurements Assets: Investments in financial assets measured at FVOCI (recycling) 843,079 843,079 – – 1,351,530 1,351,530 – – Other financial assets measured at FVPL 7,577 7,577 – – – – – – Unlisted equity investments 1,017,187 – – 1,017,187 708,809 – 708,809 – Derivative financial instruments – other forward foreign exchange contracts 25 – 25 – 169 – 169 – Liabilities: Derivative financial instruments – other forward foreign exchange contracts (92) – (92) – (12) – (12) – As at 31 December 2022, the fair value of unlisted equity instruments was determined using the market approach of comparable companies adjusted for lack of marketability discount. Accordingly, the fair value measurement was transferred from Level 2 to Level 3.