Annual Report 2023

21 2023 Annual Report Transport International Holdings Limited Key Risks and Uncertainties The Group’s businesses face a number of key risks and uncertainties, including those set out in the following paragraphs. It should be noted that the following is a non- exhaustive list and there may be other risks and uncertainties in addition to the key risk areas outlined below. Regulatory Environment and Government Policies A substantial part of the Group’s revenue is generated from franchised public bus operations. As a result, any changes in the Government’s transport policy and regulations, such as the Public Bus Services Ordinance (Cap 230) and the Public Bus Services Regulations (Cap 230A), may have a significant impact on the Group’s operating results and financial condition in either the short or the long term. Proposals for a fare increase are subject to the approval of the Hong Kong SAR Government, taking into account a basket of factors including public acceptability and affordability, which may not align with the respective financial condition of the franchised bus companies. There is no guarantee that a fare increase of a sufficient magnitude will be granted in time to enable the franchised bus companies to offset rising overheads and costs. The inflexibility inherent in this arrangement may have an adverse impact on the financial condition of the Group in an inflationary environment. Fuel Prices and Other Financial Risks Fuel represents a major component of the Group’s cost structure. Volatility in fuel prices may affect the financial stability of the Group. In addition, the Group’s activities are exposed to various financial risks, including foreign currency, interest rate, credit and liquidity risks, which are discussed in the Financial Review on pages 114 to 129 of this Annual Report. Unexpected Events and Natural Disasters The operations of the Group’s businesses may be subject to the impact of unexpected events, such as the COVID-19 pandemic, prolonged electricity outages at depots or large- scale road blockages over an extended period of time. While the Group has implemented an effective Business Continuity Plan (“BCP”) to deliver quality transport services in all circumstances, its operations may still be adversely affected by natural disasters, severe weather conditions and climate- related issues, including floods and typhoons.