Annual Report 2023

266 2023 Annual Report Transport International Holdings Limited NOTES TO THE FINANCIAL STATEMENTS (Expressed in Hong Kong dollars unless otherwise indicated) 33 Financial risk management and fair values of financial instruments (continued) (c) Interest rate risk (continued) (i) Interest rate profile The following table details the interest rate profile of the Group’s interest-bearing assets and liabilities at the end of the reporting period. 2023 2022 Effective interest rate p.a. Amount Effective interest rate p.a. Amount % $’000 % $’000 Fixed rate assets: Bank deposits 5.5 1,457,929 4.7 2,172,710 Investments in financial assets measured at FVOCI (recycling) 4.6 627,464 4.0 843,079 2,085,393 3,015,789 Fixed rate liabilities: Lease liabilities 5.5 (5,543) 1.6 (7,313) Variable rate liabilities: Bank loans 6.5 (4,639,614) 4.9 (4,967,528) (ii) Sensitivity analysis At 31 December 2023, it is estimated that a general increase/decrease of 100 basis points in interest rates, with all other variables held constant, would have decreased/increased the Group’s profit after tax and retained profits by approximately $13,736,000 (2022: $22,197,000). Other components of consolidated equity would have decreased/ increased by approximately $13,736,000 (2022: $22,197,000) in response to the general increase/decrease in interest rates. The sensitivity analysis above 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 change in interest rates 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 fair value interest rate risk at the end of the reporting period. In respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative instruments held by the Group at the end of the reporting period, the impact on the Group’s profit after tax (and retained profits) is estimated as an annualised impact on interest expense or income of such a change in interest rates. The analysis is performed on the same basis for 2022. (d) Currency risk The Group is exposed to currency risk primarily through purchases of new buses and motor vehicle components from overseas, investments in financial assets measured at FVOCI (recycling) and deposits placed at banks that are denominated in a currency other than the functional currency of the entity to which they relate. The currencies giving rise to this risk are primarily British Pound Sterling and United States dollars. (i) Exposure to currency risk The table below details the Group’s exposure at the end of the reporting period to currency risk arising from recognised assets or liabilities denominated in a currency other than the functional currency of the entity to which they relate. For presentation purposes, the amounts of the exposure are shown in Hong Kong dollars, translated using the spot rate at the end of the reporting period. Differences resulting from the translation of the financial statements of operations outside Hong Kong into the Group’s presentation currency are excluded.