Annual Report 2025

253 2025 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) (a) Credit risk (continued) The Group measures expected credit loss allowance for investments in financial assets measured at FVOCI (recycling) at an amount equal to 12-month ECLs unless there has been a significant increase in credit risk since initial recognition, in which case the loss allowance is measured at an amount equal to lifetime ECLs. As at 31 December 2025, the ECLs for credit-impaired investments in financial assets measured at FVOCI (recycling) are estimated using discounted cash flow model by considering possible future scenarios in which cash flows are expected to recover, including liquidation of the issuers, collection of contractual cash flows and sale of the defaulted assets and probabilities assigned to these scenarios are 5% to 90% respectively. The Group assumes a nil recovery rate under the liquidation scenario. As at 31 December 2024, the ECLs for credit-impaired investments in financial assets measured at FVOCI (recycling) were estimated using a model that incorporates probability of default, loss given default and exposure at default and takes into account forward-looking information about macroeconomic factors. Key assumptions used for expected credit loss allowance calculations are loss given default which ranges from 55.7% to 92.4% (2024: 62.4% to 92.1%). Movement in the expected credit loss allowance account in respect of investments in financial assets measured at FVOCI (recycling) during the year is as follows: 12-month ECL Lifetime ECLs Total $’000 $’000 $’000 At 1 January 2024 2,200 349,800 352,000 Expected credit loss recognised during the year – 171,000 171,000 At 31 December 2024 and 1 January 2025 2,200 520,800 523,000 Expected credit loss recognised during the year – 86,500 86,500 At 31 December 2025 2,200 607,300 609,500 The maximum exposure to credit risk of entire financial assets measured at FVOCI (recycling) amounted to $495 million (2024: $449 million). Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from investments in financial assets measured at FVOCI (recycling) as well as trade and other receivables are set out in notes 20 and 23 respectively. (b) Liquidity risk The Group closely monitors its liquidity and financial resources to ensure that a healthy financial position is maintained such that cash inflows from operating activities together with undrawn committed banking facilities are sufficient to meet the requirements for loan repayments, daily operational needs and capital expenditure, as well as potential business expansion and development. Major operating companies of the Group arrange for their own financing to meet specific requirements. The Group’s other subsidiaries are mainly financed by the Company’s capital base. The Group reviews its strategy from time to time to ensure that cost-efficient funding is available to cater for the unique operating environment of each subsidiary. Based on the cash flow forecast of the Group for the year ending 31 December 2026, the Group would have adequate funds from the cash inflow generated from operating activities and available banking facilities to meet liabilities as and when they fall due. The following tables detail the remaining contractual maturities at the end of the reporting period of the Group’s non- derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using interest rates current at the end of the reporting period) and the earliest date the Group can be required to pay: