HUTCHISON PORT HOLDINGS TRUST 182 NOTES TO THE FINANCIAL STATEMENTS 31 Financial risk and capital management (Continued) (c) Credit exposure The Group’s holdings of cash and bank balances, cross currency swaps contracts with fi nancial institutions expose the Group to counterparty credit risk. The Group controls its credit risk to non-performance by its counterparties through regular review and monitoring of their credit ratings. The receivables from customers and other counterparties also expose the Group to credit risk. The Group controls its credit risk by assessing the credit quality of the customer, taking into account its fi nancial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the management. The utilisation of credit limits is regularly monitored. The Group applies the HKFRS 9 simplifi ed approach to measuring the ECL which uses a lifetime ECL for all trade receivables. To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The ECL on trade receivables is either calculated using a provision matrix where a provision rate applies based on its historical observed default rates or expected default probability and the loss rate, as adjusted by forwardlooking information. On that basis, ECL of HK$9,500,000 (2024: HK$95,073,000) was recognised as at 31 December 2025. (d) Interest rate exposure The Group’s main interest risk exposures relate to cash and bank balances, loans from non-controlling interests, bank and other debts. The Group manages its interest rate exposure with a focus on reducing the Group’s overall cost of debt and exposure to changes in interest rates. The impact of a hypothetical 5 basis points increase in market interest rate at the end of the reporting period would decrease the Group’s profi t and unitholders’ equity by HK$1,402,000 (2024: HK$2,208,000). The Group entered into interest rate swap contracts to achieve an appropriate mix of fi xed and fl oating rate exposure consistent with the Group’s policy, where appropriate. The eff ects of the interest rate swap contracts on the Group’s fi nancial position and performance are as follows: 2024 HK$’000 Carrying amount assets 27,651 Notional amount (Note) 3,900,000 Maturity date March 2025 Hedge ratio 1:1 Change in fair value of outstanding hedging instruments since 1 January (166,312) Change in value of hedged item used to determine hedge eff ectiveness 166,312 Pay average interest rate 1.18% Receive average interest rate 6.08% Note: The contractual notional amount of interest rate swaps held for hedging which was based on Secured Overnight Financing Rate (“SOFR”) was US$500,000,000 (approximately HK$3,900,000,000) for the year ended 31 December 2024. The interest rate swaps matured in March 2025.
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