Annual Report 2019

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2019 152 The United Laboratories International Holdings Limited Annual Report 2019 42. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued) Fair value of the Group’s financial assets and financial liabilities that are not measured at fair value on a recurring basis Except as detailed in the following table, the directors of the Company consider that the carrying amounts of financial assets and financial liabilities measured at amortised cost in the consolidated financial statements approximate their fair values. Such fair values have been determined in accordance with generally accepted pricing models based on discounted cash flow analysis. 31.12.2019 31.12.2018 Carrying Fair Fair value Carrying Fair Fair value amount value hierarchy amount value hierarchy RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Financial liabilities Corporate Bonds (included in borrowings) – fixed rate 1,095,418,000 1,100,000,000 Level 1 1,093,274,000 1,100,000,000 Level 1 There is no transfer between the different levels of the fair value hierarchy for both years. Fair value measurements and valuation processes In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. For the embedded derivative component of the Convertible Bonds and unlisted equity investment, the third party qualified valuers were engaged by the Group to perform the valuation. The Group works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. The external valuers’ findings are reported to the board of directors of the Company semi- annually to explain the cause of fluctuations in the fair value of the assets and liabilities. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed above.