Annual Report 2019

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2019 97 The United Laboratories International Holdings Limited Annual Report 2019 10. DISPOSAL OF A SUBSIDIARY (Continued) Given that neither the Group has economic benefit over Chengdu Company nor has any right to participate in the financial and operating policy decision of Chengdu Company, the directors of the Company consider that the Group has lost the control in respect of Chengdu Company and has no significant influence over Chengdu Company for its remaining 33% equity interest and the Transaction is considered as a disposal of the 100% equity interest of Chengdu Company to Evergrande Chengdu on 6 November 2019 (i.e. the date of the Share Subscription) although the Group legally held 33% equity interest of Chengdu Company as at 31 December 2019. During the year ended 31 December 2019, the first instalment of RMB100,000,000 has been received by the Group in December 2019 and the carrying amount of the consideration receivables is RMB773,693,000 (consideration amount of RMB880,000,000) as at 31 December 2019. Consideration of RMB100,000,000 has been received in accordance with the payment schedule subsequent to the 31 December 2019. 6 November 2019 Undiscounted Carrying amount amount RMB’000 RMB’000 Consideration receivables: Cash consideration receivables within 12 months 637,000 597,330 Cash consideration receivables after 12 months 343,000 276,363 Total cash consideration receivables (Note) 980,000 873,693 Note: The consideration receivables are measured at fair value at the date of disposal and carried at amortized cost, based on the present value of the estimated future cashflow discounted using the effective interest rate of 12% per annum and the adjusted consideration receivable is RMB873,693,000. The effective interest rate of approximately 12% was determined by the directors of the Company by reference to a valuation performed by WeValue Advisory Limited (“WeValue”). Wevalue is an independent qualified professional valuer which is not connected with the Group. In determining the discount rate of the deferred considerations, the management of the Group has worked closely with WeValue to perform the valuation and establish the appropriate valuation techniques and inputs to the model in deriving an appropriate discount rate.