Annual Report 2022

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 148 The United Laboratories International Holdings Limited Annual Report 2022 38. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) Liquidity risk (Continued) The amounts included above for variable interest rate instruments for non-derivative financial liabilities is subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period. Interest rate benchmark reform As listed in note 29, several of the Group’s LIBOR/HIBOR bank borrowings have been subject to the interest rate benchmark reform. The Group is closely monitoring the market and managing the transition to new benchmark interest rates, including announcements made by the relevant IBOR regulators. LIBOR During the current year, all the LIBOR bank borrowing has been settled. HIBOR While the Hong Kong Dollar Overnight Index Average (“HONIA”) has been identified as an alternative to HIBOR, there is no plan to discontinue HIBOR. The multi-rate approach has been adopted in Hong Kong, whereby HIBOR and HONIA will co-exist. The Group’s bank loans linked to HIBOR will continue till maturity and hence, not subject to transition. 39. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation techniques and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable. • Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities; • Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. at prices) or indirectly (i.e. derived from prices); and • Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).