Annual Report 2023

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2023 131 The United Laboratories International Holdings Limited Annual Report 2023 39. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) Foreign currency sensitivity analysis (Continued) Interest rate sensitivity analysis No sensitivity analysis was prepared for pledged bank deposits and bank balances as the financial impact arising on changes in interest rates was minimal due to limited changes in interest rate. The sensitivity analysis below has been determined based on the exposure to interest rates for the floating rate borrowings at the end of the reporting period. The analysis is prepared assuming the financial instruments outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used which represents management’s assessment of the reasonably possible change in interest rates. At the end of the reporting period, if interest rates of CNY HIBOR and LPR (2022: HIBOR) had been increased/decreased by 50 basis points and all other input variables remained constant, the Group’s post-tax profit for the year ended 31 December 2023 would decrease/increase by RMB4,753,000 (2022: RMB8,418,000). The Group monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arise. Credit risk and impairment assessment At 31 December 2023, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position. In order to minimise the credit risk, the management of the Group has delegated a team responsible for determination of credit limits and credit approvals. Before accepting any new customer, the Group assesses the potential customer’s credit quality and defines credit limits by customer. Limits attributed to customers are reviewed once a year. Other monitoring procedures are in place to ensure that follow-up action is taken to recover overdue debts. The Group normally accepts bills issued or guaranteed by PRC banks if trade receivables are settled by bills and therefore the Group consider the credit risk arising from the endorsed or discounted bills is insignificant. In this regard, the Group consider that the Group’s credit risk is significantly reduced.