Annual Report 2023

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2023 137 The United Laboratories International Holdings Limited Annual Report 2023 39. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) Credit risk and impairment assessment (Continued) Notes: (Continued) (3) The estimated loss rates are estimated based on a collective basis grouped by internal credit rating or other relevant information, including but not limited to the latest public available financial information of debtors and are adjusted for forward-looking information that is available without undue cost or effort. The grouping is regularly reviewed by management to ensure relevant information about specific debtors is updated. At 31 December 2022, the Group has therefore concluded that these balances are considered as normal risk. (4) As at 31 December 2023, principal amount of RMB343,000,000 (2022: RMB343,000,000) has been due but not yet received by the Group. Based on the legal opinion from the PRC lawyer, who is independent and not connected to the Group, the Group can initiate a litigation against Evergrande Chengdu to recover the consideration receivables, after considering various factors, including but not limited to the recoverable amount of the underlying assets, potential transaction cost of recovering the consideration receivables as well as the financial position and the credit risk of Evergrande Chengdu, the management considers that there is evidence that the consideration receivables is credit-impaired. As at 31 December 2023, after taking into consideration of probability of recovery of the consideration receivables (see Note 10 for details), the management of the Group is of the opinion that no reversal of impairment loss is recognised during the year ended 31 December 2023. During the current year, an impairment loss of RMB12,346,000 (2022: RMB5,660,000) has been recognised and amount of RMB6,726,000 (2022: RMB21,130,000) has been reversed for trade receivables, based on the provision matrix.