Annual Report 2025

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2025 139 The United Laboratories International Holdings Limited Annual Report 2025 37. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) Credit risk and impairment assessment (Continued) Notes: (1) For the purposes of internal credit risk management, the Group uses repayment history or other relevant information to assess whether credit risk has increased significantly since initial recognition. At 31 December 2025, the balances of other receivables and refundable deposits are not past due and based on the historical default rates of these balances are considered as low risk. (2) For trade receivables, the Group has applied the simplified approach in HKFRS 9 to measure the loss allowance at lifetime ECL. Trade receivables with major customers and with an aggregate gross carrying amount of RMB669,917,000 as at 31 December 2025 (2024: nil) are assessed individually. The exposure to credit risk for these balances are assessed within lifetime ECL with an average loss rate of approximately 4.16%, impairment allowance of RMB27,878,000 (2024: nil) was provided by the Group as at 31 December 2025. The remaining trade receivables with gross carrying amount of RMB1,578,653,000 (2024: RMB2,406,076,000) are assessed based on debtors’ aging. The following table provides information about the exposure to credit risk for trade receivables which are assessed within lifetime ECL (not credit-impaired) as at 31 December 2025 and 2024. The provision matrix is based on the Group’s historical default rates taking into consideration forward-looking information that is reasonable and supportable available without undue costs or effort. At every reporting date, the historical observed default rates are reassessed and changes in the forward-looking information are considered. The following ECL rates are about the exposure to credit risk for trade receivables which are assessed based on provision matrix taking into account the weighted average rate of various categories’ debtors at 31 December 2025 and 2024 within lifetime ECL (not credit-impaired). 2025 2024 Average Gross carrying Allowance Average Gross carrying Allowance loss rate amount amount loss rate amount amount RMB’000 RMB’000 RMB’000 RMB’000 Current (not past due) 0.04% 1,175,655 467 0.33% 1,710,799 11,923 1-30 days past due 0.03% 159,994 47 0.06% 282,812 346 31-60 days past due 0.66% 92,678 614 0.09% 198,293 374 61-90 days past due 1.06% 90,476 963 0.11% 204,112 461 More than 90 days past due 3.08% 59,850 1,843 0.29% 10,060 62 1,578,653 3,934 2,406,076 13,166 During the current year, a net reversal in impairment loss of RMB9,232,000 has been recognised (2024: net impairment of RMB707,000) for trade receivables, based on the provisional matrix.