Annual Report 2022

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2022 140 The United Laboratories International Holdings Limited Annual Report 2022 38. 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 2022, 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. The Group uses provision matrix to calculate ECL for trade receivables. 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 2022 and 2021 within lifetime ECL (not credit-impaired). 2022 2021 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) 0.17% 1,662,589 6,143 0.47% 1,255,461 5,918 1-30 days past due 0.02% 198,625 75 1.96% 224,051 4,384 31-60 days past due 0.19% 136,756 340 7.42% 65,622 4,870 61-90 days past due 0.02% 65,792 25 7.60% 67,032 5,097 More than 90 days past due 0.08% 46,989 256 16.95% 12,032 2,040 2,110,751 6,839 1,624,198 22,309