Company: HMDCF
Filing Date: 2025-03-19
Form Type: 20-F
Source: 0001410578-25-000377
Chunk: 285

Company: HUTCHMED (China) Ltd
Filing Date: 2025-03-19
Form: 20-F
Item: Item 1
Chunk 285
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 our use of the assets.

If indicators of impairment exist, the first step of the impairment test is performed to assess if the carrying value of the net asset group exceeds the undiscounted cash flows of the asset group. If yes, the second step of the impairment test is performed in order to determine if the carrying value of the net asset group exceeds the fair value. If yes, impairment is recognized for the excess.

Allowance for Current Expected Credit Losses

We estimate our allowance for current expected credit losses (“ CECLs”) based on an expected loss model, which requires the consideration of forward-looking economic variables and conditions in the portfolio groups of receivables.

We estimate our allowances for CECLs for accounts receivables, other receivables (except for prepayments) and amounts due from related parties by considering past events, including any historical default, current economic conditions and certain forward-looking information, including reasonable and supportable forecasts. The methodologies that the Group uses to estimate the allowance for CECLs for accounts receivables, other receivables (except for prepayments) and amounts due from related parties are as follows:

Individually evaluated - we review all accounts receivables, other receivables (except for prepayments) and amounts due from related parties considered at risk on a timely basis and perform an analysis based upon current information available about the customers and other debtors, which may include financial statements, news reports, published credit ratings as well as collateral net of repossession cost, prior collection history and current and future expected economic conditions. Using this information, we determine the expected cash flow for the accounts receivables, other receivables (except for prepayments) and amounts due from related parties and calculate an estimate of the potential loss and the probability of loss. For those accounts for which the loss is probable, we record a specific allowance.

Collectively evaluated - we determine our allowance for CECLs for collectively evaluated accounts receivables, other receivables (except for prepayments) and amounts due from related parties based on appropriate groupings.

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We consider forward-looking macroeconomic variables, which may include but not limited to gross domestic product, and consumer price index when quantifying the impact of economic forecasts on our allowance for expected credit losses. Macroeconomic variables may vary based on historical experiences, portfolio composition and current environment. We also consider the impact of current conditions and economic forecasts relating to specific industries and client-credit ratings, in addition to performing a qualitative review of credit risk