Annual Report 2019

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2019 109 The United Laboratories International Holdings Limited Annual Report 2019 18. RIGHT-OF-USE ASSETS Leasehold Motor Plant and lands Buildings Vehicles machinery Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 As at 1 January 2019 Carrying amount 228,592 637 2,673 275,701 507,603 As at 31 December 2019 Carrying amount 230,928 373 1,336 – 232,637 For the year ended 31 December 2019 Depreciation charge 6,720 264 1,337 66,377 74,698 6,720 264 1,337 66,377 74,698 Additions to right-of-use assets 9,056 – – – 9,056 Transfer to property, plant and equipment – – – (209,324) (209,324) Total cash outflow for leases 9,056 – – – 9,056 For both years, the Group leases staff quarter and vehicles for its operations. Lease contracts are entered into for fixed term of 2 years to 3 years. Certain leases of equipment were accounted for as finance leases during the year ended 31 December 2019 and carried interest ranged from 1.16% to 4.05%. In addition, the Group owns several industrial buildings where its manufacturing facilities are primarily located and office buildings. The Group is the registered owner of these property interests, including the underlying leasehold lands. Lump sum payments were made upfront to acquire these property interests. The leasehold land components of these owned properties are presented separately only if the payments made can be allocated reliably. Sale and leaseback transactions – seller-lessee To better manage the Group’s capital structure and financing needs, the Group sometimes enters into sale and leaseback arrangements in relation to machinery leases. These legal transfer does not satisfy the requirements of HKFRS 15 to be accounted for as a sale of the machinery. During the year ended 31 December 2019, the Group has raised RMB400,000,000 borrowings in respect of such sale and leaseback arrangements.