Annual Report 2019

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2019 116 The United Laboratories International Holdings Limited Annual Report 2019 22. INTANGIBLE ASSETS (Continued) Note: As at 31 December 2019, cost of intangible assets comprise of: i. An amount of RMB20,237,000 (2018: RMB20,237,000), representing development costs incurred in obtaining licences for manufacturing finished products granted by the relevant PRC authorities. The licenses granted allow the Group to apply for the relevant technical know-how to manufacture finished products for five years from the date of granting relevant licenses. The costs of these intangible assets are therefore amortised over the useful lives of five years and were fully amortised in prior years. ii. An amount of RMB47,100,000 (2018: RMB47,100,000), representing externally acquired technical know- how (“Know-how”) in identifying processes for manufacturing finished products and protocols for fermentation/purification methodology. During the year ended 31 December 2015, two of the Know-how at a total cost of RMB29,140,000 had commenced amortisation starting from the date when they were put into production process. It is amortised over 10 years which is the expected period for which they will bring future economic benefits to the Group. Due to suspension of a product development, a full impairment loss of RMB17,960,000 has been recognised on one of the know-how of the relevant product development during the year ended 31 December 2018. iii. A total amount of RMB153,765,000 (2018: RMB145,318,000), representing the capitalised development costs incurred in clinical trial process stage and in obtaining licenses for manufacturing finished products including insulin glargine and insulin. During the year ended 31 December 2018, the development cost of Clavulanate Potassium of RMB9,200,000 has started to amortise from the date when it was put into production process. It is amortised over 5 years which is the expected period for which it will bring future economic benefits to the Group. During the year ended 31 December 2019, the development cost of 6-Aminopenicillanic Acid of RMB2,417,000 has started to amortise from the date when it was put into production process. It is amortised over 10 years which is the expected period for which it will bring future economic benefits to the Group. The capitalised development cost of insulin glargine of RMB69,408,000, has started to amortise from the date when it was put into production process since the year ended 31 December 2017. It is amortised over 10 years which is the expected period for which it will bring future economic benefits to the Group. There has been no amortisation for the remaining development cost of another insulin as the related products are in clinical trial process stage. In accordance with HKAS 36 Impairment of Assets, the Group performed its annual impairment test for intangible asset not yet available to use by comparing its carrying amount with its recoverable amount. The calculation applied discounted cash flow methodology, of which the cash flow projections are based on financial budget endorsed by management. The management of the Group determined no impairment loss is required.