Annual Report 2019

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2019 52 The United Laboratories International Holdings Limited Annual Report 2019 2. APPLICATION OF NEW AND AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) (Continued) New and amendments to HKFRSs that are mandatorily effective for the current year (Continued) 2.1 HKFRS 16 Leases (Continued) As a lessee (Continued) The carrying amount of right-of-use assets for own use as at 1 January 2019 comprises the following: At 1 January 2019 Notes RMB’000 Right-of-use assets relating to operating leases recognised upon application of HKFRS 16 3,310 Reclassified from prepaid lease payments (a) 228,592 Amounts included in property, plant and equipment under HKAS 17 – Assets previously under finance leases (b) 275,701 507,603 (a) Upfront payments for leasehold lands in the PRC were classified as prepaid lease payments as at 31 December 2018. Upon application of HKFRS 16, the current and non-current portion of prepaid lease payments amounting to RMB5,406,000 and RMB223,186,000, respectively were reclassified to right-of-use assets. (b) In relation to assets previously under finance leases, carrying amounts of the obligations under finance leases of RMB108,572,000 and RMB7,423,000 as current and non-current liabilities respectively and the related assets of RMB275,701,000 as at 31 December 2018 were reclassified to current and non-current lease liabilities as well as the right-of-use assets respectively as at 1 January 2019. (c) Before the application of HKFRS 16, the Group considered refundable rental deposits paid as rights and obligations under leases to which HKAS 17 applied. Based on the definition of lease payments under HKFRS 16, such deposits are not payments relating to the right to use of the underlying assets and should be adjusted to reflect the discounting effect at transition. However, no adjustment is made as the directors of the Company consider that the discounting effect is not significant to the consolidated financial statements upon the application of HKFRS 16.