Annual Report 2019

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2019 53 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) Sales and leaseback transactions The Group acts as a seller-lessee In accordance with the transition provisions of HKFRS 16, sales and leaseback transactions entered into before the date of initial application were not reassessed. Upon application of HKFRS 16, the Group applies the requirements of HKFRS 15 to assess whether sales and leaseback transaction constitutes a sale. During the current year, the Group entered into sales and leaseback transactions in relation to certain plant and machinery and the transaction does not satisfy the requirements as a sales. Accordingly, the Group accounted for the transfer proceeds of RMB400,000,000 as borrowings within the scope of HKFRS 9.