Annual Report 2020

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2020 125 The United Laboratories International Holdings Limited Annual Report 2020 33. EMPLOYEE RETIREMENT BENEFITS The Group participates in Mandatory Provident Fund Scheme (“MPF Scheme”) for all employees in Hong Kong. The MPF Schemes are registered with the Mandatory Provident Fund Schemes Authority under the Mandatory Provident Fund Schemes Ordinance. The assets of the MPF Schemes are held separately from those of the Group in funds under the control of an independent trustee. Under the rule of the MPF Schemes, the employer and its employees are each required to make contributions to the MPF Schemes at 5% of the employee’s basic salary with the maximum contribution of HK$1,500 per month. The obligation of the Group with respect of MPF Schemes is to make the required contributions under the MPF Schemes. No forfeited contribution is available to reduce the contributions payable in future years. The Group’s contributions to the MPF Scheme of RMB1,009,000 (2019: RMB1,003,000) are charged to profit or loss. Employees of the subsidiaries in the PRC are members of pension schemes operated by the Chinese local government. The subsidiaries are required to contribute a certain percentage of the relevant part of the payroll of these employees to the pension schemes to fund the benefits. The only obligation for the Group with respect to the pension schemes is the required contributions under the pension schemes. The Group’s contributions to the pension schemes of RMB97,593,000 (2019: RMB118,941,000) are charged to profit or loss. 34. GOVERNMENT GRANTS Incentive subsidies of RMB49,450,000 (2019: RMB26,562,000) have been received in the current year to encourage the operations of certain PRC subsidiaries for the development of environmental friendly manufacturing, pollution prevention, development on export sales and advanced technology. Full amounts are recognised as income in profit or loss as there were no specific conditions attached to the grants and, therefore, the Group recognised the grants to profit or loss upon receipt. The subsidies were granted on a discretionary basis to the Group during the current year. During the current year, the Group recognised government grants of RMB3,976,000 in respect of Covid-19- related subsidies and entire amount relates to Employment Support Scheme provided by the Hong Kong government. Certain subsidies relate to the development of pharmaceutical products or improvement of production efficiency amounting of RMB57,256,000 (2019: RMB57,849,000) at 31 December 2020 are included as deferred income. The amounts are recognised as income when the Group has fulfilled the relevant conditions attaching to the grants, including but not limited to obtaining the medical licenses of the pharmaceutical products or the starting of commercial sales of the pharmaceutical products. During the current year, the Group has recognised the government grant of approximately RMB3,413,000 (2019: RMB4,111,000) as income in profit or loss. Government subsidies granted for the acquisition of property, plant and equipment by the Group brought forward from prior year had been treated as deferred income and was transferred to income over the useful lives of the relevant assets. At 31 December 2020, an amount of RMB65,351,000 (2019: RMB68,085,000) were included in non-current liabilities. During the year ended 31 December 2020, RMB9,368,000 (2019: RMB9,368,000) was released to the profit or loss. The aggregate subsidy income recognised to the profit or loss during the year ended 31 December 2020 amounted to RMB66,207,000 (2019: RMB40,041,000) (Note 6).