Annual Report 2021

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2021 108 The United Laboratories International Holdings Limited Annual Report 2021 20. INTANGIBLE ASSETS (Continued) Notes: At 31 December 2021, cost of intangible assets comprise of: i. An amount of RMB20,237,000 (2020: RMB20,237,000), representing development costs incurred in obtaining licenses 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. A total amount of RMB165,744,000 (2020: RMB160,580,000), 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 2021, the capitalised development cost of insulin aspart (the “Insulin Aspart”) of RMB77,129,000 has started to amortise from the date when it was put into production process. During the year ended 31 December 2019, the development cost of 6-Aminopenicillanic Acid (the “6-Aminopenicillanic Acid”) of RMB2,417,000 has started to amortise from the date when it was put into production process. The development cost of Clavulanate Potassium (the “Clavulanate Potassium”) of RMB9,200,000 has started to amortise from the date when it was put into production process since the year ended 31 December 2018. The capitalised development cost of insulin glargine (the “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. The capitalised development cost of Insulin Aspart, 6-Aminopenicillanic Acid and Insulin Glargine is amortised over 10 years and the capitalised development cost of Clavulanate Potassium is amortised over 5 years which are the expected period for which they will bring future economic benefits to the Group In accordance with HKAS 36, 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. ii. An amount of RMB47,100,000 (2020: 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, the management estimated the recoverable amount of it to be minimal as the future economic benefits are not probable to bring to the Group based on value in use calculation. As a result, 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.