ChatDOC/OCRFlux-bench-single huggingface dataset:
# 15. INTANGIBLE ASSETS

The Group	The Company
2016	2015	2016	2015
$’000	$’000	$’000	$’000
Goodwill on consolidation	11,116	11,116	–	–
Trademarks and deferred expenditure	–	–	–	–
11,116	11,116	–	–

# (a) Goodwill on consolidation

The Group
2016	2015
$’000	$’000
Cost
Balance at beginning and end of financial year	11,116	11,116

# Impairment test for goodwill

The goodwill is allocated to the healthcare division of the Group, which is regarded as a cash-generating unit (“CGU”).

During the financial year, the Group has determined that there was no impairment of its CGU containing the goodwill. The recoverable amount (i.e. higher of value-in-use and fair value less costs to sell) of the CGU is determined on the basis of value-in-use calculations. These calculations incorporate cash flow projections by management covering a five-year period.

Key assumptions used for value-in-use calculations:

Discount rate 5.6% (2015: 5.5%)

Growth rate 0.0% (2015: 0.0%)

These assumptions have been used for the analysis of the CGU. The discount rate used is pre-tax and reflects specific risks relating to the healthcare division. Based on the sensitivity analysis performed, any reasonable change in the key assumptions would not result in any impairment adjustments.
to the case of several functions and several constraints. In all cases, the \( \mu \) s are to be regarded as independent functions just like the xs.

There are two parameterizations that we are going to discuss in this appendix: parame-terization of the path by arc length and by time. In the first case, the integral to minimize is

\[ T = { \frac { 1 } { c } } \int n ( \mathbf { x } ( \ell ) ) d \ell , \eqno { ( \mathrm { A 3 } ) } \]

while in the second case

\[ T = \int d t . \eqno ( \mathrm { A 4 } ) \]

As we will see, there are constraints to be appended to these integrals. But before doing that, there is another subtlety that we should discuss first. It is related to the fact that in these integrals the domain of integration is not a priori known and fixed. (For example, if we knew the domain of integration in parameterization with time, then we already knew T.) This is very important, since the standard results we quoted above are usually derived under the assumption that there is a fixed domain of integration and the variations vanish at its boundary.16 So in the rest of this appendix we first address the issue of variable domain in Subsection A 1, and then turn to the length and time parameterizations in Subsections A 2 and A 3, respectively.

# 1. Variation with Variable Domain

In Section II our parametererization was over a fixed domain, namely: 0 \( < s < \) 1. This meant fixed lower and upper limits (0 and 1) in the integral (3) and hence we were eligible to use the Euler-Lagrange equations. However, we may equally well describe the path connecting \( \mathbf { x } _ { 1 } \) and \( \mathbf { x } _ { 2 } \) by a function x(s) on an arbitrary domain \( \sigma _ { 1 } < s < \sigma _ { 2 } \). The travel time is still given by the same integral except for the lower and upper limits of integration:

\[ T = \frac { 1 } { c } \int _ { \sigma _ { 1 } } ^ { \sigma _ { 2 } } n ( { \bf x } ( s ) ) \sqrt { \dot { \bf x } ( s ) \cdot \dot { \bf x } ( s ) } d s . \eqno ( \mathrm { A 5 } ) \]

We wish to find such general parameterizations of the path that minimize T. This appears to be a harder problem in calculus of variations, since: (i) we have to search among a larger class of functions; and (ii) the domain of integration is not fixed as before, but variable.

Our search will be among functions

\[ \mathbf { x } : [ \sigma _ { 1 } , \sigma _ { 2 } ] \to \mathbb { R } ^ { 3 } , \qquad { \mathrm { ~ s u c h ~ t h a t ~ } } \mathbf { x } ( \sigma _ { 1 } ) = \mathbf { x } _ { 1 } { \mathrm { ~ a n d ~ } } \mathbf { x } ( \sigma _ { 2 } ) = \mathbf { x } _ { 2 } . \eqno ( \mathrm { A } 6 ) \]
# 11. TAXATION

2020	2019
RMB’000	RMB’000
The charge comprises:
Current tax
– PRC Enterprise Income Tax (“EIT”)	38,040	35,995
– Withholding tax levied on interest income of Hong Kong subsidiaries	4,572	4,820
– Withholding tax levied on dividend declared of a PRC subsidiary	–	1,625
42,612	42,440
Deferred tax (note 19)	7,080	24,927
49,692	67,367

No provision for Hong Kong Profits Tax has been made in the consolidated financial statements as the Group’s operation in Hong Kong had no assessable profit during both years.

Under the Law of the PRC on EIT (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% for both years. Certain PRC subsidiaries enjoy preferential tax rate according to approval from local tax bureau, including (i) a PRC subsidiary which enjoys preferential tax rate of 15% since year 2016 and applies a further preferential tax rate of 12.5% for the year 2020; (ii) a PRC subsidiary, located in Khorgos city in the PRC, was exempted from EIT in the first 5 years since set up in year 2018, according to “關於新疆喀什霍爾果斯兩個特殊經濟開發區企業所得稅優惠政策的通知” (Caishui [2011] 112) issued by the State Administration of Taxation and the Ministry of Finance of the PRC.

The tax charge for the year can be reconciled to the profit before taxation per the consolidated statement of profit or loss and other comprehensive income as follows:

2020	2019
RMB’000	RMB’000
Profit before taxation	387,088	362,492
Tax at the domestic EIT rate of 25%	96,772	90,623
Tax effect of share of profit of a joint venture and associates	(3,676)	(1,444)
Tax effect of expenses not deductible for tax purposes	10,731	19,288
Effect of different tax rates of the subsidiaries	(23,527)	(8,950)
Effect of tax exemption granted to a PRC subsidiary	(50,229)	(50,475)
Tax effect of tax losses not recognised	4,618	3,869
Utilisation of tax losses previously not recognised	–	(1,740)
Tax benefit on research and development expenses	(2,660)	(1,976)
Withholding tax on distributable earnings of the PRC subsidiaries	17,663	18,172
Tax charge for the year	49,692	67,367
# 12. PROFIT FOR THE YEAR/OTHER COMPREHENSIVE (EXPENSE) INCOME

# (a) Profit for the year

Profit for the year has been arrived at after charging (crediting):

2020	2019
RMB’000	RMB’000
Directors’ emoluments (note 13)	6,503	5,536
Other staffs costs (excluding directors’ emoluments)
– Salaries, allowances and other staff benefits, including share
option expenses	116,194	82,630
– Staffs’ retirement benefit scheme contributions	656	4,201
Total staff costs	123,353	92,367
Less: amount capitalised in development costs	(5,581)	(9,188)
Less: st aff costs recognised as research and development costs in
other expenses	(22,577)	(13,596)
Staff costs recognised in administrative expenses	95,195	69,583
Total depreciation of property and equipment	2,310	1,694
Less: amount capitalised in development costs	(56)	(131)
Depreciation of property and equipment recognised in
administrative expenses	2,254	1,563
Depreciation of right-of-use assets recognised in
administrative expenses	9,970	7,202
Amortisation of intangible assets recognised in
administrative expenses	5,494	3,641
Auditor’s remuneration recognised in administrative expenses	2,900	2,520
Covid-19-related rent concessions (note 18)	(224)	–
Other expenses
– Research and development costs	23,466	14,269
– Donation	1,060	1,964
Total other expenses	24,526	16,233
# Prepayments and other receivables

Our prepayment and other receivables included value-added tax recoverable, interest receivables, amounts due from shareholders, amounts due from related parties, IPO cost capitalization, prepayments and other receivables. Value-added tax recoverable represented value-added taxes incurred in procurement. Interest receivables mainly represented interests from time deposits. The table below sets forth a breakdown of our prepayments and other receivables as of the dates indicated:

As of December 31,	As of
June 30,
2018	2019	2020
(RMB in thousands)
Value-added tax recoverable	1,587	3,809	4,012
Interest receivables	37	3,006	7,268
Amounts due from shareholders during
Reorganization	8,738	–	–
Amounts due from shareholders	700	755	269
Amounts due from related parties	44	35	53
IPO cost caiiptalzation	–	–	545
Prepayments	458	458	1,141
Other receivables	309	745	2,341
Total	11,873	8,808	15,629

Our prepayments and other receivables decreased from RMB11.9 million as of December 31, 2018 to RMB8.8 million as of December 31, 2019. The decrease was primarily attributable to a decrease in amounts due from shareholders as a result of the completion of the Reorganization, partially offset by (i) an increase in value-added tax recoverable, as a result of our increased purchase of pre-clinical and clinical research and development related services and (ii) an increase in interest receivables primarily attributable to the increased amount of time deposits in 2019 as we received the funding from our series B financing. Our prepayments and other receivables increased from RMB8.8 million as of December 31, 2019 to RMB15.6 million as of June 30, 2020, mainly due to an increase in interest receivables as a result of the accrual of the interest generated by our time deposits.
# Cash and bank balances

Our cash and bank balances primarily consisted of cash at bank and short-term time deposits. Our cash and bank balances increased from RMB65.3 million as of December 31, 2018 to RMB746.8 million as of December 31, 2019. The increase was mainly attributable to the funds from our series B financing and the government subsidies we received. Our cash and bank balances decreased to RMB616.7 million as of June 30, 2020, mainly because of the RMB82.9 million payment we made in relation to the amendment of the Karyopharm Agreement, and payment of employment expenses and fees to CROs, CDMOs and SMOs. As of September 30, 2020, our cash and cash equivalents and time deposits was RMB957.7 million. For further information regarding our cash and bank balances, please see Note 16 to the Accountants’ Report set out in Appendix I.

The table below sets forth a breakdown of our cash and bank balances as of the dates indicated:

As at December 31,	As at
June 30,
2018	2019	2020
(RMB in thousands)
(1)Pledged deposits	15,935	2,625	2,625
Bank deposits with oriilgna maturity of
more than three months when
(2)acquired	–	453,383	389,302
Cash and cash equivalents	49,322	290,787	224,731
Total	65,257	746,795	616,658

Notes:

(1) This represents pledged deposits in commercial banks for bank loans and bank overdraft. None of these deposits are either past due or impaired.

(2) This represents time deposits with initial terms of over three months when acquired in commercial banks with annual return rates ranging from 2.70% to 3.25%. None of these deposits are either past due or impaired. None of these deposits are pledged.
Patents and
trademarks	Software	Non-
competition
agreement	Customer
relationships	Total
RMB’000	R MB’000	RMB’000	RMB’000	RMB’000
Accumulated amortisation:
At 1 January 2017 	(168)	(1,324)	–	–	(1,492)
Charge for the year 	(58)	(492)	–	–	(550)
At 31 December 2017	(226)	(1,816)	–	–	(2,042)
Charge for the year 	(60)	(793)	–	–	(853)
At 31 December 2018	(286)	(2,609)	–	–	(2,895)
Charge for the year 	(56)	(1,586)	(378)	(355)	(2,375)
Exchange adjustments 	–	–	3	3	6
At 31 December 2019	(342)	(4,195)	(375)	(352)	(5,264)
Charge for the period 	(38)	(1,868)	(3,295)	(3,094)	(8,295)
Exchange adjustments 	–	–	9	8	17
At 30 September 2020 	(380)	(6,063)	(3,661)	(3,438)	(13,542)
Net book value:
At 31 December 2017	383	3,455	–	–	3,838
At 31 December 2018	323	9,662	–	–	9,985
At 31 December 2019	267	14,013	13,126	41,910	69,316
At 30 September 2020 	229	16,182	9,519	37,818	63,748

The amortisation of intangible assets is included in cost of services and general and administrative expenses in the consolidated statement of profit or loss and other comprehensive income.

The useful lives of patents and trademarks of 10 years are determined based on terms of expiry of related legal rights.

The useful lives of software are around 5-10 years which are determined based on technological obsolescence.

Non-competition agreement is amortised over the shorter of the unexpired term of the agreement and its estimated useful lives, which is 3 years.

The useful life of the customer relationship recognised in acquisition of Biomere is 10 years, which is determined based on the factor of the attrition rate.
# 14 GOODWILL

RMB’000
Cost
At 1 January 2017, 31 December 2017 and 31 December 2018 	–
Acquisition of Biomere (Note 34) 	135,187
Exchange adjustments 	(1,225)
At 31 December 2019 	133,962
Exchange adjustments 	(3,190)
At 30 September 2020 	130,772

# Impairment tests for cash-generating units containing goodwill

The goodwill arose from the acquisition of Biomere in 2019 (Note 34).

The recoverable amounts of the cash-generating unit was determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a 5-year period. Cash flows beyond the 5-year period are extrapolated using estimated nil growth rate at 31 December 2019 and 30 September 2020.

As at
31 December
2019	As at
30 September
2020
Annual growth rate of revenue during the 5-year forecast
period	3.0%-10.0%	0.2%-9.8%
Pre-tax discount rate 	12.6%	13.9%

The headroom calculated based on the recoverable amounts deducting the carrying amount of the cash-generating unit as at 31 December 2019 and 30 September 2020 is RMB10,038,000 and RMB5,901,000 respectively.

Management have undertaken sensitivity analysis on the impairment test of goodwill. The following table sets out the hypothetical changes to annual growth rate and pre-tax discount rate that would, in isolation, have removed the remaining headroom respectively as at 31 December 2019 and 30 September 2020:

As at
31 December
2019	As at
30 September
2020
Decrease in annual growth rate 	0.2%	0.1%
Increase in pre-tax discount rate 	3.5%	2.2%

As a result of the above impairment tests, the directors of the Company are of the view that there was no impairment of goodwill as at 31 December 2019 and 30 September 2020.
# BOARD COMPOSITION

The Board currently comprises eight members, including two executive Directors, three non-executive Directors and three independent non-executive Directors.

The list of all Directors is set out under “Corporate Information” on page 81 and the independent non-executive Directors are expressly identified in all corporate communications pursuant to the Hong Kong Listing Rules.

As at 31 December 2017, the board of directors of the Company comprises the following Directors:

# Executive Directors

Li Chaochun, Chairman

Li Faben, General Manager (also the chief executive within the meaning of the Corporate Governance Code)

# Non-Executive Directors

Ma Hui, Vice Chairman

Yuan Honglin

Cheng Yunlei

# Independent Non-Executive Directors

Bai Yanchun

Xu Shan

Cheng Gordon

The list of Directors (by category) is also disclosed in all corporate communications issued by the Company from time to time pursuant to the Hong Kong Listing Rules. There is no relationship among members of the Board (including financial, business, family or other material or relevant relationship).

For the year ended 31 December 2017, the Board, at all times, met the requirements of the Hong Kong Listing Rules relating to the appointment of at least three independent non-executive Directors, and at least one-third of the Board with at least one independent non-executive Director possessing appropriate professional qualifications, or accounting or related financial management expertise.

The Company has received an annual confirmation from each independent non-executive Director of his independence pursuant to the requirements of the Hong Kong Listing Rules. The Company considers all independent non-executive Directors to be independent in accordance with the independence guidelines set out in Rule 3.13 of the Hong Kong Listing Rules.

Non-executive Directors (including independent non-executive Directors) bring a wide range of business and financial expertise, experience and independent judgment to the Board. Through active participation in Board meetings or meetings of Board committees, supervising management issues involving potential conflict of interests and serving on Board committees, all non-executive Directors (including independent non-executive Directors) make various contributions towards the direction of the Company.
# XVII. NOTES TO MAJOR ITEMS IN FINANCIAL STATEMENTS OF THE PARENT (Continued)

# 2. Other receivables (Continued)

# (9). Provision for bad debts (Continued)

# 2019

Unit: Yuan Currency: RMB

Provision for bad debt	Stage 1	Stage 2	Stage 3	Total
12-months
ECL	Lifetime ECL
(non-credit
impaired)	Lifetime ECL
(credit
impaired)
Amount as at 1 January 2019	420,451.00	69,160.92	–	489,611.92
Amounts due for the period as
at 1 January 2019
– Transferred to stage 2	–	–	–	–
– Transferred to stage 3	–	–	–	–
– Reversed to stage 2	–	–	–	–
– Reversed to stage 1	–	–	–	–
Provision for the period	–	93,632.41	–	93,632.41
Reversal for the period	-16,400.00	–	–	-16,400.00
Write-off for the period	–	–	–	–
Cancellation for the period	–	–	–	–
Other changes	–	–	–	–
Amount as at 31 December 2019	404,051.00	162,793.33	–	566,844.33
# XVII. NOTES TO MAJOR ITEMS IN FINANCIAL STATEMENTS OF THE PARENT (Continued)

# 2. Other receivables (Continued)

# (9). Provision for bad debts (Continued)

The significant changes in the gross carrying amount of other receivables that affected the changes in loss provisions in the current period are as follows:

# For the six months ended 30 June 2020

Unit: Yuan Currency: RMB

Book Value	Stage 1	Stage 2	Stage 3	Total
12-months ECL	Lifetime ECL
(non-credit
impaired)	Lifetime ECL
(credit
impaired)
Amount as at 1 January 2020	6,188,654,816.55	269,937.32	–	6,188,924,753.87
Amounts due for the period as
at 1 January 2020
– Transferred to stage 2	–	–	–	–
– Transferred to stage 3	–	–	–	–
– Reversed to stage 2	–	–	–	–
– Reversed to stage 1	–	–	–	–
Provision for the period	4,471,396,255.93	–	–	4,471,396,255.93
Reversal for the period	-3,638,533,099.32	–	–	-3,638,533,099.32
Write-off for the period	–	–	–	–
Cancellation for the period	–	–	–	–
Other changes	–	–	–	–
Amount as at 30 June 2020	7,021,517,973.16	269,937.32	–	7,021,787,910.48
# 12 CAPITAL, RESERVES AND DIVIDENDS

# (a) Movements in components of equity

The reconciliation between the opening and closing balances of each component of the Group’s consolidated equity is set out in the consolidated statement of changes in equity. Details of the changes in the Company’s individual components of equity between the beginning and the end of the year are set out below:

Share cailpta	Cailpta
reserve	PRC statutory
reserve	Retained
profits	Total
RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Balance at 1 January
2019	1,074,358	3161,02	57,606	212,868	1,660,934
Changes in equity for
2019
Total comprehensive
income for the year	–	–	–	38141,	38141,
Transfer to statutory
reserve	–	–	3,814	(3,814)	–
Dividends approved
in respect of the
previous year	–	–	–	(91,320)	(91,320)
Balance at 31
December 2019 and
1 January 2020	1,074,358	3161,02	6142,0	155,875	1,607,755
Changes in equity for
2020
Total comprehensive
income for the year	–	–	–	167,084	167,084
Transfer to statutory
reserve	–	–	16,708	(16,708)	–
Dividends approved
in respect of the
previous year	–	–	–	(1074,36)	(1074,36)
Balance at 31
December 2020	1,074,358	3161,02	7812,8	198,815	1,6674,03
# (b) Dividends

# (i) Dividends payable to equity shareholder of the Company attributable to the year:

2020	2019
RMB’000	RMB’000
Final dividend proposed after the end of
the year of RMB0.12 per ordinary share
(2019: RMB0.1 per ordinary share)	128,923	107,436

On 24 March 2021, a dividend for the year ended 31 December 2020 of approximately RMB128,923 thousand, representing RMB0.12 per share was proposed by the Board of Directors of the Company. Such dividend is to be approved by the shareholders at the Annual General Meeting of the Company. The final dividend proposed after the end of the reporting period has not been recognised as a liability at the end of the reporting period.

# (ii) Dividends payable to equity shareholder of the Company attributable to the previous financial year, approved and paid during the year:

2020	2019
RMB’000	RMB’000
Final dividend in respect of the previous
financial year, approved and paid during
the year	107,436	91,320

On 17 June 2020, a dividend for the year ended 31 December 2019 of approximately RMB107,436 thousand, representing RMB0.1 per share was approved by the shareholders at the Annual General Meeting of the Company.
None of the Directors participated in the determination of his/her own remuneration. Attendance of the members of the Remuneration Committee is set out below:

Name of Directors	Number of meeting
attended/Number of
meeting held
Mr. Kam Tik Lun, CPA, FCCA, LL.M (ICFL)	3/3
Mr. Shiu Yeuk Yuen	3/3
Mr. Leung Ge On, Andy	3/3
Dr. Siu Yim Kwan, Sidney, S.B.St.J.	3/3
Mr. Ho Siu King, Stanley, BEng (Civ E-Law) (HKU), LLB (HKU) and LLM (LSE)	3/3

# G. AUDIT COMMITTEE

The Company established an Audit Committee with written terms of reference in compliance with the GEM Listing Rules. The primary duties of the Audit Committee are to review the Company’s annual report and financial statements, half-yearly report and quarterly reports and to provide advice and comment thereon to the Board. The Audit Committee is also responsible for reviewing and supervising the financial reporting process and internal control procedures of the Group. Currently, it consists of three Independent Non-executive Directors, Mr. Kam Tik Lun, chairman of the Audit Committee, Dr. Siu Yim Kwan, Sidney and Mr. Ho Siu King, Stanley. Four meetings were held during the financial year ended 31 March 2018. Attendance of the members of the Audit Committee is set out below:

Name of Directors	Number of meeting
attended/Number of
meeting held
Mr. Kam Tik Lun, CPA, FCCA, LL.M (ICFL)	4/4
Dr. Siu Yim Kwan, Sidney, S.B.St.J.	4/4
Mr. Ho Siu King, Stanley, BEng (Civ E-Law) (HKU), LLB (HKU) and LLM (LSE)	4/4

The Company’s annual results for the year ended 31 March 2018, have been reviewed by the Audit Committee.

# H. NOMINATION COMMITTEE

A nomination committee (the “Nomination Committee”) consisting of three Independent Non-executive Directors and two Executive Directors was set up by the Company in accordance with the Code. The Nomination Committee has adopted written terms of reference, which have been amended by the Board in compliance with Code Provision A.5.3. The primary duties of the Nomination Committee include:

– reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board at least annually and making recommendations on any proposed changes to the Board to complement the issuer’s corporate strategy;

– identify individuals suitably qualified to become board members and select or make recommendations to the board on the selection of, individuals nominated for directorships;

– reviewing the nomination of Directors and making recommendations to the Board on terms of such appointment;

– assessing the independence of Independent Non-executive Directors.

The Company has adopted a board diversity policy (the “Board Diversity Policy”), which sets out its approach to achieve and maintain diversity on the Board in order to enhance the effectiveness of the Board.