Annual Report 2019

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2019 136 The United Laboratories International Holdings Limited Annual Report 2019 39. PLEDGE OF OR RESTRICTIONS ON ASSETS Pledge of assets Other than deposits made to financing institutions disclosed in Note 30 and 31 of the consolidated financial statements, the Group had also pledged the following assets to banks as securities against banking facilities granted to the Group at the end of the reporting period: 2019 2018 RMB’000 RMB’000 Property, plant and equipment 545,169 576,407 Rights-of-use assets 183,013 – Land use rights – 44,491 Bills receivables 61,793 373,657 Pledged bank deposits 724,981 555,806 Restrictions on assets In addition, lease liabilities of RMB1,763,000 are recognised with related right-of-use assets of RMB1,709,000 as at 31 December 2019. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor and the relevant leased assets may not be used as security for borrowing purposes. Furthermore, bills receivables issued by third parties endorsed with recourse for settlement of trade payables, other payables and payables in respect of the acquisition of property, plant and equipment, are disclosed in Notes 25 and 27. 40. CAPITAL RISK MANAGEMENT The Group manages its capital to maintain a balance between continuity of funding of cash flows from operating activities and the flexibility through the use of the finance from banks. The Group also monitors the current and expected liquidity requirements and its compliance with lending covenants regularly to ensure that it maintains sufficient working capital and adequate committed lines of funding to meet its liquidity requirement. The capital structure of the Group consists of debt, which includes the obligations under finance leases (Note 30), borrowings (Note 31) and convertible bonds (Note 32), lease liabilities (Note 29), and equity attributable to owners of the Company, comprising issued share capital, retained profits and other reserves. The management of the Group reviews the capital structure on a regular basis. As part of this review, the management considers the cost of capital and the associated risk, and takes appropriate actions to adjust the Group’s capital structure.