Annual Report 2020

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2020 127 The United Laboratories International Holdings Limited Annual Report 2020 37. PLEDGE OF OR RESTRICTIONS ON ASSETS Pledge of assets Other than deposits and property, plant and equipment made to financing institutions disclosed in Note 29 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: 2020 2019 RMB’000 RMB’000 Property, plant and equipment 446,089 545,169 Rights-of-use assets 178,270 183,013 Bills receivables 26,493 61,793 Pledged bank deposits 440,194 724,981 Restrictions on assets In addition, lease liabilities of RMB1,686,000 (2019: RMB1,763,000) are recognised with related right-of- use assets of RMB1,758,000 (2019: RMB1,709,000) at 31 December 2020. 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 24 and 26. 38. 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 net debt, which includes borrowings (Note 29), convertible bonds (Note 30) and lease liabilities (Note 28), net of cash and cash equivalents 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.