Annual Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS 12 The United Laboratories International Holdings Limited Annual Report 2020 Liquidity and Financial Resources As at 31 December 2020, the Group had pledged bank deposits, cash and bank balances amounted to approximately RMB3,437.0 million (2019: RMB3,889.8 million). As at 31 December 2020, the Group had interest-bearing borrowings of approximately RMB2,209.7 million (2019: RMB3,988.0 million), which were denominated in Hong Kong dollars, Renminbi and Euro with maturity within five years. Borrowings of approximately RMB81.5 million are fixed rates loans while the remaining balance of approximately RMB2,128.2 million is at floating rates. The directors expect that all such borrowings will either be repaid by internally generated funds or rolled over upon maturity and will continue to provide funding to the Group’s operations. As at 31 December 2020, current assets of the Group amounted to approximately RMB8,225.0 million (2019: RMB8,713.5 million). Net current assets increased from RMB2,254.7 million at 31 December 2019 to RMB3,365.1 million as at 31 December 2020. The Group’s current ratio was approximately 1.69 as at 31 December 2020, as compared with 1.35 as at 31 December 2019. The short term financial position is improved significantly. As at 31 December 2020, the Group had total assets of approximately RMB14,963.7 million (2019: RMB15,699.7 million) and total liabilities of approximately RMB6,351.9 million (2019: RMB9,027.9 million). Equity attributable to shareholders of the Company increased from RMB6,671.8 million at 31 December 2019 to RMB8,613.9 million at 31 December 2020. As at 31 December 2020, the Group’s net cash and bank balances (after deducting borrowings, bills payables and convertible bonds payable) amounted to RMB20,264,000 (2019: net liability RMB2,429.3 million). Currency Exchange Exposures The Group’s purchases and sales are mainly denominated in Renminbi, United States dollars and Hong Kong dollars. The operating expenses of the Group are mainly denominated in Renminbi and Hong Kong dollars. The Group’s borrowings are denominated in Hong Kong dollars, Renminbi and Euro. The Group’s treasury policy is in place to monitor and manage its exposure to fluctuation in exchange rates. Besides, the Group will conduct periodic review of its exposure to foreign exchange risk and may use financial instrument for hedging purpose when considered appropriate. Contingent Liabilities As at 31 December 2020 and 2019, the Group had no material contingent liabilities.