Annual Report 2021

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2021 131 The United Laboratories International Holdings Limited Annual Report 2021 37. CAPITAL RISK MANAGEMENT (Continued) 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. 38. FINANCIAL INSTRUMENTS Categories of financial instruments 2021 2020 RMB’000 RMB’000 Financial assets Financial asset at FVTPL 500 500 Financial assets at amortised cost 7,721,518 6,773,539 Financial liabilities Financial liabilities at amortised cost 5,424,177 5,110,255 Derivative financial instruments – Foreign currency swap contract 5,812 4,573 The Group’s major financial instruments include trade and bills receivables, other receivables, commercial bills receivables, other pledged deposits, pledged bank deposits, bank balances and cash, financial asset at FVTPL, trade and other payables, borrowings and derivative financial instrument. Details of the financial instruments are disclosed in respective notes. The risks associated with these financial instruments include market risk (foreign currency risk and interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management of the Group manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. Market risk Foreign currency risk The Group has foreign currency sales and purchases, and also convertible bonds, certain bank balances and bank borrowings denominated in USD, Euro and HK$ other than the functional currency of respective group entities, which expose the Group to foreign currency risks. The Group manages its foreign currency risk by closely monitoring the movement of the foreign currency rate and using foreign exchange forward contracts to eliminate the currency exposures.

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