Annual Report 2022

MANAGEMENT DISCUSSION AND ANALYSIS 13 The United Laboratories International Holdings Limited Annual Report 2022 In April 2022, The United Bio-Technology (Hengqin) Co., Ltd. （聯邦生物科技（珠海橫琴）有限公司） (“The United Bio-Technology”), one of wholly-owned subsidiaries of the Group, officially established its presence in Hengqin- Guangdong-Macao In-Depth Cooperation Zone. As the Group’s biopharmaceutical R&D headquarters, it specialises in the R&D of drug products for energy metabolism, inflammation and autoimmune diseases. The primary mission of The United Bio-Technology is the research and development of high-end biological drugs for the treatment of major chronic diseases, and it will gradually develop into a professional institution for chronic disease management. In the future, The United Bio-Technology will strengthen international cooperation and exchanges and project introduction, and actively promote the progress of new drug projects to further enhance its competitiveness in the biomedical industry. Optimising Financial Structure In terms of finance, the Group continuously optimised the financial structure to improve liquidity by adjusting the ratio of onshore and offshore borrowings. During the year, the Group successively obtained Hong Kong dollar term loan facilities from several banks, which provided sufficient liquidity to the Group and demonstrated that the Group’s profitability was widely recognised by financial institutions. During the year, the finance costs of the Group were approximately RMB81.6 million, representing a year-on-year increase of 35.5% mainly due to increase in Hong Kong dollars interest rate. As at 31 December 2022, the Group’s net bank balances and cash (after deducting borrowings and trade payables under supplier finance arrangement) amounted to RMB1,394.6 million (2021: RMB212.6 million). The Group will actively adjust its financial structure by using Renminbi as the main borrowing currency in its efforts to reduce overall finance costs, balance the risk of exchange rate fluctuation and enhance financial flexibility and efficiency in the utilisation of funds. Liquidity and Financial Resources As at 31 December 2022, the Group had pledged bank deposits, bank balances and cash amounted to approximately RMB5,437.8 million (2021: RMB4,158.4 million). As at 31 December 2022, the Group had interest-bearing borrowings of approximately RMB2,455.1 million (2021: RMB1,831.1 million), which were denominated in Hong Kong dollars and Renminbi with maturity within five years. Borrowings of approximately RMB251.4 million are fixed rates loans while the remaining balance of approximately RMB2,203.7 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.