Annual Report 2023

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2023 127 The United Laboratories International Holdings Limited Annual Report 2023 37. PLEDGE OF OR RESTRICTIONS ON ASSETS Pledge of assets Other than deposits and property, plant and machinery made to financing institutions disclosed in Notes 25 and 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: 2023 2022 RMB’000 RMB’000 Property, plant and equipment, at net book value 22,440 416,896 Right-of-use assets, at net book value 38,354 167,837 Banker’s acceptance bills receivables 23,853 251,378 Restrictions on assets In addition, lease liabilities of RMB6,831,000 (2022: RMB7,640,000) are recognised with related right-of- use assets of RMB5,961,000 (2022: RMB6,570,000) at 31 December 2023. 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 and other payables are disclosed in Note 24. 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) 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.