Annual Report 2024

MANAGEMENT DISCUSSION AND ANALYSIS 16 The United Laboratories International Holdings Limited Annual Report 2024 During the year, segmental revenue (including inter-segment sales) of Intermediate products, Bulk medicine and Finished products increased by 1.8%, decrease by 0.5% and 5.9% respectively as compared with 2023. Segmental profit increased by 5.9%, decrease by 9.8% and 47.0% year-on-year respectively. The segment profit of Finished products declined significantly, mainly due to fierce market competition and falling market prices due to the factors such as national drug central procurement leading to product price reductions. In addition, the research and development expenses of Finished products segment increased by 26.6% to RMB577.2 million during the year. Optimising Financial Structure In terms of finance, the Group continuously optimised its financial structure to improve liquidity by adjusting the mix of onshore and offshore borrowings, balancing long-term and short-term borrowings to reduce the finance expenses and enhance financial flexibility and efficiency in the utilisation of funds and maintain robust financial position. During the year, the Group has used Renminbi as the main borrowing currency to reduce the risk of exchange rate fluctuation and finance costs. The Group has also secured several long-term project loans for financing of its capital expenditures. For the year ended 31 December 2024, the finance cost of the Group amounted RMB35.0 million, representing a year-on-year decrease of 47.7%. Borrowing costs of RMB40.4 million (2023: RMB15.5 million) was capitalised during the year. As at 31 December 2024, the Group’s net bank balances and cash (after deducting borrowings and trade payables under supplier finance arrangement) amounted to RMB2,139.7 million. Liquidity and Financial Resources As at 31 December 2024, the Group had pledged bank deposits, bank balances and cash amounted to approximately RMB7,364.2 million (2023: RMB5,234.2 million). As at 31 December 2024, the Group had interest-bearing borrowings of approximately RMB3,138.3 million (2023: RMB1,496.9 million) denominated in Renminbi with maturity within five years. Borrowings of approximately RMB16.9 million is on a fixed rate basis while the remaining balance of approximately RMB3,121.4 million is on a floating rate basis. The directors expect that all such borrowings will either be repaid by internally generated funds or rolled over upon maturity and provide sustainable funding to the Group’s operations. As at 31 December 2024, current assets of the Group amounted to approximately RMB16,070.7 million (2023: RMB13,787.2 million). Net current assets increased from RMB7,160.5 million as at 31 December 2023 to RMB7,298.1 million as at 31 December 2024. The Group’s current ratio was approximately 1.83 as at 31 December 2024, as compared with 2.08 as at 31 December 2023. As at 31 December 2024, the Group had total assets of approximately RMB25,833.1 million (2023: RMB21,017.2 million) and total liabilities of approximately RMB11,397.8 million (2023: RMB8,269.6 million). Equity attributable to owners of the Company increased from RMB12,734.8 million at 31 December 2023 to RMB14,388.3 million at 31 December 2024. As at 31 December 2024, the Group’s net bank balances and cash (after deducting bank borrowings and trade payables under supplier finance arrangement) amounted to RMB2,139.7 million (2023: RMB1,755.5 million).