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Hong Kong Ferry (Holdings) Company Limited Annual Report 2013

Notes to the Accounts (Continued)

23 CAPITAL AND RESERVES (Continued)

(d)

Distributability of reserves

The distributable reserves of the Company at 31 December 2013 amounted to HK$1,373,067,000 (2012 (restated): HK$1,505,104,000), as calculated under the provisions of section 79B of the Hong Kong Companies Ordinance. After the balance sheet date the directors proposed a final dividend of HK26 cents (2012: HK26 cents) per ordinary share, amounting to HK$92,631,000 (2012: HK$92,631,000) (note 10). This dividend has not been recognised as a liability at the balance sheet date.

(e)

Capital management

The Group's primary objectives when managing capital are to safeguard the Group's ability to continue as a going concern and ensure that it maintains a healthy capital ratio in order to support its business and provide

returns for shareholders.

The Group actively and regularly reviews and manages its capital structure under the policy of prudent financial management. The Group maintains a financially sound capital position and, where appropriate, makes

adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

No changes were made in the objectives, policies or processes during the years ended 31 December 2013 and

2012.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

24 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL

INSTRUMENTS

Exposure to credit, liquidity and currency risks arises in the normal course of the Group's business. The Group is also exposed to equity price risk arising from its equity investments in other entities and movements in its own equity share

price.

The Group's exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.

(a)

Credit risk

The Group's credit risk is primarily attributable to bank deposits and trade and other receivables. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis.