2014 — Page 99

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23 CAPITAL AND RESERVES (Continued)

(c)

Nature and purpose of reserves

()

Share premium

(ii)

Prior to 3 March 2014, the application of the share premium account was governed by section 48B of the predecessor Hong Kong Companies Ordinance (Cap. 32). In accordance with the transitional provisions set out in section 37 of Schedule 11 to the new Hong Kong Companies Ordinance (Cap. 622), on 3 March 2014 any amount standing to the credit of the share premium account has become part of the Company's share capital (see note 23(b)). The use of share capital as from 3 March 2014 is governed by the new Hong Kong Companies Ordinance (Cap. 622).

Securities revaluation reserve

The securities revaluation reserve comprises the cumulative net change in the fair value of available-for-sale securities held at the end of the reporting period and is dealt with in accordance with the accounting policies adopted for the revaluation of securities (see note 1(f)).

(d)

(iii)

Other capital reserves

The other capital reserves comprise the unrealised profit on inter-company interest capitialised under investment properties.

Distributability of reserves

The distributable reserves of the Company at 31 December 2014 amounted to HK$934,115,000 (2013: HK$1,373,067,000), as calculated under the provisions of Part 6 of the new Hong Kong Companies Ordinance (Cap. 622). After the end of the reporting period the directors proposed final and second special dividends of HK26 cents and HK30 cents (2013: HK26 cents and Nil) per ordinary share, amounting to HK$92,631,000 and HK$106,882,000 (2013: HK$92,631,000 and Nil) respectively (note 10). These dividends have not been recognised as a liability at the end of the reporting period.

(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 2014 and 2013.

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

Hong Kong Ferry (Holdings) Company Limited Annual Report 2014

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