2015 — Page 121

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23 CAPITAL AND RESERVES (Continued)

24

(d)

(e)

Distributability of reserves

At 31 December 2015, the aggregate amount of reserves available for distribution to equity shareholders of the Company, as calculated under the provisions of Part 6 of the Hong Kong Companies Ordinance, was HK$712,675,000 (2014: HK$934,115,000). After the end of the reporting period the directors proposed a final dividend of HK26 cents (2014: final and second special dividends of HK26 cents and HK30 cents respectively) per ordinary share, amounting to HK$92,631,000 (2014: HK$92,631,000 and HK$106,882,000 respectively) (note 9). These dividends have not been recognised as a liability at the end of the reporting period.

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 2015 and 2014.

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

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.

Cash is deposited with financial institutions with sound credit ratings and the Group has exposure limit to any single financial institution. Given their high credit ratings, management does not expect any of these financial institutions will fail to meet their obligations.

Hong Kong Ferry (Holdings) Company Limited

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Annual Report 2015