Sun Art Retail Group Limited - TodayIR.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)
(d)
Nature and purpose of reserves (continued)
(iv)
Statutory reserve
The statutory reserve represents statutory reserves which are appropriated by the
Group’s PRC subsidiaries (“PRC Companies”). According to the relevant laws and
regulations for foreign investment enterprises and the articles of association for the
said PRC Companies, profits of the PRC Companies, as determined in accordance
with the accounting rules and regulations in the PRC, are available for distribution in
the form of cash dividends to investors after the PRC Companies have (1) satisfied
all tax liabilities; (2) offset losses in previous years; and (3) made appropriation to the
statutory reserve funds, including general reserve fund and enterprise expansion fund.
(e)
Distributability of reserves
As at 31 December 2012, the aggregate amount of reserves available for distribution to equity
shareholders of the Company, as calculated under the provisions of section 79B of the Hong
Kong Companies Ordinance was RMB1,015 million (2011: RMB836 million). After the end
of the reporting period the directors proposed a final dividend of HKD0.12 (equivalent to
RMB0.10) per ordinary share, amounting to RMB926 million (note 22(b)). This dividend has
not been recognised as a liability at the end of the reporting period.
(f)
Capital risk management
The Group defines capital as its total equity. The Group’s primary objectives when managing
capital are to safeguard the Group’s ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benefits for other stakeholders, by pricing
products and services commensurate with the level of risk and by securing access to finance
at a reasonable cost.
The Group actively and regularly reviews and manages its capital structure to maintain a
balance between the higher shareholder returns that might be possible with higher levels
of borrowings and the advantages and security afforded by a sound capital position, and
makes adjustments to the capital structure in light of changes in economic conditions.
The Group monitors its capital structure on the basis of a debt-to-equity ratio. This ratio is
calculated as debt divided by total equity. The Group defines debt as loans, borrowings
and other financial liabilities, less cash and cash equivalents, time deposits and availablefor-sale
financial assets.
There were no changes in the Group’s approach to capital management during the year.
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Sun Art Retail Group Limited
Annual Report 2012