ANNUAL%20REPORT%202015%20eng

Notes to Consolidated Financial Statements
29 CAPITAL, RESERVES AND DIVIDENDS (Continued)
(e)
Nature and purpose of reserves
(i)
Share premium
Under the Companies Law of the Cayman Islands, the share premium account of the Company
may be applied for payment of distributions or dividends to shareholders provided that
immediately following the date on which the distribution or dividend is proposed to be paid, the
Company is able to pay its debts as they fall due in the ordinary courses of business.
(ii)
Other reserve
The other reserve comprises the following:
– the aggregate amount of share capital and other reserves of the companies now comprising
the Group after elimination of the investments in subsidiaries; and
– the portion of the grant date fair value of unexercised share options granted to directors and
employees of the Company that has been recognised in accordance with the accounting
policy adopted for share-based payments in Note 2(q) (ii).
(iii) Exchange reserve
The exchange reserve comprises all foreign exchange adjustments arising from the translation of
the MNT denominated financial statements of the Group’s operations to the Group’s presentation
currency. The reserve is dealt with in accordance with the accounting policy set out in Note 2(v).
(f)
Distributability of reserves
Pursuant to the Companies Law, Cap.22 (Law 3 of 1961, as consolidated and reserved) of the Cayman
Islands, share premium of the Company is distributable to the shareholders. Other than the share
premium, there is no other amount available for distribution to equity shareholders of the Company as
at 31 December 2015.
(g)
Capital management
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. The Group defines the capital as total shareholders’ equity plus loans and borrowings.
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.
The gearing ratio (calculated as total bank and other borrowings divided by total assets) of the Group
as at 31 December 2015 was 57.0% (2014: 46.6% before considering provision for impairment loss on
non-financial assets, and 51.9% after considering it).
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Annual Report 2015