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304

Notes to the

Financial Statements

for the year ended 31 December 2016

34. OTHER RESERVES (CONT’D.)

(a) Statutory reserve

In accordance with the United Arab Emirates (“UAE”) Commercial Companies Law, 10% of profit for each year from

a Limited Liability Company incorporated in the UAE is transferred to a legal reserve until such time as the reserve

equalled 50% of the paid-up capital. Faber L.L.C. (“FLLC”) has resolved to discontinue such annual transfers since

the reserve has equalled to 50% of its share capital. This reserve is not available for distribution except as stipulated

by UAE law.

(b) Share based payment reserve

In 2008, Opus JC, a subsidiary of the Company, established the Opus IC Employee Share Ownership Plan. The

Share Ownership Plan established a framework under which Opus IC could, from time to time, offer selected

employees the opportunity to acquire shares in Opus JC. The Share Ownership Plan was wound up during the

previous financial year.

(c) Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the

financial statements of foreign operations whose functional currencies are different from that of the Group’s

presentation currency. It is also used to record the exchange differences arising from monetary items which form

part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the

functional currency of the reporting entity or the foreign operation.

(d) Capital redemption reserve

Capital redemption reserve arises from the redemption of redeemable preference shares in the prior years by a

subsidiary in accordance with Section 61(5) of Companies Act, 1965.

35. RETAINED EARNINGS

The Company may distribute dividends out of its entire retained earnings under the single tier system.

36. OPERATING LEASE COMMITMENTS

The Group has entered into non-cancellable operating lease agreements for the use of premises and certain plant and

machineries. These leases have an average tenure of between 3 and 5 years with no renewal or purchase option

included in the contracts.

The Group also leases various plant and machinery under cancellable operating lease agreements. The Group is

required to give a six-month notice for the termination of those agreements.