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Notes to the Consolidated Financial Statements

31st March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.2 Subsidiaries (continued)

2.2.2 Separate financial statements

Investments in subsidiaries are accounted for at cost less impairment. Cost also includes
direct attributable costs of investment. The results of subsidiaries are accounted for by the
Company on the basis of dividend and receivable.

Impairment testing of the investments in subsidiaries is required upon receiving dividends
from these investments if the dividend exceeds the total comprehensive income of the
subsidiary in the period the dividend is declared or if the carrying amount of the investment in
the separate financial statements exceeds the carrying amount in the consolidated financial
statements of the investee’s net assets including goodwill.

2.3 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision-maker. The chief operating decision-makers, who are responsible for
allocating resources and assessing performance of the operating segments, have been identified
as the management that make strategic decisions.

2.4 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured
using the currency of the primary economic environment in which the entity operates (the
“functional currency”). The consolidated financial statements are presented in Hong Kong
dollars (“HK$” or “HKD”), which is the Company’s functional and the Group’s presentation
currency.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2015 39