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Notes to the Consolidated Financial Statements

31st March 2015

3 FINANCIAL RISK MANAGEMENT (continued)

3.2 Capital risk management (continued)

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividend
paid to shareholders, raise or repay bank borrowings, issue new shares or sell assets to reduce
debt.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total
borrowings net of cash and cash equivalents divided by total equity as shown in the consolidated
balance sheet.

The gearing ratios at 31st March 2015 and 2014 were as follows:

2015 2014
HK$’000 HK$’000

Borrowings (Note 26) (50,000) (130,000)
Trust receipt loan (1,654) –
Less: Cash and cash equivalents (Note 24) 888,335 924,146

Net surplus cash 836,681 794,146
Total equity 1,926,335 1,855,921

Gearing ratio Not applicable Not applicable

3.3 Fair value estimation

The fair value measurements are disclosed by level of the following fair value measurement
hierarchy.

• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 – inputs other than quoted prices included within level 1 that are observable for the
asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices);

• Level 3 – inputs for the asset or liability that are not based on observable market data (that
is, unobservable inputs).

As at 31st March 2015 and 2014, there were no financial assets that were measured at fair value
for the Group.

See Note 15 for disclosures of the investment properties that are measured at fair value.

There were no transfers between levels 1, 2 and 3 during the year.

56 ALCO HOLDINGS LIMITED ANNUAL REPORT 2015