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Notes to the Consolidated Financial Statements

31st March 2015

15 INVESTMENT PROPERTIES (continued)

Fair value measurements using significant unobservable inputs

Fair value of the Group’s investment properties is mainly derived using the investment method of the
income approach, by taking into account the current rental income from the existing tenancy agreement
and reversionary income potential by adopting appropriate term/reversionary yields, which are derived
from analysis of sales transaction and Valuer’s interpretation of prevailing investor requirements or
expectations. For the reversionary potential of the property, the Valuer refers market price of similar
comparable properties. There was no change to the valuation technique with that of prior year.

Term and reversionary yields are estimated by the Valuer based on the risk profile of the type of
investment properties being valued. The higher the yields, the lower is the fair value. At 31st March
2015, yield ranged from 2.4% to 3.9% (2014: 2.3% to 3.8%) were adopted in the term yields analysis
for the Group’s investment properties.

Prevailing market price are estimated based on recent sales transactions within the subject properties
and other comparable properties. The lower the prices, the lower is the fair value. At 31st March 2015,
prevailing market prices ranged from HK$2,880 to HK$7,870 (2014: HK$2,808 to HK$7,717) per square
foot were adopted in the term and reversionary analysis for the Group’s investment properties.

74 ALCO HOLDINGS LIMITED ANNUAL REPORT 2015