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Report of the Directors

RELATIONSHIPS WITH EMPLOYEES, CUSTOMERS AND SUPPLIERS

The Group recognizes the importance of good relationships with its employees, customers and suppliers to
meet long-term business goals.

Employees are considered valuable assets of the Group and are reasonably remunerated according to
performance, qualification and market trend. Remuneration packages, including medical insurance and
education subsidies, will be reviewed regularly.

The Group has been building long-term relationships with customers and suppliers. A good relationship with
suppliers helps develop practices of punctual delivery of raw materials with good condition. With reliable
production parts, we are able to produce products with high quality and reliability for our customers. These all
in turn benefit the Company and its shareholders as a whole.

IMPORTANT EVENTS AFTER YEAR END

As far as the Company is aware, no important events affecting the Company that have occurred since the
end of the financial year.

COMPLIANCE WITH RELEVANT LAWS AND REGULATIONS

During the year, as far as the Company is aware, there was no material breach of or non-compliance with
relevant laws and regulations that have a significant impact on the business and operation of the Group.

LIQUIDITY AND FINANCIAL RESOURCES

The Group’s total equity and total equity per share as at 31st March 2016 were HK$1,985 million (2015:
HK$1,926 million) and HK$3.43 (2015: HK$3.32) respectively.

The Group maintains a strong financial position. To provide additional working capital to meet seasonal
orders, during the year we arranged a three-year loan facility with several major banks for a total standby
amount of US$80 million. As at 31st March 2016, we had cash and deposits of HK$1,592 million. After
deducting bank loans of HK$233 million, we had net cash of HK$1,359 million. The Group has adequate
liquidity for future working capital requirements.

As at 31st March 2016, our inventory was HK$316 million (2015: HK$404 million). We take a cautious
approach to monitor the inventory level especially during this environment with uncertainty.

Trade receivables balance as at 31st March 2016 was HK$662 million (2015: HK$533 million). As it is our
policy to deal with creditworthy customers and to adopt a prudent credit policy, credit risk is kept at minimal.

Trade payables balance as at 31st March 2016 was HK$290 million (2015: HK$460 million).

16 ALCO HOLDINGS LIMITED ANNUAL REPORT 2016