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Notes to the Consolidated Financial Statements

31st March 2016

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)

(e) Provision for obsolete or slow moving inventories

The Group makes provision for obsolete or slow moving inventories based on consideration of
obsolescence of raw materials and work in progress and the net realisable value of finished goods.
The identification of inventory obsolescence and estimated selling price in the ordinary course
of business require the use of judgement and estimates. Where the expectation is different from
the original estimate, such difference will impact the carrying amount of inventory and impairment
provision in the year in which such estimate has been changed.

(f) Provision for other liabilities and charges

Provisions are recognised when the Group has a present legal or constructive obligation as a
result of past events. Significant judgement is required in determining the provision for liabilities
and charges. The Group’s management determines the provision for liabilities and charges by
estimating the present value of the expenditures expected to be required to settle the obligation.
This assessment requires the use of estimation.

5 REVENUE AND SEGMENT INFORMATION

Revenues recognised during the year are as follows:

2016 2015
HK$’000 HK$’000

Consumer electronic products 2,879,104 2,562,566

(a) Segment analysed by products

The senior management (being the chief operating decision-maker) has determined the operating
segments based on the reports reviewed by the management. The chief operating decision-
makers have been identified as the executive directors and senior management who directly report
to the executive directors. The executive director and senior management reviewed the Group’s
internal reporting to assess performance and allocate resources. A management approach has
been used for the operating segment reporting.

The Group mainly operates in the People’s Republic of China (the “PRC”) and Hong Kong and is
principally engaged in designing, manufacturing and selling of consumer electronic products.

56 ALCO HOLDINGS LIMITED ANNUAL REPORT 2016