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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 2017 were HK$1,846 million (2016:
HK$1,985 million) and HK$3.19 (2016: HK$3.43) respectively.

The Group maintains a strong financial position. As at 31st March 2017, we had cash and deposits of
HK$787 million. After deducting bank loans of HK$175 million, we had net cash of HK$612 million. The
Group has adequate liquidity for future working capital requirements.

As at 31st March 2017, our inventory was HK$474 million (2016: HK$316 million). The increase of inventory
level was mainly caused by the finished goods inventory readily shipped and recognised as sales in April
2017. We take a cautious approach to monitor the inventory level especially during this environment with
uncertainty.

Trade receivables balance as at 31st March 2017 was HK$697 million (2016: HK$662 million). It is our
policy to deal with creditworthy customers and to adopt a prudent credit policy, and we have been closely
monitoring credit risk.

Trade payables balance as at 31st March 2017 was HK$250 million (2016: HK$290 million).

30 ALCO HOLDINGS LIMITED ANNUAL REPORT 2017