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Report of the Directors

LIQUIDITY AND FINANCIAL RESOURCES (CONTINUED)

Capital expenditure on fixed assets during the year was HK$48 million (2016: HK$70 million). As at 31st
March 2017, we had capital commitments contracted but not provided for in respect of moulds, plant and
machinery and renovation amounting to HK$5,189,000 (2016: HK$11,878,000).

Due to peg-rate system, we have limited exposure to trade-related foreign exchange risk as substantially all
of our sales, purchases and borrowings are denominated in United States dollars and Hong Kong dollars.
Adhering to the policy of not engaging in currency speculation, there was no gain or loss from speculative
activities during the reporting financial year.

To naturally hedge against the potential cost impact caused by RMB, the Group has diversified its cash
portfolio by investing in RMB denominated deposits. As at 31st March 2017, the amount totalled RMB75
million.

EMPLOYEES

As at 31st March 2017, the Group had approximately 1,600 (2016: 1,700) employees in Hong Kong and
the PRC. Remuneration packages are generally structured by reference to market terms and individual
qualifications. Salaries and wages are normally reviewed on an annual basis based on performance appraisals
and other relevant factors. We also provide other benefits including medical insurance, provident fund and
education subsidies to all eligible staff.

MAJOR SUPPLIERS AND CUSTOMERS

The purchases and sales attributable to the Group’s major suppliers and customers expressed as a
percentage of total purchases and sales of the Group for the year ended 31st March 2017 are as follows:

Purchases
– the largest supplier 17%
– five largest suppliers combined 55%

Sales
– the largest customer 93%
– five largest customers combined 98%

None of the directors, their associates or shareholders (which to the knowledge of the directors owns more
than 5% of the Company’s share capital) had an interest in the major suppliers or customers noted above at
any time during the year.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2017 31