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Independent Auditor’s Report

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the
HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Independence

We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional
Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code.

KEY AUDIT MATTER

Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the
consolidated financial statements of the current period. We considered “Provision for obsolete or slow moving
inventories” as key audit matter that was addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the
matter.

Key Audit Matter How our audit addressed the Key Audit Matter

Provision for obsolete or slow moving inventories

Refer to note 20 “Inventories” and note 4 “Critical
accounting estimates and judgements” to the
consolidated financial statements.

At 31st March 2017, the Group held net inventories We understood and tested the controls by which
of HK$473,819,000 and the provision for obsolete management identified obsolescence and determined
or slow moving inventories was HK$114,563,000. the net realisable value of inventories based on a
Inventories are stated at the lower of cost and consistent process in prior years where historically
net realisable value in the consolidated financial there were no material adjustments required as a result
statements. of the estimation process.

40 ALCO HOLDINGS LIMITED ANNUAL REPORT 2017