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Independent Auditor’s Report

KEY AUDIT MATTER (CONTINUED)

Key Audit Matter (Continued) How our audit addressed the Key Audit Matter
(Continued)

Provision for obsolete or slow moving inventories
(Continued)

Management assessed the provision at each We tested, on a sample basis, by comparing the
period end for obsolete or slow moving inventories estimated selling price with post year-end sales
based on consideration of obsolescence of raw data of the selected items and tested the inventory
materials and work in progress, and the net aging by comparing the inventory records with the
realisable value of finished goods. The identification underlying documents. In addition, we discussed with
of inventory obsolescence and determination of management and inspected the latest sales pattern for
estimated selling price less cost to sell require both price and quantity for potential orders, and other
the use of significant judgement and estimates, factors, including the product change and the market
including their nature, ageing, latest selling trend.
price, and expectation of future sales orders.
The estimates are also subject to uncertainty of On a sample basis, we have further corroborated
market trends, customer demands and technology management’s explanations with underlying
development. documents and analysis of inventory ageing and sales
pattern.
We focused on this area due to the significance of
the balance, significant management judgement Based on the procedures performed above, we
and estimates involved in determining the provision considered the estimates made by management in
for impairment of obsolete or slow moving assessing the provision for obsolete or slow-moving
inventories. inventories to be supported by available evidence.

OTHER INFORMATION

The directors of the Company are responsible for the other information. The other information comprises
all of the information included in the annual report other than the consolidated financial statements and our
auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2017 41