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Notes to the Consolidated Financial Statements

31st March 2017

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation (Continued)

(b) (Continued)

None of the above new standards and amendments is expected to have a significant effect
on the consolidated financial statements of the Group, except for the followings:

HKFRS 9, “Financial instruments”

The new standard addresses the classification, measurement and derecognition of financial
assets and financial liabilities, introduces new rules for hedge accounting and a new
impairment model for financial assets.

The new impairment model requires the recognition of impairment provisions based on
expected credit losses (ECL) rather than only incurred credit losses as is the case under
HKAS 39. It applies to financial assets classified at amortised cost, contract assets under
HKFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments
and certain financial guarantee contracts. While the Group has not yet undertaken a detailed
assessment of how its impairment provisions would be affected by the new model, it may
result in an earlier recognition of credit losses.

The new standard also introduces expanded disclosure requirements and changes in
presentation. These are expected to change the nature and extent of the Group’s disclosures
about its financial instruments particularly in the year of the adoption of the new standard.

HKFRS 9 must be applied for financial years commencing on or after 1st January 2018.
Based on the transitional provisions in the completed HKFRS 9, early adoption in phases was
only permitted for annual reporting periods beginning before 1st February 2015. After that
date, the new rules must be adopted in their entirety. The group does not intend to adopt
HKFRS 9 before its mandatory date.

HKFRS 15, “Revenue from contracts with customers”

The HKICPA has issued a new standard for the recognition of revenue. This will replace
HKAS 18 which covers contracts for goods and services and HKAS 11 which covers
construction contracts. The new standard is based on the principle that revenue is
recognised when control of a good or service transfers to a customer. The standard permits
either a full retrospective or a modified retrospective approach for the adoption.

52 ALCO HOLDINGS LIMITED ANNUAL REPORT 2017