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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 MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the consolidated financial statements of the current period. These matters were 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 these matters.

Key audit matters identified in our audit are summarised as follows:

• Provision for obsolete or slow moving inventories

• Capitalisation of development costs

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 2018, the Group held net inventories We understood and tested the controls by which
of HK$403,591,000 and the provision for obsolete management identified obsolescence and determined
or slow moving inventories was HK$119,049,000. the net realisable value of inventories.
Inventories are stated at the lower of cost and
net realisable value in the consolidated financial
statements.

46 ALCO HOLDINGS LIMITED ANNUAL REPORT 2018