Page 91 -

Notes to the Consolidated Financial Statements

31st March 2018

6 OTHER INCOME

2018 2017
HK$’000 HK$’000

Fair value gain on investment properties (Note 15) 3,500 11,068
Rental income from investment properties 3,846 2,979
Amortisation of deferred gain (Note) 33,446 17,450
Others 435 1,525

41,227 33,022

Note:

In January 2016, the Group disposed of a self-occupied property and certain investment properties in Hong Kong with carrying values of
HK$23,791,000 and HK$236,310,000, respectively, at a total net consideration of HK$533,769,000 to an independent third party. The Group
subsequently leased back such self-occupied property for its own use for 3 years commencing from the completion date of the aforesaid
transaction. The excess of consideration over fair value of such leased property has been deferred and amortised over the lease period. The
lease was early terminated in February 2018 and as a result, the remaining deferred gain totaling HK$33,446,000 as at 1st April 2017 has
been fully amortised and recognised in the consolidated income statement for the current year.

7 EXPENSES BY NATURE

Expenses included in cost of goods sold, selling expenses, administrative expenses and other operating
expenses are analysed as follows:

2018 2017
HK$’000 HK$’000
Amortisation of intangible assets (Note 17) 9,899 7,800
Amortisation of leasehold land and land use rights (Note 16) 283 281
Auditor’s remuneration 2,280 2,200
Cost of inventories (Note 20) 1,651,059 1,628,633
Provision for/(write-back of) impairment of inventories (Note 20) 4,486 (17,440)
Depreciation of property, plant and equipment (Note 14) 38,857 37,326
Employee benefit expenses (including directors’ emoluments)
(Note 8) 203,384 233,353
Severance pay (Note 8) 8,482 6,550
Loss on disposal of plant and equipment 1,399 662
Operating lease rental in respect of land and buildings 26,249 33,174
Research and development costs 35,007 26,443
Provision for doubtful debt (Note 21) 2,908 –

ALCO HOLDINGS LIMITED ANNUAL REPORT 2018 89