Page 18 -

MANAGEMENT DISCUSSION AND ANALYSIS (continued)
Business review (continued)

Though the products constitute the stars of the Group, backend support is no less essential.
While the Houjie Town production facility has been fully operational, its benefits are
continuing to be felt. Having replaced all of the old SMT (Surface Mount Technology)
assembly lines with new lines at the facility during the period, the Group has been able
to meet higher precision requirements and capitalise on greater manufacturing efficiency.
And since each new assembly line has significantly higher output than its predecessor, less
lines and labour are required, enabling the Group to reduce labour cost and overhead. Still
another benefit of the new assembly lines is lower energy consumption, thus allowing the
Group to fulfil its commitment to energy conservation.
Prospects

As the US economy makes incremental steps forward, the management will place even
greater attention to opportunities and trends that will emerge in the future. Having achieved
a strong track record of effectively identifying consumer trends and leveraging in-house R&D
capabilities to introduce exciting new products to market, the management will continue to
use such strengths as it pursues sustainable and healthy growth.

While always looking out for new opportunities and new product developments, the
management will at the same time seek to build on the progress achieved by the Group’s
existing product lines. Of the highest priority is to further strengthen, and therefore capitalise
on the success so far achieved by the Group’s tablet series. In addition to sizes ranging from
7-inch to 11-inch presently available, larger size models are now in the pipe-line and will
gradually enter production in 2016. Also in the new year, in addition to wireless keyboards,
other productivity accessories will be considered for inclusion with the Group’s tablets, such
as wireless mouse, active stylus and the like.

Even though the Group’s sound bars and other AV products will not need to be renewed
and revamped as drastically or as frequently as tablets, they are still being examined and re-
engineered constantly to make sure that they can be produced more efficiently and have
features and refinements which are in step with consumer trends.
The need for constant development will also extend to production. Although the Houjie
Town facility is state-of-the-art, the management will continue to dedicate efforts towards
raising efficiency, and thereby minimise the Group’s exposure to high labour costs. And apart
from investing in automation for continuous productivity improvements, the Group has also
added, and will continue to add, high-precision equipment for further enhancing product
quality, reliability and durability.
Even though the Group has made clear progress during the latest financial period, it is well
aware of the need to sustain growth over the long term. Through the determination of an
experienced management team; the nurturing of ties with long-standing and trusted business
partners; the bolstering of product lines and ongoing push to enter new markets, the Group
will have the means and methods for achieving this overriding goal.

16 ALCO HOLDINGS LIMITED Interim Report 2015