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MANAGEMENT DISCUSSION AND ANALYSIS (continued)
Liquidity and financial resources

Total equity and equity per share of the Group as at 30th September 2015 were HK$1,936
million (31st March 2015: HK$1,926 million) and HK$3.34 (31st March 2015: HK$3.32)
respectively.
The Group maintains a healthy financial position. To provide additional working capital to
meet the seasonal orders, we have arranged a three-year loan facility with several major
banks for a total standby amount of US$80 million. As at 30th September 2015, we had
cash and deposits of HK$602 million. After deducting bank loans and trust receipt loans of
HK$789 million, we had net borrowings of HK$187 million.
As at 30th September 2015, our inventory was HK$1,123 million (31st March 2015: HK$404
million). After the end of the period, substantially all of the finished goods made have been
shipped in October 2015. We have been taking a cautious approach to monitor the inventory
level especially during this environment with uncertainty.
Trade receivables balance as at 30th September 2015 was HK$1,211 million (31st March
2015: HK$533 million). As it is our policy to deal with creditworthy customers and to adopt a
prudent credit policy, credit risk is kept at minimal.
Trade payables balance as at 30th September 2015 was HK$813 million (31st March 2015:
HK$460 million).
Capital expenditure on fixed assets during the six months ended 30th September 2015
was HK$56 million (2014: HK$23 million). As at 30th September 2015, we had capital
commitments contracted but not provided for in respect of mould, plant and machinery and
renovation amounting to HK$3,837,000 (31st March 2015: HK$16,018,000).
Due to the peg-rate system, we have limited exposure to trade-related foreign exchange
risk as substantially all of our sales, purchases and borrowings are denominated in United
States dollars and Hong Kong dollars. Adhering to the policy of not engaging in currency
speculation, there was no gain or loss from speculative activities during the reporting period.

To naturally hedge against the potential cost impact caused by RMB, the Group has
diversified its cash portfolio by investing in RMB denominated deposits. As at 30th September
2015, the amount totalled RMB249 million.

Employees

As at 30th September 2015, the Group had approximately 3,100 (2014: 3,300) employees in
Hong Kong and the PRC. Remuneration packages are generally structured by reference to
market terms and individual qualifications. Salaries and wages are normally reviewed on an
annual basis based on performance appraisals and other relevant factors. We also provide
other benefits including medical insurance, provident fund and education subsidies to all
eligible staff.

Interim Report 2015 ALCO HOLDINGS LIMITED 17