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15. Commitments MANAGEMENT DISCUSSION AND ANALYSIS
(a) Capital commitments Group results

30 September 31 March For the six months ended 30 September 2019, the Group recorded turnover of HK$462
2019 2019 million (2018: HK$836 million), and loss attributable to shareholders of HK$217 million
HK$’000 HK$’000 (2018: loss of HK$181 million). One of the most significant factors for the decline was the on-
going trade war between China and the United States, which affected a substantial portion of
Property, moulds, plant and machinery and the Group’s AV business.
renovation contracted but not provided for 6,870 8,815
As the China-US trade war dragged on, many China-based electronics manufacturers had to
(b) Operating lease commitments (as lessor) fight for an ever smaller slice of the export business. In fact, many of these manufacturers
were willing to accept orders at below material costs, thus undermining gross margins for
The Group leases various properties under non-cancellable operating lease all industry players. Such dire conditions significantly affected the Group’s ability to take
agreements. The leases have varying terms, escalation clauses and renewal rights. on orders as highly fierce price competition made many of these orders unacceptable. To
make matter worse, the Group was also unable to pass on the impact of additional US tariffs
The future aggregate minimum lease rental receivables under non-cancellable that took effect on 15 October to its retail customers. In certain cases, the Group had to
operating leases in respect of land and buildings are as follows: absorb the extra import duties entirely, because the after-tariff retail prices would have been
unacceptable to consumers; in some other cases, the price increases were too high to be
30 September 31 March absorbed by either the Group or its retail customers and hence would slow down the pace of
2019 2019 re-ordering; and then there were customers who simply adopted a wait-and-see attitude, thus
HK$’000 HK$’000 continuously delaying their purchase decisions.

Not later than one year 2,619 2,280 Even though the Group’s notebook PC business made progress in terms of number of
Later than one year and units sold when compared with the same period last year, it did not grow as significantly
not later than five years 6,039 6,806 as it could have due to a weakened economy in China, social incidents in Hong Kong,
and relatively weak consumption sentiment in Taiwan (It would appear that an important
part of Taiwan’s economy remains dependent on the manufacturing industries, with many
8,658 9,086
participants in one way or another reliant on links with China, hence were affected by
the Mainland’s current economic situation). Nonetheless, to further raise awareness of the
The lease terms are from one to five years. Group’s notebook PC brands and capture market shares, during the period under review,
continuous investments were made in advertising and promotions, product development and
R&D, and penetration into new markets.
The directors do not recommend the payment of an interim dividend (2018: nil) for the six
months ended 30 September 2019.

20 ALCO HOLDINGS LIMITED Interim Report 2019