Annual Report 2016
101
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
4.
CRI T ICAL ACCOUNT ING JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY
– continued
Key sources of estimation uncertainty
– continued
Allowance for inventories obsolescence
The Group operates in the electronics industry which is subject to rapid technological changes and
product obsolescence. The Group’s policy for allowance for inventories obsolescence is based
on the aging analysis of inventories and on management’s judgement on the realisability of the
inventories. At the end of each reporting period, management is of the opinion that the allowance
for inventories obsolescence is adequate but not excessive. The carrying amount of Group’s
inventories at March 31, 2016 were approximately HK$535,547,000 (2015: HK$515,274,000), net
of allowance for inventories of HK$25,100,000 (2015: HK$18,358,000).
Fair value of derivative financial instruments
The Group is required to assess the fair values of its derivative financial instruments which involve
the input of certain variables and, accordingly, require significant management judgement and
assumptions.
Management has evaluated the assumptions used and judgement applied and is of the opinion
that the assumptions used and judgement applied are reasonable and appropriate. The carrying
amount of derivative financial instruments is disclosed in Notes 5 and 13.
Impairment of investments in associates and subsidiaries
Management exercises their judgement on estimating recoverable amounts of the Group and
subsidiaries of the Company.
The recoverable amounts of the investments are reviewed at the end of each reporting period to
determine whether there is any indication that those investments have suffered an impairment
loss (if any). Recoverable amount is the higher of fair value less cost to sell and value in use. In
assessing value in use, management needs to estimate the future cash flows expected from the
cash – generating units and an appropriate discount rate in order to calculate the present value of
the future cash flows.
During the year, an impairment on associates of the Group amounting to HK$70,080,000 (2015:
HK$ nil) was recorded. The carrying amount of investments in associates as at March 31, 2016 is
HK$ nil (2015: HK$82,498,000).
The carrying amount of investments in subsidiaries of the Company as at March 31, 2016 is
HK$117,470,000 (2015: HK$117,470,000).
