Annual Report 2015
RISK FACTORS
235
D. MAJOR RISK FACTOR ON SUBSIDIARIES
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NWS Holdings Limited (“NWSH”)
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Infrastructure division
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Ports & Logistics
7. NWSH operates warehousing and logistics facilities, as well as seaports, airport and rail container terminal
projects in Hong Kong and the PRC. The operation of NWSH’s container terminal, cargo handling and logistics
facilities may be adversely affected by many factors, such as the breakdown of shore cranes, forklifts and
other equipment, labour disputes, inclement weather, natural disasters, increasing government regulations,
the lack of adjoining land for expansion, the lack of qualified equipment operators and the overall performance
of the container shipping industry.
8. In addition, the terminals outsource various internal operations and trucking services to contractors. The failure
or inefficient operations of such contractors could disrupt operations of the terminals. Tariff and rental rates
for cargo handling and logistics services may be adversely affected by many factors, such as an increase
in warehouse supply, availability of alternative terminals and slowdown in domestic and international trade.
Aircraft movements and passenger volume handled by NWSH’s airport project may be adversely affected by
many factors, such as downturns in the domestic and global economies, airspace constraints for civil aviation,
inclement weather, increase in airfares, competition from other airports and alternative modes of transport and
changes in regulatory restrictions. Concessions and other non-aeronautical income may be adversely affected
by many factors, such as changes in passengers’ consumption ability and preference and a failure to renew
concession contracts.
Tariff and service fee determination
9. Tariff rates and fees charged by NWSH’s projects with respect to its toll roads, water supplied/treated by
water plants, electricity produced by its power stations and aeronautical service provided by its airport are set
by various relevant government authorities, although NWSH in conjunction with its joint venture partners can
propose rate changes. Factors that these government authorities take into account when considering rate
changes may include construction costs, prospective recovery period of investment, loan repayment terms,
inflation rate, operating and maintenance costs, affordability and usage. While the relevant local authorities
have in the past approved applications for tariff and toll rate increases made by NWSH’s projects, there can
be no assurance that the relevant local authorities will approve any future request in a timely manner or at all
or that the relevant local authorities or any other governmental authority will not at any time request a tariff
or toll rate reduction. The review on toll rates for all toll roads in the PRC and the implementation of new
policies by the government of the PRC (the “PRC Government”), such as toll free access by certain types of
vehicles during major holiday periods and toll rate standardization measures, may cast uncertainty on NWSH’s
roads business and operating results. Reductions in or cessation of tariffs, toll rates or concession period may
adversely affect NWSH’s operating results.
