NewWorld Development Company Limited
MANAGEMENT DISCUSSION AND ANALYSIS
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In Mainland China, the segment results from the rental portfolio of NWCL recorded a moderate
growth. The increase was mainly attributable to the increase in occupancy rate from Shanghai Hong
Kong New World Tower K11 Art Mall and increase in average rental rate upon renewal of tenancy
contract from Wuhan New World International Trade Tower.
Service
In FY2015, service segment recorded HK$1,504.0 million, drop 1.5% year-on-year. The slight decline
was mainly caused by the rising rental impact under new concession on the Free Duty business, the
effects of “Occupy Central Movement” and the operation of the new MTR West Island Line in the
transport business. The above impacts were partly offset by the construction business, which reported
healthy growth alongside the booming property market.
Hong Kong Convention and Exhibition Centre (“HKCEC”) continued to be the preferred venue for
international event organisers in staging world-class exhibitions and conferences in Hong Kong. During
FY2015, 1,113 events were held at HKCEC with a record-breaking total patronage of approximately 6.4
million.
Infrastructure
During the year under review, infrastructure segment reported HK$2,711.2 million, up 7.7%, mainly
due to the strong performance from ATL Logistics Centre and BCIA.
The occupancy rate of ATL Logistics Centre remained at the all-time high level of 99.5% while
its average rental rose by 17%. BCIA delivered the first full-year profit contribution in FY2015. As
the world’s second busiest airport in terms of passenger throughput, BCIA served 88.62 million
passengers in FY2015.
To capture the growing demand for air transportation, NWSH entered the commercial aircraft leasing
sector by acquiring 40% equity interest in Goshawk and certain outstanding loan notes together with
interest payable at a cash consideration of approximately US$222.5 million (equivalent to approximately
HK$1,724.4 million) in February 2015. As at 30 June 2015, Goshawk owned a fleet of 40 aircraft, which
were all on lease to airlines around the world.
Hotel operations
In FY2015, hotel operations segment recorded HK$244.7 million, down 32.3%, mainly due to the pre-
opening expenses incurred for the new hotels in Mainland China. Meanwhile, the effects of “Occupy
Central Movement” had negative impact on the performance of the Group’s hotels in Wan Chai
District.
The large-scale renovation at Grand Hyatt Hong Kong is currently underway with good progress. The
renovation of approximately 158 guest rooms under phase two of the renovation has commenced in
the first half of 2015. Despite the impact on occupancy rate caused by the renovation of guest rooms
during the year under review, the hotel’s average room rate achieved a high level of HK$3,268 per
night. In addition, the other three major hotels in Hong Kong, namely Renaissance Harbour View Hotel,
Hyatt Regency Hong Kong, Tsim Sha Tsui and Hyatt Regency Hong Kong, Sha Tin, performed steadily
in terms of average room rates and occupancies.
On 29 April 2015, the Group and its subsidiaries entered into transaction agreements with HIP
Company Limited, a wholly owned subsidiary of the Abu Dhabi Investment Authority, to establish a
new joint venture company to own the Grand Hyatt Hong Kong, the Renaissance Harbour View Hotel
and the Hyatt Regency Hong Kong, Tsim Sha Tsui. The transaction was completed during the year
under review. The total consideration for the sale and transfer of the hotels was HK$18.5 billion (subject
to customary closing adjustment), out of which around HK$10 billion was received by New World
Development.
In Mainland China, overall slow market and the banning of extravagance and fighting corruption
initiatives from the Central Government led to overall decrease in patronage of corporate customers in
the hotels in Mainland China.
