Annual Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
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Department stores
During the year under review, department stores segment contributed HK$307.4 million, down 43.4%.
On 16 January 2015, NWDS entered into a share purchase agreement to acquire the entire issued
share capital of Well Metro Group Limited for a consideration of HK$1.0 million. Well Metro Group
Limited and its subsidiaries have the franchise and distribution right in relation to fashion apparels and
accessories for certain brand names in the PRC and have a network of retail operation in the PRC.
As at 30 June 2015, NWDS operated and managed a total of 43 stores spreading across 21 cities in
Mainland China with total GFA of over 1.6 million sq m.
Others
Other businesses reported a loss of HK$264.3 million. This was mainly attributable to the mobile
business disposed in May 2014, which generated positive contribution in previous financial year and
less dividend income from investments in FY2015.
Other gains, net
Net other gains increased 5.6 times to HK$15,276.4 million in FY2015 mainly due to the disposal gain
on partial disposal of the hotel assets.
Net other gains also included gain on remeasuring previously held assets of a joint venture at fair value
upon acquiring control, gain on disposal of available-for-sale financial assets and net exchange gain.
Changes in fair value of investment properties
With the stable performance of the Group’s investment properties and healthy market outlook in
both Hong Kong and Mainland China, changes in fair value of investment properties amounted to
HK$3,165.5 million.
Taxation
In FY2015, taxation charge amounted to HK$4,264.4 million, down 25.7%. The drop was mainly due to
the Mainland China land appreciation tax, which was decreased from HK$2,425.0 million in FY2014 to
HK$1,667.6 million in FY2015.
LIQUIDITY AND CAPITAL RESOURCES
The Group’s debts were primarily denominated in Hong Kong dollar and Renminbi. In respect of the
Group’s operations in Mainland China, the Group maintains an appropriate level of external borrowings
in Renminbi for natural hedging of Renminbi attributed to those projects. Apart from this, the Group
does not have any material foreign exchange exposure.
The Group’s bank borrowings were mainly arranged on a floating rate basis while bonds were arranged
on fixed interest rate. The Group used interest rate swaps and foreign currency swaps to hedge part
of the Group’s underlying interest rate and foreign exchange exposure. As at 30 June 2015, the Group
had outstanding derivative instruments in the amounts of HK$5,800.0 million and US$600.0 million
(equivalent to approximately HK$4,662.0 million). As at 30 June 2015, the Group had outstanding
foreign currency swap contracts in the amounts of US$20.0 million (equivalent to approximately
HK$155.4 million).
During the year, a subsidiary of the Group issued US$900.0 million notes (equivalent to approximately
HK$6,993.0 million) and HK$1,071.0 million notes at fixed rates ranging from 4.75% to 5.375% due in
2019 and 2022 respectively.
