New World Development Company Limited
138
Financial Section
5 Critical Accounting Estimates and Judgements
(continued)
(i) Estimated volume of infrastructures of public services
The amortisation for intangible concession rights and impairment assessment of infrastructures for public services
using discounted cash flow model are affected by the estimated volume for public services, such as toll roads and
bridges. Management performs annual reviews to assess the appropriateness of estimated volume by making
reference to independent professional studies, if necessary.
The traffic volume is directly and indirectly affected by a number of factors, including the availability, quality,
proximity and toll rate differentials of alternative roads and the existence of other means of transportation. The
growth of the traffic flow is also highly tied to the future economic and transportation network development of the
area in which the infrastructures serve, in particular those projects still in their ramp-up period such as Guangzhou
Dongxin Expressway and Guangzhou City Nansha Point Expressway (collectively “Expressways”). The growth in future
traffic flow projected by the management is highly dependent on the realisation of the aforementioned factors.
Management has conducted an impairment assessment of both Expressways using discounted cash flow method.
The estimated cash flows used in the assessment are based on assumptions, such as growth of the traffic flow,
growth of toll rate and discount rate, with reference to the business plan and prevailing market conditions. Based on
the assessment, management is of the view that there is no impairment of the Group’s investment in the Expressways
as at 30 June 2016.
6 Revenues and Segment Information
Revenues recognised during the year are as follows:
2016
2015
HK$m
HK$m
Revenues
Property sales
28,527.9
25,681.9
Rental
2,492.3
2,401.5
Contracting
12,198.2
8,456.7
Provision of services
7,705.3
7,387.3
Infrastructure operations
2,444.0
2,470.7
Hotel operations
1,762.3
4,060.8
Department store operations
3,550.2
3,913.0
Others
889.8
873.1
Total
59,570.0
55,245.0
The Executive Committee of the Company, being the chief operating decision-maker, determines and reviews the Group’s
internal reporting in order to assess performance and allocate resources. The operating segments are determined based on
the afore-mentioned internal reporting. The Executive Committee considers the business from product and service
perspectives, which comprises property development, property investment, service (including facilities management,
construction & transport and strategic investments), infrastructure (including roads, environment, logistics and aviation),
hotel operations, department stores and others (including telecommunications, media and technology and other strategic
businesses) segments.
The Executive Committee assesses the performance of the operating segments based on each segment’s operating profit.
The measurement of segment operating profit excludes the effects of unallocated corporate expenses. In addition, financing
income, financing cost and taxation are not allocated to segments.
Sales between segments are carried out in accordance with terms agreed by the parties involved.