Annual Report 2016 - page 216

Risk Factors
New World Development Company Limited
202
Risk Factors
The Group’s businesses, financial condition, results of operations and growth prospects may be affected by risks and uncertainties
directly or indirectly pertaining to the Group’s businesses. The risk factors set out below are those that could result in the Group’s
businesses, financial conditions, results of operations or growth prospects differing materially from expected or historical results.
Such factors are by no means exhaustive or comprehensive, and there may be other risks in addition to those shown below which
are not known to the Group or which may not be material now but could turn out to be material in the future.
A. Risks Relating to Property Development, Sales, Investments and Hotel
Operations
1.
As most properties of the Group are located in Hong Kong and the PRC, the Group’s businesses and prospects are
principally dependent on the performance of property market in Hong Kong and the PRC. The property market in Hong
Kong and the PRC are affected by a number of factors, including changes in social, political, economic and legal
environment, as well as changes in the government’s financial, economic, monetary, industrial and conservation
policies. The Group is also susceptible to changes in economic conditions, consumer confidence, consumption
spending, and changes in consumption preferences. Other factors beyond the Group’s control, including personal and
family disposable income levels and mortgage market condition etc., may also affect consumer confidence and
demand for properties in the Group’s location of operations. Any adverse changes, price control on property prices or
rental value and restrictions on the growth of property market imposed by the relevant governments in the locations
where the Group operates may have material adverse impacts on its businesses, financial condition, results of
operations and growth prospects.
2.
Under the influence of government policies and present economic trend of Hong Kong, the PRC and the world,
property markets in Hong Kong and the PRC have witnessed volatility in recent years. In future, any downturn or
financial turmoil in Hong Kong, the PRC and the global economies may have a material adverse impact on the Group’s
potential purchasers or tenants, which will in turn lead to a decrease in the general market demand for the Group’s
properties and its property price or rental value.
3.
The Group’s results of operations may fluctuate according to the progress of property development and the timing of
its property sales. Turnover from property sales is recognised on the date of the sale or on the date of issue of the
relevant occupation permit, whilst the economic benefit and the risks and returns are respectively accrued to the
Group and the purchasers. The Group’s revenue and results may vary from one period to another depending on the
number of properties completed in a specific period, or the time and capital required for the completion of
construction projects. The timing of its property sales is dependent on the lead time required for the Group to obtain
the requisite government approvals, which is beyond the control of the Group.
4.
The property industries in Hong Kong and the PRC are regulated by the respective governments. In general, property
developers must comply with requirements mandated by the applicable laws and regulations, which include policies
and procedures established by the local governments for implementation thereof. Property developers in Hong Kong
and the PRC, in particular, must obtain relevant permits, licenses, certificates and other approvals at various stages of
property development for the purpose of its property development business. The grant of relevant permits, licenses,
certificates and other approvals is dependent on whether certain conditions set by the relevant authorities are
fulfilled as they are often subject to governmental discretions and new laws, regulations, and changes in policies that
are in relation to the property industry.
5.
The Group cannot assure that it will not encounter impediments in fulfilling the conditions or meeting the particular
process requirements in order to obtain the required approvals, or will acquire occupation of the land parcels, in
relation to its property development project, or can perform its obligations under the land grant contract including the
commencement and completion of the development in future. There can be no assurance that the Group’s businesses
will be in compliance with new laws, regulations or policies which come into effect from time to time relating to the
particular process related to the granting of the approvals or generally applicable to the overall property industry.
When the Group fails to obtain the relevant approvals, fulfill the conditions or acquire the land parcels, the relevant
projects may not proceed as scheduled or at all.
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