New World Development Company Limited
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Managemen t D i s cu s s i on and Ana l y s i s
The opening of Shanghai K11 has improved rental performance of the Group’s trophy asset, the Shanghai Hong Kong New
World Tower. Wuhan New World International Trade Tower, one of the leading super Grade A office towers in Central China,
also delivered outstanding performance and provided satisfactory rental contributions, achieved positive rental reversion
upon tenancy renewals. In addition, the high-end residential cluster of Canton Residence, a luxurious serviced apartment in
Pearl River New Town, Guangzhou, has generated strong rental income.
Service
The service segment recorded contribution of HK$1,519.1 million for FY2016, increasing by 1.0% year-on-year.
The construction business recorded notable growth in FY2016 benefited from the surging business volume. Meanwhile, the
transport business also reported growth in revenue contributions, taking advantage of higher patronage for its airport bus
services and stable fuel costs through effective hedging arrangements. Nevertheless, growth of the service segment was
partially offset by the FY2016 results of Free Duty, which had been affected by a slowdown in arrivals of inbound Mainland
tourists and the corresponding decline in visitors’ spending.
Infrastructure
In FY2016, the infrastructure segment reported contribution of HK$3,042.5 million, up 12.2% year-on-year. The growth was
mainly attributable to the satisfactory performance of ATL Logistics Centre, the injection of the commercial aircraft leasing
business and the healthy growth in traffic volume and toll revenue recorded by the expressway operations in Guangdong.
ATL Logistics Centre sustained a robust average rental growth of 15%, driven in part by the rental revision for a major tenant.
However, its occupancy rate dropped slightly from 99.5% to 97.4% as a result of the tendency of tenants to consolidate or
downsize their operations upon lease renewals.
To capture the growing demand for leased aircraft, NWSH entered the commercial aircraft leasing business by acquiring 40%
equity interests in Goshawk in February 2015. As at 30 June 2016, the fleet size had grown to 68 aircraft as compared to 40
as at 30 June 2015. All aircraft have been purchased with a lease, thereby generating steady income for the infrastructure
segment.
Hotel operations
In FY2016, the hotel operations segment recorded loss of HK$203.3 million, down 183.1% year-on-year.
The decrease in the segment results of the hotel operations was mainly attributable to the disposal of 50% interest in three
hotels in Hong Kong, namely Grand Hyatt Hong Kong, Renaissance Harbour View Hotel and Hyatt Regency Hong Kong, Tsim
Sha Tsui, to Abu Dhabi Investment Authority on 15 June 2015. As a result of the said disposal, those hotels were no longer
accounted for as subsidiaries of the Group. The share of 50% result contribution of the three hotels is included in share of
results of joint ventures, with the change in accounting treatment, the related additional depreciation and amortisation,
financing costs and taxation were included.
Patrons of the Group’s premium hotels in Hong Kong are mainly business travelers. At Grand Hyatt Hong Kong, the
refurbishment of approximately 160 guest rooms under its phase-two renovation has been completed, while the
refurbishment of multi-functional rooms and other restaurant facilities will commence in FY2017. The hotel registered a
sound average room rate for the year under review, even though its occupancy rate had been affected by the renovation
work. Meanwhile, the other major hotels in Hong Kong, namely, Renaissance Harbour View Hotel, Hyatt Regency Hong Kong,
Tsim Sha Tsui and Hyatt Regency Hong Kong, Sha Tin also reported solid performances.
The performance of the Group’s hotel operations in Mainland China was affected by rising operating costs and a decline in
room together with food and beverage businesses affected by the Central Government’s policy against extravagance and
corruption.
