Interim Report 2015/2016
EXECUTIVE VICE-CHAIRMAN’S REPORT
11
Service
During the period under review, 587 events were held at Hong Kong Convention and Exhibition Centre (“HKCEC”) with
a total patronage of approximately 3.7 million. Furthermore, HKCEC reached a significant milestone in its sustainability
efforts by becoming the first organisation in Hong Kong to achieve the ISO 20121 Event Sustainability Management
System recognition.
A reduction in the number of high-spending visitors from Mainland China and the continual contraction of inbound
tourism have negatively impacted Free Duty’s business. Coupled with the rising operating costs, the profit contribution
from this business declined. However, in light of the promising growth potential at the Lok Ma Chau terminal and the
Macau International Airport and the successful renewal of concession contracts at Macau Ferry Terminal and China
Hong Kong Ferry Terminal to 2018, NWSH remains cautiously optimistic on the sales outlook despite the headwinds.
Contribution from the construction business increased encouragingly in the first half of FY2016 mainly due to the
continuous improvement in gross profit through effective project management. As at 31 December 2015, the gross
value of contracts on hand for the construction business was approximately HK$75.3 billion.
The competition from the MTR West Island Line continues to exert pressure on ridership of transport business although
such impact was compensated by the patronage increase for airport bus services and the lower fuel costs.
The construction of Gleneagles Hong Kong Hospital is making good progress and the hospital is expected to commence
operations in early 2017.
Department Stores
China’s economic growth continued to slow down. The intensified competition brought by e-commerce and shopping
malls, coupled with consumers’ diverse needs and rising operating expenses, continued to impact the operating
environment of the department store sector in Mainland China. In response to the structural changes in the market
and the industry, the department store sector was actively pursuing fundamental transformation, such as more precise
market positioning and optimised merchandise and service portfolio, especially the focus on developing online and
offline shopping platform.
During the period under review, New World Department Store China Limited (“NWDS”) recorded a profit attributable to
shareholders of HK$59.8 million. The commission income from concessionaire sales was the major income contributor
to NWDS, accounting for 55% of the total revenue. Proceeds from direct sales and rental income accounted for 27%
and 17% respectively of the total revenue. The remaining 1% was derived from management and consultancy fees.
Region-wise, Northern China Region contributed the most to the revenue of NWDS, amounting to 50.6% of total
revenue, followed by the South Eastern China Region and the Central Western China Region, which accounted for
31.2% and 18.2% of the total revenue respectively.
As at 31 December 2015, NWDS operated and managed a total of 41 stores and two shopping malls spreading across
21 cities in Mainland China with total GFA of over 1.6 million sq m.
Outlook
The contradictions arising from the complicated economic landscape around the globe further intensified in 2015.
Among developed economies, the United States stood out from the crowd in its economic performance. Despite the
unstable engines which drove its key economic indicators, the United States delivered sound attainments which were
sufficient to lead their Federal Reserve System to kick off, towards the end of 2015, the first interest rate rise ever since
the financial crisis in 2008. Other advanced markets in Europe still remained fragile in their economic recovery. The
overall economic performance of the Eurozone is worrying, with an elevating risk of deflation.
