INFRASTRUCTURE SERVICES Sailing towards a Bright Future

Management Discussion and Analysis Management Discussion and Analysis Group Overview

Riding on the back of record profit in the previous financial Our recognition of a dilution gain of approximately year, the Group was able to deploy its well-diversified and HK$1.8 billion from the listing of Newton Resources Ltd counter-cyclical portfolio to maintain its earnings momentum (“Newton Resources”) in July 2011 drove the profit attributable by posting a record high Attributable Operating Profit to shareholders to HK$5.251 billion in FY2012. Discounting (“AOP”) of HK$4.267 billion for FY2013. This represented a this exceptional dilution gain, profit attributable to shareholders moderate AOP growth of HK$59.7 million from HK$4.208 billion in FY2013 actually increased by HK$599.6 million or 18% to for FY2012 amid an unfavourable and challenging business HK$4.008 billion compared to FY2012. environment. division achieved an AOP of HK$2.288 billion, being an increase of 7% as compared to A gain on fair value of HK$333.6 million from revaluation of HK$2.133 billion in FY2012. The AOP of Services division investment properties was recognized during FY2013 which recorded a decrease of 5% to HK$1.979 billion. reflected the robust demand for commercial properties in despite the government’s cooling measures.

Contribution by Division For the year ended 30 June

2013 2012 HK$’m HK$’m Infrastructure 2,288.1 2,133.0 Services 1,979.2 2,074.6

Attributable operating profit 4,267.3 4,207.6

Corporate office and non-operating items Net gain on deemed disposals of interests in a subsidiary and an associated company – 1,833.4 Gain on disposal of projects, net of tax – 108.7 Gain on fair value of investment properties 333.6 93.3 Share of profit from Harbour Place 28.1 51.8 Assets impairment losses – (316.5) Share of impairment loss from a jointly controlled entity – (200.0) Corporate net exchange gain 104.9 14.0 Corporate interest income 109.7 51.8 Corporate finance costs (555.3) (333.8) Corporate expenses and others (280.3) (259.2)

(259.3) 1,043.5

Profit attributable to shareholders 4,008.0 5,251.1

Contributions from the operations in Hong Kong accounted Treasury Management and Cash Funding for 52% of AOP in FY2013 as compared to 53% in FY2012. The Group’s funding and treasury policy is designed to Mainland and & others contributed 38% and maintain a comprehensively diversified and balanced debt 10% respectively, as compared to 36% and 11% respectively profile and financial structure to minimize the Group’s in FY2012. financial risks. The Group continues to monitor its cash flow position and debt profile, and to enhance the cost-efficiency Earnings per share of funding initiatives by its centralized treasury function. In The basic earnings per share was HK$1.11 in FY2013, order to maintain a sufficient and flexible liquidity position representing a decrease of 27% from HK$1.53 in FY2012. for the Group’s operations, potential investments and growth plans, the Group has built a strong base of funding resources and will keep exploring new cost-efficient ways of financing.

NWS HOLDINGS LIMITED 48 The Group purposely spreads out its debt maturity profile to to profile maturity debt its out spreads purposely Group The HK$17.680 as level at at 30 2012. similar June was was maintained which billion Debt Total Group’s the 2013, June 30 at As Maturity and Profile Debt 2012. June 30 at as equity 67% and debt 33% the to compared of as 2013, June 30 structure at as equity 70% capital and debt 30% The was Group entities. controlled jointly and companies associated from received dividends and inflow cash net operating to due was Debt Net in decline The 2012. 30 June was at as 2013 billion June HK$12.280 to 30 compared at as as billion, HK$9.911 Debt Net Group’s The ago. year a amounted to HK$7.768 billion, as compared to HK$5.386 billion balances bank and cash total Group’s the 2013, June 30 at As Liquidity Ratio Gearing Net 10 12 14 16 18 Total debt(HK$’billion) as at30June Debt Profile HK$’billion as at30June 10 20 30 40 50 0 2 4 6 8 0 2012 Total Equity Total Nature 2012 2013 34% e etNet GearingRatio Net Debt 2012 Interest term 2013 2013 24% Secured /Unsecured 2012 2013 were pledged as securities for a banking facility of the Group. the of facility banking a for securities as pledged were 2013, June (“HZRR”) Road 30 Ring Hangzhou of at rights As concession intangible FY2013. during risk Renminbi exchange than to other The exposure material respectively. any have exposure not underlying did rate Group Group’s interest the and of risk part exchange hedge to used are rate interest swaps and swaps currency floating Cross mainly were interest-bearing. loans rate bank were bonds, rate fixed loans the from Bank Apart Dollar. States United or respectively. Renminbi in denominated bonds were while year Renminbi, or Dollar Kong fifth Hong in denominated to and year third second the in the matured be will 41% which 2013, of June 55% 30 and and at as loans billion long-term HK$16.276 of the borrowings Among risks. refinancing reduce granted to associated companies, jointly controlled entities entities company. controlled related a jointly and companies, associated to granted facilities credit for guarantees of 30 composed at These as 2012. June million HK$714.1 to compared as 2013, June 30 as at million HK$603.1 were Group the of liabilities Contingent Liabilities Contingent facilities. banking and internally resources include generated expenditure capital for funding of Sources associated investments. and other rights concession intangible an equipment, and of properties entities, controlled to jointly to/acquisitions certain and company compared contributions as capital commitment 2013 represented for This June ago. year were 30 a million at expenditure HK$922.5 as capital billion for HK$1.463 commitments Group’s The Commitments 2012 Maturity 2013 and otherborrowings Short termbankloans,overdrafts Long termbankloans Fixed ratebonds Fixed rate Floating rate Secured Unsecured Within 1year In thesecondyear In thethirdtofifthyear After thefifthyear 49 Management Discussion and Analysis - Group Overview ANNUAL REPORT 2013 Management Discussion and Analysis

INFRASTRUCTURE

AOP Contribution by Segment For the year ended 30 June

2013 2012 Change % HK$’m HK$’m Fav. Roads 1,238.2 1,210.1 2 Energy 330.2 262.2 26 Water 389.3 359.3 8 Ports & Logistics 330.4 301.4 10 Total 2,288.1 2,133.0 7

14%

15% 17% 2012 57% 17% 2013 12% 54%

Roads Water 14% Energy Ports & Logistics

NWS HOLDINGS LIMITED 50

27%

23% 2012 57% 2013 16% 57% Facilities Strategic 20% Management Investments Construction & Transport 51 ANNUAL REPORT 2013

Despite the challenging economic and operating environment, each segment of Infrastructure division generated AOP growth in FY2013. As a result, the AOP of the Infrastructure division increased by 7% from HK$2,133.0 million to HK$2,288.1 million in FY2013. Management Discussion and Analysis - Infrastructure Management Discussion and Analysis Operational Review

Roads In general, toll revenues were negatively affected by the implementation of toll standardization policy in Guangdong Province and introduction of the Holiday Toll-free Policy in 2012. These negative impacts were offset by the increased contribution from the newly acquired HZRR, the shareholding of which was increased from 58.66% to 95% in January 2012.

HZRR experienced a decrease in average daily traffic flow of 19% which was mainly due to the cancellation of Easy Access Card Programme since January 2012 and the implementation of the Holiday Toll-free Policy during FY2013. Toll revenue, however, dropped by only 5% mainly due to the growth of heavy vehicles. Reduction in finance costs resulting from the early redemption of the 12% senior notes in February 2012 also had a positive impact on AOP in FY2013. Beijing – Zhuhai Expressway (Guangzhou – Zhuhai Section)

AOP of Tangjin Expressway (Tianjin North Section) was affected by the partial closure of the expressway which commenced in June 2012 in order to carry out expansion works. Its average daily traffic flow dropped significantly by 38% when compared to FY2012.

Expressways in the Pearl River Delta Region generally reported healthy traffic growth in FY2013 although the toll revenues had been negatively impacted by the adverse toll policies. Average daily traffic flow in Guangzhou City Northern Ring Road grew by 17% mainly due to the opening of a new interchange in June 2012. The traffic flow of Beijing-Zhuhai Expressway (Guangzhou-Zhuhai Section) remained relatively stable while both Shenzhen-Huizhou Expressway (Huizhou Section) and Guangzhou-Zhaoqing Expressway registered solid growth of 8% and 10% respectively. Guangzhou Dongxin Expressway, which commenced operation in Chengdu Jintang Power Plant December 2010, posted strong traffic growth of 31% in FY2013. Guangzhou City Nansha Port Expressway experienced a 1% drop in traffic volume. Electricity sales volume of Zhujiang Power Plants, however, reduced by 19% in FY2013. The decrease was mainly due to With traffic being diverted to a competing expressway, the the weakened demand in Guangdong Province together with average daily traffic flow of Guangxi Roadways Network more hydro-electricity being imported from the western dropped by 23% during FY2013. provinces which experienced higher level of rainfall in FY2013. Electricity sales volume of Chengdu Jintang Power Plant also In Hong Kong, average daily traffic flow of Tate’s Cairn dropped by 7% when compared to FY2012. Tunnel increased by 3% in FY2013. Coal trading volume of Guangzhou Fuel Company increased Energy by 18% in FY2013. However, falling coal prices and market volatility during FY2013 continued to put pressure on the As coal prices continued to decline, AOP of the Energy trading margin. segment rebounded from HK$262.2 million to HK$330.2 million in FY2013, up 26%.

NWS HOLDINGS LIMITED 52 Group (“CWG”) continued to be a key AOP contributor to to contributor AOP key Water a be Chongqing to FY2013. continued in (“CWG”) Group respectively by 14% increased Plants and Treatment 15% Water Plant CCIP Water Chongqing Waste and Tangjiatuo Chongqing by waste treated while sales 7% water by Chongqing, grew Plant in Water Chongqing development of volume economic the by Aided Water FY2013. in 5% by healthily grow to continued Power Macau of volume industry sales tourist electricity Macau, and in entertainment booming the with line In Tianjin FiveContinentsInternationalContainerTerminal Chongqing WaterPlant n a aif ie eae fetv i Jn 2013. 6% June in by effective increased became hike Water tariff Macau a and of volume sales Macau, In China. Mainland operating in escalating costs by offset partially in however segment was Water the FY2013 of Profitability Water water 12%. by waste SCIP of revenue sales growth Shanghai healthy FY2013. a reported in Plants 6% Treatment by fell Plant Tanggu Water while 8% by rose Plant Water Sanya of volume Sales its on gain exchange FY2013. in an borrowings Yen from Japanese CWG’s benefitted growth, further revenue from results apart as segment Water the ot & Logistics & Ports to the tariff hike in February 2013 and rising demand for for demand rising and 2013 services. to logistics February ancillary in TEUs hike due tariff 1,508,000 mainly the 8% by to from increased revenue 2% while TEUs by 1,537,000 Limited increased Co., throughput Containers Total FY2013. in time Rail first the for AOP an reported (“CUIRC”) International United China in segment and this out to leased contribution FY2013. AOP fully full-year was a 2011, provided December in during operation 5% by up rate in commenced which Centre, Logistics Chung Kwai NWS rental FY2013. facilities average its warehouse drove and Kong logistics Hong for demand keen The a FY2012. in recorded 98% from up Centre 99%, of rate Logistics occupancy ATL remarkable contributor, AOP key a As FY2013. during cargoes by domestic driven in was growth which the respectively, Continents TEUs 969,000 to Five 9% TEUs and 2,294,000 to 6% Tianjin by rose Ltd. Co., Orient of Terminals Tianjin Container and Ltd. Co., throughput Terminal Container the International Tianjin, In standards Kong. Hong accounting in the with from accordance projects in two 2013 these February of results the ceased for Group account The equity venture. to joint new Haicang the in a Xiamen interest for 13.8% exchange and in Limited Co., Ltd. Terminals Container the Co., Xinhaida Terminals involve Xiangyu would World which New Xiamen – Xiamen in investments Merger”) port two its of injection Ports “Xiamen Xiamen in (the operators port major other with venture joint a of establishment the announced Company the 2013, February In 53 Management Discussion and Analysis - Infrastructure ANNUAL REPORT 2013 Management Discussion and Analysis Business Outlook – Infrastructure

Notwithstanding various adverse factors affecting the global economic recovery and the slowdown of the Chinese economy, urbanization plans in will continue to generate high demand for local infrastructure developments in the coming years. The Group, as a pioneer investor in the Mainland China’s infrastructure Chongqing Rail Container Terminal industry back to early 1990s, will continue to leverage its business know-how and financial strengths to capture business opportunities.

NWS Kwai Chung Logistics Centre

NWS HOLDINGS LIMITED 54 uig Y03 Sn Fec Wtr netd n Qingdao in invested Water French Sino FY2013, During continued2005andpresenceinmarkits thisniche tomarket. in project treatment water waste first its since China Mainland in with ventureSuez Environnement) has successfully jointbuilt up market recognition a Water”, French (“Sino Limited Company Development Water French Sino treatment. sludge and water waste for especially opportunities investment create and sales water in growth the community encourage will environmentalChina Mainland in forservices call and demand water Urban Water Macau. Electricity of 2013. development the along of with steadily grow half to expected first is Power the growth Macau for in demand consumption 5.1% power at stood national which on depend China also Mainland in will plants power Group’s industry. the of power outlook the the The to within lead costs turn operating in of would normalization which 2013 the during around level at stabilize current record to expected its is from and 2012 in softening level been high has price Coal away. eased gradually costs fuel from burden the as FY2013 in rebounded generally has producers power coal-fired of performance The Energy during 3-lane 2015. in dual completion to for scheduled 2-lane is and dual FY2013 from its commenced works also expansion Section) (Huizhou Shenzhen- 2014. Expressway of end Huizhou the by completion for targeted are and planned as progressing been have Section) North (Tianjin Expressway Tangjin of works expansion the Tianjin Area, of New Binhai development the capture in To 2013. growth of digit half first double the a Automobile registered China China. Mainland Mainland in in sales growth traffic stimulate to continue will standards living and rate urbanization in rise The Policy. Toll-free Holiday the by impacted been have who operators compensate toll to framework a on set and expansion directives road clear from resulting extension give concession including regulations to expected are amendments proposed The industries.related and public the invited from comments and Roads” Toll of Administration the on of “Regulation Transport of Ministry existing the theto amendments proposed released China 2013, Mainland May In long-run. the in investors and stakeholders of interests been the between has balance a Group The industry. strike road to order authoritiesin thecommunicating proactively with toll the on negatively impacted have 2012 in introduced Policy Toll-free Holiday the and Province Guangdong in measures standardization toll The Roads increasing number of visitors and the completion of new new of completion the facilities. and entertainment visitors to of due number stably grow to increasing expected is demand water Macau, In years. coming the in plants water the of profitability the maintaining in factor key a be will hike tariff Water margin. operating the on pressure up put gone has and has years recent China in grow notably Mainland will in cost demand operating water the thesteadily, believes Group the Although FY2013. during operational become has Plant of Water Changshu II Phase while FY2014 in business commence to scheduled is FY2012, in back Park investment new Industry a Plants, Chemical Treatment Water Wuhan region. Chengdu treatment in sewage projects two operate Water to Dayi 2013 in Sichuan Limited Company with collaborating by Province inSichuan market treatment water waste the into tapped successfully also has Water French Sino 2015. inoperational be to expected is which Province Shandong in Plant Water Waste Dongjiakou s tl ro fr etl nrae n h cmn years. coming the in increase rental for room there still that is indicator positive a as serves also This Kong. in Hong facilities towards warehouse and sentiment logistics for demand market on-going the the on May positively in Yi reflected Tsing in 2013 site logistics new the of result tender The foster to expected are growth. business future developments CUIRC’s recent These July in 2013. commenced Germany and Zhengzhou new between a route on run trial Europe, to Chengdu and Chongqing from running “Chinese services train benefit block international the turn to Further in CUIRC. (the would which businesses and Government network railway Central the of development and expansion the Chinese towards Government”) the support continuous the from out spelt has regime new railway The the 2013. June in 2013, launched also March were China Mainland in in reforms Transport freight of Ministry the into Railways of Ministry the of merger and restructuring the After the for China. hub Mainland shipping of coast the southeast as operates and International Center South-East Shipping Xiamen’s of arising development opportunities the business good from and make effect will synergy Xiamen, the of in use berths 25 owns the which venture joint from new the operators, port other arising with alliance strategic forming the billion Upon Group. the by HK$0.6 recognized be will be restructuring approximately to of expected is gain exceptional an Merger time, which at 2013, Ports of end the by Xiamen completed The term. the near in cargoes domestic by driven be to expected therefore is growth throughput the and on economies, developed depend the of recovery will China Mainland in volume trade Foreign Logistics & Ports 55 Management Discussion and Analysis - Infrastructure ANNUAL REPORT 2013 Management Discussion and Analysis

SERVICES

14%

15% 17% 2012 57% 17% 2013 12% 54%

AOP Contribution by SegmentRoads Water For the year ended 30 June 14% Energy Ports & Logistics 2013 2012 Change % HK$’m HK$’m Fav./(Unfav.) Facilities Management 1,123.6 1,184.0 (5) Construction & Transport 394.3 334.2 18 Strategic Investments 461.3 556.4 (17) Total 1,979.2 2,074.6 (5)

27%

23% 2012 57% 2013 16% 57% Facilities Strategic 20% Management Investments Construction & Transport

NWS HOLDINGS LIMITED 56 57 ANNUAL REPORT 2013

Services division recorded an AOP of HK$1,979.2 million in FY2013, representing a 5% decrease from FY2012. Management Discussion and Analysis - Services Management Discussion and Analysis Operational Review

Hong Kong Convention and Exhibition Centre Free Duty

Facilities Management The Group’s Transport business reported an AOP of HK$159.4 million in FY2013, representing a 9% increase, despite the The Facilities Management segment mainly comprises the absence of the one-off exceptional gain from the disposal of management and operation of Hong Kong Convention and the Macau ferry operation and the bus operation in Kunming Exhibition Centre (“HKCEC”) and the business of Free Duty. in FY2012. This was mainly attributable to the increase in fare revenue in connection with ridership growth. Operation FY2013 saw the continuous steady growth of business events efficiency continues to improve through routes rationalization and activities at HKCEC. Demand for staging international between Citybus and . Fuel costs exhibitions and conventions at this centrally located venue remained steady due to a fuel cost hedging arrangement. with world class facilities and superb reputation remains strong. During the year, 1,180 events were held at HKCEC with a total patronage of approximately 5.2 million. Through Strategic Investments upgrading its complex and facilities, turnover from exhibition This segment includes contributions from Tricor Holdings rental and food and beverage has continued to record healthy Limited (“Tricor”), Haitong International Securities Group growth. Improvement in food and beverage margin was Limited (“Haitong International”), Newton Resources, Hyva likewise notable in FY2013. Holding B.V. (“Hyva”) and other securities investments held by the Group for strategic investment purposes. Free Duty’s tobacco and liquor retail business at all land border crossings continues to thrive and experience remarkable Tricor’s corporate services businesses performed solidly during growth by capitalizing on the strong patronage of high- FY2013 and captured about 46% of the total share of new spending visitors from Mainland China. This growth helped listings in Hong Kong. Its business operations in Hong Kong, to mitigate the impact of the expiration of the concession Singapore and Mainland China altogether contributed about contract at the Hong Kong International Airport in November 82% of the total profit of Tricor in FY2013. 2012 and the renewed concession terms. Haitong International achieved outstanding performance in its Construction & Transport brokerage and retail margin financing, structured financing and fixed income, currency and commodity businesses. The Construction business recognized an AOP of HK$234.9 Moreover, the cost to revenue ratio fell markedly, driving million in FY2013, representing a 25% increase from FY2012, profit margin to rise further. In 2013, Haitong International mainly due to the non-occurrence of loss provision for certain carried out a series of large financing projects, including rights construction projects in FY2012. As at 30 June 2013, the issue, syndicated loan and convertible bond issuance, raising gross value of contracts on hand for the Construction business was approximately HK$43.9 billion.

NWS HOLDINGS LIMITED 58 New WorldFirstBus andCitybus and discussions these of parties. respective outcome by taken be actions the would subsequent production on concentrate dependent iron of stand, matters resumption As the Mine. production Yanjiazhuang the the at of operation to and development as smooth so and solutions stable workable achieve and comprehensive of set arriving relevant a of aim at the the with level with high at in authorities negotiations engaged government and been has communication Resources active Newton site, mine the at production and development in the is facing Resources Newton that few issues the past of the complexity and in difficulty the production Given months. trial the Resources suspend Newton in to result, forced a sporadically was As continued intensity. of have degrees varying villages these of by members Disturbances amicably. met be could inhabitants villages their and neighbouring the by demands asserted the 2012. Newton of all not November of of officials, government local the Mine end by mediations the Notwithstanding Yanjiazhuang at the re-commenced Resources at production Trial to bank. firm investment brokerage an traditional a from transformation the and stressing businesses, intermediary” to and “capital-based both “fee-based” model business “fee-based” profit a on mainly International’s focusing from Haitong and of base transformation capital the its facilitate boost to aimed These to ability. deployment capital total its expand in billion HK$5 nearly f nw auatrn facility. manufacturing new a of stream on coming the to due rebounded Brazil in is sales Crane Europe Eastern Russia. in trucks duty heavy and on levied tax new the by suppressed impacted still is European Western sentiment but recovery. market of sales signs truck shown heavy has in market slowdown the a by unloading affected and been has China Mainland loading from Revenue trailers. hydraulic and trucks on in systems used components of supply and manufacturing the in 38% engaged company a approximately Hyva, in of interest effective an holds Group The New WorldFirstFerry Lam TinComplex,aprojectundertakenbyHipHing 59 Management Discussion and Analysis - Services ANNUAL REPORT 2013 Management Discussion and Analysis Business Outlook – Services

Hong Kong’s economy maintained a steady growth momentum and achieved a 3.3% growth in GDP in the second quarter of 2013, which was the highest in the past seven quarters. Government spending on infrastructure, together with private consumption, will continue The New Year • New World — Hong Kong Countdown Celebrations at the HKCEC to support the economy, although the cooling down of the property market resulting from government’s tightening measures may pose downside pressure.

The artist’s impression of Gleneagles Hong Kong Hospital

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NWS HOLDINGS LIMITED 60 o s o umn or evcs uies n og Kong. Hong in business services our augment to industry as healthcare so the into dimension business of business scope our new expand a to up open this will that opportunity confidence every unique our has Shing as Group Kong the Ka Hong partners, of Li strategic University the The Asia’s of and Medicine of of providers, one Faculty Limited, healthcare Pantai private Parkway largest With 2016. operation for 500 late scheduled of in is and capacity specialties total 15 a over have with beds will hospital The Wong Hang. at Hospital, Chuk was Kong Hong interest of Gleneagles operation 40% hospital, and private a has development Group construction, the the for formed which in a venture Kong, Hong joint in portfolio service Group’s the overseas strengthen To seek to continue will actively. purchasing opportunities Group strong The momentum. continued growth past its maintain the and visitors Mainland the of capture demand well is to Duty Free Wu, the Lo positioned in and Chau shops Ma border Lok at land stations the MTR of renovations the luxury to Further against significant. very Government not albeit Duty’s tobacco and liquor Free high-end of on sales Chinese impact adverse some the posed has consumption of stance The drivers. growth major the be will space antique and art watch, jewellery, luxury as such life products style high-end enhancements, for exhibitions as well food as its business proactive beverage ahead, and facility Looking excellence. including service and optimization development, channels different business organic through healthy sustain to growth continue will HKCEC to Group. contributor AOP the solid and icon local a as itself established sizeable projects, the Group has maintained a healthy order order healthy a maintained has Group existing the the projects, sizeable on Based for other in high. participate to opportunities need the and remain hand on contracts will the sector, Projects, public the from Infrastructure demand particularly Kong, Hong Mega in services the construction Ten and the infrastructure of on out rolling expenditure the With property. residential for public demand prevalent in rise the by buoyed be to continues industry construction Kong’s Hong Transport & Construction Wonders. & Watches and Kong 25 its Hong Celebrating Basel events Art renowned world as attract such to Asia continued It CEI market. by in the in position leading its 2013 publications maintained trade successfully to and region, influential the 2001 most the from of one times magazine, 10 for Centre” Exhibition and Convention Best “Asia’s voted been has HKCEC Management Facilities th anniversary in 2013, HKCEC has firmly firmly has HKCEC 2013, in anniversary mat s el s nacn psegr information. passenger enhancing as well as impact to continue will buses to increase passenger comfort with minimal environmental Group the friendly environmental more introducing by service meantime, our improve the already In is services underway. bus future of rationalization regarding and government provision the with negotiation and commissioned 2014 be late will in Line Island Western The year. for financial prices fuel coming the the for increase fare on pressure relieve help hedged to FY2014 fully has Management markets. energy the in demand and financial supply the to speculative addition in by derivatives affected been have on which dependable prices highly fuel is business Transport the of profit The protection environment list. priority and management the on training, high be safety to staff continue procedures, industrial tendering enhancing over controls strong and wages Therefore, margins. profit on pressure escalating posing are costs material fast shortage, labour However, book. will provide a fitting platform for the Group to enter the the enter the division. for to driver Services growth Group new a the the develop and for industry least, platform healthcare fitting Hospital not a Kong Hong provide but will Gleneagles in the Last co-invest support to business. to opportunity continue construction will Kong Group’s Hong in development infrastructure and At demand housing terminals. strong the border time, same land passenger the the in at rise spending concession average continuous and airport the flow with expired mitigated the related be of should impact services The the strength. to that strength from grow to continue confident will Kong Hong in businesses remains Group The related urban energy infrastructure and China’s water upcoming projects. Mainland roads, on especially with well- development, of associated capitalize therefore pace is opportunities the to Group on The positioned dependent investment. highly maintain The infrastructure still to is growth. domestic on Government traffic consumption focusing by Chinese with development economic the line sustainable of in improve determination is has segment to Roads policies the of expected road performance toll the hence unfavourable stabilized, the by caused the figures, impact of traffic latest irrespective the to flows According conditions. cash market and growth earnings well- a sustainable maintaining generate could which in portfolio assets Group’s defensive and diversified commitment the and endorsed strategy FY2013 business in performance overall The Conclusions 61 Management Discussion and Analysis - Services ANNUAL REPORT 2013