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Meanwhile, heavy machinery experienced a year-on-year decline in profit amidst sluggish market sentiments
and aggravating competition in the market for heavy machinery equipment for the mining, construction
materials and metallurgical sector. CITIC Heavy Industries was expediting its process of strategic transformation
by actively grooming new growth drivers, as it achieved progress in developing the market for turnkey projects,
while the special robotics business of Kaicheng Intelligence provided a new growth niche which partially offset
the impact of the decline.
Engineering contracting
During the first half of 2016, this segment recorded net profit attributable to ordinary shareholders of HK$1,060
million, an increase of HK$65 million from the same period last year, mainly due to successive collection of
amounts due from the Algerian expressway project and the write-back of certain impairment provisions charged
in previous years. However, profit from the project under construction in Venezuela decreased owing to the
devaluation of the local currency, while CITIC Engineering Design reported year-on-year profit growth driven by
expedited progress in the construction of waste water treatment plant conversion and expansion projects.
Real estate
The Group recorded tax and other expenses relating to reorganisation for the first half of 2016 following the
proposed disposal of its residential property projects in Mainland China to COLI. Moreover, there was also year-
on-year decrease in the number of property projects completed and delivered and gains from the revaluation of
investment properties. The aforesaid factors resulted in decline in profit for the property business of the Group
from the first half of 2015.
The average occupancy rate for investment properties was approximately 95% as at 30 June 2016, which was
comparable with preceding years.
The assets and liabilities related to the aforesaid residential property projects under proposed disposal
have been classified as held-for-sale, and their operating results and cash flow have been presented under
“Discontinued operations of the Group,” the details of which are set out in Note 14(a)and Note 35 to the financial
statements.
Others
For the first half of the year, net profit attributable to ordinary shareholders of other businesses amounted to
HK$2,267 million, increasing by HK$80 million. Net profit contributions were derived mainly from Dah Chong
Hong, the international telecommunications service business and gains realised from the disposal of 43.42%
equity interests in Shanghai CITIC Guojian Pharmaceutical Industry Company Limited.
Net profit of Dah Chong Hong decreased year-on-year, reflecting the overall slowdown of the automobile
market in Hong Kong and weaker performance of the food distribution business in China. The international
telecommunications service business reported year-on-year growth in net profit, as revenue from its enterprise
solutions segment, which commanded a higher gross profit, increased as a percentage of total revenue. In the
meantime, our infrastructure business, including tunnels and expressways, sustained stable results.
CITIC Envirotech, a company listed on the Mainboard of the Singapore Exchange Securities Trading Limited of
which controlling stakes were acquired by the Group on 24 April 2015, reported substantial year-on-year growth
in net profit for the first half of 2016 after expanding its EPC, water treatment and membrane product businesses.