We are coming to a close of the year 2011. The world’s markets have been riding a roaring rollercoaster. The recovery of the global economy only lasted less than a year and it followed by the outbreak of the European debt crisis. The symptoms of economic downturn have been reflected in the falling cargo demand. A toughening economic environment is foreseeable with governments revising downward the forecast GDP growth. Amid the economic uncertainty, we have to fight against cost inflationary pressure. Hong Kong Composite CPI went up to as high as 7.9% in July 2011 and Food CPI went up to 11.7% in August 2011. The Government forecasts the annual CPI is to increase by 5.5% whereas for food is to around 8%. We do not anticipate the cost inflation will go away in spite of the possible economic downturn. We are doing all possible to mitigate the overall cost impact to CPCS through strategic sourcing and process improvement but it is inevitable that we will need the support of our customers to share the cost burden.

On a brighter note, CPCS (HK) delivered new record daily meal production of 83,591 on 01st October; surpassed the design operation capacity of 80,000 meals daily. Our staff contributed significant effort in coping with the operation volume during the peaks whilst keeping high operational standards and quality. Also in 2011, both CPCS Taipei and Cebu Pacific Catering have celebrated their 15th year anniversary. Crossing these key milestones requires the dedication and passion of our people to our customers and service quality.

The areas that we certainly keep our focus on are people and service. On the people side, our business is facing the challenge of manpower shortage in the Hong Kong Airport. In fact, the manpower problem has worsened after the implementation of minimum wage legislation. All operators are joining force now to address this situation and trying to work out cost effective solutions to ensure our service will not be affected. CPCS has a pool of loyal and experience staff that we must keep our effort to nurture them and recognize their contribution. Internally, we have been promoting CPCS values CREATE (Caring, Respect, Excellence, Adaptability, Teamwork, Ethics) through special activities to inspire our staff to go the extra mile and to enhance their sense of belongings. The theme for last 12 months was Caring and Respect and the theme for next year is Teamwork. On the service side, the priority is on our Hong Kong facility expansion to meet the long-term air traffic operation growth. The expansion project objectives will also oversee operational efficiency, employees working environment and environmental commitment. The first phase of expansion will take 12 months to increase operation capacity from current 80,000 meals daily to 100,000 meals.

Finally, it has been a challenging year for all of our valued business partners and us and we have come out as stronger players in the market. We shall share our blessings with our families and friends. I take this opportunity to express my heartfelt thanks to our customers, suppliers, sister kitchens and staff for your continue support of CPCS throughout the year.

Wish you all a Merry Christmas and Happy New Year!

Mrs. Jenny Lam
Chief Executive Officer