New World to hand over 11 Skies project in April

New World Development (NWD) disclosed a significant HK$26.8 billion (US$3.42 billion) net loss for the fiscal year ending June, primarily due to HK$18.3 billion in impairments and provisions arising from the termination of its flagship 11 Skies mall project, which concluded early. NWD's chief executive, Echo Huang, assured investors that the firm had met its financial targets over the past 18 months, focusing on its property business, improving cash flow, and enhancing operating efficiency.

The developer will relinquish ownership of the 11 Skies project to the Airport Authority Hong Kong next year, as outlined in a recently signed agreement. This agreement requires NWD to pay a HK$2.3 billion early termination fee, HK$14.7 billion in non-cash impairments, and HK$1.05 billion in provisions for pre- and post-handover work.

The termination of NWD's involvement in the 11 Skies project is expected to reduce the group's future financial commitments and will not adversely impact its financial position in the coming forecast period. Despite a 28% drop in revenue to HK$20 billion for the year, NWD's core operating profit increased by 28% to HK$7.7 billion, attributed to stringent cost controls and improved margins.

The company's debt has risen to HK$143.3 billion, with a net gearing ratio of 68.3%, up from 58.1% a year earlier. NWD's residential property sales in Hong Kong increased 101% year-on-year to HK$22.1 billion, reflecting the city's rebounding residential market. The firm has postponed its dividend payments for the third consecutive year, keeping its full-year dividend suspended. NWD's shares rose 1% on Wednesday, following a 19% decline since the beginning of the year.