New World Development (0017) reported a loss of HK$28.149 billion for the year ended June 30, widened by nearly 73 per cent from a year earlier, mainly due to non-cash impairment losses and provisions related to the 11 SKIES project.
Excluding those effects, net profit from recurring operations was about HK$2.228 billion, marking the group's first return to profitability in the past three financial years.
Revenue fell 28 per cent year on year to HK$19.992 billion due to lower construction revenue and fewer property handovers in the Chinese Mainland, partly offset by increased handovers in Hong Kong. Gross margin rose to 47 per cent from 42 per cent.
The group's total attributable contracted sales from property development and asset disposals amounted to about HK$29.6 billion, with Hong Kong contributing about HK$22.1 billion and the Chinese Mainland about RMB6.8 billion.
Total debt stood at about HK$143.3 billion, a reduction of about HK$2.7 billion during the year. Total capital resources were about HK$33 billion, including cash of about HK$17 billion and undrawn bank facilities of about HK$16 billion.
CEO Echo Huang said the agreement with the Airport Authority to terminate the 11 SKIES contract resolved a major issue and was an important step for the group's next phase of development. She said the group would continue its "seven measures" to reduce debt and maintain its sales target of about HK$27 billion for the current financial year.
Chief Financial Officer Edward Lau said the net debt-to-equity ratio of 68.3 per cent was mainly due to timing differences in cash collection, not a deterioration in operating fundamentals. He said the ratio could be reduced by a further 3.1 percentage points as sales proceeds are collected and asset disposals are completed.
The group said its financing commitment with Deutsche Bank has been increased from HK$3.95 billion to HK$4.9 billion. The facility is secured by a first-ranking mortgage over Victoria Dockside — comprising five major components, namely K11 ARTUS, K11 ATELIER, K11 MUSEA, Rosewood Hong Kong and certain carparks — as well as assets related to Victoria Dockside.
The board resolved not to declare a final dividend for the year.
