New World Development (NWD), owned by one of Hong Kong's wealthiest families, posted losses for the second year in a row despite its CEO assuring shareholders there was no cause for "undue worry".
The property company, which has been struggling with cash flow issues for three years, recorded losses from ongoing operations totaling HK$16.3 billion (US$2.09 billion). This represented an increase of more than 38 percent compared to the HK$11.8 billion loss in the prior fiscal year spanning July 2023 to June 2024.
“Our debt reduction efforts have yielded initial results,” says NWD CEO Echo Huang Shaomei, who was appointed to her post in November.
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“Both total debt and net debt declined while cash flow improved significantly and returned to positive territory, reflecting the group’s gradually stabilising financial position, Huang says.
Last September, NWD announced shareholder losses of HK$19.68 billion.
“I understand that our recently announced full-year results show a loss of HK$16 billion on the books. However, there is no need for undue concern, as this number is primarily impacted by several non-cash provisions and losses of a one-off nature.”
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The company's net gearing ratio – an indicator of corporate debt levels – deteriorated from 55 percent to 58.1 percent. Overall debt decreased by HK$5.7 billion to HK$146.1 billion, according to the company's report.
The property developer and manager of Victoria Dockside – which includes properties like the upscale Rosewood hotel and K11 Musea shopping center – reported that revenue dropped 23 percent to HK$27.68 billion, while core operating earnings fell 13 percent to HK$6.01 billion.
Nevertheless, Huang – who replaced Adrian Cheng Chi-kong, the eldest son of chairman Henry Cheng Ka-shun – attempted to reassure investors who are closely watching NWD's financial difficulties.
On Thursday, NWD secured a HK$5.9 billion loan agreement with Deutsche Bank, using Victoria Dockside as collateral for the financing arrangement.
Huang additionally observed that recent interest rate reductions by both the US Federal Reserve and Hong Kong Monetary Authority would provide advantages to the organization.
During the virtual press conference following the results announcement, Huang also addressed Adrian Cheng's establishment of his new venture focusing on what he calls "transformative sectors," which encompass culture and healthcare industries.
The new company launched by the younger Cheng, called ALMAD Group, aims to serve markets across Southeast Asia, the Middle East, and mainland China, with an objective to eliminate "barriers in digital and virtual assets," according to its official statement. This group holds ownership of the "K11 by AC" brand.
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Huang clarified that the K11 by AC brand operates independently from NWD.