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New World Development (NWD), controlled by one of Hong Kong's richest families, looks set to report a loss for its financial year ending June, as property market woes continue to beset the city and the Chinese mainland.
According to its statement to the Hong Kong stock exchange on Friday, NWD said it expects to record a loss attributable to shareholders of the company that range from HK$19 billion (US$2.4 billion) to HK$20 billion for the 12 months ended June 30.
That preliminary estimate stems from the lack of revenue recognition of major projects - such as Pavilia Farm I and II - completed and handed over in the previous financial year, a revaluation or impairment loss on investment and development properties and goodwill, loss recognised on the disposal of its shares in NWS Holdings, together with the continuous interest rate hikes experienced during the year as well as the depreciation of yuan, according to the statement.
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The developer also said that it may record core operating profit from continuing operations of between HK$6.5 billion to HK$6.9 billion, representing a year-on-year decrease of 18 per cent to 23 per cent.
In its statement, NWD pointed out that it suffered from a non-cash impairment loss of as much as HK$9.5 billion owing to a reassessment of its investment and development properties in the past financial year.
"These proactive provisions are one-off non-cash and unrealised items," an NWD spokeswoman said. "They do not affect the group's cash flow, and will better position us for the future."
View of Pavilia Forest I, a joint project between New World Development and Far East Consortium, that is under construction in Hong Kong's Kai Tak district. Photo: Edmond So alt=View of Pavilia Forest I, a joint project between New World Development and Far East Consortium, that is under construction in Hong Kong's Kai Tak district. Photo: Edmond So>
The group also recorded a one-off non-cash loss of HK$8.3 billion from the disposal of all its stakes in NWS Holdings, a Hong Kong-listed firm with businesses ranging from construction and logistics to insurance.
The company's annual results announcement will be published this September, according to the statement.
Shares of NWD rose 1.8 per cent to HK$7.85 on Friday, trimming its loss to 35 per cent this year. The stock is heading for a fourth consecutive annual decline.