New World Development Co. Ltd. Stock

Good afternoon. Welcome to New World Development's FY 2026 interim presentation, online analysts and investors meeting. I am IR Director, Patrick Cheong. I am the moderator for this meeting. First of all, let me introduce our management in attendance. They are New World Development Executive Director and CEO, Ms. Echo Huang; New World Development Executive Director, Mr. Sitt Nam-Hoi; New World Development Executive Director and CFO and Joint Company Secretary, Mr. Edward Lau; New World Development Executive Director and New World China CEO, Mr. Benny Chan. [Operator Instructions].

Now I will pass the floor to Echo.

Friends from the investment community, greeting. A year ago at the interim results announcement for FY 2025, when I first appeared before you as CEO, I proposed 7 strategies to reduce debt, namely: one, accelerate property sales; two, sell noncore assets; three, unlock the value of farmland; four, increase rental return; five, streamline costs; six, suspension of dividend payment; seven, proactive treasury management. At the same time, at last September's annual results announcement, I also pointed out that after completing HKD 88.2 billion in refinancing and implementing a series of measures by the group, our company situation has begun to stabilize.

Today, I can tell you that our company's operations and finances remain stable. The 7 strategies to reduce debt have worked. Among them, I would like to highlight 3 points. First, our business continues to improve. Our contracted sales in the first half reached HKD 13.8 billion, more than half of our full year target of HKD 27 billion. Leasing for our shopping malls and office spaces has also steadily improved. On the cost side, we took a 3-pronged approach to reduce CapEx, OpEx and financing costs.

Second, we completed the debt exchange program, successfully boosting shareholders' equity. We carried out a debt exchange program from November to December last year, which significantly reduced our perpetual bonds by HKD 8.7 billion and our USD bonds by about HKD 400 million, and also increased shareholders' equity by HKD 8 billion. This bond swap will lower our future perpetual bond cost and is an important step in our debt reduction efforts.

Third, our loss narrowed and financial costs continued to decline. Our company's loss for the first half this year decreased to HKD 3.7 billion from HKD 6.6 billion in the same period last year, down more than 40%. This figure is also lower than the HKD 9.7 billion loss from the last fiscal year. This loss is mainly due to noncash provisions we made for some DP and IP projects in response to market conditions. Excluding these noncash provisions, our profit attributable to shareholders for this period should be positive. As interest rates entered a downward cycle, our total financing cost for the first half decreased by about HKD 600 million compared to the same period last year, with average interest rate down by 80 basis points.

I would like to highlight 2 points. First, we plan to launch a total of over 1,300 units in Hong Kong in the second half of FY '26, including the remaining units from our 2 Pavilia projects, Phase 3 of Pavilia Farm and a series of new projects. Additionally, contracted sales from our 2 new projects, House Muse and Austin Bohemian totaling about HKD 1 billion will also be recognized in the second half of FY '26. Second, our net debt as of last December increased compared to June due to the timing of property money collection, accounting treatment of our Hong Kong JVs and the repayment of construction loans for those JVs. So Edward will explain this in greater detail later.

Going forward, we will continue our 7 strategies to reduce debt, seizing opportunities as the market improves. With market conditions improving and interest rates falling, we will accelerate sales, while continuing to reduce OpEx and CapEx. There is still a long way to go in our debt reduction journey. I am pleased to see that the company's operations and financial position remain stable. I have confidence that the team and I have enough capabilities to continue to meet the challenges ahead.

Now I will very quickly share with you our financial performance for the first half FY '26. In terms of core operating profit and segment results, although we recorded solid contracted sales in the first half, the timing of property delivery in Hong Kong and Mainland China impacted the pace of revenue recognition. Property delivery volume in the first half FY '26 was lower than that in the same period of FY '25, resulting in an 18% decrease in core operating profit to HKD 3.6 billion and a 24% decline in segment results.

Regarding IPs, excluding the impact on revenue from assets sold and newly opened properties, the IP segment's performance recorded a 5% increase, mainly due to our strict cost control, which has driven continuous improvement in the IP segment's profitability. Our loss attributable to shareholders for first half FY '26 was HKD 3.7 billion, down over 40% year-on-year, mainly due to several one-off noncash provisions, among which the fair value loss on IP was about HKD 1.1 billion. On DPs, we also made corresponding noncash provisions in line with market conditions. As I just mentioned, excluding these noncash provisions, our profit attributable to shareholders for this period should be positive.

On expenditure side, G&A expenses was HKD 1.5 billion, down 18% year-on-year, mainly because we continued to optimize our organizational structure, and the cost-saving measures previously implemented have taken effect this year, successfully delivering further cost savings. For FY '26, our CapEx guidance is below HKD 12 billion. In the first half, we spent HKD 3.5 billion, down 30% year-on-year. On the debt front, our total debt continued to decrease. As of the end of December 2025, total debt was HKD 1.7 billion lower than in June 2025. Our net debt increased by HKD 2.6 billion since June 2025. The main reason will be explained by Edward later.

Next, I would like to talk about the situation in the Hong Kong and Mainland China property markets. The Hong Kong property market has already rebounded by over 5% from its recent low, but compared to its 2021 peak, it is still down by about 25%. The U.S. is expected to continue to cut interest rates, and combined with the strong performance of Hong Kong stocks over the past year, many prospective buyers are shifting their stock market profit into the real estate market, which we believe will help drive the market's recovery. Our company's future focus is on continuing to push sales forward with full force and accelerating cash recovery. Over the past 6 months, we delivered strong results in the Hong Kong market. The pace and performance of our sales have further improved with several projects selling strongly.

Contracted sales for the first half reached HKD 10.3 billion, the highest since 2021. I will provide a detailed explanation later. As for the Mainland property market, to improve the on-site sales environment, we postponed the launch of new project in Shenzhen. As a result, contracted sales decreased compared to last year, with contracted sales in Mainland China reaching about RMB 3.2 billion in the first half. But you don't need to worry as this is within our expectation. In the second half of the year, we plan to launch the 188 Shenzhen New World project, which will offer around 3,000 units to contribute to our sales in the second half. Overall, we are confident that we can achieve our HKD 27 billion target set at the beginning of the year. And we have also made good progress in the Northern Metropolis and our farmland projects. Later on, Mr. Sitt will share with you shortly.

In terms of IPs, in Hong Kong, K11 MUSEA and K11 Atelier at Victoria Dockside as well as K11 Art Mall continue to maintain near 100% occupancy rate, while other office buildings have also recorded significant improvement. Among them, the Manning House and New World Tower in Central have occupancy rates of 97% and 90%, respectively. Our Twin Tower office on King Lam Street in Cheung Sha Wan was completed in mid-2024 with floor area of 1.2 million square feet. It has achieved a 74% occupancy rate in Mainland China.

The flagship K11 project ECOAST in Shenzhen, which opened in April last year, and K11 Hanxi Guangzhou, which was opened at the end of September last year, have both seen sustained increase in occupancy rate. And our office K11 Atelier Huaihai, part of K11 Elysea in Shanghai is expected to begin occupancy in the second half of this year with a pre-lease rate already above 50%. Overall, our company's operations remain stable and continue to improve.

As for the debt situation that everyone is concerned about, I will defer to our CFO, Edward, to explain.

Thank you, Echo. As Echo just mentioned, we carried out a debt exchange program last November and December to give our bond investors another option, allowing them to exchange the existing perpetual bonds and bonds for new bonds tied to the Victoria Dockside project.

Here's a quick update on the results of that program. Investors submitted a total of about HKD 17.9 billion of perpetual bonds and HKD 1.9 billion of bonds to take part in this exchange, all of which were accepted by us and were exchanged for new perpetual bonds and bonds. Upon completion of the debt exchange, the nominal value or the book value of our perpetual bonds has been reduced by HKD 8.7 billion from HKD 35 billion to HKD 26.3 billion. The book value of the USD bonds has been reduced by HKD 400 million from HKD 17.7 billion to HKD 17.3 billion.

The impact of the decline in perpetual bonds and USD bonds, combined with the HKD 400 million cash expenses from the perpetual bond exchange resulted in an HKD 8.7 billion increase in shareholders' equity. It should be noted that this debt exchange led to a decrease in perpetual bonds, which is part of total equity. While shareholders' equity increased, these 2 offset each other, so the net gearing ratio would not change significantly.

Our net debt as of December 2025 rose by HKD 2.6 billion compared to June, mainly due to, first, in first half of FY '26, although the immediate repayment ratio for our projects is generally high, such repayment plan typically takes 120 to 180 days to collect payment. For example, House Muse in Kowloon City and Austin Bohemian in West Kowloon, so the cash will only come back during second half of FY '26. Second, a large portion of our contracted sales for FY 2025 and first half of FY '26 came from JV projects of Deep Water Pavilia, Pavilia Forest, The Knightsbridge, and The Legacy. The cash received from these JVs is not recorded as part of the listed company's cash until it is distributed to us.

Third, in first half FY '26, the construction work for some of our JV projects has been completed. So the related construction loans have also matured. The developers we partnered with have already repaid those loans. As for the remaining loan guarantee, the cash from project sales is expected to be sufficient to repay it.

Regarding total debt, we reduced total debt by HKD 1.7 billion in first half FY '26, from HKD 146 billion in June 2025 to HKD 144.3 billion in December. Net debt increased by HKD 2.6 billion from June 2025 due to the factors mentioned earlier. Additionally, because of onetime noncash impairments on IP and DP, our net gearing ratio rose slightly, but it remains below 60%.

Benefiting from rate cuts in the U.S. and Hong Kong, our average interest rate decreased by 80 basis points from 4.7% in first half FY '25 to 3.9%. Our total financing cost decreased by HKD 600 million from HKD 3.7 billion in first half FY '25 to HKD 3.1 billion in first half FY '26.

Now back to Echo.

Thank you, Edward. In this part, I will provide you with a detailed update on each of our businesses. As mentioned earlier, regarding Hong Kong property development, benefiting from the recovery of the Hong Kong property market, combined with the effort of our team and our strong brand effect, our contracted sales for first half FY '26 reached HKD 10.3 billion, the highest since 2021. In first half FY '26, we launched 3 major new projects. Two of them are projects from our Bohemian collection targeting young people with sophisticated lifestyle demand.

These two new projects are House Muse in School District #41 of Kowloon City, and Austin Bohemian near the West Kowloon High Speed Rail Station. They were launched in September and December of last year, respectively. Both projects were met with strong market demand, selling out all available units on the first day of launch. Their combined contracted sales reached HKD 1.2 billion. Besides, The Legacy in Western Mid-levels launched with Henderson Land in September 2025 is the residential project with the most units recording sales of over HKD 100 million in 2025. To date, The Legacy has sold a total of 36 units with combined contracted sales reaching HKD 6.1 billion.

In addition to the new projects for FY '26, the 3 Pavilia Collection projects we launched in FY '25 continued to be in high demand in the market. Our super luxury project in Hong Kong's Southern District, Deep Water Pavilia has achieved outstanding sales since its launch last May. To date, Deep Water Pavilia has sold 768 units, representing over 93% of its total number of units, with total contracted sales exceeding HKD 13.3 billion, making it the top-selling new development in Hong Kong for contracted sales in 2025. Last month, a 4-bedroom unit was sold at HKD 107 million. The per square foot price was over HKD 63,000, setting a new high for similar properties in the area.

Our residential project in North Point State Pavilia sold out all 388 units by mid-December of last year. Total contracted sales exceeded HKD 4.2 billion. Our project in Kai Tak Pavilia Forest was launched in July 2024. It offers a total of 1,305 residential units. To date, over 890 units have been sold with total contracted sales of about HKD 6.4 billion, making it the best-selling presale project in the runway area of Kai Tak to date.

Now Mr. Sitt will explain our upcoming Hong Kong property developments and the progress in the Northern Metropolis. Afterwards, Benny will also update you on the status of our property developments in Mainland China.

Thank you, Echo. I will talk about our upcoming development projects in Hong Kong. We will continue to push sales with full force. In second half FY '26, besides continuing to sell units from the two Pavilia projects, we also have a series of new projects to be launched to meet market demand, including 2 projects in Kowloon, our first brand-new project of the year on Rose Street, Kowloon, focusing on low-density luxury residential project with large 3- to 4-bedroom units, and also the new Bohemian Collection in Tsim Sha Tsui adjacent to Austin Station and West Kowloon High Speed Rail Station, which was just named Grand Austin Bohemian yesterday. In addition, we have 540 units at Phase 3 Pavilia Farm on top of Tai Wai Station, and they are expected to be launched in the second half FY '26. The above projects will altogether offer over 1,300 units in second half FY '26.

Besides, our other JV projects will continue to be launched, such as The Legacy in the Western Mid-Levels, The Knightsbridge in Kai Tak, Pavilia Forest in Kai Tak, Double Coast, Miami Quay, and also Tai Fung in Kowloon Bay. And in the Northern Metropolis, in the government's budget, the day before yesterday, the government announced that it will accelerate investment in the Northern Metropolis development to unlock potential of private land.

We have been actively supporting the government's policies with 2 of our projects already broken ground in 2025. The first is the partnership project with China Merchants Shekou on Ma Sik Road in Fanling, which will provide 2,300 units. It broke ground in March 2025 and is expected to be launched for sale as early as FY '27. The other one is Lung Tin Tsuen Phase 4 project in Yuen Long, a collaboration with China Resources Land. We paid the land premium in September 2025, and we commenced construction in November. This project will offer over 700 units and is expected to be launched in FY 2027 at the earliest. In addition to Northern Metropolis, our other farmland projects are also progressing smoothly. For example, the Sai Kung Sha Ha project. The planning application for residential use of the additional land was approved by Town Planning Board last November. In summary, we have already secured our medium- to long-term supply to support the group's development plan.

I will now hand over to Benny to talk about our Mainland property developments.

Thank you, Mr. Sitt. Since July 2025, overall policy direction for the Mainland property market has been very clear, adhering to high-quality development. As financial support and subsidy policies continue to penetrate, coupled with optimizations of the city-specific measures such as Shanghai's latest 7 measures, sales in first-tier cities have begun to recover. Purchasing confidence has further strengthened. To improve on-site sales environment, we delayed the launch of new project in Shenzhen. As a result, our contracted sales in the first half decreased.

In the first half, contracted sales was around RMB 3.2 billion. Our focus in the first half was on clearing the inventory of existing projects. Among these, New Metropolis Mansion Phase 1 has been delivered, while New World Guangzhou, Canton Bay, and The Sillage had already been sold out and been fully delivered. In Guangzhou, Central Park View is continuing to be sold and Shenyang PARKSVILLE continues to lead the region in sales. This year, we'll continue to roll out our existing premium projects.

Our urban renewal project in Shenzhen, New World 188 will also debut in the first half this year. This project has a total GFA of around 630,000 square meters. It will offer about 3,000 residential units, along with a 60,000 square meter pedestrian shopping street, aiming to create a high-quality Hong Kong-style living community. The first residential phase, Well Spring, is expected to be launched for sale in Q2 2026. This project has significant transport advantages, located near the Grand Stadium in the Central Hub. It benefits from a 3-zone intersection with direct access to the border crossing and high-speed rail station within 30 minutes. Meanwhile, another URPA project in Xili located in the heart of Nanshan's Innovation District is progressing smoothly. It is expected to go on sale in Q3 2026. This project's residential area is around 65,000 square meters and will be able to attract high net worth talent from the local innovation and technology sector.

Looking ahead, 2026 is the opening year of the 15th Five-Year plan, and the market will continue to improve with policies centered on high-quality development. We'll continue to maintain our outstanding brand influence and strong product delivery capabilities, adhere to high-quality standards and drive our business towards steady positive growth.

Back to Echo.

Thank you, Benny. As I mentioned at the beginning, in terms of IPs, we continued to perform well in the first half of FY '26 with overall segment results growing by 5% year-on-year. In Hong Kong, our office occupancy rates continued to rise with K11 Atelier at Victoria Dockside maintaining near 100% occupancy rate. Manning House and New World Tower in Central have occupancy rate at 97% and 98%, respectively. 83 King Lam Street has occupancy rate rising to 74%.

On shopping malls, K11 MUSIA and K11 Art Mall continue to have high occupancy rate of 98% and 100%, respectively. K11 MUSIA continues to attract many major international brands. Since its opening, we have continuously enhanced our brand mix, consistently drawing high-quality foot traffic. Since July 2024, more than 10 top-tier international luxury brands have moved in, upgraded or expanded. Among them, the store upgrades for AP and VCA were completed in the first half FY '26. Looking ahead, a brand-new duplex store of Prada, Miu Miu, and popular yoga brand, Alo Yoga, among others, will open later this year.

On the Mainland, in first half FY '26, our projects' occupancy rate remained robust, primarily because we enhanced our brand and adjusted our mix of offerings to deliver a richer experience for consumers, continuously driving consumer vitality. Our K11 properties in Mainland China continued to perform well with overall sales up 23% year-on-year during the National Day Golden Week. They also recorded about 120% year-on-year growth during the Christmas and New Year period at the end of 2025.

To advance the potential of the GBA's 1-hour consumption circle, 2 K11 projects in core cities of the region opened in 2025. They are K11 ECOAST Shenzhen and K11 Hanxi Guangzhou. Since its opening, K11 ECOAST Shenzhen has been actively fostering the first door economy, achieving strong operational performance. As of the end of 2025, it has recorded over 13 million visitor visits. Additionally, K11 Hanxi Guangzhou also opened in September 2025, introducing about 50 regional and even national first stores. It welcomed around 700,000 visitors during the National Day period and also surpassed 650,000 visitor mark during Christmas and New Year.

In addition to traditional commercial design, the project also innovatively integrates intangible cultural heritage from Lingnan culture into its modern retail space, actively responding to the region's need for high-quality development. Over the coming period, we will continue to have several large-scale investment property projects to be officially opened, including our flagship project, K11 Elysea located in the prime area of Huaihai Middle Road in Shanghai. It is progressing steadily. The office portion K11 Atelier will officially open at the end of this year. The project is currently over 50% pre-leased.

The first batch of key anchor tenants includes Marsh Group as well as world-renowned retailers, law firms and financial service institutions. Hangzhou Wangjiang Shenyang project is also about to enter its final phase. The commercial components, Hangzhou K11 Art Mall and K11 Atelier are slated to open gradually starting in Q4 2027.

Regarding CapEx, our CapEx guidance for FY '26 is below HKD 12 billion. As shown in this chart, in first half FY '26, our CapEx was HKD 3.5 billion, down HKD 1.4 billion year-on-year, mainly because we continue to strictly control expenditure on each project, optimizing and improving construction cost efficiency while maintaining high-quality construction. On land reserves, we align with government policies and seize opportunities to convert farmland into our land bank, reducing the cost of replenishing land reserves and CapEx.

Regarding OpEx, by optimizing our corporate structure and processes to reduce daily operating expenses. Our G&A for the first half FY 2026 was HKD 1.5 billion, down 18% year-on-year and down 38% from the same period in FY 2023. We will continue to effectively control our OpEx and spend only as necessary. Based on our financial situation, we have decided to continue to suspend payments of dividend and group level perpetual bond interest, that is the interest on the old perpetual bonds.

I'd like to take this opportunity to review our financial management progress with you. First, in FY '25, we successfully completed an HKD 88.2 billion refinancing project. Second, last September, we successfully secured a new HKD 3.95 billion bank credit facility. Although we currently have no need and no plan to draw on this facility, obtaining the new credit line provides additional standby funds and strengthens our liquidity. Third, we implemented a debt exchange program to enhance our shareholders' equity. Going forward, we will continue to actively manage our finances and pursue steady progress.

Finally, I'd like to once again thank our investors and the banks for the confidence they've placed in us over the past few months. Our team has worked very hard during this period, leading to ongoing improvements in our operations. We are very grateful to everyone, and I believe the future will only get better. Thank you all once again.

Thank you, Echo. Now it is time for Q&A. We have already received many questions, and we have done some classification and sorting out. The management will answer the questions one by one.

First, this is a question about your results. From FY '24 till now, the company has been making a loss. So management, when do you think you can achieve a turnaround?

I will take this question. In first half this year, the loss is mainly affected by noncash provisions and one-off loss. This time, in view of the market conditions for some DPs and IPs, we have made noncash provisions. If we exclude these noncash provisions, then this time, profit attributable to shareholders should be a positive number. In first half this year, the loss decreased. In the same period last year, it was HKD 6.6 billion. It came down to HKD 3.7 billion this year. So it's down more than 40%. And in second half last year, the loss was HKD 9.7 billion. So we are again lower. So this shows that we have achieved good progress in expanding revenue and reducing costs. We'll continue to improve operating efficiency. We will continue to enhance our property sale achievements and recurring revenue. We will strictly control cost so as to achieve progress amidst stability. I have confidence that when the market conditions improve, then our profitability will gradually improve.

Thank you, Echo. Next question is about refinancing. New World last year completed refinancing of HKD 88.2 billion. So for this refinancing starting 2028, it will mature gradually. So there is 2 years or so to go. What are some plans of the group to achieve long-term financial health?

I will take this question. You may know that the real estate industry has quite long cycle. So our strategic achievements need longer time to be fully realized. Last year, almost on this day -- well, I took office of CEO in 2024, and I introduced 7 strategies to reduce that. And all along, our company has been very pragmatic in improving operations and financial position. This result can reflect that our company's loss has decreased and our business is developing steadily. So this shows that our company's operations are moving towards the positive side. In the future, we will maintain stability on all fronts. At the same time, as I said, we will try our best to achieve progress amid stability. We will try to identify new growth drivers.

Thank you, Echo. Next question. So this question is about the debt exchange program. In first half FY '26, through this debt exchange program, the company had reduced bonds and perpetual bonds by about HKD 9.1 billion. Will there be similar move in the future?

Edward?

Thank you, Echo. Regarding debt management moves, well, our company will consider our overall interest and overall financial health. In relation to debt exchange, at the present moment, we do not have further plan. Our group will continue to promote project sales. Echo mentioned that we will try to accelerate cash recovery. So we will maintain stable cash flow. At the same time, our utmost goal is to reduce total debt.

Thank you, Edward. Next question is also about the debt exchange program. So for the newly issued perpetuals, will interest be paid as scheduled? Will there be other plans to handle the remaining perpetual bond interest in the future. Under what circumstances will the group resume the distribution of ordinary dividend and perpetual bond distribution?

Edward, please.

Thank you, Echo. Regarding the new perpetual bonds, our group will make distribution according to the terms. For the perpetual bond on the group level, i.e., the old perpetuals, the interest payment will be suspended. So just now, we already made an announcement via the Hong Kong Exchanges and Clearing Limited. And as mentioned earlier, we would like to offer a choice to investors so that they can make flexible decision according to their own circumstances. All along, our group has been managing our finances proactively. We are reducing our total debt, and we will discharge our liability obligations.

In terms of the payment of interest of perpetual bonds, we will act in accordance with all the contract terms. And regarding interest payment and other relevant changes about perpetuals, we will follow contract terms. We will also comply with regulatory requirements. At appropriate times, we will make the necessary notification and announcement.

Thank you, Edward. Next question. Does the company have any plan about rights issue and share placement?

Let me answer this question. We want to improve the company's cash flow all along. This has been our main direction. As the management of the company, we will very carefully consider all capital tools and options. However, at present, we do not have any plan about rights issue or share placement.

Thank you, Echo. Next question. An investor asked, in this fiscal year, what are some other JV projects in which you need to repay loan? And what will be the impact on the company's cash flow?

Edward, please?

Right. From our financial statements, you can see that as of the end of December 2025, guaranteed loan contracts only have around HKD 1 billion remaining. And this HKD 1.7 billion should be repaid by money that we will recover from our project sales.

Next question is about property sale. In Hong Kong, how much inventory do you still have? In the coming 2 years, how many units will be launched in Hong Kong? What will be some focal projects?

Mr. Sitt, please?

For our residential units, we have enough inventory. In FY '26, our plan is that in the second half of the year, in Hong Kong, we will launch more than 1,300 units. In second half FY '26, apart from the 2 Pavilia project units, we have some new projects that will be launched. We have 2 projects in Kowloon. This year, our first brand-new project is in Kowloon Road Street. It is a low-density luxury project, Pavilia Rosa, and also Bohemian Collection in Tsim Sha Tsui, House Muse -- sorry, Grand Austin Bohemian. And Phase 3 Pavilia Farm on Tai Wai Station, there are 548 units. They will be launched in second half FY '26.

In FY '27, we will emphasize our 2 projects in the Northern Metropolis and also our project in Pak Shing Kok, Tseung Kwan O. The 2 projects in the Northern Metropolis already commenced construction last year. In the government's budget, the government once again stated the importance of the Northern Metropolis development to Hong Kong. So they will accelerate development of the Northern Metropolis and attract more business in order to release potential of private land, and we will try our best to tie in our work with the government's policies.

Thank you, Mr. Sitt. Another question is about the Mainland. In the second half of the year, what are some new projects? And what do you think will be their sales?

Benny?

Thank you, Echo. As mentioned in the presentation, in the first half, our focus is to digest the existing units of the existing projects. We'll continue to sell the existing projects. The first phase of New Metropolis Mansion has been completed. And Canton Bay and also Yun Yao has already been sold out and all the units have been delivered. For The Sillage and Central Parkview, we will continue to promote sales. For Shenyang PARKSVILLE, it is #1 in local sales.

For new projects, in FY '26, our focus is that in the second half, we will launch the urban renewal project in Shenzhen that is New Work 188. Total GFA is around 630,000 square meters. There will be 3,000 residential units with a 60,000 square meter pedestrian commercial street. Our goal is to develop a high-quality Hong Kong-style living community.

And then for Phase 1 Well Spring, it will be launched for sale in Q2 this year. It enjoys very good transport advantage. It is at the intersection of 3 districts. And within 30 minutes, you can reach the border crossing and the high-speed rail station. With our very good brand strength and our product capabilities, these projects will make contribution to sales in the second half of the year.

Thank you, Benny. Next question is about New World Department Store. So New World Department Store recently announced a personnel change. And Echo will also be responsible for daily management and operations of New World Department Store. So what are the reasons behind this move? Will there be new plan for New World Department Store? Do you have plan to dispose of New World Department Store business?

Let me take this question. Regarding New World Department Store, it is a listed company under New World Development Group. For New World Group, our overall direction is to strengthen our management efficiency. New World Department Store business is on the Mainland. As you know, I am relatively more familiar with the Mainland. So for me to also take up such a position and responsibilities is reasonable. This approach is such that the group will enjoy a lot of synergies.

So regarding this arrangement and this operation arrangement, it is a normal personnel change. At present, we do not have plan to dispose of New World Department Store. In the past 1 year, the group has been strictly controlling the expenses of each project. And by optimizing organizational structure and processes, we are effective in saving day-to-day expenses. For New World Department Store and New World Development, in the coming 6 months, we'll continue to effectively control our operating expenses, so that we will only spend what we ought to.

Okay. Thank you, Echo. Next question. In second half 2025, the Federal Reserve reduced interest by 0.75%. So how much help was there for your interest expenses? How much interest have you saved? And what do you think will be the coming interest rate trend? And what will be the impact on the property market?

Edward, please?

Okay. Thank you, Echo. As mentioned in our presentation, last year, in November and December, we implemented a debt exchange program so that the nominal value of our perpetuals had come down by HKD 8.7 billion. For USD bond, it decreased by about HKD 400 million. And for shareholders' equity, there is an increase by HKD 8.7 billion. So this greatly reduced cost of our future perpetuals. This is a very important step of our debt reduction.

As mentioned earlier, interest rate is coming down. So in the first half, our interest expenses achieved a reduction of HKD 600 million year-on-year. Regarding interest rate trend, the market expects that there will still be changes. So we will continue to be prudent. We expect that interest cut will lead to positive impact on us and such positive impact will be gradually seen in the second half of the year.

Thank you, Edward. Next question. According to earlier reports, the company plans to repay the bonds that will mature in 2026 and 2027, and you do not have any intention to put in place further debt management measures. Is this your company's plan now? And what income, what revenue will you use to repay maturing bonds for perpetuals? Are you going to resume interest payment? Or are you going to redeem them?

Edward?

All along, our group has been discharging our financial obligations. For perpetuals, there is no maturity date. For perpetual interest distribution, we are doing it in line with contract terms. We are making prudent decision. Based on the latest announcement that we just released through the Hong Kong exchange, we will suspend the payment of perpetual bond interest for the old perpetuals. And for LME, we do not have any relevant plan for the time being. We will continue to promote our projects to actively improve cash flow so as to reduce total debt. That is our topmost goal.

Thank you, Edward. Because of time, I will now read out the last question. This question is about 11 SKIES. Regarding 11 SKIES, has there been any new progress, please?

Let me take this question. Our company will not comment on rumors in the market. In the past, together with the airport authority, we had already clarified on those rumors. Right now, we have been in deliberation with the airport authority. And for the time being, there is nothing for me to supplement.

Thank you, Echo. Finally, once again, let me thank you all for joining New World Development's FY 2026 interim presentation. Thank you all.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Greetings. Welcome to New World Development's FY 2025 Annual Results Announcement webcast for analysts and investors. I am Patrick Cheong, Head of IR and also the moderator for this session. First of all, let me introduce to you our management. They are New World Development, Executive Director and CEO, Ms. Echo Huang; New World Development Executive Director, Mr. Sitt Nam-Hoi; New World Development, Executive Director, CFO and Joint Company Secretary, Mr. Edward Lau; New World China, COO, Mr. Benny Chan. [Operator Instructions]

Now I will pass the floor back to Echo.

Thank you, Patrick. Friends from the investment sector, greetings. Welcome to New World Group's FY 2025 Annual Results Announcement. Time flies. Half a year ago, when I first shared our company's performance with everyone, I outlined 3 key work directions. First, focus on the property business, continuously advancing and expanding business development to ensure normal and stable business continuity, business as usual.

Second, improve the company's cash flow and actively manage our finances. Third, continuously optimize operational efficiency and governance capabilities and regularly provide everyone with the latest business updates. Through our team's dedicated efforts over the past period, we have achieved some modest results. I would like to share 3 key points with you. First, on 30th June, we successfully completed a HKD 88.2 billion bank refinancing. This refinancing provides us with valuable time to focus fully on developing our core business. I would like to once again express my gratitude to every bank for their support. Besides yesterday, we successfully secured the first tranche of an additional HKD 3.95 billion of committed loan facility as today.

This amount will be used to address the company's debt-related needs. In the future, we also have the flexibility to scale up further. Second, our core business delivered outstanding results. Despite persistent market uncertainties, we successfully achieved our annual property sales target of HKD 26 billion with multiple projects in Hong Kong and Mainland China selling exceptionally well. Retail and office leasing also delivered strong results with K11 [indiscernible] and [indiscernible] in Hong Kong, achieving record-high foot traffic, while sales across multiple tenant categories saw double-digit growth.

Third, our debt reduction efforts have yielded initial results. Both total debt and net debt declined throughout FY '25 while cash flow improved significantly and returned to positive territory, reflecting our group's gradually stabilizing financial position. I understand that our recently announced full year results shows a loss of HKD 16 billion on the books. However, there is no need undue concern as this figure is primarily impacted by several noncash provisions and losses of a one-off nature. I will elaborate on this shortly.

Looking ahead to the coming year, we'll continue our 3 directions. Focusing on our core business, actively managing finances and enhancing operational efficiency. Among these, I would like to highlight 2 key points. First, we will seize the opportunity presented by market improvements. With falling interest rates and the rebound in property market sentiment, we will continue to push forward with sales and accelerate cash flow recovery. Second, we must maintain highly prudent operations while pursuing steady progress. Current market uncertainties persist. Interest rates have only been cut once this year so far and the trajectory still contains risks. Our debt reduction efforts are just beginning with a significant journey ahead. Yet I firmly believe our team possesses the capability to navigate all challenges.

Next, I would like to discuss the progress of the 7 measures to reduce indebtedness that I proposed at the last results announcement and how we achieved steady progress. First we continue actively selling development projects. In Hong Kong, all 3 of our Pavilia collection projects were met with enthusiastic market response and achieved outstanding sales results. These include North Point State Pavilia, which has successfully kicked off the year when launched. Meanwhile, Deepwater Pavilia in Wong Chuk Hang has generated over HKD 10.7 billion in sales since its midyear launch, making it this year's new development.

Last Friday, our first new project for FY '26. House mills in Colon City sold out all units listed on its price sheet on the very first day of sales. In Mainland China, we also successfully exceeded our elevated full year targets. Guangzhou's Central [indiscernible] view, the [indiscernible], Kanton Bay and also Shenyang, the Parkville, all delivered exceptionally strong results; second, actively advancing our asset disposal plan. Through property sales and asset disposal, we successfully achieved our FY '25 annual sales target of HKD 26 billion. Our FY '26 annual sales target will be further increased to HKD 27 billion.

Third, unlocking the value of the group's farmland holdings to fully advance the Northern Metropolis project. The [indiscernible] Row project in collaboration with China Merchant Shareco commenced construction in March this year said to deliver 2,300 units with sales expected as early as FY '27. The first phase of the Yunlong sales project developed jointly with China Resources Land has completed the land premium payment. Construction is expected to commence within this year with presales anticipated as early as FY '27.

Fourth, we will enhance rental return. Our commercial properties in Hong Kong and Mainland China are performing well. Office leasing remains robust despite current market conditions. And we will continue to strive to increase rental income. Fifth, streamline costs and reduce CapEx and OpEx. We strictly manage expenses with CapEx and OpEx, both showing significant further reductions in FY '25. We will continue to prioritize cost efficiency in the coming period, 6 suspend dividend payments. We have temporarily suspended dividend payments to shareholders and perpetual bondholders to preserve cash.

Seventh, proactive treasury management. We have completed the previously mentioned HKD 88.2 billion bank refinancing, providing greater flexibility for future business development and financial needs. Moving forward, we'll continue to work diligently and fight every tough battle. Finally, I would like to express my gratitude to the management team, every colleague in the company and all friends and institutions that have supported us. It is through everyone's united effort that the situation has begun to stabilize.

Now let me very quickly share our financial performance for FY '25. Specifically, regarding core operating profit and segment results, although we recorded solid contracted sales in both Hong Kong and Mainland China in FY '25, the property delivery volume was lower than FY '24 due to the impact of Mainland Chinese delivery schedule. Besides we incurred some preopening expenses for several newly opened investment properties in FY '25. So core operating profit for FY '25 decreased by 13% year-on-year, while segment results declined 4% year-on-year. Excluding the impact of asset disposals and new openings or new development expenses on revenue, the IP segment recorded a 2% increase in segment results. K11 segment results also rose by 4%, demonstrating that despite the continued relative weakness in the retail and office markets, our investment properties continued to deliver stable performance.

Our FY '25 loss attributable to shareholders was HKD 16.3 billion. With the second half recording a loss of about HKD 9.7 billion. While this exceeded the first half loss of HKD 6.6 billion, it was mainly impacted by several noncash provisions and losses of a one-off nature. Notably having previously adjusted valuations for some investment properties, the full year fair value loss on IP for FY '25 was only about HKD 400 million including HKD 300 million impairment on the office portion of 11 skies. Prior to property development, significant impairment charges were also made. Related provisions for the first half of FY '25 amounted to HKD 3.4 billion, while the second half of FY '25 recorded about HKD 5.1 billion. Although the market sentiments and transaction volume for Hong Kong real estate improved in the latter half of FY '25, property prices remained relatively weak. Therefore, we made corresponding provisions in line with market conditions.

Besides, in second half of FY '25, we recorded HKD 5.2 billion of other provisions and one-off losses primarily comprising 3 components. First, due to changes in Hong Kong's overall retail environment, we correspondingly adjusted the valuation of the 11 SKIES retail portion, resulting in a provision of HKD 2.7 billion. Second, we disposed of certain long dormant legacy projects in Mainland China during the second half of FY '25, resulting in a loss of about HKD 1.2 billion. Third, bulk transactions and other businesses also incurred one-off loss of about HKD 1.3 billion.

On the expenses side, G&A expenses amounted to HKD 3.5 billion, down 16% year-on-year. This decrease exceeded the 9% decline recorded in the first half of the year, mainly due to our ongoing organizational optimization efforts. By enhancing collaboration between Mainland China and Hong Kong teams, we improved departmental efficiency across functions like IT, finance, HR and ESG, successfully achieving cost savings. CapEx amounted to HKD 12.6 billion. A significant 15% decrease year-on-year, and it is also below our latest FY '25 CapEx guidance of HKD 13 billion. This is mainly due to our continued strict control over CapEx. In FY '26, we will further reduce CapEx to below HKD 12 billion.

Regarding debt, our total debt continued to decrease, reaching a level as of the end of June 2025, our total debt decreased by HKD 5.7 billion compared to June 2024 and slightly decreased by HKD 0.5 billion compared to December 2024. This is due to the refinancing completed with banks in the second half of FY '25. Edward will elaborate more shortly. Notably, apart from total debt, our net debt also decreased falling by HKD 4.5 billion compared to December 2024. This is mainly due to our cash flow returning to positive territory.

Regarding the refinancing progress and debt reduction that everyone is most concerned about, let me pass the floor to Edward, our CFO, to explain.

Thank you, Echo. Regarding refinancing progress, I believe everyone has read our announcement. I will briefly summarize it here. The amount of our refinancing this time reached HKD 88.2 billion. I would also like to take this opportunity to once again thank all banks for their support. As Echo mentioned earlier, completing this refinancing has strengthened our financial position, including -- this refinancing has extended the earliest maturity date of certain bank loans to 3 years later, specifically 30th June 2028, thereby enhancing the group's short- to medium-term liquidity. As shown in the right chart, our debt maturing within 2 years decreased by HKD 44.8 billion, falling from HKD 73.8 billion in June 2024 to HKD 29 billion in June 2025. Of this, HKD 29 billion, HKD 6.1 billion represents bonds maturing within the next 2 years. About 80% of this amount or HKD 4.9 billion will mature in the second half of FY '27.

The remaining HKD 22.9 billion consists of bank loans. Of this amount, about 98%, that is HKD 2.4 billion represents secured loans. This means our debt maturing in FY '26 totals only HKD 6.6 billion, HKD 1.3 billion being bonds. This refinancing also provides greater flexibility for our future business development and financial needs. Regarding total debt, we successfully reduced it by HKD 5.7 billion in FY '25 from DK 151.6 billion in June 2024 to HKD 146 billion in June 2025. At the same time, we successfully controlled the scale of net debt reducing it from HKD 124.6 billion in December 2024 to HKD 120.1 billion in June 2025, a decrease of HKD 4.5 billion. The net gearing ratio slightly increased to 58.1%, primarily due to shareholders' equity declining from HKD 224.9 billion at the end of June 2024 and to HKD 206.7 billion at the end of June 2025. This decline was impacted by the previously mentioned property development impairment and one-off losses offsetting the decrease in net debt. However, benefiting from interest rate cut in the U.S. and Hong Kong, our average interest rate decreased from 5% in FY '24 to 4.8% in FY '25.

Consequently, the reduction in total debt, combined with lower interest rates resulted in our total financing cost decreasing by HKD 1.3 billion from HKD 8.7 billion in FY '24 to HKD 7.4 billion in FY '25. I will pass the floor back to Echo.

Thank you, Edward. In the coming part, I will provide a detailed overview of each business segment. Regarding Hong Kong DP, our attributable contracted sales for FY '25 reached HKD 11 billion. All 3 Pavilia collection projects launched in FY '25 were well received by the market, demonstrating buyers' preference for the New World Development brand and products as well as the confidence in us. Our super luxury project Deepwater Pavilia in Hong Kong Island Southern District offers 825 units across 2 phases. Since sales commenced in May 2025, performance has been exceptionally strong. To date, over 620 units have been sold, generating total contracted sales exceeding HKD 10.7 billion, making it the highest growth in new development in Hong Kong this year-to-date.

Our residential project [indiscernible] Pavilia in North Point over 388 residential units launched in January during a relatively sluggish Hong Kong property market, it immediately set 3 major records in 2025. That is becoming the first project this year to sell out its first batch of units on the same day, achieving the highest per square foot price for a new development on the Hong Kong Island at the time and reaching a peak price of HKD 51,000 per square foot. To date, over 335 units have been sold with total transaction value exceeding HKD 3.7 billion. Our Kai Tak project Pavilia Forrest commenced sales in July 2024, offering a total of 1,305 residential units. To date, over 690 units have been sold with contracted sales HKD 4.8 billion, making it the highest selling presale project in Kai Tak's runway area to date.

Besides residential properties, we continued to advance the sales of the group's office project in West Callon. Leveraging the group's effective sales strategy, the office project at 83 Wing Hong Street has attracted numerous owner-occupiers and investors. To date, the project has recorded cumulative total contracted sales of about HKD 470 million since launch. The Twin Tower Landmark Grade A office project at 83 Kingdom Street, Chengshan [indiscernible] is a leasing project right now. And then there is the [indiscernible] Innovation Center at 888 Lighter Court recorded sales of HKD 1.3 billion in FY '25.

Now I will pass to Mr. Sitt Nam-Hoi to explain our upcoming property project deployment in Hong Kong and progress in the Northern Metropolis development. Afterwards, Benny will share updates on Mainland property development. Mr. Sitt, please?

Thank you, Echo. I will outline our upcoming development projects in Hong Kong. We have ample land bank for short, medium and long term and will continue to drive sales with full force to ensure steady turnover. As Echo just mentioned, in FY '26, besides units from our 3 Pavilia projects, we also have a series of new launches entering the market. This includes last Friday's debut of our first brand-new FY '26 project, and that is House mills, [indiscernible] road in Palen City within [indiscernible] district 41, all units listed on the price sheet sold out on the very first day of sales. Besides will progressively launch other projects in Callon, including 2 Bohemian collection developments in prime West Callon locations, one on Canton Road and the other on Kunshan Street plus a low-density luxury residence on Road Street in [indiscernible].

Besides the 530 units in Phase III of Pavilia farm our development above [indiscernible] station are also expected to be launched in FY '26. The above projects will collectively provide over 2,100 units in FY '26. Furthermore, our JV projects will continue sales such as the night bridge in [indiscernible]. Miami Key Double Coast in Typhoon in Callon Bay and also the the legacy projects on Victoria Road and Mid-levels West will also be launched within this year. The Chief Executive reiterated in last week's policy addressed the need to accelerate development of the northern metropolis and has already established a Northern Metropolis Development Committee. The government is currently conducting detailed planning for areas, including the [indiscernible] City, [indiscernible]. Meanwhile, survey and design work for the Hong Kong, Shenzhen Western Railway commenced this year. With the goal of opening service by 2035 by then the journey from Hong Shakil to Tianhai will only take 15 minutes.

Our group has long-standing operations in the district, enabling us to capitalize on policy alignment and accelerate development. We possess about 15 million square feet of farmland area with existing plants expected to provide about 12 million square feet of land bank. Among these 2 projects have already completed land premium payments, providing about 500,000 square feet of attributable GFA. The first is the [indiscernible] road project, a JV with China Merchants Shareco, which will provide 2,300 units. Construction commenced in March 2025 with the sales expected to commence as early as FY '27. The other is the Phase [indiscernible] project in Longtan Village in long developed in partnership with China Resources Land. Land premium payment has just been completed, allowing construction to commence immediately. This project will deliver over 700 units also for launch the earliest in FY '27.

Besides these 2 projects, several more are expected to complete land exchange process within the next 1 to 2 years. They include Yulong Lana Village, [indiscernible] village Phase II, [indiscernible] village phase 5 and also in Saikong Shaha. Estimated to add about 2 million square feet of attributable GFA for the group. Over the next 3 to 5 years, we'll continue pursuing urban planning applications and land exchange applications, which are projected to increase the group's attributable gross floor area by about 6.2 million square feet. Key projects include Tong Yan Sanshun, Wink Village, [indiscernible] Village and [indiscernible] road. The planning application for [indiscernible] road was approved by the Town Planning Board in January 2025. And similarly, the [indiscernible] village in land sharing pilot scheme project, the Town Planning Board recently approved amendments to the statutory plan this month to resume the site for residential use. Regarding long-term outlook, the main projects currently planned include in [indiscernible] Village, [indiscernible] and [indiscernible], which together can provide nearly 3.2 million square feet of attributable GFA.

In summary, I want to emphasize that we have ample resources locally in the short, medium and long term. And we will cease market and policy opportunities to fully support the group. And for Mainland property development, I will pass the floor to Benny to make a report. Thank you.

Thank you, Mr. Sitt. On 26th September last year, the [indiscernible] of the Central Committee explicitly called for promoting the real estate market to halt decline and stabilize, marking the arrival of a policy inflection points. Then on 13th June this year, the State Council executive meeting further proposed establishing a new development model for the real estate market signaling an even clearer stance on achieving market stabilization and boosting industry confidence. Since this year, local governments have actively responded with significantly accelerated policy rollouts. Major cities, including Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou, Tier 1 cities have implemented measures across multiple fronts, such as optimizing or lifting purchase restrictions, lowering down payment ratio, reducing mortgage rates and refining price caps.

Notably, Shenzhen's new policy released on fifth September this year removed purchase quantity restrictions in multiple districts, further boosting market confidence. Consistently adhering to our philosophy of developing high-quality projects, we have successfully capitalized on policy dividend, achieving outstanding results across multiple regional projects. In FY '25, the group's mainland contracted sales reached RMB 14 billion. even after adjusting our annual target upward in response to market changes, we successfully exceeded our goals. Numerous projects achieved individual sales exceeding RMB 1 billion. For instance, Guangzhou, central Panvel, benchmark luxury project showed RMB 2 billion upon its launch, demonstrating both strong pricing power and market demand.

Other projects like Guangzhou, New World, the silage and Kanton Bay and Shenyang, the Parkville reflect the market's support and recognition for high-quality developments, residential developments. In addition to outstanding sales performance, we successfully delivered 3 high-end residential projects in this fiscal year, including Hangzhong New World River [indiscernible] New Metropolis [indiscernible] and Shanghai City Gather. Then regarding asset disposals. In FY '25, we sold the Beijing Xinjing office, Ningbo New World office building as well as commercial properties and parking spaces in locations, including Guangzhou, Central [indiscernible] and Shenyang will continue asset disposal to accelerate capital recovery.

In the coming years, the group continue to launch property development projects in Mainland China. First tier cities are beginning to relax purchase restrictions, guiding the market towards high-quality products. Over the next 2 years, we will continue to market premium projects, including Guangzhou, Central Parkview, the silage, Shenyang, the PARK VILLA and so on high-quality projects. And Shenzhen Longgang 188 project will commence sales in FY '26. This is a large-scale project with total gross floor area of 650,000 square meters, offering 3,000 residential units across 2 phases, its prime location at the core intersection of Rojo, Yantian and Pingshan District provide significant transportation advantages with direct access to border crossings and high-speed rail stations within 30 minutes.

Over the coming year, the group is also in negotiations for multiple asset disposal. We'll continue to adapt to market changes and leverage our sales strengths. We are confident in achieving our annual targets.

Now I will pass the floor back to Echo.

Thank you, Benny. As mentioned at the beginning, regarding [indiscernible], we continued to deliver solid performance in FY '25. Despite the challenging macroeconomic environment, overall segment results and K11 segment results grew 2% and 4% year-on-year, respectively. In Hong Kong, our office leasing performance remained strong. Our occupancy rate performed well with K11 [indiscernible] and North Point as well as Manning building and New World Tower in Central, maintaining high occupancy rates. For shopping malls, K11 museum and [indiscernible] maintained high occupancy rates of 96% and 100%, respectively with foot traffic reaching record highs in FY '25. In August this year, both malls achieved the highest single month foot traffic since opening, with overall foot traffic increasing 20% year-on-year, leveraging its prime location unique positioning and robust foot traffic, [indiscernible] continues to attract numerous major international brands.

Since July last year, over 10 international first-tier luxury brands have successfully opened new stores, upgraded existing stores or expanded their footprint. Among these low -- as newly upgraded concept store Hong Kong flagship store and Rolex special concept store opened in FY '25. Upgrades for AP and VCA stores were completed during the recent summer holiday period. Looking ahead, Prada's new duplex store and Balenciaga's new store will open sequentially in FY '26. This summer, international luxury brands at [indiscernible] achieved over 20% year-on-year sales growth. Besides, we continue to promote interactive experiences for our customers with 2 major events taking place at K11 MUSEA this summer vacation. First, the Cristiano Ronaldo, Hong Kong Museum, the first of its kind in Asia opened in early July, drawing numerous fans.

Second, the large scale exhibition of the popular Japanese anime character [indiscernible] was held at K11 MUSEA's Waterfront in August. These events further boosted MUSEA's foot traffic and sales performance. [indiscernible] positioned to target the Gen Z market has capitalized on the green economy trends by actively introducing multiple Anime and trendy pop toys brands. Examples include the globally popular [indiscernible] and card game giants, Kau and Toys"R"Us first life play concept store in Asia, successfully cultivating a stable young consumer base. The green economy has significantly boosted sales performance for related merchants with sales from anime and trendy pop toy merchants increasing by over 65% year-on-year in FY '25.

In Mainland China, our overall project occupancy rates remain sound primarily due to our effort in brand enhancement and tenant mix adjustments, which delivered richer experience to consumers and sustained consumption momentum. Shenyang K11 introduced 7 new brands to Northeast, China and Shenyang, first ore in FY '25, cohosted over 30 events with tenants, attracted more than 13 million visitors throughout the year and achieved record-breaking sales. During FY '25, 2 new K11 projects opened in Mainland China, Shenzhen [indiscernible] coast and Ningbo K11, Shenzhen [indiscernible] the first K11 flagship project in Mainland China, grandly opened before this year's May Day Golden Week. Since its opening, it has recorded over 12 million visitors, averaging 100,000 daily foot traffic.

On the first day of May Day holiday alone, 300,000 people came and high foot traffic was maintained during public holidays like the Dragon Boat Festival, establishing it as a new cultural and tourism hotspot in the [indiscernible]. Ningbo K11 was opened in September last year and has gained strong market recognition. Since opening, it has recorded more than 5 million visitors. The project has also brought several new stores to the local area, including Ningbo first to tie up book store establishing itself as a landmark in Ningbo and the East China region. In the coming period, we'll continue to see several major investment property projects officially open including Guangzhou's second K11 will open on 29th September 2025. That is next Monday, creating another landmark TOD complex for Guangzhou, Cheng Long [indiscernible].

On 28th May this year, we signed a strategic cooperation agreement with the Shanghai government officially launching the major project K11 Alicia establish a lifestyle hub for high-end consumption and cultural experiences along Huai Hai Road. The K11 office [indiscernible] session will open in second half of next year with key initial partners, including MS and a Singapore-based law firm, [indiscernible]. Meanwhile, the Guangzhou NEW [indiscernible] project has entered its harvest phase. The project both a total GFA of 740,000 square meters. Apart from residential units, it encompasses diverse formats, including K11 [indiscernible], [indiscernible] hotel, salable commercial components such as office towers and retail streets. Office buildings and commercial streets have been progressively delivered. Phase 2 has reached a structural completion and is expected to achieve full completion by the end of 2025.

Regarding CapEx, as shown in this chart, you can see that our CapEx for FY '25 further decreased from HKD 14.8 billion in FY '24 to HKD 12.6 billion, mainly due to, one, we continued to strictly control spending on each project, optimizing and enhancing construction cost efficiency while maintaining high building quality. Two, regarding land bank, we aligned with government policies this year, seizing opportunities to convert farmland into land bank. This reduced both the cost of replenishing land bank and capital expenditure. In FY '26, we'll continue our effort to control CapEx, strictly limiting it to below HKD 12 billion. In terms of operating expenses, we have optimized our corporate structure and processes to reduce daily operating expenses. Our G&A expenses in FY '25 amounted to HKD 3.5 billion, representing a 16% decrease compared to the previous year. Comparing with FY '23, it is down 30%. We'll continue to effectively control our operating expenses, ensuring that every dollar counts. Based on our current financial situation, we have decided to continue suspending dividend payments and perpetual bond coupon.

I'd like to take this opportunity to review our progress in treasury management. First, our company successfully completed HKD 88.2 billion refinancing project in FY '25. Second, we also successfully secured the first tranche of an additional HKD 3.95 billion in committed loan facilities yesterday with the option to scale up further as needed in the future. Third, our company's cash flow has improved. Fourth, overall total debt continues to decrease with net debt reduced by HKD 3.6 billion over the past year, and the net gearing ratio has stabilized. Moving forward, we will continue to enhance our company's cash flow, actively manage our finances and prudently handle our debt obligations to achieve steady progress.

Finally, I would like to once again express my sincere gratitude to all investors, especially banks for their tremendous support over the past few months. This has strengthened our confidence and we believe the future will get better. Thank you all.

Thank you, Echo. Now we will start Q&A session. We have already received many questions. So we have actually categorized them briefly. Our management will answer them one by one. First question, our debt position. So in FY '25, net debt decreased. So does the company have concrete goal for debt reduction and timetable.

Let me take this question. Now reducing indebtedness is our important work, and I have been emphasizing this in the coming year, we will strive for progress in instability, we will seize market improvement opportunities to manage our treasury and cash flow. We have put in place 7 measures to reduce indebtedness. And this year, you have seen initial success and achievements. Our total debt and net debt in FY '25, came down by HKD 5.7 billion and HKD 3.5 billion, respectively. Well, this year, we have completed HKD 88.2 billion bank refinancing. For the group we increased short-term and medium-term liquidity as a result in the future. In the coming few years, we'll have more time to steadily develop with full force our core businesses.

We will continue to strive for steady progress and promote sales and actively improve cash flow to reduce total debt. That is our top most target. We have not set short- to medium-term target for net gearing ratio because that involves a lot of asset disposal progress, cash recovery and interest rate environment factors.

Next question is related to your [indiscernible]. So some time ago, New World announced that for a number of perpetual bonds, coupon payment will be deferred. So now you have completed the refinancing project. When are you going to resume payments. In the market, there are rumors that the company will discuss with bondholders about LME options. So when will that be a concrete proposal. Edward can you take the question.

Thank you, Echo. Concerning deferment of payment of perpetual coupon while our group has adhered to our prudent capital management principle and that is a decision to preserve cash. All along, our company has been actively managing our finances. Our goal is to lower total debt. We comply with all debt obligations for perpetual coupon distribution. We comply with all contractual terms in our action. So in relation to coupon payments and related changes about the perpetual, we will go according to the contract and related regulatory requirements. And at appropriate times, we will make disclosure and make announcement.

Recently, the market -- there are a lot of speculations and rumors in the media about New World. So everything should be based on official announcement, please do not believe in market rumors. As I said earlier, our company has the objective of reducing indebtedness. So the management will continue to keep an open mind to assess different financial tools. In the future, if there is concrete arrangement, we will make disclosure according to the loss.

The next question is also about debt. So all along, the company emphasizes that reducing indebtedness is the goal. But yesterday, you took out a new bank loan. So what is the use of the proceeds? And for this new bank loan, is it in conflict with your goal of reducing indebtedness.

As Echo mentioned just now yesterday, we got the first tranche of additional HKD 3.95 billion committed credit facility. We're going to use it to meet debt related needs of our company. As stated in the announcement in the future, we can increase the scale according to needs. As I said earlier, this year, we have successfully controlled the scale of net debt for the whole year, net debt decreased by HKD 3.5 billion. This shows that our cash flow has improved. So while risk will be controllable, we will make good use of financing tools to help our company to increase or enhance liquidity. We will continue to actively improve our cash flow and expedite capital recovery and also our asset disposal plan.

So for all these goals, they are for the purpose of reducing indebtedness in the long run.

Next question is about the majority shareholder. Will the majority shareholder consider injecting Capital?

I will take this question. sometime earlier, we issued an announcement to clarify. So far, we have not received any capital injection plan from the majority shareholder.

This question is a similar question. Is that right now, -- is it true that the company continues to undertake that there won't be rise issue? If there is no rise issue, will you consider share placement. If so, then are you going to place the shares to the majority shareholder -- for service and CTF jewelry, recently, they issued convertible bonds, one after the other, will New World also consider issuing CB.

Let me take this question. Some time ago, we said that our major goal is to improve our cash flow right now. As management of the company, we will prudently consider any capital tools and options. But so far, we do not have any plan about rights issue, share placement or issuance of convertible bonds.

Next question. About this year's P&L.

This year, for the whole year, results still showed a loss of more than HKD 10 billion.

So at the next result announcement, do you think there will still be a loss. When do you think you can achieve a turnaround Edward?

Just now Echo said that this year, on the book full year results, our full year loss was affected by one-off provisioning and one-off loss. So there are impacts about interest rate environment, overall macro market environment and so on. The U.S. Fed so far had cut rate once. But overall interest rate trajectory still sees a lot of uncertainty. It is difficult to make any forecast now. As mentioned just now, we'll continue to optimize our operating efficiency, we will enhance our property sales results and recurring revenue. We will strictly manage our expenses. We will try our best to achieve steady progress. And when the market improves, we are confident that our profit will improve.

The next question is about 11 SKIES. Are you talking with airport authority about lowering rent or selling 11 SKIES?

Let me answer this question. all along, we have got deliberation with airport authority. There are external rumors about 11 SKIES, and the airport authority has made a response sometime earlier. You can take reference from that response. So far, we do not have anything to add.

Next question is about the recent policy address. The policy address states that the government wants to expedite development of the north metropolis. What kind of help will that be to New World in specific. Mr. Sitt.

Thank you, Echo. The group welcomes the government's decision to expedite development of the northern metropolis and there will be the setting up of Northern Metropolis development committee. This is conducive to the creation of new economic opportunities for Hong Kong. We have 15 million square feet of farm land bank. A lot of them is in the northern metropolis prime sites. We will use different channels to release value of the farmland and to expedite capital recovery. We'll actively bring in strategic working partners to enhance development potential. Now we work with China Merchant Serco in Sunland [indiscernible] project. We have completed payment of land premium. And this year, in March, construction commenced. 2,300 residential units can be offered and sales can start in FY '27 the earliest.

We also work with China Resources Land in [indiscernible] Phase 4, we completed land premium payment this month. After that, construction will command, 700 units can be offered, and they can be launched as soon as FY '27, the late -- the earliest.

The next question is about Mainland China property development. So what are the management's views in Shenzhen recently, there are new policies released? What kind of help will that be to the company? Benny.

Yes, in Shenzhen, there are 2 projects that will be launched soon in the market. In Shenzhen, there are new policies, they will definitely help the sales of our new projects. Let me add a few points about the new policies. They cover 80% of the areas of Shenzhen, number of units purchased restriction is abolished for Shenzhen people. The purchase restrictions are lowered. And then for first units and second property unit mortgage rates, it is unified at 3.05%. And this has lowered the cost for property buyers significantly, and it also helps the purchase desire. In the first week after the new policies for firsthand residential transactions in Shenzhen, comparing with August, same period, there is an increase by 40%. September and October, our traditional peak season, together with these new policies, turnover is being driven and the main demand is from upgraders.

And for our 2 projects in Shenzhen, the first one is the Long Yang 188 project. It is in the nonrestricted area. There is convenient traffic within 30 minutes, people can go to the border control points and high-speed real station. Apart from local residents, there are many Hong Kong people who may be interested to buy properties in Shenzhen, they will be attracted to the projects. Another project in Shenzhen is in Nanshan Sealy urban renewal project. So all the demolition works have been completed. The main body construction is being approved by the government already. In 2026, we will launch the project to the market.

Next question about K11. Some time ago, the former CEO of New World, Dr. Adrian Cheng, established K11 by AC. So together with K11 Group, especially together with New World Group and K11 brand under the group, what are the relationship?

Let me take this question. K11 is wholly owned registered trainmen and brand of our group. When Dr. Adrian Cheng left our group, he sought the consent of our group to use K11 by AC brand. K11 by AC current investment businesses and operations, including the asset-light management projects are not related at all with K11 and New World Group. At the same time, the Hong Kong K11 MUSEA that we are operating and managing, K11 [indiscernible], Guangzhou K11 and Shanghai K11 and also the K11 projects mentioned in our annual reports are totally not related to K11 by AC.

Finally, I would like to supplement that apart from our group series of companies, K11 series under our group at present do not manage other property projects developed by third parties.

Next question is about asset disposal. Some time ago, there are rumors in the market about K11 [indiscernible]. Apart from that, does the group have planned to sell Shanghai K11. This year regarding asset disposal, do you have any concrete goals? Now, the market is not that good. There are many developers which want to sell properties to achieve encashment. So when you dispose of assets, do you encounter big difficulty?

Let me answer this question. Regarding false market rumors, we will not make further comments. But I would like to state the point that from time to time, our group receives asset inquiries from potential buyers. This shows that our assets are of good quality, and they are attractive in the market. In the market, there is both buying and selling. This is normal. These are normal behaviors. I would like to emphasize that we will only sell our assets when our targeted price is reached.

Because of time, I will now read out the last question. This question is about recent rate cuts. Recently, the rate cuts -- how much help is brought to your interest expenses? How much interest is saved in the coming FY, how much money do you think you need to repay. Edward.

Thank you, Echo. Yes, rate cut helps our group to lower funding costs. Based on our current debt structure, if interest rate falls 1%, we can save around HKD 800 million annual interest expenses. As mentioned earlier, debt that will mature in the coming 1 year amounts to only HKD 6.6 billion. We will actively do financial planning. We'll use diversified tools to manage our refinancing risk.

Thank you, Edward. Finally, once again, thank you all for joining New World Development's FY 2025 Annual Results Announcement today. Thank you.