REG - Macau Prop Opp Fund - Interim Report to 31 December 2024
03/03/2025 07:15
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RNS Number : 9982Y Macau Property Opportunities Fund 03 March 2025
3 March 2025
Macau Property Opportunities Fund Limited
("MPO" or "the Company")
Interim results for the six-month period ended 31 December 2024
Macau Property Opportunities Fund Limited announces its results for the period
ended 31 December 2024. The Company, which is managed by Sniper Capital
Limited, holds strategic property investments in Macau.
FINANCIAL HIGHLIGHTS
Fund performance
· MPO's portfolio value(1) was US$126 million as at 31 December
2024, a decrease of 2.4% over the six-month period.
· Adjusted Net Asset Value (NAV) was US$57 million, which
translates to US$0.92 (73 pence(2)) per share, a decline of 13.8% over the
period.
· IFRS NAV was US$44.9 million as at the period end, equating
to US$0.73 (58 pence(2)) per share, a drop of 3.2% over the period.
Capital management
· The consolidated cash balance was c.US$1.7 million, of
which US$1.2 million was pledged as collateral for credit facilities.
· Gross borrowings stood at US$65 million, equating to a
loan-to-value ratio of 50.9% from 52.5%, an improvement of 1.6% over the
period.
· Loan repayments of US$17.7 million (HK$141.3 million) made in the
period. Subsequent to the period end, US$0.1 million repaid and a further
US$2.7 million scheduled for March from completions of sales post period end.
Extension of Company life
· At the Company's Annual General Meeting in December, shareholders
agreed to a further extension of the Company's life until December 2025.
(1) Calculation was adjusted to reflect like-for-like comparisons to 31
December 2024 due to the divestment of properties during the period.
(2) Based on the US Dollar/Sterling exchange rate of 1.256 on 31 December
2024.
PORTFOLIO HIGHLIGHTS
· The Waterside
- In the second half of 2024, the Company sold a further five units for a
total gross value of US$11.5 million. One of these units is expected to
complete in March 2025, post the period end.
- To date, a total of 32 units have been sold representing 54% of the total.
As of the end of 2024, 27 units remain available for sale.
- The Manager is in active discussion with the lender to reschedule part of
the March loan repayment to sales should that be required.
- The current leasing programme has largely been terminated to prioritise
sales, with only selective short-term leases now considered. As of the end of
2024, over 50% of The Waterside's remaining apartments were occupied.
· The Fountainside
- The Company sold two villas during the period at discounts to the latest
valuations, but at an average premium of 46% over the original costs.One villa
sale has completed and the second is scheduled for March with proceeds applied
to debt repayment.
- The sales campaign for the three smaller units has continued to be
hampered by bureaucratic challenges which the Manager is working towards
resolving.
· Penha Heights
- The Company has engaged a firm of specialist Hong Kong real estate agents
to boost the marketing effort to the region, including mainland China.
- Negotiations are ongoing with lenders to extend near term debt
instalments and the remaining balances into the latter half of 2025, allowing
additional time for the planned property disposal.
Mark Huntley, Chairman of Macau Property Opportunities Fund, said:
"While Macau's economy continues to demonstrate recovery driven by its two
economic motors - gaming and tourism - the real estate market is subdued with
conditions remaining challenging. Small and medium-sized enterprises, retail,
and some elements of hospitality, also continue to display weakness.
" Against the backdrop of market-driven factors and the economic imbalances
described above, the Manager continued to implement our divestment strategy
and has successfully concluded further sales which has led to a reduction in
debt levels and the restoration of working capital balances.
"Our clear focus is on reducing debt through active divestment, aligning debt
repayments with our property sales to manage repayments and also lowering debt
servicing costs that continue to weigh on returns."
For more information, please visit www.mpofund.com (http://www.mpofund.com/)
for the Company's full Interim Report 2024.
The Manager will be available to speak to analysts and the media. If you would
like to arrange a call, please contact Sniper Capital Limited
at info@snipercapital.com (mailto:celine.jiang@snipercapital.com) .
MACAU PROPERTY OPPORTUNITIES FUND LIMITED
INTERIM REPORT FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2024
CHAIRMAN'S MESSAGE
I present my Chairman's report for the first six months of the current
financial year to 31st December 2024.
While Macau's economy continues to demonstrate recovery driven by its two
economic motors - gaming and tourism - the real estate market is subdued with
conditions remaining challenging. Small and medium-sized enterprises (SMEs),
retail, and some elements of hospitality, also continue to display weakness.
Similar effects have been observed in other jurisdictions that adopted a total
lockdown response to COVID-19. However, as Macau is particularly reliant on
its primary economic drivers, the effects on the wider population and economy
can be obscured by overall GDP statistics. Nevertheless, unemployment has
fallen, which should support the economy in what is now expected to be an
extended U-shaped recovery rather than the more rapid return to a post-COVID
economy that had been previously forecast.
The spectre of the ongoing weakness in the Chinese real estate market
continues to loom large, casting a pall over investment sentiment in Macau's
property sector. The uncertainty emanating from the mainland has undoubtedly
contributed to a cautious approach among investors. While President Xi
Jinping's recent visit to Macau for the 25th anniversary of the establishment
of the SAR briefly sparked hopes for additional policy support from the Macau
government, building on the previously relaxed anti-speculation measures, no
concrete announcements have materialised to date. This lack of immediate
follow-through leaves the market in a state of anticipation, tempering
enthusiasm and delaying potential investment decisions.
During the reporting period, the real estate market experienced the continuing
effects of the previously announced relaxation of the restrictive measures
placed on real estate assets and associated lending by the Macau government.
These measures had been holding back a return to growth in the property
sector. While these changes were welcome and long overdue, prices and
transactions were impacted by the enforced sale of unsold primary inventory by
developers. What was anticipated to be a brief period in which developers sold
inventory at a discount to pay down bank debt became a more prolonged factor,
as developers pursued sales at significant discounts to their previous market
valuations. This phenomenon has, in turn, affected wider market valuations,
bringing levels to a nine-year low and presenting significant challenges in
achieving our plans regarding the pricing and timing of the sale of our own
portfolio.
Against the backdrop of market-driven factors and the economic imbalances
described above, the Manager continued to implement our investment strategy.
This has successfully delivered further sales, which has led to a reduction in
debt levels and the restoration of working capital balances. Towards the end
of the period, sales velocity slowed in response to concerns over U.S.
interest rates, which influence rates in Macau, the impact of the U.S.
elections - including post-election messaging from the Trump administration -
and trade-related tariffs targeted at China. An additional challenge for
prospective purchasers of our properties has been the difficulty in securing
debt finance, as banks have cooled their appetite for increasing their real
estate exposures.
In terms of our divestment delivery, it is pleasing to report the sale of two
of the four villas at The Fountainside. Previous attempts to achieve an
en-bloc sale of all the villas were unsuccessful, primarily because
prospective purchasers were unable to raise the necessary finance. The shift
to selling the villas individually was always going to take time, but we
successfully sold the middle two properties, along with their car parks. The
remaining corner villas are more attractive due to their better views and
location, and we expect to achieve improved pricing compared to those already
sold. The ongoing process to obtain the necessary approvals to enable the sale
of the reconfigured units is continuing. The Manager is focused on achieving
an outcome amid what remains a very frustrating delay, especially given the
better demand for properties at this pricing point.
Progress at The Waterside continues, with five additional units sold, bringing
the total to 32 out of 59 units. Our approach has been to manage the sales
process so that the higher floors, which have a greater proportionate value,
are sold towards the end of the programme whenever possible. We also observed
an improvement in pricing towards the end of the period, though sales velocity
slowed due to the aforementioned economic factors, as well as the combined
effects of the Christmas and New Year period and the Lunar New Year holiday.
This makes it more challenging to ascertain the extent to which we can
maintain our pricing targets, as we anticipate a gradual U-shaped recovery
offset by the timing of our debt repayment obligations.
Of the remaining Waterside units, over half are leased on a short-term basis.
While the overall leasing programme has been terminated, there are prospective
purchasers interested in properties with established rental income. This,
combined with the income generated to meet ongoing costs, has allowed us to
optimise returns during the ongoing sales process.
Active marketing of Penha Heights recommenced in the final quarter of 2024,
resulting in new inquiries. In parallel, the Manager has negotiated with
high-end retailers for opportunities to utilise the property for events
targeted at ultra-high-net-worth individuals, subtly increasing the property's
exposure to wealthy prospects in the region. Consequently, the building
presents very well, with upgrades financed by these third-party short-term
tenants. We continue to share the Manager's view that the sales process will
require a degree of patience and focused tactical marketing to achieve a
successful divestment of this unique offering in the Macau luxury property
space.
Our clear focus is on near term reduction of debt through active divestment,
thereby also lowering debt servicing costs which continue to weigh on returns.
The detailed debt position is explained further in the Manager's Report and is
outlined in Note 6 to the Interim Condensed Consolidated Financial Statements.
Gross borrowing at the period end fell to US$65 million (from US$82.8 million
on 30 June 2024). The loan-to-value ratio, accounting for fair-valued
inventories and cash, improved to 50.9% from 52.5% as of 30 June 2024.
The Board and the Manager remain very focused on managing the Company's debt
obligations, particularly the December 2024 outstanding amount and upcoming
March instalment obligations. The Manager has been active in promoting sales
while maintaining an open dialogue with our lenders for The Waterside and
Penha Heights relating to the repayment of loans and exploring potential loan
extensions. The aim is to align repayment terms with current market
conditions.
The Company, via the Manager, is seeking a loan extension for Penha Heights to
facilitate a strategic disposal of the property. Simultaneously, it is in
regular discussions with the lender for The Waterside to reschedule the March
instalment obligations. The Company made significant loan repayments of
HK$141.3 million (US$17.7 million) in the second half of 2024. Subsequent to
the period end, debt of HK$1 million (US$0.1 million) has been repaid and a
further HK$20.7 million (US$2.7 million) from the completion of sales will be
allocated to March instalment obligations.
As of 31 December 2024, the Company's unaudited adjusted net asset value (NAV)
was US$57.0 million, equivalent to US$0.92 (73 pence*) per share, representing
a decline of 13.8% over the period.
The Company's shares closed at 25.0 pence at the end of the reporting period,
a decline of 29.8% over the six-month period. The share price discount to
adjusted NAV increased to 66% as of 31 December 2024, from 58% over the
six-month period. Trading volumes were generally very low, and the share price
remains closely monitored. Given the present focus on debt repayment, we are
unable to implement any buyback or similar programme to close the current
discount. We continue to believe that the best outcome for shareholders will
be to deliver a positive return of capital from the portfolio through the
completion of the divestment programme.
At the Annual General Meeting, shareholders voted to continue the life of the
Company for a further year. The Board and the Manager deeply appreciate the
strong level of support for our recommended continuation. We remain firmly
committed to the orderly and successful divestment of the remaining assets and
the distribution of capital.
Looking forward in 2025, Macau has the opportunity to continue rebuilding,
with the prospect of new leadership aiding that process. Geopolitical
tensions, which are currently a focus particularly as they relate to China,
will continue to be a significant factor. The latest White House announcement
regarding US investment restrictions, which relate to China and both Hong Kong
and Macau, will do nothing to ease these concerns. It is too early to assess
the full impact of these measures as they could relate to our business. The
direction of interest rates is another imponderable.
We remain mindful of the comparable high quality of our portfolio and that
continued judgment and careful management of the divestment programme is
necessary to deliver returns in conditions where we see the near-term effects
of enforced sales and associated discounts. Keeping our focus on the clear
objectives that have been set out will be key to successfully delivering the
returns to which we are all totally committed.
MANAGER'S REPORT
INTRODUCTION
Despite Macau's economic recovery, primarily driven by its two key sectors -
tourism and gaming - the property market has continued to face significant
challenges. The second half of 2024 proved particularly tough for the sector.
While Macau's economy grew by an impressive 11.5% during the first three
quarters of 2024, property prices hit a nine-year low in November. Although
the government introduced several policy measures aimed at stimulating the
market, investor sentiment remained subdued, primarily due to the continuing
higher interest rate environment and the weak economic situation in mainland
China. Consequently, property sales activity was largely driven by developers
offloading inventory at heavily discounted prices.
In this challenging environment, the Company has made notable progress on its
divestment strategy. Two villas at The Fountainside and five units at The
Waterside were sold. Although the market presents challenges, the Company is
actively working towards meeting its sales targets, and while discussions with
lenders are ongoing, with a focus on optimising repayment terms. The Company
remains committed to executing its sales strategy and is dedicated to
maximising value for shareholders while ensuring financial stability.
FINANCIAL OVERVIEW
31 December 2024 30 June 2024
NAV (IFRS) (US$ million) 44.9 46.4
NAV per share (IFRS) (US$) 0.73 0.75
Adjusted NAV (US$ million) 57 66.1
Adjusted NAV per share (US$) 0.92 1.07
Adjusted NAV per share (pence)(1) 73 85
Share price (pence) 25 35.6
Share price discount to Adjusted NAV per share (%) 66 58
Portfolio valuation (US$ million) 126 152.7
Loan-to-value ratio (%) 50.9 52.5
1 Based on the following US dollar/sterling exchange rates: 1.256 on 31
December 2024 and 1.265 on 30 June 2024.
FINANCIAL REVIEW
Half-year financial results
The fair value of the Company's portfolio, which comprises three main assets,
was US$126 million as at 31 December 2024. On a like-for-like comparison,
adjusting for units sold during the six-month period, the valuation has
declined by 2.4%.
Adjusted Net Asset Value (NAV) was US$57 million, which translates to US$0.92
(73 pence) per share, a decline of 13.8% over the period. IFRS NAV was US$44.9
million as of the period's end, equating to US$0.73 (58 pence) per share, and
a decline of 3.2% over the period.
As at 31 December 2024, the Company's share price was 25 pence, representing a
66% discount to its Adjusted NAV per share.
Capital and cash management
As the Company progresses with its divestment plan, it remains focused on
meeting near-term debt obligations through sales and capital management,
thereby strengthening its balance sheet and operating cash flow. The Manager
continues to explore multiple channels to enhance sales while focusing on
deepening relationships with existing banking partners and cultivating new
connections. This dual approach seeks to strengthen communications with
lenders while optimising financing terms and enhancing flexibility to support
the Company's financial strategy.
As of 31 December 2024, the Company had total assets worth US$115.7 million,
offsetting combined liabilities of US$70.8 million. Gross borrowing has fallen
to US$65 million, improving the loan-to-value (LTV) ratio, with inventories
being fair valued and taking into the account of cash, by 1.6 percentage
points to 50.9% compared to 52.5% as of 30 June 2024.
The Company's consolidated cash balance was US$1.7 million, of which US$1.2
million was pledged as collateral for credit facilities. The balance of
approximately US$0.5 million reflects free cash which has increased from
US$0.2 million as of 30 June 2024. Subsequent to 30 June 2024 to period end, a
combination of US$19.1 million sales proceeds and released pledged deposits of
US$3.4 million has been utilised to repay US$21.1 million loan obligations,
finance loan interest and meet working capital requirements.
The Manager has been actively engaging with current lenders about property
rentals and potential sales, ensuring that their expectations are well
understood and effectively managed. These discussions include talks with the
lender for Penha Heights about the timeline for meeting outstanding loan
instalments and potentially deferring future repayment obligations.
Additionally, the Manager is in advanced discussions with The Waterside's
lender to extend the March instalment payment timeline. Further details are
included below.
In the second half of 2024, the Monetary Authority of Macao reduced interest
rates on three occasions. Collectively, this action has resulted in lowering
the territory's base rate by a total of 75 basis points to 4.75% at the end of
the period. Although commercial banks have reduced their lending rates in
tandem with the base rate, the prevailing higher interest rate environment
continues to weigh on the Company. Accordingly, we will seek to repay debt
facilities while looking to obtain the most flexible and cost-efficient terms.
Company Life Extended
At the Company's Annual General Meeting in December 2024, a shareholder
resolution was proposed to extend the Company's life for a further year. This
was to facilitate the continued orderly divestment of the Company's portfolio,
reduce debt and facilitate the return of capital to shareholders within the
earliest timeframe amidst the challenges posed by the current operating
environment. The Company thanks all shareholders for their further support.
PORTFOLIO UPDATES
PORTFOLIO OVERVIEW AS AT 31 DECEMBER 2024
Sector No. of Units Cost Market Valuation Change in Composition
(US$ million) (US$ million) Market Value** (based on
market value)
Since 30 June 2024
The Waterside Luxury residential 28*** 47.4 79.9 3% 63.4%
Tower Six at One
Central Residences*
The Fountainside Low-density residential 6*** 5.3 10 -22.8% 8%
Penha Heights Luxury residential N.A. 28.7 36.1 -6.1% 28.6%
Total 81.4 126 -2.4% 100%
* One Central is a trademark registered in Macau SAR under the name of
Basecity Investments Limited. Sniper Capital Limited, Macau Property
Opportunities Fund Limited, MPOF Macau (Site 5) Limited, Bela Vista Property
Services Limited and The Waterside are not associated with Basecity
Investments Limited, Shun Tak Holdings Limited or Hongkong Land Holdings
Limited.
** Calculation is based on adjusted figures made to 30 June 2024 to
reflect like-for-like comparisons to 31 December 2024 due to property sales
during the period.
*** Including a unit with sale completion to occur post period end.
In the latter half of 2024, the Manager continued to face the challenges
impacting Macau's real estate sector. Despite the Macau government announcing
policy changes in April 2024 to lift its decade-long measures aimed at curbing
speculation in the property market, these adjustments alone were not enough to
revive subdued investor sentiment, particularly in the luxury segment where
the Company operates.
Several factors continued to weigh on investor sentiment, namely, the
prevailing higher interest rate environment, stringent mortgage approval
requirements and the ripple effects of mainland China's struggling property
market. With the dampened investor interest in real estate, investors hovered
on the sidelines and only entered the market when prices were heavily
discounted.
Despite the challenging operating environment, the Manager continued to
achieve notable progress in the orderly divestment of the portfolio. A
significant milestone was reached at The Fountainside, where two villas and
their corresponding parking spaces were successfully sold. At The Waterside,
the divestment programme, which commenced in mid-2022, maintained its
momentum, with sales surpassing the halfway mark.
The Waterside
The Waterside is the Company's landmark asset of luxury residential apartments
in downtown Macau. In mid-2022, the Company initiated a programme to divest
The Waterside's 59 units.
During the period under review, five sales were secured with a gross value of
US$11.5 million, achieved at an average single-digit discount to their latest
valuations. One of these sales is expected to complete by March 2025. This
brings the total number of units sold since the programme commenced to 32,
grossing US$89.6 million and leaving 27 units still available for sale.
During the period, loan repayments totalling HK$136.3 million (US$17.2
million) were made by the Company, reducing The Waterside's total loan
facility balance to HK$389.7 million (US$50.2 million).
Of this repayment amount, HK$90.0 million (US$11.4 million) was utilised to
fully settle the outstanding loan instalment due in September 2024, with the
remaining HK$46.3 million (US$5.8 million) applied to partially reduce the
forthcoming tranche of HK$125.0 million (US$16.1 million) due in March 2025.
Additionally, sales proceeds received after the period end are expected to
contribute another HK$20.7 million (US$2.7 million) towards the March
instalment, covering 54% of the obligations. The Company is progressing
discussions with The Waterside's lender, which has shown positive indications
about refinancing and extending the remaining 46%, contingent upon the timing
and outcome of further sales.
Although the current leasing programme has been terminated to facilitate
sales, the Company continues to selectively lease out some of the remaining
units for short tenures. As at end-2024, the occupancy rate for the remaining
27 units was over 50% of the gross floor area. Rents at The Waterside have
decreased by 3.8% over the past six months to an average monthly rate of
HK$18.52 per square foot.
The Fountainside
The Fountainside is a low-density, freehold residential development originally
comprising 42 homes and 30 car-parking spaces in Macau's popular Penha Hill
district. With all 36 standard units sold, the Company's marketing efforts
have been focused on the divestment of seven homes - four villas and three
smaller units created by reconfiguring two original duplexes - together with
two car parking spaces. The Company's efforts to showcase the four villas to
local buyers have borne fruit. By adopting a flexible approach and
entertaining both individual and en bloc offers, the Company sold two villas
in the second half of 2024 at discounts to the latest valuations but which
represent an average of 46% premium over the original cost.
The sale of the three smaller units is presently on hold due to ongoing
bureaucratic approval processes and issues with the building's ownership
committee regarding the newly constructed parking spaces created from the
reconfiguration programme. The Manager is actively pursuing solutions to
resolve these challenges while simultaneously marketing the two remaining,
more attractive corner villas for sale which are unaffected.
The Manager has regularly updated the lender to maintain their support and
facilitate oversight. The current loan facility now totalling US$0.7 million
will mature on 30 June 2025, and the Manager will seek an extension with the
lender. Please refer to Note 6 to the Interim Condensed Consolidated Financial
Statements for further details.
Penha Heights
Penha Heights is a prestigious, colonial-style villa with a gross floor area
of approximately 12,000 square feet, located in the exclusive residential
enclave of Penha Hill and surrounded by lush greenery. This large, detached
house is situated amidst Macau's most highly prized locations, given its
position, size and opportunity.
Investor interest in luxury homes such as Penha Heights has been hit by a
perfect storm - Macau's isolation during the COVID-19 pandemic coupled with
the prevailing higher interest rate environment and China's sluggish economy
have kept potential purchasers from entering the market. To expand its appeal
to ultra-high-net-worth individuals, the Company has engaged a firm of
specialist Hong Kong real estate agents to boost the marketing effort to the
region including mainland China. Concurrently, the Company is exploring
additional marketing avenues to showcase the property to a select group of
potential purchasers. Marketing campaigns include but not limited to online
social media promotional video, road shows in mainland China and targeted
private viewing.
While the Manager continues efforts to promote the sale of Penha Heights,
negotiations are ongoing with lenders to extend near term debt instalments and
the remaining balances into the latter half of 2025, allowing additional time
for the planned property disposal.
MACROECONOMIC UPDATES
Economy: Robust GDP numbers mask pockets of weakness
Macau's economy maintained strong double-digit growth, with gross domestic
product (GDP) increasing by 11.5% year-on-year (YoY) over the first three
quarters of 2024. The nine-month GDP surpassed MOP300 billion for the first
time since 2019, reaching 86.3% of the GDP for the first nine months of 2019.
However, in the third quarter, GDP growth had slowed to 4.7% YoY. As a result,
the International Monetary Fund revised its full-year GDP growth forecast for
Macau to 10.6%, down 3.3 percentage points from its previous estimate of
13.9%.
In this regard, Macau's economy remains driven by its key sectors - tourism
and gaming - which had resulted in unemployment returning to pre-pandemic
levels. In 2024, the overall unemployment rate fell by 0.9 percentage points
to 1.8%, while the unemployment rate for local residents dropped by 1.0
percentage point to 2.4%.
However, a sharp disparity persists in other areas, particularly among small
and medium-sized enterprises (SMEs) and local retail stores. Their
post-pandemic recovery has been challenged by shifts in consumer spending
habits. With travel to mainland China now as convenient as it was before the
pandemic, many Macau residents are opting to shop in Zhuhai and other nearby
cities, where prices for goods and services are significantly lower. This has
been compounded by mainland China's weak economy, which has curtailed
post-pandemic "revenge spending" by tourists in Macau's retail shops.
Source: DSEC, The International Monetary Fund (IMF)
Gaming and tourism continue on upward trajectory
Macau's gross gaming revenue (GGR) for 2024 reached MOP226.78 billion (c.
US$28.34 billion), marking a 23.9% YoY increase. This sustained recovery
highlights the strong demand for Macau's tourism and gaming offerings,
particularly among visitors from mainland China and Hong Kong. Compared to
pre-pandemic levels, 2024's GGR amounts to roughly 78% of 2019's total,
reflecting a 16 percentage point improvement from 2023.
Tourism experienced a significant rebound, with Macau welcoming 34.9 million
visitors in 2024 - about 88% of the pre-pandemic peak of over 39 million in
2019. Mainland Chinese visitors, who made up the majority at 70.1% of total
arrivals, increased by 28.6% YoY. Notably, those from the nine cities of the
Greater Bay Area grew by 28.8% YoY, accounting for half of all mainland
Chinese visitors. The expansion of the Individual Visit Scheme in 2024 further
fuelled a 15.5% YoY rise in independent travellers.
Visitors from Hong Kong, representing 20.6% of total arrivals, saw a slight
decline of 0.2% YoY. In contrast, international markets responded positively
to government tourism campaigns, with international visitor arrivals surging
by 66% YoY, making up 6.9% of total visitors - an increase from 5% in 2023.
Day trippers constituted 54.1% of all visitors in 2024, leading to a slight
reduction in the average length of stay by 0.1 days YoY to 1.2 days.
Meanwhile, the average stay for overnight visitors remained unchanged at 2.3
days.
Source: DSEC, Macau Government
PROPERTY MARKET OVERVIEW
Source: DSF DSEC
Note: Luxury is defined as residential unit with usable area above 150 square
metres
Source: DSEC
Note: Luxury is defined as residential unit with usable area above 150 square
metres
Policy initiatives result in modest increase in transactions but lower prices
Macau's government had announced a raft of initiatives in the first half of
2024 to revitalise the property market, reversing the territory's policies
aimed at curbing real estate speculation. This was greeted with enthusiasm
from the players in the property market and the residential property sector
ended 2024 with a 17% YoY gain with 3,380 transactions. Average prices for the
year, however, fell 9% YoY, suggesting that the bulk of the market activity
was the result of property developers offloading inventory at steep discounts.
In the luxury residential segment under which the Company's assets are
classified, for homes measuring over 150 square metres, 227 transactions were
recorded in 2024. Although this was an increase of 67% YoY in terms of volume,
luxury residential sales accounted for only 6% of the total sales transactions
in the residential market.
Three interest rate cuts in H2 2024
After holding the base interest rate at 5.75% since July 2023, the Monetary
Authority of Macau announced three interest rate cuts in the second half of
2024 in tandem with the Federal Reserve of the United States. The net result
of the rate cuts was a reduction of the base rate by 100 basis points to 4.75%
by December 2024 while commercial banks in the territory have also lowered
their prime rates accordingly.
Despite lower borrowing costs, the approvals for new mortgages have been
uneven in the second half of 2024. For example, while in September new
property loans were double that of the previous month, by October, the value
of new property loans had slumped by over 60%. This boom-bust element suggests
that home purchase transactions remain sporadic with investors taking a "wait
and see" attitude.
Mainland China's property sector woes have regional impact
Mainland China's sustained slow-down in its property market has had
wide-ranging impact on the domestic economy as well as that of regional
markets. With the property and infrastructure sectors accounting for more than
30% of the economy, the loss of investor confidence in the property market has
spilled over to adversely impact consumer confidence and consumption. In
addition, the absence of land sales have also led to financial problems among
local governments.
The Central government had moved more aggressively to support the economy and
stabilise the property market in H2 2024 through a raft of measures to boost
the residential market, which include cutting borrowing costs on existing
mortgages, relaxing buying curbs in big cities and lowering taxes on home
purchases. While analysts are of the opinion that these efforts will help
stabilise property prices by late 2025, if coupled with further follow-through
fiscal stimulus measures, the data for January 2025 indicate that the decline
in residential sales had resumed as the effect of the stimulus waned.
China's property market woes have a spillover effect on regional property
markets such as Hong Kong, in particular in the luxury sector, where investor
sentiment and interest have remain muted. In addition,
ultra-high-net-worth-individuals, who are closely linked to mainland China's
property sector, have made headlines in Hong Kong for distressed sales of
their trophy homes. Sold sometimes at half their purchase prices, the low
prices reflect the impact of the slowdown in the mainland Chinese economy on
Hong Kong's luxury real estate market where overall home prices have fallen to
an eight-year low.
LOOKING AHEAD
The Macau property market is expected to remain under pressure in the near
term, with investor sentiment continuing to be impacted by high interest
rates, sluggish economic conditions in mainland China, and cautious consumer
behaviour. While recent government measures to stimulate the market have had
some effect on transaction volumes, they have not been sufficient to drive
substantial price recovery, particularly in the luxury residential segment
where the Company's assets are positioned.
Despite these challenges, the Company has made progress with its divestment
strategy, having sold properties at both The Fountainside and The Waterside.
The Manager remains focused on achieving sales targets to support upcoming
loan repayments and negotiating with lenders for flexible repayment terms.
We continue to place the highest priority on the timely divestment of the
assets to deliver the best outcome for shareholders. In this regard, timing is
of the essence as we strive to match the receipt of sales proceeds with debt
repayment obligations.
We again thank shareholders for their continued support for the Company.
Directors' Statement of Responsibilities
The Directors are responsible for preparing this half-yearly financial report
in accordance with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
• the interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting; and
• the Chairman's Message and Manager's Report meet the requirements of
an interim management report, and include a fair review of the information
required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the interim condensed consolidated
financial statements; and a description of the principal risks and
uncertainties for the year to date and the remaining six months of the year;
and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
On behalf of the Board
Mark Huntley
Chairman
2 March 2025
Interim Condensed Consolidated Statement
of Financial Position (Unaudited)
As at 31 December 2024
Unaudited Unaudited Audited
31 Dec 2024 31 Dec 2023 30 Jun 2024
Note US$'000 US$'000 US$'000
ASSETS
Non-current assets
Investment property 3 79,873 124,956 97,970
Deposits with lenders 4 - 320 320
Trade and other receivables 14 16 14
79,887 125,292 98,304
Current assets
Inventories 5 34,065 34,933 35,017
Trade and other receivables 59 63 72
Deposits with lenders 4 1,172 4,245 4,295
Cash and cash equivalents 510 282 243
35,806 39,523 39,627
Total assets 115,693 164,815 137,931
EQUITY
Capital and reserves attributable to the Company's equity holders
Share capital 12 618 618 618
Retained earnings 28,822 42,365 30,722
Distributable reserves 15,791 15,791 15,791
Foreign currency translation reserve (307) (738) (740)
Total equity 44,924 58,036 46,391
LIABILITIES
Non-current liabilities
Deferred taxation provision 11 3,900 6,482 4,580
Taxation provision 11 - 240 -
Interest-bearing loans 6 11,453 69,124 51,816
15,353 75,846 56,396
Current liabilities
Taxation provision 11 189 - 316
Trade and other payables 1,797 4,021 4,163
Interest-bearing loans 6 53,430 26,912 30,665
55,416 30,933 35,144
Total liabilities 70,769 106,779 91,540
Total equity and liabilities 115,693 164,815 137,931
Net Asset Value per share (US$) 8 0.73 0.94 0.75
Adjusted Net Asset Value per share (US$) 8 0.92 1.32 1.07
The interim condensed consolidated financial statements were approved by the
Board of Directors and authorised for issue on 2 March 2025.
The notes form part of these interim condensed consolidated financial
statements.
Interim Condensed Consolidated Statement
of Comprehensive Income (Unaudited)
For the six-month period from 1 July 2024 to 31 December 2024
Unaudited Unaudited Audited
6 months 6 months 12 months
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
Note US$'000 US$'000 US$'000
Income
Income on sale of inventories 5 1,709 - -
Rental income 597 714 1,494
Other income 1 - 134
Net gain from fair value adjustment on investment property 3 1,930 - -
4,237 714 1,628
Expenses
Net loss from fair value adjustment on investment property 3 - 3,569 12,657
Net loss on disposal of investment property 3 1,455 1,616 2,398
Cost of sales of inventories 5 1,147 - -
Management fee 10 600 600 1,200
Realisation fee 10 1 39 (7)
Non-executive Directors' fees 10 89 86 172
Auditors' remuneration 102 92 161
Property operating expenses 475 605 1,169
Sales and marketing expenses 132 39 95
General and administration expenses 307 246 480
Loss on foreign currency translation 178 102 106
(4,486) (6,994) (18,431)
Operating loss for the period/year (249) (6,280) (16,803)
Finance income and expenses
Bank loan interest 6 (2,253) (3,373) (6,283)
Other financing costs (131) (155) (291)
Bank and other interest 28 12 38
(2,356) (3,516) (6,536)
Loss for the period/year before tax (2,605) (9,796) (23,339)
Taxation 11 705 1,819 3,719
Loss for the period/year after tax (1,900) (7,977) (19,620)
Items that may be reclassified subsequently to profit or loss
Exchange difference on translating foreign operations 433 329 327
Total comprehensive loss for the period/year (1,467) (7,648) (19,293)
Loss attributable to:
Equity holders of the Company (1,900) (7,977) (19,620)
Total comprehensive loss attributable to:
Equity holders of the Company (1,467) (7,648) (19,293)
Unaudited Unaudited Audited
6 months 6 months 12 months
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$ US$ US$
Basic and diluted loss per Ordinary Share attributable to the equity holders 7 (0.0307) (0.1290) (0.3173)
of the Company during the period/year
All items in the above statement are derived from continuing operations.
The notes form part of these interim condensed consolidated financial
statements.
Interim Condensed Consolidated Statement
of Changes in Equity (Unaudited)
Movement for the six-month period from 1 July 2024 to 31 December 2024
(unaudited)
Share Retained earnings Distributable reserves Foreign currency translation reserve Total
capital
US$'000 US$'000 US$'000 US$'000 US$'000
Balance brought forward at 1 July 2024 618 30,722 15,791 (740) 46,391
Loss for the period - (1,900) - - (1,900)
Items that may be reclassified subsequently to profit or loss
Exchange difference on translating foreign operations - - - 433 433
Total comprehensive loss for the period - (1,900) - 433 (1,467)
Balance carried forward at 31 December 2024 618 28,822 15,791 (307) 44,924
Movement for the six-month period from 1 July 2023 to 31 December 2023
(unaudited)
Share Retained earnings Distributable reserves Foreign currency translation reserve Total
capital
US$'000 US$'000 US$'000 US$'000 US$'000
Balance brought forward at 1 July 2023 618 50,342 15,791 (1,067) 65,684
Loss for the period - (7,977) - - (7,977)
Items that may be reclassified subsequently to profit or loss
Exchange difference on translating foreign operations - - - 329 329
Total comprehensive loss for the period - (7,977) - 329 (7,648)
Balance carried forward at 31 December 2023 618 42,365 15,791 (738) 58,036
Movement for the year from 1 July 2023 to 30 June 2024 (audited)
Share Retained earnings Distributable reserves Foreign currency translation reserve Total
capital
US$'000 US$'000 US$'000 US$'000 US$'000
Balance brought forward at 1 July 2023 618 50,342 15,791 (1,067) 65,684
Loss for the year - (19,620) - - (19,620)
Items that may be reclassified subsequently to profit or loss
Exchange difference on translating foreign operations - - - 327 327
Total comprehensive loss for the year - (19,620) - 327 (19,293)
Balance carried forward at 30 June 2024 618 30,722 15,791 (740) 46,391
The notes form part of these interim condensed consolidated financial
statements.
Interim Condensed Consolidated Statement of Cash Flows (Unaudited)
For the six-month period from 1 July 2024 to 31 December 2024
Unaudited Unaudited Audited
6 months 6 months 12 months
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
Note US$'000 US$'000 US$'000
Net cash used in operating activities 9 (1,144) (30) (679)
Cash flows from investing activities
Proceeds from disposal of investment property 19,082 11,392 28,480
Movement in pledged bank balances 3,443 1,043 993
Net cash generated from investing activities 22,525 12,435 29,473
Cash flows from financing activities
Repayment of bank borrowings (18,193) (9,565) (23,263)
Interest and bank charges paid (2,959) (3,701) (6,457)
Net cash used in financing activities (21,152) (13,266) (29,720)
Net movement in cash and cash equivalents 229 (861) (926)
Cash and cash equivalents at beginning of period/year 243 1,118 1,118
Effect of foreign exchange rate changes 38 25 51
Cash and cash equivalents at end of period/year 510 282 243
The notes form part of these interim condensed consolidated financial
statements.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)
For the six-month period from 1 July 2024 to 31 December 2024
General information
Macau Property Opportunities Fund Limited (the "Company") is a Company
incorporated and registered in Guernsey under The Companies (Guernsey) Law,
1994. This law was replaced by the Companies (Guernsey) Law, 2008 on 1 July
2008. The Company is an authorised entity under the Authorised Closed-Ended
Investment Schemes Rules 2008 and is regulated by the Guernsey Financial
Services Commission. The address of the registered office is given below.
The interim condensed consolidated financial statements for the six months
ended 31 December 2024 comprise the interim financial statements of the
Company and its subsidiaries (together referred to as the "Group"). The Group
invests in residential property in Macau.
There has been no change to the Group's principal risks and uncertainties in
the six-month period to 31 December 2024. The Manager provides the Board with
regular reports and updates on key local developments and on divestment
updates. Detailed working capital requirements and analysis of loan to value
covenants are regularly reported to the Board for monitoring. Principal risks
and uncertainties are further discussed in the Annual Report.
The interim condensed consolidated financial statements are presented in US
Dollars ("US$") and are rounded to the nearest thousand ($'000).
These interim condensed consolidated financial statements were approved for
issue by the Board of Directors on 2 March 2025.
1. Significant accounting policies
Basis of accounting
The annual consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRS"); applicable legal
and regulatory requirements of Guernsey Law and under the historical cost
basis, except for financial assets and liabilities held at fair value through
profit or loss ("FVPL") and investment properties that have been measured at
fair value. The accounting policies and valuation principles adopted are
consistent with those of the previous financial year.
The interim condensed consolidated financial statements have been prepared in
accordance with International Accounting Standard ("IAS") 34, Interim
Financial Reporting. The same accounting policies and methods of computation
are followed in the interim financial statements as compared with the annual
financial statements. The interim condensed consolidated financial statements
do not include all information and disclosures required in the annual
financial statements and should be read in conjunction with the Group's annual
financial statements as of 30 June 2024.
New and amended standards and interpretations applied
The following amendments to existing standards and interpretations are
effective for the year ended 30 June 2025 and therefore were applied in the
current period but did not have a material impact on the Group:
• IFRS S1: General Requirements for Disclosure of Sustainability-related
Financial Information (effective 1 January 2024)
• IFRS S2: Climate-related Disclosures (effective 1 January 2024)
• Amendment to IFRS 7: Financial Instruments: Disclosures (effective 1
January 2024)
• Amendment to IFRS 16: Leases (effective 1 January 2024)
• Amendments to IAS 1: Presentation of Financial Statements (effective 1
January 2024)
• Amendment to IAS 7: Statement of Cash Flows (effective 1 January 2024)
Going concern
In the period the Group continued to meet its capital requirements and
day-to-day liquidity needs through sales to augment the Group's cash
resources. As part of their assessment of the going concern of the Group as at
31 December 2024, the Directors have reviewed the comprehensive cash flow
forecasts prepared by management which make assumptions based upon current and
expected future market conditions, including predicted future sales of
properties taking into consideration current market circumstances. It is the
Directors' belief that, based upon these forecasts and their assessment of the
Group's committed banking facilities and the discussions and communications
regarding the extension of such facilities, it is appropriate to prepare the
financial statements of the Group on a going concern basis.
After the continuation resolution was passed at the Annual General Meeting of
the Company on 20 December 2024 extending the Fund's life until the 2025
Annual General Meeting, the Directors assessed whether the continuation vote
before the end of 2025 gives rise to a material uncertainty that might cast
significant doubt on the Fund's ability to continue as a going concern. The
Directors have also considered the going concern assumption outside the
primary going concern horizon. The Directors currently expect to receive
continuation support from major shareholders noting that over 50% of
shareholder support is required in December 2025 to ensure continuation; it is
likely that returns from the sale of properties would be significantly lower
if the Fund was forced to sell as a result of discontinuation and it is
therefore commercially rational for the Fund to continue in business.
Therefore, the Directors believe it is appropriate to prepare the financial
statements of the Group on the going concern basis based upon existing cash
resources, the forecasts described above, the extension of the life of the
Company until the 2025 Annual General Meeting agreed at the Annual General
Meeting on 20 December 2024. The Directors assessed the Group's committed
banking facilities, the Manager's ongoing discussions with lenders and
expected compliance with related covenants and accommodation of loan
extensions as part of their determination of the going concern assessment.
Seasonal and cyclical variations
The Group does not operate in an industry where significant or cyclical
variations as a result of seasonal activity are experienced during the
financial year.
2. Segment reporting
The Chief Operating Decision Maker (the "CODM") in relation to Macau Property
Opportunities Fund Limited is deemed to be the Board itself. The factors used
to identify the Group's reportable segments are centred on asset class,
differences in geographical area and differences in regulatory environment.
Furthermore, foreign exchange and political risk are identified, as these also
determine where resources are allocated.
Based on the above and a review of information provided to the Board, it has
been concluded that the Group is currently organised into one reportable
segment based on the single geographical sector, Macau.
This segment refers principally to residential properties. Furthermore, there
are multiple individual properties that are held within each property type.
However, the CODM considers, on a regular basis, the operating results and
resource allocation of the aggregated position of all property types as a
whole, as part of their on-going performance review. This is supported by a
further breakdown of individual property groups only to help support their
review and investment appraisal objectives.
3. Investment property
Unaudited Unaudited Audited
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
At beginning of the period/year 97,970 141,045 141,045
Net sales proceeds from disposals (19,082) (11,392) (28,480)
Loss on disposal of investment property (1,455) (1,616) (2,398)
Fair value adjustment 1,930 (3,569) (12,657)
Exchange difference 510 488 460
Balance at end of the period/year 79,873 124,956 97,970
Valuation losses (fair value adjustment) from investment property are
recognised in profit and loss for the period and are attributable to changes
in unrealised losses relating to investment property held at the end of the
reporting period.
The valuation process is initiated by the Investment Adviser with the Board
consent and approval, who appoints a suitably qualified valuer to conduct the
valuation of the investment property. The results are overseen by the
Investment Adviser. Once satisfied with the valuations based on their
expectations, the Investment Adviser reports the results to the Board. The
Board periodically meets with the valuer and reviews the latest valuations
based on their knowledge of the property market and compare these to previous
valuations.
The Group's investment properties were revalued at 31 December 2024 by an
independent, professionally-qualified valuer: Savills (Macau) Limited
("Savills"). The valuation has been carried out in accordance with the current
Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation
Standards to calculate the market value of the investment properties in their
existing state and physical condition, with the assumptions that:
• The owner sells the property in the open market without any
arrangement, which could serve to affect the value of the property.
• The property is held for investment purposes.
• The property is free from encumbrances, restrictions and outgoings of
any onerous nature which could affect its value.
The fair value of investment property is independently determined by Savills,
using recognised valuation techniques. The technique deployed was the income
capitalisation method. The determination of the fair value of investment
property requires the use of estimates such as future cash flows from assets
(such as lettings, tenants' profiles, future revenue streams, capital values
of fixtures and fittings, plant and machinery, any environmental matters and
the overall repair and condition of the property) and discount rates
applicable to those assets. These estimates are based on local market
conditions existing at the reporting date.
During the current period, seven residential units of The Waterside were sold
with net losses on disposal of US$1,455,000 recognised against valuations.
During the year ended 30 June 2024, 11 units were sold at The Waterside with
net losses on disposal of US$2,398,000 recognised against valuations. During
the period ended 31 December 2023, five residential units of The Waterside
were sold with net losses on disposal of US$1,616,000 recognised against
valuations.
See Note 11 in relation to deferred tax liabilities on investment property.
Capital expenditure on property relates to refurbishment costs for The
Waterside.
Rental income arising from The Waterside of US$592,000 (6 months ended 31
December 2023: US$709,000, 12 months ended 30 June 2024: US$1,485,000) was
received during the period. Direct operating expenses of US$231,000 (6 months
ended 31 December 2023: US$354,000, 12 months ended 30 June 2024: US$611,000)
arising from rented units were incurred during the six-month period. Direct
operating expenses during the period arising from vacant units totalled
US$61,000 (6 months ended 31 December 2023: US$93,000, 12 months ended 30 June
2024: US$156,000).
The table below shows the assumptions used in valuing the investment
properties which are classified as Level 3 in the fair value hierarchy:
Property information Carrying amount/fair value as at 31 December 2024: US$'000 Valuation Input Unobservable and observable inputs used in determination of fair values Other key information
technique
Name The Waterside 79,873 Term and Reversion Analysis Term rent HK$18.5 psf Age of building
(inclusive of
management fee and furniture) (30 June 2024: HK$18.1 psf)
Type Residential/Completed apartments Term yield 1.65%-2.45% (30 June 2024: 1.4%-2.2%) Remaining useful life of building
(exclusive of management fee and furniture)
Location One Central Tower 6 Macau Reversionary rent HK$13.5 psf
(exclusive of management fee and furniture) (30 June 2024: HK$11.99 psf)
1.80%
(30 June 2024:
Reversionary yield
1.55%)
The fair value of The Waterside is determined using the income approach, more
specifically a term and reversion analysis, where a property's fair value is
estimated based on the rent receivable and normalised net operating income
generated by the property, which is divided by the capitalisation (discount)
rate. The difference between gross and net rental income includes the same
expense categories as those for the discounted cash flow method with the
exception that certain expenses are not measured over time, but included on
the basis of a time weighted average, such as the average lease up costs.
Under the income capitalisation method, over and under-rent situations are
separately capitalised (discounted).
If the estimated reversionary rent increased/decreased by 5%, (and all other
assumptions remained the same), the fair value of The Waterside would increase
by US$3.9 million (6 months ended 31 December 2023: US$6.3 million, 12 months
ended 30 June 2024: US$4.4 million) or decrease by US$3.9 million (6 months
ended 31 December 2023: US$6.3 million, 12 months ended 30 June 2024: US$4.4
million).
If the term and reversionary yield or discount rate increased/decreased by 5%,
(and all other assumptions remained the same), the fair value of The Waterside
would decrease by US$3.7 million (6 months ended 31 December 2023: US$6
million, 12 months ended 30 June 2024: US$4.6 million) or increase by US$4.1
million (6 months ended 31 December 2023: US$6.5 million, 12 months ended 30
June 2024: US$5.3 million).
The same valuation method was deployed in June 2024 and December 2024.
The Waterside is currently valued at its highest and best use. There is no
extra evidence available to suggest that it has an alternative use that would
provide a greater fair value measurement.
There have been no transfers between levels during the period or any change in
valuation technique since the last period.
4. Deposits with lenders
Pledged bank balances represent cash deposits pledged to the banks to secure
the banking facilities granted to the Group. Deposits amounting to US$ nil (31
December 2023: US$0.3 million, 30 June 2024: US$0.3 million) have been pledged
to secure long-term banking facilities which are classified as non-current
assets. There are no other significant terms and conditions associated with
these pledged bank balances.
Unaudited Unaudited Audited
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Non-current - 320 320
Current 1,172 4,245 4,295
1,172 4,565 4,615
5. Inventories
Unaudited Unaudited Audited
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Cost
Balance brought forward 35,017 34,775 34,775
Additions - 32 113
Disposals (1,150) - -
Exchange difference 198 126 129
Balance carried forward 34,065 34,933 35,017
Additions include capital expenditure, development costs and capitalisation of
financing costs.
Under IFRS, inventories are valued at the lower of cost and net realisable
value. The carrying amounts for inventories as at 31 December 2024 amounts to
US$34,065,000 (6 months ended 31 December 2023: US$34,933,000, 12 months ended
30 June 2024: US$35,017,000). Net realisable value as at 31 December 2024 as
determined by the independent, professionally-qualified valuer, Savills, was
US$44,751,000 (6 months ended 31 December 2023: US$56,829,000, 12 months ended
30 June 2024: US$53,104,000).
During the period ended 31 December 2024, one residential villa of The
Fountainside was sold for a total consideration of US$1.7 million (HK$13.3
million) against a total cost of US$1.2 million (HK$9.4 million) which
resulted in a net profit of US$0.5 million (HK$3.9 million) after all
associated fees and transaction costs.
During the year ended 30 June 2024 and the comparative period ended 31
December 2023, no units of The Fountainside were sold.
6. Interest-bearing loans
Unaudited Unaudited Audited
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Bank loans - Secured
- Current portion 53,430 26,912 30,665
- Non-current portion 11,453 69,124 51,816
64,883 96,036 82,481
There are interest-bearing loans with three banks:
Hang Seng Bank
The Group has a term loan facility with Hang Seng Bank for The Waterside.
As at 31 December 2024, outstanding loan balance was HK$389.7 million (US$50.2
million) (31 December 2023: HK$601 million (US$77.0 million); 30 June 2024:
HK$526 million (US$67.4 million)). The interest rate is 1.8% per annum over
the 1-, 2-or 3-month HIBOR rate. The Manager determines the interest period
upon assessing funding and market conditions prevailing at each interest rate
fixing date the choice of rate is at the Group's discretion. The loan-to-value
covenant for The Waterside facility is 60%, which is assessed on aggregate
basis to include The Fountainside facility. As at 31 December 2024, the
combined loan-to-value ratio was 56.6%. The facility is secured by means of a
first registered legal mortgage over all unsold units of The Waterside as well
as a pledge of all income from the units. The Company is the guarantor for the
credit facility. In addition, the Group is required to maintain a cash reserve
equal to six months' interest with the lender.
The mid-March 2025 half yearly principal instalment has been paid down from
HK$125 million (US$16.1 million) to HK$78.7 million (US$10.1 million) during
the period; and the remaining HK$311 million (US$40.1 million) is due upon
maturity in September 2025.
The Group has a loan facility with Hang Seng Bank for The Fountainside.
As at 31 December 2024, outstanding loan balance was HK$5.2 million (US$0.7
million) (31 December 2023: HK$29.2 million (US$3.7 million); 30 June 2024:
HK$5.2 million (US$0.7 million)). The interest rate applicable is 3.3% per
annum over the 1-, 2- or 3-month HIBOR rate. The Manager determines the
interest period upon assessing funding and market conditions prevailing at
each interest rate fixing date. The loan-to-value covenant is 55%. As at 31
December 2024, the loan-to-value ratio was 6.7%. The facility is secured by
means of a first registered legal mortgage over all unsold units and car
parking spaces of The Fountainside as well as a pledge of all income from the
units and the car parking spaces. The Company is the guarantor for the credit
facility. In addition, the Group is required to maintain a cash reserve equals
to six months' interest with the lender.
Properties pledged under loan facilities for The Waterside and The
Fountainside cross-collateralised both facilities.
The Group has two loan facilities for Penha Heights:
Banco Tai Fung
The loan facility with Banco Tai Fung has a term of seven years and interest
was Prime Rate minus 2.25% per annum, with applicable interest rate of Prime
minus 1.75% during the period from September 2023 to December 2024. The
principal is to be repaid in 28 quarterly instalments of HK$2.5 million
(US$321,977) each, commencing in September 2022. As at 31 December 2024, the
facility had an outstanding balance of HK$50 million (US$6.4 million) (31
December 2023: HK$60.0 million (US$7.7 million), 30 June 2024: HK$55 million
(US$7.0 million)) including the principal due to be repaid in December 2024 of
HK$5 million (US$0.6 million). This facility is secured by a first legal
mortgage over the property as well as a pledge of all income from the
property. The Company is the guarantor for this term loan. Interest is paid
quarterly for the first six months and monthly thereafter on this loan
facility. As at 31 December 2024, the loan-to-value ratio for this facility
was 39.1%. There is no loan-to-value covenant for this loan.
Banco Comercial de Macau, S.A. ("BCM Bank")
The loan facility with BCM Bank has a term of two years up to September 2025
and interest is 2.75% over 3-month HIBOR. The principal of HK$3 million is to
be repaid in March 2025 and June 2025 respectively, with the rest due upon
maturity. As at 31 December 2024, the facility had an outstanding balance of
HK$60 million (US$7.7 million) (31 December 2023: HK$63 million (US$8.1
million), 30 June 2024: HK$60 million (US$7.7 million)). This facility is
secured by a first legal mortgage over the property as well as a pledge of all
income from the property. The Company is the guarantor for this term loan. In
addition, the Group is required to maintain a cash reserve equal to six
months' interest with the lender. Interest is paid monthly on this loan
facility. The loan-to-value covenant is 45%. As at 31 December 2024, the
loan-to-value ratio for this facility was 39.5%.
Bank Loan Interest
Bank loan interest paid during the period was US$2,253,000 (6 months ended 31
December 2023: US$3,373,000, 12 months ended 30 June 2024: US$6,283,000). As
at 31 December 2024, the carrying amount of interest-bearing loans included
unamortised prepaid loan arrangement fee of US$154,000 (31 December 2023:
US$415,000, 30 June 2024: US$281,000).
Fair Value
Interest-bearing loans are carried at amortised cost. The fair value of fixed
rate financial assets and liabilities carried at amortised cost are estimated
by comparing market interest rates when they were first recognised with
current market rates for similar financial instruments.
The estimated fair value of fixed interest bearing loans is based on
discounted cash flows using prevailing market interest rates for debts with
similar credit risk and maturity. As at 31 December 2024, the fair value of
the financial liabilities was US$24,000 lower than the carrying value of the
financial liabilities (31 December 2023: US$222,000 higher than the carrying
value of the financial liabilities, 30 June 2024: US$204,000 lower than the
carrying value of the financial liabilities).
The Group's interest-bearing loans have been classified within Level 2 as they
have observable inputs from similar loans. There have been no transfers
between levels during the period or a change in valuation technique since last
period.
7. Basic and diluted loss per Ordinary Share
Basic and diluted loss per equivalent Ordinary Share is based on the following
data:
Unaudited Unaudited Audited
6 months 6 months 12 months
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
Loss for the period/year (US$'000) (1,900) (7,977) (19,620)
Weighted average number of Ordinary Shares ('000) 61,836 61,836 61,836
Basic and diluted loss per share (US$) (0.0307) (0.1290) (0.3173)
8. Net asset value reconciliation
Unaudited Unaudited Audited
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Net assets attributable to ordinary shareholders 44,924 58,036 46,391
Uplift of inventories held at cost to market value 12,070 23,655 19,730
Adjusted Net Asset Value 56,994 81,691 66,121
Number of Ordinary Shares Outstanding ('000) 61,836 61,836 61,836
NAV per share (IFRS) (US$) 0.73 0.94 0.75
Adjusted NAV per share (US$) 0.92 1.32 1.07
Adjusted NAV per share (£)* 0.73 1.04 0.85
* US$:GBP rates as at relevant period/year end
The NAV per share is arrived at by dividing the net assets as at the date of
the consolidated statement of financial position, by the number of Ordinary
Shares in issue at that date.
Under IFRS, inventories are carried at the lower of cost and net realisable
value. The Adjusted NAV includes the uplift of inventories to their market
values before any tax consequences or adjustments.
The Adjusted NAV per share is derived by dividing the Adjusted NAV as at the
date of the consolidated statement of financial position, by the number of
Ordinary Shares in issue at that date.
There are no potentially dilutive instruments in issue.
9. Cash flows from operating activities
Unaudited Unaudited Audited
6 months 6 months 12 months
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Cash flows from operating activities
Loss for the period/year before tax (2,605) (9,796) (23,339)
Adjustments for:
Net (gain)/loss from fair value adjustment on investment property (1,930) 3,569 12,657
Fair value loss on disposal of investment property 1,455 1,616 2,398
Net finance costs 2,355 3,516 6,574
Operating cash flows before movements in working capital (725) (1,095) (1,710)
Effect of foreign exchange rate changes 176 102 106
Movement in trade and other receivables 13 3 (4)
Movement in trade and other payables (1,758) 992 1,042
Movement in inventories 1,150 (32) (113)
Net change in working capital (595) 963 925
Taxation paid - - -
Net cash used in operating activities (1,144) (30) (679)
Cash and cash equivalents (which are presented as a single class of assets on
the face of the interim condensed consolidated statement of financial
position) comprise cash at bank and other short-term, highly-liquid
investments with a maturity of three months or less.
10. Related party transactions
Directors of the Company are all Non-Executive and by way of remuneration,
receive only an annual fee which is denominated in Sterling.
Unaudited Unaudited Audited
6 months 6 months 12 months
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Directors' fees 89 86 172
The Directors are considered to be the key management personnel (as defined
under IAS 24) of the Company. Directors' fees outstanding as at 31 December
2024 were US$ nil (31 December 2023: US$44,000, 30 June 2024: US$43,000).
Sniper Capital Limited is the Manager to the Group and received management
fees of US$300,000 per quarter during the period as detailed in the Interim
Condensed Consolidated Statement of Comprehensive Income. At the option of the
Board, from 1 January 2025 the management fee may be reduced to US$80,000 per
month with one month's notice given to the Manager. Management fees are paid
quarterly in advance and amounted to US$600,000 (6 months ended 31 December
2023: US$600,000, 12 months ended 30 June 2024: US$1,200,000) at a quarterly
fixed rate of US$300,000 per annum. Management fees outstanding as at 31
December 2024 were US$ nil (31 December 2023: US$500,000, 30 June 2024:
US$500,000).
A realisation fee shall be payable on deals originated and secured by the
Manager which shall be linked to the sales price achieved. The realisation fee
is currently active until 31 December 2025. The realisation fee is payable
upon the sale of individual properties and becomes payable 10 business days
after completion. Where the sale price of the asset is 90 per cent. or more of
the value of the relevant asset as at 30 September 2019 (the "Carrying Value")
a fee of 2.5 per cent. of net proceeds (net of debt, costs and taxes) ("Net
Proceeds") shall be payable; where the sale price of an asset is more than 80
per cent. but less than 90 per cent. of the Carrying Value of the relevant
asset, a realisation fee of 1.5 per cent. of Net Proceeds shall be payable;
and where the sale price of an asset is less than 80 per cent. of the Carrying
Value, no realisation fee shall be payable. In no circumstances will the
aggregate of the 2024 management fee and realisation fee exceed US$1,439,816.
Realisation fees for the period totalled US$1,000 (6 months ended 31 December
2023: US$39,000, 12 months ended 30 June 2024: US $nil with a reverse of prior
year overprovision of US$7,000).
Starting from 1 January 2025, where the sale price of the listed asset is 90%
or more of the value of the relevant asset as at 31 December 2024 (the
"Amended Carrying Value") a fee of 2.5% of Net Proceeds is payable subject to
net realisation proceeds for the 2024 calendar year exceeding US$100,000,000.
Where the sale price is less than 90% of the Amended Carrying Value no
realisation fee will be payable. The aggregate amount of the Management fees
and Realisation fees for each calendar year from 2024 onwards shall not exceed
the amount which is equal to 4.99% of the lower of the Group's market
capitalisation and net asset value calculated on an annual basis. The fee cap
for 2025 onwards will be reset on 1 January of the relevant calendar year
based on the market capitalisation or net asset value (as applicable) at close
of business on the last business day of the previous calendar year. Any
realisation fee achieved on strata sales of units at The Waterside will be
subject to the retention of 50% until all units have been sold.
All intercompany loans and related interest are eliminated on consolidation.
11. Taxation provision
As at period-end, the following amounts are the outstanding tax provisions.
Unaudited Unaudited Audited
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Non-current liabilities
Deferred taxation 3,900 6,482 4,580
Provisions for Macanese taxations - 240 -
3,900 6,722 4,580
Non-current liabilities
Provisions for Macanese taxations 189 - 316
Deferred taxation
The Group has recognised the deferred tax liability for the taxable temporary
difference relating to the investment property carried at fair value and has
been calculated at a rate of 12%.
Provision for Macanese taxations
The Group has made provisions for property tax and complementary tax arising
from its Macau business operations.
Tax Reconciliation
Unaudited Unaudited Audited
1 Jul 2024- 1 Jul 2023- 1 Jul 2023-
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Accounting loss before taxation (2,605) (9,796) (23,339)
Exempt from income tax in Guernsey - - -
Movement in deferred tax provision 705 1,042 2,941
Movement in provision for Macanese taxation - 777 778
At the effective income tax rate of (27.1)% 705 1,819 3,719
(31 Dec 2023: (18.6)%, 30 Jun 2024: (15.9)%)
The differences between the taxation for the period and the movement in
taxation provisions are due to the foreign exchange movements and Macanese
taxation paid during the period.
12. Share capital
Ordinary shares
Unaudited Unaudited Audited
31 Dec 2024 31 Dec 2023 30 Jun 2024
US$'000 US$'000 US$'000
Authorised:
300 million ordinary shares of US$0.01 each 3,000 3,000 3,000
Issued and fully paid:
61.8 million (31 December 2023: 61.8 million; 30 June 2024: 618 618 618
61.8 million) ordinary shares of US$0.01 each
The Company has one class of ordinary shares which carries no rights to fixed
income.
The Board has publicly stated its commitment to undertake share buybacks at
attractive levels of discount of the share price to Adjusted NAV. In order to
continue this strategy, the Board renewed this authority at the 2024 Annual
General Meeting.
Currently cash reserves are applied to meet and repay debt obligations.
13. Subsequent events
During the period, the Group entered into sales and purchase agreements to
dispose of one unit in The Waterside and one villa in The Fountainside which
should both complete by March 2025 and net proceeds will be applied to meet
loan repayments. Subsequent to the period end, a further payment of HK$16.9
million (US$2,176,356) was received in escrow for the unit in The Waterside.
Subsequent to the period end, the Company settled a HK$1.0 million
(US$128,791) loan principal for Penha Heights with Banco Tai Fung due in
December 2024 leaving HK$4.0 million (US$515,163) outstanding. The Manager is
in discussions with the lender about the timeline for meeting the outstanding
loan obligation.
DIRECTORS AND COMPANY INFORMATION
Directors
Mark Huntley (Chairman)
Alan Clifton
Carmen Ling
Audit and Risk Committee
Alan Clifton (Chairman)
Mark Huntley
Carmen Ling
Management Engagement Committee
Mark Huntley (Chairman)
Alan Clifton
Carmen Ling
Nomination and Remuneration Committee
Alan Clifton (Chairman)
Mark Huntley
Carmen Ling
Disclosure and Communication Committee
Mark Huntley (Chairman)
Alan Clifton
Manager
Sniper Capital Limited
Vistra Corporate Services Centre
Wickhams Cay II
Road Town, Tortola
VG1110
British Virgin Islands
Investment Adviser
Sniper Capital (Macau) Limited
Largo da Ponte,
Nos. 51 e 57, Taipa
Macau
Solicitors to the Group as to English Law
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
Advocates to the Group as to Guernsey Law
Carey Olsen
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Corporate Broker
Panmure Liberum Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
Independent Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey GY1 3HW
Property Valuers
Savills (Macau) Limited
Suite 1309-10
13/F Macau Landmark
555 Avenida da Amizade
Macau
Administrator & Company Secretary
Ocorian Administration (Guernsey) Limited
PO Box 286
Floor 2, Trafalgar Court
Les Banques
St Peter Port, Guernsey
Channel Islands GY1 4LY
Macau and Hong Kong Administrator
Adept Capital Partners Services Limited
Unit B1, 25/F, MG Tower
133 Hoi Bun Road
Kwun Tong, Kowloon
Hong Kong
Registered Office
PO Box 286
Floor 2, Trafalgar Court
Les Banques
St Peter Port, Guernsey
Channel Islands GY1 4LY
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