Interim Results

RNS Number : 7950H

Macau Property Opportunities Fund

01 March 2010

 



Macau Property Opportunities Fund Limited

("MPO" or the "Company")

Interim Results for the period ended 31 Dec 2009

Macau Property Opportunities Fund Limited announces its interim results for the six-month period ended 31 December 2009. The Company, which is managed by Sniper Capital Limited, develops and invests in property opportunities primarily in Macau and also in the Western Pearl River Delta region of Southern China.

Highlights

·         Adjusted NAV per share is US$2.49 or 161p*, representing an uplift of 10.7% in dollar terms and 18% in sterling terms* respectively, during the six-month period

·         Property portfolio valued at US$309 million, up 12% for the six-month period ended 31 December 2009

·         Cash balance of US$36.8 million as at 31 December 2009, ensuring sufficient liquidity for operating requirements

·         Overall loan-to-value is 23.8% following the drawdown of US$82 million credit facility in August 2009

·         MPO's shares traded at a narrower discount to Adjusted Net Asset Value. In the six months under review, the discount narrowed from 44% to 22%

·         Investment property:

-      Tower Six, One Central Residences: Officially launched for lease under the marketing brand of The Waterside

·         Development properties:

1.  Rua do Laboratório (entry level residential): Completed demolition of disused factory buildings on site

2.  Rua da Penha (niche residential): Preliminary site works underway

3.  Senado Square (mixed-use development): Ongoing analysis of development concepts and ideal tenant mix

4.  Zhuhai Logistics Centre (warehouse/logistics): Commenced preliminary site works at Phase Two

Commenting on the period under review, David Hinde, the Company's Chairman, said:

"As we enter the asset management and development stages of our investment cycle, MPO is continuing to demonstrate real value creation for its shareholders. 

"We are proud to have launched our major asset, Tower Six at One Central Residences, as The Waterside which sets a new benchmark for luxury accommodation in Macau.

"The 10.7% uplift in our Adjusted NAV since 30 June 2009, reflects the quality of our strategically positioned portfolio, which leaves us well placed to capitalise on Macau's next era of economic growth."

*based on a Dollar/Sterling exchange rate of 1.546 as at 23 February 2010

--Ends--

About Macau Property Opportunities Fund

Macau Property Opportunities Fund Limited, which raised £105 million in a placing and commenced trading on AIM in 2006, is a closed-end investment fund registered in Guernsey. The Company's investment policy is to provide shareholders with an attractive total return through investing in property opportunities in one of the world's fastest growing and most dynamic regions - Macau and the Western Pearl River Delta of Southern China.

The Fund is managed by Sniper Capital Limited, an independent investment manager that specialises in property investment opportunities in niche, undervalued and developing markets.

For further information:

Website: www.mpofund.com

Public Relations

Hogarth Partnership Limited

Simon Hockridge / Andrew Jaques 

Tel: [phone]

Nominated Adviser & Joint Broker

Collins Stewart Europe Limited

David Yovichic / Helen Goldsmith

Tel: [phone]

Joint Broker

Shore Capital Stockbrokers Limited

Dru Danford

Tel: [phone]

Company Secretary & Administrator

Heritage International Fund Managers Limited

Mark Huntley / Laurence McNairn

Tel: [phone]

Manager

Sniper Capital Limited

Daisy Tang, Corporate & Investor Communications

Tel: [phone]

Email: [e-mail]

www.snipercapital.com

Stock Codes: 

Bloomberg:  MPO LN

Reuters: MPO.L

Chairman's Statement

After three and a half years of operation, as we enter the asset management and development stages of our investment cycle, we are continuing to demonstrate real value creation for our shareholders. Encouragingly, this has coincided with a 10.7% uplift in our Adjusted Net Asset Value in the six months since 30 June 2009.

The publication of our fourth Interim Report comes at a time of cautious international recovery from the unprecedented financial crisis of late 2008. While this improvement in confidence is encouraging, it is the unique drivers and sound fundamentals of the Macanese economy that offer the most promising prospects for sustained growth in our sector.

Against this backdrop of improved sentiment, Macau's economy and property markets staged a comeback in the second half of 2009. Infrastructure projects such as the Hong Kong-Zhuhai-Macau bridge and the Light Rapid Transit system are underway. The reactivation of some of the suspended construction projects on the Cotai Strip is expected, and Macau's new Chief Executive is committed to a programme of economic diversification. As a result, our Company remains well positioned to make continued progress in line with Macau's long term growth.

Our performance during the six-month period to 31 December 2009 confirms this.

The rise in our Adjusted Net Asset Value of 10.7% since 30 June 2009 is not only encouraging, but also underscores the quality of our portfolio and value of investing in carefully chosen segments of the Macau property market.

We have also seen a welcome narrowing of the discount to our Adjusted Net Asset Value at which our shares trade. At the same time, Sniper Investments Limited - an investment vehicle associated with our Manager - has further increased its investment so that it is currently our sixth largest shareholder.

Our focus is now on the asset management and development of our various projects.

We have launched our major asset, Tower Six at One Central Residences, as The Waterside, a brand that befits its exceptional location overlooking Macau's Nam Van Lake. This project is currently the subject of a targeted marketing and leasing campaign, with interiors offering bespoke styling that will create a new benchmark for luxury rental accommodation in the city. Now that full handover of Tower Six has occurred, and reflecting our intention to lease out and earn rental income from the units, the asset has been classified as an investment property in the Consolidated Statement of Financial Position.

Demolition works are now complete at Rua do Laboratório, while preliminary site works have begun at Phase Two of our development of the Zhuhai Logistics Centre. We are also continuing to make good progress on our two other development projects, Rua da Penha and Senado Square.

With our strategically positioned portfolio of assets, our healthy balance sheet and our prudent approach to cash management, we are well placed to capitalise on Macau's next era of economic growth.

David Hinde

Chairman

Macau Property Opportunities Fund Limited

PROPERTY PORTFOLIO

Valuation US$309m

Uplift (current period) +12%

Rua da Penha

Valuation: US$22,953,000

Change (current period): +5%

Change (year-on-year): +11%

Change (since acquisition): +184%

One Central

Valuation: US$184,241,000

Change (current period): +17%

Change (year-on-year): +24%

Change (since acquisition): +33%

Rua do Laboratório

Valuation: US$39,587,000

Change (current period): +4%

Change (year-on-year): +11%

Change (since acquisition): +84%

Senado Square

Valuation: US$37,266,000

Change (current period): +12%

Change (year-on-year): +20%

Change (since acquisition): +132%

Zhuhai Logistics Centre

Valuation: US$14,184,000

Change (current period): +10%

Change (year-on-year): +21%

Change (since acquisition): +28%

Other Property Assets

Valuation: US$10,781,000

Change (current period): +5%

Change (year-on-year): +9%

Change (since acquisition): +49%

Market value information is based on independent valuations of the Company's portfolio properties by Savills (Macau) Limited.

Figures for One Central include The Waterside and individual units at One Central Residences.

One Central#

• Macau's premier mixed-use development

• Acquired Tower Six and a number of individual units

• Current status: Leasing

• Exit strategy: Lease and asset manage

Total Commitment:	US$138 million
Type	Investment
Location	Macau Peninsula
Acquisition Date	November 2006
Gross Floor Area	201,000 ft2 / 18,700 m2
Handover	August 2009

# Disclaimer: "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 and "The Waterside" are not associated with Basecity Investments Limited, Shun Tak Holdings Limited or Hongkong Land Holdings Limited.

The Waterside (Prestigious, high end residential)

Marketed as The Waterside, Tower Six of One Central Residences comprises 59 apartments which boast breathtaking views over Macau's Nam Van Lake and the historic Penha Hill.

All apartments in The Waterside have been luxuriously appointed under the creative direction of award-winning designer Yasumichi Morita, featuring three distinct styles - classic, contemporary and grand deluxe.

Situated in a prime location on Macau Peninsula, The Waterside is adjacent to MGM Grand Macau, One Central Macau shopping centre as well as the soon-to-be-opened Mandarin Oriental hotel.

We are now engaged in a targeted marketing and leasing programme designed to capitalise on this exceptional asset.

MPO acquired Tower Six of One Central Residences in late 2006 and subsequently purchased an additional number of units.

Rua da Penha (Niche market residential)

Rua da Penha will provide attractive accommodation for middle/upper-income locals who prefer to live in this popular location close to the city centre.

• Low-level residential block

• Positioned towards local residents

• Current status: Advanced planning

• Exit strategy: Pre-sell and sell

Total Commitment:	US$20 million
Acquisition Cost:	US$8.6 million
Projected Development Cost:	US$11.4 million
Type	Development
Location	Macau Peninsula
Acquisition Date	October 2006
Projected Gross Floor Area	80,000 ft2 / 7,430 m2
Estimated Completion Date	2011

Senado Square (Mixed-use development)

Located in the heart of Macau's tourist district, Senado Square will offer prime, multi-storey mixed-use retail space designed to serve a variety of tenant needs.

• First mixed-use property

• Multi-storey retail complex

• Current status: Advanced planning

• Exit strategy: Lease and sell

Total Commitment:	US$33 million
Acquisition Cost:	US$16 million
Projected Development Cost:	US$17 million
Type	Development
Location	Macau Peninsula
Acquisition Date	October 2007
Projected Gross Floor Area	70,000 ft2/ 6,500 m2
Estimated Completion Date	2011

Rua do Laboratório (Entry level residential)

Close to the border with China and with easy access to the proposed Light Rapid Transit System, this project is being developed for first-time buyers.

• High-rise residential block

• Targeting local first-time buyers

• Current status: Planning

• Exit strategy: Pre-sell and sell

Total Commitment:	US$50 million
Acquisition Cost:	US$20.6 million
Projected Development Cost:	US$29.4 million
Type	Development
Location	Macau Peninsula
Acquisition Date	November 2006
Projected Gross Floor Area	220,000 ft2 / 20,440 m2
Estimated Completion Date	2011

Zhuhai Logistics Centre (Warehousing and logistics)

Adjacent to the recently-started Hong Kong-Zhuhai-Macau bridge, this project is well placed to serve the growing demand for logistics needs from Macau's gaming, tourist and MICE industries.

• First acquisition in mainland China

• First warehousing/logistics property

• Current status: Leasing and planning

• Exit strategy: Sell with long-term leases

Total Commitment:	US$45 million
Acquisition Cost:	US$11 million
Projected Development Cost:	US$34 million
Type	Investment/Development
Location	Zhuhai, China
Acquisition Date	August 2008
Projected Gross Floor Area	1.6m ft2 / 150,000 m2
Estimated Completion Date	2011/2012

All information is based on the latest indicated zoning, plot ratios and construction costs and is subject to final planning approval.

MANAGER'S REPORT

The six months under review have seen a step change in investors' attitudes towards Macau. Having weathered the worst international financial crisis in decades, the city has returned to growth in its GDP. A new Chief Executive has been sworn in and a mood of cautious confidence has returned to the property sector. At the same time, Macau Property Opportunities Fund (MPO) has embarked on the value creation phase of its investment cycle.

As our Chairman has noted, the six months ended 31 December 2009 proved to be encouraging. Despite the widespread recession that followed the international financial crisis, the uncertainty of a year ago has turned to cautious optimism in many commercial sectors. As a result, investors have begun to return to the market with renewed enthusiasm, particularly during the last quarter of 2009.

At the local level, Macau has recently returned to growth, with GDP improving during the second half of 2009. At the same time, MPO has seen increased activity in its shares and has further narrowed the discount to its Adjusted Net Asset Value. Their value has risen once more to a level above their IPO price.

We are now primarily focused on the development and asset management of our current portfolio, whilst keeping a watchful eye open for new investment opportunities that might sit well with our strategy and existing portfolio.

The Waterside comes on stream

Tower Six of One Central Residences - The Waterside - is now the subject of a widespread campaign targeting the premium sector of Macau's residential leasing market.

With panoramic views across the Nam Van Lake, The Waterside offers an unmatched location and excellent facilities. Combining bespoke interior styling with highly personalised services, it sets new standards for luxury rental accommodation in Macau. Residents have a choice of living spaces created by world-class Japanese interior designer, Yasumichi Morita, CEO and Principal Designer of Glamorous Co., Ltd.. A winner at the Andrew Martin Interior Design Awards 2009, Morita's work includes the W Hotel in Hong Kong and the Michelin three-starred Château Restaurant Joël Robuchon in Tokyo.

Residents at The Waterside have access to facilities which include a state-of-the-art clubhouse with a designated gym, sports and leisure areas and Macau's first 50-metre infinity pool. The shopping, dining and entertainment options include immediate connection to MGM Grand Macau, Wynn Macau and the new One Central Macau shopping centre, which features a number of upscale international retail brands.

The characteristics found at The Waterside are unparalleled in Macau and we are fully capitalising on them as we progress our marketing activities.

Progress at other sites

The disused factory buildings at Rua do Laboratório have now been demolished and contractors will shortly move on site to demolish the existing buildings at Rua da Penha. Both these sites will be developed as residential projects.

Rua do Laboratório, an entry level development, is adjacent to the site of a government-sponsored regeneration programme, which includes the imminent construction of a new Light Rapid Transit (LRT) system designed to serve Macau's residents.

Rua da Penha is located in a central district on Macau Peninsula, much favoured by middle/upper-income locals who prefer to live close to the city centre.

We have also begun preliminary construction work on Phase Two of our proposed development of the Zhuhai Logistics Centre, close to Hengqin Island. We are confident the project will prosper from its proximity to the proposed Shizimen Central Business District, which will eventually feature six million square feet of convention and exhibition space, a number of world-class hotels and office and residential buildings.

This ambitious commercial district will also benefit from the groundbreaking 30-km bridge linking Zhuhai, Macau and Hong Kong, the construction of which began in December 2009.

We continue our research into the ideal tenant mix for Senado Square and are now developing concepts for a sophisticated multi-storey retail complex. With Macau's retail sales on an upward trajectory, we are confident of the prospects for this project.

Financial results

The Company's interim financial statements as at 31 December 2009 have been prepared in accordance with International Financial Reporting Standards. All properties have been valued by Savills (Macau) Limited as at 31 December 2009. Development properties classified as inventories are included in the financial statements at the lower of cost and net realisable value, whereas properties classified as investment properties are carried at fair value. The Company has recorded a net profit of US$49.2 million during the six-month period, mainly as a result of the fair value adjustment from reclassification of the investment in The Waterside from inventory to investment property as well as the unrealised gain on our other investment property. This results in a Net Asset Value per share of US$1.95 as at 31 December 2009, representing a 31.6% increase during the six-month period.

The market valuation of MPO's interests in these properties, as reported by Savills and as detailed in the Portfolio Summary of this report, was US$309.0 million. This represents an uplift of US$99.7 million or 47.7% over the cost of the properties. The Adjusted Net Asset Value per share resulting from this uplift is US$2.49 or 157p at 31 December 2009, which translates to a respective 38.54% and 62.74% increase since the Company's admission to AIM.

As at 31 December 2009, MPO's total assets stood at US$288.4 million comprising US$96.1 million of development properties, US$155.3 million of investment property and cash of US$36.8 million. If development properties were included in the Financial Statements at market value, as reported by Savills and as used for the Adjusted Net Asset Value, total assets would be US$346.0 million. MPO's total liabilities as at 31 December 2009 were US$83.7 million, mainly consisting of the bank financing for One Central.

Unaudited results are summarised below:

	31 December 2009		30 June 2009
	US$	£1	US$	£1
NAV	$204.65m	£128.49m	$155.51m	£94.13m
Adjusted NAV2	$261.86m	£164.40m	$236.45m	£143.12m
NAV per share	$1.95	122.37p	$1.48	89.65p
Adjusted NAV per share2	$2.49	156.58p	$2.25	136.31p
Changes in Adjusted NAV
Since Admission3	38.54%	62.74%	25.10%	41.68%
YoY	17.14%	6.48%	-20.00%	-3.37%

1   Based on US$/£ exchange rate of 1.593 at 31 December 2009 and 1.652 at 30 June 2009.

2   Adjusted Net Asset Value is shown after accruing for the performance fee (if any) and is calculated by taking the NAV per share calculated under IFRS and adjusting inter alia to include the properties owned by the Company at fair value rather than at the lower of cost and net realisable value.

3   Based on NAV per share at Admission on 5 June 2006 of US$1.80 (96.21 pence).

Cash management

As at 31 December 2009, the Company had a cash balance equivalent to US$36.8 million. The majority of the cash reserves are held primarily in HK$ fixed deposits and in savings and current accounts across a number of international banks located in Guernsey, Hong Kong and Macau. The Company continues to adopt a prudent cash management policy and closely monitors its capital requirements.

With most MPO assets denominated in US$ and HK$ during the period, our exposure to foreign exchange risk can be considered minimal.

Financing

In August 2009, MPO successfully completed the drawdown of a loan facility of US$82 million arranged with a consortium of international and Macanese banks, which has been used to finance the Company's investment in The Waterside and other units in One Central Residences. The loan facility extends until 30 September 2012 at an interest rate of 3-month HIBOR plus 2.4% per annum. The loan-to-value for the project is 44.6%, which is comfortably within the loan covenant, while MPO has an overall loan-to-value ratio of 23.8% as at 31 December 2009.

Capitalising on its strong relationships with the region's financial institutions, MPO is in advanced discussions with respect to construction financing for its development projects.

Trading of shares

During the past six months, MPO's share price has benefited from the renewed confidence in the property sector, with its shares trading at a narrower discount to the latest Adjusted Net Asset Value per share. In the six months under review, the discount narrowed from 44% to 22%.

Over the same period, Sniper Investments Limited - an investment vehicle associated with the Company's Manager - has increased its total holding in MPO to 4.725 million shares, or 4.5% of the Company's issued share capital as at 31 January 2010. In addition, several new tier-one shareholders have joined the register.

Significant shareholders*

Name of Shareholder	Number of shares	%
Amvescap (including Invesco & Aim)	30,767,229	29.30%
Insight Investment Management	11,906,136	11.34%
Universities Superannuation Scheme	10,500,000	10.00%
Lazard Asset Management LLC	9,841,075	9.37%
Midas Capital Partners	8,550,000	8.14%
Sniper Investments Limited	4,725,000	4.50%
RWC Partners	4,321,293	4.12%
Other	24,389,267	23.23%
	105,000,000	100.00%

* As at 31 January 2010

The future for Macau

The general outlook for Macau remains promising. The territory has made a rapid recovery from the international financial crisis, particularly during the last three months of 2009, recording a double-digit growth in GDP for that quarter.

The territory's new Chief Executive, Fernando Chui Sai-on, has reiterated his promise to help diversify the economy and improve the quality of life in Macau.

The government's commitment to the new LRT system and its encouragement of new, non-gaming tourist attractions bear this out.

The construction of the new Hong Kong-Zhuhai-Macau bridge also demonstrates the desire to strengthen trade and economic ties within the region, which will make the entire Western Pearl River Delta more accessible and competitive.

Gaming and tourism

While the first half of 2009 saw a fall in the territory's gaming revenues, the second half saw a resurgence. Exceeding the expectations of many commentators who were forecasting a negative year, the full year recorded a 10% uplift year-on-year, resulting in overall revenues of US$15 billion.

As a result, Macau's gaming revenues have surpassed those of Nevada and New Jersey combined. The sector's popularity amongst investors is reflected in the success of the IPOs launched by Wynn Resorts in October 2009, and Las Vegas Sands Corp. in November 2009. Both companies listed their Macau operations on the Hong Kong Stock Exchange, raising a combined US$4 billion of new investment.

While the bigger picture shows visitor numbers falling 5% year-on-year, the figures for the second half of 2009 show some improvement, thanks to the revival in the Macanese economy and the ongoing stability of China, which was comparatively unaffected by the international financial crisis. The numbers may be further boosted in the coming two years by the opening of the Encore at Wynn Macau and the next phase of Las Vegas Sands and Galaxy Entertainment Group resorts on the Cotai Strip.

The property market

The demand for residential properties has recovered since the midpoint of 2009, in line with the region's economic situation.

Transaction volumes picked up dramatically from July onwards, with a return to the pre-crisis level of over 1,000 transactions per month. Transaction values have also doubled since then.

Much of this improvement has been driven by the government's housing subsidies, which offer incentives to first-time buyers interested in purchasing accommodation priced at US$325,000 or less. Our entry level residential development at Rua do Laboratório is well positioned to benefit from such incentives, when the time comes for us to launch our sales drive.

In the high end residential sector, capital values grew by 22% in 2009, recovering much previously lost ground, and rents in the sector remained stable after the dramatic falls in late 2008 and early 2009, according to Jones Lang LaSalle.

It is now clear that local purchasing power has been strengthened by the government's incentives, which is a trend we expect to see continuing in the near future. Moreover, the demand for rented residential accommodation is expected to increase when major projects resume construction, thus attracting a renewed influx of expatriate executives and workers.

In the luxury housing segment, the growing interest in Macau among mainland China's high net worth individuals, coupled with the current level of liquidity and a gradual economic recovery, should provide room for further capital value growth in 2010.

Macau's retail sector is also reporting continuing sales growth by recording US$2.8 billion for 2009 and a year-on-year growth of 16%. This augurs well for our retail development at Senado Square.

The political landscape

The swearing-in of the new Chief Executive has ushered in a new era for Macau. The territory has recovered following the international financial crisis and is now entering a new stage of growth, which we expect will be maintained over the medium to long term.

The government is committed to a number of schemes that will see the economy diversify towards a broad-based mix of commercial activities, including retailing and the conference and exhibition business.

The various infrastructure projects also bode well for the future, as many of them will help improve Macau's competitiveness in the region.

Future prospects

While Macau continues to evolve, our intention is to remain focused on the business at hand: the careful development and asset management of our portfolio, securing the best possible rental yield at The Waterside and maintaining sound progress at our development sites. We remain confident in the Macanese economy's capacity for sustainable growth over the long term.

With investment sentiment expected to strengthen during 2010, we believe our Company is on course to benefit from Macau's unique strengths as one of the most dynamic property markets in the world.

Sniper Capital Limited

Manager

Disclaimer: "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 and "The Waterside" are not associated with Basecity Investments Limited, Shun Tak Holdings Limited or Hongkong Land Holdings Limited.

Macau Property Opportunities Fund Limited

Consolidated Statement of Financial Position (Unaudited)

At 31 December 2009

		31 Dec 09		31 Dec 08		30 Jun 09
	Note	US$'000		US$'000		US$'000
ASSETS
Non-current assets
Investment property	3	155,253		11,702		12,903
		155,253		11,702		12,903
Current assets
Inventories	4	96,115		177,728		181,047
Trade and other receivables		147		38		37
Prepayments		94		385		20
Cash and cash equivalents		36,768		50,263		47,010
		133,124		228,414		228,114
Total assets		288,377		240,116		241,017
EQUITY
Capital and reserves attributable to the
Company's equity holders
Share capital		1,050		1,050		1,050
Distributable reserve		187,960		187,960		187,960
Retained earnings/(accumulated losses)		15,639		(34,107)		(33,527)
Foreign exchange on consolidation		3		38		23
Total equity		204,652		154,941		155,506
LIABILITIES
Non-current liabilities
Interest-bearing loans	5	73,841		-		-
		73,841		-		-
Current liabilities
Trade and other payables		1,595		85,175		85,511
Interest-bearing loans	5	8,289		-		-
		9,884		85,175		85,511
Total liabilities		83,725		85,175		85,511
Total equity and liabilities		288,377		240,116		241,017

The consolidated financial statements were approved by the Board of Directors and authorised for issue on 26 February 2010.

Macau Property Opportunities Fund Limited

Consolidated Statement of Comprehensive Income (Unaudited)

For the period from 1 July 2009 to 31 December 2009

		1 Jul 09 -		1 Jul 08 -		1 Jul 08 -
		31 Dec 09		31 Dec 08		30 Jun 09
	Note	US$'000		US$'000		US$'000
Revenue
Bank and other interest		16		417		511
Rental income		111		120		233
Net gain from fair value adjustment on investment property	3	48,367		625		1,811
Sale of inventories	4	760		-		-
(Losses)/gains on foreign currency exchange		(138)		1,132		1,138
Other income		66		-		-
		49,182		2,294		3,693
Expenses
Management fee		2,368		2,940		5,154
Non-executive Directors' fees		99		103		200
Auditors' remuneration		44		49		116
(Reversal of write-down)/write-down of inventories	4	(4,239)		14,371		12,296
Cost of inventories sales	4	931		-		-
General and administration expenses		813		628		1,144
		(16)		(18,091)		(18,910)
Profit/(loss) for the period		49,166		(15,797)		(15,217)
Other comprehensive income		(20)		52		37
Total comprehensive income for the period		49,146		(15,745)		(15,180)
Profit/(loss) attributable to:
Equity holders of the Company		49,166		(15,797)		(15,217)
Total comprehensive income attributable to:
Equity holders of the Company		49,146		(15,745)		(15,180)
		1 Jul 09 -		1 Jul 08 -		1 Jul 08 -
		31 Dec 09		31 Dec 08		30 Jun 09
		US$		US$		US$
Basic and diluted profit/(loss) per share for profit/(loss) attributable to the equity holders of the Company during the period	6	0.4682		(0.1504)		(0.1449)

Macau Property Opportunities Fund Limited

Consolidated Statement of Changes in Equity (Unaudited)

For the period from 1 July 2009 to 31 December 2009

Movement for the period from 1 July 2009 to 31 December 2009

	Share capital		Retained earnings/ (accumulated losses)		Distributable reserve		Foreign exchange on consolidation		Total
	US$'000		US$'000		US$'000		US$'000		US$'000
Balance brought forward at 1 July 2009	1,050		(33,527)		187,960		23		155,506
Profit for the period	-		49,166		-		-		49,166
Other comprehensive income - Foreign exchange differences on consolidation	-		-		-		(20)		(20)
Total comprehensive income for the period	-		49,166		-		(20)		49,146
Balance carried forward at 31 December 2009	1,050		15,639		187,960		3		204,652

Movement for the period from 1 July 2008 to 31 December 2008

	Share capital		Accumulated losses		Distributable reserve		Foreign exchange on consolidation		Total
	US$'000		US$'000		US$'000		US$'000		US$'000
Balance brought forward at 1 July 2008	1,050		(18,310)		187,960		(14)		170,686
Loss for the period	-		(15,797)		-		-		(15,797)
Other comprehensive income - Foreign exchange differences on consolidation	-		-		-		52		52
Total comprehensive income for the period	-		(15,797)		-		52		(15,745)
Balance carried forward at 31 December 2008	1,050		(34,107)		187,960		38		154,941

Movement for the year from 1 July 2008 to 30 June 2009

	Share capital		Accumulated losses		Distributable reserve		Foreign exchange on consolidation		Total
	US$'000		US$'000		US$'000		US$'000		US$'000
Balance brought forward at 1 July 2008	1,050		(18,310)		187,960		(14)		170,686
Loss for the year	-		(15,217)		-		-		(15,217)
Other comprehensive income - Foreign exchange differences on consolidation	-		-		-		37		37
Total comprehensive income for the year	-		(15,217)		-		37		(15,180)
Balance carried forward at 30 June 2009	1,050		(33,527)		187,960		23		155,506

Macau Property Opportunities Fund Limited

Consolidated Cash Flow Statement (Unaudited)

For the period from 1 July 2009 to 31 December 2009

		1 Jul 09 -		1 Jul 08 -		1 Jul 08 -
		31 Dec 09		31 Dec 08		30 Jun 09
	Note	US$'000		US$'000		US$'000
Net cash used in operating activities	7	(8,081)		(21,259)		(24.464)
Cash flows from investing activities
Acquisition of subsidiary		(1,861)		(9,085)		(9,118)
Final instalment on acquisition of properties		(82,410)		-		-
Net cash used in investing activities		(84,271)		(9,085)		(9,118)
Cash flows from financing activities
Proceeds from bank borrowing	5	82,130		-		-
Net cash generated from financing activities		82,130		-		-
Net decrease in cash and cash equivalents		(10,222)		(30,344)		(33,582)
Cash and cash equivalents at beginning of period		47,010		80,555		80,555
Effect of foreign exchange rate changes		(20)		52		37
Cash and cash equivalents at end of period		36,768		50,263		47,010

 

Macau Property Opportunities Fund Limited

Notes to the Consolidated Financial Statements (Unaudited)

For the period from 1 July 2009 to 31 December 2009

             General information

Macau Property Opportunities Fund Limited (the "Company") is a company incorporated and registered in Guernsey under applicable Guernsey law.  The address of the registered office is Heritage Hall, PO Box 225, Le Marchant Street, St. Peter Port, Guernsey, Channel Islands GY1 4HY.

The consolidated financial statements for the period ended 31 December 2009 comprise the financial statements of the Company and its subsidiaries (together referred to as the "Group").

The Group invests in commercial property and property-related ventures primarily in Macau and in the Western Pearl River Delta region.

These consolidated financial statements have been approved for issue by the Board of Directors on 26 February 2010.

1.         Significant accounting policies

             Basis of accounting

The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) under the historical cost convention.

The interim financial statements have been prepared in accordance with the 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 presentation of the interim financial statements is consistent with the annual financial statements.

Seasonal & cyclical variations

The Group operates in an industry where significant seasonal or cyclical variations in total income are not experienced during the financial year.

Consolidation

The consolidated financial statements incorporate the financial statements of the Company and all special-purpose entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of a special-purpose entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date control commences until the date control ceases.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Accounting policies

Except as described below, the accounting policies applied for this interim period are consistent with those of the annual financial statements for the year ended 30 June 2009, as described in those annual financial statements.

·      Presentation of financial statements

The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in these condensed interim financial statements as of and for the six-month period ended on 31 December 2009.

Comparative information has been re-presented so that it is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

·      Segmental reporting

The Group has adopted IFRS 8 Operating Segments with effect from 1 July 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.  As a result, following the adoption of IFRS 8, the identification of the Group's reportable segments has not changed.

The Directors are of the opinion that the Group is engaged in a single segment of business, being property investment and related business.  The Group invests in commercial property and property related ventures primarily in Macau and in the Western Pearl River Delta region.

2.         Subsidiaries

All special-purpose vehicles (SPVs) are owned 100% by Macau Property Opportunities Fund Limited.  The following subsidiaries have a year end of 31 December to coincide with the Macanese tax year:

MPOF Macau (Site 1) Limited	MPOF Macau (Site 2) Limited	MPOF Macau (Site 3) Limited
MPOF Macau (Site 4) Limited	MPOF Macau (Site 5) Limited	MPOF Macau (Site 6) Limited
MPOF Macau (Site 7) Limited	MPOF Macau (Site 8) Limited	MPOF Macau (Site 9) Limited
MPOF Macau (Site 10) Limited	The Waterside Company Limited

The consolidated financial statements include the financial statements of the Company and the subsidiaries listed in the following table:

Ownership		Incorporation		Ownership		Incorporation
MPOF Macau (Site 1) Limited	100%	Macau		Magic Bright International Limited	100%	BVI
MPOF Macau (Site 2) Limited	100%	Macau		Manage Gain Investments Limited	100%	BVI
MPOF Macau (Site 3) Limited	100%	Macau		Mega League Investments Limited	100%	BVI
MPOF Macau (Site 4) Limited	100%	Macau		Multi Gold International Limited	100%	BVI
MPOF Macau (Site 5) Limited	100%	Macau		Phoenixville Holdings Limited	100%	BVI
MPOF Macau (Site 6) Limited	100%	Macau		Poly Advance Management Limited	100%	BVI
MPOF Macau (Site 7) Limited	100%	Macau		Prominent Group Limited	100%	BVI
MPOF Macau (Site 8) Limited	100%	Macau		Richsville Investment Limited	100%	BVI
MPOF Macau (Site 9) Limited	100%	Macau		Right Year International Limited	100%	BVI
MPOF Macau (Site 10) Limited	100%	Macau		See Lucky Enterprises Limited	100%	BVI
The Waterside Company Limited	100%	Macau		Smooth Run Group Limited	100%	BVI
MPOF (Penha) Limited	100%	Guernsey		Swift Link Limited	100%	BVI
MPOF (Taipa) Limited	100%	Guernsey		Talent Empire International Limited	100%	BVI
MPOF (Jose) Limited	100%	Guernsey		Tycoon Villa International Limited	100%	BVI
MPOF (Sun) Limited	100%	Guernsey		Worthy Way Limited	100%	BVI
MPOF (Senado) Limited	100%	Guernsey		Yield Return Limited	100%	BVI
MPOF (Domingos) Limited	100%	Guernsey		Capital Full Limited	100%	Hong Kong
MPOF (Monte) Limited	100%	Guernsey		China City Properties Limited	100%	Hong Kong
MPOF (Paulo) Limited	100%	Guernsey		China Crown Properties Limited	100%	Hong Kong
MPOF (Guia) Limited	100%	Guernsey		East Base Properties Limited	100%	Hong Kong
MPOF (Antonio) Limited	100%	Guernsey		Eastway Properties Limited	100%	Hong Kong
MPOF (6A) Limited	100%	Guernsey		Elite Gain Limited	100%	Hong Kong
MPOF (6B) Limited	100%	Guernsey		Excelsior Properties Limited	100%	Hong Kong
MPOF (7A) Limited	100%	Guernsey		Glory Properties Limited	100%	Hong Kong
MPOF (7B) Limited	100%	Guernsey		Gold Century Properties Limited	100%	Hong Kong
MPOF (8A) Limited	100%	Guernsey		Golden City Properties Limited	100%	Hong Kong
MPOF (8B) Limited	100%	Guernsey		Golden Properties Limited	100%	Hong Kong
MPOF (9A) Limited	100%	Guernsey		Goldex Properties Limited	100%	Hong Kong
MPOF (9B) Limited	100%	Guernsey		Honway Properties Limited	100%	Hong Kong
MPOF (10A) Limited	100%	Guernsey		Maxland Properties Limited	100%	Hong Kong
MPOF (10B) Limited	100%	Guernsey		New Perfect Properties Limited	100%	Hong Kong
MPOF Mainland Company 1 Limited	100%	Barbados		Newton Properties Limited	100%	Hong Kong
Bream Limited	100%	Guernsey		Orient Land Properties Limited	100%	Hong Kong
Cannonball Limited	100%	Guernsey		Pacific Asia Properties Limited	100%	Hong Kong
Civet Limited	100%	Guernsey		Pacific Link Properties Limited	100%	Hong Kong
Aim Top Enterprises Limited	100%	BVI		Pacific Success Properties Limited	100%	Hong Kong
Championway International Limited	100%	BVI		Platinum Properties Limited	100%	Hong Kong
Extra Able International Limited	100%	BVI		Queensland Properties Limited	100%	Hong Kong
Fondue International Limited	100%	BVI		Sky Century Properties Limited	100%	Hong Kong
Gainsun Investments Limited	100%	BVI		Top Century Properties Limited	100%	Hong Kong
Go Gain International Limited	100%	BVI		Top Faith Properties Limited	100%	Hong Kong
Gorey Hills International Limited	100%	BVI		Union Century Properties Limited	100%	Hong Kong
Hillsleigh Holdings Limited	100%	BVI		Victory Star Properties Limited	100%	Hong Kong
Honeypot International Limited	100%	BVI		Weltex Properties Limited	100%	Hong Kong
Jin Mei International Limited	100%	BVI		Windex Properties Limited	100%	Hong Kong
Lucan Investments Limited	100%	BVI		World Pacific Properties Limited	100%	Hong Kong
Lucky Go International Limited	100%	BVI		Sailing Logistics (Zhuhai Free Trade Zone) Co. Ltd.	100%	PRC

Macau Property Opportunities Fund Limited

Notes to the Consolidated Financial Statements (Unaudited) (continued)

For the period from 1 July 2009 to 31 December 2009

3.         Investment property

	31 Dec 09		31 Dec 08		30 Jun 09
	US$'000		US$'000		US$'000
Cost of investment properties	105,075		11,077		11,092
Net gain from fair value adjustments on investment properties	50,178		625		1,811
	155,253		11,702		12,903

During the period, full handover of Tower Six of One Central Residences, The Waterside, has occurred and to reflect the intention to lease out and earn rentals from the units, the property has been classified as an investment property in the Consolidated Statement of Financial Position. Carrying value amounted to US$93.9 million was transferred from inventories and fair value gain of US$47.1 million was recognised in the Consolidated Statement of Comprehensive Income.

The Group's investment properties were revalued at 31 December 2009 by independent professionally qualified valuers Savills (Macau) Limited. 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.

4.         Inventories

	31 Dec 09		31 Dec 08		30 Jun 09
	US$'000		US$'000		US$'000
Cost of  properties	104,172		192,099		193,343
Write down to net realisable value	(8,057)		(14,371)		(12,296)
	96,115		177,728		181,047

During the period there has been reduction to the write down in the values of the inventories held due to a general increase in the market values of properties in Macau. This decrease in the write-down of inventories amounted to US$4,239,115 and has been recognised as an income in the Consolidated Statement of Comprehensive Income.

During the period an apartment in One Central Residences was sold for US$759,827 against a total cost of US$930,979.

Macau Property Opportunities Fund Limited

Notes to the Consolidated Financial Statements (Unaudited) (continued)

For the period from 1 July 2009 to 31 December 2009

5.         Interest bearing loans

	31 Dec 09		31 Dec 08		30 Jun 09
	US$'000		US$'000		US$'000
Bank loans - Secured
- Current portion	8,289		-		-
- Non-current portion	73,841		-		-
	82,130		-		-

The Group has a credit facility of US$82.8 million with a consortium of banks lead by HSBC (the "Lenders"). On 27 August 2009, HK$636,930,000 (US$82,130,469) of the credit facility was drawndown to finance the remaining  payments due on the One Central Residences apartments held in Tower Six and the individual apartments.

The credit facility is secured by means of a first registered legal mortgage over all the residential units owned by the Group at One Central Residences. The credit facility is to be repaid in four half-yearly instalments commencing on 27 November 2010 with 65% of the principal due on the final repayment date. The loan-to-value covenant is 55%. In addition, the Group is required to maintain a cash reserve equal to 6 months' interest with the Lenders. As at 31 December 2009, the property had an loan-to-value ratio of 44.6%.

Interest rate applicable to the credit facility is 2.4% per annum over the 3-month HIBOR, payable quarterly in arrears.

6.         Basic and diluted earnings/(losses) per Ordinary Share

The basic and diluted earnings/(losses) per equivalent Ordinary Share is based on the profit/(loss) attributable to equity holders for the period of US$49,166,000 (31 December 2008: US$(15,797,000) and 30 June 2009: US$(15,217,000)) and on 105,000,000 (31 December 2008 and 30 June 2009: 105,000,000) weighted average number of Ordinary Shares in issue during the period.

7.         Net cash used in operating activities          

	1 Jul 09 -		1 Jul 08 -		1 Jul 08 -
	31 Dec 09		31 Dec 08		30 Jun 09
	US$'000		US$'000		US$'000
Profit/(loss) for the period	49,166		(15,797)		(15,217)
Adjustments for:
Unrealised gain on investment property	(48,367)		(625)		(1,811)
Unrealised (gain)/loss on inventories	(4,239)		14,371		12,296
Operating cash flows before movements in working capital	(3,440)		(2,051)		(4,732)
Movement in receivables	(184)		(370)		(4)
Movement in payables	(424)		(14,174)		(13,971)
Expenditure on properties	(4,033)		(4,664)		(5,757)
Net change in working capital	(4,641)		(19,208)		(19,732)
Net cash used in operating activities	(8,081)		(21,259)		(24,464)

Macau Property Opportunities Fund Limited

Notes to the Consolidated Financial Statements (Unaudited) (continued)

For the period from 1 July 2009 to 31 December 2009

8.         Related party transactions  

Tom Ashworth received no Directors' fees from the Company.

Tom Ashworth is a shareholder and Director of Sniper Capital Limited.  Sniper Capital Limited is the Manager to the Company and received fees during the period as detailed in the Consolidated Statement of Comprehensive Income.  

Tom Ashworth is a shareholder and Director of Adept Capital Partners Services Limited.  Adept Capital Partners Services Limited provides administrative services to the Hong Kong, BVI and Macanese SPVs and received fees during the period of US$56,114 of which US$nil was outstanding at the period end (31 December 2008: US$47,285 of which US$19,353 was outstanding at the period end).

Macau Property Opportunities Fund Limited

Directors and Company Information

Directors:		Public Relations:
David Hinde (Chairman)		Hogarth Partnership Limited
Tom Ashworth		No 1 London Bridge
Richard Barnes		London SE1 9BG
Alan Clifton
Tim Henderson		Nominated Adviser & Broker:
		Collins Stewart Europe Limited
Audit Committee:		9th Floor
Alan Clifton (Chairman)		88 Wood Street
Richard Barnes		London EC2V 7QR
Tim Henderson
		Joint Broker
Registered Office:		Shore Capital Stockbrokers Limited
Heritage Hall		Bond Street House
PO Box 225		14 Clifford Street
Le Marchant Street		London W1S 4JU
St Peter Port
Guernsey GY1 4HY		Independent Auditors:
		PricewaterhouseCoopers CI LLP
Manager:		PO Box 321
Sniper Capital Limited		National Westminster House
PO Box 957		Le Truchot
Offshore Incorporations Centre		St Peter Port
Road Town		Guernsey GY1 4ND
British Virgin Islands
		Property Valuers:
Investment Adviser:		Savills (Macau) Limited
Sniper Capital (Macau) Limited		Suite 1310
918 Avenida da Amizade		13/F Macau Landmark
14/F World Trade Centre		555 Avenida da Amizade
Macau		Macau
Administrator & Company Secretary:
Heritage International Fund Managers Limited
Heritage Hall
PO Box 225
Le Marchant Street
St Peter Port
Guernsey GY1 4HY
Macau and Hong Kong Administrator:
Adept Capital Partners Services Limited
26/F Jubilee Centre
42-46 Gloucester Road
Hong Kong

 

END

 

 

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