Final Results
Macau Property Opportunities Fund Limited
('MPO' or the 'Company')
Final Results for the period ended 30 June 2008
Macau Property Opportunities Fund Limited announces its results for the year ended 30 June 2008. 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$2.81 (154p*), representing a 27% uplift in dollar terms
* Total Adjusted NAV is US$296 million, representing a 56% increase since admission
* 35% uplift in property portfolio valuations for the twelve month period ended 30 June 2008
* New investments during the period and after the year-end include:
'Senado Square', MPO's first mixed-use property
'Zhuhai Logistics Centre', MPO's first acquisition in warehousing & logistics sector as well as mainland China
* Agreed terms for first bank loan facility of US$82.5 million with a consortium of international and Macanese banks, led by HSBC, for financing MPO's remaining consideration in One Central Residences
* The Company's property commitments currently total US$294 million
* Continued progress with the design and planning of MPO's development properties during the year
* Strong pipeline of potential investment opportunities currently under negotiation
David Hinde, Chairman, said:
'Our second year's trading has been marked by further growth in our Adjusted Net Asset Value and a broadening of our activities into new sectors of the Macau property market. We still believe Macau is one of the most dynamic and exciting investment markets in the world. With our diversified and well-positioned portfolio of projects, a healthy pipeline of further opportunities and our entrepreneurial focus on niche markets, I believe we can look forward with optimism to sustained levels of growth for our Company.'
*based on a Sterling/Dollar exchange rate of 1.82 as at 19 September 2008
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.
Key Contacts:
Public Relations
Hogarth Partnership Limited
Andrew Jaques
Tel: +44 20 7357 9477
Nominated Adviser & Joint Broker
Collins Stewart Europe Limited
Hugh Field
Tel: +44 20 7523 8350
Joint Broker
Shore Capital Stockbrokers Limited
Dru Danford
Tel: +44 20 7408 4090
Manager
Sniper Capital Limited
Daisy Tang, Corporate & Investor Communications
Tel: +852 2292 6700
Email: info@snipercapital.com
For further information, please visit the Company's website at www.mpofund.com
Stock Codes: Bloomberg: MPO LN
Reuters: MPO.L
CHAIRMAN'S STATEMENT
This second set of full year results from Macau Property Opportunities Fund Limited marks a step-change in our Company's development.
During the past twelve months, we have not only seen our Adjusted Net Asset Value* increase by 27%, but have also consolidated our position in the Macau property market.
In the same period, we have diversified the scope of our property portfolio - which has hitherto focused solely on development projects in both the high-end and entry-level residential sectors - with the acquisition of a fourth major project, Senado Square. This strategically-located US$33.4 million mixed-use development offers us the first of what we hope will be several opportunities for capitalising on the future of Macau's burgeoning retail and tourist industries.
We have also broadened our horizons by committing ourselves to a strategy of acquiring smaller property assets by investing US$7.3 million in a number of carefully selected, well-located sites. Our aim here is to expand our scope for success by acquiring and consolidating older properties in sought-after areas of Macau.
The past twelve months also saw us breaking new ground when, in June 2008, we agreed terms for our first bank loan facility with a consortium of banks led by HSBC. The signing of this in-principle agreement, which secures the financing of our One Central investment, says much for the strength of our relationships with HSBC, the Macanese banks and the financial community at large.
Since the year-end, we have added a fifth key property to our portfolio. This 1.1 million square foot Zhuhai-based site is our first acquisition in the important warehousing and logistics sector and also our first in mainland China. It is strategically located very close to Macau, and has excellent access to an extensive infrastructure network serving the entire Western Pearl River Delta.
As a result of all of these developments, we have not only strengthened our position in the region's property sector, but also gained a growing reputation for success in what is a very demanding, highly competitive market; one where the ability to identify suitable assets has to be matched by astute portfolio positioning and strong property development skills.
The progress we have made owes much to the quality of advice we receive from our investment manager, Sniper Capital. Their recommendations have helped us maintain our position as an investor in and developer of first-rate properties that meet the demands of our niche target markets.
Looking ahead, there is no doubt the current situation in the international financial markets will continue to have an impact on global confidence. Indeed, in light of these conditions, we are actively managing our long-term capital requirements and will continue to maintain our borrowing at levels which we believe are prudent and yet appropriate for Macau's rapidly growing market.
We still believe Macau is one of the most dynamic and exciting investment markets in the world. The local economy, although still largely driven by the gaming industry, is beginning to broaden into the increasingly important tourism, convention, exhibition and retailing sectors. This is creating huge potential for further property development opportunities.
In line with the Company's stated objective of delivering attractive total returns from capital appreciation, no dividend will be proposed in respect of the trading year under review.
With our diversified and well-positioned portfolio of projects, a healthy pipeline of further opportunities and our entrepreneurial focus on selected niche markets, I believe we can look forward with optimism to sustained levels of growth for our Company.
David Hinde
Chairman
Macau Property Opportunities Fund Limited
*Adjusted Net Asset Value is shown after accruing for the performance fee 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 net realisable value rather than at the lower of cost or net realisable value.
PROPERTY PORTFOLIO
Valuation: US$312m*
Uplift (current period): +35%
Uplift (since acquisition): +67%
One Central
Valuation: US$211,476,000
Sector: Residential (high-end)
Uplift (current period): +25.3%
Uplift (since acquisition): +53.3%
Rua da Penha
Valuation: US$22,041,000
Sector: Residential (niche)
Uplift (current period): +50.9%
Uplift (since acquisition): +170.9%
Rua do Laboratório
Valuation: US$39,084,000
Sector: Residential (entry-level)
Uplift (current period): +37.4%
Uplift (since acquisition): +82.9%
Senado Square
Valuation: US$31,908,000
Sector: Mixed-use
Uplift (current period): +99.1%
Uplift (since acquisition): +99.1%
Other property assets
Valuation: US$7,343,000
Sector: Various
Uplift (since acquisition): +109.2%
Post year-end acquisitions**
Zhuhai Logistics Centre: US$45,000,000***
Other property assets: US$3,800,000***
The Company's properties were previously referred to as:
Property 1 now known as Rua da Penha
Property 2 now known as One Central
Property 3 now known as Rua do Laboratório
Property 4 now known as Senado Square
*Based on independent valuations of the Company's portfolio properties by Savills (Macau)Limited
**Properties acquired since 30 June 2008 and therefore not included in the valuation summary above
*** Total commitment value
Investment properties
|
One Central |
|
|
Residential (high-end) |
|
|
Total Commitment |
US$138 million |
|
Acquisition Date |
November 2006 onwards |
|
Location |
Macau Peninsula |
|
Positioning |
Premium luxury |
|
Current Status |
Under construction |
|
Gross Floor Area |
201,000 ft2/18,700 m2 |
|
Estimated Completion Date |
2009 |
This project is set to become one of the most prestigious residential locations in Macau. Due for completion in 2009 by developers Hongkong Land and Shun Tak Holdings, it comprises seven high-end residential towers, a five-star Mandarin Oriental Hotel and a luxury shopping centre. We acquired the whole of Tower 6 in November 2006 and a further 25 well-located residential units during 2007. The financing for this investment has been secured by an in principle loan facility of US$82.5 million, arranged with a consortium of banks led by HSBC.
Development properties
We are continually seeking to enhance the potential value of our development properties through maximising their positioning and gross floor areas. All projections shown below are based on the latest indicated zoning, plot ratios and construction costs and are subject to final planning approval.
|
Rua da Penha |
|
|
Residential (niche) |
|
|
Total Commitment |
US$19.9 million |
|
Acquisition Cost |
US$8.6 million |
|
Projected Development Cost |
US$11.3 million |
|
Acquisition Date |
October 2006 |
|
Location |
Macau Peninsula |
|
Projected Gross Floor Area |
80,000ft2/7,430m2 |
|
Current Status |
Advanced planning |
|
Estimated Completion Date |
2010 |
Rua da Penha is acquired as a redevelopment site in October 2006. Located in a popular residential neighbourhood in an architecturally sensitive area, its value has increased by 171% since acquisition. Zoning has been confirmed for our proposed development of a low-rise apartment block for local residents and construction is expected to begin in early 2009, once final approvals have been received. The combination of an increasing demand by locals to upgrade to quality properties together with rising income levels, bodes well for the potential returns from this project.
|
Rua do Laboratório |
|
|
Residential (entry-level) |
|
|
Total Commitment |
US$50.3 million |
|
Acquisition Cost |
US$20.6 million |
|
Projected Development Cost |
US$29.7 million |
|
Acquisition Date |
November 2006 |
|
Location |
Macau Peninsula |
|
Projected Gross Floor Area |
220,000ft2/20,440m2 |
|
Current Status |
Consolidating |
|
Estimated Completion Date |
2011 |
Rua do Laboratório is a residential redevelopment site in the north of Macau. The entire project, which will offer attractive accommodation to first-time buyers, has benefited from a number of recent government initiatives, including the record-breaking sale of two nearby plots and the recent stamp duty concessions on apartments valued at US$385,000 or less. These two events alone validate our strategy of acquiring well-located sites where we can create affordable housing for the entry-level market.
|
Senado Square |
|
|
Mixed-use |
|
|
Total Commitment |
US$33.4 million |
|
Acquisition Cost |
US$16.0 million |
|
Projected Development Cost |
US$17.4 million |
|
Acquisition Date |
October 2007 |
|
Location |
Macau Peninsula |
|
Projected Gross Floor Area |
70,000ft2/6,500m2 |
|
Current Status |
Assessment and planning |
|
Estimated Completion Date |
2010 |
Senado Square is located at the heart of Macau's booming retail and tourist district. Our aim here is to create a high quality mixed-use retail complex offering well-designed space that meets a variety of tenant needs. As our first development project of this kind, Senado Square remains on schedule. With shop rentals, capital values and pedestrian footfall constantly rising, we expect this US$33.4 million scheme to produce excellent returns at the time of its completion.
|
Zhuhai Logistics Centre |
|
|
Warehousing & Logistics |
|
|
Total Commitment |
US$45 million |
|
Acquisition Cost |
US$11 million |
|
Projected Development Cost |
US$34 million |
|
Acquisition Date |
August 2008 |
|
Location |
Zhuhai, China |
|
Projected Gross Floor Area |
1.6m ft2/150,000m2 |
|
Current Status |
Assessment and planning |
|
Estimated Completion Date |
2011 |
Zhuhai Logistics Centre is our first foray into the important warehousing and logistics sector. Located in Zhuhai, China, minutes away from the Macau border, this US$45 million project was acquired in August 2008, after the end of our financial year. With the world-class hotels and casinos of the Cotai Strip close by, the site is ideally positioned to serve the growing needs of the gaming, tourist and retail industries in Macau. It also has excellent access to deep water harbours, airports and planned railways.
Other property assets
A key part of our ongoing strategy focuses on sourcing and acquiring smaller property assets that will collectively add value to our portfolio. Our priorities focus on viable, up-coming locations and opportunities for capital growth through either consolidation, refurbishment or redevelopment in niche market segments. At present, we have investments of US$7.3 million in this area, US$3.8 million of which has been
invested since 30 June 2008.
MANAGER'S REPORT
This has been a testing but important year for the Company. For most of the twelve-month period since the publication of our last full year results, the world's financial markets have been dealing with the effects of the US sub-prime mortgage crisis. As a result, international property markets have experienced an unwanted downturn, most notably in the residential sector.
In Macau, where powerful growth drivers continue to fuel the city's rapid development, GDP increased by almost 30% in the first half of 2008. The current global economic slowdown and government imposed visa restrictions are, we believe, likely to moderate this growth to more sustainable levels. In this environment, we continue to avoid segments which we believe are most susceptible to over-supply - such as the overcrowded mass-market residential segment - remaining focused on our target niche segments where property values have been well supported.
Against this background, we have seen Macau Property Opportunities Fund (MPO) increase its Adjusted Net Asset Value by 27% over the year whilst continuing to improve its overall standing in the market. We believe the prospects for generating further value in our strategically chosen sectors are as encouraging as ever.
Investing in new projects
In October 2007, we acquired our first mixed-use property, Senado Square, a redevelopment project offering a projected gross floor area of 70,000 square feet.
Located in the heart of Macau's World Heritage district, with its bustling retail and tourist trade and its heavy pedestrian footfall, our plans for Senado Square include a multi-storey building offering prime mixed-use space designed to attract both the local population and tourists.
We are currently in the process of assessing designs for Senado Square, together with its precise market positioning and prospective tenant mix. With forecasts for retailing and tourism indicating continuing growth in the region, we are confident this project will deliver good returns in the future. The acquisition was funded entirely from the Company's cash resources. Debt financing will be sought for the redevelopment of the project.
In January 2008, we announced our new, complementary smaller assets acquisition strategy with the purchase of a number of carefully chosen, well-located and attractively priced smaller properties worth a combined US$3.5 million. Our aim here is to source new projects which we believe offer potential for significant capital appreciation, either as investment properties in their own right, or through consolidation, refurbishment or redevelopment. We have subsequently invested a further US$3.8 million under this programme, bringing the total amount to US$7.3 million.
Since the year-end, we have made our first acquisition in the warehousing and logistics sector. Zhuhai Logistics Centre, acquired in August 2008, is also our first investment in mainland China. Situated just across the border from Macau, this 1.1 million square foot site has excellent access to the region's transport network and already offers 210,000 square feet of warehouse space, 50% of which is leased. We plan to up-grade the existing premises and develop logistics and warehouse facilities and workers' accommodation on the adjacent vacant land.
This investment was made in full awareness of the climate of uncertainty surrounding the world's financial markets, and well within the parameters of our borrowing policy. We recognise that we need to balance the negative effects of tighter global liquidity against the positive growth prospects of the Macau market and the generation of future cash flow from our projects. With this in mind, we will continue to maintain our gearing at levels we deem to be prudent yet appropriate for the high-growth environment we are operating in.
Investment properties
Our prime investment property, One Central, has recently topped out and is on schedule for completion in 2009.
One Central is destined to become the location of choice in the very high-end of Macau's residential property market. We have acquired the whole of Tower 6 and a further 25 well-positioned individual residences, which together account for 12% of the project's residential floor area.
Of the US$138 million invested in this prestigious development, US$82.5 million is due on handover. This will be funded through a loan agreement, announced in June 2008 and agreed in principle, with a consortium of international and Macanese banks led by HSBC. Our ability to secure attractive loan funding at this level stems largely from the quality of our property portfolio and the strong relationships we have developed in the financial community.
With panoramic views across Macau's Nam Van Lake, One Central is being developed by Hongkong Land and Shun Tak Holdings, two of the region's leading developers. Once complete, it will offer high quality luxury accommodation with a residents' clubhouse, an integral shopping centre, a new Mandarin Oriental Hotel and serviced apartments.
We are currently considering a number of options for the future of this investment, all of them geared towards maximising the possible returns.
Development properties
MPO acts as both an investor and developer. In our role as a developer, we have three major projects in the planning and development phase. All of them - including Senado Square, as reported above - have made progress during the past year.
We acquired Rua da Penha in October 2006. Located in a popular residential neighbourhood in an architecturally sensitive part of Macau, this redevelopment - which has a projected gross floor area of some 80,000 square feet - has now reached an advanced stage of planning. Our objective is to create a low-rise apartment block designed to enhance the surrounding area and appeal to local middle-to-upper income residents, whose earning power has risen as affluence has spread throughout Macau.
Rua do Laboratório was acquired in November 2006. Located on a well-positioned site in the northern part of Macau, this residential redevelopment project, with a projected gross floor area of 220,000 square feet, will see us offering attractive accommodation to first-time buyers in an increasingly popular district close to the border with China. Ongoing improvements to the local infrastructure include plans for the nearby location of the proposed light railway system. The record price achieved for a neighbouring site at the government's early 2008 land auction has also had a significant impact on the area.
Healthy pipeline
Our acquisition pipeline remains strong and varied. At the present time, we are either in the process of reviewing or negotiating on a number of sites with a combined acquisition value of US$250 million. Of these, 55% are residential projects, 25% are mixed-use and 20% are industrial opportunities.
In line with our overall investment strategy, we continue to avoid market sectors, such as office and middle-income residential developments, which we think are susceptible to over-supply. This does not, however, preclude us from assessing opportunities that we think will add value to our existing portfolio.
The final audited results are summarised below:
|
|
30 Jun 2008 |
30 Jun 2007 |
||
|
|
US$ |
£1 |
US$ |
£1 |
|
NAV |
$170.69m |
£85.55m |
$188.24m |
£94.08m |
|
NAV per share |
$1.63 |
81.47p |
$1.79 |
89.60p |
|
Adjusted NAV2 |
$295.56m |
£148.12m |
$232.81m |
£116.34m |
|
Adjusted NAV per share2 |
$2.81 |
141.07p |
$2.22 |
110.80p |
|
Uplift in Adjusted NAV |
|
|
|
|
|
Since Admission3 |
56.37% |
46.63% |
23.17% |
15.16% |
|
Since 30 June 2007 |
26.96% |
27.32% |
n/a |
n/a |
1. Based on US$/£ exchange rate of 1.995 at 30 June 2008 and 2.001 at 30 June 2007
2. Adjusted Net Asset Value is shown after accruing for the performance fee 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 net realisable value rather than at the lower of cost or net realisable value
3. Based on NAV per share at Admission on 5 June 2006 of US$1.80 (96.21p)
Strong financial results
During the current financial year, the Company has continued the strong financial performance delivered in its first year. As at 30 June 2008, total commitment - including estimated redevelopment costs - amounted to US$244 million. Following further acquisitions made since 30 June 2008, this figure has increased to US$294 million.
In accordance with International Financial Reporting Standards and the Company's valuation policy, all properties have been valued by Savills (Macau) Limited as at 30 June 2008 and included in the financial statements at the lower of cost or net realisable value. This results in a reported Net Asset Value per share as at 30 June 2008 of US$1.63. The reduction in Net Asset Value per share reflects the fact that development properties are classified as inventories and carried at their deemed cost whilst operating expenses including management and performance fees are expensed through the income statement.
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$311.9 million. This represents an uplift of US$124.9 million over the cost of the properties, or a 66.8% increase over cost. The Company's Adjusted Net Asset Value per share has exceeded both basic performance hurdle of 10% (calculated on a compounded basis) and the high watermark. This has resulted in an Adjusted Net Asset Value per share, after accruing for performance fees, of US$2.81 or 141p at 30 June 2008. These figures represent a respective 27.0% and 27.3% increase from 30 June 2007 and a respective 56.4% and 46.6% increase from the Net Asset Value per share at the time of the Company's admission to AIM.
The Sterling/Dollar exchange rate has fallen by 9% since 30 June 2008 to 1.82 as at 19 September 2008. Based on this exchange rate, the Sterling equivalent Adjusted Net Asset Value per share has increased to 154p.
As at 30 June 2008, MPO's total assets stood at US$185.2 million comprising US$104.6 million of development properties and cash of US$80.6 million. If development properties were included in the Balance Sheet at market value, as reported by Savills and as used for the Adjusted Net Asset Value, total assets would be US$392.5 million. Total liabilities of the Company as at 30 June 2008, including the outstanding amounts due on all One Central properties were US$96.9 million, of which US$14.5 million comprised performance fees and expense accruals.
Cash Management
As at 19 September 2008, the Company had a cash balance, after adjusting for the payment of performance fees, equivalent to US$52 million. Cash balances are held primarily in HK$ fixed deposits, with some in US$ fixed deposits and in savings and current accounts with international banks located in Guernsey, Hong Kong and Macau. The majority of the cash balances are held with a United Kingdom bank that holds a Aa2 rating from Moody's.
With most MPO assets denominated in US$s and HK$s during the year, our exposure to foreign exchange risk can be considered minimal.
Developments in financing
In June 2008, MPO signed an in-principle agreement for a US$82.5 million forward commitment loan facility with a consortium of international and Macanese banks led by HSBC. This facility will be used to meet the Company's outstanding obligations in connection with One Central. Drawdown of the loan will be on handover in 2009 and is subject to the agreement of final documentation. The facility extends until 30 September 2012 at an interest rate of 3-month HIBOR plus 1.4% per annum.
Our ability to secure this attractively priced facility in the current credit market conditions, and against a background of tightening global liquidity, has given us renewed confidence in the pursuit of our investment strategy.
Having developed strong relationships with the region's financial institutions, we are also in advanced discussions regarding construction financing for our redevelopment projects.
We operate a highly measured borrowing policy, and continue to place a significant emphasis on managing our long-term cash flows. To date, no debt has been drawn down and, even after accounting for the final payment of One Central, our most recent valuations imply a fully drawn down projected loan-to-value ratio of only 20%. We are confident our cash flow management is sufficiently strong to countervail any worsening credit or liquidity situations over the next three to four years.
Trading of shares
In common with other London-listed property stocks, MPO's share price has suffered from weak market sentiment, with its shares trading at a discount to Adjusted Net Asset Value. Earlier this year, MPO renewed the authority to repurchase and cancel its own shares. Since then, extensive consideration has been given to the subject of a share buyback. The current stance of the directors remains that so long as attractive investment opportunities with high potential returns continue to be identified, a stock buyback programme does not best utilise our remaining cash resources and that our stock price is more likely to be positively influenced through the ongoing successful implementation of our investment strategy.
Significant shareholders*
|
Name of shareholder |
Number of shares |
% |
|
Amvescap (including Invesco & Aim) |
30,828,244 |
29.36% |
|
Insight Investment |
21,595,000 |
20.57% |
|
Midas Capital Partners |
17,100,000 |
16.29% |
|
Universities Superannuation Scheme |
10,500,000 |
10.00% |
|
MPC Investors |
4,106,609 |
3.91% |
|
Other |
20,870,147 |
19.87% |
|
Total |
105,000,000 |
100% |
*As of 31 August 2008
The political landscape
The Macau government has made a commitment to fighting inflation and to providing more help for low income families. It is also moving towards both a greater degree of transparency in its land policy and the creation of a more level playing field in the land market.
Practical evidence of these policies has been seen in the abolition of stamp duty on properties bought by first-time buyers, and in a promise to build 19,000 new public housing units by the end of 2010. The government has also introduced land auctions for disposal of public land, some of which have seen record prices paid for recently released development sites.
The eradication of corruption is also high on the government's agenda. We believe that any initiatives of this kind should help further strengthen public confidence in the administration.
A strong economy
There is no doubting the current strength of the Macau economy. Indeed, driven by gaming revenues and the continuous stream of foreign investment, there is still room for further growth, with less than 25% of the committed capital of US$35 billion so far invested.
Despite its location in a comparatively high inflation region, the city boasts Asia's highest level of GDP per capita. In the past two years, median monthly incomes have grown by 23% while the local unemployment rate stands at 2.9%. Strong consumer spending and the constant demand for housing provide ample evidence of the city's prosperity.
Macau has also seen a massive influx of foreign workers, which continues unabated at about 2,000 per month. These incomers are employed at both the managerial and service levels of the hospitality and construction industries, where plentiful jobs fuel the population's growth and spending power.
An improving infrastructure
As a measure of Macau's economic prosperity, the city's infrastructure is in the midst of a huge improvement and expansion programme.
On the domestic front, a new light rail system, designed to serve the whole city, is due to open in 2011, and a Macau-Taipa undersea tunnel is planned as a new connection between the peninsula and Cotai. In response to local demand and as a way of easing congestion, more taxi licences are being granted.
At a regional level, improvements are being made at the Gongbei border gate, where Macau meets Zhuhai and mainland China. The Lotus Bridge - connecting Macau's Cotai Strip and Zhuhai - has been opened to traffic and ferry services between Macau and Hong Kong have been stepped up. Perhaps the most ambitious plan is to build a 30 kilometre bridge - the Hong Kong-Zhuhai-Macau Bridge - that will connect Macau with both Zhuhai and Hong Kong. Finance for this massive project, which will cut the journey time from Hong Kong to Macau to just 20 minutes, is already in place, with construction due to begin by 2010.
It has also been recognised that Macau International Airport's current capacity of 6 million passengers and 120,000 tonnes of cargo per year is insufficient to cope with the anticipated strong growth in air traffic, and the facilities are being expanded substantially.
The gaming industry
Since 2002 and the issue of the government's six gaming licences, Macau has become one of the world's most vibrant playgrounds.
The city's gaming revenues - which contribute significantly to the government's income through gaming tax - grew by 45.8% during the year ended 2007. In January of this year, for the first time ever, they overtook those of Nevada. The growth slowed down in the second quarter of 2008 compared with the first quarter, but it was nothing compared with the Las Vegas and Nevada experience, where revenues fell by some 5% year-on-year over the first half of 2008.
Even allowing for the government's April announcement that no new gaming licences would be issued, and that future casino developments would be halted pending further studies of their impact, Macau currently has a total of 31 casinos offering over 4,300 gaming tables. In the period between July 2007 and June 2008, four more luxury casino-hotel developments were opened, with many more to follow in the next three years. All of them were approved at the time of the government's April announcement.
In August 2007, the Venetian Macao-Resort-Hotel was launched on the Cotai Strip. With its 3,000 hotel rooms, 1 million square feet of retail space and a 1.2 million square foot exhibition and entertainment complex, this US$2.4 billion venture is aimed at the mass market. Within 12 months of its launch, it had recorded a total of nearly 25 million visitors.
Wynn Macau Phase II opened in December 2007 as an extension of the successful Phase I, offering additional gaming space and up-scale retail premises. A second hotel tower is currently under construction, which will double the hotel's capacity to over 1,000 rooms. In the same month, the MGM Grand Macau opened for business. This US$1.3 billion hotel and casino, which has been developed to serve the upper end of the market, is already proving popular.
February of this year saw the opening of Ponte 16, a theme-park-style gaming and hotel development in the northern part of Macau, facing towards China. Other major projects in hand and approved by the government include the integrated entertainment resort, City of Dreams, the 32-acre Macao Studio City and the Galaxy Mega Resort on Cotai Strip. All these, and other projects which will come to fruition during the next few years, will add to Macau's allure as one of the most exciting tourist destinations in the world.
Tourism, MICE and retailing
This does not mean, however, that the government and investors are ignoring the need to develop Macau's non-gaming attractions. On the contrary, a commitment is being made to satisfy the demands of the growing number of visitors, many of them from mainland China, which is increasing by 27% year-on-year in the first half of 2008.
Beyond gaming, and in the past year alone, Macau has enhanced its growing reputation as Asia's principal entertainment centre, with Venetian Macao's 15,000-seat arena hosting concerts by performers such as Celine Dion, The Police and The Black Eyed Peas. Another international attraction of 2008 was Zaia, Cirque du Soleil's first permanent show in Asia.
On the sporting front, Macau has hosted an exhibition match between tennis stars Roger Federer and Pete Sampras. NBA basketball games have also been staged, complementing the established Macau Grand Prix - a four-day event featuring motorcycle, touring car and Formula 3 races - the annual Macau Open Golf Tournament and the Macau International Marathon.
In parallel with the expansion of Macau's tourist attractions, the opening of the Venetian Macao's exhibition and convention facilities has given fresh impetus to the MICE industry (meetings, incentives, conferences and exhibitions). Over the past year, the number of MICE events has increased by 8.6%, with MICE now seen as one of the new drivers of Macau's growth. In bringing a new kind of visitor to the city, MICE will bolster the demand for hotel accommodation and increase the footfall in the new retail centres.
In the retail sector itself, one of the most compelling statistics of 2007 was its 33% growth over the full year. Sales were up, capital values and rents increased and the supply of new retail space continued.
A prime example is the opening of the Venetian Macao, featuring 350 new outlets, which has added 1 million square feet to the city's retail space. Directly connected to The Shoppes at Four Seasons - the new 211,000 square foot shopping centre which houses the DFS Galleria Macao and its 180 luxury brands - Venetian Macao and the rest of the city's new retail space will do much to cement Macau's burgeoning reputation as an attractive retail destination.
The property market
This remarkable combination of strong economic growth and the government's encouragement of Macau's development as an international gaming centre and tourist and retail destination, is playing well in the property market. We continue to stress, however, that highly strategic portfolio positioning is essential to maximising investment returns in this rapidly developing market.
In the residential sector, sentiment is cautiously optimistic despite the global economic downturn. Nevertheless, we remain highly selective investors in this market segment, focusing on niche areas and avoiding the mass market which we believe is in danger of over-supply. During the period between July 2007 and June 2008, the number of transactions remained comparatively stable, if slightly down on the first half of 2007. Of these, 7,114 were primary transactions and 9,963 secondary transactions. Values continued to grow during the period, with an increase of 6.2% YoY.
For the most part, the US sub-prime crisis has made only a marginal impact on Macau, despite the resulting volatility in regional stock markets during 2008. As mentioned earlier, the principal drivers of growth in the property sector can be seen as the steady rise in affluence within Macau, coupled with the limited supply of good quality residential projects such as One Central.
In the retail sector, Macau's growing importance as a tourist destination has fuelled retail sales growth of 40.4% year-on-year in the second quarter of this year. The sector's capital values and rental incomes have also increased by 3.5% and 2.2% respectively during the same period.
In the residential leasing market, rentals grew by 22.4% during the year, fuelled in part by the influx of foreign workers seeking accommodation. These migrant numbers are set to grow further over the next few years, as new hotels and casinos come on stream and employment opportunities increase.
All the evidence suggests that we have been right to adhere to our strategy of investing in and developing selected quality projects that meet the needs of both luxury and entry-level residential buyers.
While we are mindful of the city's potential over-supply of retail space in casinos and hotels, we are optimistic about the intrinsic profitability of good quality retail space located in key non-gaming parts of Macau.
Moreover, the weakening of sentiment in the global property market has resulted in some vendors becoming more open to price negotiation, which will help our acquisition strategy. With strong cash reserves, we are well-placed to act quickly when the opportunity arises.
The challenges for Macau
Despite its vibrant casino and tourism industries, which continue to drive Macau's economic growth, the city is not immune to the financial difficulties being experienced by the larger international community. There is no doubt that the global economic slowdown is making lending and financing difficult for everyone, and that Macau has not entirely escaped the effects of the credit crunch.
The Chinese government's recent tightening of their visa policy may also have an impact on Macau's tourism, with new visa restrictions reducing the number of visits from mainland China. Paradoxically, the proposed restrictions may result in people making longer stays in Macau, where the average is still only 1.5 days versus 3.5 days in Las Vegas, and in them making an increased contribution to the city's economy. In any event, none of the restrictions is likely to affect the city's high rollers who, between them, account for almost 70% of Macau's gaming revenues.
As mentioned earlier, the government is tackling corruption and the delays in land and project approval and is pressing ahead with plans for the city's infrastructure, which will combat the congestion created by the recent rapid development.
Future prospects
Looking ahead, we have good cause for continued optimism, despite the challenges being faced. Macau and the surrounding region remain amongst the fastest-growing areas in the world and are experiencing unprecedented prosperity. The government and local operators are taking all the necessary steps to encourage the development of a more diverse economy - one which will attract a broader range of visitors than the city's established gaming community. As a result, Macau's further progress looks to be assured.
We believe that our present portfolio of sound investments in carefully selected niche markets in Macau, and our recent acquisition across the border in China, provides us with a solid and strategic base from which to capture the continuing growth in the region.
Sniper Capital Limited
Manager
Consolidated Balance Sheet
As at 30 June 2008
|
|
Note |
2008 US$'000 |
|
2007 US$'000 |
|
ASSETS |
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
5 |
104,599 |
|
56,084 |
|
Trade and other receivables |
6 |
27 |
|
458 |
|
Prepayments |
|
26 |
|
54 |
|
Cash and cash equivalents |
|
80,555 |
|
144,297 |
|
|
|
185,207 |
|
200,893 |
|
Total assets |
|
185,207 |
|
200,893 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Capital and reserves attributable to the Company's equity-holders |
||||
|
Share capital |
9 |
1,050 |
|
1,050 |
|
Distributable reserves |
|
187,960 |
|
187,960 |
|
Accumulated losses |
|
(18,310) |
|
(524) |
|
Foreign exchange on consolidation |
|
(14) |
|
(247) |
|
Total equity |
|
170,686 |
|
188,239 |
|
LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
7 |
14,521 |
|
12,654 |
|
Total liabilities |
|
14,521 |
|
12,654 |
|
Total equity and liabilities |
|
185,207 |
|
200,893 |
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 23 September 2008.
The accompanying notes are an integral part of these consolidated financial statements.
Company Balance Sheet
As at 30 June 2008
|
|
Note |
2008 US$'000 |
|
2007 US$'000 |
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Investment in subsidiaries |
8 |
- |
|
- |
|
Loans to subsidiaries |
|
125,539 |
|
54,455 |
|
|
|
125,539 |
|
54,455 |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
6 |
5,928 |
|
455 |
|
Prepayments |
|
25 |
|
54 |
|
Cash and cash equivalents |
|
60,282 |
|
137,790 |
|
|
|
66,235 |
|
138,299 |
|
Total assets |
|
191,774 |
|
192,754 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Capital and reserves attributable to the Company's equity-holders |
||||
|
Share capital |
9 |
1,050 |
|
1,050 |
|
Distributable reserves |
|
187,960 |
|
187,960 |
|
Accumulated losses |
|
(18,329) |
|
(493) |
|
Total equity |
|
170,681 |
|
188,517 |
|
LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Investment in subsidiaries |
8 |
6,772 |
|
256 |
|
Trade and other payables |
7 |
14,321 |
|
3,981 |
|
Total liabilities |
|
21,093 |
|
4,237 |
|
Total equity and liabilities |
|
191,774 |
|
192,754 |
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 23 September 2008.
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Income Statement
Year ended 30 June 2008
|
|
Note |
Year ended 30 June 08 US$'000 |
|
Period from 18 May 06 to 30 June 07 US$'000 |
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
Bank and other interest |
|
3,640 |
|
8,876 |
|
(Losses)/gains on foreign currency exchange |
|
(711) |
|
18 |
|
|
|
2,929 |
|
8,894 |
|
Expenses |
|
|
|
|
|
Management fee |
15 |
5,153 |
|
4,319 |
|
Performance fee |
15 |
14,043 |
|
3,807 |
|
Non-executive Directors' fees |
|
251 |
|
338 |
|
Auditors' remuneration |
|
107 |
|
52 |
|
General and administration expenses |
11 |
1,161 |
|
902 |
|
|
|
(20,715) |
|
(9,418) |
|
Loss for the year/period |
|
(17,786) |
|
(524) |
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Equity-holders of the Company |
|
(17,786) |
|
(524) |
|
|
|
Year ended 30 June 08 US$ |
|
Period from 18 May 06 to 30 June 07 US$ |
|
Basic and diluted loss per share for loss attributable to the equity-holders of the Company during the year/period |
13 |
(0.1694) |
|
(0.0050) |
The accompanying notes are an integral part of these consolidated financial statements.
Company Income Statement
Year ended 30 June 2008
|
|
Note |
Year ended 30 June 08 US$'000 |
|
Period from 18 May 06 to 30 June 07 US$'000 |
|
Revenue |
|
|
|
|
|
Bank and other interest |
|
9,453 |
|
8,815 |
|
(Losses)/gains on foreign currency exchange |
|
(378) |
|
16 |
|
|
|
9,075 |
|
8,831 |
|
|
|
|
|
|
|
Fair value adjustment of subsidiaries |
|
(6,517) |
|
(256) |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Management fee |
15 |
5,153 |
|
4,319 |
|
Performance fee |
15 |
14,043 |
|
3,807 |
|
Non-executive Directors' fees |
|
251 |
|
258 |
|
Auditors' remuneration |
|
97 |
|
52 |
|
General and administration expenses |
11 |
850 |
|
632 |
|
|
|
(20,394) |
|
(9,068) |
|
Loss for the year/period |
|
(17,836) |
|
(493) |
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Equity-holders of the Company |
|
(17,836) |
|
(493) |
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity
Year ended 30 June 2008
|
2008 Movements during the year |
|
Share capital US$'000 |
Share premium US$'000 |
Accumulated losses US$'000 |
Distributable reserves US$'000 |
Foreign exchange on consolidation US$'000 |
Total US$'000 |
|
Balance brought forward at 1 July 2007 |
|
1,050 |
- |
(524) |
187,960 |
(247) |
188,239 |
|
Foreign exchange on consolidation |
|
- |
- |
- |
- |
233 |
233 |
|
Loss for the year |
|
- |
- |
(17,786) |
- |
- |
(17,786) |
|
Balance carried forward at 30 June 2008 |
|
1,050 |
- |
(18,310) |
187,960 |
(14) |
170,686 |
|
|
|
|
|
|
|
|
|
|
2007 Movements during the period |
Note |
Share capital US$'000 |
Share premium US$'000 |
Accumulated losses US$'000 |
Distributable reserves US$'000 |
Foreign exchange on consolidation US$'000 |
Total US$'000 |
|
|
|
|
|
|
|
|
|
|
Issue of shares |
|
1,050 |
195,410 |
- |
- |
- |
196,460 |
|
Cancellation of share premium |
10 |
- |
(195,410) |
- |
195,410 |
- |
- |
|
Placing fees and formation costs |
|
- |
- |
- |
(7,450) |
- |
(7,450) |
|
Foreign exchange on consolidation |
|
- |
- |
- |
- |
(247) |
(247) |
|
Loss for the period |
|
- |
- |
(524) |
- |
- |
(524) |
|
Balance carried forward at 30 June 2007 |
|
1,050 |
- |
(524) |
187,960 |
(247) |
188,239 |
The accompanying notes are an integral part of these consolidated financial statements.
Company Statement of Changes in Equity
Year ended 30 June 2008
|
2008 Movements during the year |
|
Share capital US$'000 |
Share premium US$'000 |
Accumulated losses US$'000 |
Distributable reserves US$'000 |
Total US$'000 |
|
Balance brought forward at 1 July 2007 |
|
1,050 |
- |
(493) |
187,960 |
188,517 |
|
Loss for the year |
|
- |
- |
(17,836) |
- |
(17,836) |
|
Balance carried forward at 30 June 2008 |
|
1,050 |
- |
(18,329) |
187,960 |
170,681 |
|
2007 Movements during the period |
Note |
Share capital US$'000 |
Share premium US$'000 |
Accumulated losses US$'000 |
Distributable reserves US$'000 |
Total US$'000 |
|
Issue of shares |
|
1,050 |
195,410 |
- |
- |
196,460 |
|
Cancellation of share premium |
10 |
- |
(195,410) |
- |
195,410 |
- |
|
Placing fees and formation costs |
|
- |
- |
- |
(7,450) |
(7,450) |
|
Loss for the period |
|
- |
- |
(493) |
- |
(493) |
|
Balance carried forward at 30 June 2007 |
|
1,050 |
- |
(493) |
187,960 |
188,517 |
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Cash Flow Statement
Year ended 30 June 2008
|
|
Note |
Year ended 30 June 08 US$'000 |
|
Period from 18 May 06 to 30 June 07 US$'000 |
|
|
|
|
|
|
|
Net cash used in operating activities |
12 |
(6,844) |
|
3,002 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Expenditure on inventories |
|
(57,131) |
|
(47,468) |
|
Net cash used in investing activities |
|
(57,131) |
|
(47,468) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds on issue of shares |
|
- |
|
196,460 |
|
Placing fees and formation costs |
|
- |
|
(7,450) |
|
Net cash generated from financing activities |
|
- |
|
189,010 |
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(63,975) |
|
144,544 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year/period |
|
144,297 |
|
- |
|
Effect of foreign exchange rate changes |
|
233 |
|
(247) |
|
Cash and cash equivalents at end of year/period |
|
80,555 |
|
144,297 |
The accompanying notes are an integral part of these consolidated financial statements.
Company Cash Flow Statement
Year ended 30 June 2008
|
|
Note |
Year ended 30 June 08 US$'000 |
|
Period from 18 May 06 to 30 June 07 US$'000 |
|
|
|
|
|
|
|
Net cash used in operating activities |
12 |
(12,941) |
|
2,979 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Loans to subsidiaries |
|
(71,084) |
|
(54,455) |
|
Fair value adjustment for investment in subsidiaries |
|
6,517 |
|
256 |
|
Net cash used in investing activities |
|
(64,567) |
|
(54,199) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds on issue of shares |
|
- |
|
196,460 |
|
Placing fees and formation costs |
|
- |
|
(7,450) |
|
Net cash generated from financing activities |
|
- |
|
189,010 |
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(77,508) |
|
137,790 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year/period |
|
137,790 |
|
- |
|
Cash and cash equivalents at end of year/period |
|
60,282 |
|
137,790 |
The accompanying notes are an integral part of these consolidated financial statements.
Notes to the Consolidated Financial Statements
Year ended 30 June 2008
General information
Macau Property Opportunities Fund Limited is a company incorporated and registered in Guernsey under The Guernsey Company Law. The address of the registered office is given on the inside back cover.
The consolidated financial statements for the year ended 30 June 2008 comprise the financial statements of Macau Property Opportunities Fund Limited 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 23 September 2008.
1 Significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
Basis of accounting
The financial statements have been prepared on a historical cost basis and in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board, interpretations issued by the International Financial Reporting Interpretations Committee and applicable legal and regulatory requirements of Guernsey Law.
In the current year, the Company and the Group has adopted IFRS 7 Financial Instruments: Disclosures which is effective for annual financial reporting periods beginning on or after 1 January 2007, and the related amendment to IAS1 Presentation of Financial Statements. The impact of the adoption of IFRS 7 and the changes to IAS1 has been to expand the disclosures provided in these financial statements regarding the Group's financial instruments and management of capital.
Five interpretations issued by the International Financial Reporting Interpretation Committee are effective for the current period. These are:
IFRIC 7 Applying the Restatement Approach under IAS 29;
Financial Reporting in Hyper inflationary Economies; IFRIC 8 Scope of IFRS 2;
IFRIC 11 - IFRS 2 - Group and Treasury Share Transaction;
IFRIC 9 Reassessment of Embedded Derivatives; and
IFRIC 10 Interim Financial Reporting and Impairment.
The adoption of these Interpretations has not led to any changes in the Company's or the Group's accounting policies. At the date of authorization of these financial statements, the following standards and interpretations, which have not been applied, were in issue but not yet effective:-
IFRS 8: Operating Segments - for accounting periods commencing on or after 1 January 2009
IAS 1 Revised: Presentation of Financial Statements - for accounting periods commencing on or after 1 January 2009
IAS 23 Revised: Borrowing Costs - for accounting periods commencing on or after 1 January 2009; and
IFRIC 12 - Service Concession Agreements - for accounting periods commencing on or after 1 January 2008.
The Directors anticipate that the adoption of these standards and interpretations in future periods will not have material impact on the financial statements of the Company or the Group.
IFRS requires management to make judgements, estimates and assumptions that affect the application of the reported amounts in these financial statements. Complex areas involving a higher degree of judgement or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.
Consolidation
The consolidated financial statements incorporate the financial statements of the Company and 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.
Segmental reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those segments operating in other economic environments.
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.
Foreign currency translation
-
Functional and presentation currency
Items included in the financial statements of each of the Group entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in US Dollars, which is the Company's functional and presentational currency. -
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. -
Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
i) Assets and liabilities for each balance sheet are presented at the closing rate at the date of that balance sheet;
ii) Income and expenses for each income statement are translated at average exchange rates; and
iii) All resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to shareholders' equity.
Inventories
Properties and land that are being held or developed for future sale are classified as inventories. They are individually carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less costs to complete redevelopment and selling expenses. Cost is the acquisition cost together with subsequent capital expenditure incurred, including capitalised interest where relevant.
Investment in subsidiaries
Investments in subsidiaries are designated at fair value through profit or loss. Gains and losses arising from changes in fair value are included in the income statement.
The comparative figures have been reclassified to show investment in subsidiaries as a current liability, having previously been shown as a negative non-current asset.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the income statement.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value, with an original maturity of three months or less. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.
Provisions
Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
Share capital
Shares are classified as equity when there is no obligation to transfer cash or other assets. Shares issued by the Company are recorded based upon the proceeds received, net of incremental costs directly attributable to the issue of new shares.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and includes income from property trading.
Financial asset interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
Expenses
Property and contract expenditure, including bid costs, incurred prior to the exchange of a contract is expensed as incurred, with the exception of expenditure on long-term development contracts.
Taxation
The Company is exempt from taxation in Guernsey under the provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinances, 1989 and is charged an annual exemption fee of £600.
In response to the review carried out by the European Union Code of Conduct Group, the States of Guernsey has abolished exempt status for the majority of companies with effect from January 2008, and has introduced a zero rate of tax for companies carrying on all but a few specified types of regulated business. The Company, is not classified as one of the regimes deemed as harmful and will continue to be able to apply for exempt status for Guernsey tax purposes after 31 December 2007.
The Company's subsidiaries are subject to corporate income tax on any taxable income, calculated in accordance with applicable legislation in the jurisdictions in which each entity operates.
2 Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and cash flow interest risk), credit risk and liquidity risk.
The Board of Directors provide written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk and liquidity risk.
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|
|
The accounting polices for financial instruments have been applied to the line items below: |
|||
|
|
|
|
|
|
Group |
|
|
|
|
|
Loans and |
|
|
|
|
receivables |
|
Total |
|
30 June 2008 |
US$'000 |
|
US$'000 |
|
Assets as per balance sheet |
|
|
|
|
Trade and other receivables |
27 |
|
27 |
|
Prepayments |
26 |
|
26 |
|
Cash and cash equivalents |
80,555 |
|
80,555 |
|
Total |
80,608 |
|
80,608 |
|
|
|
|
|
|
|
Other financial |
|
|
|
|
liabilities |
|
Total |
|
|
US$'000 |
|
US$'000 |
|
Liabilities as per balance sheet |
|
|
|
|
Trade and other payables |
14,521 |
|
14,521 |
|
Total |
14,521 |
|
14,521 |
|
|
|
|
|
|
|
Loans and |
|
|
|
|
receivables |
|
Total |
|
30 June 2007 |
US$'000 |
|
US$'000 |
|
Assets as per balance sheet |
|
|
|
|
Trade and other receivables |
458 |
|
458 |
|
Prepayments |
54 |
|
54 |
|
Cash and cash equivalents |
144,297 |
|
144,297 |
|
Total |
144,809 |
|
144,809 |
|
|
|
|
|
|
|
Other financial |
|
|
|
|
liabilities |
|
Total |
|
|
US$'000 |
|
US$'000 |
|
Liabilities as per balance sheet |
|
|
|
|
Trade and other payables |
12,654 |
|
12,654 |
|
Total |
12,654 |
|
12,654 |
|
Company |
Loans and |
|
|
|
|
receivables |
|
Total |
|
30 June 2008 |
US$'000 |
|
US$'000 |
|
Assets as per balance sheet |
|
|
|
|
Trade and other receivables |
5,928 |
|
5,928 |
|
Prepayments |
25 |
|
25 |
|
Cash and cash equivalents |
60,282 |
|
60,282 |
|
Loans to subsidiaries |
125,539 |
|
125,539 |
|
Total |
191,774 |
|
191,774 |
|
|
|
|
|
|
|
Other financial |
|
|
|
|
liabilities |
|
Total |
|
|
US$'000 |
|
US$'000 |
|
Liabilities as per balance sheet |
|
|
|
|
Trade and other payables |
14,321 |
|
14,321 |
|
Total |
14,321 |
|
14,321 |
|
|
|
|
|
|
|
Loans and |
|
|
|
|
receivables |
|
Total |
|
30 June 2007 |
US$'000 |
|
US$'000 |
|
Assets as per balance sheet |
|
|
|
|
Trade and other receivables |
455 |
|
455 |
|
Prepayments |
54 |
|
54 |
|
Cash and cash equivalents |
137,790 |
|
137,790 |
|
Loans to subsidiaries |
54,455 |
|
54,455 |
|
Total |
192,754 |
|
192,754 |
|
|
|
|
|
|
|
Other financial |
|
|
|
|
liabilities |
|
Total |
|
|
US$'000 |
|
US$'000 |
|
Liabilities as per balance sheet |
|
|
|
|
Trade and other payables |
3,981 |
|
3,981 |
|
Total |
3,981 |
|
3,981 |
Market risk
Market risk is the risk that value of instruments will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment or all factors affecting all instruments traded in the market including foreign exchange risk, price risk and cash flow interest rate risk as detailed below.
The Group's market risk is managed by the Manager in accordance with policies and procedures in place. The Group's overall market positions are monitored on a quarterly basis by the Board of Directors.
a) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised monetary assets and liabilities and net investments in foreign operations.
The Group's policy is not to enter into any currency hedging transactions.
The table below summarises the Group's exposure to foreign currency risk as at 30 June 2008 and 30 June 2007. The Group's assets and liabilities are included in the table, categorised by their currency at their carrying amount in US$.
Group
|
As at 30 June 2008 |
|
US$'000 |
£'000 |
HK$'000 |
MOP'000 |
|
Total |
|
Trade and other receivables |
|
22 |
- |
5 |
- |
|
27 |
|
Prepayments |
|
- |
25 |
1 |
- |
|
26 |
|
Cash and cash equivalents |
|
2,445 |
147 |
77,962 |
1 |
|
80,555 |
|
Total financial assets |
|
2,467 |
172 |
77,968 |
1 |
|
80,608 |
|
Trade and other payables |
|
14,136 |
166 |
219 |
- |
|
14,521 |
|
Total financial liabilities |
|
14,136 |
166 |
219 |
- |
|
14,521 |
|
On balance sheet financial position |
|
(11,669) |
6 |
77,749 |
1 |
|
66,087 |
|
|
|
|
|
|
|
|
|
|
As at 30 June 2007 |
|
US$'000 |
£'000 |
HK$'000 |
MOP'000 |
|
Total |
|
Trade and other receivables |
|
458 |
- |
- |
- |
|
458 |
|
Prepayments |
|
- |
54 |
- |
- |
|
54 |
|
Cash and cash equivalents |
|
123,570 |
192 |
20,535 |
- |
|
144,297 |
|
Total financial assets |
|
124,028 |
246 |
20,535 |
- |
|
144,809 |
|
Trade and other payables |
|
3,841 |
197 |
8,616 |
- |
|
12,654 |
|
Total financial liabilities |
|
3,841 |
197 |
8,616 |
- |
|
12,654 |
|
On balance sheet financial position |
|
120,187 |
49 |
11,919 |
- |
|
132,155 |
The table above presents financial assets and liabilities denominated in foreign currencies held by the Group as at 30 June 2008 and 30 June 2007 and can be used to monitor foreign currency risk as at that date.
If the US Dollar weakened/strengthened by 10% against the HK Dollar with all other variables held constant, the post-tax loss for the period would have been US$7,774,900 (2007: US$1,191,900) higher/lower.
The Macanese Pataca is fixed to the HK Dollar at a rate of MOP:HK$ of 1.03, due to the low level of assets held in this currency 10% change in value would not have a significant affect on the financial statements.
If the US Dollar weakened/strengthened by 10% against Sterling with all other variables held constant, the post-tax loss for the year would have been US$600 (2007: US$5,000) higher/lower.
b) Price risk
The Group is exposed to property price risk. The Group is not exposed to the market risk with regards to financial instruments as it does not hold equity instruments.
c) Cash flow interest rate risk
The success of any investment is affected by general economic conditions which may affect the level and volatility of interest rates and the extent and timing of investor participation in the asset markets. Unexpected volatility or illiquidity in the markets in which the Group holds positions can impair the Group's ability to conduct its business or cause it to incur losses.
The Group's interest rate risk is managed by the Manager in accordance with policies and procedures in place. The Group's overall positions and exposures are monitored on a quarterly basis by the Board of Directors.
Group
The Group has an in principle agreement for a club loan facility of HK$642.82m (US$82.5m). This facility will be used to finance the remaining consideration of The One Central Residences apartments held in Tower 6 and the 25 individual apartments upon handover of the project in 2009.
The following table details the Company's exposure to interest rate risks:
|
|
As at 30 June 2008 |
|
Interest bearing |
|
Non-interest bearing |
|
Total |
|
|
|
|
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
|
|
Inventories |
|
- |
|
104,599 |
|
104,599 |
|
|
|
Trade and other receivables |
|
- |
|
27 |
|
27 |
|
|
|
Prepayments |
|
- |
|
26 |
|
26 |
|
|
|
Cash and cash equivalents |
|
80,555 |
|
- |
|
80,555 |
|
|
|
Total assets |
|
80,555 |
|
104,652 |
|
185,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
- |
|
14,521 |
|
14,521 |
|
|
|
Total liabilities |
|
- |
|
14,521 |
|
14,521 |
|
|
|
As at 30 June 2007 |
|
Interest bearing |
|
Non-interest bearing |
|
Total |
|
|
|
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
|
Inventories |
|
- |
|
56,084 |
|
56,084 |
|
|
Trade and other receivables |
|
- |
|
458 |
|
458 |
|
|
Prepayments |
|
- |
|
54 |
|
54 |
|
|
Cash and cash equivalents |
|
144,297 |
|
- |
|
144,297 |
|
|
Total assets |
|
144,297 |
|
56,596 |
|
200,893 |
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
- |
|
12,654 |
|
12,654 |
|
|
Total liabilities |
|
- |
|
12,654 |
|
12,654 |
An increase of 100 basis points in interest rates as at the reporting date would have increased the net assets attributable to the Company's equity-holders and changes in net assets attributable to the Company's equity-holders by US$805,550 (2007: US$1,442,970). A decrease of 100 basis points would have had an equal but opposite effect.
Company
The Company has an exposure to interest rate risks as the loans to its subsidiaries are determined in accordance with agreements which have a variable interest based on the 6 months US Dollar LIBOR plus 1.5%. The loans are held as due on demand.
The following table details the Company's exposure to interest rate risks:
|
|
As at 30 June 2008 |
|
Interest bearing |
|
Non-interest bearing |
|
Total |
|
|
|
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
|
Investment in subsidiaries |
|
- |
|
- |
|
- |
|
|
Loans to subsidiaries |
|
125,539 |
|
- |
|
125,539 |
|
|
Trade and other receivables |
|
- |
|
5,928 |
|
5,928 |
|
|
Prepayments |
|
- |
|
25 |
|
25 |
|
|
Cash and cash equivalents |
|
60,282 |
|
- |
|
60,282 |
|
|
Total assets |
|
185,821 |
|
5,953 |
|
191,774 |
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
|
- |
|
(6,772) |
|
(6,772) |
|
|
Trade and other payables |
|
- |
|
(14,321) |
|
(14,321) |
|
|
Total liabilities |
|
- |
|
(21,093) |
|
(21,093) |
|
|
As at 30 June 2007 |
|
Interest bearing |
|
Non-interest bearing |
|
Total |
|
|
|
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
|
Investment in subsidiaries |
|
- |
|
- |
|
- |
|
|
Loans to subsidiaries |
|
- |
|
54,455 |
|
54,455 |
|
|
Trade and other receivables |
|
- |
|
455 |
|
455 |
|
|
Prepayments |
|
- |
|
54 |
|
54 |
|
|
Cash and cash equivalents |
|
137,790 |
|
- |
|
137,790 |
|
|
Total assets |
|
137,790 |
|
54,964 |
|
192,754 |
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
|
- |
|
(256) |
|
(256) |
|
|
Trade and other payables |
|
- |
|
(3,981) |
|
(3,981) |
|
|
Total liabilities |
|
- |
|
(4,237) |
|
(4,237) |
An increase of 100 basis points in interest rates as at the reporting date would have increased the net assets attributable to the Company's equity-holders and changes in net assets attributable to the Company's equity-holders by US$1,858,210 (2007: US$1,377,900). A decrease of 100 basis points would have had an equal but opposite effect.
The investment in subsidiaries of US$(6,772,000) (2007: US$(256,000)) consists of cash placed in interest bearing bank accounts and interest bearing loans from group companies. Any movement in interest rates will have an immaterial effect.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group.
The Group is not exposed to significant credit risk, as the income of the Group is derived from bank deposits only through the use of high credit quality financial institutions.
The Group has deposits with the below banks:
|
Bank |
Credit Rating* |
|
HSBC |
AA |
|
The Royal Bank of Scotland plc |
AA |
|
CITIC Ka Wah Bank Limited |
BBB |
|
The Royal Bank of Scotland International** |
AA |
|
|
|
|
*From Standard & Poor's |
|
|
**A subsidiary of The Royal Bank of Scotland plc |
|
Interest receivable per Note 6 is split in to two categories, bank interest and interest due on inter-company loans. The bank interest related to accrued interest on fixed deposits held at the year end which have now matured. The inter-company loan interest is repayable on demand with the loan, no loans have been called for repayment.
Liquidity risk
The Group adopts a prudent approach to liquidity management and maintains sufficient cash reserves and borrowings to meet its obligations. The Group maintains sufficient cash and obtains funding through credit facilities, to meet its current property development liabilities. The Group has an in principle agreement for a club loan facility of HK$642.82m (US$82.5m). This facility will be used to finance the remaining consideration of The One Central Residences apartments held in Tower 6 and the 25 individual apartments upon handover of the project in 2009. The amounts outstanding on these properties that are due between 1 and 2 years is US$82.4m (2007: US$60.4m).
The Group's liquidity position is monitored by the Manager and is reviewed quarterly by the Board of Directors.
The table below analyses the Group's financial assets and liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
Group
|
|
2008 |
|
2007 |
|
Financial assets - current |
|
|
|
|
Trade and other receivables - maturity less than 1 year |
53 |
|
512 |
|
Cash and cash equivalents - maturity less than 1 year |
80,555 |
|
144,297 |
|
|
80,608 |
|
144,809 |
|
|
|
|
|
|
Financial liabilities - current |
|
|
|
|
Trade and other payables - maturity less than 1 year |
14,521 |
|
12,654 |
Company
|
|
2008 |
|
2007 |
|
Financial assets - non-current |
|
|
|
|
Loans to subsidiaries |
125,539 |
|
54,455 |
|
|
|
|
|
|
Financial assets - current |
|
|
|
|
Trade and other receivables - maturity less than 1 year |
5,953 |
|
509 |
|
Cash and cash equivalents - maturity less than 1 year |
60,282 |
|
137,790 |
|
|
66,235 |
|
138,299 |
|
Financial liabilities - current |
|
|
|
|
Trade and other payables - maturity less than 1 year |
14,321 |
|
3,981 |
Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
During the year ended 30 June 2008 there were no borrowings other than trade and other payables and there was sufficient cash and cash equivalents to pay these as they fell due.
The Group has an in principle agreement for a club loan facility of HK$642.82m (US$82.5m) to finance the remaining consideration of The One Central Residences apartments as detailed in Note 5.
3 Critical accounting estimates and assumptions
Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.
a) Net realisable value and net asset value are based on the current market valuation provided by Savills (Macau) Limited, an independent valuer. Savills are required to make assumptions on establishing the current market valuation.
b) The performance fees, management fees and administration fees are based on adjusted net asset value.
4 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 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 |
|
MPOF (Penha) Limited |
100% |
Guernsey |
|
Smooth Run Group Limited |
100% |
BVI |
|
MPOF (Taipa) Limited |
100% |
Guernsey |
|
Swift Link Limited |
100% |
BVI |
|
MPOF (Jose) Limited |
100% |
Guernsey |
|
Talent Empire International Limited |
100% |
BVI |
|
MPOF (Sun) Limited |
100% |
Guernsey |
|
Tycoon Villa International Limited |
100% |
BVI |
|
MPOF (Senado) Limited |
100% |
Guernsey |
|
Worthy Way Limited |
100% |
BVI |
|
MPOF (Domingos) Limited |
100% |
Guernsey |
|
Yield Return Limited |
100% |
BVI |
|
MPOF (Monte) Limited |
100% |
Guernsey |
|
Capital Full Limited |
100% |
Hong Kong |
|
MPOF (Paulo) Limited |
100% |
Guernsey |
|
China City Properties Limited |
100% |
Hong Kong |
|
MPOF (Guia) Limited |
100% |
Guernsey |
|
China Crown Properties Limited |
100% |
Hong Kong |
|
MPOF (Antonio) Limited |
100% |
Guernsey |
|
East Base Properties Limited |
100% |
Hong Kong |
|
MPOF (6A) Limited |
100% |
Guernsey |
|
Eastway Properties Limited |
100% |
Hong Kong |
|
MPOF (6B) Limited |
100% |
Guernsey |
|
Elite Gain Limited |
100% |
Hong Kong |
|
MPOF (7A) Limited |
100% |
Guernsey |
|
Excelsior Properties Limited |
100% |
Hong Kong |
|
MPOF (7B) Limited |
100% |
Guernsey |
|
Glory Properties Limited |
100% |
Hong Kong |
|
MPOF (8A) Limited |
100% |
Guernsey |
|
Gold Century Properties Limited |
100% |
Hong Kong |
|
MPOF (8B) Limited |
100% |
Guernsey |
|
Golden City Properties Limited |
100% |
Hong Kong |
|
MPOF (9A) Limited |
100% |
Guernsey |
|
Golden Properties Limited |
100% |
Hong Kong |
|
MPOF (9B) Limited |
100% |
Guernsey |
|
Goldex Properties Limited |
100% |
Hong Kong |
|
MPOF (10A) Limited |
100% |
Guernsey |
|
Honway Properties Limited |
100% |
Hong Kong |
|
MPOF (10B) Limited |
100% |
Guernsey |
|
Maxland Properties Limited |
100% |
Hong Kong |
|
MPOF Mainland Company 1 Limited |
100% |
Barbados |
|
New Perfect Properties Limited |
100% |
Hong Kong |
|
Bream Limited |
100% |
Guernsey |
|
Newton Properties Limited |
100% |
Hong Kong |
|
Cannonball Limited |
100% |
Guernsey |
|
Orient Land Properties Limited |
100% |
Hong Kong |
|
Civet Limited |
100% |
Guernsey |
|
Pacific Asia Properties Limited |
100% |
Hong Kong |
|
Aim Top Enterprises Limited |
100% |
BVI |
|
Pacific Link Properties Limited |
100% |
Hong Kong |
|
Championway International Limited |
100% |
BVI |
|
Pacific Success Properties Limited |
100% |
Hong Kong |
|
Extra Able International Limited |
100% |
BVI |
|
Platinum Properties Limited |
100% |
Hong Kong |
|
Fondue International Limited |
100% |
BVI |
|
Queensland Properties Limited |
100% |
Hong Kong |
|
Gainsun Investments Limited |
100% |
BVI |
|
Sky Century Properties Limited |
100% |
Hong Kong |
|
Go Gain International Limited |
100% |
BVI |
|
Top Century Properties Limited |
100% |
Hong Kong |
|
Gorey Hills International Limited |
100% |
BVI |
|
Top Faith Properties Limited |
100% |
Hong Kong |
|
Hillsleigh Holdings Limited |
100% |
BVI |
|
Union Century Properties Limited |
100% |
Hong Kong |
|
Honeypot International Limited |
100% |
BVI |
|
Victory Star Properties Limited |
100% |
Hong Kong |
|
Jin Mei International Limited |
100% |
BVI |
|
Weltex Properties Limited |
100% |
Hong Kong |
|
Lucan Investments Limited |
100% |
BVI |
|
Windex Properties Limited |
100% |
Hong Kong |
|
Lucky Go International Limited |
100% |
BVI |
|
World Pacific Properties Limited |
100% |
Hong Kong |
|
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 |
|
MPOF (Penha) Limited |
100% |
Guernsey |
|
Smooth Run Group Limited |
100% |
BVI |
|
MPOF (Taipa) Limited |
100% |
Guernsey |
|
Swift Link Limited |
100% |
BVI |
|
MPOF (Jose) Limited |
100% |
Guernsey |
|
Talent Empire International Limited |
100% |
BVI |
|
MPOF (Sun) Limited |
100% |
Guernsey |
|
Tycoon Villa International Limited |
100% |
BVI |
|
MPOF (Senado) Limited |
100% |
Guernsey |
|
Worthy Way Limited |
100% |
BVI |
|
MPOF (Domingos) Limited |
100% |
Guernsey |
|
Yield Return Limited |
100% |
BVI |
|
MPOF (Monte) Limited |
100% |
Guernsey |
|
Capital Full Limited |
100% |
Hong Kong |
|
MPOF (Paulo) Limited |
100% |
Guernsey |
|
China City Properties Limited |
100% |
Hong Kong |
|
MPOF (Guia) Limited |
100% |
Guernsey |
|
China Crown Properties Limited |
100% |
Hong Kong |
|
MPOF (Antonio) Limited |
100% |
Guernsey |
|
East Base Properties Limited |
100% |
Hong Kong |
|
MPOF (6A) Limited |
100% |
Guernsey |
|
Eastway Properties Limited |
100% |
Hong Kong |
|
MPOF (6B) Limited |
100% |
Guernsey |
|
Elite Gain Limited |
100% |
Hong Kong |
|
MPOF (7A) Limited |
100% |
Guernsey |
|
Excelsior Properties Limited |
100% |
Hong Kong |
|
MPOF (7B) Limited |
100% |
Guernsey |
|
Glory Properties Limited |
100% |
Hong Kong |
|
MPOF (8A) Limited |
100% |
Guernsey |
|
Gold Century Properties Limited |
100% |
Hong Kong |
|
MPOF (8B) Limited |
100% |
Guernsey |
|
Golden City Properties Limited |
100% |
Hong Kong |
|
MPOF (9A) Limited |
100% |
Guernsey |
|
Golden Properties Limited |
100% |
Hong Kong |
|
MPOF (9B) Limited |
100% |
Guernsey |
|
Goldex Properties Limited |
100% |
Hong Kong |
|
MPOF (10A) Limited |
100% |
Guernsey |
|
Honway Properties Limited |
100% |
Hong Kong |
|
MPOF (10B) Limited |
100% |
Guernsey |
|
Maxland Properties Limited |
100% |
Hong Kong |
|
MPOF Mainland Company 1 Limited |
100% |
Barbados |
|
New Perfect Properties Limited |
100% |
Hong Kong |
|
Bream Limited |
100% |
Guernsey |
|
Newton Properties Limited |
100% |
Hong Kong |
|
Cannonball Limited |
100% |
Guernsey |
|
Orient Land Properties Limited |
100% |
Hong Kong |
|
Civet Limited |
100% |
Guernsey |
|
Pacific Asia Properties Limited |
100% |
Hong Kong |
|
Aim Top Enterprises Limited |
100% |
BVI |
|
Pacific Link Properties Limited |
100% |
Hong Kong |
|
Championway International Limited |
100% |
BVI |
|
Pacific Success Properties Limited |
100% |
Hong Kong |
|
Extra Able International Limited |
100% |
BVI |
|
Platinum Properties Limited |
100% |
Hong Kong |
|
Fondue International Limited |
100% |
BVI |
|
Queensland Properties Limited |
100% |
Hong Kong |
|
Gainsun Investments Limited |
100% |
BVI |
|
Sky Century Properties Limited |
100% |
Hong Kong |
|
Go Gain International Limited |
100% |
BVI |
|
Top Century Properties Limited |
100% |
Hong Kong |
|
Gorey Hills International Limited |
100% |
BVI |
|
Top Faith Properties Limited |
100% |
Hong Kong |
|
Hillsleigh Holdings Limited |
100% |
BVI |
|
Union Century Properties Limited |
100% |
Hong Kong |
|
Honeypot International Limited |
100% |
BVI |
|
Victory Star Properties Limited |
100% |
Hong Kong |
|
Jin Mei International Limited |
100% |
BVI |
|
Weltex Properties Limited |
100% |
Hong Kong |
|
Lucan Investments Limited |
100% |
BVI |
|
Windex Properties Limited |
100% |
Hong Kong |
|
Lucky Go International Limited |
100% |
BVI |
|
World Pacific Properties Limited |
100% |
Hong Kong |
5 Inventories
|
|
Year ended 30 June 08 US$'000 |
|
Period from 18 May 06 to 30 June 07 US$'000 |
|
Cost of properties at the beginning of the year/period |
56,084 |
|
- |
|
Cost of properties purchased during the year/period |
48,515 |
|
56,084 |
|
Cost of properties at the end of the year/period |
104,599 |
|
56,084 |
Macau Property Opportunities Fund Limited is guarantor for its subsidiary company MPOF Macau (Site 5) Limited in respect of outstanding amounts due on Tower 6 of One Central Residences. The total of the guarantee is HK$471,370,716 (US$60,403,328) (2007: HK$572,379,000 (US$73,233,000)) and is due on completion of the property development
During the year subsidiaries of Macau Property Opportunities Fund Limited purchased additional units in One Central Residence and there are further payments of HK$171,450,641 (US$21,970,370) due by the subsidiaries on completion of the units.
The Group has an in principle agreement for a club loan facility of HK$642.82m (US$82.5m) to meet the further payments due on the One Central Residence properties.
6 Trade and other receivables
|
|
2008 |
2008 |
|
2007 |
2007 |
|
|
Company |
Group |
|
Company |
Group |
|
|
|
|
|
|
|
|
Interest receivable |
27 |
27 |
|
455 |
458 |
|
Inter-company loan interest |
5,901 |
- |
|
- |
- |
|
|
5,928 |
27 |
|
455 |
458 |
7 Trade and other payables
|
|
2008 |
2008 |
|
2007 |
2007 |
|
|
Company |
Group |
|
Company |
Group |
|
Payments due for acquired property |
- |
- |
|
- |
8,616 |
|
Payable to the Manager |
14,043 |
14,043 |
|
3,801 |
3,801 |
|
Trade and other payables |
278 |
478 |
|
180 |
237 |
|
|
14,321 |
14,521 |
|
3,981 |
12,654 |
Other payables principally comprise amounts outstanding for ongoing costs. The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
8. Investment in subsidiaries
|
|
|
2008 US$'000 |
|
2007 US$'000 |
|
Opening balance |
|
- |
|
- |
|
Cost of subsidiaries |
|
- |
|
- |
|
Fair value adjustment for elimination of subsidiary equity |
|
- |
|
- |
|
Closing balance after elimination of subsidiary equity |
|
- |
|
- |
|
Fair value adjustment of subsidiaries |
|
(6,772) |
|
(256) |
|
Investment in subsidiaries |
|
(6,772) |
|
(256) |
The cost of subsidiaries as at 30 June 2008 was US$91 (2007: US$79). The fair value adjustment for elimination of subsidiary equity is equal and opposite to the cost of the subsidiaries, the purpose of this adjustment is to show the investment as US$ nil as shown in non-current assets on the Company balance sheet.
The fair value adjustment of subsidiaries is an adjustment to show the true negative value of the investment in subsidiaries as shown in current liabilities on the Company balance sheet.
The investment in subsidiaries is accounted for as stated in Note 2. The fair value is based on the net asset value of the HK, BVI, Macanese and Guernsey SPVs as at 30 June 2008.
9. Share capital
|
|
2008 US$'000 |
2008 |
|
2007 US$'000 |
2007 |
|
|
Company |
Group |
|
Company |
Group |
|
Authorised: |
|
|
|
|
|
|
300 million Ordinary Shares of US$0.01 each |
3,000 |
3,000 |
|
3,000 |
3,000 |
|
Issued and fully paid: |
|
|
|
|
|
|
105 million Ordinary Shares of US$0.01 each |
1,050 |
1,050 |
|
1,050 |
1,050 |
The Company has one class of Ordinary Shares which carry no right to fixed income.
10. Share premium
In accordance with the Listing prospectus and under Guernsey Statute, on 7 June 2006 an application was made to the Royal Court of Guernsey to have the share premium cancelled and re-designated as a distributable reserve. As such the share premium account was reduced by US$195.41 million and a distributable reserve created for this amount.
11. General and administration expenses
|
|
Year ended 30 June 08 US$'000 Company |
Year ended 30 June 08 US$'000 Group |
|
Period from 18 May 06 to 30 June 07 US$'000 Company |
Period from 18 May 06 to 30 June 07 US$'000 Group |
|
|
|
|
|
|
|
|
Legal and Professional |
165 |
338 |
|
225 |
237 |
|
Holding Company administration |
229 |
229 |
|
208 |
208 |
|
Guernsey SPV administration |
114 |
114 |
|
- |
99 |
|
BVI, HK, & Macau SPV administration |
- |
87 |
|
- |
42 |
|
Insurance costs |
42 |
42 |
|
40 |
40 |
|
Other operating expenses |
300 |
351 |
|
159 |
276 |
|
General and administration expenses |
850 |
1,161 |
|
632 |
902 |
Administration fees for the BVI, Hong Kong and Macanese SPVs are payable to Adept Capital Partners Services Limited (formerly Adept Capital Services Limited) in which Tom Ashworth is a shareholder and Director.
12. Net cash used in operating activities
|
|
Year ended 30 June 08 US$'000 Company |
Year ended 30 June 08 US$'000 Group |
|
Period from 18 May 06 to 30 June 07 US$'000 Company |
Period from 18 May 06 to 30 June 07 US$'000 Group |
|
Operating loss from continuing operations |
(17,836) |
(17,786) |
|
(493) |
(524) |
|
Operating cash flows before movements in working capital |
(17,836) |
(17,786) |
|
(493) |
(524) |
|
|
|
|
|
|
|
|
(Increase)/decrease in receivables |
(5,445) |
459 |
|
(509) |
(512) |
|
Increase in payables |
10,340 |
10,483 |
|
3,981 |
4,038 |
|
Net change in working capital |
4,895 |
10,942 |
|
3,471 |
3,526 |
|
Net cash used in operating activities |
(12,941) |
(6,844) |
|
2,979 |
3,002 |
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.
13. Basic and diluted loss per Ordinary Share
The basic and diluted loss per equivalent Ordinary Share is based on the loss attributable to equity-holders for the year of US$(17,786,000) (2007: US$(524,000)) and on the 105,000,000 (2007: 105,000,000) weighted average number of Ordinary Shares in issue during the year.
|
|
Year ended 30 June 2008 |
|
Period from 18 May 2006 to 30 June 2007 |
||||
|
|
Loss Attributable US$'000 |
Weighted Average No. of Shares '000s |
EPS US$ |
Loss Attributable US$'000 |
Weighted Average No. of Shares '000s |
EPS US$ |
|
|
Basic |
(17,786) |
105,000 |
(0.1694) |
(524) |
105,000 |
(0.0050) |
|
|
Diluted |
(17,786) |
105,000 |
(0.1694) |
(524) |
105,000 |
(0.0050) |
|
14. Related party transactions
On 8 March 2007 Tim Henderson was appointed as a Director of all of the Guernsey incorporated subsidiaries of Macau Property Opportunities Fund Limited. In the year to 30 June 2008 Directors' fees of US$ nil (2007: US$80,000) were paid by the Guernsey incorporated subsidiaries.
|
|
Year ended 30 June 08 US$'000 Company |
Year ended 30 June 08 US$'000 Group |
|
Period from 18 May 06 to 30 June 07 US$'000 Company |
Period from 18 May 06 to 30 June 07 US$'000 Group |
|
|
|
|
|
|
|
|
Directors' Fees |
251 |
251 |
|
258 |
258 |
|
Subsidiary Directors' Fees |
- |
- |
|
- |
80 |
|
|
251 |
251 |
|
258 |
338 |
Tom Ashworth is a shareholder and Director of Sniper Capital Limited. Sniper Capital Limited is the Manager to the Company and received fees during the year as detailed in the income statement and in Note 15.
Tom Ashworth is a shareholder and Director of Adept Capital Partners Services Limited (formerly Adept Capital Services Limited). Adept Capital Partners Services Limited provides administrative services to the Macanese, Hong Kong and British Virgin Islands SPVs and received fees during the year as detailed in Note 11.
The Company makes loans to its subsidiaries which are detailed in the table below:
|
|
2008 US$'000 |
|
2007 US$'000 |
|
MPOF (Antonio) Limited |
13,487 |
|
11,314 |
|
MPOF (Domingos) Limited |
10,829 |
|
10,723 |
|
MPOF (Guia) Limited |
13,487 |
|
11,314 |
|
MPOF (Jose) Limited |
4,139 |
|
4,044 |
|
MPOF (Monte) Limited |
48 |
|
48 |
|
MPOF (Paulo) Limited |
48 |
|
48 |
|
MPOF (Penha) Limited |
8,082 |
|
666 |
|
MPOF (Senado) Limited |
10,829 |
|
10,723 |
|
MPOF (Sun) Limited |
4,139 |
|
4,043 |
|
MPOF (Taipa) Limited |
8,082 |
|
666 |
|
MPOF (6A) Limited |
5,755 |
|
342 |
|
MPOF (6B) Limited |
5,755 |
|
342 |
|
MPOF (7A) Limited |
34 |
|
23 |
|
MPOF (7B) Limited |
34 |
|
23 |
|
MPOF (8A) Limited |
24 |
|
23 |
|
MPOF (8B) Limited |
24 |
|
22 |
|
MPOF (9A) Limited |
24 |
|
22 |
|
MPOF (9B) Limited |
24 |
|
22 |
|
MPOF (10A) Limited |
24 |
|
22 |
|
MPOF (10B) Limited |
24 |
|
22 |
|
MPOF Mainland Company 1 Limited |
6 |
|
3 |
|
Bream Limited |
28,908 |
|
- |
|
Cannonball Limited |
3,536 |
|
- |
|
Civet Limited |
8,197 |
|
- |
|
|
125,539 |
|
54,455 |
15. Material contracts
Management Fee
Under the terms of an appointment made by the Board of Directors of Macau Property Opportunities Fund Limited on 23 May 2006, Sniper Capital Limited ('SCL') was appointed as Manager to the Company. The Manager is paid quarterly in advance a fee of 2.0% of the Net Asset Value, as adjusted to reflect the Property Investment Valuation Basis. Management fees paid for the year were US$5,153,000 (2007:US$4,319).
Performance Fee
In addition, the Manager will be entitled to a performance fee in certain circumstances. This fee is payable by reference to the increase in Adjusted NAV per Ordinary Share over the course of each calculation period. The first calculation period begins on Admission and ends on 30 June 2007; each subsequent performance
period is a period of one financial year.
Payment of the performance fee is subject to:
(i) the achievement of a performance hurdle condition: Adjusted NAV per Ordinary Share at the end of the relevant performance period must exceed an amount equal to the US dollar equivalent of the Placing Price increased at a rate of 10 per cent. per annum on a compounding basis up to the end of the relevant performance period (the 'Basic Performance Hurdle'); and
(ii) the achievement of a 'high watermark': Adjusted NAV per Ordinary Share at the end of the relevant performance period must be higher than the highest previously reported Adjusted NAV per Ordinary Share at the end of a performance period in relation to which a performance fee, if any, was last earned.
If the Basic Performance Hurdle is met, and the high watermark exceeded, the performance fee will be an amount equal to 20 per cent. of the excess of the Adjusted NAV per Ordinary Share at the end of the relevant performance period over the higher of (i) the Basic Performance Hurdle; (ii) the Adjusted NAV per Ordinary Share at the start of the relevant performance period; and (iii) the high watermark (in each case
on a per share basis), multiplied by the time weighted average of the number of Ordinary Shares in issue in the performance period (or since Admission in the first performance period) (together, if applicable, with an amount equal to the VAT thereon).
In addition, the Manager will become entitled to a super performance fee in respect of a performance period if a further additional criterion is met, being the achievement of a super performance hurdle condition: Adjusted NAV per Ordinary Share at the end of the relevant performance period must exceed an amount equal to the US dollar equivalent of the Placing Price increased at a rate of 25 per cent. per annum on a compounding basis up to the end of the relevant performance period (the 'Super Performance Hurdle').
If the Super Performance Hurdle is met and the high watermark exceeded, the super performance fee will be an amount equal to a further 15 per cent. of the excess of the Adjusted NAV per Ordinary Share at the end of the relevant performance period over the higher of (i) the Super Performance Hurdle; (ii) the Adjusted NAV per Ordinary Share at the start of the relevant performance period; and (iii) the high watermark (in each case on a per share basis), multiplied by the time weighted average of the number of
Ordinary Shares in issue in the performance period (or since Admission in the first performance period)(together, if applicable, with an amount equal to the VAT thereon).
The amounts accrued in the financial statements are as follows:
|
|
2008 US$ |
|
2007 US$ |
|
Performance Fee |
14,043,700 |
|
3,807,300 |
|
Super Performance Fee |
Nil |
|
Nil |
16. Post Balance Sheet Event
On 4 August 2008, the Group acquired two properties located in Macau for a total consideration of HK$27.6m (US$3.5m).
On 21 August 2008, the Group acquired a property through a wholly-foreign owned enterprise in Mainland China for a total consideration of HK$83m (US$10.6m). Of the total consideration HK$68.3m (US$8.7m) was paid in cash with the remainder of HKD14.7m (US$1.9m) made up of liabilities in the wholly-foreign owned enterprise.
This information is provided by RNS
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