Interim Results

Macau Property Opportunities Fund 15 February 2008 Macau Property Opportunities Fund Limited ('MPO' or the 'Company') Interim Results for the six months ended 31 December 2007 Macau Property Opportunities Fund Limited is pleased to announce its interim results for the six months ended 31 December 2007. 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 • To date, the Company's property commitments total US$226.7 million which is equivalent to approximately 120% of the total equity of US$200 million (£105 million) raised in June 2006 • Adjusted NAV per share is US$2.60 (130.1p), representing a 17% uplift over the corresponding Adjusted NAV per share as at 30 June 2007 • 22% uplift in property portfolio valuations for the six month period ended 31 December 2007 • Strong pipeline of potential investment opportunities with 11 sites (value of c.US$550 million) currently under negotiation David Hinde, Chairman, said: 'These interim results reflect the successful execution of Sniper Capital's investment strategy of targeting niche and strategically positioned assets in the region. With an exciting portfolio of current projects and a healthy pipeline of attractive sites, I am confident that the Company will continue to benefit from Macau's dynamic property market and generate strong returns for the shareholders.' For further information: Website: www.mpofund.com Public Relations Hogarth Partnership Limited Andrew Jaques / Sarah Richardson Tel: +44 20 7357 9477 Nominated Adviser and Joint Broker Collins Stewart Europe Limited Hugh Field Tel: +44 20 7523 8325 Joint Broker Shore Capital Stockbrokers Limited Dru Danford Tel: +44 20 7408 4090 Company Secretary & Administrator Heritage International Fund Managers Limited Mark Huntley / Laurence McNairn Tel: +44 1481 716000 Manager Sniper Capital Limited Corporate and Investor Communications Daisy Tang Tel: +852 2292 6700 Email: info@snipercapital.com www.snipercapital.com Stock Codes: Bloomberg: MPO LN Reuters: MPO.L Macau Property Opportunities Fund Limited (MPO) is a closed-end investment fund registered in Guernsey and traded on the Alternative Investment Market (AIM) of the London Stock Exchange. 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 specialising in property investment opportunities in niche, undervalued and developing markets. Chairman's Statement I am delighted to report on the further successful progress of Macau Property Opportunities Fund Limited in the six months ended 31 December 2007. In only its second full year of operation, MPO has continued to demonstrate encouraging progress in the execution of its investment strategy whilst adhering to the key disciplines which are essential to astute investment in a rapidly developing and highly competitive marketplace. During the six months to 31 December 2007, further investments totalling US$78.5 million were made by the Company, bringing the total amount invested or committed to US$226.7 million, equivalent to approximately 120% of the total equity raised at AIM Admission. MPO has continued to generate significant value for shareholders. During the period, the value of the Company's properties increased by US$50.6 million or 22.1% resulting in an Adjusted NAV* as at 31 December 2007 of US$272.8 million, equivalent to US$2.60 or 130.1p per share. This represents a 17.1% uplift over the corresponding Adjusted NAV per share as at 30 June 2007 and an increase of 44.4% in US dollar terms and 35.2% in sterling terms over the NAV per share on Admission to AIM. These figures reflect the high quality and strategic positioning of the Company's portfolio, as well as the positive effect of deploying additional capital. The high degree of selectivity demonstrated in the choice of investments to date clearly illustrates our adherence to stringent and disciplined investment processes in acquiring well positioned assets within targeted market segments. I am satisfied that the Board continues to receive well researched, high quality investment proposals from the Manager, Sniper Capital, which should enable the Company to pursue its investment strategy successfully. With an exciting portfolio of existing projects and a healthy pipeline of attractive sites on which negotiations are progressing, I look forward with confidence to the continued development of the Company and to creating further value for shareholders. 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. Manager's Report Overview In the six months to the end of December 2007, the Company successfully built on the foundations laid in its first full year of operation. Acquisitions have further contributed to the Company's existing portfolio of niche and strategically placed properties in key market segments, leaving it positively exposed to the remarkable on-going economic transformation of Macau. We believe that the Company's strategic positioning in the premium luxury residential sector through its investment purchase in One Central Residences, along with the niche positioning and significant redevelopment potential of its other three redevelopment projects, render it well positioned to generate continuing strong returns for shareholders. The investment pipeline currently being negotiated by the Company, consists of 11 sites totalling approximately US$550 million in combined acquisition value. In selecting suitable investments for MPO, we continue to avoid sectors which we believe are susceptible to oversupply, instead focusing on the core areas which are likely to deliver the greatest value to shareholders in Macau's rapidly developing property markets. These include: • Premium luxury residential accommodation in prime locations • Entry-level/affordable residential accommodation • Retail space in areas of high footfall • Leisure/commercial facilities in strategic locations • Hotel and serviced apartments in key locations • Industrial/warehouse space With negotiations continuing to advance steadily on a number of key pipeline sites, we remain confident in our ability to commit the Company's remaining cash reserves of US$95 million efficiently and profitably within our target two year investment period. Current Investments The Company continued to make steady progress in its investment strategy during the first half of this financial year. In the six months to the end of December 2007, further acquisitions amounting to US$78.5 million were completed or secured, bringing the total amount committed to US$226.7 million or approximately 120% of the Company's total equity. Of these new investments, US$26.7 million relates to a mixed-use redevelopment project (known as Property 4), comprising an acquisition price of US$16 million and an estimated redevelopment cost of US$10.7 million. The acquisition of Property 4 brings to a close almost two years of negotiations and successfully converts a key pipeline site which was referred to in the Company's AIM Admission Document. The remaining acquisitions since 30 June 2007 comprised a number of separate smaller transactions. These form part of an on-going, opportunistic strategy of acquiring well located and attractively priced smaller property assets which the Company believes offer significant capital appreciation as investment properties in their own right or through consolidation, refurbishment or redevelopment. The total amount invested to date in such properties amounts to US$51.8 million. Of this amount, US$48.3 million has been spent on acquiring 24 well located units in One Central Residences, the residential portion of the premium mixed-use One Central development, in which the Company purchased a luxury residential tower (Tower 6) in November 2006 for US$86.6 million. These additional units, all situated on well positioned floors with superior aspects, increase the Company's total combined gross floor area in One Central Residences by 34% to a total of approximately 200,000 square feet. This represents 12% of the total residential floor space in the development at an average acquisition cost of approximately US$680 per square foot. This compares favourably to Savills' most recent average valuation of US$980 per square foot for the properties, representing an increase over total cost of 44%. For clarity, these additional units will henceforth be amalgamated with Tower 6 and jointly referred to as Property 2 of the Company's portfolio. The Company continues to believe in the unprecedented quality and positioning of One Central, which is due for completion in 2009. The project's unique nature and value is further enhanced by the fact that other premium luxury residential developments currently being planned in Macau continue to experience delays in obtaining the necessary planning permission and/or construction permits. We, therefore, believe that demand for residential units in One Central will remain strong and possibly escalate further as the project nears completion and the surrounding area continues to be transformed. The remaining US$3.5 million invested was deployed under the smaller properties acquisitions scheme. The Company's other three property assets are all redevelopment sites which remain at various stages of planning or consolidation and are fully summarised in the following pages. Property Portfolio To date, MPO's property commitments total US$226.7 million in combined acquisition and projected development costs. Property 1 Sector: Residential (Luxury) Valuation: US$16,784,000 Uplift (current period): +15.1% Uplift (since acquisition): +107.1% Property 2 (One Central) Sector: Residential (Premium luxury) Valuation: US$194,945,000 Uplift (current period): +17.3% Uplift (since acquisition): +43.9% Property 3 Sector: Residential (Entry-level) Valuation: US$30,622,000 Uplift (current period): +7.8% Uplift (since acquisition): +43.1% Property 4 Sector: Mixed-use Valuation: US$30,109,000 Uplift (current period): +88.4% Uplift (since acquisition): +88.4% Other Assets Sector: Various Valuation: US$6,791,000 Uplift (current period): +93.6% Uplift (since acquisition): +93.6% Portfolio Summary Valuation: US$279,251,000 Uplift (current period): +22.1% Uplift (since acquisition): +51.4% Property 1 Property 1 represents a 100% interest in a prime residential redevelopment project located in a popular and well established neighbourhood. The Company intends to develop Property 1 into mid-rise residential flats targeted at local middle income residents seeking to improve the quality of their existing accommodation. The project's conceptual design comprises a courtyard style residential building laid out around an internal garden. Site investigations are now underway and the demolition of the existing structure is scheduled to commence once necessary Government approvals have been received. Completion is scheduled by the end of 2009. The Company's current intention is to sell all of the residential units in this project either on a pre-sale basis or on completion of the project. Acquisition Date October 2006 Sector Residential Location South Western Macau Peninsula Current Status Design process Title Freehold Land Area 13,000 ft2/1,200 m2 Acquisition Cost US$8.6 million Projected Development Cost US$7.1 million Total Commitment US$15.7 million Valuation Uplift Since Acquisition 107.1% Positioning Local middle income residents Proposed Development Apartment block with car parking Estimated Completion Date End 2009 Property 2 (One Central) The Company has acquired a total of 198,900 square feet of residential space in One Central Residences, the residential portion of the premium mixed-use development, One Central. This represents approximately 12% of the total 1.63 million square feet of floor area over the 7 residential towers in the project. MPO's investment comprises an entire 40 storey luxury residential tower (Tower 6) purchased in November 2006 and 24 well positioned individual units in various other towers, which were purchased as a series of individual transactions in the second half of 2007. The completion date for all the residential towers is expected during the course of 2009. One Central is being jointly developed by two of the region's leading developers, Hongkong Land and Shun Tak Holdings. It consists of a 300,000 square foot premier shopping complex, a 210-room, 6-star Mandarin Oriental Hotel and a 50,000 square foot clubhouse and health spa for the exclusive use of residents. Acquisition Date November 2006 Sector Residential Location Central Macau Peninsula Current Status Under construction Title Leasehold Gross Floor Area 198,900 ft2/18,480 m2 Acquisition Cost: Tower 6 US$86.6 million Acquisition Cost: other units (24) US$48.3 million Total Commitment US$134.8 million Valuation Uplift Since Acquisition 43.9% Positioning Premium luxury Proposed Development High-rise apartment tower in prime mixed-use project Estimated Completion Date 2009 Property 3 Property 3 is a 100% interest in a site located in the rapidly regenerating northern part of Macau Peninsula. The Company intends to redevelop the site into affordable high-rise apartments catering to the increasing demand for entry-level accommodation from local residents. The surrounding area is undergoing widespread redevelopment and urban renewal. Furthermore, the recent high profile sale of two nearby sites by public tender has added further impetus to the regeneration of this part of Macau. Negotiations are continuing to consolidate adjacent sites in this area before commencing with the planning process and redevelopment of the property. Acquisition Date November 2006 Sector Residential Location Northern Macau Peninsula Current Status Consolidating adjacent sites Title Leasehold Land Area 20,000 ft2/1,860 m2 Acquisition Cost US$20.6 million Projected Development Cost US$25.4 million Total Commitment US$46.0 million Valuation Uplift Since Acquisition 43.1% Positioning Entry-level Proposed Development High-rise apartment block Estimated Completion Date End 2009 Property 4 Property 4 was acquired in October 2007, bringing to a close almost two years of negotiations and successfully converting a key pipeline site which was referred to in the Company's AIM Admission Document. The 10,500 square foot freehold site is located adjacent to Senado Square, one of the most popular tourist destinations on Macau Peninsula, which, due to its rich Macanese architectural legacy, forms part of the Territory's World Heritage district. The area's increasing local and tourist pedestrian traffic has resulted in strong demand for retail outlets in the vicinity, driving retail property prices and rents to amongst the highest in Macau. In order to capitalise on the excellent location of Property 4, a mixed-use redevelopment is proposed incorporating prime retail and entertainment facilities. Acquisition Date October 2007 Sector Mixed-use Location Macau Peninsula Current Status Planning Title Freehold Land Area 10,500 ft2/975 m2 Acquisition Cost US$16.0 million Projected Development Cost US$10.7 million Total Commitment US$26.7 million Valuation Uplift Since Acquisition 88.4% Positioning Retail/Tourism Proposed Development Six storey retail & entertainment complex Estimated Completion Date End 2010 Other Assets Various additional properties have been purchased by MPO as part of the on-going strategy of acquiring well located and attractively priced smaller property assets which the Company believes offer the prospect of significant capital appreciation as investment properties in their own right or through consolidation, refurbishment or redevelopment. The total amount invested to date in such properties now amounts to US$3.5 million. Property Market Macau's property market continues to be driven by the spectacular transformation currently underway in the Territory's gaming industry. Substantial investment in new casino-related projects is continuing to have a significant and far reaching impact on all segments of the domestic property market, both from demand and supply side perspectives. Demand from end-users, investors and developers for quality residential properties has continually outpaced supply across all areas of Macau. For most of 2007, this resulted in consistent price appreciation which has been further boosted by booming regional stock markets and negative real mortgage rates. Meanwhile, the sub-prime mortgage crisis in the US, which has dampened many markets around the world, has so far had limited impact on lending or local market sentiment in Macau. Sales activity was brisk during the first three quarters of 2007, with 11,274 real estate sales and purchase contracts being executed with a total value of US$1.511 million, up by 14% and 42% respectively year-on-year. Despite this rapid growth in sales activity, the shortage of quality developments on the horizon, combined with planning delays for a number of larger residential projects, continued to drive prices higher, particularly at the top end of the market, with overall prices reportedly increasing by 30% and more during the year. We believe that upward pressure on both prices and rentals is unlikely to abate in the coming year for a number of reasons, both demographic and economic: • High levels of population influx: Immigrant workers exceeded 85,000 in 2007, representing a 25+% year-on-year growth rate, against a 5% growth in the overall population of Macau • Rising household incomes as new casinos continue to vie for employees in a tight labour market • Rapid household formation as local inhabitants capitalise on their new-found disposable incomes • Limited supply of quality projects across Macau • Increasing Government incentives to local home buyers In December, as part of the Government's move towards greater transparency in the land disposal process, two plots of land in north west Macau Peninsula were offered for sale by public tender, the first to be sold in this way since the handover from Portugal in 1999. The tender closed in January 2008 and the sites, zoned for residential development, sold for about nine times the opening bid. The sites in question are located near to the Company's Property 3, which we expect to benefit from valuation uplift if these tender results have a general market impact on the prices of neighbouring properties. The Government has also moved to appease local disquiet over escalating property prices and rising costs of living for lower income earners. Various measures were announced recently, including the reduction of estate tax, waiving of stamp duty for first-time home buyers of properties valued below US$385,000, and low income mortgage interest relief measures. This is not only positive for the domestic residential property market overall, but also for MPO's 'entry-level' projects. Retail Supply of high quality casino retail space has grown rapidly in the last 12 months, driven largely by the opening of the 1.2 million square foot Venetian Macao retail shopping facilities on the Cotai Strip in August 2007. By comparison, local and tourist retail space has seen no significant new additions during the year due to the very limited availability of appropriate sites. Cumulative retail sales grew very strongly during the year, reaching US$1.25 billion in the first three quarters of 2007. This strong performance, combined with the shortage of quality retail premises outside the casino/hotel locations, has driven up demand for prime retail properties which has, in turn, had an upward impact on values and rents across most of Macau. Against this positive backdrop, however, it should be noted that a significant number of new casino/hotel and retail properties are due to be completed over the next two to three years. In the near term, this scale of development is likely to dampen overall growth rates in the retail property market until the new supply is fully absorbed. Over the longer term, however, we believe that these developments will bode well for values and rents across the prime retail property sector by ensuring Macau's place as a major Asian retail destination offering the entire complement of international and luxury brand names. Gaming The principal measure of the performance of Macau's economy is gaming revenues which, for 2007, rose by 46.6% to US$10.4 billion. Concerns have been voiced in some quarters relating to the relative performance of individual casino operators, particularly with respect to VIP market share. However, the clear consensus is that growth in gaming revenues as a whole will continue to be strong into the foreseeable future. In December 2007, Macau witnessed the high profile launch of MGM Grand Macau, US-listed MGM Mirage's first project in Asia. All six gaming concessions in Macau are now finally in operation. SJM, owned by local casino tycoon Stanley Ho, has announced it will be building a new hotel on the site of its original flagship and Macau's oldest casino, the Lisboa Hotel. Redevelopment is expected to begin following the full opening of the neighbouring Grand Lisboa Hotel in 2008. In the future, the Cotai Strip is likely to emerge as the Territory's integrated business, leisure and gaming destination with upscale casino-resort-hotels increasingly dominating the landscape. The Four Seasons and Shangri-La hotels are due to open in 2008 followed by Galaxy's 'Mega Resort', Melco/PBL's 'City of Dreams' and 'Macau Studio City' backed by eSun Holdings. MGM Grand Macau has recently announced that it has secured funding for its expansion onto the Cotai Strip. Further announcements are expected in the months ahead. Milestone opening of new hotels/casinos(from Jun-Dec 07 and forecast openings) Aug 07 Grand opening of Venetian Macao-Resort-Hotel Sep 07 Harrah's Entertainment Inc. acquire Oriental golf course on Cotai Dec 07 Opening of Wynn Macau Phase II Dec 07 Launch of MGM Grand Macau Early 08 Opening of Ponte 16 Mid 08 Four Seasons and Shangri-La hotels are expected to open Tourism & MICE Macau's tourism industry continues to expand and flourish as it increasingly repositions itself as an international destination with growing numbers of Meeting, Incentive, Convention and Exhibition (MICE) events and Las Vegas-style attractions. Visitor numbers in 2007 rose by 22.8% over the previous year to over 27 million, setting new records for the city. By the fourth quarter of 2007, the total number of guest rooms available in the hotel sector had increased by 3,321 year-on-year to 15,740 (+26.7%). In October, a total of 490,271 guests checked into hotels and similar establishments, representing a year-on-year growth of 18.9%. With the attraction of several major MICE events held in that month, the average hotel occupancy rate soared by 5.7% to 79.3%, with 3-star hotels leading at 82.4%. In addition, the important measure of average length of stay of hotel guests extended substantially by 0.43 nights to 1.62. The majority of guests came from Mainland China (46.3%) and Hong Kong (27.9%). The total number of hotel guests in the first ten months of 2007 was 4,706,089, up 25.3% over the same period of 2006. Government Policy In his eighth policy address delivered in November, Macanese Chief Executive Edmund Ho reiterated the Government's continued commitment to developing the gaming and tourism industries, whilst also maintaining the fight against corruption and crime. In addition, he outlined several new policies designed to improve the city's political and socio-economic fabric. Amongst them was the construction of subsidised housing and other support measures for lower income earners, including mortgage interest relief and the abolition of stamp duty for first-time home buyers. The move towards greater Government transparency was also demonstrated by the announcement of the tender of two plots of land at the end of the year. Infrastructure On-going rapid property development and the growth in visitor numbers continue to place considerable pressure on the Territory's transport infrastructure. In order to cope with these pressures, the Government has instigated a number of initiatives: • Lotus Bridge - now completed, connecting Macau's Cotai Strip and Zhuhai for road traffic. Soon to open for 24 hour operation for passenger and cargo traffic • Hong Kong-Zhuhai-Macau Bridge (planned) - a 35km bridge connecting the three cities and linking up the East and West Pearl River Delta for passenger and cargo traffic • Light Rail System - studies have been finalised and optimal routes chosen for this high speed passenger system running through Macau and Taipa. Construction due to commence in 2008 with completion planned by end 2011 • Taxi licences - additional taxi licences were issued to help alleviate taxi queues and increase use of public transport • Second ferry pier in Taipa - temporary second pier opened in 2007 with the full size permanent terminal due to be completed in 2009. Cotaijet ferry service connecting Macau with Hong Kong Airport, Hong Kong Central, Shenzhen Airport and other Pearl River Delta cities is now resumed. Economy Macau's rapid economic growth continues to be accompanied by a surge of foreign investment. Government statistics indicate that gross fixed capital formation grew by 38.3% year-on-year, helping to drive GDP growth to 30.9% in the third quarter of 2007. This has placed the local labour market under significant pressure with unemployment falling to 3.1%, pushing wage inflation to over 20%. Gaming revenues, one of the principal drivers of Macau's GDP, continue to grow exponentially exceeding US$10 billion in 2007, a rise of 46.6% on the previous year. Visitor numbers also set new records, hitting 27 million in 2007, up 22.8% year-on-year. Infrastructure pressure from the continued development of casinos and resorts is also reflected in consumption of electricity which, in the third quarter, registered the largest growth among all energy, up by 25.9% from the previous quarter and 30% year-on-year. Key Economic Statistics 2007 Figure YoY% Unemployment rate FY 3.1% -0.7% CPI FY 114.46 +5.6% Visitor arrivals FY 27 m +22.8% Gaming revenues FY US$10.4 bn +46.6% Retail sales value (est.) FY US$1.67 bn +30% Median monthly income Q3 US$983 +15.5% Real GDP Q3 US$4.79 bn +30.9% Source: DSEC Financial Review During the second half of 2007, the Company committed a further US$78.5 million on property acquisitions and as at 31 December 2007 had a total commitment, including estimated redevelopment costs, of US$226.7 million, representing approximately 120% of equity raised. In accordance with International Financial Reporting Standards (IFRS) and the Company's valuation policy, all properties have been valued by Savills (Macau) Limited as at 31 December 2007 and included in the financial statements at the lower of cost and net realisable value. This results in a reported NAV per share of US$1.69. The open 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$279.3 million. This is an uplift in the portfolio valuations during the period under review of US$50.6 million (which represents a 22.1% increase) and of US$94.8 million over the cost of the properties (equivalent to a 51.4% increase since acquisition). The Company's Adjusted NAV per share has exceeded the basic performance hurdle of 10%, the super performance hurdle of 25% (both calculated on a compounding basis) and the high watermark resulting in an Adjusted NAV per share after accruing for performance fees of US$2.60 or 130.09p per share. This represents a respective 17.2% and 17.4% increase from 30 June 2007 and a respective 44.3% and 35.2% increase from the NAV per share on admission to AIM. As at 31 December 2007, MPO's total assets stood at US$198.2 million, made up of US$102.9 million of development properties and cash of US$95.1 million. If development properties were included in the Balance Sheet at open market value, as reported by Savills and as used for the Adjusted NAV, total assets would be US$374.6 million. Total liabilities of the Company as at 31 December 2007 were US$10.6 million comprising mainly payments due for acquired properties and fees accruals. In line with MPO's stated objective of delivering an attractive total return primarily from capital appreciation, payment of a dividend is not recommended. Cash Management As at 31 December 2007, the Company had a cash balance equivalent of US$95.1 million. Cash balances are held in both US$ and HK$ 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 which holds an Aaa rating from Moody's. Unaudited results are summarised below: 31-Dec-07 30-Jun-07 US$ £1 US$ £1 NAV $177.92m £89.08m $188.24m £94.08m Adjusted NAV2 $272.81m £136.59m $232.81m £116.34m NAV per share $1.69 84.84p $1.79 89.60p Adjusted NAV per share2 $2.60 130.09p $2.22 110.80p Uplift in Adjusted NAV Since Admission3 44.34% 35.21% 23.17% 15.16% Since 30 June 2007 17.19% 17.41% n/a n/a 1 Based on US$/£ exchange rate of 1.997 at 31 Dec 2007 and 2.001 at 30 Jun 2007 2 Adjusted Net Asset Value is shown after accruing for the performance fee 3 Based on NAV per share at Admission on 5 June 2006 of US$1.80 (96.21 pence) Outlook Over the period, MPO has consolidated its position as one of the leading investors in the Macau property market. As the Macanese economy continues to grow dynamically, the period ahead will see the Company focusing on committing all remaining funds to the acquisition of further attractive pipeline assets as well as progressing current development projects. Our priorities for the coming half-year are as follows: • commit all remaining capital • progress design and approvals of development projects • secure competitive bank financing for existing projects • continue to widen MPO investor base with an emphasis on retail participation • expansion of media coverage to a wider investor audience We believe that the Company's current portfolio of strategically located, niche properties in clearly differentiated market segments is well positioned to benefit from the continuing expansion and transformation being experienced in the Macau market. Tom Ashworth/Martin Tacon Principals Sniper Capital Limited Consolidated Balance Sheet (Unaudited) As at 31 December 2007 31 Dec 07 31 Dec 06 30 Jun 07 Note US$'000 US$'000 US$'000 Assets Non-current assets - - - - - - Current assets Inventories 3 102,894 56,376 56,084 Trade and other receivables 179 575 458 Prepayments 22 30 54 Cash and cash equivalents 95,106 148,706 144,297 198,201 205,687 200,893 Total assets 198,201 205,687 200,893 EQUITY Capital and reserves attributable to the Company's equity holders Share capital 1,050 1,050 1,050 Distributable reserve 187,960 187,960 187,960 Retained earnings/(accumulated (10,723) 2,584 (524) losses) Foreign exchange on (365) - (247) consolidation Total equity 177,922 191,594 188,239 LIABILITIES Current liabilities Trade and other payables 20,279 14,093 12,654 Total liabilities 20,279 14,093 12,654 Total equity and liabilities 198,201 205,687 200,893 The financial statements were approved by the Board of Directors and authorised for issue on 14 February 2008. Consolidated Income Statement (Unaudited) For the period from 1 July 2007 to 31 December 2007 1 Jul 07- 18 May 06 - 18 May 06 - 31 Dec 07 31 Dec 06 30 Jun 07 Note US$'000 US$'000 US$'000 Revenue Bank and other interest 2,901 5,290 8,876 Gains on foreign currency exchange - 41 18 2,901 5,331 8,894 Expenses Management fee 2,313 2,142 4,319 Performance fee 9,663 - 3,807 Non-Executive Directors' fees 126 139 338 Auditors' remuneration 29 11 52 General and administration expenses 588 455 902 Losses on foreign currency exchange 381 - - (13,100) (2,747) (9,418) Net profit/(loss) for the period (10,199) 2,584 (524) Attributable to: Equity holders of the Company (10,199) 2,584 (524) (10,199) 2,584 (524) 1 Jul 07- 18 May 06 - 18 May 06 - 31 Dec 07 31 Dec 06 30 Jun 07 US$ US$ US$ Basic and diluted earnings/(losses) per share for profit/(loss) attributable to the equity holders of the Company during the period 5 (0.0971) 0.0246 (0.0050) Consolidated Statement of Changes in Equity (Unaudited) For the period from 1 July 2007 to 31 December 2007 Foreign Share Share Accumulated Distributable exchange on capital premium losses reserve consolidated Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Balance at 1 July 2007 1,050 - (524) 187,960 (247) 188,239 Foreign exchange on consolidation - - - - (118) (118) Net loss for the period - - (10,199) - - (10,199) Balance carried forward at 31 December 2007 1,050 - (10,723) 187,960 (365) 177,922 For the period from 18 May 2006 to 31 December 2006 Foreign exchange on Share Share Retained Distributable consolidation capital premium earnings reserve Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Issue of shares 1,050 195,410 - - - 196,460 Cancellation of share premium - (195,410) - 195,410 - - Placing fees & formation costs - - - (7,450) - (7,450) Net profit for the period - - 2,584 - - 2,584 Balance carried forward at 1,050 - 2,584 187,960 - 191,594 31 December 2006 For the period from 18 May 2006 to 30 June 2007 Foreign exchange on Share Share Accumulated Distributable consolidation capital premium losses reserve Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Issue of shares 1,050 195,410 - - - 196,460 Cancellation of share premium - (195,410) - 195,410 - - Placing fees & formation costs - - - (7,450) - (7,450) Foreign exchange on consolidation - - - - (247) (247) Net loss for the period - - (524) - - (524) Balance carried forward at 1,050 - (524) 187,960 (247) 188,239 30 June 2007 Consolidated Cash Flow Statement (Unaudited) For the period from 1 July 2007 to 31 December 2007 1 Jul 07 - 18 May 06 - 18 May 06 - 31 Dec 07 31 Dec 06 30 Jun 07 Note US$'000 US$'000 US$'000 Net cash used in operating activities 6 (6,836) (2,546) (5,434) Cash flows from investing activities Expenditure on inventories (45,036) (42,522) (47,468) Interest received 3,180 4,723 8,418 Net cash used in investing activities (41,856) (37,799) (39,050) Cash flows from financing activities Proceeds on issue of shares - 196,460 196,460 Placing fees and formation costs - (7,450) (7,450) Net cash generated from financing activities - 189,010 189,010 Net increase/(decrease) in cash and cash equivalents (48,692) 148,665 144,526 Effect of foreign exchange rate changes (499) 41 (229) Cash and cash equivalents at beginning of period 144,297 - - Cash and cash equivalents at end of period 95,106 148,706 144,297 Notes to the Consolidated Financial Statements (Unaudited) For the period from 1 July 2007 to 31 December 2007 General information Macau Property Opportunities Fund Limited is a company incorporated and registered in Guernsey under the Companies (Guernsey) Law, 1994 (as amended) on 18 May 2006. The address of the registered office is given on the inside back cover. The consolidated financial statements for the period ended 31 December 2007 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 potentially in the Western Pearl River Delta region. These consolidated financial statements have been approved for issue by the Board of Directors on 14 February 2008. 1. SIGNIFICANT ACCOUNTING POLICIES Basis of accounting The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) under the historical cost convention. The interim financial statements have been prepared in accordance with the International Accounting Standard (IAS) 34, Interim Financial Reporting. The same accounting policies and methods of computation are followed in the interim financial statements as compared with the annual financial statements. The presentation of the interim financial statements is consistent with the annual financial statements. The Group operates in an industry where significant seasonal or cyclical variations in total income are not experienced during the financial year. Consolidation The consolidated financial statements incorporate the financial statements of the Company and 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. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Segmental reporting 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 potentially in the Western Pearl River Delta region. 2. SUBSIDIARIES All special purpose vehicles 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 MPOF Macau (Site 1) Limited 100% Macau MPOF Macau (Site 2) Limited 100% Macau MPOF Macau (Site 3) Limited 100% Macau MPOF Macau (Site 4) Limited 100% Macau MPOF Macau (Site 5) Limited 100% Macau MPOF Macau (Site 6) Limited 100% Macau MPOF Macau (Site 7) Limited 100% Macau MPOF Macau (Site 8) Limited 100% Macau MPOF Macau (Site 9) Limited 100% Macau MPOF Macau (Site 10) Limited 100% Macau MPOF (Penha) Limited 100% Guernsey MPOF (Taipa) Limited 100% Guernsey MPOF (Jose) Limited 100% Guernsey MPOF (Sun) Limited 100% Guernsey MPOF (Senado) Limited 100% Guernsey MPOF (Domingos) Limited 100% Guernsey MPOF (Monte) Limited 100% Guernsey MPOF (Paulo) Limited 100% Guernsey MPOF (Guia) Limited 100% Guernsey MPOF (Antonio) Limited 100% Guernsey MPOF (6A) Limited 100% Guernsey MPOF (6B) Limited 100% Guernsey MPOF (7A) Limited 100% Guernsey MPOF (7B) Limited 100% Guernsey MPOF (8A) Limited 100% Guernsey MPOF (8B) Limited 100% Guernsey MPOF (9A) Limited 100% Guernsey MPOF (9B) Limited 100% Guernsey MPOF (10A) Limited 100% Guernsey MPOF (10B) Limited 100% Guernsey MPOF Mainland Company 1 Limited 100% Barbados Bream Limited 100% Guernsey Cannonball Limited 100% Guernsey Civet Limited 100% Guernsey Extra Able International Limited 100% BVI Go Gain International Limited 100% BVI See Lucky Enterprises Limited 100% BVI Aim Top Enterprises Limited 100% BVI Manage Gain Investments Limited 100% BVI Poly Advance Management Limited 100% BVI Fondue International Limited 100% BVI Richsville Investment Limited 100% BVI Phoenixville Holdings Limited 100% BVI Lucan Investments Limited 100% BVI Mega League Investments Limited 100% BVI Prominent Group Limited 100% BVI Talent Empire International Limited 100% BVI Tycoon Villa International Limited 100% BVI Yield Return Limited 100% BVI Championway International Limited 100% BVI Swift Link Limited 100% BVI Magic Bright International Limited 100% BVI Multi Gold International Limited 100% BVI Right Year International Limited 100% BVI Gainsun Investments Limited 100% BVI Honeypot International Limited 100% BVI Jin Mei International Limited 100% BVI Lucky Go International Limited 100% BVI Smooth Run Group Limited 100% BVI Hillsleigh Holdings Limited 100% BVI Pacific Success Properties Limited 100% Hong Kong Maxland Properties Limited 100% Hong Kong Queensland Properties Limited 100% Hong Kong Union Century Properties Limited 100% Hong Kong Pacific Link Properties Limited 100% Hong Kong Pacific Asia Properties Limited 100% Hong Kong Golden Properties Limited 100% Hong Kong Platinum Properties Limited 100% Hong Kong Victory Star Properties Limited 100% Hong Kong Top Faith Properties Limited 100% Hong Kong China City Properties Limited 100% Hong Kong Sky Century Properties Limited 100% Hong Kong Golden City Properties Limited 100% Hong Kong Newton Properties Limited 100% Hong Kong Orient Land Properties Limited 100% Hong Kong China Crown Properties Limited 100% Hong Kong World Pacific Properties Limited 100% Hong Kong Excelsior Properties Limited 100% Hong Kong Goldex Properties Limited 100% Hong Kong Windex Properties Limited 100% Hong Kong Honway Properties Limited 100% Hong Kong Gold Century Properties Limited 100% Hong Kong New Perfect Properties Limited 100% Hong Kong Top Century Properties Limited 100% Hong Kong Weltex Properties Limited 100% Hong Kong East Base Properties Limited 100% Hong Kong 3. INVENTORIES 31 Dec 07 31 Dec 06 30 June 07 US$'000 US$'000 US$'000 Cost of properties 102,894 56,376 56,084 102,894 56,376 56,084 Macau Property Opportunities Fund Limited is guarantor for its subsidiary company in respect of payments due on Tower 6 of One Central Residences. The total of the guarantee is HK$471,370,716 (US$60,393,901) which is due on completion of the property development. During the period subsidiaries of Macau Property Opportunities Fund Limited purchased additional units within One Central Residences and there are further payments of HK$163,955,883 (US$21,006,683) due by the subsidiaries on completion of the units. 4. BASIC AND DILUTED EARNINGS/(LOSSES) PER ORDINARY SHARE The basic and diluted profit/(loss) per equivalent Ordinary Share is based on the profit/(loss) attributable to equity holders for the period of (US$10,199,000) (31 December 2006 US$2,584,000 and 30 June 2007 (US$524,000)) and on 105,000,000 (31 December 2006 and 30 June 2007: 105,000,000) weighted average number of Ordinary Shares in issue during the period. 5. NET CASH USED IN OPERATING ACTIVITIES 1 July 07- 18 May 06 - 18 May 06 - 31 Dec 07 31 Dec 06 30 June 07 US$'000 US$'000 US$'000 Operating loss from continuing operations (12,719) (2,747) (9,418) Adjustments for: Increase/(decrease) in provisions - - - Operating cashflows before movements in working capital (12,719) (2,747) (9,418) Decrease/(increase) in receivables 32 (38) (54) Increase/(decrease) in payables 5,851 239 4,038 Cash used in operations (6,836) (2,546) (5,434) Interest paid - - - Net cash used in operating activities (6,836) (2,546) (5,434) 6. RELATED PARTY TRANSACTIONS Tom Ashworth received no Director's fee from the Company. Tom Ashworth is a shareholder and Director of Sniper Capital Limited. Sniper Capital Limited is the Manager of the Company and all management and performance fees, as detailed in the Consolidated Income Statement, are due to the Manager. Tom Ashworth is a shareholder and Director of Adept Capital Services Limited. Adept Capital Services Limited provides administrative services to the Hong Kong, BVI and Macanese SPVs and received fees during the period of US$40,000 of which US$25,000 was outstanding at the period end (30 June 2007 US$42,000 of which US$Nil was outstanding at the period end). This information is provided by RNS The company news service from the London Stock Exchange

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