The Waterside

The Waterside is MPO's landmark development in downtown Macau, comprising 59 luxury residential apartments for lease.

Macau's COVID-19 prevention and control measures severely impacted the city's economy in H1, leading to a subdued leasing environment at The Waterside. After visa and travel restrictions between mainland China and Macau were relaxed, potential tenants began making enquiries, but they remained significantly more cautious about committing to long-term leases than before COVID. As of the end of the year, 31% of The Waterside's apartments were occupied and the average rent stood at US$2.47 per square foot per month. The Manager will continue to offer flexible terms to stabilise and improve the occupancy rate. On the asset management front, we have utilised the relatively quiet period to conduct further maintenance and enhancement works at the property, upgrading furniture and installing more energy-efficient electrical appliances.

The divestment of The Waterside will be a key focus for the Manager, and discussions with a number of interested parties for an en-bloc sale are ongoing. The property remains a prime asset for investors seeking exposure to Macau and the next phase of growth in the Greater Bay Area.

Strata Unit at One Central Residences

At One Central Residences, the final remaining unit has been sold for approximately HK$25 million (US$3.2 million), a 4% premium to its latest valuation. The transaction was completed in November. Most of the sale proceeds were used to pay down The Waterside's bank loan.

A loan facility of HK$540 million (US$69.7 million) was arranged in September 2020 to refinance repayments of previous loan tranches on improved terms. Subsequent to the period end, in February 2021, a further tranche of the facility was successfully arranged to refinance the repayment obligations of the original tranche, which will become due for settlement up to and including March 2022 for a total sum of HK$250 million (US$32.2 million). These refinancing initiatives significantly improve the Company's liquidity, which is particularly critical during the current period of market uncertainty, to help secure optimal value for Shareholders.

The Fountainside

The Fountainside is a low-density, freehold residential development comprising 42 homes and 30 car-parking spaces in Macau's popular Penha Hill district.

Despite the dampening effects of the pandemic, the Manager secured sales of three residential units for a combined total of HK$36 million (US$4.7 million). The sales were transacted at prices representing a 2% premium to the properties' respective latest valuations. Among the three sales, two were completed in October and one is expected to be complete by end of February. This leaves only one standard unit for sale.

The Manager continues to pursue creative strategies to drive sales of the four villas, and has engaged selected agents to position the remaining units as investment properties. As purchasers currently prefer smaller, more affordable properties, the Manager is pursuing a plan to reconfigure the two large duplexes into smaller apartments. A submission has been made to the authorities for approval to carry out this work, and we expect the reconfiguration to complete by the end of this year. The Manager is currently working on a variety of divestment options.

Penha Heights (Estrada da Penha)

Estrada da Penha is a prestigious, colonial-style villa with a gross floor area of approximately 12,000 sq ft perched above the exclusive residential enclave of Penha Hill and surrounded by lush greenery.

The Manager has completed further essential maintenance and carefully considered enhancement works at the property, taking advantage of the lull ushered in by COVID to position the property for a renewed sales process.

Since travel restrictions for visitors from mainland China to Macau were eased in H2 2020, sales and marketing efforts have been stepped up to tap the pool of potential buyers. Estrada da Penha has been name branded as Penha Heights, reflecting the prestigious positioning of the property. The Manager has also engaged selected property agents specialising in the luxury segment to explore potential divestment opportunities.

MACROECONOMIC OUTLOOK

COVID-19 situation remains under control

In contrast with the COVID challenges faced globally, the pandemic remains well under control in Macau. The total number of confirmed cases stands at 48 with no related deaths. The containment of the disease is encouraging, especially given the government's announcement that Macau has procured 1.5 million doses of COVID vaccines, sufficient for the entire population. The territory's vaccination programme commenced in February 2021.

Although Macau and mainland China have been vigilant about managing COVID-19 outbreaks, public health officials continue to walk a tightrope until herd immunity is achieved through widespread vaccination. The fragility of the situation has been borne out by winter surges affecting almost every Asian country.

Neighbouring Hong Kong, in sharp contrast to Macau, is suffering a fourth COVID wave which started in November. Despite the easing of quarantine measures for Hong Kong residents returning from Macau and Guangdong from late November onwards, a proposed travel bubble involving mainland China, Macau and Hong Kong has been postponed, due primarily to the pre-requisite that Hong Kong brings the pandemic under control before it can be launched.

Economy began a nascent recovery

Macau's economy was severely disrupted by efforts to curb the spread of COVID-19. In particular, border control measures meant that Macau's twin economic engines - tourism and gaming -almost ground to a halt, particularly in Q2 2020, causing gross domestic product to plummet 68% year on year (YoY).

Macau's government has been commended for its swift action in mobilising its reserves to soften the impact of the pandemic on the economy. A package of economic relief measures was rolled out rapidly to boost local spending and reduce the financial burden on local businesses, particularly SMEs, including consumption subsidies, rent waivers, job-training opportunities, tax deductions, interest-free loans and other incentives. Public infrastructure investments, including the Light Rail Transit link between Cotai and Hengqin Island, were also announced.

One of the relief measures was an innovative consumer subsidy plan that provided each Macau resident with US$1,000 worth of e-vouchers totalling c.US$730 million and aimed at boosting the SME sector. A further tranche is being considered, depending on developments related to the pandemic and its continued economic impact.

After travel restrictions with China were lifted and the issuance of visas was resumed to allow mainland Chinese visitors to travel to Macau, the economy began a nascent recovery. In Q3, the GDP contraction narrowed to 64% YoY. For the first three quarters of the year, GDP was down 60% YoY. The International Monetary Fund forecasts that Macau's GDP will have contracted by 52% in 2020 and that it will return to positive growth of 24% in 2021.

Policy Address to strengthen Macau's foundations

In November, Macau Chief Executive Ho lat Seng delivered his 2021 Policy Address, a strategic plan focused on epidemic control, revitalising and diversifying the economy, social welfare, administrative reform and closer integration with mainland China's development plans.

Among the highlights were plans for economic recovery and sustainable development. These include investments in public infrastructure to enhance cross-border connectivity and to improve local transportation. A host of economic focus areas also featured, including the development of a financial services industry and the establishment of a bond market, the promotion of industrialisation of traditional Chinese medicine, facilitation of the development of the convention and exhibition industry, and enhanced support for the SME sector.

On the keenly-anticipated issue of Macau's new gaming concessions, the policy address delivered very few details. In 2021, the government will focus on preparatory and preliminary work for the new concessions, with the goal of promoting the stable and healthy development of the gaming industry. This will entail a review of existing laws, including a public consultation, culminating in the submission of a draft bill to the Legislative Assembly by the end of the year.

Gross gaming revenue recovers

Gross gaming revenue (GGR) for full-year 2020 stood at around US$7.6 billion, a drop of 79% YoY. By October, with the return of some Chinese tourists to Macau, the GGR data was more encouraging, albeit from a low base. GGR for October surged 229% month on month (MoM) to around US$910 million, and reached US$980 million in December, the highest since February.

Increased optimism has also been reflected in new hotel openings previously put on the back burner amid the pandemic. After witnessing the return of mainland Chinese tourists to Macau, Sands China opened its new all-suite tower, The Grand Suites at Four Seasons, in October and launched its first phase of its British-themed resort, The Londoner Macao, in early February 2021.

Although the forecasts for 2021 are much higher than 2020's lows, GGR will not recover to 2019 levels as yet. Morgan Stanley has recently predicted that 2021's GGR will reach around 65% of 2019's total while official Macau government numbers are projecting 44.5% of 2019. VIP gaming which has been outpaced by the growing mass market segment in recent years will continue to face pressures in 2021. In particular, China's new law combatting overseas gaming, which will come into force in March 2021, is likely to affect Macau's VIP segment.

Despite continued uncertainties over the award of new gaming concessions, Morgan Stanley predicts that Macau's government is likely to extend the six existing casino concessions for three years until 2025.

Tourism began to recover following the relaxation in travel and visa restrictions for mainland Chinese

Following a dismal period for tourism in the first three quarters of the year, there were signs of a revival from late September onwards, when a travel bubble between Macau and mainland China was launched. The issuance of tourist visas for mainland Chinese to travel to Macau resumed in tandem with easing travel restrictions in time for the Golden Week holiday. In October, November and December, visitor arrivals rose steadily MoM, by 30%, 9% and 4%, respectively. Macau welcomed more than 30,000 visitors on New Year's Eve, the highest daily number over the past 11 months. In Q4, visitor arrivals increased by 150% QoQ to around 1.9 million, although this represented a decline of 80% YoY. For the full-year 2020, Macau welcomed a total of around 5.9 million visitors, down 85% YoY, marking the first year since 2015 in which tourist numbers have declined.

Mainland China is the main source market of Macau's tourist arrivals, so the Macau government has set up a pipeline of promotions to boost visitor arrivals and increase tourist spending. To heighten awareness that Macau is "open for business", a MOP290 million (US$36 million) campaign ran from September to December with attractive offers for mainland Chinese visitors involving accommodation and shopping vouchers. For 2021, the government is already rolling out further promotions targeting mainland Chinese.

PROPERTY MARKET OVERVIEW

Following a subdued H1 2020, Macau's residential property market picked up slightly in H2 as the pandemic remained well under control in the territory, with the total number of transactions increasing by 10% over the six-month period to 3,354, though still a 12% decline YoY. In Q4, developers' new launches in October were well received by local purchasers, primarily end-users looking to upgrade from their current homes. For the full year, a total of 6,394 transactions were recorded, down 17% YoY, and the average transaction price was c.US$1,190 per square foot, down 6% YoY. Purchases by first-time buyers continued to account for over 80% of all residential property transactions.

Luxury residential segment remains subdued

In the luxury residential property segment, sentiment is still muted. Property agents expect investor confidence and appetite for the luxury segment to recover, with Macau seen as a safe haven that has COVID-19 under control and a vaccination programme being successfully rolled out.

Properties in the Company's portfolio fall into the over-MOP8 million (US$1 million) price category, meaning that property investors face anti-speculation measures such as higher stamp duties for second and third properties, alongside strict mortgage policies. Buyers have therefore remained cautious when it comes to making high-value investments. Recent trends in Macau show that residential homes priced below MOP8 million (US$1 million) remain the most sought-after properties.

Looking ahead

Although Macau has delivered a measure of cautious optimism about an economic recovery in 2021, the territory's growth trajectory hangs in the balance and depends on a stable COVID situation both internally and in mainland China. Despite vigilance among the authorities, any resurgence of the virus could dampen tourism and gaming, impacting Macau's recovery.

With restrictions gradually being eased, investors may feel that the worst is over and begin to refocus on potential property investment. Macau remains well positioned for such interest, offering a strong value propositions for investors. The government's goals, as stated in the Chief Executive's Policy Address, are designed to lay the foundations for more sustainable growth in the future. Initiatives to diversify the economy to focus on non-gaming tourism and integrate more closely with the Greater Bay Area are sound policies that will enable Macau to tap mainland China's growth.

It is expected that China's economy will be the only major economy in the world to have grown in 2020, with GDP remarkably having increased by 2.3% YoY. For 2021, China is expected to register GDP growth of c.8%, according to forecast by the IMF. The strengthening of the RMB against the US dollar will also likely rekindle mainland Chinese investors' appetite for offshore real-estate purchases, potentially having a positive impact on Macau's property market and the Company's divestment efforts.

The Company continues to work actively towards timely divestments of the remaining assets in 2021, although any adverse developments related to the pandemic may continue to affect our disposal timeline.

INTERIM FINANCIAL STATEMENTS

Directors' Statement of Responsibilities

The Directors are responsible for preparing this half-yearly financial report in accordance with applicable law and regulations.

The Directors confirm that to the best of their knowledge:

• the interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union; and

• the Chairman's Message and Manager's Report meet the requirements of an interim management report, and include a fair review of the information required by:

a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the interim condensed consolidated financial statements; and a description of the principal risks and uncertainties for the year to date and the remaining six months of the year; and

b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board

Mark Huntley

Chairman

17 February 2021

Interim Condensed Consolidated Statement of Financial Position (Unaudited)

As at 31 December 2020

The interim condensed consolidated financial statements were approved by the Board of Directors and authorised for issue on 17 February 2021.

The notes form part of these interim condensed consolidated financial statements.

Interim Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the six-month period from 1 July 2020 to 31 December 2020

All items in the above statement are derived from continuing operations.

The notes form part of these interim condensed consolidated financial statements.

Interim Condensed Consolidated Statement of Changes in Equity (Unaudited)

Movement for the six-month period from 1 July 2020 to 31 December 2020 (unaudited)

Movement for the six-month period from 1 July 2019 to 31 December 2019 (unaudited)

Movement for the year from 1 July 2019 to 30 June 2020 (audited)

The notes form part of these interim condensed consolidated financial statements.

Interim Condensed Consolidated Statement of Cash Flows (Unaudited)

For the six-month period from 1 July 2020 to 31 December 2020

The notes form part of these interim condensed consolidated financial statements.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

For the six-month period from 1 July 2020 to 31 December 2020

General information

Macau Property Opportunities Fund Limited (the "Company") is a Company incorporated and registered in Guernsey under The Companies (Guernsey) Law, 1994. This law was replaced by the Companies (Guernsey) Law, 2008 on 1 July 2008. The Company is an authorised entity under the Authorised Closed-Ended Investment Schemes Rules 2008 and is regulated by the Guernsey Financial Services Commission. The address of the registered office is given below.

The interim condensed consolidated financial statements for the six months ended 31 December 2020 comprise the interim financial statements of the Company and its subsidiaries (together referred to as the "Group"). The Group invests in residential property in Macau.

There have been no changes to the Group's principal risks and uncertainties in the six-month period to 31 December 2020 and the Board of Directors does not anticipate any changes to the principal risks and uncertainties in the second half of the year. Principal risks and uncertainties are further discussed in the Manager's Report in the Group's Annual Report to 30 June 2020.

The interim condensed consolidated financial statements are presented in US Dollars ("US$") and are rounded to the nearest thousand ($'000).

These interim condensed consolidated financial statements have been approved for issue by the Board of Directors on 17 February 2021.

1 Significant accounting policies

    Basis of accounting

The annual consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the United Kingdom; applicable legal and regulatory requirements of Guernsey Law and under the historical cost basis, except for financial assets and liabilities held at fair value through profit or loss ("FVPL") and investment properties that have been measured at fair value. The accounting policies and valuation principles adopted are consistent with those of the previous financial year.

The interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting. The same accounting policies and methods of computation are followed in the interim financial statements as compared with the annual financial statements. The interim condensed consolidated financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as of 30 June 2020.

    New and amended standards and interpretations applied

The following amendments to existing standards and interpretations are effective for the year ended 30 June 2021 and therefore were applied in the current period but did not have a material impact on the Group:

• Amendments to IFRS 3 Business Combinations - Definition of a Business

• Amendments to IAS 1 and IAS 8 - Definition of Material

• Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7

Going concern

The Group continues to meet its capital requirements and day-to-day liquidity needs through the Group's cash resources. As part of their assessment of the going concern of the Group as at 31 December 2020, the Directors have reviewed the comprehensive cash flow forecasts prepared by management which make assumptions based upon current and expected future market conditions, including predicted future sales of properties taking into consideration current market circumstances. It is the Directors' belief that, based upon these forecasts and their assessment of the Group's committed banking facilities, it is appropriate to prepare the financial statements of the Group on a going concern basis.

The Directors, after the continuation resolution was passed at the Annual General Meeting of the Company on 30 November 2020 extending the Fund's life until 30 November 2021, assessed whether the continuation vote before the end of 2021 gives rise to a material uncertainty that might cast significant doubt on the Fund's ability to continue as a going concern. The Directors have also considered the going concern assumption outside the primary going concern horizon. The Directors currently expect to receive continuation support from major shareholders and over 50% of shareholder support is required in November 2021 to ensure continuation; it is likely that returns from the sale of properties could well be significantly lower if the Fund was forced to sell as a result of discontinuation and it is therefore commercially rational for the Fund to continue in business. Therefore, the Directors believe it is appropriate to prepare the financial statements of the Group on the going concern basis based upon existing cash resources, the forecasts described above, the extension of the life of the Company until November 2021 agreed at the Annual General Meeting on 30 November 2020 and the Directors' assessment of the Group's committed banking facilities and expected continuing compliance with related covenants.

The continuing impact of the COVID-19 pandemic has had a slight downward effect on the valuation of the Group's investment portfolio but has not prevented a number of sale transactions in the current period and has not had a significant impact on the loan covenants held by the Group. The overall uncertainty brought about by COVID-19 and its impact on the Group is continuing to be closely monitored by the Board.

Seasonal and cyclical variations

The Group does not operate in an industry where significant or cyclical variations as a result of seasonal activity are experienced during the financial year.

2. Segment reporting

The Chief Operating Decision Maker (the "CODM") in relation to Macau Property Opportunities Fund Limited is deemed to be the Board itself. The factors used to identify the Group's reportable segments are centred on asset class, differences in geographical area and differences in regulatory environment. Furthermore, foreign exchange and political risk are identified, as these also determine where resources are allocated.

Based on the above and a review of information provided to the Board, it has been concluded that the Group is currently organised into one reportable segment based on the single geographical sector, Macau. This segment refers to residential properties.

3. Investment property

Valuation gains and losses from investment property are recognised in profit and loss for the period and are attributable to changes in unrealised gains or losses relating to investment property held at the end of the reporting period.

The valuation process is initiated by the Investment Adviser with the Board consent and approval, who appoints a suitably qualified valuer to conduct the valuation of the investment property. The results are overseen by the Investment Adviser. Once satisfied with the valuations based on their expectations, the Investment Adviser reports the results to the Board. The Board periodically meets with the valuer and reviews the latest valuations based on their knowledge of the property market and compare these to previous valuations.

The Group's investment properties were revalued at 31 December 2020 by independent, professionally-qualified valuers: Savills (Macau) Limited ("Savills"). The valuation has been carried out in accordance with the current Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Standards to calculate the market value of the investment properties in their existing state and physical condition, with the assumptions that:

• The owner sells the property in the open market without any arrangement, which could serve to affect the value of the property.

• The property is held for investment purposes.

• The property is free from encumbrances, restrictions and outgoings of any onerous nature which could affect its value.

The fair value of investment property is independently determined by Savills, using recognised valuation techniques. The technique deployed was the income capitalisation method. The determination of the fair value of investment property requires the use of estimates such as future cash flows from assets (such as lettings, tenants' profiles, future revenue streams, capital values of fixtures and fittings, plant and machinery, any environmental matters and the overall repair and condition of the property) and discount rates applicable to those assets. These estimates are based on local market conditions existing at the reporting date.

See Note 11 in relation to deferred tax liabilities on investment property.

Capital expenditure in the period relates to The Waterside.

Rental income arising from The Waterside of US$670,000 (6 months ended 31 December 2019: US$1,435,000, 12 months ended 30 June 2020: US$2,606,000) was received during the period. Direct operating expenses of US$481,000 (6 months ended 31 December 2019: US$459,000, 12 months ended 30 June 2020: US$956,000) arising from The Waterside that generated rental income were incurred during the six-month period. Direct operating expenses during the period arising from vacant units totalled US$197,000 (6 months ended 31 December 2019: US$115,000, 12 months ended 30 June 2020: US$255,000).

The table below shows the assumptions used in valuing the investment properties which are classified as Level 3 in the fair value hierarchy:

The fair value of The Waterside is determined using the income approach, more specifically a term and reversion analysis, where a property's fair value is estimated based on the rent receivable and normalised net operating income generated by the property, which is divided by the capitalisation (discount) rate. The difference between gross and net rental income includes the same expense categories as those for the discounted cash flow method with the exception that certain expenses are not measured over time, but included on the basis of a time weighted average, such as the average lease up costs. Under the income capitalisation method, over and under-rent situations are separately capitalised (discounted).

If the estimated reversionary rent increased/decreased by 5%, (and all other assumptions remained the same), the fair value of The Waterside would increase by US$10 million (6 months ended 31 December 2019: US$11 million, 12 months ended 30 June 2020: US$10 million) or decrease by US$10 million (6 months ended 31 December 2019: US$11 million, 12 months ended 30 June 2020: US$10 million).

If the term and reversionary yields or discount rates increased/decreased by 5%, (and all other assumptions remained the same), the fair value of The Waterside would decrease by US$10 million (6 months ended 31 December 2019: US$10 million, 12 months ended 30 June 2020: US$10 million) or increase by US$11 million (6 months ended 31 December 2019: US$11 million, 12 months ended 30 June 2020: US$10 million).

The same valuation method was deployed in June 2020 and December 2020.

The Waterside is currently valued at its highest and best use. There is no extra evidence available to suggest that it has an alternative use that would provide a greater fair value measurement.

There have been no transfers between levels during the period or any change in valuation technique since the last period.

4. Deposits with lenders

Pledged bank balances represent deposits pledged to the banks to secure the banking facilities granted to the Group. Deposits amounting to US$6.7 million (31 December 2019: US$1.9 million, 30 June 2020: US$4.3 million) have been pledged to secure long-term banking facilities and are, therefore, classified as non-current assets. There are no other significant terms and conditions associated with these pledged bank balances.

5. Inventories

Additions include capital expenditure, development costs and capitalisation of financing costs.

Under IFRS, inventories are valued at the lower of cost and net realisable value. The carrying amounts for inventories as at 31 December 2020 amounts to US$35,592,000 (6 months ended 31 December 2019: US$41,091,000, 12 months ended 30 June 2020: US$39,631,000). Net realisable value as at 31 December 2020 as determined by independent, professionally-qualified valuer, Savills, was US$66,848,000 (6 months ended 31 December 2019: US$81,006,000, 12 months ended 30 June 2020: US$74,829,000).

During the period ended 31 December 2020, three residential units and one car parking space of The Fountainside and one individual unit of One Central Residences were sold for a total consideration of US$8.2 million (HK$63.9 million) against a total cost of US$4.1 million (HK$32.3 million) which resulted in a net profit of US$4.1 million (HK$31.6 million) after all associated fees and transaction costs.

During the year ended 30 June 2020, one residential unit, two car parking spaces and five motorcycle spaces of The Fountainside, and one individual unit of One Central Residences were sold for a total consideration of US$4.6 million (HK$36.0 million) against a total cost of US$2.7 million (HK$21.0 million) which resulted in a net profit of US$1.9 million (HK$15.0 million) after all associated fees and transaction costs.

During the period ended 31 December 2019, one residential unit, two car parking spaces and five motorcycle spaces of The Fountainside were sold for a total consideration of US$2.2 million (HK$17.1 million) against a total cost of US$0.8 million (HK$5.9 million) which resulted in a net proceed of US$1.4 million (HK$11.2 million).

6. Interest-bearing loans

There are interest-bearing loans with three banks:

Hang Seng Bank

The Group has a term loan facility with Hang Seng Bank for The Waterside.

In September 2020, the Group executed a HK$540 million (US$69.7 million) five-year term loan facility (Tranche 7) to refinance previous tranches which were due for settlement in September 2020.

As at 31 December 2020, two tranches remained outstanding. Tranche 3 had an outstanding balance of HK$nil (US$nil) (31 December 2019: HK$300 million (US$38.4 million), 30 June 2020: HK$300 million (US$38.7 million)); Tranche 4 had an outstanding balance of HK$nil (US$nil) (31 December 2019: HK$40 million (US$5.1 million), 30 June 2020: HK$40 million (US$5.2 million)); Tranche 5 had an outstanding balance of HK$nil (US$nil) (31 December 2019: HK$132 million (US$17.0 million), 30 June 2020: HK$132 million (US$17.1 million)); Tranche 6 had an outstanding balance of HK$358 million (US$46.2 million) (31 December 2019: HK$428 million (US$55.0 million), 30 June 2020: HK$428 million (US$55.2 million)); and Tranche 7 had an outstanding balance of HK$515 million (US$66.5 million) (31 December 2019: HK$nil (US$nil), 30 June 2020: HK$nil (US$nil)).

The interest rates applicable to Tranche 3, Tranche 4, Tranche 5 and Tranche 6 of the term loan are 1.9% per annum over the 1-, 2-or 3-month HIBOR rate. The interest rates applicable to Tranche 7 is 1.8% per annum over the 1-, 2-or 3-month HIBOR rate. The choice of rate is at the Group's discretion. Tranche 3, Tranche 4 and Tranche 5 have been fully repaid in September 2020. Tranche 6 matures on 19 September 2022 and the principal is to be repaid in half-yearly instalments commencing from September 2020 with 30% of the principal due upon maturity. Tranche 7 matures in September 2025 and the principal is to be repaid in nine instalments commencing from December 2020 with 60% of the principal due upon maturity. The loan-to-value covenant is 60%. As at 31 December 2020, the loan-to-value ratio for the Hang Seng One Central facility was 56.34%. The facility is secured by means of a first registered legal mortgage over The Waterside as well as a pledge of all income from the units. The Company is the guarantor for the credit facility. In addition, the Group is required to maintain a cash reserve equal to six months' interest with the lender.

The Group has a loan facility for The Fountainside.

The Group has executed a loan facility with Hang Seng Bank to refinance the credit facility with the Industrial and Commercial Bank of China (Macau) Limited in relation to The Fountainside. The Facility amount is HK$96 million (US$12.4 million) divided into 3 tranches, with a tenor of 4 years to mature in March 2024. Tranche A is a facility for an amount of HK$89 million (US$11.5 million) for refinancing the loan facility with ICBC, which expired in March 2020. Tranche B is a facility for an amount of HK$7 million (US$0.9 million) for financing the alteration costs of The Fountainside. The facility of Tranche A was fully drawdown in March 2020 to repay the ICBC facility. The interest rates applicable to Tranche A and Tranche B are 2.8% per annum and 3.3% per annum respectively over the 1-, 2-or 3-month HIBOR rate. The choice of rate is at the Group's discretion. The principal is to be repaid in half-yearly instalments commencing in September 2021 with 47% of the principal due upon maturity. The loan-to-value covenant is 55%. The facility is secured by means of a first registered legal mortgage over all unsold units and car parking spaces of The Fountainside as at the loan facility date as well as a pledge of all income from the units and the car parking spaces. The Company is the guarantor for the credit facility. In addition, the Group is required to maintain a cash reserve equal to six months' interest with the lender.

As at 31 December 2020, the facility had an outstanding balance of HK$50.9 million (US$6.6 million) (31 December 2019: HK$89.0 million (US$11.4 million), 30 June 2020: HK$89.0 million (US$11.5 million)). As at 31 December 2020, the loan-to-value ratio for this facility was 28.68%.

The Group has two loan facilities for Estrada da Penha:

Banco Tai Fung

The loan facility with Banco Tai Fung originally had a term of two years and the facility amount was HK$70 million which expired in June 2019 and was subsequently renewed for another term of two years. Interest was charged at 2.3% per annum over the 3-month HIBOR rate and was revised to Prime Rate minus 1.375% per annum in June 2019. Repayment is due in full at maturity in June 2021. As at 31 December 2020, the facility had an outstanding balance of HK$70 million (US$9.0 million) (31 December 2019: HK$70 million (US$9.0 million), 30 June 2020: HK$70 million (US$9.0 million)). This facility is secured by a first legal mortgage over the property as well as a pledge of all income from the property. The Company is the guarantor for this term loan. Interest is paid monthly on this loan facility. As at 31 December 2020, the loan-to-value ratio for this facility was 44.30%. There is no loan-to-value covenant for this loan.

ICBC Macau

The loan facility with Industrial and Commercial Bank of China (Macau) Limited originally had a term of two years. Interest was 2.3% per annum over the 3-month HIBOR rate and repayment was due in full at maturity in December 2019. It was subsequently renewed for another term until June 2021 at the same interest rate. As at 31 December 2020, the facility had an outstanding balance of HK$79 million (US$10.2 million) (31 December 2019: HK$79 million (US$10.1 million), 30 June 2020: HK$79 million (US$10.2 million)). This facility is secured by a first legal mortgage over the property as well as a pledge of all income from the property. The Company is the guarantor for this term loan. In addition, the Group is required to maintain a cash reserve equal to six months' interest with the lender. Interest is paid monthly on this loan facility. The loan-to-value covenant is 60%. As at 31 December 2020, the loan-to-value ratio for this facility was 42.02%.

Bank Loan Interest

Bank loan interest paid during the period was US$1,737,000 (6 months ended 31 December 2019: US$3,100,000, 12 months ended 30 June 2020: US$5,690,000). As at 31 December 2020, the carrying amount of interest-bearing loans included unamortised prepaid loan arrangement fee of US$1,084,000 (31 December 2019: US$484,000, 30 June 2020: US$461,000).

Fair Value

The fair value of fixed rate financial assets and liabilities carried at amortised cost are estimated by comparing market interest rates when they were first recognised with current market rates for similar financial instruments.

The estimated fair value of fixed interest bearing loans is based on discounted cash flows using prevailing market interest rates for debts with similar credit risk and maturity. As at 31 December 2020, the fair value of the financial liabilities was US$184,000 lower than the carrying value of the financial liabilities (31 December 2019: US$401,000 higher than the carrying value of the financial liabilities, 30 June 2020: US$332,000 higher than the carrying value of the financial liabilities).

The Group's interest-bearing loans have been classified within Level 2 as they have observable inputs from similar loans. There have been no transfers between levels during the period or a change in valuation technique since last period.

7. Basic and diluted loss per Ordinary Share

Basic and diluted loss per equivalent Ordinary Share is based on the following data:

8. Net asset value reconciliation

*  US$:GBP rates as at relevant period end

The NAV per share is arrived at by dividing the net assets as at the date of the consolidated statement of financial position, by the number of Ordinary Shares in issue at that date.

Under IFRS, inventories are carried at the lower of cost and net realisable value. The Adjusted NAV includes the uplift of inventories to their market values before any tax consequences or adjustments.

The Adjusted NAV per share is derived by dividing the Adjusted Net Asset Value as at the date of the consolidated statement of financial position, by the number of Ordinary Shares in issue at that date.

There are no potentially dilutive instruments in issue.

9. Cash flows from operating activities

Cash and cash equivalents (which are presented as a single class of assets on the face of the interim condensed consolidated statement of financial position) comprise cash at bank and other short-term, highly-liquid investments with a maturity of three months or less.

10.  Related party transactions

Directors of the Company are all Non-Executive and by way of remuneration receive only an annual fee.

The Directors are considered to be the key management personnel (as defined under IAS 24) of the Company. Directors' fees outstanding as at 31 December 2020 were US$41,000 (31 December 2019: US$39,000, 30 June 2020: US$37,000).

Thomas Ashworth retired as a Director at the Annual General Meeting on 29 November 2019 and is therefore not a related party as at 31 December 2020. Thomas Ashworth has a beneficial interest in and is a Director of Sniper Capital Limited, is a shareholder and Director of Adept Capital Partners Services Limited.

Sniper Capital Limited is the Manager to the Group and received management fees during the period as detailed in the Interim Condensed Consolidated Statement of Comprehensive Income. Management fees are paid quarterly in advance and amounted to US$736,000 (6 months ended 31 December 2019: US$1,863,000, 12 months ended 30 June 2020: US$2,668,000) at a fee of 1.0% per annum of the Net Asset Value (2.0% per annum until 31 December 2019), as adjusted to reflect the Property Investment Valuation Basis. Thomas Ashworth received no Directors' fees from the Group.

A realisation fee shall be payable on deals originated and secured by the Manager in 2020 which shall be linked to the sales price achieved. Where the sale price of the asset is 90 per cent. or more of the of the value of the relevant asset as at 30 September 2019 (the "Carrying Value") a fee of 2.5 per cent. of net proceeds (net of debt, costs and taxes) ("Net Proceeds") shall be payable; where the sale price of an asset is more than 80 per cent. but less than 90 per cent. of the Carrying Value of the relevant asset, a realisation fee of 1.5 per cent. of Net Proceeds shall be payable; and where the sale price of an asset is less than 80 per cent. of the Carrying Value, no realisation fee shall be payable. Realisation fees for the period totalled US$217,000 (6 months ended 31 December 2019: US$nil, 12 months ended 30 June 2020: US$nil). For the calendar year 2021, a realisation fee of 1.5 per cent. shall be payable on sales of assets above 80 per cent. of the Carrying Values and a management fee of US$300,000 per quarter shall be payable.

Additionally, in the event that divestments of all of the assets are secured by the Manager (either in one transaction or multiple transactions) prior to 31 December 2020, an extra incentive fee equal to 1 per cent. of the Net Proceeds of the assets shall be payable (the "Extra Incentive Fee"), subject to the aggregate sale price of those assets exceeding 80 per cent. of the Carrying Values of the relevant assets in aggregate. The time period for securing the realisation of all assets in order for the Manager to qualify for the Extra Incentive Fee may be extended for a further six month period subject to the satisfaction of certain conditions. In no circumstances will the 2020 Realisation fee and Incentive Fee exceed in aggregate US$5 million. The 2021 Realisation fee (together with Incentive Fee (if any) during such period) shall not exceed in aggregate US$5 million. Incentive fees payable for the period totalled US$nil (6 months ended 31 December 2019: US$nil, 12 months ended 30 June 2020: US$nil).

No performance fee was accrued at period end (31 December 2019: US$nil, 30 June 2020: US$nil). No performance fee was paid during the period (6 months ended 31 December 2019: US$nil, 12 months ended 30 June 2020: US$nil).

Adept Capital Partners Services Limited provides administrative services to the Macanese, Hong Kong and British Virgin Islands SPVs and received fees during the period of US$29,000 of which US$nil was outstanding at the period end (31 December 2019: US$29,000 of which US$nil was outstanding, 30 June 2020: US$58,000 of which US$nil was outstanding).

All intercompany loans and related interest are eliminated on consolidation.

11.  Taxation provision

As at period-end, the following amounts are the outstanding tax provisions.

Deferred taxation

The Group has recognised the deferred tax liability for the taxable temporary difference relating to the investment property carried at fair value and has been calculated at a rate of 12%.

Provision for Macanese taxations

The Group has made provisions for property tax and complementary tax arising from its Macau business operations.

Tax Reconciliation

The differences between the taxation for the period and the movement in taxation provisions are due to the foreign exchange movements and Macanese taxation paid during the period. The effective tax rate of 551.2% has occured due to the disproportionately large increase in Macanese complimentary tax relative to the loss before tax for the period.

12.  Share capital

Ordinary shares

The Company has one class of ordinary shares which carries no rights to fixed income.

The Board has publicly stated its commitment to undertake share buybacks at attractive levels of discount of the share price to Adjusted NAV. In order to continue this strategy, the Board has renewed this authority at the 2020 Annual General Meeting.

13.  Subsequent events

The Group entered into a promissory sale and purchase agreement for a residential unit at The Fountainside in November 2020 for a consideration of HK$12,628,000 (US$1,629,000). The transaction is due to be completed in late February 2021.

DIRECTORS AND COMPANY INFORMATION

Directors

Mark Huntley (Chairman)

Alan Clifton

Wilfred Woo

Audit and Risk Committee

Alan Clifton (Chairman)

Wilfred Woo

Mark Huntley

Management Engagement Committee

Mark Huntley (Chairman)

Alan Clifton

Wilfred Woo

Nomination and Remuneration Committee

Alan Clifton (Chairman)

Wilfred Woo

Mark Huntley

Disclosure and Communications Committee

Mark Huntley (Chairman)

Alan Clifton

Manager

Sniper Capital Limited

Vistra Corporate Services Centre

Wickhams Cay II

Road Town, Tortola

VG1110

British Virgin Islands

Investment Adviser

Sniper Capital (Macau) Limited

Rua Correia Da Silva No. 53

Soi Cheong Res-Do-Chao A, Taipa

Macau

Solicitors to the Group as to English Law

Norton Rose Fulbright LLP

3 More London Riverside

London SE1 2AQ

Advocates to the Group as to Guernsey Law

Carey Olsen

Carey House

Les Banques

St Peter Port

Guernsey GY1 4BZ

Corporate Broker

Liberum Capital Limited

Ropemaker Place, Level 12

25 Ropemaker Street

London EC2Y 9LY

Independent Auditors

(appointed on 3 December 2020)

Deloitte LLP

Regency Court

Glategny Esplanade

St Peter Port

Guernsey GY1 3HW

(resigned on 3 December 2020)

Ernst & Young LLP

PO Box 9

Royal Chambers

St Julian's Avenue

St Peter Port

Guernsey GY1 4AF

Property Valuers

Savills (Macau) Limited

Suite 1309-10

13/F Macau Landmark

555 Avenida da Amizade

Macau

Administrator & Company Secretary

Ocorian Administration(Guernsey)Limited

PO Box 286

Floor 2, Trafalgar Court

Les Banques

St Peter Port

Guernsey GY1 4LY

Macau and Hong Kong Administrator

Adept Capital Partners Services Limited

Unit B1, 25/F, MG Tower

133 Hoi Bun Road

Kwun Tong, Kowloon

Hong Kong

Registered Office

PO Box 286

Floor 2, Trafalgar Court

Les Banques

St Peter Port

Channel Islands, GY1 4LY