Dear Shareholders,

At this time last year, Macau had suffered a gaming and property downturn lasting more than two years. Amid fragile sentiment, I cautiously highlighted some early positive indicators suggesting that a gradual recovery in property market values was in sight.

Today, Macau’s prospects are looking much brighter. Gaming revenue has rebounded for 13 consecutive months, returning the economy to growth. In tandem, property values have begun to recover.

We came through this challenging period thanks to our prudent debt and cash flow management.

By focusing on enhancing the quality and profile of our assets in anticipation of an eventual upturn, our Company is well positioned today to benefit further from what we expect to be a gradual, but continuing, recovery in property values.

Financial Performance

MPO’s portfolio of properties was valued at US$425.7 million as at 30 June 2017, an increase of 9.7% on the previous year. Adjusted NAV rose by 10.2% to US$249.3 million, equivalent to US$3.26 (250 pence) per share.

IFRS NAV increased 20.8% to US$128.8 million, with an IFRS NAV per share of US$1.69 (129 pence).

Total cash at the period end stood at US$16.2 million and total borrowings were US$174.0 million, equating to a loan-to-value ratio of 39.4%.

MPO’s closing share price as at 30 June 2017 had increased 49.5% over the year to 157 pence, yet was still at a 37.2% discount to Adjusted NAV per share.

Remaining Resilient in a Challenging Environment

We have continued to enhance our portfolio, which stands out in terms of quality and positioning, through asset management and marketing initiatives.

Leasing occupancy at our flagship residential tower, The Waterside, rose strongly from 40% to more than 60% over the period, benefitting from our extensive refurbishment programme and an improvement in the VIP gaming segment. Our focus is now on increasing rental values.

Sales at our mid-market residential development, The Fountainside, remained challenging amid the introduction of further mortgage restrictions by the government. However, we are beginning to make headway, with one unit recently divested.

We have expanded our divestment strategy for Estrada da Penha by appointing a specialised international agency to manage the sale of this exceptional private villa.

As we progress towards the advanced stages of planning approval for our prime retail redevelopment site, Senado Square, we remain open to divesting the property at an acceptable price.

A Promising Outlook

Macau’s economy is forecast to grow at an average rate of approximately 8% this year and next on the back of a stronger China economy, improving gross gaming revenue and ongoing support by the Chinese government.

Large-scale new infrastructure developments will boost visitor capacity and support the city’s growth momentum, as well as its transition into a world-class leisure and tourism centre. The much-anticipated Hong Kong-Zhuhai-Macau Bridge, set to open in 2018, is likely to be a significant game-changer, enabling greater ease of access to Macau’s wide variety of attractions.

With a limited supply of new properties and barring any unforeseen negative economic or political developments, a continued recovery in property prices is the most likely future path.

Portfolio Realisation

Having navigated through the downturn, our overriding focus is now on realising asset values into the recovery. With this in mind, the Board is continuing to assess all forms of potential divestment options that might benefit shareholders.

In late 2016, the Company received a bid for its entire portfolio – the first serious combined offer for our assets. Driven by the clear attraction of offering shareholders a complete and clean exit within a short period of time, we engaged with the interested party but the final offer remained at a substantial discount to MPO’s end-December 2016 Adjusted NAV. This was considered unacceptable and rejected by the Directors and key shareholders, particularly in light of the clear evidence of a continued recovery in the property cycle.


Sentiment in Macau has turned, as we anticipated, with a recovery in property prices proving to be gradual but sustained. Our portfolio is prime and well positioned. We remain wholly committed to our goal of divesting our assets, maximising exit values and returning cash to shareholders over the next two years.

Chris Russell