Macau Property Regulatory News (MPO)

27 February 2015

Macau Property Opportunities Fund Limited

("MPO" or the "Company")

Interim Results for the period ended 31 December 2014

Macau Property Opportunities Fund Limited announces its results for the six months ended 31 December 2014. The Company, which is managed by Sniper Capital Limited, develops and invests in property opportunities in Macau and China's Pearl River Delta.

FINANCIAL HIGHLIGHTS

· Property portfolio registered a decline in valuation of 2.1% to US$547.6* million over the period amid a softening of the property market in the wake of China's anti-graft campaign.

· Adjusted NAV per share decreased 3.6% to US$4.71 (302p**) whilst IFRS NAV per share fell 9.6% to US$2.48 over the period.

· 3.6% of MPO's outstanding issued shares were repurchased and cancelled at a weighted average price of 245.38p.

· Cash balance stood at US$10.4 million as at 31 December 2014, inclusive of which US$5.8 million in deposits pledged as collateral for banking facilities.

· Assuming a full drawdown of its committed loan facilities and based on the Company's portfolio value as at 31 December 2014, MPO's loan-to-value ratio is 27.2%.

* Including the new acquisition.

** Based on a US Dollar/Sterling exchange rate of 1.558 as at 31 December 2014.

OPERATING HIGHLIGHTS

· The Waterside (luxury residential)

- Occupancy rates have dipped to 67.2% while rental rates grew from HK$25 to HK$28.50 per square foot, per month.

· The Fountainside (low-density residential)

- Since the period end, the property has received its Occupancy Permit, allowing the handover to buyers of the 27 pre-sold units and receipt of final payments, totalling US$19 million, to commence.

· Estrada da Penha (luxury private home)

- A highly complementary acquisition of the property adjoining The Green House was completed for HK$182.45 million (US$23.5 million). The two properties will be consolidated into a single, ultra-prime residence spanning over 10,000 square feet.

· Senado Square (prime retail)

- Planning approval is still awaited for the project and is now anticipated by early 2016. While the project has been subject to delays due to its scale and location in a sensitive heritage district, significant further value is expected to be unlocked through redevelopment.

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

"Considering the near-term challenges currently being faced by Macau, your Company has delivered a resilient performance for the period.

"We completed a strategic acquisition that we believe will create significant value for our shareholders. We continue to manage our assets at the very highest level of engagement and remain firmly committed to our ongoing share buy-back programme.

"I have every confidence that MPO, with its prime portfolio of assets, will successfully weather this healthy period of consolidation."

The Manager will be available to speak to analysts and media. If you would like to arrange a call, please contact Simon Hockridge at MHP Communications on +44 (0) 20 3128 8100 or Simon.Hockridge@mhpc.com.

- Ends -

About Macau Property Opportunities Fund

Macau Property Opportunities Fund Limited is a closed-end investment fund registered in Guernsey and listed on the London Stock Exchange's main market.

Launched in 2006, the Company targets strategic property investment and development opportunities in Macau and Mainland China's western Pearl River Delta. Its current US$548 million portfolio comprises a mix of well-positioned residential and retail property assets.

The Fund is managed by Sniper Capital, an Asia-based property investment manager with an established track record in fund management and investment advisory.

For further information:

Company Registration Number 44813

Website: www.mpofund.com

Public Relations

MHP Communications

Simon Hockridge / Andrew Jaques / James Morgan

Tel: +44 20 3128 8100

Manager

Sniper Capital Limited

Tel: +65 6222 1440 (Investor Contact)

Tel: +853 2870 5151(Fund Adviser)

Email: info@snipercapital.com

www.snipercapital.com

Corporate Broker

Liberum Capital

Chris Bowman / Richard Bootle

Tel: +44 20 3100 2228

Company Secretary & Administrator

Heritage International Fund Managers

Mark Huntley / Laurence McNairn

Tel: +44 14 8171 6000

Stock Codes:

Bloomberg: MPO LN

Reuters: MPO.L

MACAU PROPERTY OPPORTUNITIES FUND LIMITED

INTERIM REPORT FOR THE PERIOD ENDED 31 DECEMBER 2014

CHAIRMAN'S MESSAGE

Considering the near-term challenges currently being faced by Macau, your Company has delivered a resilient performance in the six months to 31 December 2014.

We completed a strategic acquisition that we believe will create significant value for our shareholders. We are continuing to manage our assets at the very highest level of engagement. While we are committed long-term to share buy-backs, we have utilised significant cash flow funding our acquisition in the period.

Fund Performance

Macau's demographic trends - one of the most important drivers of the territory's real estate market - remain dynamic and powerful. Yet a decline in gaming revenues has dampened market sentiment, leading to a softer property market.

MPO's portfolio was valued at US$547.6 million1 as at 31 December 2014. Adjusted Net Asset Value was US$369.6 million and Adjusted NAV per share was US$4.71 (302p)2, a decrease of 3.6% since June 2014.

IFRS NAV fell 13% to US$194.3 million, with an IFRS NAV per share of US$2.48 (159p)2, a decline of 9.6%.

MPO's loan-to-value ratio is now at 27%3, with total cash balances of US$10.4 million, inclusive of US$5.8 million in deposits pledged as collateral for banking facilities.

3.6% of the Company's outstanding issued shares were repurchased and cancelled at a weighted average price of 245.38p, reducing the number of shares in issue to 78,483,964.

Portfolio Update

At The Waterside, our leased luxury residential property, we have witnessed a decline in occupancy to 62.7% due to a weaker market and a more aggressive pricing policy. Although occupancy levels are important, they should not come at the expense of rental growth - a primary driver of capital values. Our strategy is yielding rewards, with rental rates growing from HK$24.9 to HK28.5 per square foot per month over the period.

Since the end of the period, the Fund's low-density luxury residential redevelopment, The Fountainside, has received its occupancy permit, allowing the handover to buyers of the 27 pre-sold units and the receipt of final payments. Meanwhile, our sales programme for the 15 unsold units continues.

Senado Square, our flagship retail redevelopment project in the heart of Macau's shopping district, continues to await planning approval. While we share investors' frustrations over the delays to the project, we continue to highlight the exceptional positioning of this site and the further value that will be unlocked through redevelopment.

Finally, we have completed a complementary acquisition of the property adjoining The Green House, which will allow us to combine and position the two properties as a single, ultra-prime residence. This outstanding property is poised to become one of the most sought-after assets in Macau.

Future Strategy

Our focus remains on enhancing the values of our portfolio assets, through driving rental growth at The Waterside, maximising sales values at The Fountainside, redeveloping Senado Square, and refurbishing the enlarged Green House. We also remain committed to maximising shareholder value through opportunistic share buy-backs.

Outlook

The corruption clampdown in China is likely to continue to affect market sentiment in Macau. But we would caution against losing sight of the city's unique positioning. Macau remains the only territory on Chinese soil in which gaming is permitted. The potential for long term growth remains significant.

Over the next three years, six new casino resorts will open, boosting the number of hotel rooms from 29,000 to 42,500 - still 110,000 fewer than in Las Vegas. Some 35,000 new foreign workers, or almost 10% of Macau's working population, will be needed to staff these resorts. This new phase of casino developments will be heavily geared towards China's growing middle class - the key to sustainable future growth in the territory. This in turn is expected to drive mass-market gaming, which is significantly more profitable and less volatile than the VIP segment upon which Macau has been overly dependent.

I have every confidence that your Company, with its prime portfolio of assets, will successfully weather this healthy period of consolidation.

David Hinde

Chairman of the Board

Macau Property Opportunities Fund Limited

27 February 2015

1 Portfolio valuation as at 31 December 2014 included an acquisition made by the Company during the period for US$23.5 million.

2 Based on a Dollar/Sterling exchange rate of 1.5584 as at 31 December 2014.

3 Assuming a full drawdown of its committed loan facilities and based on MPO's portfolio value as at 31 December 2014.

KEY HIGHLIGHTS

· Portfolio Valuation: US$547.6m

· Adjusted NAV per Share: US$4.71 / 302p*

- -3.6% over the period

· Continued Share Buybacks: 3.6%

- Issued shares repurchased

· Complementing The Green House

- New strategic acquisition

· The Fountainside

- Occupancy permit received

· Gaming Revenue Declines

- Mass market growth continues

* Based on a Dollar/Sterling exchange rate of 1.5584 as at 31 December 2014.

PORTFOLIO OVERVIEW: SUMMARY (AS AT 31 DECEMBER 2014)

· Portfolio Valuation: US$547.6m1

· Loan-to-value: 27.2%2

1 Based on independent valuations of Savills (Macau) Limited as at 31 December 2014.

2 Versus 22.2% as at 30 June 2014 and assuming a full drawdown of its committed loan facilities and based on MPO's portfolio value as at 31 December 2014.

THE WATERSIDE

Tower Six of One Central Residences; please refer to the disclaimer below.

Sector & Type

Luxury residential & investment

Current Status

Leasing and asset management

Commitment

US$99 million

Project Composition (Based on Market Value)

53.7%

Uplift (Over the Period)

-4.1%

Market Valuation

US$293.9 million

ONE CENTRAL

Individual units at One Central Residences.

Sector & Type

Luxury residential & investment

Current Status

Leasing and asset management

Commitment

US$10 million

Project Composition (Based on Market Value)

3.4%

Uplift (Over the Period)

-4.1%

Market Valuation

US$18.4 million

THE FOUNTAINSIDE

Sector & Type

Low-density residential & redevelopment

Current Status

Final sales phase

Commitment

US$23 million

Project Composition (Based on Market Value)

14.2%

Uplift (Over the Period)

1.1%

Market Valuation

US$77.9 million

SENADO SQUARE

Sector & Type

Prime retail & redevelopment

Current Status

Advanced planning

Commitment

US$37 million

Project Composition (Based on Market Value)

20.3%

Uplift (Over the Period)

-2.3%

Market Valuation

US$110.9 million

ESTRADA DA PENHA

Planned fusion of The Green House with the adjoining residence.

Sector & Type

Luxury private home & investment

Current Status

Consolidation underway

Commitment

US$28 million

Project Composition (Based on Market Value)

8.4%

Uplift (Over the Period)

8.1%

Market Valuation

US$46.0 million

SMALLER PROPERTY

Sector & Type

Residential & investment

Current Status

Hold

Market Valuation

US$0.4 million

THE WATERSIDE

Property Type

Investment

Current Status

Leasing and asset management

Gross Floor Area

148,000 square feet

Total Commitment

US$99 million

Acquisition Cost:

US$88 million

Asset Enhancement Cost:

US$11 million

Valuation

US$293.9 million

-4.1% over the period

+235% since acquisition

The Waterside, located at the centre of Macau's standout waterfront precinct at One Central Residences, comprises 59 luxury apartments for lease. The 148,000 square feet property includes a mixture of fully furnished standard units, a special collection of premium high-floor residences, and state-of-the-art simplex and duplex apartments. The property offers residents flexible leasing packages, personalised services and exclusive membership of the Waterside Club.

While occupancy at the property has eased to 67.2%, rental values remain firm, with the average rental for new leases rising from HK$24.9 to HK$28.5 per square foot per month during the period.

THE FOUNTAINSIDE

Property Type

Redevelopment

Current Status

Final sales phase

Gross Floor Area

80,000 square feet

Total Commitment

US$23 million

Acquisition Cost:

US$8 million

Project Development Cost:

US$15 million

Valuation

US$77.9 million

+1.1% over the period

+865% since acquisition

The Fountainside, an 80,000 square feet, low-density development of luxury residences, is located in Macau's prestigious, heritage-rich Penha Hill district. The property consists of 38 apartments and four villas. The redevelopment of the property into luxury housing has been achieved while maintaining the building's original Macanese façade, which blends seamlessly into its surroundings. The property boasts features such as private garages, landscaped gardens and an eco-friendly roof.

The Fountainside has recently been awarded an occupancy permit, allowing the handover of units to buyers to commence. The sales programme for the remaining 11 apartments and four villas is progressing and we continue to target high-net-worth individuals and homeowners seeking premium properties in Macau.

SENADO SQUARE

Property Type

Redevelopment

Current Status

Advanced planning

Gross Floor Area

70,000 square feet

Total Commitment

US$37 million

Acquisition Cost:

US$16 million

Project Development Cost:

US$21 million

Valuation

US$110.9 million

-2.3% over the period

+589% since acquisition

MPO's flagship retail development, Senado Square, is located in the heart of Macau's shopping district and UNESCO-listed heritage quarter. The 70,000 square feet project was conceptualised by international design consultant Arquitectonica and it has received notable recognition for its sustainable and contemporary features.

Despite delays in the approvals process, the value of the property has increased since its acquisition, supported by the area's high visitor numbers, healthy retail sales and a very limited land supply. The eventual receipt of full planning permission is likely to drive its value further.

ESTRADA DA PENHA

Property Type

Investment

Current Status

Consolidation underway

Gross Floor Area

Over 10,000 square feet

Total Commitment

US$28 million

Acquisition Cost:

US$27 million

Project Development Cost:

US$1 million

Valuation

US$46.0 million

+8.1% over the period

+70% since acquisition

Located at the top of Penha Hill, Macau's most prized residential address, Estrada da Penha is a planned fusion of MPO's The Green House with the adjoining residence, which the Fund recently acquired. An asset enhancement programme will bring the two properties together as a single ultra-prime residence as depicted above.

When consolidated, Estrada da Penha will offer over 10,000 square feet of airy space for tranquil living amid beautiful surroundings. Affording spectacular views over Macau and the mainland city of Zhuhai, and only a short drive from Macau's city centre, this magnificent property is poised to become one of the most desirable residential assets in the territory.

MANAGER'S REPORT: OVERVIEW

Macau Property Opportunities Fund saw a slight decrease in its portfolio value in the six months to December 2014 with Adjusted Net Asset Value per share falling by 3.6%.

China's assertive and ongoing anti-corruption clampdown has had a marked effect on VIP gaming revenues, which have declined. While this has dampened overall market sentiment, and to some extent property prices, the fundamentals of population growth, affordability and local demand for properties in Macau remain strong.

Financial Results

In the six months to 31 December 2014, the market value of MPO's portfolio eased 2.1% to US$547.6 million amid a softening of the property market in the wake of China's anti-graft campaign, which has negatively impacted gaming revenues and overall market sentiment.

Adjusted NAV softened 7% to US$369.6 million resulting in an Adjusted NAV per share of US$4.71. In Sterling terms, Adjusted NAV per share was £3.02, based on a Dollar/Sterling exchange rate of 1.558 as at 31 December 2014.

IFRS NAV fell 13% to US$194.3 million or US$2.48 per share.

This slippage in NAV follows an extended period of strong, sustained growth that has seen a total return, including distributions, in Adjusted NAV per share of 191% since MPO was established, demonstrating the overall resilience of the Fund's fundamentals even amid recent economic headwinds that are expected to abate in 2015.

MPO's share price at the end of the period was £2.36 - a decline of 7% for the period, equating to a discount to Adjusted NAV per share of 22%, versus 11% six months earlier.

MPO half-year financial summary

* Based on the following Dollar/Sterling exchange rates: 1.558 at 31 December 2014 and 1.710 as at 30 June 2014.

Financial Management

In accordance with IFRS, MPO's total assets amounted to US$384.1 million as at the period end and total liabilities were US$189.9 million. Bank borrowings increased by US$23 million during the period due to the refinancing of the One Central loan facilities, as well as a new loan being drawn down to partially finance the acquisition of the new property adjoining The Green House.

Based on the Company's portfolio value as at 31 December 2014, MPO's loan-to-value ratio is 27%, an increase from 22% six months earlier.

As at 31 December 2014, the Company held a cash balance equivalent to US$10.4 million, of which US$5.8 million was pledged as collateral for its banking facilities.

During the period, cash resources decreased by US$39.0 million. The primary cash outflows were: US$13.3 million, after bank financing, for the property acquisition; US$ 11.8 million for share repurchases and US$24.0 million for the payment of the performance fee.

The Manager is at an advanced stage in agreeing terms to refinance the unsold units at The Fountainside. The refinancing is expected to increase the Company's cash level by US$28.0 million. In addition, the occupancy permit for The Fountainside has been received, with the handover of pre-sold units to commence, which will result in positive net cash flow of US$6.1 million.

Note: The Company's interim financial statements as at 31 December 2014 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. All properties in the Company's portfolio have been valued by Savills (Macau) Limited.

Development properties classified as inventories are included in the financial statements at the lower of cost and net realisable value, whereas properties classified as investment properties are carried at fair value.

Please refer to Notes below for more information on share buy-backs and related party transactions.

A Complementary Acquisition

We have acquired the three-storey villa adjoining The Green House following extensive and complex negotiations.

Purchased for HK$182.32 million (US$23.5 million), inclusive of all fees and expenses, this highly complementary acquisition will allow us to create a single, ultra-premium detached residence, to be named Estrada da Penha to reflect its address.

Given the scarcity of such properties, we believe this investment will create significant additional value for our investors.

The Waterside - Optimising the Tenant Mix

Tenancy demand has been softer during the second half of 2014, caused in part by skittish market sentiment amid China's anti-graft campaign. This has partly led to a slowdown in VIP gaming revenues, forcing small to medium-sized junket operators to consolidate their businesses and in certain cases, for junket operators to disappear altogether. While The Waterside has seen some early lease terminations, there continue to be new tenants who are taking up leases at higher prices. We are focused on boosting rental values through a revised leasing strategy as described below that we believe will diversify and optimise our tenant mix.

Higher rental values have to a great extent offset the decline in occupancy levels to 67.2%, as net yields on a square foot basis rose from HK$24.9 to HK$28.5 per square foot per month over the period. Total gross rental income from all leased units at The Waterside stands at HK$2.8 million (US$0.4 million) as at January 2015, translating into a yield of 1.6%.

We are committed to maximising rental rates at The Waterside, with continuing upgrades of the luxury residences through an ongoing enhancement programme. Media campaigns are also being undertaken to secure further positive exposure for the property.

One Central Residences - Opportunistic Disposals

We currently hold four remaining units at One Central Residences and will seek to dispose of these at premiums to their respective valuations.

The Fountainside - Handover Commences

The Fountainside, our 80,000 square feet low-density residential development in Macau's exclusive Penha Hill district, received its occupancy permit on 18 February 2015.

Among a total of 38 apartments and four villas, 27 units had been sold as at 19 February 2015. The 15 remaining units are available for sale at prices ranging from c.HK$10,000 to HK$15,000 per square foot, with a total combined sales value of more than HK$400 million (US$51.6 million). As part of the development's sales programme, more weekend viewings were introduced. Advertising and marketing campaigns are also underway, coupled with exclusive showings for high net-worth individuals and partnerships with property agents. Events were also held to introduce a newly furnished showroom to attract potential buyers.

We are proceeding with the handover to pre-sale buyers which will yield positive net cash flow of HK$47 million (US$6.1 million) after repayment of our bank facility.

Senado Square - Worth the Wait

A 70,000 square feet project at the heart of the city's most popular shopping and tourism district, the Fund's first retail development has been subject to extensive delays due to its scale, location and ambition to build a modern multi-storey shopping centre in old Macau.

Being a large redevelopment project in an existing built up area, multiple government approvals have been required, necessitating many rounds of discussions and endorsements of the project's design.

Furthermore, as the project is in the immediate vicinity of several UNESCO protected sites, the project has been the subject of increasingly stringent implementation of heritage, planning and technical guidelines and regulations being applied to the site and surrounding area.

MPO is committed to the successful execution of this important project and continues to work closely with consultants and relevant government bodies to gain approvals and expedite progress on the development, which is widely expected to spur a significant regeneration of one of Macau's most popular heritage quarters.

Having recently responded to what we believe to be the final set of planning hurdles, we remain hopeful that work will commence at the beginning of 2016, upon receipt of all required construction approvals.

MANAGER'S REPORT: PROPERTY MARKET OVERVIEW

Macau's property market is consolidating amid economic pressures related in part to China's ongoing anti-corruption campaign and its impact on the VIP gaming segment. Looking beyond the spate of negative headlines, the city's fundamentals, however, remain solid. Neighbouring Hengqin, one-third of whose population is expected to come from Macau by the end of the decade, looks set to play a major role in supporting Macau's continued long term growth.

Property Market Growth Easing

Property price growth in Macau over the past decade has been exceptionally strong. The recent easing should be viewed as a healthy and welcome period of consolidation before the next phase of growth commences.

In 2014, the average price of a residential unit was US$1,159 per square foot - a rise of 22% year-on-year.

Transaction volumes have declined, with 36.7% fewer transactions in 2014, and a total transaction volume of 7,625 residential properties. However, this decline comes on the back of a period of strong growth in the market, as evidenced by the year-on-year increase in transaction values of pre-sale and existing residential units of 48.1% and 28.8% respectively for the whole of 2014.

Local real estate agent, Centaline, believes the city's property market has been in an "adjustment phase" since 2013, which saw a drop in annual home transactions to about 12,000 from almost 17,000 the year before. Cooling measures imposed in October 2012 resulted in heavy stamp duties being levied and restrictions on loan-to-value ratios introduced.

Centaline believes, however, that 2015 will be a stable year for Macau's housing market, and estimates that the transaction volume of residential units will reach 8,000.

Despite the short term pressures, we remain optimistic about the medium- and longer-term outlook for Macau's property investment market. With decreasing rates of housing starts and completions coupled with manpower shortages in the construction industry, supply remains tight. Key drivers include the city's strong economic fundamentals and the upcoming wave of Cotai casino resort openings. Tourism development in Hengqin is also expected to boost demand for homes, especially among expatriate workers seeking accommodation.

Hengqin - "Orlando" next to "Vegas"

We believe Hengqin's rise will complement Macau's long-term growth.

The Chinese Government is intensifying its efforts to develop and diversify cities further in the Pearl River Delta region. Much attention has been given to the Guangdong-Macau joint industrial park, which is being seen as the lynch pin of the Government's diversification efforts.

Chimelong Ocean Resort, which opened its initial phase in Hengqin Island last year, saw a surge in tourists over the Christmas festive period. Visitor figures were further bolstered by the newly-introduced 24-hour opening times of the Lotus Bridge crossing. This bodes well for the Resort, which looks set to attract even more visitors in the long-run.

The property market in Hengqin is also proving popular with Macau investors who are looking to purchase property in the city for both investment and residential purposes. Property sales in Hengqin have absorbed some of the liquidity in Macau's real estate market and contributed to the current period of consolidation in the territory.

Jones Lang LaSalle estimates that Hengqin may complete most of its planned 20,000 residential units by 2017, of which some 14,000 will be saleable.

MANAGER'S REPORT: MACROECONOMIC OUTLOOK

Macau is in a transition phase, facing short-term headwinds from China's anti-graft campaign and falling gaming revenues. Key to Macau's economic fortunes will be the changing dynamics of its gaming industry as the market increasingly shifts away from VIPs towards the higher margin mass market, and a planned, longer term rebalancing of economy towards a greater diversity of commercial activity.

Anti-graft Clampdown

The Chinese government's anti-graft campaign kept the pressure on Macau's economy at the tail end of 2014, and the campaign is not expected to abate in the foreseeable future.

With the crackdown on illicit money flows into Macau, a large number of VIP junkets have reported decreased revenue figures. Junket operators - middlemen who bring in VIP players and high-rollers and loan them money to gamble in VIP rooms - have borne the brunt of falling VIP gamers who have stayed away as a result of the anti-graft clampdown. Facing liquidity problems, some junkets have consolidated their businesses, while others have ceased operations.

The anti-corruption measures have created short-term headwinds, which we believe will be overcome in due course - particularly so when the new wave of Cotai resorts open, given their focus on non-gaming sectors such as entertainment, food and beverage, and retail.

Gaming Revenues - Gradual Stabilisation

Analysts have cut their estimates for 2015, with most predicting similar results to 2014's gaming revenue of US$44 billion, following a 2.6% year-on-year contraction in full year gaming revenue in 2014, which was in line with analyst estimates. Macau's Secretary for Economy and Finance estimates that Macau's monthly gaming revenue will remain between MOP23 billion and MOP28 billion - a range similar to the second half of 2014. Credit Suisse believes 2015 is a year of rebalancing, with the VIP market showing signs of stabilisation. Gaming research firm, Union Gaming, echoes this sentiment, believing a "modest return to sentiment" this year. Bloomberg expects gaming revenues to range between -5% and flat, while noting that the second half of the year may improve due to progressively easier year-on-year comparisons, new resort openings and stimulus measures paying off.

Economic Diversification

The Chinese government has targeted Macau for expansion in sectors beyond gaming amid its clampdown on graft and money laundering, which it sees as linked to VIP gaming junkets.

President Xi Jinping himself said in December 2014 that Macau must focus on its development as a global tourism and leisure centre to promote diversification and sustainable development. Although he did not explicitly mention Macau's casinos, industry watchers regard his remarks as a clear message from the top that Macau must diversify.

Hengqin is already enjoying growing numbers of tourist arrivals, thanks in no small measure to the opening of the Chimelong Ocean Resort in March 2014.

Increased Connectivity

Macau's secondary border crossing is now open 24 hours a day: the Lotus Bridge Cotai Frontier Post, which connects the city to Hengqin, has been operating around the clock since 18 December 2014. Operating hours at the primary Gongbei Border Gate have also been extended by two hours daily.

Construction has been delayed on the Hong-Kong-Zhuhai-Macau Bridge. This was originally expected to open to traffic in late 2016. No specific date has been mentioned although the delay cited, due to operational challenges including labour shortages, is to be approximately six months.

Risks and Uncertainties*

China's anti-graft campaign may continue for a lengthy period, and its full ramifications for Macau's economy are as yet unknown. Most analysts, however, believe that Macau is experiencing a temporary hiatus in its ongoing growth story, with its upside potential in the medium to longer term intact.

Gaming revenues from the mass-market and its emerging, affluent sector - the premium-mass-market - could be further affected by the anti-graft campaign amid a shift in focus towards day-trippers and package tour visitors to Macau. Minimum gaming bet values could also decline further. However, the territory's visitor mix is expected to improve with the opening of several new five-star hotels, which will be part of the upcoming gaming resorts in Cotai. Furthermore, visitor arrivals for the year 2014 were a record high of 31.5 million, a 7.5% year-on-year increase.

Macau's labour shortage may negatively impact the city's gaming industry, given the effects of higher staff costs. Protests by gaming workers in the first half of 2014 prompted gaming operators to increase staff benefits. Current labour costs and relations appear stable, however.

Construction work on upcoming Cotai resorts may take longer than expected, delaying their opening dates.

* The full list of risks and uncertainties are disclosed in the Corporate Governance Report of the annual financial statements as of 30 June 2014. There have been no changes to the Group's principal risks and uncertainties in the six month period to 31 December 2014 and the Board of Directors does not anticipate any changes to the principal risks and uncertainties in the next six months.

Summary

Macau's development in recent years has been rapid and far reaching. While China's anti-graft campaign has sent a chill through the VIP gaming segment, this is likely to bring with it a silver lining as it encourages the territory to accelerate its transformation into a truly diversified global leisure destination.

We continue to believe that Macau is in the midst of a consolidation phase amidst longer term growth with its property market supported by powerful demographics. Our overriding focus remains on maximising shareholder value through astute asset and financial management.

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 Investment 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 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

David Hinde

Chairman

26 February 2015

Independent Review Report to Macau Property Opportunities Fund Limited

Introduction

We have been engaged by Macau Property Opportunities Fund Limited to review the interim condensed consolidated financial statements in the interim report for the six months ended 31 December 2014 which comprise the Interim Condensed Consolidated Statement of Financial Position, the Interim Condensed Consolidated Statement of Comprehensive Income, the Interim Condensed Consolidated Statement of Changes in Equity, the Interim Condensed Consolidated Statement of Cash Flows and the related notes 1 to 15. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The interim report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The interim condensed consolidated financial statements included in this interim report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the interim condensed consolidated financial statements in the interim report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards

on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements in the interim report for the six months ended 31 December 2014 are not prepared, in all material respects, in accordance with International Accounting Standard 34 and with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

Guernsey, Channel Islands

26 February 2015

Macau Property Opportunities Fund LimitedInterim Condensed Consolidated Statement of Financial Position (Unaudited)

As at 31 December 2014

The interim condensed consolidated financial statements were approved by the Board of Directors and authorised for issue on 26 February 2015.

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

Macau Property Opportunities Fund LimitedInterim Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the 6 month period from 1 July 2014 to 31 December 2014

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

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

Macau Property Opportunities Fund LimitedInterim Condensed Consolidated Statement of Changes in Equity (Unaudited)

MOVEMENT FOR THE 6 MONTH PERIOD FROM 1 JULY 2014 TO 31 DECEMBER 2014 (UNAUIDTED)

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

Macau Property Opportunities Fund LimitedInterim Condensed Consolidated Statement of Cash Flows (Unaudited)

For the 6 month period from 1 July 2014 to 31 December 2014

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

Macau Property Opportunities Fund LimitedNotes to the Interim Condensed Consolidated Financial Statements (Unaudited)

For the 6 month period from 1 July 2014 to 31 December 2014

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 2014 comprise the interim financial statements of the Company and its subsidiaries (together referred to as the "Group"). The Group invests in residential and commercial property and property-related ventures primarily in Macau.

There have been no changes to the Group's principal risks and uncertainties in the six month period to 31 December 2014 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 Investment Managers Report on above.

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 26 February 2015.

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 European Union; applicable legal and regulatory requirements of Guernsey Law and under the historical cost convention as modified by the revaluation of investment properties and derivative financial instruments.

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 2014.

As a result of the decision of the IFRS Interpretations Committee in its July 2014 meeting relating to deferred taxation for a single asset held by a corporate wrapper, the Group has recognised the deferred tax liability for the taxable temporary difference relating to the investment property carried at fair value in its interim financial statements and, in line with the prior period adjustment made in its 30 June 2014 financial statements, the Group has adjusted the 31 December 2013 comparative numbers (see Note below).

There was a further, presentational, reclassification within the consolidated statement of cash flows whereby it was deemed appropriate to include the `movement in pledged bank balances' under `investing activities' as opposed to `financing activities' as in the prior periods. This resulted in no net cash flow impact.

New and amended standards and interpretations applied

The following new and amendments to existing standards and interpretations, either did not have a material impact on the Group or were not applicable are outlined below:

Going concern

As part of their assessment of the going concern of the Group, the Directors have reviewed the comprehensive cash flow forecasts prepared by management which make assumptions based upon current and expected future market conditions. It is the Directors' belief that, based upon those forecasts and their assessment of the Group's committed banking facilities, it is appropriate to prepare the financial statements of the Group on the going concern basis. In arriving at their conclusion that the Group currently has adequate financial resources, the Directors have taken into consideration the fact that the Group has cash of US$4.6 million and net current assets of US$44.4 million as at 31 December 2014.

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 the end of 2016 agreed at the EGM on 7 April 2014 and the Directors' assessment of the Group's committed banking facilities and expected continuing compliance with related covenants.

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. Further, foreign exchange and political risk is 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 geographical sector, Macau.

This segment includes residential, commercial and mixed-use properties. Furthermore, there are multiple individual properties that are held within each property type. However, the CODM considers on a regular basis the operating results and resource allocation of the aggregated position of all property types as a whole as part of their on-going performance review, this is supported by a further breakdown of individual property groups only to help support their review and investment appraisal objectives.

3. Investment property

*Stamp duty expenditure relating to the purchase of The Waterside has been capitalised. See Note below for further information.

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 (completed and under construction) held at the end of the reporting period.

The valuation process is initiated by the Investment Adviser 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 review the latest valuation based on their knowledge of the property market and compare these to previous valuations.

The Group's investment properties were revalued at 31 December 2014 by independent, professionally-qualified valuers: Savills (Macau) Limited. The valuation has been carried out in accordance with the current Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Standards to calculate the market value of the investment properties in their existing state and physical condition, 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 determined by Savills (Macau) Limited 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 below in relation to deferred tax liabilities on investment property.

Capital expenditure in the period relates to the fit out costs for The Waterside.

Rental income arising from The Waterside of US$2,453,000 (6 months ended 31 December 2013: US$2,459,000, 12 months ended 30 June 2014: US$4,957,000) was received during the period. Direct operating expenses of US$314,000 (6 months ended 31 December 2013: US$355,000, 12 months ended 30 June 2014: US$939,000) arising from The Waterside that generated rental income were incurred during the 6 month period. Direct operating expenses during the period arising from vacant units totalled US$46,000 (6 months ended 31 December 2013: US$17,000, 12 months ended 30 June 2014: US$58,000).

Trade and other receivables mainly consists of rent receivable. Any debtors past due have not been impaired, the effect of which is immaterial to the Group.

The table below shows the assumptions used in valuing the investment properties:

The fair value of The Waterside is determined using the income capitalisation 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$15 million (6 months ended 31 December 2013: US$13 million, 12 months ended 30 June 2014: US$15 million) or decrease by US$15 million (6 months ended 31 December 2013: US$13 million, 12 months ended 30 June 2014: US$16 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 increase by US$14 million (6 months ended 31 December 2013: US$13 million, 12 months ended 30 June 2014: US$16 million) or decrease by US$15 million (6 months ended 31 December 2013: US$14 million, 12 months ended 30 June 2014: US$15 million).

The same valuation method was deployed in June 2014 and December 2014.

All properties are currently valued at their highest and best use. There is no extra evidence available to suggest that any property has an alternative use that would provide a greater fair value measurement.

The Company's investment property has been classified within Level 3 as they unobservable inputs.

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

4. Deposits with lenders

Pledged bank balances represents deposits pledged to the Group's bankers to secure the banking facilities and interest rate swaps granted to the Group. Deposits have been pledged to secure long-term banking facilities and interest rate swaps 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. Interest costs of US$193,000 (6 months ended 31 December 2013: US$247,000, 12 months ended 30 June 2014: US$374,000) relating to The Fountainside loan facility were capitalised during the period.

On 13 October 2014, the Group, entered into a promissory sales and purchase agreement to acquire a luxury private house located in Macau's exclusive neighbourhood of Penha Hill for a total acquisition cost of HK$182,320,000 (US$23,500,000) (inclusive of stamp duty and all other fees and expenses) to purchase The Green House 2. The acquisition is complementary to the Group's portfolio given that the property adjoins the Group's existing property The Green House. At the time, a deposit of HK$79,000,000 (US$10,200,000) was paid and a further payment was made on 11 December 2014 of HKD$63,200,000 (US$8,150,000). A final payment of HK$15,800,000 (US$2,040,000) was made when the Group took vacant possession of the property on 18 February 2015. This amount was paid before 31 December 2014 and held in escrow at the period end date.

Under IFRS, inventories are valued at the lower of cost and net realisable value. The carrying amounts for inventories as at 31 December 2014 amounts to US$78,348,000 (6 months ended 31 December 2013: US$68,834,000, 12 months ended 30 June 2014: US$54,351,000). Net realisable value as at 31 December 2014 as determined by independent, professionally-qualified valuer, Savills (Macau) Limited, was US$251,102,000 (6 months ended 31 December 2013: US$232,385,000, 12 months ended 30 June 2014: US$226,966,000).

6. Interest rate swaps

During the period the Group paid net interest of US$523,000 (6 months to 31 December 2013: US$518,000, 12 months to 30 June 2014: US$1,031,000) as shown in financing expenses on the consolidated statement of comprehensive income.

The swaps are treated as financial liabilities at fair value through profit or loss with a net period end value of US$377,000 (31 December 2013: US$668,000, 30 June 2014: US$660,000). For the period ended, a fair value gain of US$283,000 (6 months ended 31 December 2013: US$87,000, 12 months ended 30 June 2014: US$95,000) arising from the interest rate swaps in aggregate has been recognised in the consolidated statement of comprehensive income.

All swaps held are categorised in level 2 of the fair value hierarchy. There were no transfers between levels 1, 2 and 3 or changes in valuation techniques during the period. The swaps have been valued on the basis of discounting future cash flows at prevailing interest rates.

There are no changes in the counterparty credit risk during the period.

Standard Chartered Bank

The Group has entered into five interest rate swaps with Standard Chartered Bank to mitigate risks associated with the variability of cash flows arising from interest rate fluctuations.

The total notional amount for the interest rate swaps is HK$500,000,000 (US$64,485,000) (31 December 2013: HKD$500,000,000 (US$64,485,000), 30 June 2014: HK$500,000,000, (US$64,515,000)), being a notional amount of HK$100,000,000 for each swap. The tenor of each swap is five years, with the earliest maturity date being 6 August 2015 and the latest being 20 May 2016.

Under these swaps, the Group would receive quarterly interest at variable rates of three-month HIBOR and pay quarterly interest at fixed rates ranging from 1.395% to 2.09% per annum. The Group has placed HK$8,500,000 (US$1,096,000) (31 December 2013: HKD$14,375,000 (US$1,854,000), 30 June 2014: HK$10,725,000, (US$1,384,000)) with Standard Chartered Bank as a pledged deposit to secure the interest rate swap facilities.

Hang Seng Bank

The Group has also entered into an interest rate swap with Hang Seng Bank to mitigate risks associated with the variability of cash flows arising from interest rate fluctuations.

The notional amount for the interest rate swap is HK$250,000,000 (US$32,243,000) (31 December 2013: HKD$250,000,000 (US$32,243,000), 30 June 2014: HK$250,000,000, (US$32,257,000)), the tenor of the swap is five years with maturity date of 19 March 2018. Under this swap, the Group receives quarterly interest at variable rates of three-month HIBOR and pays quarterly interest at fixed rate of 1% per annum.

7. Interest-bearing loans

The Group has a term loan facility with Hang Seng Bank for The Waterside and the individual One Central Residences units. On 17 September 2013 the loan facility was renegotiated. The facility amount increased to HK$828 million (US$106.8 million). HK$750 million (US$96.7 million) of the facility, tranche 3, was drawndown and used to fully repay HK$157.7 million (US$20.3 million) of tranche 2 of the previous loan and repay HK$390.9 million (US$50.4 million) of tranche 1. Tranche 3 has a tenure of 7 years until 19 September 2020 and is subject to interest at 2.25% per annum over the one, two or three-month HIBOR rate; the choice of rate is at the Group's discretion. The principal is to be repaid in half-yearly instalments commencing two years after the drawdown date. The loan-to-value covenant is 60%. The facility is secured by means of a first registered legal mortgage over The Waterside and the individual residential units owned by the Group at One Central Residences as well as a pledge of all income from the units. The Group 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.

On 4 September 2014, a top up loan on the One Central facility of HK$100 million (US$13 million) with Hang Seng Bank was executed (tranche 4). The tenor of the loan is 6 years until 19 September 2020. Interest is charged at 2.35% per annum over the one, two or three month HIBOR rate, the choice of the rate is at the Group's discretion. In addition, early prepayment covenant for sales proceeds out of the individual One Central Residences units was removed, subject to maintaining a loan-to-value ratio of not more than 50% on the facility. As a result HK$132 million (US$17 million) of previously pledged cash was released to the Group.

As at 31 December 2014, tranche 1 has an outstanding balance of HK$79.4 million (US$10.2 million) (31 December 2013: HKD$79.4 million (US$10.2 million), 30 June 2014: HK$79.4 million (US$10.2 million)). Tranche 3 has an outstanding balance of HK$750 million (US$96.7 million) (31 December 2013: HKD$750 million (US$96.7 million), 30 June 2014: HK$750 million (US$96.7 million)). Tranche 4 has an outstanding balance of HK$100 million (US$ 13 million) (31 December 2013: HK$ Nil (US$ Nil), 30 June 2014: HK$ Nil (US$ Nil)). Interest is paid quarterly on this loan facility. As at 31 December 2014, the loan-to-value ratio for this facility was 38.38%.

The Group has a credit facility with Banco Weng Hang S.A. to finance The Fountainside redevelopment which was secured by a first legal mortgage over the property as well as a pledge of all income from The Fountainside units. The facility was renegotiated in July 2013 for up to HK$100 million (US$12.9 million) until 20 September 2015, with interest charged at 2.6% per annum over the three-month HIBOR rate. The bank has released HK$34.9 million (US$4.5 million) of the charged deposits to the Group to fund the development expenditures of The Fountainside. As at 31 December 2014, HK$100 million (US$12.9 million) (31 December 2013: HKD$100 million (US$12.9 million), 30 June 2014: HK$100 million (US$12.9 million)) of the facility had been drawdown. The loan-to-value covenant is 60%. This facility is non-recourse to the Group. As at 31 December 2014, proceeds of US$1.8 million (31 December 2013: US$0.8 million, 30 June 2014: US$1.3 million) received from the pre-sale of The Fountainside units were pledged with the lender. Interest is paid monthly on this loan facility. As at 31 December 2014, the loan-to-value ratio for this facility was 16.56%.

On 9 June 2014 the Group approved the repayment of the Wing Lung Bank loan facility for The Green House and arranged a new loan facility with Banco Tai Fung to finance this project. The term of the new loan is 3 years and the facility amount has been increased to HK$70 million. Interest is charged at 3.2% per annum over the six-month HIBOR rate and repayment is due in full at maturity. As at 31 December 2014, the facility had an outstanding balance of HK$70 million (US$9 million) (31 December 2013: HKD$ Nil (US$ Nil), 30 June 2014: HK$70 million (US$9 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 Group is the guarantor for this term loan. Interest is paid monthly on this loan facility. As at 31 December 2014, the loan-to-value ratio for this facility was 42.94%.

On 11 December 2014 the Group arranged a new loan facility with Industrial and Commercial Bank of China (Macau) Limited to partially finance the purchase of The Green House 2 located next to The Green House as discussed in note 5 above. The term of the new loan is 3 years. Interest is charged at 3.2% per annum over the three-month HIBOR rate and repayment is due in full at maturity. As at 31 December 2014, the facility had an outstanding balance of HK$79 million (US$10.2 million) (31 December 2013: HK$ Nil (US$ Nil), 30 June 2014: HK$ Nil (US$ Nil)). This facility is secured by a first legal mortgage over the property as well as a pledge of all income from the property. The Group is the guarantor for this term loan. Interest is paid monthly on this loan facility. As at 31 December 2014, the loan-to-value ratio for this facility was 40.72%.

Bank loan interest paid during the period was US$1,872,000 (6 months period ended 31 December 2013: US$1,563,000, 12 months period ended 30 June 2014: US$3,148,000), including US$193,000 (31 December 2013: US$247,000, 30 June 2014: US$374,000), capitalised during the period (see Note 5 above).

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 2014, the fair value of the financial liabilities was US$176,000 higher than the carrying value of the financial liabilities (31 December 2013: US$159,000 lower than the carrying value of the financial liabilities, 30 June 2014 US$27,000 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.

8. Basic and diluted earnings

Earnings per share is based upon the following data:

The earnings per share (EPS) is based on the profit for the period/year and on the weighted average number of shares in issue for the period/year.

9. 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.

The Adjusted NAV per share is arrived at 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.

10. 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.

11. Related party transactions

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

Thomas Ashworth is a shareholder and Director of Sniper Capital 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$4,195,000 (6 months to 31 December 2013: US$3,614,000, 12 months to 30 June 2014: US$8,080,000) at a fee of 2.0% per annum of the Net Asset Value, as adjusted to reflect the Property Investment Valuation Basis. Thomas Ashworth received no Directors' fees from the Group.

Performance fee of US$ Nil was accrued at period end (6 months to 31 December 2013 US$19,870,000, 12 months to 30 June 2014 US$23,964,000). Performance fee of US$23,964,000 was paid during the period (6 months to 31 December 2013 US$10,943,000, 12 months to 30 June 2014 US$10,943,000). No performance fee was accrued in the current period as the previous high watermark had not been surpassed.

Thomas Ashworth is a shareholder and Director of Adept Capital Partners Services Limited. Adept Capital Partners Services Limited provides administrative services to the Macanese, Hong Kong and British Virgin Islands SPVs and received fees during the period of US$49,000 of which US$ Nil was outstanding at the period end (6 months to 31 December 2013: US$50,000 of which US$ Nil was outstanding, 12 months to 30 June 2014: US$101,000 of which US$ Nil was outstanding).

The Group has a Development Management Services Agreement with a development management company named Headland Developments Limited ("Headland"). Headland is part-owned by Thomas Ashworth and therefore constitutes a related party of the Group. During the period, Development Management Services fees of HK$ Nil (US$ Nil) (6 months to 31 December 2013: HK$1,681,000 (US$217,000), 12 months to 30 June 2014: HK$2,169,000 (US$280,000)) were capitalised in investment property and HK$807,000 (US$104,000) (6 months to 31 December 2013: HK$2,188,000 (US$282,000), 12 months to 30 June 2014: HK$3,600,000 (US$465,000)) were capitalised in inventories. As at 31 December 2014 US$10,000 (6 months to 31 December 2013: US$159,000, 12 months to 30 June 2014: US$29,000) was outstanding.

All intercompany loans and related interest are eliminated on consolidation.

12. Ordinary Share repurchases

During the period, under the authority first granted in the Extraordinary General Meeting of 28 June 2010, and renewed at each Annual General Meeting since then, the Company repurchased 2,931,036 Ordinary Shares or 2.79% (3.60% since 1 July 2014) of the originally issued shares, at an average share price of 245.38p. All shares bought back under the buy-back programme were cancelled.

The following table summarises all shares repurchased by the Company as at 31 December 2014:

*Price in pence Sterling

13. Taxation provision

The Group has exposure to People's Republic of China taxation for its business operation in the People's Republic of China. The Board considers that the Group's exposure to People's Republic of China tax has been properly reflected in the Group's consolidated financial statements.

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

People's republic of China tax authorities provision

As at 31 December 2014 due to the disposal of the APAC Logistics Centre and Cove Residences in Zhuhai, China, the Group is in the process of submitting a tax return to the People's Republic of China tax authorities. The provision has arisen due to the profit on the disposal. The Group has received taxation advice as to the potential charge that may be imposed by the People's Republic of China tax authorities. As the outcome is uncertain as to the charge, the Group has taken the approach of taking the mean of the highest and lowest potential charge estimated. The provision relating to the estimated tax is expected to be settled within one to two years. The Group is unlikely to be reimbursed for this provision.

Deferred taxation and prior period adjustments