Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Global economic slowdown and government-imposed visa restrictions moderating Macau's growth.
• Weakening sentiment in the global property market.
• Global economic slowdown making lending and financing difficult.
• Chinese government tightening visa policy impacting Macau's tourism.

Mitigation Strategies

• Focusing on niche market segments less susceptible to oversupply.
• Actively managing long-term capital requirements and maintaining prudent borrowing levels.
• Strong cash reserves to act quickly on acquisition opportunities.
• Cautiously optimistic approach to residential sector investments, focusing on niche areas.
• Addressing corruption and delays in land and project approvals, improving infrastructure to combat congestion.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: PricewaterhouseCoopers CI LLP

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Continued decline in Macau’s gaming revenue and slowing economy, largely attributable to China’s anti-corruption campaign.
• Sluggish leasing market for mid to high-end residential properties.
• Difficult sales in mid and high-end property segments.
• Lengthy approval process for Senado Square project.

Mitigation Strategies

• Proactive leasing initiatives at The Waterside.
• Extensive asset enhancement initiatives at The Waterside.
• Marketing campaigns for The Fountainside.
• Adjusted sale prices for The Fountainside.
• Working closely with authorities to obtain approvals for Senado Square.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Challenging macroeconomic landscape in Macau, including a two-year downturn in the gaming sector and government anti-speculation policies affecting property sales.
• High-end residential sales remained challenging due to government anti-speculation policies, cash liquidity concerns, and the launch of newer developments with smaller, lower-priced units.
• Potential buyers for high-end assets like Estrada da Penha adopted a wait-and-see approach.
• Continued rises in US interest rates and potential new measures by China's central government to curb capital outflows could subdue Macau's recovery.

Mitigation Strategies

• Shifted focus to asset enhancement to sustain portfolio value (e.g., marketing efforts, rental adjustments at The Waterside).
• Concerted efforts to generate awareness and buyer interest in The Fountainside.
• Seeking to maximize the exit value of Estrada da Penha by divesting at an opportune time.
• Exploring the optimal time frame to divest Senado Square after architectural concept plan approval.
• Maintaining an optimal debt profile and sufficient cash balance.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Sales at The Fountainside remained challenging amid the introduction of further mortgage restrictions by the government.
• Uncertainties in the gaming industry as the government has yet to announce its plans for concession renewals or other changes being considered.
• Beijing’s moves to stem capital outflows have affected Macau’s economic growth.
• Concerns that the central government may introduce further tightening measures in the mainland’s property market, which could pose downside risks to the economy.

Mitigation Strategies

• Prudent debt and cash flow management.
• Focusing on enhancing the quality and profile of assets in anticipation of an eventual upturn.
• Asset management and marketing initiatives.
• Expanded divestment strategy for Estrada da Penha by appointing a specialised international agency.
• Exploring innovative marketing strategies to maintain interest levels and to expand our reach to targeted groups of buyers.
• Evaluating all options to maximise returns from Senado Square to shareholders.
• Macau has stepped up its audit on the junkets to become a better regulated gaming hub.
• Hengqin’s future development of non-gaming facilities is designed to work in synergy with Macau’s economic diversification efforts.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Corporate governance
• Anti-money laundering

Governance Achievements

• Review of the Company structure and committees
• Engagement with service providers following changes to investment objectives
• Assessment of ESG obligations and confirmation of policies and procedures in place to operate in accordance with relevant ESG principles
• Comprehensive anti-money laundering policies regularly reviewed and updated

Climate Goals & Targets

Environmental Challenges

• Weak Chinese stock market and increasingly stringent cross-border capital controls
• Concerns over the pace of US interest rate rises and the US-China trade war
• Marked drop-off in the number and size of transactions involving higher-priced properties
• Anti-speculation mortgage restrictions affecting purchasing behaviour
• Slowdown in Macau's luxury property sector
• Decline in leasing activity in Macau’s high-end residential market amid a slowdown in the VIP gaming sector
• Macau government’s plans to introduce more stringent oversight of junket operators
• Muted residential sales market due to stricter mortgage policies
• Growing popularity of smaller, more affordable homes among younger locals
• Softening of luxury residential property prices in Hong Kong
• US-China trade war causing investors to adopt a “wait-and-see” attitude
• Uncertainty over gaming concessions with looming expiry dates
• Potential further interest rate rises
• Continued anti-corruption campaign and more stringent capital outflow restrictions

Mitigation Strategies

• Divestment of three remaining properties with a results-focused approach maximizing appeal to prospective investors
• Modest refurbishments at The Waterside
• Enhancements at Estrada da Penha
• Reconfiguring larger units at The Fountainside to meet current market demands
• Active utilization of networks to implement divestment plans
• Asset enhancement works at modest cost
• Prudent stance towards capital management, maintaining a healthy balance sheet
• Focus on containing costs, reviewing and refinancing debt facilities
• Offering attractive incentives to potential tenants at The Waterside
• Renewing marketing of available apartments and car-parking spaces at The Fountainside with special offers
• Applying to Macau’s authorities to reconfigure the six largest units at The Fountainside into smaller apartments
• Dedicated marketing efforts to promote Estrada da Penha

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Human Rights
• Labour
• Environment
• Anti-Corruption
• Social Responsibility
• Supply Chain Management

Environmental Achievements

• Reduced energy consumption by replacing lighting fixtures with LEDs, reducing lighting in common areas, and installing energy-efficient air conditioning systems.
• Implemented rechargeable battery recycling program.

Social Achievements

• Provided quality property management services and aimed to improve the living quality of tenants.
• Maintained tenants' privacy and confidentiality.

Governance Achievements

• Incorporated ESG-related risks into the Group’s risk management.
• Complied with UNGC's Ten Principles.
• Established close contacts with contractors on all constructions and sourcing affairs and regularly performed assessment of contractors based on environmental and social risks.

Climate Goals & Targets

Environmental Challenges

• Slowdown in the VIP gaming market affecting tenant occupancy at The Waterside.
• Muted demand for high-end residential properties due to stricter anti-speculation mortgage policies in Macau.
• Reluctance among potential buyers to make new investments due to capital controls and broader uncertainties.

Mitigation Strategies

• Reconfiguration of larger units at The Fountainside into smaller, more marketable residences.
• Incentives package to motivate sales at The Fountainside.
• Enhancements to The Waterside apartments to maintain their appeal.
• Bespoke divestment structures for Estrada da Penha to cater to potential purchasers.
• Successful renegotiation of debt finance terms, reducing interest rates.

Supply Chain Management

Responsible Procurement

• Careful appointment of external contractors considering human rights, non-discrimination, environmental protection, and safety.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UNGC

Environmental Metrics

Governance Achievements

• Lower management and administration fees came into effect from 1 January 2020 as a consequence of the affirmative Continuation Vote.
• Further cost savings and the renegotiation of debt facilities were also welcome achievements by the Manager.

Climate Goals & Targets

Environmental Challenges

• Lower valuations and a reduced Net Asset Value amid a backdrop of subdued transaction levels, reflecting sustained caution among prospective investors in high-end residential property in Macau.
• Emergence of the coronavirus in mainland China dampened sentiment and created further uncertainty.
• Covid-19 coronavirus outbreak substantially negatively impacted Macau visitor numbers.
• Very low transaction volumes that have prevailed since mortgage restrictions were introduced in Macau commencing in 2017 and capital controls were imposed in mainland China have persisted.

Mitigation Strategies

• Manager’s continued efforts to secure sales.
• Lower management and administration fees came into effect from 1 January 2020.
• Meaningful reductions in debt-servicing obligations.
• Essential maintenance work to preserve value so that the Manager is well positioned to continue its sales initiatives when the current crisis abates.
• Renegotiation of debt facilities to obtain the most cost-efficient terms.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Upgraded furniture and installed more energy-efficient electrical appliances at The Waterside.

Social Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic severely impacted Macau's economy, leading to subdued leasing environment and cautious potential tenants.
• Travel restrictions curtailed divestment efforts.
• Luxury residential segment remained subdued due to anti-speculation measures and cautious buyers.

Mitigation Strategies

• Restructured debt to improve cashflows and reduce expenditure.
• Secured new loan facilities to improve cash position and liquidity.
• Implemented cost-containment measures.
• Continued efforts to divest remaining portfolio properties, including property enhancements and engaging property agents.
• Implemented flexible lease terms to improve occupancy rate at The Waterside.
• Pursued creative strategies to drive sales of The Fountainside, including reconfiguring duplexes into smaller apartments.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced energy consumption by replacing lighting fixtures with LEDs, reducing lighting in common areas, and installing energy-efficient air-conditioning systems.
• Provided recycling facilities for tenants and encouraged resource conservation.

Social Achievements

• Provided quality property experience through innovation and sensitivity.
• Ensured high standards in property management to achieve customer satisfaction.
• Maintained regular communication with tenants through satisfaction surveys.

Governance Achievements

• Incorporated ESG-related risks into the Company’s risk management processes.
• Appointed Deloitte LLP as its external auditor.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic and resulting travel restrictions severely impacted the luxury property market and hampered divestment efforts.
• Slow implementation of Macau's immunization program further hampered economic recovery.
• Shrinkage of potential investors due to restrictions constrained investment activity.

Mitigation Strategies

• Implemented various divestment tactics, including enhancements to Penha Heights and reconfiguration of The Fountainside.
• Successfully restructured and renegotiated the Company’s debt.
• Continued engagement with lenders and shareholders to secure refinancing and continuation vote support.

Supply Chain Management

Supplier Audits: Regular assessments of contractors based on environmental and social risks are performed.

Responsible Procurement

• Careful appointment of external contractors considering human rights, non-discrimination, environmental protection, and safety.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UNGC

Environmental Metrics

ESG Focus Areas

• Environment
• Social Responsibility
• Governance

Environmental Achievements

• Reduced energy consumption by replacing lighting fixtures with LEDs, reducing lighting in common areas, and installing energy-efficient air conditioning systems.
• Provided recycling facilities for tenants and encouraged resource conservation.

Social Achievements

• Appointment of Carmen Ling to the Board, bringing regional expertise and insight into debt management.
• Increased physical attendance at meetings once UK and Guernsey lockdowns ceased.
• Maintained high tenancy levels at The Waterside and improved tenant quality, shifting away from the junket sector.

Governance Achievements

• Continued to comply with the AIC Code and relevant provisions of the UK Code.
• Regularly reviewed Board performance through an internal process.
• Maintained active dialogue with lenders and shareholders.

Climate Goals & Targets

Environmental Challenges

• Macau's continued response to COVID-19 severely affected planned asset divestments.
• Worsening economic environment in Macau due to COVID-19 restrictions and crackdown on junket operators.
• Sluggish buyer sentiment and travel restrictions impeded further sales.
• Tighter capital controls and tougher lending restrictions.
• Challenges around whole portfolio pricing.

Mitigation Strategies

• Commencement of The Waterside strata sales programme.
• Appointment of Hodes Weill to market the portfolio to prospective investors.
• Active dialogue with bank lenders to extend loan facilities.
• Reconfiguration of two duplex units into three smaller, more marketable units at The Fountainside.
• Selective refurbishment of The Waterside apartments to improve sales and leasing prospects.
• Renegotiation for reduced service charges at One Central Residences.

Supply Chain Management

Responsible Procurement

• Careful appointment of external contractors considering human rights, non-discrimination, environmental protection, and safety.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UNGC