South Shore Holdings Ltd has reported a loss attributable to owners of the company of HK$1.02 billion (US$131.6 million) in the 12 months to 31 March 2020 on the back of ongoing struggled at its luxury Macau hotel THE 13.
The loss was considerably lower than the HK$5.85 billion (US$754.8 million) loss reported in FY19, which South Shore said was due to a decrease in rent, consultancy fees, and legal and professional fee in addition to an impairment loss on hotel assets of approximately HK$4.70 billion (US$606.4 million) recorded in the prior year.
Nevertheless, the additional losses, combined with current net liabilities of HK$4.0 billion, “indicate the existence of a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern,” the company said.
South Shore’s revenue in FY20 grew 16% year-on-year to HK$10.90 billion (US$1.41 billion), of which its 51.76%-owned engineering business PYE contributed the vast majority. The subsidiary’s property development management division reported a loss of approximately HK$1 million (US$129,000) and the property investment division reported a loss of approximately HK$2 million (US$258,000) in FY20.
By contrast, THE 13, recorded revenue of just HK$17 million (US$2.2 million) from hotel rooms and from food and beverage, with a segment loss of HK$994 million (US$128 million). The hotel segment recorded an EBITDA loss of HK$146 million (US$18.8 million).
Publication of South Shore’s FY20 financial results comes just two weeks after it revealed the sale of a minimum 50% stake in THE 13 had fallen through.
The sale had promised to net the company HK$750 millionwhich was to be used to cover substantial pending debts.
In April of this year South Shore was forced to apply to its bank for a “standstill” to prevent enforcement of security over THE 13 and liquidation of the company after the bank issued a demand for immediate payment of HK$2.48 billion (US$320 million) owing under its facility agreement.
That demand, which covers the entire principal amount plus interest, was issued after the company was unable to pay HK$470 million (US$60.6 million) due on 31 March 2020, which it had previously anticipated would be sourced from the proposed sale.
South Shore has promised to seek new buyers for the property, which remains closed due to the impact of COVID-19.
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