Hong Kong-listed South Shore Holdings Limited, which owns THE 13 Hotel in Coloane, has admitted that “a material uncertainty exists that may cast significant doubt” on its “ability to continue as a going concern.”
The company announced the downbeat news in a statement to the Hong Kong Stock Exchange on Tuesday night.
In the statement, the company described THE 13 as an “exclusive luxury hotel and entertainment complex.”
Concerning the troubled hotel project, the statement said that following the completion of a rights issue in March this year, the company raised net proceeds of about HK$973 million. With these funds, the statement pointed out, the company completed the hotel’s fit-out, furnished and installed operating equipment and obtained a hotel licence in August 2018 and opened the hotel at the end of that month.
According to the statement, at the end of September, the hotel segment recorded assets of around HK$9.36 billion. The hotel segment assets include cost of land, the hotel property and THE 13 Hotel’s fixtures, furniture and equipment, including deposits paid, the statement said.
The hotel segment recorded liabilities of around HK$4.3 billion which include the liability portion of convertible bonds issued and borrowings for financing the hotel development and operation, according to the statement.
“There was a [hotel] segment loss of approximately HK$425 million for the six months ended September 30, 2018 which mainly represents finance costs for hotel operations, depreciation and amortisation charges and other hotel operation costs recorded in the current period,” the statement pointed out.
The statement underlined that the company has obtained all the required licences – namely all the hotel, F&B, health club and bar licences – for the operation of the hotel, adding that the hotel accepted private events in September.
According to the statement, the company “has also been conducting training exercises to maximise the service levels of the operational team,” adding that at the end of September, the hotel employed 270 people.
The statement said that South Shore Holdings Limited incurred a net loss of HK$433.6 million for the six months ended September 30, and as of that date, the company’s current liabilities exceeded its current assets by HK$3.86 billion. The company’s total bank and other borrowings amounted to HK$4.11 billion, of which HK$4.08 billion were classified as current liabilities.
According to the statement, revenue rose 44 percent to HK$4.4 billion for the six months ending on September 30, while gross profit increased 28 percent to HK$178 million. Loss attributable to the owners of the company jumped 1,822 percent to HK$442 million.
On its website, South Shore Holdings Limited describes itself as a hospitality and management contracting/engineering company listed on the Hong Kong Stock Exchange. Its hospitality division operates under the brand THE 13, “an ultra luxury hotel on Macau’s Cotai Strip”. The company, which was reportedly founded in 1946, conducts its engineering and property related services in Hong Kong, mainland China, Macau, Singapore and Malaysia through the 51.8 percent owned subsidiary Paul Y. Engineering Group Limited, the website states.