New Frontier - SEM Listing Particulars

Transcription

NEW FRONTIER
NEW FRONTIER PROPERTIES LTD
(Incorporated in the Republic of Mauritius)
(Registration number 123368C1/GBL)
Having its registered address at
19th Floor Newton Tower, Sir William Newton Street,
Port Louis, Mauritius
SEM Code: NFP.N0000
ISIN: MU0453N00004
(LEC/P/04/2014)
Dated 13th November 2014
(“New Frontier” or “the Company”)
LISTING PARTICULARS
An application has been made for the listing of 938,736 ordinary shares of no par value of New Frontier on the SEM by way of a
private placement with a total value of USD 938,736. Accordingly, these Listing Particulars have been prepared and issued:
•
in compliance with the SEM Listing Rules governing the listing of securities in the Official List of the SEM in respect of the
listing of the 938,736 ordinary shares on the SEM;
•
to provide information to investors with regard to the Company. This is not an invitation to the public to subscribe for shares in
New Frontier.
It is expected that dealings in the shares on the SEM Official Market will commence on 28th November 2014.
A copy of these Listing Particulars is available in English only, accompanied by the documents referred to under “Documentation
available for inspection” as set out in section five, paragraph 13 of these Listing Particulars.
These Listing Particulars are distributed in connection with the listing of the shares of the Company, no shares of which will be
issued to any person other than a person to whom a copy of these Listing Particulars is provided by the Company. These Listing
Particulars have been issued in compliance with the Listing Rules for the purpose of giving information to the public regarding
New Frontier.
At the time of the SEM listing, the stated capital of New Frontier will comprise 938,736 ordinary no par value shares. At the date
of the SEM listing the anticipated market capitalisation of the Company will be $938,736.
938,736 ordinary no par value shares will be listed. The existing shareholder of the Company has undertaken to make 234,684
shares available for trading on the first day of trading at an introductory price of $1.00 per share (the prevailing NAV per share of
the Company is $1.011).
These Listing Particulars include particulars given in compliance with the Stock Exchange of Mauritius Limited Rules governing
the Official Listing of Securities for the purpose of giving information with regard to the issuer. The directors, whose names appear
on page 10 and Annexure 1, collectively and individually, accept full responsibility for the accuracy or completeness of the
information contained in these Listing Particulars and confirm that, having made all reasonable enquiries, to the best of their
knowledge and belief there are no other facts the omission of which would make any statement herein misleading.
The legal advisor, sponsor, management company, auditor and bankers whose names are included in these Listing Particulars, have
consented in writing to the inclusion of their names in the capacity stated and have not withdrawn their written consent prior to
publication of these Listing Particulars.
This document may include forward-looking statements. Forward-looking statements are statements including, but not limited to,
any statements regarding the future financial position of the Company and its future prospects. These forward-looking statements
have been based on current expectations and projections which, although the directors believe them to be reasonable, are not a
guarantee of future performance.
1Calculated as USD 947,781 divided by 938,736 shares
1
The distribution of these Listing Particulars is restricted by law in certain jurisdictions. Therefore, persons who may come into
possession of these Listing Particulars are advised to consult their own legal advisors as to what restrictions may be applicable to
them and to observe such restrictions. These Listing Particulars may not be used for the purpose of an offer or invitation in any
circumstances in which such offer or invitation is not authorised.
The contents of this document should not be treated as advice relating to legal, taxation, investment or any other matters. Targeted
investors should inform themselves as to (i) the legal requirements within their own respective country for the purchase, holding,
transfer or other disposal of shares; (ii) any foreign exchange restrictions applicable to the purchase, holding, transfer or other
disposal of shares which they may encounter; (iii) the income and other tax consequences which may apply in their own countries
as a result of the purchase, holding, transfer or other disposal of shares. Prospective investors must rely on their own representatives,
including their own legal advisors and accountants, as to legal, tax, investment or any other related matters concerning the Company
and an investment.
These Listing Particulars have been vetted by the Listing Executive Committee of the SEM (“LEC”), in conformity with the Listing
Rules on 13 November 2014. Neither the LEC of the SEM, nor the Financial Services Commission of Mauritius (“FSC”) assumes
any responsibility for the contents of these Listing Particulars. The LEC and the FSC make no representation as to the accuracy or
completeness of any of the statements made or opinions expressed in these Listing Particulars and expressly disclaim any liability
whatsoever for any loss arising from or in reliance upon the whole or any part thereof.
Permission has been granted by the LEC on 13 November 2014 for the listing of 938,736 ordinary shares of no par value of New
Frontier on the Official List of the SEM at a price of $1.00 per share.
This approval is subject to the following conditions:
(i)
New Frontier raises a minimum amount of equity in the sum of $12.5 million in the first year of listing, being the least likely
scenario of the capital raising exercise, as disclosed in paragraph 4.10 of these Listing Particulars.
(ii) The current shareholder of New Frontier, Brendon Jones, does not dispose of, during the first year of listing, more than 25%
of the total number of shares of New Frontier admitted to listing (i.e. Brendon Jones, being the sole shareholder of New Frontier
at the last practicable date, may dispose of up to 234,684 shares within the first year after listing on the SEM).
A copy of these Listing particulars has been filed with the FSC.
2
CORPORATE INFORMATION
Registered office and address of the Company
19th Floor Newton Tower
Sir William Newton Street
Port Louis
Mauritius
Company secretary
GMG Trust Ltd
Port Louis
Mauritius
Mauritian bankers
Barclays Bank
Port Louis
Mauritius
SEM authorised representative and listing sponsor
LCF Securities Ltd
Suite 108, 1st Floor
Moka Business Centre
Mont Ory Road, Moka
Mauritius
Auditors
BDO
Port Louis
Mauritius
Independent Financial Advisor
RSM Margéot
Suite 112,
Moka Business Centre
Mount Ory Road, Moka
Mauritius
Mauritian company administrator
GMG Trust Ltd
Port Louis
Mauritius
Corporate advisor and legal advisor as to Mauritian law
Mardemootoo Solicitors
3rd floor, Jamalacs Building
Port Louis
Mauritius
Investment Manager
Premier Capital Managers Ltd
Coastal Building
Wickham’s Cay II
Road Town
Tortola
British Virgin Islands
South African corporate advisor
Java Capital
2 Arnold Road
Rosebank
2196
South Africa
JSE sponsor
Java Capital Trustees and Sponsors (Proprietary) Limited
2 Arnold Road
Rosebank
2196
South Africa
3
____________________________________________________________________________________
TABLE OF CONTENTS
____________________________________________________________________________________
Page
Corporate information
3
Introduction to New Frontier and overview
6
Definitions
8
Listing Particulars
11
Section One – Information on the Company
1. Introduction
2. Directors and management of the Company
3. Incorporation, history and nature of business
4. Investment policy
5. Company structure
6. The Property
7. Employees
8. Commissions paid and payable
9. Material contracts
10. Directors and related parties’ interest in shares
11. Expenses of the SEM listing
11
11
13
13
16
16
17
17
17
18
18
Section Two – Details of the SEM listing
1.
Reasons for a listing on the SEM
2.
Particulars of the listing
3.
Additional placements
19
19
19
Section Three – Risk factors and risk management
20
Section Four – Statements and reports regulating the listing
1.
Working capital
2.
Listing and dealings on the SEM
3.
Significant changes
22
22
22
Section Five – Additional material information
1. Historical financial information
2. Dividends and distribution
3. Acquisitions
4. Disposals
5. Advances, loans and borrowings
6. Corporate governance
7. Litigation
8. Directors’ responsibility statement
9. Material commitments, lease payments and contingent liabilities
10. Material commitments in respect of acquisition and erection of buildings, plant
and machinery
11. Principal immovable property leased or owned
12. Taxation
13. Documentation available for inspection
23
23
23
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24
24
24
24
24
24
24
25
Annexure 1 Directors, executive management, founders, appointment, qualification,
remuneration and borrowing powers
26
Annexure 2 Independent Valuation Report
31
4
Annexure 3 Salient Terms of the Investment Management Agreement
32
Annexure 4 Company Structure
33
Annexure 5Stated Capital and Shareholding
34
Annexure 6 Extracts from the Constitution of the Company
36
Annexure 7 Historical financial information of New Frontier
43
5
_____________________________________________________________________________________
INTRODUCTION TO NEW FRONTIER AND OVERVIEW
_____________________________________________________________________________________
New Frontier was incorporated on 5 June 2014 in Mauritius as a private company limited by shares and was subsequently converted
into a public company2 in accordance with the Companies Act 2001. It currently holds a Category One Global Business License in
accordance with the Financial Services Act 2007 of Mauritius and has been operational since 5th June 2014. The Company’s
registered address is 19th Floor Newton Tower, Sir William Newton Street, Port Louis, Mauritius.
New Frontier has been established with the primary objective of acquiring and developing good quality income generating property
assets situated in frontier markets.3
The Company, through its wholly-owned subsidiary Coastal Building Holdings Limited, owns a commercial property in the British
Virgin Islands.4
New Frontier has access to a strong pipeline of potential acquisitions and developments, including in particular:

properties with medium to longer term lease expiry profiles with strong tenants and high probabilities of renewal; and

developments comprising greenfields development of land or brownfields development by refurbishment, upgrade or other
improvement to existing buildings.
Its intention is to rapidly grow its portfolio of assets.
The Company conducts its business out of Mauritius because of the business-friendly environment, its tax regime, including its
unique double-taxation treaty network and the reputation of the island as a sound financial services centre. The Company has already
received significant interest from existing corporate investors; the listing on the SEM would therefore facilitate the raising of capital
from these investors as well as from other global market operators.
Investment strategy
New Frontier has undertaken to focus on a two-fold strategy: income generating assets and development assets.
 Income generating assets
The income generating assets will comprise of completed buildings, held directly or indirectly. New Frontier will target
income generating properties with strong sustainable income from high quality tenants with strong likelihood of renewal of
leases on expiry. Not only will the income generating assets provide investors with a satisfactory yield, but they will also
provide New Frontier with stable income and balance sheet strength for the Company to responsibly secure and fund highgrowth opportunities within developments.
 Development assets
Developments will comprise of greenfields development of land or brownfields development by refurbishment, upgrade or
other improvement to existing buildings of office, mixed use, retail and light industrial properties.
New Frontier has acquired 100% of the Class A shares in Coastal Building Holdings Ltd, which owns commercial property in the
British Virgin Islands, at an average annualised property yield of 8%,5 details of which are included in Annexure 2. New Frontier
has been established with the primary objective of acquiring and developing good quality income generating property assets situated
in frontier markets. The Company’s investments may be held through subsidiaries incorporated in appropriate jurisdictions for the
purpose of maximising tax efficiencies of the Company’s underlying investments. All business operations will be carried out by the
Company, New Frontier.
New Frontier is led by a team of individuals with significant experience and successful track records in real estate and fund
management, and having sufficient and satisfactory experience in the management of global businesses. Further information on the
experience of the directors and the Investment Manager is detailed in Annexure 1.
2
Shareholders resolution dated 6th June 2014
The term frontier market was first coined by an Indian economist Farida Khambata at the International Finance Corporation (IFC). The main characteristic of a
frontier market are countries that are at an early stage of economic development, with a much higher growth potential than their “bigger brother” emerging markets
(http://internationalbanker.com/world-news/investing-in-frontier-markets/). Morgan Stanley Capital International (MSCI) classifies 33 countries as Frontier
Markets and has the following countries within the African continent, namely Botswana, Ghana, Kenya, Mauritius, Morocco, Nigeria, Tunisia and Zimbabwe.
4
Please refer to Pg 15 for further information.
5Property yield is defined as total rental income divided by the total value of assets.
3
6
Listing on additional exchanges
To broaden its investor base and source additional capital to fund growth aspirations, New Frontier will consider listing its shares
on other recognised international stock exchanges to:
•
provide an additional source of capital to fund the growth aspirations of the Company;
•
enhance potential investors’ awareness of the Company;
•
improve the depth and spread of the shareholder base of the Company, thereby improving liquidity in the trading of its shares;
•
provide invited investors, both institutional and private, the opportunity to participate directly in the income streams and future
capital growth of the Company; and
•
provide invited investors with an additional market for trading the Company shares.
Given that there is potential capital available in South Africa and that New Frontier currently presents an attractive diversification
opportunity to South African investors, New Frontier intends to seek a secondary listing on the AltX shortly after listing on the
SEM.
The Company has appointed Java Capital as South African corporate advisor to assist with the JSE listing and capital raising on the
AltX.
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_______________________________________________________________________________________
DEFINITIONS
______________________________________________________________________________________
In these Listing Particulars and the annexures hereto, unless the context indicates otherwise, references to the singular include the
plural and vice versa, words denoting one gender include the others, expressions denoting natural persons include juristic persons
and associations of persons and vice versa, and the words in the first column have the meanings stated opposite them in the second
column, as follows:
“AltX”
the Alternative Exchange of the JSE;
“business day”
any day other than a Saturday, Sunday or official public holiday in
Mauritius;
“CDS”
Central Depository and Settlement Company Limited approved
under the Securities (Central Depository, Clearing and Settlement)
Act 1996 of Mauritius;
“certificated shares”
shares in respect of which physical share certificates will be issued;
“Coastal Building Holdings Limited”
Coastal Building Holdings Limited (Registration number
1661050), a company incorporated under the laws of the British
Virgin Islands;
“Coastal Building Sale Agreement”
the Agreement dated 25th July 2014 between the company and
Brendon Jones, in terms of which the company acquired 100% of
the Class A Shares in Coastal Building Holdings Limited from
Brendon Jones, with effect from 5thJune 2014, for a purchase price
of $937,736, which was settled by the issuing by the Company of
4,000 ordinary shares in itself to Brendon Jones, with effect from
5th June 2014;
“the Company” or “New Frontier”
New Frontier Properties Limited (Registration number 123368
C1/GBL), a company incorporated under the laws of Mauritius and
holding a category one Global Business License issued by the FSC;
“Constitution”
the Constitution of the Company dated 5th June 2014;
“dematerialise” or “dematerialisation”
the process whereby physical share certificates are replaced with
electronic records of ownership under CDS with the duly appointed
broker, as the case may be;
“dematerialised shareholder”
a holder of dematerialised shares;
“dematerialised shares”
shares which have been dematerialised and deposited in the CDS;
“directors” or “the board” or “board of directors”
the directors of the Company as at the date of these Listing
Particulars, further details of whom appear in Annexure 1 of these
Listing Particulars;
“FSC”
the Financial Services Commission of Mauritius;
“GBL1”
a category one Global Business License issued under the Financial
Services Act 2007;
8
“Investment Manager” or “Premier Capital”
Premier Capital Managers Limited (Registration number 1512794),
a BVI licensed investment manager, will serve as the investment
manager of the company, or such other entity appointed by the
company, from time to time;
“Investment Management Agreement”
the agreement dated 6th June 2014 between the Company and the
Investment Manager, in terms of which the Investment Manager
will manage the assets of the company;
“investment strategy”
the investment strategy of the Company as determined by the board
of directors, further details of which are contained on page 6 in
paragraph 4 of these Listing Particulars;
“Java Capital”
Collectively, Waydale Investments (Proprietary) Limited t/a Java
Capital (Registration number: 2012/089864/07) and Java Capital
Trustees and Sponsors (Proprietary) Limited (Registration number
2006/005780/07), private companies incorporated in accordance
with the laws of South Africa, further details of which are set out
in the corporate information section;
“JSE”
JSE Limited (Registration number 2005/022939/06), a company
duly registered and incorporated with limited liability under the
company laws of South Africa, licensed as an exchange under
South Africa’s Securities Services Act, 2004;
“JSE Listing”
the proposed secondary listing of all the Company’s issued shares
on the AltX of the JSE, in line with the JSE Listings Requirements,
subsequent to the SEM listing;
“JSE Listing Requirements”
the Listings Requirements as published by the JSE, as amended
from time to time;
“last practicable date”
the last practicable date prior to the finalisation of these Listing
Particulars, being 13th November 2014;
“LEC”
Listing Executive Committee of the SEM;
“listing date”
the anticipated date of listing of the shares on the SEM official
market, being on the 28th November 2014;
“Listing Particulars”
this document and its annexures, dated 13th November 2014, which
have been prepared in compliance with the Listing Rules;
“Listing Rules”
the Listing Rules of the SEM governing the Official Market;
“management”
the current management of the Company, as detailed in Annexure
1;
“Mauritian Companies Act”
the Mauritian Companies Act 2001 (Act 15 of 2001) as amended;
“Mauritian share register”
the share register maintained on behalf of the Company by the
Mauritian company administrator;
“Mauritius”
the Republic of Mauritius;
“MUR” or “Rs”
the Mauritian Rupee;
“Official List”
the list of all securities admitted for quotation on the SEM Official
Market;
“property portfolio”
means the immovable properties owned or leased by the Company
or its subsidiaries at the date of signature of the property services
agreement, together with (1) any other immovable property which
may be acquired, directly or indirectly, or leased, and (2) listed or
9
unlisted shares, loans or other interests in companies and other
persons or legal structures which own or lease immovable
properties, whether owned by the Company or any of its
subsidiaries from time to time;
“SA Companies Act”
the South African Companies Act 2008 (Act 71 of 2008) as
amended;
“SA private placement”
an offer to investors to subscribe for new New Frontier shares on
the AltX, details of which will be announced in due course;
“SEM”
the Stock Exchange of Mauritius Ltd established under the repealed
Stock Exchange Act 1988 and now governed by the Securities Act
2005 of Mauritius;
“SEM Official Market”
the Official List of the SEM;
“shares” or “New Frontier shares”
ordinary no par value shares in the stated capital of the Company;
“shareholder”
a holder of shares; and
“US$” or “USD”
United States Dollar;
10
NEW FRONTIER
(Incorporated in the Republic of Mauritius)
(Registration number 123368 C1/GBL)
Having its registered address at
19th Floor Newton Tower, Sir William Newton Street,
Port Louis, Mauritius
SEM Code: NFP.N0000
ISIN: MU0453N00004
(LEC/P/04/2014)
Dated 13th November 2014
(“New Frontier” or “the Company”)
Directors of the Company
Brendon Jones (Chief Executive Officer)
Daniel Romburgh (Financial Director)
Gary Fourie (Executive Director)
Hendrik Barnhoorn
Peter Todd
Diane Bosman
______________________________________________________________________________________
SECTION ONE – INFORMATION ON THE COMPANY
______________________________________________________________________________________
1.
INTRODUCTION
The purpose of these Listing Particulars is to provide information to investors in relation to the Company and its activities.
2.
DIRECTORS AND MANAGEMENT OF THE COMPANY
2.1
New Frontier’s board of directors
Annexure 1 contains the following information:
2.2
2.1.1
details of directors including their names, addresses, qualifications and experience;
2.1.2
information concerning the appointment, remuneration, terms of office and borrowing powers of the directors;
and
2.1.3
directors’ interests.
Key Service Providers
2.2.1
Company administrator
All administrative business functions of the Company shall be carried out by GMG Trust Ltd in Mauritius.
GMG Trust Ltd is licensed by the FSC to provide a comprehensive range of financial and fiduciary services to
international businesses.
Its duties will include:
(i)
maintaining statutory registers such as the register of members, directors and directors’ interests;
11
(ii)
(iii)
(iv)
(v)
2.2.2
filing statutory returns and forms with the relevant authorities;
providing the relevant information and assistance to the auditors;
providing the board of directors with guidance as to its duties, responsibilities and powers; and
ensuring compliance with anti-money laundering legislation.
Investment Manager
New Frontier has entered into an investment management agreement with the Investment Manager. The
Investment Management Agreement regulates the undertakings between the Investment Manager and the
Company, in terms of which the Investment Manager will provide certain services in relation to the Company’s
property investments in return for a fee payable by the Company or a nominated subsidiary.
The Investment Manager is a BVI registered company and is a subsidiary of Osiris Secretarial Services. It was
established as an Investment Manager in 2008 and is regulated by the BVI Business Companies Act 2004, as
amended and is overseen by the British Virgin Islands Financial Services Commission. The Investment Manager
was incorporated to operate as an Investment Manager for offshore mutual funds. It currently has approximately
$100 million under management for various commodity and equity Emerging Market hedge funds.
The Investment Manager has considerable expertise in property and structured finance, having previously acted
as external investment manager for Osiris Properties International Ltd, (now Delta International Property Holdings
Ltd), a property company listed on the Bermuda and Johannesburg Stock Exchanges which owned retail and
residential properties in the United Kingdom. The Investment Manager has also acted for other property based
mutual funds and Africa-focused mutual funds, some of which have been listed on the Bermuda Stock Exchange.
Peter Todd, a director of the Investment Manager, has a number of years of experience in the property market,
including undertaking a number of property syndications in the United Kingdom, the British Virgin Islands and
Switzerland, utilising his South African relationships, as well as new relationships forged internationally, raising
in excess of £15 million; and facilitating numerous property acquisitions in the United Kingdom for various clients
and managing in excess of 100 properties.
Peter was a founder member of the Corovest International Real Estate Fund (“Ciref”), an open ended property
investment fund established in 2002. Ciref was listed on AIM in London in 2006. In 2008, Ciref changed its name
to Redefine International pursuant to Redefine Properties taking a majority shareholding. The Company is now
dual listed on AIM and the JSE.
Julie Lamberth-Dawson, the second director of the Investment Manager has a master’s degree in development
economies and has worked in urban regeneration and project finance. She has been a director of the Investment
Manager since early 2012 and was involved in the establishment and listing of Osiris Properties International Ltd,
as well as the management of various other mutual funds.
Further details of the directors of the Investment Manager are set out in Annexure 1.
The Investment Manager is responsible for inter alia:
•
sourcing and evaluating suitable property;
•
conducting due diligence on properties;
•
negotiating disposals of property;
•
sourcing and raising equity funding;
•
negotiating debt funding and re-financings;
•
devising strategies with respect to the Company’s fixed property;
•
managing the property portfolio in keeping with the operating standard as directed by the Company;
•
preparation of annual budgets, financial reporting, letting policies, and valuations;
•
conducting or procurement of strategic and operational research;
•
identifying property managers and other service providers;
•
all administration and regulatory aspects of the Company’s property; and
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•
providing non-binding recommendations and other advisory services to the Company with regards to its
property investments.
The salient terms of the Investment Management Agreement and other third party service providers are detailed
in Annexure 3.
It is intended that the directors of the Investment Manager would undertake the investment management function,
with additional employees being employed when it is so required.
3.
INCORPORATION, HISTORY AND NATURE OF BUSINESS
3.1
Incorporation, name and address
New Frontier was incorporated on 5 June 2014 in Mauritius as a private company limited by shares and was subsequently
converted into a public company in accordance with the Companies Act 2001. It currently holds a Category One Global
Business License in accordance with the Financial Services Act 2007 of Mauritius and has been operational since 5th June
2014. The Company’s registered address is 19th Floor Newton Tower, Sir William Newton Street, Port Louis, Mauritius.
3.2
History
The Company was incorporated on 5th June 2014 and accordingly has no trading history.
3.3
Nature of the business
New Frontier has been established with the primary objective of acquiring and developing good quality income generating
property assets situated in frontier markets.
The Company, through its subsidiary Coastal Building Holdings Limited, owns a commercial property in the British Virgin
Islands.
New Frontier has access to a strong pipeline of potential acquisitions and developments, including in particular:
 properties with medium to longer term lease expiry profiles with strong tenants and high probabilities of renewal; and
 developments comprising greenfields development of land or brownfields development by refurbishment, upgrade or
other improvement to existing buildings.
Geographically, the Company will target assets situated primarily in frontier markets outside of South Africa but will pursue
strategic investments in developed markets on an opportunistic basis. The Company will invest in properties, property-related
rights and land in respect of office, mixed use, retail and light industrial properties and developments. The directors of New
Frontier believe attractive real estate investment opportunities exist in this region through fundamentally sound property
portfolios which offer attractive yields. These investments will be held directly or via subsidiaries incorporated in various
jurisdictions for the purpose of maximising the tax efficiencies of New Frontier’s investments. New Frontier will receive
regular distributions from its investments which it will aggregate, and after making provision for expenses and working
capital, declare a net amount to investors as dividends on a semi-annual basis.
For example, for the period from listing until 31 December 2015, the Company intends to focus on purchasing retail,
commercial and industrial buildings in East Africa. Based on the Company’s research, it is clear that there are numerous
opportunities in the target jurisdictions for both the acquisition of appropriate properties and the market for the development
of retail and office space.
The Company’s intention is to grow its portfolio of assets after listing.
The management of the Company and the Investment Manager have significant experience and successful track records in
real estate and fund management, as set out in Annexure 1 hereto.
3.4
Financial year-end
The financial year-end of the Company is 31 December each year.
4.
INVESTMENT POLICY
4.1
New Frontier has undertaken to focus on a two-fold strategy: income generating assets and development assets.
4.1.1 Income generating assets
13
The income generating assets will comprise of completed buildings, held directly or indirectly. New Frontier will
target income generating properties with strong sustainable income from high quality tenants with strong likelihood
of renewal of leases on expiry. Not only will the income generating assets provide investors with a satisfactory yield,
but they will also provide New Frontier with stable income and balance sheet strength for the Company to responsibly
secure and fund high-growth opportunities within developments.
4.1.2 Development assets
Developments will comprise of greenfields development of land or brownfields development by refurbishment,
upgrade or other improvement to existing buildings of office, mixed use, retail and light industrial properties.
4.2
New Frontier will adopt a balanced strategy which aims to have 50% by value of the Company’s assets in income generating
assets and 50% in developments. New Frontier’s weighting of investments to developments, its re-investment of profits from
rentals or occasional disposals, and its retention of completed developments as investments rather than their sale and resultant
realisation of development profits, are intended to optimise long-term sustainable capital growth and enhance total returns to
shareholders.
4.3
Geographically, the Company will target assets situated in frontier markets and has identified East Africa, West Africa and
high growth countries bordering the European Union as initial jurisdictions in which it will consider investing. The Company
will invest in properties, property-related rights and land in respect of office, mixed use, retail and light industrial properties
and developments. The directors of New Frontier believe attractive real estate investment opportunities exist in this region
through fundamentally sound property portfolios which offer attractive yields. New Frontier will receive regular distributions
from its investments which it will aggregate, and after making provision for expenses and working capital, declare a net
amount to investors as dividends on a semi-annual basis.
4.5
The Company’s investments may be held through subsidiaries incorporated in various jurisdictions for the purpose of
maximising tax efficiencies of the Company’s investments.
4.6
Investments in listed property securities may be made from time to time where this is justified by pricing differentials between
direct property and property securities; however the majority of assets will always comprise fixed properties.
4.7
The Company’s medium term target is to grow its gross asset value to $150 million by the end of the financial year ended
31 December 2017. The Company will target total investment returns in excess of 9% p.a. net to investors, which is a low
estimate of the yields obtainable in the target jurisdictions 6, through a combination of income and capital appreciation.
4.8
Investment Process
The Company’s directors will set the investment policy, parameters and objectives and review and approve each sale or
purchase of investment assets.
The Investment Manager is responsible for identifying and reporting, to the Company’s directors, the availability of new
investment opportunities that fall within the investment policy and objectives.
Following the identification of a potential new investment opportunity and approval by the Board, the Investment Manager
is responsible for negotiating the terms of investment and ongoing management of the investment assets.
4.9
Potential Investors
In furtherance of the Company’s strategy, the Board has for some time been in discussion with South Africa’s Billion Group
(Proprietary) Limited (the “Billion Group”).
The Billion Group is headed by Sisa Ngebulana who is the founder and current chief executive officer of Rebosis Property
Fund Limited ("Rebosis"), a JSE listed REIT with a market capitalisation of approximately R4.4 billion (as at 6 October
2014) and a property portfolio valued at approximately R7 billion (as at 28 February 2014).
The Billion Group is a property investment, management and development group, whose resume includes, amongst others,
Hemingways Mall situated in East London, South Africa and Forest Hill Shopping Centre situated in Centurion, South Africa.
The Hemingways Mall is a shopping centre with a gross lettable area of approximately 75 000m 2 consisting of 280 shops
with the anchor tenants being some of South Africa's largest retailers. The Forest Hill Shopping Centre has approximately
75 000m2 of space tenanted by numerous blue chip anchor retailers, boasts an ice rink, movie theatres and a games arcade.
The Billion Group has a development pipeline of over 1.7 million square metres in South Africa.
The Billion Group has been actively pursuing opportunities in Sub-Saharan African, emerging and high growth markets that
neighbour the European Union and selected developed markets, including the United Kingdom, Switzerland and Germany.
6As
per the research report on African property prepared by Knight Frank in 2013, which indicates that the average yield for retail properties in Kenya, Tanzania
and Zambia is 10% per annum, with slightly higher yields for industrial properties.
14
The intention is that the Billion Group, and/or its associates, would become cornerstone investors in New Frontier following
its listing on the JSE. Following this, the Board would likely be re-constituted by the introduction of new executive and nonexecutive directors (these could be in addition to the current directors or replace certain of the current directors, as considered
appropriate).
It is anticipated that the introduction of the Billion Group and associates on this basis would provide New Frontier with a
wealth of experience, a proven entrepreneurial and deal making track record, a South African investor network and a solid
pipeline of investment and development opportunities in New Frontier’s target markets.
4.10
Risk Factors and Risk Management
In implementing its investment policy, the Company will contemplate opportunities that will yield satisfactory returns at
acceptable levels of risk.
The risks of the Company are all of the risks that would typically be associated with investing in fixed property and listed
property securities. The board of the company understands and will take appropriate steps to mitigate such risks.
The risk factors considered by the Board to be material are set out in Section Three hereto.
In particular, we wish to draw attention to the risk of failing to raise capital. It is a risk that the Company may fail to raise
the funds required to meet its objectives, set out herein. However, with potential investors in the pipeline, such as the Billion
Group as set out above, it is expected that the Company will raise at least a minimum of $50 million in 2015. In the event
that such amount, or less, is raised, the Company will acquire a property portfolio only up to the value of the capital raised.
Given that the Company would then be earning revenue of approximately $4.6 million per annum, the Company could then
still pursue its objectives and strategy as set out herein. However, if required, additional capital raisings could then take place
over the next 12 – 36 months on a project by project basis, to fund additional property purchases and developments as these
opportunities become available.
The following tables show the projected pro forma income statement and balance sheet of the Company for 2015, 2016 and
2017 given different levels of capital raised - $25 million, $37.5 million or $50 million. The Company intends to fund its
property purchases with 50% equity (capital raised on the SEM and JSE) and 50% debt.
Please note that these projections have not been reviewed nor reported on by the auditors of the Company and are based on
the Company’s current expectations and predictions about future events including the Company’s intentions. These
projections are, however, subject to inherent risks, uncertainties and assumptions that could cause actual results, performance
or achievements of the Company to differ materially from the expectations and predictions, expressed or implied, in such
projections. These factors include, among other things, those risks identified in Section Three.These projections, including
the assumptions on which they are based and the financial information from which they are prepared, are the responsibility
of the directors of the Company.
Capital
raised in
2015
Least Likely
Equally likely
Most Likely
$25 million
$37.5 million
$50 million
Pro forma Income Statement for the period
ended 31 December 2015
Pro forma Income Statement for the period ended
31 December 2015
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
2,347,285.00
-757,314.00
-768,957.50
821,013.50
Pro forma Balance Sheet for the period
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
26,070,616.00
13,158,314.50
12,912,301.50
26,070,616.00
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
3,520,927.50
-1,135,971.00
-1,153,436.25
1,231,520.25
Pro forma Balance Sheet for the period ended 31
December 2015
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
39,105,924.00
19,737,471.75
19,368,452.25
39,105,924.00
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
4,694,570.00
-1,514,628.00
-1,537,915.00
1,642,027.00
Pro forma Balance Sheet for the period ended
31 December 2015
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
52,141,232.00
26,316,629.00
25,824,603.00
52,141,232.00
15
Capital
raised in
2016
$25 million
$37.5 million
$50 million
31 December 2016
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
4,948,794.50
-1,259,647.50
-1,535,337.00
2,153,810.00
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
Capital
raised in
2017
52,304,161.00
26,067,538.50
26,236,622.50
52,304,161.00
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
7,423,191.75
-1,889,471.25
-2,303,005.50
3,230,715.00
December 2016
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
78,456,241.50
39,101,307.75
39,354,933.75
78,456,241.50
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
9,897,589.00
-2,519,295.00
-3,070,674.00
4,307,620.00
31 December 2016
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
104,608,322.00
52,135,077.00
52,473,245.00
104,608,322.00
$25 million
$37.5 million
$50 million
31 December 2017
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
7,558,619.00
-1,775,162.00
-2,348,985.00
3,434,472.00
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
79,594,680.50
39,220,088.00
40,374,592.50
79,594,680.50
5.
COMPANY STRUCTURE
5.1
Company structure
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
11,337,928.50
-2,662,743.00
-3,523,477.50
5,151,708.00
December 2017
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
119,392,020.75
58,830,132.00
60,561,888.75
119,392,020.75
Income
Expenses
Finance costs
Total
comprehensive
income for the
period
15,117,238.00
-3,550,324.00
-4,697,970.00
6,868,944.00
31 December 2017
Total assets
Total Equity
Total Liabilities
Total equity and
liabilities
159,189,361.00
78,440,176.00
80,749,185.00
159,189,361.00
The Company structure is set out in Annexure 4.
5.2
Stated capital
Information regarding the stated capital of the Company, the shareholders of the Company holding in excess of 5% of the
shares immediately prior to the SEM listing, alterations of capital, a summary of offers of shares by the Company to the
public since incorporation and ancillary information is set out in Annexure 5.
5.3
Constitution
Extracts from the Company’s constitution are set out in Annexure 6.
6.
THE PROPERTY
In terms of the Coastal Building Sale Agreements, New Frontier acquired 100% of the Class A shareholding (“Class A
Shares”) of Coastal Building Holdings Ltd, a company incorporated in the British Virgin Islands on 15 July 2011 and which
owns a 2 storey commercial office building in the British Virgin Islands, at an annualised property yield of 8%. The property
is situated at Wickham’s Cay II, Road Town, Tortola, British Virgin Islands. The property is fully let and has a gross lettable
area of 4,980 square feet. The property has been independently valued by Smiths Gore at 16 June 2014 at USD1,700,000
and a copy of their valuation report is presented in Annexure 2.
16
Coastal Building Holdings Limited currently has 23,900 Class A shares and 47,900 Class B shares in issue. The building
currently consists of 2 storeys, which are designated “Class A Floors”. The Class A shareholder has the exclusive right to
use and to receive and retain all income from the Class A Floors. The Class B Shareholder is entitled to construct an additional
2 storeys above the Class A Floors, designated “Class B Floors”. This construction has not yet commenced, but once
completed, the Class B Shareholder shall have the exclusive right to use and to receive and retain all income from the Class
B Floors.
The details of the property are as follows:
Property
Name
Location
Sector
Lease
expiry
Annual
Average
rental per
square foot
Rentable
Area
Occupancy
Valuation as at
16 June 2014
(USD)
Net yield
1,700,000
8%
Per annum
(Sq Ft)
(US$/Sq
Ft)
Coastal
Building
(Class
Floors)
Tortola,
BVI
Commercial
A
Mediumterm
tenancies*
37
4,980
100%
*The length of the leases are 9 years, 5 years and various 1 year leases
There are no restrictions affecting the remittance of profits or repatriation of capital into Mauritius from outside of Mauritius.
7.
EMPLOYEES
The Company does not have, and will not have, any employees.
8.
COMMISSIONS PAID AND PAYABLE
8.1
No amount has been paid, or accrued as payable, since incorporation, as commission to any person, including commission
so paid or payable to any sub-underwriter that is the holding company or a promoter or director or officer of the Company,
for subscribing or agreeing to subscribe, or procuring, or agreeing to procure, subscriptions for any securities of the company.
8.2
Since incorporation, there have been no commissions paid or are payable in respect of underwriting by the Company.
8.3
Since incorporation, the Company has not paid any material technical or secretarial fees.
8.4
Since incorporation, the Company has not entered into any promoter’s agreements and as a result no amount has been paid
or is payable to any promoter.
9.
MATERIAL CONTRACTS
The following contracts, not being contracts entered into in the ordinary course of business, have been entered into by the
Company and are, or may be, material:
-
the Coastal Building Sale Agreement dated 25th July 2014 between the Company and Brendon Jones, in terms of which
the Company acquired 100% of the Class A Shares in Coastal Building Holdings Limited from Brendon Jones, with
effect from 5th June 2014, for a purchase price of $937,736, which was settled by the issuing by the Company of 4,000
ordinary shares in itself to Brendon Jones, with effect from 5th June 2014;
-
a Deed of Adherence entered into by the Company dated 5th June 2014in respect of the Shareholders Agreement dated
8 December 2011, as amended, entered into between Pasea Investment Limited and Coastal Building Holdings Ltd,
governing the relationship between Coastal Building Holdings Ltd and its shareholders; and
-
the Investment Management Agreement, the salient terms of which are detailed in Annexure 3.
17
10.
DIRECTORS AND RELATED PARTIES’ INTEREST IN SHARES
As at the last practicable date, the holdings of the directors and of related parties of directors (the existence of whom is known
or could with reasonable diligence be ascertained by those directors) are as detailed in Annexure 1.
None of the advisors of the Company have or have had an interest in any shares or options in respect of shares as at the last
practicable date.
11.
EXPENSES OF THE SEM LISTING
The estimated expenses relating to the SEM listing which have been or are expected to be incurred are set out below in USD:
Professional services

Corporate advisors and sponsor fees

Company secretarial fee

Property Valuer
48,000
Miscellaneous costs
3,000
SEM application & listing fee
3,200
Net Expenses
54,200
The Company will pay the expenses of the SEM listing out of its working capital.
Save for the expenses set out above, the Company has not incurred any other preliminary expenses since incorporation.
18
______________________________________________________________________________________
SECTION TWO – DETAILS OF THE SEM LISTING
______________________________________________________________________________________
1.
REASONS FOR A LISTING ON THE SEM
1.1
A listing on the SEM will provide the Company with the ability to raise capital in the future, by means of a further issue and
placing in Mauritius and a further issue and placing on the AltX, to pursue its investment policy as set out in paragraph 4, on
page 12. Further to the Company being listed, it will undertake capital raisings on both the SEM and AltX by the first quarter
of 2015, at which stage it is anticipated that the Billion Group would invest in the Company, as set out in paragraph 4.8. The
capital to be raised will be determined by projects and investments earmarked by the Company, but is estimated to be in the
region of $25 million in 2015.
1.2
The Company will undertake listing by way of private placement. Once listed, it is anticipated that the Company will
undertake a further issue and placing in Mauritius, which is anticipated to take place by the first quarter of 2015. As referred
to above, the Company also envisages a listing on the AltX in the future to raise further funds, which is similarly anticipated
to be completed by the first quarter of 2015.
2.
PARTICULARS OF THE LISTING
The listing of the New Frontier shares on SEM is by way of private placement only and there are no New Frontier shares
being issued or sold in connection with this listing. However, Brendon Jones, the sole shareholder of the Company, will offer
234,684 shares to the market on the first day of listing.
3.
ADDITIONAL PLACEMENTS
Details of the potential future private placements in South Africa and in Mauritius will be communicated in due course by
the Company.
19
SECTION THREE – RISK FACTORS AND RISK MANAGEMENT
______________________________________________________________________________________
A number of factors may affect the result of operations, financial conditions and prospects of the Company. This section describes
the risk factors which are considered by the board to be material. However, these factors should not be regarded as a complete and
comprehensive statement of all potential risks and uncertainties. Additional risks not presently known to the board or that the board
currently consider to be immaterial may also adversely impact the Company’s business operations. The business, growth prospects,
financial condition and/or results of operations of the Company could be materially adversely affected by any of these risks. The
trading price of the shares could decline due to the materialisation of any of these risks and investors could lose part or all of their
investment.
Investing in and holding shares in the Company involves a number of risks. Prior to making an investment decision in respect of
New Frontier shares, prospective investors should carefully consider all the information set out in these Listing Particulars, including
the following risk factors and consult their professional advisors.
1.
No assurance of Profits
There can be no assurance that the Company will sustain a cumulative profit during the period of its existence. The investor may
lose part or all of his or her initial investment.
2.
Investment Restrictions
The Company's investment policies do not prohibit certain investment techniques such as concentration of investments in a small
number of companies, or sectors that may entail significant risks.
3.
Currency Fluctuations
The assets of the Company may be invested substantially in securities whereby the income and proceeds of which will be received
in currencies other than US Dollars. Accordingly, the value of the Shares and distributions in US Dollar terms will be adversely
affected by any reductions in value of the relevant currency relative to US Dollar. In addition, the Company will incur transaction
costs in connection with the conversions between other currencies and US Dollars.
4.
Political and/or Regulatory Risks
The value of the Company’s assets may be affected by uncertainties such as international political developments, changes in
government policies, changes in taxation, restrictions on foreign investment and currency repatriation, currency fluctuations and
other developments in the laws and regulations of countries in which investment may be made. Furthermore, the legal
infrastructure and accounting, auditing and reporting standards in certain countries in which investment may be made may not
provide the same degree of investor protection or information to investors as would generally apply in major securities markets.
5.
Overall Investment Risk
All securities investments represent potential risk of loss of capital. The Investment techniques and strategies and the nature of
the securities and or instruments to be purchased and traded by the Company may increase this risk. While the Company will
devote its best efforts to the management of its assets, there can be no assurance that the Company will not incur losses. Many
unforeseeable events may cause sharp market fluctuations, which could adversely affect the Company. Changes in economic
conditions, including, for example, interest rates, inflation rates, industry conditions, competition, technological developments,
political events and trends, changes to tax laws and innumerable other factors can substantially and adversely affect the
performance of the Company. None of these conditions will be within the control of the Company.
6.
Failure to raise capital
It is a risk that the Company may fail to raise the funds required to meet its initial objectives. However, with potential
investors such as the Billion Group in the pipeline, it is expected that the Company will raise sufficient funds to pursue its
objectives fully. In the event that insufficient funds are raised, the Company will acquire a property portfolio only up to the
value of the capital raised. Additional capital raisings would then take place over the next 12 – 24 months on a project by
project basis, to fund additional property purchases and developments as these become available.
7.
Single Asset
There is a risk that, as the Company currently only owns one asset, whereby revenue generation will be dependent on a single
investment. This risk is mitigated by the fact that the Company intends to diversify its investments and increase its property
portfolio upon listing, as set out in paragraph 3.3, and this risk will therefore be of short duration and limited impact.
20
8.
8.1
Specific Commercial Property Risks
Although over the long term property is often considered a low risk asset, investors must be aware that significant short and
medium term risk factors are inherent in the asset class.
8.2
Property and property related assets are inherently difficult to value due to the individual nature of each property. As a result,
valuations are subject to uncertainty. There is no assurance that the estimates resulting from the valuation process will reflect
the actual sales price even where a sale occurs shortly after the valuation date. The performance of any underlying property
investments would be adversely affected by a downturn in the property market in terms of capital value or a weakening of
rental yields. In the event of a default by an occupational tenant, the investment will suffer a rental shortfall and is likely to
incur additional cost including legal expenses, in maintaining, insuring and re-letting the property.
8.3
Property, like other asset classes is affected by economic cycles. In a downturn, sentiment will limit the number of potential
purchasers even at reduced prices. Any future economic recession could therefore materially adversely affect the value of
properties.
8.4
Returns from investment in property depend largely upon the amount of rental income generated from the property and the
expenses incurred in the repair, maintenance and management of the property, as well as upon changes in its market value.
Development or redevelopment can be necessary to preserve or enhance value when a building has become economically
obsolete.
8.5
Rental income and the market value for properties are generally affected by overall conditions in the local economy,
employment trends, inflation and changes in interest rates, which in turn may impact upon the demand for premises,
especially for office space for commercial enterprises in the service sector. Furthermore, movements in interest rates may
also affect the cost of financing for real estate companies.
8.6
As property yields are closely correlated to long-term bond rates, interest rate cycles play an extremely important role in
valuing property prices. Investors should thus be aware that capital values could be at risk in the short term if interest rates
rise.
8.7
Both rental income and property values may also be affected by other factors specific to the real estate market, such as
competition from other property owners, the perceptions of prospective tenants of the attractiveness, convenience and safety
of properties, the inability to collect rents because of the bankruptcy or insolvency of tenants or otherwise, the periodic need
to renovate, repair and release space and the costs thereof, the costs of maintenance and insurance, and increased operating
costs.
8.8
In addition, certain significant expenditures, including operating expenses, must be met by the owner even when the property
is vacant.
8.9
Investments in property are relatively illiquid and usually more difficult to realize than listed equities or bonds. The reasons
for this are, inter alia:
8.9.1
8.9.2
8.9.3
8.9.4
8.10
high transaction costs;
agency transaction systems (general unavailability of information to all players simultaneously);
chunky asset sizes; and
specialized nature of buildings.
A willing and able buyer has to be matched with a willing and able seller to conclude a transaction as there is no “stock
exchange type” marketplace, the time taken to match these two parties can sometimes be lengthy and expensive. Investment
in property cannot therefore necessarily be converted to cash on demand.
21
______________________________________________________________________________________
SECTION FOUR – STATEMENTS AND REPORTS REGULATING THE LISTING
______________________________________________________________________________________
1.
WORKING CAPITAL
The directors of the Company, are of the opinion that the working capital available to the Company will, from the date of the
SEM listing, be sufficient for its present requirements, that is at least for the next 12 months.
2.
LISTING AND DEALINGS ON THE SEM
2.1
An application has been made for the listing of 938,736 New Frontier shares on the Official Market of the SEM with effect
from November 2014.
2.2
It is expected that dealings in New Frontier shares will commence on 28th November 2014.
3.
SIGNIFICANT CHANGES
3.1
There has been no significant change in the financial or trading position of New Frontier since 5 June 2014, the date on which
the financial information of the Company set out in Annexure 7 was prepared.
3.2
There have been no material changes in the business of New Frontier since incorporation and no such changes are
contemplated.
3.3
There has been no change in the trading objective of New Frontier since incorporation.
22
______________________________________________________________________________________
SECTION FIVE – ADDITIONAL MATERIAL INFORMATION
______________________________________________________________________________________
1.
HISTORICAL FINANCIAL INFORMATION
1.1
The historical financial information of New Frontier on the day of incorporation (being 5 June 2014) is set out in Annexure
7.
1.2
The preparation of the historical information falls under the responsibility of the directors of the Company.
1.3
Given that New Frontier is a newly incorporated company there is no historical profit or loss information available.
2.
DIVIDENDS AND DISTRIBUTIONS
2.1
Subject to the laws of Mauritius, the directors have absolute discretion as to the payment of any dividends, including interim
dividends, on the shares. Any dividends will be paid in accordance with the laws of Mauritius. In addition, the directors may,
in their discretion, declare dividends in the form of a bonus issue of additional shares in lieu of a cash dividend.
2.2
No dividend shall be declared or paid unless the directors are satisfied or reasonable grounds that immediately after the
dividend, the value of the Company’s assets will exceed its liabilities and the Company will be able to pay its debts as they
fall due.
2.3
The directors intend to distribute the majority of the Company’s earnings to the shareholders, after making provision for
expenses and working capital, on a semi-annual basis in respect of the six month periods ending 30 June and 31 December
each year.
2.4
No dividends have been declared as of the last practicable date.
2.5
No shares of the Company are currently in issue with a fixed date on which entitlement to dividends arises and there are no
arrangements in force whereby future dividends are waived or agreed to be waived.
3.
ACQUISITIONS
With the exception of the purchase of the shareholding in Coastal Building Holdings Ltd in terms of the Coastal Building
Sale Agreement, no material immovable properties, fixed assets, securities and/or business undertakings have been acquired
by the Company since incorporation or are in the process of being or are proposed to be acquired by the Company (or which
the Company has an option to acquire).
4.
DISPOSALS
No material immovable properties, fixed assets, securities in subsidiaries and/or business undertakings have been disposed
of by the Company since incorporation.
5.
ADVANCES, LOANS AND BORROWINGS
5.1
As at the 5th June 2014, there is an outstanding loan to Coastal Building Holdings Ltd from VP Bank (BVI) Ltd in the sum
of $782,304, and a mortgage over the property, Coastal Building, in favour of VP Bank (BVI) Ltd.
5.2
With the exception of this liability:
5.2.1 as at the last practicable date, no material loans were advanced by or to the Company (including by the issue of
debentures).
5.2.2 As at the last practicable date, no shareholders’ loans were recorded in the Company’s statement of financial position.
5.2.3 As at the last practicable date, there are no loans receivable outstanding.
5.2.4 As at the last practicable date, there is no loan capital outstanding in the Company.
5.2.5 As at the last practicable date, no loans have been made or security furnished by the Company to or for the benefit of
any director or manager or associate of any director or manager of the Company.
23
5.2.6 As at the last practicable date, there were no inter-company loans or other financial transactions between the Company
and its subsidiary.
5.2.7 As at the last practicable date, no charge or mortgage has been created over any assets of the Company.
5.2.8 As at the last practicable date, there were no outstanding convertible debt securities.
6.
CORPORATE GOVERNANCE
New Frontier is fully committed to complying with The Report on Corporate Governance for Mauritius.
7.
LITIGATION
The Company is not involved in any governmental, legal or arbitration proceedings and, in so far as the directors are aware,
there are no governmental, legal or arbitration proceedings pending or threatened against them, or being brought by the
Company since incorporation which may have, or have had in the recent past, a significant effect on the financial position or
profitability of the Company.
8.
DIRECTORS’ RESPONSIBILITY STATEMENT
The directors whose names are given in Annexure 1:
8.1
have considered all statements of fact and opinion in these Listing Particulars;
8.2
collectively and individually, accept full responsibility for the accuracy of the information given;
8.3
certify that, to the best of their knowledge and belief, there are no facts the omission of which would make any statement
false or misleading;
8.4.
have made all reasonable enquiries in this regard; and
8.5.
certify that, to the best of their knowledge and belief, these Listing Particulars contains all information required by law and
the Listing Rules.
9.
MATERIAL COMMITMENTS, LEASE PAYMENTS AND CONTINGENT LIABILITIES
The Company does not have any capital commitments, financial lease payments and contingent liabilities as at the last
practicable date, other than in the ordinary course of business.
10.
MATERIAL COMMITMENTS IN RESPECT OF ACQUISITION AND ERECTION OF BUILDINGS, PLANT
AND MACHINERY
As at the last practicable date, the Company does not have any material commitments for the purchase and erection of
buildings, plant or machinery.
11.
PRINCIPAL IMMOVABLE PROPERTY LEASED OR OWNED
With the exception of the property owned by Coastal Building Holdings Ltd, as at the last practicable date, the Company
does not own any immovable property nor has the Company entered into any leases in respect of immovable property.
12.
TAXATION
Mauritian taxation provisions
Under the current provisions of the Mauritian Income Tax Act, a GBL 1 is taxed at a fixed rate of 15%. A system of deemed
foreign tax credits of 80% effectively reduces the income tax rate to 3%.
Under the prevailing Mauritius fiscal regime, there are no:
12.1
withholding taxes on dividends distributed by a company to its shareholders;
12.2
withholding taxes on interest; and
24
12.3
capital gains taxes. Accordingly, the capital gains realised by a non-resident shareholder on the disposal of its shares in the
company are not subject to tax in Mauritius.
12.4
However, the nature and amount of tax payable by the company is dependent on the availability of relief under the various
tax treaties in the jurisdictions in which the board chooses to invest from time to time.
13.
DOCUMENTATION AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the Company’s registered office during business hours
from the date of issue of the Listing Particulars for a minimum period of 14 calendar days:
13.1
the signed Listing Particulars;
13.2
the business plan prepared by the Company and certified by an independent financial advisor;
13.3
the Constitution of the Company;
13.4
the Coastal Building Sale Agreement;
13.5
the Deed of Adherence detailed in Section 1 above;
13.6
the Investment Management Agreement; and
13.7
the full property valuation report, a copy of which is in Annexure 2;
SIGNED AT PORT LOUIS, MAURITIUS ON 13th NOVEMBER 2014 ON BEHALF OF NEW FRONTIER PROPERTIES
LIMITED
Brendon Jones
who warrants that he is duly authorised thereto by resolution of the board of directors of New Frontier Properties Limited
25
Annexure 1
________________________________________________________________________________________________________
DIRECTORS, EXECUTIVE MANAGEMENT, FOUNDERS, APPOINTMENT, QUALIFICATION, REMUNERATION
AND BORROWING POWERS
________________________________________________________________________________________________________
1.
FULL NAMES, NATIONALITIES, AGES, BUSINESS ADDRESSES, ROLES, QUALIFICATIONS,
OCCUPATIONS AND EXPERIENCE OF EACH DIRECTOR
The full names (including former names, if applicable), ages, nationalities, qualifications, roles, business addresses,
occupations and experience of each of the directors of the Company are set out below:
Director, age, nationality
and qualification
Role
Business address
Occupation and experience
Chief Executive
Officer
Suite 510, 5th Floor Barkly
Wharf,
Le
Caudan
Waterfront, Port Louis,
Mauritius
Mr Jones is a Director of Maitland (Mauritius) Limited since
November 2006 and currently holds a number of Executive
and Non-Executive Directorships, including Tremont
Master Holdings, a mining investment holding company
funded substantially by Denham Capital with an advisory
relationship with Pangea Exploration (Pty) Ltd since 2011,
One Thousand and One Voices Management (Mauritius)
Ltd, a pan African Private Equity Fund and Novare Africa
Fund PCC, a Mauritian Stock Exchange listed property
Fund. His Board role include the review and approval of
investment proposals presented by the various investment
teams. Mr Jones was Business Systems Manager for
Diethelm Travel (Thailand) Limited, in Bangkok in 2005
and 2006, and Business Analyst for Reuters, London, in
2002.
Daniel
Romburgh
(32); South Africa;
Bachelor of Commerce
(Hons)
Financial
Analysis and Portfolio
Management
Financial Director
4th Floor, Protea Place, 40
Dreyer Street, Claremont,
South Africa
Mr Romburgh was previously a director of Caledonian Fund
Services (South Africa) (Pty) Ltd. His responsibilities
included internal and outward management of an
international fund administration and accounting service
provider. He was previously appointed as accounts manager
at Beacon Fund Administrators (Pty) Ltd and is currently
Head of Operations at Drake Fund Advisors (SA) (Pty) Ltd.
Peter
Todd
(55)
British/South African;
B.Comm, LLB, H Dip
Tax
Non-executive
Director
2ndFloor La Croisette,
Grand Baie, Mauritius
Mr Todd qualified as an attorney and then became a senior
tax manager at Arthur Anderson and Associates in
Johannesburg. He joined TWS Rubin Ferguson in 1993 as a
tax partner and was instrumental in listing several companies
on the JSE. Peter’s practice was very focused on the property
industry in South Africa and TWS had most of the major
property companies as clients including, Stocks and Stocks,
RPP, Abland, Edge Properties Ltd and Concor Ltd. The
practice consulted on property structuring and raising
finance for property developments. In 2000, Peter set up
Osiris International Trustees Limited in the BVI to provide
international trust and corporate administrative services to
global clients, as well as Drake Fund Advisors which sets up
and administers hedge funds in the BVI and Cayman Islands.
Peter was involved as a director from inception with the
creation of Ciref Ltd. Ciref went on to list on AIM and later
reversed into Wichford Ltd on the main board of the LSE.
Peter was also general manager of Corovest Fund Managers
the investment manager of Redefine. Peter remained a non-
Directors of New Frontier
Brendon
Jones
(40);
British/South
African;
Higher Diploma in Human
Resource
Management,
International
Capital
Markets and Investment
Advice Certificate ( IAC),
Master of Business
Administration (MBA)
26
executive director of Redefine International Limited from
initial listing for some 9 years and has otherwise been
involved in the property industry for many years including
in property syndications into the UK market, a large office
development in the BVI, and in indirectly managing some
50 other property investments worldwide.
Gary Ian Fourie (47);
South African; B.Comm
(Finance)
Hendrik
Petrus
Barnhoorn (46); South
African;
Chartered
Accountant
(CA);
Master of Business
Administration (MBA)
Diane Bosman (32);
South African; BA.LLB
Executive
Director
3rd Floor, Palazzo Towers
West,
Montecasino
Boulevard,
Fourways,
Johannesburg,
South
Africa
Mr Fourie is currently a director of Billion Asset
Management Limited (the external asset manager of the
Billion Group) and Ascension Property Management
Company (Proprietary) Limited (the external asset manager
of the JSE listed Ascension Properties Limited). Mr Fourie
joined Billion Group in 2012 as a Chief Investment Officer
and his current responsibilities include finding, analysing,
presenting, funding, executing and hedging investments
(mostly property investments) on behalf of the Billion Group
and Rebosis Property Fund Limited. Prior to joining the
Billion Group, Mr Fourie worked at Investec Bank South
Africa from 2005 in a specialised finance team. The
transactions were predominantly property related
(residential estates and shopping centres), but he was also
involved in black economic empowerment deals, mining
transactions and securitization. Mr Fourie was then
transferred to Investec Bank Australia in the Property
Investment Banking Division where he was involved in the
financing property developments in and around Brisbane.
Upon his return to South Africa, he headed up the Investec
Private Bank South Africa recoveries and property risk
division. Prior to that, Mr Fourie worked as a portfolio
manager at Coronation Specialised Funds (Proprietary)
Limited and at Eskom (the South African electricity public
utility) in foreign exchange, commodity dealing, and the risk
management sphere.
Non-executive
Director
19th Floor, Newton Tower,
Sir
William Newton
Street,
Port
Louis,
Mauritius
Mr Barnhoorn joined the Geneva Management Group in
March 1, 2008, as Chief Financial Officer. From June 2006 to
February 2008 he served as Financial Director for a Property
Development Group, based in South Africa. From 1999 to
June 2006, he worked for Plantronics Inc, a US based
Company listed on the New York Stock Exchange. During
this period he held the position of Finance Manager at the
European head office based in the Netherlands, before taken
up the position of Director Accounting and Reporting at the
group’s head office, based in Santa Cruz, California. Mr
Barnhoorn is a Chartered Accountant (CA) and holds an
Executive MBA from the Rotterdam School of Management,
the Netherlands, where he passed with distinction
Non-executive
Director
2nd Floor, 30 Charles II
Street, London, SW1Y
4AE, United Kingdom
Ms Bosman is a qualified attorney, notary and conveyancer
and has worked in the property industry as a property
specialist for many years. She has also worked as an advisor
to Redefine Properties International working out of their
offices in London for the past 3 years. As such she has been
intimately involved in preparing leases, raising finance,
putting together property syndicates and related activities.
27
2.
REMUNERATION OF THE DIRECTORS OF NEW FRONTIER
2.1
The remuneration and benefits to be paid by the company or the service provider to the directors of New Frontier in their
capacity as directors (or in any other capacity) for the financial period from inception until31 December 2014 will be as set
out below:
Director
Brendon Jones
Peter Todd
Gary Fourie
Hendrik
Barnhoorn
Daniel
Romburgh
Diane Bosman
Basic
salary
US$
2 000
2 000
2 000
2 000
Director’s Other
fees
fees
Performance
bonus
Expense
allowance
Other
Pension
Commission
material scheme
benefits^ contributions
Shares or share
Share of
options or similar profit
rights†
Total
US$
2 000
2 000
2 000
2 000
2 000
2 000
2 000
2 000
2.2
As the Company was only incorporated on 5th June 2014 no fees have been paid to the directors of the Company as at the
last practicable date.
2.3
There shall be no variation to the fees receivable by any of the directors as a consequence of the SEM listing.
3.
DIRECTORS’ INTERESTS IN SECURITIES
New Frontier’s directors’ interests in New Frontier
As at the last practicable date, Brendon Jones holds directly 938,736 shares in the capital of the Company representing 100%
of the Company’s stated capital. None of the other directors of the Company or the Investment Manager hold any securities
in the Company as at the last practicable date.
4.
DIRECTORS’ INTERESTS IN TRANSACTIONS
4.1
Brendon Jones has a beneficial interest in the Coastal Building Sale Agreement. Otherwise, no other directors of the Company
have a beneficial interest in transactions entered into by the Company:
•
during the current financial year; or
•
during the two preceding financial years; or
•
during any earlier financial year and which may still be outstanding.
4.2
No amount has been paid to any director (or to any company in which he is interested (whether directly or indirectly)or of
which he is a director or to any partnership, syndicate or other association of which he is a member) in the three years
preceding the date of these Listing Particulars (whether in cash or securities or otherwise) by any person either to induce him
to become or to qualify him as a director or otherwise for services rendered by him (or by the associate identity) in connection
with the promotion or formation of the Company.
5.
DIRECTORS’ INTERESTS IN PROPERTY ACQUIRED OR TO BE ACQUIRED
Other than Brendon Jones, who holds shares in the Company as referred to in paragraph 3 of this annexure and who has a
beneficial interest in the Coastal Building Sale Agreement, as referred to in paragraph 4.1 of this annexure, no director has
had any material beneficial interest, direct or indirect, in the promotion of the Company or in any property acquired or
proposed to be acquired by the Company in the three years preceding the date of issue of these Listing Particulars and no
amount has been paid during this period, or is proposed to be paid to any director.
28
6.
TERMS OF OFFICE
None of the directors have entered into a service contract with the company and accordingly the appointment of the directors
is indefinite but remains subject to all applicable laws and the provisions of the company’s Constitution.
7.
CONSTITUTION
The relevant extracts of the Constitution of the Company providing for the appointment, qualification, retirement,
remuneration and borrowing powers of the directors and the powers enabling a director to vote on a proposal, arrangement
or contract in which he is materially interested are set out in Annexure 6.
8.
BORROWING POWERS
As set out more fully in Annexure 6, the borrowing powers of the Company exercisable by the directors are unlimited and,
accordingly, have not been exceeded since incorporation.
9.
SUMMARY OF EXISTING OR PROPOSED CONTRACTS (WHETHER WRITTEN OR ORAL) RELATING TO
DIRECTORS’AND MANAGERIAL REMUNERATION, RESTRAINT PAYMENTS, ROYALTIES AND
SECRETARIAL ANDTECHNICAL FEES
9.1.
There are no existing or proposed contracts (whether written or oral) relating to directors or managerial remuneration,
restraint payments, royalties or secretarial and technical fees.
9.2.
As at the date of these Listing Particulars, there were no other contracts or arrangements in which the directors were materially
interested and which were significant in relation to the business of the Company.
10.
THE INVESTMENT MANAGER
The Company has entered into an Investment Management Agreement with an external service provider, as set out in
paragraph 2.2 of these Listing Particulars.
The full names (including former names, if applicable), ages, nationalities, qualifications, roles, business addresses,
occupations and experience of each of the directors of the Investment Manager are set out below:
Director, age, nationality and
qualification
Role
Directors of Premier Capital Managers Ltd
Peter Todd (55) British/South
Director
African; B.Comm, LLB, H Dip
Tax
Business address
Occupation and experience
2ndFloor La Croisette, Grand Baie,
Mauritius
Mr Todd qualified as an attorney and then
became a senior tax manager at Arthur
Anderson and Associates in Johannesburg. He
joined TWS Rubin Ferguson in 1993 as a tax
partner and was instrumental in listing several
companies on the JSE. Peter’s practice was
very focused on the property industry in South
Africa and TWS had most of the major
property companies as clients including,
Stocks and Stocks, RPP, Abland, Edge
Properties Ltd and Concor Ltd. The practice
consulted on property structuring and raising
finance for property developments. In 2000,
Peter set up Osiris International Trustees
Limited in the BVI to provide international
trust and corporate administrative services to
global clients, as well as Drake Fund Advisors
which sets up and administers hedge funds in
the BVI and Cayman Islands. Peter was
29
involved as a director from inception with the
creation of Ciref Ltd. Ciref went on to list on
AIM and later reversed into Wichford Ltd on
the main board of the LSE. Peter was also
general manager of Corovest Fund Managers
the investment manager of Redefine. Peter
remained
a non-executive director of
Redefine International Limited from initial
listing for some 9 years and has otherwise been
involved in the property industry for many
years including in property syndications into
the UK market, a large office development in
the BVI, and in indirectly managing some 50
other property investments worldwide.
Julie Lamberth-Dawson (52)
British; Bachelor of Art (Econ),
Masters in City & Regional
Planning
Director
Coastal Building, Wickham’s Cay
II, Road Town, Tortola, British
Virgin Islands
Ms Lamberth-Dawson graduated from the
University of Cape Town with a masters’
degree
specialising
in
development
economics. She moved to London in 1988 and
worked in urban regeneration and project
finance until her return to South Africa at the
beginning of 1997.She has been resident in the
British Virgin Islands for over 5 years. She is
on the board of Pasea Investments in the BVI
which has conducted a large office
development in the BVI.
For the past 12 years Ms Lamberth-Dawson
has specialised in the Technology, Media &
Telecommunications (TMT) sectors, in both
the business advisory and corporate finance
spheres. She has worked on and led numerous
large cross-border transactions, and became an
Emerging Market specialist in these areas.
Ms Lamberth-Dawson has acted as a director
of many listed and unlisted property funds.
30
Annexure 2
________________________________________________________________________________________________________
INDEPENDENT VALUATION REPORT
________________________________________________________________________________________________________
31
On the instructions of Coastal Building Holdings Limited Sub‐leasehold interest in Parcel 85/1/2/1 and Parcel 89/2/1/1, Block 2938B, Road Town Registration Section Photo taken:18 June 2014 Valuation Report June 2014 Britannic Hall, PO Box 135, Road Town, Tortola, British Virgin Islands Tel: 284 494 2446 Fax: 284 494 2141 London Edinburgh Denver Kuala Lumpur Sabah Brunei.
Table of Contents
Table of Contents Transmittal Letter ........................................................................................................................................................................ 3 Summary of Salient Facts and Conclusions.................................................................................................................................. 4 Special Assumptions .................................................................................................................................................................... 5 Terms of Engagement.................................................................................................................................................................. 6 General Assumptions................................................................................................................................................................... 8 Road Town Commercial Land Market Overview ......................................................................................................................... 9 Office Market Overview............................................................................................................................................................. 10 Location and Neighbourhood .................................................................................................................................................... 12 Site Description.......................................................................................................................................................................... 13 Improvement Description ......................................................................................................................................................... 20 Highest and Best Use ................................................................................................................................................................. 21 Valuation Methodology and Valuation Analysis........................................................................................................................ 22 Reconciliation and Final Estimate of Value................................................................................................................................ 29 Appendices Summary of Superior Lease for Parcel 85/1 (Instrument 3/1974) ............................................................................................ 31 Summary of Superior Lease for Parcel 89/2 (Instrument 23/1987) .......................................................................................... 32 Summary of Sub‐Lease for Parcels 85/1/2 and 89/1/2 (Instrument 190/2011)........................................................................ 33 Summary of Sub‐Lease for Parcels 85/1/2/1 and 89/1/2/1 (Instrument 246/2012)................................................................. 34 Copy of Land Register ................................................................................................................................................................ 36 Survey Plan VISS‐2938B‐2‐T....................................................................................................................................................... 47 Survey Plan VISS‐2938B‐3‐T....................................................................................................................................................... 48 Letter of 10 October 2012 from VISS regarding Encroachment ................................................................................................ 49 Construction Plans of the Coastal Building................................................................................................................................ 50 Plan showing layout of Lower floor of Coastal Building ............................................................................................................ 55 Plans of the Meridian Building (including elevations of Coastal Building)................................................................................. 56 Photographs of Subject.............................................................................................................................................................. 60 2 Summary of Salient Facts and Conclusions Client Coastal Building Holdings Limited Purpose of Valuation To estimate the fair value for the subject for financial reporting purposes in connection with the listing of a parent company which holds the shares of Coastal Building Holdings Limited. Legal Description: The subject property comprises Parcel 85/1/2/1 and Parcel 89/2/1/1, Block 2938B Road Town Registration Section. Interest Appraised We value the leasehold interest of Coastal Building Holdings Limited as Lessee under a lease from Pasea Investments Limited. The lease has approximately 58½ years remaining unexpired at the date of valuation (lease expires 1 January 2073). Location Wickham’s Cay II, Road Town, Tortola, British Virgin Islands Type of Property The subject is a two storey commercial office building of approximately 4,980 square feet located on a site of approximately 3,829 square feet (0.088 acres). Land Area 3,829 square feet (0.088 acres) Improvements Two storey office building containing approximately 4,980 square feet. Definition of Fair Value “The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.” (International Financial Reporting Standards IFRS13) Date of Inspection 16 June 2014 Effective Date of Value 16 June 2014 Date of Report 18 June 2014 Highest and Best Use Continue to hold as an investment. Fair Value Conclusion $1,700,000 (ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS) Special Assumption This estimate of value is subject to, and can only be fully understood when read in conjunction with, the special assumptions listed on page 5 of this report. Reasonable Exposure Time 12 months Coastal Building: 16 June 2014 4 Special Assumptions The value conclusions contained in this report are subject to the following special assumptions: −
We assume that the ground rent payable for the Head Leases for the subject property will remain at the current estimated rate of $12,736 per year through the term of the lease, subject only to adjustment for inflation at the rent review dates contained in the sub‐lease agreements. In the event that Wickhams Cay Development Authority seeks to adjust the ground rent in accordance with the terms of the Superior Lease, this would have a significant effect on the value of the leasehold interest in the subject property. −
We understand that Pasea Investments Limited has agreed to provide parking for the Coastal Building at no cost to Coastal Building Holdings Limited. We recommend that this obligation is confirmed in writing and recorded against the title. −
We have been provided only with outline terms for the lease to Osiris International Trustees Ltd. We assume that this is a typical net lease at the stated rent with a service charge based on actual costs including the items identified as ‘recoverable operating expenses’ under the discussion of operating expenses in the valuation section of this report. −
To arrive at an ‘as‐is’ value for the subject property, we make a deduction of $50,000 from the value on completion to allow for the cost of installing a fire escape to the upper floor and adjusting the electrical system for the lower floor to allow the operation of the air conditioning system. −
In the Land Register, on the pages for Parcels 85 and 89, a note is made that Tortola Investment Trust Limited is “to be informed before any dealings” and refer to Instrument 729/1976 (see the copy of the Land Register for Parcel 89, appended to this report). Subject to legal advice, these appear to be historic entries that are no longer applicable and we assume the same for the purposes of this report. We recommend that this is confirmed by a legal opinion. −
The subject property forms part of an area that has been used as a boatyard for many years. We have not been provided with any environmental report for the subject but assume that the property is free and clear of environmental contamination that would require any special treatment or clean up. −
According to a letter dated 10 October 2012 from Virgin Islands Surveying, provided to us by Meridian Construction, the second and third levels of the Meridian Building encroach two feet onto the site of the Coastal Building. Subject to legal advice, we recommend that any lender ensures that this encroachment is formally agreed and recorded on the title. We make no allowance for any costs associated with this encroachment. Coastal Building: 16 June 2014 5 Terms of Engagement 1 Identification of Valuer responsible and status The valuation will be undertaken by Anthony Campbell FRICS who has more than 30 years experience in the valuation of property in the British Virgin Islands, and the Caribbean. In accordance with the RICS Valuation – Professional Standards (VPS1), the valuer confirms: −
That the valuer is in a position to provide an objective and unbiased valuation. −
That the valuer has sufficient current local, national and international knowledge of the market for the subject property and the skills and understanding to undertake the valuation competently. 2 Identification of client and any other intended users: Coastal Building Holdings Limited 3 Purpose of the valuation: The report is required for financial reporting purposes in connection with the listing of a parent company which holds the shares of Coastal Building Holdings Limited. It may not be relied upon for any other purpose. 4 Identification of the asset or liability to be valued The legal description of the subject property is Parcel 89/2/1/1 and Parcel 85/1/2/1, Block 2938B, Road Town Registration Section. The subject property is held under the terms of a lease between Pasea Investments Limited (as lessor) and Coastal Building Holdings Limited (as lessee). The lease terminates on 1 January 2073. The terms of the lease will be summarized in the report. 5 Interest to be valued: We will value the leasehold interest in the subject property. 6 Type of asset or liability and how it is used or classified by the client: The subject property comprises a two storey commercial office building of approximately 4,980 square feet located on a site of approximately 3,829 square feet which is partly leased to two tenants and held as an investment. 7 Basis or bases of value: The basis of value adopted in this report is ‘Fair Value’, which is defined as follows: “The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.” (International Financial Reporting Standards IFRS13) 8 Valuation date: The valuation date will be the date of inspection. 9 Extent of investigations: We will carry out enquiries and an inspection of the subject property to determine the general characteristics, use and overall dimensions of the land and any buildings, the apparent construction and accommodation of any buildings, their approximate age, state of repair and condition as well as utilities available to the property. We may rely upon plans and schedules provided to us for dimensions, areas, utilities, details of construction and age of improvements. We will gather the market data necessary to estimate the fair value of the subject property. We will prepare a narrative report summarizing our conclusions, including a summary of the data used in the analysis and the methodology used to arrive at the value. 10 Nature and source of information to be relied upon: We will rely upon information gathered during our inspection. In order to proceed with this assignment we will require the following information to provided to us: Coastal Building: 16 June 2014 6 Terms of Engagement −
Copy of executed lease to Osiris International Trustees Limited −
Copy of executed lease to Heritage Corporate Services −
Copy of executed lease or Heads of Terms for proposed lease of the lower floor by Osiris International Trustees Limited, if applicable. −
Schedule of operating expenses −
Details of insurance premium and current coverage −
Cost to complete any outstanding works −
Copy of the latest ground rent statement received from the head lessee Any delay in providing this information may result in a delay in the final delivery of our report. 11 Disclosure of any material involvement: In accordance with the RICS Valuation – Professional Standards 2014, Smiths Gore BVI Limited confirms that they have previously prepared a valuation of the subject property dated September 2013. Smiths Gore has also acted as leasing agent for Coastal Building Holdings Limited in connection with the lease to Heritage Corporate Services. 12 Currency adopted: All values in the report will be expressed in US dollars unless otherwise stated. 13 Assumptions and special assumptions: The valuation is made subject to the General Assumptions and Limiting Conditions appended to these Terms of Engagement. The valuation is also made subject to the special assumptions, reservations and special instructions appended to these Terms of Engagement. 14 Restrictions on use, distribution or publication: Neither the whole nor any part of the report nor any reference thereto may be included in any published document, or referred to in any way without our prior written approval of the form and context in which it may appear. 15 Limits or exclusion of liability to parties other than the client: The valuation report is prepared for the use only of the client to whom it is addressed and we cannot accept responsibility to any third party for the whole or any part of its contents. 16 Valuation Standards: The valuation will be made in accordance with the RICS Valuation – Professional Standards 2014, published by the Royal Institution of Chartered Surveyors and the International Valuation Standards 2013. 17 Description of Report The report will be prepared in accordance with the minimum reporting requirements contained in International Valuation Standards 2013 (IVS) 103. 18 Basis on which the fee will be calculated: The fee for the valuation will be $1,500 plus expenses reasonably incurred in connection with the valuation. The fee will be payable upon delivery of the draft report. Two signed, bound copy of the report will be included in this fee. There will be a charge of $100 for any additional copies that may be required. 19 Compliance Monitoring Compliance of the valuation with the RICS Valuation – Professional Standards 2014, published by the Royal Institution of Chartered Surveyors, may be subject to monitoring under the Institution’s conduct and disciplinary regulations. Coastal Building: 16 June 2014 7 General Assumptions and Limiting Conditions Our valuation of the subject property is made subject to the following general assumptions and limiting conditions. Government Consent: We assume that if any Government consent is required to accomplish a sale of the property that it would be granted by the Government without undue delay or restriction. Planning and Building consents: We assume that all necessary planning and building consents required for the construction of the improvements have been obtained. Licences: We assume that all licences required by Government have been obtained. Title and Legal Matters: We assume that information on the title for the subject property is accurate and correct. We accept no responsibility or liability for legal matters and assume that our interpretation of title and any agreements affecting the property is correct. Unless stated in the report, we assume that there are no onerous or unusual conditions or restrictions affecting the property and that it is free and clear of any mortgages or charges. Soil conditions: We assume that there are no adverse site or soil conditions that would cause us to make deductions for exceptional site or construction costs. Engineering We have not undertaken any engineering investigation or structural analysis of improvements on the subject property. Environmental conditions: We are not aware of the content of any environmental audit or other environmental investigation or soil survey which may have been carried out on the property and which may draw attention to any contamination or the possibility of such contamination. We have not carried out an investigation into past or present uses of the property to establish whether there is any contamination or potential for contamination to the subject property from these uses, and have assumed that none exist. Should it be established subsequently that contamination, seepage or pollution exists at the property, or that the premises have been or are being put to a contaminative use, this might reduce the values now reported Cost of sale and taxation: We make no allowance for any expenses of realisation, or for taxation, which might arise in the event of a disposal. General considerations: In undertaking valuations in the Caribbean region, we would bring attention to the following points: −
Sovereign Risk: Sovereign risk is a significant factor in the investment equation in the Caribbean. −
Micro‐Economies: The economies of small Caribbean islands rely on external factors beyond the control of local Governments. The impact of the North American and European markets on both tourist arrivals and investment could be significant in the uncertainty of the present economic climate. −
Time to accomplish a sale: Primarily due to the limited size of the market, the time required to accomplish a sale of investments in the Caribbean is often much longer than in North America or Europe. The requirement for overseas investors to obtain landholding licences prior to acquiring real estate can also extend the time taken to accomplish a sale Coastal Building: 16 June 2014 8 Road Town Commercial Land Market Overview General Characteristics For the most part the commercial land market in Road Town is the preserve of local developer‐
of Market investors, who hold land and commercial buildings as long term investments. In recent years much of the development has taken the form of offices developed for lease to third party tenants and office / retail buildings constructed for owner users. Because land is typically held as a long term investment, land sales transactions are scarce and there is often strong competitive demand when well‐located sites are offered for sale. Locations The majority of commercial land in Road Town is located on Wickhams Cay I and II, which includes the subject property. These two areas of land, created by reclamation in the 1970s, extend into Road Harbour. The land on Wickhams Cay I and II has been sold by the Crown on Long Leases which run for 99 years from 1974. The premiums achieved for the sale of leases on Wickhams Cay, which until recently were at prices as low as $7.00 per square foot, do not represent market land values because they have been granted on favourable terms to local investors, without market competition. Almost all available Crown land on Wickhams Cay I and II has now been leased. Two other significant areas of commercial land are Pasea Trading Estate, which is to the north of Wickhams Cay II, and Port Purcell which is located to the east of Wickhams Cay II. Both are privately held. Pasea Trading Estate has been owned by UK investors since the 1960s. The Trading Estate has been sold on long leases of 99 years and almost all of the land has been sold. Redevelopment of some of the sites is now occurring. A site of 1.5 acres remains undeveloped. The Port Purcell Estate, which is owned by JOMA Properties, is located next to the main deep water port for the Territory. Historically this area was developed with low rise warehouse buildings but is now being planned for redevelopment as an office park. Development The success of the financial service sector in the British Virgin Islands since the late 1980s, along with expansion of Government, has been the main demand driver for the development of commercial land in Road Town. Recent office development has occurred on and around Wickhams Cay I and II. Since 2003 the planning authority has allowed several buildings of more than 3 stories. The latest buildings are six stories in height. A shortage of land, traffic congestion and lack of parking in the central areas, including Wickhams Cay I, are now encouraging development of sites slightly outside the main commercial core. New development is planned for Port Purcell, Pasea Estate and Wickhams Cay II. The first of such developments is the 65,000 square foot office building developed by Ashley Ritter, which is located to the south of the subject on Wickhams Cay II. Coastal Building: 16 June 2014 9 Road Town Office Market Overview Introduction The subject property is partly developed with office buildings and the owners intend to develop the remaining surplus land with office buildings as market demand occurs. Following is an overview of the office market in Road Town. Survey of the Road Town office market Almost all private sector offices and the majority of Government offices in the British Virgin Islands are located in Road Town. On Tortola a few private sector office users are located out of Road Town, in the marinas of Nanny Cay and Soper’s Hole, but these are exceptions. The reason for the concentration of offices is that the majority of private sector office space is occupied by law firms, trust companies and accounting firms that need access to the services provided by other professional firms and to Government offices such as the BVI Company Registry. There is no complete survey of the office market in the BVI. The following table provides a summary of office buildings completed since 2004 and proposed office construction in the Road Town market. Analysis of Buildings Completed and Under Construction since 2004 Second Quarter 2014 Office space completed 2004‐2014 Occupied 349,365 Vacant 77,366 Vacancy rate 18.0% Buildings under construction Buildings Completed 430,595 33,532 Pre‐leased 5,424 Available 28,108 Vacancy rate 83.8% Source: Smiths Gore Market Research Since 2004 approximately 430,000 square feet of new office space has been constructed in the Road Town market. The space is located in 26 buildings, indicating an average building size of approximately 16,500 square feet. Approximately 40% of the new space is located on Wickham’s Cay I with the remainder being located on Main Street, at Pasea Estate, at Road Reef, on Wickham’s Cay II and on Fishlock Road / Flemming Street. Buildings Under Construction A further 33,000 square feet of office space is currently under construction. Included in this figure is the additional floor being added to the Hodge Building located at the roundabout in the centre of the financial district. Approximately 475,000 square feet of office space is at various stages of planning, ranging from conceptual design to detailed working drawings. Site work began on two of these buildings during 2009 and stopped as a result of the downturn in market conditions. Proposed Construction Coastal Building: 16 June 2014 In the current economic climate and with existing vacant space it is unlikely that construction of further buildings will commence without pre‐leasing. 10 Road Town Office Market Overview Vacancy Rate There is approximately 77,000 square feet of vacant space in completed buildings and 28,000 square feet of vacant space in buildings under construction, giving a total of 98,000 square feet of available space of which approximately 87,000 square feet is offered in ‘shell’ condition. Approximately 38,000 square feet of this vacant space is contained in Ritter House. The current overall vacancy rate is 18.0% in completed buildings constructed since the beginning of 2004. Although the vacancy rate for shell space is high, the vacancy rate for finished, semi‐finished or second generation space remains relatively low. Space that is finished or semi‐finished is an attractive option for tenants because of savings on the cost of fit out. Absorption Rates The average annual absorption rate over the last 10 years has been approximately 33,000 square feet per year. Market Rental Rates Asking net rental rates for office space in shell condition are typically between $30.00 and $38.00 per gross rentable square foot. In addition to rent, tenants are responsible for paying a service charge in the range $3.50 to $6.00 per square foot. For semi‐finished or second generation space with existing fit out, rental rates are typically in the range $30.00 to $42.00 per square foot for newer buildings (post 2004) and $23.00 to $35.00 per square foot in older buildings (pre 2004). Composition of Demand Historically, demand for new office space has been driven by the growth of the financial service sector and expansion by Government. Trust companies tend to be smaller users of less than 5,000 square feet although a few occupy over 10,000 square feet. The international law firms occupy the largest office spaces in the market, with floor areas of more than 10,000 square feet. In aggregate, the BVI Government is the largest office user in the market. We estimate it has absorbed a total of 124,000 square feet in buildings constructed since 2004. This represents approximately one third of all absorption since 2004. Current Market Conditions Following the global financial crisis in 2008 both private and public sector demand for office space in Road Town contracted sharply. A number of tenants cancelled plans to take new leases and Government scaled back its demand because of budgetary constraints. At the same time most lenders held back on new loans for projects unless there was 100% pre‐
leasing. Summary The current supply of vacant office space of approximately 98,000 square feet represents three years supply based on average absorption over the last ten years, creating a competitive environment favourable to tenants. Rental rates are unlikely to change significantly over the next 12 to 24 months. Coastal Building: 16 June 2014 11 Location and Neighbourhood Location and Neighbourhood The subject property is located on Wickhams Cay II, an area of reclaimed land bordered by commercial marinas on two sides. There is a mixture of land uses on Wickhams Cay II. The largest commercial user is The Moorings Limited which has a site of approximately 5 acres and a 200 berth marina. Several supporting marina service businesses are located on Wickhams Cay II. These include the boatyard for The Moorings Limited, which is adjacent to the subject and from which the subject was created by subdivision. Development in the Neighbourhood of the Subject New development has recently occurred on Wickhams Cay II. −
During 2009 The Moorings Limited completed construction of a new marina basin at the south end of Wickhams Cay II together with a new reception, hotel rooms and restaurant. This development has been completed to a high standard of design and construction. −
During first quarter 2010 the six storey Ashley Ritter office building of 60,845 square feet was completed to the south of the subject on a site of approximately 1.03 acres. This building was constructed on a speculative basis. This office use created a change in the balance of the users of Wickhams Cay II from marine related businesses to office use. Further office buildings are planned adjacent to the Ritter building. Parking Currently many of the older developments on Wickhams Cay II, rely on the public road for parking. The Moorings has off‐street parking facilities as does Ritter House. Improvements to Access into Wickhams Cay II During October 2011, Government installed traffic lights at the intersection of the main entry to Wickhams Cay II and Waterfront Drive, which was designed to allow full movement in both directions on and off Waterfront Drive. Subsequently Government has removed the right turn from Waterfront Drive onto Wickhams Cay II for eastbound traffic until such time as a filter lane can be introduced. Neighbouring Land Uses On the west the subject has direct frontage to the main public road that extends through Wickhams II. On the east the subject is bounded by a boatyard. On the north the subject adjoins the Meridian Building and on the south subject has frontage to an area of parking that is used by the Golden Hind Yacht Chandlery and the Moorings boatyard office. Coastal Building: 16 June 2014 12 Site Description Identification The subject is a two storey commercial office building of approximately 4,980 square feet located on a site of approximately 3,829 square feet (0.088 acres). Legal Description The subject property comprises Parcels 89/2/1/1 and 85/1/2/1, Block 2938B Road Town Registration Section. The following annotated extract from Plan VISS‐2938B‐3‐T, prepared by Virgin Island Surveying Limited illustrates the component parts of the subject property. Parcel 89/2/1/1
Parcel 85/1/2/1 The area of Parcel 89/2/1/1 is shaded in blue and the area of Parcel 85/1/2 is shaded in red. The sub‐lease of these two areas is contained in Registered Instrument 246/2012. Land Area According to the above plan Parcels 85/1/2/1 and 89/2/1/1) contain a combined area of 3,829 square feet (0.088 acres), summarised as follows. Parcels Encroachment Square feet Acres Parcel 89/2/1/1 583 0.013 Parcel 85/1/2/1 3,246 0.075 Land area of Coastal Building sub‐lease 3,829 0.088 We understand from a copy of a prepared by Marc Downing of Virgin Island Surveying Services Ltd dated 10 October 2012, that the Meridian Building encroaches two feet over the boundary of the sub–lease to Coastal Building Holdings Limited on the second and third floor levels. We understand that this encroachment has been acknowledged and accepted by both parties. Subject to legal advice, we would recommend that it is recorded on the Land Register. A copy of Marc Downing’s letter is appended to this report. Interest Valued Coastal Building: 16 June 2014 We value the sub‐leasehold interest held by Coastal Building Holdings Limited (as Lessee) from Pasea Investments Limited (as Lessor) and as defined by the sub‐lease recorded in Land 13 Site Description Registry as Instrument 246/2012. At the date of valuation the sub‐leasehold interest held by Pasea Investments Limited has a remaining term of approximately 58½ years (the sub‐lease expires 99 years from 2 January 1974, that is, on 1 January 2073). Land Register The pages in the Land Register for Parcels 85 and 89, make note that Tortola Investment Trust Limited is “to be informed before any dealings” and refer to Instrument 729/1976 (see the copy of the Land Register for Parcel 89, appended to this report). Subject to legal advice, these appear to be historic entries that are no longer applicable and we assume the same for the purposes of this report. The following is a summary of the Land Registry entries for the subject property as of 18 June 2014. Copies of the Land Register entries are appended to this report. Coastal Building: 16 June 2014 14 Site Description Parcel 85/1/2 Parcel 85/1/2 Block 2938B Registration Section Road Town Title Leasehold Approx. Area 0.75 acres [this area is incorrect as it includes both 89/2/1 and 85/1/2] Lessor Tortola Yacht Services Limited Lessee Pasea Investments Limited Instrument Reference 190/2011 recorded 28 January 2011 Term of Lease For the unexpired portion of the term of 99 years less 1 day from 1 January 1974. Initial Rent (See instrument #190/2011 for details) Proprietor Pasea Investments Limited Incumbrances Restrictive Covenants: Transfer subject to restrictive covenants as set out in Inst 190/2011. Sub‐Lease to Coastal Building Holdings Limited recorded 8 February 2012 in Instrument 246/2012 creating Parcel 85/1/2/1 Parcel 85/1/2/1 Parcel 85/1/2/1 Block 2938B Registration Section Road Town Title Leasehold Approx. Area 0.75 acres [again, this repeats the error in the area shown for 85/1/2 – see above] Lessor Pasea Investments Limited Lessee Coastal Building Holdings Limited Instrument Reference 246/2012 Term of Lease For the unexpired portion of the term of 99 years less 1 day from 1 January 1974. Initial Rent Premium of $1,000,000. See Instrument 246/2012 for further details Proprietor Coastal Building Holdings Limited Incumbrances Restrictive Covenants: Sub‐lease subject to the restrictive covenants as set out in Instrument 246/2012. recorded 8 February 2012 Coastal Building: 16 June 2014 Charge to secure $768,750 in favour of VP Bank (BVI) Limited, recorded 8 February 2012. 15 Site Description Parcel 89/2/1 Parcel 89/2/1 Block 2938B Registration Section Road Town Title Leasehold Approx. Area 0.75 acres [this area is incorrect as it includes both 89/2/1 and 85/1/2] Lessor Tortola Yacht Services Limited Lessee Pasea Investments Limited Instrument Reference 190/2011 recorded 28 January 2011 Term of Lease For the unexpired portion of the term of 99 years less 1 day from 1 January 1974 Initial Rent (See instrument #190/2011 for details) Proprietor Pasea Investments Limited Incumbrances Restrictive Covenants: Transfer subject to restrictive covenants as set out in Inst 190/2011. Parcel 89/2/1/1 Parcel 89/2/1/1 Block 2938B Registration Section Road Town Title Leasehold Approx. Area 0.75 acres [again, this repeats the error in the area shown for 89/2//1 – see above] Lessor Pasea Investments Limited Lessee Coastal Building Holdings Limited Instrument Reference 246/2012 Term of Lease For the unexpired portion of the term of 99 years less 1 day from 1 January 1974. Initial Rent Premium of $1,000,000. See Instrument 246/2012 for further details Proprietor Coastal Building Holdings Limited Incumbrances Restrictive Covenants: Sub‐lease subject to the restrictive covenants as set out in Instrument 246/2012. recorded 8 February 2012 Charge to secure $768,750 in favour of VP Bank (BVI) Limited, recorded 8 February 2012. Coastal Building: 16 June 2014 16 Site Description History of the Subject Property Pasea Investments Limited acquired the sub‐lease of Parcels 85/1/2 and 89/2/1 from Tortola Yacht Services Limited on 14 September 2010. The sub‐lease of these two parcels is recorded as Instrument 190/2011. The only consideration referred to in the sub‐lease is the ground rent. Parcels 85/1/2 and 89/2/1 were acquired following a series of negotiations which are reflected in Heads of Agreement dated 18 April 2008 and 4 December 2009 between Alban Enterprises Limited (Alban) which company we understand owns Tortola Yacht Services (TYS) and Pasea Investments Limited (PIL). Julian Smith was also a party to the first agreement. Under the first agreement, PIL agreed to lend Alban $1,000,000 in exchange for shares in TYS. Meridian (a part owner of PIL) has provided us with a copy of a cheque in the sum of $1,000,000 dated 9 July 2008 payable to Harney Westwood & Riegels, which we understand represents consideration under the terms of the first agreement. By the date of the second agreement dated 9 December 2009 the parties acknowledged that $880,000 remained outstanding on the Promissory Note. At closing on 14 September 2010 we understand that PIL discharged the balance on the Promissory Note in exchange for TYS granting the sub‐lease over Parcels 89/2/1 and 85/1/2. Richard Starkey of Meridian Construction Ltd advises us that the effective consideration paid for Parcels 89/2/1 and 85/1/2 was the original amount of the Promissory Note ($1,000,000). This price is equivalent to $30.61 per square foot of land area ($1,000,000 ÷ 32,670 square feet). Sub‐lease of the Coastal Building Pasea Investments Limited subsequently sub‐leased the Coastal Building (formerly referred to as the Cay Electronics Building) to Coastal Building Holdings Limited under the terms of a sub‐lease dated 19th December 2011 and recorded in Land Registry as Instrument 246/2012. The sub‐lease to Coastal Building Holdings Limited runs for the same term as the Head Sub‐
Lease between Tortola Yacht Services Limited and Pasea Investments Limited, less one day. Coastal Building Holdings Limited paid a premium of $1,000,000 for the sub‐leasehold interest. They are also liable to pay a pro‐rata share of the ground rent payable by the Head Lessor, Tortola Yacht Services Limited, to the Crown under the Superior Lease. Lease Agreements A summary of the Sub‐Lease to Coastal Building Holdings Limited is appended to this report. Following is a note of some of the more significant terms. Legal Description Parcels 89/2/1/1 & 85/1/2/1 Land Area 0.088 acres (3,829 square feet) Leases Begin 19 December 2011 Leases End 1 January 2073 Remaining Term approximately 58.5 years (at June 2014) Right of Renewal None Rent Coastal Building Holdings Limited is responsible for paying a pro‐rata share of the ground rent payable under Superior Lease. Rent Review A rent review was due under both the superior leases on 1 January 2009 and for Parcel 89/2 on 1 January 2014. It appears that the rent was not adjusted on these dates. Our understanding is that the next rent review due under the Superior Leases is 1 January 2019. Coastal Building: 16 June 2014 17 Site Description User Yachting and marine services subject to change of use approved by the Head Lessor. See note below regarding ‘Change of Use’. Head Leases A summary of the Head Leases (Instruments 3/1974 and 23/1987) is appended to this report. Ground Rent Ground Rent for Head Leases We have been provided with statements of account from Wickhams Cay Development Authority for the Ground Rent due for the Head Leases over Parcels 85/1 (Plot 100C) and 89/2 (Plot 100B) for the 12 month period 2 January 2010 to 2 January 2011. These show the following annual ground rent payable for the Head Leases: Ground Rent for Head Leases Parcel Plot Annual Ground Rent Square feet PSF 85/1 100C $20,000 108,726 $0.184 89/2 100B $17,740 41,744 $0.425 Estimated Current Ground Rent for Subject Property Based on the above figures and the areas of the subject property that fall within each of the Head Lease parcels, we estimate the ground rent for the subject property at $12,736, as follows. Parcel 89/1 85/2 Total Square feet 41,744 108,726 150,470 Ground Rent $17,740 $20,000 $37,740 Ground Rent PSF $0.4250 $0.1839 $0.2508 Head Lease Area and Ground Rent Allocated Land Areas Meridian Building 4,907 213 5,120 583 3,246 3,829 Remainder of site 22,414 1,307 23,721 Total 27,904 4,766 32,670 Coastal Building Allocated Ground Rent Meridian Building Coastal Building Remainder of site Total $2,085 $39 $2,125 $248 $597 $845 $9,526 $240 $9,766 $11,859 $876 $12,736 This shows that the ground rent payable for the Coastal Building is $845 per year. A notice for the period July‐December 2013 provided to us shows a figure of $437.57, indicting a full year ground rent charge of $875.14. For purposes of calculating the operating expenses for the subject we adopt the figure contained in the notice. In addition to ground rent, Clause 3(2) of the sub‐lease for Parcels 89/2/1/1 and 85/1/2 /1 specifies that an ‘Additional Sum’ of $1,250 shall be payable annually. Coastal Building: 16 June 2014 18 Site Description Ground Rent Review We understand that, in common with most Crown leases on Wickhams Cay, the ground rent for the subject property has never been subject to a market rent review. Under the terms of the Head Leases, the ground rent is to be reviewed on the following cycles. Head Lease Ground Rent Review Cycle Parcel Next Review Frequency 85 1‐Jan‐19 10 years 89 1‐Jan‐19 5 years The ground rent review clauses state that the ground rent is to be based on 10% of the freehold market value of the land. Based on our valuation of the land this indicates that the ground rent, if reviewed at today’s date, would be $147,000 per year. We assume that the ground rent payable for the head leases will remain at the current estimated rate of $12,736 per year through the term of the lease, subject only to adjustment for inflation at the rent review dates contained in the sub‐lease agreements. In the event that Wickhams Cay Development Authority seeks to adjust the ground rent in accordance with the terms of the Superior Lease, this would have a significant effect on the value of the leasehold interest in the subject property. Parking We understand that Pasea Investments Limited has agreed to provide parking for the Coastal Building at no cost to Coastal Building Holdings Limited. Based on the office floor area of the Coastal Building of approximately 4,970 square feet and assuming a parking ratio of 3 cars per 1,000 square feet we estimate the parking requirement at 15 cars. Since 4 spaces are provided within the Coastal Building site, we estimate that an additional 11 spaces will be required. Allowing 300 square feet per car parking space indicates that a land area of approximately 3,300 SF will be required to accommodate the parking, for the Coastal Building. Access The subject property has direct frontage to a public road. Consent to Change of Use The Superior Leases contain restrictions on user. This valuation is predicated on the understanding that the Crown has no objection to the continued use of the subject property as a commercial office. Coastal Building: 16 June 2014 19 Improvement Description Improvements The subject property is a two storey office building. Year Built The building was originally constructed in 1992. The building was completely renovated in 2012‐2013 with the work being substantially completed in the fourth quarter of 2013. The installation of a pre‐fabricated fire escape for the upper floor remains outstanding. Construction Steel frame structure on a reinforced concrete foundation with block and composite exterior board cladding under a formed sheet metal roof over a steel and timber frame. A balcony extends along the east side of the building at the upper level. Plans Plans of the Coastal Building are appended to this report, together with plans of the adjacent Meridian Building, which include elevations of the Coastal Building. Floor area The overall dimensions of the building are approximately 50’ x 50’. Based on the floor plans provided to us we calculate that the floor area of the upper floor is approximately 2,420 square feet, measured to the inside face of the external walls. This is slightly higher than the floor area shown on the construction drawings (2,380 square feet) but modifications have been made since that date which probably account for the difference. We estimate the gross rentable floor area of the lower floor at 2,321 square feet. We estimate the gross external floor area at approximately 4,980 square feet. Fencing A slatted timber fence separates the subject from the boatyard to the north and east. Utilities The Coastal Building is connected to mains water and electricity supplies. There is also an independent back‐up generator located on the east side of the building. Renovations Works Extensive renovation work was carried out on the Coastal Building during 2012/2013, which was completed in fourth quarter of 2013. The refurbishment work included replacement of walls, windows and doors along with all internal wall, floor and ceiling finishes, electrical wiring, communications cabling, air conditioning, back‐up generator, plumbing and lighting. Tenant finishes include internal partitioning, male and female bathroom, kitchen area and conference room. The total cost of the renovations was $503,742 ($101 per square foot) for hard construction and $64,688 ($12.99 per square foot) for architectural fees. These figures include the supply and installation of the emergency back up generator. Summary A fire escape is currently being designed for the upper floor. The electrical system for the lower floor needs to be adjusted to provide adequate load for the operation of the air conditioning on the lower floor. No estimates are currently available for these works but we understand that the contractor has indicated an approximate price of $35,000 for the fire escape. We make an allowance of $50,000 for completion of the fire escape and the electrical works. The subject building provides good quality office accommodation suitable for financial service sector tenants. Coastal Building: 16 June 2014 20 Highest and Best Use Highest and Best Use Physically Possible The subject is a two storey commercial office building of approximately 4,980 square feet located on a site of approximately 3,829 square feet (0.088 acres). The building has been completely refurbished and is now leased to third party tenants. Works are required to complete the building, namely the installation of a fire escape and final works to the electrical system for the lower floor. Legally permissible The subject is held under the terms of two Crown Leases. The leases have an unexpired term of approximately 58.5 years at the date of valuation. We understand that there is an informal agreement between the owners of the subject and Pasea Investments Limited that the owners of the Coastal Building will be permitted to use part of Parcel 89/2/1 for parking. We allocate a land area of 3,300 square feet for parking for the Coastal Building. We make no allowance for any payment for parking by the owners of the subject. We understand that Pasea Investments Limited and Coastal Building Holdings Limited have acknowledged and accepted that the Meridian Building encroaches approximately 2 feet into the site of the Coastal Building. We assume that no costs will be incurred in formalizing this agreement. Financially feasible The subject property is leased to third party tenants and generates a positive cash flow indicating that it is a financially feasible use. As discussed in the market overview section of this report, the Road Town office market has suffered a significant slow down since the second quarter of 2008, with limited demand from major tenants. The current vacancy rate in the Road Town market in buildings completed since the beginning of 2004 and including buildings currently under construction, is approximately 18.0%. Speculative office construction is not financially feasible in the current market because of the lack demand and the vacancy in existing buildings. Maximally productive The subject building provides good quality office accommodation suitable for financial service sector tenants and consistent with market tenant requirements. We conclude that the highest and best use for the subject is to continue to hold the subject property as an investment property. Coastal Building: 16 June 2014 21 Valuation Methodology and Valuation Analysis Valuation Methodology We develop the income capitalization and cost approaches to estimate the fair value of the Coastal Building. There have been no recent, arms‐length, comparable building sales of commercial buildings and therefore we do not develop the sales comparison approach. Income Capitalization Approach Potential Gross Income: The subject property is fully leased. Following is a summary rent roll Coastal Building: Rent Roll Level From To Type Gross SF PM PA PSF Osiris International Trustees Limited 2 Oct‐13 Sep‐22 Net 2,420 $8,333 $100,000 $41.32 Heritage Trust Services (BVI) Limited 1 Jan‐14 Jan‐19 Net 1,257 $3,666 $43,995 $35.00 Redefine BDL Hotel Group (Unit 1)* 1 Jan‐14 Dec‐14 Semi‐gross 207 $1,500 $18,000 $86.96 Ciref Europe (Unit 2)* 1 Jan‐14 Dec‐14 Semi‐gross 287 $1,500 $18,000 $62.72 GMG BVI Ltd (Unit 3)* 1 Apr‐14 Mar‐15 Net 282 $1,000 $12,000 $42.55 Premier Capital Managers Ltd (Unit 4)* 1 Jun‐14 May‐15 Semi‐gross 288 $2,000 $24,000 $83.33 Totals 4,741 $18,000 $215,995 $45.56 *Leases are full service, with a recovery of a service charge of $150 per month with the exception of Unit 3 which contains provision for recovery of ‘ad hoc’ service charge, which we interpret to mean full pass through of operating expenses. Note on existing leases The lease to Osiris is not an arms length transaction, in that the there is ownership in common between Osiris and the landlord, Coastal Building Holdings Limited. We have been provided only with outline terms for the lease to Osiris International Trustees Ltd. We assume that this is a typical net lease at the stated rent with a service charge based on actual costs including the items identified as ‘recoverable operating expenses’ under the discussion of operating expenses below. We also note that the leases of Units 1 to 4 on the ground floor of the subject, of spaces with less than 300 square feet, are to client companies of Osiris. While we recognize the demand for single office leases, these do not in our view fall within the definition of market leases, given their small size and short duration. In concluding to a fair value for the subject we assume that upon expiration of the existing leases the lower floor would be leased to two tenants, with the four units (Units 1 to 4) being leased to a single tenant, creating a space of 1,064 square feet. Market Rent Comparables In order to estimate the market rent for the subject we have researched the market for recent leases of office space comparable in size to the spaces at the subject property. The following table is a summary of the comparables we consider most relevant. Coastal Building: 16 June 2014 22 Valuation Methodology and Valuation Analysis Market Rent Comparables No. Began YOC Gross SF Net SF Term Type Current Contracts in negotiation Condition Service Charge Rent Review (yrs/basis) Per Gross SF Per Net SF 1 Contract 1980s 2,817 2,817 5 Net Second Gen $3.50 2 / CPI $34.00 $34.00 2 Contract 2004 4,487 4,487 5 Net Finished $4.50 2 / CPI $37.00 $37.00 3 Contract 1980s 3,322 3,322 5 Net Second Gen $3.50 2 / CPI $34.00 $34.00 Closed 4 Q1 2014 2011 3,640 2,995 5 Net Shell $3.50 2 / CPI $36.00 $43.75 5** Q1 2014 2013 1,257 1,236 5 Net Finished $3.50 2 / CPI $35.00 $35.59 6 Q1 2013 1990s 2,200 2,600 6 Gross Second gen. ‐ none $39.00 $39.00 7 Q1 2013 2011 1,164 980 1 Gross Finished* ‐ N/A $53.45 $63.48 8 Q2 2013 2011 1,176 990 1 Gross Finished* ‐ N/A $49.89 $59.26 *Includes furnishings **Lease to Heritage in the subject property These comparables range from 1,164 to 4,487 square feet in gross floor area and in rent from $34.00 to $63.48 per net square foot, with the majority of rents falling in the range $35.00 to $39.00 per square foot per net square foot. Based on these comparables, and taking into consideration the size, age and quality of the subject as well as the availability of parking at no extra cost to tenant, we conclude that the leases to Osiris and to Heritage are at market and that the net market rent for the remainder of the lower floor is $35.00 per square foot. Rental Income This results in the following calculation of potential gross income: Space / Tenant Square feet PSF PA Total PA Osiris International Trustees Limited 2,420 $41.32 $100,000 Heritage Trust Services (BVI) Limited 1,257 $35.00 $43,995 Remainder of lower floor 1,064 $35.00 $37,240 Totals / Average 4,741 $38.23 $181,235 Operating Expense Recovery The leases to Osiris and Heritage are agreed on a net basis. In the case of Osiris the tenant is directly responsible for operating costs and in the case of Heritage the tenant is liable to reimburse the landlord for operating expenses at a fixed rate of $3.50 per square foot per year. We estimate the market rent for the remainder of the lower floor on a net basis and assume a recovery based on actual costs. We estimate recoverable operating expenses for the building at $8,808 per year or approximately $1.86 per square foot. We calculate Osiris share of these expenses at 51.04% (2,420 SF ÷ 4,741 SF) or $4,496 per year. The lease to Heritage contains a fixed contribution of $3.50 per square foot per year for the service charge, which equates to $4,400 per year. We calculate the service charge for the remaining space at $1,977, based on a pro‐rata share of the estimated operating expenses (22.44% x $8,808). Total operating expense recovery is estimated at $10,872. Adding the rental income and the operating expense recovery results in a Potential Gross Income of $192,107. Coastal Building: 16 June 2014 23 Valuation Methodology and Valuation Analysis Vacancy allowance and Effective Gross Income Estimate We make a 2.0% vacancy allowance to reflect the long term vacancy for the building, allowing for the rollover of leases taking into account an average lease‐up time of 4 months and a 75% probability of renewal. Applied to the Potential Gross Income estimate, this results in a total vacancy allowance of $3,842 and an Effective Gross Income estimate of $188,265. Operating Expenses The subject has been partially occupied since September 2013 and therefore there is limited data available for stabilized operating expenses. Furthermore, some of the repairs and maintenance works are being carried out by Meridian Construction Limited on a non‐arm’s length basis. We have therefore prepared an operating expense estimate based on typical market rates, as summarized in the following table. Coastal Building: Estimated Operating Expenses Total PA Recoverable operating expenses PSF PA Maintenance and repairs $2,400 $0.51 External cleaning $1,200 $0.25 Landscaping $1,800 $0.38 $800 $0.17 $2,200 $0.46 Generator fuel & oil $300 $0.06 Sewerage (building charge) $108 $0.02 Exterminator Generator Service Total recoverable operating expenses Landlord (non‐recoverable) expenses House and Land Tax Ground Rent and 'additional sum' Insurance Administration Total non‐recoverable expenses Total Operating Expenses $8,808 $1.86 $400 $0.08 $2,087 $0.44 $11,000 $2.32 $3,600 $0.76 $17,087 $3.60 $25,895 $5.46 We separate recoverable and non‐recoverable expenses. The total operating expenses are estimated at $25,895, equivalent to $5.46 per square foot. Net Operating Income: Deducting the total operating expenses ($25,895) from the effective gross income ($188,265) results in a net operating income before replacement reserve of $162,370. Replacement Reserve From Net Operating Income we deduct a replacement reserve allowance. This is a notional allowance for capital replacement expenditure. In practice, such expenditure will be incurred by an owner at irregular intervals as improvements reach the end of their physical life. A reserve allowance is an estimate of the average annual expenditure on capital replacements. Taking into consideration the typical age and the condition of the improvements, we make a replacement reserve allowance of 2.50% of gross revenue. Applying this figure to the projected gross revenue of $192,107 results in a replacement reserve allowance of $4,803 and a net operating income after replacement reserve of $157,567. Indicated Fair Value by Income Capitalization Approach There are few good comparables to support capitalization rates for commercial real estate investments in the BVI as few properties change hands on a pure investment basis. Sales of larger investments that occurred in 2004 and 2005 indicate Coastal Building: 16 June 2014 24 Valuation Methodology and Valuation Analysis capitalization rates of between 9.8% and 10.7%. Taking into consideration the small size of this investment, which would make it attractive in the local market, we capitalize the net operating income using a yield capitalization rate of 9.0%, below the range indicated by larger commercial transactions. Applying this capitalization rate to the net operating income results in an indicated fair value by the income capitalization approach of $1,750,000, as rounded, calculated as follows: $157,567 x YP 58.5 years @ 9.0% (11.03928) = $1,739,430 rounded to $1,750,000 Adjustment for above market contract rent As noted above, part of the lower floor is leased to four tenants which are clients of Osiris and which each occupy a single room on a full service basis, including utilities, air conditioning maintenance and cleaning. We comment that in our opinion these do not conform to the definition of market leases. We therefore assume that following expiration of the four leases, the four rooms will be leased as a single space to a single tenant at a net market rent of $35.00 per square foot following expiration of the existing lease. In the following table we show the calculation of the ‘above market’ income receivable from the four leases for the remaining term. We calculate the net income receivable under the existing contracts, including an allowance for the rent and service charge as well as a deduction for the estimated operating costs. From the net income we deduct the net market rental income. Coastal Building: Calculation of above market rent Square Feet Lease ends Months Redefine BDL Hotel Group (Unit 1) 207 Dec‐14 Ciref Europe (Unit 2) 287 Dec‐14 Tenant / Unit Net contact
income Net Market income Difference 6 $8,661 $3,623 $5,038 6 $8,182 $5,023 $3,160 GMG BVI Ltd (Unit 3) 282 Mar‐15 9 $9,393 $7,403 $1,990 Premier Capital Managers Ltd (Unit 4) 288 May‐15 11 $20,489 $9,240 $11,249 $46,725 $25,288 $21,438 Totals 1,064 This shows that there is a difference of approximately $21,000 between contract income and our estimate of net market rent. When the cost of hypothetical vacancy at the end of the current leases is taken into consideration the difference is nominal and we make no adjustment for above market rent. Adjustment for outstanding works and fair value by the Income Capitalization Approach At the date of valuation the fire escape for the upper floor of the building was not installed and certain adjustments to the electrical system on the lower floor to increase the capacity were required to allow the air conditioning system to function correctly. No accurate estimate for the cost of these works was available. The contractor is waiting for the final design of the fire escape but we understand has estimated the approximate cost for materials and labour at $35,000. We make an allowance of $50,000 for the total cost of the fire escape and the electrical works. Deducting this cost from the estimated fair value on completion results in a fair value estimate of $1,700,000 ($1,750,000 less $50,000). Coastal Building: 16 June 2014 25 Valuation Methodology and Valuation Analysis Cost Approach Depreciated Replacement Cost We also consider the value of the Coastal Building using the Cost Approach. Based on an estimated hard construction cost of $175.00 per gross square foot applied to the estimated gross floor area of 4,980 square feet and making additional allowances for soft costs, the cost of construction finance and development profit (at 20.00% of total development costs), we estimate the replacement cost new for the building at $1,310,000. The building is new and therefore does not suffer from depreciation. Fair Value of the Land To this figure we add an estimated fair value of the land. We allocate a total land area of 6,020 square feet to the Coastal Building, including an allowance for the parking area. We estimate the site value at $45.00 per square foot. Applying this figure to the site area results in a total estimated fair value of the land of $270,000, as rounded. Indicated Fair Value by the Cost Approach When the fair value of the land is added to the depreciated replacement cost of $1,310,000, it results in an indicated fair value for the Meridian Building by the Cost Approach of $1,580,000, as rounded. As in the income capitalization approach an adjustment is required for the outstanding works noted above, namely the installation of the fire escape and electrical works required to the lower floor space. We make the same adjustment of $50,000 for the estimated cost approach for these works. This results in an fair value estimate by the cost approach of $1,530,000. The Income Capitalization and Cost Approaches are summarized on the following page. Coastal Building: 16 June 2014 26 Valuation Methodology and Valuation Analysis Income Capitalization Approach
Rent
Total
Square feet PSF Osiris International Trustees Limited
2,420
$41.32
$100,000
Heritage Trust Services (BVI) Limited
1,257
$35.00
$43,995
Remainder of lower floor
1,064
$35.00
$37,240
Total rental income
4,741
$38.23
Osiris International Trustees Limited
2,420
$1.86
$4,496
Heritage Trust Services (BVI) Limited
1,257
$3.50
$4,400
Lower floor
1,064
$1.86
$1,977
Total operating expense recovery
4,741
$2.29
$181,235
Operating Expense recovery
$10,872
Potential Gross Income
$192,107
Vacancy Allowance
2.0%
Effective Gross Income
$3,842
$188,265
Operating Expenses
Recoverable operating expenses
4,741
$1.86
$8,808
House and Land Tax
4,741
$0.08
$400
Ground Rent and 'additional sum'
4,741
$0.44
$2,087
Insurance
4,741
$2.32
$11,000
Administration
4,741
$0.76
$3,600
Total Operating Expenses
4,741
$5.46
$25,895
Net Operating Income before replacement reserve
$162,370
Replacement reserve (%age PGI)
2.50%
$4,803
Net Operating Income after replacement reserve
$157,567
YP 58.5 years @ 9.0%
11.03928
$1,739,430
Rounded $1,750,000
Less estimated cost of outstanding works (fire escape and electrical works)
Indicated 'as‐is' market value by the Income capitalization approach
Coastal Building: 16 June 2014 $50,000
$1,700,000
27 Valuation Methodology and Valuation Analysis Cost Approach
Square feet
Main structures
4,980
PSF
$175.00
Site Improvements
Total
$871,500
$50,000
Total Hard Costs
$921,500
Soft Costs
10.00%
Total Hard and Soft Costs
$92,150
$1,013,650
Financing Cost
$81,092
Total Development Cost
$1,094,742
Entrepreneurial Profit
20.00%
Replacement Cost New
$218,948
$1,313,690
Depreciation
0.00%
$0
$1,313,690
Rounded Depreciated Replacement Cost $1,310,000
Market land value
$270,000
$1,580,000
Less estimated cost of outstanding works (fire escape and electrical works)
Indicated 'as‐is' market value by the cost approach
$50,000
$1,530,000
Coastal Building: 16 June 2014 28 Reconciliation and Final Estimate of Value Reconciliation In the preceding section of the report we have developed the income capitalization and cost approaches to estimate the fair value for the Coastal Building. This has resulted in the following value estimates for the subject: Income Capitalization Approach .............................................................................. $1,700,000 Cost Approach .......................................................................................................... $1,530,000 The subject property is an income generating asset and the most probable purchaser would be primarily concerned with the quantity and quality of the cash flow from the property. Therefore income capitalization is the most appropriate approach to estimating fair value. The weakness of this approach is the lack of closely comparable sales from which to extract capitalization rates. The only evidence is provided by much larger transactions several years ago. We have adjusted the capitalization rate downwards to reflect the characteristics of the subject. The cost approach provides secondary evidence. Since there have been no recent sales of comparable commercial buildings it is not possible to develop a credible fair value estimate using the sales comparison approach. Final Estimates of Value Having regard to the matters referred to in this report, we are of the opinion that the prospective fair value of the leasehold interest in the subject property upon physical completion (projected for 1 November 2013) and assuming that it is fully leased, and free and clear of all mortgages and charges, and subject to the special assumptions and limiting conditions contained in this report, would be fairly represented in the following figure: $1,700,000 (ONE MILLION SEVEN HUNDRED THOUSAND US DOLLARS) This estimate of value is subject to, and can only be fully understood when read in conjunction with, the special assumptions contained on page 5 of this report. Critically, we assume that the subject property benefits from parking rights located on Parcel 89/2/1 at no cost to Coastal Building Holdings Limited. Reasonable Exposure Time “Exposure time may be defined as: the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market.” (Uniform Standards of Professional Appraisal Practice SMT ‐6 2006) Based on reported typical marketing times for commercial land in Road Town, we estimate a reasonable exposure time for the subject of 12 months. Coastal Building: 16 June 2014 29 Appendices Appendices Summary of Superior Lease for Parcel 85/1 (Instrument 3/1974) ............................................................................................ 30 Summary of Superior Lease for Parcel 89/2 (Instrument 23/1987) .......................................................................................... 31 Summary of Sub‐Lease for Parcels 85/1/2 and 89/1/2 (Instrument 190/2011)........................................................................ 32 Summary of Sub‐Lease for Parcels 85/1/2/1 and 89/1/2/1 (Instrument 246/2012)................................................................. 33 Copy of Land Register ................................................................................................................................................................ 35 Survey Plan VISS‐2938B‐2‐T....................................................................................................................................................... 46 Survey Plan VISS‐2938B‐3‐T....................................................................................................................................................... 47 Letter of 10 October 2012 from VISS regarding Encroachment ................................................................................................ 48 Construction Plans of the Coastal Building................................................................................................................................ 49 Plan showing layout of Lower floor of Coastal Building ............................................................................................................ 54 Plans of the Meridian Building (including elevations of Coastal Building)................................................................................. 55 Photographs of Subject.............................................................................................................................................................. 59 Coastal Building: 16 June 2014 30 Summary of Head Lease for Parcel 85/1 (Instrument 3/1974) Instrument 3/1974 Parcel 85/1 Lessor Crown Lessee Tortola Yacht Services Limited Date of Agreement 2 January 1974 Demised Premises Unit 100C (2.496 acres) plus the revetment adjacent to the unit (0.136 ac) Lease Term 99 years from 2 January 1974 Rent As provided for in Agreement for years 1 – 15 Rent Review The ground rent to be reviewed after the fifteenth year and every ten years thereafter. This indicates rent reviews should have occurred on 2 January 1989, 1999, 2009 and the next review would be due on 1 January 2019. Rent to be determined by ascertaining the letting value of the site (excluding site improvements) in the open market as between a willing landlord and a willing tenant. The parties agree that the amount of rent at any time determined shall not be less than the equivalent of 10% of $80,000 per acre (ie not less than $19,968). Option The tenant has the option to take a lease over Unit 100B “… for a period equivalent to all the residue then expired of the term [of Lease 3/1974] ….” and for the payments specified in the lease. Lessee Covenants To keep and maintain the Demised Unit in good and substantial repair and condition. Not to make alterations or improvements without the prior consent of the landlord. To pay the landlord the cost of insuring the Demised Unit against the Insured Risks. To maintain an adequate depth of sea water for the purposes mentioned or approved under Clause 3(12). Alienation Not to assign or charge part of the Demised Unit. To give notice in writing to the Landlord or every assignment or underlease of the whole. To provide such papers within twenty one days after execution of grant thereof. User Yachting and marine services and ancillary operations Lessor Covenants To insure the Demised Premises against the Insured Risks. Not to permit any competing trade or business on the Estate (Wickhams Cay II) within the first five years of the term. The Tenant shall have the right to protection from the Landlord against any silting up of the sea water to any degree that may cause material damage to the works. Coastal Building: 16 June 2014 31 Summary of Head Lease for Parcel 89/2 (Instrument 23/1987) Instrument 23/1987 Parcel 89/2 Lessor Crown Lessee Tortola Yacht Services Limited Date of Agreement 30 December 1986 Demised Premises Unit 100B (0.958 acres – see Agreement 290‐1977) Lease Term 99 years from 1 January 1974 Effective Commencement 1 January 1982 Rent As provided for in Agreement for years 1 – 7 Rent Review The ground rent to be reviewed after the seventh year and every five years thereafter. This indicates rent reviews should have occurred on 1 January 1989, 1994, 1999, 2004, 2009 and the next review would be due on 1 January 2014. Rent to be determined by ascertaining the letting value of the site (excluding site improvements) in the open market as between a willing landlord and a willing tenant. The market rent to be equivalent to 10% of the undeveloped freehold value. Lessee Covenants To keep and maintain the Demised Unit in good and substantial repair and condition. Not to make alterations or improvements without the prior consent of the landlord. To pay the landlord the cost of insuring the Demised Unit against the Insured Risks. To maintain an adequate depth of sea water for the purposes mentioned or approved under Clause 3(12). Alienation Not to assign or charge part of the Demised Unit. To give notice in writing to the Landlord or every assignment or underlease of the whole. User Yachting and marine services and ancillary operations Lessor Covenants To insure the Demised Premises against the Insured Risks. Coastal Building: 16 June 2014 32 Summary of Sub‐Lease for Parcels 85/1/2 and 89/2/1 (Instrument 190/2011) Instrument 190/2011 Parcel 85/1/2 and 89/2/1 Lessor Tortola Yacht Services Limited Lessee Pasea Investments Limited Date of Agreement 14 September 2010 Demised premises 0.75 acres Lease terminates Same duration as Superior Lease less one day. Right of renewal None Rent Proportionate amount of rent payable under the Superior Lease plus additional sum Easements granted To run utilities from and to the Demised Premises Reservations To enter upon the Demised Premises for purpose of: −
Inspecting the Demised Premises −
Carrying out repairs or decorations neglected by Lessee −
Verifying that the covenants are being observed −
Reasons stated in Superior Lease Lessee Covenants To pay the rent To pay rates, taxes and outgoings To pay for utilities and services To keep and maintain conduits and sewage lines in good and substantial repair To keep exterior of all buildings in decorative repair and condition To keep the interior of all buildings in decorative repair and condition To make good defects of construction To pay Lessor a fair proportion of insurance expense incurred by Lessor under Superior Lease Not to make any structural alteration, addition or improvement to the Demised Premises without consent (NTBUW) of Lessor and LDCA or WCDA, as applicable. To comply with the Laws of the Virgin Islands To landscape and keep landscaped appropriate areas to satisfaction of Lessor. Alienation Not to assign or charge the Demised Premises without consent User To maintain Lot 1 as a right of way serving Lots 3 and 4. To use and occupy "only for the purpose of yachting and marine services and ancillary operations directly related thereto including the business described in Clause 4(5) of the Superior Lease or for such other purposes as may be approved in writing from time to time by the Head Lessor. It is hereby acknowledged that the Lessee intends to develop and use the Demised Premises for commercial and or residential purposes and, to this end, the Lessor has agreed to apply to the Head Lessor for approval of a change of user." Lessor Covenants To pay insurance premiums due to the Head Lessor To perform and observe the covenants and conditions of the Superior Lease Coastal Building: 16 June 2014 33 Summary of Sub‐Lease for Parcels 85/1/2/1 and 89/2/1/1 (Instrument 246/2012) Instrument 246/2012 Parcel 85/1/2/1 and 89/2/1/1 Lessor Pasea Investments Limited Lessee Coastal Building Holdings Limited Date of Agreement 19 December 2011 (recorded 13 January 2013) Demised premises 0.09 acres Lease terminates Same duration as Superior Lease less one day. Right of renewal None Rent Proportionate amount of rent payable under the Superior Lease plus ‘Additional Sum’ fixed at $1,250 for the first five years and thereafter increasing annually by the amount of the change in the BVI CPI. Premium $1,000,000 Easements The Lessee is granted the following easements. Utilities To pass utilities from and to the Demised Premises Use of Common Areas To use the ‘Common Areas’ used and enjoyed by the users and occupiers of the ‘Additional Area’ (clause 4(1)(ii)). The ‘Additional Area’ is not explicitly defined but is referred to in clauses 5(1),(4),(5) and (6). We assume this to refer to what is now known as the ‘Meridian Building’. Support & protection Right of support and protection. Car Parking Right to use the ‘Parking Spaces’ and ‘Permitted Access’. This refers to the rights set forth in the parking licence agreement dated 14 September 2010 between the Moorings Limited and Pasea Investments Limited (clause 1(h)). This agreement was for a term of 3 years and we understand will terminate on 14 September 2013. Reservations Services Right to passage and running of services and supplies Conduits Right to construct and maintain conduits Scaffolding Right to erect scaffolding Common areas Right to shared use of Common Areas in the Additional Area Support & protection Right to support and protection Repairs Right to enter for purposes of repairing and maintaining the Additional Area Alterations Right to alter, raise or rebuild the Building and to erect any new building on adjoining property (clause 5(8)). This appears to refer to the Coastal Building itself (which is referred to as ‘the Building’ in the preamble. For purposes of our analysis, we assume that this right could not be exercised without compensation to the sub‐leaseholder, Coastal Building Holdings Limited. Right to enter Right to enter upon the Demised Premises for purpose of Inspecting the Demised Premises, carrying out repairs or decorations neglected by Lessee, verifying that the covenants are being observed and reasons stated in Superior Lease Lessee Covenants To pay the rent To pay rates, taxes and outgoings To pay for utilities and services Coastal Building: 16 June 2014 34 Summary of Sub‐Lease for Parcels 85/1/2/1 and 89/2/1/1 (Instrument 246/2012) To keep and maintain conduits and sewage lines in good and substantial repair To keep exterior of all buildings in decorative repair and condition To keep the interior of all buildings in decorative repair and condition To make good defects of construction To pay Lessor a fair proportion of insurance expense incurred by Lessor under Superior Lease To maintain public liability insurance To maintain all risk insurance during construction work relating to the Building Not to make any structural alteration, addition or improvement to the Demised Premises without consent (NTBUW) of Lessor and LDCA or WCDA, as applicable. To comply with the Laws of the Virgin Islands To landscape and keep landscaped appropriate areas to satisfaction of Lessor. To fence the Demised Premises. To keep Demised Premises in clean and tidy state. Alienation Not to assign or charge the Demised Premises without consent and to give written notice to the Lessor of “every assignment, assent, transfer, underlease, mortgage, charge or devolution” (clause 6(6)). The Lessee is also obliged to impose similar covenants on any sub‐lessee. User The Lessee acknowledges that the Lessor has obtained the consent of the Head Lessor to vary the original user clause in the Head Lease. The Lessor agrees that the Lessee may request further changes of use provided they do not adversely affect the use of Lot 5 (the boatyard) or other adjoining property of the Lessor (clause 6(7)). Lessor Covenants To maintain the Head Lease To pay such insurance premiums as may be due to the Head Lessor Not to do anything to disrupt services to the Demised Premises. To perform and observe the covenants and obligations contained in the Head Lease Coastal Building: 16 June 2014 35 Certified Copy of Land Register Coastal Building: 16 June 2014 36 Certified Copy of Land Register Coastal Building: 16 June 2014 37 Certified Copy of Land Register Coastal Building: 16 June 2014 38 Certified Copy of Land Register Coastal Building: 16 June 2014 39 Certified Copy of Land Register Coastal Building: 16 June 2014 40 Certified Copy of Land Register Coastal Building: 16 June 2014 41 Certified Copy of Land Register Coastal Building: 16 June 2014 42 Certified Copy of Land Register Coastal Building: 16 June 2014 43 Certified Copy of Land Register Coastal Building: 16 June 2014 44 Certified Copy of Land Register Coastal Building: 16 June 2014 45 Certified Copy of Land Register Coastal Building: 16 June 2014 46 Survey Plan VISS 2938B‐2‐T Coastal Building: 16 June 2014 47 Survey Plan 2938B‐3‐T Coastal Building: 16 June 2014 48 Letter dated 10 October 2012 from VISS re Encroachment Coastal Building: 16 June 2014 49 Construction Plans for Upper Floor of Coastal Building Coastal Building: 16 June 2014 50 Construction Plans for Upper Floor of Coastal Building Coastal Building: 16 June 2014 51 Construction Plans for Upper Floor of Coastal Building Coastal Building: 16 June 2014 52 Construction Plans for Upper Floor of Coastal Building Coastal Building: 16 June 2014 53 Construction Plans for Upper Floor of Coastal Building Coastal Building: 16 June 2014 54 Plan showing layout for Lower Floor of Coastal Building Coastal Building: 16 June 2014 55 Plans of Meridian Building (including elevations of Coastal Building) Coastal Building: 16 June 2014 56 Plans of Meridian Building (including elevations of Coastal Building) Coastal Building: 16 June 2014 57 Plans of Meridian Building (including elevations of Coastal Building) Coastal Building: 16 June 2014 58 Plans of Meridian Building (including elevations of Coastal Building) Coastal Building: 16 June 2014 59 Photographs of subject (Taken 18 June 2014) Corridor on lower floor showing kitchen area Building from south west Building from east Building from south Entrance to lower floor Interior of room on lower floor Coastal Building: 16 June 2014 60 Photographs of subject (Taken September 2013) Entry to Osiris space on Upper floor Staff kitchen in Osiris space Passage to kitchen and bathrooms in Osiris space Side offices in Osiris space Open plan office in Osiris space Open plan office in Osiris space Coastal Building: 16 June 2014 61 Annexure 3
________________________________________________________________________________________________________
SALIENT TERMS OF THE INVESTMENT MANAGEMENT AGREEMENT
________________________________________________________________________________________________________
New Frontier and the Investment Manager entered into an investment management agreement on 6th June 2014. The salient terms
of the Investment Management Agreement are set out below:
1.
New Frontier appointed the Investment Manager to manage the investment and re-investment of the assets of the Company.
2.
In connection with such appointment, the Investment Manager is to perform a number of investment management duties,
development management duties and property management duties. Further to its investment management duties, the
investment manager is to advise the group of any recommended property acquisition or property disposal.
3.
The Investment Manager has been appointed for a period of 10years, with an option to renew for a further 5-year period.
4.
The Investment Manager will have an incentive to maximise the performance of New Frontier’s properties, thus aligning its
interests with those of shareholders.
5.
The fees for performance of the investment management duties will be agreed by New Frontier and the Investment Manager
from time to time. The fees which apply at the date of this pre-listing statement are as follows:
5.1.
New Frontier will pay the Investment Manager an annual fee up to a maximum of one percent (1%) of the enterprise
value of New Frontier;
5.2.
there will also be an acquisition fee equal to one percent (1%) of the gross asset value of the assets being acquired
by New Frontier; and
5.3.
the base investment management fee shall be calculated quarterly based on the value on the last working day in the
final month of each calendar quarter.
Other third-party service providers
It is envisaged that the Company will outsource a number of functions to specialist third-party service providers. Such service
providers may include without limitation: investor relations managers; company administrators; legal counsel; accountants and
auditors; and bankers. The Company may also employ the services of a global securities broker and custody for the trading and
custody of listed, unlisted, over the counter securities, and corporate or real estate bonds.
In this regard, the board of New Frontiers will engage only with reputable, internationally-recognised institutions with established
track records for the provision of such services.
32
Annexure 4
________________________________________________________________________________________________________
COMPANY STRUCTURE
________________________________________________________________________________________________________
The current structure of New Frontier is set out below:
Brendon Jones
100%
Premier Capital
Managers Ltd
(British Virgin Islands)
Investment
Manager
New Frontier
Properties Ltd
(Mauritius)
100%
Coastal Building
Holdings Ltd
(Class A Shares)
(British Virgin Islands)
100%
Commercial Property
in the British Virgin
Islands
33
Annexure 5
________________________________________________________________________________________________________
STATED CAPITAL AND SHAREHOLDING
________________________________________________________________________________________________________
1.
MAJOR AND CONTROLLING SHAREHOLDERS
As at the last practicable date, Brendon Jones is the sole shareholder and beneficial owner of the Company.
2.
SHARES ISSUED OTHERWISE THAN FOR CASH
With the exception of the 4,000 ordinary shares issued to Brendon Jones in terms of the Coastal Building Sale Agreement,
no shares have been issued or agreed to be issued otherwise than for cash by the Company since incorporation.
3.
COMPANY’S STATED CAPITAL
3.1
The stated capital of the Company at the time of the initial listing on the SEM is as follows:
Stated Capital USD
Issued shares
938,736 ordinary no par value shares
Total
938,736
938,736
3.2
The Company does not hold any shares in treasury.
3.3
The shares of the Company are under the control of the directors of the Company. In terms of Clause 4.1 of the Constitution,
the members in general meeting may authorise the board to issue shares and/or grant options at any time to any person. On
5th June 2014, the shareholders of the Company passed a resolution authorising the board to issue up to 100,000 shares and
that such authority given to the directors shall be valid for a period of twelve months from the date of the JSE listing or until
the Company’s first annual general meeting of its shareholders.
3.4
In terms of Mauritian law, the Company does not have authorised share capital.
4.
ALTERATIONS TO STATED CAPITAL OF THE COMPANY
4.1.
The Company was incorporated on 5th June 2014 with stated capital of 1,000 no par value shares.
4.2
With effect from 5th June 2014, the Company issued an additional 4,000 no par value shares.
4.3
On 6th October 2014 the Board resolved to subdivide the 5,000 ordinary no par value shares into 938,736 ordinary no par
value shares.
4.3
As at the last practicable date there have been no further alterations to the Company’s stated capital. Accordingly:
5.
4.3.1
there has been no consolidation of shares in the Company since incorporation;
4.3.2
no offer for shares in the Company was made to the public since incorporation; and
4.3.3
no share repurchases were undertaken by the Company since incorporation;
FOUNDERS AND MANAGEMENT SHARES
Shares held as at the last practicable date and which are expected to be held after the SEM listing by founders and the directors
of the Company are set out in Annexure 1.
6.
OPTIONS AND PREFERENTIAL RIGHTS
6.1
There are no preferential conversion, redemption and/or exchange rights in respect of any of the shares or other securities.
6.2
There are no contracts, arrangements or proposed contracts or arrangements whereby any option or preferential right of any
kind was or is proposed to be given to any person to subscribe for or acquire any shares in the Company.
34
7.
FRACTIONS
No fractions of shares have been issued.
35
Annexure 6
________________________________________________________________________________________________________
EXTRACTS FROM THE CONSTITUTION OF THE COMPANY
________________________________________________________________________________________________________
1.
Clause 4 of the Constitution: CAPITAL
4.1
Subject to the provisions of paragraph to 18 hereinafter, the Members of the company (the “Members”) in general
meeting may authorise the board to issue shares and/or grant options at any time to any person and in any number as
it thinks fit pursuant to Section 52 of the Companies Act 2001.
4.3
The company may from time to time increase or reduce its capital and to issue any shares in the original or increased
or reduced capital with such preferred or deferred, qualified or other special rights or restrictions whether in regard to
voting, dividend, return of capital or otherwise as the company may determine subject always to the Companies Act
of 2001.
The shares shall unless otherwise stated be fully paid up when issued and rank pari passu in all respects as amongst
themselves including as to participation in the profits of the company.
2.
Clause 10 of the Constitution: TRANSFER OF SHARES
10.1
Subject to the provision of this Constitution, where shares are listed on the SEM or on another securities exchange,
the shares of the company shall be freely transferable and free from any lien. Each Member may transfer, without
payment of any fee or other charges, save Brokerage Fees payable in relation to such transfer, all or any of his
shares which have been fully paid.
10.2
For so long as the Company shall be admitted for listing on the SEM, a Member wishing to transfer its shares,
shall where physical Share Certificates have been issued to that Member, cause its shares to be dematerialized.
10.3
For so long as the Company shall be admitted for listing on the SEM, all shares transferred must be in the
dematerialized form and must be conducted through the Automatic Trading System in accordance with the
Trading Procedures.
10.4
In respect of shares held in certificated form and where such shares have not been listed on the SEM, every
instrument of transfer shall be executed by or on behalf of the transferor. Every instrument of transfer shall be left
at the registered office of the company (or such other place as the board may from time to time determine) at
which it is presented for registration accompanied by the certificate of the shares so transferred, and/or such other
evidence as the company may require, to prove the title of the transferor of his rights to transfer the shares. All
authorities to sign instruments of transfer granted by Members exhibited with or to the company at its registered
office (or such other place as the Board may from time to time determine) shall, as between the company and the
grantor of such authorities, be taken and deemed to continue and remain in full force and effect and the company
may allow the same to be acted upon until such time as express notice in writing of the revocation of the same
shall have been given and lodged at the company’s registered office (or such other place as the board may from
time to time determine) at which the authority was lodged, produced or exhibited. Even after the giving and
lodging of such notice, the company shall be entitled to give effect to any instrument signed under the authority
to sign, and certified by any officer of the company, as being in order before the giving and lodging of such
notices. The transferor shall be deems to remain the holder of such share until the name of the transferee is entered
in the Register in respect of it.
10.5
Transmission of shares
10.5.1
If title to a share passes to a Transmittee, the company may only recognise the Transmittee as having any title to
that share.
10.5.2
A Transmittee who produces such evidence of entitlement to shares as the directors may properly require –
10.5.2.1
may, subject to the provisions of this Constitution choose either to become the holder of those shares
or to have them transferred to another person; and
10.5.2.2
subject to the provisions of this Constitution, and pending any transfer of the shares to another person,
has the same rights as the holder had.
36
10.5.3
3.
Transmittees do not have the right to attend or vote at a general meeting, or agree to a proposed written resolution,
in respect of shares to which they are entitled, by reason of the holder’s death or bankruptcy or otherwise, unless
they become the holders of those shares.
Clause 12 of the Constitution: DIRECTORS
12.1
Number
12.1.1
Subject to any subsequent amendment to change the number of directors the number of the directors shall not be
less than four (4) and shall include at least two (2) directors who are ordinarily resident in Mauritius. If the number
falls below four the remaining directors shall as soon as possible, and in any event not later than three months
from the date the number of directors falls below the minimum, fill the vacancy or call a general meeting to fill
the vacancy. After the expiry of the three month period the remaining directors shall only be permitted to act for
the purpose of filling vacancies or calling general meetings of Members.
12.1.2
Any director appointed under paragraph 12.1.1 shall hold office only until the next following annual meeting and
shall then retire, but shall be eligible for appointment at that meeting.
12.1.3
The quorum for all board meetings shall be three, of which at least on must at all times be an executive director.
12.2
Qualification
No director shall be required to hold shares in the company to qualify him for an appointment
12.3
Appointment
The directors of the company shall be appointed by the company in general meeting or at meetings of the board.
12.4
Retirement of directors
12.4.1
Life directorships are not permissible.
12.4.2
At each Annual General Meeting of Shareholders all the directors shall retire from office and may make
themselves available for re-election.
12.4.3
The company at the meeting at which a director retires under any provision of this Constitution may by ordinary
resolution fill the office being vacated by electing thereto the retiring director or some other person eligible for
appointment. In default, the retiring director shall be deemed to have been re-elected except in any of the following
cases:
12.4.3.1
where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election
of such director is put to the meeting and lost;
12.4.3.2
where such director has given notice in writing to the company that he is unwilling to be re-elected
12.4.3.3
where such director has attained any retiring age applicable to him as director.
12.5
Remuneration of directors
12.5.1
The remuneration of directors shall be determined by the Remuneration Committee.
12.5.2
The board may determine the terms of any service contract with a managing director or other executive director.
12.5.3
The directors may be paid all travelling, hotel and other expenses properly incurred by them in attending any
meetings of the board or in connection with the business of the company.
12.5.4
If by arrangement with board any director shall perform or render any special duties or serves outside his ordinary
duties as a director and not in his capacity as a holder of employment or executive office, he may be paid such
reasonable additional remuneration (whether, by way of salary, commission, participation in profits or otherwise)
as the Remuneration Committee may from time to time determine.
37
12.5.5
A director shall not vote on any contract or arrangement or any other proposal in which he or his associates have
a material interest nor shall he be counted in the quorum present at the meeting.
12.5.6
Notwithstanding clause 12.5.5 above, a director shall be entitled to vote and be counted in the quorum at the
meeting in respect of the following matters: -
12.5.6.1. the giving of any security or indemnity either:
(a)
to the director in respect of money lent or obligations incurred or undertaken by him at the request
of or for the benefit of the issuer or any of its subsidiaries; or
(b) to a third party in respect of a debt or obligation of the issuer or any of its subsidiaries for which
the director has himself assumed responsibility in whole or in part and whether alone or jointly
under a guarantee or indemnity or by the giving of security;
12.5.6.2 any proposal concerning an offer of shares or debentures or other securities of or by the issuer or any other
company which the issuer may promote or be interested in for subscription or purchase where the director is or is
to be interested as a participant in the underwriting or sub-underwriting of the offer;
12.5.6.3 any proposal concerning any other company in which the director is interested only, whether directly or indirectly,
as an officer or executive or shareholder or in which the director is beneficially interested in shares of that
company, provided that he, together with any of his associates, is not beneficially interested in shares of that
company, provided that he, together with any of his associates, is not beneficially interested in five percent or
more of the issued shares of any class of such company (or of any third company through which his interest is
derived) or of the voting rights;
12.5.6.4. any proposal or arrangement concerning the benefit of employees of the issuer or its subsidiaries including:
(a)
the adoption, modification or operation of any employees’ share scheme or any share incentive or
share option scheme under which he may benefit; or
(b) the adoption, modification or operation of a pension fund or retirement, death or disability benefits
scheme which relates both to directors and employees of the issuer or any of its subsidiaries and
does not provide in respect of any director as such any privilege or advantage not generally
accorded to the class of person to which such scheme or fund relates; and
12.5.6.5. any contract or arrangement in which the director is interested in the same manner as other holders of shares or
debentures or other securities of the issuer by virtue only of his interest in shares or debentures or other securities
of the issuer.
12.5.7 For the purposes of Clause 12.5.6 associate shall have, in relation to any director, the following meanings: 12.5.7.1 his spouse and any child or stepchild under the age of 18 years of the director (“the individual’s family”) and;
12.5.7.2 the trustees (acting as such) of any trust of which the individual or any of the individual’s family is a beneficiary
or discretionary object; and
12.5.7.3 any company in the equity capital of which the individual and/or any member or members of the individual’s
family (taken together) are directly or indirectly interested so as to exercise or control the exercise of 20 percent
or more of the voting power at meetings of shareholders, or to control the appointment and/or removal of directors
holding a majority of voting rights at board meetings on all or substantially all matters, and any other company
which is its subsidiary.
12.5.8
For the purposes of Clause 12.5.6.3, associate shall have, in relation to a director, the following meaning: (i)
a spouse, a director living “enconcubinage” under the common law, any child or stepchild or any relative
residing under the same roof as that director,
(ii)
a succession in which the director has an interest;
(iii)
a partner of that director;
38
(iv)
any company in which the director owns securities assuring him of more than 10 per cent of a class of
shares to which are attached voting rights or an unlimited right to participate in earning and in the assets
upon winding up;
(v)
any controller of that director;
(vi)
any trust in which the director has a substantial ownership interest or in which he fulfils the functions of a
trustee or similar function;
(vii)
any company which is a related company.
12.6
Proceedings of directors
12.6.1
Chairperson
12.6.2
12.6.3
12.6.4
12.6.1.1
The directors may elect one of their number as chairperson of the board and determine the period for
which he is to hold office.
12.6.1.2
Where no chairperson is elected, or where at a meeting of the board the chairperson is not present within
15 minutes after the time appointed for the commencement of the meeting, the directors present may
choose one of their number to be chairperson of the meeting.
Notice of Meeting
12.6.2.1
A director or, if requested by a director to do so, an employee of the company, may convene a meeting
of the board by giving notice in accordance with this paragraph.
12.6.2.2
A notice of a meeting of the board shall be sent to every director and the notice shall include the date,
time, and place of the meeting and the matters to be discussed.
12.6.2.3
Any meeting at which the business of the meeting is to appoint a director whether as an additional
director or to fill a casual vacancy shall be called by at least 30 business days’ notice. Any person
appointed by the directors to fill a casual vacancy on or as an addition to the board shall hold office
only until the following annual meeting of shareholders, and shall then be eligible for re-election.
12.6.2.4
An irregularity in the notice of a meeting is waived where all directors entitled to receive notice of the
meeting attend the meeting without protest as to the irregularity or where all directors entitled to receive
notice of the meeting agree to the waiver.
Methods of holding meetings
12.6.3.1
The board or any committee thereof may meet at such times and in such manner and places within the
Republic of Mauritius as the board may determine to be necessary or desirable.
12.6.3.2
A director shall be deemed to be present at a meeting of the board if he participates by telephone or
other electronic means and all directors participating in the meeting are able to hear and communicate
with one another.
Alternate directors
A director may by a written instrument appoint an alternate who need not be director and an alternate is entitled
to attend meetings in the absence of the director who appointed him and to vote or consent in the place of the
director.
12.6.5
Voting
12.6.5.1
Every director has one vote.
12.6.5.2
The chairperson shall not have a casting vote.
12.6.5.3
A resolution of the board is passed if it is agreed to by all directors present without dissent or if a
majority of the votes cast on it are in favour of it.
39
12.6.5.4
12.6.6
A director present at a meeting of the board is presumed to have a need to, and to have voted in favour
of, a resolution of the board unless he expressly dissents from or votes against the resolution at the
meeting.
Minutes
The board shall ensure that minutes are kept of all proceedings at meetings of the board.
12.6.7
12.6.8
Resolution in writing
12.6.7.1
A resolution in writing, signed or assented to by all directors then entitled to receive notice of a board
meeting, is as valid and effective as if it had been passed at a meeting of the board duly convened and
held.
12.6.7.2
Any such resolution may consist of several documents (including facsimile or other similar means of
communication) in like form each signed or assented to by one or more directors.
12.6.7.3
A copy of any such resolution must be entered in the minute book of board proceedings.
Directors may delegate
12.6.8.1
12.6.9
Subject to this Constitution, the directors may delegate powers which are conferred on them:
12.6.8.1.1
to such person or committee;
12.6.8.1.2
by such means (including by power of attorney);
12.6.8.1.3
to such an extent;
12.6.8.1.4
in relation to such matters or territories; and
12.6.8.1.5
on such terms and conditions as they think fit.
12.6.8.2
If the directors so specify, any such delegation may authorise further delegation of the directors’ powers
by any person to whom they are delegated.
12.6.8.3
The directors may revoke any delegation in whole or part, or alter its terms and conditions.
Committees
12.6.9.1
Committees to which the directors delegate any of their powers must follow procedures which are based
as far as they are applicable on those provisions of the Constitution which govern the taking of decisions
by directors.
12.6.9.2 The directors may not make rules including rules of procedure for all or any committees, which are
inconsistent with this Constitution.
4
Clause 13 of the Constitution: POWERS AND DUTIES OF DIRECTORS
13.1
Borrowing Powers
The directors may exercise all powers of the company to borrow or raise or secure the payment of money or the performances
or satisfaction by the company of any obligation or liability and to mortgage or charge its undertaking, property and uncalled
capital or any part thereof and to issue mortgages, charges, bonds, notes and other securities and other instrument whether
outright or as security, for any debt liability or obligation of the company or of any third party. In addition, such power shall
be exercised, in compliance with Section 143 of the Companies Act 2001.
13.2
Overseas Seal and Branch Registers
13.2.1
The company may exercise the powers conferred by the Companies Act 2001 with regard to having an official
seal for use abroad, and those powers shall be vested in the directors.
40
13.2.2
The company may exercise the powers conferred by the Companies Act 2001 relating to the keeping of branch
register and the directors may (subject to the provision of that section) make and vary such regulations as they
think fit regarding the keeping of any such branch register.
13.3
Management of company
The business of the company shall be managed by the directors in Mauritius who may pay all expenses incurred
in promoting or registering the company and who may exercise all such powers of the company as are, by the
Companies Act 2001 or by this Constitution, required to be exercised by the Company in general meeting, subject,
nevertheless, to the provision of this Constitution and to the provision of the Companies Act 2001.
13.4
Indemnity
Subject to the provisions of the Companies Act 2001, and any other statute for the time being in force, every
director or other officer of the company shall be entitled to be indemnified out of the assets of the company against
all losses or liabilities which he may sustain or incur in or about the execution of the duties of his office or
otherwise in relation thereto, and no director or other officer shall be liable for any loss, damage or misfortune
which may happen to, or be incurred by the company in the execution of his office, or in relation thereto.
13.5
Directors expenses
The company may pay any reasonable expenses which the directors properly incur in connection with their
attendance at:
5
13.5.1
meetings of directors or committees of directors;
13.5.2
general meetings of Members, or
13.5.3
separate meetings of the holders of any class of share or of debentures of the company, or otherwise in
connection with the exercise of their powers and the discharge of their responsibilities in relation to the
company.
Clause 16 of the Constitution: DIVIDENDS AND RESERVES
16.1
Declaration of Dividends
16.1.1
The company in general meeting may declare dividends but may not declare a larger dividend than that declared
by the directors and no dividend shall be declared and paid except out of profits and unless the directors determine
that immediately after the payment of the dividend:
16.1.1.1
the company shall be able to satisfy the solvency test in accordance with Section 6 of the Companies
Act 2001; and
16.1.1.2
the realisable value of the assets of the company will not be less than the sum of its total liabilities,
other than deferred taxes, as shown in the books of account, and its capital.
16.1.2
Dividends may be declared and paid in money, shares or other property.
16.1.3
The company may cease sending dividend warrants by post if such warrants have been left uncashed on two
successive occasions.
16.1.4
Notwithstanding clause 16.1.3 above, the company may cease sending dividend warrants after the first occasion
on which such warrant is returned undelivered where afar reasonable enquiries, the company has failed to establish
any new address of the registered holder.
16.2
Computation of Profit
In computing the profits for the purpose of resolving to declare and pay a dividend, the directors may include in
their computation the net unrealised appreciation of the assets of the company.
16.3
Interim Dividends
41
The directors may from time to time pay to the Members such interim dividends as appear to the directors to be
justified by the surplus of the company.
16.4
Entitlement to dividends
16.4.1
Subject to the rights of holders of shares entitled to special rights as to dividends, all dividends shall be declared
and paid equally on all shares in issue at the date of declaration of the dividend.
16.4.2
If several persons are registered as joint holders of any share, any of them may give effectual receipt for any
dividend or other monies payable on or in respect of the share.
42
Annexure 7
________________________________________________________________________________________________________
HISTORICAL FINANCIAL INFORMATION OF NEW FRONTIER
________________________________________________________________________________________________________
The extracts from the unaudited management accounts of New Frontier on the day of incorporation (being 5th June 2014) as set
out below, falls under the responsibility of the board of New Frontier.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
5 June 2014
USD
ASSETS
Non-Current Assets
Investment Property
1 700 000
Current Assets
Trade and other receivables
Cash and cash Equivalents
TOTAL ASSETS
43 585
1 011
1 744 596
EQUITY
Equity attributable to equity holders of the Company
Stated capital
Goodwill/Gain on bargain purchase
Total Equity
938 736
9 045
947 781
LIABILITIES
Non-Current Liabilities
Borrowings
Tenant deposits
638 470
6 166
Current Liabilities
Trade and other payables
Borrowings
Tenant deposits
Total Liabilities
TOTAL EQUITY AND LIABILITIES
2 345
143 834
6 000
796 815
1 744 596
43

New Frontier - SEM Listing Particulars

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