GREEN FLASH GREEN FLASH PROPERTIES LTD (Incorporated in the Republic of Mauritius) (Registration number C124756 C1/GBL) Having its registered address at 19th Floor Newton Tower, Sir William Newton Street, Port Louis, Mauritius SEM Code “GFP.N0000” ISIN: MU0461N00007 (LEC/P/02/2015) Dated 13 January 2014 (“Green Flash” or “the Company”)
LISTING PARTICULARS
An application has been made for the listing of 7,396,040 ordinary shares of no par value of Green Flash on the SEM by way of a private placement with a total value of €591,683. Accordingly, these Listing Particulars have been prepared and issued: •
in compliance with the SEM Listing Rules governing the listing of securities on the Official Market of the SEM in respect of the listing of the 7,396,040 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 Green Flash.
It is expected that dealings in the shares of Green Flash on the SEM Official Market will commence on 30th January 2015. 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 Green Flash. At the time of the SEM listing, the stated capital of Green Flash will comprise 7,396,040 ordinary no par value shares. On the first day of trading, the existing shareholder of the Company has undertaken to make 1,848,985 shares available for trading at an introductory price of €0.08 per share. 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 page11 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, 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.
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. 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 for the listing of 7,396,040 ordinary shares of no par value of Green Flash on the Official List of the SEM at a price of €0.08 per share. This approval is subject to the following conditions: (i)
Green Flash raises a minimum amount of equity in the sum of €2 million in the first year of listing. Should this minimum amount of €2 million not be raised in the first year of listing, the Stock Exchange of Mauritius may proceed with the withdrawal of the Company from the Official Market
(ii) The current shareholder of Green Flash, Koral Bay Limited, does not dispose of, during the first year of listing, more than 25% of the current number of shares that it holds in Green Flash (i.e. Koral Bay Limited, being the majority shareholder of Green Flash at the last practicable date, may dispose of up to 1,848,985 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 19th Floor Newton Tower Sir William Newton Street 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 Moore Stephens 6th Floor Newton Tower Sir William Newton Street Port Louis Mauritius
Independent Financial Advisor RSM Margéot Suite 112 Moka Business Centre Mount Ory Road, Moka Mauritius
Mauritian company administrator GMG Trust Ltd 19th Floor Newton Tower Sir William Newton Street Port Louis Mauritius
Corporate advisor and legal advisor as to Mauritian law Mardemootoo Solicitors 3rd floor, Jamalacs Building Port Louis Mauritius
Registrar and Transfer Agent (Mauritius) Mauritius Computing Services Ltd 18 Edith Cavell Street Port Louis Mauritius
3
____________________________________________________________________________________
TABLE OF CONTENTS
____________________________________________________________________________________ The definitions given on pages 6 to 8 of this document have been used in the following table of contents.
Page Corporate information
3
Introduction to Green Flash 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 12 12 15 16 16 16 16 17 17
Section Two – Details of the SEM listing 1. Reasons for a listing on the SEM 2. Additional placements
18 18
Section Three – Risk factors and risk management
19
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 23 23 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
29
4
Annexure 3 Company Structure
30
Annexure 4 Stated Capital and Shareholding
31
Annexure 5 Extracts from the Constitution of the Company
33
Annexure 6 Historical financial information of Green Flash
40
5
_____________________________________________________________________________________
INTRODUCTION TO GREEN FLASH AND OVERVIEW
_____________________________________________________________________________________ Green Flash was incorporated on 14 August 2014 in Mauritius as a public company limited by shares in accordance with the Companies Act 2001. It currently holds a Category One Global Business License in accordance with the Companies Act 2001 and the Financial Services Act 2007 of Mauritius and has been operational since 31 August 2014. The Company’s registered address is 19th Floor Newton Tower, Sir William Newton Street, Port Louis, Mauritius. Investment strategy
Green Flash has been established with the primary objective of investing in global real estate assets and companies, predominantly in the Class A logistics1, industrial and warehousing sectors. Opportunistic acquisitions in the commercial, retail and office sectors will also be considered. The Company will seek to invest predominantly in Europe 2 as well as certain parts of Africa. The Company will target properties with strong sustainable income from high quality tenants with strong likelihood of renewal of leases on expiry. The Company believes that there is a significant market for a dual listed property fund established to acquire such properties, in order to offer investors an opportunity to invest in internationally high yielding property assets. The Company was established to meet the demands of this market and the Company intends to take advantage of the business relationships, skills, market knowledge and experience of its Chief Executive Officer, Stephen Carlin, to fulfil its business objectives. In order to take advantage of these opportunities it is necessary for the Company to be able to raise capital quickly, to enable it to grow its assets. The benefit of a dual listing is that it allows the Company to raise capital in South Africa and Mauritius, having regard to the strength of the directors’ relationships and the known interest of investors in those jurisdictions. The Company has begun investing in retail properties by the acquisition of 100% of the issued share capital in Banstead Property Holdings Limited with effect from 31 August 2014. This acquisition was funded via the issue of shares in the Company. Banstead Property Holdings Ltd owns a retail property in the United Kingdom, at an average annualised property yield of 6.28%3, further details of which are included in Section 1 and Annexure 2. 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 Green Flash. Green Flash 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 details of the experience of the directors are included in Annexure 1. Green Flash has been established in Mauritius in order to take advantage of Mauritius’ business friendly environment, its tax regime, including its unique double taxation treaty agreements that Mauritius has negotiated with many of the jurisdictions in which the company intends to invest, as well as the reputation of the island as a sound financial centre. It is envisaged that a listing on the SEM will provide access to a global investor base of managed funds, high net worth individuals and other sources of capital who view Mauritius as an attractive investment destination. Further information on the Company’s investment strategy, process and operations is detailed in Section 1 paragraph 4. Listing on additional exchanges To broaden its investor base and source additional capital to fund growth aspirations, Green Flash will consider listing its shares on other recognised international stock exchanges to:
1
Defined as logistics properties that meet the demands of tenant logistics companies and their customer facility users with respect to operational efficiency and fulfil certain criteria with respect to size, location, state-of-the-art equipment, convenience and safety 2 "Europe" means the Euro area (also known as the Eurozone) which consists of those European Union countries which have adopted the euro as their currency. currently has 18 member states being Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain. 3 Property yield is defined as total rental income divided by the total value of assets.
6
•
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 Green Flash currently presents an attractive diversification opportunity to South African investors, Green Flash intends to seek a secondary listing on the AltX in the first half of 2015 after listing on the SEM.
7
_______________________________________________________________________________________
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;
“Banstead Property Holdings Ltd”
Banstead Property Holdings Ltd (Registration number 1067776), a company incorporated under the laws of the British Virgin Islands;
“Banstead Sale Agreement”
the Agreement dated 28 August 2014 between the company and Koral Bay Limited, in terms of which the company acquired 100% of the ordinary Shares in Banstead Property Holdings Limited, plus shareholder loans, from Koral Bay Limited, with effect from 31 August 2014, for a purchase price of £445,643.32, which was settled by the issuing by the Company of 73,959,400 ordinary shares in itself to Koral Bay Limited;
“the Company” or “Green Flash”
Green Flash Properties Ltd (Registration number C124756 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 20th August 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;
“EUR” or “€”
the unit of single currency as defined in the Regulations on the introduction of the Euro which entered into force on January 1,
8
1999 being the starting date of the third stage of European Economic and Monetary Union; “FSC”
the Financial Services Commission of Mauritius;
“GBL1”
a category one Global Business License issued under the Financial Services Act 2007;
“GBP” or “£”
Great British Pound, the legal currency of the UK;
“investment strategy”
the investment strategy of the Company as determined by the board of directors, further details of which are contained on page 12 in paragraph 4 of these Listing Particulars;
“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 AltX, 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 and as applicable to Secondary Listings;
“last practicable date”
the last practicable date prior to the finalisation of these Listing Particulars, being 13 January 2015;
“LEC”
Listing Executive Committee of the SEM;
“listing date”
the anticipated date of listing of the shares on the SEM official market, being 30 January 2015;
“Listing Particulars”
this document and its annexures, dated 13 January 2015, 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, together with (1) any other immovable property which may be acquired, directly or indirectly, or leased, and (2) listed or 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
9
subsidiaries from time to time; “SA Companies Act”
the South African Companies Act 2008 (Act 71 of 2008) as amended or replaced from time to time;
“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 “Green Flash shares”
ordinary no par value shares in the stated capital of the Company;
“shareholder”
a holder of shares.
10
GREEN FLASH GREEN FLASH PROPERTIES LTD (Incorporated in the Republic of Mauritius) (Registration number C124756 C1/GBL) Having its registered address at th 19 Floor Newton Tower, Sir William Newton Street, Port Louis, Mauritius SEM Code “GFP.N0000” ISIN: MU0461N00007 (LEC/P/02/2015) Dated 13 January 2015 (“Green Flash” or “the Company”)
Directors of the Company Stephen Carlin (Chief Executive Officer) Daniel Romburgh (Financial Director) Serge Richard Hendrik Barnhoorn Peter Todd
______________________________________________________________________________________ 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
Green Flash’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.
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: maintaining statutory registers such as the register of members, directors and directors’ interests; filing statutory returns and forms with the relevant authorities; providing the relevant information and assistance to the auditors;
11
providing the board of directors with guidance as to its duties, responsibilities and powers; and ensuring compliance with anti-money laundering legislation. 2.3
Investment Manager No external investment manager will be appointed.
2.4
Registrar and transfer agent The Company has appointed Mauritius Computing Services Ltd to act as its registrar and transfer agent in Mauritius.
3.
INCORPORATION, HISTORY AND NATURE OF BUSINESS
3.1
Incorporation, name and address Green Flash was incorporated on 14 August 2014 in Mauritius as a public company limited by shares in accordance with the Companies Act 2001. It currently and holds a Category One Global Business License in accordance with the Companies Act 2001 and the Financial Services Act 2007 of Mauritius and has been operational since 31 August 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 14 August 2014 and accordingly has no trading history.
3.3
Nature of the business The primary objective of the Company is to invest opportunistically in undervalued real estate assets to provide investors with exposure to high yielding property assets. The Company will target properties with strong sustainable income from high quality tenants with strong likelihood of renewal of leases on expiry. The Company believes that there is a significant market for a dual listed property fund established to acquire opportunistically good quality undervalued real estate assets (predominantly in Europe) in order to offer investors an opportunity to invest in internationally high yielding property assets. The Company was established to meet the demands of this market and the Company intends to take advantage of the business relationships, skills, market knowledge and experience of its Chief Executive Officer, Stephen Carlin, to fulfil its business objectives. Mr Carlin has almost 30 years’ experience in the property market, including being on board of Redefine International Property Management Ltd and being a founder member of Redefine BDL Hotels Ltd, and has sourced properties in excess of £300 million for the Redefine group. In order to take advantage of these opportunities it is necessary to be able to raise capital quickly. The benefit of a dual listing is that it allows the Company to raise capital in South Africa and Mauritius, having regard to the strength of the directors’ relationships and the known interest of investors in those jurisdictions.
3.4
Financial year-end The financial year-end of the company is 30 September each year.
4.
INVESTMENT POLICY Global distribution trends are requiring new, modern logistics facilities in various geographical locations, serving large distribution networks and with the object of meeting the growing needs of global companies. Green Flash has been established with the primary objective of acquiring and investing in global real estate assets and companies, predominantly in the Class A logistics, industrial and warehousing sectors.
12
The Company will seek to invest predominantly in Europe 4 as well as certain parts of Africa, with a specific focus in the logistics, industrial and warehousing sector. Opportunistic acquisitions in the commercial, retail and office sectors will also be considered. 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. The Company believes that there is a significant market for a dual listed property fund established to acquire good quality real estate assets (predominantly in Europe and Africa) in order to offer investors in Mauritius, South Africa and other international investors, an opportunity to invest in high yielding property assets. The Company was established to meet the demands of this market and the Company intends to take advantage of the business relationships, skills, market knowledge and experience of its Chief Operating Officer, Stephen Carlin, to fulfil its business objectives. The Company has made its first investment in a retail property by the acquisition of 100% of the issued share in Banstead Property Holdings Limited with effect from 31 August 2014. This acquisition was funded by way of an issue of shares in the Company and falls squarely into the long term plan of Green Flash, as the shares were available as a one off acquisition, and the property owned by the company had been leased since September 2000 and offers an average annualised property yield of 6.28%. The Company has access to a pipeline of new developments (and potentially undervalued properties in certain regions) with sustainable income streams from high quality tenants. This will offer investors exposure to investments that is geographically diversified, providing a blend of income and capital growth. The Company has identified a number of properties that would fall within its investment strategy and will seek to purchase these upon listing, depending on availability at the time. If these properties are no longer available, alternative properties with similar purchase prices and yields will be sought. These include the following: Doncaster Property (UK): This development, which comprises 11 self-contained industrial units, is situated in Doncaster, United Kingdom, and is a modern, self-contained development, which is part of a larger industrial area and is within a 25 minute drive of Rotherham and Doncaster. The Company would be targeting a purchase price of €2,382,980, which would be funded 35% by way of a 10 year bond bearing interest at an annual rate of 3.5%5 compounded monthly, the balance to be equity funded. The rental rate per square foot for the units ranges from £0.35 to £0.43, and the total rent received from the occupiers of the estate is £207,980.38 per annum. SPC Logistic Platform (Portugal): In order to acquire this property a minimum amount of €2 500 000 would have to be raised on listing. This property, which comprises a warehouse, containers park area, covered containers repair area and uncovered land, is located in Campo industrial area in Valongo, Portugal and benefits from excellent road and railway accesses, as well as direct access to Porto Airport (15 km) and the Leixões harbour (20Km). The Company would be targeting a purchase price of €6,177,075, which would be funded 35% by way of a 10 year bond bearing interest at an annual rate of 3.5% compounded monthly, the balance to be equity funded. The current lessee is SPC which is part of the SAPEC GROUP and offers logistic support procedures, intermodality and integrated transport services using the network of logistic and railway terminals/platforms in Portugal. SPC is proposing a 10 year lease period, with negotiable renewal terms. The proposed monthly rental amount would be a total of €41,181. Zambia While no specific properties or developments have been earmarked in this jurisdiction, the Company would be looking to invest in Zambia, as a natural gateway into Africa. The development of infrastructure around Zambia is opening up regional areas for new property development to improve local supply and various infrastructure projects have been initiated in the country to facilitate freight movement, both inland and cross-border. For instance, several roads connecting the major cities in Zambia and the main regional ports are being upgraded. With an increase in investment by the existing
4
"Europe" means the Euro area (also known as the Eurozone) which consists of those European Union countries which have adopted the euro as their currency. It currently has 18 member states being Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain. 5 This rate was determined with reference to the 5 year swap rate plus a margin of 2%, which was viewed to be appropriate given the low level of gearing.
13
players and joint ventures/partnerships between foreign and local players, the supply of consumer and industrial goods is expected to rise. This will lead to increased demand for storage/warehousing. Green Flash intends to offer investors with above average yields and potential capital growth by investing in emerging and desirable locations, with high demand and under supplied modern logistics facilities as well as acquiring assets that are under-valued and well below replacement cost, in previously distressed markets. The latter are high yielding assets, with the prospect of capital appreciation. The Company intends to grow its portfolio of assets, mainly through investments in modern logistics parks and distribution centres and a strong development pipeline. The Company’s medium term target is to grow its gross asset value to €23.5 million by the end of the financial year ended 30 September 2017. Benefits of investment policy It is expected that the Company’s investments will provide it with a high initial foreign currency yield (in the form of semiannual distributions) with high growth which should in turn result in meaningful capital appreciation for investors. Gearing policy The Company will make use of the current low interest rate environment in Europe to enhance returns through gearing. A gearing level of approximately 65% will be targeted by the Company. The majority of the gearing will be fixed for periods of between 2 and 10 years at current indicative rates of circa 5% per annum. Where possible gearing will be specific to a property and raised in a ring-fenced property owning subsidiary. Investment Process The Company’s directors will set the investment policy, parameters and objectives, and will review and approve each sale or purchase of investment assets. The Board will also be responsible for identifying the availability of new investment opportunities that fall within the investment policy and objectives and negotiating the terms of the investment and ongoing management of the investment assets. The ongoing management may be delegated to an appointed property manager, on a case by case basis. 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 expected that the Company will raise at least a minimum of €2 million and a maximum of €5.7 million in 2015. In the event that insufficient funds are raised, the Company will acquire a property portfolio only up to the value of the capital raised and would not be able to acquire the SPC Logistic Platform property in Portugal. However, if required, 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 opportunities become available. In the event that the Company does not succeed in raising the minimum of €2 million in 2015, the SEM may proceed with the withdrawal of the Company from the Official Market. The following tables show the projected pro forma income statement and balance sheet of the Company for 2015 and 2016 given different levels of capital raised – €2 million, €3.5 million or €5.7 million for 2015 and €3 million, €5 million and €6.6 million for 2016. 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
14
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
€2 million
€3.5 million
€5.7 million
Pro forma Income Statement for the period ended 31 December 2015
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
104,308.77 -32,917.19 -20,656.14 50,735.44
Pro forma Balance Sheet for the period ended 31 December 2015 Total assets Total Equity Total Liabilities Total equity and liabilities
Capital raised in 2016
3,543,677.89 2,184,280.35 1,359,397.54 3,543,677.89
Income Expenses Finance costs Total comprehensive income for the period
182,540.35 -57,605.09 -36,148.25 88,787.02
Pro forma Balance Sheet for the period ended 31 December 2015 Total assets Total Equity Total Liabilities Total equity and liabilities
6,201,436.32 3,822,490.61 2,378,945.70 6,201,436.32
Income Expenses Finance costs Total comprehensive income for the period
297,280.00 -93,814.00 -58,870.00 144,596.00
Pro forma Balance Sheet for the period ended 31 December 2015 Total assets Total Equity Total Liabilities Total equity and liabilities
10,099,482.00 6,225,199.00 3,874,283.00 10,099,482.00
€3 million
€5 million
€6.6 million
Pro forma Income Statement for the period ended 31 December 2016
Pro forma Income Statement for the period ended 31 December 2016
Pro forma Income Statement for the period ended 31 December 2016
Income Expenses Finance costs Total comprehensive income for the period
632,615.45 -56,547.73 -92,635.00 483,432.73
Pro forma Balance Sheet for the period ended 31 December 2016 Total assets Total Equity Total Liabilities Total equity and liabilities
10,703,711.36 6,337,863.64 4,365,847.73 10,703,711.36
5.
COMPANY STRUCTURE
5.1
Company structure
Income Expenses Finance costs Total comprehensive income for the period
1,054,359.09 -94,246.21 -154,391.67 805,721.21
Pro forma Balance Sheet for the period ended 31 December 2016 Total assets Total Equity Total Liabilities Total equity and liabilities
17,839,518.94 10,563,106.06 7,276,412.88 17,839,518.94
Income Expenses Finance costs Total comprehensive income for the period
1,391,754.00 -124,405.00 -203,797.00 1,063,552.00
Pro forma Balance Sheet for the period ended 31 December 2016 Total assets Total Equity Total Liabilities Total equity and liabilities
23,548,165.00 13,943,300.00 9,604,865.00 23,548,165.00
The Company structure is set out in Annexure 3. 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 4.
5.3
Constitution Extracts from the Company’s constitution are set out in Annexure 5.
15
6.
THE PROPERTY In terms of the Banstead Sale Agreement, with effect from 31 August 2014, Green Flash acquired 100% of the shareholding of Banstead Property Holdings Ltd, a company incorporated in the British Virgin Islands on 14 July 2004, and which owns a retail property in the United Kingdom, at an average annualised property yield of 6.28%. The property is situated in Banstead, Surrey, United Kingdom. The property is fully let and has a gross lettable area of 4,307 square feet. The property has been independently valued by Strutt & Parker at 31 July 2014 at £1,175,000 and a copy of their valuation report is presented in Annexure 2. The details of the property are as follows: Property Name
Location
Sector
Lease expiry of anchor tenant
Annual Average rental per square foot (GBP/Sq Ft)
Rentable Area (Sq Ft)
Occupancy
Valuation as at 31 July 2014 (GBP)
Net yield per annum
Banstead
98-100 High Street, Banstead, Surrey, UK
Retail
September 2020
18.24
4,307
100%
1,175,000
6.28%
Tenant spread The property is fully let to Tesco and Countrywide Estate Agents, both of which are considered A-type tenants, which are defined as comprising of large international and national tenants, large listed tenants and government, in respect of which rental guarantees are issued. 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 currently 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 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 contract, not being a contract entered into in the ordinary course of business, has been entered into by the Company and is, or may be, material: the Banstead Sale Agreement dated 28 August 2014 between the Company and Koral Bay Limited, in terms of which the Company acquired 100% of the shares, and shareholders loan account, in Banstead Property Holdings Limited from Koral Bay Limited, with effect from 31 August 2014, for a purchase price of £445,643.32, which was settled by the issuing by the Company of 73,959,400 ordinary shares in itself to Koral Bay Limited.
16
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.
17
_________________________________________________________________________________ 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 11. Further to the Company being listed, it will undertake capital raisings on both the SEM and AltX by the first quarter of 2015. The equity to be raised will be determined by projects and investments earmarked by the Company, but is estimated to be in the region of €5.7 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 during the first quarter of 2015. The Company also envisages a listing on the AltX in the future to raise further funds, which is similarly anticipated to be completed during the first quarter of 2015.
2.
ADDITIONAL PLACEMENTS Details of the potential future private placements in South Africa and in Mauritius will be communicated in due course by the Company.
18
______________________________________________________________________________________ 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 Green Flash 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.
Failure to raise capital It is a risk that the Company may fail to raise the funds required to meet its initial objectives. 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.
2.
Failure to raise capital may affect forecasts In the event that the Company fails to raise the amount forecast this may have a material effect on the forward looking statements.
3.
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.
4.
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.
5.
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 EUR. Accordingly, the value of the Shares and distributions in EUR terms will be adversely affected by any reductions in value of the relevant currency relative to EUR. In addition, the Company will incur transaction costs in connection with the conversions between other currencies and EUR.
6.
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.
7.
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.
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
19
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
high transaction costs; agency transaction systems (general unavailability of information to all players simultaneously); chunky asset sizes; and specialized nature of buildings.
6.10
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.
6.11
The current investment consists of only one property, situated in the United Kingdom, which means that risk is currently not diversified across a number of geographical areas and that revenue generation is dependent on a single investment. Green Flash’s property is currently located in the United Kingdom. As a result of this, Green Flash is more exposed than an entity whose assets are spread over a broader geographical area, which would thereby enjoy a greater spread in its risk. Any significant decrease in the popularity or property values in the United Kingdom could have an adverse impact on the value of the Company’s portfolio. The directors intend to address this by diversifying its property portfolio, as investment opportunities present themselves.
6.12
The Company faces inherent general risks relating to property investment and development activities. Revenue earned from the properties held by the Company, the value of properties held by the Company and the operating expenses of the Company would be subject to a number of inherent general risks, which include, among others:
20
6.13
6.12.1
a competitive rental market, which may affect rental levels or occupancy levels at the Company’s properties;
6.12.2
the amount of rent and the terms on which lease renewals and new leases are agreed being less favourable than current leases;
6.12.3
the periodic need to renovate, repair and re-lease space, and the cost thereof;
6.12.4
the Company’s ability to collect rent and service charge payments from tenants on a timely basis or at all;
6.12.5
the Company’s ability to manage increases in the cost of services provided by third party providers and/or increases in the cost of maintaining properties including, but not limited to, unforeseen capital expenditure;
6.12.6
tenants seeking the protection of bankruptcy laws which could result in delays in receipt of rental and other contractual payments, inability to collect such payments, the termination of a tenant’s lease or the failure of a tenant to vacate a property, all of which could hinder or delay the sale or re-letting of a property;
6.12.7
whether the Company’s properties are perceived as attractive, convenient and safe;
6.12.8
changes in laws and governmental regulations in relation to real estate, including those governing permitted and planning usage, taxes and government charges (including those relating to health and safety and environmental compliance). Such changes may lead to an increase in management expenses or unforeseen capital expenditure to ensure compliance. Rights related to particular properties may also be restricted by legislative actions, such as revisions to existing laws or the enactment of new laws; and
6.12.9
the Company’s ability to obtain adequate maintenance or insurance services on commercial terms and at acceptable premiums or at all.
The Company may fail to integrate acquisitions successfully and may incur liabilities on such acquisitions Part of the Company’s strategy is to make selective acquisitions of additional retail properties and property portfolios. Successful integration of properties and property portfolios is affected by factors including the alignment of the management of the property portfolios with that of the Company, refurbishment to bring properties up to market standard and differences in lease structures and tenant composition. Any delay or inability to integrate new properties and property portfolios efficiently could adversely affect operations and future financial performance. The Company may also be exposed to substantial undisclosed or unascertained liabilities embedded in properties that were incurred or that arose prior to the completion of the Company’s acquisition of such properties. These liabilities include, in cases where the Company has acquired the entity which owned the property, liabilities (including tax liabilities and other liabilities to state entities) to existing tenants, to creditors or to other persons involved with the properties prior to the acquisition.
6.14
Future developments and acquisitions may be limited by the failure to identify and acquire suitable property Future developments and acquisitions may be limited by the Company’s ability to identify and acquire suitable property at satisfactory prices. In addition, the Company is likely to face competition from a variety of other potential purchasers in identifying and acquiring suitable properties. The success of the Company largely depends on the ability of the Company to identify, evaluate and execute investments. There is no guarantee that suitable investments can or will be acquired nor that investments will be successful, and, in the event of the failure of an investment, part or all of that investment may be lost. The Company may be unable to identify and secure a sufficient number of Investments to meet its objectives.
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 7,396,040 Green Flash shares on the Official Market of the SEM with effect from 30 January 2015.
2.2.
It is expected that dealings in Green Flash shares will commence on 30 January 2015.
3.
SIGNIFICANT CHANGES
3.1.
There has been no significant change in the financial or trading position of Green Flash since 30 September 2014, the date on which the financial information of the company set out in Annexure 6 was prepared.
3.2.
There have been no material changes in the business of Green Flash since incorporation and no such changes are contemplated.
3.3.
There has been no change in the trading objective of Green Flash since incorporation.
22
______________________________________________________________________________________ SECTION FIVE – ADDITIONAL MATERIAL INFORMATION ______________________________________________________________________________________ 1.
HISTORICAL FINANCIAL INFORMATION
1.1
The historical financial information of Green Flash for the period 14 August 2014 to 30 September 2014 is set out in Annexure 6.
1.2
The preparation of the historical information falls under the responsibility of the directors of the Company.
1.3
Given that Green Flash 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 provisions of the Constitution of Green Flash and 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 31 March and 30 September 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 Banstead Property Holdings Ltd in terms of the Banstead 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 31 August 2014, there is an outstanding loan to Banstead Property Holdings Ltd from Investec Bank in the sum of £880,036. It holds a mortgage over the property.
5.2
As at the 31 August 2014, there is also an outstanding shareholders loan from Koral Bay Limited to Banstead Property Holdings Ltd in the sum of £432,273.
5.2
With the exception of these liabilities: 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.
23
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. 5.2.6 As at the last practicable date, no charge or mortgage has been created over any assets of the company. 5.2.7 As at the last practicable date, there were no outstanding convertible debt securities. 6.
CORPORATE GOVERNANCE Green Flash 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 Banstead Property 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;
24
12.2
withholding taxes on interest; and
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 Constitution of the Company;
13.3
the Business Plan prepared by the Company and certified by an independent financial advisor;
13.4
the Banstead Sale Agreement; and
13.5
the full property valuation report, a copy which is attached as Annexure 2;
SIGNED AT LONDON ON 13 JANUARY 2015 ON BEHALF OF GREEN FLASH PROPERTIES LTD
Stephen Carlin who warrants that he is duly authorised thereto by resolution of the board of directors of Green Flash Properties Ltd
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
2nd Floor, 30 Charles II Street, London, SW1Y 4AE, United Kingdom
Mr Carlin is a qualified engineer with almost 30 years’ experience in the real estate industry. He has been involved in many aspects of the industry, including property services, project management and development. He was the founder of the consortium that developed Lanseria Airport in Johannesburg, South Africa and has also been involved in forming a number of private syndicates to acquire direct ownership of various commercial and retail properties, predominantly in the UK. He was on the board of Redefine International PLC, which is now listed on the main board of the LSE, from 2006 until 2010 and was also on the board of Redefine International Property Management Limited, where he was instrumental in the rapid growth of Redefine’s property portfolio in Europe. He is now an executive director of Redefine|BDL Hotels Ltd, which now the UK’s largest independent hotel operator, where he is responsible for business development.
Daniel Romburgh (33); 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.
Serge Richard (50); Swiss; MBA
Non-executive Director
24 Route des Acacias 1227 les Acacias Geneva Switzerland
Mr Richard trained as an accountant and spent 7 years working for two major accounting firms in France. In 1995 he joined a leading independent Trust company in Geneva, Switzerland where he served as senior manager and a member of the operations board. He is co-founder of BasTrust Corporation, member of the Basel Group and currently serves as the Managing Director. He has an MBA from the Management School of Reims University, France.
Peter Todd (55) British/South African; B.Comm, LLB, H Dip Tax
Independent, nonexecutive Director
2nd Floor 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
Directors of Green Flash Stephen Carlin (64); British/South African; BSc(Eng), M. Ind. Admin
26
Hendrik Petrus Barnhoorn (46); South African; Chartered Accountant (CA); Master of Business Administration (MBA)
Independent, nonexecutive Director
19th Floor, Newton Tower, Sir William Newton Street, Port Louis, Mauritius
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-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. 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
2.
REMUNERATION OF THE DIRECTORS OF GREEN FLASH
2.1
The remuneration and benefits to be paid by the company or the service provider to the directors of Green Flash in their capacity as directors (or in any other capacity) for the financial period from inception until 31 December 2014 will be as set out below: Director Stephen Carlin Peter Todd Hendrik Barnhoorn Daniel Romburgh Serge Richard
Basic salary US$ 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
2.2
As the Company was only incorporated on 14 August 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.
27
3.
DIRECTORS’ INTERESTS IN SECURITIES Green Flash’s directors’ interests in Green Flash As at the last practicable date, Stephen Carlin holds indirectly, through Koral Bay Limited, 7,396,040 shares in the capital of the Company representing 99.99% of the Company’s stated capital. None of the other directors of the Company hold any securities in the Company as at the last practicable date.
4.
DIRECTORS’ INTERESTS IN TRANSACTIONS
4.1
Stephen Carlin has a beneficial interest in the Banstead 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 Stephen Carlin, who holds shares in the Company as referred to in paragraph 3 of this annexure and who has a beneficial interest in the Banstead 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.
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 5.
8.
BORROWING POWERS As set out more fully in Annexure 5, 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 AND TECHNICAL 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.
28
Annexure 2 ________________________________________________________________________________________________________ INDEPENDENT VALUATION REPORT ________________________________________________________________________________________________________
29
Valuation Report Century House 98-100 High Street Banstead Surrey
Prepared on the instructions of:
Green Flash Properties Ltd, of th 19 Floor, Newton Tower, Sir William Newton Street, Port Louis, Mauritius
August 2014
CONTENTS 1.
Introduction
2.
Location
3.
Situation
4.
Description
5.
Accommodation
6.
Condition
7.
Statutory Enquiries
8.
Site and Ground Conditions
9.
Environmental Issues
10.
Tenure
11.
Tenancies
12.
Tenant Covenant Information
13.
Economic Background
14.
Occupational Market Commentary
15.
Investment Market Commentary
16.
Capital Value
17.
Limitation and Non Publication
98-100 High Street, Banstead, Surrey, August 2014
Appendices APPENDIX 1
Letter of Instruction and Terms of Engagement
APPENDIX 2
Location Plan
APPENDIX 3
Situation and Ordnance Survey Plans
98-100 High Street, Banstead, Surrey, August 2014
Green Flash Properties Ltd of 19th Floor, Newton Tower, Sir William Newton Street, Port Louis, Mauritius
For the attention of Diane Bosman
DirectDirect Dial: 020 Dial:7318 020 5025 7318 5106 Mobile: 07774 Mobile: 861 475 07968172539 E-Mail: E-Mail:
[email protected] [email protected] Your Ref: 696727 31st July 2014 4 July 2011
Dear Sirs, Re:
Century House, 98-100 High Street, Banstead, Surrey, (The ‘Property’)
1.0
INTRODUCTION
In accordance with the instructions received during July 2014, which were confirmed in our letter of engagement we have complied with your instructions to undertake a formal valuation in order to provide you with our opinion of the property’s Market Value as at 31 July 2014. Purpose We understand that our valuation is required for valuation purposes in connection with the proposed primary listing of Green Flash Properties Ltd on the Stock Exchange of Mauritius (the “SEM”) and a proposed secondary listing of Green Flash on the JSE Limited (the “JSE”). Compliance We confirm that Strutt & Parker LLP is acting as an independent valuer as defined by Professional Standard 2 of the RICS Valuation Professional Standards, January 2014. All valuations are given in pounds sterling unless agreed otherwise. No allowance has been made for liability or taxation, which may arise on disposal. This report is also prepared in accordance with the relevant provisions of the Listing Rules and Prospectus Rule 5.6.5G of the Prospectus Rules issued by the United Kingdom Listing Authority (the “UKLA”) and paragraphs 128 to 130 of ESMA's update of CESR’s recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses no 809/2004. Accordingly, we confirm that the Valuation has been prepared for a ‘Regulated Purpose’ as defined in the Red Book. Basis of Valuation Our valuations have been prepared on the basis of Market Value, the definition of which is set out in Practice Statement 3.2 of the Red Book and which is defined as follows;
98-100 High Street, Banstead, Surrey, August 2014
‘’The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion.’’ We have also provided our opinion of Market Rent. General Assumptions and Conditions Our valuation has been carried out on the basis of the General Assumptions and Conditions set out in the relevant sections of this report, and as attached at Appendix 5. Date of Valuation Our opinion of value is as at 31st July 2014, as instructed. The importance of the date of valuation must be stressed as property values can change over a relatively short period. Conflicts of Interest We are not aware of any conflict of interest, either with the Property preventing us from providing you with an independent valuation of the Property in accordance with the RICS Red Book. Inspection and Valuer Details The property was inspected during July 2014 by Mark Whittingham MRICS, the author of this report and registered RICS valuer based in our London office with the relevant experience and knowledge for valuations of this nature. We have not undertaken a full measured survey of the property and as instructed we have relied upon the floor areas provided to us by the Managing agents. Extent of Due Diligence Enquiries and Information Sources The extent of the due diligence enquiries we have undertaken and the sources of the information we have relied upon for the purpose of our valuation are stated in the relevant sections of our report below. Where reports and other information have been provided, we summarise the relevant details in this report. We do not accept responsibility for any errors or omissions in the information and documentation provided to us, nor for any consequences that may flow from such errors and omissions The valuation is subject to all the matters explained in this report including any reservations and assumptions. In the event that any of our assumptions are found to be incorrect, no reliance should be placed upon the valuation until it has been reviewed by Strutt & Parker LLP in light of that additional information. Disclosure The report is prepared on behalf of the addressee and no liability whatsoever can be accepted to any third parties for the whole or part of its content.
98-100 High Street, Banstead, Surrey, August 2014
2.0
LOCATION
2.1
Banstead
Banstead is a town in the borough of Reigate and Banstead in the county of Surrey, England, on the border with Greater London. It lies 13 miles (21 km) south of London, 3 miles (5 km) south of Sutton, 5 miles (8 km) west of Croydon and 8.5 miles (14 km) southeast of the county town of Kingston-Upon-Thames. Banstead is on the North Downs and is protected by the Metropolitan Green Belt; Banstead Downs is a Site of Special Scientific Interest (SSSI). Although Banstead is a town, it is frequently referred to and known as "Banstead Village". Nearby towns include Epsom and Worcester Park to the west, Reigate to the south and Leatherhead to the west. Banstead is a busy commuter town and has a well-established retail High Street incorporating many of the national multiples including Waitrose, Marks & Spencers and Boots. The town provides a comprehensive wide range of national multiple and speciality/boutique type retailers. The principal retail thoroughfare for the town is situated on High Street running east to west for a distance of approximately half a mile. However, the absence of some multiples is thought to be as a result of the proximity of other nearby towns. This may be explained by the fact that Banstead is overshadowed in terms of retailing hierarchy by nearby Epsom, Sutton and Croydon town centres. For example, on the day of our inspection there was a notable absence of mainstream multiple fashion retailers in the town. Therefore, Banstead tends to provide a comprehensive “day to day” convenience facility with people prepared to travel to Croydon for more extensive fashion/white goods etc. Nevertheless, we would envisage that a reasonable level of demand should still exist for the town. Aside from the Waitrose supermarket (which was re-built after being damaged by fire in 2009) the, majority of the buildings are of similar style and age to the subject property or of typical 1960’s retail terracing. There is a private car park to the rear of the subject property and spaces have been let out on annual licenses to local retailers. However, free but restricted time car parking lay bys are provided along the whole stretch of the High Street. In addition there is a ‘pay and display’ car park situated approximately 500 yards to the west of the subject property and the Waitrose car park neighbouring the east of the property. 2.2
Communications
The town is located approximately 17 miles to the south west of London with Epsom town centre 4 miles to the west and Reigate Town Centre some 6 miles to the south. The town benefits from good road access being located beside the A217 which provides dual carriageway access to the M25 and the A24 (London to Dorking Road). The majority of the town is bypassed by the A217 dual carriageway to the west. The A2022 passes through the residential area just to the north of the town centre; however the town centre frequently suffers from traffic congestion. Gatwick and Heathrow Airports are approximately 30 minutes away by car. 98-100 High Street, Banstead, Surrey, August 2014
Banstead mainline rail station provides a regular service to London Victoria with a journey time of circa 45 minutes. Banstead railway station is located to the west of the town's centre, across the A217. It is closer to Nork than to Banstead itself, therefore if travelling by public transport it is often quicker and easier to get a train to Sutton railway station then a bus from the station concourse directly into Banstead town centre, as Banstead railway station is a single track, unmanned station, which only sees 2 trains per hour during the rush hour, 1 per hour at other times and no Sunday service. There is now a ticket machine as of 2011. There are several bus services through the town, linking to Epsom, Sutton and Croydon, which all have good onward bus and rail connections. Banstead is served by the S1 bus (Banstead to Mitcham via Sutton), the 420 bus (Redhill to Sutton), and the 166 Bus (Epsom to Croydon). 2.3
Local Economy / Catchment
Banstead is a prosperous Surrey commuter town with a resident population of circa 39,000 (2001 census). The town shops are frequently associated with the middle class for example Marks & Spencer Simply Food, Boots the Chemist, The Lemon Tree and Waitrose. There are also a variety of restaurants and coffee bars along the High Street like Zizzi, Prezzo, Caffe Nero, Costa Coffee and Pizza Express as well as several upmarket independents. On 12 December 2008, a large fire totally destroyed the Waitrose supermarket, a local landmark. While the original store was being completely rebuilt Waitrose opened a temporary store, around 200m down the High Street, in a building vacated by the defunct Woolworths retail chain. The rebuilt store re-opened on 26 November 2009. Other than the limited amount of employment in the retail sector based around the High Street, a small number of jobs are found in the public sector; in the local authority offices and NHS facilities to the west of the Banstead's centre, and in various schools across the area. However, the majority of Banstead's residents commute out of the district for employment. 2.4
Retail Area
Banstead is a busy commuter town and has a well-established retail High Street incorporating many of the national multiples including Waitrose, Marks & Spencers and Boots. The town provides a comprehensive wide range of national multiple and speciality/boutique type retailers. The principal retail thoroughfare for the town is situated on High Street running east to west for a distance of approximately half a mile. However, the absence of some multiples is thought to be as a result of the proximity of other nearby towns. This may be explained by the fact that Banstead is overshadowed in terms of retailing hierarchy by nearby Epsom, Sutton and Croydon town centres. For example, on the day of our inspection there was a notable absence of mainstream multiple fashion retailers in the town. Therefore, Banstead tends to provide a comprehensive “day to day” convenience facility with people prepared to travel to Croydon for more extensive fashion/white goods etc. Nevertheless, we would envisage that a reasonable level of demand should still exist for the town.
98-100 High Street, Banstead, Surrey, August 2014
3.0
SITUATION
The Property forms the end part of a parade of shops occupying a prominent position on the south side of Banstead High Street. The High Street is regarded as Banstead’s principal retail location, and the parade is slightly set back form the High street. The Property is adjacent to a large new Waitrose supermarket which has recently been redeveloped, which also has the benefit of an upper car deck adding a further 170 parking spaces. Access to and egress from the site is via the High Street. Aside from the Waitrose supermarket, the majority of buildings surrounding the property are of a similar style and age. Given the good location the Property should always compete well with other retail areas within the town. However it is considered to be on the poorer side of the High street with the northern side being the favoured location. 4.0
DESCRIPTION
The Property forms part of a row of nine terrace shops fronting the High Street. The Property forms the western end of the terrace and comprises two retail units on the ground floor with 12 flats above all of which have been ‘sold off’ on long leases. The building appears to have been constructed during the 1970’s and is of framed construction with brick elevations and pitched tiled surfaced roof surmounting the second floor. The upper parts were redeveloped to provide residential accommodation in 2005. The entrance to the flats is at the western end of the terrace, adjoining the subject property.
The subject property is arranged to provide two retail units at ground floor level only. The units are regularly shaped and provide clear space, fitted out to each individual tenant’s own specification. Internally, the standard specification of the retail accommodation includes suspended ceilings, recessed fluorescent strip lighting, plastered and painted walls, timber and aluminium framed single glazed shop frontages and linoleum or carpet surfaced solid floors. Additionally, No. 98 High Street (occupied by Tesco) has air conditioning units recessed into the suspended ceiling. 98-100 High Street, Banstead, Surrey, August 2014
The site has a total frontage to High Street of approximately 60 ft (18 m), a maximum depth of about 95 ft (30 m). We compute the total area of the site to be approximately 5,200 sq ft (480 sq m). Although the units will have been demised to the tenants in shell and core they will have subsequently been fitted out to each tenant’s requirements. The Property has seven car parking spaces to the rear that are let (with the exception of 1) on separate agreements with the tenants of the shop parade. The rear car parking area and Tesco loading bay is accessed to the south of the parade via a full height metal security gate with key card security access. Within the rear car parking area on the east boundary is an electrical sub-station let to the South Eastern Electrical Board. 5.0
ACCOMMODATION
We have relied on measured floor areas provided, having taken check measurements. We have valued the Property on the basis that the areas provided are complete and correct, and are the net internal floor areas measured in accordance with the RICS Code of Measuring Practice, (7th Edition) as updated.
98-100 High Street, Banstead, Surrey, August 2014
Unit
Floor
Use
ITZA (sq ft)
Sq Ft (NIA)
Sq M (NIA)
98
Ground (Tesco)
Retail
1,576
3,899
362.2
100
Ground Pees)
Retail
336
408
37.9
1,912
4,307
400.1
(Gascoigene
Total
6.0
CONDITION
We have not been instructed to undertake a building survey of the property and therefore comment that during the course of our inspection of the property which comprised a walk around the internal and external parts. The property appeared to be in a good state of repair and condition commensurate with the buildings age and use. We have assumed that a routine program of planned maintenance is in place and that there are no inherent defects within the building. Our valuation has been undertaken on the strict assumption that no major items of capital expenditure in connection with the maintenance and upkeep of the centre are required in the short to medium term. 7.0
STATUTORY ENQUIRIES
7.1
Rating
The Valuation Office Agency Internet Rating List www.voa.gov.uk, lists individual rating assessments for each of the two units. These aggregate to a rateable value of £60,750. The Uniform Business Rate for the 2012/2013 financial year is 45.8 pence in the Pound We calculate that the rates currently payable are £27,824 excluding any transitional or other relief. 7.2
Planning
All our enquiries have been undertaken on an informal basis, by either telephone or Internet. We have assumed that your solicitors will be making formal enquiries relevant bodies and that you will rely solely on their findings. Please advise us discrepancies found, so that we may advise you whether this would have an effect valuation.
via the of the of any on our
The subject property lies within the jurisdiction of Reigate and Banstead Borough Council whose planning policies are contained within the Reigate and Banstead Local Plan. The first 98-100 High Street, Banstead, Surrey, August 2014
alteration of the Local Plan was adopted and came into effect as at 7 April 2005 to form part of the new Local Development Framework. We understand that the property is situated within the Banstead Village Centre Shopping Area. The property does not lie within a Conservation Area, neither is it listed. The current planning use of the property is A1 (retail) and A2, with C3 residential on the upper parts. We confirm that, in our opinion, the present use of the property complies with this. The Local Planning Authority have advised us that there are no outstanding planning applications or enforcement issues relating to the property. Two planning applications have been approved and the works completed to the upper parts of Nos. 98 and 100 High Street (subject property). The first in 2004 (Ref: 04/03027/F) for ‘conversion and extension to upper floors to create 7 x 2 and 5 x 1 bedroom flats’. The second was granted in 2005 (REF: 05/02356/DET) for ‘submission of method of construction details for conversion and extension to create 12 flats.’ 7.3
Highways
We are not aware of any highway proposals in the vicinity that may have an impact upon the value of the property in the foreseeable future. The property has direct access to an adopted highway. The property is currently in its highest value and best use and, therefore, redevelopment is not considered to be a major factor in the valuation of the property at the present time. 7.4
Note
We are unaware of any Planning or Highway proposals likely to have an adverse effect upon the value of the property
98-100 High Street, Banstead, Surrey, August 2014
8.0
SITE AND GROUND CONDITIONS
We have not been instructed to undertake a building survey of the property and therefore comment that during the course of our inspection of the property which comprised a walk around the internal and external parts. The property appeared to be in a good state of repair and condition commensurate with the buildings age and use. We have assumed that a routine program of planned maintenance is in place and that there are no inherent defects within the building. Our valuation has been undertaken on the strict assumption that no major items of capital expenditure in connection with the maintenance and upkeep of the centre are required in the short to medium term 9.0
ENVIRONMENTAL ISSUES
We have not undertaken, commissioned or been provided with an environmental assessment to establish whether contamination exists or may exist. We have not undertaken any investigations into past and present uses of the subject property or of any adjoining property. However, we note that the subject property was constructed c. 1970 and is in an established town centre location and taking into account the current uses on the site it is unlikely that there has been any significant contamination in the past. We did not observe evidence of potential and actual contamination on the property. Overall, therefore, for the purposes of this Valuation, we have assumed that no contamination exists in relation to the property sufficient to affect value. However, should this assumption prove to be incorrect, the values reported herein might be reduced. 9.1
Flood Risk
We have made enquiries of the Environment Agency website and understand that statistically the property has an insignificant risk of flooding and that it is not located in a designated flood plain or flood risk area. Accordingly, we have not made any adjustment to our valuation in respect of flood risk. 10.0
TENURE
We have not been provided with any report on title. However we understand form our enquiries that the property is held freehold. We have assumed that there are no encumbrances or unduly onerous or unusual easements, restrictions, outgoings or conditions, likely to have an adverse effect upon the value of the property, and we have assumed that a good and marketable title is held.
98-100 High Street, Banstead, Surrey, August 2014
11.0
TENANCIES
11.1
Overview
The property is let to two commercial tenants and is also subject to the letting of 4 car parking spaces (one remains vacant) and 12 residential ground rents. The current total gross income receivable from the property is £78,050 per annum:
Tenant
Rent £ p.a.
Tesco
£57,000
Countrywide Surveyors
£14,500
Ground Rents
£3,000
Car Parking
£3,550
TOTAL
£78,050
The weighted average unexpired term, calculated by reference to net income is 11.59 years, however this is slightly distorted by the inclusion of the residential ground rents. Without these, the weighted average unexpired calculated by reference to income is 7 years. 11.2
Individual Terms
The tenancy situation is as below: Lease Name Tesco Nationwide Estate Agents (Bairstow Eves) Resi Ground Rents Car Parking Space ( Nos 15-17 & 21,24 & 26) Vacant Car Space
Unit Description Retail Unit Estate Agents
AAA Good
Tennant Use Retail Retail
Current Rent £57,000 £14,500
Lease Start 20/09/2000 20/06/2012
Next Review 20/09/2010
Lease Expiry 19/09/2020 23/06/2017
12 Flats
Average
Other
£3,000
30/09/2006
30/09/2016
29/09/2131
Car Parking
Local Tenants
Car Parking
£3,550
19/06/2006
Car Parking
Vacant
Car Parking
£0
Covenant
Total
98-100 High Street, Banstead, Surrey, August 2014
£78,050
18/06/2009
11.3
Summary of Leases
We have not had sight of the commercial leases for the two retail units, however, we understand that they are standard full repairing and insuring institutional terms, in line with the below: Rent Reviews The rent is to be reviewed on a five yearly basis, from the commencement of the term, in an upwards direction only. The rent on review is to be the open market rent at which time the demised premises might reasonably be expected to be let for a term equal to the term of the lease commencing on the relevant review date by a willing landlord to a willing Tenant at the relevant review date, with the usual assumptions and disregarded matters. In the event that the parties cannot reach agreement, the rent review is to be determined by an Independent Expert. Repair The Tenant covenants to keep the premises in good and substantial repair and condition. The Tenant is to redecorate the interior every five years and in the last year of the term and the exterior once every three years and in the last year of the term. Service Charge The Tenant covenants with the Landlord to pay a fair proportionate cost of the expenses incurred by the Landlord for repairing, maintaining and cleaning the structure, common parts and exterior of the building. Insurance The Tenant undertakes to reimburse the Landlord, equal to the proportionate part, the cost incurred in insuring the demised premises in the full cost of reinstatement against the usual risks together with professional fees and at least three years loss of rent. User The Tenant undertakes not to use the demised premises other than as in its current use as stated within the lease or as any other retail unit within Class A1 of the Town and Country Planning (Use Classes) Order 1987, subject to obtaining the Landlord’s prior written consent (not to be unreasonably withheld). Alienation The Tenant may assign or underlet the whole of the demised premises, subject to obtaining the landlord’s prior written consent, which is not to be unreasonably withheld. Assignment of part is prohibited in both leases. Underletting of part only of the shop premises is permitted within the lease to Tesco subject to landlord’s prior written consent, which is not to be unreasonably withheld. Net Rental Income The gross rental income is £78,050 per annum. The only vacancy at the property is a single car parking space and therefore, there are no non-recoverable costs. The net rental income is £78,050 per annum. We would recommend that the information and opinions set out above are verified by your legal advisors and, furthermore, we would stress that the above information and opinions 98-100 High Street, Banstead, Surrey, August 2014
regarding tenancies should not be relied upon until they have been confirmed as being accurate by your legal advisors. 12.0
TENANT COVENANT INFORMATION
On the basis of the current contracted rent, the two commercial tenants, Tesco Stores (73.03%) and Countrywide (18.58%), account for 91.61% of the aggregate gross income. We provide, below, commentary on the two commercial tenants: 12.1
Tesco Stores
Tesco is an international retailer of food, non-food and retailing services and currently operates in China, The Czech Republic, Hungary, India, Japan, Malaysia, Poland, Republic of Ireland, Slovakia, South Korea, Taiwan, Thailand, Turkey, UK and the USA. We have set out below the most recent financial information available for Tesco Plc: Tenant
Date of Turnover Accounts (£’000s)
Pre-Tax profits
Tesco Plc
February 2012
3,853,00 0
64,539,00 0
Total Assets Less Risk Current Liabilities Score (£’000s) 31,532,000 91
Taking the above into consideration, we are of the opinion the investment market would perceive the covenant as being ‘very strong’. 12.2
Countrywide Estate Agents (Company no: 00789476)
Although Countrywide Estate Agents is stated to be the tenant on the tenancy schedule provided to us by the Company, the premises have previously been traded as Bairstow Eves and Gascoigne Pees. Bairstow Eves Plc was acquired by HAMBROS Bank in March 1986, and the national chain of agents was renamed Hambro Countrywide plc, later becoming Countrywide plc. Bairstow Eves is still used as a brand name of Countrywide plc, and is the franchising arm of the business. Countrywide plc own 41 high street brands, including Gascoigne Pees. Many of these brands are still registered at Companies House as dormant companies. Countrywide plc acquired the Nationwide Estate Agents business from Nationwide Building Society in October 1994. Countywide Plc is the UK’s largest estate agency group with over 1,100 branches. Gascoigne Pees has 14 offices in the south west of London and 26 offices within the M25 commuter belt. We have set out below the most recent financial information available for Countrywide Estate Agents:
98-100 High Street, Banstead, Surrey, August 2014
Tenant
Date of Turnover Accounts (£’000s)
Pre-Tax profits
Countrywide Estate Agents
December 2011
17,797
286,680
Total Assets Less Risk Current Liabilities Score (£’000s) 133,975 89
We are of the opinion that the majority of investors would form the opinion that the covenant status of the tenant is ‘good’ although, given the property’s location in the town and the low level of rent roll, it is unlikely that investors would not have any material concerns in this regards. 13.0
ECONOMIC BACKGROUND
Overview There was an improvement in sentiment regarding the global economy through the end of 2013 and this has continued into 2014. Damage done to emerging markets continues to present significant risk, but it appears problems with major economies’ monetary policies are easing. Both the IMF and World Bank predicted a strengthening in the global economy, although some risk has returned to advanced economies in the form of low inflation and geopolitical issues. In contrast to uncertainty at the global level, the recovery in the UK continues to gain momentum. The IMF has already upgraded forecasts for 2014 UK economic growth twice this year, most recently to 2.9%. Strong labour market conditions and business confidence in the UK are credited for this, as a fall in unemployment is met with an improvement in wage conditions. The latest release of information from the ONS showed that growth in UK GDP has continued to pick up pace, reporting growth of 0.8% in the first quarter of 2014. Global Economic Outlook The improvement in sentiment over the global economy through the end of 2013 and beginning of 2014 is now met with political uncertainty. Damage done to emerging markets continues to present significant risk, but it appears problems with major economies’ monetary policies are easing. Both the IMF and World Bank predicted a strengthening in the global economy, although some risk has returned to advanced economies in the form of low inflation and geopolitical issues. The IMF still expects the US to drive this return to stable global economic growth through 2014. The FED has continued to hold off on any tightening of monetary policy. It has been argued that this is partly down to lower than expected levels of inflation, currently at 1%, and lower than the 2% target. The US employment rate has failed to rise throughout the beginning of 2014. Although there is little threat of deflation, the lack of rising employment has meant prices have not grown as quickly as expected. This will consequently raise the prospect of easy monetary policy for longer than expected in the US. Geopolitical issues are now at the forefront within Europe. The heightened tensions within Ukraine are threatening to spill over and affect trade relations between the EU monetary bloc and Russia. Economic sanctions are being pursued by the EU and US against Russia, including the freezing of Russian assets within the two formers. Prior to the enveloping Ukraine crisis, economic conditions had continued their small but stable recovery into 2014. 98-100 High Street, Banstead, Surrey, August 2014
Borrowing costs had been falling for most European governments, easing their need for further rounds of quantitative easing. The main economic issue appearing in the EU is similar to that in the US – a threat of deflation. Although this still remains only a small threat. Slower expansion in emerging economies is starting to become an issue, and is indicative of the downside risks that still remain in emerging economies post global economic crisis. It was previously noted in this commentary that productivity had stalled in China and declined in India during 2013. Significantly in 2014, China’s growth has fallen to its lowest rate in over two years. This has been largely blamed on the Chinese property market, where real estate investment is now at its weakest growth in over a decade. UK Economic Outlook The UK recovery continued its momentum into 2014. The recent consensus forecast (published by HM Treasury April) showed that the panel of independent forecasters have consistently raised their projections for 2014, over the last twelve months. The most recent projection for 2014 was up to 2.8%. This continual upwards revision of forecasts reflects the changing mood around the prospects for the UK’s economy (see figure 1). Projections for the economy in 2015 have only been present in the last four editions of the HM Treasury release. Projections for 2015 have been constant at 2.4%, which reflects some uncertainty but also the fact that 2015 is still a considerable time away. Figure 1: HM Treasury Consensus Forecasts for UK GDP Forecast for 2014
3.0%
Forecast for 2015
2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
Source: HM Treasury The latest release of UK economy data conveyed two important signs that the economic recovery is continuing. There has been a fall in the national unemployment rate to 6.9%, the first time it has dropped below 7% since the beginning of the recession. Business confidence is increasing and this is illustrated by employers’ willingness to increase workforce sizes. The second dose of good news came in the form of a rise of nominal wages. Nominal wage growth now matches inflation at 1.7%, thus ending over six years of falling real wages. It should be noted though that real incomes are not expected to return to their pre-recession levels until 2018 at the earliest.
98-100 High Street, Banstead, Surrey, August 2014
There are still significant downside risks on the horizon. Significant uncertainty remains within the global economy as shown in the previous section. Moreover, the recovery in labour market employment and wage growth has not been matched by an increase in productivity. This has led some economic commentators to suggest that the UK recovery is consumption led, rather than investment led, and could therefore be short lived. Despite this downside risk, output and employment growth have continued to shine in Q1, and Volterra expects this trend to continue through the remainder of 2014. 14.0
OCCUPATIONAL MARKET COMMENTARY
14.1
Local Market Commentary
Banstead is a busy commuter town and has a well-established retail High Street incorporating many of the national multiples including: Waitrose, Tesco Express, Marks & Spencer, Boots and Superdrug. Banstead is an affluent town with a district population estimated at 38,664 and a retail catchment of 126,523. The town provides a comprehensive wide range of national multiple and speciality/boutique type retailers. However, the absence of some multiples is thought to be as a result of the proximity of other nearby towns and Banstead is slightly overshadowed in terms of retailing hierarchy by nearby Epsom, Sutton and Croydon Town centres. On the day of our inspection there was a notable absence of mainstream multiple fashion retailers in the town, is an example of this. Therefore, Banstead tends to provide a comprehensive “day to day” convenience facility with people prepared to travel to Croydon for more extensive fashion/white goods etc. Nevertheless, we would envisage that a continued good level of demand should still exist for the town, confirmed by conversations with local agents. The subject property is predominately situated within a parade of shops along the High Street which is considered to be in the prime retail pitch for the town. There were no vacancies along this section of the parade and our enquiries indicate that occupational demand is relatively good. We are of the opinion that the property would not experience significant rental growth over the coming six to 12 months albeit rental levels should remain stable. 14.2
Rental Transactions
There is a dearth of occupational evidence within the immediate vicinity, however, we have had a number of conversations with the local agents and have relied on these and had consideration to the transactions below:81 High Street, Banstead - The property was subject to an open market letting in November 2013, at a rent equating to £45 per sq ft. We understand that the property was also subject to a rent review in March 2014 with rents rumoured to be between £50-52.50 per sq ft. We have not been able to confirm this however with the details of the review remaining confidential.
98-100 High Street, Banstead, Surrey, August 2014
The property is close to the subject property and therefore provides particularly salient rental evidence. 96 High Street, Banstead –This property was subject to open market letting August 2013 number 96 was let to an undisclosed tenant by Graham Tring Associates at £50 per sq ft Zone A. 67 High Street, Banstead – the unit was let on 11th July 2014 for £20,000 per annum which equates to £334 /m² (£31.00 /ft²). The property occupies a prime position on Banstead High Street. The 160 m² (645 ft²) retail premises was taken on assignment of an existing lease with an 8 year term remaining. 167 High Street, Banstead – In December 2013 an undisclosed tenant took 964 sq ft of ground floor retail space at a passing rent of £21,000 per annum, equating to £234.50 /m² (£21.75 /ft²). The above transaction outlines how rental values significantly decrease the further they are located away from the prime retailing pitch on the High Street. 14.3
Market Rent
In light of the above evidence and taking into account the opinions of the various local agents with whom we have spoken, we have applied a rental value of £463 /m² (£42.50 /ft²) in respect of the larger Tesco unit and a small premium of £489 /m² (£45.00 /ft²) to the smaller Countrywide Estate Agents. The new lease to Countrywide Estate Agents was agreed in June 2012 at £14,500 pa equating to c £470 /m² (£43.00 /ft²) and there is no evidence to suggest a significant increases on the rental tone since. This results in a market rent of £71,000 per annum for the retail element of the property and accordingly is largely rack-rented. Residential - The each of the 12 flats pay £250 per annum for the 125 years from 2004, we have assumed that this remains the same throughout the term resulting in a Market Rent of £3,000 per annum. Car Parking - There are a total of 6 car parking spaces, all of which are currently let on short term contracts. We have applied a rate of £62.50 per month to each space resulting in a Market Rent of £3,600 per annum. This gives rise to a Headline Market Rent of; £79,600 (Seventy Nine Thousand and Six Hundred Pounds) per annum exclusive
98-100 High Street, Banstead, Surrey, August 2014
15.0
INVESTMENT MARKET COMMENTARY
15.1
Investment Market Background
Demand from investors for high street retail investments is polarised with investors focussing heavily on property within the M25, the south east of England and cathedral cities. This has led to a large disparity in yields between these areas and the rest of the UK. Investors are looking for reduced risk and the relative economic security the south east is perceived to offer is attracting investment both from institutional and private investors. There have been significant cash inflows to a number of the institutional fund managers that now seek opportunities in the market. The majority of this un-deployed cash is looking for representation in prime assets of which the High Street is generating significant interest. There is very limited prime stock available and as such when quality assets are marketed they are generating significant interest and competitive bidding scenarios. 15.2
Comparable Investment Transactions
20 High Street, Epsom, KT19
The property comprises a 223.24 sq m (2,403 sq ft) mid terraced building arranged over three floors, providing retail space throughout. The property is prominently located on High street with Epsom Railway Station, within walking distance. The freehold interest was sold in July 2014 for £520,000 reflecting a net initial yield of 6.09%. The property is single let to Devetco Ltd until February 2015. The annual rent is £33,499.92 pa. The property is more prominently located than the subject Property, however this comparable offers far less income security (in terms of length and strength).
98-100 High Street, Banstead, Surrey, August 2014
112 Portland Road, SE25
The property is located at Portland Road's junction with Werndee Road, and is within walking distance from Norwood Railway Station. The property comprises a retail investment arranged over two floors, providing retail accommodation on the ground floor and residential accommodation above which has subsequently been sold off on long lease hold. The property is let to Sainsbury’s (trading as a Local) for £73,320 per annum on a 10 year lease with 9.5 years remaining. The 1,104 sq ft property was sold in February 2014 for £1.1 million, reflecting £996.38 per sq ft and a 5.3% net initial yield. The property is located in a similar trading location to the subject Property, however offers more income security. 32-38 the Green, Twickenham
The property comprises a detached building arranged over two floors with retail space on the ground floor and ancillary space on part of the first floor. The remainder of the first floor holds residential accommodation. There is also side access to a yard area off which are situated additional storage buildings. The property is located in Twickenham, prominently situated overlooking Twickenham Green to the western end of the town centre. Twickenham Railway Station provides regular services to London Waterloo with a scheduled journey time of approximately 25 minutes. The 3,903 sq ft retail space is let to Sainsbury’s local on a 15 year lease with 10 year tenant break clause at year 10 and is subject to RPI linked rent reviews between 1-3.5%. The current rent is £65,000 per annum exclusive to Sainsburys Supermarkets Ltd plus 6 flats contributing £250 pa on ground rent income. Total rental income equates to £66,500 per annum. 98-100 High Street, Banstead, Surrey, August 2014
The property was purchased by an undisclosed buyer in March 2014 for £1.174 million, reflecting £300.79 per sq ft and a 5.34% net initial yield. The property offers similar income security however is considered to be in a superior macro location. 15.3
Analysis of Investment Transactions
Real estate investments for convenience stores located in the greater London areas are faring well in the current climate. Yield achieved is driven by the location, tenant covenant strength, unexpired term and lot size, although regard is also had to the underlying real estate. The above evidence ranges from 5.30% to 6.09% however, with the exception of 20 High Street, Epsom, KT19, the income security offered are all considered to be superior to the subject property. Whilst 112 Portland Road, SE25 occupies a comparable location to the subject property, it is let for a considerably longer term. We would therefore expect the subject property to transact at a discount to the yield achieved in this transaction. 32-38 the Green, Twickenham offers similar income security and has a similar arrangement of retail on the lower floors and residential units sold off on long leases on the upper floors. This property is however located in a more desirable location. We would therefore expect the subject property to achieve a softer yield. 20 High Street, Epsom, KT19 provides a good indication of the relatively low initial yields that purchasers are prepared to pay for standing convenience store investments with very little income security. We consider that the subject Property, with its longer term would trade at a yield harder than this comparable if the Tesco unit were to be traded separately. Having regard to the above comparables and the views of our investment agency colleagues, we have targeted an initial yield in our valuation of 5.75% for the Tescos income. 16.0
MARKET VALUE
16.1
Valuation Methodology
The Property is a small lot size and provides reasonable retail accommodation in a good location on the main High Street in Banstead. Given the the rack rented nature of the Property; we have adopted an initial yield approach in our valuation. To arrive at our valuation we have adopted yield groupings to reflect the varying quality of the respective income streams. We have applied 5.75% to the national Tesco covenant, 8.0% to the Countrywide income, 6.00% to residential ground rents and 9.00% to the car park income. This produces a net initial yield of 6.25% on the contracted rent. Based on our opinion of market sentiment and the above comparable information we have targeted an initial yield of 6.25%, reflecting an equivalent yield of 6.30%, a reversionary yield of 6.36%. In light of the length of time until lease expiry, we have not adopted any voids or costs in our appraisal.
98-100 High Street, Banstead, Surrey, August 2014
Our valuation calculations have been undertaken using the Argus Capitalisation software. 16.2
Principal Valuation Considerations
Key Attributes
The subject property is well located within Banstead, being adjacent to Waitrose and provides good, flexible retail space.
The property is held freehold.
The property is held on a full repairing lease and is rack rented.
The first floor residential has its own access and does not interfere with access to the ground floor retail. The property’s proximity to the prime pitches gives it a substantial advantage over the other units on the high street.
Lettings in the vicinity and the general lack of vacant units indicate reasonable demand from both local and independent occupiers for well-located retail units within Banstead.
In line with recent auction results for high street retail properties in such locations, there is good demand for this type of asset.
The investment is a small lot size, which would be readily financeable by a wide pool of lenders.
Although the property is currently rack rented, there is potential rental growth in the medium term.
On the basis of supply and demand in the town, should a vacancy occur, we consider that a new tenant could be found within a 6 month period.
Principal Risks
The commercial income is relatively short term which could deter some purchasers.
Whilst rack rented, the Property has not experienced any rental growth recently and prospects, in our opinion, remain limited.
The maisonettes have been sold off on long leaseholds until 2131 so only have a nominal value.
Competition from Epsom, Sutton and Croydon town centres.
98-100 High Street, Banstead, Surrey, August 2014
16.3
Market Value
Having carefully considered the Property, as described above, we are of the opinion that the current Market Value of the freehold interest in the property subject to the existing leases as at 31st July 2014, is: £1,175,000 – One Million One Hundred and Seventy Five Thousand Pounds 17.0
LIMITATION AND NON PUBLICATION
This report is made solely for Green Flash Properties Ltd and no liability can be accepted to third parties for the whole or any part of its contents. No part of this report may be sent to a third party or included in any published document, circular or statement nor published in any way without our written approval.
Signed Mark Whittingham MRICS Partner Registered Valuer For And On Behalf Of STRUTT & PARKER LLP
98-100 High Street, Banstead, Surrey, August 2014
Date
4 September 2014
Annexure 3 ________________________________________________________________________________________________________ COMPANY STRUCTURE ________________________________________________________________________________________________________ The current structure of Green Flash is set out below:
Koral Bay Limited (British Virgin Islands)
Minority shareholder
(Beneficial owner: Stephen Carlin)
0.01%
99.99% Green Flash Properties Ltd (Mauritius) 100%
Banstead Property Holdings Ltd (British Virgin Islands)
Retail Property in the United Kingdom
30
Annexure 4 ________________________________________________________________________________________________________ STATED CAPITAL AND SHAREHOLDING ________________________________________________________________________________________________________ 1.
MAJOR AND CONTROLLING SHAREHOLDERS As at the date of the Listing Particulars, Stephen Carlin is the sole beneficial shareholder of the Company, holding indirectly through Koral Bay Limited.
2.
SHARES ISSUED OTHERWISE THAN FOR CASH With the exception of the 73,959,400 ordinary shares issued to Koral Bay Limited in terms of the Banstead 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
2.1
The stated capital of the Company at the time of the initial listing on the SEM is as follows: Stated Capital Issued shares 7,396,040 ordinary no par value shares Total
7,396,040 €591,683
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 or by way of ordinary resolution may authorise the board to issue shares and/or grant options at any time to any person. On 31 August 2014, the shareholders of the Company passed a resolution authorising the board to issue up to 10,000,000,000 shares and that such authority given to the directors shall be valid for a period of twelve months from the date of the resolution or until the company’s first annual general meeting of its shareholders.
4.
ALTERATIONS TO STATED CAPITAL OF THE COMPANY
4.1.
The Company was incorporated on 14 August 2014 with a stated capital of 1,000 no par value shares.
4.2
With effect from 31 August 2014, the Company issued an additional 73,959,400 no par value shares.
4.3
With effect from the 22nd December 2014, the board of the Company has, by way of written resolutions, altered the number of shares issued such that the stated capital be represented by 7,396,040 ordinary no par value shares.
4.4
As at the last practicable date there have been no further alterations to the Company’s stated capital. Accordingly:
5.
4.4.1
there has been no consolidation or subdivision of shares in the Company since incorporation;
4.4.2
no offer for shares in the Company was made to the public since incorporation; and
4.4.3
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.
31
7.
FRACTIONS No fractions of shares have been issued.
32
Annexure 5 ________________________________________________________________________________________________________ EXTRACTS FROM THE CONSTITUTION OF THE COMPANY ________________________________________________________________________________________________________ 1.
2.
Clause 4 of the Constitution: CAPITAL 4.1
Subject to the provisions of paragraph 18 hereinafter, the Shareholders of the company (the “Members”) in general meeting or by way of ordinary resolution 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.
4.5
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.
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.
33
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 directors.
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 Members 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.
34
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 Members, 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 “en concubinage” 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;
35
(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 Members, 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.
36
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
4
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.
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.
37
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
38
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.
39
Annexure 6 ________________________________________________________________________________________________________ HISTORICAL FINANCIAL INFORMATION OF GREEN FLASH ________________________________________________________________________________________________________ The extracts from the unaudited financial statements of Green Flash for the period 14 August 2014 to 30 September 2014 as set out below, falls under the responsibility of the board of Green Flash.
GREEN FLASH PROPERTIES LTD CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 September 2014 EUR ASSETS Non-Current Assets Investment Property
1,484,378
Current Assets Trade and other receivables Cash and cash Equivalents TOTAL ASSETS
34,146 219,061 1,737,585
EQUITY Equity attributable to equity holders of the Company Stated capital Retained earnings6 Foreign currency translation Total Equity
562,982 16,382 3,892 583,193
LIABILITIES Non-Current Liabilities Borrowings Tenant deposits
1,051,762 0
Current Liabilities Trade and other payables Borrowings Tenant deposits Total Liabilities TOTAL EQUITY AND LIABILITIES Number of Shares in issue
51,979 50,561 0 1,154,392 1,737,585 7,396,040
6
Calculated as revenue for the period of €12,374 less operating and financing costs of €5,465
40
