THE RESORT GROUP DUE DILIGENCE REPORT
CONTENTS 1.0 Executive Summary...4 2.0 The Resort Group Overview....6 3.0 The Resort Group Model...8 3.1 Meliá Tortuga Beach Resort & Spa...10 3.2 Meliá Hotels International...13 3.3 Tour Operators...14 3.4 Cape Verde Overview...15 3.5 Meliá Dunas Beach Resort & Spa...16 3.6 Meliá Llana Beach Hotel & Spa...20 3.7 Meliá White Sands Hotel & Spa...23 4.0 Due Diligence...26 4.1 Due Diligence Documentation...27 4.2 The Resort Group Audited Accounts...28 4.3 Strategic Relationships...29 4.4 Summary Information...30 5.0 Further Information and Contact Details...33 Appendix A: Due Diligence Documentation for Meliá Tortuga Beach Resort & Spa...35 Appendix B: Due Diligence Documentation for Meliá Dunas Beach Resort & Spa...41 Appendix C: Due Diligence Documentation for Meliá Llana Beach Hotel & Spa...46 Appendix D: Due Diligence Documentation for Meliá White Sands Hotel & Spa...53 Updated March 2015 THE RESORT GROUP DUE DILIGENCE REPORT P. 2
1.0 EXECUTIVE SUMMARY
1.0 EXECUTIVE SUMMARY This report has been compiled for clients and prospective buyers of properties and other property based investments by The Resort Group (TRG). TRG are the premier developer of 5-star holiday resorts in Cape Verde. The Resort properties are sold to clients and this report has been created to offer a full insight into TRG s background and credentials. The report contains a full company overview as well as an insight into the current and future developments from TRG. It also details the TRG sales process and investment model, alongside further insight into the financial strength and stability of the group, including an extract from the company profit and loss statement. The final section of the report provides a summary analysis of the investment proposition. THE RESORT GROUP DUE DILIGENCE REPORT P. 4
2.0 THE RESORT GROUP
2.0 THE RESORT GROUP OVERVIEW The Resort Group PLC (TRG) sell freehold ownership of hotel rooms, suites and apartments to individual and fractional investors within new build self-contained Resort destinations. All of the apartments, rooms and suites are individually numbered and registered under separate legal title with the local municipality. TRG s customers typically invest during the off-plan/construction stage of the development cycle in order to maximise the potential investment return. All customers invest in the knowledge that a globally recognised hotel group has contracted to manage their property upon completion as part of the Resort. The hotel operator agreement typically has an initial management term of 15 years, with an option for that to be extended in two further tranches of 5 years. Upon the launch of the Resort, investors receive a proportion of the net revenue derived from the touristic exploitation of their specific property. These payments are typically made to the investor or SSAS on a quarterly basis, net of costs. TRG s proposition is that of an asset backed, hotel managed commercial property investment, generating touristic revenues and the potential for capital appreciation. Corporate Structure Incorporated in 2007, TRG is a Gibraltar based company with registered office at 23 Ocean Village Promenade, Gibraltar with Company Number: 98967. TRG is the ultimate holding company for each of the individual Resort/ operational companies. The individual Resort/operational companies are as follows; Tortuga Beach Resort, S.A. Dunas Beach Resort, S.A. Llana Beach Hotel, Sociedade Unipessoal, S.A. White Sands Beach Hotel & Spa, Sociedade Unipessoal, S.A. TRG Boa Vista Beach Hotel & Spa, Sociedade Unipessoal, S.A. Beach Resorts Management Company, Sociedade Unipessoal, S.A. Condominium Management Company Administração de Condominios, Sociedade Unipessoal, S.A. Resort Group Fiscal Services, Sociedade Unipessoal, S.A. Rhooms Cape Verde, Sociedade Unipessoal, S.A. Corporate Governance Castle Trust Group based in Gibraltar act as company secretary and are regulated and licensed by the Financial Services Commission No: 00229B. Deloitte Gibraltar are appointed as Group auditors, registration number 97704. THE RESORT GROUP DUE DILIGENCE REPORT P. 6
2.0 THE RESORT GROUP OVERVIEW Financial Stability TRG is able to demonstrate its financial strength, profitability and liquidity through consolidated Deloitte audited accounts. P&L extracts are included within this report. Due Diligence Prior to the launch of an investment product, TRG issue a Resort specific legal pack to each of its prospective customers, containing the following due diligence documents; Unencumbered Title Deed to Land (to be developed) Land Registration Certificate Construction License and master plan approval (issued by the local authority) Construction contract signed with building contractor Environmental Impact Study and Approval Signed Hotel Operator Agreement Each of the above legal documents are provided within this Report. Sales & Distribution The TRG offering is promoted to UK residents via independent intermediaries, the processing of these sales are supported by a promoter agreement with First Resort Property Services Limited (FRPS Ltd), registered at 12a Melbourne Business Court, Millennium Way, Pride Park, Derby, DE24 8 LZ with registration number 07355102. FRPS Ltd perform certain sales support, marketing and administrative duties on behalf of TRG and trade as The Resort Group PLC under license in the UK. FRPS Ltd is an independent trading entity and is not a subsidiary company of TRG. Through this promoter agreement, TRG distributes its products and services via 3rd party intermediaries and introducers in the UK, Ireland and Europe. These intermediaries consist primarily of individuals operating in the real-estate and financial services sectors. In addition, TRG works closely with a number of respected and resourced Pension Trustees in the UK, all of whom have conducted a thorough due diligence review prior to approving TRG as an acceptable commercial property investment. A proportion of TRG properties are purchased by UK Pension Trustees and the remainder by traditional cash buyers throughout the UK and Europe. The promotion of TRG property relies predominantly on word of mouth and customer referrals in addition to a growing awareness of the Cape Verde Islands. THE RESORT GROUP DUE DILIGENCE REPORT P. 7
3.0 THE RESORT GROUP MODEL
3.0 THE RESORT GROUP MODEL - OVERVIEW A TRG property offers an investor the opportunity to acquire a hotel room or similar commercial property within a high quality, hotel managed resort. TRG s investment strategy is currently focussed on developing Resort property in the Cape Verde Islands, an area experiencing exceptional year-on-year touristic growth. The investor acquires their chosen property on a freehold basis and all property is individually numbered, titled and registered under the Cape Verdean legal system. Customers typically invest during the off-plan/construction stage of the development cycle in order to maximise the investment return. All customers invest in the knowledge that typically a globally recognised hotel group has contracted to manage their investment upon completion of the Resort. The hotel operator agreement typically has an initial management term of 15 years, with an option for that to be extended in two further tranches of 5 years. Upon the launch of the Resort, investors receive a proportion of the net revenue derived from the touristic exploitation of their specific property. These payments are typically made to the investor or SSAS on a quarterly basis, net of costs. TRG s proposition is that of an asset backed, hotel managed commercial property investment, generating touristic revenues and the potential for capital appreciation. THE RESORT GROUP DUE DILIGENCE REPORT P. 9
3.1 MELIÃ TORTUGA BEACH RESORT & SPA Introduction Meliá Tortuga Beach Resort (MTBR) was the first Cape Verde development by TRG and is situated on Sal Island. It is part of three hotels and resorts being developed by the Group, located on a beach-front known locally as Ponta Preta MTBR comprises of 372 properties, including detached villas, family and hotel suites. All property was originally sold off-plan to private cash buyers. The resort was released for sale in early 2007 and sold out in January 2009. Construction completed in February 2011 and the Resort opened to paying guests on May 10th 2011. The facility is managed and operated by Meliá Hotels International, under their 5-star MELIÃ brand. The Resort has won Trip Advisors Certificate of Excellence award in 2013 and 2014, and was also named Cape Verde s Leading Hotel in 2012, 2013 and 2014 at The World Travel Awards. Resort Plan Cape Verde's Leading Hotel Cape Verde's Leading Hotel All developments by TRG are delivered to meet the exacting standards of the hotel operator so to ensure the highest levels of service, facilities and guest experience. This delivers the best possible hotel occupancy and performance, producing strong and sustainable investor returns. THE RESORT GROUP DUE DILIGENCE REPORT P. 10
3.1 MELIÃ TORTUGA BEACH RESORT & SPA Facilities at MTBR Include: 4 restaurants offering a choice of buffet and fine dining Choice of bars, formal and informal 2 large resort pools, including a swim-up bar at the main pool Kids club and infant pools YHI Spa with treatment rooms, sauna and steam room Fully equipped Gymnasium Investor returns 286 of the resort properties form part of the Hotel Managed Inventory. The remaining units are used privately by owners. Investors receive quarterly rental payments based upon the touristic exploitation of their specific property. THE RESORT GROUP DUE DILIGENCE REPORT P. 11
3.1 MELIÃ TORTUGA BEACH RESORT & SPA Image Gallery THE RESORT GROUP DUE DILIGENCE REPORT P. 12
3.2 MELIÃ HOTELS INTERNATIONAL Meliá Hotels International has long been regarded a genuine world leader in the leisure and tourism industry. Founded over 50 years ago, they are an established global brand and recognised as the world s largest operator of resort based hotels. Throughout the past half century they have continually set new standards in excellence, recently winning the Prince Felipe award for the 2nd time, considered the most prestigious mark of respect in the tourism industry. The award recognises expertise in quality, commitment, innovation and successful entry into new markets. The Group has amassed more than 350 hotels in 35 countries employing 35,000 people and is listed in the exclusive responsible investment index of the Spanish stock exchange, the FTSE4Good Ibex index. Their online network receives over 4.5 million visits per month, generating an annual turnover exceeding 1 billion. Meliá Hotels International has a diverse portfolio of eight brands that manage their Hotels and Resorts throughout the world. The MELIÃ brand is the largest within their portfolio, accounting for more than 100 hotels world-wide. The MELIÃ brand is currently operating Meliá Tortuga Beach Resort and MELIÃ Dunas Beach Resort & Spa and is contracted to operate the following future pipeline resort hotels; MELIÃ Llana Beach Hotel MELIÃ White Sands Hotel & Spa THE RESORT GROUP DUE DILIGENCE REPORT P. 13
3.3 TOUR OPERATORS Meliá Hotels International drive occupancy through a global network of established tour operators and travel companies. The following list of leisure operators are currently marketing MTBR to many tens of millions of customers throughout the World. THOMSON (TUI) - United Kingdom ITS KOLN (REWE) - Germany TUI GERMANY - Germany LUXAIR - Luxemburg FRITIDSRESOR (TUI) - Sweden JETAIR (TUI) - Belgium SECRETS DU MONDE - France SOL FERIAS - Portugal ALPITOUR - Italy VIAJES ABREU Spain TUI NEDERLAND N.V. Netherlands JSC MIR INTERNATIONAL - Russia THOMAS COOK Belgium, Germany, Holland & France THE RESORT GROUP DUE DILIGENCE REPORT P. 14
3.4 CAPE VERDE OVERVIEW Located a few hundred kilometres off the north-western coast of Africa, the former Portuguese colony of Cape Verde is an archipelago consisting of ten islands, boasting a colourful creole of African and European cultures. The Island of Sal, home to Cape Verde s first international airport is currently experiencing the majority of visitor numbers, closely followed by Boa Vista. In addition to its stunning location, Cape Verde is now well on the way to considerable GDP growth through international tourism, which is in turn creating a strong property market. A meteoric rise in tourism is one of the key reasons why TRG has chosen to focus its investment strategy in Cape Verde. Cape Verde has experienced year-on-year touristic growth since 2000. The islands benefit from a year round tropical climate and breathtaking beaches, identifying it as an emerging holiday destination set to rival the Canaries and the Caribbean. Cape Verde is now becoming increasingly accessible for UK tourists with weekly direct flights from London, Manchester, Birmingham and Glasgow. There are also over 20 direct flights a week from European cities. At present the growth in demand from tourists far outstrips the supply of quality accommodation, a trend that is set to continue well into the future. TRG s investment strategy is centred on delivering Resort facilities of the highest standard, allowing its Hotels to capitalise on this over supply of tourists. The Islands also benefit from strict development legislation prohibiting the development of high level, high density projects. This further safe-guard protects against over-supply. Cape Verde Investment Summary Politically stable since independence in the 1970 s Growing economy since late 1990 s Increasing international access routes 115% increase in Tourism since 2000 Year-round climate of 25 C to 30 C Some of the best beaches in the World 5 ½ hours flight time from UK Strict environmental controls and regulations for touristic development THE RESORT GROUP DUE DILIGENCE REPORT P. 15
3.5 MELIÃ DUNAS BEACH RESORT & SPA Introduction Meliá Dunas Beach Resort & Spa (MDBR) is more than twice the size of MTBR with 1,251 properties, from detached villas with private pools to hotel suites, studios and apartments. It has been developed as a tourist destination in its own right and will deliver a wide range of 5-Star facilities to further monopolise the touristic market on Sal Island. Full scale construction commenced in 2010 and the resort opened on 1st November 2014. Resort Masterplan RESTAURANTS R SHOPS & BOUTIQUES O O M 3 BOULEVARD BOUTIQUE S 2 A full range of salon services for a special holiday treat. 19 M MANHATTAN AQUA ANALITA BEAUTY SALON O O 91 R 17 Serving a range of steaks, fish and seafood fresh from the Grill. 3 89-12 Chilled out bar area near the main resort pool. 1 18 High-fashion store offering a designer range of swimwear, beachwear and accessories. S RANCHO 9 1 2 GABI BAR 17 3 A speciality restaurant serving fresh fish and seafood dishes. 18-1 OM 2 Beach front bar area and the perfect setting for cocktails at sunset. ANALITA BOUTIQUE AB O 1 ATLANTIS 20 GABI BEACH S 01 R 11 BARS Mediterranean themed restaurant serving delicious authentic cuisine. Chic and contemporary clothing store located on the Boulevard. 80 M Stylish bar located between the Aqua and Sahel restaurants 24-80 01 VELVET O M 97-1 0 S 01 08-4 9 60 01-13 19 60 9 ROOM S 10 15 14 70 ODYSSEY 8 ROOMS M M O T 32 R 1 H RO OM 4-3 E S 36 1 0 B - 3 O 01-1 6 RO 3 6-5 2 S 10 U O L O M S E R 30 1 V O O M - 3 A S 20 R 34 1 80 O 27 MS M S 0 25 S OM VI L 01 1 D - 3 FUN & ENTERTAINMENT 10 WATER PARK 11 TEEN CLUB / KIDS & CO / MINI KIDS & CO 8 85-2 7 12 THE CASTLE CHILDREN S PLAY AREA POOL BARS 6-2 9 15 MAIO 8 14 Poolside bar for drinks and snacks. 13 18 AMPHITHEATRE 3 @ SPACE 3 THE RESORT GROUP SALES 3 EXCURSIONS Outdoor stage for our nightly entertainment schedule. BRAVO Swim up pool bar situated at the main hotel pool. SAL Main poolside bar serving drinks and snacks throughout the day. FOGO 19 20 Poolside bar for drinks and snacks. THE RESORT GROUP DUE DILIGENCE REPORT Treat yourself to a unique pampering experience for all your senses. OTHER FACILITIES Children s adventure play park and play area. 60 YHI SPA Plenty of fun for all ages at the splash water park. Activities and entertainment for children of all ages. 5 S LA 10 2-2 O LL AS ROO R VI R YOU ARE HERE SPA RANCE 03 4 M - 20 1 ICE CREAM PARLOUR O 01 50 15 ENT 19 Speciality coffee shop. 7 T E L RO O M S O 5 31 S - 20 01 H 016 O O 30-2 O R 01 MACCHIATO O 70 S A piano bar located in the main hotel building. 1 M 19 RESTAURANTS 3 O Hotel late bar for all occasions and parties. 20 3 5 0 R O S R 7 Delicious menu of fresh fish and meat from the grill. VIP lounge area located on the Boulevard. 0 01 6 THE LEVEL RO O GRILLE 16 S 9 1301-13 11 The main buffet restaurant serving breakfast, lunch and dinner. An opulent champagne bar to celebrate your holiday in style. 40 3 SPICES 7 16 10 Convenience store for holiday essentials, gifts and souvenirs. ROOM 17 40 RJ S GENERAL STORE 3 A traditional restaurant inspired by the cuisine of Africa. 88 3 SAHEL 2 Contemporary bar located between the Atlantis and Rancho restaurants. RO O 12-5 RENDEZVOUS 01-5 11 2 90 S 2 TENNIS COURTS VOLLEY BALL COURT POOLS 7 Enquire about property ownership and investment in Cape Verde. A range of days outs, trips and activities for you to enjoy during your stay. CONFERENCE CENTRE 7 READING ROOM 4 WEDDING PAVILION 7 pools located throughout the resort for adults and children. YOGA AREA Internet access available throughout the day. A quiet area to relax and take a break from the sunshine. Enquire about our weddings and blessing service at the main reception. P. 16
3.5 MELIÃ DUNAS BEACH RESORT & SPA Facilities at MDBR: Palm-tree lined boulevard comprising of bars, restaurants and retail outlets. Further restaurants and bars located throughout the resort Nightclub and champagne bar Internet Cafe VIP Lounge 5 communal swimming pools MELIÃ YHI Spa Fully equipped gymnasium Evening entertainment arena for up to 800 guests Outdoor and indoor children s play areas Recreational facilities including tennis courts and beach volley-ball Gabi Club THE RESORT GROUP DUE DILIGENCE REPORT P. 17
3.5 MELIÃ DUNAS BEACH RESORT & SPA Image Gallery THE RESORT GROUP DUE DILIGENCE REPORT P. 18
3.5 MELIÃ DUNAS BEACH RESORT & SPA THE RESORT GROUP DUE DILIGENCE REPORT P. 19
3.6 MELIÃ LLANA BEACH HOTEL Introduction Meliá Llana Beach hotel (MLBH) is the third development on Sal Island by TRG and is situated between MTBR and MDBR. Llana Beach Hotel is set to elevate the guest experience in Cape Verde to a new level of excellence. The 601 all suite hotel was designed by award-winning architect, Alvaro Sans, commissioned by Meliá Hotels International with the specific objective of designing luxurious accommodation to meet the needs of both family and adult groups. Construction commenced in 2012, and is due to open in 2016. Resort Masterplan Facilities at MLBH Include: Separate family and adults only accommodation Two large communal pools Private swim up pools and children s pool Mini-club, family restaurants and crèche THE RESORT GROUP DUE DILIGENCE REPORT P. 20
3.6 MELIÃ LLANA BEACH HOTEL Range of restaurants, including buffet and a la carte, with outdoor terrace grille Wide selection of bars and night club Beach-Club MELIÃ YHI Spa with infinity pool Full equipped gymnasium Royal Service areas known as The Level Construction Gallery March 2015 www.theresortgroupplc.com/our-developments/llana-beach/lbh-gallery View our latest construction images online THE RESORT GROUP DUE DILIGENCE REPORT P. 21
3.6 MELIÃ LLANA BEACH HOTEL CGI Image Gallery THE RESORT GROUP DUE DILIGENCE REPORT P. 22
3.7 MELIÃ WHITE SANDS HOTEL & SPA Introduction Meliá White Sands Hotel & Spa (MWSH) is TRG s first development on the Island of Boa Vista, currently a very close second to Sal in terms of overall visitor numbers. MWSH is currently being sold off-plan in the UK and Europe via our network of Agents. MWSH is the first of six planned developments on Santa Monica Beach, located on the West coast of the Island. Named after its more famous Los Angeles cousin, Santa Monica beach is famed for its equally pristine white sandy beaches and considered to be one of the finest pieces of development land anywhere in the world. MWSH will consist of 835 properties, a range of hotels suites and villas, serviced by the highest quality range of facilities. MWSH was launched for off-plans sales in 2013. Resort Masterplan Facilities at MWSH: Four thematic restaurants within the hotel building Two main buffet restaurants Range of bars and nightclub, including a Sports bar and Champagne bar THE RESORT GROUP DUE DILIGENCE REPORT P. 23
3.7 WHITE SANDS HOTEL & SPA Selection of retail outlets YHI Spa Fully equipped fitness centre Recreation facilities, including tennis courts and volleyball Selection of large resort pools, with swim-up bars and eateries Playground, kids and baby pool Beach Club with pool and swim-up bar Boa Vista Boa Vista (Portuguese meaning good view ) is the eastern most island of Cape Verde. It is located in the Barlavento group of the archipelago. Boa Vista is currently the second most popular island within Cape Verde for tourism, behind Sal. However, that gap is closing with the introduction of more quality accommodation on the Island. The move to develop on Boa Vista represents a strategic response by TRG, given the island is tipped to rival or even exceed visitor numbers on Sal Island over the coming years. THE RESORT GROUP DUE DILIGENCE REPORT P. 24
3.7 WHITE SANDS HOTEL & SPA Image Gallery THE RESORT GROUP DUE DILIGENCE REPORT P. 25
4.0 SUITABILITY FOR INVESTORS
4.1 DUE DILIGENCE DOCUMENTATION Extensive due diligence has been undertaken on all developments by TRG, and the supporting documentation is available to all clients prior to reservation. See below for a summary of the documentation available for each TRG resort. Meliá Tortuga Beach Resort Copies of the following documentation are included in Appendix A Land Registry Certificate Land Title Deeds Construction License Environmental Impact Study Signed Meliá Operator Agreement Meliá Dunas Beach Resort & Spa Copies of the following documentation are included in Appendix B Land Registry Certificate Building License Planning Approval Signed Meliá Operator Agreement Meliá Llana Beach Hotel Copies of the following documentation are included in Appendix C Building License Land Title Deeds Land Registry Certificate Commercial Registration Certificate Signed Meliá Operator Agreement Meliá White Sands Hotel & Spa Foreign Investor Certificate Joint Order for Development Approval Joint Order for Status of Tourism Utility Public Deed of Purchase and Sale Certificate for Land Hotel Management Agreement with Meliá Hotels International THE RESORT GROUP DUE DILIGENCE REPORT P. 27
4.2 THE RESORT GROUP AUDITED ACCOUNTS Deloitte Gibraltar have been appointed as Group auditors. Below shows Profit (after tax) taken from TRG s Audited Accounts for 2008 to 2013 m) 9 8 7 6 5 4 3 2 1 0 2008 2009 2010 2011 2012 2013 Year 60 50 40 30 20 10 0 Source: The Resort Group PLC audited Consolidated Financial Statements THE RESORT GROUP DUE DILIGENCE REPORT P. 28
4.3 STRATEGIC RELATIONSHIPS The TRG brand is associated with the following industry experts. Melia Hotels International Services Provided: Hotel and Resort Operator Company overview provided on page 14 Savills Services Provided: Hotel Investment and Development Savills plc is a global real estate services provider listed on the London Stock Exchange. They have an international network of more than 500 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. Savills (Hotels Investment & Development) provide TRG with specialist touristic advice and assistance in building hotel operator relationships. They compile certain feasibility studies in order that TRG can formulate future touristic strategies and build expertise. BANIF Financial Group GRUPO SANJOSE Services Provided: Construction SANJOSE is a Spanish listed construction company with operations in several countries throughout Europe, America and Africa. With a turnover of 752 million in 2011, SANJOSE is renowned for delivering high quality projects. SANJOSE has already fully completed TRG s first 5-Star Resort in Cape Verde and are currently building Dunas Beach Resort under a maximum price contract, due to complete in 2014. SANJOSE are contracted to build TRG s 3rd project, Meliá Llana Beach Hotel, which is due to commence later this year (2012), completion mid 2015. Deloitte Services Provided: Group Auditors Deloitte is the second largest professional services network in the world based on revenue with 182,000 employees in more than 150 countries around the world. They provide their clients audit, tax, consulting, enterprise risk and financial advisory services. Services Provided: Financial Products BANIF Financial Group was established in 1988 in Portugal, following the take-over of Caixa Económica do Funchal, a bank with over a 100 years experience in the financial services sector. BANIF Group encompasses more than 50 financial companies and employs approximately 6,000 people in 16 countries. BANIF s client base exceeds 1.4 million, with total assets of 16.5 billion. BANIF provide commercial loan facilities for TRG and consumer mortgages to its customers, subject to status. THE RESORT GROUP DUE DILIGENCE REPORT P. 29
4.4 SUMMARY INFORMATION Off-Plan Property Purchase The term off-plan is a well-known concept in the UK. The TRG model follows the same principle as any off-plan purchase, offering customers additional value through incentivised payment plans and off plan discounts. In reality TRG are working in partnership with customers and using deposit funds for the necessary capital to deliver each resort. TRG compensate for this by paying a return throughout the construction period which is generally more favourable than may be achieved by a customer holding such funds on deposit. TRG offer a range of deposits choices from 45% of the purchase price, through to 100%. A variety of incentives are offered to encourage investors to opt for the highest possible option, ensuring TRG generate substantial deposits that are economically viable and that each Resort is adequately funded. This strategy places TRG in a positive cash flow position, greatly reducing reliance on 3rd party funding and removing the need for such costs to be passed on to the investor. In terms of protection, TRG will ring-fence funds and only allow such to be utilised towards the specific development in which the customer is investing. There is no cross subsidy between projects. Moreover, all assets such as land acquisition and build are held within the same development company to which the customer is signing a promissory contract. TRG does make a profit on the sale of properties although this margin is minimal compared to the long term opportunity to the Group through operation of the resort. TRG retain a vested interest in the long-term touristic exploitation of the Resort once operational, which brings with it a certain degree of safety and comfort to its investors. Rental Income Investors receive a proportion of the net revenue derived from the touristic exploitation of their specific property. These payments are typically made to the investor or SSAS on a quarterly basis, net of costs. TRG s proposition is that of an asset backed, hotel managed commercial property investment, generating touristic revenues and the potential for capital appreciation. Below is a summary of information in relation to the touristic and rental performance of Meliá Tortuga Beach. THE RESORT GROUP DUE DILIGENCE REPORT P. 30
4.4 SUMMARY INFORMATION OCCUPANY ON MELIÃ TORTUGA BEACH RESORT SINCE OPENING OCCUPANCY ON MELIÃ TORTUGA BEACH RESORT SINCE OPENING (%) 100 90 80 70 60 50 57 75 62 66 52 79 86 72 84 76 65 67 57 56 50 64 67 87 95 89 93 91 89 75 74 60 68 69 66 95 98 94 96 96 90 75% 87 60 62 54 54 63 99 85 65 40 30 Occupancy (%) Occupancy Average (%) 20 10 MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV DEC 2011 2012 2013 2014 RENTAL YIELD FOR MELIÃ TORTUGA BEACH RESORT CLIENTS SINCE OPENING 7.36 7.34 5.01 4.13 4.36 2.28 THE RESORT GROUP DUE DILIGENCE REPORT P. 31
4.4 SUMMARY INFORMATION Resale and Liquidity Investors own their individual property/hotel suite on a freehold basis with no resale restrictions placed on the customer by TRG. To protect the touristic integrity and performance of each Resort, customers are advised that any new purchaser must fulfil the remaining term of the rental agreement, already signed by the original purchaser. Since 2007, TRG has sold over 2000 properties, averaging 40 properties sales per month. This demonstrates a continuing demand for property in the region, which in turn helps to support a healthy resale market. Specifically for Pension related investments, The Resort Group undertake to liquidate investments in the event the member either passes away, becomes terminally ill or permanently incapacitated should such an event occur prior to the pension scheme going into draw-down. This undertaking allows liquidation to take place within a 6 month period for fractional investments or a 12 month period for the liquidation of a whole property. THE RESORT GROUP DUE DILIGENCE REPORT P. 32
5.0 FURTHER INFORMATION AND CONTACT DETAILS
5.0 FURTHER INFORMATION AND CONTACT DETAILS If you have any questions regarding this report or would like further information from The Resort Group, you can get in touch using the contact details below. Corporate Headquarters The Resort Group PLC 23 Ocean Village Promenade Gibraltar enquiries@theresortgroupplc.com www.theresortgroupplc.com UK Services and Support Office First Resort Property Services Ltd* 12a Melbourne Business Court Millennium Way Pride Park Derby DE24 8LZ Tel: +44 (0)1332 387 818 Fax: +44 (0)1332 613 611 Cape Verde Office The Resort Group PLC Dunas Beach Resort & Spa, Lda Urbanização Ponta Preta - Parcela C-3 Santa Maria Ilha Do Sal * First Resort Property Services Ltd is the UK exclusive promoter for The Resort Group PLC and uses The Resort Group name under licence THE RESORT GROUP DUE DILIGENCE REPORT P. 34
APPENDIX A RESPONSE DOCUMENT TO THE FSA CONSULTATION PAPER P. 35
TORTUGA - DUE DILIGENCE DOCUMENTATION THE RESORT GROUP DUE DILIGENCE REPORT P. 36
TORTUGA - DUE DILIGENCE DOCUMENTATION THE RESORT GROUP DUE DILIGENCE REPORT P. 37
TORTUGA - DUE DILIGENCE DOCUMENTATION THE RESORT GROUP DUE DILIGENCE REPORT P. 38
TORTUGA - DUE DILIGENCE DOCUMENTATION THE RESORT GROUP DUE DILIGENCE REPORT P. 39
TORTUGA - DUE DILIGENCE DOCUMENTATION THE RESORT GROUP DUE DILIGENCE REPORT P. 40
APPENDIX B THE RESORT GROUP DUE DILIGENCE REPORT P. 41
DUNAS - DUE DILIGENCE DOCUMENTATION THE RESORT GROUP DUE DILIGENCE REPORT P. 42
DUNAS - DUE DILIGENCE DOCUMENTATION THE RESORT GROUP DUE DILIGENCE REPORT P. 43
DUNAS - DUE DILIGENCE DOCUMENTATION APPROVAL OF ARCHITECTURAL PROJECT THE RESORT GROUP DUE DILIGENCE REPORT P. 44
DUNAS - DUE DILIGENCE DOCUMENTATION THE RESORT GROUP DUE DILIGENCE REPORT P. 45
APPENDIX C THE RESORT GROUP DUE DILIGENCE REPORT P. 46
LLANA - DUE DILIGENCE DOCUMENTATION BUILDING LICENSE THE RESORT GROUP DUE DILIGENCE REPORT P. 47
LLANA - DUE DILIGENCE DOCUMENTATION PUBLIC DEED OF PURCHASE THE RESORT GROUP DUE DILIGENCE REPORT P. 48
LLANA - DUE DILIGENCE DOCUMENTATION PUBLIC DEED OF PURCHASE (CONT.) THE RESORT GROUP DUE DILIGENCE REPORT P. 49
LLANA - DUE DILIGENCE DOCUMENTATION LAND REGISTRY CERTIFICATE THE RESORT GROUP DUE DILIGENCE REPORT P. 50
LLANA - DUE DILIGENCE DOCUMENTATION LLANA COMMERCIAL REGISTRATION CERTIFICATE THE RESORT GROUP DUE DILIGENCE REPORT P. 51
LLANA - DUE DILIGENCE DOCUMENTATION SOL MELIÁ AGREEMENT THE RESORT GROUP DUE DILIGENCE REPORT P. 52
APPENDIX D THE RESORT GROUP DUE DILIGENCE REPORT P. 53
WHITE SANDS - DUE DILIGENCE DOCUMENTATION FOREIGN INVESTOR CERTIFICATE REPUBLIC OF CAPE VERDE Ministry of Finance and Planning Office of the Minister FOREIGN INVESTOR CERTIFICATE No. 01/1E/2012 NAME: THE RESORT GROUP PLC REGISTRY: United Kingdom MAIN OFFICE: United Kingdom FOREIGN INVESTMENT TRANSACTION: Construction of a five-star hotel, with 835 rooms and various support facilities, including a beach club, wedding pavilion, conference rooms, kids club and theme restaurants. INVESTMENT BENEFICIARY COMPANY: WHITE SANDS BEACH HOTEL Sociedade Unipessoal, S.A. DEADLINE FOR START OF ECONOMIC ACTIVITY: 18 months from the issue date of this certificate REGISTRY: Under the terms of article 12 of Regulatory Decree 1/94 of 03 January, the sponsor must register the investment under this proposal at the appropriate offices of the Bank of Cape Verde (Banco de Cabo Verde) within 30 days of the investment transaction s performance. This document certifies that the entity identified above is duly authorized to perform the foreign investment, under the terms of Law no. 89/IV/93 of 13 December, and in compliance with request no. 001/2012, and is entitled to all of the rights, guarantees and incentives under said law. All public entities to whom this certificate is presented are requested to handle the issues brought by its owner with all due speed and diligence, in accordance with applicable legal and regulatory provisions. Issued in the city of Praia on 09 May 2012 (Minister of Finance and Planning) THE RESORT GROUP DUE DILIGENCE REPORT P. 54
WHITE SANDS - DUE DILIGENCE DOCUMENTATION JOINT ORDER FOR DEVELOPMENT APPROVAL [stamp:] Ministry of Tourism, Industry and Energy [stamp:] Ministry of Environment, Housing and Territorial Planning JOINT ORDER Approves the Melia White Sands Hotel & SPA Detailed Development Project, abbreviated POD White Sands, located in the sub-zone of Porto de Santa Mónica, ZDTI 1 of Santa Mónica. Whereas, as the managing entity of the ZDTIs of Boa Vista and Maio Islands, the Boa Vista and Maio Island Tourism Development Society (SDTIBM) is specifically responsible for approving Detailed Development Projects (PODs) in close collaboration with the central territorial planning office; Whereas, under the terms of article 15 (5) of Law no. 75/VII/2010 of 23 August, which establishes the legal scheme for the declaration and operation of Special Tourism Zones, the POD s approval depends on the approval of the Tourism Development Plan (POT) and, in this specific case, the POT of the ZDTI of Santa Mónica, which occurred under Ministerial Order no. 21/2009 of 08 June, as amended by Ministerial Order no. 25/2012 of 08 June; In view of the fulfillment of the legal requirements for the approval of the Melia White Sands Hotel & SPA Detailed Development Project, abbreviated POD White Sands, as laid out in article 17 (1) and (2) of Law no. 75/VII/2010, and in view of the approval of the respective environmental impact study; And finally, whereas the tourism development plans (POT and POD) have the nature of an administrative regulation, and their binding provisions must be observed by the management, by those managed and by tourism developers; Therefore: 1 ZDTI, or Full Tourism Development Zone, is a classification of Special Tourism Zone, as established by Cape 1 Verde s Translator s Legislative note: Decree ZDTI, or no. Full 02/93 Tourism of 01 February. Development ZDTIs Zone, are areas is a having classification outstanding of Special geographic Tourism conditions Zone, as established and landscapes by Cape particularly Verde s suited Legislative to tourism. Decree no. 02/93 of 01 February. ZDTIs are areas having outstanding geographic conditions and landscapes particularly suited to tourism. THE RESORT GROUP DUE DILIGENCE REPORT P. 55
WHITE SANDS - DUE DILIGENCE DOCUMENTATION JOINT ORDER FOR DEVELOPMENT APPROVAL CONT D [stamp:] Ministry of Tourism, Industry and Energy [stamp:] Ministry of Environment, Housing and Territorial Planning Under the provisions of article 17 (4) of Law no. 75/VII/2010 of 23 August, we hereby rule the following: 1. The Melia White Sands Hotel & SPA Detailed Development Project, abbreviated POD White Sands, located on lot POD.CSM.06 in the sub-zone of Porto de Santa Mónica, ZDTI of Santa Mónica, whose regulations are published as an attachment to this order and are an integral part hereto, is hereby approved; 2. The deadlines for the completion of work, construction and tree planting shall be those stated in the POD White Sands Regulations approved by the SDTIBM General Assembly; 3. The original documents comprising the POD White Sands referred to in article 3 of the respective regulations shall be kept at the SDTIBM s main office; 4. This order shall enter into force on the day following that of its publication. Praia, 22 November 2012 (The Minister of Tourism, Industry and Energy) (The Minister of Environment, Housing and Territorial Planning) Humberto Santos de Brito Antero Veiga THE RESORT GROUP DUE DILIGENCE REPORT P. 56
WHITE SANDS - DUE DILIGENCE DOCUMENTATION JOINT ORDER FOR STATUS OF TOURISM UTILITY [stamp:] Ministry of Tourism, Industry and Energy [stamp:] Ministry of Finance JOINT ORDER STATUS OF TOURISM UTILITY WHEREAS: The company WHITE SANDS BEACH HOTEL & SPA, S.A. has requested the status of tourism utility for a new installation 1 for the tourism development of the same name, to be installed in Santa Mónica, Boa Vista Island, Cape Verde; As it involves: - A project with an estimated investment of 117,802,000 (one hundred and seventeen million, eight hundred and two thousand euros) which will create 529 direct job positions; - A project aimed at promoting the tourism business, which will help increase the country s accommodation capacity and enhance the quality of service; - A project that is in line with the national policy laid out for the tourism sector, with regard to the type and level of services. WE HAVE DECIDED TO GRANT THE STATUS OF TOURISM UTILITY FOR A NEW INSTALLATION to the WHITE SANDS BEACH HOTEL & SPA tourism development under the terms of article 5 of Law no. 55/VI/2005 of 10 January. (The Minister of Tourism, Industry and Energy) (The Minister of Finance and Planning) City of Praia, 11 April 2012 1 Translator s note: Tourism utility for City a new of installation Praia, 11 April (utilidade 2012 turística de instalção) is one of several 1 tourism utility statuses under article 2 of Cape Verde s Law no. 55/VI/2005 of 10 January 2005, in this case Tourism utility for a new installation (utilidade turística de instalção) is one of several tourism utility statuses under applicable article to 2 new of Cape tourism Verde s developments Law no. 55/VI/2005 or establishments. of 10 January 2005, in this case applicable to new tourism developments or establishments. THE RESORT GROUP DUE DILIGENCE REPORT P. 57
WHITE SANDS - DUE DILIGENCE DOCUMENTATION PUBLIC DEED OF PURCHASE AND SALE CERTIFICATE FOR LAND REGIONAL SECOND CLASS NOTARY'S OFFICE - BOA VISTA Av. 4 de Julho - C.P. 38 - Sal-Rei - Boa Vista NOTARY: JACILENE ROMI FORTES LOPES CERTIFICATE SALE AND PURCHASE DEED Issued on 30th October 2012, on page 08/12 of volume no. 09 SIGNATORY PARTIES: Boa Vista and Maio Islands Tourism Development Corporation White Sands Beach Hotel & SPA, Sole Proprietorship, SA THE RESORT GROUP DUE DILIGENCE REPORT P. 58
WHITE SANDS - DUE DILIGENCE DOCUMENTATION PUBLIC DEED OF PURCHASE AND SALE CERTIFICATE FOR LAND CONT D REGIONAL SECOND CLASS NOTARY'S OFFICE - BOA VISTA REGIONAL Av. SECOND 4 de Julho CLASS - C.P. NOTARY'S 38 - Sal-Rei OFFICE - Boa Vista - BOA VISTA Av. NOTARY: 4 de Julho JACILENE - C.P. 38 ROMI - Sal-Rei FORTES - Boa LOPES Vista NOTARY: JACILENE ROMI FORTES LOPES Signatory, Assistant, Adriano Jorge Noro, of Regional Second Class Notary's Office, Boa Vista Signatory, Assistant, Adriano Jorge Noro, of Regional Second Class Notary's Office, Boa Vista CERTIFIES CERTIFIES ONE - That the photocopy appended to this certificate accurately represents the original. ONE - That the photocopy appended to this certificate accurately represents the original. TWO - That the contents entered onto page 08/12 of the volume for various deeds, number 9 were drawn from this Deed Office. TWO - That the contents entered onto page 08/12 of the volume for various THREE deeds, number - That it 9 occupies were drawn 05 pages from this that Deed bear Office. the stamp of this Office, all pages being numbered and initialled by myself. THREE - That it occupies 05 pages that bear the stamp of this Office, all pages being numbered and initialled Sal-Rei, by myself. 30th October of Two Thousand and Twelve Sal-Rei, 30th October of Two Thousand and Twelve [Translators Note: throughout this document the $ symbol represents the Cape Verdean escudo currency] [Translators Note: throughout this document the $ symbol represents the Cape Charges: Verdean escudo currency] Charges: Notary Fees - $ 600 Notary Seal - $ Fees 200 - $ 600 Seal TOTAL - $ - 200 $ 800 TOTAL Confirmed - $. 800 Confirmed Registered. under no. 169/2012 Registered under no. 169/2012 Throughout this document the $ symbol represents the Cape Verdean escudo currency THE RESORT GROUP DUE DILIGENCE REPORT P. 59
WHITE SANDS - DUE DILIGENCE DOCUMENTATION HOTEL MANAGEMENT AGREEMENT WITH MELIÁ HOTELS INTERNATIONAL THE RESORT GROUP DUE DILIGENCE REPORT P. 60
NOTES THE RESORT GROUP DUE DILIGENCE REPORT P. 61
NOTES THE RESORT GROUP DUE DILIGENCE REPORT P. 62
NOTES THE RESORT GROUP DUE DILIGENCE REPORT P. 63
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