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1 Tel: Fax: BDO & CO 10, Frère Félix de Valois Street Port Louis, Mauritius P.O. Box 799 May 2, 2017 The Board of Directors Mara Delta 3 rd Floor, La Croisette Grand Bay Mauritius Dear Sirs We have examined the Business Plan of Paradise Property Investments Ltd, in accordance with Section 18.6(a)(ii) of the Listing Rules of the Stock Exchange of Mauritius Ltd, in view of the company s application for listing Class B shares on the Official Market of the Stock Exchange of Mauritius Ltd. Our review was based on assumptions and information provided by management and we have not audited same. Based on our review, nothing has come to our attention which causes us to believe that the operational assumptions laid out in the Business Plan, inclusive of the financial forecast (covering the three-year period ending 2020) do not provide a reasonable basis for the forecast with regards to its sustained viability. Further, in our opinion the forecast is properly prepared on the basis of the assumptions and is presented in accordance with International Financial Reporting Standards. Actual results may also differ from the forecast since anticipated events may not occur as expected and the variation may be material. BDO assumes no responsibility whatsoever in respect of or arising out or in connection with the contents of this certificate to third parties. Afsar Ebrahim BDO & CO Chartered Accountants

2 BUSINESS PLAN PARADISE PROPERTY INVESTMENTS LTD 28 APRIL 2017

3 2 TABLE OF CONTENTS Page 1. Executive Summary 3 2. Corporate Information 3 3. Incorporation and Listing 4 4. Overview of the Company 5 5. Investment Policy 6 6. Share capital Capital Raises on Listing on the SEM Debt Funding Market Research Investments Risks Personnel Key Service Providers SWOT Analysis Structure Diagram Financial Data 28 Annexure A Profile of Board Members 33

4 3 1. Executive Summary Paradise Property Investments Ltd ( Paradise Property or the Company ) was incorporated in Mauritius on 7 February 2017 and the Company is a public company limited by shares holding a Category 1 Global Business License in Mauritius issued by the Mauritian Financial Services Commission. Paradise Property has been established with the primary objective of investing into properties (directly or indirectly) in the hospitality sector within the Indian Ocean region, including among others Madagascar, Seychelles and Mauritius. The Company will identify yield accretive assets that will generate hard currencies return to its shareholders while at the same time partnering with blue chip hotel brands in the different countries to generate sustainable rental income. The capital structure of the Company is made up of two classes of shares as follows:- a. Class A Ordinary shares ( Class A shares ) Delta International Mauritius Limited currently owns 100% of the Class A shares in the Company. b. Limited voting Class B Preference Shares ( Class B shares) As at the date of this business plan, i.e. as at 28 April 2017, there are no Class B shares in issue. The Company is seeking to list its Class B shares on the Official Market of the SEM while its Class A shares will not be listed on any securities exchange. Post listing of the Class B shares on SEM, it is envisaged that the Company will raise further capital from targeted investors (through private placements) to fund its various investments opportunities. In return, Paradise Property will issue new Class B shares to those investors which will be listed on the Official Market of the SEM. The directors of the Company do not anticipate that an active secondary market will develop in the Class B shares. Given that the Company is newly incorporated and that its primary capital raising exercise will only take place concurrently with the listing of the Company s Class B shares on the Official Market of the SEM, the Company does not currently hold any major assets. In anticipation of the approval to list on the SEM, the Company has identified a number of investment opportunities in line with Paradise Property s investment policy as defined in paragraph 5 below. 2. Corporate Information 2.1. Name of Company: Paradise Property Investments Ltd Registered Address: c/o Intercontinental Fund Services Ltd ( IFSL ) Level 5, Alexander House

5 4 35, Cybercity Ebene Republic of Mauritius 2.2. Regulatory Bodies: Financial Services Commission ( FSC ) and, once listed, the Stock Exchange of Mauritius Ltd ( SEM ) 2.3. Constitutive Document: Constitution 2.4. Date of incorporation: 7 February Banker: SBM Bank (Mauritius) Ltd SBM Tower 1, Queen Elizabeth II Avenue Port Louis, Mauritius 2.6 Auditor: BDO & Co 10 Frère Félix de Valois Street Port Louis Mauritus 2.7 Mauritian legal advisor: C&A Law (Registered as a Law Firm in Mauritius) Suite 1005, Level 1, Alexander House 35 Cybercity, Ebene, Mauritius 2.8 SEM authorised Perigeum Capital Ltd representative & Ground Floor, Alexander House sponsor and transaction 35 Cybercity, Ebene, advisor: Mauritius 3. Incorporation and listing Paradise Property Investments Ltd was originally incorporated as a domestic private company in Mauritius according to the Companies Act 2001 under the name of Delta Leisure Investments Limited on 7 February Paradise Property was converted into a public company limited by shares on 21 April On 14 April 2017, the FSC granted a Category 1 Global Business License to the Company in accordance with the Financial Services Act 2007 of Mauritius. The Company has changed its reporting currency from Mauritian Rupee ( MUR ) to Euro ( EUR ) as approved by the Mauritian Registrar of Companies effective as from 20 March The Company has also changed the denomination of its share capital from MUR to EUR under Section 50(4) of the Companies Act 2001, as approved by the Mauritian Registrar of Companies effective as from 20 March 2017.

6 5 The Company does not currently have any class of shares which are listed on a securities exchange. It is envisaged that the Company will seek to list its Class B shares on the Official Market of the SEM. The Company s Class A shares will not be listed on the SEM. 4. Overview of the Company Paradise Property has been established with the primary objective of investing into properties (directly or indirectly) in the hospitality sector within the Indian Ocean region including amongst others Madagascar, Seychelles and Mauritius. The company will identify yield accretive assets that will generate hard currencies return to its shareholders while at the same time partnering with blue chip hotel brands in the different countries to generate sustainable rental income. The Company s objective is therefore to rent out its properties so as to maximize shareholder return from its property portfolio. The Company will follow a value-added strategy with a strong income focus. Paradise Property is led by a team of individuals with significant experience and a successful track record in real estate investment and property asset management. The team comprises individuals with a proven track record in value-added intensive asset management and the management of significant real estate businesses. Reference can be made to Annexure A of this business plan for more information relating to the experience of the directors of the Company. Management s first-hand experience, knowledge and network across the targeted jurisdictions is considered invaluable to the strategic direction and day-to-day management of the Company. The Company has not appointed a Property Asset Manager. As such, the ongoing management of the portfolio of assets will be undertaken by the management team of the Company. However, the Company intends to appoint a Property Asset Manager in the medium term, once the property assets of the Company reach EUR 50 million. The Company s reporting currency is Euro, with the financial year-end of the Company being 30 June each year. It is envisaged that the listing of the Class B shares 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. To broaden its investor base and source additional capital to fund growth aspirations, Paradise Property may consider listing its shares on other recognised international stock exchanges to: provide an additional source of capital to fund the growth aspirations of the Company; enhance potential investors awareness of the Company;

7 6 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 and income growth of the Company; and provide invited investors with an additional market for trading the Company shares. In order to create a platform for future growth both locally, regionally and internationally, a listing of the Class B shares on SEM in Mauritius is envisaged by 15 th May This will provide an investment vehicle which is ideally positioned to raise capital from both within and beyond Mauritius in order to take advantage of investment opportunities in a variety of jurisdictions. The choice to list on the SEM is motivated by several factors, which include reasonable costs of compliance, corporate action thresholds and flexibility. 5. Investment policy 5.1. Objectives, Geographic and Sectoral Focus Paradise Property has been established with the primary objective of investing into properties (directly or indirectly) with triple net, long term leases in the hospitality sector within the Indian Ocean region, including amongst others Madagascar, Seychelles and Mauritius. The company will identify yield accretive assets that will generate hard currencies return to its shareholders while at the same time partnering with blue chip hotel brands in the different countries to generate sustainable rental income. The Company s objective is therefore to rent out its properties so as to maximize shareholder return from its property portfolio. Paradise Property will consider opportunistic investments outside of the above mentioned jurisdictions, where the commercial merits of the opportunistic investments support the Company s overall investment strategy. The proposed investments of the Company in Mauritius shall be subject to receipt of all regulatory approvals, such as approval from the Board of Investment, Prime Minister s Office, amongst others.

8 Investment Strategy The Company s investments may be held through subsidiaries incorporated in Mauritius or foreign jurisdictions for the purpose of maximising tax efficiencies of the Company s investments. The Company s intended strategy is different from most investment companies as it intends to keep the property ownership of its hotels segregated from the hotel business. The Company s strategy is to identify properties that are managed by well-known and reputable hotel brands in the identified jurisdictions and that are able to deliver a rental yield of 7.5% or more in hard currencies (EUR, GBP and USD). Lower rental yield may be considered by the Company on a case-to-case basis if the targeted property forms part of a portfolio of assets managed by blue chip brands. As far as possible, the Company shall aim to secure triple net leases with the various tenants Investment Criteria Investment decisions will be based on the following criteria: Regional analysis; Country specific analysis; Macro and micro analysis; Specific hotel performance (including operating margins, rental to EBITDA margins, occupancy rates and seasonal fluctuations); Ability to provide financial guarantees from the hotel operator (including parent company rental guarantees, substantial lease deposits, etc); Air transportation availability for guests; Analysis of the underlying guests catchment (primarily the region and currency of the paying guests); Geographic analysis; Quality, sustainability and location of asset analysis; Value-added asset management opportunity analysis; Income growth potential; Total return analysis; and

9 8 Well-known hotel brands Investment Source All investments will be sourced through management, any appointed Property Asset Manager, and a select network of hospitality sector contacts principally based in Africa. Management expects to source its investments from both the open market and off-market opportunities due to the collective team s extensive network and relationships across the targeted geographical jurisdictions Investment Process The Company s directors will set the investment policy, parameters and objectives and review and approve each purchase or sale of investment assets together with the Investment Committee. Management together with any appointed Property Asset Manager is responsible for identifying and reporting, to the Company s directors, the availability of new investment opportunities that fall within the investment policy and objectives. Following the identification of a potential new investment opportunity and approval by the Board and Investment Committee, Management is responsible for negotiating the terms of investment and ongoing management of the investment assets. The ongoing management of the portfolio of assets will be undertaken by the management team of the Company. However, the Company intends to appoint a Property Asset Manager in the medium term, once the property assets of the Company reach EUR 50 million Medium Term Goals and Capital Raising The Company anticipates investing approximately EUR million in the first 12 months of operation, which may be funded through a combination of third-party debt and equity capital (through the issue of Class A shares and Class B shares). Equity capital will be raised through private placements of Class B shares to targeted investors after securing a listing on the SEM. The Company s medium term target is to grow the value of investments to EUR 117 million by the end of the financial year ending June 2019.

10 Gearing Policy In order to fund future value-accretive investments, management will look to raise debt financing with a targeted loan to value ratio at, or below, 60% 5.8. Exchange Rate Policy The Company will not take speculative positions on currency exchange contracts. Any such contracts will only be taken as hedges, taking into account its current debt portfolio and cash holdings and the near to medium-term expected debt portfolio and cash holdings Distribution Policy The Company will receive regular distributions from its investments which it will aggregate, and after making provision for expenses, interest and loan repayment obligations, maintenance, capital expenditure, and its current and anticipated operational cash requirements, declare a net amount to shareholders as dividends on a semi-annual basis, subject to all applicable laws. The Board shall declare dividends and effect distributions on a semi-annual basis. The Company will declare 100% of its distributable earnings, provided that the Company satisfies the solvency test and has sufficient liquidity equivalent to 3 months worth of working capital. Class A shares The holders of Class A shares shall rank below the Class B shares in respect of dividend payments and the dividend for Class A shares shall be calculated using the following formula: D= E-B Where: D= Dividends available for holders of Class A shares; E= Distributable earnings of the Company; and B= Total dividend declared to Class B shareholders. And, the dividend per Class A share shall be calculated using the following formula: DN Where: D= Dividends available for holders of Class A shares; and

11 10 N= Number of Class A shares in issue as date of declaration. Class B shares The holders of Class B shares shall be entitled to the first right to dividend of up to 6.25% of the net asset value ( NAV ) per Class B share and the dividend for each Class B share shall be calculated using the following formula: NAV per Class B share as at the date of declaration x 6.25%. The Class B shares dividend will be non-accumulative Targeted Acquisition Yields Management aims to acquire assets with a net forward acquisition yield between 7.5% and 9% Targeted Dividend Returns The Company s core objective is to provide shareholders with property investments in the hospitality industry that yields above average returns on a continual basis with income growth potential. This is intended to be achieved through active value-added management of the acquired portfolio of assets, and through future acquisitions of earnings enhancing properties. In line with this objective, the board expects to generate a dividend yield on Class A shares of between 8% and 10% and a dividend yield on Class B shares of 6.25% from its investments in the targeted geographical jurisdictions, with modest to stable positive earnings growth. Comparing Paradise Property to similar Mauritian listed companies, it is anticipated that the Company will produce an above-average yield with strong income growth, which should in turn result in meaningful capital appreciation for its investors. 6. Share capital 6.1. Class of shares Paradise Equity has two classes of shares, namely: Class A Ordinary Shares

12 11 The Class A shares shall be unlisted shares in the share capital of the Company of par value EUR Limited voting Class B Preference Shares The Class B shares shall be listed on the Official Market of the SEM of par value EUR The number of Class B shares may not exceed 40% of the total number of shares in issue (both Class A shares and Class B shares combined) for any period exceeding 12 months Description of the rights attached to share classes Class A Ordinary Shares Rank below the Class B shares in respect to dividend payment; One vote for every share held at a meeting of the Shareholders Rank equally with Class B shares in all other respects Limited voting Class B - Preference Shares Ranks senior to Class A shares in regard to a first right to dividends, capped at a maximum dividend of 6.25% on the Net Asset Value per Class B share One vote for every two shares held at a meeting of the Shareholders Rank equally with Class A shares in all other respects Rights common to both classes of shares Both classes of shares are entitled to a pro rata share of the entity s net assets in the event of the entity s winding up or liquidation; and Both classes of shares rank below financiers and creditors Shareholders Delta International Mauritius Limited currently owns 100% of the Class A shares in the Company. Delta International Mauritius Limited is a wholly owned subsidiary of Mara Delta Property Holdings Limited, which is listed on the Official Market of the SEM and on the Main Board of the JSE. On incorporation the Company was capitalised by its founder shareholder in an amount of MUR 100. As at the date of this business plan, i.e. as at 28 April 2017, there are no Class B shares in issue. Following approval for listing on the SEM, the Company intends to raise funds with proceeds derived from private placements of Class B shares to targeted investors. It is anticipated that the equity funding will be raised from investors in Mauritius and from international investors (including in South Africa) to whom listed Class B shares will be issued and at the same time,

13 12 meet the minimum market capitalisation requirement of MUR 20 million prior to the initial date of listing. As highlighted above, the Company will seek a listing of its Class B shares on the SEM, which will provide the Company with the ability to issue shares to both on-shore and off-shore investors, having regard to the strength of managements relationships and the known interest of investors in the targeted geographical jurisdictions. The listing on the SEM will provide Paradise Property with access to a global investor base of institutional investors, managed funds, high net worth individuals, retail investors and other sources of capital who view Mauritius as an attractive investment destination. 7. Capital Raises on Listing on the SEM It is anticipated that Paradise Property will raise c. EUR 10 million on listing on the SEM. Paradise Property intends investing these proceeds into a portfolio of hotels in the targeted geographical jurisdictions. A number of possible hospitality targets have been identified by the Company. Discussions with the relevant parties are still at an early stage. Post listing, larger capital raisings may be undertaken through private placements of Class B shares to targeted investors, depending on demand. These proceeds will be invested in line with the Company s investment policy. 8. Debt Funding The Company will also consider raising debt capital in order to fund its various investments in line with its investment strategy. 9. Market Research In line with the Company s investment strategy, the Company will mainly seek opportunities in property assets in the hospitality sector within the Indian Ocean region. It will initially focus in finding opportunities in Seychelles, Madagascar and Mauritius. Some Indian Ocean Islands market analysis 9.1. Seychelles Seychelles has a stable political environment and is situated in a favourable time zone (GMT +4). Government policies are mostly supportive of both domestic and foreign investment. Seychelles population is skilled, with adult literacy rate at 96% and labour force fluent in both English and French. The country also has favourable tax regimes for investment in Tourism, Agriculture,

14 13 Energy and Fisheries sectors and a world class financial centre with no foreign exchange restrictions Trends in hospitality sector Tourism is an important sector of Seychelles' economy. With over 20 % of gross domestic product (GDP) directly attributable to tourism in the recent years 2, Seychelles ensures that its tourism sector will continue to be competitive in the long-run through pro-tourism government policies. In line with the government s commitment towards developing the tourism industry, an enabling policy framework guides the development of the sector as outlined in the country s development plan ( ) and tourism strategy ( ). According to JLL (2016) 3, international arrivals to the Seychelles grew from 128,000 in 2006 to 276,000 in 2015 representing a compounded annual growth rate of 7.9% across the 10-year period. Tourist arrivals have enjoyed significant growth in 2015, increasing by 18.7% y-o-y as at YTD December 2015 as a result of improving air access and more direct flights. There are around 15 Seychelles tourist offices around the world that serve as vital first-hand information links between Seychelles and potential visitors, tour operators, travel agents, and the media. Infrastructure developments and an increase in the number of weekly flights between Abu Dhabi and Mahé as well as more code share agreements between Air Seychelles and several major airlines will help support further growth in tourist arrivals. Several leading international airlines, provide non-stop flights from London, Paris, Rome, Milan, Frankfurt, Dubai, Doha, Johannesburg, Nairobi, Mauritius, Reunion and Singapore and these contribute in maintain the rising trend of Seychelles tourist arrivals and expanding hospitality industry Players in hospitality segment In Seychelles, a wide range of affordable, new and refurbished hotels, self-caterings and Creole guesthouses are joining the ranks of existing 5-star hotels and exclusive island retreats 4. According to the Seychelles Tourism Board, there were 30 large hotels (more than 25 rooms) with 9,082 beds available in The main concentration of hotel rooms in the Seychelles is on Mahé and Praslin islands. With a small future supply pipeline compared to markets such as the Maldives, any increase in demand is likely to have a major impact on trading performance by allowing resorts to upsell and yield more effectively during peak periods and keeping occupancy stable during low periods. 1 Seychelles Investment Board. (2017) 2 World Bank Seychelles Tourism Sector Review : Sustaining Growth in a Successful Tourism Destination 3 JLL 2016: Hotels destinations Indian Ocean 4 Seychelles Tourism Board (2016) 5 JLL 2016: Hotels destinations Indian Ocean

15 14 Occupancy rates for rooms in Seychelles averaged 70% in 2015, which is well in line with peers like Mauritius (73%) and Maldives (64%) 6. The Average Daily Rate was also USD500 in 2015, which places the island in the luxury destination segment 7. Since Seychelles is considered to be a premium destination, Paradise Property can investigate opportunities to acquire property assets currently being managed by luxury hotel groups. These should guarantee steady rental income and returns to the Company. Paradise Property will thus consider investment opportunities in property assets in the hospitality sector in Seychelles Madagascar Madagascar has a challenging history but the government recently passed legislation to promote the country as an investment destination. It has recently established the first ever regulatory framework for public-private partnerships, and it will seek foreign investment to rehabilitate and extend its dilapidated infrastructure in accordance with its five-year National Development Plan. The legislative framework governing investment in Madagascar does not discriminate against foreign investors, nor does it prohibit, limit, or condition foreign investments. Any natural person or legal entity, Malagasy or foreign, is free to invest in Madagascar, in accordance with the laws and regulations in force, and national treatment is not denied to foreign investors in any sector. Despite presenting challenges to investment akin to those encountered in many other developing countries, Madagascar remains a country of vast resources and potential Trends in hospitality sector Madagascar joined the Vanilla Islands (Mauritius, Reunion, Seychelles and Madagascar) to acquire part of the new touristic market via each island s strengths and complementarity. The increase of tourists during the last 3 years, including the arrival of cruise tours, showed the dynamism of the tourism sector. This significant growth of the demand needs to be supported by an appropriate supply, namely in terms of accommodation facilities. Madagascar is especially lacking offers at a high and very high standing (4 and 5 star hotels) 9. Tourism to Madagascar had been deeply affected but the year 2013 was a turning point in Madagascar s political history. After almost five years of political crisis following 2009 s unconstitutional change of government, which led to a deep governance crisis, international isolation and sanctions, Madagascar succeeded in organizing general elections (presidential and parliamentary), a necessary step toward ending the crisis and restoring international and regional relations. As Madagascar once again possesses elected institutions and is recognized as a 6 JLL 2016: Hotels destinations Indian Ocean 7 JLL 2016: Hotels destinations Indian Ocean 8 US Department of State (2016): Bureau of economic and business affairs 9 Economic Development Board of Madagascar

16 15 potential international and regional partner, the conditions are ripe for an improvement in democratic and economic performance 10. Madagascar's tourism industry is a key source of foreign exchange for the country. Since 1990, the number of tourists in the country has grown considerably and 60% of its tourists are French, who form the majority because of cultural and historical links between the countries, and flight routes 11. Paradise Property will thus also consider investment opportunities in the hospitality sector in Madagascar Mauritius Mauritius has established itself as one of Africa's most dynamic and attractive investment destinations increasingly positioning itself as a port for Africa-destined investment. The country's reliable judicial system, low tax environment and liberal investment regime, as well as a number of Double Taxation Avoidance Agreements and Investment Promotion and Protection Agreements, have turned the island into a platform for investments into the African continent. The Mauritian government has been pushing to diversify its economy further, including by turning the island into a high-tech and telecoms hub. Mauritius has a stable political environment and has virtually no security threats. Crime rates are also relatively low. However, global trends and demand pose a risk to the country's growth prospects, given the island's heavy reliance on the external sector Trends in Hospitality sector Mauritius has a well-established tourism market and well-developed hospitality sector. The country has long been a popular beach holiday destination for vacationers from Europe and arrivals from affluent Asia Pacific, and Middle Eastern markets are also increasing as travel connections improve and visa restriction are eased. The country is well placed to keep up with demand, being home to an extensive hotel sector which caters primarily to the high end and luxury travel segment and with visitor numbers increasing steadily. In 2014 tourist arrivals peaked the 1 million mark with tourist arrivals growing by 3.4% annually over the past 10 years. Leisure tourism is the primary purpose of visit, accounting for 93% of arrivals in The segment has grown by 4% per annum since 2004, in line with the global average of 3.9% and remains the primary driver of the hotel market. Latest figures from the Statistics Mauritius Office are more optimistic, showing an increase of 10.8% in arrivals in the country in 2016 as compared to BTI (2016): Madagascar Country Report 11 World Bank(2013): MADAGASCAR Tourism Sector Review: Unlocking the tourism potential of an unpolished gem 12 Statistics Mauritius (2017): Tourist Arrivals 2016

17 16 Mauritius has high growth ambitions which is supported by air access development. The Sir Seewoosagur Ramgoolam International airport with capacity of servicing 4.5 million passengers per annum serves the country s needs for the foreseeable future. The new airport was ranked as the best airport in Africa for 2015 according to the Airport Service Quality Awards Players in hospitality segment Hotels can be split in two groups, namely those belonging to global conglomerates and those that are owned by local companies. Only 25% of hotels in Mauritius are globally branded, with the majority of these positioned in the upper upscale and luxury segments. Globally branded supply has grown by 5% per annum since 2005, compared to total supply growth of 6% per annum over the same period. Globally branded properties are on average 167 keys, with non-branded and locally branded hotels being smaller at 125 keys. Locally operated hotels have historically outperformed the globally branded hotels for two primary reasons: Group ownership of tour operators - This horizontal integration and control of the value chain allow these groups to channel demand into their hotels. Understanding of the market - Established nature of these groups, together with their Mauritius specific experience has enabled stronger performance than the internationals. The concentration of supply in the luxury and upper upscale segments is consistent with the positioning of Mauritius as a high-end destination. However, supply growth in the 3- and 4-star segment over the past 10 years has been stronger than the 5-star segment. All inclusive packages have grown in popularity, both evidence of a shift in the destinations positioning towards a less exclusive, volume driven destination. The hotel performance in Mauritius has seen steady recovery in occupancy since 2013 when the market hit a recent low of 63%. In 2014 this increased to 64% and in 2015 to 73% according to STR Global. During the first half of 2016 the occupancy achieved was 71% which compared to 69% for the same period in Paradise Property will thus also consider investing in bricks and mortars in the hospitality sector in Mauritius. Competitive Advantage The Company s intended strategy is different from most investment companies as it intends to keep the property ownership of its hotels segregated from the hotel business. The Company s objective is therefore to rent out its properties so as to maximize shareholder return from its property portfolio. Industry peer with similar strategy has recently achieved returns above 7%.

18 17 However, this does not limit the Company from considering other acquisition opportunities whereby the Company will also manage the operations of the hotel. The Company will seek to differentiate from its competitors through a targeted investment approach. The Company will systematically seek targets that have potential to generate healthy earnings, focussing on businesses and assets with good track record. The management team has a wealth of experience in managing real estate and hospitality related investments to generate lucrative returns for its stakeholders. The team members have had exposure in structuring investments in the least risky way, investing in bricks and mortars rather than operations. In this way, they were able to own tangible assets and benefit from steady rental income, while minimising tenant default risk. The identified jurisdictions, mainly Seychelles and Mauritius, have well developed hospitality sectors. Most hotel operators in Seychelles and Mauritius boost healthy profits, with some of the hotel groups in Mauritius achieving profitability levels in the double digits. Revenue is mostly earned in foreign hard currencies like the EURO and GBP, which in some cases, allows the investee companies to repay shareholders in foreign currencies. In Mauritius, returns for major hospitality sector players averaged 8% in 2015, which indicates the potential to tap in a profitable market. The Company will thus have a wider pool of existing profitable businesses and assets to consider for investment, which gives the Company a significant advantage over other investment companies targeting different jurisdictions. The Company will also have access to competitive lending rates for debt financing for Mauritian acquisitions as banks in Mauritius generally offer more competitive rates than banks in mainland Africa. This will enable the Company to reduce its cost of capital and achieve higher profitability levels. Conclusion The market analysis performed by Paradise Property shows that there are significant opportunities in the hospitality sector in the targeted geographic jurisdictions. Paradise Property intends to capitalise on these opportunities by making a series of acquisitions in the next 12 to 36 months. The Company aims to benefit from above-market returns earned through its investment in hospitality assets offering strong income returns and value-added asset management opportunities. Whilst undertaking its market analysis, a number of possible property assets in the hospitality sector have been identified by Paradise Property. Discussions with the relevant parties are still at an early stage. As discussions are at an early stage, and the details are highly confidential, details of these potential acquisitions cannot be disclosed at this stage. Note that the proposed listing of the Class B shares of Paradise Propery on the Official Market of the SEM is not dependent on these conclusion of these potential investments.

19 Investments Paradise Property s stated investment strategy is to invest in properties within the hospitality sector in the Indian Ocean region, including Mauritius, Seychelles and Madagascar, and it is intended that these investments will deliver suitable returns for investors through both income and capital growth. Details of the criteria that will be considered when evaluating the types of investments that the Company will target can be found in paragraph 5 above. Given that the Company is newly incorporated and that its primary capital raising exercise will only take place concurrently with the listing of the Company s Class B shares on the Official Market of the SEM, the Company does not currently hold any major assets. In anticipation of the approval to list on the SEM, the Company has identified a number of hospitality investment opportunities in line with Paradise Property s investment policy as defined in paragraph 5 above. 11. Risks The risks of the Company are all of the risks that would typically be associated with investing in the real estate, and to a lesser degree the hospitality sector. The board of Paradise Property understands these inherent risks and will take reasonable and, where possible, appropriate steps to mitigate such risks. The Company is considering to raise further capital once it is listed on the SEM, to avail itself of any investment opportunities that may arise in order to pursue its investment policy. Although there is always a risk that the Company does not raise the capital they intended to, such failure to do so would not impact on the operations of the Company Risk from tenants Where the Company will consider to invest in bricks and mortar, it will be exposed to the risk of tenants inability to pay rental fees. However, the Company will seek to have triple net, long-term rental agreements with strong counterparties, and where applicable parent guarantees and/or step-in clauses with the relevant parent global hospitality group. The rental agreements will have well-defined clauses to ensure tenants always settle rental dues in a timely and fashionable manner. The Company will also ensure that rental agreements include clauses on penalties for late payments and breach of contract. In a worst case scenario, the Company will resume possession of the properties and be forced to seek a single new tenant or multiple tenants for its different properties. Under these circumstances, the Company may be financially strained as a result of no rental income for a period of time. Liquidity risk is further explained under paragraph 11.6.

20 Risk arising from leasehold land Specific to hotel properties is the limited lifetime risk of ownership. Most land found in Mauritius is on the so called Pas Geometriques basis and is not freehold but leasehold. Thus the Company faces the real risk that the Mauritian government may not renew its lease agreement. The Company thus faces the risk of loss of future income as well as loss of property Capital and Portfolio Risk The acquisition of assets carries the investment risk of a loss of capital and there can be no assurance that the Company will not incur losses. Returns generated from the investments of the Company may not adequately compensate shareholders for the business and financial risks assumed. An investor should be aware that it may lose all or part of its investment in the Company. Many unforeseeable events, including actions by various government agencies, domestic and international economic and political developments as well as the global prevalence of terrorism; may cause sharp market fluctuations which could adversely affect the Company s portfolios and performance both in the short and longer terms Currency Risk The Company will also seek to acquire assets located in foreign jurisdictions and denominated in foreign currencies ( the foreign currency ); albeit that primary currency denominations shall be in hard currencies. For those investors whose base or home currency is not the same as the relevant foreign currency, there is a risk of currency losses if the foreign currency depreciates against the investors base currency Stock Market Risk The investments of and in the Company could decrease in value as a result of a decline in global stock markets Liquidity Risk Further, direct investment in hospitality property assets such as hotels is a relatively illiquid investment and long lead times are sometimes required to divest from these holdings. This may affect the liquidity of the Company and the ability to repay investors, if required Leverage and Financing Risk The capital of the Company may be leveraged so as to achieve a higher rate of return. Accordingly, the Company may pledge its securities in order to borrow additional funds for investment purposes. While leverage presents opportunities for increasing the total return of the Company, it has the effect of potentially increasing losses as well. Accordingly, any event which adversely affects the value of an investment by the

21 20 Company would be magnified to the extent the Company is leveraged. The cumulative effect of the use of leverage by the Company in a market that moves adversely to the Company s investments could result in a substantial loss which would be greater than if the Company were not leveraged Interest Rate Risk The company s use of leveraging creates the risk that any substantial increase in interest rates may result in a difficulty in meeting its debt repayment obligations. The company manages its exposure to interest rate fluctuations through the use of hedging instruments, and continuous monitoring of credit metrics and financial ratios Global Political, Economic and Financial Risk As the Company will invest in property assets in the African hospitality sector, it will be exposed to adverse political, economic and financial events in the African continent. The value of the investments could decline as a result of economic developments such as poor or negative economic growth, poor balance of payments history, high interest rates or rising inflation. A similar situation could prevail due to political instability in certain jurisdictions. The Company will take reasonable steps to mitigate against these risks, including risk insurance cover Valuations Risk Valuations of hospitality-related assets are inherently subjective due to the individual nature of each asset and the hospitality operation s primary customer base / consumer market. As a result, valuations are subject to uncertainty and, in determining market value, valuers are required to make certain assumptions and such assumptions may prove to be inaccurate. This is particularly so in periods of volatility or when there is limited transactional data against which valuations can be benchmarked. There can also be no assurance that these valuations will be reflected in the actual transaction prices, even where any such transactions occur shortly after the relevant valuation date, or that the estimated yield and annual rental income will prove to be attainable Regulatory change may affect the Company Legal or regulatory change may affect the Company and impose potential limits on the Company s flexibility in implementing its strategy. Any change to landlord and tenant, planning, trust, tax (including stamp duty and stamp duty land tax) or other laws and regulations relating to the areas in which the Company operates may have an adverse effect on the Company. The levels of, and relief from, taxation may change, adversely affecting the financial prospects of the Company and/or the returns to shareholders.

22 21 The Company is subject to the tax authorities within the jurisdictions it operates and taxes and tax dispensations accorded to the Company may change over time. The nature and amount of tax payable is dependent on the availability of relief under tax treaties in a number of jurisdictions and is subject to changes to the tax laws or practice in any other tax jurisdiction affecting the Company. Any change in the terms of tax treaties or any changes in tax law, interpretation or practice could increase the amount of tax payable by the Company and could affect the value of the investments held by the Company or affect its ability to achieve its investment objective and alter the post-tax returns to shareholders. The level of dividends the Company is able to pay would also be likely to be adversely affected Natural disaster and damage risk Another risk factor lies with the risk of structural damage or other types of damage on the Company s properties as a result of fire, theft, intentional infliction of damage or other acts of God. As a preventive measure, the Company will subscribe to insurance with reputable insurers against damage of property. 12. Personnel Board of Directors The board of directors will be responsible for the management of the Company and strategic decision making and implementation. Annexure A contains the profile of the Company s board members. Attention is drawn to the significant experience and expertise of the board members in the real estate sector, asset and property management. On incorporation, the majority of the directors are resident in Mauritius and the board has ensured that each member has the requisite advisory and management experience and expertise. The Company will at all times seek to uphold corporate governance standards commensurate with international best practice. It is further anticipated that the Board will set up an Investment Committee that will comprise of directors and other members as may be appointed by the board. The Investment Committee s primary role will be to assess identified investment opportunities and to make recommendations to the Board Management and Operational Team A key component to the ultimate success of Paradise Property and the investment in and ongoing management of suitable hospitality assets is the management and operations team, comprising Heidi Rix and Bevan Smith. The management team has a wealth of experience in managing real estate and hospitality related investments to generate lucrative returns for its stakeholders. The team members

23 22 have had exposure in structuring investments in the least risky way, investing in bricks and mortars rather than operations. In this way, they were able to own tangible assets and benefit from steady rental income, while minimising tenant default risk. The team jointly has over 24 years of extensive real estate investment, property and asset management experience. Collectively, management s experience provides the Company with deep rooted expertise in: Hospitality industry; Real Estate Investment, Finance, Asset and Fund Management; Business Origination, negotiation, structuring, investment and acquisition; Financial and Portfolio Management; and Mergers and Acquisitions. Their careers have provided them with first-hand experience of managing real estate businesses through wide ranging economic cycles and across varying geographic locations including Paradise Property s targeted geographical jurisdictions, thereby enabling a fundamental understanding of the property asset class, and its respective risks and returns. As and when other businesses are acquired by the Company, the operations team will expand to include additional experts joining the Group. 13. Key Service Providers Company Secretary It is anticipated that the board will leverage off existing operations within its duly appointed Company Secretary in Mauritius, Intercontinental Fund Services Ltd ( IFSL ) and its associated companies. IFSL is licensed by the Mauritius Financial Services Commission to provide a comprehensive range of financial and fiduciary services to international businesses. All administrative business functions of the Company shall be carried out by IFSL in Mauritius, and they will also act as the company secretary to Paradise Property SEM authorised representative & sponsor and transaction advisor The Company has appointed Perigeum Capital Ltd ( Perigeum Capital ) as its SEM authorised representative & sponsor and transaction advisor. Perigeum Capital holds an Investment Advisor (Corporate Finance Advisory) licence issued by the Mauritius Financial Services Commission.

24 23 Perigeum Capital shall handle the listing application process with the SEM and has been engaged to advise the Company and its directors on compliance with ongoing SEM listing obligations Property Asset Manager The Company has not appointed a Property Asset Manager. As such, the ongoing management of the portfolio of assets will be undertaken by the management team of the Company. However, the Company intends to appoint a Property Asset Manager in the medium term, once the property assets of the Company reach EUR 50 million Management Performance Managing Similar Assets Management has a proven track record in value-added investment through its management of previous property projects, and believes that its knowledge advantage and entrepreneurial outlook enables it to exploit market inefficiencies to provide superior risk-adjusted returns. Previous managed portfolios have generated total returns well in excess of the comparable IPD index. Through its network and previous experience, management plans to acquire mispriced assets where it considers there is an opportunity to create additional value through active asset management Other Third-Party Service Providers In addition, it is envisaged that the Company will outsource a number of functions to specialist third-party service providers. Such service providers may include without limitation: investor relations managers; company administrators; legal counsel; accountants and auditors; and bankers. In this regard, the board of Paradise Property will engage only with reputable, internationally-recognised institutions with established track records for the provision of such services. 14. SWOT Analysis An analysis of the target markets and Company s strengths, weaknesses, opportunities and threats is detailed below: STRENGTHS Seychelles Well-recognized destination image in the international markets for holidays; Politically stable and the tourism sector is prioritized by the government; and Strong partnership between public and private sector.