port hinchinbrook resort unit trust invitation to invest product
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PORT HINCHINBROOK RESORT UNIT TRUST
Invitation to Invest
Product Disclosure Statement September, 2013
Andrew du Boulay LLB, B.Ec (Hon), GDLP, JP
Managing Director
AA New Image Developments Pty Ltd
133 Tompkins Rd Shaw, Qld. 4818
Tel: 61+7+ 4066 2000 Fax: 61+7+ 4066 8271
Email: [email protected]
CONFIDENTIAL
This document includes proprietary information of and regarding AA New Image Developments Pty Ltd. Any offering or interests in the Port Hinchinbrook Resort Unit Trust is made in compliance with Commonwealth and State corporations law. This document is provided for informational purposes. You may reproduce this document in whole or in part. There are no restrictions or limitations as to its circulation or use.
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Table of Contents
1. EXECUTIVE SUMMARY
2. BUSINESS OVERVIEW
3. SUCCESS FACTORS
4. THE MANAGEMENT TEAM
5. THE INVESTMENT ON OFFER
6. HOW THE PORT HINCHINBROOK UNIT TRUST SHALL WORK
7. WHAT THE TRUSTEE WILL DO
8. PLANNED EXPENDITURE
9. EXPECTED OPERATIONAL REVENUE OVER THREE YEARS
10. PLANNED COMPANY FLOAT & INITIAL PURCHASE OFFER
11. CUSTOMER ANALYSIS
12. COMPETATIVE ADVANTAGES
13. APPENDIX A PROPERTIES UNDER TRUSTEE MANAGEMENT
14. APPENDIX B KEITH WILLIAMS’ LEGACY
15. APPENDIX C AN EXPLANATION OF UNIT TRUSTS
See separate documents for:
INDEPENDENT MARKET ANALYSIS
PORT HINCHINBROOK RESORT UNIT TRUST DEED
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1. EXECUTIVE SUMMARY
This document sets out an investment opportunity relating to the Port
Hinchinbrook Resort Project in North Queensland. Based on the success of
Keith Williams’ other development projects, Port Hinchinbrook Resort is a
continuation of Mr Williams’ legacy to the Queensland tourist industry. While
the land and waterways mentioned in this prospectus are presently
encumbered, AA New Image Developments (AANID) is seeking equity
partners to payout those liabilities, fund renovations and initiate stage 2
development.
The mechanism for attracting equity partners is via a Unit Trust with an
expected vesting period of three years. Although Unit holders cannot redeem
their investment within those three years, their Units may be traded or sold
onto other parties with written notice to the Trustee. By December 2016 it is
planned that the Port Hinchinbrook Resort will be floated on the Australian
Stock Exchange (ASX) thus generating return on investment (ROI) gains of
15% per annum paid out after the three year vesting period. The projected
internal rate of return (IRR) calculates out at 29%.
Our expected returns of 15% p/a can be considered robust when compared
with share trading. Australian shares have returned only 12% per annum
compared to 6% for bonds and 4.8% for cash (August 2012 ASX Investor
Update). Additionally, this investment is very secure. The Trust Fund is
backed by quality real estate which will not be offered as security for any form
of loan. Unit holders will receive quarterly financial reports and have the
opportunity to vote on any proposal which may involve selling off trust
property prior to the end of the vesting date. In the tradition of joint ventures,
our Investors have true collaboration with the added advantage of being able
to vote on major business decisions.
2. BUSINESS OVERVIEW
Based in Townsville Queensland, AA New Image Developments Pty Ltd
(AANID) is a privately owned property development company with a strong
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background in the regional housing market and construction industry. Our
Company Directors have a wealth of experience in the construction industry
which led to AA New Image Developments’ acquisition of the Port
Hinchinbrook Resort from the Williams Corporation in June 2013; this being
30% below its pre cyclone Yasi valuation which stood at AU$27 million.
The principal acquisition of the Port Hinchinbrook development is 5.076
hectares of land in the centre of the Resort (as Lot 99 on SP 190029) that
includes a marina terminal, administration buildings, 200 pax restaurant, bar,
small shopping centre, pool, tennis courts, and about another 3 hectares of
vacant land suitable for future strata titled townhouses and an international
hotel.
Other assets include the Marina (as Lot 58 on SP 116825 and Lot 54 on
SP115194); approximately 145 hectares of vacant adjoining land (Lot 170 on
SP177389, Lot 4 on SP168551, plus Lots L1-2 on RP739118 and Lots 5,6 & 7
on RP732868) ready for stage 2 development; and the Hinchinbrook Island
Wilderness Resort with 23 secluded tree-house accommodation units in
Australia’s largest island national park. In total, there is approximately $20
million worth of quality property to be held in trust under the Port Hinchinbrook
Resort Unit Trust (PHRUT). For a full list of land holdings see Appendix A.
History
Port Hinchinbrook Resort was the brainchild of legendary resort developer
Keith Williams1 who passed away in 2011. Mr Williams is famous for
promoting Queensland as an international tourist destination; his other
successful developments included Sea World on the Gold Coast and Hamilton
Island Resort in the Whitsundays. The success of those two developments is
testimony to Mr Williams’ visionary outlook and faith in the Queensland tourist
industry. Yet with his passing, the Port Hinchinbrook Resort development
remains an uncompleted project.
1 See the Legacy of Keith Williams in Appendix C at the rear of this document.
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The Resort is in a state of disrepair due to damage caused by cyclone Yasi2
which struck in February 2011. Keith Williams died that same year leaving the
restoration and management of the Resort to his son Ben Williams. Due to
commercial reasons, the portion of the Resort owned by the Williams
Corporation has not been rebuilt since Yasi and no progress has been made
to continue on with the stage 2 development.
The marina was extensively damaged, the restaurant and bar remain closed
and the administration building and shopping centre are vacant. AANID will
repair /rebuild those facilities and continue on with the stage 2 development.
The Resort was developed over the past 15 years (with most buildings being
built in the mid 2000s) so everything is relatively new. It will not take a lot of
effort to get the 200 seat restaurant / function centre, bar and shops
operational again. PHRUT plans to lease these facilities to external
stakeholders as a continuous revenue source once they have been
refurbished. It is envisioned these business activities will breathe life back into
the Resort and attract buyers for other real estate sub-divisions.
Williams Corp had estimates from outside contractors to rebuild the marina in
the vicinity of $4 million but being in the building, construction and heavy
transport industry, AANID has calculated it can restore the marina with a
much lower figure (approximately $1.6million).
The Resort complex incorporates 300 residential home sites that are privately
owned as well as other businesses that cater to the boating /recreational
fishing industry. Within the Port Hinchinbrook complex there is other privately
owned tourist accommodation being provided by independent sources. The
Township of Cardwell is a thriving tourist destination as well as a popular stop
over point between Townsville and Cairns. Although Domestic Tourism
2 With a central pressure of 930 hectopascals and 10 minutes of sustained winds at 215 km/h
with 3-second gusts estimated at 285 km/h, the cyclone was the worst in Queensland's recorded history. The storm surge combined with an extra high tide and waves of 12 metres forced its way up the Hinchinbrook Channel and into the marina. With the category 5 cyclone coinciding with the extra high tide, it made this a one in one thousand year event.
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remains healthy, International Tourism has increased by 12%. Both the local
community and tourists patronised the resort and facilities before cyclone Yasi
so it just needs a concentrated effort to restore Port Hinchinbrook to its former
glory.
AA New Image Developments Pty Ltd is taking on the task of completing Mr
Williams’ vision. Consequently, we are looking for investors who can
appreciate the unique opportunity sharing in the rewards that this valuable
tourism and real estate project will generate. Not only does the Port
Hinchinbrook Resort cater to the growing tourist market, but a substantial
portion of the project is dedicated to future marketing fee simple allotments to
the general public. It is both a real estate development project with provisions
for long term revenue streams via the tourism and hospitality service industry.
This is an investment opportunity which repeats the success of previous Keith
Williams’ projects, has continued growth forecasts within the tourism industry
that is backed with a solid asset base of in-situ bricks and mortar and
premium real estate.
With experts in the tourism and hospitality management sector on board who
specialise in the Chinese tourist and real estate market, AANID believes that
this project is a secure investment that will generate considerable revenue for
years to come. The independent market analysis report (presented as an
attachment to this document) supports our calculations with convincing
numbers.
The funding for this project is solely by way of private equity managed through
the Port Hinchinbrook Resort Unit Trust (PHRUT)3 administered by AA New
Image Developments Pty Ltd which acts as the Trustee owing fiduciary duties
to the investors and beneficiaries of the trust property. The Trustee believes
the Port Hinchinbrook Resort Project should not be encumbered with bank
mortgages thus avoiding any financial risks associated with rising interest
rates, economic contractions or bank foreclosure. It is envisioned that for
future funding requirements (only if required), the company could expand the
3 For a full explanation of Unit Trusts and how they operate, see Appendix C plus refer to the Trust
Deed.
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Unit Trust membership or sell off some minor assets. The desired goal is to go
public listing Port Hinchinbrook Resort on the Australian Stock Exchange
(ASX) via an initial public offering (IPO). It is predicted that this scenario would
prove very successful for investors who secured ownership at the early stages
of this project. The vesting period of the Unit Trust is envisioned to mature
within three years and coincide with the $50,000,000 IPO thus rewarding the
initial investors once the company goes public.
3. SUCCESS FACTORS
AA New Image Developments Pty Ltd is uniquely qualified to succeed with the
Port Hinchinbrook Resort Unit Trust due to the following reasons:
This project was the brain child of Keith Williams who had a proven
track record of developing successful real estate and tourism
destinations within Queensland.
The grand design of the Port Hinchinbrook marina, resort, golf course
and residential development for stage 2 has already been planned.
Approval and Construction of stage 2 has not commenced but it
provides a continuation of a strategic development project in a unique
area of Australia.
Prior to cyclone Yasi and the death of Keith Williams, Port
Hinchinbrook was a thriving community. It just needs leadership to re-
build and continue on with Keith’s vision.
With the effects of the Global Financial Crisis coming to a close and the
fact that property prices have declined by 30% and bottomed out over
the past 5 years, it is an ideal time to re-invest in this prime real estate.
The management team behind AA New Image Developments is very
experienced, with skill sets encompassing, building and construction,
legal, economic and financial professions as well as experts in the
tourism and hospitality management sector. Additionally, several
members of our management team are fluent in Mandarin and have
influential connections within the Chinese tourist market.
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Port Hinchinbrook is a unique location on the doorstep of the Great
Barrier Reef ~ one of the world’s greatest natural attractions with no
other competition. It is the only approved tourist resort and residential
marina between Cairns and Townsville with spectacular fishing and
boating.
Monopolistic position ~ there is unlikely to be other marina complexes
approved by the Queensland government for this part of the Great
Barrier Reef. The Marine Parks Act 1982 & 2004 (Qld), the Coastal
Protection and Management Act 1995 (Qld), Great Barrier Reef Marine
Park Act 1975 (Cth), the Nature Conservation Act 1992 (Qld), and the
Environment Protection and Biodiversity Conservation Act 1999 (Cth)
provide a legal framework to protect and manage nationally and
internationally important flora, fauna, ecological communities and
heritage places. Departments like the Queensland Parks and Wildlife
Service, the Environmental Protection Agency and the Great Barrier
Reef Marine Park Authority will resist further development along the
Queensland coast giving Port Hinchinbrook Project a monopolistic
position in the market.
The target market for both tourists and real estate sales is, in addition
to the local market, the Chinese market with international connections
already in place.
The Port Hinchinbrook Project also caters to the needs of the local
boating and recreational fishing sector.
The externally commissioned and independent market research and
analysis report by Growthink Inc. (accompanying this document)
strongly signifies that the Port Hinchinbrook Resort is a viable
investment. The AANID management team in consultation with the Port
Hinchinbrook Resort Unit Trust investors will ensure that it stays that
way.
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4. THE MANAGEMENT TEAM
Managing Director, Andrew du Boulay, LLB, B.Ec (Hon), GDLP, JP
Director of International Tourism, Dr Shu-yun Chang, BBA, MBA, Ph.D.
Associate Professor Shu-yun Chang has worked for the Graduate
Institute of Recreation Tourism and Hospitality Management at
National Chiayi University, as Head of the Department of
International Tourism Management at Tamkang University and
as a senior lecturer in the Department of Tourism and Leisure
Management at Tung-Fang Institute of Technology. She is a
highly motivated, results-oriented individual with hands-on
experience within the tourism industry. This practical experience
is combined with sound academic qualifications. She is
proficient in building and maintaining excellent rapport with all
levels of management, staff and clients and has a proven ability
to apply sound analytical decision making and problem solving
skills to the tourism product.
Andrew has been involved in the construction /infrastructure
industry for over 30 years and appreciates the contribution the
private sector gives to the national economy. He has held
numerous supervisory and managerial positions for large
commercial enterprises related to hi-rise construction plus the
coal, oil and gas industries. He has degrees in economics and
law and has lectured at universities in Australia and overseas.
His management experience and academic qualifications are
valuable assets to understanding the complexities of the free
market from both a micro and macro-economic perspective.
Andrew brings that wealth of experience to the Port
Hinchinbrook project to ensure goals are met, assets are
protected and profits realized.
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Chairman of the Board of Directors, Anthony Dotta
Director of Project Management and Construction Services, Robert Bisetto
Anthony (Tony) has been involved in the building construction,
transport and heavy lifting industries for over 40 years. He has
been self employed for most of that time managing several
successful businesses in NSW and Qld. As well as hands on
practical experience, he heads a competent team of professionals
to manage the Port Hinchinbrook re-development project. He
grasps concepts quickly to come up with a variety of practical
solutions for problematic situations and keeps vigilant watch
over all matters relating to the profitability of his business
investments. With his commitment to complete the vision of
making the Port Hinchinbrook Resort amongst the best there is,
this project is assured of success under Tony’s leadership.
Robert has been involved in the construction /infrastructure
industry for over 35 years. Specialising in multiple dwelling and
hi-rise construction, he has a creative flair that surpasses
contemporary building design. In addition to being the director
of a successful building company Robert also teaches at TAFE.
Originally from Sydney where the competition in the building
industry is fierce, he is bringing his skill set to North Queensland
where he will apply the same competitive managerial spirit to
the Port Hinchinbrook re-development project. In addition to his
project management skills and being a certified trainer, Robert is
also a renowned horticulturalist specialising in the cultivation
and breeding of exotic orchids which will blend in perfectly with
Port Hinchinbrook.
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5. THE INVESTMENT ON OFFER
AA New Image Developments Pty Ltd (AANID) is the legal owner of
substantial land and property holdings in and around the Port Hinchinbrook
Resort development which it has assigned to the Port Hinchinbrook Resort
Unit Trust. At present, AANID holds 23% equity in those real estate holdings
with 77% under finance. AA New Image Developments is seeking venture
capital / equity partners to payout $12,000,000 of debt owed on the Resort
land and fund another $13,000,000 of future development work.
AA New Image Developments Pty Ltd intends to fulfill the dream of legendary
resort developer Keith Williams who had a 45 year record of success
developing prestige tourist locations along the Queensland coastline. We are
committed to completing the project that Mr Williams initiated over twenty
years ago. To do that, AANID is seeking private equity funding by offering
portions of their property holdings to investors in the form of a Unit Trust. AA
New Image Developments has created the Port Hinchinbrook Resort Unit
Trust which will be the investment vehicle to fund this re-development work.
Port Hinchinbrook Resort Unit Trust holds equitable interests in Lot 99 on SP
190029 within the Port Hinchinbrook Resort complex; which includes the
restaurant & bar, marina terminal and shopping centre. Lot 99 covers 5.076
hectares at the centre of the Port Hinchinbrook Resort. Lot 99 is being
subdivided into smaller parcels of land which will be developed into 20
waterfront apartments, 10 resort villas and a hotel with 4-5 star
accommodation facilities. There is great potential for significant capital gains
from this property as the property was acquired at the bottom of the real
estate cycle.
Port Hinchinbrook Resort Unit Trust holds equitable interests in Lot 58 on SP
116825 and Lot 54 on SP115194 within the Port Hinchinbrook Resort complex
which includes both the freehold and government leasehold of the private
marina and its public waterways. Amongst other things, the Unit Trust will
reconstruct and manage the marina. As part of the reconstruction process,
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there will be made available an extra 100 private berths for future sale as well
as long and short term leases. The sale price for the average berth will be
around $60,000 with ongoing maintenance fee charges of $3,000 per annum.
The marina represents potentially $6,000,000 in future sales with the
advantage of continuing long term income.
Port Hinchinbrook Resort Unit Trust holds equitable interests in Lot 170 on
SP177389, Lot 4 on SP168551, plus Lots L1-2 on RP739118 and Lots 5 -7 on
RP732868. The total land area adjacent to the Port Hinchinbrook Resort and
Marina exceeds 145 hectares. Keith Williams had prepared the plans for this
future development which still requires further work to get development
approval from Council. The sheer size of this mega-property with its
impending development represents a golden opportunity to capitalise on a
project that had the visionary input of one of Queensland’s most successful
property developers.
On Hinchinbrook Island, Australia's largest island National Park, Port
Hinchinbrook Resort Unit Trust holds equitable interests in the Wilderness
Resort ~ an oasis within nature's paradise. The resort complements the
natural environment of the Island with 8 Beach Cabins and 15 Treetop
Bungalows designed and located above ground to ensure minimum
environmental impact. Each with a deck for views, these cabins offer a unique
elevated position amongst the rainforest. The Resort is well suited to cater to
private functions or individual tourists with first class restaurant and function
facilities.
Additionally, this project will see very little competition due to the
government’s environmental approach to tighter control of the Great Barrier
Reef and its coastline thus ensuring the exclusivity and profitability of this
existing prestige development.
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6. HOW PORT HINCHINBROOK RESORT UNIT TRUST SHALL WORK
1. The Port Hinchinbrook Resort Unit Trust is governed by a Trust Deed that gives investors certain voting rights dependent upon the number of Units held.
2. For full information, please refer to the Port Hinchinbrook Resort Unit Trust Deed attached to the back of this document.
3. Potential investors may apply to join the Unit Trust by acquiring either part, single or multiple Units. AA New Image Developments is offering investment in the Port Hinchinbrook Resort Unit Trust via 50 x $500,000 Units which will raise $25,000,000.
4. Investments of lesser amounts are of course welcome. By joining a Unit Trust Syndicate, smaller investors may pool their money and receive the same level of return as the full Unit holders ~ minus a small administration fee for extra statutory compliance needs.
5. AA New Image Developments is the legal owner of the property which is held in trust for investors who become the beneficiaries of future sales and profits.
6. AA New Image Developments is both the Trustee and a joint investor along with all other investors in the Unit Trusts, therefore it is in AANID’s own interests (and that of its beneficiaries) that it protects all investors’ capital and brings this development project to a successful conclusion.
7. The value of the property being assigned to the Trust by AA New Image Developments equates to approximately $7,500,000.
8. On offer, there are 50 Units x $500,000 available with voting rights
allocated to each $500,000 Unit.
9. Smaller investors ($10,000 and above) are welcomed with voting rights proportional to the percentage ownership value of each full Unit. Contact [email protected] to participate with other astute investors in joining a syndicate.
10. When the 50 (full) Units are taken up it will raise $25 million which will
allow the Trustee to payout $12,000,000 in debt owed on the property thus leaving $13 million to fund restoration work and further development.
11. The vesting period of the Unit Trusts is scheduled to be three years ~
about December 2016 through which time the Resort will be floated on the Australian Stock Exchange enabling all investors to either cash in
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their investment or convert their holdings to shares in the ASX listed company.
12. Unit holders cannot redeem their investment within those three years but their Units may be traded or sold onto other parties with written notice to the Trustee.
13. It is the Unit holder's responsibility to notify the Trustee of any changes in ownership. No transfer will be recognised unless written documentation is given by both seller and purchaser to the Trustee (see Deed for details).
14. The Trustee is required to keep the Unit Trust register up-to-date.
15. This is an investment structure where Unit holders can choose to actively participate with major management decisions or rest easy knowing that the Trustee and its management team is, itself, a major investor committed to producing profit.
7. WHAT THE TRUSTEE WILL DO Duty to Beneficiaries
1. For the comprehensive version of the Trustee’s duties please refer to the Port Hinchinbrook Resort Unit Trust Deed.
2. In brief, the Trustee owes both common law and legislated fiduciary duties to all beneficiaries of the Trust. This includes, the requirement to act in good faith, honestly, with integrity, exercising a duty of care and due diligence. Legal penalties apply if a Trustee breaches any duty owed to its beneficiaries.
3. The Trustee will manage the re-development projects and co-ordinate the transition towards floating the public company. The Trustee will have full authority from the Unit Trust members to decide and act on all day-to-day operations throughout the re-development project.
4. The Trustee will administer the expenses and revenue of the Port Hinchinbrook Resort re-development.
5. The Trustee will supply written reports to the Unit holders on a quarterly basis.
6. The Trustee will administer the financial accounts and have them externally audited.
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7. At the request of 25% of Unit holders, the Trustee will call an extra-ordinary meeting to vote on pressing issues raised by members. Members may vote via proxy if they choose not to attend the meeting in person.
8. A majority vote by special resolution of 85% of all Unit holders may replace the Trustee.
Task 1
1. The Trustee will initiate the rebuilding and renovation of the buildings on Lot 99 including the administration buildings, restaurant, bar and shopping centre. These facilities will be made available for external lease.
2. The Trustee will build 20 waterfront apartments, 10 resort villas as well as refurbish 12 lake view cabins. These will be available for holiday letting.
3. A 200 guest Hotel will also be built at the rear of the main resort complex. The Trustee will seek qualified parties to lease/manage the hotel.
4. Along with the mainland re-development, the Hinchinbrook Island Wilderness Resort will also be repaired and commissioned to form a diverse holiday package.
5. It is envisioned that the PHRUT would retain equitable ownership of all
land up until the time of the public float. However, on approval of 75% of the Unit holders through general resolution portions of the Trust property may be sold off to raise capital or return a dividend to investors before the three year vesting period ends.
6. The Trustee will initiate the re-building of the marina which will include
repairing and re-installing pontoons and associated services.
7. The Trustee shall administer the sales, rentals and income of the marina.
8. It is envisioned that the PHRUT would retain equitable ownership of all
marina infrastructure facilities up until the time of the public float and offer leases to short term visitors who may wish to rent the un-sold berths. However, the Trustee retains the option to seek buyers for approximately 100 marina berths at an average of $60,000 each for the benefit of Unit holders.
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Task 2
9. The Trustee will initiate the next development stage of the Port Hinchinbrook Resort to make use of the 145 hectares of vacant land adjoining the existing Resort.
10. The Trustee will lodge Development Applications to Council and other statutory bodies based on the plans already devised by Keith Williams.
11. It is envisioned that the PHRUT would retain equitable ownership of all
infrastructure concerning this development until such time as the assets are sold or listed on the ASX.
Task 3
12. Three months prior to becoming a publicly listed company, Unit holders will have the option of either selling their Units back to the Trust or converting the value of their Units to shares in the new publically listed company.
13. On becoming a publicly listed company, the administration buildings, restaurant, bar and other buildings along the marina foreshore shall remain in the legal ownership and managerial control of AA New Image Developments Pty Ltd.
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8. PLANNED EXPENDITURE The $25 million raised in private equity financing will enable the Port Hinchinbrook
Project to float the Port Hinchinbrook Resort development on the ASX within three
years. Below is an overview of our expected expenses over the next three years. The
$25 million capital raised by the Port Hinchinbrook Project shall be allocated in the
following manner:
Port Hinchinbrook Resort Capital Injection
See Cash Flow Forecast Document
It is the intention to retain ownership of as many assets as possible up to the time of
floating Port Hinchinbrook Project on the ASX so that the maximum amount of
property is available for the IPO. However, if circumstances dictate, minor assets
might be sold off to fund further expansion.
Internal Rate of Return
Year Cash Flows
AA New Image
Developments
Pty Ltd 23%
1 -$18,867,480
New Unit Trust
Investors 77% 46% over 3 years
2 -$1,810,031 Total Investment 100% 15% per annum
3 -$3,102,269
4 $47,500,000
IRR 29% *
New Unit Trust
Investors
50 Units
@$500,000 25,000,000.00$ AA New Image
Developments 7,500,000.00$
Total Initial
Investment 32,500,000.00$
Plan for Total
Investment
Payout Existing
Debt 12,000,000.00$
Future
Development
and Repairs
(Including
Working Capital) 13,000,000.00$
Year 4 Flow = Float less IPO Costs
Capital Structure
Investments at the base rate have the
highest potient for gain. Smaller
investments at sub base rates are
welcome.
Return On Inventment = (Public Float-
Cost of Investment)/Cost of
Investment
Note: Cash flow in year 4 based on public
share issue.
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10. PLANNED COMPANY FLOAT & INITIAL PURCHASE OFFER CAPITAL RAISING IPO float 10,000,000 shares at $5 each raising $50,000,000.00 Minus IPO establishment costs and brokerage fees at 5% of transaction Set up costs $ 2,500,000.00 Minus Initial Investment $32,500,000.00 In just over three years returning an expected gain of some $15,000,000.00 Expected return on investment (ROI) = 46 % over three years
*ROI = (sale of investment - cost of investment) /initial investment
11. CUSTOMER ANALYSIS
Below is a description of who our target customers are, and their core needs.
Target Customers
AANID’s target market is the Asian tourist industry ~ particularly China and
Japan as well as the Australian recreational boating industry. With close
access to the Great Barrier Reef, Hinchinbrook Island National Park, and
superb fishing in a tropical climate, it is envisioned that Port Hinchinbrook can
return to providing experiences un-equaled in Australia. With the eventual
development of an international class hotel within the Port Hinchinbrook
development, we plan to capitalise on the growing Chinese inbound tourist
market which is expanding at annual two digit percentages.
For the residential real estate aspect of the Port Hinchinbrook Project
development, we will direct our advertising towards the domestic market ~
both local and inter-state as well as international buyers. The tropical
perspective has proven an attractive destination for the grey nomads who are
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generally well financed. The international sales team will predominantly target
foreign high net worth individuals or consortiums.
12. COMPETITIVE ADVANTAGES
AA New Image Developments Pty Ltd is positioned to outperform competitors
for the following reasons:
The Port Hinchinbrook Project represents a bricks and mortar investment that
has already proven itself to be successful. The Williams Corporation fought
long and hard to gain approval from the Queensland government to develop
this project which it did so in a very profitable manner before Mr Williams’
health declined. It is very unlikely further developments of this nature will be
approved by future governments due to the pressure applied from
environmental groups who oppose any new development along this pristine
coastline. That exclusivity means that the Port Hinchinbrook Project has a
monopolistic position as the premier marina resort development between
Cairns and Townsville ~ and arguably the best marina – resort facility and
fishing and boating spot on the Great Barrier Reef coastline.
The management team has the expertise to fulfill the vision of Mr Williams, it
has the resources and building team to accomplish the task, it has the
overseas connections to market the resort to international investors and the
professional capabilities to float the resort on the Australian Stock Exchange.
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13. APPENDIX A
Properties assigned to the PHRUT Trust Fund
Lot 99 on SP 190029 Lot 59 on SP 174367 Lot 57 on SP 196157 Lot 63 on SP 196157 Lot 56 on SP 196157 Lot 24 on SP177389 Lot 197 on SP202762 Lot 170 on SP177389 Lot 59 on SP 139869 Lot 60 on SP 116825 Lot 62 on SP 125903 Lot 64 on SP 132625 Lot 65 on SP 155035 Lot 65 on SP 135869 Lot 66 on SP 135869 Lot 81 on SP 169551 Lot 82 on SP 169551
Lot 4 on SP 168551 Lot 1 on C1043 Lot 2 on C1043 -CWL 1212 Lot 3 on C1043 Lot 3 on RP 733367 Lot 58 SP 116825 Lot 54 SP 115194 ~ Crown Lease PPL 0/211509 Lot 98 SP 177389 Lots 1 to 12 on SP 208891 Lot 30 on SP 208891 Lot 1 on RP 739118 Lot 2 on RP 739118 Lot 5 on RP 732868 Lot 6 on RP 732868 Lot 7 on RP 732869 Lot 4 on Crown Lease/Plan CWL3399
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Stage 1 (existing)
Stage 2 Proposal
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14. APPENDIX B Keith Williams’ Legacy
Promoting Tourism
The legacy of the late Keith Williams lives on in his opus creation of Port
Hinchinbrook Resort in North Queensland. Mr Williams can be considered as
having advanced Queensland tourism more than any other entrepreneur and
his passion to develop world class attractions has propelled Queensland to a
favourite tourist destination at the international level.
For well over four decades, Mr Williams built Queensland’s major tourist
attractions starting with Sea World on the Southport Spit in the 1970s,
Hamilton Island Resort and Harbour in the 1980s and Port Hinchinbrook in the
1990s.
Those tourist destinations have contributed to the Queensland economy in
ways that many people fail to realise. Not only have those projects created
thousands of jobs for Queenslanders in the development and construction
stages but also many thousands more in the continuing hospitality and
tourism industry. The on-going success of Sea World on the Gold Coast and
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Hamilton Island Resort in the Whitsundays are testament to the strategic
thinking and meticulous detail that Mr Williams exerted when planning his
projects.
Sea World circa 1976
Port Hinchinbrook Stage 1 Marina Pre Cyclone Yasi
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Hamilton Island continuous development
When Mr Williams died in October 2011 at the age of 82, Port Hinchinbrook
Resort was ~ and still is ~ a work in progress. Unfortunately, he did not
survive to see his last project to completion. This has meant that stage one of
the Port Hinchinbrook Resort is yet to be completed and stage two of this
world class project has not been commenced. To fulfill Mr William’s vision, a
passionate and dedicated team of professionals has assembled to form a
consortium to complete this project.
Mr Williams had planned years ahead. The designs, drawings and models for
future development have already been devised and the subdivisions
surveyed. It is now time to raise capital and make Mr Williams’ dream a
reality. We invite you to invest in this world class project and share ownership
of one of Australia’s finest marina resort destinations.
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15. APPENDIX C An Explanation of Unit Trusts
There are three main factors to take into consideration when evaluating the
most appropriate ownership structure for your next investment. If optimised
properly, these three factors will help to minimise your overall risk and tax, as
well providing you with peace of mind and maximum flexibility into the future.
These factors are:
Estate planning
Estate planning involves preparing your will, appointing an executor of that
will, determining a power of attorney (if required) and establishing trusts (to
preserve the assets for a particular person or group).
Asset protection
Asset protection is especially important for those individuals with high-risk
occupation profiles, such as surgeons. It is important for people with these
profiles to look at buying a property with a structure which protects their
assets in the event that they are involved in any professional indemnity, public
risk or product liability insurance claims or lawsuits.
Tax planning
If you are the type of person who has all of their receipts in a shoebox, the tax
process is only going to get more complicated once you introduce investment
properties into the mix. So it is vital to have a solid tax planning strategy
before buying and your structure should complement this strategy to benefit
your wealth creation. For example, different structures will impact taxable
income in different ways.
Trusts
Trusts come in a few different forms and are typically more flexible than other
structures available for investors. They also offer more asset protection.
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Advantages of Trusts
Asset Protection
Should any beneficiary become bankrupt or financially troubled, such as
being sued for example, any assets that are owned by the trust cannot
be touched by the beneficiary’s creditors. This protection exists provided
that the assets were transferred into the trust a number of years before
the bankruptcy or similar proceedings commence. In this situation, only
assets that are personally owned by the beneficiary are able to be
repossessed.
50% Capital Gains Tax Discount
As long as the asset has been held for more than 12 months, most trust
structures, including Unit trusts, are eligible for a 50% CGT discount on
all capital gains that are produced.
Cheaper and easier than a company structure
A Unit Trust is cheaper to establish and maintain than a company. It is
also generally an easier procedure to wind up a trust than to wind up a
company.
Fewer regulations
There are fewer regulations governing trusts than companies, and Units
can generally be easily transferred and re-acquired without any legal
problems
Disadvantages of Trusts
Transferring property into trust triggers stamp duty and CGT
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The act of transferring a property that is owned by an individual into a
trust, will see the trust liable to pay stamp duty on acquisition of the
asset. Additionally, the individual who is transferring ownership to the
trust, will be liable to pay capital gains tax on the disposal of the
asset.
AA New Image Development’s has already acquired the property so
there are no tax or stamp duty liabilities that the Unit holders are
responsible for. As AANID is the legal owner and Trustee, it holds
the property on trust for members of the Unit Trust who are the
beneficial owners.
Rental loss quarantined
For investment properties that are owned by trusts, it is not possible
to offset any rental loss amounts against other investment income.
The loss must remain quarantined in the trust until such time that a
rental gain is made and the previous loss can be offset against it.
Capital loss quarantined
As with a rental loss, if a trust makes a capital loss on its assets, the
amount is quarantined until there is a capital gain that it can be offset
against. Beneficiaries or Unit holders are not able to apportion this
loss to offset their own individual income.
However, there can be diverse taxation and other factors that need to be
considered. As the details will differ for each individual situation, it is extremely
important that you seek advice from both legal and accounting professionals
before proceeding to make any decisions. Your lawyer and accountant can
explain the long term intentions for the trust, not just the short term benefits.
A Unit trust structure exists where the assets owned by the trust are divided
into defined portions known as ‘Units’. ‘Unit’ ownership by the trust’s
beneficiaries (or Unit holders) can be likened to the way in which shareholders
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hold shares in a company. Each beneficiary’s share of the trust’s income, and
consequently the taxation liabilities and related expenses, is proportional to
the number of ‘Units’ that they hold.
This means Unit trusts allow some flexibility in the distribution of the income
and capital that is generated by the entity. In general terms, trust Units can be
allocated to beneficiaries as either ‘capital’ or ‘income’ Units. This allows for
Unit holders who are on a lower marginal income tax rate to be nominated to
receive the income generated by ‘income Units’, as they will be taxed at a
lower rate. Those Unit holders who are on a higher marginal income tax rate
are more likely to be allocated ‘capital Units’. For example, ‘capital Unit’
holders may choose to sell the asset when they retire and are no longer
receiving other forms of income. In that case they will receive the lump sum of
income produced by the capital gain on sale of the asset. The ‘capital Unit’
holder will then be liable for less tax on this income amount as they currently
have no other forms of income.
However, while there is some flexibility in relation to the distribution of income
in a Unit trust, the implementation and allocation of capital and income Units is
restricted by the conditions set out in the trust’s Deed. Any requests for
variation on these distribution conditions must be done so by formally
amending the Deed.
Individuals are not able to claim a deduction for any interest paid on monies
that are borrowed and then injected into the trust for the purchasing of assets.
However, the trust entity itself is able to borrow monies and then claim a
deduction for the interest paid on those borrowings.
Further to that, individuals are generally able to claim interest on any monies
that are borrowed in order to acquire Units in the trust structure as this is
deemed to be a similar action to that of purchasing shares in a company.
It should also be noted that each beneficiary has complete discretion as to the
transferring of their Units on their passing, as dictated by their will. Essentially,
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a beneficiary’s Units can pass to whomever they choose. This is a huge
advantage in that the asset is secured through probate for the beneficiary of
the will to do as they please without complicated title transfers.