Aqua Sol: Expansion of operations in time sharing sector
8/6/2004 10:09
1. The Board of Directors of the Company AQUA SOL HOTELS LTD in its endeavour to diversity the activities of the Company from the problem ridden tourist industry and the create new sources of income has decided to expand in the field of Time Sharing. Specifically, in the meeting of 24 February 2004, the Board appointed a Special Committee comprising of Mr. Demetris Marinos, non executive director, Mr. Tassos Anastasiades, Chief Financial Officer and Mr. Haris Papadopoulos, director of strategy, in order to explore the company’s opportunities in the field of time sharing.
The Committee, having considered the issue, following the advice of external consultants and bearing in mind that Adrasteia Hotels Limited and Nike Hotels Limited belonged to parties affiliated to the Board of Directors suggested entering into the agreements mentioned herein below. During the study as mentioned hereinbelow, external appraisals were duly considered.
2.A. The Board of Directors of Aqua Sol Hotels Ltd, having considered the recommendation of the Special Committee as well as the advantages of time sharing which are mentioned thoroughly hereinbelow, with a Written Decision of June 1st 2004, has decided to proceed in signing the agreements mentioned hereinbelow in paragraph 3.
B. The advantages offered by time sharing operations for a group such as Aqua Sol are the following:
i. Creation of new sources of income.
ii. Release of capital bound in other assets to use in different investments.
iii. Long term management contracts, of 50 years duration, which would allow the more efficient programming of cash flow and investment and establish higher percentage of earning than the current contract.
3. The Agreements which the Board of Directors of Aqua Sol decided to sign are the following:
A. Agreement with Paradise Resorts (Cyprus) Ltd for the creation of a new Company under the name Parasol Vacation Ltd for the promotion of sales of apartments around which the “club” shall be created. The two parties shall have equivalent participation of 50%-50%.
Paradise Resorts (Cyprus) Ltd is a sister company of Paradise Group Limited, which is registered in England. Paradise commenced trading in 1991 and has become a respectable and profitable company in the field of time sharing in Europe.
Paradise Group has developed Time-Sharing complexes in Spain and Scotland and has made sales exceeding £60 million GBP. Paradise Group developing a new complex in Paphos.
Paradise Vacation Ltd has signed a new contract with Aqua Sol Hotels Ltd or her affiliates for a 50 years lease of the following apartments.
· 80 apartments in Aqua Sol Village in the region of Coral Bay, Peyia, valued at £90,000.- per apartment, inclusive of V.A.T.
· 70 apartments at Callisto Tourist Village in Ayia Napa, valued at £70,000.- per apartment, inclusive of V.A.T.
Parasol Vacation shall endeavour to promote the afore mentioned apartments in time sharing by creating Parasol Vacation Club.
B. The Management Agreement for the aforementioned apartments between Aqua Sol and Parasol Vacation. This agreement calls for the provision of hotel services from Aqua Sol Hotels to the members of Parasol Vacation Ltd for the amount of £150 per week per apartment. It is noted that each apartment is considered sold if it has been sold for at least 40 weeks.
C. An Agreement for the purchase of the totality of the share capital of Adrasteia Hotels Ltd, for the amount of CY4.4 million . The signing of this agreement has been deemed necessary because Aqua Sol Village Tourist Complex belongs to Adrasteia Hotels Ltd and has been leased by Aqua Sol Hotels on 1/1/2000 for a period of 18 years, whilst the creation of the Time Sharing Club presupposes the existence of a right of use for 50 years.
The Board has sought 2 independent valuations from Antony Loizou & Associates and from Rois Nicolaides & Associates. These valuations have been performed on the basis that Aqua Sol Village is leased for the following 14 years. The Board has decided to adopt the median valuation between the two which is CY£4.4 million. It is further noted that the median valuation given by the above mentioned valuers for the value in vacant possession was CY£11.2 million.
It is clarified that the remaining assets or obligations which are included in Adrasteia Hotels Ltd balance sheet or outside it, if such are in existence, shall be added to or subtracted from the price accordingly.
As it is mentioned hereinabove, Adrasteia Hotels Ltd is the owner of Aqua Sol Village , comprising of 149 apartments (A’ Class). The profits of the company are generated from the change of the immovable's asset value, which is reflected in the Company’s balance sheet as “Investments in real estate” and appears in purchase value and under its lease.
In 2003 the net profit of Adrasteia Hotels Ltd were CY£1,297,772 in 2002 CY£925,715 and in 2001 CY£400,789.
The turn over for 2003 was CY£1,708,269, for 2002 CY£410,497 and the obligations for 2001 CY£515,218.
From this purchase there will arise a negative super value of CY£2,544,428 which will be recognised in the current year according to International Financial Standard 3.
Adrasteia Hotels Ltd belongs to Yiannis E. Panayis Investments Ltd and A.S.P & K. Paschali Ltd, companies controlled by Aqual Sol major shareholders Yiannis Panayi and Antonis Paschalis.
D. An Agreement with Nike Hotels Ltd to expand the lease and the right of usage of Callisto Tourist Village for 50 years, which is necessary to create the time sharing Club, for rental value of CY£35,177 per apartment which is the estimated cash flew per apartment. It is noted that Aqua Sol Hotels Ltd has agreed to lease the aforementioned apartments to Parasol Vacation Ltd for £90,000 per apartment. The payment of rents has been agreed to be paid in 3 annual instalment commencing 1/1/2004.
In consideration of the aforementioned payment Nike Hotels Ltd resigns from its rights in the Contract of Management of 50 years duration with Parasol Vacation Ltd which Aqua Sol has signed. It is noted that without the aforementioned agreement 33 out of the 50 years of the Contract of Management would belong to Nike Hotels Ltd and not to Aqua Sol.
Callisto Tourist Village belongs to Nike Hotels Ltd which is owned by the Aqua Sol Hotels board members Messrs., Antonis Paschalis and Yiannis Panayis.
The Committee, having considered the issue, following the advice of external consultants and bearing in mind that Adrasteia Hotels Limited and Nike Hotels Limited belonged to parties affiliated to the Board of Directors suggested entering into the agreements mentioned herein below. During the study as mentioned hereinbelow, external appraisals were duly considered.
2.A. The Board of Directors of Aqua Sol Hotels Ltd, having considered the recommendation of the Special Committee as well as the advantages of time sharing which are mentioned thoroughly hereinbelow, with a Written Decision of June 1st 2004, has decided to proceed in signing the agreements mentioned hereinbelow in paragraph 3.
B. The advantages offered by time sharing operations for a group such as Aqua Sol are the following:
i. Creation of new sources of income.
ii. Release of capital bound in other assets to use in different investments.
iii. Long term management contracts, of 50 years duration, which would allow the more efficient programming of cash flow and investment and establish higher percentage of earning than the current contract.
3. The Agreements which the Board of Directors of Aqua Sol decided to sign are the following:
A. Agreement with Paradise Resorts (Cyprus) Ltd for the creation of a new Company under the name Parasol Vacation Ltd for the promotion of sales of apartments around which the “club” shall be created. The two parties shall have equivalent participation of 50%-50%.
Paradise Resorts (Cyprus) Ltd is a sister company of Paradise Group Limited, which is registered in England. Paradise commenced trading in 1991 and has become a respectable and profitable company in the field of time sharing in Europe.
Paradise Group has developed Time-Sharing complexes in Spain and Scotland and has made sales exceeding £60 million GBP. Paradise Group developing a new complex in Paphos.
Paradise Vacation Ltd has signed a new contract with Aqua Sol Hotels Ltd or her affiliates for a 50 years lease of the following apartments.
· 80 apartments in Aqua Sol Village in the region of Coral Bay, Peyia, valued at £90,000.- per apartment, inclusive of V.A.T.
· 70 apartments at Callisto Tourist Village in Ayia Napa, valued at £70,000.- per apartment, inclusive of V.A.T.
Parasol Vacation shall endeavour to promote the afore mentioned apartments in time sharing by creating Parasol Vacation Club.
B. The Management Agreement for the aforementioned apartments between Aqua Sol and Parasol Vacation. This agreement calls for the provision of hotel services from Aqua Sol Hotels to the members of Parasol Vacation Ltd for the amount of £150 per week per apartment. It is noted that each apartment is considered sold if it has been sold for at least 40 weeks.
C. An Agreement for the purchase of the totality of the share capital of Adrasteia Hotels Ltd, for the amount of CY4.4 million . The signing of this agreement has been deemed necessary because Aqua Sol Village Tourist Complex belongs to Adrasteia Hotels Ltd and has been leased by Aqua Sol Hotels on 1/1/2000 for a period of 18 years, whilst the creation of the Time Sharing Club presupposes the existence of a right of use for 50 years.
The Board has sought 2 independent valuations from Antony Loizou & Associates and from Rois Nicolaides & Associates. These valuations have been performed on the basis that Aqua Sol Village is leased for the following 14 years. The Board has decided to adopt the median valuation between the two which is CY£4.4 million. It is further noted that the median valuation given by the above mentioned valuers for the value in vacant possession was CY£11.2 million.
It is clarified that the remaining assets or obligations which are included in Adrasteia Hotels Ltd balance sheet or outside it, if such are in existence, shall be added to or subtracted from the price accordingly.
As it is mentioned hereinabove, Adrasteia Hotels Ltd is the owner of Aqua Sol Village , comprising of 149 apartments (A’ Class). The profits of the company are generated from the change of the immovable's asset value, which is reflected in the Company’s balance sheet as “Investments in real estate” and appears in purchase value and under its lease.
In 2003 the net profit of Adrasteia Hotels Ltd were CY£1,297,772 in 2002 CY£925,715 and in 2001 CY£400,789.
The turn over for 2003 was CY£1,708,269, for 2002 CY£410,497 and the obligations for 2001 CY£515,218.
From this purchase there will arise a negative super value of CY£2,544,428 which will be recognised in the current year according to International Financial Standard 3.
Adrasteia Hotels Ltd belongs to Yiannis E. Panayis Investments Ltd and A.S.P & K. Paschali Ltd, companies controlled by Aqual Sol major shareholders Yiannis Panayi and Antonis Paschalis.
D. An Agreement with Nike Hotels Ltd to expand the lease and the right of usage of Callisto Tourist Village for 50 years, which is necessary to create the time sharing Club, for rental value of CY£35,177 per apartment which is the estimated cash flew per apartment. It is noted that Aqua Sol Hotels Ltd has agreed to lease the aforementioned apartments to Parasol Vacation Ltd for £90,000 per apartment. The payment of rents has been agreed to be paid in 3 annual instalment commencing 1/1/2004.
In consideration of the aforementioned payment Nike Hotels Ltd resigns from its rights in the Contract of Management of 50 years duration with Parasol Vacation Ltd which Aqua Sol has signed. It is noted that without the aforementioned agreement 33 out of the 50 years of the Contract of Management would belong to Nike Hotels Ltd and not to Aqua Sol.
Callisto Tourist Village belongs to Nike Hotels Ltd which is owned by the Aqua Sol Hotels board members Messrs., Antonis Paschalis and Yiannis Panayis.
