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SANTIAGO GOLF RESORT

FIXED TERM, FIXED RETURN LAND PLOTS

FAQ’s
What is the aim of the opportunity?

The opportunity arises through the desire for Arck LLP and its associates (detailed below) to deliver a
high-end multi-purpose resort into the market in the quickest possible time so investors and visitors
can enjoy the benefits fully sooner, rather than later. As a result, ARCK wishes to share some of the
profits with private / pension investors and distribution channels such Independent Financial Advisors,
Property Agents and Accountants.

Who are ARCK LLP?

ARCK LLP is a management Company with a Product and Venture Capital View. There are two
partners in the company;

Richard Clay
Born 12th December 1964, Partner. Richard, raised in the UK's smallest county of Rutland, has spent
18 years working within the finance and property sectors, including bespoke product design. Having
worked in The USA on 'Risk' products for Lloyds Syndicates, and then throughout Sub-Saharan Africa
for BDO Chartered Accountants on non-resident asset swap contracts, he returned to The UK in 2000
to further his position in the Finance Sector. Having predominantly been engaged in tax mitigation and
product design, Richard's main responsibility is Product Construction around the concept of the Closed
Ended Property Portfolio or 'CEPP', which is now widely used by individuals who wish to invest a
portion of their personal pension assets into bespoke property contracts in both The UK and in global
emerging markets.

Kathryn Clark
Born 20th September 1962, Partner. Kathryn, raised firstly in South Yorkshire, and then in
Nottinghamshire, has 22 years experience in the banking and Financial Services sector. Having held
several key positions in such institutions as Norwich Union, Scottish Equitable and Scottish Mutual she
went on to operate in the Private Sector. In addition to her Partnership in ARCK LLP, she is a fully
qualified and regulated Financial Services Authority (FSA) individual holding a Directorship of a major
midlands IFA where she heads up the Business Solutions Team. Her expertise lies in the Corporate
Group Pensions and Final Salary sectors. In addition to the above, Kathryn also holds in excess of 20
Directorships / Company Secretary Positions, three of which are non UK based. Her greatest strength
is attention to detail and in-depth knowledge of her subject – a case in point is where, in recent times,
she successfully challenged, and won, a ruling by HM Revenue and Customs over a Pension Fund
Contribution!

Do ARCK LLP have a track record?

ARCK LLP is a management company with a number of business and controlling interests in a variety
of companies.
The main areas of interest are based around financial investment opportunities. The main area of
initial focus was with regard to the deferred pension market.
This provides a unique opportunity to invest into a “Closed Ended Property Portfolio” (CEPP) which
ultimately aims to repay almost 99% of investors’ capital after a typical period of 3 years and then
provide them with an income via the Gross Operating Profit of a Hotel. This investment opportunity is
offered through Euro-Balkan Properties (EBP, a wholly owned subsidiary of ARCK).
The CEPP was designed around the finance bill (2) 2006 and so only went live last year.
To date ARCK/EBP have a fully subscribed project in Bansko, Bulgaria which is currently completed up
to the 3rd floor and is due for completion in approximately 18 months. The anticipated build time for
this hotel is 2-3 years. At which point in the CEPP process the balance of the investors’ loan account
is geared out.
ARCK/EBP are almost fully subscribed for the 2nd CEPP offering in SAL on Cape Verde. Out of a
£27.5m project there is approximately £1m left to collect.
The 3rd CEPP offering, Fernie in Canada is a £20m project and we have pre-subscriptions of over
£10m.
There are a number of Institutional investors who have invested lump sums in to the various projects
as well, so ARCK is not just dealing with members of the public, although, this is the CEPP target
market.
On top of this there are individual property offerings on SAL and also the offering on Santiago, which
is a 1,000 hectare site with 4 hotels, a 27 hole Nick Faldo golf course and over 1600 properties. To
date we have contracted to sell 960 of these properties to institutions with an overall value of
approximately €480m.
Fernie also has 575 apartments as well as a number of individual properties.
There is also a request to repeat this process for 42 hotel sites in the UK.
All of the hotels use major brand names such as Marriott etc.
With ARCK’s partner company, UK Integrity Ltd an Expert Protected Cell Company (PCC) in
conjunction with IFG, KPMG and HSBC on the Channel Islands Stock Exchange has just been
launched.
As a total, ARCK Group are currently involved with projects totally somewhere in the region of £600-
700m.
On top of this ARCK LLP are also involved with several other non related companies such as design,
printing, surveying, construction, property rental, aviation and so on.
In respect of aviation ARCK are in the early stages of developing a new International Airport at a
major European Capital City.

Who are ARCK Marketing Ltd?

ARCK Marketing Ltd is purely a distribution channel for all products designed and offered through
ARCK LLP.

About the resort – Who owns it, how, and who is involved?

ESTRELA SANTIAGO RESORT – Santiago, Cape Verde

OWNERSHIP MATRIX AND MARKETING RIGHTS

This part of the document is designed to provide an understanding of the current, and previous
ownership of Estrela Santiago Resort, formally known as Santiago Golf Resort, Santiago, Cape Verde.

In the early years, this resort was owned 25% by a local family from Cape Verde and 75% by Group
Sacramento Campos, a large Construction company based in Lisbon, Portugal, which formed Santiago
Golf Resort (SGR).

SGR subsequently employed WATG in London to design an overall Master Plan for the resort for
submission to the Camara for planning consent.

This was successfully achieved and the following was correct as at 15th September 2007. The Resort is
split into 14 Zones of various compilations.

Estrela Santiago Resort, Cape Verde Executive Summary

As at: 15th September 2007

Resort Summary:
Area: c 500 hectares / c. 1200 acres
Coastline c. 5km
Beaches 2
Units: c. 2000 villas, apartments and townhouses. Villas predominate.
Hotels: Beach Hotel, 5* 300 rooms + conference area
Golf, 5*Hotel 200 rooms + conference area
Golf Courses: Nick Faldo Design
18 Hole course to PGA championship standards
9 Hole ‘Executive’ course

Marina with leisure and commercial facilities, creating a social focus for
the resort
Sports Academy, including tennis courts, soccer pitches, squash courts,
Olympic size swimming pool
Equestrian Centre
Ten pin bowling alley
Cinema

Suppliers:

WATG - Masterplanning and design


www.watg.com
The world’s number one hospitality, leisure and entertainment design
firm, with over 5 decades of experience across six continents

Faldo Design – Golf Course architecture


www.nickfaldo.com/design/template.php
More than 30 projects around the world. Faldo Design's impressive
portfolio reflects the adaptability and passion by which Faldo made his
name on the golf course.

Chaos Design – Design and print


www.chaosdesign.com
Over 30 years experience in b2b and b2c sectors, with an extensive
portfolio of leisure and resort work across Europe and beyond.
MARPE S.A. – infrastructure construction to date
www.marpe.pt
Leading Portuguese construction firm since 1976. 2005 turnover in
excess of €20 billion across production and construction.

ARUP – Sustainability consultancy


www.arup.com
Global design, engineering and business consulting firm. ARUP UK
projects at the 2007 RIBA awards included The Barbican Arts Centre
(London), VCR Tower (Heathrow) and SS Great Britain (Bristol). ARUP
are also extensively engaged across the London Olympics.

Faldo Resort Management – Resort management consultancy


www.nickfaldo.com
Pending contract
In the stable of Nick Faldo golf-related enterprises, FRM and partners
have the breadth of experience to develop and manage all aspects of
resort operations, from booking systems to waste collection, not to
mention golf course management.

Southern Golf - Golf Course Construction


www.southerngolf.co.uk
Pending contract
Over 30 years experience constructing golf courses around the world
including notably arid regions such as Egypt, Dubai and Tunisia. Trusted
with construction and renovations of world famous courses such as at
Penina.

ECP – Quality control, contract and project management


www.ecp.ie
Pending contract
Edward Cotter Partnership is a practice of Chartered Quantity Surveyors
based in Blackrock, Cork City, Ireland.
The practice has established a reputation as one of Irelands leading
building cost consultancy practices.

HTL – Leisure sector consulting and asset management


www.htlconsulting.com
HTL Consulting is based in London and provide advice to clients in the
hotel, tourism and leisure sectors.

Interior design - to be determined

Thomas Eggar LLP – Legal


www.thomaseggar.com
Thomas Eggar offer a comprehensive range of legal and financial services
to private clients and commercial organisations. Their major work areas
include high net worth client advice, private client litigation, tax and
trust, charities, international tax, financial services, corporate , banking
support, pharmaceutical, insurance litigation, international fraud,
aviation, investment property, construction, retail property, planning and
development.

UHY Hacker Young – Accounts / Audit services


The Rope Walk
Nottingham
www.uhy-uk.com
One of the top 20 UK chartered accountants

Herald Trust – Off shore company administration


www.heraldtrust.com
Herald Trust Company Limited is a fully licenced Jersey Trust Company
providing offshore services to professional firms, individuals and
companies.

HSBC/RBS – www.hsbc.co.uk
www.rbs.com
Construction Progress to date:

Initial Masterplan completed by WATG and approved by Cape Verde government.


Infrastructure for the first zone, Zone 3, completed.
Construction of the first villa in Zone 3 is due for completion in 1st Quarter 2008
Infrastructure for Zone 4 started in March 2007.
Golf course design and construction on target for opening early 2010
Golf & Spa Hotel target completion mid 2010.
Beach Hotel target completion mid 2011

Commercial Progress to date:

138 Plots in Zone 3 sold, 55 held back for later release as properties with plot.
Negotiations under way with Hilton, Hyatt and Marriott Hotel Groups for operating contracts with
letters of intent from some parties already received. No contractual agreements have been reached at
this stage and negotiations are ongoing.

Oscar Investments Limited and Dr Owen Dennis, who, through a tax efficient Trust system in Jersey,
are beneficiaries of Leefran Limited (Jersey Limited Company), started discussions with SGR with a
view to only taking one or two zones as a project. In February 2007 Christie and Co., London,
introduced Leefran Limited to Richard Clay and Kathryn Clark of Arck LLP with a view to joining forces
for a larger flavour of the resort. Arck LLP had, prior to this meeting, already entered into the early
stages of negotiations with a Protected Cell Company managed by Stirling Mortimer, via their
appointed lawyers ELS LLP.

Due to the speed of these negotiations, it was agreed that, as Leefran had already secured options on
zones 3 and 4 of SGR, any negotiations would be conducted with Leefran.

Leefran Limited and Arck LLP in turn formed a new Jersey based company called ARCK Estrela Limited
in which Leefran holds 50% and the members of Arck LLP hold 50% through a newly formed tax
structure in The Isle of Man called Joyston Limited, established by UHY Hacker Young / Crossleys.

For the benefit of Zones 3 and 4, any opportunity is being explored between Stirling Mortimer and
Leefran Limited via ELS LLP (as detailed in their own document – No.4 Fund Cape Verde dated 26th
July 2007), and, for the protection of the beneficiaries of Joyston Limited (Arck LLP members), a
simultaneous agreement was drawn up between Leefran and Joyston sharing ownership.

Therefore, all contractual work with Leefran, ultimately reverts to ARCK Estrela Limited, which in turn
dissipates through to the beneficiaries equally, Dr Owen Dennis, Oscar Investments Limited, Richard
Clay and Kathryn Clark (via Joyston Limited) in equal shares.

Arck Estrela Limited via Arck LLP holds a contract, together with its separate Limited company, Arck
Marketing Limited, to market any of/or the entire project through whatever channel it feels is
appropriate.

ARCK Estrela Limited holds 100% of the shares in a Cape Verde Company, Arco Verde, which has
gained a Certificate of Tourism Approval for Tax Purposes and, as such, owns the local assets on
behalf of the Jersey Company.

Going forward, all options and ownerships on Cape Verde will be held by ARCK Estrela Limited. The
most recent accepted offers by Estrela Limited is from another Property Fund – Integrity Alternative
Asset Fund PCC – this is for phase one of Zone 5, 100 2 bedroom apartments at an average of 115
Square metres per unit gross space.

For the purposes of marketing, Arck LLP and Arck Marketing Limited assume ownership for the above
structure on behalf of the parties involved.

What is the opportunity?

Arck Estela is wholesaling zones of Estrela Santiago to a selection of property funds on a promissory
contract basis. Due to the nature of this type of contract it allows Arck Estrela to retain the freehold
title of the land until final notarisation once the property is complete in say 2 to 3 years. In order to
forward cash-flow the business to ensure a quicker build time, Estrela Santiago is selling, and then
repurchasing each plot at a fraction of its market value before notarisation stage.
How safe is my investment?

The capital is protected. The money is held in Segregated Client Account with either The Yorkshire
Bank (Clydesdale / National Australia Bank), or Halifax Bank of Scotland (HBoS) – depending on which
phase of the development is reached. Your representative will have letters from ARCK LLP’s lawyers
(Geldards LLP) and a letter of instruction from ARCK LLP countersigned by a senior partner at the
Yorkshire Bank or the management team at HBoS. This states that the monies are held in Segregated
Client Account and balances will be paid back to clients on a given date, as an example - 1st
September 2009. The interest from the multiples of £25,000.00 deposits is paid back to ARCK LLP.
This interest accrued is used to cover marketing and accompanying costs. The uplift on the money is
deposited into the Segregated Client Account on a monthly basis at the agreed rate of return by ARCK
LLP.

What is a Segregated Client Account?

A segregated account is an account used by a variety of firms and organisations to keep the
customer’s assets separate from the firms so that if a firm or organisation becomes insolvent, the
customer’s funds will be readily recognizable and will not be tied up in litigation for extended periods
of time.

Segregated accounts are used extensively. These accounts are segregated in line with FSA
regulations. These regulations have been developed to protect client funds in the unexpected event of
fraud. Client money always resides in segregated accounts held within banks, such as Yorkshire Bank.

The rules provide that any asset which attaches to a particular segregated account shall not be used
to meet liabilities to, and shall be absolutely and for all purposes protected from, the general
shareholders of the Holding Company and from the creditors of the Holding Company who are not
creditors in respect of the particular segregated account.

Below is an explanation taken directly from the FSA(Financial Services Authority) Handbook

CASS 4.3 Segregation and operation of client money accounts

CASS 4.3.1 R

Application
CASS 4.3 applies in accordance with CASS 4.1

CASS 4.3.2 G
The purpose of the client money rules is to ensure that, unless otherwise permitted, client money is
kept separate from the firm’s own money. Segregation, in the event of a firms’ failure is important for
the effective operation of the statutory trust that is created to protect client money. The aim is to
clarify the difference between client money and general creditors’ entitlements in the event of the
failure of the firms.

CASS 4.3.3 R
A firm must, except to the extent permitted by the client money rules, hold client money separate
from the firm’s money.

CASS 4.3.4 R
A firm may segregate client money in a different currency from that of receipt. If it does so, the firm
must ensure that the amount held is adjusted each day to an amount at least equal to the original
currency amount (or the currency in which the firm has its liability to its clients, if different),
translated at the previous day’s closing spot exchange rate.

CASS 4.3.5 R
A firm must not hold money other than client money in a client bank account unless it is:

(1) a minimum sum required to open the account, or to keep it open; or


(2) money temporarily in the account in accordance with CASS 4.3.13 R (Mixed remittance); or
(3) interest credited to the account which exceeds the amount due to clients as interest and has
not yet been withdrawn by the firm.

CASS 4.3.6 R
If it is prudent to do so to ensure that client money is protected, a firm may pay into client bank
account money of its own, and that money will then become client money for the purposes of the
client money and the client money distribution rules.

CASS 4.3.7 G
Firms are reminded of the requirements of CASS 4.3.66 R and CASS 4.3.67 R. The money paid into
the client bank account by the firm, in accordance with CASS 4.3.6 R, does not lessen the requirement
to carry out the daily client money calculation.

So my capital is protected, how are ARCK Group able to offer the returns?

The investments in multiples of £25,000 are allocated to a specific plot within the development. The
plots are having various types of properties built on them. The finished properties have been pre-sold
to the relevant Protected Cell Company (PCC) or other party under the promissory contract basis. The
properties within the phase are sold to the Fund on a plot by plot basis as each one is completed. The
first of these properties is due to be completed at the end of December 2007. This profit is simply
being shared with investors.
An example of the money flows are shown below and, for ease, show a PCC as the first party
promissory Contracted buyer;

Protected Cell
Company
deposit 30% /
35% of
contracted price

Paid to
Deposit a % of Stage
contracted price ARCK LLP Payments

Protected Cell Company Uplifts


or Another Wholesaler Contract for Finished
Contracted to Purchase Properties
The Next Phase

Deposits of £25,000 shown as cash Completed


Repeat the Sub-division of flow to contractors Properties
process title obtained Sold To

Build Out Infrastructure Protected Cell


For The Next Phase Company /
Uplifts
Wholesaler – who
has Ongoing Retail
Sales

Stage Stage
Payments
ARCK LLP Payments

How is my return amount calculated?

Once the paperwork and money has been sent to ARCK Marketing, from the day the money has
cleared that is the date the return is calculated from. As an example, an offering which began in June
2007 and finishes on 31st August 2009 works as follows: In June 2007 the return on £25,000 was
50% net. This return diminishes on a straight line reduction of 1.9% per month. This is shown below;

Rates Of Return
Reducing Scale 1.9% Return

Maturity 1st September 2009

June 25000 37500 50.0% 12500


July 25000 37025 48.1% 12025
August 25000 36550 46.2% 11550
September 25000 36075 44.3% 11075
October 25000 35600 42.4% 10600
November 25000 35125 40.5% 10125
December 25000 34650 38.6% 9650
2008 January 25000 34175 36.7% 9175
February 25000 33700 34.8% 8700
March 25000 33225 32.9% 8225

What if the Protected Cell Company (PCC) / 3rd Party don’t buy the properties?

The promissory contract system is similar to the UK system in that, once ‘Exchange’ has taken place,
‘completion’ must take place or large financial penalties occur. For a PCC, as it is a listed fund,
contracts are not signed unless the ability to ‘complete’ is known otherwise, it would breach the
regulatory status of the fund. The 3rd party usually holds the contract with a view to on-selling it to
the final owner before Notary stage, thus saving / passing on the 6% closing costs. To assist in this
process, Thomas Eggar issue an ‘Irrevocable Deed of Transfer’ attached to the promissory Contract
allowing the on-sell.

So what is the risk?

Risk is; the build takes longer than it is contracted to. The build cannot go over-budget as it is a fixed
price build. But if the build took longer there would obviously be a delay in the completion of the site.
As the properties are bought on stage payments as they are completed one by one it would only leave
a small shortfall. This would be able to be covered by ARCK LLP’s profit which is substantially loaded
to the front of the development.

Another risk is the contractors ceased trading. The team is comprised of a large group of professional
all offering bank guarantees. It is unlikely they would cease trading. If they did, as the build is paid for
in stage payments on certification, payments are always made in arrears. ARCK would simply bring in
a new principle contractor to complete the build. This may cause a time delay.

If the unlikely event ARCK ceased trading then investor’s capital is protected through the Segregated
Client Account. The monthly uplift of the capital will have been accrued to the account on a monthly
basis. The rules of a segregated client account mean, any monies paid into the account become
protected under the terms. This means any uplift deposited will be paid to investors also.

Why are ARCK offering the investment to individuals and not just using a bank?

Currently on Cape Verde debt/mortgage cannot be obtained on property until it has been completed
and notarised. Also the reason for the investment is because ARCK want to develop the whole site as
quickly as possible. To get sub-division of title of each phase, the infrastructure needs to have been
completed. As cash-flow is concentrated on the phase being completed at present, the protected
multiples of £25,000 sit as ‘cash in the bank’ to show cash flow, and allow the principle contractors,
Sacramento Campos, to put the infrastructure in on the next phase – allowing the whole development
process to be completed more quickly. Also, the product is distributed through Independent Financial
Advisers. ARCK LLP’s intention is to distribute wealth through this industry instead of simply lining the
pockets of the Bank.

In addition, if finance were readily available, the costs of acquisition would be high. Each plot’s value
is circa £150,000 and ARCK are only raising £25,000 per plot. The return to the client / investor is
50% over 30 months, but, broken down, this represents effective borrowing for ARCK as the net cost
is circa only 3%. Why pay banks when you can share with private investors?

Is there any tax to pay on my investment?

The investment is potentially subject to UK taxes applicable at the time of maturity. ARCK Group does
not offer tax advice. You should seek independent advice relating to this matter.

The information contained in this document is designed for guidance purposes and forms
no part of any contract. Any reference to any third party or returns are based on purely on
current information as understood by ARCK and are subject to change without reference.

Amended document completed – 01/010/2007