prospectus - comet properties ipo

PPuubblliicc SShhaarree OOffffeerr

Thursday 30th December 2010 – Monday 31st January 2011

PPRROOSSPPEECCTTUUSS

For The Sale of 61,823,968 Ordinary Shares of No Par Value of

CCOOMMEETT PPRROOPPEERRTTIIEESS LLIIMMIITTEEDD

At GH¢1.00 Per Share Payable in Full on Application

Lead Manager & Sponsoring Broker

WWOORRLLDDWWIIDDEE SSEECCUURRIITTIIEESS LLIIMMIITTEEDD

DDaatteedd:: DDeecceemmbbeerr 3300,, 22001100

Comet Prospectus, December 2010

Lead Advisor and Sponsoring Broker: Worldwide Securities Limited i

Mandatory Declaration and Statements

Responsibility Statement by Comet Properties Limited This Prospectus has been seen and approved by us the Directors of Comet Properties Limited (COMET) and we collectively and individually accept full responsibility for the accuracy of the information given and that after making all reasonable inquiries and to the best of our knowledge and belief, there are no material facts the omission of which would make any statement in the Prospectus misleading. A copy of this document has been delivered to the Registrar General’s Department in Ghana for filing. The Registrar of Companies has not checked and will not check the accuracy of any statement made and accepts no responsibility thereof or for the financial soundness of the company or the value of the securities concerned. This document was registered by the Registrar of Companies on 30th December, 2010. Application has been made to the Ghana Stock Exchange (GSE), a stock exchange approved in accordance with Section 280 of Ghana’s Companies Code, 1963 (Act 179) as amended by section 145(2) of the Securities Industry Law 1993, (PNDCL 333) as Amended by Securities Industry (Amendment) Act 2000, Act 590, for listing the shares of Comet hereby offered and other issued shares of the company on the First Official List of the GSE. No person has been authorized to give any information or to make any representation other than those contained in this document, and if given or made, such information or representation must not be relied upon as having been authorised. This Prospectus has been reviewed and approved by the Securities and Exchange Commission (SEC), pursuant to the Securities Industries Law (SIL) 1993 (PNDCL 333) as amended by the Securities Industry (Amendment) Act 2000, Act 590. In its review, the Commission examined the contents of the prospectus to ensure that adequate disclosures have been made. To ascertain the financial soundness or value of the securities on offer, investors are advised to consult a broker-dealer, investment advisor or other professional advisor for appropriate advice.


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited ii

CCOOMMEETT PPRROOPPEERRTTIIEESS LLIIMMIITTEEDD (Incorporated in Ghana with Limited Liability under the Companies Code, 1963 (Act179) with Registered

Number CA-1,505)

Public Share Offer On Behalf of COMET PROPERTIES LIMITED

of 61,823,968 ordinary shares at GH¢1.00 Per Share By Worldwide Securities Limited (WSL)

The distribution of this document and the offering of the shares in certain jurisdictions may be restricted by law; persons into whose possession this document comes are required by Comet to inform them about, and observe any such restrictions. This document does not constitute an offer to and may not be used for the purpose of an offer to or the solicitation by anyone in any jurisdiction or in any circumstance in which such offer or solicitation is not authorized or is unlawful. Before deciding whether to apply for shares, you should consider whether investment in shares is suitable for you. The value of shares may go down or up. Past performance is not necessarily indicative of future performance. If you need advice you should consult an appropriate professional advisor. Neither the delivery of this document nor sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof or that the information contained herein is correct as of any time subsequent to this date. Worldwide Securities Limited (WSL) is acting solely for Comet Properties Limited (Comet). WSL will not be responsible to any other than Comet for providing the protection offered to its customers or for providing advice in relation to such transactions. To the best of WSL’s knowledge and belief the prospectus constitutes the full and fair disclosure of all material facts about the issue and the issuer and the profit forecast as has been stated by the Directors after due and careful enquiry.

Comet Prospectus dated December 30, 2010


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited iii

Key Milestones and Expected Time Table

Activity Date/Time Launching and Commencement of the offer …..… Thur. 30th December, 2010 10:00AM Offer ends …… … … … … … … …….. … … … Monday 31st January, 2011, 5:00 PM Latest date and time for receipt of application ….. Monday 31st January, 2011, 4:00 PM Allotment begins … … … … … … … …………… Tuesday 1st February, 2011, 9:00 AM Completion of allotment ………………………….… Thursday 3rd February, 2010, 5:00 PM Submission of Report on the offer to SEC … … Thursday 10th February, 2011, 4:00 PM Final Notification of Shares allotted to applicants …. Mon. 14th February, 2011, 10:00PM Dealings Commence on the GSE … ……….. …Monday 14th February, 2011, 10.00 AM


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited iv

TABLE OF CONTENTS

MANDATORY DECLARATION AND STATEMENTS .......................................................................... I KEY MILESTONES AND EXPECTED TIME TABLE ........................................................................ III CORPORATE INFORMATION .............................................................................................................XII EXECUTIVE SUMMARY ..................................................................................................................... XVI SUMMARY OF SELECTED FINANCIAL INFORMATION ........................................................... XIX CHANGES IN STATED CAPITAL ........................................................................................................ XX ASSETS REVALUATION ..................................................................................................................... XXI DIVIDEND RECORDS – PAST AND PROPOSED ........................................................................... XXII ELECTRONIC SHARE CERTIFICATION IN GSE DEPOSITORY.............................................. XXII TAX EXEMPTIONS .............................................................................................................................. XXII RELEVANT DOCUMENTS FOR INSPECTION .............................................................................. XXII 1.0 DESCRIPTION OF THE OFFER ................................................................................................ 1 1.1 THE SHARE OFFER ............................................................................................................................ 1 1.2 OBJECTIVES OF THE SHARE OFFER .................................................................................................... 1 1.3 SHARE OFFERING .............................................................................................................................. 2 1.4 FLOTATION EXPENSES ...................................................................................................................... 3 1.5 THE APPLICATION ............................................................................................................................. 4 1.6 MINIMUM AGGREGATE TAKE-UP FROM SUBSCRIPTIONS ................................................................. 4 1.7 ALLOTMENT, ISSUE OF ADDITIONAL SHARES & OVER-SUBSCRIPTION ............................................. 5 1.8 PLAN OF DISTRIBUTION .................................................................................................................... 6 1.9 RECEIVING INSTITUTIONS ................................................................................................................. 6 1.10 ESCROW ACCOUNT AGREEMENT ...................................................................................................... 6 1.11 REGISTRAR SERVICES ....................................................................................................................... 6 1.12 DEALINGS ......................................................................................................................................... 7 1.13 LISTING ............................................................................................................................................. 7 1.14 DIVIDEND WITHHOLDING TAX ......................................................................................................... 7 1.15 CAPITAL GAINS TAX ......................................................................................................................... 7 1.16 GIFT TAX .......................................................................................................................................... 7 1.17 STAMP DUTY .................................................................................................................................... 8 1.18 RESTRICTIONS ON FOREIGN SHARE OWNERSHIP OF LISTED SECURITIES .......................................... 8 1.19 CORPORATE TAX .............................................................................................................................. 8 2.0 THE COMPANY: COMET PROPERTIES LIMITED ............................................................. 9


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2.1 BRIEF HISTORY ................................................................................................................................. 9 2.2 LEGAL STATUS ............................................................................................................................... 10 2.3 OFFICE LOCATION .......................................................................................................................... 10 2.4 CORPORATE MISSION AND VISION STATEMENT .............................................................................. 10 2.5 COMET’S GOAL ............................................................................................................................... 10 2.6 COMET’S CONCEPT ......................................................................................................................... 11 2.7 COMET’S VALUES ........................................................................................................................... 11 2.8 COMET’S STRATEGY ....................................................................................................................... 11 2.9 COMET’S PLEDGE ........................................................................................................................... 12 2.10 CORPORATE GOVERNANCE ............................................................................................................. 12 2.11 MEMBERS OF THE BOARD OF DIRECTORS ....................................................................................... 12 2.12 POST FLOTATION RECONSTITUTION OF THE BOARD ....................................................................... 14 2.13 CORPORATE GOVERNANCE AND BOARD SUB COMMITTEES ........................................................... 15 2.14 BOARD SECRETARY ........................................................................................................................ 17 2.15 SHAREHOLDING STRUCTURE .......................................................................................................... 17 2.16 MANAGEMENT TEAM ...................................................................................................................... 17 2.17 OTHER STAFF .................................................................................................................................. 19 2.18 FAMILY RELATIONS ........................................................................................................................ 20 3.0 INDUSTRY AND MARKET INFORMATION ........................................................................ 22 3.1 OVERVIEW OF THE ECONOMY ......................................................................................................... 22 3.2 GOVERNMENT POLICIES AND REGULATORY ENVIRONMENT .......................................................... 23 3.3 THE STRUCTURE OF THE INDUSTRY ................................................................................................. 25 3.4 STRATEGIC OPPORTUNITIES ............................................................................................................ 26 3.5 MARKET ANALYSES ....................................................................................................................... 26 3.5.1 Demand and Supply Situation ........................................................................................................ 26 3.5.2 Customer Base ............................................................................................................................... 27 3.5.3 Products .......................................................................................................................................... 27 3.5.4 Promotion ....................................................................................................................................... 29 3.5.5 Competition .................................................................................................................................... 29 4.0 PROSPECTS AND RISK FACTORS ........................................................................................ 30 4.1 LAND LITIGATIONS ......................................................................................................................... 30 4.2 FOREIGN EXCHANGE ....................................................................................................................... 30 4.3 COMPETITION ................................................................................................................................. 31 4.4 LOAN CONTRACTING RISK .............................................................................................................. 31 4.5 INDUSTRIAL RELATIONS RISK ......................................................................................................... 31 4.6 ENVIRONMENTAL AND SOCIAL RISK FACTORS ............................................................................... 32 5.0 FINANCIAL INFORMATION .................................................................................................. 33 5.1 CLEARANCE ON THE HISTORICAL FINANCIAL STATEMENTS ........................................................... 33 5.2 SUMMARY OF HISTORICAL FINANCIAL STATEMENTS ..................................................................... 35 5.2.1 Accounting Policies ....................................................................................................................... 38


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5.2.2 Notes to the Financial Statements .................................................................................................. 39 5.2.3 Management Accounts March 31, 2010 ......................................................................................... 45 5.2.4 Technical Analysis of the Historical Financial Statements ............................................................ 48 5.3 FINANCIAL FORECASTS ................................................................................................................... 51 5.3.1 Key Underlying Assumptions for the financial Projections ........................................................... 53 5.4 SHARE PRICE VALUATION .............................................................................................................. 58 5.4.1 Results of Valuation ....................................................................................................................... 58 5.4.2 Weighted Average Cost of Capital (WACC) ................................................................................. 58 5.4.3 Discounted Free Cash Flow Value ................................................................................................. 58 5.4.4 Net Adjusted Book Value (NABV) ................................................................................................ 58 5.4.5 Weighted Market Value ................................................................................................................. 58 5.4.6 Justification for Selection of weights ............................................................................................. 59 5.4.7 Recommended Share Price and Discount offered .......................................................................... 59 5.4.8 The Price Earnings Multiple .......................................................................................................... 60 6.0 TERMS AND CONDITIONS OF THE OFFER ....................................................................... 62 6.1 GENERAL CONDITIONS ................................................................................................................... 62 6.2 OFFER TO PURCHASE SHARES ......................................................................................................... 62 6.3 ACCEPTANCE OF OFFER .................................................................................................................. 63 6.4 PAYMENT FOR SHARES ................................................................................................................... 63 6.5 REFUND OF EXCESS CASH ............................................................................................................... 64 6.6 LATE REFUNDS ............................................................................................................................... 64 6.7 WARRANTIES .................................................................................................................................. 64 6.8 SUPPLY AND DISCLOSURE OF INFORMATION .................................................................................. 64 6.9 MISCELLANEOUS ............................................................................................................................ 65 7.0 ADDITIONAL INFORMATION ............................................................................................... 66 7.1 OVERVIEW OF THE GHANA STOCK EXCHANGE ............................................................................... 66 7.2 DEVELOPMENT & TRENDS .............................................................................................................. 67 7.3 PERFORMANCE OF THE GHANA STOCK EXCHANGE ........................................................................ 69 7.3.1 Trading Volumes:........................................................................................................................... 69 7.3.2 Traded Values: ............................................................................................................................... 70 7.3.3 Overall Market Performance .......................................................................................................... 70 8.0 APPLICATION PROCEDURE AND FORMS ......................................................................... 72 8.1 THE APPLICATION ........................................................................................................................... 72 8.2 INSTRUCTIONS FOR COMPLETION OF APPLICATION FORM .............................................................. 72


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited vii

LIST OF TABLES

TABLE 1.1: APPLICATION OF PROCEEDS FROM THE IPO ATTRIBUTABLE TO NEW ISSUE OF SHARES ............... 2 TABLE 1.2: DETAILS OF THE OFFER ................................................................................................................. 3 TABLE 1.3: FLOTATION EXPENSES .................................................................................................................. 3 TABLE 1.4: APPLICATION OF MINIMUM AGGREGATE SUBSCRIPTION OF GH¢18 MILLION .......................... 5 TABLE 2.1: MEMBERS OF BOARD OF DIRECTORS .......................................................................................... 13 TABLE 2.2: LIST OF MANAGEMENT TEAM ..................................................................................................... 18 TABLE 3.1: SELECTED MACROECONOMIC INDICATORS ................................................................................. 23 TABLE 3.2: PRICE RANGE OF HOUSES IN ACCRA-TEMA METROPOLIS........................................................... 27 TABLE 3.3: STANDARD FEATURES OF VARIOUS HOUSE TYPES ...................................................................... 28 TABLE 5.1: PROFIT AND LOSS ACCOUNTS FOR THE YEARS ENDED 2006 TO 2009 ......................................... 35 TABLE 5.2: BALANCE SHEETS AS AT DECEMBER 31, 2006 TO 2009 .............................................................. 36 TABLE 5.3: CASH FLOW STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2006 TO 2009 ...................... 37 TABLE 5.4: PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2010 ..................................... 45 TABLE 5.5: BALANCE SHEET AS AT MARCH 31, 2010 .................................................................................. 46 TABLE 5.6: CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2010 ........................................... 47 TABLE 5.7: KEY FINANCIAL RATIOS ............................................................................................................. 50 TABLE 5.8: PROJECTED INCOME STATEMENT, 2010-2014 ............................................................................. 55 TABLE 5.10: PROJECTED BALANCE SHEET, 2010-2014 ................................................................................. 56 TABLE 5.11: PROJECTED CASH FLOW STATEMENT, 2010-2014 .................................................................... 57 TABLE 5.12: THE VALUATION MODEL .......................................................................................................... 59 TABLE 5.13: SUMMARY OF THE OFFER AND SHAREHOLDING ANALYSIS ....................................................... 60 TABLE 5.14: PROJECTED PRICE-EARNING RATIOS ........................................................................................ 60 TABLE 7.1: YEARLY TRADED VALUES FOR THE PAST FIVE YEARS ................................................................ 70 TABLE 7.2: GSE PERFORMANCE TRENDS FOR THE LAST FIVE (5) YEARS....................................................... 71

TO: THE DIRECTOR GENERAL THE SECURITIES & EXCHANGE COMMISSION 30, 3RD CIRCULAR ROAD CANTONMENTS, ACCRA GHANA THE MANAGING DIRECTOR THE GHANA STOCK EXHANCE 5TH FLOOR, CEDI HOUSE ACCRA – GHANA Dear Sir,

COMET PROPERTIES LIMITED INITIAL PUBLIC OFFERING AND LISTING ON THE GHANA STOCK EXCHANGE

1.0 Introduction 1.1 Basis of instructions

We have acted as Flotation Legal Advisors to Comet Properties Limited (“the company” or “COMET”) and Worldwide Securities Limited (“the Sponsoring Brokers and Flotation Managers”) in connection with its proposed initial Public Offering (IPO) and formal listing on the Ghana Stock Exchange (GSE).

P.O. BOX GP 2792 Accra

233 – 24 – 4362169 233 – 3022 - 920746

P.O. BOX 525 Cape Coast

233 – 3321-92862 e-mail [email protected] Date: Sept. 30, 2010


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited ix

1.2 Documents Examined We have examined the following documents in their original forms and certified copies and advise that they be made available at the company’s offices for public inspection during the period of the IPO.

a. The Regulations of the company adopted pursuant to a special resolution by members at

the Annual General Meeting dated 20th September, 2006. b. Special Resolutions by members of the company dated 30th September 2006 to; i. convert the company to a public limited liability company. ii. authorize the Directors of the company to make the IPO and to list the

issued shares on the GSE. c. The draft Prospectus and other offering documents to be issued by the company in

connection with the IPO and the GSE listing. d. A letter from the GSE approving the provisional listing of COMET. e. A letter from the Securities and Exchange Commission approving the Prospectus f. A letter from the Registrar of Companies waiving compliance with sections 274 and 275

(1) (a) of the Companies Code, 1963 (Act 179) in accordance with section 291 A of Act 179.

g. A letter from the GSE approving the GSE listing of COMET shares. h. The Central Securities Depository Act, 2007 (Act 733) i. In addition, we have also examined such other documents, certificates, official searches

and records as are necessary under the laws of Ghana to enable us to give this opinion and certification.

1.3 Scope and purpose of the opinion The opinion expressed herein is limited to matters of the laws of Ghana as are in force

and applied at the date of this opinion. For the avoidance of doubt we have not investigated the laws of any country other Ghana and no opinion is expressed on the laws of other jurisdiction.

The basis of assumptions underlying this opinion are set out in the schedule below.


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited x

2.0 OPINION 2.1 Incorporation COMET Properties Limited is a public limited liability company duly incorporated under

the Companies Code, 1963 (Act 179). 2.2 Authorization to do Business COMET is authorized by its Regulations and has obtained all the necessary corporate

authorizations and approvals necessary or advisable in connection with the IPO and GSE listing.

2.3 Approvals and Consents COMET has obtained all the necessary regulatory and statutory approvals, consents or

authorizations of any governmental or other authority that are necessary or advisable in connection with the IPO and GSE listing.

2.4 The Prospectus The Prospectus substantially complies with the requirements of schedule 5 of the

Securities and Exchange Commission Regulations, 2003 (L.I. 1728) and Schedule 7 of the Companies Code, 1963 (Act 179).

2.5 Material Contracts All the material contracts of Comet necessary for the conduct of its business are in proper

legal form for the particular matters to which they are related and enforceable under the laws of Ghana.

2.6 The Regulations 2.6.1 The Regulations comply with all legal requirements on the contents of the Regulations of

a public company.

2.6.2 The Regulations comply with the GSE Rule Book. 2.6.3 The proposed IPO and GSE Listing do not contravene any provision of the Regulations. 2.7 Contractual Obligations To the best of our knowledge and upon enquiry and verification, there are not contractual

agreements, obligations or undertakings preventing COMET from undertaking the IPO and GSE Listing.


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2.8 Registration and Filings All Statutory or regulatory registration or filing requirements necessary or advisable in

relation to or in connection with the IPO and GSE listing have been complied with. Yours faithfully,

AMPONSA –DADZIE & ASSOCIATES

- SCHEDULE – ASSUMPTIONS

In giving this opinion, we have assumed, and this opinion is given on the basis that; 1. All original documents supplied to us are complete, authentic and up to date, and that all

copy documents supplied to us are complete and confirm to the originals. 2. The person or person’s who signed the relevant Documents were authorized to do so. 3. The authorizing resolutions of COMET were duly passed at properly convened meetings

of members and directors and a duly qualified quorum voted in favour of approving the relevant board resolutions.

4. All material contracts have been reviewed and assurances received from the directors that

they are genuine.


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited xii

Corporate Information

BOARD OF DIRECTORS

: Nana Odeneho Kyeremateng (Executive Chairman) Mr. Samuel Amponsah Kyeremateng Mr. Osei Owusu Mr. Sampson Awuah Mr. Kwasi Sarpong Peprah

COMPANY SECRETARY

: Mr. Kwasi Sarpong Peprah Comet Properties Limited

REGISTERED OFFICE

: 3rd Floor Kapital Building Ring Road Central, Kwame Nkrumah Circle Accra PO Box KA 16392 Airport, Accra Telephone: +233 (0)30 2257735/ 2256625 Fax: +233 (0)30 2256625 e-mail: [email protected] [email protected] website: www.comethomesgh.biz

AUDITORS

: Cardinal Consult Chartered Accountants PO Box OS 414 Osu, Accra

SOLICITORS

Edward Darlington % Comet Properties Limited PO Box KA16392 Airport, Accra

Bankers: Standard Chartered Bank


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited xiii

Barclays Bank Ghana Limited Agricultural Development Bank

LEAD ADVISORS TO THE LISTING

: Worldwide Securities Limited No. 80 Yeboah Afari Plaza Ringway Estates, Osu. PO Box OS1072, Osu, Accra. Contacts: Kwadwo Ansah Afari – CEO Ms. Juliana Obessey – Head of Brokerage Tel: +233 (0)30 2764578/9, 2256001/2 Fax: +233 (0)30 2764580 E-mail: [email protected] [email protected]

SUPPORTING ADVISORS: Legal Due Diligence:

Amponsah-Dadzie & Associates Esi Dentewa Chambers P. O. Box GP 2792 Accra P.O. Box 525 Cape Coast

Mr. Ollenu Amponsah Dadzie

Assets Verification: Apex Valuation, Surveying & Property Consult Melvina House 3rd Suite Three No.8 Okai M Lane Adabraka, Accra

Mr. Andrew Kojo Asamoah, M.Gh.I.S.

Reporting Accountants/Financial Due Diligence:

Delloite & Touche Audit and Assurance


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited xiv

4 Liberation Road P.O Box GP 453 Accra

Contact: Mr. Andrew Ampong

Technical & Management Consultants1: Worldwide Investments Co. Ltd. No. 80 Yeboah Afari Plaza Ringway Estates, Osu. PO Box OS1072, Osu, Accra.

Mr. Rexford Adomako-Bonsu – President & CEO

Registrars: NTHC Limited Martco House 1st Floor Okai Mensah Link PO Box KIA9563 Airport, Accra, Ghana

Website: www.nthcghana.com Email: [email protected] Tel: +233 (0)30 2238492-3, 235814-5. Fax: +233 (0) 30 2240243 Contact: Mrs. Hellen Obeng

Media Advisors: Channel Two Communications 13 Yiyiwa Drive Abelemkpe, Accra

Contact person: Mr. David Ampofo

1 The Technical and Management Consultant is a registered Founder Associate Member of the GSE and it shares common shareholder with the Lead Advisor. The two companies are however operationally independent.


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited xv

Receiving Institutions:

Worldwide Securities Limited

CAL Brokers Limited Merban Stockbrokers Limited EDC Stockbrokers Limited Strategic African Securities Limited NTHC Securities Limited First Atlantic Brokers Limited Gold Coast Securities Limited Newworld Renaissance Securities

Limited SDC Brokerage Services Limited HFC Brokerage Services Limited Prudential Securities Limited SIC Financial Services Limited CDH

Securities Limited IC Securities Limited African Alliance Securities Ghana

Limited Liberty Capital Ghana Limited Databank Brokerage Limited CDH Securities Limited

Ghana Commercial Bank Ecobank Ghana Limited Zenith Bank Ghana Limited


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited xvi

EXECUTIVE SUMMARY

The Company The name of the Company is COMET PROPERTIES LIMITED.

Location The company is ran from two sites as detailed below: (i) The corporate administrative office is the Capital

Building, at the Kokomlemle end of Kwame Nkrumah Circle, Accra.

(ii) Current development site is the Hill City, Brekuso, on the Akuapim Hills.

Authorized Business The Company is authorised, to carry on business as follows: a) Real estates developers b) production and distribution of quarry stones c) production and distribution of cement and concrete

products d) dealers in wood and furniture

Products of the Company

COMET presently deals in the following products

• serviced lands

• sale of houses

| 2 bedroom detached | 2 bedroom semidetached | 3 bedroom detached | 3 bedroom semidetached | 3 bedroom detached with boys quarters (out house) | 3 bedroom storey | 4 bedroom storey | 4 bedroom storey with out house

• contract services for the construction of houses to specification

New Products Comet, after the IPO, will commence the construction of low-cost high-rise residential buildings at its Hill City site. The company


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plans to construct at least 20 blocks of these low cost apartments, with each block containing 32 apartments/flats to cater for the housing needs of workers.

Comet is in the process of establishing new industries to manufacture downstream products to be used in its housing projects – these include, the manufacture of concrete products and roofing materials, plastic T&G, for ceiling and panelling, etc.

The facility for producing the concrete products is ready and is undergoing test running. The machinery and equipment for producing the roofing sheets have been acquired and the factory building is nearing completion.

Governance & Management

The Members of the Board of Directors of the Company are:

1. Nana Odeneho Kwaku Kyeremateng (Chairman) 2. Mr. Samuel Kyeremateng 3. Mr. Sampson Awuah 4. Mr. Osei Owusu 5. Mr. Kwasi Sarpong Peprah

Company Secretary – Mr. Kwasi Sarpong Peprah The Management Team is made up of:

1. Nana Odeneho Kwaku Kyeremateng – Managing Director

2. Mr. Samuel Kyeremateng – Technical Director 3. Mr. Sampson Awuah – Director, Projects 4. Mr. Nicholas Mensah – Finance Manager 5. Mr. Joseph Kodua – Head of

Estates/Marketing Dept 6. Mr. Edward Cudjoe – Acting Project Manager 7. Mr. Kwasi Sarpong Peprah – Director for

Administration 8. Maame Serwaah Kyeremateng, Manager,


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Corporate Affairs 9. Mr. Edward Darlington – Legal Officer

The Proposed Share Offer

The company is offering to the investing public 61,823,968 shares of no par value for subscription. This is made up of 54,095,972 new shares to be issued from Authorised Shares whilst 7,727,996 ordinary shares are being offered by the existing shareholder for sale to the public. The 54,095,972 new shares are anticipated to increase the issued shares outstanding from 154,559,920 to 208,655,892. The new shareholders will hold 30% of the company’s post flotation shares. Authorized Shares is 2,000,000,000 ordinary shares of no par value. The share offer is summarised thus; Authorised Shares 2,000,000,000 Existing Shares 154,559,920 Additional Issue 54,095,972 From existing Shareholders 7,727,996 Total Shares on Offer 61,823,968 Total Shares After Flotation 208,655,892 Share Price GHC 1.00Current Capitalisation GHC 159,810,712Value of New Issues GHC 54,095,972Value of Issues from existing Shareholders

GHC 7,727,996

Value of Ordinary Shares on Offer GHC 61,823,968Post Flotation Market Capitalisation at GH¢1.00/share

GHC 208,655,892

Purpose of the Proposed Offer

The objective among other things is to increase the company’s capacity to deliver housing units to the public, retire long term debts, set up and/or expand downstream facilities for the production of roofing tiles, concrete products, aggregate stones, wood products and plastic T&G to support the core business of delivering affordable and functional houses as well as support working capital needs. In addition to expanding the production of


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the current brand of houses, the company plans to produce high-rise low-cost residential houses for workers.

Symbol The symbol of the Company is “COMET”

Sponsors Worldwide Securities Limited

Summary of Selected Financial Information

Selected Income Statement Information, (2006 to 2009) ITEM 2006 2007 2008 2009 Amount in Ghana Cedis (GH¢) Turnover 5,454,690 18,272,891 19,339,504 14,507,600 Gross Profit 1,523,592 3,248,388 4,269,112 4,821,657 Net Profit Before Interest & Taxation 850,811 1,936,877 2,896,630 3,559,355 Profit After Tax 758,311 1,833,427 2,663,564 3,373,685

Income Surplus Account (2006 to 2009)

2006 2007 2008 2009 Balance at January 1 1,733,485 791,796 2,625,223 5,288,787 Net Profit for the Year 758,311 1,833,427 2,663,564 3,373,685 Transfers to Stated Capital (1,700,000)

Balance at December 31 791,796 2,625,223 5,288,787 8,662,472


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Selected Balance Sheet Information

ITEM 2006 2007 2008 2009 Amount in GH¢ Property and Equipment 2,759,273 225,493,909 227,843,065 229,368,035 Current Assets 80,340,838 126,089,704 128,793,145 133,403,671 Total Assets 83,100,111 351,583,613 356,636,210 362,771,706 Capital and Surpluses Stated Capital 72,279,960 72,279,960 72,279,960 72,279,960 Income Surplus 791,796 2,625,223 5,288,787 8,662,472 Capital Surplus 182,046,550 182,046,550 182,046,550 Total Equity /Net Worth 73,071,756 256,951,733 259,615,297 262,988,982 Total Current Liabilities 1,241,855 87,626,719 85,795,913 41,557,724 Long Term Liabilities 8,786,500 7,005,161 11,225,000 85,225,000

Changes in Stated Capital

On incorporation, Comet Properties Limited issued 5,000,000 ordinary shares which was fully paid for a consideration of GH¢500. The company’s net worth increased over the years through the accumulation of income surpluses and revaluation surplus. The Directors’ Current Account represented significant amounts of resources injected into the company to support its operations by the sole shareholder Nana Odeneho Kyeremateng. On September 20, 2006, the company’s existing stated capital was increased from GH¢500.00 to GH¢72,279,960 by:

• The transfer of GH¢1,700,000 from the accumulated income surplus Account of GH¢1,733,486;


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• And a further transfer of all the accumulated Directors Current Account of GH¢70,579,460.

These transfers were accompanied by the issue of corresponding additional 722,799,601 ordinary shares, which were further consolidated in consonance with Companies Code 1963 (Act 179) Schedule 2 subsection (8b) to 72,279,960 shares. Available for your perusal is a Special Resolution dated September 20, 2006 on these transfers from the Income Surplus Accounts and the Directors’ Current Account to stated capital and the corresponding issued shares. Further, on May 17, 2010, the company undertook share split by issuing one additional share to any share held. By this, the total issued shares of the company were increased from 77,279,960 to 154,559,920.

Assets Revaluation

As a result of the dynamic nature of the Real Estate Industry, asset values increase regularly due largely to demand and supply factors. This is particularly true with the price of land which has experienced astronomical increases over the last couple of years. In response to this development, the Company has had to revalue its assets regularly to reflect fair market values. The first of such asset revaluations was conducted in December 2006. This was followed by subsequent revaluations on January 2008 and August 2009. Presented below are the summary findings of the most recent asset revaluations conducted in May 2010. May 2010 (US$) Land Bank (2,500 acres) 55,000,000.00 Serviced Plots (1,125 Plots) 39,375,000.00 Houses available for sale 7,700,000.00 Houses Under Construction 7,800,000.00 Office Building at site 1,020,465.00 Motor Vehicles 600,000.00 Office Equipment 350,152.00 Furniture and Fittings 392,662.00 Plant and Machinery 8,001,543.60 Total 120,239,822.60


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited xxii

Dividend Records – Past and Proposed

Historically, the Directors of Comet Properties Limited opted not to declare dividends but to plough back profits into the operations of the company. The company in 2006 transferred an amount of GH¢1,700,000 from the Income Surplus Account to Stated Capital. The company, upon expansion of its shareholder base, following this IPO shall institute appropriate Dividend Policies that will guide the Directors in declaring and paying future dividends. This prospectus projects dividend payout of 30% per annum.

Electronic Share Certification in GSE Depository

Comet, by a resolution dated 15/03/2010 has decided to subscribe to the GSE Securities Depository System by keeping shareholdings in electronic form with the GSE Securities Depository Company Limited. In our desire to ensure maximum public patronage of this IPO, the company has decided to issue shares in electronic form to those who already have accounts in the GSE Securities Depository System. For those without accounts, letters of allotment will be given them to take to brokers of their choice so that accounts can be opened for them and shares credited to those accounts. The lead managers of the offer and its receiving agents will however exert their maximum effort to ensure that most participants in the IPO without GSD accounts are made to sign up to the System.

Tax Exemptions

Comet Properties Limited has been exempted from paying corporate taxes since 2005 and up to 2010.

Relevant Documents for Inspection

The following documents relative to the offer will be available for inspection during the offer period at the offices of Comet Properties Limited:


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited xxiii

1. Certificate of Incorporation of Comet Properties Limited 2. Certificate to Commence Business of Comet Properties Limited 3. Company Regulations of Comet Properties Limited 4. Share Transfer Agreement between Mr. Samuel Kyeremateng and Nana

Odeneho Kyeremateng 5. Annual Audited Financial Statements 2006 to 2009 6. Management Accounts, March 31, 2010. 7. Assets Revaluation Report, May 2010. 8. Regulations of the Company adopted on conversion to a Public Company by

Special Resolution dated Wednesday, 20th September, 2006 9. Special Resolutions:

a. To recapitalise the company by transfer of income surpluses and credits on Director’s Current Accounts to increase the company’s Stated Capital from GH¢500.00 to GH¢72,279,960 dated September 20, 2006.

b. To adopt Regulations of the Company pursuant to conversion of Comet to a Public Company. And a Special Resolution to list the Company on the Ghana Stock Exchange dated September 20, 2006

c. Undertaking to comply with the continuing listing obligations of the Exchange as well as the guidelines for Provisional to listing on the GSE.

d. Undertaking to complete the formal listing process within a period of six months from the date of the Provisional Listing or in a shorter period as may be agreed upon with the Exchange.

10. Provisional Listing Statement dated October 20, 2009. 11. Financial Due Diligence Report, May 2010 12. Legal Due Diligence Report, May 2010 13. Stand-still undertaking by the existing shareholder dated 9th August, 2010.


Lead Advisor and Sponsoring Broker: Worldwide Securities Limited 1

1.0 DESCRIPTION OF THE OFFER

1.1 THE SHARE OFFER

The Comet Share Offer is an open, unrestricted cash Offer made to all interested investors, institutions and individuals resident in Ghana and, resident institutions and individuals in a limited number of other countries whose laws allow them to invest under the conditions of the Offer. The company is offering 61,823,968 ordinary shares of no par value for subscription at a price of GH¢1.00 per share through a public offering to the general public under the terms of the offer. Comet Properties Limited expects to raise an amount of GH¢61,823,968 from the proceeds of this Offer. Of this amount, GHC 7,727,996 representing 12.5% shall go to the current shareholder being 7,727,996 shares offered for sale in this IPO. The remaining GHC 54,095,972 being proceeds from new shares to be issued under the offer will be used for the expansion of the operations of the company, by establishing down stream operations for the production of plastic T&G for ceiling and panelling, aggregate stones (stone quarry), expansion of the company’s wood processing facility and its aluminium fabrication plant. The amount shall also be used to construct 1,000 residential houses during the plan period as well as low cost high rise buildings for workers. Flotation costs will also be paid out of the proceeds to be raised.

1.2 OBJECTIVES OF THE SHARE OFFER

The objective is to raise additional equity capital: a. To increase the production of houses b. Increase housing units in the existing Key Market-Accra, c. Expand the operations of the Company to other key markets in Ghana

notably Kumasi and Sekondi-Takoradi; d. Establish related auxiliary projects- Plastic T&G production facility, stone

quarry to support the core business of delivering affordable and functional houses

e. To expand existing auxiliary facilities namely: – wood processing and aluminium fabrication factories



f. Retire all medium term debt, g. Support working capital needs and h. Pay flotation and related expenses and other third party expenses

Table 1.1 below details the projected utilisation of the proceeds of the IPO.

Table 1.1: Application of Proceeds from the IPO Attributable to new Issue of Shares

Amount (GH¢) Establish Factory for the production of Plastic T&G 1,450,000 Establish Stone Quarry 2,175,000 Expansion of Wood Processing Factory 3,625,000 Expansion of Aluminium Fabrication Factory 725,000 Purchase of Motor Vehicles 2,000,000 Working Capital for the Construction of High Rise Buildings for Workers 13,700,000 Construction of the current brand of houses (1,000 units) 13,000,000 Payment of Overdraft from Banks 8,277,900 Flotation Expenses chargeable to the Company on new issue of shares 2,706,070 Payment of amount owed to the Registrar of companies 365,350 Acquisition of land in Takoradi and Kumasi 6,071,652 Total 54,095,972

1.3 SHARE OFFERING

A total of 61,823,968 ordinary shares are being offered to the public. This is made up of 54,095,972 new shares to be issued from Authorised Shares, whilst 7,727,996 ordinary shares are being offered by the existing shareholder for sale to the public. The 54,095,972 new shares are anticipated to increase the issued shares outstanding from 154,559,920 to 208,655,892. Details of the offer are summarised below.



Table 1.2: Details of the Offer

Authorised Shares 2,000,000,000 Existing Shares 154,559,920 Additional Issue 54,095,972 From existing Shareholders 7,727,996 Total Shares on Offer 61,823,968 Total Shares After Flotation 208,655,892 Share Price GHC 1.00 Current Capitalisation GHC 159,810,712 Value of New Issues GHC 54,095,972 Value of Issues from existing Shareholders GHC 7,727,996 Value of Ordinary Shares on Offer GHC 61,823,968 Post Flotation Market Capitalisation at GH¢1.00/share GHC 208,655,892

1.4 FLOTATION EXPENSES

The total cost of the flotation of the shares of Comet is estimated to be 5.00% of the amount to be raised and will be paid pro rata by the Company and the selling shareholder. The expenses shall therefore be borne by the Company and the selling shareholder in the ratio of 87.5% (GH¢2,704,799) to 12.5% (GH¢386,400) respectively. Table 1.3 presents the summary. Table 1.3: Flotation Expenses

Item Amount (GH¢) %

GSE 47,400 0.08% SEC (0.05% of the offer) 30,912 0.05% Registrars 10,000 0.02% Vendors’ Commissions 927,360 1.50% Media, road show and Prospectus Printing 261,040 0.42% Provisional Listing Expenses 12,365 0.02% Stamp Duty to the Registrar of Companies (0.5% of GH¢54,095,972) 270,480 0.44% Consultants' Fees (Mgt, Financial, legal, valuation, assets verification/valuation, reporting accountants, lead managers) 1,039,415 1.68% Success Fees 492,227 0.80% Total GH¢3,091,198 5.00%



1.5 THE APPLICATION

The minimum subscription for each application must be for 50 shares, and thereafter, in multiples of 10 shares. Close of day, Monday 31st January, 2011 will be the latest date and time for the receipt of an Application Form. The share offer commences on Thursday, 30th December, 2010 and ends on Monday 31st January, 2011. Should it become necessary however, the offer will be extended by two (2) weeks to end on Tuesday 15th February, 2011. If an application is successful, in whole, or in part, the number of shares allotted shall be kept electronically on GSD and the applicant notified. If there is excess demand under the Share Offer, the applicant may receive fewer shares than he/she might have expected to receive on the basis of the maximum amount he/she had expressed willingness to invest in the Share Offer. If an application is unsuccessful, or is accepted in part, or if the amount of the application divided by the offered price does not equal a whole number of shares, a refund for the appropriate amount, without interest, will be returned to the applicant within 14 working days after the allotment without interest (excluding holidays). Late refunds will attract an annual interest rate of 5%. The right is reserved to present for payment all cheques, bankers drafts, and money/postal orders on receipt. It is a condition of the Offer that all cheques or other remittances must be honoured on first presentation. No interest will be paid to applicants on any monies held on behalf of applicants, or on behalf of the Company.

1.6 MINIMUM AGGREGATE TAKE‐UP FROM SUBSCRIPTIONS

Comet’s Offer is expected to raise a total of GH¢61,823,968 but the Company has set itself a minimum aggregate subscription of GH¢18 million, which is deemed a reasonable threshold to meet significant part of the company’s projected capital expenditure for 2010 as well as increase its working capital to carry through the strategic objectives of the Company. In the event that this amount is not obtained, all application monies received will be refunded without interest to the applicants within three weeks



(21) days of the close of the Offer and the Offer accordingly cancelled. Refunds after this time period will attract the prevailing Bank of Ghana prime rate. In the event of the IPO not meeting the projected full subscription target of GH¢61,823,968, but realising the minimum aggregate subscription of GH¢18 million, the application of funds will be prioritised in accordance to the disbursement schedule in table 1.4. Table 1.4: Application of Minimum Aggregate Subscription of GH¢18 million

Amount (GH¢)

Establish Factory for the production of Plastic T&G 1,450,000 Establish Stone Quarry 2,175,000 Expansion of Aluminium Fabrication Factory 725,000 Purchase of Motor Vehicles 2,000,000 Working Capital for the Construction of High Rise Buildings for Workers 6,850,000 Payment of amount owed to the Registrar of companies 365,350 Flotation expenses 1,440,000 Construction of the current brand of houses 2,994,650 18,000,000

1.7 ALLOTMENT, ISSUE OF ADDITIONAL SHARES & OVER‐SUBSCRIPTION

The allotment of shares will ensure widespread ownership. In the event of over-subscription, monies in respect of applications not allocated will be returned to applicants. The Managers reserve the right to accept or reject any Application in whole or in part, if it is determined to be incomplete, illegible, or if it is determined that the Applicant is not eligible to participate in this Offer. Applications, which are received after closure of the offer, will not be considered. In the case of an oversubscription, the Company will issue additional shares of up to 40% of the current offer, representing a maximum of 24,729,587 ordinary shares. These shares will be additional to the total shares of 61,823,968 offered for sale.



1.8 PLAN OF DISTRIBUTION

• No director or senior management or staff has declared his intention to subscribe to the Offering. However, there is no restriction on any of these parties who want to acquire some of the shares during the Offer period at the price of GH¢1.00/share.

• None of the Shares on Offer has been reserved for any targeted investors.

1.9 RECEIVING INSTITUTIONS

This public share offer is under the management of Worldwide Securities Limited. The shares are also available at the offices of all registered brokers, the list of which can be read from page xv of this prospectus. Other receiving agents are Ghana Commercial Bank Limited, Ecobank (Ghana) Limited and Zenith Bank Ghana Limited.

1.10 ESCROW ACCOUNT AGREEMENT

All application monies collected on behalf of Comet by Vendors and Agents are to be paid into the Escrow Account Number 0006010138280 at the Premier Towers Branch of Zenith Bank Ghana Limited, Accra. Vendors and Agents will operate a separate bank account designated “Comet Share Offer Account” into which all payments in respect of this Comet Share Offer shall be placed. A vendor/Agent will thereafter issue a cheque for the bulk amount on a weekly basis to the order of Comet/WSL Escrow Account. A copy of the Escrow Account Agreement has been lodged with the SEC.

1.11 REGISTRAR SERVICES

The Register of the members of the Company will be maintained by NTHC Limited, Martco House 1st Floor, Okai Mensah Link, PO Box KIA9563, Airport, Accra, Ghana. Shares allotted pursuant to the offer will be registered in the Register alongside the shares already issued. Shares of the company will be held electronically in the GSE Depository System.



1.12 DEALINGS

Dealings in Comet’s shares is expected to commence on the Ghana Stock Exchange on Monday 14th February, 2010 and can only take place through a licensed dealing member of the Exchange. The shares will be traded on the GSE in Cedis and dealings are expected to take place in lots of 100 shares among the licensed dealers. However shareholders can legally sell any number of shares.

1.13 LISTING

Application has been made to the Ghana Stock Exchange for all of the 154,559,920 ordinary shares outstanding and any additional new shares issued as described herein to be admitted to the Exchange’s First Official List. The Ghana Stock Exchange has given approval for the listing of the said shares.

1.14 DIVIDEND WITHHOLDING TAX

Under current Ghanaian legislation, tax is withheld from dividend payments by the Company at the rate of 8%. No further Ghanaian tax is payable on dividends received.

1.15 CAPITAL GAINS TAX

Exemption from the payment of capital gains tax on disposal of securities was in force from November 1990 to November 2010. It is the expected that this will be extended for another term.

1.16 GIFT TAX

Under the Internal Revenue Act 2000, liability to gift tax may arise by gift of shares in the Company if the open market value of the shares at the time of the gift exceeds GH¢50.00 (subject to certain exemptions). The tax is payable by the donee of the gift at 10% of the excess over GH¢50.00. Any value up to GH¢50.00 does not attract a gift tax.



1.17 STAMP DUTY

The Stamp Duty (Amendment) Act, 1996, (Act 510) has granted foreigners as well as Ghanaians general exemption from all stamp duties in respect of transfers of shares in companies listed on the Ghana Stock Exchange.

1.18 RESTRICTIONS ON FOREIGN SHARE OWNERSHIP OF LISTED SECURITIES

Foreign Exchange transactions are currently governed by the Foreign Exchange Act, 2006 (Act 723). It grants permission for external residents to deal in securities listed on the Exchange without prior Exchange Control approval, and assures full and free foreign exchange remittability of original capital or principal amounts, any gains, dividends or interest payments, and related earnings and refunds in respect of investments made by external residents in such securities.

1.19 CORPORATE TAX

The Internal Revenue Act 2000 (Act 592) prescribes a general corporate tax of 25% for all listed companies. This rate was reviewed in the 2006 fiscal budget and thus new companies being listed will enjoy a 3% rebate on the corporate tax rate for the first three years of full listing.



2.0 THE COMPANY: COMET PROPERTIES LIMITED

2.1 BRIEF HISTORY

COMET PROPERTIES LIMITED was established in Ghana by Mr. Samuel Kyeremateng in the year 2002, as a Real Estate firm, with the primary objective to construct and deliver into the Ghana Property Market, functional and comfortable houses. The company was issued with a certificate of incorporation number CA-1,505 on April 24, 2002 and on the same day was issued with a Certificate to Commence Business as a Private Company limited by Shares. Mr. Samuel Kyeremateng after acquiring initial land for residential real estate development decided to transfer all his 100% interest in the company to his senior brother Nana Odeneho Kyeremateng, a legal practitioner and a Land broker in Accra. The deed of transfer is duly registered with the Registrar of Companies and copies are available for inspection. The company in fulfilment of its Mission Statement of transforming virgin lands into modern cities, develops and services residential plots with utilities like water, electricity and access roads and leases them to the general public at competitive prices. The company has chalked a lot of successes during the few years of operation since its inception. From a meagre 200 acres of land as its maiden acquisition, Comet now possesses a land bank of over 2,000 acres in and around the capital of Ghana, Accra. Comet’s maiden Estate known as HILLSIDE HOUSING ESTATE, is located at the Southern End of AKWAPIM HILLS near ASHONGMANG HOUSING ESTATE – ACCRA. The general public response to the company’s services and products has been very encouraging and this has necessitated the extension of its geographical area of operations to cover new acquisitions since 2004, at Obosomase, on the same Akwapim Hills. The company is a respected member of Ghana Real Estate Developers Association (GREDA). Comet, in its maiden entry into the prestigious Ghana Club 100 in 2008 impressively placed 47 in the over all rankings and 1st in the Real Estates Industry rankings.



Comet Properties Limited is currently expanding its operations to cover other regional capitals of the country. Current development site is at the Hill city at the Akuapim Hills, near Accra.

2.2 LEGAL STATUS

Comet Properties Limited by the adoption of a special resolution on September 20, 2006 was converted from a private limited liability company to a Public Company Limited by Shares. The Regulations of the Company has been submitted with this offer document to the Ghana Stock Exchange and it is available at the offices of Comet Properties Limited and Worldwide Securities Limited for the perusal of interested prospective investors during the offer.

2.3 OFFICE LOCATION

The Head Office of Comet Properties is located in the Kapital Building at the Kokomlemle end of Kwame Nkrumah Circle. Its present development sight, the Hill City, Brekusu on the Akuapem Hills has offices for the technical and the construction staff.

2.4 CORPORATE MISSION AND VISION STATEMENT

The company’s vision is “To be the leading and the most sought after property developer in Ghana and the ECOWAS sub-region by delivering high quality functional and affordable houses to meet the needs of society”. The mission is: “dedicated to transforming virgin lands to modern cities with the development of modern infrastructure and provision of utilities within its township.”

2.5 COMET’S GOAL

Comet’s goal is to: • Become an urban and residential estate developer of preferred choice within Ghana

and the ECOWAS sub-region, • Achieve high standards of excellence in residential development and post

constructional management services,



• Achieve sustainable levels of long term growth and stability in order to meet the needs of the various stakeholders including customers, residential dwellers, shareholders, employees, the townships and the immediate environs.

2.6 COMET’S CONCEPT

Comet is dedicated to supporting private urbanisation as a choice of residential real estate development. Comet has four project concepts designed for the Hill City Project and these are as follows: Concept Units Location 1 Workers’ High rise Housing Scheme –

Affordable Homes 30 acres (20 units)

Hill Side – Brekusu

2 Exclusive/Executive Scheme 400 acres Hill Top – Brekusu 3 Middle Class Scheme 200 acres Hill City Brekusu/Ashongman 4 Serviced Plots 200 acres Hill Top Brekusu

2.7 COMET’S VALUES

COMET PROPERTIES LIMITED expects all employees to conduct themselves according to the core values and ethics established by the company, namely:

• Service quality and excellence • Hard work and team play • Work life balance • Integrity and respect • Open communication • Commercial viability

2.8 COMET’S STRATEGY

Comet’s strategy is to: • be totally customer focused • develop a dynamic organizational structure that addresses the changing needs of the

industry and customers • recruit and retain the best people for every position



• maximize the usage of information technology for the delivery of its services, • Be efficiency and productivity driven.

2.9 COMET’S PLEDGE

COMET realizes that the success of the Company’s operations is rooted in the commitment of its employees to achieving the company’s goals and objectives and the satisfaction of its customers. COMET is thus committed to providing its employees with a positive work environment that provides opportunity for personal growth. Each employee is encouraged to contribute to improve the effectiveness of Comet. COMET PROPERTIES LIMITED customers are the essence of its business. Employees of the company are encouraged to extend to each other and to each customer utmost respect and personal attention.

2.10 CORPORATE GOVERNANCE

The Board of Comet, with the determination to ensure high performance and compliance with acceptable industry standards established by regulatory authorities, is committed to good corporate governance. They thus continually monitor and review policies and processes affecting all aspects of the operations of the company. Of particular concern are the issues of employee welfare and the assurance of strong leadership that gives room for skills development and improvement in their capacities through formal and on- the -job training.

2.11 MEMBERS OF THE BOARD OF DIRECTORS

At the apex of the company’s organisational chart is a five-member Board of Directors. Their brief profiles are listed in table 2.1 below.



Table 2.1: Members of Board of Directors Name Age Address Background/

Qualification Position

Mr. Odeneho Kwaku Kyeremateng

53 years PO Box 9264, Airport, Accra

Lawyer Executive Chairman

Mr. Samuel Kyeremateng 48 PO Box 557, Korle-Bu, Accra

Chemical Engineer

Executive Director

Mr. Sampson Awuah 46 18 Sgt. Adjetey St., Adenta Housing Estate, Accra

Architect Executive Director

Mr. Osei Owusu 53 15 Awuley St. Agbogba, Accra

Banker Non-Executive Director

Mr. Kwasi Sarpong Peprah 47 HNo. 2, Church Road, New Nii Abetiaman Asofa, Accra

Administrator Executive Director

Nana Odeneho Kyeremanteng, 53 years, is the Executive Chairman of the Company. He holds a BA Law (Hons) degree from the University of Ghana, Legon (1981), and Barrister at Law (BL) from Ghana School of Law (1988). Between 1981 and 1986 he was a Teacher at Oyo State Central Schools Board. He joined J B Da Rocha Chambers as a Junior Counsel/Solicitor from 1988-1994. Between 1994 and 1996 he worked with the State Housing Corporation as Legal Consultant. In 1996 he set up his own Legal Consulting Firm, Kwaku Kyeremanteng & Co where he was the Chief Legal Consultant from 1996 to 2004. He has been the Executive Chairman of Comet since 2005. Nana Odeneho Kyeremanteng joined the Board of the Company in 2005

Mr. Samuel Kyeremanteng, 48 years, is the Executive Director in charge of operations and Technical duties. He holds a B.Sc. Degree in Engineering (1986) from the Ryerson University, Toronto Canada. Before setting up Comet in 2002, he had worked as an Assistant Researcher with the Ministry of Environment (1987); Ontario Province, Canada, as Production Supervisor with Shopsy’s Foods Limited- a subsidiary of Lever Brothers-(1988); and finally as the CEO of Smoth and Natural Limited Toronto , Canada (1992-1999). He joined the Board of COMET in 2002.



Mr. Osei Owusu, 53 years, is a Non- Executive Director of Comet Properties. Mr. Osei Wusu holds B.A. Degree in Political Science from University of Ghana (1985) and Certificate in Marketing from the Chartered Institute of Marketing (UK) 1995. He has a wealth of experience in Banking having spent over 10 years with the Bank for Housing & Construction (BHC) (from1987-2000). Before joining BHC he was employed by Produce Buying Company (PBC) as District Monitor of Akuafo Cheques from 1985-1986. He rose to the level of Regional Manager in 1987, a position he held until he resigned to join Bank for Housing &Construction (BHC) in 1987. He joined the Board of COMET in 2004.

Mr. Sampson Awuah, 46 years of age, is an Executive Director of Comet. He holds Diploma in Civil Engineering from the Institute for Foreign Students, Sofia Bulgaria (1984-1985) and obtained the MSc Architecture from the Higher Institute for Architecture, Sofia, Bulgaria from 1985 to 1991. He is an Associate Member of the Ghana Institute of Architects (since February 1994) Mr. Awuah was employed by the State Housing Corporation (SHC) from February 1992 to January 1998. He held various Managerial positions including being the Acting Architect for the Northern, Upper and Upper West Regions. He was at one time the Chairman of the Greater Accra Interim Management Committee (IMC) of SHC Limited. He also acted as the Construction Supervisor for the construction of the National Theatre which was constructed by the China State Construction Corporation. He has been a Business Partner of Avangard Design Series, an Architectural Consulting firm based in Accra since March 1998. He joined Comet Properties Limited as an Executive Director in charge of Operations in 2006. Mr. Kwasi Sarpong Peprah, 46 years of age, is the Director for Administration and Head of Human Resources. He is a graduate of Kwame Nkrumah University of Science and Technology (BSc. Biochemistry) (1986). He has attended various Management programs to enhance his capacity. These include Certificate of Achievement in Project Management, (July 2006), and Post graduate Certificate in Business Administration (November 2006) at the Ghana Institute of Management and Public Administration (GIMPA).

2.12 POST FLOTATION RECONSTITUTION OF THE BOARD

In line with good governance practices, the Board of Comet shall be reconstituted after the flotation to reflect the post flotation shareholding structure. The reconstitution of the Board will lead to the following changes.



• The Executive Chairmanship position will be abolished and a new Chief Executive

Officer of the Company shall be appointed, who will serve on the Board in executive capacity.

• The number of Executive Directors will be restricted to three appointees. • At least two other independent Directors shall be appointed to the Board in non

executive capacity. • Board representation may be offered to one or two major Institutional Investors and

these shall be non Executive Directors. • In line with the proposed Board changes, the following Board Subcommittees shall

be constituted.

i) Sub-Committee on Finance, Accounting and Audit Matters ii) Sub-Committee on Procurement, Operations and Technical Matters iii) Sub-Committee on Legal, Administration and Employee Relations

The reconstituted Board shall be subject to the approval of the first post flotation Annual General Meeting of shareholders of the Company.

2.13 CORPORATE GOVERNANCE AND BOARD SUB COMMITTEES

The Board subcommittees would meet and deliberate on technical issues impacting on the performance of the company with respect to:

a) Finance, Accounting and Auditing matters, b) Operational and Technical issues c) Legal, Administrative and Employees Relations and compensations matters

These structures are meant to improve governance and further enhance Board oversight responsibilities. Decisions of the subcommittees would be subjected to ratification by the full Board. At full listing, these subcommittees shall be in place. 1. The Finance and Audit Board sub committee will have the following members: (i) Non –executive Director, Chairman (ii) Executive Director (iii) Non-Executive Director The terms of reference and scope of functions of the Audit sub committee will include:

a) To recommend the appointment of the external auditors of the company;



b) To liaise with the external auditors for the purposes of maintaining and ensuring audit quality, effectiveness, risk assessment, interaction with internal auditors and dealing with situations governing the resignation of the external auditors;

c) To review with the auditors their report on the financial status of the company. d) To review the adequacy of systems of internal controls and of the degree of

compliance with material policies, laws and the code of ethics and business practices of the company;

e) To provide a direct channel of communication between the Board and the external and internal auditors of the company, Accountants and Compliance officers(if any) of the company;

f) To review and approve the company’s Capital and Operating Budgets and to prescribe guidelines for their disbursement;

g) To report to the Board on all issues of significant extraordinary financial impact; and

h) To assist the Board in developing policies that will enhance the controls and operating systems of the company.

The sub-committee would have the authority to investigate any matter under its terms of reference and would be given full access to all necessary information. The sub-committee would also perform an annual review of the company’s internal controls over financial, operational and compliance matters and report on the same to shareholders in the Annual Report of the company. 2. Sub Committee on Operational and Technical Issues will be made up of:

(i) Executive Director in charge of Operations as Chairman (ii) Non Executive Director (iii) Non Executive Director

3. Sub Committee on Compensation Executive Directors who may be appointed members of this subcommittee would exclude themselves from deliberations concerning their own remuneration. The Terms of Reference and scope of functions of the remuneration subcommittee are

a) To establish a formal and transparent procedure for developing policy on executive remuneration;

b) To ensure that a proper system of short and long term compensation is in place to provide performance oriented incentives to management;

c) To scrutinise executive service contracts with a view to ascertaining any inordinate losses which the company may be liable to incur in the event of an early termination of services/contracts.



d) To report on its activities and functions for inclusion in the Annual Report to shareholders.

2.14 BOARD SECRETARY

Mr. Kwasi Sarpong Peprah, is the Secretary to the Board of Comet Properties Limited. He is also the Director for Administrative of the company.

2.15 SHAREHOLDING STRUCTURE

Nana Odeneho Kyeremateng, the Executive Chairman is the sole shareholder of Comet Properties Limited. The Authorised Shares of the Company is 2,000,000,000 ordinary shares of no par value of which 154,559,920 have been issued and fully paid for. The Stated Capital of Comet as at March 31, 2010 stood at GH¢72,269,960.

2.16 MANAGEMENT TEAM

The Company is managed by a 8-member Management Team who receives policy direction from the Board of Directors. The Internal Auditor position is vacant and the company will appoint an incumbent by December 2010. The company presently employs a total of 81 people including the Managing Director who is also the Chairman of the Board. After the flotation, the position of the CEO and the Chairman will be separated giving way for the appointment of new Chief Executive Officer of the company. To befit its status as a reputable listed company, Comet will appoint a professionally qualified accountant as its Financial Controller. Fifty (50) of the employees are permanent staff while the remaining 31 are temporal.



Table 2.2: List of Management Team Name Age Position

Mr. Odeneho Kwaku Kyeremateng 53 CEO/Chairman

Mr. Samuel Kyeremateng 48 Director, Technical

Mr. Sampson Awuah 46 Director, Projects Development

Mr. Nicholas Mensah 34 Finance Manager

Mr. Joseph Kodua 28 Head of Estates/Marketing Dept

Maame S. Kyeremateng 30 Manager, Corporate Affairs

Mr. Kwasi Sarpong Peprah 47 Director for Administraion

Mr. Edward Darlington 49 Legal Officer

The Profiles of the Management Team are outlined below:

1. Mr. Odeneho Kyeremanteng (See Profile of Directors) 2. Mr. Samuel Kyeremanteng (See Profile of Directors) 3. Mr. Sampson Awuah (See Profile of Directors) 4. Mr. Kwasi Sarpong Peprah (See Profile of Directors)

Mr. Nicholsa Mensah is the Manager in charge of Finance and Accounting. He graduated from the Institute of Profesional Studies in 2008 with BA Degree in Administration. He is a student member of Institute of Chartered Accountants (Ghana) having written and passed all subjects on level 1. He has been with Comet since June 2008. Mr. Mensah was on attachment training at Cocoa Processing Company Limited from June 2000 to June 2001. He worked with Compliance Trail, a Chartered Accounting firm from June 2001 to the end of 2003. Mr. Darlington Ankamah is the Legal Officer of the Company. He holds BA Degree from the University of Ghana, Legon (1980) and Barrister at Law (BL) from Ghana School of Law, Accra (2003). He has had a number of years of experience including being a Tutor at St. Thomas Aquinas Secondary School, Accra from 1980 to 1982; as a Contract Officer for the Rivers State Government in Nigeria from 1982 to1990 and was a Special Assistant to the Secretary to the Governor, Rivers State Government Nigeria from 1990 to 1996. Between 2000 and 2003, he was a Budget Analyst at the Ministry of Finance, Ghana. He joined Kwaku Kyeremanteng & Co., a Legal Firm in Accra from



2003 to November 2006 where he was detailed as legal consultant for Comet. He formally joined the Management of Comet Properties in December 2006. He is a member of the Institute of Chartered Accountants, Nigeria and the Ghana Bar Association.

Maame Serwaah Kyeremateng, 30 years of age, is the Manager for Corporate Affairs of Comet Properties Limited. She had her Elementary School education at Datus Preparatory at Dansoman - Accra between 1986 t-o 1995. She was admitted at Holy Child Senior High School for her Secondary education from 1995 to 1999. Maame Serwaah entered the University of Ghana in 2001 for BA (Hons) degree and majored in Economics in 2005. She did her National Service in October 2005 and completed in July 2006 at the Foreign Affairs Ministry of the Republic of Ghana. Maame, after the National Service secured an employment with the Ghana Commercial Bank as Banking Officer in June 2007 and resigned in March 2008 to take appointment with Comet Properties Limited. In April, 2008 she was appointed Marketing Officer in charge of (Buildings and houses) sales until 1st April 2010 when Maame was offered a new position as Manager for Corporate Affairs.

Mr. Joseph Kodua (29 years) is the Head of Estate and Marketing Department of Comet Properties. He holds the Bachelor of Arts Degree in Political Science from the University of Ghana. He joined Comet Properties in 2004 as a marketing assistant for period of 2 years. After obtaining his Bachelors Degree, he was promoted to the position of Head of Estates and Marketing.

2.17 OTHER STAFF

In addition to the eight (8) Management staff there are seventy-two (72) other employees, that are based in Accra and Brekusu-the maiden project site. The total staff strength of Comet stands at 81. The Organogram and the accompanying table below show the distribution of staff by department. Fifty (50) of the employees are permanent staff while the remaining 31 are temporal.



2.18 FAMILY RELATIONS

Two (2) of the Directors, Nana Odeneho Kyeremanteng and Mr Samuel Kyeremanteng, are siblings. 2.19 Emoluments of Directors and Senior Management Staff Staff remuneration in the year 2009 amounted to GH¢433,703. Of this, the salaries of the top management staff accounted for 32% amounting to GH¢140,916. Details of Directors’ Remuneration for the period under review, 2006 to 2009 are as

follows.

2006 2007 2008 2009 Sitting Allowance* 6,000 6,000 6,000 12,000* Fixed Annual Allowance 6,000 6,000 6,000 6,750** 12,000 12,000 12,000 18,750

* Board Meetings are conducted quarterly. Board sitting allowance is pegged at GH¢300 per Director per sitting (i.e. GH¢300 per quarter) In 2009 however, Board sitting allowance which had been stable for sometime was doubled. ** In 2009, the Chairman’s fixed allowance was increased by GH¢750 per annum whilst that of the other Board members remained unchanged.



Figure 2.1: Organisational Chart of Comet Properties Limited

Board of Directors

Executive Director Nana Odeneho Kyeremateng

Internal Audit (Vacant)

Manager for Corporate Affairs (Maame S.

Kyeremateng

Legal Officer (Edward

Darlington)

Director of Administration

(Kwasi S. Peprah)

Director, Technical Services

(Sam Kyeremateng)

Director of Development

(Sampson Awuah)

Board Secretary (Kwasi Sarpong Peprah)

Finance Manager (Nicholas Mensah)

Estate Manager (Joseph

Admin Manager (Vacant)

IT Manager (Nana

Amankwa)

Technical Manager (Vacant)

Project Manager (Charles Donkor)

Personal Assistant

Accounts Officers

Workshop Officers

Services Officers

Road Officers

Building Officers

HR Officers

Estate Officers

Marketing Officers



3.0 INDUSTRY AND MARKET INFORMATION

3.1 OVERVIEW OF THE ECONOMY

The macro-economy of Ghana has sustained relative stability over the past nine years in the face of difficult turns in the world economy. Although oil prices have increased astronomically, prudential fiscal and monetary measures instituted by government over the years have enabled the country maintain a stable macro-economy. End of year inflationary rate declined from 40.5% in 2000 to 21.3% in 2001 and declined further reaching 10.9% in December 2006. End of year inflation in 2008 and 2009 were 18.1% and 15.9% respectively. The country has since August 2010 maintained single digit inflation hovering around 9.5%. Gross international reserve measured in months of imports cover was 1.0 month in 2000. This increased steadily over the years to 3.8 months of imports cover in 2004. The situation however reversed after 2006. The 2009 national budget reported gross international reserves at 1.8 months of import cover for the year 2008. The situation improved significantly in 2009 with gross international reserves registering 3.2 months of imports cover. Interest rates have generally followed declining trends in the past 10 years, the only exception being 2008 (table 3.1). Following improvements in the macroeconomic situation in the country, the Monetary Policy Committee of the Bank of Ghana revised the BoG prime rate downwards from 24.5% in 2002 to 21.5% by the end of 2003. This was further reduced to 18.5% in 2005, and 12.5% in 2006. The prime rate however inched upwards to 12.75% in 2007 and also in 2008. The Central Bank’s prime rate in December 2009 was 18.0%. Interest rates for the 91-Day Treasury bill trended downwards in the period under review (table 2.1). The year 2008 however saw a reversal in the trend recording a year end 91-day Treasury bill rate of 24.6%. The year 2009 saw a recovery trending downwards into 2010. Commercial banks’ base rates have responded positively to the general decline in interest rates as described above. With the general economic recovery after the 2008 slum, banks have begun to reduce their base rates.



The impact of the declining interest rates on the real estate industry is evident in the reduction in interest on mortgage loans, having reduced from the average of 40% in 1999/2001 to a current average of 24.5%. A declining mortgage rate into the future is expected to boost the real estate industry by expanding its market base to cover the expanding middle income workers, businessmen and entrepreneurs. The prudent management of the economy has translated into higher real GDP growth rates, with the rates rising from 3.7% in 2000 to 5.6% in 2004 and 6.4% in 2006. Real GDP growth in 2008 was 7.2% against the backdrop of the global economic meltdown and high crude oil prices. In 2009, the economy of Ghana grew by 5.4%. It is however provisionally estimated to grow at 6.5% in 2010 reaching over 10% in 2011 when commercial oil production comes on stream. Table 3.1: Selected Macroeconomic Indicators

Year on year 2002 2003 2004 2005 2006 2007 2008 2009 GDP Growth 4.5% 5.2% 5.6% 5.9% 6.4% 6.3% 7.2% 4.7%Inflation 15.2% 23.6% 11.8% 14.9% 10.9% 10.2% 18.1% 15.9%Treasury Bill 23.68% 18.66% 17.6% 10.5% 9.6 10.19% 24.65% 20%GSE Index (% Change)

45.96% 154.67%

91.33 -30% 3.5% 31.84% 58.06% -46.58%

BOG Prime Rate 24.5% 21.5% 18.5% 15.5% 12.5% 12.75% 12.75% 18.0%

Gross Int. Reserves (in months)

2.2 3.9 3.8 3.5 3.0 3.1 1.8 3.2

Source: Budget Statement – Various Years, BoG Annual Reports.

3.2 GOVERNMENT POLICIES AND REGULATORY ENVIRONMENT

Access to housing is a fundamental human right recognized by the government of Ghana. The government, in furtherance of its obligation to ensure access to housing, has put in place various institutions to oversee the industry. The general policy direction of the government seeks to strengthen these institutions to function effectively. The state at different periods has been directly involved in the provision of housing facilities. For example, the 2006 budget statement outlined government’s policy to construct 113



apartment blocks i.e. a total of 1,138 units of flats for the lower and middle income workers. The government in 2009 acknowledged and indicated its readiness to champion the cause of the real estate industry as an engine of growth. The potential for growth is clearly evident by the fact that the country has a deficit in its housing stock to the tune of one million. The main business law governing the operations of companies in Ghana is the Ghana Companies Act, 1963 (Act 179). Among other things it gives guidance on issues such as the roles and responsibilities of the board of directors, management, professional advisors to the company and general corporate governance. The Company’s regulations are in line with standard provisions of the Act. Aside the Companies’ Act, the real estate sector in Ghana has specific operating guidelines that entities in the sector must comply with. For example, the National Building Regulations, 1996 issued under Section 63 of the Local Government Act 1963 (Act 462) has specific provisions on requirements for site development, structural fire precautions including fire resistance, fire escapes etc, drainage, sanitary conveniences, refuse disposal, water supply and lighting and electrical installations. Concerns have however been expressed about the cumbersome approval process for acquiring building permits. The Local Government Act 462 (1993) and the National Building Regulations give the District Planning Authority the sole responsibility of issuing building permits. There are nine (9) steps for acquiring a building permit. If an applicant is not informed of the grant or refusal of his or her application within three months of receipt by the Town and Country Planning or the Works Department, the application is considered to have been approved and the applicant may start work provided no queries are raised about the application. At the subsequent stages of the building project, the applicant must contact the Works Department for inspection before proceeding further. According to the Ghana Statistical Service Report on the 2000 Population and Housing Census, “While the maximum period for processing a development permit is ninety days, the average processing time is six months. In fact, delays could be up to five years. Response is not timely and has contributed to the chaotic development in, for example, Accra Metropolitan Area (AMA).”



To avoid the frustrations associated with the above procedures, prospective home owners prefer to buy houses from Real Estate Companies such as Comet Properties Limited who have the capacity, resources and expertise to follow through the approval processes and deliver houses free from litigations and other limiting encumbrances.

3.3 THE STRUCTURE OF THE INDUSTRY

The real estate industry in Ghana has over the past two decades experienced tremendous growth. Currently the real estate industry is made up of two groups of operators. These are (i) the well organised and well resourced progressive Real Estate Developers whose numbers and influence continue to grow within the industry, and who are responsible for the development of most of the major real estate projects located in the regional capitals, especially in Accra and Kumasi. Companies in the category include Regimanuel Gray, Taysec, State Housing Company, ACP Estates, Trassaco, Elm Capital etc. (ii) the numerous micro-small scale artisans who have traditionally been the backbone of the industry, and who are the preference of the dominant lower to middle income earners who normally undertake single units development at a time. The construction industry which is made up of roads, highways and bridges, coastal works as well as housing is the second major contributor to real industry output after manufacturing. The sector also constitutes about 10% of GDP. Thus its importance cannot be overemphasized. The growth rate of the sub-sector has been one of the driving forces behind the real GDP growth as it has always grown more than the GDP growth rate. For example the sector grew by 8.2% in 2006. This increased to 15% in 2007 and then dropped to 14% in 2008. Real estate companies operating within the formal sector vary in sizes, areas of coverage and indeed experience. It is important to note that, SSNIT as a pension fund institution has invested extensively in real estate to qualify as one of the market leaders. The industry is also made up of professionals whose expertise has over the years shaped the direction of the industry. These professionals include valuers, architects, surveyors, and town and development planners. Other supporting activities have been developing alongside the construction industry. These include producers and distributors of cement, iron rods, roofing sheets and tiles,



nails and other accessories. These industries provide good substitutes for imported building materials which in turn saves the country needed foreign exchange.

3.4 STRATEGIC OPPORTUNITIES

The Real Estate Industry affords stakeholders unique investment opportunities in Ghana. With secured land tenure, an investor in real estate is assured of continued flow of returns and appreciation of the financial value of the property over time. Investment in housing therefore constitutes significant store of value of resources of investors with no risk of loss of value in the absence of natural disasters. It is these natural advantages offered by the Real Estate Industry that Comet Properties Limited seeks to fully enjoy and extend to prospective investors.

3.5 MARKET ANALYSES

3.5.1 Demand and Supply Situation

Available data indicate a large demand gap for housing facilities in the country estimated at between 45,000 to 60,000 housing units per annum. At the moment, the accumulated housing stock deficit stands at one million. The situation is more acute in the urban areas of which Accra and Tema Metropolis are considered as key. According to the 2000 Population and Housing Census of the Ghana Statistical Service, a significant percentage (45%) of households within the Accra Metropolis occupy one room with shared amenities. The remainder occupy two rooms or more. This state of affairs is directly attributable to low income levels, and supply bottlenecks among other things. Key supply bottlenecks include inadequate mortgage facilities provided at relatively prohibitive terms to potential home owners. Another important contributor to the inadequacy of housing stock is cost which in turn affects the price of houses. Observed price ranges of houses of noted real estate companies are presented in Table 3.2. The price differences are determined by location factors, type and quality of materials used, additional facilities like garage, garden and car port, presence of boys quarters and the number of storeys (floors).



Table 3.2: Price Range of Houses in Accra-Tema Metropolis

Standard Features Lower Price Range (US$)

Maximum Price Range (US$)

2 bedroom house 35,000-74,000 >75,000

3 bedroom house 40,000-85,000 >90,000

4 bedroom house 80,000-200,000 >250,000

3.5.2 Customer Base

Real estate companies deal with two broad markets: local market and foreign markets. The companies have devised various means including flexible payment terms to attract customers. Most of the companies have established links abroad for the purpose of targeting Ghanaians in the Diaspora. The strategy is to access potential customers with the ability to pay for the houses at the shortest time possible. The housing needs of Ghanaians living abroad have been increasing in recent years. Several reasons account for the increase. Most of the Ghanaians who travelled abroad in the 1970s and the 1980s are returning home either as pensioners or as businessmen having accumulated substantial funds to continue their lives at home. Ghanaians in the Diaspora also find established real estate companies credible and are increasingly utilizing their services. The expansion of the economy of Ghana is evidently increasing the middle income bracket and thereby providing market for housing, a critical household valuable asset. With appropriate mortgage terms, Comet and indeed other real estate companies would have a large market.

3.5.3 Products

Comet Properties Limited has developed houses with different specifications to meet the needs of their varied customers. They also offer serviced plots of various dimensions. The range of houses includes:

(a) 2 bedroom detached (b) 2 bedroom semi-detached



(c) 3 bedroom detached (d) 3 bedroom semi-detached (e) 3 bedroom detached with out-house (f) 3 bedroom story (g) 4 bedroom storey (h) 4 bedroom story with out-house (i) Building to the specification of customers

Table 3.3 details the standard features of various house types provided by Comet. Table 3.3: Standard Features of Various House types

FEATURES 2A 2B 2C 2D 2E 2F 3A 3B 3C 3D 4A 4B 4C 4D 4E

Floor • Ceramics tiles • Porcelain

Ceiling • T&G • POP

Doors (panel) Windows • Frontages • All-sides

Wardrobe • Bedroom

Kitchen (fitted) Land scaping Fence Wall TV & AC Points

Comet appreciates the importance of using quality materials to ensure durability and longevity of its houses to the satisfaction of customers. The company, in the effort to provide customers with unique products, has created its maiden township called the Hill City, designed to contain 4,000 residential plots located at the Southern end of the Akuapem Hills near Ashongmang Housing Estates. The Hill City has been provided with the necessary facilities including water, electricity, and paved roads. Provision has been made for landline telephones, markets, worship centres, play grounds and other social



facilities. The township has been divided into suburbs, namely Hill Crescent, High Point, Mountain View and Hillside Extension. Comet offers competitive prices for its products and associated services.

3.5.4 Promotion

Comet has extensively studied the dual market for housing and has positioned itself to take advantage of these markets. Both Ghanaians living at home and abroad have been targeted by the company by offering them with flexible terms of payment either by dealing directly with the company or utilising the services of Mortgage Companies. Special needs of customers are also provided. The company has demarcated certain suburbs for customers willing to put up houses to specification. The serviced plots were designed for such customers. Comet utilises all manner of media forms to reach its customers. These include the print and the electronic media, outdoor advertisements and the use of the Internet.

3.5.5 Competition

Several real estate companies are located within Ghana. Whilst it is important to recognise the apparent supply gap within the industry, it is also important to appreciate the existence of some competition within the industry. Competition finds expression in factors including pricing, terms of payment, and the aesthetic value of the houses which is also determined by location factors, the design, availability of essential facilities, and accessibility, among other things. Comet Properties aims at 10% of the lucrative residential real estate market in Accra-Tema areas within the next five years. This will be a significant increase from its prevailing share of 2% of the total annual housing starts in the two cities.



4.0 PROSPECTS AND RISK FACTORS

Investing in the stocks of any company or relating to any company in any form entail some prospects as well as risks. These prospects and risks may be attributed to the general conditions of the market place or to the character of the specific stock or company or the industry. Notwithstanding the foregoing, it must be noted that an investment in the securities of a company entails certain risks. We have identified the risks in investing in the real estate sector to include the following;

4.1 LAND LITIGATIONS

The Land Tenure system in Ghana is fraught with numerous and lengthy litigations. This has been a major disincentive to investment in the country and is seen as a key risk factor in doing business in Ghana. Comet seeks to mitigate this risk by acquiring and establishing land banks with relevant and valid documents to necessitate easy transfer of lease titles to home owners and other investors.

4.2 FOREIGN EXCHANGE

An estimated 40% of the cost of building houses is spent on imported building materials notably tiles, sinks, basins, bathes, lighting and sometimes roofing materials, paints, wires and fittings. Foreign exchange risks are high in periods of continuing depreciation of the value of the Ghana cedi. Where such declines in the value of the Ghana cedi are unexpected, the potential for exchange losses increases for companies that rely heavily on imported inputs. Fortunately, the cedi has remained relatively stable and efforts are being made to stabilise it. However, Comet, realising this risk, indexes the prices of its houses to the US dollar, although prices are payable in Ghana cedis. The purpose for doing this is to mitigate the potential foreign exchange loss associated with the weakening Ghanaian cedi.



4.3 COMPETITION

There are presently over 50 real estate companies operating within the Accra-Tema Metropolis that compete directly with Comet Properties. Comet, in the midst of the competition is developing a niche for itself in a way that the company envisages shall significantly differentiate its products and offer unique value to its customers. The company’s Hill City concept creates a unique township provided with all necessary amenities. The community has its own water supply source from the deep valleys of the Akuapem Mountains independent of Ghana Water Company Limited. Comet thus provides its customers with value for their money and shall continue to do so. Comet is able to compete effectively as far as pricing is concerned partly because of bulk delivery of service on large track of land that ends up reducing the fixed cost per unit of house. The company in addition has various specifications of houses to meet the pockets of its varied customers.

4.4 LOAN CONTRACTING RISK

There is minimal interest bearing debt standing in the books of Comet. Whilst loans, effectively utilised increase the profits of the company, the interest on the loan when not managed properly could erode the profits of the firm. The risk of default and the consequent legal burdens are carefully considered in loan contracting. All significant credit balance on Directors’ Current account which constituted about 94% of current assets in earlier years have been converted to equity. With injection of fresh capital through public flotation, the possibility of the company going in for loan facility shall be reduced considerably.

4.5 INDUSTRIAL RELATIONS RISK

This risk emanates from disputes among management, staff and owners of the company. Comet expects to employ over 350 staff and subcontractors at its Hill City Estate alone. This will require effective management of human resources by providing channels for addressing grievances of staff and dealing with such grievance with utmost diligence and speed.



Additionally regular staff durbars, job analysis and evaluations, regular staff appraisals and other methods designed to create conducive working environment for high performance and to motivate the staff would be implemented.

4.6 ENVIRONMENTAL AND SOCIAL RISK FACTORS

The construction industry is noted for its environmental risks and attendant social upheavals. Comet addresses these twin problems on two levels: (a) taking care of the environment and (b) addressing the needs of the communities affected by Comet projects. Comet undertakes thorough appraisal in planning its projects so as to fit it within the natural environment in which it finds itself. For example, because the current project is being sited on virgin land, the company has designed the project to preserve the streams and spring waters in the valleys as well as selected trees of commercial value. The community shall benefit immensely from these water sources so preserved. Moreover, the company has a property management team to manage the township Comet is creating by collecting and dumping refuse, maintaining the landscape, attending to the water pumping station and responding to the concerns of members of the community as far as the environment is concerned. Comet relates very well with the Chiefs and people of Brekuso, the village sharing boundary with Comet’s Hill City. To provide security to the area, Comet has built a modern Police Station for the people. Comet is encouraged to continue with this proactive and positive attitude toward the environment and be sensitive to social issues so as to operate peaceably and add value to its products. The company, as indicated in this prospectus plans to produce aggregate stones, quarry dust, etc for its construction activities. Prior to the establishment of such a vital facility, all relevant permits will be secured and mitigating measures to address attendant environmental damage instituted.



5.0 FINANCIAL INFORMATION

5.1 CLEARANCE ON THE HISTORICAL FINANCIAL STATEMENTS

INDEPENDENT REPORTING ACCOUNTANTS’ OPINION The Board of Directors Comet properties Limited High Street P. O. Box 768 Accra Gentlemen, Issue of Ordinary Shares We have examined the audited financial statements of Comet Properties Limited (the "Issuer") for the years ended 31 December 2006,2007,2008,2009 and the unaudited financial statement for the three months period ended 31 March 2010. J K Attobrah and partners have acted as Auditors of the Company for the years 2006 to 2008 and Comet Properties Limited changed their auditors to Cardinal Consults in 2009. For each of the relevant years, the Auditors issued an unqualified audit report. The Board of Directors approved the audited financial statements for the year ended 31 December 2009. No audited financial statements have been prepared for submission to the shareholders for any period subsequent to 31 December 2009.

Deloitte & Touche Ibex Court, 4 Liberation Road Dr. Ako Adjei Interchange PO Box GP 453 Accra Tel: +233 (0) 21 775 355 +233 (0) 21 773 761 Fax:+233 (0) 21 775 480 www.deloitte.com May 25, 2010



The audited financial statements have been prepared on the basis of the accounting policies set out below. For all the accounting periods dealt with in this report, the financial statements have been, in all material respects, prepared in accordance with the Ghana National Accounting Standards. Our work has been carried out in accordance with the Auditing Guidelines: “Prospectuses and the Reporting Accountant” In our opinion, the financial information set out below gives a true and fair view of the profits and cash flows of the Company for the years stated and of the state of affairs of the Company at the end of those years, in accordance with Ghana National Accounting Standards. Yours faithfully,



5.2 SUMMARY OF HISTORICAL FINANCIAL STATEMENTS

Tables 5.1, 5.2 and 5.3 summarises the Comet’s historical financial statements from 2006 to 2009. Table 5.1: Profit and Loss Accounts for the Years Ended 2006 to 2009

ITEM 2006 2007 2008 2009 Amount in Ghana Cedis (GH¢) Turnover 5,454,690 18,272,891 19,339,504 14,507,600 Cost of Sales 3,931,098 15,024,503 15,070,392 9,685,943 Gross Profit 1,523,592 3,248,388 4,269,112 4,821,657 Less: General & Admin Expenses 672,781 1,311,511 1,372,482 1,262,302 Net Profit Before Interest & Taxation 850,811 1,936,877 2,896,630 3,559,355 Finance Cost 92,500 103,450 233,066 185,670 Profit After Tax 758,311 1,833,427 2,663,564 3,373,685 Income Surplus Account Balance at January 1 1,733,485 791,796 2,625,223 5,288,787 Net Profit for the Year 758,311 1,833,427 2,663,564 3,373,685 Transfers to Stated Capital 1,700,000 - - -

Balance at December 31 791,796 2,625,223 5,288,787 8,662,472



Table 5.2: Balance Sheets as at December 31, 2006 to 2009

ITEM 2006 2007 2008 2009 Amount in Ghana Cedis (GH¢) Non-current Assets Property and Equipment 2,759,273* 225,493,909 227,843,065 229,368,035 2,759,273 225,493,909 227,843,065 229,368,035 Current Assets Stocks 75,820,500 106,118,670 114,810,310 123,929,602Receivables & Prepayments 4,416,463 19,797,805 13,649,629 7,197,509Bank & Cash Balances 103,875 173,229 333,206 2,276,560 80,340,838 126,089,704 128,793,145 133,403,671 Total Assets 83,100,111 351,583,613 356,636,210 362,771,706 EQUITY AND LIABILITIES Capital and Surpluses Stated Capital 72,279,960 72,279,960 72,279,960 72,279,960 Income Surplus 791,796 2,625,223 5,288,787 8,662,472 Capital Surplus 182,046,550 182,046,550 182,046,550 Total Equity 73,071,756 256,951,733 259,615,297 262,988,982 Current Liabilities Trade & other Payables 1,241,855 87,626,719 85,795,913 34,307,450Short Term Loan 7,250,274 Total Current Liabilities 1,241,855 87,626,719 85,795,913 41,557,724 Long Term Liabilities 8,786,500 7,005,161 11,225,000 58,225,000Total Liabilities 10,028,355 94,631,880 97,020,913 99,782,724Total Equity and Liabilities 83,100,111 351,583,613 356,636,210 362,771,706

*Note: Non-current property and equipment assets value for 2006 reflected what was originally carried in the books, prior to the December 2006 assets revaluation and additions to land banks in 2007, which resulted in significant increase in the value of



assets under this line item in the subsequent years. The same resulted in significant capital surpluses recognised from 2007 and beyond. Table 5.3: Cash Flow Statements for the Years Ended December 31, 2006 to 2009

Amount in Ghana Cedis (GH¢) 2006 2007 2008 2009 Operating Activities Profit from Operations 850,811 1,936,877 2,896,630 3,559,355Adjustment for Depreciation on Property, Plant & Equipment 404,873 1,263,143 1,625,007 1,046,626(Profit)/Loss on sale of Assets 24,000 Operating Cash Flows before movement in working capital 1,279,684 3,200,020 4,521,637 4,605,981 Increase in Stocks (391,024) 6,655,280 (8,691,640) (9,119,292)Increase in Receivables (2,577,006) (15,381,342) 6,148,176 6,452,120Increase/(Decrease) in Payables 17,533 12,477,964 (1,830,806) (51,488,463) Cash Generated by Operations (1,670,812) 6,951,922 147,367 (49,549,654)Interest Paid - (103,450) (233,066) (185,670) Net Cash from Operating Activities (1,670,812) 6,848,472 (85,699) (49,735,324) Investing Activities Purchase of Property, Plant & Equipment (638,086) (4,997,779) (3,974,163) (4,421,596)Proceeds from sale of Assets 36,000 - - 1,850,000Net Cash used in Investing Activities (602,086) (4,997,779) (3,974,163) (2,571,596) Financing Activities Long Term Loans 2,311,500 (1,781,339) 4,219,839 56,900,000Repayment of long term liabilities - - - 9,900,000Overdraft 7,250,274Net Cash used in Financing Activities 2,311,500 (1,781,339) 4,219,839 54,250,274 Increase in cash & cash equivalents 38,602 69,354 159,977 1,943,354Cash & cash equivalents at the beginning of the period 65,273 103,875 173,229 333,206 Cash and Bank Balance 103,875 173,229 333,206 2,276,560



5.2.1 Accounting Policies

The principal accounting policies adopted by the company in the preparation of these financial statements are set out below:

(a) Basis of Accounting These financial statements have been prepared in accordance with generally accepted accounting principles. The financial statements have been prepared under the historical cost convention. Comet will take the necessary steps to be IFRS compliant by the end of 2010.

(b) Property, Plant and Equipment All fixed assets are stated at historical cost less depreciation. Depreciation of fixed assets is calculated on the straight line method to write off the cost of each asset to their residual values over their estimated useful lives as follows:

Buildings - 10% Motor Vehicle - 20% Plant & Machinery - 15% Office Equipment - 15% Furniture and Fittings - 15%

(c) Stocks

Stocks are stated at the lower of cost and net realisable value. Cost of all stocks is determined by all expenses incurred in bringing these stocks to their current destination and present condition. Net realisable value is the estimate of the selling price in the ordinary course of business less the selling expenses.

(d) Cash and Cash Equivalent Cash and cash equivalent are carried in the balance sheet at cost. For the purpose of the cash flow statements, cash and cash equivalents comprise cash in hand and deposit held with banks.

(e) Debtors Debtors are carried at anticipated realisable values. Estimates are made for doubtful receivables based on reviews of all outstanding amounts at the year end. Bad debts are written off during the year when they are identified.



5.2.2 Notes to the Financial Statements

1. Directors Accounts This represents funds invested into the company in the form of cash and fixed assets.

2. Stated Capital The company is registered with two billion (2,000,000,000) shares of no par value of which 154,559,920 has been issued for a cash and non-cash consideration of GH¢72,279,960.

3. Debtors This has been carried at anticipated realizable value. Estimates are made for doubtful receivables based on reviews of all outstanding amounts at the year end. Bad debts are written off during the year identified.

4. Foreign Exchange Transactions denominated in foreign currencies are translated into Cedis at the rate of exchange prevailing at the transaction date. Balances denominated in foreign currencies are translated into cedis at the rate of exchange ruling at the company’s balance sheet date.

5. Cost of sales ITEM Amount in GH¢ 2006 2007 2008 2009 Stock as at January 1 34,757,612 75,820,500 106,118,670 115,110,310 Purchases

Land Lease & Cost of Preparatory Works 20,336,602 11,874,720 7,977,894 8,373,700 Building Materials 24,195,299 31,047,816 14,146,780 8,290,566 Development Levies 281,892 1,856,412 876,306 1,045,180 Depreciation 180,193 543,725 1,061,052 795,789 44,993,986 45,322,673 24,062,032

79,751,598 121,143,173 130,180,702 133,615,545 Less Closing Stock 75,820,500 106,118,670 115,110,310 123,929,602 3,931,098 15,024,503 15,070,392 9,685,943



6. Stocks ITEM Amount in GH¢ 2006 2007 2008 Stock at December 31

Serviced Plots & Buildings 55,500,000 16,465,250 23,456,780 Building Materials - 7,653,420 13,085,094 Buildings 14,740,500 71,000,000 64,603,486 Development & Civil Works 5,580,000 11,000,000 13,964,950

Total 75,820,500 106,118,670 114,810,310 ITEM Amount in GH¢ 2009 Stock at December 31

Houses Available 12,478,952Houses under construction 21,300,000Building Materials 3,350,650Serviced Plots 86,200,000Development & Civil contracts services 600,000

Total 123,929,602

7. Selling Administrative and General Expenses ITEM Amount in GH¢ 2006 2007 2008 2009 Salaries 175,085 313,994 386,962 433,703 Directors' Emoluments 12,000 12,000 12,000 18,750 Printing and Stationery 7,835 8,766 10,686 13,358 Fuel and Lubricants 97,456 72,338 130,934 163,668 Electricity and water 3,821 4,765 7,266 9,083 Travelling & Transport 10,300 15,388 21,004 26,255 Bank Charges 2,439 4,325 6,780 8,475 Registration and Licensing 4,341 380 878 1,098 Communication Expenses 3,003 8,290 9,160 11,450 Accountancy Charges 1,080 1,480 2,000 2,500 Site Expenses - 64,581 87,362 109,203 General Expenses 8,941 16,215 26,918 33,648



ITEM Amount in GH¢ 2006 2007 2008 2009 Repairs & Maintenance 42,327 25,661 39,356 49,195 Security Services 6,227 7,865 11,692 14,615 Advertising & Publicity 33,337 19,080 31,084 38,855 Donations/ social responsibilities 10,810 7,650 10,454 63,868 Professional Fees 4,000 5,087 7,662 9,578 Insurance 1,100 1,230 3,330 4,163 Loss on Sale of Assets 24,000 - - Depreciation 224,680 719,418 563,954 250,837 672,781 1,311,511 1,372,482 1,262,302

8. Accounts Receivable

ITEM Amount in GH¢ 2006 2007 2008 2009 Debtors (Land & Houses) acquisitions 3,048,917 8,953,014 8,027,106

5,438,506

Contract Service 1,363,946 - - Prepayments 3,600 - - Land & Admin 6,677,349 3,210,199 Development Levies - 4,167,442 2,412,324 1,759,003 4,416,463 19,797,805 13,649,629 7,197,509

9. Trade and Other Payables

ITEM Amount in GH¢ 2006 2007 2008 2009 Trade Payables (Land Owners) - 85,706,508 83,406,704 33,522,540 Suppliers & Subcontractors 490,130 1,279,796 1,243,245 150,000 PHC Motors 13,875 - - - Landline Properties Ltd 250,000 250,000 250,000 - Accruals 30,000 - 13,700 235,000 Interest Payable 92,500 25,065 516,914 34,560 Registrar General's Dept. 365,350 365,350 365,350 365,350 1,241,855 87,626,719 85,795,913 34,307,450



10. Long Term Liabilities

ITEM Amount in GH¢ 2006 2007 2008 2009 i) Loans (Financial Institutions) Opening balance Jan. 1 - 2,311,500 530,161 4,750,000 Additions 2,311,500 - 4,684,000 3,300,000 Payments - 1,781,339 464,161 8,050,000 Balance as at Dec. 31 2,311,500 530,161 4,750,000 - ii) Other Liabilities Landline Properties Ltd 1,850,000 1,850,000 1,850,000 - Land Owners 4,625,000 4,625,000 4,625,000 58,225,000 Balance as at Dec. 31 6,475,000 6,475,000 6,475,000 58,225,000 TOTAL 8,786,500 7,005,161 11,225,000 58,225,000

11. Fixed Assets Schedule ITEM Amount in GH¢ Fixed Assets Schedule 2006 2007 2008 2009 Cost at January 1 Land bank - - 219,000,000 219,000,000 Office Building 100,000 1,850,000 3,278,651 3,278,651 Plant & Machinery 568,800 1,201,286 3,654,558 7,282,161 Motor Vehicles 341,900 341,900 454,416 800,976 Office Equipments 16,000 18,113 490,213 490,213 Furniture & Fittings 15,000 18,487 549,727 549,727 1,041,700 3,429,786 227,427,565 231,401,728 Additions Land - 36,953,450 - 4,421,596 Office Building 1,850,000 1,428,651 - Plant & Machinery 632,486 2,453,272 3,627,603



ITEM Amount in GH¢ Fixed Assets Schedule 2006 2007 2008 2009 Motor Vehicles - 112,516 346,560 Office Equipments 2,113 472,100 - Furniture & Fittings 3,487 531,240 - 2,488,086 41,951,229 3,974,163 4,421,596 Land - Revaluation 182,046,550 Disposal Office Building 1000,000 Plant & Machinery - Motor Vehicles - 1,850,000 Office Equipments - Furniture & Fittings - 100,000 - - 1,850,000 Cost as at December 31 Land 219,000,000 219,000,000 223,421,596 Office Building 1,850,000 3,278,651 3,278,651 1,428,651 Plant & Machinery 1,201,286 3,654,558 7,282,161 7,282,161 Motor Vehicles 341,900 454,416 800,976 800,976 Office Equipments 18,113 490,213 490,213 490,213 Furniture & Fittings 18,487 549,727 549,727 549,727 3,429,786 227,427,565 231,401,728 233,973,324 Depreciation as at Jan. 1 Office Building 40,000 185,000 430,750 758,615 Plant & Machinery 170,640 350,833 894,558 1,955,610 Motor Vehicles 78,500 112,690 262,690 342,788 Office Equipments 7,500 10,217 251,426 324,958 Furniture & Fittings 9,000 11,773 94,232 176,692 305,640 670,513 1,933,656 3,558,663 Charge for the Year Office Building 185,000 245,750 327,864 73,770 Plant & Machinery 180,193 543,725 1,061,052 795,789



ITEM Amount in GH¢ Fixed Assets Schedule 2006 2007 2008 2009 Motor Vehicles 34,190 150,000 80,098 60,074 Office Equipments 2,717 241,209 73,532 55,149 Furniture & Fittings 2,773 82,459 82,460 61,844 404,873 1,263,143 1,625,006 1,046,626 Disposal Office Building 40,000 Plant & Machinery Motor Vehicles Office Equipments Furniture & Fittings 40,000 - - Depreciation as at Dec. 31 Office Building 185,000 430,750 758,614 832,385 Plant & Machinery 350,833 894,558 1,955,610 2,751,399 Motor Vehicles 112,690 262,690 342,788 402,862 Office Equipments 10,217 251,426 324,958 380,107 Furniture & Fittings 11,773 94,232 176,692 238,536 670,513 1,933,656 3,558,662 4,605,289 Net Book Value Land 219,000,000 219,000,000 233,421,596 Office Building 1,665,000 2,847,901 2,520,037 596,267 Plant & Machinery 850,453 2,760,000 5,326,551 4,530,761 Motor Vehicles 229,210 191,726 458,188 398,114 Office Equipments 7,896 238,787 165,255 110,106 Furniture & Fittings 6,714 455,495 373,035 311,191 2,759,273 225,493,909 227,843,066 229,368,035



5.2.3 Management Accounts March 31, 2010

Below is the Management Accounts for the first quarter of 2009 ending March 31, 2010. Table 5.4: Profit and Loss Account for the Period ended March 31, 2010

For the period ended 31 March 2010 2010 2009 GH¢ GH¢ Turnover 3,077,965 14,507,600 Cost of sales (1,846,779) (9,685,943) Gross profit 1,231,186 4,821,657 General and administrative expenses (381,172) (1,262,302) Profit before taxation 850,014 3,559,355 Finance Cost (97,650) (185,670) Profit after tax transferred to income surplus account 752,364 3,373,685

Income surplus account For the period ended 31 March 2010 2010 2009 GH¢ GH¢ At 1 January 8,662,472 5,288,787

Net Profit for the period 752,364 3,373,685

9,414,836 8,662,472

At 31 March 9,414,836 8,662,472



Table 5.5: Balance Sheet As At March 31, 2010

2010 2009 Non- current assets GH¢ GH¢ Property Plant and Equipment 92,787,578 229,368,035 92,787,578 229,368,035 Current assets Stocks 81,781,200 123,929,602 Receivables 6,724,176 7,197,509 Cash & Bank Balances 2,601,658 2,276,560 91,107,034 133,403,671 Total Assets 183,894,612 362,771,706 Equity and Liabilities Capital and Surpluses Stated capital 72,279,960 72,279,960 Income surplus 9,414,836 8,662,472

Capital Surplus 78,115,916 182,046,550 Total equity 159,810,712 262,988,982 Current liabilities Trade and other payables 8,349,290 34,307,450 Short Term Loan (Overdraft) 8,277,900 7,250,274 16,627,190 41,557,724 Long Term Liability 7,456,710 58,225,000 Total liabilities 24,083,900 99,782,724

Total equity and liability 183,894,612 362,771,706



Table 5.6: Cash Flow Statement for the period ended March 31, 2010

2010 2009 GH¢ GH¢ Operating activities

Profit from operations 850,014

3,559,355

Adjustments for depreciation on Property, Plant & Equipment 501,345

1,046,626 Operating cash flows before movement in working capital 1,351,359 4,605,981 Increase in stocks 42,148,402 (9,119,292)Increase/(Decreases) in Receivables 473,333 6,452,120 (Decrease) in Payables (25,958,160) (51,488,463)Cash generated by operations 18,014,934 (49,549,654)Interest paid (97,650) (185,670)Net cash from operating activities 17,917,284 (49,735,324)Investing activities Purchase of property, plant and equipment (4,270,888) (4,421,596)proceeds on sale of Asset 1,850,000 Net cash used in investing activities (4,270,888) (2,571,596)Financing activities Increase in Long term Liability - 56,900,000 Repayment of long term Liability (14,348,924) (9,900,000)Overdraft 1,027,626 7,250,274 Net cash used in financing activities (13,321,298) 54,250,274 Net increase in cash and cash equivalents 325,098 1,943,354 Cash and cash equivalents at beginning of the period 2,276,560 333,206 Cash and bank balance 2,601,658 2,276,560



GHC 2 ,18 1,978

GHC 5,454 ,69 0

GHC 18 ,272 ,891GHC 19 ,339 ,504

GHC 14 ,507,600

2 005 200 6 2 007 2 008 200 9

Gross Turnover

5.2.4 Technical Analysis of the Historical Financial Statements

Gross Income Gross income has seen significant growth in the review period increasing by an average of 100% per annum from 2005 to 2008. The company recorded gross income of GH¢2.18 million in 2005. This increased to GH¢5.5 million in 2006 and then increased by a whopping 235% in 2007 to GH¢18.17 million. In 2008, Comet recorded GH¢19.34 million in gross revenue. The year 2009 saw a reduction in gross revenue by 25%. This significant growth has been achieved due to a myriad of reasons, mostly attributable to the quality of products offered by Comet onto the real estate market and the strong marketing drive of the company. The company’s Revenue is generated from four (4) main sources namely: • Serviced lands and administrative charges (39%) • Development levies (16%) • Contract services and other income (9%), and • Houses sold (37%) Cost of Sales Cost of sales generally consist of land lease and cost of land preparation, building materials, development service charges and apportionment of depreciation to direct operating cost. Cost of sales averaged 74% of turnover from 2005 to 2009. Selling, Administrative and General Expenses These indirect expenses have been significantly controlled over the period under review and was at about 7% of gross income. Selling, administrative and general expenses for 2005 was GH¢123,300. This increased to GH¢672,781 in 2006, GH¢1.31 million in



GHC 6 6 1,10 9GHC 758 ,3 11

GHC 1,8 3 3 ,4 2 7

GHC 2 ,6 6 3 ,56 4

GHC 3 ,3 73 ,6 8 5

2 0 05 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9

Profits After Tax

2007, GH¢1.37 million in 2008 and then declined to GH¢1.26 million in 2009. Staff remuneration in the year 2009 amounted to GH¢433,703 representing 34% of total selling, administrative and general expenses. Of this, the salaries of the top management staff accounted for 11.2% amounting to GH¢140,916. Profits after Taxes The company performed significantly well by way of its net earnings. In 2005, comet recorded a net profit after tax of GH¢661,109. This increased by 15% to GH¢758,311 in 2006 and then by 446% to GH¢1.83 million in 2007 and finally by 45% to GH¢2.66 million in 2008. In 2009, the company made a net profit of GH¢3.37 million representing 27% increase over the previous year’s profit. The company’s gross balance on its Income Surplus Accounts at the end of 2005 stood at GH¢1.73 million. In 2006, a transfer of GH¢1.70 million was made from the income surplus account to stated capital. Comet, as a result of continuously posting profits has increased its income surplus account balance from GH¢791,796 in 2006 to GH¢5.29 million by the end of December 2008 and further to GH¢8.66 million in December 2009. The Company’s Management Accounts as at March 31, 2010 recorded an income surplus balance of GH¢9.41 million. Working Capital Working capital though impressive especially in 2006, a large part of it is in stocks of land. In 2008, lands that are undeveloped which were hitherto classified as stocks were re-classified as fixed assets. In 2008, therefore an amount of GH¢219 million in the name of land was reported in that years financial statement. Cash Balances The cash balances for the period 2006 to 2009 show that the company is in quite a good financial health. The total bank overdraft as at March 31, 2010 amounting to GH¢8,277,900 stood in the names of the following banks.



Name of Bank Amount (GH¢)

Barclays Bank Ghana Limited 6,838,439 Prudential Bank Limited 1,141,416 HFC Bank Limited 298,045 Total 8,277,900

Ratio Analysis Table 5.7 below shows the summary of key financial ratios from 2006 to 2009. Table 5.7: Key Financial Ratios

ITEM 2006 2007 2008 2009 Liquidity Current Ratio 64.69 1.44 1.50 3.21 Quick Ratio 3.64 0.23 0.16 0.02 Asset Management Fixed Assets Turnover 1.98 0.08 0.08 0.06 Total Assets Turnover 0.07 0.05 0.05 0.05 Debt Management Total Debt Ratio 0.12 0.27 0.27 - Debt/Equity 0.14 0.37 0.37 0.04 Profitability Profit Margin 14% 10% 14% 23.3% Basic Earnings Power EBIT/Total Assets 1% 1% 1% 1% Return on Equity 1% 1% 1% 1.3%



5.3 FINANCIAL FORECASTS

The Board of Directors Comet properties Limited Ghana Limited High Street P. O. Box 768 Accra Gentlemen, Reporting Accountants’ report on forecast and projections We have examined the accounting policies and calculations for the profit forecast and projections of the Company for the five years ending 31 December 2014, set out on Pages 54 to 56 of this report in accordance with the Listing Rules of the Ghana Stock Exchange (GSE), the company’s Code, Act 179 and L.I.1728 of the Securities and Exchange Commission applicable to the examination of prospective financial information. The directors are responsible for the forecast and projections, including the assumptions set out on page 53 on which it is based. The forecasts and projections have been prepared for inclusion in the offering Circular. These forecasts and projections have been prepared using a set of assumptions that include hypothetical assumptions about future events and management’s actions that are not necessarily expected to occur. Consequently, readers are cautioned that these assumptions may not be appropriate for purposes other than those described above. Based on our examination of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that these assumptions do not provide a reasonable basis for the projections.

Deloitte & Touche Ibex Court, 4 Liberation Road Dr. Ako Adjei Interchange PO Box GP 453 Accra Tel: +233 (0) 21 775 355 +233 (0) 21 773 761 Fax:+233 (0) 21 775 480 www.deloitte.com September 30, 2010



In our opinion the forecast financial statements, so far as the accounting policies and calculations are concerned, have been properly compiled on the basis of the assumptions made by the Directors of the Company, and are presented on a basis consistent with the accounting policies normally adopted by the Company.

We do not express an opinion as to whether the actual results for the forecast period will approximate the forecast because events and circumstances do not frequently occur as expected, and those differences may be material.

Yours faithfully,



5.3.1 Key Underlying Assumptions for the financial Projections

COMET PROPERTIES LIMITED sells its properties for prompt cash payment. In view of this, clients who cannot afford immediate cash payment are introduced to the various mortgage institutions especially the Ghana Home Loans Company limited who can offer prompt payment on behalf of clients. The five years financial projection is based on the sales and marketing plans for the next five years.

Macroeconomic Assumptions

We assume a strong and stable economy with no major recession; We assume a healthy growth trend in the national real estate market, along with

continued strong national economy; We assume that COMET will continue to stay in the real estate industry with

either a continuing or an evolving technology; Though the inflationary trend has been flexible downwards in the last few years

with the exception of 2008 and 2009 which posted erratic inflationary trends, this year has been recording declining inflation rates posting a low of 10.5% at the close of 2006, we assume a conservative inflationary rate of 15 percent per annum throughout the planning period;

Although, the Ghana cedi has sustained relative instability in the past 3 years, we expect it to remain relatively stable in the next five years. Our assumption is based on the concerted efforts by government and Bank of Ghana through various restrictive fiscal and monetary policies that have sought to reduce inflation and stabilise the cedi. We anticipate the cedi to remain stable averaging GH¢1.45 to the US Dollar over the next 12 months. Subsequently, we assume that the cedi will depreciate in nominal terms by 5% per annum for the projection in the out years.

We expect the economy to register growth rates per annum averaging 7.0%. Production and Sales Assumptions

Cost of construction is based on the bill of quantities and is expected to increase by 5 percent per annum per housing unit constructed and is expected not to exceed 60% of selling price of the houses;

The company through the past few years has accumulated stock of houses (completed and uncompleted) to the tune of GG¢33,778,952 as at December 31, 2009 and then to GH¢22,165,000 as at March 31, 2010. The company plans to



reduce its stock holdings by embarking on aggressive sales drive whilst embarking on massive construction of new houses to meet the increasing demand for housing in the country.

Based on these conservative performance rates, average revenue growth for the planned period calculated on revenues from houses sold is 25% and this is expected to continue into the out years;

It is expected that the values of properties would increase by 7 percent per annum; with prices expected to escalate by the same rate.

General and Administrative Expenses

Salaries and wages is expected to increase by 10 percent per annum; Printing and stationery is expected to increase by 8 percent per annum; Fuel and lubricants will increase by 15 percent per annum; Electricity and water will increase by 8 percent per annum; Bank charges and interest will increase by 3 percent annum; Communication expenses is expected to increase by 3 percent per annum; Accountancy charges is expected to increase by 5 percent per annum; Miscellaneous expenses is projected to increase by 15 percent per annum; Directors’ emoluments is projected to increase by 8 percent per annum; Advertising is projected to increase by 15 percent per annum. In total, Direct Operating Expenses is projected to increase by 21% per annum.

Depreciation

The Corporate office building is depreciated at 3 percent on the straight line basis.

All other fixed assets are depreciated at 15 percent per annum on straight line except motor vehicles which is depreciated at 10 percent per annum on straight line method.

Other Assumptions

Work in progress made up of houses under construction is assumed to be 15% percent of end of year’s stock of properties;

The Company owes its land owners (creditors) an amount of GH¢7,456,710. This has been budgeted to be repaid over three (3) year period in equal instalments.

Taxes are paid one year in arrears; Transaction cost is assumed to be 5.5% percent of the total funds to be raised

from the capital market or any other sources;



Land bank is utilised at a rate of 2% per annum amounting to GH¢1,246,074. This fixed amount is transferred to stock for processing into serviced plots for direct sale or to be developed into houses for sale.

Table 5.8: Projected Income Statement, 2010-2014

Amount in Ghana Cedis (GH¢) 2010 2011 2012 2013 2014Serviced Plots 4,978,854 5,807,335 6,271,922 6,773,676 7,315,570 Development Levies 2,987,312 3,484,401 3,763,153 4,064,206 4,389,342 Dev & Civil Contract Services 347,467 364,840 383,082 402,236 422,348 Houses sold 9,208,619 14,388,468 17,985,585 22,481,981 28,102,476 Turnover 17,522,252 24,045,044 28,403,742 33,722,098 40,229,736 Direct Expenses 8,726,001 12,590,755 15,173,284 18,324,410 22,180,185 Depreciation 2,096,118 2,096,118 2,096,118 2,096,118 2,096,118 Gross Profit 6,700,133 9,358,171 11,134,340 13,301,570 15,953,432

General Expenses 1,049,419 1,206,832 1,387,857 1,596,035 1,835,441 Depreciation 120,323 661,932 661,932 661,932 661,932 Flotation Cost 618,240 618,240 618,240 618,240 618,240 EBIT 4,912,151 6,871,167 8,466,311 10,425,363 12,837,820

EBT 4,912,151 6,871,167 8,466,311 10,425,363 12,837,820 Taxation - 1,717,792 2,116,578 2,606,341 3,209,455 Profit After Tax 4,912,151 5,153,375 6,349,734 7,819,022 9,628,365

Table 5.9: Projected Income Surplus Accounts, 2010-2014

Amount in GH¢ 2010 2011 2012 2013 2014

Opening Balance Jan. 1 8,662,472 11,855,370 15,205,064 19,332,391 24,414,756 Profit for the Year 4,912,151 5,153,375 6,349,734 7,819,022 9,628,365 Proposed Dividend 1,719,253 1,803,681 2,222,407 2,736,658 3,369,928 Closing Balance 11,855,370 15,205,064 19,332,391 24,414,756 30,673,193



Table 5.10: Projected Balance Sheet, 2010-2014

Amount in GH¢ 2010 2011 2012 2013 2014 Property Plant and Equipment 98,818,179 96,060,128 93,302,077 90,544,027 87,785,976 Flotation expense 2,472,959 1,854,719 1,236,479 618,240 -Current Assets Stocks 94,577,633 103,749,563 110,917,493 115,475,078 116,762,703 Receivables 8,761,126 12,022,522 14,201,871 16,861,049 20,114,868 Cash and Bank Balances 26,872,181 20,879,595 17,692,742 20,301,417 27,040,016 130,210,940 136,651,680 142,812,105 152,637,544 163,917,586

Current Liabilities Trade and Other Liabilities 8,464,466 8,862,572 9,187,439 9,550,208 9,959,139 Taxation - 1,717,792 2,116,578 2,606,341 3,209,455 Dividend 1,719,253 1,803,681 2,222,407 2,736,658 3,369,928

10,183,719 12,384,045 13,526,423 14,893,207 16,538,522

Net Current Assets 120,027,221 124,267,635 129,285,682 137,744,337 147,379,065

Long Term Liabilities 4,971,140 2,485,570 - - -

Net Assets 216,347,218 219,696,912 223,824,239 228,906,604 235,165,041

Shareholders Fund Stated Capital 72,279,960 72,279,960 72,279,960 72,279,960 72,279,960 Equity injection 54,095,972 54,095,972 54,095,972 54,095,972 54,095,972 Income Surplus 11,855,370 15,205,064 19,332,391 24,414,756 30,673,193 Capital Surplus 78,115,916 78,115,916 78,115,916 78,115,916 78,115,916

216,347,218

219,696,912

223,824,239

228,906,604

235,165,041



Table 5.11: Projected Cash Flow Statement, 2010-2014

Amount in GH¢ 2010 2011 2012 2013 2014 Profit Before Tax 4,912,151 6,871,167 8,466,311 10,425,363 12,837,820 Depreciation 2,216,441 2,758,051 2,758,051 2,758,051 2,758,051 Amortised Flotation Expenses 618,240 618,240 618,240 618,240 618,240

7,746,832 10,247,457 11,842,602 13,801,653 16,214,110

Changes in current assets/liabilities (Increase)/Decrease in stock (11,550,359) (9,171,930) (7,167,930) (4,557,585) (1,287,625) (Increase)/Decrease in receivables (2,036,950) (3,261,396) (2,179,349) (2,659,178) (3,253,819) Increase/(Decrease in Payables) 115,176 398,106 324,867 362,770 408,931

(13,472,133) (12,035,220) (9,022,412) (6,853,994) (4,132,513) Cash generated by operating activities (5,725,301) (1,787,763) 2,820,190 6,947,660 12,081,597 Payment of Overdraft (8,277,900) Payment of Long term liabilities (2,485,570) (2,485,570) (2,485,570) Taxation - - (1,717,792) (2,116,578) (2,606,341) Dividend - (1,719,253) (1,803,681) (2,222,407) (2,736,658) Payments to Reg Gen Dept (270,480) Payment of Flotation Expenses (3,091,198)

(14,125,148) (4,204,823) (6,007,043) (4,338,985) (5,342,999) Investing Activities Plastic T&G Equipment (1,450,000) Stone Quarry Plant (2,175,000) Expansion of Wood Processing Plant (3,625,000) Expansion of Aluminum Fabrication Plant (725,000) Motor Vehicles (2,000,000) (9,975,000) Financing Activities Equity Injection 54,095,972 Cash and Cash Equivalents 24,270,523 (5,992,586) (3,186,853) 2,608,675 6,738,599 Opening bal 2,601,658 26,872,181 20,879,595 17,692,742 20,301,417 Closing balance 26,872,181 20,879,595 17,692,742 20,301,417 27,040,016



5.4 SHARE PRICE VALUATION

5.4.1 Results of Valuation

5.4.2 Weighted Average Cost of Capital (WACC)

The WACC which was used to calculate the Present Values of the Free Cash Flow was derived from the debt to equity ratio of 4%:96% for the company, required returns on equity of 17.5%, cost of debt of 28% and a tax shield of 75%. Despite the in built risk factors in the various variables, the composite was adjusted by a risk premium of 10% to arrive at a WACC of 27.7%.

5.4.3 Discounted Free Cash Flow Value

From the above assumptions and the forecasts the FCF Model yielded a value of GH¢187,395,382.

5.4.4 Net Adjusted Book Value (NABV)

The open market values of the company based on the Revaluation of all the landed assets of COMET Properties Limited undertaken in March 2010 by Messrs APEX Valuation, Surveying & Property Consult was GH¢174,347,742 or (US$ US$120,239,822). The Net Assets of the Company as at January 01, 2010 was GH¢159,810,712 and it is considered as the Adjusted Net Assets for the valuation of the company.

5.4.5 Weighted Market Value

The estimated market value of Comet was derived by calculating a weighted average of the two valuation models used and the results are presented in table 5.12. The resulting value of GH¢168,086,113 is considered a fair market value for Comet Properties Limited.



Table 5.12: The Valuation Model

Valuation Model Value Weights Weighted Average Value

Free Cash Flow Model GHC 187,395,382 30% GHC 56,218,615 Adjusted Net Book Value GHC 159,810,712 70% GHC 111,867,498 Total GHC 347,206,094 100% GHC 168,086,113

5.4.6 Justification for Selection of weights

1. The assignment of a weight of 70% to the Net Adjusted Book Value approach is designed to reflect the fundamental importance of the stock of land and other facilities including the buildings, machinery and equipment in housing delivery, which ultimately determines the ability of the enterprise to generate products for sale.

2. The viability of any enterprise is significantly reflected in its ability to generate and

retain cash flow for reinvestment and for dividend payment. Every investor’s preference is to hold equity in a firm which has the potential to generate cash flow over and above its operating requirements. Firms in this category have the potential to pay dividends and also to reinvest, resulting in higher future cash flows and dividends. The assignment of a weight of 30% to the FCFE model of share pricing is to reflect this importance.

5.4.7 Recommended Share Price and Discount offered

From the analysis of the company’s operating circumstances and past financial performance as contained in our share price valuation, we recommend a price per share of GH¢1.09 and the recommended minimum quantity to be purchased by an applicant is 50 shares. The company has offered a discount of 8% amounting to GH¢0.09. The price per share is therefore GH¢1.00.



Table 5.13: Summary of the Offer and Shareholding Analysis

Authorised Shares 2,000,000,000 Existing Shares 154,559,920 Additional Issue 54,095,972 From existing Shareholders 7,727,996 Total Shares on Offer 61,823,968 Total Shares After Flotation 208,655,892 Share Price GH¢ 1.00Current Capitalisation GH¢ 159,810,712Value of New Issues GH¢ 54,095,972Value of Issues from existing Shareholders GH¢ 7,727,996Value of Ordinary Shares on Offer GH¢ 61,823,968Expected Capitalisation GH¢ 208,655,892

5.4.8 The Price Earnings Multiple

Table 5.14 presents the projected PE ratios for Comet. Table 5.14: Projected Price-Earning Ratios

P/E Analysis 2010 2011 2012 2013 2014 Price Per Share GH¢ 1.00 GH¢ 1.00 GH¢ 1.00 GH¢ 1.00 GH¢ 1.00Earnings Per Share (old) GH¢ 0.0318 GH¢ 0.0333 GH¢ 0.0411 GH¢ 0.0506 GH¢ 0.0623PE Ratio 43 41 33 27 22Clydestone (Dec. 31, 2009) – maximum as at date 132 PBC, SWL and CFAO (Dec. 31, 2009) – Minimum as at date 2 HFC (Dec. 31, 2009) 15 Average for the market (Dec 31, 2009) 17.61

The value of Comet Properties is quite tangible and easily verifiable as it's a land based investment with a value which could be easily ascertained at the market place. Hence the Company cannot be overpriced. There is clearly not a market comparable for purposes of assessing the value and P/E of Comet, since there is no real estate firm listed on the market. HFC being a-Financial Institution (i.e. a Universal Bank) cannot



serve as a useful proxy for the evaluation of Comet, the two are in completely different but complementary industries. Hence in assessing the value of Comet there has been overwhelming reliance on the prevailing market value of the landed assets of the Company, as opposed to relying on fanciful assumptions and projections of Revenues and costs to arrive at a Net present Value. Traditionally, P/E ratios of viable real estate firms tend to be high. This is especially the case in Ghana due to the slow rate of outright housing purchases by individuals and institutions, and non availability of financial intermediation services to support the financing of home purchases or commercial property development. It is also influenced by the type of homes being developed. Comet with its huge landed asset stock has for sometime concentrated on developing homes for sale to upscale clients, hence the slow rate of development influenced by the slow rate of housing purchases which is underlined by the high cost of such developments. Moreover such developments attract few buyers. This partly explains the low level of earnings vis-a-vis the high landed asset stock: and hence the high historical PIE ratio. However this does not in anyway pose a threat to the financial viability of the Company. With the injection of funds, Comet will along side its current development initiative, concentrate on developing complementary lower income/workers housing, which will be lowly priced and will attract more purchases i.e. increase earnings vis-a-vis the stock of landed assets and hence improve the P/E of the Company over time.



6.0 TERMS AND CONDITIONS OF THE OFFER

6.1 GENERAL CONDITIONS

If applicant receives a copy of this document and/ or application form in any territory other than Ghana, one may not treat it as constituting an invitation or an offer, nor should one use such application form, unless in the relevant territory, such an invitation and offer could lawfully be made to applicant without compliance with any unfulfilled registration or other legal requirements. It is the responsibility of applicant, if she/he is outside Ghana and/or subject to the laws of any territory other than Ghanaian territory and if he/she receives a copy of this document and/or an application form and wishes to make an application, to satisfy himself/herself as to the full observance of the laws of the relevant territory in connection therewith, including the obtaining of any governmental or other consents and compliance with other necessary formalities, and to pay transfer or other taxes or duties required to be paid in such territory in respect of the offer of shares acquired by applicant under this offer.

6.2 OFFER TO PURCHASE SHARES

i. The Applicant offers to purchase from Comet such number of shares that when multiplied by the offer price, nearest to but not more than, the amount indicated in his/her application Form on these terms and conditions and subject to the Regulations of the Company.

ii. The Applicant agrees that his/her offer cannot be revoked after 31st January, 2011 or such later date as the Directors and the Advisors may agree, and promises that any cheque, bankers draft or money or postal order will be honoured on the first presentation and that this paragraph constitutes an agreement between the applicant and Comet. It becomes binding when application is posted by registered mail or in the case of delivery by hand is received by the company. The applicant must pay all bank commissions and transfers and other bank charges.

iii. A thumbprint on application form will be accepted instead of a signature thereon only if it is duly certified in accordance with the Laws of Ghana.

iv. If the application form is not completed correctly or is amended, or if any cheque, bankers draft, money order or postal order is found to be less than the amount stated on the application form, it may still be treated as valid. In such cases, the Advisors’



decision as to whether to treat the application as valid and how to construe, amend or complete it shall be final. The applicant will not however be treated as having offered to purchase a number of shares on offer which, when multiplied by the offer price, is more than the amount of remittance upon allotment of shares.

v. An application may be rejected in whole or in part at the discretion of the Advisors and Management of Comet for applications that are incomplete, illegible, or if it is determined that the applicant is not eligible to participate in this public offer.

6.3 ACCEPTANCE OF OFFER

i. Acceptance of an offer will be made (if application is received, validated or received valid, processed and not rejected) by notifying acceptance to the Advisors and Management of Comet.

ii. The acceptance may be of the whole or any part thereof and in the latter event, the number of shares applicant offers to purchase may be scaled down;

iii. If the offer to purchase is accepted (in whole or in part) there will be a binding contract under which the applicant will be required to purchase the shares in respect of which the offer has been accepted and has not been repudiated

6.4 PAYMENT FOR SHARES

i. Applicant undertakes to pay the purchase price for the shares in respect of which the offer is accepted. The cheque or bankers draft or other remittances may be presented for the payment before acceptance of the offer, but this will not constitute acceptance of offer either in whole or in part;

ii. If the application is invalid, rejected or not accepted in full, or if the amount of the application divided by the offer price does not result in a number which is in a multiple of 10 of shares the proceeds of the cheque or other remittance or the unused balance of those proceeds will be refunded without interest;

iii. If the remittances are not honoured on the first presentation, then at any time until the company received, cleared funds in respect of a share on offer, the Advisors, on behalf of Comet may terminate the agreement to purchase that share. The termination will be effected by notice being dispatched to the applicant.



6.5 REFUND OF EXCESS CASH

Excess cash for applications that have not been honoured under the Allocation Strategy outlined in this document will be returned to investors within 14 days after the share allotment following the closure of the IPO. In line with the Escrow Account Agreement, WSL and Comet will approve the refund of the excess cash and would be paid before any other disbursements are made.

6.6 LATE REFUNDS

Late refunds will be treated in line with the provisions of Section 284, subsection 4 of the Companies Code 1963, Act 179. It will attract an annual interest rate of 5%.

6.7 WARRANTIES

The Applicant warrants that: i. He/she is qualified to apply; ii. In making the application she/he is not relying on any information or

representation concerning the company and or the offers or any of them not contained in this mini prospectus or the Full Prospectus. She/he agrees that no person responsible for this document or any part of it will have liability for any such other information or representation.

iii. If any person signing, or making a thumb print on the application form is not the applicant, that person warrants that he or she has authority to do so on behalf of the applicant and that this authority is vested in him or her by virtue of a power of attorney which (or a copy of which certified by a solicitor) accompanies the application.

iv. If the applicant is other than a natural person, the person signing the application form warrants that he/she has authority to do so on behalf of the applicant.

6.8 SUPPLY AND DISCLOSURE OF INFORMATION

The Company, Directors, Advisors and their agents shall have full access to all information relating to, or deriving from, the cheque or bank draft or other remittance



accompanying the application, and its processing. If the Directors or their agents request any information about the application, it must be promptly disclosed to them.

6.9 MISCELLANEOUS

a) The rights and remedies of the Company and Advisors under these Terms and Conditions are in addition to any rights and remedies, which would otherwise be available to each of them, and the exercise or partial exercise of one will not prevent the exercise of others.

b) If applicant delivers the application form to the Company or the Advisors, she/he authorizes the company to send any money returnable to the applicant and a share certificate for the number for which the applicant is accepted by registered mail in the same manner. If the application was sent by post, the applicant authorizes the company to send a share certificate for the number of shares for which the application is accepted and/or a cheque for any money returnable by registered mail to the address (or in the case of joint applicants, the address of the first-named person) as set out in the application form.

c) All documents and monies sent or delivered to or by applicant will be sent or delivered at the applicant’s own risk. Any cheque will be made payable to applicant (or the first person-named person) as set out in the application form.

d) The applicant agrees to be bound by the Regulations of Comet Properties Limited once the shares agreed upon have been transferred to the applicant.

e) The application and acceptance of the application and the contract resulting therefrom will be governed by, and construed in accordance with the laws of Ghana. The applicant irrevocably submits to the jurisdiction of the Ghanaian courts in respect of the matters relating to this transaction. This does not prevent an action being taken against the applicant in any other jurisdiction.

f) Words defined in the Prospectus and not defined in these Terms and Conditions have the same meaning in these Terms and conditions and in the application form and in the guide to the application form as in the Prospectus. In the case of joint applicants, references to an application in these terms and conditions are to each of the joint applicants and their liability is joint and several.



7.0 ADDITIONAL INFORMATION

7.1 OVERVIEW OF THE GHANA STOCK EXCHANGE

The Ghana Stock Exchange (GSE) was incorporated in July 1989 as a company limited by guarantee. It is a non-governmental organization governed by a thirteen (13) member council. Members of the GSE include eighteen (18) Licensed Dealing Members (brokerage firms) and forty-one (41) associate members. The Exchange is regulated by the Securities and Exchange Commission under the Securities Industry Law, PNDCL 333 of 1993, as amended by Securities Industry (Amendment) Act, 2000, (Act 590).

Key Information:

Trading Days: Daily Trading; from at 9.30 am. To 1.00pm of each working day

Trading Method: Automated Trading carried via Wide Area Net Work

(WAN). Settlement Period: Trade day plus 3 working days (T+3) Receipt of Certificate: No Paper Certificate is issued, because of the GSE

Securities Depository (GSD). All trades are recorded instantly in the clients GSD Account upon settlement.

Access to trade and general information on GSE: This is obtained through Bloomberg

Reuters, the Internet, GSE website, Official Trading Results, Local Newspapers, GSE Fact Book, and periodic publications put out by member brokerage firms.

Settlement of Trades: Trades are settled through a centralized system

thus making sure that no member defaults.



7.2 DEVELOPMENT & TRENDS

Trading on the Exchange began on 12th November 1990 with eleven listed Companies. The number of listed Companies has since then increased to 35 with the formal listing of Ecobank Transnational Incorporated Limited (ETI) in 2006 and UT Financial Services in 2008. One Corporate Bond and many other Government of Ghana Bonds also listed. To deepen the growth and broaden the base of the Exchange, the GSE has been reaching out to SMEs to list on the stock market through a two-tier arrangement-Provisional Listing. The first equity to be listed under this arrangement was Clydestone Ghana Limited. Two other SMEs including Starwin Products Limited and Golden Web Company Limited have benefited from this arrangement. AYRTN is the 4th Company to be listed on the Ghana Stock Exchange using the Provisional Listing Approach. Cross-Boarder Listings: The Ghana Stock Exchange has in conjunction with the under listed Stock Exchanges listed the following;

• Trust Bank of Gambia (TBL) –The Gambia Stock Exchange • Ecobank Transnational Incorporated Limited (ETI) - across the West and East

African Stock Exchanges, • Golden Star Resource Limited (GSR) – Toronto Stock Exchange • AngloGold Ashanti Limited (AGA) on Johannesburg Stock Exchange (JSE) and

New York Stock Exchange (NYSE). Mergers and Acquisition: Adcock Ingram Holdings Limited of South Africa, a Pharmaceutical company acquired 65.59% of Ayrton Drug Manufacturing Company Limited in March 2010. GSE Securities Depository: The Ghana Stock Exchange has come a long way with Central Securities Depository Act 2007 (Act 733) being passed in 2007. With the passing of the law it has paved the way for companies to issue un-certificated shares and also dematerialise shares already in their Share Register. Shareholders are advised to open account with the GSE Securities Depository Company Ltd.

• Automated Trading System is now in operation. • GSE Securities Depository Company is in operation • The Clearing and Settlement System and Clearing House also in operation.



MARKET CAPITALISATION BY BUSINESS SECTORS: The distribution of companies listed on the Ghana Stock Exchange and the market capitalization for the various sectors as at the end of March 2010 are as shown below.

Industry No. of

Companies Market Cap

(GH¢ Million) % Market

Cap. Financial Institutions 12 3,781.05 21.22% CAL 45.37 Ecobank 885.99 EIC 51.65 ETI 1 ,487.17 GCB 251.75 SCB 630.48 HFC Bank 84.00 SCB PREF 9.09 SG-SSB 150.25 SIC 52.82 TBL 79.80 UTF 52.68 Paper Converters/IT 5 14.20 0.08% Camelot 1.05 Clydestone 2.38 Sam Woode 0.65 ACI 2.92 Transol 7.20 Manufacturing/Trading 6 279.62 1.57% Aluworks 18.34 CFAO 7.25 MLC 9.02 PKL 2.33 PZ Cusson 30.80 Uniliver 211.88 AGRIBUSINESS/ AGRO PROCESSING 4 95.37 0.54% BOPP 17.40



Industry No. of

Companies Market Cap

(GH¢ Million) % Market

Cap. CPC 33.02 Golden Web 1.75 PBC 43.20 METALS/Oil 5 13,221.11 74.21% AGA 12,285.39 AADS 29.37 Golden Star 766.28 Goil 39.94 Total 100.13 Pharma/ Beverages 5 424.14 2.38% Accra Brewery 24.94 Ayrton 30.10 Fan Milk 136.51 GGBL 228.89 Starwin 3.70 Total Market Capitalisation 17,815.49 100%

7.3 PERFORMANCE OF THE GHANA STOCK EXCHANGE

7.3.1 Trading Volumes:

At the end of December 2009, the total volume of shares traded stood at 96.77 million compared with 531.66 million shares recorded at the end of 2008. The rather bearish performance of GSE in 2009, resulting in the big drop in volume of shares traded could be attributed to a number of factors including the world wide economic downturn and the effect of the change in government and the Ghanaian attitude of waiting to see how the economy performs during the recession. Nevertheless, over the past five (5) years, trading volumes have averaged 219.07 million shares, which is quite encouraging for an emerging stock market, with relatively limited listed stocks. It is therefore expected that as more companies are listed, the market will continue to deepen resulting in higher traded volumes.



7.3.2 Traded Values:

The total value of shares traded on the GSE from January through December 2008 amounted to GH¢365.51 million compared to GH¢ 74.19 million recorded for the same period in 2009. The relatively lower value is due to the world wide recession and the drop in prices of all shares traded. In 2009 the Exchange did not have any major IPOs. Over the last five (5) years, trading values have averaged GH¢134.89 million due to a number of factors, which include favourable macroeconomic conditions, increased foreign participation on the Exchange, and unstable share prices. Table 7.1: Yearly Traded Values for the past five years

2009 2008 2007 2006 2005 GSE All Share Index

5,572.34 10,431.60 6,599.80 5,006.00 4,769.00

GSE ALL SHARE INDEX (Y-O-Y)

-46.58% 58.06% 31.48% 4.97% -29.85%

Market Capitalisation (Gh¢) Million

15,941.92 17,844.00 12,370.00 11,250.00 9,186.00

Total Number Of Listed Equities

35 35 34 33 29

Value Traded (Gh¢) million

74.19 365.51 140.71 47.60 46.44

Volume Traded (000)

96,767.39 531,660.00 287,221.70 98,286.00 81,400.00

7.3.3 Overall Market Performance

Since the inception of GSE, the exchange has performed commendably as shown by the GSE All-Share Index, which measures the overall performance of the GSE. Over the period under review, the GSE All-Share Index rose from 4,769.00 points at the end of 2005 to 10,431.60 points at the end of December 2008, before dropping to close 2009 at 5,572.34 points. Although year on year performance has been mixed, returns have been significant for long-term investors averaging about 3.60% over the last five years. Market performance on the exchange over the past five years (2005 – 2009) is shown in the table and table below.



Table 7.2: GSE Performance Trends for the last five (5) years.

2009 2008 2007 2006 2005 GSE ALL SHARE INDEX

5,572.34 10,431.60 6,599.80

5,006.00 4,769.00

GSE ALL SHARE INDEX (y-o-y)

-46.58% 58.06% 31.48%

4.97% -29.85%



8.0 APPLICATION PROCEDURE AND FORMS

8.1 THE APPLICATION

Each application must be for a minimum of 50 shares and in multiples of 10 shares thereafter. The latest time for the receipt of application forms is Monday, 31st January, 2011 at 4.00pm. If an application is successful in whole or in part, the number of shares allotted to applicant shall be credited to the applicant’s accounts with the GSE Securities Depository. If there is excess demand under this offer, applicant may receive fewer shares than might be expected to receive on the basis of the maximum amount expressed without interest. If an application is not accepted or is accepted in part, or if the amount of the application divided by the offer price does not equal a whole number of shares, a refund for the appropriate amount without interest will be returned by registered mail to applicant within two weeks after the offer closes i.e. by 15th February, 2011 (excluding holidays). The closing date for the offer is extendable by Two (2) weeks, in which case the closing date shall be Tuesday, 15th February, 2011. Should there be extension to the offer period, the last date for the refund of excess application funds, if applicable, shall be 30th February, 2011. The right is reserved to present for payment all cheques, bankers draft and money or postal orders on receipt. It is a condition of the offer that all cheques or other payments must be honoured on first presentation. No interest will be paid to applicants on any monies held on behalf of applicants or on behalf of the company. If there is excess demand under the proposed offer, applicants may receive fewer shares than applied for.

8.2 INSTRUCTIONS FOR COMPLETION OF APPLICATION FORM

Read this carefully before completing an application form:

PLEASE USE BLOCK/ CAPITAL LETTERS PLEASE RETURN THE COMPLETED APPLICATION FORM BY 31st JANUARY, 2011



1. Multiple applications are not permitted. Applicants must please read the declaration carefully before he/she signs (or if unable to sign, make a thumb print) and date the space provided on the application form.

2. The Application Form may be signed by someone on behalf of applicant if he/she is duly authorized to do so. An agent must enclose the original power of attorney appointing him/her (or a copy by a notary public) unless he/she is a selling agent or financial intermediary and states the capacity in which he/she signs.

3. The application form of illiterates should bear their right thumb print on the Application Form and be witnessed by an official of the offices at which application is lodged, who must first have explained the meaning and must record in writing that he has given this explanation to the illiterate in the language understandable by him/her and the illiterate appeared to have understood the same before affixing his/her thumb impression. If applying for someone under the age of 18 years, applicant (rather than that minor) must sign the Application form, and put the minors name in the box provided.

4. Fill in your Surname (i.e. Family Name) all your Forenames (i.e. First/Other names) and the title by which you are addressed. In the case of Corporate Applicant, appropriate Form must be used. Applications from corporations and partnerships must bear the institutions common stamp and be completed under the hand of a duly authorized official who should also state his/her designation/title

5. Only people over 18 years of age can buy shares in their own name but shares can be bought for children by a parent, grandparent or guardian of the child. The adult can complete another application to buy shares in his or her own name.

6. Put in the number of shares (minimum is 50) that you are applying for. Please use figures. Your payment must be in a form, which will realize cleared funds for the full amount payable by 4.00pm GMT on 31st January, 2011. The last day a local cheque can be presented to the company or Advisors is 27th January 2011 to allow for three working days for clearance of the cheque.

Cheques, Money Orders, and Bankers Drafts should be made payable to Comet/WSL Escrow Account and endorsed COMMISSION TO DRAWERS ACCOUNT. The amount is to be paid into the ESCROW Account Number 6010138280 at Zenith Bank, Premier Towers, Accra. All Bank commissions and transfers must be paid by the Applicant. MINIMUM APPLICATION IS FOR 50 SHARES, THEN IN MULTIPLES OF 10 SHARES THEREAFTER



When the basis of allocation under the Comet public offer is set, successful applicants will be allocated a number of shares. Any balance owing will be refunded.

7. Put in your postal address 8. Provide the information for the Bank where you wish to receive dividend

payments. If you have no bank, leave it blank. Ask the Brokers for Assistance if you have any difficulties.

9. Tick the Relevant line to indicate your citizenship (whether or not a resident in Ghana)

10. GSE Securities Depository System You are required to register with the GSD as shares purchased under this offer will be kept electronically in line with the GSE Securities Depository system.

11. By signing the Application Form you will be applying for shares on offer on the terms and conditions set out in the Prospectus and the Application Form. Proceedings may be instituted against anyone knowingly making a false representation. This applies to whether application is made solely or jointly with other persons.

12. Joint Applications:

You may apply jointly with up to three (3) people, provided each applicant is an adult of over 18 years of age. They should complete their names and sign the appropriate places by their names. Power(s) of Attorney must be enclosed if any one is signing on behalf of any joint applicant(s).



APPLICATION FORM

(PLEASE USE BLOCK/CAPITAL LETTERS)

Form Number: Receipt number:

Receiving Agent’s Signature & Stamp

Signature/Thumbprint (above the line)

Receiving Agent Receiving Agent’s Code:

Application Date:

2 State title if any (e.g. Mr./Mrs./Ms.) Name of Broker Surname/Company name: GSD Account Number

Forename(s) in full: Number of Shares:

Individual: Company: Company Registration Number:

Amount Payable (GH¢)

Applying in Trust for: (If applying on behalf of someone else):

Applicant’s Address Details: Dividend payment details: 4 House No./Street: 5 Bank:

P. O. Box

Branch:

Phone number: E-mail: Town: Branch Code: Region: Account Number: Country: Account Name: 6. Nationality: Ghanaian Resident Non Resident Ghanaian Resident Foreigner Non Resident Foreigner COUNTRY OF RESIDENCE: 7 Joint Applicants: I/We join in this application and give the Declaration in Box 8 below Other Applicants 2nd Joint Applicant 3rd Joint Applicant 4th Joint Applicant Surname:

Forename(s) in full:

Signature or Thumbprint

8 Declaration: I/We hereby apply for offer Shares on the terms and conditions set out in the Prospectus. I/We declare that I/we am/are a Qualified Applicant(s) and that to my/our knowledge there is no other application being made for my/our benefit (or that of any person for whose benefit) I/We am/are applying for Comet Properties Limited Shares for which I/we have applied on this form. To be completed by receiving Broker/Bank and then signed by the applicant and retained by applicant as evidence of payment SHARE OFFER: COUNTERFOIL for COMET PROPERTIES LTD

Title (Mr./Mrs./Ms.):

Name Of Broker Applicant’s Signature/Thumbprint

Receiving Agent’s Signature & Stamp

Forename(s) in full:

GSD Account Number

Surname/Organisation:

Address (Hse No./Street) P. O. Box: Town: Region: Country: NUMBER OF SHARES:

Amount Paid (Gh¢):

prospectus - comet properties ipo

Documents

kwame nkrumah

worldwide

touche ibex

cometwsl escrow

kwasi sarpong

osei owusu

po box os1072

income surplus