The Vergenoegd Development Initiative

PREAMBLE

The Vergenoegd Development Initiative came about as a result of the combination of recognising a commercial opportunity to improve a poorly performing wine farm, and a need to respond to National and Provincial Government policy with respect to broad based black economic empowerment, job creation and the development of entry level housing.

This project was started with the negotiations with the present landowners in April 2005. This document, which as a result of work since the commencement date now envisions a development that will, subject to layout plan being approved;

o unlock the value in the currently undeveloped and uneconomic portion of the farmland
o will create 2000 to 8000 jobs through our BBBEE partner, The Nation’s Trust
o provide 70 to 150 houses to assist in meeting community needs
o provide funding for the rehabilitation of the natural environment
o provide funding for amenities for local communities. e.g., an AIDS clinic and support for children's organisations.
o provide the necessary resources to refinance the wine farm
o deliver additional cash flow streams from tourism to the winemaking business
o construct housing for the employees of the wine farm

The delivery of the benefits will be by way of a Sustainable Development Initiative (SDI)/Public Beneficiary Organisation(PBO). The funding for the entire project is to be raised from the sale of residential properties and does not require any public funding.

THE PAST AND PRESENT

The historic wine farm Vergenoegd has been a landmark in the Helderberg region since 1696. The farm is located on the eastern boundary of Baden Powell Drive (R310) and straddles the N2 Highway.

The wines produced on the farm have achieved international recognition, and have won prizes both here in South Africa and abroad. The well- known South African wine guide,” John Platter South African Wines” has rated the Vergenoegd wine at 4½ stars in quality (ref. page 571 of the 2007 edition). At present the vineyard produces only red wines, but consideration is being given to the development of a new white wine range.

Wine farming is a notoriously cyclical activity with a worldwide glut of wine production, and for the past few years the present owners have been obliged to dispose of a substantial part of their land holdings, in order to sustain the business. Clearly, the farm cannot go on selling land assets indefinitely to support the business.

This document serves as an outline business plan for the long-term sustainability of the farm. The plan conceived will stabilise the business by providing additional cash flow streams from tourism, conferences and events and thus ensure that the combined wine and tourism enterprise is subject to a less cyclical earning stream and a stable future.

Taking cognisance of National and Provincial Government policy, this concept plan has been devised such that it unlocks the value in the currently undeveloped portion of the farmland. The benefits will flow not only to the business but will provide substantial job creation and socio-economic upliftment to the surrounding area and contribute to the economy of the Western Cape.

OUTLINE OF THE BUSINESS PLAN

The farm consists of several portions, the aggregate area of which is approximately 325 ha.

The Vergenoegd Development Initiative will provide funding for the following activities on this land.

VINEYARDS AND THE WINE ESTATE

The wine making activity uses approximately 70 ha of which only about 20 ha is required for the core business, the production of premium red wine. The remaining 50 ha produces bulk wine that is uneconomic.

Currently the farm is producing a range of red wine only. It is intended that this range will be expanded to include white and rosé wines. Marketing resources will be applied to expanding the geographic distribution particularly in international markets.

The growth of the business will create jobs and add to the economic activity on the farm. The farm will retain over 200 ha of agricultural land and nature reserve.

In line with our programme of protecting the environment (see the residential development) we hope to convert the farm to produce organic products only.

PROTECTION OF AGRICULTURAL HERITAGE

The agricultural heritage of the farm will be protected in perpetuity. The development will be undertaken to make the farm viable and meet the corporate social investment requirements of this project.

Once the sustainable business plan has been implemented there will be no further residential development on the farm.

This will also provide security of the environment for the new property owners and preserve the amenity that they have bought into.

TOURISM AND HOSPITALITY DEVELOPMENT

A restaurant has been established. The restaurant’s income will be supplemented by the development of a business catering for meetings, incentives, conferences and events. This will enhance both food and wine sales particularly the home produced Vergenoegd wines. Restaurant trade will also enhance wine sales through consumption and retail sales. This will have the effect of making the current wine business more economically viable and a platform for growth into the future.

A boutique guest house (about 50-60 rooms) located on the homestead portion of the farm will add to tourism capacity and create employment in the region. The location of the estate near the junction of the N2 and the R310 is at the gateway to South Africa’s premier wine route and is thus well placed to offer a pleasant and convenient location to both local and particularly international tourists.

Both of the executive Directors have significant skills and experience in the local and international tourism business.

RESIDENTIAL DEVELOPMENT

In line with the latest thinking of residential development in the Winelands, the proposal is that three nodal villages be located on not more than 20% of the farm, providing a range of quality housing in a range of market segments.

It is envisaged that the housing architecture will be based on the Boland wine farm style. The concept will fit in comfortably with the architecture of the region.

It is this development that will be the funding “engine room” to meet the social and commercial benefits of the overall business plan.

ECOLOGICAL ASPECTS OF THE RESIDENTIAL DEVELOPMENT

Mindful of the dry nature of the South African climate the developers intend to impose requirements on the construction of the homes to take into account the most efficient use of water and the use of solar energy.

It will be a requirement that all the homes have a dual water system which will permit the use of grey water and rainwater as the principal source of water for the home and the garden.

On the advice of experts we believe that this can easily save more than 75% of municipal water. Only the kitchen will be serviced from the municipal water supply. All bathrooms will be serviced from the rain water supply although backup municipal water will be available in the event of the rain water supply being depleted.

Each home will be fitted with a solar water heater. This will reduce their energy consumption at each property by considerable amount.

The insulation of the house will be considered during the design stage and advice will be sought as to the most efficient methods of heat insulation.

We are advised that in terms of the Kyoto Protocol to the United Nations framework Convention on climate change, it is likely that the development we will be a net saver of carbon emissions and therefore we may be able to earn carbon credits.

The homes will also comply with City of Cape Town’s new proposed guideline on energy efficient buildings.

COMMERCIAL AND RETAIL CENTRE

A small convenience retail centre will be required to provide facilities for the tourism market and the residential development.

INDUSTRIAL DEVELOPMENT

It is envisaged that a small site will be set aside on the south side of the N2 for much-needed industrial development and therefore job opportunities, adjacent to Khayelitsha.

NATURE RESERVE

There are areas on the farm which have been identified as having significant botanical importance. In addition to the plant life on the farm there are some areas of the farm which were formerly seasonal wetlands.

It is the intention of VDI that the areas of environmental significance will be protected.

130 ha to 150 ha of the farm (not less than 40% of the total land area) will be secured for nature reserve purposes.

THE FARM AND LAND USE

The farm soils at Vergenoegd are somewhat variable. The soil profile comprises the eastern edge of Cape flats sand and the more variable soils of the Helderberg mountain range.

At present the farm is growing vines on about 70 ha of land, a substantial portion of which, is uneconomic. The farming and wine business occupy about 100 Ha. The remaining 225 Ha of the land is unused.

The development options being considered by the Vergenoegd Development Initiative show the development of a maximum about 25% the farm area. The proposed development will provide funding for the tourism venture described above, re-invest and revitalise the wine farm business, and to make a major contribution to corporate social investment, in particular, job creation and housing development.

Between 70% and 75% of the land will be retained for farming purposes and nature reserve.

THE SUSTAINABLE DEVELOPMENT INITIATIVE (SDI)/ PUBLIC BENEFICIARY ORGANISATION (PBO)

It is intended to create an SDI/PBO to administer the financial contributions made by the Vergenoegd Development Initiative for the purposes of corporate social investment.

Subject to the input of the various interested and affected parties, this project will contribute, depending on the extent of the development, about 5% of the net revenue received from the sale of the land to the SDI/PBO.

It is also envisaged that a sustainable income flow will be set up from this development in order that the SDI/PBO may continue its work indefinitely. This is in line with current thinking on sustainable development initiatives set up for the public benefit. It is proposed that 2.5% of the proceeds of each subsequent sale of property (to be paid for from the estate agents’ commission) will be made available to the SDI/PBO.

The entrenched beneficiaries of the SDI/PBO shall be as follows:


THE NATION’S TRUST

The Nation’s Trust, who is our BBBEE partner in the Vergenoegd Development Initiative.

The Nation’s Trust is an organisation which provides funding for the development of entrepreneurship in young people and to equip them, as far as possible, with the necessary skills, resources and facilities to create viable and sustainable businesses and employment opportunities for the future.

The principles of the Nation’s Trust closely align with the views and principles of the developers, and this association of like-minded individuals, we believe, is a powerful asset which is necessary to bring this development to successful fulfilment.

This integrated development, if the rights are granted, will make it possible to provide capital to assist the Nation’s Trust in its good works.

This contribution will be the driver to create up to 8000 thousand jobs. Whilst the activities on the farm will create approximately a further 100 jobs, the main focus of job creation by the Nation’s Trust will be off site in the surrounding areas of Eerste Rivier, Macassar, Khayelitsha, Mfuleni, and Blue Downs. The Nation’s Trust funds young entrepreneurs in a variety of activities and the jobs will be created as a consequence of the contribution from the development.

The Nation’s Trust provides funding on a loan basis. Therefore when the monies are recovered they are re-lent to new entrepreneurs. The estimate of job creation has been based on the first tranche of lending only. Over time, the money initially given to the Nation’s Trust will create even more jobs into the future. It is envisaged that the Nation’s Trust will be a beneficiary in perpetuity and therefore, upon re-sales of the properties, the Nation’s Trust will receive further funding for it’s work.

The patrons of the Nation’s Trust are Mr Nelson R Mandela, Mrs Zanele M Mbeki, her Majesty Queen Elizabeth II of Great Britain and His Royal Highness, Charles, Prince of Wales.

HABITAT FOR HUMANITY

Discussions have been held with Habitat for Humanity with regard to assisting their excellent program in the creation of quality housing. The modus operandi of Habitat for Humanity is very closely aligned with the developers ideals as well as those of the Nation’s Trust. The method of Habitat for Humanity is to provide community housing on a self-help, self-build basis with the assistance of volunteers. This means that the labour costs are provided free by the community and all the money is spent on construction materials. The new house owner will have to pay for the house that has been built, but without interest payments on the money. The repayments are however, adjusted to take into account the inflation, and funding is recovered on a purchasing power basis. The funds can then be re-lent to new house owners and therefore there is a continuing and sustainable investment in housing stock.

It is the intention of the developers that they will fund 70 to 150 houses (depending on developable footprint) through Habitat for Humanity. Habitat for Humanity will also be an entrenched beneficiary of the SDI/PBO and therefore upon re-sales of the properties on Vergenoegd, Habitat will enjoy continuing benefit into the future.

ENVIRONMENTAL IMPROVEMENTS

At present the areas which have been identified as suitable for conservation are heavily degraded or previously farmed but non-economic farmland and require active management in order to rehabilitate the flora that is found in the area.

The conservation areas are not sufficiently large to be self-sustaining and it is envisaged that an ongoing active management plan will be necessary both to restore the natural areas to their former pristine beauty and to maintain them in that manner.

AMENITIES FOR LOCAL COMMUNITIES

On an ad hoc basis the SDI/PBO will identify suitable organisations who will also benefit from VDI. For example a local AIDS clinic and a suitable children's fund. VDI it has retained the services of a professional consultant who is currently undertaking research with the local communities to determine these communities' needs and desires in order to make the SDI/PBO most effective.

BROAD BASED BLACK ECONOMIC EMPOWERMENT

It has been determined by our specialist adviser that the Vergenoegd Development Initiative is presently a level 4 contributor to BBBEE and therefore has 100% recognition as such.

We are advised that it is likely that upon completion of the project, VDI will be a level 3 contributor to BBBEE.

A PICTORIAL TOUR OF THE FARM

http://picasaweb.google.com/rod.macphail/vergenoegd


CURRICULA VITAE OF THE EXECUTIVE DIRECTORS.

Roderick Campbell Simpson MacPhail

Academic and Professional qualifications:

o BSc (Civil engineering) University of Strathclyde (1973)
o Member of the South African Institution of Civil Engineers (1976)
o registered as a Professional Engineer in terms Act 81 of 1968 (1976)
o Member of the Institution of Civil Engineers (UK) 1977
o Diploma in Financial Management (1982)
o Certificate in Labour Law UCT (2004)

Rod has design and construction experience, both in South Africa and in the UK. His experience extends to the design and construction of townships services including roads, sewerage systems, water supply systems and the like.

Having spent several years in consulting engineers' design offices, he gained extensive experience in the design of bridges and other structures, including dams and retaining walls.

In the mid-80s, Rod held the post of National Sales Manager (capital equipment) for a major packaging equipment supplier in Cape Town. During that period the principal customers were from the wine industry, who were supplied with packaging equipment and materials by the business. Rod developed his interest in wine at that stage, and he holds a certificate in wine tasting.

During the late 80's and early 90's he was managing director of a specialist concrete repair company in the UK.

During the past six years he has, together with his partner Andy Miles, been successful in developing residential property in Cape Town.

Since 2002 he has been a founding shareholder and director engaged in the development of the Dreamworld Film City, a R400 million integrated film studio and residential development for Cape Town.

In 1993, he started a guest house in Tamboerskloof. This 12 bedroom luxury development has been very successful and in February 2007 an adjacent property was acquired and a further three rooms were added. Rod has now opened a new luxury guesthouse in Langebaan. These businesses have afforded him the opportunity to make high level business connections within the international travel industry.

Andrew John Miles

Academic qualifications:

o BSc (Hons) Mechanical Engineering
o Master of Business Administration (UCT)

Andy has 30 years business experience in his own businesses and in major corporations in general management in South Africa. He has held both Managing Director and Marketing Director positions.

The positions he has held have included Marketing Director of the AA when he was principally responsible for the recognition of the economic value of the AA brand, and its subsequent commercial exploitation.

As Managing Director of Springbok Atlas, the largest inbound tour operator in South Africa, he was responsible for the turnaround of the business, and developed excellent connections within the international travel industry.

During the past six years, he has, together with his partner Rod MacPhail, been successful in developing residential property in Cape Town.

Since 2002 he has been a founding shareholder and director engaged in the development of the Dreamworld Film City, a R400 million integrated film studio and residential development for Cape Town.

Contact details

Rod MacPhail 083 303 1133 fax 021 438 3486
email: rod@leeuwenvoet.co.za

Andy Miles 082 569 4708 fax 021 438 2697
e-mail: andymiles@mweb.co.za

Postal address 20 Ingleside Rd, Camps Bay, 8005



CURRICULA VITAE OF THE NON EXECUTIVE DIRECTORS (designate)

Ashley du Plooy (Chairman VDI) (BEE Director)

Born in Cape Town, he matriculated from this Spes Bona secondary school in 1981 and continued his studies at the University of Cape Town where he undertook two years work in the furtherance of a bachelor of arts degree in 1983 and 1984.

He set aside his studies in 1984 owing to the intense political upheavals in the Western Cape at that time. During this period he held various activist leadership roles in student, youth, civic and political structures.

His work in socio-economic development has included leadership roles in UCT's Southern Africa Labour and Development Research Unit, the Africa Research Centre and the Sashed Trust.

The scope of his work has been in socio-economic profiling in the townships, inquiring into poverty, wage and service conditions, key legislation on labour and Parliamentary debates thereon, early childhood learning, language policy, anti-racist and anti-sexist programs, development funding, sports transformation, children's rights, corporate development, sanctions, local government and political works.

During the scope of his work he has contributed to numerous publications in his fields of interest as well as in the production and distribution of pamphlets.

He has also consulted to a number of organisations which include, inter alia, the South African Institute for distance learning, the Apex Advisory Board, the Swiss Development Corporation, National Department of Education, USAID, adult learning, Basic education and development foundation, and the National Association of Distance Learning Organisations of Southern Africa.

He has held principal positions in a number of organisations but latterly as managing director of the Nation’s Trust. The Nation’s Trust is a youth economic empowerment programme which he was CEO until March 2006 when the trust merged with The Umsobomvu Youth Fund. His appointment is as market linkages director for the new enlarged group.


Enrico Charles Lionel Fourie (BEE Director)

o BA (economics/mathematics) UCT 1983
o BA (Honours) (economics) UCT 1985/86
o MA (economics) UCT 1991/92
o higher diploma in education UNISA 1983/1984
o certificate in industrial relations Wits University 1988
o certificate in personnel man. IPM 1982
o MBA programme (incomplete) Stellenbosch 1995/1996
o certificate in tourism planning GTAT WTO course 2003

Enrico is an economist with highly developed business planning and tourism strategy skills.

During his career he has held the posts of regional secretary and national coordinator of a Cosatu affiliated trade union, the post of Cosatu Education Secretary in the Western and Eastern Cape, a senior business and development adviser to the Johannesburg Metro, South African tourism, Mpumalanga Provincial Government, Gauteng Provincial Government, the Western Cape Provincial Government, Telkom, Eskom and South African Police Service.

Sandra Anne Benting (BEE Director)

A matriculant of the South Peninsula Senior Secondary School, Sandie started her career in banking where she gained experience with the Standard Bank, United Bank and Allied Bank. Her career in banking spans 11 years with the final period of a career in banking as a loans consultant for residential mortgages.

For a period of three years is she then pursued a career as a residential estate agent and became the top selling agent in her area.

For the last nine years Sandie has been self-employed with her own construction company and as a developer and project manager of residential houses in Paarl, Wellington, Klapmuts, the Blouberg area and Parklands.

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