Chairmans Statement

Chairman’s Statement delivered to the Annual General Meeting

on 27 June 2006 in Johannesburg

Ladies and gentlemen, once again it gives me great pleasure to present my report to you on the activities of the Company.

The Audited Annual Financial Statements of the Company, together with the Directors’ report thereon, have been circulated to all shareholders, together with the notice of this meeting.

2005 PROJECTS
Our major focus is now on the refurbishment of apartments, which is part of an on-going process. Upgrades to the apartments include the tiling of the lounge and kitchen areas, the installation of shower doors in both bathrooms, to replace the shower curtains, painting of apartments and refurbishment of kitchen cupboards and worktops.

New assets purchased, over and above replacements, during the year amounted to R84 294 (2005:R155 109) which included the following:

- 1x industrial washing machine @ R35 555

- 1 x industrial tumble dryer @ R18 000

- 1 x industrial roller ironer @ R 25 757

- 1 x air conditioner @ R4 982

The purchase of the industrial laundry equipment has now reduced the need to outsource the resort’s laundry as we found that the costs were increasing disproportionately. The need for the new air conditioner was mainly due to upgrading to the new DSTV decoders and the add-on of 3 channels – which required the room temperature to be kept as cool as possible to avoid overheating of the decoders.

R634 964 (2004 – R599 616) was spent on replacements as part of budgeted expenditure of R700 000 and was made up as follows:

Facilities (eg. Tennis courts, swimming pool, playground equip) R 11 875

Office Furniture & Equipment (computer and laundry equipment) R 150 595

Apartments (carpets, tiles, showers, curtains, cupboards etc) R 283 786

Air conditioning R 34 396

Appliances (eg. Fridges, stoves, microwaves, dishwashers) R 63 661

Geysers R 25 759

Awnings R 32 220

Mattresses and beds R 2 020

Soft Furnishings (eg. Bed sheets, blankets, towels etc) R 30 652

2006 PROJECTS
For 2006, we have identified projects totalling R603 000 (2005 – R700 000). I previously emphasised the need to build up the provision for replacements. Ideally, there should be a buffer of at least R500 000 to meet emergencies. At the moment, we only have R119 345 in reserves for replacements. We hope to provide another R100 000 by the end of this year. The major projects for 2006 will focus on:

Office furniture & Equipment R 20 000

Apartments (carpets, tiles, showers, curtains, cupboards etc) R 323 795

Air conditioning R 15 000

Appliances (eg. Fridges, stoves, microwaves, dishwashers) R 24 100

Geysers R 9 300

Awnings R 50 000

Facilities (eg. Tennis courts, swimming pool, playground equip) R 19 254

Soft Furnishings (eg. Bed sheets, blankets, towels etc) R 37 051

Mattress & Bedding R 104 500

We are also investigating the establishment of a pay as you go WiFi hotspot for the building. This will help many guests who seek internet connectivity in this day of communication necessities.

RCI

The RCI awards for the 2006 were presented in February this year. We are proud to have received the prestigious Silver Crown status. In the USA market, we are one of a very few SA resorts recognised as a quality resort. We encourage all our shareholders to use the facilities of RCI, especially if you wish to bank your units for use elsewhere in Southern Africa or the rest of the World. I continue to caution you about various point system holiday clubs and suggest you read the fine print very carefully. Many complaints continually arise of unhappy transactions with the point systems operated by holiday clubs. If you are in any doubt consult your attorney before you sign any sales documentation. Some clubs continue to be levy defaulters in an attempt to bring hardship to resorts who need the finance in on time. The motivation of those clubs is mala fide.

2005 AGM
The minutes of the 2005 AGM, were circulated prior to this meeting and are self-explanatory.

FLEXI-CLUB: Legal Proceedings
The present legal proceedings of an action for purported damages instituted by Flexi-Club against the Company have now been set down for 30th August 2006. Legal costs to date in these matters totals R339 014 over the last four years: (2005: R94 352), (2004: R15 390), (2003: R110 555) and (2002: R118 717). The second application brought by Flexi Club to transfer a share from one of our shareholders to Flexi Club resulted in a judgement in our favour, with costs. A copy of that judgement was circulated to all shareholders with the notice of this meeting. I thank the lawyers involved in that case for their resolve.

We have it on the opinion of Counsel that all these clubs are unincorporated associations for gain and are in contravention of ss 30 and 31 of the Companies Act 1973 and thus illegal.

The current despicable activities of Flexi Club/Club Leisure are an attempt to gain control of your company, railroad the Annual General Meeting thus avoiding an adverse judgement by circularising all our shareholders with an anonymous letter and completed proxy form in favour of their employee (Alex Bosch) and attorney (Shaun Hornby). They also harassed all our shareholders (from a list obtained surreptitiously) with anonymous, misleading and impersonating telephone calls to con you in to appointing their lackeys as proxies. All of which clearly display their lack of transparency and good business ethics. Would you really want such persons running your company?

TIMESHARE INDUSTRY
The Timeshare Industry does not have a good reputation. It is tainted by unprofessional practices adopted by certain points clubs who continue to con the man-in-the-street. The timeshare industry through clubs and bad management in a number of share block companies is in a total shambles. I reiterate my caution, made over many years, to shareholders in dealing with certain points clubs, as, in my opinion, they are an extension of pyramid schemes and have nothing to offer that RCI cannot offer.

I, once again, draw your attention to the fact that it is illegal to cede your use without transferring the share. The Company no longer deals with clubs who purport to have cession of your use and will deny them access to your accommodation. It will be up to you to advise us of the arrangement, together with the appropriate supporting documentation, you have with any club and we will communicate only with you on these matters. Certain clubs are attempting to claim ownership of your shares. We will not accept this or their occupation based on the illegal cession of use. We do not look to clubs for your levy payments and only communicate with you. If you have ceded your use to them, it is illegal and unenforceable. Please consult your attorney, especially where the clubs threaten you with action and attempt to keep your money based on their illegal transaction.

Your company will not become another victim like so many others, of the odious business practices of some of the clubs, who lack casuistry.

We continue to recognise all your arrangements with RCI, leases in the rental pool and your private tenants.

RENTAL POOL

The average dividend for shareholders for the year was R1 093, the highest dividend being R6 604(week 48) and the lowest dividend being R337 (week 15). Private tenants are undisclosed.

I must remind shareholders that check in time, in keeping with many resorts is 14:00 and check out time is 10:00. This period is essential to ensure housekeeping have the opportunity to complete their duties for occupation. I request you all to respect this and not to make circumstances unpleasant and nasty for our staff because you think you have an automatic right to earlier occupation. House rules and regulations are created out of necessity and respect for all parties.

GRATITUDE
I wish to thank all the staff under the able leadership of Jeanne Parker, who have served your Company during the year, and continue to do so diligently. Without exception, the staff is always prepared to go the extra mile. Unfortunately, on the rare occasion, one or two guests take out their frustrations and life’s woes unwarrantedly and unkindly on them through verbal abuse. We are not prepared to tolerate such behaviour or abuse and I personally will defend the staff and take such action as is required. The staff provide a very harmonious atmosphere in the work place and a home from home for all our guests. A Company such as ours is successful because of the dedication, charm and utter loyalty of the staff in performing their duties for the benefit of the company, shareholders and guests. I am extremely grateful for their performances and very proud to be working with them.

The various contractors to the resort continue to provide the level of service we expect at your resort and I thank them for being receptive to change, quality standards and striving to provide proper service delivery.

I thank PricewaterhouseCoopers, the auditors, for their diligent approach to the very exacting requirements placed on them, in terms of new International Financial Reporting Standards and the risks they face in the performance of their onerous duties of assurance. I thank Ms Imelda Way ACIS, of Broll Property Group (Pty) Ltd, who performed the duties of Company Secretary over many long years starting with Anglo-American Properties, which merged eventually into the current Broll Group. Your company no longer had the profile fitting the operations of the Group and thus they resigned at 31 December 2005. We are sad at the closure of this longstanding relationship. We welcome Shirley Braham FCIS of Companies House Secretarial Services (Pty) Ltd, as the new Company Secretary from 1 January 2006.

Your company is indebted to George Wolfe, a shareholder, a director and practising attorney, who miraculously pieced together an outstanding legal team with his colleague G Fitchett, Advocates N Tee, M Van Baarselaar and Attorney D Grundlingh, to handle our very complex issues. We are able to give matters our very best shot.

I wish to thank my colleagues on the Board for their constant counsel, guidance, support and untiring efforts to ensure the successful operations of your resort. Having observed other share block companies and their many difficulties because they have too few outside and non-executive directors to maintain control, I am very proud of your company, which has a fine group of highly competent persons as your directors. They are diligent, aware of their onerous fiduciary duties and provide proper control and restraint for your benefit. They are all individuals of whom you can be proud. Their task is made even more difficult due to the attacks on your company motivated by greed and the desire to gain control of the valuable property, to your detriment.

Finally, I thank shareholders who enjoy and appreciate the resort and staff efforts, pass constructive comment, where necessary, and offer encouragement and wise counsel for the betterment of all, without rancour, thus making all our efforts worthwhile.

Happy holidaying!

P M COLLINS 27 June 2006

Chairman LA LUCIA