KeyWorld Launches Points Club As Financial Services Product
The Timeshare Beat
April 20, 2001
As reported in The Timeshare Beat last December, a new company has been formed claiming to have reinvented timeshare
as a financial services product --which will be sold in much the same way as pensions and Isas. KeyWorld Investments
Plc has developed a system which enables clients to invest cash in a tax-free bond in return for lifelong savings
on their holidays, and the issue was finally floated on the London Stock exchange in early March of this year.
Shares in KeyWorld Investments Plc were quoted at its debut at a 1/4p premium to their issue price of two pence.
The timeshare marketing firm raised 1.5 million pounds by issuing around 800 million ordinary shares at 1.15p and
75 million at 2p. Listed under the symbol KWIW, it closed on April 19 at 0.8 pence.
The KeyWorld proposition is that a member of the public can secure their leisure accommodation for up to 75
years by investing approximately five times the average amount spent for their annual holiday accommodation in
the KeyWorld Bond, together with payment of the Membership Charge and annual Administrative Charge.
KeyWorld chief executive officer Kevin Barker has explained that rather than purchasing a week in an actual
property, clients would purchase points to redeem against holidays in a choice of 3,500 resorts and hotels worldwide.
The company's portfolio, currently in existence only through its affiliation and alliance with RCI Europe, includes
everything from safari lodges to family villas on the Spanish costas and ski chalets in France. Eventually, as
money is raised by the company for that purpose, KeyWorld will develop its own properties.
Said Barker in an article by Joanne O'Connor in the Guardian
Unlimited on Oct. 29, 2000: "The average family spends £3,500 a year on holidays and travel. After
three years you've got nothing to show for this but happy memories. Based on an initial investment of £3,000
in a KeyWorld bond the average client could expect to reclaim their original payment in holiday savings within
three years and by the end of seven years they would have saved £6,400 on holidays."
The KeyWorld Bond is being distributed by KeyWorld International Limited, which is a wholly owned subsidiary
of KeyWorld Investments plc. KeyWorld International limited is an appointed representative of Criterion Life Assurance
Limited which is regulated by the Personal Investment Authority for the conduct of investment business.
Basic information concerning the operations of KeyWorld include:
- It is intended that 75% of premiums paid on the KeyWorld Bond will be invested in the property fund, with 25%
being used to pay the fees, expenses and commissions involved in the cost of distribution, other overheads and
to generate revenue for KeyWorld.
- The Company has entered into an agreement with RCI Europe for exchange privileges. Through the Company's relationship
with RCI Europe, the Bondholder will have access to RCI's network of more than 3,500 international resort properties
as well as their travel service.
- The company has positioned itself to utilise Independent Financial Advisors, Affinity Groups and the Internet
for distribution, supported by media and television advertising. The Directors of KeyWorld consider that this will
reduce marketing and other costs to approximately 25% of those generally associated with the sale of typical Vacation
Ownership products. Normally, the costs from other suppliers are in excess of 50% of funds invested.
- All properties purchased using Bondholder funds will be held in the Property Fund under the control of Criterion
Life Assurance Limited.
The management team includes:-
- John Wilson, Non-Executive Chairman; also Chief Executive of Millennium and Copthorne Hotels plc.
- Kevin Barker, Chief Executive; previously Managing Director of Johnson Fry plc and Chairman of Fraser Smith
Holdings Limited.
- Richard Atkinson, Non Executive: also Chief Executive of Holidaybreak plc
Kevin Barker, Chief Executive of KeyWorld, said recently, "The KeyWorld Bond, which we believe is the first
regulated product of its kind in the UK, will become in effect a 'leisure currency' enabling investors to buy their
holiday accommodation using a specially designed points system. By re-engineering the product and reducing the
marketing costs related to the Bond we are able to give far superior value compared with other vacation ownership
products; in the region of three times better value."
As of February 5, 2001 (pre-IPO launch), the Offer Statistics were as follows (based upon Full Subscription):
- Offer Price 2p
- Number of Offer Shares subject to the Offer 75,000,000
- Number of Ordinary Shares in issue following the Offer and Admission 808,759,067
- Proportion of enlarged issued Ordinary share capital being offered 9.27%
- Number of existing Warrants 48,226,250
- Number of Offer Warrants 37,500,000
- Number of Warrants in issue following the Offer 89,476,250
- Proportion of the enlarged issued Warrants now being offered 41.91%
- Market capitalisation at the Placing Price and the Offer Price £16,175,181
- Gross proceeds of the Offer (minimum amount £1,250,000) £1,500,000
- Net proceeds of the Offer receivable by the Company £1,220,000
KEY INFORMATION
Background
- The idea of the KeyWorld Bond was conceived by Ellingham Investments Limited and further developed by Lifestyle
2000. Ellingham provided the initial finance to enable KeyWorld to reach its present position.
Marketing the KeyWorld Bond
- KeyWorld International, the marketing subsidiary of KeyWorld, will distribute the KeyWorld Bond as an Appointed
Representative of Criterion Life Assurance Limited.
Initially, it is intended that the KeyWorld Bond will be sold only to persons and entities resident in the UK.
The KeyWorld Club
- Bondholders automatically become members of the KeyWorld Club.
The KeyWorld Club will offer a dedicated travel and reservation service for Club members operated by RCI Europe.
Members will be able to obtain advice on a range of travel services and products offered, including flights, car
hire, travel insurance and airport parking. The Directors intend that these services will be communicated by the
KeyWorld Club to its members by a variety of means, including a 'Welcome Pack' and via the website.
Membership Charge
- In addition to the annual Membership Fee (currently £99 a year), each Bondholder will be charged an annual
Management Fee calculated on the basis of an amount per Accommodation Right, which will initially be 15 pence per
Accommodation Right (Keypoint).
The Directors have calculated that the typical marketplace Vacation Ownership charge for a management fee ranges
from 15p to 26p. The Company expects to receive a contribution of 15% of the Membership Charge, comprising the
Membership fee and the Management fee.
Sources of Revenue
The Company expects to benefit from the following sources of revenue:
- 25% gross margin on sales of the KeyWorld Bond, less the initial charge paid to Criterion Life Assurance Limited
and any charges paid to IFAs, which together are anticipated to be about 5%.
- The annual Membership Charge will include a 15% contribution to the Company, providing an element of recurring
income
- Any commissions that may be earned from procuring loan finance arrangements enabling clients to fund their
purchase of Accommodation Rights
- Any appreciation in the value of property which it acquires. In the event of KeyWorld purchasing a property
and then selling it into the Property Fund at an uplifted valuation (agreed by an independent valuer appointed
by Criterion Life Assurance Limited), any profit will accrue to the Company
- Revenue from hospitality and entertainment spent in hotels and resort properties which may be owned or acquired
by KeyWorld.
- Any vacant accommodation within the Property Fund Properties not taken up by Bondholders or RCI members may
be let to the general public for the benefit of the Company.
- The developing database which may become an important asset.
Board of Directors
- John Wilson, BA, Non-Executive Chairman, aged 58
- Duncan Gee, LLB, Deputy Chairman, aged 54
- Kevin Barker, Chief Executive, aged 46
- George Raynor, FCA, Finance Director, aged 65
- Ian Dale, Marketing Director, aged 47
- Patrick Murphy, Sales Director, aged 46
- Grant Peires, Director, aged 30
- Richard Atkinson, BA (Econ.), MCIM, Non-Executive, aged 47
ENQUIRIES
KeyWorld Investments plc. Tel 020 7724 2423
Patrick Murphy, Sales Director
College Hill. Tel 020 7457 2020