HARVER BUSINESS PLANPrepared for www.merar.com

Business Plan

Executive Summary

• Seawave aims to provide the market with quality products that will save the consumer time and money.

• The products in our portfolio are new generation innovative and use the latest technology to provide electricity saving, time saving and ultimately a water saving.

• With the drive to Go Green and save energy, these products will help the consumer achieve their goals.

• Seawave is a company that is consistently looking for new products that will further the wishes and requirements of our consumers in South Africa to save energy and water.

The Team

• This business is a family run sole proprietorship.

• The focus is on the sourcing quality products that help to save energy and money for the consumer.

• Lesley – Comes from a PA back round and also has run family businesses including Petrol stations and Distribution companies.

• Gary – Is in the Aviation engineering field and has also been involved in family businesses in the Fuel retail and consumer products distribution.

Opportunities

• There is a potential market of 200 000 units per annum.

• Realistically a market share of 25% could be attainable.

• The largest task will be changing the mind set of the consumer.

• There will be a need to educate the consumer on why these products save time, energy and water.

• This will be done through advertising and demonstrations

Business Concept

• Our products use magnetic induction to heat the water.

• With the water heaters this is achieved by magnetic induction resistance that heats whole storage tank. This results in the water being heated quicker than a conventional heater.

• With the Induction cookers, the concept is the same but the magnetic resistance is used to heat the pot and then the product in the pot. This again results in the product in the pot heating (cooking)a lot quicker.

• Both of these products will save time and ultimately money

Competition

• The competition comes in various forms.

• 1) The traditional water heater companies.

• 2) Solar heating companies.

• 3) Heat pump technology companies.

• 4) Instant water heating companies.

• Solar and Heat pumps are very costly and are not ideal to all areas of SA.

• Instant water heaters are suited to single use and therefore a unit for each hot water tap outlet is needed.

• Our product is competitively priced to the traditional water heater and so is a product that the consumer can see immediate results in savings.

Comparisons

Type CostRand

RebateAvg. yearly

usage at R0.65

% Saving Cost1 year

Cost 5 years

Electric water heater R5 000 R2 340* R7 340 R14 700

Solar water heater R12 000 R4500 R650* 67 R8 150 R10 750

Heat pump R9 000 R936 60 R9 936 R13 680

Induction water heater R5 000 TBA R1 638 30 R6 638 R13 190

* Info from Eskom web site Note: All costs are average and not official

Marketing

• Marketing will be based on securing agents for the different areas in SA and countries in Africa.

• These agents will then be assisted in advertising in the print media, on the internet, through displays on shows and at shopping centres and mail shots.

• We will apply to be included on Master Builders Association data base.

Goals and Objectives

Below is a five year goal for market share

0%

20%

40%

60%

80%

100%

2012 6%

2013 15%

2014 20%

2015 25%

2016 25%

Sale

s/an

nu

m

Market share

Total sales

Seawave sales

FINANCIAL PLAN

• The financial plan in the next slide is based on the market share graph above.

• The yearly costs include an inflation rate of 10%

• The ideal capital requirement is USD300 000.00

• The minimum capital requirement is USD200 000.00

• This minimum capital will pay for removal of existing stock from bond store, and much needed advertising campaign to grow sales.

• The loan is based on a 30 month repayment term with an interest rate of 10%.

Five Year Financial Plan

SEAWAVE DISTRIBUTORS

5 Year Operating Budget Monthly Monthly

2012/13 2013/14 2014/15 2015/16 2016/17 Totals 2012 2013

Average price of units sold R 1,660 R 1,743 R 1,830 R 1,922 R 2,018 R 1,660 R 1,743

Total units sold 12,000 30,000 40,000 50,000 50,000 R 182,000.00 1,000 2,500

INCOME R 19,920,000 R 52,290,000 R 73,206,000 R 96,082,875 R 100,887,019

R

342,385,894 R 1,660,000 R 4,357,500

EXPENDITURE R 18,825,000 R 47,883,000 R 66,704,550 R 87,291,311 R 91,722,760

R

312,426,621 R 1,568,750 R 3,990,250

Operating Profit R 1,095,000 R 4,407,000 R 6,501,450 R 8,791,564 R 9,164,259 R 29,959,273 R 91,250 R 367,250

Profit Incentive Fee @ 3% R 32,850 R 132,210 R 195,044 R 263,747 R 274,928 R 898,778 R 2,738 R 11,018

Replacement Reserve @ 2% R 21,900 R 88,140 R 130,029 R 175,831 R 183,285 R 599,185 R 1,825 R 7,345

Net Trading Profit before

Interest R 1,040,250 R 4,186,650 R 6,176,378 R 8,351,986 R 8,706,046 R 28,461,309 R 86,688 R 348,888

Capatil Outstanding R 1,500,000 R 939,500 R 322,950 R 0 R 0

Interest at 10% R 150,000 R 93,950 R 32,295 R 0 R 0

Total R 1,650,000 R 1,033,450 R 355,245 R 0 R 0

Repayment Value R 710,500 R 710,500 R 355,245 R 0 R 0 R 1,776,245 R 59,208 R 59,208

Oustanding Capatil carried forward R 939,500 R 322,950 R 0 R 0 R 0

Profit before Taxation R 329,750 R 3,476,150 R 5,821,133 R 8,351,986 R 8,706,046 R 27,479 R 289,679

2012 2013 2014 2015 2016 Totals

EXPENDITURE R 18,825,000 R 47,883,000 R 66,704,550 R 87,291,311 R 91,722,760 R 312,426,621 R 1,568,750 R 3,990,250

Cost of units ea. R 1,485 R 1,559 R 1,637 R 1,719 R 1,805 R 8,206 R 1,485 R 1,634

Cost of units R 17,820,000 R 46,777,500 R 65,488,500 R 85,953,656 R 90,251,339 R 306,290,995 R 1,485,000 R 3,898,125

Rent R 12,000 R 13,200 R 14,520 R 15,972 R 17,569 R 73,261 R 1,000 R 1,100

Telephone Cost of Sales R 12,000 R 13,200 R 14,520 R 15,972 R 17,569 R 73,261 R 1,000 R 1,100

Insurance R 12,000 R 13,200 R 14,520 R 15,972 R 17,569 R 73,261 R 1,000 R 1,100

Sundry Cost of Sales R 6,000 R 6,600 R 7,260 R 7,986 R 8,785 R 36,631 R 500 R 550

Administration & General R 12,000 R 13,200 R 14,520 R 15,972 R 17,569 R 73,261 R 1,000 R 1,100

Staff Payroll Costs R 687,000 R 755,700 R 831,270 R 914,397 R 1,005,837 R 4,194,204 R 57,250 R 62,975

Unit Marketing Costs R 60,000 R 66,000 R 72,600 R 79,860 R 87,846 R 366,306 R 5,000 R 5,500

Vechile costs R 180,000 R 198,000 R 217,800 R 239,580 R 263,538 R 1,098,918 R 15,000 R 16,500

Utilities R 24,000 R 26,400 R 29,040 R 31,944 R 35,138 R 146,522 R 2,000 R 2,200

COMPLIANCE

• NRCS certified (supplied)

• SANS compliant (Test Africa report supplied)

• ESKOM tested

Resource Requirements

• Requirements for the following resources:– Personnel - Seawave is a family run business.

– Technology - There will be a need to travel to the factory in China at least once a year to gain new development knowledge.

– Finances - As mentioned in the Finance plan, a capital investment of USD300 000.00 would be needed to secure the business.

– Distribution – Seawave is in the process of signing agents in the various provinces in South Africa and we are actively looking for agents in the SADC region.

– Promotion – This will be done through the print media and at various home expo and improvement shows within Southern Africa.

Risks and Rewards

• The only risk for this business will be the unlikely prospect of sales not reaching the full potential. All feedback has been very positive and we believe these products will sell successfully.

• The possibility of these product exceeding expectations is high and the resultant rewards will be very good.

• All funding for the start up operations will be paid back well within the allotted time frame of 30 months.

Key Issues

• Near term– The most important decision on the success of this business is the

funding to allow for continuity of stock holding and marketing.

– If this is not made available then there is a very likely chance that the opportunity will be made available to someone else..

• Long term– The long term issues will be for funding availability to expand the

products in our range .

– If this is not available then the business will stagnate and not grow with new products coming out on the market.