MDE 1113 Financial Analysis PMA

P a g e | 1UTM Razak School of Engineering and Advanced TechnologyUTM International Campus,Jalan Semarak, 54100 Kuala Lumpur

POST MODULE ASSIGNMENTMASTER OF SCIENCE (ENGINEERING BUSINESS MANAGEMENT)

TOPIC: BUSINESS PLAN

Module Name : FINANCIAL ANALYSISModule ID : MDE 1113Module Lecturer : DR. ROHAIDA BASIRUDDIN

Student Name : Tan Chan YeeStudent IC : 831126-02-5949Student ID : KL MD121002












TABLE OF CONTENT

NO ITEM PAGE1 EXECUTIVE SUMMARY 3

2 GENERAL COMPANY DESCRIPTION 42.1 Mission Statement2.2 Vision Statement2.3 Objective2.4 Goals2.5 Company History2.6 Company Ownership2.7 Company Location and Facilities

3 PRODUCT 73.1 Product Description3.2 Services3.3 Competitive Comparison3.4 Entry Barriers and Strategies to Overcome

4 MARKETING PLAN 114.1 Marketing Analysis Summary4.2 Market Segmentation4.3 Target Market Segment Strategy4.4 Market Trend4.5 SWOT Analysis4.6 Competition Edge

5 PRODUCT DEVELOPMENT STRATEGY 185.1 Material and Labour5.2 Facilities and Equipment

6 MARKETING STRATEGY 196.1 Marketing Mix6.2 Marketing Research

Market Segmentation

7 FINANCIAL PROJECTION 227.1 Proforma Profit & Loss Accounts7.2 Projection of Taxations & Tax Shields7.3 Projection of Cash Flow7.4 Proforma Balance Sheet7.5 Sensitivity Analysis

8 CONCLUSION 309 APPENDICES 31


TABLE OF CONTENT







Market Segmentation




TABLE OF CONTENT







Market Segmentation




1. Executive Summary

Green Lightning Consultancy has established a strong foothold in a niche technology market for

green solution to the Mechanical & Electrical Consultants and Commercial & Factory Owner.

The company CEO plans to research and develop more green solution to the customer and

expand the market share to South East Asia by end of 2015. So that he drive the engineering

department to come out with creative idea in order to gain more reputation internationally.

Green Lightning Consultancy currently led by Desmond Tan which triggered his idea on last five

years which is service based company previously. He had able to source his company career

advancement by included Michael Yip and Stephen Hii in to his management profile. Desmond

Tan, CEO cum Technical Advisor of the company are still actively advice his Technical

department which led by Technical Manager if they still have doubt on the process and solution.

Michael Yip is now aggressively targeting the M&E Consultants as he has a very huge network

among the consultants. Stephen Hii however will be targeting end user consumers that willing to

be environmentally conscious group. Through a combination of Sales, Marketing, and Technical

management team, Green Lightning Consultancy will be able to successfully execute on its

business plan.

















business plan.

















business plan.


2. General Company Description

2.1 Mission Statement

Green Lightning Consultancy’s mission is to Converting the Energy Research into Expertise

Solution.

2.2 Vision Statement

As part of business in Green Energy Solution, our vision:

1. To convert the lightning strike into energy foam to provide electricity power to the

industry.

2. To offer alternative green solution to the customer

3. To assist WWF and WNO to achieve their target in greener environment

2.3 Objectives

Green Lightning Consultancy had defined THREE major key to success in the industry

1. Build branding awareness among the industry in shortest period of time

2. Provide 100% satisfaction among consumer; target of 0% complaints

3. Expand the business to South East Asia by end of year 2015





Solution.




industry.



2.3 Objectives









Solution.




industry.



2.3 Objectives






2.4 Goals

Green Lightning Consultancy has identified THREE keys to its success.

1. The first is to research and develop more green solution to the customer. However, we

only research solution that fulfills the need which is based on market demand.

2. The second is to ensure that all of its offerings are based on economic justifications; the

solution should make sense beyond the environmental considerations because it has long-

term economic value.

3. The third is to be targeting M&E Consultants and individual consumers. We will work

closely with M&E Consultants providing them the ability to offer green environmental

solutions to their customers. This group is highly grown at Penang, Klang Valley and

Johor Bahru area. The second customer group is individual consumers; an

environmentally conscious group that have sought out a service provider to help them

implement their personal ethics into the design of their new or existing structure. This

segment we will also target to expand the market share to South East Asia by end of 2015.

2.5 Company History

Green Lightning Consultancy was solely service based company for the past five years. However,

since the government bodies had recently concentrated in Green Building Index (GBI). Our

company currently had emphasis more to design consulting to Mechanical &Electrical Engineers

Consulting Firms and new factories owner who are interested in new environmental sound

factories.


2.4 Goals














2.5 Company History





factories.


2.4 Goals














2.5 Company History





factories.


2.6 Company Ownership

Green Lightning Consultancy was partnership among THREE young stakeholders; Desmond

Tan, Stephen Hii and Michael Yip who are eager to build up a new company and contribute to

the government policies on Green Building. Desmond act as CEO cum Technical Director of the

company; Stephen act as Sales Director of the company and Michael act as Marketing Director

of the company.

2.7 Company Location and Facilities

Green Lightning Consultancy presently operates from Single lot of Factories lot located in Port

Klang (North Port), Selangor. All manufacturing is out-sourced to contract manufacturers. We

are the sole-distributors to products that we are selling. However, we will soon have a team of

research and development team to develop on new equipment which act towards green

environment.







of the company.






environment.







of the company.






environment.


3. Product

Lightning Energy Converter is a comprehensive system completed with at least one or more

Lightning Arrester installed on top of the roof of the factory, attached with Rectifier (Convert

AC to DC) and Capacitor Bank to store the energy. Earth Resistance is a key important point

whereby need to be less than 5 ohm.

3.1 Product Description

Early Streamer Emission (ESE) Lightning Arrester/Conductor is designed on a specific initiation

advance; well before the natural formation of an upward leader, able to generate an upward

leader that rapidly propagates to capture the lightning in certain specific radius and direct it to

earth. During a storm the ambient electric filed may rise to between 10 to 20 kV/m. As soon as


3. Product











3. Product











the field exceeds a threshold representing the minimum risk of a lightning strike, the lightning

terminal is activated. It draws its energy from the ambient electric field the energy required to

generate high voltage pulses, creating and propagating an upward leader. No other power sources

are required, and no radioactive components are used. Besides acting as lightning protection

system, we took this opportunity to attract the lightning strike and convert it into energy source

to supply electricity to the factory.

For conversion of an alternating current (AC) input into a direct current (DC) output, a bridge

rectifier is the most suitable device to be used. Normally, arrangement of four diodes in a bridge

circuit configuration that provides the same polarity of output for either polarity of input will be

configured. An addition of a capacitor may be desired inside the system because the bridge alone

supplies an output of pulsed DC. The function of this capacitor, known as a reservoir capacitor

(or smoothing capacitor) is to lessen the variation in the rectified AC output voltage waveform

from the bridge.

High Voltage Power Capacitors play a key role in the transmission of electrical energy from

Lightning strike and store as a backup to the electrical power system. High voltage power

capacitors also improve the performance, quality and efficiency of electrical systems,

minimizing the power losses, this reducing the environmental load and making them more cost

effective.














from the bridge.





effective.














from the bridge.





effective.


3.2 Services

Green Lightning Consultancy offers a comprehensive solution in terms of providing consultancy

to the Mechanical & Electrical Engineering consulting firms to design on the Lightning Energy

Converter Solution. Between, we also offer consultancy to new or existing factory owner who

are interested in adapting out environmental green solution. Our services is based on a “3G”

strategies; whereby stands for Green Management, Green Discussion, and Green Solution.

3.3 Competitive Comparison

1. Outsource Provider 1: The HV Capacitor Bank price is more competitive than when

comparing. However, for the whole solution, we do offer more advantage whereby we are

providing FREE consultation.


3.2 Services











3.2 Services











2. Outsource Provider 2: The lightning Arrester/Conductor used is not accordance to NFC

17102 compare to us and are without Early Time Gain certification.

3.4 Entry Barriers and Strategies to Overcome

Awareness of Green Energy among the market is still far behind. Our marketing teams had to

work hard to deliver the knowledge to the consultants and end users. Besides, due to the high

price on the starting to cover the Return of Investments, the investment from the end user is

limited. Our few key major projects are solely specified in through the consultants as we had to

concentrate more on the consultants first.




















4. Marketing Plan

4.1 Marketing Analysis Summary

Green Lightning Consultancy focuses on THREE major market segments. The first group is

Mechanical & Electrical Engineering consulting firms who are designing on environmental

solution either on a new building or new factory structures. The second customer group is Green

Energy Auditors that in-charge in advising building or factory owners to convert their facilities

into green solution. The third customer group is individual existing building or factory owner

who desire environmental elements designed into their building. The niche of Green Lightning

Consultancy faces competition from eco-architects as well as from the local utilities that may

have a small department that offers green energy consultation advice. The industry often operates

to satisfy clients; it is the end customer that typically requests green energy designs and they

either seek out a specific architect or they request their architect to receive guidance from firms

such as Green Power.

4.2 Market Segmentation

Green Lightning Consultancy has segmented its target market segment into THREE different

major customer groups:

Electrical & Mechanical Engineering Consulting Firms (40%)

This customer group is made up of professional Electrical & Mechanical Consultant that designs

Green Environmental Solution for clients. Consultants have developed a strategic relationship

with Green Lightning Consultancy to offer value-added-services for their clients.


4. Marketing Plan





















4. Marketing Plan





















The consultant firms typically have two to twenty Electrical & Mechanical Engineers working

for the design.

Offer both residential and commercial/factory design work, however at least 50% of their work

is commercial/factory design work.

Yearly revenue ranges from RM500,000 to RM5,000,000.

Green Energy Auditors (20%)

This customer group is made up of Green Energy Auditors that in-charge in advising building or

factory owners to convert their facilities into green solution.

The auditor firms typically have one to five Green Energy Auditors working for the consulting

advice.

Normally audit the building or factory once a year for the authority approval.

Also offer service to approve on the building for Green Building Index (GBI) purposes.


Commercial Buildings / Factories Owner (40%)

This segment contains consumers who are either having a commercial building and factories.

Due to their personal environmental concerns and recognition that it can be cost effective to have

building decisions with environmental considerations, they have requested Green Lightning

Consultancy assistance. They are generally working directly with Green Power for their design

needs and will likely then take these design criteria.

The individual is an environmentalist and they take into account how their action will impact the

environment.



for the design.








advice.











environment.



for the design.








advice.











environment.


The age range of clients is normally 35-65.

Average building income is RM3,000,000 per annum. Please note that while the overriding

concern in using Green Lightning Consultancy’s services is the positive impact on the

environment, a cost benefit analysis indicates that in the long term it is cost effective to adopt

green energy considerations.

4.3 Target Market Segment Strategy

Based on chart above, we can summarize that Mechanical & Electrical Consultant (51% of total

market) and Commercial Buildings / Factories Owner (41% of total market) stands very

important role in our business nature. We had decided to concentrate on these two segments and

open more leads to conquer the market. The Mechanical & Electrical Consultant had been

focused on as they are the key person to design on the Green Energy Solution and present to the

developer or client. Commercial Buildings / Factories Owner however will want the

environmental designs make into their existing building to meet the Green Building Index (GBI)

8%

41%

Market Analysis















51%

Market Analysis

Mechanical & ElectricalConsultant

Green Energy Auditor

Commercial Buildings /Factories Owner















Mechanical & ElectricalConsultant

Green Energy Auditor

Commercial Buildings /Factories Owner


certification. These provide Green Lightning Consultancy with a wide market of interested

customers.

4.4 Market Trend

Based on company sales forecast from past years, Green Energy had become a drastic increasing

trend in future. We had target to expand the market share in the best ever way in next few years.

Histogram below shows five years sales forecast, the trend shows positive growth. In order to

have higher market share in next forecast the company needs to produce more attractive and high

quality Green Environmental Solution with extra features.

RM0

RM1,000,000

RM2,000,000

RM3,000,000

RM4,000,000

RM5,000,000

RM6,000,000

2013 2014 2015

SALES FORECAST (2013 to 2017)



customers.

4.4 Market Trend






2015 2016 2017

SALES FORECAST (2013 to 2017)

SALES FORECAST



customers.

4.4 Market Trend







4.5 SWOT Analysis

SWOT Analysis is the method to identify the capability of the organization by analyze the

environment with strengths, weaknesses, opportunities and threats. Strengths and weaknesses are

internal factors while opportunities and threats are external factors.

Key Internal Factors Weight RatingWeighted

ScoreSTRENGTHS1. Well known for quality and reliable service with good

reputation and image0.09 3 0.27

2. Strong financial position, balance sheet with very littledebt to increase cash flow

0.07 2 0.14

3. Strong management team with loyal employees 0.06 4 0.244. Long-range planning 0.08 2 0.165. Financial ratios 0.07 3 0.216. Factory set up in developing countries to reduces

production cost7. Strong relationship with consultants and end users

0.08

0.09

3

3

0.24

0.27

WEAKNESSES8. Provide many benefits to employees that raise costs 0.08 1 0.089. Absence of strategic partner to develop different range

of products0.07 3 0.21

10. Lack of R&D in different market segment 0.08 2 0.1611. Price competition with others manufacturer12. Represent only one solution for Green Environment

Solution13. Limited access to international markets

0.080.09

0.06

33

3

0.240.27

0.18

TOTAL 1.00 2.67


4.5 SWOT Analysis








0.07 2 0.14



0.08

0.09

3

3

0.24

0.27





0.080.09

0.06

33

3

0.240.27

0.18

TOTAL 1.00 2.67


4.5 SWOT Analysis








0.07 2 0.14



0.08

0.09

3

3

0.24

0.27





0.080.09

0.06

33

3

0.240.27

0.18

TOTAL 1.00 2.67


Key External Factors Weight RatingWeighted

ScoreOPPORTUNITIES1. Growing number of end user looking for green

environmental solution0.07 3 0.21

2. Increased demand for new green technologies 0.10 4 0.403. Venturing with famous international market player for

R&D purposes0.07 2 0.14

4. Increasing manpower to promote on the productssolution

0.05 4 0.20

5. Focus on others product possibility for futureexpansion

0.04 3 0.12

6. Implementing Total Quality Management 0.06 2 0.127. 24 hours services hotline8. Consumer expect green business opportunity

0.050.05

23

0.100.15

THREATS9. Competition from others cheaper solution 0.10 2 0.2010. Consumer tends to choose cheaper solution 0.07 3 0.2111. International Currency Variation cause Fluctuations 0.10 1 0.1012. High and increasing operation costs 0.08 1 0.0813. High turnover rate of experience staff 0.04 3 0.1214. High competition and prices for logistic 0.04 3 0.1215. Competition from other regional airlines 0.07 2 0.14

TOTAL 1.00 2.41

COMPETITIVE PROFILE MATRIX(CPM)

GreenLightning

Competitor 1 Competitor 2

Critical Success Factor Weight Rating Score Rating Score Rating Score

Research and Development 0.10 2 0.20 3 0.30 2 0.20Product Quality 0.15 4 0.60 3 0.45 2 0.30Product Design 0.15 3 0.45 1 0.15 2 0.30Price Competitiveness 0.10 4 0.40 1 0.10 1 0.10Customer Loyalty 0.05 3 0.15 1 0.05 1 0.05Global Expansion 0.11 1 0.11 4 0.44 3 0.33Market Share 0.11 4 0.44 2 0.22 2 0.22Management 0.08 2 0.16 3 0.24 3 0.24Sales Distribution 0.05 4 0.20 3 0.15 2 0.10Financial Position 0.10 4 0.40 3 0.30 3 0.30

TOTAL 1.00 3.11 2.40 2.14








0.05 4 0.20


0.04 3 0.12


0.050.05

23

0.100.15


TOTAL 1.00 2.41


GreenLightning




TOTAL 1.00 3.11 2.40 2.14








0.05 4 0.20


0.04 3 0.12


0.050.05

23

0.100.15


TOTAL 1.00 2.41


GreenLightning




TOTAL 1.00 3.11 2.40 2.14


4.6 Competition Edge

For Competitor A, they are good in strategic location with a huge factory. The quality of product

and price are competitive with us but lack of advertising of the product too. For Competitor B,

their advantage is on investment of advertising while their weakness is majorly on the expertise

of the products.






of the products.






of the products.


5. Product Development Strategy

The company product development strategy is to concentrate efforts on the developing on new

more green environmental products to have more options for the consultants design and end user.

Estimated for each new product development will cost at least 2 to 5 years of research and

development.

5.1 Material and labour

Sources the material required around the world especially on the DC motors and Inverter to build

up new product. Engineers and Architects level of labour are needed to ensure the research and

development progress goes fine.

5.2 Facilities and Equipment

In order to make new product research development, we may need to extend the current factory.

The software needed is Solid work and Auto Desk which may assist in developing the 3D type of

product.






development.








product.






development.








product.


6. Marketing Strategy

The marketing strategy is based on developing an awareness regarding Green Lightning

Consultancy and Services to both Mechanical & Electrical Consultants and the end user

consumers. Green Lightning Consultancy will strongly use existing networking and browse

through Association of Consulting Engineers Malaysia (ACEM) and Institute Engineers

Malaysia (IEM) to collect the data of Mechanical & Electrical Consultant firms.

We also will cooperate with Suruhanjaya tenaga (ST) to collect the data information from them

on the IEC standards and Green Energy Manager whereby factories need to appoint them when

the electricity reach certain limits.

Besides, we will co-organize with Institute Engineers Malaysia (IEM) to hold seminars and

technical discussion around Malaysia as a means to develop relationships with many of

Mechanical & Electrical Consultants and end users. This will also serve also as a free source of

information for the Building & Factories owner. We strongly believes that participating in the

seminars and exhibition will be an effective way of meeting many of potential leads and

allowing them to be familiar with our expertise in energy conversion/saving solution.

Green Lightning Consultancy will also increase manpower in Research and Development

division to create new innovative product that able to help customer to perform better green

energy solution.



















energy solution.



















energy solution.


6.1 Marketing Mix

Product Strategy

Green Lightning Consultancy promotes the product by maintaining the core function with extra

innovative value added in all new series products.

Product Innovation

Green Lightning Consultancy focus on the innovation of the product that based on customer

needs.

Pricing Strategy

Green Lightning Consultancy offer accretive price to customer with high performance product

with value added function incorporate to the new products.

Promotion Strategy

Green Lightning Consultancy promotes the products using multi dimensional advertisement such

as;

a. Company Website

b. Direct marketing

c. Event Marketing (Seminar / Exhibition )

d. Distribution Strategy

e. Education on Mechanical & Electrical Consultants


6.1 Marketing Mix

Product Strategy



Product Innovation


needs.

Pricing Strategy



Promotion Strategy


as;

a. Company Website

b. Direct marketing





6.1 Marketing Mix

Product Strategy



Product Innovation


needs.

Pricing Strategy



Promotion Strategy


as;

a. Company Website

b. Direct marketing





6.2 Marketing Research

In market research area two main elements are need to cover;

a. Manufacturing of the series of product that have demand by customer and based on voice of

customer. In other word all feedback from customer has to seriously bring to new product for

improvement to achieve high customer satisfaction.

b. Marketing Channel is another important element where the company has to look in deep on

the potential new market segment and study strength point of competitor so marketing team need

to come out with better strategy to compete with competitor.




















7. Financial Projection

7.1 PROFORMA PROFIT & LOSS ACCOUNTS

GREEN LIGHTNING CONSULTANCYPROFORMA PROFIT AND LOSS ACCOUNTS ( IN '000 )

TABLE 1Year 1 2 3 4 5 6 7 8 9 10

Sales volume in unit 5,000,000 5,500,000 6,050,000 6,655,000 7,320,500 8,052,550 8,857,805 9,743,586 10,717,944 11,789,738

Selling price in $ per unit 1 1 1 1 1 1 1 1 1 1

SALES REVENUES IN RM 5,000 5,555 6,172 6,857 7,618 8,463 9,403 10,446 11,606 12,894Less :

Variable costs 4,550 4,641 4,734 4,828 4,925 5,024 5,124 5,227 5,331 5,438

Fixed costs 95 100 105 110 115 121 127 134 140 147TOTAL COSTS OFPRODUCTION 4,645 4,741 4,839 4,938 5,041 5,145 5,251 5,360 5,471 5,585

Less:Depreciation,land/bildg 200 200 200 200 200 200 200 200 200 200

Depreciation,plant/mac'nery 40 40 40 40 40 40 40 40 40 40

Less: Amortisation expenses 7 7 7 - - - - - - -

GROSS PROFIT, $000 108 568 1,086 1,678 2,337 3,078 3,911 4,846 5,895 7,069GROSS PROFIT MARGIN, % 2% 10% 18% 24% 31% 36% 42% 46% 51% 55%

Less:Administrationandgeneralexpenses 120 126 132 139 146 153 161 169 177 186





TABLE 1Year 1 2 3 4 5 6 7 8 9 10




Variable costs 4,550 4,641 4,734 4,828 4,925 5,024 5,124 5,227 5,331 5,438











TABLE 1Year 1 2 3 4 5 6 7 8 9 10




Variable costs 4,550 4,641 4,734 4,828 4,925 5,024 5,124 5,227 5,331 5,438








Marketingexpenses 150 162 175 189 204 220 238 257 278 300

TOTAL OPERATING EXPENSES 270 288 307 328 350 374 399 426 455 486

NET OPERATING PROFIT,$000-162 280 779 1,350 1,987 2,705 3,513 4,420 5,440 6,583

OPERATING PROFITMARGIN,% -3% 5% 13% 20% 26% 32% 37% 42% 47% 51%

Less: Financial charges 98 88 78 69 59 49 39 29 20 10

NET PROFIT BEFORETAX,$'000

-260 191 701 1,282 1,928 2,656 3,473 4,391 5,420 6,573

Less: Taxation payment - - - - - - - - - -

NET PROFIT AFTER TAX,$'000-260 191 701 1,282 1,928 2,656 3,473 4,391 5,420 6,573

NET PROFIT MARGIN,% -5% 3% 11% 19% 25% 31% 37% 42% 47% 51%

BREAK EVEN ANALYSIS

Contribution margin,$'000 450 914 1,438 2,028 2,693 3,440 4,279 5,220 6,275 7,457Contribution margin in $ 0.09 0.17 0.24 0.30 0.37 0.43 0.48 0.54 0.59 0.63per unit of salescontribution margin ratio,% 9% 16% 23% 30% 35% 41% 46% 50% 54% 58%

Break-even sales in $'000 7,885 4,392 3,164 2,524 2,162 1,928 1,770 1,659 1,581 1,527

Break-even sales in volume 7,885,185 4,348,350 3,101,464 2,449,317 2,077,628 1,834,900 1,667,247 1,547,424 1,460,202 1,396,420Break-even capacity,% 98.56% 54.35% 38.77% 30.62% 25.97% 22.94% 20.84% 19.34% 18.25% 17.46%Safety margin -37% 26% 95% 172% 252% 339% 431% 530% 634% 744%








-260 191 701 1,282 1,928 2,656 3,473 4,391 5,420 6,573




BREAK EVEN ANALYSIS











-260 191 701 1,282 1,928 2,656 3,473 4,391 5,420 6,573




BREAK EVEN ANALYSIS





7.2 PROJECTION OF TAXATIONS & TAX SHIELDS

GREEN LIGHTNING CONSULTANCYPROJECTIONS OF TAXATION AND TAX SHIELD ( IN '000 )TABLE 2

Year 1 2 3 4 5 6 7 8 9 10

NET PROFIT BEFORE TAX,$'000-260 191 701 1,282 1,928 2,656 3,473 4,391 5,420 6,573

Add:Depreciation,land/bildg 200 200 200 200 200 200 200 200 200 200

Depreciation,plant/machinery 40 40 40 40 40 40 40 40 40 40

Amortisation 7 7 7 - - - - - - -

Less: Capital allowances

Land/buildg 120 20 20 20 20 20 20 20 20 20

Plant/machinery 80 40 40 40 40 40 40 40 40 40

TAXABLE INCOME,$'000-213 378 887 1,462 2,108 2,836 3,653 4,571 5,600 6,753

Less : Investment tax credit - - - - - - - - - -

TAXABLE INCOME AFTER ITC - 378 887 1,462 2,108 2,836 3,653 4,571 5,600 6,753

TAXATION,$'000 - - - - - - - - - -




Year 1 2 3 4 5 6 7 8 9 10




Amortisation 7 7 7 - - - - - - -


Land/buildg 120 20 20 20 20 20 20 20 20 20

Plant/machinery 80 40 40 40 40 40 40 40 40 40

TAXABLE INCOME,$'000-213 378 887 1,462 2,108 2,836 3,653 4,571 5,600 6,753



TAXATION,$'000 - - - - - - - - - -




Year 1 2 3 4 5 6 7 8 9 10




Amortisation 7 7 7 - - - - - - -


Land/buildg 120 20 20 20 20 20 20 20 20 20

Plant/machinery 80 40 40 40 40 40 40 40 40 40

TAXABLE INCOME,$'000-213 378 887 1,462 2,108 2,836 3,653 4,571 5,600 6,753



TAXATION,$'000 - - - - - - - - - -


7.3 PROJECTION OF CASH FLOW

GREEN LIGHTNING CONSULTANCYPROJECTIONS OF CASH FLOW ( IN '000 )

TABLE 3

Year 1 2 3 4 5 6 7 8 9 10CASH INFLOW:

SALES REVENUES IN RM 5,000 5,555 6,172 6,857 7,618 8,463 9,403 10,446 11,606 12,894

CASH OUTFLOW:

Payment of variable costs 4,550 4,641 4,734 4,828 4,925 5,024 5,124 5,227 5,331 5,438

Payment of fixed costs 95 100 105 110 115 121 127 134 140 147

Pay't of financial charges 98 88 78 69 59 49 39 29 20 10

Pay't of admin.& gen.exp 120 126 132 139 146 153 161 169 177 186Pay't of marketing

expenses 150 162 175 189 204 220 238 257 278 300

Payment of taxation - - - - - - - - - -

Payment of loan 140 140 140 140 140 140 140 140 140 140

Pay't of production costs 2,049 42 1 0 0 0 0 0 0 0due to increase in

inventoryTOTAL CASHDISBURSEMENT 7,202 5,299 5,365 5,475 5,589 5,707 5,829 5,956 6,086 6,221

NET CASH INFLOW-2,202 256 807 1,382 2,028 2,756 3,573 4,491 5,520 6,673

Add: Cash opening - - -




TABLE 3

Year 1 2 3 4 5 6 7 8 9 10CASH INFLOW:


CASH OUTFLOW:





expenses 150 162 175 189 204 220 238 257 278 300


Payment of loan 140 140 140 140 140 140 140 140 140 140



NET CASH INFLOW-2,202 256 807 1,382 2,028 2,756 3,573 4,491 5,520 6,673





TABLE 3

Year 1 2 3 4 5 6 7 8 9 10CASH INFLOW:


CASH OUTFLOW:





expenses 150 162 175 189 204 220 238 257 278 300


Payment of loan 140 140 140 140 140 140 140 140 140 140



NET CASH INFLOW-2,202 256 807 1,382 2,028 2,756 3,573 4,491 5,520 6,673



balance 200 2,002 1,746 940 442 2,471 5,226 8,800 13,291 18,811

CASH CLOSING BALANCE-2,002

-1,746

-940 442 2,471 5,226 8,800 13,291 18,811 25,484

NET PRESENT VALUEANALYSIS ( IN '000 )=Cash outflow in year 0 $100Salvage values $0.00Cost of capital 18%

Factor of discount0.847457627 0.71818443

0.608630873

0.515788875

0.437109216

0.370431539 0.313925033 0.266038164 0.225456071 0.191064467

NPV of net cash inflow-1,866 184 491 713 887 1,021 1,122 1,195 1,245 1,275

Total NPV of project6,264,738.37

INFLATION DISCOUNT ( IN '000 )=Inflation rate 3%

Factor of discount0.968992248

0.938945977

0.909831373

0.881619547

0.854282507

0.827793127 0.802125123 0.777253026 0.753152157 0.729798602

NPV of net cash inflow-1,808 173 447 628 757 845 900 929 937 931

after discount for cost ofcapital and inflation

Total NPV of project 5,006,024


balance 200 2,002 1,746 940 442 2,471 5,226 8,800 13,291 18,811


-1,746

-940 442 2,471 5,226 8,800 13,291 18,811 25,484



0.608630873

0.515788875

0.437109216

0.370431539 0.313925033 0.266038164 0.225456071 0.191064467





0.938945977

0.909831373

0.881619547

0.854282507

0.827793127 0.802125123 0.777253026 0.753152157 0.729798602





balance 200 2,002 1,746 940 442 2,471 5,226 8,800 13,291 18,811


-1,746

-940 442 2,471 5,226 8,800 13,291 18,811 25,484



0.608630873

0.515788875

0.437109216

0.370431539 0.313925033 0.266038164 0.225456071 0.191064467





0.938945977

0.909831373

0.881619547

0.854282507

0.827793127 0.802125123 0.777253026 0.753152157 0.729798602





7.4 PROFORMA BALANCE SHEET

GREEN LIGHTNING CONSULTANCYPROFORMA BALANCE SHEET

TABLE 4Year 1 2 3 4 5 6 7 8 9 10

ASSETS:

Cash on hand-2,002

-1,746

-940 442 2,471 5,226 8,800 13,291 18,811 25,484

Inventories 2,049 2,091 2,092 2,092 2,092 2,092 2,092 2,092 2,092 2,092

TOTAL CURRENT ASSETS: 47 345 1,152 2,534 4,563 7,319 10,892 15,383 20,903 27,576

Land & building 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

Less: acc.depreciation 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

Plant & machinery 200 200 200 200 200 200 200 200 200 200

Less: acc.depreciation 40 80 120 160 200 240 280 320 360 400

Preoperating expenses 255 255 255 255 255 255 255 255 255 255

Less: acc.amortisation 7 13 20 20 20 20 20 20 20 20

TOTAL FIXED ASSETS: 1,208 962 715 475 235-5

-245

-485

-725

-965

TOTAL ASSETS: 1,255 1,307 1,867 3,009 4,798 7,314 10,647 14,898 20,178 26,611

LIABILITY & EQUITY:

Income tax payable - - - - - - - - - -Bank loan




TABLE 4Year 1 2 3 4 5 6 7 8 9 10

ASSETS:

Cash on hand-2,002

-1,746

-940 442 2,471 5,226 8,800 13,291 18,811 25,484

Inventories 2,049 2,091 2,092 2,092 2,092 2,092 2,092 2,092 2,092 2,092


Land & building 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000


Plant & machinery 200 200 200 200 200 200 200 200 200 200





-245

-485

-725

-965

TOTAL ASSETS: 1,255 1,307 1,867 3,009 4,798 7,314 10,647 14,898 20,178 26,611

LIABILITY & EQUITY:





TABLE 4Year 1 2 3 4 5 6 7 8 9 10

ASSETS:

Cash on hand-2,002

-1,746

-940 442 2,471 5,226 8,800 13,291 18,811 25,484

Inventories 2,049 2,091 2,092 2,092 2,092 2,092 2,092 2,092 2,092 2,092


Land & building 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000


Plant & machinery 200 200 200 200 200 200 200 200 200 200





-245

-485

-725

-965

TOTAL ASSETS: 1,255 1,307 1,867 3,009 4,798 7,314 10,647 14,898 20,178 26,611

LIABILITY & EQUITY:



106 106 106 106 106 106 106 106 106 106

Less: acc.repayment 140 280 420 560 700 840 980 1,120 1,260 1,400

Net owing to the bank-34

-174

-314

-454

-594

-734

-874

-1,014

-1,154

-1,294

TOTAL LIABILITIES-34

-174

-314

-454

-594

-734

-874

-1,014

-1,154

-1,294

Shareholders'funds 100 100 100 100 100 100 100 100 100 100

Opening retained earnings 149-111 81 781 2,063 3,992 6,648 10,121 14,512 19,932

Unappropriated earning-260 191 701 1,282 1,928 2,656 3,473 4,391 5,420 6,573

Ending retained earnings-111 81 781 2,063 3,992 6,648 10,121 14,512 19,932 26,505

TOTAL SHAREHOLDERS'EQUITY

-11 181 881 2,163 4,092 6,748 10,221 14,612 20,032 26,605

TOTAL LIABILITIES ANDEQUITY

-45 7 567 1,709 3,498 6,014 9,347 13,598 18,878 25,311

- - - - - - - - - - -FINANCIAL RATIO ANALYSIS=

1 2 3 4 5 6 7 8 9 10ASSETS / LIABILITIES -36.92 -7.51 -5.95 -6.63 -8.08 -9.96 -12.18 -14.69 -17.49 -20.57RETURN ON ASSETS -20.69 14.65 37.52 42.59 40.20 36.32 32.62 29.47 26.86 24.70CURR.ASSETS / LIABILITIES -1.38 -1.98 -3.67 -5.58 -7.68 -9.97 -12.46 -15.17 -18.11 -21.31RETURN ON EQUITY 2434.38 105.90 79.50 59.25 47.13 39.36 33.98 30.05 27.06 24.71TOTAL DEBTS / TOTALEQUITY 3.19 -0.96 -0.36 -0.21 -0.15 -0.11 -0.09 -0.07 -0.06 -0.05PAY BACK PERIOD -0.39 -1.46 0.16 0.05 0.03 0.01 0.01 0.01 0.01 0.00


106 106 106 106 106 106 106 106 106 106



-174

-314

-454

-594

-734

-874

-1,014

-1,154

-1,294


-174

-314

-454

-594

-734

-874

-1,014

-1,154

-1,294






-11 181 881 2,163 4,092 6,748 10,221 14,612 20,032 26,605


-45 7 567 1,709 3,498 6,014 9,347 13,598 18,878 25,311




106 106 106 106 106 106 106 106 106 106



-174

-314

-454

-594

-734

-874

-1,014

-1,154

-1,294


-174

-314

-454

-594

-734

-874

-1,014

-1,154

-1,294






-11 181 881 2,163 4,092 6,748 10,221 14,612 20,032 26,605


-45 7 567 1,709 3,498 6,014 9,347 13,598 18,878 25,311




7.5 SENSITIVITY ANALYSIS

GREEN LIGHTNING CONSULTANCYSENSITIVITY ANALYSIS

TABLE 5

Estimate Fixed Direct Selling OperatingFor Cost Cost Price CostsYear 1 Up UP Down Up- - - - -

Sales volume in unit 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000Selling price in $ per unit $1.00 $1.00 $1.00 $0.90 $1.00

SALES REVENUES IN $'000 5,000 5,000 5,000 4,500 5,000Less :

Variable costs 4,550 4,550 5,005 4,550 4,550

Fixed costs 95 105 95 95 95TOTAL COSTS OFPRODUCTION 4,645 4,655 5,100 4,645 4,645

Less:Depreciation,land/bildg 200 200 200 200 200

Depreciation,plant/mac'nery 40 40 40 40 40Less: Amortisationexpenses 7 7 7 0 0

GROSS PROFIT, $000 108 99-347

-385 115

GROSS PROFITMARGIN, % 2% 2% -7% -9% 2%

Less:Administration andgeneralexpenses $120 $120 $120 $120 $132Marketingexpenses $150 $150 $150 $150 $165

TOTAL OPERATINGEXPENSES $270 $270 $270 $270 $297

NET OPERATINGPROFIT,$000

-162

-171

-617

-655

-182

OPERATING PROFITMARGIN,% -3% -3% -12% -15% -4%

Less: Financial charges $98 $98 $98 $98 $98

NET PROFIT BEFORE - - - - -




TABLE 5




Variable costs 4,550 4,550 5,005 4,550 4,550




GROSS PROFIT, $000 108 99-347

-385 115





-162

-171

-617

-655

-182







TABLE 5




Variable costs 4,550 4,550 5,005 4,550 4,550




GROSS PROFIT, $000 108 99-347

-385 115





-162

-171

-617

-655

-182





TAX,$'000 260 269 715 753 280NET PROFIT MARGIN,% -5% -5% -14% -17% -6%

BREAK-EVEN ANALYSISContributionmargin,$'000 450.00 450.00

-5.00

-50.00 450.00

Contribution margin in $ 0.09 0.09-0.00

-0.01 0.09

per unit of salescontribution marginratio,% 9% 9% 0% -1% 9%

Break-even sales in $'000 7,885 7,991-709,667

-63,270 8,111

Break-even sales involume 7,885,185 7,990,741

-709,666,667

-70,300,000 8,111,111

Break-even capacity,% 99% 100% -8871% -879% 101%

8. Conclusion

In future development, company strategies is to move forward to South East Asia by end of year

2015. We had figure out few ideas and strategies that must be developed first before the mission

could be accomplished. The first is on selling back the energy generated by the lightning strike to

the TNB grid for monthly bill deduction. The second is by cooperate more with Suruhanjaya

Tenaga personnel in making this product as compulsory when setting up a new factories or on

the existing factories as well. The third is to communicate with others countries authorities to

educate them on the effectiveness and awareness of the product.

With these few strategies, we strongly believe that we are able to make it throughout the South

East Asia as per expected time.




-5.00

-50.00 450.00


-0.01 0.09



-63,270 8,111


-709,666,667

-70,300,000 8,111,111


8. Conclusion













-5.00

-50.00 450.00


-0.01 0.09



-63,270 8,111


-709,666,667

-70,300,000 8,111,111


8. Conclusion











9. APPENDICES

Organizational Chart

TechnicalDirector

Project Team

Service Team

R&D Team


9. APPENDICES


CEO

TechnicalDirector

R&D Team ProductionTeam

MarketingDirector

MarketingTeam

Sales Director

Sales Team


9. APPENDICES


Sales Director

Sales Team

Account &Human

Resource


High Voltage Capacitor Bank Schematic Diagram






Lightning Arrestor Schematic Diagram





Documents

MDE 1113 Financial Analysis PMA