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Biz Plan Smart Solution

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    Biz Plan Smart Solution Biz Plan Smart Solution Document Transcript

    • 2008 Traffic Control Plan SMART SOLUTION Nguyen thi Bao Quynh Nguyen Phuoc Bao Dung Nguyen The Vinh 1/25/2008
    • Smart Solution – Business Plan 1. EXECUTIVE SUMMARY...................................................................................... 6 1.1 DESCRIPTION OF SS PLAN ....................................................................................... 6 1.2 BENEFITS OF SS PLAN TO THE MARKET ......................................................................... 6 1.3 COMPETITIVE STRENGTHS: ....................................................................................... 6 1.4 OVERALL ENTRY STRATEGY ....................................................................................... 6 1.5 GROWTH STRATEGY ............................................................................................... 7 1.6 FINANCIAL SUMMARY – AND START-UP NEEDS ................................................................. 7 1.7 START-UP CAPITALS:.............................................................................................. 7 2. INTRODUCTION & BACKGROUND..................................................................... 7 2.1 HISTORY OF TRAFFIC CONTROL PLAN: .......................................................................... 7 2.2 BACKGROUND RELATED TO THE PERFORMANCE: ............................................................... 8 2.3 INTRODUCTION OF OUR SMART SOLUTION SYSTEM ....................................................... 8 2.3.1 Equipments: ................................................................................................ 8 2.3.2 Process and transfer information to requester:............................................... 10 2.3.3 Software: .................................................................................................. 11 2.3.4 Infrastructure: ........................................................................................... 11 3. EXTERNAL ENVIRONMENT ............................................................................. 11 3.1 TECHNOLOGICAL:................................................................................................ 11 3.2 ECONOMIC ........................................................................................................ 11 3.2.1 The growth of Vietnam economy has leaded to the growth of traffic modes: ...... 11 3.2.2 Affection of traffic jam to the city economy.................................................... 12 3.2.3 Economic solution of HCM City to settle traffic jam problem: ........................... 12 3.3 MARKET (DEMOGRAPHIC, PSYCHOGRAPHIC) ................................................................. 12 3.4 POLITICAL ........................................................................................................ 14 3.5 LEGAL ............................................................................................................. 14 3.6 ECOLOGICAL...................................................................................................... 14 3.7 SOCIO / CULTURAL .............................................................................................. 15 4. INDUSTRY ANALYSIS ..................................................................................... 17 4.1 PORTER‘S FIVE FORCES......................................................................................... 17 4.1.1 Entry barrier: ............................................................................................ 17 4.1.2 Intensity of rivalry: .................................................................................... 17 4.1.3 Substitutes:............................................................................................... 17 4.1.4 Bargaining power of suppliers: ..................................................................... 17 4.1.5 Bargaining power of buyers: ........................................................................ 18 4.2 CONCLUSION FROM ENVIRONMENTAL ANALYSIS ............................................................. 18 2
    • Smart Solution – Business Plan 5. CRITICAL SUCCESS FACTORS ......................................................................... 18 5.1 EXCLUSIVE BOT AGREEMENT WITH HO CHI MINH CITY PEOPLE COMMITTEE ........................... 18 5.2 FINDINGS & TECHNOLOGY SUPPORTS BY STRATEGIC SHARE-HOLDERS ................................... 18 5.3 LOCATION FOR CONSTRUCTION OF CONTROL CENTER ....................................................... 18 5.4 STRONG MANAGEMENT TEAM ................................................................................... 18 6. ORGANIZATION CAPABILITIES ANALYSIS..................................................... 18 6.1 KEY RESOURCES AND CAPABILITIES ARE: .................................................................... 18 6.1.1 Key resource: ............................................................................................ 18 6.1.2 Capabilities: .............................................................................................. 18 6.1.3 Major weakness: ........................................................................................ 19 6.1.4 Business level strategy: .............................................................................. 19 7. SWOT ANALYSIS ............................................................................................ 19 7.1 STRENGTHS ...................................................................................................... 19 7.2 WEAKNESS ....................................................................................................... 19 7.3 OPPORTUNITIES: ................................................................................................ 19 7.4 THREATS:......................................................................................................... 20 8. PROPOSED BUSINESS & FUNCTIONAL / OPERATIONAL STRATEGIES ............ 20 8.1 MISSION & VISION .......................................................................................... 20 8.2 PURPOSE OF THIS BUSINESS: .................................................................................. 20 8.2.1 Mission ..................................................................................................... 20 8.2.2 Vision ....................................................................................................... 20 8.3 DETAILS SUPPORTING FUNCTIONAL / OPERATIONAL STRATEGIES......................... 21 8.3.1 Business & functional strategy ..................................................................... 21 8.3.2 Market research and analysis ....................................................................... 21 8.3.3 Market size & trends ................................................................................... 25 8.3.4 Competitors & competitive position: ............................................................. 27 8.3.5 Market share: ............................................................................................ 28 8.3.6 Ongoing market assessment: ...................................................................... 28 8.4 MARKETING PLAN................................................................................................ 28 8.4.1 Overall marketing strategy .......................................................................... 28 8.4.2 Pricing ...................................................................................................... 28 8.4.3 Sales tactics: ............................................................................................. 28 8.4.4 Guarantees & warranties:............................................................................ 28 8.4.5 Advertising & promotion : ........................................................................... 28 8.4.6 Logistics: not applicable .............................................................................. 29 8.5 PRODUCT & OPERATION ........................................................................................ 29 3
    • Smart Solution – Business Plan 8.5.1 Value proposition: unique selling proposition ................................................. 29 8.5.2 Product development: differentiation, emphasizing brand for future market expansion ........................................................................................................... 29 8.5.3 Product enhancement plans: ....................................................................... 29 8.5.4 Location & facilities: ................................................................................... 29 8.5.5 Proprietary issues – license, IP: priority license for advertisement on LED panels at cross-roads ...................................................................................................... 29 8.5.6 Regulatory &legal issues: exclusive BOT agreement for traffic information to assure project life-time ......................................................................................... 29 8.5.7 Training & development .............................................................................. 29 8.6 FINANCE MODEL & PLAN ........................................................................................ 29 8.6.1 Assumptions: market size, growth................................................................ 29 TABLE 2: REVENUE ASSUMPTION .......................................................................... 31 TABLE 4: BALANCE SHEET ..................................................................................... 39 TABLE 5: STATEMENT OF CASHFLOWS................................................................... 41 TABLE 6: CAPITAL EXPENDITURE .......................................................................... 44 TABLE 7: DEPRECIATION & AMORTIZATION CHARGE............................................ 45 TABLE 8: ENTERPRISE FREE CASH FLOW ............................................................... 45 TABLE 9: TERMINAL VALUE CALCULATION ............................................................ 47 TABLE 10: INTERNAL RATE OF RETURN ................................................................. 48 8.7 HUMAN RESOURCES ............................................................................................. 52 8.7.1 Organization & ownership............................................................................ 52 8.7.2 Key managers: .......................................................................................... 53 8.7.3 Remuneration for management team ............................................................ 54 8.7.4 Employees and stock options ....................................................................... 54 8.8 BOARD OF DIRECTORS .......................................................................................... 54 8.9 SHARE-HOLDERS ................................................................................................ 54 8.10 OTHER KEY CONTRACTORS:.................................................................................. 55 9. ACTION PLANS .............................................................................................. 55 9.1 TIME-TABLE FOR THE DEVELOPMENT (KEY ACTION STEPS AND DECISION POINTS, KEY FACTORS REQUIRED AT EACH STEP) .............................................................................................. 55 9.2 FUNDING PROPOSALS (DESIRED FINANCING, CAPITALS REQUIREMENTS, USE OF FUNDS AND INVESTOR RETURNS) ................................................................................................................ 56 4
    • Smart Solution – Business Plan TOTAL USD 7,808,963 MILLIONS, IN WHICH OUR OWN CAPITALS MUST BE 30% OF INVESTMENT CAPITALS (IT MEANS $2,342,689), THIS WILL BE PREPARED AS FOLLOWS : ............................................................................................................ 56 9.3 EXIT STRATEGY .................................................................................................. 56 9.4 IMPLEMENTING THE APPROACH ................................................................................. 57 9.4.1 Resource requirements and time table .......................................................... 57 9.4.2 Review mechanism ..................................................................................... 57 9.4.3 Change management process ...................................................................... 57 9.4.4 Action plan ................................................................................................ 58 10. STRATEGIC CONTROL: THE BALANCED SCORE CARD...................................... 58 11. QUANTIFIED PLANS ....................................................................................... 58 11.1 DETAILED OPERATIONAL & FINANCIAL PLANS FOR 12 MONTHS ......................................... 59 11.2 GENERAL OPERATIONAL & FINANCIAL PLANS FOR 12 – 48 MONTHS TIME PERIOD ................... 67 12. CONCLUSION ................................................................................................. 73 13. APPENDIX ...................................................................................................... 73 14. SOURCE OF INFORMATION ............................................................................ 73 5
    • Smart Solution – Business Plan 1. EXECUTIVE SUMMARY 1.1 Description of SS plan - At moment, traffic jam has become serious problem for Ho Chi Minh City Governors and nightmare for Ho Chi Minh City citizens. People Committee of HCM City has organized many meetings to find out solutions for this matter; however most of solutions are long-tem planning only. Short-term planning such as: collecting operation fees from automobiles or charging high fees for using automobiles in peak time… are facing strong opposes from citizens. - Our planning is to propose a solution which can be put into implementation in short period without being opposed. The plan is to set up traffic control system to give traffic information to HCMC citizens about routine situation and to suggest them the most appropriate routine to move on. The information about traffic situation will be recorded by camera installed at each cross-road and transferred to control center. IT center will process this information to provide suggestions to require. The revenue from this service will be mainly from information-providing charges and advertisements at LED panels installed in the same camera poles. 1.2 Benefits of SS plan to the market - Government need not use city budget to invest. Government can reserve budgets for other plans for road building & expansion, metro & train system… - formality for private investment is simpler than city budget investment, project can be realized sooner - HCM citizens can have 2 choices of receiving information about traffic : o Active choice: before starting to go, they can spend small changes to exchange options for routines to save time, save power and save cost of gasoline… Even though in case there is no way to move, they can utilize their times for useful works than spending time waiting on the streets! o Positive choice : for poor people for whom even small changes are worth, they can get information from LED panel on streets to inform which directions ahead they can choose to avoid traffic jams. This project can help to minimize the number of people who jams into 1 point at the same time, therefore it can help to release the jam at soonest - Camera system is also helpful for political & security purposes 1.3 Competitive strengths: - At the moment, there has been no any project of the same type to be proposed to HCM People Committee 1.4 Overall entry strategy - This project will be proposed to People Committee of HCM City on the basic of BOT term, so that we can get agreement for exclusive implementation. - To push up the realization of this, we need to minimize implementation period to settle the traffic problems at soonest to ease the strong complains of citizens to governors. And we also must commit to allow HCM City Department of Policeman to utilize our data for their activities free of charge. 6
    • Smart Solution – Business Plan 1.5 Growth strategy - Our project will at first cover the plan for city center area only (including 1st & 3rd District). If the plan is successful, we will develop to remained districts of Ho Chi Minh City - If we can be successful in HCM City at this 1st period, we will also move to Hanoi for the same plan - For far future, we can use satellite technology for this project in order to apply traffic control to connect provinces to provinces in Vietnam 1.6 Financial summary – and start-up needs - The financial structure for this project as follows : o Total investment value: USD 7,808,963 o Registered capitals: valued 30% of total investment value USD 2,342,689 o Remained 70% of investment value : to be borrowed from HIFU (Ho Chi Minh City Investment Fund for Urban Development) as approved by Ho Chi Minh City People Committee at 3% (using WB loans for city infra-structure projects) 1.7 Start-up capitals: Total USD 7,808,963 millions, in which our own capitals must be 30% of investment capitals (it means $2,342,689), this will be prepared as follows : - for the purpose of exclusive project and for the purpose of low-interest, we offer 20% share of par value to HIFU (Ho Chi Minh City Investment Fund for Urban Development) valued USD 468,537 - for the purpose of listing in 2010, we offer 10% share of par value to institutional investor (we are discussing with Mekong Venture) valued USD 234,268 - for the purpose of obtaining experience & technology from expertise, we offer 10% share of par value to NEXUS TECHNOLOGY – USA who have signed with us agreement to support us in software & system control technology, valued USD 234,268- - for the purpose of real estate and construction & funding, we offer 30% share of par value to Indochina Group, valued USD 702,806 - Our group reserves 30% share to issue shares among key members, valued USD 702,806. 2. INTRODUCTION & BACKGROUND 2.1 History of traffic control plan: - The idea for traffic control by camera system is not a kind of new technology nowadays. The business model has been tested and proved to be successful in many developed countries around the world, such as the United Kingdom, the United States, Japan, Singapore, etc. (Please refer to the attached CD-ROM about camera system linked with the traffic control centre in London – UK). - However, traffic control camera until now still has not been set up in Vietnam yet, even in big cities such as Ho Chi Minh City, Hanoi… Even the traffic policemen have to react positively 7
    • Smart Solution – Business Plan 2.2 Background related to the performance: Our groups have strong back-ground necessary for the realization of these projects. Our groups include of personnel with following abilities & experiences and have a very strong track record: - 1 member has close connection with Vietnam Central Government, People Committee of HCM City and strong networks with governing departments of People Committee. She also has working experiences in overseas so that she can negotiate for technology support and equipment procurements from foreign partners. - 1 member is working for Mekong Capital- a fund manager, he can develop effective financial planning and raise capital when needed - 1 member is experienced in marketing; she can organize well the advertisement network. - Other key share-holders of this projects are also have strong back-ground : o Indochina Co. Ltd is the long-term experienced and successful company in construction & real-estate investment o Mekong Venture (an subsidiary of Mekong Capital) is an experienced fund- management company, who can add value and support us to list our stocks for future expansion o HIFU belongs to People Committee of Ho Chi Minh City, with strong & close relationship with all governors in the city o NEXUS Technology is USA partner with experience in soft-ware developing and hard-ware export, they have also experiences in providing soft-ware solution and hard-ware for biggest corporation in Vietnam such as Vietnam Petroleum Corp, Vietnam Electricity Corp… 2.3 Introduction of our SMART SOLUTION system - The project uses medium-high technology with coordinating solutions. 2.3.1 Equipments: a. Receive and transfer data to the centre - High-tech cameras (temperature-proof, water proof, high capacity & flexible zoom length, specification as attached appendix) are installed at hot traffic spots. Special stainless steel columns are also installed to protect the cameras from being stolen. - Cameras to be linked with the centre through visual cable system. 8
    • Smart Solution – Business Plan - In case we use the cables of the TV cable companies, the map is as below: 9
    • Smart Solution – Business Plan - Sensors alarming device linked to the centre and alarming device at site. 2.3.2 Process and transfer information to requester: 2.3.2.1 Automatically - Computer system at the centre process data through specialized software. - Computer system receive and answer messages automatically - Control system at the centre transfer data about the routes to the electronic LED Panel on the streets. 2.3.2.2 Manually - Telephone operators at the centre will access the system to have information for requests through telephone or fax. 10
    • Smart Solution – Business Plan - Website is linked with the system to provide information for those who use the Internet. 2.3.3 Software: - Include all software which is linked together into a solution system - Calculating and classifying software is installed to process data from the cameras, and continuously update data. Based on these data, the software assesses the level of jams. - Vehicle travelling speed software calculates the time for vehicles to get out of the jam spot, so travelers can know (if they do not want to choose other ways) how long it takes them to get out of the crowd. - Software to select the suitable routes provides instructions about routes to avoid jam spots. However, if so many people switch to the same route, there will be possibly another jam spot; so the software must make estimation and prompt adjustment properly - Software for Identifying and automatic answering will analyze & read the message from requires to identify their requests and to respond - Processing software sends information about traffic spots linked with electronic LED panel (every 2 minutes). When passing the LED panel, travelers will be informed about the possibility of traffic jams if they go straight, turn right or turn left at the next crossroad. - This software solution is similar to that of MESH LINE in USA (use fiber-optic cable). 2.3.4 Infrastructure: - Install fiber-optical cables to link traffic spots to the centre. Temporarily at the starting time as experiment period, we can rent the excising lines in 1st District and 3rd District of Ho Chi Minh City Television Company. - Construct a building functioning as control centre to install data processing equipments, telephone operation centre, data storage office…with total usage area of 12,200 m2 (in which 5,000 m2 is reserved for future expansion) 3. EXTERNAL ENVIRONMENT 3.1 Technological: - We can corporate with oversea-suppliers to study applied technology in developed countries, especially the MESHLINE system in USA. - About road map, at the moment in Ho Chi Minh City there have been several companies providing software for searching streets. Therefore, we can utilize this software company as sub-contractor to save our time for writing routine searching program. - For other main equipments of the projects such as camera and LED panel, we have already connected with main suppliers in USA and China to provide equipments and operation technology. 3.2 Economic 3.2.1 The growth of Vietnam economy has leaded to the growth of traffic modes: - Up to September 2007, private transportation vehicles had increased sharply. The registered quantity of vehicles in the city has exceeded 3.5 million (motorcycles: 11
    • Smart Solution – Business Plan 3,233,105 units, cars: 319,603 units); not including 60,000 cars, 700,000 motorcycles from other provinces and 60,000 tricycles and 2 million bicycles. The average quantity of the newly registered vehicles is about 960 per month for car and 37,790 per month for motorcycle. This means within each 1 minute, the city has another new motorcycle and within each 45 minutes, another new car. With the rocketing increase, the fear of traffic jams all over the city will become true soon. The traffic flow is far over the infrastructure capacity. Especially, during the peak hours, the situation is much worse. (Date source: from Traffic control section, Department of Transportation & Public works – People Committee of Ho Chi Minh City). 3.2.2 Affection of traffic jam to the city economy - According to the calculation of experts in Ho Chi Minh City Economic Institute, if there are no solutions to settle current traffic jam problems, the loss of city economy is estimated around VND 14 billion or USD 900 million per year. This amount is equivalent to half of the city’s GDP in 2006 or the damages to the country by the bird flu in 2005 and is big enough to build up the irrigational network for the whole Mekong Delta area from 2006 to 2010 - The traffic jam also has bad influences to the investment environment, holding back the attraction of investment into HCMC. - President of the People’s Committee of HCMC, Mr. Le Hoang Quan, described the traffic jams in the city as ‘ant-nest break’. “If one person loses 15 minutes per day in a traffic jam, the city with millions of people will definitely lose so much”, he said. - According to the calculation of experts, during the traffic jam, a motorcycle has to consume 1 / 4 litter of gas more per km (speed in traffic jam is around 1-8 km/ hour) - The business of the city citizens will be damaged as well: taxis cannot run; groceries, restaurants, fashion shops are shortage for shoppers who are stuck in the traffic jams, etc. 3.2.3 Economic solution of HCM City to settle traffic jam problem: - The city authority has put forward some solutions to the traffic jams. The overall estimated cost for a solution including traffic lane organization, lane installation, public transportation system improvement… is around 260 billion VND. The objective of the plan is to reduce at least 7.7% the traffic accidents, 3% death, 10% injury and 15% traffic jam spots. The development of infrastructure cannot meet the demand of transportation means development. As a result, to solve the traffic jams problems the city authority is waiting for vital traffic plans such as: building underground, sky-high metro, constructing new centre-align routes as well as city-boundaries etc….. However, to these plans will not come true until the next 5-10 years at least. - Therefore, practically, until above plans can be put into implementation, establishing the traffic control centre is crucial and vital as an immediate solution to control the increasing traffic problems. 3.3 Market (demographic, psychographic) - Vietnam is ranked 12th largest population in the world and HCMC is the biggest city in population of Vietnam. HCMC is also the city with the highest GDP nationwide with GDP/ capital of USD 2,000, nearly double the national average, 30% higher than that of Hanoi (IMF data). - The No. of people in the rank of using automobile from 20 to 50 years-old averagely is about nearly 50% of total population. - The No. of residents in HCMC up to end 2006 is as below: Table 1: Population and density 2006 by district 12
    • Smart Solution – Business Plan Quantity of Population Density Area (km2) wards (person) (person/km2) Total 322 2,127.34 6,530,265 3,070 District 259 526.05 5,493,084 10,442 1st District 10 7.73 226,736 29,332 2nd District 11 49.74 130,189 2,617 3rd District 14 4.92 222,446 45,213 4th District 15 4.18 192,007 45,935 5th District 15 4.27 191,258 44,791 6th District 14 7.19 253,166 35,211 7th District 10 35.69 176,341 4,941 8th District 16 19.18 373,086 19,452 9th District 13 114.01 214,345 1,880 10th District 15 5.72 239,927 41,945 11th District 16 5.14 238,074 46,318 12th District 11 52.78 306,922 5,815 Govap District 16 19.74 496,905 25,172 TanBinh District 15 22.38 417,897 18,673 TanPhu District 11 16.07 376,855 23,451 BinhThanh District 20 52.78 449,943 8,525 PhuNhuan District 15 4.88 183,726 37,649 ThuDuc District 12 47.76 356,088 7,456 BinhTan District 10 51.89 447,173 8,618 Small districts 63 1,601.29 1,037,181 648 CuChi District 21 434.70 309,648 712 HocMon District 12 109.26 254,598 2,330 BinhChanh District 16 252.69 330,605 1,308 NhaBe District 7 100.42 74,945 746 13
    • Smart Solution – Business Plan Quantity of Population Density Area (km2) wards (person) (person/km2) CanGio District 7 704.22 67,385 96 Source: Department of Planning & Investment – People Committee of Ho Chi Minh City - Above statistical No. s are excluded the quantity of around 1 million of immigrants from other provinces, foreigners and tourists. - From the above table, the total residents in 1st & 3rd District is 450.182 persons, the number of residents using automobile daily in & out these districts is about 225.000 persons (not including persons living in other districts, but working in 1st district). - Researches in 64 main office buildings in operations located in 1st & 3rd District proved the total quantity of 190,000 persons working & frequently visiting these buildings. At the moment, there are about 433 hotels in 1st District and 86 hotels in 3rd District (in all ranks from 5-star to mini hotel. There are also 109 office building in 1st District and 33 office building in 3rd District (not including about 18 buildings to be put into operations in city centers soon in 2008-2009). There are also 15 super-markets, 12 shopping centers, 6 open-markets. The number of companies officially registered in 1st District only has been about 1,112 companies till Dec/2006. The potential increasing quantity of customers for traffic information would practically increase remarkably. 3.4 Political - Ho Chi Minh City Department of Police has already planned for years to build up camera systems to control traffics, to issue penalty for traffic-law breaker, and to control security, but they still cannot precede idea due to complicated formality to get funds even for researching & writing plans. Our plan of camera control systems will contribute a lot to providing the information to the authority, especially the HCMC Police stations for their traffic control and coordination, crime capturing, city security assurance. - And because this project does not use the national or city budget, the city can solve the traffic jam problem without spending their budget. The city authority can use the budget for other traffic long-term projects in road & metro investments. 3.5 Legal - The Vietnam government in general and the HCMC authority in particular have always been encouraging the socialization and privatization of proposals for public benefits. - Because the project uses the private capital, the implementation process will not be much complicated as government budget‘s procedure, then it will be soon put into operation to settle traffic problems in time. 3.6 Ecological - As the traffic jams cause the increase in gas consumption, more exhaust fumes will be produced, bring harms to the people’s health. - According to a research conducted by a group of scientists of Chicago University (Chicago), air pollution can make the blood curdle, leading to coronary thrombosis and some other dangerous diseases. This result is really a warning to all the travelers in such a polluted environment. 14
    • Smart Solution – Business Plan - According to the research conducted by the Asian Institute of Technology (AIT) and Engineering University in HCMC, through observation stations installed along the streets, it was found that up to 40% of the poisons in the air came from the transportation. - This project will help people avoiding staying on streets in traffic jam, therefore will help to prevent people from diseases caused by polluted environment. 3.7 Socio / Cultural - It is clear that traffic jams cause harmful to the society: - One survey of Ministry of Transportation and civil engineering shows that: the speed of a motorcycle in the peak time (around 5 pm) is around 10kms/ hour, of a car in main routes such as Bach Dang, Hoang Van Thu, Ly Thuong Kiet, Nguyen Kiem, Hai Ba Trung, Nguyen Van Troi – Nam Ky Khoi Nghia, Pasteur, only 8kms/ hour. The survey also states that currently, the city has around 100 road junctions which are always in the tense situation; only a small incident will cause a severe traffic jam. - Many flights have been delayed because 50% passengers of the flights were stuck in the traffic jams so they could not arrive at the air-port in time (for example the flight CX 764 to Hong Kong at 19:05 on 15 November). The passengers have to estimate more time to travel from the city centre to the airport (around 90 minutes on a 10-km route) to avoid the above-mentioned situation. This also affects the city image as well as the plan to call for investment and to develop our tourism. - Traffic jams also causes problems to ambulances, threatening the patients’ lives. - On the main routes in the city, the automobile queues get longer and longer. To pass a crossroad, it takes around 2-3 times of the traffic light signal. This is one of the main reasons of the traffic jams. - Ho Chi Minh City is seriously short of parking space; routing is not suitable; the travelers’ self-discipline is still low; the city is centre-focused; - The traffic jams also affect the characteristics of the citizens. There will be more violation, people will be easier to get angry, and everyone will feel tense, trying in all means to make ways to get out of the crowd. . 15
    • Smart Solution – Business Plan Figure 1: Traffic jams at the roundabout of Cong Truong Dan Chu, Dist.3, HCMC Figure 2:Traffic jams on the Nguyen Dinh Chieu Street, Dist.3, HCMC, at 18.00, 12 September, 2007 Figure 3: Despite traffic lights, the policeman had to go into the roadway to settle the jam (3/2 and Nguyen Tri Phuong cross-road, Dist. 10, HCMC) 16
    • Smart Solution – Business Plan 4. INDUSTRY ANALYSIS 4.1 Porter‘s Five Forces 4.1.1 Entry barrier: - We can prevent future competitors for this scope due to exclusive BOT contract with Ho Chi Minh City People Committee. 4.1.2 Intensity of rivalry: - There is no competition in this newly created business. There are only 2 previously similar activities but its mission & affection is quite different 4.1.2.1 In HCMC: - Currently, there is already a traffic control centre of the city traffic police station. However, they have installed only 30 cameras and process the data manually (they use screen monitoring supervisor only). Besides, the centre cannot provide the information to the travelers. 4.1.2.2 In Hanoi: - GAPIT assign 7 employees to update the information at 7 police stations. These employees collect the information that the policemen inform through walkie-talkie from 222 traffic spots in Hanoi. They are updated every 15 minutes during the peak hours and every 60 minutes during the rest. The data are transferred to the main server, processed and sent to subscribers. Cost for a message is 1,000. Up to now, there have been 3,000 subscribers. - However, the solutions have some disadvantages as follows: o The police have to be present at all the traffic spots to assure all data can be collected. o The data cannot be updated quickly and the quantity of the vehicles cannot be calculated so it is impossible to estimate when the jams can be exhausted. o The subscribers cannot remember 222 codes for 222 traffic spots. o The project is just for sending messages through mobile phones, not for answering calls, internet. As a result, the No. of subscribers is very limited. 4.1.3 Substitutes: - There is possibility of substitutes in the future when Vietnam starts and operates stably satellite; therefore we must also consider expanding in this scope in the future. 4.1.4 Bargaining power of suppliers: - There are several suppliers in the world that can provide cameras, computer software, LED panel and fiber-optic cables at similar standard of specification, therefore bargaining power of supplier for these equipments are not remarkable. - It is important to choose proper supplier of software for SMART SOLUTION, USA Company will be 1st priority of choice due to their familiarity with MESH LINE using in USA. However, because of our policy to offer software supplier 10% of our total shares, they will play the role of investors too, therefore their bargaining power will be reduced. 17
    • Smart Solution – Business Plan 4.1.5 Bargaining power of buyers: - because we have no competitors, therefore customers may only choose whether to use our service or to suffer waiting in traffic jam on streets, this bargaining power of buyers of service will be not much - At the moment, Ho Chi Minh City People Committee has not issued any license for advertisement by electronic bill-board in the city, except for only 2 boards: 1 in front of Ben Thanh market and another one in front of Tan Son Nhat airport. This kind of license will be very hard to get. Therefore, if we have this license in hand, we are in very good position for customers to approach us for advertisement by LED panel on streets. Therefore bargaining power of buyers of advertisement will also be not much 4.2 Conclusion from environmental analysis - Currently Ho Chi Minh City is seriously in need of prompt solution to reduce traffic jam and to support policeman in dispatching human resources to ‘hot’ locations in time. SMART SOLUTION would be certainly very suitable to satisfy this need. Therefore, SMART SOLUTION would be appreciated highly by both City Governors and Ho Chi Minh citizens. The high feasibility of the project basing on the demands and great space for expansion also can highly attract experienced share- holders. Existing environment brings great chance for this project. If we catch this chance promptly, we would be the pioneer to open this kind of business in Vietnam. 5. CRITICAL SUCCESS FACTORS 5.1 Exclusive BOT agreement with Ho Chi Minh City People Committee 5.2 Findings & technology supports by strategic share-holders 5.3 Location for construction of control center 5.4 Strong management team 6. ORGANIZATION CAPABILITIES ANALYSIS 6.1 Key resources and capabilities are: 6.1.1 Key resource: - The license of this project can be considered as the valuable asset - The building constructed for the purpose of control center can be used partly for office rent (priority for the member companies of our group) - Well financial status of group members. 6.1.2 Capabilities: - The reputation of Indochina Group – main key holder in infra-structure projects in Ho Chi Minh City. Indochina Group also has strong connection with land-owner authorities who are ready to offer us the location to run this project. - Our strong connection & affection to top government to assure exclusive BOT agreement. 18
    • Smart Solution – Business Plan - The knowledge of our group members (trained in MBA – RMIT, Entrepreneur course...) - The experience of our group members (in marketing, in management, in finance and in IT) 6.1.3 Major weakness: - Because this kind of project is still quite new in Vietnam, therefore most of our members have no experience to run this business before. It must cost a lot of time to research for mastering this technology. Until we can master this, we mostly have to rely on partners. 6.1.4 Business level strategy: - competitive scope: ‘product focus’ with special products to serve special types of customers : o traffic information providing service for automobile travelers o advertisement services by LED Panel on streets for advertisements companies - Competitive advantage: through ‘differentiation’ by features, we will offer typically functional characteristics of products. 7. SWOT ANALYSIS 7.1 Strengths - strong resources, experience & public relations of group members as mentioned above - Exclusive BOT contract is the important strength. - Position of business pioneer - Strongly warm appreciation and cooperation of government. 7.2 Weakness - We do not have experience in operating the system; therefore we must rely mainly in our partner at starting period. - There has been no any research data about quantity of travelers of each traffic jam point; it must take time to measure this data to set up precise positions. - Our benefits for the must be limited within 15 years of operation only, after that we must transfer all project to People Committee of Ho Chi Minh City - The quality of services heavily depends on other service suppliers (communication services for phone and electricity supply for camera) 7.3 Opportunities: - high demands in society for both traffic control and advertisement service - Strong barriers for competitors. Especially this type of business is classified into ‘sensitive business’ which only limited type of persons can own & run. - Increasing problems of traffic in Ho Chi Minh City, Hanoi and in other cities of VN in the future. - VN now is increasing OEM contracts with USA for software writing, in the future we can utilize VN Software Company to amend & develop software for additional function. 19
    • Smart Solution – Business Plan 7.4 Threats: - new business, there may be unpredictable matters - no any legal guidance for this business, when government person in charge is changed, level of supporting may be changed - Restriction of government in advertisement in advertisement business may threat the income for this. - Pressure of implementation timing 8. PROPOSED BUSINESS & FUNCTIONAL / OPERATIONAL STRATEGIES 8.1 MISSION & VISION 8.2 Purpose of this business: - To support government in reducing traffic jams in Ho Chi Minh City. - Expand business operation scope of key share-holders for effective usage of funds 8.2.1 Mission - The project: is to set up a system including cameras installed in busiest cross- roads and a control centers. The camera will record traffic situations at places, transfer to control center. Software in control center will process data to calculate moving speed in each point and will provide this information to travelers (through telephone, message, internet…)to decide whether they should or should not join the traffic, and to propose the quickest way to move from place to place to avoid traffic jam. In case travelers on the street at the time, they can look for information from LED panels at the points to know about situation of traffic at the next cross-roads. - This system will also provide information free of charge to the police station so that they can send policemen to the busiest points in time to control the traffic. And 113 Policeman can use information from camera to act for urgent security purposes. - This business will not only offer benefits to society but also good profits and short- term refunding to investors. 8.2.2 Vision - In the future, this system can also be upgraded to serve several other purposes: o Recording traffic actions for punishment to traffic-law breakers (for example: wrong routine moving, not wearing helmet…) o recording automobile No. s for toll collections when moving into city center at peak time (this application is used in Stockholm now) o Invest in the image storage system within 60 days for traffic control, investigation and social security. o Based on the permission of the authority, we can expand the data providing through radio frequency and television channel, and satellite, this will be the basic for our expansion into communication business. - If this project is proved to operate well, we can automatically extend the operation to all remained districts of Ho Chi Minh City and even to Hanoi City. In those periods, we will set up our own fiber-optic cables to run the project. And with this fiber-optic cable network, we can also extend to other projects in communication. 20
    • Smart Solution – Business Plan - The project wills set-up foundation for share-holders to enter into other attractive business in VN, and increase its offering benefits to society. 8.3 DETAILS SUPPORTING FUNCTIONAL / OPERATIONAL STRATEGIES 8.3.1 Business & functional strategy 8.3.1.1 Business strategy - defining & selecting business: we would focus in 2 kinds of business as follows at the moment : o Traffic information providing o Advertisement on LED panels - in the future the scope of product type can be expanded more: o Traffic & security information providing o Advertisement on LED panels, by TV channel and on radio frequency o Communication operators of fiber-optical cables and channel of satellite - Competitive scope: from product focus now to broad scope in the future. - Generic competitive strategy ‘DIFFERENTIATION !’ through the exclusive BOT agreement with government 8.3.1.2 Corporate strategy - Synergy corporate composition: the above 2 types of business must be closely related each other, if 1 cannot be put into implementation, the remained one will be also isolated. - Corporate management: o Integration mechanism: both 2 business will operate in the same infra- structure, therefore only 1 management board will manage 2 business, The 2 business units will act differently only in marketing & trading. Other units of finance, techniques and administration will serve both 2 business units o Corporate integration through control & cooperation 8.3.2 Market research and analysis 8.3.2.1 Customers: (A).Customer‘s target segment: - Mainly focus on people who usually travel to 1st & 3rd District area for working. List of main office buildings in 1st & 3rd District and estimated quantity of working staffs and visitors of each building is as follows: TYP # LOCATION E ADDRESS TRAFFIC 1 H i Thành B 2 Thi Saùch , Dist.1 720 2 Tu n Minh B 90 Le Thi Rieng, Dist.1 1,024 3 Saigon 3 B 140 Nguyen Van Thu, Dist.1 7,680 21
    • Smart Solution – Business Plan TYP # LOCATION E ADDRESS TRAFFIC 4 IBC B 1 Me Linh, Dist.1 1,320 5 Dông Anh B 181 Dien Bien Phu, Dist.1 1,112 6 Pasteur Tower B 139 Pasteur, Dist3 2,592 7 Kim ô B 123 Le Loi, Dist.1 1,560 8 Lucky Star B 201 Bis Le Lai, Dist.1 680 9 Ph m Vi t B 149 Truong Dinh, Dist.3 400 10 Hoa Rang B 32 Ngo Duc Ke, Dist.1 1,440 11 Titan B 18A Nam Quoc Cang, Dist 1 672 12 LAT B 14-16-18 Chu Maïnh Trinh, Dist.1 480 13 Morning Sun B 15/1 Le Thanh Ton, Dist 1 400 14 Central Garden A 225 Ben Chuong Duong, Dist1 5,200 15 Nam An B 167 Dien Bien Phu, Dist.1 1,280 16 Opera View B 161 Dong Khoi, Dist.1 4,880 17 Lieân Sôn B+S 34 Nguyen Binh Khiem, Dist.1 480 18 A&C B 229 Dong Khoi, Dist.1 1,200 19 VCCI B 171 Vo Thi Sau,Dist, 3 4,400 20 Nhà R ng B 185 Dien Bien Phu, Dist.1 1,216 21 Anh Kim B 43 Le Thi Hong Gam, Dist.1 560 22 T&T B 9A Nam Quoc Can, Dist.1 768 23 Central Park B 208 Nguyen Trai, Dist.1 4,432 24 Harbour View B 35 Nguyen Hue, Dist.1 6,800 25 Anh Kim B 141 Nguyen Thai Binh, Dist.1 400 26 Nam Phuong 2 B 101 Nguyen Van Thu, Dist.1 560 27 Fosco B 6 Phung Khac Khoan, Dist.1 2,800 28 Ngoïc Ñoâng Döông B 76 CMT8, Dist.3 1,320 29 Höõu Nghò B 35 Le Loi, Dist.1 280 22
    • Smart Solution – Business Plan TYP # LOCATION E ADDRESS TRAFFIC 30 Giaøy Vieät B 180-182 Ly Chinh Thang, Dist.3 4,800 31 The Landmark B 5B Toân Duc Thang, Dist.1 8,840 151 Ter Nguyen Dinh Chieu, 32 151 TerNDC B+A Dist.3 1,780 33 AD B 18 Nam Quoc Cang, Dist.1 672 34 Savimex B 194 Nguyen Cong Tru, Dist.1 2,800 35 TT NC&TV KHCN B+A 291 Dien Bien Phu, Dist.3 1,200 36 Maison B 180 Pateur, Dist.1 1,080 37 Zen Plaza B 54-56 Nguyen Trai, Dist.1 5,600 38 141 HBT B 141 Hai Ba Trung, Dist.1 400 Indochina Park 39 Tower B 4 Nguyen Dinh Chieu, Dist.1 2,800 40 Star View B+A 63 Nam Ky Khoi Nghia, Dist.1 2,000 41 1 Mac Dinh Chi B 1 Mac Dinh Chi, Dist.1 3,000 42 Petro Vietnam B 1-5 Le Duan, Dist.1 8,400 43 Savico B 68 Nam Ky Khoi Nghia, Dist.1 720 44 ÑMC ÑBP B 223 Dien Bien Phu, Dist.1 500 45 Saigon Coop A Pham Thai Hoc, Dist.1 350 46 Spring Court B+A 1bis Phung Khac Khoan, Dist.1 224 47 Loc Le B 454 Nguyen Thi Minh Khai, Dist.3 1,120 48 Vitek B 63 Vo Van Tan, Dist.3 2,400 49 Melinh Point B 2 Ngo Duc Ke, Dist,1 17,600 50 Sacombank B 278 Nam Ky Khoi Nghia, Dist.3 2,600 51 Central Plaza B 17 Le Duan, Dist.1 8,640 52 Saigon Riverside B 2A-4A Ton Duc Thang, Dist.1 14,400 53 Botanic Tower C 312 Nguyen Thuong Hien, Dist.1 4,800 23
    • Smart Solution – Business Plan TYP # LOCATION E ADDRESS TRAFFIC Saigon Finance 54 Center B 9 Dinh Tien Hoang, Dist.1 10,400 55 Blue Star B 23 Ton Duc Thang, Dist.1 720 56 26 Haøm Nghi B 26 Ham Nghi, Dist.1 2,912 57 Sunshine B 74C Nguyen Van Cu, Dist.1 720 58 Ocean Bank B 185-187 Nguyen Thai Hoc, Dist.1 1,020 59 Rando B 67-71 Thach Thi Thanh, Dist,1 660 60 Tuildona B 119 Dien Bien Phu, Dist.1 660 61 E-Star B 147-149 Vo Van Tan, Dist.3 780 62 Sunwah B 115 Nguyen Hue, Dist.1 18,000 63 Satra B 275 Pham Ngu Lao, Dist.1 650 64 Royal Sfone B 19 Ton That Tung, Dist.1 800 TOTAL 190,704 - This number is not included quantity of people in other 78 office buildings which we have not carried out the research, estimated about 120,000 peoples. According to our short interview in these buildings (utilizing support of telephone operators and receptionist), 85% of the people using motorbikes have warmly welcomed our service and 100% of people using car readily accepted to use our service of traffic information. - Therefore, number of potential customers in 1st & 3rd District will be: o Number of people working in office building: 190,704 + about 120,000 = about 310.704 people o Supposing that 50% of this No. is citizens of 1st & 3rd District, remained persons from other district will be about 160.000 persons o Half population of 1st & 3rd District who may use automobile (as mentioned in above item III-3) : 225,000- o The number of car traveling in city center : 6,000 – 7,000 times/ day & night o Total market size is about 160,000 + 225,000 + 6,000 = 391.000 persons. (B). No. s of advertisement by LED panels and by LCD in HCM City at the moment: - People Committee of Ho Chi Minh City so far has licensed for only 2 LED panels on streets: 1 in front of Ben Thanh market (however the license will be expired 24
    • Smart Solution – Business Plan without review early of 2008), 1 in front of Tan Son Nhat Airport. There are other 2 LED panels inside Saigon Railway Stations. There has been no any policy to issue any license for advertisement at cross-roads so far. - in Ho Chi Minh City so far, only 1 Golden Focus Media (leader in LCD advertising) there are 178 LCD TV inside of office building and 736 LCD TV inside of super markets to be installed for advertisement purpose purely. 8.3.3 Market size & trends 8.3.3.1 Traffic information providing service - Currently traffic jams have been sharply increasing. Despite many proposals from the city authority, with the current increase in the No. of vehicles, the establishment of the traffic control centre is crucial. The demand for information from travelers is huge. B ng 1: Data up to September 2007 about the traffic jam spots as follows: No Area – District name Quantity of jam spots 1 1 &3 16 2 5 & 10 15 3 6 & 11 9 4 Tan Binh 10 5 Tan Phu 21 6 Binh Tan 1 7 Binh Thanh & Phu Nhuan 14 8 Go Vap 10 9 t4&8 3 Total 99 Note: Source: Transportation and Public Works Department – HCM City - Currently, the No. of jam spot has been remarkably increasing, especially in the centre and the surrounding areas, in the routes from the centre to the airport and from the Saigon Bridge to the centre. - However, the Transportation and Civil Engineering has not been able to count the vehicle quantity at each spot at each time slot during the day. However, we can refer some other data from other projects as below o From North-East to the centre: there are 5 main streets (Nguyeãn Höõu Caûnh, Xoâ Vieát Ngheä Tónh, Ñieän Bieân Phuû, Ñinh Tieân Hoaøng, Hai Baø Tröng), daily traffic flow is around 1,626,180 vehicles, during the 2 peak hours in the morning around 569,202, average for one street around 113,840 per hour o From North – East, South – West to the centre: there are 9 streets (Lyù Chính Thaéng, Voõ thò Saùu – Ba Thaùng Hai, Ñieän Bieân Phuû, Nguyeãn Ñình Chieåu, Nguyeãn thò Minh Khai, Nguyeãn Du, Lyù Töï Troïng, Leâ Thaùnh Toân, Traàn Höng Ñaïo - Leâ Lôïi), daily traffic flow is 25
    • Smart Solution – Business Plan around 1.845.600 vehicles, during the 2 peak hours in the morning around 406,000, average for one street around 113,840 per hour o North to the centre: there are 5 main streets (Nguyeãn Vaên Troãi, Leâ Vaên Syõ, Caùch Maïng Thaùng Taùm, Lyù Thöôøng Kieät, Leâ Ñaïi Haønh), daily traffic flow is around 1.201.500 vehicles, during the 2 peak hours in the morning around 253.105, average for one street around 113,840 per hour - Upon receiving official approval from People Committee of Ho Chi Minh City, we must start to count vehicles at the jam spots and the nearby spots to locate the camera installation positions. (a.2) The 10 most serious jam spots: - 1. An Sương roundabout: jams from 9 am – 16pm due to too many trucks. - 2. T-junction Âu Cơ - Cách m ng tháng Tám - crossroad Cách m ng tháng Tám - Tân Kỳ Tân Quý - crossroad Tân Kỳ Tân Quý - C ng Hòa: form an endless jam net both in peak and normal hours - 3. From Cách m ng tháng Tám to 6-way crossroad Công trư ng Dân Ch , crossroad Võ Văn T n, Nguy n Th Minh Khai, 6-way crossroad Phù ng Thiên Vương, crossroad Ph m Ngũ Lão, Tr n Hưng o... - 4. Nguy n Th Minh Khai - Cao Th ng - Nguy n Thi n Thu t - i n Biên Ph has traffic jams during peak hours both in the morning and evening. - 5. Nguy n Oanh - Phan Văn Tr - Hoàng Minh Giám (Gia nh Park) – Nguy n Ki m has traffic jams during peak hours both in the morning and evening. - 6. Phan ăng Lưu – Bà Chi u market - Phú Nhu n cross-road – T junction Hoàng Văn Th – H Văn Huê 26
    • Smart Solution – Business Plan Figure 5: On the Hoàng Minh Giám street (Gia nh park) at Figure 4: In the Pasteur street noon 18-9 with lots of buses - 7. Lý Thư ng Ki t - Tân Bình market – Tjunction Thành Thái - crossroad Tô Hi n Thành - L Gia - 8. Roundabout Cây Gõ - roundabout Phú Lâm has traffic jams in the morning due to lots of buses from Ch L n in and out. - 9. Xô Vi t Ngh Tĩnh - inh B Lĩnh (roundabout Hàng Xanh - Mi n ông bus station - crossroad Bình Tri u) has traffic jams nearly all the time. - 10. Ch L n area has new jam spots in the morning: roundabout Phan ình Phùng, H i Thư ng Lãn Ông - H u Giang after the city started East-West highway projects, water environment projects with setting up fences, banning travelling in the Châu Văn Liêm, Tr n Hưng o, demolishing Chà Và Bridge. 8.3.3.2 Advertisement service - In the past time till now, the mode of out-door advertisement in HCM City is mainly by painting bill-boards, and recently there are LCD TV inside of office building and super-market as mentioned above. The advertisement by LED panel on streets, which are very popular in many Asian countries such as Hong Kong, China, Malaysia. Japan, Korea… have been still not licensed in HCM City yet, due to limitation policy of People Committee of Ho Chi Minh City by his decision No. 108 issued on 2002. This restriction is important entry barriers to prevent our competitors. - According to Saigon Times Weekly on Dec/12/2007, the current demands for out- door advertisement by new technology such as LED panel, LCD TV in HCM City is quite much bigger than capabilities of advertisement companies at the moment. Estimated advertisement revenue for total advertisement expenses of VN enterprises will be about 15,000 billion VND (equivalent to USD 950 million) in 2010 and about 55.000 billion VND in 2020 (equivalent to USD 3.5 billions). Also according to above mentioned article, most of advertisers prefer to use high- technology like LED panel than old-type bill-boards in order to increase attractiveness. Therefore, our license to advertise by LED panel on streets will be very the essential competitive strength to be market-leader in this business. 8.3.4 Competitors & competitive position: - Competitive advantage: differentiation - Competitive position: market leader, market pioneer. 27
    • Smart Solution – Business Plan 8.3.5 Market share: - full market share in Ho Chi Minh City because no competitor - Estimated quantity of customers is calculated basing on 30% of total number of people frequently working and visiting 1st District & 3rd District. 8.3.6 Ongoing market assessment: - Increasing demands for traffic information service within 10 years until other construction projects come into fully implementation - increasing automobile quantity - Technology for information providing service must be up-dated following developments of technology 8.4 Marketing Plan 8.4.1 Overall marketing strategy - Marketing concept: societal- marketing orientation (focus on satisfying customer needs & wants while enhancing individual & societal well-being) - Segmentation: product focus - Buyer‘s behavior type: habitual buying behavior - Brand strategy: defensive marketing 8.4.2 Pricing - attractive pricing : ideal for market penetration at introduction stage of Product Life Cycle to reach ‘market share leadership’ (low as possible price to encourage more users of service) - legality : price fixing - generic pricing strategy : ‘high-value strategy’ (high quality, medium price), value-based pricing (uses buyer ‘s perception of value of service rather than seller ‘s costs to set price) 8.4.3 Sales tactics: - Direct distribution of both services (traffic information providing and advertisement) basing on exclusive service with valued pricing. 8.4.4 Guarantees & warranties: - make traffic information to be optimum & effective - Refund if request cannot be reached to customers due to un-predicted problems (of telephone line, electricity….), this can be applied for long-term contract customers only. - extend service period equivalent to the suspension period of advertisement in case of electricity cut-off or technical problems of signals - Report to advertisers for No. s of travelers passing by advertisement LED panel daily 8.4.5 Advertising & promotion : - Advertisement through the LED panel on the street itself (occupying 50% of total broadcasting time at starting period and gradually reduce to none in replace by advertisement service) - Advertisement through newspaper, television and radio for both services 28
    • Smart Solution – Business Plan - Promotion: o For information users: free of charge during trial operation, discount during 1st period of operation, additional value-added service to long-term contract customers, for example: weather forecast message, stock exchange information… o For advertisers: free of charge advertisement at traffic web-site, discount for long-term contract. 8.4.6 Logistics: not applicable 8.5 Product & Operation 8.5.1 Value proposition: unique selling proposition 8.5.2 Product development: differentiation, emphasizing brand for future market expansion 8.5.3 Product enhancement plans: - increase frequency of use by customers - add new users - design more added-value to service 8.5.4 Location & facilities: - Operation of company is concentrated at control center; Soft-ware will automatically calculate No. s of users at each point of camera. - Distribution :by direct providing information service and advertisement service to customers - there must be technical teams check daily at locations of camera & panel 8.5.5 Proprietary issues – license, IP: priority license for advertisement on LED panels at cross-roads 8.5.6 Regulatory &legal issues: exclusive BOT agreement for traffic information to assure project life-time 8.5.7 Training & development - operation & maintenance of hard-ware to be trained by suppliers - installation & developing soft-ware to be trained by both suppliers and partners 8.6 Finance model & Plan 8.6.1 Assumptions: market size, growth 8.6.1.1 Investment structure: - 2 cameras to be installed at the corner of every 2-way street, 1 of every 1-way street. The No. of cameras can be calculated on the principle of 4 times of jam spot quantity (it means there must be at least 1 camera at cross-road leading to the jam locations) - Total 16 heavy traffic jam spots in 1st & 3rd District (as given by Department of Public Transport), so No. of camera will be 64 camera and No. of LED panel will be 32 LED panel. 29
    • Smart Solution – Business Plan - For the purpose of negotiation of license, quantity of LED Panel must be not more than 50% camera quantity. 8.6.1.2 Revenues: - Revenues from information providing : o Service users: as mentioned in above VIII-2.2.1, the market size about 391,000 persons using automobiles. Our calculation is based on assumption that there will be about 35% of potential customers using our service and 5% of potential customers who are citizens of 1st & 3rd District will have long- term contract for information service. o No. s of days of revenues per month: 22 days (excluding Saturdays and Sundays as these days are weekend with less traffic jams). - Revenues from advertising : o Based on the rate quoted by Goldsun Focus Media (in-house TV) and PROWTECH VINA CO. LTD (outdoor LED panel) as below: Goldsun Focus Media (in-house LCD TV 17”), 60 times/day, 30 seconds / time, full package USD 550/month, broadcasting at the same time in 178 TV installed in 113 buildings in HCM City ROWTECH VINA CO.,LTD (outdoor LED panel size 56 m2), advertising cost USD 4,000 /month (3,600 spots / month, basing on 1 sector (1 hour / day displaying 120 spots TVCs 30”), broadcasting at the same time at 4 LED panels installed inside Saigon Railway Station and Tan Son Nhat Airport 30
    • Table 2: REVENUE ASSUMPTION Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 COMPANY'S SHARE ISSUANCE Equivalent No. of Absolute Shares 3,748,30 3,785,78 3,823,64 3,861,87 3,900,4 3,939,5 3,978,8 4,018,68 4,058,8 4,099,4 Issued 2 5 3 9 98 03 98 7 74 63 1,386,24 2,810,49 3,041,85 3,185,21 3,335,3 3,492,6 3,657,4 3,828,43 4,002,9 4,185,7 SMART SOLUTIONS 0 8 6 3 80 83 62 6 26 01 % Growth 102.74% 8.23% 4.71% 4.71% 4.72% 4.72% 4.67% 4.56% 4.57% % of Total Revenue 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% No. of STATIONS No. of stations at Beginning of Year 64 64 64 64 64 64 64 64 64 64 No. of Additional stations - - - - - - - No. of offices at End of Year 64 64 64 64 64 64 64 64 64 64 Average No. of stations during year 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00 No. of PANEL No. of panel at Beginning of Year 32 32 32 32 32 32 32 32 32 32 No. of Additional panel - - - - - - - - - No. of panels at End of Year 32 32 32 32 32 32 32 32 32 32 Average No. of panel during year
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 32.00 32.00 32.00 32.00 32.00 32.00 32.00 32.00 32.00 32.00 1,440,41 1,505,88 1,574,34 1,645,9 1,720,8 1,799,1 1,881,13 1,966,8 2,056,4 Revenue: providing information 723,360 8 0 6 55 54 93 3 41 90 No. of SMS per station 132,000 264,000 277,200 291,060 305,613 320,894 336,938 353,785 371,475 390,048 % growth of SMS per station 0.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% SMS fee 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 Average SMS revenue per station/year 4,125 8,214 8,587 8,978 9,386 9,813 10,260 10,727 11,216 11,727 No. of fixed telephone subscriber per station 79,200 158,400 166,320 174,636 183,368 192,536 202,163 212,271 222,885 234,029 % growth 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Fixed telephone fee 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 Average fixed telephone revenue per station/year 3,465 6,900 7,213 7,541 7,884 8,243 8,618 9,011 9,421 9,851 No. of cell telephone subscriber per station 59,400 118,800 124,740 130,977 137,526 144,402 151,622 159,203 167,164 175,522 % growth 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Cell phone fee 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 Average cell phone subscriber revenue 32
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 per station/year 3,713 7,393 7,729 8,080 8,448 8,832 9,234 9,655 10,094 10,555 Revenue: long term contract 202,080 402,400 420,687 439,814 459,819 480,743 502,628 525,519 549,463 574,507 No. of contract per station 2,526 5,052 5,305 5,570 5,848 6,141 6,448 6,770 7,109 7,464 % growth 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Contract value 1.25 1.24 1.24 1.23 1.23 1.22 1.22 1.21 1.21 1.20 Average contract revenue per station/year 3,158 6,287 6,573 6,872 7,185 7,512 7,854 8,211 8,585 8,977 1,016,06 1,066,86 1,120,2 1,176,2 1,235,0 1,296,78 1,361,6 1,429,7 Revenue: advertising 460,800 967,680 4 7 11 21 32 4 23 04 No. of advertisement sector per station 24 48 48 48 48 48 48 48 48 48 Advertisement value 600 630 662 695 729 766 804 844 886 931 % growth 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Average advertisement revenue per panel/year 14,400 30,240 31,752 33,340 35,007 36,757 38,595 40,524 42,551 44,678 $104,18 $109,39 $114,86 $120,60 $125,00 $125,00 $125,00 $0 $0 $99,225 Revenue: office for lease 6 6 5 9 0 0 0 No. of square 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Value per square meter 33
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 18 19 20 21 22 23 24 25 25 25 Rent growth 100.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 34
    • Smart Solution – Business Plan Table 3: PROFIT AND LOSS STATEMENT Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 NET REVENUE 1,386,24 2,810,49 3,041,85 3,185,21 3,335,3 3,492,68 3,657,46 3,828,43 4,002,92 4,185,70 0 8 6 3 80 3 2 6 6 1 Yearly revenue growth 100.00% 102.74% 8.23% 4.71% 4.71% 4.72% 4.72% 4.67% 4.56% 4.57% COST OF GOODS SOLD 0 0 0 0 0 0 0 0 0 0 COGS as % of Net Revenues 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% GROSS PROFIT 1,386,24 2,810,49 3,041,85 3,185,21 3,335,3 3,492,68 3,657,46 3,828,43 4,002,92 4,185,70 0 8 6 3 80 3 2 6 6 1 Gross margin 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Gross profit growth 102.7% 8.2% 4.7% 4.7% 4.7% 4.7% 4.7% 4.6% 4.6% OPERATING EXPENSES Utilities (water, electricity, phone) 69,312 154,577 184,032 211,976 244,166 281,250 323,971 373,027 429,031 493,483 Utilities (water, electricity, phone) as % of Net Revenue 5.00% 5.50% 6.05% 6.66% 7.32% 8.05% 8.86% 9.74% 10.72% 11.79% Depreciation cost 153,967 307,933 460,433 497,100 460,433 505,233 387,100 387,100 724,600 724,600 Depreciation cost as % of Net Revenue 11.11% 10.96% 15.14% 15.61% 13.80% 14.47% 10.58% 10.11% 18.10% 17.31% Rent 35
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 810,000 810,000 Rent as % of Net Revenue 58.43% 28.82% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Maintenance cost (3 year/time) - - 60,837 - - 69,854 - - 80,059 - Maintenance cost (3 year/time) as % of Net Revenue 2.00% 2.00% 2.00% Yearly Maintenance cost 6,931 15,458 18,403 21,198 24,417 28,125 32,397 37,303 42,903 49,348 Yearly Maintenance cost as % of Net Revenue 0.50% 0.55% 0.61% 0.67% 0.73% 0.81% 0.89% 0.97% 1.07% 1.18% Marketing & Selling Expenses 20,794 42,157 15,209 15,926 16,677 17,463 18,287 19,142 20,015 20,929 Marketing & Selling Expenses as % of Net Revenue 1.50% 1.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% G&A Expenses 166,812 299,504 328,359 355,341 385,571 419,498 457,640 500,510 548,635 603,014 G&A Expenses as % of Net Revenues 12.03% 10.66% 10.79% 11.16% 11.56% 12.01% 12.51% 13.07% 13.71% 14.41% G&A Expenses Growth rate 79.55% 9.63% 8.22% 8.51% 8.80% 9.09% 9.37% 9.62% 9.91% Management salary 97,500 112,125 128,944 148,285 170,528 196,107 225,523 259,352 298,255 342,993 No. of managers 36
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 5 5 5 5 5 5 5 5 5 5 Average annual salaries per managers 19,500 22,425 25,789 29,657 34,106 39,221 45,105 51,870 59,651 68,599 Average annual salaries per managers growth rate 100.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% Others 69,312 140,525 152,093 159,261 166,769 174,634 182,873 191,422 200,146 209,285 Others as % of Net Revenues 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Bonus for management - 46,854 47,322 47,796 48,273 48,756 49,244 49,736 50,234 50,736 - By Cash 23,427 23,661 23,898 24,137 24,378 24,622 24,868 25,117 25,368 - By Shares @ par value 23,427 23,661 23,898 24,137 24,378 24,622 24,868 25,117 25,368 TOTAL OPERATING EXPENSES 1,227,81 1,629,63 1,067,27 1,101,54 1,131,2 1,321,42 1,219,39 1,317,08 1,845,24 1,891,37 5 0 4 1 64 3 6 2 2 4 Operating expenses as % of net revenue 88.57% 57.98% 35.09% 34.58% 33.92% 37.83% 33.34% 34.40% 46.10% 45.19% OPERATING PROFIT 1,180,86 1,974,58 2,083,67 2,204,1 2,171,26 2,438,06 2,511,35 2,157,68 2,294,32 158,425 8 1 2 16 0 6 4 4 7 Operating margin 11.43% 42.02% 64.91% 65.42% 66.08% 62.17% 66.66% 65.60% 53.90% 54.81% 37
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Financial income Financial expenses 163,988 140,561 117,134 93,708 70,281 46,854 23,427 - - - in which: Interest expenses 163,988 140,561 117,134 93,708 70,281 46,854 23,427 - - - Average interest rate (p.a) PROFIT BEFORE TAX 1,040,30 1,857,44 1,989,96 2,133,8 2,124,40 2,414,64 2,511,35 2,157,68 2,294,32 (5,564) 7 7 4 35 6 0 4 4 7 0% 37% 61% 62% 64% 61% 66% 66% Current year's income tax 291,286 520,085 557,190 597,474 594,834 676,099 703,179 604,152 642,412 Tax rate 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% NET PROFIT 1,337,36 1,432,77 1,536,3 1,529,57 1,738,54 1,808,17 1,553,53 1,651,91 (5,564) 749,021 2 4 61 2 0 5 2 6 Net profit margin -0.4% 26.7% 44.0% 45.0% 46.1% 43.8% 47.5% 47.2% 38.8% 39.5% - 13562.7 Growth of net profit % 78.5% 7.1% 7.2% -0.4% 13.7% 4.0% -14.1% 6.3% 1,070,70 1,390,83 1,627,35 1,553,53 1,651,91 Dividend payout - 299,608 534,945 716,387 921,817 1 2 8 2 6 Dividend payout ratio 40.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 100.0% Dividend per share 38
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 - 0.08 0.14 0.19 0.24 0.27 0.35 0.40 0.38 0.40 Available for retain earning (5,564) 449,413 802,417 716,387 614,545 458,872 347,708 180,818 - - Table 4: BALANCE SHEET Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 ASSETS Current Assets 1,264,3 1,046,1 1,315,1 1,762,21 1,622,77 1,820,51 1,789,06 1,590,99 2,331,03 3,071,35 Cash 65 24 78 2 1 9 9 4 6 2 Notes Receivable Accounts receivable, net 231,000 250,016 261,798 274,141 287,070 300,613 314,666 329,008 344,030 Receivables day 30 30 30 30 30 30 30 30 30 Inventory Other Total Current Assets 1,264,3 1,277,1 1,565,1 2,024,01 1,896,91 2,107,58 2,089,68 1,905,66 2,660,04 3,415,38 65 23 93 1 2 9 3 0 4 3 Long-Term Assets Property, plant, and equipment 6,693,0 6,693,0 6,913,0 6,913,00 7,361,00 7,361,00 7,361,00 7,361,00 7,361,00 7,361,00 39
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 00 00 00 0 0 0 0 0 0 0 (153,96 (461,90 (922,33 (1,419,43 (1,879,86 (2,385,10 (2,772,20 (3,159,30 (3,883,90 (4,608,50 Less accumulated depreciation 7) 0) 3) 3) 7) 0) 0) 0) 0) 0) 6,539,0 6,231,1 5,990,6 5,493,56 5,481,13 4,975,90 4,588,80 4,201,70 3,477,10 2,752,50 Net property, plant, and equipment 33 00 67 7 3 0 0 0 0 0 Other long-term assets Total Long-Term Assets 6,539,0 6,231,1 5,990,6 5,493,56 5,481,13 4,975,90 4,588,80 4,201,70 3,477,10 2,752,50 33 00 67 7 3 0 0 0 0 0 Total Assets 7,803,3 7,508,2 7,555,8 7,517,57 7,378,04 7,083,48 6,678,48 6,107,36 6,137,14 6,167,88 99 23 60 7 5 9 3 0 4 3 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term debt 0 0 0 0 0 0 0 0 0 0 Current maturities of long-term 0 0 0 0 0 0 0 0 0 0 debt Accounts payable Income taxes payable Accrued liabilities 12,881 15,336 17,665 20,347 23,438 26,998 31,086 35,753 41,124 Other Total Current Liabilities 0 12,881 15,336 17,665 20,347 23,438 26,998 31,086 35,753 41,124 40
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Long-Term Liabilities Long-term debt less current 5,466,2 4,685,3 3,904,4 3,123,58 2,342,68 1,561,79 780,896 0 0 0 maturities 74 78 81 5 9 3 Deferred income taxes Other long-term liabilities Total Long-Term Liabilities 5,466,2 4,685,3 3,904,4 3,123,58 2,342,68 1,561,79 780,896 0 0 0 74 78 81 5 9 3 Total Liabilities 5,466,2 4,698,2 3,919,8 3,141,25 2,363,03 1,585,23 807,894 31,086 35,753 41,124 74 59 17 0 6 0 Shareholders' Equity 2,342,6 2,366,1 2,389,7 2,413,67 2,437,81 2,462,18 2,486,81 2,511,67 2,536,79 2,562,16 Common stock 89 16 77 5 1 9 1 9 6 4 Additional paid-in capital 1,246,2 1,962,65 2,577,19 3,036,06 3,383,77 3,564,59 3,564,59 3,564,59 Retained earnings (5,564) 443,849 66 3 8 9 7 5 5 5 Other Total Shareholders' Equity 2,337,1 2,809,9 3,636,0 4,376,32 5,015,00 5,498,25 5,870,58 6,076,27 6,101,39 6,126,75 25 64 43 8 9 9 9 4 1 9 Total Liabilities and Shareholders' 7,803,3 7,508,2 7,555,8 7,517,57 7,378,04 7,083,48 6,678,48 6,107,36 6,137,14 6,167,88 Equity 99 23 60 7 5 9 3 0 4 3 Table 5: STATEMENT OF CASHFLOWS Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 41
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 CASH FLOWS FROM OPERATING ACTIVITIES 1,536,36 1,529,57 1,738,54 1,553,53 1,651,91 Net Income (5,564) 749,021 1,337,362 1,432,774 1 2 0 1,808,175 2 6 Depreciation and Amortization 153,967 307,933 460,433 497,100 460,433 505,233 387,100 387,100 724,600 724,600 + / - in Current Assets - (231,000) (19,016) (11,783) (12,343) (12,929) (13,543) (14,053) (14,342) (15,023) + / - in Short-term Investment + / - in Sales Receivable (231,000) (19,016) (11,783) (12,343) (12,929) (13,543) (14,053) (14,342) (15,023) + / - in Other receivables + / - in Inventory + / - in Other current assets + / - in Current Operating Liabilities 12,881 2,455 2,329 2,683 3,090 3,560 4,088 4,667 5,371 + / - in Trade Payables + / - in Tax Payables + / - in Other payables + / - in Other current liabilities 12,881 2,455 2,329 2,683 3,090 3,560 4,088 4,667 5,371 Net Cash Provided by 1,987,13 2,024,96 2,115,65 2,268,45 2,366,86 148,403 838,836 1,781,234 1,920,420 2,185,311 Operating Activities 5 7 7 8 4 42
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 CASH FLOWS FROM INVESTING ACTIVITIES Sale (purchase) of Fixed (6,693,00 (448,000 Assets 0) - (220,000) - ) - - - - - + / - in Other non-current assets Net Cash Used in Investing (6,693,00 (448,000 0 (220,000) 0 0 0 0 0 0 Activities 0) ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from New Issues of Shares 2,342,689 23,427 23,661 23,898 24,137 24,378 24,622 24,868 25,117 25,368 Dividends Paid / Cash (921,817 (1,070,7 (1,390,8 (1,627,35 (1,553,5 (1,651,9 withdrawn - (299,608) (534,945) (716,387) ) 01) 32) 8) 32) 16) + / - in Short Term Debt (780,896 (780,896 (780,896 + / - in Long Term Debt 5,466,274 (780,896) (780,896) (780,896) ) ) ) (780,896) - - + / - in Other non-current liabilities Net Cash Provided by (1,057,07 (1,292,18 (1,473,38 (1,678,5 (1,827,2 (2,147,1 (2,383,38 (1,528,4 (1,626,5 7,808,963 Financing Activities 8) 0) 6) 76) 19) 07) 6) 16) 48) 43
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Net Increase In Cash And (139,442 Cash Equivalents 1,264,365 (218,242) 269,054 447,034 ) 197,748 (31,450) (198,075) 740,042 740,316 + / - in Exchange rate difference and Other Reserves 1,264,36 1,762,21 1,622,77 1,820,51 1,590,99 2,331,03 Cash At Beginning Of Year - 5 1,046,124 1,315,178 2 1 9 1,789,069 4 6 1,046,12 1,622,77 1,820,51 1,789,06 2,331,03 3,071,35 Cash At End Of Year 1,264,365 4 1,315,178 1,762,212 1 9 9 1,590,994 6 2 Table 6: CAPITAL EXPENDITURE Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 CAPEX 6,693,000 0 220,000 0 448,000 0 0 0 0 0 Camera system 448,000 448,000 IT system 220,000 220,000 Software 300,000 Led Panel 704,000 Camera pillar and installation 384,000 Switchboard 30,000 Cable renting 32,000 Building 4,575,000 44
    • Smart Solution – Business Plan Table 7: DEPRECIATION & AMORTIZATION CHARGE Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Depreciation & Amortization Charges during the year % D&A on Fixed Assets DEBT Short term Debt Short term Debt as % of Working Capital (Except Debt) 4,685,37 3,904,48 3,123,58 2,342,68 1,561,79 Long term Debt 5,466,274 8 1 5 9 3 780,896 - - - Long term Debt as % of Non-current assets TOTAL DEBT 4,685,37 3,904,48 3,123,58 2,342,68 1,561,79 5,466,274 780,896 0 0 0 8 1 5 9 3 Table 8: ENTERPRISE FREE CASH FLOW Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Net Profit (5,564) 749,021 1,337,362 1,432,77 1,536,36 1,529,57 1,738,54 1,808,17 1,553,53 1,651,91 45
    • Smart Solution – Business Plan 4 1 2 0 5 2 6 Plus Interest Expense 166,812 299,504 328,359 355,341 385,571 419,498 457,640 500,510 548,635 603,014 Plus Depreciation & Amortization - 307,933 460,433 497,100 460,433 505,233 387,100 387,100 724,600 724,600 1,356,45 2,285,21 2,382,36 2,454,30 2,583,28 2,695,78 2,826,76 2,979,53 Cash from P&L 161,248 8 2,126,154 6 5 3 1 5 7 0 + / - in Current Assets + / - in Current Liabilities + / - in Cash & Equivalents Cash from Current Portion of Balance Sheet - - - - - - - - - - (6,693,00 (448,000 Gross CAPEX 0) - (220,000) - ) - - - - - Cash from LT portion of (6,693,00 (448,000 Balance Sheet 0) - (220,000) - ) - - - - - Enterprise Free Cash Flow 1,356,45 2,285,21 2,382,36 2,454,30 2,583,28 2,695,78 2,826,76 2,979,53 161,248 1,906,154 8 6 5 3 1 5 7 0 Free Cash Flow per share YoY FCF Growth Rate 741% 41% 20% 4% 3% 5% 4% 5% 5% 46
    • Smart Solution – Business Plan Table 9: TERMINAL VALUE CALCULATION Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Total Debt Per Share 0.60 0.40 0.20 - - - Net Cash Per Share (0.18) 0.07 0.25 0.40 0.57 0.75 Book Value per Share 0.62 0.74 0.95 1.13 1.29 1.40 1.48 1.51 1.50 1.49 P/B Entry/Exit Multiple 2.5 2.5 2.5 2.5 Value based on P/B 0.00 - - 3.69 3.78 3.76 3.74 Sales per Share 0.37 0.74 0.80 0.82 0.86 0.89 0.92 0.95 0.99 1.02 P/S Entry/Exit Multiple 3.0 3.0 3.0 3.0 Value based on P/S 0.00 - - 2.76 2.86 2.96 3.06 Earnings per share (0.00) 0.20 0.35 0.37 0.39 0.39 0.44 0.45 0.38 0.40 P/E Entry/Exit Multiple 15.00 15.00 15.00 15.00 47
    • Smart Solution – Business Plan Value based on P/E 0.00 0.00 0.00 - - - 6.55 6.75 5.74 6.04 EBIT per Share 0.04 0.31 0.52 0.54 0.57 0.55 0.61 0.62 0.53 0.56 EV/EBIT Entry/Exit Multiple 10 10 10 10 Value based on EV/EBIT - - - - - - 6.38 6.65 5.89 6.35 EBITDA per Share 0.08 0.39 0.64 0.67 0.68 0.68 0.71 0.72 0.71 0.74 EV/EBITDA Entry/Exit Multiple 7 7 7 7 Value based on EV/EBITDA - - 5.22 5.44 5.55 5.90 Median Terminal Value per share - - 5.22 5.44 5.55 5.90 Table 10: INTERNAL RATE OF RETURN Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Entry Price (0.63) Dividend Received 0.00 0.08 0.14 0.19 0.24 0.27 0.35 0.40 0.38 0.40 Terminal Value 0.00 0.00 5.22 5.44 5.55 5.90 48
    • Smart Solution – Business Plan Remittance and Capital Gain tax (0.1%) 0.00 0.00 (0.01) (0.01) (0.01) (0.01) Total Cash Flows for equity investor per share - Exit 2014 (0.63) 0.08 0.14 0.19 0.24 0.27 5.57 Total Cash Flows for equity investor per share - Exit 2015 (0.63) 0.08 0.14 0.19 0.24 0.27 0.35 5.84 Total Cash Flows for equity investor per share - Exit 2016 (0.63) 0.08 0.14 0.19 0.24 0.27 0.35 0.40 5.92 Total Cash Flows for equity investor per share - Exit 2017 (0.63) 0.08 0.14 0.19 0.24 0.27 0.35 0.00 0.00 6.30 IRR - 2014 Exit 55.36% IRR - 2015 Exit 50.00% IRR - 2016 Exit 45.96% IRR - 2017 Exit 41.26% Table 11: DUPONT ANALYSIS AND FINANCIAL RATIOS Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 PROFITABILITY Profit Margin (Net Profit / Sales) -0.40% 26.65% 43.97% 44.98% 46.06% 43.79% 47.53% 47.23% 38.81% 39.47% ROE = Net income / Average equity -0.24% 26.66% 44.78% 39.88% 35.52% 30.98% 31.94% 31.24% 25.95% 27.07% ROA = (Net income +Interest expenses) / Average total assets 2.03% 11.85% 18.94% 20.32% 21.52% 21.59% 25.07% 27.42% 24.24% 26.91% LIQUIDITY Leverage (Assets / Equity) 3.3 2.7 2.1 1.7 1.5 1.3 1.1 1.0 1.0 1.0 49
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Current ratio (current assets/current liabilities) - 99.1 102.1 114.6 93.2 89.9 77.4 61.3 74.4 83.1 Quick ratio (current assets- inventory)/current liabilities - 99.1 102.1 114.6 93.2 89.9 77.4 61.3 74.4 83.1 EFFICIENCY Sales / Net working capital - - - - - - - - - - Fixed Assets Turnover (Sales / Average Fixed Assets) 21% 45% 49% 54% 58% 67% 73% 83% 99% 120% Total Asset Turnover ( Sales / Average Total Assets) 18% 37% 40% 42% 45% 48% 53% 60% 65% 68% Free Cash Flow to Sales 0.1 0.5 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.7 SAFETY 1,180,86 1,974,58 2,083,67 2,204,1 2,171,2 2,438,0 2,511,35 2,157,6 2,294,3 EBIT 158,425 8 1 2 16 60 66 4 84 27 1,488,80 2,435,01 2,580,77 2,664,5 2,676,4 2,825,1 2,898,45 2,882,2 3,018,9 EBITDA 312,391 1 5 2 49 93 66 4 84 27 Interest Coverage Ratio 0.97 8.40 16.86 22.24 31.36 46.34 104.07 - - - 50
    • Smart Solution – Business Plan Year 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 Debt/Equity 2.34 1.67 1.07 0.71 0.47 0.28 0.13 - - - 51
    • 8.6.1.3 Margins & profit potential - Net profit margin will be around 43% in 2010 and remain the same every year. This margin is higher than the average margin of listing companies in Ho Chi Minh Stock Exchange. At the moment there is no comparable data for such business model in Vietnam. 8.6.1.4 Fixed, variable costs - Based on equipment quotation from foreign suppliers (free import duty), Computers and cameras will be replaced every 5 years, LED panel every 10 years. - Based on specifications of operation period stated by the producers, every 5 year s we will replace all computers, cameras and LED panels. - Software value is the values of all described software, including research, data purchase (map, GPS, etc.). - According to Financial Model, total operating expense of the business is about 37% of the revenue in which the General and Administrative expenses occupy 30% which are salary and bonus of management 8.6.1.5 Income and expenditure projections (and actual where they exist) - The income of 2008 comes from 6 months as we take 6 months to install and import the camera. We forecast the revenue is about $1,3 million - The financial model is based on conservative approach in which we project 5% growth from year 2010. As for 2009, the revenue will be double the start-up year with nearly $ 3 million. - Yearly expense relies on management salary (which increases 15% per year) and depreciation of fixed assets 8.6.1.6 Cash flow analysis (5-year projections) - We intend to pay a dividend from 2009 with a ratio of 40%. Since then, every year, we will pay about 70% of net profit for dividend, the remaining to reserve for expansion and new equipment purchase - Cash flow from operating activities is positive, in other words, the operating activities can generate cash to pay for its expenses - Net cash used in investing activities is negative in 2008, 2010, 2012 due to investment in fixed assets to replace the disposals. - Net cash provided by financing activities is negative because we project to pay back the principal to HIFU - Cash at year end of each year remains stable at $1.7 million on average. 8.6.1.7 Break-even projections (sensitivity analysis) - The payback period (recovering cost of investment) is about 4,8 years ($7,8 million/$1,6 million) or as of 31 Oct 2012. - The IRR is 55% and 41% in 2014 and 2017 respectively. This show the project is promising worth investing 8.6.1.8 Cost control measures - Activity-based costing 8.7 Human Resources 8.7.1 Organization & ownership ORGANIZATION CHART
    • Smart Solution – Business Plan s Shareholders Inspection Committee Board of Directors CEO Internal Control Infra- Customer Sales & Finance & IT HRs structure Service Marketing Accounts Table 12: staffs of Data, Information and Infrastructure management dept work 3 shifts/day, the : others 1 shift/day. st No Organization 1 stage 1 Department head 1 2 Department deputy head 1 3 Data department: manage and process data 5 4 Infrastructure management dept: manage camera system 10 5 Information providing dept: answering telephone requests 60 6 Sales and Marketing 10 7 Finance 4 8 HR & GA 3 Total: 94 8.7.2 Key managers: - Chief Executive Officer : progress of MBA and IT education basic 53
    • Smart Solution – Business Plan - Deputy Executive Officer : progress of MBA with economic & marketing education basic - Manager of IT department : in charge of soft ware, computer hard-ware and fiber-optic cables - Manager of Technical department : in charge of camera, panels and infra- structure - Manager of Information Service Department : handling all services relating to traffic information providing - Manager of Advertisement Department : in charge of advertisement service (in which design & film production is out-sourced) - Manager of Finance & Accounting Department - Manager of Administration & Human Resources 8.7.3 Remuneration for management team - Based on the averaged income of managers surveyed by Navigos/Vietnamworks, we are ready to offer competitive package to our management team. - Averaged monthly salary is $1,500 with a 15% growth year on year - Bonus for management is performance-based and there will be 2 kinds: o Cash pool is calculated by 15% of the difference of Year n net income and Year n-1 net income. Percentage will be distributed by the responsibility of the management team o Share bonus: the company will issue 1% of outstanding share every year to offer to management team. The value of each share is par value no matter what the fair value. The pool is distributed by the responsibility of the management team. 8.7.4 Employees and stock options - Each year, depend on the performance of the business, the board of director will require the shareholder meeting resolution to issue new share to employee (not including Management Team in 8.6.3) 8.8 Board of Directors - Each shareholder who holds at least 10% of outstanding common shares will appoint 1 member of the board of directors. - The best practice of corporate governance will be applied to Smart Solution for the best interest of shareholders - The Board of Directors comprises 5 members representing for shareholders (5 is odd number). 8.9 Share-holders - (1). Existing company of our group : 30% - (2). Indochina Co. Ltd : 30% - (3). Oversea Fund (ex: Mekong Venture) : 10% - (4). Ho Chi Minh City Investment Fund for Urban development : 20% - (5). Nexus Technology – USA : 10% 54
    • Smart Solution – Business Plan 8.10 Other key contractors: - building design and building construction - soft-ware provider - hard-ware provider - camera supplier - LED panel supplier - HTV for leasing cable lines 9. ACTION PLANS 9.1 Time-table for the development (key action steps and decision points, key factors required at each step) Step Things to do Duration 1st Set-up Company to run the project 2 months Preparation and Presentation of business plan to People Committee of HCM nd 2 Obtain approval of People Committee of HCM for feasibility study 2 weeks 3rd Allocate shares of projects and get initial funds from share-holders 1 month Sub-contractor for researching up-to-dated and precise data about number of traveler passing by each busy cross-road in the project area to decide strategic positions for camera th 4 Sub-contractor to design routine for cable connecting cameras 1 month Re-confirm offer price of key suppliers / contractors th 5 Write official & details plan with exact locations of cameras 1 month th nd 6 Obtain 2 -round approval for proposal 1 month 7th Negotiation for BOT contract 3 months Negotiation with contractors for design & construction of building for general construction drawings Negotiation for location of control center th 8 Send final plan with BOT contract to Ministry of Planning & 1 month Investment to get approval from Vietnam Government Contracting with Design Company for details construction drawings th 9 Obtaining construction license 3 months Obtaining land-use right Contracting with contractor for office-renting during construction time Contracting with suppliers of equipments 55
    • Smart Solution – Business Plan Contracting with HIFU for loans th 10 Land-breaking ceremony to start construction 3 months Funding from share-holders and receive loans from HIFU Importation & installation of equipments Recruitment of key staffs 11th Start trial operation 6 months Recruitment of full staffs th 12 Fulfillment of construction 11 months after 10th step th 13 Move to own building 1 month after that th 14 Start stable operation & earn profit, pay to share-holders 4 years after that) th 15 Transfer whole project to People Committee of Ho Chi Minh City (10th year) In the future when we expand operation area to whole Ho Chi Minh City after this 1st stage is successful; we only need to amend this license with simpler procedure. 9.2 Funding proposals (desired financing, capitals requirements, use of funds and investor returns) Total USD 7,808,963 millions, in which our own capitals must be 30% of investment capitals (it means $2,342,689), this will be prepared as follows : - for the purpose of exclusive project and for the purpose of low-interest, we offer 20% share of par value to HIFU (Ho Chi Minh City Investment Fund for Urban Development) valued USD 468,537 - for the purpose of listing in 2010, we offer 10% share of par value to institutional investor (we are discussing with Mekong Venture) valued USD 234,268 - for the purpose of obtaining experience & technology from expertise, we offer 10% share of par value to NEXUS TECHNOLOGY – USA who have signed with us agreement to support us in software & system control technology, valued USD 234,268- - for the purpose of real estate and construction & funding, we offer 30% share of par value to Indochina Group, valued USD 702,806 - Our group reserves 30% share to issue shares among key members, valued USD 702,806. 9.3 Exit strategy - in case the revenue of the project is not as good as expectation, we can exit this project by leasing the whole building to real-estate investors to refund investment value to pay to share-holders with negotiable premium before transferring building to People Committee of Ho Chi Minh City. 56
    • Smart Solution – Business Plan 9.4 Implementing the approach 9.4.1 Resource requirements and time table # of step Resource requirement Time table 1st 3 members (MBA) to prepare plan starting 2nd VIP relations (to submits to People starting Committee) 3rd 2 members (negotiates with share- After approval holders) Funds for researches more data. 4th, 5th, 6th , Funds for research & details planning After approval 7th & BOT contract 8th VIP relationship (for approval from After BOT contract MPI) 9th Full investment required, loans from Purchasing equipments & Bank required construction period Key-staff recruitments 10th Full-staff recruitments Operation start Training from partners 11th 12th Loans on schedule Implementation th th 13 14 15th All share-holders End of project 9.4.2 Review mechanism - internal review: top-down and bottom-up (2-way), by check-list & procedure among departments & sections internally, inspection Unit from Board of Management, - external review : by auditing company, funds management company / banks, by Department of Finance and Department of Planning & investment, Department of Transportation & Public Works 9.4.3 Change management process - change due to government policy : BOT contract must be reviewed and amended accordingly - change for adopting environment (without affection to BOT contract) : will be proposed by business units and approved by Board of Management basing on majority agreement - Change in management policy which may affect BOT contract : both of above modes will be applied. 57
    • Smart Solution – Business Plan 9.4.4 Action plan - finance : start-up funds can be ready right after obtaining top-authority approval - people : our own member will act at 1st step, after BOT contract remained staffs will be recruited - permissions : draft permission will be got upon official submission of plans 10. STRATEGIC CONTROL: The balanced Score Card Financial perspective Customer perspective Goals Measure Goals Measure Monthly sales growth both from information service and Service & No of subscribers and Succeed advertisement Performance service users Prosper Expand market Time On-time delivery nationwide& ROE Cost Reasonable price Percent of subscribers and service users New products using new products Internal business perspective Innovation & learning perspective Goals Measure Goals Measure New product Effectiveness Smooth operations Time to market introduction New product Actual introduction Technology Updated new introduction schedule vs. plan capability technology 11. QUANTIFIED PLANS 58
    • 11.1 Detailed operational & financial plans for 12 months Year Jan- Feb- Mar- Apr- May Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 -08 08 08 08 08 08 08 08 REVENUE ASSUMPTION - 231,0 231,04 231,0 231,0 231,04 231,04 1,386,24 0 0 0 0 0 0 SMART SOLUTIONS 40 0 40 40 0 0 0 0.00 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% % Growth % 0.00 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% % of Total Revenue % No. of STATIONS $0.00 No. of stations at Beginning of Year 64 64 64 64 64 64 64 No. of Additional stations - - - - - - - - No. of offices at End of Year - - - - - - 64 64 64 64 64 64 64 Average No. of stations during year - - - - - - 64.00 64.00 64.00 64.00 64.00 64.00 64.00 No. of PANEL $0.00 No. of panel at Beginning of Year 32 32 32 32 32 32 32 No. of Additional panel
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 -08 08 08 08 08 08 08 08 - - - - - - - - - - No. of panels at End of Year - - - - - - 32 32 32 32 32 32 32 Average No. of panel during year - - - - - - 32.00 32.00 32.00 32.00 32.00 32.00 32.00 120,5 120,56 120,5 120,5 120,56 120,56 Revenue: providing information 723,360 60 0 60 60 0 0 No. of SMS per station 22,00 22,00 22,00 22,000 22,000 22,000 132,000 0 0 0 % growth of SMS per station 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% SMS fee 0.03 0.03 0.03 0.03 0.03 0.03 0.19 Average SMS revenue per station/year - - - - - - 688 688 688 688 688 688 4,125 No. of fixed telephone subscriber 13,20 13,20 13,20 per station 13,200 13,200 13,200 79,200 0 0 0 % growth 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Fixed telephone fee 0.04 0.04 0.04 0.04 0.04 0.04 0.26 Average fixed telephone revenue per station/year - - - - - - 578 578 578 578 578 578 3,465 60
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 -08 08 08 08 08 08 08 08 No. of cell telephone subscriber per station 9,900 9,900 9,900 9,900 9,900 9,900 59,400 % growth 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Cell phone fee 0.06 0.06 0.06 0.06 0.06 0.06 0.38 Average cell phone subscriber revenue per station/year - - - - - 619 619 619 619 619 619 3,713 33,68 33,68 33,68 Revenue: long term contract 33,680 33,680 33,680 202,080 0 0 0 No. of contract per station 421 421 421 421 421 421 2,526 % growth 0.0% Contract value 1.25 1.25 1.25 1.25 1.25 1.25 7.50 Average contract revenue per station/year - - - - - 526 526 526 526 526 526 3,158 76,80 76,80 76,80 Revenue: advertising 76,800 76,800 76,800 460,800 0 0 0 No. of Ad. sector per station 4 4 4 4 4 4 24 Advertisement value 600 600 600 600 600 600 3,600 61
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 -08 08 08 08 08 08 08 08 % growth 0.0% Average Ad. revenue per panel/year - - - - - 2,400 2,400 2,400 2,400 2,400 2,400 14,400 Revenue: office for lease $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 No. of square - Value per square meter - Rent growth Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 08 08 08 08 08 08 08 08 PROFIT AND LOSS 0 STATEMENT NET REVENUE 231,0 231,04 231,0 231,0 231,04 231,04 1,386,24 0 0 0 0 0 0 40 0 40 40 0 0 0 100.0 Yearly revenue growth % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% COST OF GOODS SOLD 0 0 0 0 0 0 0 0 0 0 0 0 0 COGS as % of Net Revenues 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% GROSS PROFIT 0 0 0 0 0 0 231,0 231,0 231,0 231,0 231,0 231,0 1,386,24 62
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 08 08 08 08 08 08 08 08 40 40 40 40 40 40 0 100.0 100.0 100.0 100.0 100.0 100.0 Gross margin 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% % % % % % % 600.0% Gross profit growth 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% OPERATING EXPENSES Utilities (water, 11,55 11,55 11,55 electricity, phone) - - - - - - 2 11,552 2 2 11,552 11,552 69,312 Utilities (water, electricity, phone) as % of Net Revenue 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 30.00% 25,66 25,66 25,66 Depreciation cost 1 25,661 1 1 25,661 25,661 153,967 Depreciation cost as % of 11.11 11.11 11.11 11.11 11.11 11.11 Net Revenue % % % % % % 66.64% 90,00 90,00 90,00 90,00 90,00 Rent 90,000 0 0 0 90,000 0 0 90,000 90,000 810,000 38.95 38.95 38.95 38.95 38.95 38.95 Rent as % of Net Revenue % % % % % % 58.43% 63
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 08 08 08 08 08 08 08 08 Maintenance cost (3 year/time) Maintenance cost (3 year/time) as % of Net Revenue Yearly Maintenance cost - - - - - - 1,155 1,155 1,155 1,155 1,155 1,155 6,931 Yearly Maintenance cost as % of Net Revenue 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% Marketing & Selling Expenses - - - 2,310 2,310 2,310 2,310 2,310 2,310 2,310 2,310 2,310 20,794 Marketing & Selling Expenses as % of Net Revenue 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 5.00% 15,16 15,16 15,16 15,16 15,16 G&A Expenses 15,165 15,165 15,165 5 5 5 15,165 5 5 15,165 15,165 166,812 G&A Expenses as % of Net Revenues 6.56% 6.56% 6.56% 6.56% 6.56% 6.56% 12.03% G&A Expenses Growth rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Management salary 64
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 08 08 08 08 08 08 08 08 8,864 8,864 8,864 8,864 8,864 8,864 8,864 8,864 8,864 8,864 8,864 97,500 No. of managers 5 5 5 5 5 5 5 5 5 5 5 55 Average annual salaries per managers 1,773 1,773 1,773 1,773 1,773 1,773 1,773 1,773 1,773 1,773 1,773 19,500 Average annual salaries per managers growth rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Others 6,301 6,301 6,301 6,301 6,301 6,301 6,301 6,301 6,301 6,301 6,301 69,312 Others as % of Net 105.00 205.00 Revenues 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% % % 355.00% Bonus for management - - By Cash - - By Shares @ par value - TOTAL OPERATING 107,47 107,4 107,4 145,8 145,84 145,8 145,8 145,84 145,84 1,227,81 0 15,165 15,165 EXPENSES 5 75 75 43 3 43 43 3 3 6 Operating expenses as % of 0.00 63.12 63.12 63.12 63.12 63.12 63.12 net revenue % 0.00% 0.00% 0.00% 0.00% 0.00% % % % % % % 378.75% 65
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 08 08 08 08 08 08 08 08 OPERATING PROFIT (15,16 (15,16 (107,4 (107,4 (107,4 85,19 85,19 85,19 0 85,197 85,197 85,197 158,424 5) 5) 75) 75) 75) 7 7 7 0.00 36.88 36.88 36.88 36.88 36.88 36.88 Operating margin % 0.00% 0.00% 0.00% 0.00% 0.00% % % % % % % 221.25% Financial income - 27,33 27,33 27,33 Financial expenses 1 27,331 1 1 27,331 27,331 163,988 27,33 27,33 27,33 in which: Interest expenses 1 27,331 1 1 27,331 27,331 163,988 Average interest rate (p.a) PROFIT BEFORE TAX (15,16 (15,16 (107,4 (107,4 (107,4 57,86 57,86 57,86 0 57,865 57,865 57,865 (5,564) 5) 5) 75) 75) 75) 5 5 5 #DIV/ #DIV/ #DIV/ #DIV/ #DIV/ #DIV/ 0! 0! 0! 0! 0! 0! 25% 25% Current year's income tax 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 Tax rate % % % % % % % % % % % % 336.00% NET PROFIT 0 (15,16 (15,16 (107,4 (107,4 (107,4 57,86 57,865 57,86 57,86 57,865 57,865 (5,564) 66
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 08 08 08 08 08 08 08 08 08 08 08 08 5) 5) 75) 75) 75) 5 5 5 Net profit margin 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 150.3% - 608.7 153.8 Growth of net profit 0.0% 0.0% % 0.0% 0.0% % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 11.2 General operational & financial plans for 12 – 48 months time period Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 09 09 09 09 09 09 09 09 09 09 09 09 09 NET REVENUE 1,386,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 2,810,4 40 08 08 08 08 08 08 08 08 08 08 08 08 98 100.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 100.00 Yearly revenue growth % 100.% % % % % % % % % % 0.00% 0.00% % COST OF GOODS SOLD 0 0 0 0 0 0 0 0 0 0 0 0 0 0 COGS as % of Net Revenues 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% GROSS PROFIT 1,386,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 234,2 2,810,4 40 08 08 08 08 08 08 08 08 08 08 08 08 98 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1200.0 Gross margin 600.0% % % % % % % % % % % % % % Gross profit growth 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 67
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 09 09 09 09 09 09 09 09 09 09 09 09 09 OPERATING EXPENSES Utilities (water, 12,88 12,88 12,88 12,88 12,88 12,88 12,88 12,88 12,88 12,88 12,88 12,88 electricity, phone) 69,312 1 1 1 1 1 1 1 1 1 1 1 1 154,577 Utilities (water, electricity, phone) as % of Net 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Revenue 30.00% 5.00% % % % % % % % % % 5.00% 5.00% 60.00% 25,66 25,66 25,66 25,66 25,66 25,66 25,66 25,66 25,66 25,66 25,66 25,66 Depreciation cost 153,967 1 1 1 1 1 1 1 1 1 1 1 1 307,933 Depreciation cost as % of 10.96 10.96 10.96 10.96 10.96 10.96 10.96 10.96 10.96 10.96 10.96 10.96 Net Revenue 66.64% % % % % % % % % % % % % 10.96% 67,50 67,50 67,50 67,50 67,50 67,50 67,50 67,50 67,50 67,50 67,50 67,50 Rent 810,000 0 0 0 0 0 0 0 0 0 0 0 0 810,000 28.82 28.82 28.82 28.82 28.82 28.82 28.82 28.82 28.82 28.82 28.82 28.82 Rent as % of Net Revenue 58.43% % % % % % % % % % % % % 28.82% Maintenance cost (3 year/time) Maintenance cost (3 year/time) as % of Net 68
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 09 09 09 09 09 09 09 09 09 09 09 09 09 Revenue Yearly Maintenance cost 6,931 1,288 1,288 1,288 1,288 1,288 1,288 1,288 1,288 1,288 1,288 1,288 1,288 15,458 Yearly Maintenance cost as 0.55 0.55 0.55 0.50 0.50 0.50 0.50 0.50 0.50 % of Net Revenue 0.50% 0.55% % % % % % % % % % 0.50% 0.50% 0.50% Marketing & Selling Expenses 20,794 3,513 3,513 3,513 3,513 3,513 3,513 3,513 3,513 3,513 3,513 3,513 3,513 42,157 Marketing & Selling Expenses as % of Net 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 Revenue 5.00% 1.50% % % % % % % % % % 1.50% 1.50% 1.50% 21,05 21,05 21,05 21,05 21,05 21,05 21,05 21,05 21,05 21,05 21,05 67,90 G&A Expenses 166,812 4 4 4 4 4 4 4 4 4 4 4 8 299,504 G&A Expenses as % of Net 8.99 8.99 8.99 8.99 28.99 Revenues 12.03% % % % % 8.99% % 10.66% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 222.5 222.54 G&A Expenses Growth rate 0.00% % % % % % % % % % 0.00% 4% % Management salary 97,500 9,344 9,344 9,344 9,344 9,344 9,344 9,344 9,344 9,344 9,344 9,344 9,344 112,125 Number of managers 55 5 5 5 5 5 5 5 5 5 5 5 5 60 69
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 09 09 09 09 09 09 09 09 09 09 09 09 09 Average annual salaries per managers 19,500 1,869 1,869 1,869 1,869 1,869 1,869 1,869 1,869 1,869 1,869 1,869 1,869 22,425 - Average annual salaries 90.42 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 - per managers growth rate 0.00% % % % % % % % % % % 0.00% 0.00% 90.42% 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 Others 69,312 0 0 0 0 0 0 0 0 0 0 0 0 140,525 Others as % of Net 355.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 105.0 205.0 355.00 Revenues % % % % % % % % % % 0% 0% % 46,85 Bonus for management - 4 46,854 23,42 - By Cash - 7 23,427 23,42 - By Shares @ par value - 7 23,427 TOTAL OPERATING 1,227,8 131,8 131,8 131,8 131,8 131,8 131,8 131,8 131,8 131,8 131,8 131,8 178,7 1,629,6 EXPENSES 16 98 98 98 98 98 98 98 98 98 98 98 52 30 Operating expenses as % 378.75 56.32 56.32 56.32 56.32 56.32 56.32 56.32 56.32 56.32 56.32 56.32 76.32 695.80 70
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 09 09 09 09 09 09 09 09 09 09 09 09 09 of net revenue % % % % % % % % % % % % % % OPERATING PROFIT 102,3 102,3 102,3 102,3 102,3 102,3 102,3 102,3 102,3 102,3 102,3 55,45 1,180,8 158,424 10 10 10 10 10 10 10 10 10 10 10 6 68 221.25 43.68 43.68 43.68 43.68 43.68 43.68 43.68 43.68 43.68 43.68 43.68 23.68 Operating margin % % % % % % % % % % % % % 42.02% Financial income - - 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 Financial expenses 163,988 3 3 3 3 3 3 3 3 3 3 3 3 140,561 in which: Interest 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 11,71 expenses 163,988 3 3 3 3 3 3 3 3 3 3 3 3 140,561 Average interest rate (p.a) 0.0% PROFIT BEFORE TAX 90,59 90,59 90,59 90,59 90,59 90,59 90,59 90,59 90,59 90,59 90,59 43,74 1,040,3 (5,564) 7 7 7 7 7 7 7 7 7 7 7 3 07 39% 39% 39% 39% 39% 39% 39% 39% 25,36 25,36 25,36 25,36 25,36 25,36 25,36 25,36 25,36 25,36 25,36 12,24 Current year's income tax 7 7 7 7 7 7 7 7 7 7 7 8 291,286 336.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 Tax rate % % % % % % % % % % % % % 28.00% 71
    • Smart Solution – Business Plan Year Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Year 08 09 09 09 09 09 09 09 09 09 09 09 09 09 NET PROFIT 65,23 65,23 65,23 65,23 65,23 65,23 65,23 65,23 65,23 65,23 65,23 31,49 (5,564) 749,021 0 0 0 0 0 0 0 0 0 0 0 5 72
    • 12. CONCLUSION - SMART SOLUTION project, providing information for traffic control and coordination, is really a contribution to decrease the traffic jams in HCMC. The project does not use the government budget; as a result, the city authority can focus their financial resources to invest in more long-term projects such as: road expansion and building, public transport means upgrading, etc. With sufficient resources, with modernized technology and support from governments, this project will be highly practical and profitable for both 13. APPENDIX - Specification of camera - Specification of LED panel - List of building in 1st & 3rd District and No. s of persons in these building - Map of fiber-optic cable in 1st & 3rd District - CD-ROM about traffic control camera in London 14. SOURCE OF INFORMATION - Officers of People Committee of Ho Chi Minh City - Department of Transportation & Public Works - Department of Police - Department of Planning & Investment - Goldsun Focus Media - Prowtech International VIna - INFO Television - Nexus Technology – USA