bucket man

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BUCKETMAN PROJECT

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AGENDA

Introduction of business and company

Investment strategy

Pricing, Execution and Risk

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I. INTRODUCTIONOFBUCKETMAN

Add: Huynh Van Luy, Thu Dau Mot, Binh Duong

Ownership: Foreign investment from 2004

Total employees: 36 at current (of which 3 expats)

Major Customer: IKEA Total factory: 3000-5000m2

Current capacity: 40% (2011)

CEO: Mr. Nicklas Karsson

Industry: Steel processing

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BUCKETMANBUSINESS

Main Technologies: Tube semi automated bending (X1); Punching (x1), ,

Resistant welding, TIG Welding, Robot welding

Powder Coated

Finished goods: supporting to product lines asstorage, Metal furniture in Carbon steel, combinematerial with textile & wood. Interior furniture

Raw materials: Sheet: Local (Posco)/ Tube: King

Star, Minh Huu Li % of production: Carbon steel tube (50%), sheet

(35%), wire (15%en, 190 Tube

Quality (IKEA): SQA, IWAY (95%)

Distribution: Export (90%) and local

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LEGAL DOCUMENTS

Bucketman has adequate necessary documentssupporting to legal issues such asestablishment/business register, ownership,taxation, real property, fixed assets, employment,

insurance

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BUCKETMANFINANCIALPOSITION

BALANCE SHEET at 30 Sep 2011Current Asset 9.124.230.448 Liabilities 16.077.364.364

Cash 517.334.795 Trade Payables 9.391.582.814

Trade receivables 4.420.103.285 Due to Nick 6.685.781.550

Inventories 2.420.967.758

Other currentassets

1.765.824.610

Long-term Assets 4.094.432.321 Equity -2.858.701.595

Fixed assets 3.924.555.393 Owned Capital 1.643.827.398

Other long termassets

169.876.928 Acc Loss -4.502.528.993

TOTAL 13.218.662.769 13.218.662.769

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Assets Revaluation at 30 Sep 2011

Cash 517 517

Trade receivables 4.420 3.492 (receivable fromcustomer)

Inventories 2.421 2.421

Other currentassets

1.766 VAT input, advances to suppliers, receivables from State, couldnot convert into cash

Fixed assets 3.925 3.527 NBV at 30 Sep 2011

TOTAL 9.957

Unit: Mil VND

Due to we have not obtained the Financial reports of Bucketman at the latest date then theabove analysis is for purpose of general evaluation of financial position of Bucketman.The revaluation is based on the assumption that: Liquidity of these assets is absolute(recoverable ratio = 100%).

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Liabilities Revaluation at 30 Sep 2011Trade Payables 9.391 9.391 Of which Short-term loan and Payables to

suppliers and advance from customer:8.931 (95%)

Due to Nick 6.686 6.686 Mr.Nick made this loan to the company forbuying cars and being used as workingcapital in many years.

TOTAL 16.077

Equity Revaluation at 30 Sep 2011

Owned Capital 1.643 1.643

Acc Loss -4.502 (4.502)

TOTAL (2.858)

Unit: Mil VND

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The recoverable assets value is not enough to

cover the liabilities

Assets Liabilities

9.957 16.077

=Asset Liabilities (afterrevaluation at 30-Sep-

2011)

(6.120)mVND

The accumulated loss is extremely big whichcauses the equity is negative now -2.858mVND

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INCOME STATEMENT at 30 Sep 2011

Sale 38.079.782.718

COGS - 31.034.234.287

Gross Profit 7.045.548.431

Financial Income 548.332.221

Selling and G&A

expense

-6.916.528.125

Other income -39.670.391

Earnings before tax 637.682.136

Earnings after tax 637.682.136

Unit: VND


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Turnover total: ~2mil USD (up to Sep 2011)

Most of valued fixed assets of Bucketman are usedunder capacity. The current production only remainsat 4.000 operations/day, which generate 2mil USDas revenue now. (the designed production is 10.000opertaions/day)

~35-40% of raw materials are purchased locally,which partly causes high COGS.

Selling and G&A expense is too high, not relevantto the total no. of employee (36 persons)

The company just makes profit for 2 years so far(2010: ~500mVND and 2011: ~600mVND)

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SUMMARYOF FINANCIALPOSITION

Bucketman has difficulties with working capital dueto the accumulated loss from 2006-2011 withamount >2bil VND.

Bucketman had to delay payments for somesuppliers in 2011 due to shortage of workingcapital.

Receivables only from major customer is IKEA

Capacity to generate revenue is low meanwhile thefixed cost remains high

The companys operation currently relies much on

the money lent by Mr.Nick.

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SWOT ANALYSIS- BUCKETMAN

STRENGTH- Well-equipped in-house workshop- Owner: long-term business with IKEA,strong understanding of IKEAstandards, many potential customerfrom Europe.

- Know-how: SQA, IWAY (95%)

WEAKNESS- Limited product range: all made fromsteel only.- Poor administration: only the ownercan understand the technical issues andrun business stably

- Under capable machines operation- Financial difficulties due to unstableoperation and poor revenue

OPPORTUNITY- Possibility to expand production rangeas Bucketman plans to take over a

Bamboo factoryFor GIL:

-Improve production chain, optimizemargin, build up share with IKEA-Expand product range: metal, metal+mixed materials-Start up steel processing business.

THREAT- Owners sickness limits hisparticipation into business

- Pending claim at IKEA may lead todiscontinued business- Labor shortage- Downturn demand of steel industry

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SWOT (CONT.)

Maxi-Maxiuse S to maximize O

Mini-miniminimize W to avoid T

-Exploit current know-how, well-equipped infrastructure, availablehuman resources to increase

efficiency in GILs traditionalbusiness.- Start up and develop business insteel and steel processing industrywith recognized standards.

-Provide administration and humanresources supports to takecontrolling stake of BKM in order

to increase production capacity,revenue.-Build up a favor supply position inCarbon Steel industry thanks toeconomic down turn

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II. INVESTMENTSTRATEGY

Rationales

Based on the need and long-term strategy of GIL

Opportunity to take the controlling stake of

Bucketman

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III. PRICINGANDEXECUTION

Need from GIL Need from Bucketman

In house metal workshop toimprove the upstream cost (as Giland Bucketman both have same

major customer is IKEA)

Expand business on productranges: Metal + Mixed material

A reliable and financial strengthto recover from current financialstatus and to develop business.

A management support for thefactorys operation, then the

Mr.Nick can work at his best andwith his current health status, onproduct R&D and expanding

customer networking.

Build up the trust from IKEA toimprove business.

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PROPOSAL

Investor will acquire 51% of Bucketmans stakeafter the signed agreement date.

Investor will put a favor credit of 3bil VND with lowinterest at 8% in 3-4 years as working capitalserved for maintain and improve Bucketmanbusiness.

Investor will support resources i.e human,administrative process, financial management for

restructuring Bucketman.

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IV. BUSINESS PLANFORBUCKETMAN

bucket man

Documents