ECOMIST AUSTRALIA

5 YEAR STRATEGIC PLAN

JANUARY 2013

The objectives contained in this plan will only be realised if it is well implemented. That is, it results in a series of activities that are well ordered sequential and well implement to achieve the results expected in the business. Leadership, direction, communication, planning, measurement of progress and corrective action will be key to a successful implementation.

Peter Vrachas

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MISSION

Our ultimate aim is to improve the businesses of our commercial customers and the homes of our domestic customers, through high quality products and excellent after- sales support.

As Franchisor our aim is to facilitate the needs of our franchisees for sufficient profit, flexibility of lifestyle, respect, independence, belonging, leadership and meaningful work.

VALUES

Interest of franchise owners firstProfitable franchises

Conduct ourselves ethicallyTell franchise owners the truth

Support and lead franchise owners for success

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BACKGROUND

Ecomist Australia commenced its operations in 1993. A franchise system was developed and launched in 1994 with three franchisees being appointed by January 1995. By early 1998 Ecomist had franchisees operating their own businesses in NSW, Victoria, Queensland and the Northern Territory. The success of the franchise system has been recognised with franchisees becoming regional finalists in both the 1997 and 1998 Franchisee of the Year Awards, as judged by the Franchise Association of Australia and New Zealand. Ecomist now operate 30 franchises in all states of Australia and continues to grow steadily. Four of the territories within Sydney are company operated.

The company markets and services a range of products that provide Insect Control, Odour Control, Fragrancing and Hygiene. The business has as its core product an innovative programmable aerosol dispensing system, which in 1997 won an award for Best New Product from the Aerosol Association of Australia and New Zealand. Aerosols used in the sophisticated computerised dispensers include, odour neutralisers, air fresheners and an insect repellent.

The company also markets a complete range of hygiene products such as soap dispensers, nappy disposal units, sanitary bins, hand dryers, paper products and many others. Ecomist will continue to add to the product range by forming strategic alliances with the most reputable suppliers.

After 20 years of operations and primarily focussing on the commercial market the company has achieved notable success. A national distribution network, turnover of $6m (franchisees), $3.6m (franchisor), 6000 commercial customers, 8000 domestic customers, 20,000 serviced dispensers and strong profitability for both franchisees and franchisor characterise its success. In addition the Ecomist business model has proven to be robust and delivers consistent and predictable earnings. This is due to the strategy of selling only consumables and a service that customers use regularly and that provides for consistent repeat business.

The company is also proud of its values and the culture that drives daily life. It is one of providing the right support and leadership for franchisees to achieve their business goals as well as their personal goals.

Over the past few months the company has reflected on the business, evaluated trends in results, its market penetration, its product sales, revenue and cost streams, competition and people. It has assessed financial health and identified the risks to revenue and cost structures. In light of this review and to build on its past success and that of its franchisees, new goals have been set for the next 5 years. The goals, strategies and an action plan are the subject of this Strategic Plan document.

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Current situation and change that is needed

There are a number of factors that compel Ecomist to continue to be dynamic and change to meet the needs of the times. The most important of these follow below.

1. We need stronger & more consistent growth to survive and prosper. The business has been flat the last three years and our ability to gain new customers must improve. Growth has mainly come by concentrating on a few niche markets and seeking out customers that have not used the product or service before.

2. We need greater diversification (Industry, Products & Customers). Our industry risk to Schools and Aged Care is too high. We are heavily reliant on only a few industries such as Schools (30%) & Nursing Homes (20%).

3. Our number of customers should grow faster and our focus aimed toward gaining smaller but a greater number of customers. We have too few customers, only 6000 customers as an organisation. Our persistent and misguided concentration on Schools & Nursing Homes as larger lucrative customers has resulted in overexposure to these sectors.

4. Increase the value of each invoice and cross sell to existing customers to reduce the inherent product risk. We are heavily reliant on Service Income (80%) from Serviced Dispensers. It is important that we reduce this product risk by cross selling other products. We should aim to sell 3 products to each customer.

5. Competition in our core markets has increased significantly making it more difficult to gain new business.

6. Prospects in our niche markets are reducing as we near saturation in each of our traditional markets.

7. Telemarketing appointments in core segments are becoming less effective & more costly increasing the cost of customer acquisition.

8. With the advent of the GFC customer needs, outlook and values have changed – increasingly our customers Look to consolidate suppliers Want products & services that represent good value Interested in what value you can add to their business not what you are selling

9. Our product differentiation is no longer the strength it was. The market has caught up.

10. It is harder to sell a 12 month serviced dispenser in mature franchises in core segments.

We must continue to evolve to ensure survival, profitability and value.

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OBJECTIVES THIS YEAR (Sum of Franchise Owner targets)

Sell 185,000 Cans Sell 5000 Dispensers Sell $1100k – Other Products 1000 new customers Zee Turnover up 10% 2 more franchises Cancellation rate - 8% or less

STRATEGIC OBJECTIVES in 5 Years (June 2017)

Continue growth trends (6%-10% pa) Franchisee turnover - $10m 25900 serviced dispensers in the field 250000 can sales $ 2.5 million Other Product sales (EA sales) - $3.7m (Zee Sales) EA turnover $6m

2,000 Schools (1500 now) 500 Nursing Homes (350) 1,000 Hospitality (600) 1,000 CCC (600) 4,000 (Food prep, Restaurants, Cafes, Retail) - (1500 now) 3,500 Other Commercial (1500) 13,000 active Households (8000) - Insect Killer Reduce percentage of schools from 29% - less than 20%

Highly profitable franchises – Average of $80k per franchise Satisfied Customers (98% satisfaction rating) Customers buying 3 products (dispensers, spray soap plus 1 more) Strong mutually beneficial relationships between ZOR & ZEES & less than 5% in

dispute

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ECOMIST AUSTRALIA 5 YEAR PLAN – KPI’S – GAP ANALYSIS

KPIJune 2012

June 2013

June 2014

June 2015

June 2016

June 2017

NOW GAP THEN

# SERVICED DISPENSERS 19000 20717 22017 23317 24617 25917

# DISPENSERS SOLD - SERVICED 3559 3000 3100 3200 3300 3400

CANCELLATIONS 1842 1700 1800 1900 2000 2100

# DISPENSERS SOLD - NON SERVICED 1980 2000 2000 2000 2000 2000

# ACTIVE NON SERVICED DISPENSERS 8000 9000 10000 11000 12000 13000

# CANS SOLD BY EA 000's 175 185 197 213 231 250

OTHER PRODUCT SALES - $000s 910 1100 1300 1600 2000 2500

FRANCHISEE TURNOVER $000s 6000 6600 7300 8000 9000 10000

EA TURNOVER $000s 3500 4000 4400 4900 5400 6000

# COMMERCIAL CUSTOMERS 6000 7000 8000 9300 10600 12000

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KEY ASSUMPTIONS

In order to achieve the conservative objectives in the 5 Year Plan there are a number of factors that must hold true over the next five years. These key assumptions follow below.

1. Growth of serviced dispensers is an average of 1300 a year(ie New Sales less cancellations)

2. Sales of 2000 non serviced dispensers and consumption of 3 cans per annum by each active non serviced dispenser.

3. Each serviced dispenser consumes 8 cans per year growing to 8.5 cans by 2017.

4. Sale of Other Products quickly spreads more widely to more franchisees in order to grow by 20% per annum. By 2017 Other Products form 37% of the turnover of each franchise and 42% of EA’s turnover.

5. Have been able to diversify more into Other Products, Other Industries and to more Customers. Our ability to gain new customers has matured and become a strength.

6. As a result of the growth of new customers the number of serviced dispensers per customer reduces from 3 – 2 reducing customer risk.

7. Evolved to using as least half person in sales per franchise from the current level of a quarter. BY 2017 we should be close to 1 person selling per franchise. We have become a sales led organisation.

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Following below is an assessment of the likelihood of the Key Assumptions holding true.

Assumption 1 & 2. VERY LIKELY (Grow by 1300 Serviced Dispensers)

What is built into the plan is the level of sales we achieve as a business now. It does not assume any substantial increase in capacity to sell more dispensers. It assumes a steady state. It is far more likely that we should outperform this target as we reach more sectors in the market and increase sales capacity.

Assumption 3. VERY LIKELY (Consume 8 cans a year)

This is the rate of consumption that occurs now. The plan assumes a steady state of 8 cans and a small increase in about the 5th year. Can consumption rate is a critical factor in our business and has been stagnant the past three years. There are a number of factors contributing to this. It is however realistic to assume it will not decline any further and will hold at current levels. Therefore the growth of serviced dispensers will lead to a commensurate increase in usage of cans and a small growth in the consumption rate.

Assumption 4. MOST LIKELY (Grow Other Products by 20% per annum)

This is the biggest challenge in the Plan. Growing Other Products by 20% per annum is a stretch goal. However, it is a pivotal strategy to diversify our product sales and improving our capacity to do so will be a major focus of Franchisees and Franchisor. The Key is to become a broad based mainstream supplier with an advantage is serviced Insect Control and serviced Odour Control.

Assumption 5 & 6. MOST LIKELY (Diversification to more industries, more customers)

This is also a challenge as our sales capacity is strong only in traditional core markets. It is a weakness in the general market. We will need to learn how to win business from competitors and gain market share. We cannot rely on schools and nursing homes for our future. Education and training programs as well as our people will need to change for this capability to become a core competence and grow our customer base.

Assumption 7 MOST LIKELY (more sales activity)

Franchise owners are currently more service and admin focussed than sales and marketing focused. A cultural change is needed to evolve to a sales and marketing priority and focus. It is however very achievable and critical to success and a bright future. The equivalent of 1/2 person per franchise must be allocated to the sales function consistently and effectively.

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What change is needed?

People, Systems, Processes, Marketing, Operations, should all gradually change and support what we want to become. That is

A LEADING PROVIDER OF A COMPLETE RANGE OF QUALITY ENVIRONMENTAL PRODUCTS & SERVICES TO THE COMMERCIAL MARKET

Our competitive advantage is Serviced Insect Control and Serviced Odour Control.

Any change will be gradual, planned, controlled & strategic. Change should be effective and improve the business of every franchisee and that of the franchisor.

EA commits to an Action Program to

Support Zees to meet sales targets Mentor Zees for performance Lead Zees to meet growth plans & profitability Improve monitoring and reporting systems Offer whatever support Zees need to grow Continue to improve HO infrastructure

The GAP between now & 5 years is easily filled. At our conference in August 2012 thiswas the unanimous view of all the groups in the workshops.

The Action Program following below comprises a large number of projects to be doneover the next two years. Each project is a major initiative and will have its own plan with an action program and well defined desired outcomes. The Program in its entirety is aimed at taking us from where we are to where we want to be in 5 years time.

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To fill the GAP and achieve our 5 year Objective EA commits to an Action Plan for phase 1. Following below is the ACTION PLAN outline for the next 2 years.

ACTION PLAN – Phase 1 Projects

DESCRIPTION PERSON CATEGORY By When

Cold Calling - Training and ongoing education David Sales OngoingCRM for Prospecting, Telemarketing and Cross Selling David Sales Mar-13Free up time for Zees to focus on sales – half a person

selling per franchise growing to 1 Peter Sales June-14

Lift company owned areas performance Val Sales Dec-13

Sales process documentation Including GAP Questions David Sales Jun-13

Improving cross selling capacity in the field Peter Sales Ongoing

Diversify products, industries and number of customers Peter Sales Ongoing

Telesales (scripts, offers, people) Peter Sales Jun-13Change from a service to a sales culture Peter Sales OngoingMonitoring and encouraging can usage Peter Sales Ongoing

Educating network on cross selling Peter Sales Ongoing

Repositioning ourselves as a complete supplier of environmental products Peter Marketing Jun-14

Stronger lead generation from the Internet Val Marketing Ongoing

Stronger brand awareness in selected markets Val Marketing Jun-14

Simplify, product range and standardise Peter Marketing Jun-14Telemarketing improvement program Val Marketing Dec-13

Zee visitation program Peter Teamwork Jun-13

Regular Zee discussion on Skype Peter Teamwork Jun-13

Establish a forum for Zees on the internet Val Teamwork Dec-12Continue improvement of annual conference Peter Teamwork Ongoing

Ecomist Franchise System checklist - manual update Jon Operations Dec-14

Preparation and documentation of procedures Jon Operations Dec-13

WHS (Workplace Health & Safety Compliance) Jon Operations Feb-13

Disaster Recovery Plan and Procedures Jon Operations May-13

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What franchisees must do on their part?

With some exceptions franchisees have been doing the same thing for many years. We should evolve to protect ourselves as we risk not surviving if we don’t. Franchisees will need to change behaviours, actions and attitudes that address the key aspects of the business following below.

Master what matters – achievement of KPI’s Focus on driving Sales and meet sales targets Ensure at least half a person is allocated to sales per franchise consistently Within 5 years to become the equivalent of 1 person selling per franchise

Learn to provide a full service offering, bid for business against competitors and win market share of existing business

Target prospects that already spend money with competitors

Embrace the direction of being a broad based supplier Get better at Local Marketing

Target sectors other than Schools and Nursing homes Develop greater core competence at selling a broad range of products Grow their knowledge of all of our Other Products

Learn cold calling and become good at it Target new smaller customers and grow the number of customers Embrace the greater use of technology tools for efficiency

Bundle products and offer individually tailored packages Learn to sell cans without dispensers when appropriate

Develop passion for the brand and build support structures (family, friends, connections, franchisor, memberships, conferences, clubs, forums)

Stay positive and drive growth

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IMPLICATIONS FOR FRANCHISE OWNERS

Must continue to grow to survive and add value to your business

Growth means more profit, flexibility in lifestyle, higher value for business

Grow either with Core Products & in Core Markets or by the complete range and in new markets or a combination of both

Cannot rest on laurels or be complacent

All of us should embrace evolution of the business to ensure its survival and its prosperity

Stagnation is not fair on your business, other zees business or the Zor’s business. It means a decline as costs will increase and revenue will not.

CHALLENGES AHEAD

The major challenges for the next couple of years for both ZOR & ZEE is to implement the Action Program affectively in order to

1. Change from a service to a sale culture2. Become a broad based mainstream supplier and selling at least 3 products to

each customer.3. Improve prospecting, sales process & tools and marketing support from the

Franchisor4. Franchisees embracing a broader product range, different markets, taking on

the competition and learning to cold call. 5. Franchisees growing their customer base to reduce reliance on large customers

such as schools and nursing homes.

Can we change the way we see ourselves and what we do?An effective face to face selling organisation with strong national distribution

A LEADING PROVIDER OF A COMPLETE RANGE OF QUALITY ENVIRONMENTALPRODUCTS & SERVICES TO THE COMMERCIAL MARKETOur competitive advantage is Serviced Insect Control and Serviced Odour Control.

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Ecomist Environmental Package – Our offering

Serviced Odour Control & Insect ControlSpray Soap Dispensers & Spray Soap

Sanitary Bins, Hand Driers, UDCsNappy Wrapper – Where appropriate

Paper Products (Hand towels, Tissues,TP)Hand Sanitisers, Alpha Mouss, Cleaning Products

Wipes, Nappies, Gloves, Sharps & Medical Waste binsAnything else the customer needs

Ecomist – Our Positioning

We add value to your business by Enhancing your Environment

Franchisees will need to position Ecomist as a serious broad based supplier to customers. They should perceive that Ecomist can meet all their environmental and hygiene needs. The initial approach will need to evolve to one that is seeking to quote for their business. It could start with a hygiene needs inspection or a dispenser installation but our ultimate goal is to meet all their needs that fall within what we do.

We should be seen as A reliable and responsive supplier Providing a comprehensive range of high quality products Having value for money pricing Improving the business of our customers An ethical and community oriented business Environmentally friendly

Our Unique Selling Proposition – Why do business with us

No contracts

Warranty/guaranteeLocally Owned and Operated

Premium QualityFully Serviced and Maintained

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KPI’S – Measures of Success – ZEES

Following below is the set of performance measures that reflect success in our business.

GROWTH KPI’s

NUMBER OF SALES CALLSNEW DISPENSER SALES

SERVICE FREQUENCY – number of services you sellNUMBER OF CUSTOMERS

CAN SALESOTHER PRODUCT SALES

CANCELLATIONSPRODUCT MIX (Diversification)

FINANCIAL KPIs

TOTAL TURNOVERGROSS MARGIN

SERVICE INCOMEOPERATING COSTS

NET PROFIT

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