“Company A” Limited – Business Plan Commentary

Business Plan - EXAMPLE

Strictly Private & Confidential

-- for internal use only --

Confidentiality
This document is only to be issued following the receipt of the Non Disclosure
Agreement (NDA). This document may not be disclosed to any third party without
the prior written authorisation by “Company A” Limited. This document may only
be disclosed to your officers and professional advisers on condition that they too
agree to be bound by the terms of the NDA.

Basis of Information Memorandum

This document has been prepared to provide a guide to the Business implementing
its growth strategies and the detail has been checked and approved by the
Directors of the Business. However the Directors of the Business are not making
any Representation or Warranty as to the fairness accuracy or completeness of the
contents of this document.

Potential acquirers, investors or lenders must conduct their own reviews and
satisfy themselves in terms of the Business and its prospects for the future. The
Directors accept no liability for any loss or damage whatsoever which may occur as
a result of reliance on the information in this document.

Questions and requests for further information regarding the Business should be
made in strictest confidence to:

Joe Bloggs
Managing Director
“Company A” Limited

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 “Company A” Limited – Business Plan Commentary

“Company A” Limited
Business Plan

Section Description Page

A Executive Summary 4
B Background 5
C The Organisational Business Model 6
D Intellectual Property and trademanks 7
E The Target Market – Hosting Services 7
F Sales and Marketing 11
G Competition 14
H The Directors & Management Team 16
I Financial Information 17
Appendix A – 5 Year Financial Forecast 18
Appendix B – Vertical Sector Growth Drivers 27

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 “Company A” Limited – Business Plan Commentary

A. EXECUTIVE SUMMARY
“Company A” Limited is a middle tier hosting company with a focus on high levels of technical
and customer support based in Marlow, Buckinghamshire. It is managed by its two founding
directors and has an annual turnover of just under £1m, a customer base of around 600
customers and a team of 10 employees. It is growing its revenue slightly above the industry
average and exceeds industry best practice KPIs. The company is a Microsoft Certified Partner.

The Hosting market in the UK is set to grow by 11.5% CAGR over the next 5 years from a base
of £746m in 2008. This growth being driven to by factors that fit well with the economic climate
– cost reduction, increased efficiency, scalability and flexibility. In addition, the Hosting market is
populated with a wide range of similar product offerings often only differentiated by relatively
small technical variables. Being competitive in this market relies on adding value by additional or
peripheral services such as consultancy and high levels of technical service support

The opportunity for “Company A” lies in providing value-added services that deliver cost
reduction, increased efficiency, scalability and flexibility.

“Company A” has a product range to compete with the best providers with ready-to-go server
systems through to highly complex solutions. It is the leading supplier of Filemaker database
hosting in the UK and is a Microsoft Certified Partner. In addition “Company A” already
positions itself in the market as a providing significant added value through its service levels.
It provides a superior level of hand-holding and technical support that differentiates itself from
other hosting providers.

“Company A” is well positioned to convert this opportunity into significant growth with its
existing product range and high service levels but has identified a need to increase its market
visibility. It has therefore created a plan to develop its sales and marketing structure which will
capitalise on this opportunity and double its revenue over the next three years. Core to this
plan is investment in three target growth areas with low cost of sale that provide low risk and
potential high return. This will increase its currently low visibility with its customers and in the
market place, develop new sales channels and increase large customer sales.

With 75% of revenue currently generated through solid and predictable monthly recurring
business, and cash providing 4x cover of its monthly overheads the company is in a stable
financial position. It is able to support its growth plans with its current borrowing and does not
anticipate any need for further loan or equity finance.

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 “Company A” Limited – Business Plan Commentary

B) BACKGROUND
“Company A” Limited (“The Company”) is a middle tier hosting company based in
XXX, UK with an annual turnover of £xxm in the full year to July 2008. It was established X
years ago to provide web-development and hosting services and is now 100% focused on
providing hosted services - internet hosting, back-up and email services – from its secure data
centre in the UK.

The company is the leading supplier of XXX hosting solutions and is a

Microsoft Gold Certified Partner. It offers simple Ready-To-Go-Systems and built to
order Complex Hosted Systems as well as the ability to host customer hardware in
its secure data centre. It also offers Domain Management for its clients.

The Company has a client base of around 600 small, medium and large businesses
operating both internationally and in the UK that include Abacus Media, Prestige Property,
WorldZone /Daily Telegraph, Kodak Dental Systems and Sifex.

Clients are served by XX staff who provide a 24/7 managed service environment and
a range of expertise that includes Linux, MySQL Server, Cisco & Jupiter Networks, HP
and Dell storage, IIS and Apache Servers, SAP, PHP, Ajax and .NET.

The Company is run by Managing Director Joe Bloggs who has over 20 years of IT industry
experience, and Josephine Bloggs who has guided the growth of the company as Financial and
Administrative Director.

To date the company has been funded by a mixture of loan and equity finance secured by the
current directors of the company.

The company is in a stable financial position with good recurring business but has yet to reach
its full market potential. With the experience of the current directors and operations team and
the recruitment of experiences sales and marketing personnel it has developed a growth plan
that will see its revenue double over the next three years to around £XXm.

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 “Company A” Limited – Business Plan Commentary

C) THE ORGANISATION BUSINESS MODEL

“Company A” offers a complete range of managed hosting services - from domain names,
through ready-to-go server systems, to highly complex solutions specifically designed and
engineered to meet the most demanding business needs. Core services include:

- Domain Management - acquisition, management and hosting of internet domains.

- Ready-To-Go-Systems - a range of fixed price Virtual Private Server systems that
can be live within one working day of a purchase, as well as pre-priced dedicated
server systems.
- Complex Hosted Systems - a build to order service that utilises all of our technical
experience to cost effectively create more complex hosting environments for
customers with specific technical or commercial needs. This can include system
deployments across multiple data centres.
- FileMaker Services - a complete portfolio of hosting solutions for users of the
FileMaker database technology.
- Co-Location - making our data centre facilities available to customers who wish to
own their hardware but have it deployed in a securely 24x7 managed environment.

“Company A” positions itself in the market as a providing significant added value through its
service levels. It does not aim to compete on price with its larger competitors but instead
provides a superior level of hand-holding and technical support that differentiates itself from
other hosting providers. It is from this added vale that it gains a sustainable competitive
advantage over other mid-size and large competitors.

The Operational delivery of “Company A” services is driven by an established team of 5

technical staff including an experienced operations manager. This team supplies a 24x7
managed service environment. Technical support is provided by 'real people' on a 24 hour
basis sharing a common technical management platform. Operations are managed within
“Company A”’s secure data centre in the UK.

“Company A”’s customer list numbers over 600 made up of a mix of small, medium and large
businesses operating internationally as well as within the UK. Existing hosting contracts are
split between 3 large very profitable customers that will account for around 25% of sales in
2008/9 and medium and small customers that will account for the remaining 75% of sales.

85% of Sales revenue is generated predominantly from core hosting services and fees
collected by monthly direct debits. Other services accounting for the remaining 15% of sales
(including domain names, one of set up charges and one-off hardware and software re-sales)
are invoiced upon delivery on standard 30-day terms.

75% of sales are currently generated through solid and predictable recurring repeat business.
The remaining 25% of sales is generated through new business sales. The “Company A” web-
site, which has recently been re-designed to focus on core business offerings and ready-to-go
solutions, acts as a sales channel and generates around 15% of new business annually. New
business sales from existing customer referrals account for the remaining 10% of sales. Where
new proposals for larger customers are required the Managing Director is responsible for the
sales process and for developing client proposals.

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 “Company A” Limited – Business Plan Commentary

D) INTELLECTUAL PROPERTY AND TRADEMARKS

At present “Company A” does not have any protectable intellectual property, trademarks or
exclusive agreements in place.

E) THE TARGET MARKET – Hosting Services

Current Global Market

The global market for hosting services1 was $21,746.0 million in 2007.

Of the Global market the Banking, Financial Services & Insurance (BFSI) sector was the
biggest spender on hosting services with $4,758.9 million or 21.9 percent of the market in
2007. Manufacturing and services sectors spent $3,960.4 million and $2,261.2 million,
accounting for 18.2 percent and 10.4 percent of the total market, respectively.

Hosting Services Market Size by Vertical (2007)

Vertical Market Size ($

million)
BFSI 4,758.9
Manufacturing 3,960.4
Services 2,261.2
Government 1,973.7
Communications 1,973.7
Retail 1,359.7
Education 1,109.3
Healthcare 927.8
Wholesale 745.6
Transport 657.9
Utilities 636.0
Media 482.5
Construction 239.0
Oil & Gas 219.3
Mining 177.6
Entertainment 153.5
Agriculture 109.7
Total 21,746.0

Source: TechNavio Analysis

Current EMEA & UK Market

At $6,750.2 million, EMEA was the second largest market in 2007 and accounted 31 percent of
the global market. In 2007, UK was the largest hosting services market in EMEA accounting
for 19.7 percent ($1,333.1m or £746m2).

1
Hosting services are offered in various models such as shared hosting, dedicated hosting, managed
hosting
2
Exchange Rate used : £1 = $1.78607

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 “Company A” Limited – Business Plan Commentary

The UK Hosting and Internet Services Market

The UK hosting market for core packages such as dedicated, co-location and virtual private
hosting is well populated with large companies and is a price competitive market. From
competitor research it seems clear that here is no easy or accepted categorisation of
companies within the internet services market. Companies describe the nature of their
business in a variety of ways and, whilst this categorisation of their services may differ, there
is often overlap in types of services offered. Samples of the descriptions are as follows:

- Website Hosting
- Website Development Software.
- Internet Solutions
- Internet Services
- Internet Services Provider
- Web Design And Hosting
- Internet and Computer Consultants and Internet Services.
- Resellers of Computer Equipment and Internet Service.
- Web Site Development Management and Hosting.
- Computer Related Activities

Within these descriptions the overlap of services can include:

- Internet Access
- Personal Web-site Hosting
- Business Web-site Hosting
- Application Service Provision
- Email
- Data services
- Domain Name Registration
- Consultancy
- Hosting Management Services
- Hardware sales
- Web-site design

Some basic distinctions can be drawn between companies by a review of their web-sites.
Whilst hosting companies use similar technology to deliver hosting services the market focus
can vary. At a product level one such distinction is between consumer and business services.
Within the business services sector a further one is between non-managed and managed
services.

Despite these distinctions it is often the case that mid-size and large companies compete
across these categories. Mid-size and small companies therefore may often find themselves
competing with larger companies able to secure significant economies of scale. Being
competitive may therefore relies on adding value by additional or peripheral services such as
consultancy and high levels of technical service support.

Over the past few years the hosting and data centre market has seen consolidation and it is
anticipated that this will continue.

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 “Company A” Limited – Business Plan Commentary

Market Growth
According to TechNavio, the global market for hosting services3 is forecast to grow from
$21,746.0 million in 2007 to $31,294.0 million in 2010, growing at a CAGR of 12.9 percent
over the forecast period.

The EMEA market is estimated to reach $9,357.1 million in 2010, growing at a CAGR of 11.5
percent.4 The UK can realistically expect to grow in line with this and grow to around $1,850m
by 2010

Drivers of Market growth

The Technavio report identifies the key drivers of growth in the hosting market are:
- green IT initiatives
- reducing energy cost
- increasing willingness to outsource management of both public facing websites and
internal infrastructure

Further drivers include:

- interest in flexible service options
- data centre power and cooling requirements
- growth of eCommerce

For the largest five vertical markets there are a number of common drivers – cost reduction,
efficiency, scalability and flexibility.

Cost reduction is being sought by migrating customers to low-cost channels like e-services or
CRM, offering pay-as-you-go functionality, reducing up front expenditure/investment and lower
training costs.

The benefits of increasing efficiency through hosting are seen as reducing the wastage of
time, expense and business disruption, improved resilience, availability of expert staff, fast
implementation, and lower maintenance.

Scalability and flexibility benefits are seen as stemming from the choice of different
technologies and architectures, instant upgrades, accessibility anywhere any time, reduced
incremental costs of new solutions, and ease of switching.

Market Opportunity - Potential Growth Opportunities for Rapid Host

Operationally focused solutions such as CRM, ERP, Exchange and Collaboration provided as
managed applications give opportunities for cost-reduction. scalability at flexibility. In
providing turn-key solutions, a resilient hosting environment and the availability of expert staff
through end user service support efficiency gains can also be made.

Technically focused solutions such as Virtual Private Hosting also provide clear opportunities
for cost reduction, Scalability and Flexibility and have a very good future market potential.

A detailed breakdown of the vertical sector drivers and potential matching of hosted services
to meet that demand is at Appendix B.

3
Hosting services are offered in various models such as shared hosting, dedicated hosting, managed
hosting
4
Technavio Insights – Hosting Services Technology Report – July 2008

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 “Company A” Limited – Business Plan Commentary

Impact of global economic downturn on Market Opportunity

“Company A” has already seen fewer enquiries and orders for new business over the past 3
months compared with the same period last year and fully recognises the impact that
economic downturn will have on the hosting market through increased energy costs and
customer focus on cost-reduction. In anticipation of this the company is focused on keeping
operating costs to a sustainable level.

“Company A” has assumed a CAGR growth rate of 10% in the UK hosting market over the next
5 years which is below that suggested by the latest industry research (20085) of 11.5%. It has
also written in a cumulative attrition rate into its revenue estimates through to early 2010
equivalent to about 1.25% (one and one quarter percent) of forecasted revenue. In addition it
has accounted for bad debts at 0.5% (one half of one percent) of total forecasted sales
revenue.

Market opportunities highlighted above coincide substantially with the potential impact on the
market of a downturn – price sensitivity and the seeking for alternative and flexible solutions
that allow customers to scale up and down as required. The downturn therefore go to
emphasise these opportunities and is likely to increase competitiveness in these areas. With
this in mind the provision of additional value to existing and potential customers through low-
cost/no-cost services such as cost management packages, disaster recovery and off-site back
up will help to improve competitive positioning.

5
Technavio Insights – Hosting Services Technology Report – July 2008

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 “Company A” Limited – Business Plan Commentary

F) SALES AND MARKETING

Sales and Marketing Strategy - 2007/8
To date the company sales and marketing strategy has been developed and actioned by the
Managing Director. The business relies substantially on repeat business and a limited amount
of marketing activity has been undertaken. On-line visibility is provided by the corporate web-
site www.”Company A”.co.uk but little on-line advertising has been put in place. Some hard
mailings in 2007 were undertaken but business has in the past been generated largely through
a few partners and customer referrals.

With its limited sales capacity the company has seen limited growth in 2007/8 as a result of
the focus by the Managing Director on acquisition negotiations. As such the company has a
limited new business pipeline. However, “Company A” has significant potential to increase
revenue by actively marketing its services.

Sales and Marketing Strategy – 2008-2013

A new sales and marketing strategy has been put in place to focus on developing three target
growth areas with low cost of sale that provide low risk and potential high return:

1) Upselling and Price Rises for existing customers

2) Direct Sales – Large customers
3) Hardware and ISV sales channels

The company has taken steps to overcome the previous limitations of its structure by
recruiting extra sales and marketing resource. “Company A” has engaged a marketing
consultant who will provide weekly input into the development and implementation of
“Company A”’s new marketing strategy. In addition, “Company A” is in the process of
appointing an experienced Interim Sales Manager to develop Direct Sales and Hardware and
ISV channels and build a clear sales pipeline for the business. The sales Manager will be
supported by the Managing Director. This position will be recruited as a full-time permanent
position within the next XX months.

1) Upselling and Price Rises for existing customers

“Company A” customers do not use all the services available to them and there is a
significant opportunity to add an estimated XX% revenue over a full year starting in
XX by upselling existing services. This is a low cost of sale process that requires
minimal investment. “Company A”’s customer base has not seen any price rises over
the past X years. Whilst it is anticipated that some customers will leave it is estimated
that the net effect of price rises will be 10% growth in revenue in 2008/9.

2) Direct Sales – Large customers

A large customer is classified as one that spends in the region of £XXk per month on
hosting and internet services. “Company A”’s largest customers are its most profitable.
The high service levels offered by “Company A” position the company well in this
market. The Sales Cycle (from "prospect" to "invoice") for large customers is
estimated at X months based on previous sales in this area. One of “Company A”’s
customers is already in the process of upgrading its level of service that will increase it
from a medium to a large customer. This will bring the number of large customers to
3.

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 “Company A” Limited – Business Plan Commentary

3) Hardware and ISV sales channels

Hardware resellers and ISVs require hosting solutions. Securing partners in this area
will provide “Company A” with a low cost and low risk route to market. It is also
seeking other partners offering managed applications in the B2B space.

The Buying Process

This relies on an assessment by the buyer at some level of the technical variables within that
product offering. The technical knowledge of the buyer (or their agent) is a factor in the
buying process. There is clearly a wide variety of buyer technical knowledge in the business
market ranging from the technically illiterate where the needs of the buyer are not clearly
understood by the buyer to the IT expert who works from a clear specification requirement.

With many smaller and medium sized businesses that require an internet presence unable to
afford internal IT expertise the ability to communicate a relevant offering in lay terms with
hand-holding through the process is recognised by “Company A” as important. “Company A”
aims to address this with its high levels of technical support.

To address the wide range of product offerings and companies in the sector a number of
“Independent” hosting rankings are maintained. These try to cut through the complexity and
frequently changing market offerings to provide a hierarchy of providers in various product
areas as well as a simple ranking of top providers. This goes some way to giving the
inexperienced buyer a reference point in this fast changing market.

Marketing - Immediate Action Plan

The focus of the immediate action plan is to increase market awareness of “Company A”
services to existing and potential customers and facilitate sales activity in the three target
growth areas.

- Business As Usual - continue with inbound sales handling (Current MD)

- Adwords - directed to new web-site
- Customer Audit:
o facilitating a price rise decision
o looking for up-sell opportunities
o helping determine vertical focus areas
- Partners: Hardware and Software Resellers - potential for new sales channel & helping
with vertical/technical focus areas
- Customer Panel - improved customer communication channel
- Hyper-V - option for lower cost VPS server offer
- Direct Selling - investigate/plan for specific vertical sectors

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 “Company A” Limited – Business Plan Commentary

Sales – Targets by growth area

Based on the above marketing strategy and taking into account UK market growth estimates
the following sales targets have been identified:

Targeted New Business Sales 2008/9 2009/10 2010/11

Existing Customers & Organic Growth

Upsell and Price Increases

Large Customers

Hardware and Software Resales

Total

Sales Action Plan

Existing Customer Base.
“Company A” will be using its knowledge of its customers and the services that “Company A”
provides to identify gaps between the two. It is planned that “Company A” will identify key
services that are straightforward to implement and during the course of year and approach its
customers through a mixture of email, post and telephone selling.

Upselling and Price Increases.

“Company A” will look carefully at areas of the product portfolio that can be safely increased in
price, and implement these prices over the year ahead. It is anticipated that with such
increases low or no cost added value will be provided e.g. free remote backup service. In
addition a section of “Company A”’s customers are likely to be suitable targets for up-selling
e.g. additional hosting space, or migration from Shared Hosting to Virtual Private Server
Hosting. These customers will be identified and approached through email and phone sales
activity.

New Large Customer Sales

“Company A” has provided a level of service that has attracted two high value customers. It
already has one further customer whose revenue stream is forecast to become very significant
over the year ahead and another organisation which represents another high value integration
opportunity if the organisation’s plans proceed as expected. These leads have come entirely
through recommendation or customer’s own growth but “Company A” realises that this is not
a reliable source of new high value sales. Therefore “Company A” has identified a major IT
hardware reseller with its own sizeable sales team with a very significant customer base. It is
anticipated that through this relationship new mutually beneficial opportunities will emerge. In
addition

Reseller and ISV’s

“Company A” has found it difficult in the past to establish a suitable, efficient, successful sales
team. However we can deliver excellent, flexible solutions that can derive revenue for
ourselves and others. Therefore, initially using an interim sales resource, “Company A” will
seek out a number of suitable organisations whose customer base would be suitable users of
our hosted services. “Company A” already have a small number of such relationships and will
use this knowledge to grow new ones. After initial research identifying companies, ideally in
the Thames Valley, “Company A” will approach these by telephone with the objective of
deriving new recurring business for both the partners and “Company A”.

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G) COMPETITION
The Hosting market is populated with a wide range of similar product offerings that are often
only differentiated by relatively small technical variables. In this sense “Company A” competes
with a broad range of hosting providers for its core services.

“Company A” adds most value to its customers through technical expertise and support. It is this
– rather than price - on which it bases its service differentiation.

a) Financial Data
An overview of the financial Data for UK Internet Service Providers6 shows “Company A”
growing its turnover in line with the industry average in 2005 and 2006 and slightly above the
industry average in 2007. It is also performing well in line with best practice estimates7:

Gross Profit Operating PBIT % PBT %

% Profit %
Best Practice
“Company A”
Variance

“Company A” shows a better than industry average gross and operating profit. However,
despite the fact that the industry averages exclude unusually high or low figures (i.e. plus or
minus two standard deviations from the mean) they include multinational companies with a
diverse product set (e.g. BT). Therefore care must be taken in viewing this as anything other
than a general indicator. A review of some of its immediate competitors listed in this report
shows the following:

Turnover 2007 Gross Profit % Operating Profit

(£m) %
“Company A”
UK2.net
Easyspace
Fasthosts
(parent is 1&1)
Rackspace

Results seem to indicate the ability of hosting solution providers to maintain margins within
the market whilst scaling up.

b) Web-based data
On a simple Google search for the “Company A” product range it is clear that large, medium
and small companies (including resellers) provide competition fore “Company A”. It is also
clear that from a simple price comparison “Company A” pricing is comparatively high for
similar generic offerings based on its higher service levels.

Perhaps because of the similar technological structure of hosting companies, and the struggle
to differentiate, the definition of a product may vary substantially from one provider to
another. For example, whilst a “Dedicated Server” product can be compared at a top level the
number of variables in server specification and service that delivers this type of product allows
companies to differentiate their offer.

6
Data Source: UK Internet Service Providers August 2008 - XXX
7
Best Practice - Calculated using the data for companies that are both financially strong and have been
consistently profitable over previous years. Irregardless of size some companies are quite simply better
managed or better placed to take advantage of industry changes than others so these averages show the
potential for firms within this sector.

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Barriers to Entry for Competition

Barriers to entry for the Hosting market are relatively low on the sales side. In this area there
are an increasing number of hosting reseller packages available to anyone wanting to offer
hosting packages.

However, at the supply end of the hosting market where “Company A” has established itself,
higher technical expertise and investment in a secure hosting infrastructure and customer
acquisition would be necessary. With these taken into account a total investment in the order
of £Xm-£Xm would meet the requirements of a mid-sized hosting company like “Company A”.
Speed to market for a new company in this area would be in the region of XX-XX months. For
a company wishing to go further by establishing its own data centre the cost of market entry
would be further increased and the timescale limited by constraint of power availability.

Customer Retention
Whilst there is a relatively low cost of switching for customers in financial terms the “hassle”
factor of switching from one provider to another can be significant in preventing a change of
supplier. Interruption of email, exchange and sales related services resulting in business
interruption at some level can provide a significant deterrent.

Secure routes to market

Routes to market through sales channels or partners that offer services requiring independent
hosting, is an established route to market for hosting companies. Exclusive deals in this area
are possible but it is often through “preferred supplier” status that channels are secured.

Competitive Threat
Whilst there is a constant competitive threat in a market that is fluid and changing the forecast
growth in the market would seem to indicate that “Company A” is well positioned to defend its
position and capitalise on this growth potential. It seems more likely that any “threat” to the
business will come from a competitor within the hosting services market which wishes to gain
“Company A”’s high value customers or alternatively a company with an emerging application,
product or technology who wishes to secure a launch platform and route to market.

Substitutes & Buyer Power

The most obvious substitute in this market is internal hosting. However, as we have seen from
the growth forecast, companies are moving away from this to find more cost-effective and
flexible solutions. Buyer power in the light of the economic downturn will increase as
companies examine their cost base and look more closely at hosting alternatives.

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H) THE DIRECTORS AND MANAGEMENT TEAM

The management team combines founder vision with market expertise.

Joe Bloggs – Managing Director

Jo has lead “Company A” since its formation. Bringing with him over XX years of experience in
the IT industry, Jo has guided “Company A” from a web development business, through web
development and hosting to now purely a hosted services organisation. Jo has been a strong
technical leader in the “Company A” but with the introduction of an experienced technical team
over the last 3 years this baton has been passed on.

Josephine Bloggs – Commercial Director

Sue has worked alongside Jo throughout “Company A”’s existence to create a disciplined
approach to its accounting and administration. As with all “Company A”’s staff Sue has learnt
the technicalities of the core services that “Company A” provides, from a customer’s
perspective. This has allowed “Company A” to ensure its approachability, without forgetting
the necessity for sound cash management. Sue holds a BA in Natural Sciences from
Cambridge University.

Having established and grown the business from scratch through their technical and
operational experience, and built a team to deliver a high level of customer service, the
Directors are committed to capitalize on the market opportunities facing “Company A” and
grow the business to its next stage.

An additional key member of the team is Operations Manager XXX XXX. X comes from a
development background and has X years of operational delivery within a hosting
environment. He has a broad range of experience in the technologies employed by “Company
A” and a good understanding of the company’s customer base and their needs. He has proven
himself well capable of responsible for the operational management of the company in periodic
absence of the directors.

Professional Services Team

“Company A” has established relationships with local professional accounting and legal firms.

Directors Remuneration
The Two directors of the company receive £XX each in gross salary. No other benefits are
provided.

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 “Company A” Limited – Business Plan Commentary

I) FINANCIAL INFORMATION
Financial results to date are as follows:

Year End 31 July 2006 2007 2008

£ ‘000 £ ’000 £ ’000
Turnover
Cost Of Sale
Gross Profit
Fixed / Administrative expenses
Operating (Loss) / Profit Total

Funding of Growth Plans

“Company A”’s cash position at the end of September 2008 is £175k. It is able to support its
growth plans with its current borrowing and does not anticipate any need for further loan or
equity finance.

Funding to date
“Company A” have been funded to date from equity investment of £1,700 by the two directors
of the company and loan finance.

The company has two bank loans in place. The details of the loans are as follows:

Loan 1 - 7.00% (base plus 2%) on a loan of £XX outstanding (of original £XX X year
loan) - monthly payments currently of £XX Last payment due Dec XX.

Loan 2 - 7.125% (base plus 2.125%) on a loan of £XX outstanding (of original £XX X
year loan) - monthly payments of £XX. Final payment of £XX on XX XX XXXX.

The directors have given personal guarantees by way of deed of priority over their private
residence in favour of the company’s bankers in order to provide loan security.

Other Contractual Commitments

The Company has a lease commitment of around £31k that expires by middle of 2010.

Shareholding

Shareholding
Shareholder Share Class Shares
%
Jo Bloggs
Josephine Bloggs
Total A Ordinary Shares

By virtue of their owning XX% each of the ordinary share capital, Jo and Josephine Bloggs control
the company jointly. No approved or unapproved share option scheme is in place.

The Company has in the past operated a subsidiary company – Shared Knowledge Systems
Limited. On XX, the assets and liabilities of the subsidiary undertaking were transferred to
“Company A” Limited. This generated a loss of £XX.

A full 5 year financial forecast is at Appendix A.

Page 16 of 26
 “Company A” Limited – Business Plan Commentary

Appendix A – 5 Year Financial Forecast

`
Years ending Jul 2007-08 2008-09 2009-10 2010-11 Remarks

Act/Est Proj Proj Proj

£000 £000 £000 £000

Sales 932 1,172 1,523 1,858 3-yr change is 99%

Gross profit 500 698 946 1,154 3-yr change is 131%

Overheads 276 564 651 716 3-yr change is 160%

Trading profit 224 134 295 438 3-yr change is 96%

Pre-tax profits 2 13 180 344 3-yr change is 13889%

Net cashflow N/A 45 252 354 2-yr change is 687%

Closing net cash position 197 242 493 847 3-yr change is 331%

Net assets & cap. employed 152 150 266 497 3-yr change is 228%

These ratios are based on a combination of monthly/quarterly/annual values

Peak debt as % net assets
Lowest current asset ratio (times) 0.8 1.2 1.6
Peak sales/capital employed (times) 11.1 7.8 5.1
Trading profit as % capital employed 89 111 88
Gross profit margin (as % sales) 60 62 62

Net profit before tax (as % sales) 1.1 11.8 18.5

Page 17 of 26
 “Company A” Limited – Business Plan Commentary

2007- 2008- %
12 Months 2008 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 2009 2009 2009 As % Chge
in
to end Jul Year Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Year Sales Year

PROFIT & LOSS ACCOUNTS £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Sales:
- Existing Products and
Demand Growth 931.8 80.2 81.6 72.2 78.3 80.1 72.8 73.5 87.6 82.2 74.1 103.7 60.6 947.0 81 2
- Upselling and Price
Increases 5.0 10.0 15.0 15.1 16.5 16.0 15.2 18.1 13.8 124.8 11
- New Large Customer Sales 30.0 10.0 10.0 10.0 10.0 70.0 6
- Reseller and ISV Sales 0.6 1.1 1.7 2.2 2.8 3.3 3.9 4.4 5.0 5.5 30.3 3
1,172
Total sales 931.8 80.2 81.6 72.8 84.4 91.8 90.1 91.4 137.4 112.0 103.7 136.8 89.9 .1 100 26
Cost of sales:
-Other direct 432.2 37.6 38.7 34.9 38.1 39.4 36.5 37.3 44.0 42.1 38.9 52.5 33.8 473.7 40 10
Cost of sales 432.2 37.6 38.7 34.9 38.1 39.4 36.5 37.3 44.0 42.1 38.9 52.5 33.8 473.7 40 10

Gross profit 499.6 42.6 42.9 37.8 46.3 52.4 53.5 54.1 93.4 70.0 64.8 84.3 56.2 698.4 60 40

Overhead costs:
-Operational 76.4 13.6 13.6 13.6 13.6 13.6 13.6 13.6 16.3 16.3 16.3 16.3 16.3 176.8 15 131
-Selling & distribution 20.7 3.7 4.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 95.7 8 363
-Management/admin staff 85.3 15.9 15.9 15.9 15.9 15.9 15.9 15.9 15.9 15.9 15.9 15.9 15.9 190.8 16 124
-Research & development 5.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 5.5 0 -0
-Administration 28.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 28.4 2
-Establishment & general 59.3 4.9 7.4 4.9 4.9 4.9 4.9 4.9 9.9 4.9 4.9 4.9 4.9 66.8 6 13
Total overhead costs 275.7 41.0 44.5 46.0 46.0 46.0 46.0 46.0 53.7 48.7 48.7 48.7 48.7 564.1 48 105

Trading profit 223.9 1.6 (1.6) (8.2) 0.3 6.4 7.5 8.1 39.7 21.3 16.1 35.5 7.4 134.3 11 -40
Less: Bad debts 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.7 0.6 0.5 0.7 0.4 5.9 1
Less: Depreciation 65.5 9.5 9.6 9.6 9.7 9.7 9.8 9.8 9.9 9.9 10.0 10.0 10.1 117.6 10 79
Operating Profit 158.4 (8.3) (11.5) (18.1) (9.8) (3.7) (2.7) (2.2) 29.2 10.8 5.6 24.8 (3.1) 10.9 1 -93
Less: Interest payable 7.4 0.6 0.5 0.7 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.3 5.3 0 -29
Less: Intangible asset
writedowns 157.5 -100
Plus: Interest receivable 7.3 0.7 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.7 0.8 6.9 1 -5
Plus: Miscellaneous income 1.6 -100
Net profit before tax 2.5 (8.2) (11.4) (18.2) (9.8) (3.7) (2.7) (2.1) 29.3 11.0 5.9 25.2 (2.6) 12.6 1 411
Corporation tax 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 3.8 0
Profit after tax 2.5 (8.5) (11.7) (18.5) (10.1) (4.0) (3.0) (2.4) 29.0 10.7 5.5 24.9 (3.0) 8.8 1 258
Dividends declared 10.0 10.0 10.0 1
Transferred to reserves (7.5) (8.5) (11.7) (18.5) (10.1) (4.0) (3.0) (2.4) 29.0 10.7 5.5 24.9 (13.0) (1.2) -0

Page 18 of 26
 “Company A” Limited – Business Plan Commentary

12 Months 2008 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 2009 2009 08-09
to end Jul July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Year
CASHFLOW PROJECTIONS £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

Cash Inflows
Total trade debtor receipts (Note 1) 64.3 125.6 88.4 89.3 98.9 104.9 105.5 117.5 146.6 130.8 131.9 143.7 1,347.3
Interest received 0.7 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.7 0.8 6.9
Total cash inflow 65.0 126.2 89.0 89.7 99.3 105.4 106.0 118.0 147.2 131.4 132.7 144.5 1,354.2

Cash Outflows

Materials/goods creditor payments (Note 3) 40.1 40.1 80.3

Total direct cost payments (Note 4) 37.6 38.7 34.9 38.1 39.4 36.5 37.3 44.0 42.1 38.9 52.5 440.0
Total overhead payments (Note 5) 17.7 41.0 46.9 46.0 46.0 46.0 46.0 47.6 53.7 48.7 48.7 48.7 537.1
Corporation tax payments 4.4 4.4

Total capital expend. payments (Note 6) 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 21.5
Operating lease & HP payments
Longterm debt repayments 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 29.6

VAT paid on o/h expense, capex etc. inputs 8.9 9.7 8.6 9.2 9.4 8.9 9.1 11.1 9.9 9.3 11.7 8.4 114.4
VAT paid to State 32.0 16.1 26.5 30.4 105.0
Opening PAYE etc. paid 12.0 12.0
Changes in accruals (3.4) (3.4) (3.4) (3.4) (3.4) (3.4) (3.4) (3.4) (3.4) (3.4) (3.4) (3.4) (40.2)
Interest paid 0.6 0.5 0.7 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.3 5.3
Total cash outflow 82.9 130.0 127.9 91.6 95.0 111.9 93.1 97.5 135.5 101.5 100.7 141.5 1,309.2

Net cashflow (17.9) (3.9) (39.0) (1.9) 4.3 (6.5) 12.9 20.5 11.7 29.9 31.9 2.9 45.0
Opening

Closing net cash balances (overdraft) 196.5 178.6 174.7 135.7 133.8 138.1 131.6 144.5 165.1 176.8 206.7 238.6 241.5 241.5

Page 19 of 26
 “Company A” Limited – Business Plan Commentary

12 Months 2008 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 2009 2009
to end Jul Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
BALANCE SHEETS £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

Fixed assets @ cost 401.5 403.5 405.4 407.4 409.3 411.3 413.2 415.2 417.1 419.1 421.0 423.0 424.9
Accumulated depreciation 217.2 226.7 236.3 245.9 255.5 265.2 275.0 284.8 294.7 304.6 314.6 324.7 334.8
Fixed assets @ WDV 184.3 176.8 169.2 161.5 153.8 146.0 138.2 130.3 122.4 114.4 106.4 98.3 90.2

Intangible assets @ WDV

Current assets:
Trade debtors 91.1 120.6 90.4 87.1 96.4 104.9 105.3 106.7 149.8 134.2 124.7 152.7 114.1
Prepayments 37.8 37.8 37.8 37.8 37.8 37.8 37.8 37.8 37.8 37.8 37.8 37.8 37.8
Cash at bank 196.5 178.6 174.7 135.7 133.8 138.1 131.6 144.5 165.1 176.8 206.7 238.6 241.5
Total current assets 325.4 336.9 302.9 260.6 268.1 280.8 274.7 289.0 352.7 348.8 369.1 429.1 393.5

Creditors - within one year:

Trade & sundry creditors 80.3 89.2 53.7 47.4 50.6 51.9 49.0 49.8 61.5 54.6 51.4 65.0 46.3
Other creditors:
Capex creditors 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
PAYE etc 12.0 11.8 11.8 13.4 13.4 13.4 13.4 13.4 14.5 14.5 14.5 14.5 14.5
VAT due to State 22.5 27.5 32.0 4.0 9.5 16.1 6.8 13.6 26.5 9.6 18.3 30.4 7.2
Corporation tax 4.4 0.3 0.6 0.9 1.3 1.6 1.9 2.2 2.5 2.8 3.1 3.5 3.8
Dividends 10.0
Accruals 155.9 159.3 162.6 166.0 169.3 172.7 176.0 179.4 182.7 186.1 189.4 192.8 196.1
Longterm creditors-within 1 year:
Longterm debt 80.5 78.1 75.6 73.1 70.7 68.2 65.8 63.3 60.8 58.4 55.9 53.4
Total current liabilities 275.1 370.6 340.7 309.3 319.2 328.2 317.3 326.1 352.9 330.3 337.1 364.0 333.2

Net current assets 50.3 (33.7) (37.8) (48.7) (51.1) (47.4) (42.5) (37.1) (0.2) 18.5 32.0 65.0 60.2

Total assets less curr liabilities 234.5 143.1 131.3 112.8 102.7 98.7 95.7 93.3 122.2 132.9 138.4 163.4 150.4

Creditors - after one year:

Longterm debt 83.0
Net assets 151.5 143.1 131.3 112.8 102.7 98.7 95.7 93.3 122.2 132.9 138.4 163.4 150.4

Share capital & premium account 66.6 66.6 66.6 66.6 66.6 66.6 66.6 66.6 66.6 66.6 66.6 66.6 66.6
Reserves 84.9 76.4 64.6 46.1 36.0 31.9 29.0 26.5 55.5 66.2 71.7 96.6 83.7
Shareholders' funds 151.5 143.0 131.2 112.7 102.6 98.5 95.6 93.1 122.1 132.8 138.3 163.2 150.3

Page 20 of 26
 “Company A” Limited – Business Plan Commentary

12 Months 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 2009 2009 Year
to end Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2008-9
PERFORMANCE REVIEW (Annual averages where appropriate)

Net borrowings (cash surplus) as percentage

of shareholders' funds -69 -74 -53 -59 -68 -66 -85 -83 -87 -107 -112 -125 -125
Current asset ratio (times) 0.9 0.9 0.8 0.8 0.9 0.9 0.9 1.0 1.1 1.1 1.2 1.2 1.2

Trade debtors (days annualised sales) 46 34 36 35 35 36 35 33 36 37 34 39 36

Creditors (days annualised costs) 35 20 18 18 18 18 18 19 18 18 20 17 20

As % sales:
-Gross profit 53.1 52.6 52.0 54.9 57.1 59.4 59.2 68.0 62.5 62.5 61.6 62.5 59.6
-Research & development 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.3 0.4 0.4 0.3 0.5 0.5
-Selling/distribution expenses 4.6 5.8 12.0 10.3 9.5 9.7 9.5 6.3 7.8 8.4 6.4 9.7 8.2
-Trading profit 2.0 (1.9) (11.2) 0.3 7.0 8.4 8.9 28.9 19.0 15.5 26.0 8.3 11.5
-Net profit before tax (10.3) (14.0) (25.0) (11.6) (4.0) (3.0) (2.3) 21.3 9.8 5.6 18.4 (2.9) 1.1

Gross profit breakdown (£000):

- Existing Products and Demand Growth 42.6 42.9 37.6 42.9 45.8 43.3 43.5 59.5 51.3 46.3 63.9 37.8 557.6
- Upselling and Price Increases 2.7 5.7 8.9 8.9 11.2 10.0 9.5 11.2 8.6 76.9
- New Large Customer Sales 20.4 6.2 6.2 6.2 6.2 45.3
- Reseller and ISV Sales 0.3 0.6 0.9 1.3 1.6 2.2 2.4 2.7 3.0 3.4 18.6
Overall gross profit (£000) 42.6 42.9 37.8 46.3 52.4 53.5 54.1 93.4 70.0 64.8 84.3 56.2 698.4

Gross profit as % sales:

- Existing Products and Demand Growth 53.1 52.6 52.0 54.9 57.1 59.4 59.2 68.0 62.5 62.5 61.6 62.5 58.9
- Upselling and Price Increases 54.9 57.1 59.4 59.2 68.0 62.5 62.5 61.6 62.5 61.6
- New Large Customer Sales 68.0 62.5 62.5 61.6 62.5 64.7
- Reseller and ISV Sales 52.0 54.9 57.1 59.4 59.2 68.0 62.5 62.5 61.6 62.5 61.6

Average number of employees (Persons) 10.0 10.0 11.0 11.0 11.0 11.0 11.0 12.0 12.0 12.0 12.0 12.0 11.3

Annualised sales per employee (£000) 96.2 97.9 79.4 92.0 100.1 98.3 99.7 137.4 112.0 103.7 136.8 89.9 103.6

Page 21 of 26
 “Company A” Limited – Business Plan Commentary

Years ending 08-09 08-09 08-09 08-09 09-10 09-10 09-10 09-10 10-11 10-11 10-11 10-11 08-09 09-10 10-11 11-12 12-13
Jul 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Year Year Year Year
PROFIT & LOSS
ACCOUNTS £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

Sales 235 266 341 330 349 327 431 416 431 407 518 502 1,172 1,523 1,858 2,044 2,248
Cost of sales 111 114 123 125 132 124 163 158 163 154 196 190 474 577 704 774 852
Gross profit 123 152 218 205 217 203 268 258 267 253 322 312 698 946 1,154 1,270 1,396

Overhead costs 132 138 148 146 159 154 165 173 175 170 181 190 564 651 716 752 789
Trading profit -8 14 69 59 58 49 103 85 92 83 141 122 134 295 438 518 607

Less: Bad debts 1 1 2 2 2 2 2 2 2 2 3 3 6 8 9 12 14

Less:
Depreciation 29 29 30 30 28 29 30 31 26 26 28 28 118 118 109 120 134
Operating profit -38 -16 38 27 28 18 71 52 64 54 111 92 11 169 320 386 459

Less: Interest
payable 2 1 1 1 1 1 1 1 1 0 0 0 5 3 2 1 0
Plus: Interest
receivable 2 1 2 2 3 3 4 4 5 6 7 8 7 14 25 40 54
Net profit before
tax -38 -16 38 28 29 21 74 56 69 59 117 99 13 180 344 424 513
Corporation tax 1 1 1 1 - - - 54 - - - 103 4 54 103 127 154
Profit after tax -39 -17 37 28 29 21 74 2 69 59 117 -4 9 126 241 297 359
Dividends
declared 10 10 10 10 10 10 10 10
Transferred to
reserves -39 -17 37 18 29 21 74 -8 69 59 117 -14 -1 116 231 287 349

Page 22 of 26
 “Company A” Limited – Business Plan Commentary

Years ending 08-09 08-09 08-09 08-09 09-10 09-10 09-10 09-10 10-11 10-11 10-11 10-11 09-10 10-11 11-12 12-13
Jul 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Year Year Year
CASHFLOW STATEMENTS £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Net cash inflow from operating
activities -45 9 58 77 70 68 94 103 99 101 129 140 335 469 491 582
Returns on investments & servicing of
finance:
Interest received 2 1 2 2 3 3 4 4 5 6 7 8 14 25 40 54
Interest paid -2 -1 -1 -1 -1 -1 -1 -1 -1 -0 -0 -0 -3 -2 -1 -0
Dividends paid -33 -10
Net cash inflow from returns on 0 0 0 1 2 2 3 4 5 5 6 7 11 24 5 44
investments & servicing of
finance
Taxation:
Corporation tax paid -4 -4 -54 -4 -54 -103 -127
Tax paid -4 -4 -54 -4 -54 -103 -127
Investing activities:
Purchases of fixed assets -4 -6 -6 -6 -28 -8 -28 -8 -28 -8 -28 -8 -70 -70 -61 -70
Net cash outflow from investing
activities -4 -6 -6 -6 -28 -8 -28 -8 -28 -8 -28 -8 -70 -70 -61 -70

Net cash inflow before financing -53 3 53 72 44 59 69 100 76 45 108 140 272 369 332 429

Financing:
Repayments of long-term loans & debt -7 -7 -7 -7 -7 -6 -4 -4 -4 -4 -4 -4 -21 -14 -10 -8
Net cash inflow from financing -7 -7 -7 -7 -7 -6 -4 -4 -4 -4 -4 -4 -21 -14 -10 -8

Increase (decrease) in cash -61 -4 45 65 37 53 66 96 73 41 104 136 252 354 322 420

1,16 1,58
Closing net cash balance (deficit) 136 132 177 242 279 331 397 493 566 607 711 847 493 847 9 9
Operating profit -38 -16 38 27 28 18 71 52 64 54 111 92 169 320 386 459
Depreciation 29 29 30 30 28 29 30 31 26 26 28 28 118 109 120 134
Increase in debtors 4 -18 -29 20 -24 9 -41 6 -6 9 -44 6 -50 -34 -20 -22
Increase in creditors -33 2 6 -8 3 -2 9 0 1 -2 9 0 10 8 5 5
Other adjustments:
Revenue grants (eliminates double
counting)
Prepayments & accruals 10 10 10 10 15 15 15 15 14 14 14 14 59 56
PAYE etc 1 1
VAT -18 3 3 -2 20 -0 11 -1 -0 -0 12 -1 29 10 0 6
Net cash inflow from operating
activities -45 9 58 77 70 68 94 103 99 101 129 140 335 469 491 582

Page 23 of 26
 “Company A” Limited – Business Plan Commentary

Years ending 08-09 08-09 08-09 08-09 09-10 09-10 09-10 09-10 10-11 10-11 10-11 10-11 07-08 08-09 09-10 10-11 11-12 12-13
Jul 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Year Year Year Year Year
BALANCE SHEETS £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Fixed assets @ cost 407 413 419 425 452 460 487 495 522 530 557 565 402 425 495 565 635 705
Accumulated
depreciation 246 275 305 335 363 392 422 453 479 506 534 562 217 335 453 562 682 816
Fixed assets @
WDV 161 138 114 90 89 68 65 42 43 24 24 3 184 90 42 3 -47 -111
Intangible assets
@ WDV
Trade debtors 87 105 134 114 138 129 170 164 170 161 204 198 91 114 164 198 218 240
Prepayments 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38
Cash at bank 136 132 177 242 279 331 397 493 566 607 711 847 197 242 493 847 1,169 1,589
Total current
assets 261 275 349 393 454 498 605 695 774 806 954 1,083 325 393 695 1,083 1,425 1,867
Creditors - within
one year:
Trade & sundry
creditors 47 49 55 46 50 47 56 56 58 55 64 65 80 46 56 65 70 75
Other creditors:
Capex creditors 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 11 11
PAYE etc 13 13 14 14 14 14 14 14 14 14 14 14 12 14 14 14 14 14
VAT due to State 4 7 10 7 27 27 37 36 36 36 47 46 23 7 36 46 46 52
Corporation tax 1 2 3 4 4 54 54 103 4 4 54 103 127 154
Dividends 10 10 10 10 20 20 20 20 30 10 20 30 7 7
Accruals 166 176 186 196 211 225 240 255 269 283 297 311 156 196 255 311 311 311
Longterm debt 76 68 61 53 46 40 36 33 29 25 22 18 53 33 18 8 -0
Total current
liabilities 309 317 330 333 364 366 396 471 482 436 467 590 275 333 471 590 594 623

Net current
assets -49 -43 18 60 90 132 209 224 292 370 487 494 50 60 224 494 831 1,243

Total assets less

curr liabilities 113 96 133 150 180 201 274 266 335 394 511 497 235 150 266 497 784 1,133

Creditors - after
one year:
Longterm debt 83
Net assets 113 96 133 150 180 201 274 266 335 394 511 497 152 150 266 497 784 1,133
Share capital &
premium account 67 67 67 67 67 67 67 67 67 67 67 67 67 67 67 67 67 67
Reserves 46 29 66 84 113 134 207 199 268 327 444 430 85 84 199 430 717 1,066
Shareholders'
funds 113 96 133 150 180 200 274 266 335 394 511 496 152 150 266 496 783 1,132

Page 24 of 26
 “Company A” Limited – Business Plan Commentary

Years ending 08-09 08-09 08-09 08-09 09-10 09-10 09-10 09-10 10-11 10-11 10-11 10-11 08-09 09-10 10-11 11-12 12-13
Jul 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Year Year Year Year
PERFORMANCE REVIEW
As % total sales:
-Gross profit 52.6 57.2 63.8 62.1 62.1 62.1 62.1 62.1 62.1 62.1 62.1 62.1 59.6 62.1 62.1 62.1 62.1
-Trading profit (3.5) 5.4 20.3 17.9 16.5 14.9 23.9 20.4 21.4 20.3 27.2 24.4 11.5 19.4 23.6 25.3 27.0
-Net profit before tax (16.1) (6.1) 11.2 8.6 8.4 6.3 17.1 13.4 15.9 14.6 22.5 19.7 1.1 11.8 18.5 20.8 22.8
-Research & development 0.6 0.5 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.5 0.4 0.3 na na
-Selling/distrib expenses 7.3 9.8 7.7 7.9 7.5 8.0 6.1 6.3 6.1 6.4 5.1 5.2 8.2 6.9 5.6 na na
Projected sales as % breakeven 94 110 147 140 136 132 163 149 153 148 178 165 124 145 161 169 177
Number of employees 11 11 12 12 11 11 14 14 13 12 15 15 12 14 15 15 17
Changes over previous year
(%):
-Sales - - - - 49 23 27 26 23 25 20 21 26 30 22 10 10
-Net profit before tax - - - - na na 93 96 133 186 58 77 411 1,329 91 23 21
-Retained earnings - - - - na na 98 na 133 186 58 na na na 99 24 22
-Shareholders' funds - - - - 59 110 106 77 86 97 86 87 -1 77 87 58 45
-Earnings per share - - - - - - - - - - - - 258 1,329 91 23 21
Trading profit/capital employed
(% pa) na 59.7 208.0 157.1 128.4 97.4 150.7 127.7 110.2 83.8 110.4 98.5 89.3 110.8 88.2 66.1 53.6
Operating profit/capital
employed (% pa) na na 113.7 72.6 61.7 36.8 103.1 78.1 76.4 54.8 86.6 73.7 7.2 63.4 64.4 49.2 40.5
Return on shareholders' funds
(% pa) (137.8) (71.6) 112.1 73.2 65.5 41.4 107.4 2.9 82.1 60.3 91.4 (3.3) 5.8 47.3 48.4 37.9 31.7
Annual sales/capital employed
(times) 8.3 11.1 10.3 8.8 7.8 6.5 6.3 6.3 5.1 4.1 4.1 4.0 7.8 5.7 3.7 2.6 2.0
Annual sales/fixed assets (times) 5.8 7.7 11.9 14.7 15.6 19.2 26.5 39.8 39.9 67.5 87.2 666.7 13.0 36.5 616.8 na na
Current asset ratio (times) 0.8 0.9 1.1 1.2 1.2 1.4 1.5 1.5 1.6 1.8 2.0 1.8 1.2 1.5 1.8 2.4 3.0

Trade debtor days 34 36 36 32 36 36 36 36 36 36 36 36 36 39 39 39 39

Stock days
Trade creditor days 18 18 18 16 16 16 16 16 16 16 16 16 16 17 17 17 17

Cumulative issued shares (000s) 170 170 170 170 170 170 170 170 170 170 170 170 170 170 170 170 170
Net assets per share (£) 0.66 0.56 0.78 0.88 1.06 1.18 1.61 1.57 1.97 2.32 3.00 2.92 0.88 1.57 2.92 4.61 6.66
Earnings per share (£) - - - - - - - - - - - - 0.05 0.74 1.41 1.75 2.11
Dividend per share (£) - - - - - - - - - - - - 0.06 0.06 0.06 0.06 0.06
Dividend cover (times) - - - - - - - - - - - - 0.9 12.6 24.1 29.7 35.9

Page 25 of 26
 “Company A” Limited – Business Plan Commentary

Appendix B – Vertical Sector Growth Drivers

Vertical Sector Vertical Sector Growth Drivers Potential Growth Services

Banking, Financial Regulation requiring significant IT investments Web-based client-facing
Services and Increased efficiency by migrating customers to low-cost applications such as call
Insurance channels like e-banking and web-based CRM centre and customer
Improved resilience and lower operational risk with a relationship applications
stable, flexible, and scalable IT infrastructure (CRM)
Lower transaction costs through economies of scale
Flexibility to embrace new innovative solutions
Reallocate time and talent to focus on business rather
than IT
Manufacturing Cost reduction, fees based on a specific functionality and Enterprise Resource
capacity to use depending on individual requirements Planning (ERP)
Higher business value benefits, faster and at reduced costs
than a purchased solution008 Manufacturing Execution
Reducing the wastage of time, expense and business Systems (MES)
disruption associated with in-house applications
No upfront expenditure on licenses, maintenance contracts Supply Chain Management
and new staff (SCM)
Scalability
Availability of industry-specific functionality that best meets
a company’s needs
Availability of expert staff to address issues
Advantage of security and risk-mitigation capabilities
Services Pay only for the functions used (Pay-As-You-Go) Hosted solutions - using
Reduced training Costs the internet as an
Access to the latest technology without IT Investment application platform
Increase efficiency and cost savings
Access to applications for a fraction of the cost
Quick implementation process and lower maintenance
responsibilities
Instantaneous upgrades based on necessity for software
products
Unprecedented reach and flexibility to access from anywhere,
anytime
Government Choice of different technologies and architectures e-governance solutions
Reduce the incremental cost for implementation of new
solutions as well as the time needed for design and development
Improved cost efficiencies for improved ROI
Provides a lower-cost option that eliminates traditional
investment, setup, and maintenance hurdles
Designed to meet the requirements, budgets and needs of
individual agency or a large organization
Scalability & Flexibility
Availability on a monthly subscription fee basis
Access securely anytime, anywhere, from any computer with
internet access
Lower total cost of ownership
Communications IT platforms to offer services that drive subscriber growth Web-based back-office
and profitability to meet the challenge of creating new revenue applications such as billing,
opportunities mediation, rating and
Tailored, industry-specific solutions to solve business subscriber management
challenges
Cost effective solutions, with managed servers and updates Web-based client-facing
IT platform to offer advanced services such as voice over IP, applications such as call
wireless and convergent services centre and customer
Complexity in upgrading legacy systems relationship applications
Ease of switching - Facility to switch solutions easily (CRM)
Efficient back up and security
Anytime, anywhere accessibility

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