HKSEC Submission Form for Business Written Report
-growing your green vision
Team
58
Project Title:
MetroPlateauŠ
Visual Promotion URL:
http://hksec.vcasmo.com/video/GlobalTouch/3742 (without
Leader:
YIP Ho Long
Member:
LO Joseph, LO Tak Tsun, NGAI Hung, SO Wing Ki Jessica
sound); http://osaka.cool.ne.jp/hehascout/HKSEC.html (normal display)
Executive SUMMARY Overview MetroPlateau© is an entrepreneurial presence of the novel blend of green roof and cafeteria. We provide unique refreshment for office staff and visitors, at the same time cooling the metropolis and creating job opportunities. Our share will proliferate from the skyscrapers in the CBD, sending positive environmental plus economical impacts across Hong Kong. Our geography will constitute a green skyline emerging from the busiest parts of the city. We change ultimately not only our city, but also the world in the MetroPlateau©-way. Critical situation in Hong Kong Despite Hong Kong’s economic growth, her physical beauty is fading. The rapid urbanization throughout the past decades has not only turned Hong Kong into a concrete jungle, but also brought her serious air pollution problem. At the same time, thousands of roofs are left unattended in Hong Kong, being a vast wastage in terms of land use. Our unique
G1
MetroPlateau© solution refreshes the metropolis – by utilizing roofs and beautifying them, problems addressed above could be duly resolved. With foreign precedence and motivation, we are confident to bring Hong Kong change, making environmental impacts. Highlights of the proposal In this proposal, the MetroPlateau© -way, a unique style and value that MetroPlateau© pursues in its operation, will be introduced. We are also proud to present the business model and theory of change of MetroPlateau©, which visualize how MetroPlateau© operates and makes social impacts respectively. Presentation Structure of the proposal A top-down approach is adopted in this proposal. The proposal consists of three parts. It proceeds from Greenings (G), to Soil (S) and finally to Deck (D), which are the three main parts of the vegetations on roofs. In Greenings, what MetroPlateau© is will be explained in detail. Soil reveals prudent plans and strategies, the nutrients that breed MetroPlateau© and the place for it to anchor its roots. Deck, including finance and financial budget, shows the rock-steady structure which supports the whole MetroPlateau©.
G2
Content
Executive summary
--G1
Content
--G3
Mission
--G4
Vision
--G4
The MetroplateauŠ Way
--G5
Business Model
--S6
Theory of Change
--S7
Market Competition & Comparative Advantage
--S9
Operation and Management
--S10
Social Marketing
--S11
Legal Concerns
--S12
Projected Expansion
--S13
Implementation Plan
--S14
Financing
--D15
Financial
D16
Appendix
A
G3
Mission Sustainably elevating visual, physical, economical and social environment of the city, grows your green vision.
Vision Bring the natural landscape to the cement-covered city and optimize the employment of resources of the disadvantaged.
G4
The MetroPlateau©-way
Social enterprise suppliers will be prioritized at the top of our consumption list. The raw materials of our green roofs and gardens and capitals of our cafeterias will be purchased from other reputable social enterprises. Our expenses will therefore subsidize more of the disadvantaged sector and MetroPlateau© will truly suffice to be an impact-maximizer.
Environmental and legal concerns will be duly addressed. MetroPlateau© will develop according to governmental regulations (Study on Green Roof Application in HHong Kong Final Reportm Architectural Services Department, 2007). Professional advices regarding the construction of cafeteria (e.g. electricity wiring and water-pipe laying) will also be acquired.
Multicultural design will be offered. MetroPlateau© will invite some of the most renowned designers across the globe to be consultants and to direct the construction of roof gardens for our company. A brank promoting variety and innovation, we present different roof gardens of multicultural styles, Chinese, Japanese, Eropean, Af rican etc. Our products appeals to a broad range of individual and entrepreneurial clients with diversified background.
Cafeteria-on-the-roof will be unique to MetroPlateau©. Amid the pleasant setting of a vogue roof garden, our branded cafeteria providing refreshments like coffee, juice and tea will be erected. Office staff and visitors can consume energizing drinks as well as appreciating the oasis-inmetropolitan grown by our social enterprise.
Fair-traide cafeteria amplifies the MetroPlateau©-way as an agent for positive change. All the coffee beans will be purchased from fair-trade suppliers. Additional to practicing our own cooperate social responsibility, MetroPlateau© promotesequity and to sustain farmers in developing countries. Carbon-neutral approach takes precedence in the MetroPlateau©way. In line with our aim of beautifying our city from within, we employ austere principles on carbon emission. Local experts (e.g. Prof. C. Y. JIM, HKU) will be invited to monitor our environmental impact and to counsel our energy efficiency optimization.
G5
Business Model
Customer Finance
Target Customer MetroPlateau© first initiates its impact by collaborating with start-up partners, including hospitals and universities. Upon expansion, residential buildings and commercial buildings in the CBD will be our target customer.
Customer Relationship
Distribution Channels
MetroPlateau© serves as a partner to its customers. We help different parties, including the government, residential and commercial building owners to bring protection and beauty to the rooftops they own.
We sell our MetroPlateau© product directly to our target customers, without agents or other distributers. A flexible close follow-up will be employed in each deal, as our product is highly customized.
Revenue Stream The revenue of MetroPlateau© comes from the building and maintenance charge of roof gardens. After years of expansion, rooftop cafeteria will be introduced, with its revenue covering the gradual decrease of revenue of building roof gardens due to the satuation of markets.
Offer With a view to change the world in the MetroPlateau© -way, a novel blend of green roof and cafeteria is offered to our customers, which brings positive environmental and economical impacts across Hong Kong.
Cost Structure
Infrastructure Partner Network To maximize the social impact, raw materials of our green roofs and gardens and capitals of our cafeteria will be purchased from other reputable social enterprises. Staff and gardeners will be extensively hired from disadvantaged sector through associated organizations.
Value Configuration The building and maintenance services of green roofs will be charged at a optimal scale, such that our customers enjoy the benefit of a green roof at a considerable cost while we are making profit by turning raw materials into aesthetic roof gardens.
Core Capabilities The core capabilities of MetroPlateau© include raw materials used in building roof gardens and cafeteria, professionals (e.g. designers, gardeners) and operational officers.
S6
The cost structure is mainly constituted by purchasing of raw materials and transportation cost. Upon construction of intensive roof gardens, additional cost of design is also required.
Theory of Change
S7
The illustration in the previous page shows that MetroPlateau© will reach its ultimate impacts through a domino effect. Furthermore, every green roof made imposes reinforcement in raising the incentives of the building owners. In other words, once launched, MetroPlateau© sets a virtuous cycle for itself in growing the public’s green vision. At the same time, social impacts other than environmental ones are also made, though they are not inside the virtuous cycle. Yet, these impacts will become more important in later years because of the introduction of MetroPlateau© cafeteria, which promotes fair trade and creates more employment opportunities.
Interventions The marketing activities conducted by MetroPlateau©. Consultancy service provided by MetroPlateau© for analyzing whether the roof is appropriate for greening. Same as above. Roof greening service provided by MetroPlateau©.
Assumptions The mass media will help MetroPlateau© spread the effect and benefits of greening roofs once a significant number of roofs are greened. Some building owners own more than one building; Building owners communicate among themselves about news in reducing cost of maintenance.
S8
Market competition and comparative advantage
People notice the feasibility of greening roofs
Increasing incentive in greening roofs
Green roofs replaces cements by natural beauty The extensive nature of our products can promote themselves as illustrated above, or in the theory of change diagram. Besides, the innovative synergy between roof gardens and cafeteria in MetroPlateauŠ also generates competitive margin. This is because revenue brings by MetroPlateauŠ cafeteria covers the decreasing revenue from roof-greening service due to the saturation of market. The cafeteria also allows MetroPlateauŠ continues to bring social impacts.
S9
Operational and Management
The chief executive officer together with the subordinates including the chief operational officer and chief financial officer will be responsible for the management of Metroplateau. All schemes related to Metroplateau must be approved by them before implementation as they are the policymakers who serve irreplaceable roles in ensuring the proper functioning of our company. Apart from the central management team, we will hire local experts, including jurisconsults, engineers and horticulturists etc, to be our consultants via various channels, academic or otherwise. Advices like the effective ways to deal with legal issues, the construction constraints of the green roof and cafeteria as well as the favorable style of the roof garden for each customer. While for the operational team, we will recruit foreign designers to create designs for roof garden according to the suggested style by the horticulturists. Under the foreign
S 10
designers are the designing and gardening teams which assist in constructing the ideal roof garden. It will be our catering team who negotiate with the customers to seek out the best and desirable design for their green roof. Our staff will be extensively hired from the disadvantaged sector of the society which comprises of less competitive or low-skilled people. They will constitute most of the personnel of MetroPlateau and this may help lowering the unemployment rate of the underprivileged citizens. All of the above broad range of talents from backgrounds across the spectrum will help operate MetroPlateauŠ and grow our green vision. Social Marketing One unique characteristic for our brand is that it is auto-marketable. The green roofs can be served as an advertising mean since their extensive nature enables them to promote themselves. The conspicuous green vision of the green roof can surely gain the attention of people from other buildings and their incentive to construct a green roof may be aroused by the authentic view. In order to furnish the customers with the most appropriate and qualified service, a one-to-one distribution strategy will be adopted. This is applicable since our products are highly flexible and customized. Also, close post-sales work will be assigned for each of our clients such that a comprehensive and customer-orientated maintenance can be provided.
S 11
Legal Concerns There are multiple legal issues fronting us when we construct the green roof or the cafeteria. Concerning the ownership issues, we have to deal with questions like who the owner of the roof is, whether business activities are allowed there or whether it is accessible for the public etc. Upon consulting a lawyer, it was known that all of the above problems depends on the Government Lease and the Deed of Mutual Covenant ( DMC ) of the relevant building for answers. Therefore, different measures are employed for different circumstances, according to the types of owners and the permitted use of the roof. According to section 32 of Cap.132AQ, it is found that the procession, reconstitution or storage of milk or any milk beverage are not allowed in the roof. In response to this legal restriction, we plan to sell scented tea and juice in our cafeteria instead of coffee. To facilitate the operation of MetroPlateauŠ, jurisconsults will be invited to join our company or be our legal consultant, so that process of constructing green roofs can be always kept smooth.
S 12
Projected Expansion MetroPlateau© is projected to be mid-way through start-up projects within half a year. The numbers of clients are projected at 5, 10 and 20 in the first three years respectively. Cafeteria operations will be launched in the beginning of the third year and is projected to see similar growth. The geographical presence of MetroPlateau© is related to its scale. In the first year, with its target customers being hospitals, universities and small-scaled business, the presences of MetroPlateau© is discrete. After accumulating experience, our focus will be moved to the CBD. Both intensive and extensive gardens will be constructed on the roofs at the core of the city.
S 13
Implementation Plan The timeline of MetroPlateau©’s development can be summarized as follow:
Zeroth Year:
2nd Year:
Preparation for the launching of © MetroPlateau
Expanding the scope of target customers; preparation for the introduction of rooftop cafeteria.
1st Year: Officially establishing © MetroPlateau .
3rd Year and onwards: Launching the © MetroPlateau cafeteria © on existing MetroPlateau roofs
The Gantt Chart below puts a clearer picture about the tasks to be carried out in the first few years of operation:
S 14
Financing Financing will be achieved by bank debt and possibly also from sponsoring of companies who are willing to be our initiators. We would present our proposal to banks to gain credibility and loans to start help with the starting fund. Possible governmental or non-governmental supports would also be sought, such as the Architectural Service Department, environmental groups and gardening companies.
D 15
Financal Breakeven Analysis Assume 3,000,000 investment, which contributed to over 90% of first year’s cost of goods sold. In first year, sales gradually increase starting from month 3. Workers salaries and maintenance cost also increased. Profit also increased gradually, enabling making profit on Month 5. Accounting break even started on Month 10. Cafeteria Sales started on Year 3, and gradually increased in sales because more and more buildings set up cafeteria. Service sales of constructing green roof decreased after year 5 due to the saturation of green roof. This caused the great decrease in profit of year 5 and year 7. The financial breakeven period is on the year 4. In the worst case, the sales decreased, and other expense increased. The accounting breakeven appears in year 3, after a sales increase. The worst case will have no financial breakeven. There is accounting profit in the projected 8 years view. In the best case, the accounting breakeven will be in month 4. The best case financial breakeven will be in year 2. There will be profit over 1,000,000 over all the years.
D 16
Summary Timeline
Initial Investment and net cash flow 1000000 800000 600000 400000 Initial Investment and net cash flow
200000 0 1
2
3
4
5
6
7
8
-200000 -400000 -600000
Year 1:
Start business, sales gradually increase
Year 2:
Sales increased greatly, projected breakeven in best case
Year 3:
Café starts to operate, at the same time in maintenance cost increases.
Year 4:
Projected breakeven.
Year 5:
Sales starts to decrease but increase in café sales causing profit dropped
Year 6:
Café sales continue to increase
Year 7:
Café sales increased but sales decreased further
D 17
Appendix
Content
Structure of Green Roof
Cost of Raw Material and Installation
Total Cost of Goods Sold
Projected I&E and CP
A
Structure of green roof
Basic Components of a Green Roof System (Intensive and Extensive)
Conventional (Intensive) and Lightweight (Extensive) Green Roof Systems
Source: “STUDY ON GREEN ROOF APPLICATION IN HONG KONG”, ARCHITECTURAL SERVICES DEPARTMENT
Cost of Raw Material and Installation Intensive Plant Items Growing Medium Drainage and Protection
Items Price per unit Grasses 50 Shrubs 5 Assume 1/4 area is covered by shrub Topsoil 330 Filter Layer 10 Separated root layer 60 Waterproofing 130 Drainage layer 120 Cost per square meter 705
for
intensive roof
Grasses Shrubs Topsoil Filter Layer Separated root layer
Extensive Plant Items Growing Medium Drainage and Protection
Items Price per unit Grasses 50 Lightweight soil 65 About 1/5 thick of topsoil Filter Layer 10 Protection layer board 60 Cost per square meter Waterproofing 130 Drainage layer 60 intensive roof 375
for Grasses Lightweight soil Filter Layer Protection layer board Waterproofin g Drainage layer
Total Cost of Goods Sold Intensive Cost of Raw material Transport Design
Extensive Transport
705 200 500 Assume $50000 to design a garden of 100 square meter 1405
375 200 575
Projected I&E and CP Year Intensive Unit price Sales unit Extensive Unit price Sales unit
0 1826.5 0 747.5 0
1 1826.5 2000 747.5 1000
2 1826.5 3000 747.5 2000
3 1826.5 3000 747.5 2000
4 1826.5 3000 747.5 2000
5 1826.5 2000 747.5 1000
6 1826.5 2000 747.5 1000
7 1826.5 1000 747.5 500
8 1826.5 1000 747.5 500
Revenue Revenue from costructing green roof Cost of construction on green roof Gross Profit
0 0 0
4400500 6974500 6974500 6974500 4400500 4400500 2200250 2200250 3385000 5365000 5365000 5365000 3385000 3385000 1692500 1692500 1015500 1609500 1609500 1609500 1015500 1015500 507750 507750
Café sales unit Café sales Total Revenue
0 0 0
0 0 10950 32850 54750 87600 109500 131400 0 0 328500 985500 1642500 2628000 3285000 3942000 1015500 1609500 1938000 2595000 2658000 3643500 3792750 4449750
Expense Maintainance cost Salaries of workers and staff Promotion Administrative cost Cost of good sold in Café Café staff Net Income Tax Income after tax
0 0 0 0 0 0 0 0 0
42500 729000 360000 360000 0 0 -476000 -76160 -399840
107500 744000 360000 360000 0 0 38000 6080 31920
172500 759000 360000 360000 109500 0 177000 28320 148680
237500 774000 360000 360000 328500 144000 391000 62560 328440
280000 783000 360000 360000 547500 144000 183500 29360 154140
322500 343750 365000 792000 796500 801000 360000 360000 360000 360000 360000 360000 876000 1095000 1314000 144000 144000 144000 789000 693500 1105750 126240 110960 176920 662760 582540 928830
-1000000
-399840
31920
148680
328440
154140
662760
Initial Investment and net cash flow Net Present value Initial rate of return
HK$481,019.21 12.6310%
582540
928830
Assumed amount Sales Margin 30% Unit price of café 30 Unit sales per building per day 30 Maintainance cost per intensive unit 20 Maintainance cost per extensive unit 2.5 Salaries of worker per month 9000 Number of units worker maintained per month 3000 Salaries of worker per unit 3 Salaries of staff per month 12000 Number of staffs Promotion cost per month Administrative cost per month Unit cost of café sales Saleries of café staff Tax rate Required rate of return
5 30000 30000 10 12000 16% 7%