COMPANY DRY DOCKS GENOA
Business Plan
18/01/2012 12:27:53(GMT)
Executive Summary.....................................................................................................3
Business Overview......................................................................................................4
Products and Services................................................................................................5
Sales Forecast...............................................................................................................6
Marketing Strategy.......................................................................................................7
Management and Staffing.........................................................................................7
Implementation Plan....................................................................................................9
Overhead and Investments.........................................................................................9
Financing..................................................................................................................... 10
Financial Projections................................................................................................. 11
Risk Analysis................................................................................................................ 16
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Executive Summary
The contest in which the Dry Docks Genoa develops its business is located in the ships
repair area situated in the eastern part of Genoa port. This company offers a lot of
services for ships that are under repair. The Dry Docks can supply large docks that can be
utilized to accomodate boats of different sizes. Instruments of raising as quay-cranes,
compressed air and gas tools (used for cutting and welding plates steel) and logistic
supports towards crews (mainly during the periods in which the ships are under repair)
are only a few of the services that “Ente Bacini Genova” offers to its clients. Facilities
consist of five dry docks and one thousand and five hundred meters utilized by ships that
are waiting for their reparation-phase. The entire equipment is under concession from
the Port Authority of Genoa.
Main financial measures
2012 2013 2014
Cash 753,400
1,179,643
1,989,272
Sales revenue 6,400,000
11,000,000
14,000,000
Net profit for financial year -479,318
1,938,965
2,854,629
Operating margin -7.49%
17.6%
20.4%
Owners' equity 1,020,682
2,959,647
4,629,276
Return on equity (per year) -47.0%
65.5%
61.7%
Dry docks Genoa3
4
Dry docks Genoa2
Business Overview
The market taken in consideration is that one of international naval repairing. The largest
harbours are equipped with different-size dry docks; dimensions are required to the last
generation of ship constructions and the type of work they need. In fact, nowadays
vessels as container ships (whose weight can be close to 14000 tons and whose length
could be around 360 meters with breadth of 55 meters) and cruisers (able to
accommodate 4000 passengers with a crew composed by almost 2000 members) needed
good and innovative structures and modern ports have to be in the position to supply this
kind of services. Therefore the winning elements of a naval repairing area are extremely
linked with large harbour infrastructures, logistic availability of the city considered
(airports, hotels and institutional seats), with the quality of operating companies, and of
course with the typical weather that marks the above-mentioned city (fundamental
parameter that has to be considered before starting with the necessary operations).
Obviously such kind of activity suffers the international variations of raw materials’ costs
like oil and steel. These costs affect (influence) deeply the prices that firms offer for their
5
services. Another important issue is the national stability of the country considered. Well-
organized and operative trade-union relationships between workers, firms and
government are essential elements for having success in the shipping business.
Products and Services
The main goal of Dry Docks of Genoa is to improve the quality of its services and its
offers. Nowadays the company is missing some points connected with environment and
security at work. There is also a lack of a large dock that could permit to host bigger
ships. The management and shareholders of the company are strongly engaged in trying
to trace the necessary instruments to achieve what was above-mentioned. The examined
company (Ente Bacini Genova) is a S.R.L. (Private Limited Company). It has a fully pay-
up share capital that comes to 300.000 Euro and a mixed stock consisting of Port
Authority (56%) and Private Naval Repairers (44%). The main goal of the company, as
already claimed in other sections of this business plan, is that one to supply shipyards and
naval workshop with the suitable equipment for working on different-sizes ships.
Recently a technical due diligence has laid bare several sensitive matters. Firstly we can
notice the old age of some parts of the structure, for example three of five dry docks have
been built in 1903, so it’s evident that they need fast interventions for innovating and
consolidating their conditions. The company has entered a budget of fifteen-twenty
millions of Euro for realizing these maintenances in 3/5 years. The availability of funds
has to be researched in the State and local authorities, though interventions of private
capital within administration and organization. The Italian market competitors with the
same characteristics are only located in the port of Napoli. In the other calls the presence
of dry docks and relative services are directly managed by the shipyard that has the
concession for it. In these cases there is no possibility to offer a public service, thing that
instead happens in the port of Genoa.
6
Dry docks Genoa
Sales Forecast
During the last five years the earning reports have been slow but steadily growing. This
happened because presently ships are still considered the best instrument to transport of
goods worldwide. Globalization has allowed to new huge markets, as the Chinese one, to
enter overbearingly in the international sphere.
Therefore the worldwide fleet has considered important to start up orders to build
innovative vessels and making safe the ships already working/sailing.
As far as the field of services is concerned, the company has already received
applications for using its dry docks until the first semester of 2012. However it is
necessary to remember that some negative matters can be the cause to cancel a dry
dock reservation. Among them we can mention for example the international instability
(like 11 September or other terroristic attacks), the sudden closing of the Suez Canal, the
price of oil, etc.
7
Sales revenue (EUR)
Products and services 2012 2013 2014
Dry Docks Service 3,650,000
7,000,000
8,000,000
Other Services 2,750,000
4,000,000
6,000,000
6,400,000
11,000,000
14,000,000
Marketing Strategy
Ente Bacini Genoa gets a monopolistic position in the national contest. In fact it cannot
have the same economic behavior of the other Italian private companies, that, having to
face up to the market competition, can decide to offer their dry docks free of charge (in
relation with the number of services that they are required to offer). Considering instead
the other European ports (especially those located in the north), we have to effect a
different interpretation. Rotterdam, Amsterdam and Hamburg are in the technological
forefront and they hold an unreachable position for the Dry Docks of Genoa. Marseille,
Barcelona and Malta live contradictions so similar to Genoa’s ones. The challenge is
played mainly on the due delivery’s trustworthiness of the final product.
Important additional services that can be required to a Dry Docks company are the
possibility of satisfying the crew’s requests (in fact the crew live on board of the ship
during the works) and to grant security safety towards people and things. Another
essential issue is represented by the capability of working respecting the main standard
characters given by international organisms of control. Other interesting parameters are
the capability of the company in not loosing time (in fact the ships are profitable when
they can sail); so companies don’t have to waste time due to spare parts delay or
for instruments of work that have limited capabilities.
Management and Staffing
The organization chart of the company consists of a management that is characterized by
an administrator (or General Manager) and an administrative office where five office-
workers and a director of operations. Then there is a technical office made of two heads
of team, eleven electricians, three boatswains (personnel managers), twenty between
sailors, crane operators and carpenters, and one maintenance-team that includes five
authorized staff.
If the company will be able to build a new dry dock (characterized by important
dimensions) during next years, then it should expand its staff at least of eight members.
The features of these new specialists will be chosen considering the necessities connected
with the building of the innovative facility.
Within a company that provides services, the cost of the work is definitely high and
during the last years it has represented at least 35% of whole turnover. To work out the
salaries the firm relies upon the Italian national contract for engineering workers,
enriched by an integrative internal contract that improves considerably the wages. In fact
this type of agreement pays remarkably the overtime for all workers.
8
Status (professional qualification) Time of work Firm's cost per month Wage per month
Manager 8-18+ext. time
9.800,00 euro 3.000,00 euro
Technician 8-18+ext. time
6.700,00 euro 2.400,00 euro
Office-worker 8-17 5.500,00 euro 1.700,00 euro
Team's head 8-18+ext. time
5.500,00 euro 1.900,00 euro
Electrician (shift worker) 8 hours 4.700,00 euro 1.550,00 euro
Crane operator (shift worker) 8 hours 4.700,00 euro 1.550,00 euro
Worker 8 hours 4.450,00 euro 1.400,00 euro
Beginner (worker) 8 hours 1.900,00 euro 980,00 euro
Headcount
Personnel 2012 2013 2014
Manager 1
1
1
Team's head 5
5
5
Office-worker 4
4
4
Electrician 14
16
18
Crane operator 18
20
22
Carpenter 6
8
10
Worker 2
4
6
50
58
66
Monthly salary (EUR)
Personnel 2012 2013 2014
Manager 9,800
9,800
9,800
Team's head 5,500
5,500
5,500
Office-worker 5,500
5,500
5,500
Electrician 4,700
4,700
4,700
Crane operator 4,700
4,700
4,700
Carpenter 4,700
4,700
4,700
Worker 4,450
4,450
4,450
Labor cost (EUR)
2012 2013 2014
Wages and salaries 2,961,600
3,406,800
3,852,000
Social security costs 0
0
0
Labor cost 2,961,600
3,406,800
3,852,000
REVENUES 6,400,000
11,000,000
14,000,000
Labor cost to revenues 46.3%
31.0%
27.5%
9
Implementation Plan
The company has troubles in trying to stand comparison with other international
shipyards, as those situated in the north of Europe or in South Korea and China. The main
causes of this backwardness have to be researched in the lack of technological innovation
that is necessary for a such important plant engineering. The productive process of the
Dry Docks Genoa consists of receiving different-dimensions ships and, after that the
boats have been docked, offers the necessary services for permitting other companies of
effecting the requested interventions (following important parameters and standards set
by international bodies like Boureau Veritas, RINA, LLoydd Register, ABB, etc...). The
skill of the management consists in researching structural and engineering critical states
and investing in the appropriate way for increasing technology and organization. In order
to clarify this concept, we can proceed reporting an example that considers the closing’s
system of dry docks (this is fundamental for proceeding with emptying of the same dry
docks). The dry docks of Ente Bacini utilize doors to close the gates (this is the most
famous system used all over in the world). Such gate is sunk at the entrance of the dry
dock. Four hours are usually necessary for emptying a medium-size dry dock (250 met. x
40 met.). However floating dock needs two hours.
Within shipping world time is money, so those firms who are able to safe time warranting
security and quality of services, are for sure winning. The same considerations have to be
done with cranes, short power supply and compressed air, as well as for hot works
equipment used for steel repair.
Overhead and Investments
The shareholders’ meeting has recently approved a new investment plan. It establishes
interventions of refit concerning the eleven cranes (around two millions of Euro) whose
Ente Bacini can arrange, the making safe of the gates of each dry dock (200.000 Euro)
and the complete renovation of one door (650.000 Euro). Then the company, utilizing the
financial resources coming directly from the Italian government through the Port
Authority, will realize the so-called “Cold Iron” (that is a mechanism of supplying for
giving energy straight from shore power lines) , an important instrument necessary for
closing the on board generators, reducing in this way atmospheric emissions and
consequently pollution (around 14 million of Euro). Furthermore nine million of Euro
have been entered for reducing pollution caused by the two dry docks closer to the city
centre (house settlements).
ISP-Code systems, utilizing for controls against terroristic actions, have already been
realized.
Good's name Unit cost Time of realisation
Crane 150.000 euro 90 days per crane
Door 650.000 euro 300 days
Access staircases 40.000 euro 365 days
10
Cold Iron 14 millions of euro 3 years
Telescopic covering 9 millions of euro 2 years
Other operating expenses (EUR)
Other operating expenses 2012 2013 2014
Raw materials and goods 1,300,000
1,500,000
1,800,000
Services and Overhead 2,000,000
2,200,000
2,500,000
3,300,000
3,700,000
4,300,000
Assets purchase value (EUR)
Fixed assets 2012 2013 2014
Immaterial assets 1,000,000
500,000
200,000
Material fixed assets 250,000
100,000
100,000
1,250,000
600,000
300,000
Financing
The company’s resources on one hand are distributed among the shareholders (Port
Authority and other private companies) and on the other hand they are directly property
of the Port Authority who got them through public state act. Ente Bacini, to face the
forecast interventions and investments, will have to increase its capital stock and all
tariffs connected with its offered services (always considering the market demand and the
actual period of world economic crisis). The forecast capital increase is equal to 700.000
euro that has to be added to the current 300.000 euro. So the total amount is one million
of euro and it has to be entirely endorsed. The rate increase will have to be less than 10%
to preserve the client base and not drive it towards other dry docks.
After one year the economic resources will be about two millions of euro and around
900.000 for all next years. This opportunity permits the company of getting the necessary
resources to solve the above-mentioned structural problems (utilizing loans and financial
plans as well).
Capital structure (EUR)
2012 2013 2014
Current assets 1,364,015
1,790,759
2,767,055
Fixed assets 1,200,000
1,730,000
1,940,000
Current liabilities 1,043,333
561,112
77,778
Long-term liabilities 500,000
0
0
Owners' equity 1,020,682
2,959,647
4,629,276
11
Financial Projections
Performance measures (EUR)
2012 2013 2014
Sales revenue 6,400,000
11,000,000
14,000,000
Export sales 730,000
1,400,000
1,600,000
Cost of sales 640,000
1,100,000
1,400,000
Gross profit 5,760,000
9,900,000
12,600,000
Other operating revenue and expenses 0
0
0
Other operating expenses 3,300,000
3,700,000
4,300,000
Labor cost 2,961,600
3,406,800
3,852,000
Depreciation of fixed assets 50,000
70,000
90,000
Operating profit -551,600
2,723,200
4,358,000
EBITDA -501,600
2,793,200
4,448,000
Financial income and expenses -105,000
-67,083
-16,042
Profit before income tax -656,600
2,656,117
4,341,958
Income tax expense -177,282
717,151
1,487,329
Profit -479,318
1,938,965
2,854,629
Operating margin -7.49%
17.6%
20.4%
Gross margin 90%
90%
90%
Sales per employee 128,000
189,655
212,121
Value added 2,460,000
6,200,000
8,300,000
Value added per employee 49,200
106,897
125,758
Return on equity (per year) -47.0%
65.5%
61.7%
Quick ratio 1.31
3.19
35.6
Current ratio 1.31
3.19
35.6
ISCR -4.78
41.6
277
DSCR 0
2.62
8.62
Debt to equity ratio 1.47
0.17
0
Debt to capital ratio 59.5%
14.5%
0%
12
Receivables collection period, days 24.4
20.0
20.0
Payable period, days 24.4
20.0
20.0
Inventory period, days 0
0
0
Income statement (EUR)
2012 2013 2014
Sales revenue 6,400,000
11,000,000
14,000,000
Export sales 730,000
1,400,000
1,600,000
Other operating revenue 0
0
0
Cost of sales 640,000
1,100,000
1,400,000
Other operating expenses 3,300,000
3,700,000
4,300,000
Labor cost
Wages and salaries 2,961,600
3,406,800
3,852,000
Social security costs 0
0
0
Total labor cost 2,961,600
3,406,800
3,852,000
Depreciation of fixed assets 50,000
70,000
90,000
Operating profit -551,600
2,723,200
4,358,000
Financial expenses
Interest expense 105,000
67,083
16,042
Total financial expenses 105,000
67,083
16,042
Profit before income tax -656,600
2,656,117
4,341,958
Income tax expense -177,282
717,151
1,487,329
Net profit for financial year -479,318
1,938,965
2,854,629
Balance sheet (EUR)
2012 2013 2014
ASSETS
Current assets
Cash 753,400
1,179,643
1,989,272
Receivables and prepayments
Trade receivables 433,333
611,116
777,783
Prepaid and deferred taxes 177,282
0
0
Other short-term receivables 0
0
0
Inventories
Inventories 0
0
0
Total current assets 1,364,015
1,790,759
2,767,055
Fixed assets
Tangible assets
Machineny and equipment 1,250,000
1,850,000
2,150,000
Less: Accumulated depreciation -50,000
-120,000
-210,000
Total 1,200,000
1,730,000
1,940,000
Total fixed assets 1,200,000
1,730,000
1,940,000
Total assets 2,564,015
3,520,759
4,707,055
LIABILITIES and OWNERS' EQUITY
Liabilities
Current liabilities
Loan liabilities
Short-term loans and notes 0
0
0
Current portion of long-term loan liabilities 1,000,000
500,000
0
Total 1,000,000
500,000
0
13
Debts and prepayments
Trade creditors, goods 43,333
61,112
77,778
Trade creditors, other 0
0
0
Employee-related liabilities 0
0
0
VAT (GST) 0
0
0
Total 43,333
61,112
77,778
Total current liabilities 1,043,333
561,112
77,778
Long-term liabilities
Long-term loan liabilities
Loans, notes and financial lease payables 500,000
0
0
Deferred grant revenue 0
0
0
Total long-term liabilities 500,000
0
0
Total liabilities 1,543,333
561,112
77,778
Owners' equity
Share capital in nominal value 1,500,000
1,500,000
1,500,000
Share premium 0
0
0
Retained profit/loss 0
-479,318
274,647
Current year profit -479,318
1,938,965
2,854,629
Total owners' equity 1,020,682
2,959,647
4,629,276
Total liabilities and owners' equity 2,564,015
3,520,759
4,707,055
Cash flow statement (EUR)
Jan-2012 Feb-2012
Mar-2012
Apr-2012
May-2012
Jun-
2012
CASH FLOWS FROM OPERATING
ACTIVITIES
Inflows
Payments from customers 111,111
333,332
333,333
388,891
500,000
500,000
Receipt of grant financing (operating
expenses)
0
0
0
0
0
0
Receipt of grant financing (personnel
expenses)
0
0
0
0
0
0
Receipt of other operating revenue
0
0
0
0
0
0
Total 111,111
333,332
333,333
388,891
500,000
500,000
Outflows
Payments to vendors (goods) 11,111
33,333
33,333
38,889
50,000
50,000
Payment of salaries and wages 246,800
246,800
246,800
246,800
246,800
246,800
Social security costs 0
0
0
0
0
0
Payments to vendors (operating
expenses)
274,999
274,999
274,999
274,999
274,999
274,999
Total 532,910
555,132
555,132
560,688
571,799
571,799
Net cash flow from operating
activities
-421,799
-221,800
-221,799
-171,797
-71,799
-71,799
CASH FLOWS FROM INVESTING
ACTIVITIES
Receipt of grant financing (assets) 0
0
0
0
0
0
Total 0
0
0
0
0
0
Outflows
Payments to vendors (assets) 1,250,000
0
0
0
0
0
Total 1,250,000
0
0
0
0
0
Net cash flow from investing activities
-1,250,000
0
0
0
0
0
CASH FLOWS FROM FINANCING
ACTIVITIES
Inflows
Inflows of nominal value 1,500,000
0
0
0
0
0
Inflows of share premium 0
0
0
0
0
0
14
Loan amounts received 1,500,000
0
0
0
0
0
Total 3,000,000
0
0
0
0
0
Outflows
Principal repayments 0
0
0
0
0
0
Interest expense 8,750
8,750
8,750
8,750
8,750
8,750
Dividends (net to shareholders) 0
0
0
0
0
0
Payment of corporate income tax
0
0
0
0
0
0
Corporate income tax on dividends
0
0
0
0
0
0
VAT Return 0
0
0
0
0
0
Total 8,750
8,750
8,750
8,750
8,750
8,750
Net cash flow from financing activities
2,991,250
-8,750
-8,750
-8,750
-8,750
-8,750
Net change in cash and cash
equivalents
1,319,451
-230,550
-230,549
-180,547
-80,549
-80,549
Cash and cash equivalents at the
beginning
0
1,319,451
1,088,900
858,351
677,804
597,255
Cash and cash equivalents at the end 1,319,451
1,088,900
858,351
677,804
597,255
516,706
Cash flow statement (EUR)
Q3-2012 Q4-2012 Q1-2013 Q2-2013
CASH FLOWS FROM OPERATING ACTIVITIES
Inflows
Payments from customers 1,850,000
1,950,000
2,572,221
2,749,998
Receipt of grant financing (operating expenses) 0
0
0
0
Receipt of grant financing (personnel expenses) 0
0
0
0
Receipt of other operating revenue 0
0
0
0
Total 1,850,000
1,950,000
2,572,221
2,749,998
Outflows
Payments to vendors (goods) 185,000
195,000
257,222
275,000
Payment of salaries and wages 740,400
740,400
851,700
851,700
Social security costs 0
0
0
0
Payments to vendors (operating expenses) 824,997
825,009
924,999
924,999
Total 1,750,397
1,760,409
2,033,921
2,051,699
Net cash flow from operating activities 99,603
189,591
538,300
698,299
CASH FLOWS FROM INVESTING ACTIVITIES
Receipt of grant financing (assets) 0
0
0
0
Total 0
0
0
0
Outflows
Payments to vendors (assets) 0
0
600,000
0
Total 0
0
600,000
0
Net cash flow from investing activities 0
0
-600,000
0
CASH FLOWS FROM FINANCING ACTIVITIES
Inflows
Inflows of nominal value 0
0
0
0
Inflows of share premium 0
0
0
0
Loan amounts received 0
0
0
0
Total 0
0
0
0
Outflows
Principal repayments 0
0
249,999
249,999
Interest expense 26,250
26,250
23,333
18,958
Dividends (net to shareholders) 0
0
0
0
Payment of corporate income tax 0
0
134,967
134,967
Corporate income tax on dividends 0
0
0
0
VAT Return 0
0
0
0
Total 26,250
26,250
408,300
403,925
Net cash flow from financing activities -26,250
-26,250
-408,300
-403,925
15
Net change in cash and cash equivalents 73,353
163,341
-470,000
294,374
Cash and cash equivalents at the beginning 516,706
590,059
753,400
283,400
Cash and cash equivalents at the end 590,059
753,400
283,400
577,774
Cash flow statement (EUR)
2012 2013 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Inflows
Payments from customers 5,966,667
10,822,217
13,833,333
Receipt of grant financing (operating expenses) 0
0
0
Receipt of grant financing (personnel expenses) 0
0
0
Receipt of other operating revenue 0
0
0
Total 5,966,667
10,822,217
13,833,333
Outflows
Payments to vendors (goods) 596,667
1,082,222
1,383,333
Payment of salaries and wages 2,961,600
3,406,800
3,852,000
Social security costs 0
0
0
Payments to vendors (operating expenses) 3,300,000
3,700,000
4,300,000
Total 6,858,267
8,189,022
9,535,333
Net cash flow from operating activities -891,600
2,633,196
4,298,000
CASH FLOWS FROM INVESTING ACTIVITIES
Receipt of grant financing (assets) 0
0
0
Total 0
0
0
Outflows
Payments to vendors (assets) 1,250,000
600,000
300,000
Total 1,250,000
600,000
300,000
Net cash flow from investing activities -1,250,000
-600,000
-300,000
CASH FLOWS FROM FINANCING ACTIVITIES
Inflows
Inflows of nominal value 1,500,000
0
0
Inflows of share premium 0
0
0
Loan amounts received 1,500,000
0
0
Total 3,000,000
0
0
Outflows
Principal repayments 0
1,000,000
500,000
Interest expense 105,000
67,083
16,042
Dividends (net to shareholders) 0
0
1,185,000
Payment of corporate income tax 0
539,869
1,172,329
Corporate income tax on dividends 0
0
315,000
VAT Return 0
0
0
Total 105,000
1,606,953
3,188,371
Net cash flow from financing activities 2,895,000
-1,606,953
-3,188,371
Net change in cash and cash equivalents 753,400
426,243
809,629
Cash and cash equivalents at the beginning 0
753,400
1,179,643
Cash and cash equivalents at the end 753,400
1,179,643
1,989,272
16
Risk Analysis
The elements that could endanger the Ente Bacini’s business plan are hard to identify. In
fact, the services towards productive activities follow the market fluctuations and then, in
presence of economic crises, either the same services or the power of the company
decrease. Besides there are critical situations that can be identified both the trade-union
problem and the lack of innovative technologies regarding the plant engineering (the
latter really concerns the Dry Docks of Genoa).
Therefore for getting round this, a social peace is necessary and work contracts have to be
appealing. Besides during the most prosperous moments the company has to be able to
set aside economic resources to be used later for ordinary and extraordinary maintenance.
However the company has to entertain good relationships with the Port Authority and
with Ministry of Public Works and Transport. This is indispensable because the
economic strategy of ports is not merely a local problem, but nowadays it concerns the
entire country and actually the whole of Europe. (The railway network, that connects
from one side to the other all European ports, can be considered as an example regarding
what above-mentioned).
Break-even analysis (EUR)
2012 2013 2014
Sales revenue 6,400,000
11,000,000
14,000,000
Cost of sales 640,000
1,100,000
1,400,000
Variable expenses, total 640,000
1,100,000
1,400,000
Labor cost 2,961,600
3,406,800
3,852,000
Other operating expenses 3,300,000
3,700,000
4,300,000
Depreciation of fixed assets 50,000
70,000
90,000
Financial expenses 105,000
67,083
16,042
Fixed expenses, total 6,416,600
7,243,883
8,258,042
Gross margin 90%
90%
90%
Break-even sales revenue 7,129,556
8,048,759
9,175,602
Sales revenue above break-even 0
2,951,241
4,824,398
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