Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

ANALYSIS OF FINANCIAL STATMENTS

REPORT ON THE FINANCIAL MARKETING PLAN OF

AQUVA SPA & FITNESS CENTRE

Submitted to: MR. S.M. SHUJA RIZVI
Submitted by Group Six 1) Mr. M. Ashar Jameel 2) Mr. M.Faisal Panawala
(MEN-2200344) (MEN-2200649)

Submission Date: 16th September, 2007

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

TABLE OF CONTENTS
S/ NO. DESCRIPTION PAGE NO.

(i) (ii) (iii) 1 2

LETTER OF TRANSMETTAL PREFACE ACKNOWLDEGMENT EXECUTIVE SUMMARY FINANCIAL ANALYSIS 2.1 2.2 2.3 2.4 FINANCIAL OBJECTIVES BREAK EVEN ANALYSIS SALES FORECAST MARKETING EXPENSE BUDGET

04 05 06 07 07 07 08 08 08 09 10 10 10 11 11 11 11 12 12 12 13

MARKET SUMMARY 3.1 3.2 3.3 MARKET NEEDS MARKET TRENDS MARKET GROWTH

MARKET STRATEGY 4.1 4.2 4.3 4.4 4.5 4.6 MISSION MARKETING OBJECTIVES TARGET MARKET POSTIONING MARKETING MIX MARKETING RESEARCH

SWOT ANALYSIS

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

2nd September. 2007 Mr. S. M SHUJA RIZVI Hamdard Institute of Management Sciences Hamdard University, City Campus Karachi. Subject: LETTER OF TRANSMITTAL Dear Sir, With all due respect we are thankful to you for giving us a worth-while opportunity to have the new experience which is not only fruitful in our present but also will help us in future because of its practical nature and application. Enclosed find herewith a term report of Analysis of Financial Statement. This report is prepared on estimating Financial Marketing Plan for a Spa & Fitness Centre named Aquva Spa & Fitness Centre. In order to make this report, we tried our level best to get as much information from concerned people as we can. Report is submitted for your kind perusal please.

1. M. Faisal Panawala

____________________

2. Muhammad Ashar Jameel

____________________

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

PREFACE
To fulfill the requirement of our course outline of Analysis of Financial Statement, we both students combined together were asked to make a group and prepare a financial plan based report on Spa & Fitness Centre. We chose the area of SharaeFaisal to start our project.

Before starting the report, we worked on several factors that influence the plan of constructing the health centre; we matched the standard of construction that was maintained by other health resorts. So it would be easy for us to analysis the cost, competition around & service criteria.

During preparation of this report, we both as a group members completely cooperated with each other. Each of us tried our best to incorporate and implement all the aspects taught to us in the course.

Now, the decision about the authentication and standard of the report is in the hands of our respected teacher Mr. S.M Shuja Rizvi and we hope that our report will receive a favorable consideration at our teachers hands.

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

ACKNOWLEDGEMENT
First of All we are grateful to Almighty Allah, for his blessings that enabled us to understand and undertake the opportunity for completing this report with the right approach and sense of direction.

We wish to express our sincere thanks to Mr. S.M Shuja Rizvi the respected teacher for giving us an opportunity to work on a practical approach project and giving us the guidance to complete the same.

We would also like to thank all the friends, colleagues and concerned persons like trainers, fitness centre owners, health resorts etc. who helped us in the preparation of this report.

Special thanks go to all of our supporters who contributed in the formation of this report in order to make it they tried their level best and each member collected as much information as they can.

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

1. Executive Summary

Aquva Spa & Fitness Centre will serve Karachi-area residences & businesses, helping them to become more productive, healthy & fresh while lowering businesses costs with innovative Wellness programs and strategies to serve them. At Aquva Spa & Fitness Centre (ASFC), we tie your smartness & productivity directly to the health care issue. We believe that traditional approaches to the current health care crisis are misdirected. These traditional efforts wait until after you have been stricken with illness or injury, and then pay for the necessary treatments. Our approach, which emphasizes prevention and good health promotion, is much more proactive. The state of Pakistans healthcare crisis, coupled with current demographic changes, threaten to not only aggravate the crisis, but further corrode health as Well. For us these environmental factors coupled with the local competitive situation signal a favorable opportunity in this market. We feel the time is right for Aquva Spa & Fitness Centre.

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

Financial Analysis

This section will offer a financial overview of Aquva Spa & Fitness Centre as it relates to the financial activities. We will address Break-even Analysis, sales forecasts, expense forecasts, and how they link to the marketing strategy

2.1 Financial Objectives Decrease customer acquisition costs by 4% every two quarters. Lower the cost of service delivery by 1% a quarter. Holding spending, as a percentage of sales, at a steady rate.

2.2 Break-even Analysis Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost 250 Rs.625,000

Rs.2,500 Rs.500 Rs.500,000

2.4 Marketing Expense Budget 2007 TV Ad Campaign Pamphlet Production Website Other Total Cost Percent of Sales Rs. 1,250,000 Rs. 350,000 Rs. 250,000 Rs. 100,000 Rs. 13,200,000 38.00%

2008 Rs. 8,000,000 Rs. 300,000 Rs. 200,000 Rs. 100,000 Rs. 8,600,000 15.00%

2009 Rs. 8,000,000 Rs. 300,000 Rs. 200,000 Rs. 75,000 Rs. 8,575,000 14.00%

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

3.

Capital Structure

Classification of Equity & Debt

Capital of Sponsors Mr. Ashar Jameel Mr. Faisal Panawala

Rs. in 000 5,000 5,000

Borrowed Capital First Meezan Murabaha Al-Jazaeer Investment

Rs. in 000 10,000 5,000

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

Income Statement of the project over 5 years 2007 Revenues Corporate Clients Individual Clients Total Revenues Cost of Sales Payroll Room Expenses Telephone Expenses Dining/Parties Fitness/Spa/Gym Repair & Maintenance Utilities Total Cost of Sales Gross Profit Marketing Expenses TV Ad Campaign Web Site Pamphlet Total Marketing Expenses Administrative Expenses 2008 2009 2010

Rs. In '000 2011

17,500 9,000 26,500 7,000 5,000 1,000 4,000 1,000 1,000 1,000 (20,000) 6,500 1,250 250

20,000 12,000 32,000 7,000 5,000 1,000 4,000 1,000 1,000 1,000 (20,000) 12,000 800 250

22,000 10,000 32,000 7,500 5,000 1,000 4,000 1,000 1,000 1,000 (20,500) 11,500 800 250

22,000 9,500 31,500 7,500 5,000 1,000 4,000 1,000 1,000 1,000 (20,500) 11,000 800 250

21,000 9,000 30,000 8,000 5,000 1,000 4,000 1,000 1,000 1,000 (21,000) 9,000 800 250

100 1,600 2,500 (4,100) 2,400

0 2,400 (240) 2,160

75 1,125 2,500 (3,625) 8,375

(2,000) 6,375 (638) 5,738

50 1,100 2,800 (3,900) 7,600

(2,000) 5,600 (560) 5,040

50 1,100 2,800 (3,900) 7,100

(2,000) 5,100 (510) 4,590

50 1,100 2,600 (3,700) 5,300

(2,000) 3,300 (330) 2,970

Operating Income Finance Cost Profit before Taxation Taxes (10%) Profit after Taxation

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

4. Market Summary Aquva Spa & Fitness Centre possesses good information about the market and knows a great deal about the common attributes of the prized and loyal customers. This information will be leveraged to better understand who is served, their specific needs, and how Aquva Spa & Fitness Centre can better communicate with them. The business model has been well received and marketing is especially important to maintain growth and market penetration. In addition to offering fitness facilities for Karachi corporations & residence, Aquva Spa & Fitness Centre' main activity is the recreation Spa Wellness programs. The basic market need for our corporate clients is the reduction of corporate costs and the increase in employee efficiency & to provide them & our individual customer Spa facilities to relax and health facility that can be achieved through long-term Wellness programs.

4.1 Market Needs Aquva Spa & Fitness Centre is providing their customers with a health care cost management program for Individuals who seek relax environment to be taken care off & Corporate that will increase employee productivity and decrease overall business costs. We seek to fulfill the following benefits that are important to their customers. We will offer a totally customized solution for each company as well as to individuals. Our results-orientated strategy will improve a company's bottom line in order to attract and maintain customers. While we strive to address all of the customer's needs, the reality is that they must indeed provide significant value for the companies themselves in order to grow their market share.

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

Recently there were widespread reports about an impeding health crisis & obesity. Pakistanis, relative to their Asian counterparts have higher incidents of obesity. To a large degree, this is correlated to Pakistanis unhealthy diet of oily, fast food, and generally poor food choices, especially fried foods. There have been two significant market trends in the last five years. 1. Increased usage of fitness facilities on behalf of individuals. 2. Exercising and working out has become a more mainstream activity in Pakistanis lives over the last decade.
Market Growth Trend

4.3 Market Growth Important demographic changes are taking place in Pakistan that point to the importance of worker productivity in coming decades. The chart shows explosive growth in the health wellness program industry. The last five years has seen a 9% growth rate and the next five years are expected to achieve a 10% growth rate.
60 50 40 30 20 10 0 2005 2006 2007 2008 2009

5. Marketing Strategy Aquva Spa & Fitness Centre will begin by targeting small- to medium-sized businesses in the downtown Karachi area. The first task is to convince senior executives of the benefits and needs of wellness programs. This will be accomplished by aggressively pursuing interaction and relationships with business professionals who would profit from using this service.

5.1 Mission Aquva Spa & Fitness Centre is a health service that helps businesses and individual to attain one of the greatest gifts of all good health. Personal gains, such as improved selfesteem and self-motivation, combined with measurable benefits & advantages.

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

5.2 Marketing Objectives Generate a 10% yearly increase in sales. Increase market penetration every quarter. Continue to cultivate ASFC image as the premier long-term wellness program provider. 5.3 Target Market The market for Aquva Spa & Fitness Centre is not particularly segmented, as potential customers include all downtown businesses that offer their employees some type of medical benefits, are experiencing escalating health care costs, and wish to more effectively manage those costs. ASFC will also target individuals who want to relax and want to take a breather in a friendly environment to use our spa & fitness facilities.

5.4 Positioning Aquva Spa & Fitness Centre will position them selves as the most effective wellness strategy and program developer. This positioning will be supported by statistics indicating an increase in you productivity and a decrease in business operation expenses from the implementation of corporate wellness programs.

5.5 Marketing Mix Aquva Spa & Fitness Centre marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion, and customer service. Pricing- Prices for using Aquva Spa & Fitness Centre services are comparable to those of higher-end fitness centres. The prices reflect the quality of the equipment and service. Distribution- This will occur both at the company's worksite or individual customers place as well as at ASFC facilities. Advertising and Promotion- Printed material, presentations, advertising in industry specific journals, TV ad and a comprehensive website will be used.

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

Customer Service- Aquva Spa & Fitness Centre will operate on the principle that it is imperative to achieve total customer satisfaction if the business is going to succeed. 5.6 Marketing Research Two types of market research were used when we were collecting market research. Focus Group The first type of research was focus groups. The focus groups were collections of seven to nine people who were asked a series of predetermined questions with the responses recorded and discussed among the group members. Questionnaires were used to collect market information from perspective customers. The questionnaires were submitted to a total of 100 HR

professionals. The response rate was 43, higher than expected. This research introduced several valuable perspectives that ASFC was not yet privy to.
6. SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Aquva Spa & Fitness Centre.
6.1 Strengths

o Results-orientated approach to attracting and maintaining customers. o A well-researched, detailed health wellness program that is long-term in focus. o Intensively trained staff.
6.2 Weaknesses

o High costs associated with customized, personal service. o The inability to work on a high volume business model. o The costs of attracting a large corporate client.
5.3 Opportunities

o Participation within a growing market.

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

o The large increase in clients that follow with the acceptance of Aquva Spa & Fitness Centre Corporate Fitnesss program by a single company. o The ability to leverage future quantitative analysis that supports the contention that long-term wellness programs have a significant, positive impact on a company's bottom line.
5.4 Threats

o Lack of immunity to an economic downturn. o Potential competition from larger, well established competitors. o A change in society where the individual begins to take far more responsibility for his/her health maintenance.

6.3

Spa Services Overview

Advanced skin care, therapeutic body treatments, nutrition, exercise, and stress management are major components of our services. Bridging scientific research and advanced technologies with medical spa therapies originating from Europe and Asia, we are committed to providing exceptional services in a medically supervised spa. Our services include, acupuncture, nutrition, massage therapy, dermatology, exercise, stress management, and weight loss. We offer preventative and restorative therapies that improve your, health, appearance, lifestyle choices, and well-being.

6.4

Keys to Success are: Marketing services to companies and individuals. Recruitment of experienced managerial talent. Dedication and hard work of the founders. Raising productivity. Lowering overall costs.

6.5

Critical Issues

Critical issues faced by Aquva Spa & Fitness Centre are:

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Hamdard Institute Of Management Sciences Analysis of Financial Statements Report

1. Sign up a sufficient number of medium-sized companies. It is more cost effective for us to service a couple medium-sized companies than many small companies. 2. Continue to drive down the costs associated with serving individual

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