BUCKETMAN PROJECT

AGENDA
Introduction

of business and company Investment strategy Pricing, Execution and Risk

I. INTRODUCTION OF BUCKETMAN
Add: Huynh Van Luy, Thu Dau Mot, Binh Duong Ownership: Foreign investment from 2004 Total employees: 36 at current (of which 3 expats) Major Customer: IKEA Total factory: 3000-5000m2 Current capacity: 40% (2011) CEO: Mr. Nicklas Karsson Industry: Steel processing

BUCKETMAN BUSINESS

Main Technologies:

Tube semi automated bending (X1); Punching (x1), , Resistant welding, TIG Welding, Robot welding Powder Coated

Finished goods: supporting to product lines as storage, Metal furniture in Carbon steel, combine material with textile & wood. Interior furniture Raw materials: Sheet: Local (Posco)/ Tube: King Star, Minh Huu Li % of production: Carbon steel tube (50%), sheet (35%), wire (15%en, 190 Tube Quality (IKEA): SQA, IWAY (95%) Distribution: Export (90%) and local

LEGAL DOCUMENTS

Bucketman has adequate necessary documents supporting to legal issues such as establishment/business register, ownership, taxation, real property, fixed assets, employment, insurance

BUCKETMAN FINANCIAL POSITION

BALANCE SHEET at 30 Sep 2011 Current Asset Cash Trade receivables Inventories Other current assets Long-term Assets Fixed assets Other long term assets 9.124.230.448 Liabilities 517.334.795 Trade Payables 4.420.103.285 Due to Nick 2.420.967.758 1.765.824.610 4.094.432.321 Equity 3.924.555.393 Owned Capital 169.876.928 Acc Loss -2.858.701.595 1.643.827.398 -4.502.528.993 16.077.364.364 9.391.582.814 6.685.781.550

TOTAL

13.218.662.769

13.218.662.769

BUCKETMAN FINANCIAL POSITION

Assets Cash Trade receivables Inventories 517 517 4.420 3.492 (receivable from customer) 2.421 2.421

Unit: Mil VND

Revaluation at 30 Sep 2011

Other current assets

Fixed assets

1.766 VAT input, advances to suppliers, receivables from State, could not convert into cash
3.925 3.527 NBV at 30 Sep 2011

TOTAL

9.957

Due to we have not obtained the Financial reports of Bucketman at the latest date then the above analysis is for purpose of general evaluation of financial position of Bucketman. The revaluation is based on the assumption that: Liquidity of these assets is absolute (recoverable ratio = 100%).

BUCKETMAN FINANCIAL POSITION

Liabilities Trade Payables 9.391

Unit: Mil VND

Revaluation at 30 Sep 2011 9.391 Of which Short-term loan and Payables to suppliers and advance from customer: 8.931 (95%)

Due to Nick

6.686

6.686 Mr.Nick made this loan to the company for buying cars and being used as working capital in many years.
16.077

TOTAL

Equity Owned Capital Acc Loss 1.643 -4.502 TOTAL 1.643 (4.502) (2.858)

Revaluation at 30 Sep 2011

BUCKETMAN FINANCIAL POSITION

The recoverable assets value is not enough to cover the liabilities

Assets 9.957 =Asset Liabilities (after revaluation at 30-Sep2011) Liabilities 16.077 (6.120)mVND

The accumulated loss is extremely big which causes the equity is negative now -2.858mVND

BUCKETMAN FINANCIAL POSITION

INCOME STATEMENT at 30 Sep 2011 Sale COGS Gross Profit Financial Income Selling and G&A expense Other income Earnings before tax Earnings after tax 38.079.782.718 - 31.034.234.287 7.045.548.431 548.332.221 -6.916.528.125 -39.670.391 637.682.136 637.682.136 Unit: VND

BUCKETMAN FINANCIAL POSITION

Turnover total: ~2mil USD (up to Sep 2011) Most of valued fixed assets of Bucketman are used under capacity. The current production only remains at 4.000 operations/day, which generate 2mil USD as revenue now. (the designed production is 10.000 opertaions/day) ~35-40% of raw materials are purchased locally, which partly causes high COGS. Selling and G&A expense is too high, not relevant to the total no. of employee (36 persons) The company just makes profit for 2 years so far (2010: ~500mVND and 2011: ~600mVND)

SUMMARY OF FINANCIAL POSITION

Bucketman has difficulties with working capital due to the accumulated loss from 2006-2011 with amount >2bil VND. Bucketman had to delay payments for some suppliers in 2011 due to shortage of working capital. Receivables only from major customer is IKEA Capacity to generate revenue is low meanwhile the fixed cost remains high The companys operation currently relies much on the money lent by Mr.Nick.

SWOT ANALYSIS- BUCKETMAN

STRENGTH - Well-equipped in-house workshop - Owner: long-term business with IKEA, strong understanding of IKEA standards, many potential customer from Europe. - Know-how: SQA, IWAY (95%) WEAKNESS - Limited product range: all made from steel only. - Poor administration: only the owner can understand the technical issues and run business stably - Under capable machines operation - Financial difficulties due to unstable operation and poor revenue THREAT - Owners sickness limits his participation into business - Pending claim at IKEA may lead to discontinued business - Labor shortage - Downturn demand of steel industry

OPPORTUNITY - Possibility to expand production range as Bucketman plans to take over a Bamboo factory For GIL: -Improve production chain, optimize margin, build up share with IKEA -Expand product range: metal, metal+ mixed materials -Start up steel processing business.

SWOT (CONT.)
Maxi-Maxi use S to maximize O -Exploit current know-how, wellequipped infrastructure, available human resources to increase efficiency in GILs traditional business. - Start up and develop business in steel and steel processing industry with recognized standards. Mini-mini minimize W to avoid T -Provide administration and human resources supports to take controlling stake of BKM in order to increase production capacity, revenue. -Build up a favor supply position in Carbon Steel industry thanks to economic down turn

II. INVESTMENT STRATEGY

Rationales Based on the need and long-term strategy of GIL Opportunity to take the controlling stake of Bucketman

III. PRICING AND EXECUTION

Need from GIL In house metal workshop to improve the upstream cost (as Gil and Bucketman both have same major customer is IKEA) Need from Bucketman A reliable and financial strength to recover from current financial status and to develop business. A management support for the factorys operation, then the Mr.Nick can work at his best and with his current health status, on product R&D and expanding customer networking. Build up the trust from IKEA to improve business.

Expand business on product ranges: Metal + Mixed material

PROPOSAL
Investor will acquire 51% of Bucketmans stake after the signed agreement date. Investor will put a favor credit of 3bil VND with low interest at 8% in 3-4 years as working capital served for maintain and improve Bucketman business. Investor will support resources i.e human, administrative process, financial management for restructuring Bucketman.

IV. BUSINESS PLAN FOR BUCKETMAN