GIFT designed and facilitated part of the 2010 Global Leaders Module (GLM), a component of the annual Senior Management Programme at the Lee Kuan Yew School of Public Policy. Participants worked with Hydrologic, a spin-off social enterprise set up by International Development Enterprises (IDE) to provide a rural Cambodians with a cheap low-tech device which provides a source of clean drinking water. The United Nations (UN) estimates that 1.8 million children around the world die each year as a result of diarrhoea, a disease partly caused by contaminated water. This issue is of utmost priority in poverty-stricken Cambodia, where years of civil war left much of the country’s infrastructure in ruins. The business plan proposed a revamp of the NGO-centric distribution system for the Hydrologic Ceramic Water Purifier into a for-profit model that stresses the education of rural Cambodians.

1. Senior Management Program
Safe Water Saves Lives
A Model for Affordable
Clean Water and Sanitation
for Rural Cambodia
1

2. Table of Contents
Executive summary………………………………………………………………..................... 5
Report objectives………………………………………………………………………………… 8
Background……………………………………………………………………………………….. 9
•
Cambodia’s challenges…………………………………………………………………….. 11
•
Current market opportunities and operating landscape………………………………… 13
Hydrologic: The Company and its Products….……………………………………………. 15
•
Core mission of the company……………………………………………………………… 16
•
Company background and history…………………………………….…………………… 17
•
Social Enterprise model development……………………………………..……………… 19
•
Current distribution reach and partner network………………………………………….. 21
•
Existing products……………………………………………………………………………. 23
•
Market penetration and opportunity…………………………………..…………………... 25
•
SWOT Analysis (Hydrologic, Rabbit CWP, Aspiration CWP)………………………….. 26
Proposed Business Model: ……………………………………………………………………. 29
•
Business Model……………………………………………………………………………… 30
•
Buyer utility map……………………………………………………………………………… 31
•
Target markets……………………………………………………………………………….. 32
•
Distribution channel for Rabbit CWP……………………………………………………… 33
•
Proposed sales and marketing channels………………………………………………… 34
•
Education service…………………………………………………………………………… 35
2

3. Table of Contents
•
Expansion strategy…………………………………….…………………………………….. 38
•
Geographic focus of sales activities……………………………………………………….. 40
•
Distribution centers and sales analysis……………………………………………………. 41
•
Proposed business model and quality control……………………………………………. 43
Value Proposition: Social and Economic Benefits………………………………………….. 47
Marketing and Sales plans………………………………………………………………………. 49
•
Overview of sales and marketing plans……………………………………………………. 50
•
Target market and sales projections……………………………………………………….. 51
•
Branding and pricing of various products………………………………………………….. 53
•
Marketing strategy…………………………………………………………………………….. 55
•
Marketing and sales structure……………………………………………………………….. 59
•
Training………………………………………………………………………………………… 60
•
Customer service.……………………………………………………………………………. 61
Governance and Strategic Partners……………………………………………………………. 62
•
Proposed structure and organisation………………………………………………………. 63
•
Terms of reference and employment requirements……………………………………… 64
•
Staffing plan…………………………………………………………………………………… 67
•
Strategic plans for Hydrologic………………………………………………………………. 68
•
Implementation timeline……………………………………………………………………… 69
3

4. Table of Contents
Financials………………………………………………………………………………………….
•
Social enterprise objectives………………………………………………………………..
•
Financial data assumptions………………………………………………………………..
•
Financial summary………………………………………………………………………….
•
Financials:
•
Income statement……………………………………………………………………
•
Cash flows……………………………………………………………………………
•
Operating expenses………………………………………………………………...
•
Income statement……………………………………………………………………
•
Cash flows……………………………………………………………………………
Risk assessment and mitigation………………………………………………………………
Implementation schedule……………………………………………………………………….
Conclusion………………………………………………………………………………………...
Appendices………………………………………………………………………………………..
4
70
71
72
74
75
76
77
78
79
80-82
83-86
87-88
89-94

5. Executive Summary (1)
LKY Senior Management Program (SMP)
• LKY SMP is a unique leadership programme designed for senior executives in the
government, non-profit and private sectors. The program explores global challenges,
pertinent topics and fundamental issues that affect decision making and leadership.
GIFT Global Leaders Module (GLM)
• The GLM is a 7-day experiential learning module which includes an immersive site
visit offering the participants an opportunity to apply their classroom learning, skills
and experiences to a critical development challenge in Southeast Asia. It takes place
in a real life setting requiring an innovative business-driven solution based on new
thinking and ideas from participants.
The SMP GIFT Program, 2010:
• This year, participants from the SMP program supported Hydrologic, a social
enterprise located in Cambodia in the process of re-working their business plan in
order to more effectively deliver affordable water and sanitation products using a
commercial approach to tackling a social health issue.
5

6. Executive Summary (2)
•
Hydrologic is a company currently in transition from an NGO to a social enterprise
business model. The transition requires the company to realign its business and
operations to facilitate its commercial viability.
•
Through the field trips and meetings with the various stakeholders, the SMP
participants identified gaps to be closed, operational inefficiencies to be streamlined
as well as new business opportunities for growth to be captured.
•
Participants identified a need for the organization to shift from reliance on grants
towards a mindset of entrepreneurship and proper corporate governance. The SMP
participants recommend that, upon incorporation as a private commercial entity,
Hydrologic’s management and staff be issued equity shares to promote greater buyin and interest in the well-being of the new company.
•
More importantly, there is a need to incentivise the sales staff and the retailers to
grow the market share for Hydrologic’s products.
6

7. Executive Summary (3)
•
Meanwhile, the establishment of the new production facility has created momentum
toward streamlining the company’s production and operations. The SMP participants
recommend that Hydrologic close the old plant and consolidates all operations and
management activities at the new plant.
•
The move to launch an improved version of the ceramic water purifier (CWP) is
timely. The true market potential and social impact of the product can be realized by
revamping the marketing and sales approaches, such as having all-in-one outlets for
sales, education and customer service.
•
The SMP participants have also identified that a structured and professional
approach is needed to build and sustain awareness of safe water and sanitation
practices among the rural community. This need presents a new opportunity for a
commercially viable education service that can be provided by Hydrologic.
Embarking on this new business will also reinforce Hydrologic’s social objectives and
its relevance and role in the Cambodian community.
7

8. Report Objectives
After onsite information gathering in Phnom Penh and surrounding rural areas, this report
serves as a business plan for Hydrologic and potential investors highlighting:
•
•
•
•
•
•
•
•
•
•
•
The water challenge in Cambodia
The current water purifier market
Market opportunities and challenges
Hydrologic’s current status
Proposed business model
Marketing and sales plans
8
Governance and strategic partners
Financial analysis
Risk assessment and mitigation
Implementation timeline
Conclusions

9. BACKGROUND
9

10. Country Background - Cambodia
•
•
•
•
•
•
Located in the Greater Mekong Sub-Region,
bordering Thailand, Vietnam and Laos
Population - 14 million, mostly Khmer origin
- 80% rural
- 20% urban
Landmass - 181,035 sq km, 24 provinces
GDP per capital - USD 593
Poverty Ranking : 54
Main industries - garments, construction and
tourism
10

11. Cambodia’s Challenges: Access to Safe Drinking Water
Effects of a violent past…
– Much of the country’s infrastructure
was destroyed, including basic
services such as those providing
access to safe water
– 9.4 million cases of diarrhoea per
year, which leads to 10,000 deaths
and USD 80m loss in productivity
According to a report by the Ministry of Health… 60
people died of cholera and diarrhea among the 449 cases
found this year. Currently, 11 provinces and cities are still
suffering from cholera and diarrhea, including Phnom Penh,
and there are about 4,000 suspected cases…
[Source: 2005 Cambodia Demographic and health
Survey]
Source: Cambodia People’s Daily 5 Jul 2010
Lack of basic water infrastructure
11

12. Current Water Situation
•
Limited water access:
– Access to piped water: urban (55%); rural (5%).
– Most rural households depend on ponds, rivers or streams
•
Water Sources: Contamination Problems
– Surface water.
• Mekong River and Tonle Sap Lake account for
30-50% of primary drinking water in rural areas
• Presence of microbes and contaminants
causes diseases ranging from diarrhoea, Cholera to Hepatitis A.
– Ground water
• Protected and unprotected wells (60% in rural areas).
• Presence of arsenic in deep wells.
– Piped water. Mainly in urban areas. Generally safe for consumption
•
Poverty Level: 36.1% of total population (14 m) live below national poverty line (USD
0.75 per day).
Key Water Challenges: Accessibility and Affordability
12

13. Household Water Treatment Market
•
Untapped markets for household water
treatment solutions
– 1.4 million rural households
– 0.4 million urban households
•
Primary target market comprises
families with incomes between
USD 2-5 per day
•
Current treatment options at point-ofuse (POU).
– Boiling
– Filters (mineral and ceramic pots)
– Fast Moving Consumer Goods
(FMCGs)
– Central water treatment systems
(piped water)
Ceramic filters (CWP)
FMCGs
Mineral filters
Sizeable Market Opportunity: 1.4 million rural households
13

14. Competitive Landscape for Ceramic Water Purifier (CWP)
•
Hydrologic Ceramic Water Purifier (Rabbit CWP)
– Low cost USD 12.50 (retailer)
– Highly effective at removing
various forms of contamination
•
“Mineral Pots” household filtration system
– Local perception is of status symbol
– Visible technology gives the image of superior
technology
– High retail penetration
– Proven to be less effective than ceramic filters
•
Market distortions: CWP currently distributed by NGOs
for free or at artificially low rates through subsidies
– Adds to market distortions
– Creates perception of a ‘Poor man’s product’
CWP must overcome mistaken perceptions & market distortions
14

15. Hydrologic: Company & Products
15

16. Vision
To be a leading Cambodian social enterprise offering
water filtration and sanitation products which will achieve
financial success and sustainability and thereby also
drive positive improvements in the overall health of the
Cambodian people.
Mission
To gain and sustain a majority of the market share for
scientifically proven water filtration and sanitation
products and accessories in Cambodia by meeting and
exceeding customer expectations and also providing
affordable product solutions to the poor.
16

17. Company Background and History
Since 1997, IDE Cambodia has been a leading international NGO working with the
rural poor focusing on two key sectors; namely : Agriculture and Water & Sanitation.
Products promoted under the Agriculture sector include the treadle pump, drip
irrigation systems, rice weeders etc. In recent and current projects, IDE Cambodia has
worked with rural enterprises and households to develop the following services : drip
irrigation, vegetable transport and storage and cool storage.
In the Water & Sanitation sector, since 2001, IDE Cambodia has been promoting the
Ceramic Water-Purifier (CWP) as an affordable household water filtration option for
rural Cambodia. Other products introduced in more recent years also include latrines
and hand pumps.
Hydrologic promotes Rabbit CWP in Cambodia through a social enterprise
business model. After 8 years of extensive marketing and with the financial and
strategic support from two leading organisations, WaterSHED and the Program for
Appropriate Technologies in Health (PATH), IDE spun off Hydrologic as an
independent entity in 2009.
17

18. IDE Cambodia: Awards
IDE Cambodia has won numerous international accolades for its contribution to
various projects. Among others, in 2009, IDE Cambodia won the World Bank’s
Development Marketplace Award for Micro Franchising Scheme for Agricultural
Services.
In 2010, IDE Cambodia also won the inaugural Nestle Prize for Creating Shared
Value for their work in promoting private sector development in the agricultural
sector of Cambodia and the prestigious Fast Company International Design
Excellence Award for its easy latrine product.
18

19. IDE Cambodia & Hydrologic
This chart illustrates the key areas of focus and products of IDE Cambodia which
have led to the spin off of Hydrologic as a social enterprise.
IDE Cambodia (1994)
Water & Sanitation
Agriculture
2009
Latrines
2001
- Treadle pumps
- Drip irrigation systems
- Improved fertilizer technology
- Farm Business Advisors
- Vegetable transport and storage
- Rice weeders
- Cool storage
Hand Pump
Ceramic Water
Filter
To Spin-off as
Social Enterprise
Hydrologic
Hydrologic becomes a social enterprise in 2009
19

20. Hydrologic: Social Enterprise snapshot
The
Company
Social
Impact
Production
facilities
Supply
Chain
•IDE is currently the sole owner of Hydrologic
•WaterSHED (USAID) is main financing partner. PATH is 2nd partner
•Provides access to and ensures proper use of health promoting products
•Commercially viable business model creates jobs and expands local economy
•Committed to the highest level of business ethics
•One factory (Plant 1) in operation, S.O.P. procedures, optimisation, QA
•2nd factory (Plant 2) currently at pilot production phase
•Complete supply chain turnaround implemented
•Shift from independent distributors to dedicated sales teams
Strategic
Partners
•WaterSHED as principal business incubator
•PATH supports direct sales pilot, product development and market study
Products
•Rabbit CWP: >150k units sold since 2002
•Crystal Pur – emergency relief product, also within portfolio
•”Aspiration CWP” in product development (PATH funded)
20

21. Regional Sales Offices & Factories
Regional
Sales Office
Factory
Old Factory
(Plant 1)
New Factory
(Plant 2)
Growing market penetration / Streamlining distribution
21

22. Current Network of Partners
Suppliers
-Vietnam, China:
plastic casing
-Local clay and
rice husk
supplier
Funding Partner
-PATH
-WaterSHED
NGOs
-UNICEF
-World Vision
-RedCross
-Research Dev
Institute of
Cambodia
Owner
-IDE
Retailers
-380 retailer
outlets
Community Members
-Farmer Association
-Village Heads
-Schools
-Clinics
-Health centres
-Pharmacies
22
Sales Reps
-Direct sales

23. Existing Products (1)
Rabbit Ceramic Water
Purifier
Hydrologic’s main product is the IDE Rabbit
Ceramic Water Purifier (CWP). It is based on a
simple but proven technology which uses porous
ceramic (fired clay) to filter microbes, bacteria and
other contaminants from ground, surface or rain
water.
Field studies by UNICEF and IDE Cambodia
have shown that the CWP reduces incidences of
diarrhoea by 46 %.
The CWP project won the International Water
Association Project Innovation Award Grand Prize.
Its ease of use, local production and low
production cost, combined with proven
effectiveness makes it possible to reach large
numbers of people through a market-based
approach.
Rabbit CWP is flagship product of Hydrologic
23

24. Existing Products (2)
Crystal Pur Siphon Filter
The Crystal Pur Siphon Filter is a small and
portable ceramic/cloth filter product imported from
India.
Its key attributes are its portability and fast flow
rate compared to the Rabbit CWP.
This product provides a complementary water
filtration solution for rural or urban consumers
who are in a higher income bracket than the main
target audience for the Rabbit CWP.
Good potential for product diversification and consumer segmentation
24

25. Market Penetration
Research conducted in 2009 by PATH, the Programme for Appropriate
Technology in Health, showed the following statistics:
Location:
RURAL
URBAN
Total House Hold (HH)
2.20 million
0.56 million
Unaddressed Market HH
1.40 million
0.40 million
Piped Water
Surface/Ground Water
5%
95%
55%
45%
Access to Alternatives
Low
High
The unaddressed market potential for water filtration products in both the rural and
urban areas stood at 1.4 million and 0.4 million respectively.
Significant opportunity for further market penetration
25

26. SWOT Analysis-Hydrologic
Strengths
Weaknesses
•Strong network among NGOs for technical
assistance and distribution partnerships
•Existing financial support from
WaterSHED and PATH for essential
company infrastructure development
including construction of new production
facility
•Relatively young and inexperienced
marketing and sales team
•Insufficient detailed knowledge among
staff of Rabbit CWP current usage and
market penetration
•Current lack of sufficient retail presence
•Current lack of business management
experience and commercial precedent
Opportunities
Threats
•Significant market need for improved
water quality and safety in Cambodia
•Ongoing and future expected lack of water
supply infrastructure in rural areas
•Continued NGO mandate to provide safe
water resulting in ample marketing partners
•Low penetration of effective water
treatment solutions
•Significant room to expand existing
product portfolio to meet demand
•Population has poor knowledge on the
assessment of and need for safe water
•Popularity of alternative mineral filter pot
•Low consumer awareness of the
technological superiority of Hydrologic’s
Rabbit CWP compared to competitors
•Low awareness among users of need for
proper maintenance of CWP
Market opportunities & existing support outweigh
pressures from competitive products
26

27. SWOT Analysis - Rabbit CWP
Strengths
Weaknesses
•Affordability of CWP among rural consumers
•Product materials are abundant in local areas
and CWP can be produced at low cost
•Proven to be highly effective in removing
Pathogens and other water contaminants
•Added advantage of discouraging boiling
water as treatment solution thereby reducing
energy consumption and threat of fire.
•Currently perceived as “poor man’s” product
•Slow filtration flow rate
•Relatively heavy and difficult to transport
•Users must be educated on proper cleaning of
and maintain discipline to ensure durability
•Currently unable to remove odour of water
•Requires after sales support and consumer
solutions in case of breakage
Opportunities
Threats
•Simple but highly effective technology
•Standard technology with new applications
•Continued NGO mandate to provide safe
water and distribute the CWP
•Growing consumer awareness for the need for
safe water
•Large untapped market for household water
treatment solutions
•Poor knowledge on how to judge unsafe water
•Popularity of alternative mineral pot filters
•Users must clean CWP frequently for
continued effectiveness
•Through continued subsidies and free CWP
distribution among the very poor by NGO,
consumers maintain the perception of CWP as
a free or ‘poor man’s’ product
Rabbit CWP is simple technology at affordable price
27

28. SWOT Analysis - Aspiration CWP
Strengths
Weaknesses
•Improved product capacity over Rabbit CWP
•Consumer perception of it as a higher-tech
product and improved performance
•Combines effective technology with improved
aesthetics, more modern appearance
•Builds on existing CWP distribution with a
premium product positioning
•Higher price point than Rabbit CWP
•Filter needs to be cleaned regularly
•No increase in flow rate over CWP
•Also unable to remove odour of water
•Requires ongoing after sales support just as
Rabbit CWP
•No improvement in durability, still fragile
despite more attractive appearance
Opportunities
Threats
•Consumers prioritize the products with
modern appearance and higher status symbol
•Provides Hydrologic with product
differentiation and market segmentation
•Can be marketed in both rural and urban
areas
•Consumers may confuse with mineral pot
filter – need to educate on differences
•Users currently have low awareness of need
of maintenance
•Still difficult to transport and risk of breakage
Aspiration CWP is optimised to meet the demand of the
middle tier population segment
28

29. Proposed Business Model
29

30. Business Model
•The proposed business model for Hydrologic describes how the company shall carry out the
process of value creation, value delivery and value capture.
•The business model defines the target markets and how Hydrologic shall organise itself in the
areas of production, supply chain and logistics, distribution, sales and marketing, and after
sales support in order to meet customer demand. It details key refinements to sales channels
and an aggressive expansion of its direct sales force.
•As the key business expansion strategy, Hydrologic shall diversify to enter both the more
sophisticated household water treatment business and the sanitation markets.
•In addition the company will launch a professional education delivery services which will drive
demand for its products and also serve as an additional revenue stream.
30

31. Buyer Utility Map
@Purchase
Delivery
Use
Maintenance
Image
Safety
Productivity
Convenience
Source: Based on SMP group market study of 5 representative families in Kampong Chhnang
Key buyer utilities are image, productivity and convenience
31

32. Target Markets
Products
Household Income
Aspiration CWP
High
>US$5 a day
Middle
US$2 to US$5 a day
Aspiration CWP
Rabbit CWP
Poor (68%)*
Target the right product to right household
*Source: eStandardForum Country Report on Cambodia
32
<US$2 a day

33. Distribution Channel for Rabbit CWP
Rabbit CWP
NGOs
Low Income Families
33

34. Proposed Sales and Marketing Channels
Phase I
Phase II
Existing Products
Diversified Products/Services
+
Puricom Water Purifier
Aspiration CWP
Retail Sales
Middle income
and above
{
Regional Offices
Families
Solar products
Spare Filters
+
Liquid / Bar Soap
Direct Sales
Rabbit CWP
34
Education Service
Low Income

35. Education Service - Overview
Market research indicates there is an opportunity to provide educational services to the rural communities
particularly around the importance of drinking safe water.
Hydrologic can leverage its direct sales force in rural communities to support NGO’s and development agencies
with a mandate to develop awareness around such critical health messages. This can be provided as a
comprehensive service (cost estimated at $1.73 per household (HH)) bundled with the gathering of customer
information and data.
100 HydroReps would be engaged to conduct about 5 house-to-house calls per day for a fee, to create greater
awareness through distribution of printed materials and demonstration of how the Rabbit CWP is used to clean
the water thereby also supporting Hydrologic’s sales efforts.
I have no time to
wash the CWP
I do not know
where to get CWP
35

36. Education Service - Delivery
The following is the programme outline for sales reps to reach 144,000 rural
households (HH) scattered throughout the country.
Programme Outline
-Safe water
-The current water source
-Health problems
-What is safe water?
-Benefits of safe water
-Ways to get safe water
-Importance of Sanitation
-Related health problems
-Benefits of proper
sanitation
-How to get it done
HydroRep (HR)
5 HH/day
144K HH/year
Billboard
-Enhance consumer
Face to Face
Printed material
Demonstration
-Building personal
relationship
-Create awareness
-Improve health
awareness
-Additional Outreach
Helpline
(e.g. 1800-Rabbit)
-Personal touch
-Answer doubts
Remarks: HydroRep – Hydrologic professional trained educator cum sale advisor &
customer service
36
Target Revenue
US$250,000
yearly

37. Education Service – Cost Model
144,000 HH per year
$1.73 per HH
Cost
breakdown
Total
144,000 HH
Printed material – design &
marketing (free gift)
$0.25
$36,000
HydroRep commision
$0.50
$72,000
Marketing & training
Profit
$0.63
$90,720
$0.35
$50,400
Total
$1.73
$249,120
Targeted
Revenue
US$250,000
Conservative estimate - Education
service to generate US$250K / year
37

38. Expansion - Strategy (Market segmentation)
Households
New Product
Existing Product
Existing Market
(<US$2)
Rabbit
CWP
Solar
Product
Fast Moving
Consumable
Goods
Fast Moving
Consumable
Goods
New Market
(>US$2)
Aspiration
CWP
Solar
lamps
Sanitation
Products
38
Existing Product will
not be offered to the
new market

39. Product Portfolio
Expansion – Phased Launch
(Diversified product
Offering)
Sanitation
Products
Fast Moving
Consumable
Goods
Puricom
Water
Purifier
(New CWP model)
Rabbit CWP
(Current
Offering)
Solar
lamps
Solar
lamps
Aspiration
CWP
Sequence of Launching New Products
39

40. Geographic Focus of Sales Activities
Sales force to focus on regions
with higher population density
40

41. 683
Distribution Centres & Sales Analysis
825
1410
400
2384
150
582
100
1672
1100
189
Distribution to be consolidated in
areas of highest sales volume
31
41

42. Proposed Operational Improvements
•
Recommendations for Streamlining
Production / Distribution:
–
Close Plant 1 and consolidate all operations and
production of both Rabbit CWP & Aspiration
CWP at the newly opened Plant 2
–
Close store/office in Phnom Penh and set up a
new showroom at more advantageous location
(e.g. near Central Market and on the same
street that sells water and sanitation products)
–
Shift management team’s office and warehouse
to Plant 2 in order to consolidate all aspects of
management on site and immediately address
and resolve any critical problems in operations.
Plant 1 at Kampong Chhnang
Build efficiency by maximizing existing plant resources
42

43. Proposed Operational Improvements
Advantages
–
Estimated savings of USD0.75/unit
USD2,250 per month
approx
–
Overall redundancy up to 2 staff only
–
Optimizes Plant 2 for production, warehousing and
retail opportunities
–
Better working environment in Plant 2 as compared to
Plant 1 provides worker benefits
–
Eliminates transportation of CWPs from plant to end
users via city store/office thereby reducing breakages
and product loss
Plant 2 at Udon
Clear benefits to consolidating operations in Plant 2
43

44. Quality Control
Ceramic filters are fragile and tend to crack easily. Currently the cumulative rejection rate
during the process of pressing, drying and firing is unnecessarily high at 30%. By
consolidating production in Plant 2, Hydrologic can set up an R&D unit to optimize on
Quality Control (QC) processes and use of facilities and equipment.
Preliminary enhancements to improve upon the following processes include:
a) Pressing
• Increase physical checks to detect
faulty ceramic filters at the onset to
reduce production costs.
• Explore various membrane
materials to eliminate adhesion of
clay to press mould (instead of
using disposable plastic bags)
44

45. Quality Control
b) Drying
• Create a temperature controlled enclosed
area for drying of ceramic filters to reduce
cracks
• Conduct physical checks prior to firing to
conserve resources
c) Firing
• Explore the use of other fuel materials
(instead of firewood) to create a more even
burn temperature to 831°C and reduce
firing costs.
• Consider the use of rice husks, coconut
husks, gas, etc. which will reduce the
environmental impact viz deforestation
Quality Control reduces costs and enhances company image
45

46. Value Proposition: Social Benefits
•
Hydrologic will drive the provision of safe water, especially to rural
population (reaching about 108,000 households over 2 years)
•
Subsequent improvement in public health of Cambodians, especially
in the rural areas
•
Establishment of a financially sustainable social enterprise (estimated
in 2 years time) which can also serve as a model for others
•
Increased availability of other socially useful products to improve
livelihoods (solar power lamp, bar soap, liquid soap, Puricom).
•
Enhanced awareness among rural population about issues related to
water, sanitation and hygiene (about 288,000 households in 2 years).
Provision of safe water in rural areas improves health and productivity
46

47. Value Proposition: Economic Benefits
•
Enhanced investment in water awareness
programmes (USD 250,000 /year) will boost
productivity and drive economic improvement
•
Provision of employment for recommended sales
expansion within the company (from 38 to 82 staff,
plus 100 HydroReps within first 2 years).
•
Provision of business activities related to the
marketing and sale of associated products (10 sales
offices and 100 HydroReps).
•
Delivery of educational service through HydroReps
frees up NGO charitable resources for other social
requirements (estimated at USD 500,000 per year).
Enhanced investment in water awareness, employment and business opportunities.
47

48. MARKETING AND SALES PLANS
48

49. Overview of Marketing and Sales Plans
HYDROLOGIC HQ
Marketing Strategy
- Branding
- Education
- Strategic Marketing
Channels
- Hydrologic Outlets
Hydrologic
Outlets
Retail Network
HydroReps
Target Market
49
Sales Strategy
- Strategic pricing
structure
- Strengthening and
expanding sales
network
- HydroReps
- Training
- Customer Service

50. Target Markets
Urban Areas
Populated Rural
Areas
Less Populated
Rural Areas
Households
560,000
1,400,000
800,000
<$2
Rabbit /
NGOs
$2 – 5
Aspiration /
Retail
Rabbit / NGOs
Cambodia Overall
>$5
Aspiration /
Retail
Rural Area
Some Treatment
35%
Some Treatment
29%
No Treatment
65%
No Treatment
71%
Note - About 0.4 million urban households and 1.4 million rural
households lack access to improved water.
Rabbit CWP will be distributed through NGOs.
Aspiration CWP will be distributed through Retail and Direct Sales.
50

51. Sales Projections
2-Year Sale Projection by Quarter
Rabbit
Key Assumptions
Aspiration
12000
10629
10000
8785
7986
8000
No. of Sale
- As strong demand for Rabbit CWP
currently exists in commercially isolated
populations, one additional sales staff
will enhance sales through NGOs.
A 7% quarterly growth will enable the
sales to achieve 2,000 sales/ month
by July 2012.
9663
7260
7216
6600
6000
6000
5000
4494
4200
4809
5891
5505
5145
6744
6303
4000
NGO
2000
1800
Retail
0
Current /
Qtr
- Aspiration CWP to be launched
by January 2011.
Qtr 1 / 2011 Qtr 2 / 2011 Qtr 3 / 2011 Qtr 4 / 2011 Qtr 1 / 2012 Qtr 2 / 2012 Qtr 3 / 2012 Qtr 4 / 2012
Quarter / Year
5-Year Projection
Rabbit
Aspiration
64045
60000
53371
50000
No. of Sale
- Given the enhanced marketing and
sales strategy, the sales of the
Aspiration CWP has potential to increase
significantly to 5,000 units for the
1st quarter, 20% increase for the
2nd quarter, and 10% per quarter
thereafter.
70000
44476
37063
40000
34811
31646
28769
30000
24860
26154
19953
20000
16800
NG
10000
7200
Reta
0
Current Sale
2011
2012
2013
Year
Strong sales growth projected for both Rabbit and Aspiration
CWP models
51
2014
2015

52. Product Branding
The Aspiration CWP will be branded with Five S’s:
• Super-Effective
- Highly effective in filtering pathogens
- Extensively & internationally tested
• Smart
- Immense positive impact on health
• Simple
- Stylish product is easy to use & maintain
• Socially Responsible
- Affordable
- Responsible for water purification & sanitation
- Made of environmental friendly natural material
• Service and customer oriented
Made in Cambodia with Hope for Cambodia
52

53. Product Pricing
Rabbit CWP
Aspiration
CWP
Cost
U
S$6.10
Wholesale
U
S$9.50
U
S$7.60
U
S$15.50
- Out of Factory - Operation
Retail
U
S$19.50
- Affordable
- Marketing & Prom
otion - Im
age Perception
- Potential Profit
The Rabbit CWP is sold wholesale to NGOs only.
The pricing structure of Aspiration CWP takes into account:
• affordability for target households.
• pricing to reflect the ‘new look and sophisticated’ model.
• a realistic profit margin which includes:
- incentives for retailers and HydroReps.
- flexibility for seasonal discounts.
53
- Realistic profit m
argin

54. Marketing Strategy
Short Term - Within 1 year:
• Position Aspiration CWP as the most effective brand with important health benefits.
• Strengthen and stabilise the sales network under 10 existing sales offices.
• Begin conversion of sales offices to Hydrologic Outlets incorporating customer service.
• Drive further market penetration within desired coverage areas.
• Introduce Education Service initiatives in marketing (see next page).
• Support marketing through strategic channels (see next page).
Mid/Long Term - After 2nd year:
• Widen the sales network from existing sales offices to other provinces.
• Introduce sales of sanitation and diversified products.
• Explore international market opportunities beginning with neighbouring countries.
Education goes hand-in-hand with product marketing
54

55. Marketing Strategy
Education & Increasing Awareness is Key.
Educational Initiatives
• Engage schools, clinics, health promotion centres,
pharmacies, farmers’ association, village heads.
• Engage Educational Community Service.
• Education talks/ seminars.
• Picture/ Cartoon education leaflets.
Strategic Marketing Channels
• People: Retailers, direct sales through HydroReps
(commission-based), educational and promotional
road shows with visual aids.
• Media: TV, Radio, Print Advertisement,
Advertisement on Bus, Banner, Billboard and
Poster
55

56. Marketing Strategy
Hydrologic Outlets
•
Convert existing 10 sales offices to
“All in One” outlets. Each outlet will be
staffed by 2 trained representatives.
•
Incorporate provincial sales office,
show room, education, sales and
customer service.
•
Establish contact point for retailers
and HydroReps.
•
Positive image building.
•
Exhibition of future products, such as
FmCGs, sanitation products and solar
lights.
Retail outlets are central to all marketing and sales efforts
56

57. Sales Strategy
• Monthly commissions for sales staff
- proportionate to the sales turnover.
- incremental to motivate sales
growth.
• Energizing retail network
- Incentives : increasing profit
margin from currently about $2 to
$4.
- Engage credible retailing outlets,
e.g. pharmacies and
health centres.
- Display of Aspiration CWP by retailers as
a policy.
- Delivery service may be
considered at a fee.
• Direct Sales Scheme
- Recruit local people to be HydroReps
on commune basis.
- Self-employed.
- Education and Customer Service
point for communes / villages.
- Incentives : profit margin - same as
retailers.
- Subject to subsidies, HydroReps may
be paid for educating households.
• Other Ad-hoc Initiatives
- Seasonal discounts.
- Providing discount coupons for
other commercial items.
(e.g. mobile phone).
- Road show combining with
education and giving out discount
coupons.
Aggressive sales expansion driven by positive incentives
57

58. Marketing and Sales Structure
Structure
Manpower
HYDROLOGIC
Marketing and Sales
Provincial Sales
Office
Retailers
Retailers
Retailers
HydroRep
HydroRep
p
HydroRep
p
Marketing /
Education
Team
Responsibility
1 Marketing Mgr
TV
Radio
Print Ad.
Partnership
Banner
1 Sales Mgr
1 dedicated to
NGO Sales
20 Sales Rep.
(2 per Sales
Office)
Billboard
Wall banner
Bus Ad
R&D
Training
Hydrologic Outlets
Recruitment of HydroReps
Engage schools, clinics and health
centres
Recruit pharmacies as retailers
Commission Scheme
Display of Aspiration CWP
Accept discount coupon
Seasonal discount
400+
Retailers
100+ HydroReps
(10+ per Province)
2 staff
58
Extra rebate
Accept discount coupon
Seasonal discount
Education and customer
service
Road show
Education talk

59. Staff and Sales Training
Education, sales and customer service,
and technical training.
•
Training upon recruiting new retailers
and HydroReps in water filtering and
sanitation.
•
Coaching HydroReps after
recruitment for one month.
•
Regular workshops and seminars.
•
Sales manual to incorporate
education information, sales skill do’s
and don’ts.
Training One, Gaining Everyone
59

60. Customer Service
Customer Service
•
Run by Sales Offices with support from
Headquarters
•
Continued support (education and technical) and
After Sales
•
Data-base to be built up
•
Availability of Customer Service Hotline &
Website (email contact) affixed to the product for
easy reference.
Making Customer Loyalty a Priority
60

61. Governance and Strategic Partners
61

62. Proposed Structure and Organisation
Board of Directors
Board of Directors
BOD
BOD
Chief Executive Officer
Chief Executive Officer
(CEO)
(CEO)
Composition of
BOD
Chairman/IDE
CEO
PATH Rep
WaterSHED Rep
Chief Operations Officer
Chief Operations Officer
(COO)*
(COO)*
Operations &
Operations &
Production
Production
Finance
Finance
Sales
Sales
Marketing
Marketing
Human Resource*
Human Resource*
(HR)
(HR)
* Denotes new capacity to be created 1st year into operation
*# An MBA intern on secondment from PATH for free for 12 mths
62
Business
Business
Development*#
Development*#

63. Terms of Reference and Employment Requirements
•
Chief Executive Officer (CEO)
– Member of the Board of Directors (BOD), also represents the management team
– Execute directions decided by BOD
– Key focus on Strategy, Finance and Business Development
– Lead the management team
– Work closely with strategic partners, potential investors and relevant agencies
– Supervise overall corporate functioning and processes
– Remuneration tied to performance
– Preferably bilingual in Khmer and English
•
Chief Operations Officer (COO)
– Take charge of day-to-day operations
– Key focus on Operations & Production, Marketing & Sales, HR and Admin
– Act on behalf of CEO in the absence of the latter
– Remuneration tied to performance
– Must speak Khmer
63

64. Terms of Reference and Employment Requirements
•
Operations & Production Manager
– Timely production of products which meet stipulated quality and safety standards
– Product research and development
– Logistics and distribution management
•
Financial Manager
– Budget forecast
– Financial management
– Cash flow management
•
Marketing & Education Manager
– Marketing strategy and initiatives for current and future products
– Customer relations management
– Marketing survey and research
– Drive education services for water, sanitation and hygiene
– Remuneration tied to sales performance
64

65. Terms of Reference and Employment Requirements
•
Sales Manager
– Sales forecast
– Sale management
– After sales service
– Direct sales
– Sales to NGOs and retailers
– Remuneration tied to sales performance
•
HR/Admin Manager
– HR management
– Administration support
– HR development
•
Business Development Manager
– Long term strategic planning
– New business opportunities and initiatives
– Remuneration tied to performance
65

66. Staffing Plan
Transition (asap) Proposed
CEO
1
COO*
-
1
Ops/Production
20
48
Finance
3
3
Marketing
3
3
Sales
22
Improved
22 Sales/Prod to Mgmt ratio
HR/Admin*
1
2
Business Dvp*#
1
1
Total
Current MP = 38/76 pers
1
51
81
* Denotes new capacity
*#An MBA intern on secondment from PATH for free for 12 mths
66

67. Timeline - Overview
Short term plan
–
–
–
–
The company will be financially independent by January 2012
IDE will retain at least partial ownership of the company for strategic influence
WaterSHED and PATH continue to provide support on ad hoc or project basis
Hydrologic registered as a new company by Jan 2011
Long term plan
–
Equity Holding (balance of IDE’s ownership)
Top Management 40%
Managers 30%
Employees –
30%
(Actual terms and conditions of equity holding will be worked out separately)
–
Control to remain with Management and Board of Directors
(strategic planning, accountability, etc)
Employee-Owned & Financially Independent:
A New Model for Cambodia
67

68. Implementation
Jan 2010
COO
HR
Biz Dev
Break
even
point
Jan 2011
1
Jan 2012
Jan 2013
Jan 2014
WaterSHED Grant
Ceases
Ownership Transfer
1
1
20
25
Ops/Prod
Sales/Mkt
48
25
Short Term
USD 1,023,000
BOD
USD 1,297,000
68
USD 1,470,000
USD 1,674,000

69. FINANCIALS
69

70. Social Objectives
Financially Sustainable Business Venture
1. Gleaning reasonable returns within an acceptable payback period
2.
3.
Driving revenue from a large untapped market, with growing demand
from population and economic growth
Employee owned with culture of entrepreneurship
Responsibility Embedded in Core Business
1. Allowing poor rural communities of Cambodia to gain access to safe
2.
3.
drinking water by selling them affordable household water filtration
and sanitation products
Through the use of these products, achieving better health impact by
reducing incidences of water borne diseases
Profits reinvested in expanding the business and positive social
impacts
Responsible use of capital for social good
70

71. Financial Data Assumptions
•
Merger of Plants - Plant 1 and 2 merged by Dec 2010,
Achieve 8% cost reduction on Rabbit CWP
•
No grant income from WaterSHED from Year 2 onwards
•
•
Education Service Income starts in Year 2
Inventories holding period: one month
•
No change in applicable tax rates
•
Cash flow analysis does not include float in working capital apart from inventory
movement
71

72. Financial Data Assumptions
•
Sales price and Unit cost
Rabbit CWP:
$9.50 and $6.10 respectively throughout
Aspiration CWP:
$15.50 and $7.60 respectively throughout
Other products: 30% to 40% mark-up on cost
•
Sales volume
Rabbit CWP:
Y1 & Y2: 7% quarterly increase in sales
Y3 to Y5: 10% annual increase
Aspiration CWP:
Y1: Q1 - 5,000 units Q2 – 6000 units
Y1 Q3, Q4 and Y2: 10% quarterly increase
Y3 to Y5: 20% annual increase
•
General and admin overheads
3% increase yearly
72

73. Financial Summary
•
Profitable from Year 1, financially independent from Year 2
•
Positive cash flow from Year 1
•
Debt free
•
Internal Rate of Return: 27%
•
Significant financial resources allocated to achieve sales targets
A Social, Environmental and
Economical investment
73

74. Income Statement
Year 1
Year 2
Year 3
Year 4
Year 5
2011
2012
2013
2014
2015
USD'000
SALES
773
1,047
1,220
1,424
1,667
VAT
(70)
(95)
(111)
(129)
(152)
NET SALES
703
952
1109
1295
1515
(450)
(598)
(693)
(805)
(937)
GROSS PROFIT
253
353
416
490
578
GP MARGIN
33%
34%
34%
34%
35%
GRANT INCOME
278
-
-
-
-
-
250
250
250
250
(427)
(541)
(571)
(606)
(644)
PROFIT BEFORE TAX
103
63
94
134
184
TAXATION
(21)
(13)
COGS
SERVICE INCOME
G&A EXPENSES
PROFIT AFTER TAX
83
(19)
(27)
(37)
A Social, Environmental and
50
76
107
Economical investment 147
74

75. Cash Flows
Year 1
Year 2
Year 3
Year 4
Year 5
2011
2012
2013
2014
2015
USD'000
PROFIT BEFORE TAX
103
63
94
134
184
7
10
11
13
15
10
11
7
8
6
(21)
(13)
(19)
(27)
(37)
CAPITAL EXPENDITURE
(8)
(4)
-
-
-
NET CASH INFLOWS
92
67
94
128
168
ADD
DEPRECIATION
INVENTORY MOVEMENT
LESS
INCOME TAX
75

76. Operating Expenses
Year 1
Year 2
Year 3
Year 4
Year 5
2011
2012
2013
2014
2015
USD'000
PAYROLL & BENEFITS
178
183
189
194
200
SALES & MARKETING
131
114
132
153
178
-
121
125
128
132
DISTRIBUTION COSTS
55
57
59
60
62
OTHER ADMIN. COSTS
28
29
30
31
32
PROFESSIONAL FEES
15
16
16
17
17
TRAVEL &
TRANSPORTATIONS
13
13
14
14
14
4
4
4
4
4
427
541
571
606
644
EDUCATION INCENTIVES
MISC. COSTS
Total
76

77. Income Statement
USD('000)
2000
1500
1000
500
0
2011
SA LE S
COG
2012
2013
GROSS P ROFI T
77
2014
G&A E x pens es
2015
EBIT A

78. Cash Flows and Profit
USD('000)
200
150
100
50
2011
2012
2013
CA SH FLOWS
78
P ROFI T S
2014
2015

79. Risk Assessment & Mitigation (1)
Description
Competition from
new mineral pots
which are cheaper
and more attractive
Category
Consequence
Risk
Mitigation
Measures
Finance & Marketing
Sales volume
adversely affected
Medium
Reduce production
costs and sale price
but maintain profit
margin
Discrepancies and
distortion along raw
material supply chain
Finance
Production costs
would be increased
Medium
Put in audit systems
& monitor closely the
management and
purchasing section
to prevent loss
Political unrest and
economic recession
Finance
Demand for water
filters would be
reduced
Low
79
Reduce production
of water filters and
diversify to other
product offerings

80. Risk Assessment & Mitigation (2)
Description
Category
Consequence
Risk
Mitigation
Measures
Loss of public
confidence
Governance &
Strategic Partners
(external)
Reduction in sales
Low
Maintain public
relations and timely
feedback
Staff Malpractice
Governance &
Strategic Partners
(internal)
Demoralised staff
and management
Withdrawal of
investors
High
Enforcement of
transparent
accounting
procedures and
reporting
Loss of capable
management or staff
to other companies
Governance &
Strategic Partners
(internal)
Reduced
management
effectiveness
Low demand for
selected products for
diversification
Business Model
Low revenue –
unable to recover
cost
80
Medium
Ensure competitive
wage rate; focus on
vision sharing,
promote company
ownership among
members of
management team
Low
-Extensive customer
survey on new
product.
-Indent sale of new
product (NGO sale).

81. Risk Assessment & Mitigation (3)
Description
Category
Consequence
Risk
Mitigation Measures
Poor uptake of
Aspiration CWP
model by the
community
Marketing & Sales
Financial Loss
Medium
-Aggressive
marketing, education
initiatives and after
sales service
-Continued &
Increased sales of
Rabbit via NGOs
-Sale of diverse
products
Poor engagement of
retailers/ direct
salesman
Marketing & Sales
Poor penetration of
market
Medium
-Bigger sales margin
(double)
-Commission-based
arrangements with
HydroReps
Production targets
will not be met
Medium
Implement regular
maintenance regime
to reduce incidents of
breakdown
Breakdown of critical
component of
production (eg Kiln)
Operations &
Distribution
81

82. Implementation Schedule – Short Term (1)
3
6
Governance/ HR
Commence recruitment of
COO, HR, BD, Ops & Prod,
and Sales & Marketing
personnel
Complete recruitment of
COO, HR and BD personnel
Operations/
Distribution
– Close Plant 1 &
consolidate ops in Plant 2
– Initiate QC processes &
facilities
– Close store/office in
Phnom Penh
– Set up a new ‘Rabbit’
showroom in more
strategic location (e.g.
near Central Market
– Set up R&D unit
Month
9
12
Issues
82
Complete recruitment of
Ops & Prod, Sales &
Marketing personnel
(Transition
Establishment)
Review potential need
to increase additional
kilns
Monitoring & review of
QC processes

83. Implementation Schedule – Short Term (2)
3
6
9
12
Month
Issues
Sales & Marketing
Business Model
Begin development of
Educational offering to
include:
•Design of services and
materials to distribute
•Build distribution networks
•Present opportunity to
NGOs for contract
Launch of the Aspiration
CWP
Introduction of customer
service and database
Converting sales offices
into Hydrologic outlets
Move to secure NGO
contract for Educational
service delivery
Further penetration
within coverage areas
Begin to see impact on
sales as driven by
Education initiative
Recruitment of
Education/Sale Staff
Begin diversification of
products to include:
•Soap / Liquid soap
•Solar Lamps
•Puricom
Additional organizational
preparation for launch of
education service
Begin to deliver
Education through
HydroReps
Additional marketing support
for Aspiration CWP
83

84. Implementation Schedule – Mid to Long Term (1)
Year
2
3
Issues
Governance/
HR
Complete recruitment of
Ops & Prod, Sales &
Marketing personnel (final
phase)
Complete full
establishment of
Hydrologic as
independent company
Operations/
Distribution
Review expansion plans in
line with Sales & Marketing
efforts
Development of water
filtration products
Build 2 additional kilns to
expand operations
84
4
5

85. Implementation Schedule – Mid to Long Term (2)
Year
2
3
4
Issues
Business Model
Begin promoting
sanitation products
Expansion of sales of
Diversified Products
Expand educational
service and sales of
Rabbit / Aspiration CWP
Sales &
Marketing
Widen domestic sales
network
Consider adding NGO
clients for educational
service delivery
85
Move to explore and
enter international
markets
5

86. Conclusions
With a population of 18 million of which more than 60% currently lack access to safe potable water,
there is a clear opportunity to serve this critical social need. Despite having the highest ratio of
NGO’s and development agencies per capita in Asia, many problems such as the provision of
safe water have not been solved using the charitable model and therefore, a for-profit social
enterprise called HYDROLOGIC is being created in order to meet this need through a commercial
vehicle.
HYDROLOGIC’s vision is to be the leading Cambodian social enterprise offering water filtration and
sanitation products by meeting customer expectations through providing superior product
solutions and also being affordable to the poor.
In addition to its flagship product the “Rabbit” Ceramic Water Purifier which has a strong track record
and broad acceptance by the technical community, HYDROLOGIC is launching an upgraded
version of its CWP as well as diversifying into a range of other product lines with strong potential
to generate profit while meeting social needs.
Furthermore, HYDROLOGIC has a unique opportunity to leverage its expanding direct sales force
among the rural communities in Cambodia to deliver an educational information and household
data collection service. This service will both generate additional revenue for the company and
also support the increased marketing efforts for its water purification products.
86

87. Conclusions (2)
The business plan as recommended by the SMP group points to a few key financial outcomes in
addition to the clear social benefits of substantially improving public health through the provision of
safe water to rural households:
•
The business is profitable from Year 1 with positive cash flow. Hydrologic is debt free despite
significant financial resources allocated to achieve sales targets. The company will be financially
independent in Year 2, 2011 at which time it will no longer require funding from the existing
donors.
•
With the enhanced marketing and sales strategy which drives up sales figures of the Rabbit and
Aspiration CWP models as well as the launch of the new education delivery service, the revenue
of the company will increase significantly yielding net profit after tax of $147,000 by Year 5.
•
Based on the existing resources and organizational structure as proposed by the group,
HYDROLOGIC has the opportunity to be entirely employee owned, providing also strong financial
incentives to management and its sales force to drive continued profitability over the medium and
long term time horizon for the company.
87

88. Appendices
88

89. Appendix A – Financial Sensitivity Analysis
Scenario A: Meet 80% of sales targets
Scenario B : Margin decreases by USD 1
Scenario C : 10% increase in G&A Expenses
89

90. Appendix A – Financial Sensitivity Analysis
SCENARIO A: VOLUME UNDERPERFORMANCE (Sales Meets 80% of Target, G&A Expenses Remain Status Quo)
Year 1
Year 2
Year 3
Year 4
Year 5
2011
2012
2013
2014
2015
USD'000
SALES
619
837
976
1,139
1,333
VAT
(56)
(76)
(89)
(104)
(121)
NET SALES
562
761
887
1036
1212
(360)
(479)
(554)
(644)
(750)
GROSS PROFIT
202
283
333
392
463
GP MARGIN
33%
34%
34%
34%
35%
GRANT INCOME
278
-
250
250
250
250
(427)
(541)
(571)
(606)
(644)
PROFIT BEFORE TAX
53
(8)
11
36
68
TAXATION
(6)
(8)
(10)
(11)
(13)
PROFIT AFTER TAX
46
(16)
2
25
55
COGS
SERVICE INCOME
G&A EXPENSES
90

91. Appendix A – Financial Sensitivity Analysis
SCENARIO B: MARGINS COMPRESSION (Margin Reduced by $1, Volume and G&A Status Quo)
Year 1
Year 2
Year 3
Year 4
Year 5
2011
2012
2013
2014
2015
USD'000
SALES
749
1,010
1,175
1,371
1,603
VAT
(68)
(92)
(107)
(125)
(146)
NET SALES
680
918
1068
1246
1457
(450)
(598)
(693)
(805)
(937)
GROSS PROFIT
230
320
375
441
520
GP MARGIN
31%
32%
32%
32%
32%
GRANT INCOME
278
-
250
250
250
250
(427)
(541)
(571)
(606)
(644)
81
29
54
86
126
(16)
(6)
(11)
(17)
(25)
64
23
43
69
101
COGS
SERVICE INCOME
G&A EXPENSES
PROFIT BEFORE TAX
TAXATION
PROFIT AFTER TAX
91

92. Appendix A – Financial Sensitivity Analysis
SCENARIO C: COST WORST CASE (10% Increase in G&A Expenses)
Year 1
Year 2
Year 3
Year 4
Year 5
2011
2012
2013
2014
2015
USD'000
SALES
773
1,047
1,220
1,424
1,667
VAT
(70)
(95)
(111)
(129)
(152)
NET SALES
703
952
1109
1295
1515
(450)
(598)
(693)
(805)
(937)
GROSS PROFIT
253
353
416
490
578
GP MARGIN
33%
34%
34%
34%
35%
GRANT INCOME
278
-
250
250
250
250
(427)
(561)
(624)
(694)
(774)
PROFIT BEFORE TAX
103
42
42
45
55
TAXATION
(21)
(8)
(8)
(9)
(11)
83
34
33
36
44
COGS
SERVICE INCOME
G&A EXPENSES
PROFIT AFTER TAX
92

93. Appendix B - Research References
•
Understanding Consumers and the Market for Household Water Treatment Products
in Cambodia, PATH Dec 2009
•
Royal Government of Cambodia, “ Progress in Achieving Cambodia’s Millennium
Development Goals: Challenges and Opportunities 2007
•
WSP and UNICEF, “ Use of Ceramic Water Filters in Cambodia”, 2007
•
IDE Cambodia Clean Water in Every Home Report April 2007
•
United Nations, Human Development Report 2006
•
Webpage resources –
http://www.un.org/milleniumgoals/global.shtml
–
http://www.wpro.who.int/NR/rdonlyres/1AB59A47-F2EC-47EC-99117EABC501DEEF/0/Cambodia.pdf
93