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DRY DOCKS GENOA
(EXAMPLE BUSINESS PLAN)

 

Online Business Plan Document

25/09/2017 20:18:55(UTC)


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.

This is an example business plan created with iPlanner.NET business planning software

 

Dry docks Genoa3

Dry docks Genoa3

 

Dry docks Genoa2

Dry docks Genoa2

 

Main financial measures
 201720182019
Cash753,4001,179,6431,989,272
Sales revenue6,400,00011,000,00014,000,000
Net profit for financial year-479,3181,938,9652,854,629
Operating margin-7.49%17.6%20.4%
Owners' equity1,020,6822,959,6474,629,276
Return on equity (per year)-47.0%65.5%61.7%

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 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. 

 

Dry docks Genoa

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.

 

Sales revenue (EUR)
Products and services201720182019
Dry Docks Service3,650,0007,000,0008,000,000
Other Services2,750,0004,000,0006,000,000
 6,400,00011,000,00014,000,000

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.



 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
Personnel201720182019
Manager111
Team's head555
Office-worker444
Electrician141618
Crane operator182022
Carpenter6810
Worker246
 505866

 

Average monthly salary (EUR)
Personnel201720182019
Manager9,8009,8009,800
Team's head5,5005,5005,500
Office-worker5,5005,5005,500
Electrician4,7004,7004,700
Crane operator4,7004,7004,700
Carpenter4,7004,7004,700
Worker4,4504,4504,450

 

Labour cost (EUR)
 201720182019
Wages and salaries2,961,6003,406,8003,852,000
Social security costs000
Labour cost2,961,6003,406,8003,852,000
REVENUES6,400,00011,000,00014,000,000
Labour cost to revenues46.3%31.0%27.5%

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
 Cold Iron  14 millions of euro  3 years
 Telescopic covering  9 millions of euro  2 years

 

Other operating expenses (EUR)
Other operating expenses201720182019
Raw materials and goods1,300,0001,500,0001,800,000
Services and Overhead2,000,0002,200,0002,500,000
 3,300,0003,700,0004,300,000

 

Assets purchase value (EUR)
Fixed assets201720182019
Immaterial assets1,000,000500,000200,000
Material fixed assets250,000100,000100,000
 1,250,000600,000300,000

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)
 201720182019
Current assets1,364,0151,790,7592,767,055
Fixed assets1,200,0001,730,0001,940,000
Current liabilities1,043,333561,11277,778
Long-term liabilities500,00000
Owners' equity1,020,6822,959,6474,629,276

 

Owners equity (EUR)

Financial Projections

 

Performance measures (EUR)
 201720182019
Sales revenue6,400,00011,000,00014,000,000
Export sales730,0001,400,0001,600,000
Cost of sales640,0001,100,0001,400,000
Gross profit5,760,0009,900,00012,600,000
Other operating expenses3,300,0003,700,0004,300,000
Labour cost2,961,6003,406,8003,852,000
Depreciation of fixed assets50,00070,00090,000
Operating profit-551,6002,723,2004,358,000
EBITDA-501,6002,793,2004,448,000
Financial income and expenses-105,000-67,083-16,042
Profit before income tax-656,6002,656,1174,341,958
Income tax expense-177,282717,1511,487,329
Profit-479,3181,938,9652,854,629
    
Operating margin-7.49%17.6%20.4%
Gross margin90%90%90%
Sales per employee128,000189,655212,121
Value added2,460,0006,200,0008,300,000
Value added per employee49,200106,897125,758
    
Return on equity (per year)-47.0%65.5%61.7%
Quick ratio1.313.1935.6
Current ratio1.313.1935.6
ISCR-4.7841.6277
DSCR02.628.62
Debt to equity ratio1.470.170
Debt to capital ratio59.5%14.5%0%
    
Receivables collection period, days24.420.020.0
Payable period, days24.420.020.0

 

Income statement (EUR)
 201720182019
Sales revenue6,400,00011,000,00014,000,000
Export sales730,0001,400,0001,600,000
Cost of sales640,0001,100,0001,400,000
Other operating expenses3,300,0003,700,0004,300,000
Labour cost   
Wages and salaries2,961,6003,406,8003,852,000
Total labour cost2,961,6003,406,8003,852,000
Depreciation of fixed assets50,00070,00090,000
Operating profit-551,6002,723,2004,358,000
Financial expenses   
Interest expense105,00067,08316,042
Total financial expenses105,00067,08316,042
Profit before income tax-656,6002,656,1174,341,958
Income tax expense-177,282717,1511,487,329
Net profit for financial year-479,3181,938,9652,854,629

 

Balance sheet (EUR)
 201720182019
ASSETS   
Current assets   
Cash753,4001,179,6431,989,272
Receivables and prepayments   
Trade receivables433,333611,116777,783
Prepaid and deferred taxes177,28200
Inventories   
Inventories000
Total current assets1,364,0151,790,7592,767,055
Fixed assets   
Tangible assets   
Machinery and equipment1,250,0001,850,0002,150,000
Less: Accumulated depreciation-50,000-120,000-210,000
Total1,200,0001,730,0001,940,000
Total fixed assets1,200,0001,730,0001,940,000
Total assets2,564,0153,520,7594,707,055
LIABILITIES and OWNERS' EQUITY   
Liabilities   
Current liabilities   
Loan liabilities   
Short-term loans and notes000
Current portion of long-term loan liabilities1,000,000500,0000
Total1,000,000500,0000
Debts and prepayments   
Trade creditors, goods43,33361,11277,778
Trade creditors, other000
Employee-related liabilities000
Total43,33361,11277,778
Total current liabilities1,043,333561,11277,778
Long-term liabilities   
Long-term loan liabilities   
Loans, notes and financial lease payables500,00000
Total long-term liabilities500,00000
Total liabilities1,543,333561,11277,778
Owners' equity   
Share capital in nominal value1,500,0001,500,0001,500,000
Share premium000
Retained profit/loss0-479,318274,647
Current year profit-479,3181,938,9652,854,629
Total owners' equity1,020,6822,959,6474,629,276
Total liabilities and owners' equity2,564,0153,520,7594,707,055

 

Cash flow statement (EUR)
 Jan-2017Feb-2017Mar-2017Apr-2017May-2017Jun-2017
CASH FLOWS FROM OPERATING ACTIVITIES      
Inflows      
Payments from customers111,111333,332333,333388,891500,000500,000
Total111,111333,332333,333388,891500,000500,000
Outflows      
Payments to vendors (goods)11,11133,33333,33338,88950,00050,000
Payment of salaries and wages246,800246,800246,800246,800246,800246,800
Payments to vendors (operating expenses)274,999274,999274,999274,999274,999274,999
Total532,910555,132555,132560,688571,799571,799
Net cash flow from operating activities-421,799-221,800-221,799-171,797-71,799-71,799
       
CASH FLOWS FROM INVESTING ACTIVITIES      
Inflows      
Outflows      
Payments to vendors (assets)1,250,00000000
Total1,250,00000000
Net cash flow from investing activities-1,250,00000000
       
CASH FLOWS FROM FINANCING ACTIVITIES      
Inflows      
Payments from shareholders1,500,00000000
Loan amounts received1,500,00000000
Total3,000,00000000
Outflows      
Principal repayments000000
Interest expense8,7508,7508,7508,7508,7508,750
Dividends (net to shareholders)000000
Payment of corporate income tax000000
Corporate income tax on dividends000000
Total8,7508,7508,7508,7508,7508,750
Net cash flow from financing activities2,991,250-8,750-8,750-8,750-8,750-8,750
       
Net change in cash1,319,451-230,550-230,549-180,547-80,549-80,549
Cash at the beginning01,319,4511,088,900858,351677,804597,255
Cash at the end1,319,4511,088,900858,351677,804597,255516,706

 

Cash flow statement (EUR)
 Q3-2017Q4-2017Q1-2018Q2-2018
CASH FLOWS FROM OPERATING ACTIVITIES    
Inflows    
Payments from customers1,850,0001,950,0002,572,2212,749,998
Total1,850,0001,950,0002,572,2212,749,998
Outflows    
Payments to vendors (goods)185,000195,000257,222275,000
Payment of salaries and wages740,400740,400851,700851,700
Payments to vendors (operating expenses)824,997825,009924,999924,999
Total1,750,3971,760,4092,033,9212,051,699
Net cash flow from operating activities99,603189,591538,300698,299
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Inflows    
Outflows    
Payments to vendors (assets)00600,0000
Total00600,0000
Net cash flow from investing activities00-600,0000
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Inflows    
Payments from shareholders0000
Loan amounts received0000
Total0000
Outflows    
Principal repayments00249,999249,999
Interest expense26,25026,25023,33318,958
Dividends (net to shareholders)0000
Payment of corporate income tax00134,967134,967
Corporate income tax on dividends0000
Total26,25026,250408,300403,925
Net cash flow from financing activities-26,250-26,250-408,300-403,925
     
Net change in cash73,353163,341-470,000294,374
Cash at the beginning516,706590,059753,400283,400
Cash at the end590,059753,400283,400577,774

 

Cash flow statement (EUR)
 201720182019
CASH FLOWS FROM OPERATING ACTIVITIES   
Inflows   
Payments from customers5,966,66710,822,21713,833,333
Total5,966,66710,822,21713,833,333
Outflows   
Payments to vendors (goods)596,6671,082,2221,383,333
Payment of salaries and wages2,961,6003,406,8003,852,000
Payments to vendors (operating expenses)3,300,0003,700,0004,300,000
Total6,858,2678,189,0229,535,333
Net cash flow from operating activities-891,6002,633,1964,298,000
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Inflows   
Outflows   
Payments to vendors (assets)1,250,000600,000300,000
Total1,250,000600,000300,000
Net cash flow from investing activities-1,250,000-600,000-300,000
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Inflows   
Payments from shareholders1,500,00000
Loan amounts received1,500,00000
Total3,000,00000
Outflows   
Principal repayments01,000,000500,000
Interest expense105,00067,08316,042
Dividends (net to shareholders)001,185,000
Payment of corporate income tax0539,8691,172,329
Corporate income tax on dividends00315,000
Total105,0001,606,9533,188,371
Net cash flow from financing activities2,895,000-1,606,953-3,188,371
    
Net change in cash753,400426,243809,629
Cash at the beginning0753,4001,179,643
Cash at the end753,4001,179,6431,989,272

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)
 201720182019
Sales revenue6,400,00011,000,00014,000,000
Cost of sales640,0001,100,0001,400,000
Variable expenses, total640,0001,100,0001,400,000
Labour cost2,961,6003,406,8003,852,000
Other operating expenses3,300,0003,700,0004,300,000
Depreciation of fixed assets50,00070,00090,000
Financial expenses105,00067,08316,042
Fixed expenses, total6,416,6007,243,8838,258,042
Gross margin90%90%90%
Break-even sales revenue7,129,5568,048,7599,175,602
Sales revenue above break-even02,951,2414,824,398

 

Funding needs analysis (EUR)
 201720182019
CASH FLOWS FROM OPERATING ACTIVITIES   
Inflows   
Payments from customers5,966,66710,822,21713,833,333
Total5,966,66710,822,21713,833,333
Outflows   
Payments to vendors (goods)596,6671,082,2221,383,333
Payment of salaries and wages2,961,6003,406,8003,852,000
Payments to vendors (operating expenses)3,300,0003,700,0004,300,000
Total6,858,2678,189,0229,535,333
Net cash flow from operating activities-891,6002,633,1964,298,000
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Inflows   
Outflows   
Payments to vendors (assets)1,250,000600,000300,000
Total1,250,000600,000300,000
Net cash flow from investing activities-1,250,000-600,000-300,000
    
Net change in cash-2,141,6002,033,1963,998,000
Cash at the beginning0-2,141,600-108,404
Cash at the end-2,141,600-108,4043,889,596
Amount of funding needed (max)2,141,600  


This document was created with iPlanner.NET online business plan software
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Document version: 25/09/2017 20:18:55 (UTC)



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