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 (MEN-2200344)

2) Mr. M.Faisal Panawala (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) LETTER OF TRANSMETTAL 04

(ii) PREFACE 05
(iii) ACKNOWLDEGMENT 06
1 EXECUTIVE SUMMARY 07
2 FINANCIAL ANALYSIS 07
2.1 FINANCIAL OBJECTIVES 07
2.2 BREAK EVEN ANALYSIS 08
2.3 SALES FORECAST 08
2.4 MARKETING EXPENSE BUDGET 08
3 MARKET SUMMARY 09
3.1 MARKET NEEDS 10
3.2 MARKET TRENDS 10
3.3 MARKET GROWTH 10
4 MARKET STRATEGY 11
4.1 MISSION 11
4.2 MARKETING OBJECTIVES 11
4.3 TARGET MARKET 11
4.4 POSTIONING 12
4.5 MARKETING MIX 12
4.6 MARKETING RESEARCH 12
5 SWOT ANALYSIS 13

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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 Shara–e–Faisal 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 teacher’s 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 Pakistan’s 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

2 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

¾ Decrease customer acquisition costs by 4% every two quarters.
¾ Lower the cost of service delivery by 1% a quarter.
¾ Holding spending, as a percentage of sales, at a steady rate.

2.2 Break-even Analysis

Monthly Units Break-even 250

Monthly Revenue Break-even Rs.625,000

Assumptions:
Average Per-Unit Revenue Rs.2,500
Average Per-Unit Variable Cost Rs.500
Estimated Monthly Fixed Cost Rs.500,000

2.4 Marketing Expense

Budget 2007 2008 2009

TV Ad Campaign Rs. 1,250,000 Rs. 8,000,000 Rs. 8,000,000

Pamphlet Production Rs. 350,000 Rs. 300,000 Rs. 300,000
Website Rs. 250,000 Rs. 200,000 Rs. 200,000
Other Rs. 100,000 Rs. 100,000 Rs. 75,000
Total Cost Rs. 13,200,000 Rs. 8,600,000 Rs. 8,575,000
Percent of Sales 38.00% 15.00% 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 ‘ Rs. in ‘000

Mr. Ashar Jameel 5,000
Mr. Faisal Panawala 5,000

Borrowed Capital ‘ Rs. in ‘000

First Meezan Murabaha 10,000
Al-Jazaeer Investment 5,000

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 Hamdard Institute Of Management Sciences
Analysis of Financial Statements Report

Income Statement of the project over 5 years Rs. In '000

2007 2008 2009 2010 2011

Revenues
Corporate Clients 17,500 20,000 22,000 22,000 21,000
Individual Clients 9,000 12,000 10,000 9,500 9,000
Total Revenues 26,500 32,000 32,000 31,500 30,000
Cost of Sales
Payroll 7,000 7,000 7,500 7,500 8,000
Room Expenses 5,000 5,000 5,000 5,000 5,000
Telephone Expenses 1,000 1,000 1,000 1,000 1,000
Dining/Parties 4,000 4,000 4,000 4,000 4,000
Fitness/Spa/Gym 1,000 1,000 1,000 1,000 1,000
Repair & Maintenance 1,000 1,000 1,000 1,000 1,000
Utilities 1,000 1,000 1,000 1,000 1,000
Total Cost of Sales (20,000) (20,000) (20,500) (20,500) (21,000)

Gross Profit 6,500 12,000 11,500 11,000 9,000

Marketing Expenses
TV Ad Campaign 1,250 800 800 800 800
Web Site 250 250 250 250 250
Pamphlet 100 75 50 50 50
Total Marketing Expenses 1,600 1,125 1,100 1,100 1,100
Administrative Expenses 2,500 2,500 2,800 2,800 2,600
(4,100) (3,625) (3,900) (3,900) (3,700)

Operating Income 2,400 8,375 7,600 7,100 5,300

Finance Cost 0 (2,000) (2,000) (2,000) (2,000)

Profit before Taxation 2,400 6,375 5,600 5,100 3,300

Taxes (10%) (240) (638) (560) (510) (330)

Profit after Taxation 2,160 5,738 5,040 4,590 2,970

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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.

4.2 Market Trends

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

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 self-
esteem 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

¾ Generate a 10% yearly increase in sales.
¾ Increase market penetration every quarter.
¾ 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.
¾ 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.
¾ Distribution- This will occur both at the company's worksite or individual
customers’ place as well as at ASFC facilities.
¾ 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

¾ 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.
¾ 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.
¾ 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 Fitness’s 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:

¾ Marketing services to companies and individuals.
¾ Recruitment of experienced managerial talent.
¾ Dedication and hard work of the founders.
¾ Raising productivity.
¾ 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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