BUSINESS PLAN

3.FEASIBILITY STUDY REPORT

(a) Terms of Reference

Having been appointed by the Directors/Shareholders of Natures World Holdings (Pty) Ltd, otherwise to trade under the Business Name of KGOMOTSO LODGE to assess the economic, operational and technical feasibilities of its intended operation of a lodge and some related facilities in the northern outskirts of Gaborone, Interlands Botswana (Pty) Ltd hereby submits its report.

(b) Methods of StudyWe followed a number of routes in our study that included the followings:

1. Our constant meetings with the intended owner/Managing Director (Ms Kgomotso Ntsatsi), who is the majority shareholder at 99%.

2. Our joint visiting to the site of the project, just opposite the well-known Phakalane Estate in Gaborone North.

3. A visit to the nearest competitor, the Phakalane Golf Estate was carried out.

4. National Development Plan 9 (2003/4 2008/9) as published by the Ministry of Finance and Development Planning in Gaborone was used for reference.

5. Tourism Statistics 2002 published by the Central Statistics Office (CSO) in Gaborone.

6. Statistical Bulletin (June and September 2001, Vol. 2, Nos 2 & 3) also published by CSO.

7. Bajanala: A Tourist Guide to Botswana, Vol. 5, a Publication of the Department of Tourism in Gaborone.

8. Discover Botswana, a recent Publication by the same Department of Tourism.

9. Tourist Guide to Botswana, a Shell Oil Companys Publication as authored by Veronica Roodt.

9. National Conservation Strategy (Co-ordinating) Agency, a leaflet published by the Ministry of Environment, Wildlife and Tourism in Gaborone.

(c)Analysis and Development

This project relates to the promotion of tourism and the need for the provision of conferencing facilities. Botswana, with Gaborone as a particular case still lacks behind in the provision of conferencing facilities that could cater for a world class come together. Many lodges/guest houses in at least Gaborone are composed of fewer rooms that could accommodate at least one group of conference attendants at a go.

The result is that many high-class conferences earmarked for Botswana are shifted to such neighbouring countries as South Africa, Namibia or Zimbabwe. The benefits of selling Botswana internationally and the positive economic impacts are therefore also shifted. Past statistics, although old, indicated that local hotels/motels/lodges/guest houses had 1 620 rooms in 1992; 1 709 (1993); 1 773 (1994); 1 724 (1995); 1 755 (1996); 1 959 (1997) and 1 815 (1998). The rooms occupancy rates in the average were 54.6 (1992); 52.4 (1993); 51.4 (1994); 50.6 (1995); 51.6 (1996); 57.9 (1997) and 48.0 (1998).

The overall monthly hotel turnover, based on 73 of such facilities that responded to the Central Statistics Offices enquiry as touched above averaged P249 559 228.00 in 1998 covering such amenities as accommodation, meals, bar sales and others. Many people topping the list of arrivals were day visitors, holidaying, business and those in transit during 1994 to 2002.

In 2001 for instance, 560 054 visitors entered Botswana; those for holiday/tourists were 197219; returning residents (296 680); in transit (265 697), while 146 437 arrived for business purposes. There are other statistics for diplomats, students, employment seekers, etc, but we quoted the above figures as they are synonymous with the project. All in all, 2001 registered 1 917 819 arrivals. We chose the entry points of Ramokgwebana, Tlokweng, Sikwane, Ramatlabama, Pioneer Gate, Kazungula Ferry, Sir Seretse Khama Airport (SSKA), Maun Airport, Sowa Airport, Ramotswa, Kasane, Tsabong and Francistown Airport as our tools of analysis.

Even though the figures tell us more about the entries into Botswana through the stated points of entry, it is difficult to trace their exact lodgings either for night or day throughout their stay within Botswana. We thus chose a compromise approach by assuming that those who chose a particular point of entry would likewise lodge in the nearest facility or within that region or district. With this project planned for Gaborone, we consequently assumed that it would have a share from those entrants at Tlokweng, SSKA, Pioneer Gate, Ramotswa, Ramatlabama, Sikwane, etc.

This projects only immediate competitor is the affluent Phakalane Golf Estate Hotel Resort, just 5 kilometres away located in the affluent Phakalane Estate. It has eight (8)Chalets of three (3) bedrooms each. They have two (2) bathrooms, Satellite Television, communal swimming pool, self-catering facilities, laundry service and braai facilities. Their charges are as thus:

Persons

MidweekWeekends

4-6 OccupantsP385.00 p/p per night sharing

P1 100.00 per Chalet/night

2-3 Occupants

P440.00 p/p per night sharingP1 100.00 per Chalet/night

1 OccupantP825.00 p/p per night singleP1 100.00 per Chalet/night

Children under 14 yearsP145.00 p/child per night sharing

Group RateP300.00 p/p per night sharing

It also has twelve (12) villas of either three (3) or four (4) bedrooms. The three (3) bedroomed ones are made up of one (1) Executive Suite (master-en-suite) and two (2) Standard rooms, while the four (4) bedroomed ones are made up of one (1) Executive Suite (master-en-suite) and three (3) Executive rooms (en-suites). It further on has six (6) budget rooms. Other facilities as a satellite TV, communal swimming pool, self-catering, laundry service and braai are also available. Their charges are as thus:

Persons Charges

Standard Room (sharing bath & shower)P 350.00 per room per night

Executive Room (en-suite)P 450.00 per room per night

Executive Suite (master en-suite)P 615.00 per room per night

Single Occupancy (3 bedroom Villa)P1 100.00/villa/night single

Single Occupancy (4 bedroom Villa)P1 200.00/villa/night single

Children under 14 yearsP 175.00 per room per night

Budget Room (day use, 08h00 18h00P 120.00 per room per day

Budget Room (night use) P 145.00 per room per night

Group RateP 300.00/person/night sharing

Weekend Rate (3 bedroom Villa)P1 100.00 per villa per night

Weekend Rate (4 bedroom Villa)P1 500.00 per villa per night

(d) Conclusions and Recommendations

1. To experience maximum benefit to Botswana of the hospitality industrys impact, we suggest that more citizens be accorded entry into this industry. That would go a long way in localising the associated benefits of dividends, profits, expertise, etc, that are shipped out of the country by foreign shareholders.

2. We recommend that this project should carry out services and provide such facilities as categorised under the Explanatory Notes of the Income Statement (Revenue Computation) for it to be viable. The labour force is depicted under the Organisational Structure chapter.

3. For optimum achievement, this project would need seeding funding to an estimated tune of P3 650 500.00 as computed under the Explanatory Notes of the Cash Flow Statement (Loan Computation). Should a Grant be awarded either fully or partially secured, the better.

4.Having assessed this projects economic feasibility as derived from the projected Cash Flow Statement, Income Statement, Balance Sheet and Trial Balance; the Operational Feasibility as touched under the covered Organisational Structure, Succession Arrangement and SWOT Analysis as well as the Technical Feasibility as learned normally from other existing similar projects in Botswana, we give this project thumbs up.

4.OPERATIONAL METHODOLOGY, ENVIRONMENTAL IMPACT STUDY

AND MARKETING APPROACH

The intended project herein is to be for the provision of medium to high class lodging and its related facilities like Conferencing, Restaurant/Bar, Hair/Beauty Salon, Laundry services for clients in residence, Secretarial services, Swimming, etc. Meals of various cultures as per the clients tastes would also be in the offering.

Clients would book in through the reception and then allocated rooms usages for whatever time frame. The same procedure would be applied in the case of booking for the conference facilities. The Bar/Restaurant would be open to both in-house clients and members of the public. The conference room would, like the rooms be equipped with certain facilities like telephones, televisions, air conditioners, chairs and tables, etc where relevant. The rooms would also encompass such basics as beds, beddings and cutlery for self service. The recreational side would be occupied by an already available swimming pool, which would be operated on a pay-as-you-use basis for outside clients, but would be free for in-house clients.

The Hair/Beauty Salon is aimed at being rented out to professionals on monthly rentals, the same procedure that is planned for the Curio shop. Kgomotso Lodge would only take over their operations should there be no potential tenant fitting the requirement.

The entire complex is to generate various forms of waste. There would be plastics, papers, food and beverages waste to be considered. There would also be issues of internal landscapes and used water from both the swimming pool and other mentioned business operations. For all such and sub-such eventualities, adequate measures are already planned for. The swimming pool water would be re-used after being rejuvenated up to a certain accepted health condition and then would be diverted to a drainage system. All the water from the toilets, water basins and baths/showers would be diverted to a drainage system enroad to the Gaborone system as well.

In marketing itself, the project is to institute a host of promotional gestures like Billboards, Street poles adverts, Brochures, Magazines, Television, Radio, Internet, Newspapers, Sign boards and Telephone Directory, especially the Yellow pages.

Te project is intending to participate in community development projects and charities in the form of donations - giving in one way or the other to the level of its ability as part of its social responsibility. It will also find ways of being a tourist promotion venture through its intended Curio shop that would market traditional products made by the rural communities.

That would supplement the Governments concerted NDP 9 efforts of developing and implementing the National Eco-Tourism Strategy that stands to diversify tourism products, thus leading to the improvement of every local communitys lives. That participation would build loyalty to this project in the minds of the selling community and other beneficiaries as well as announcing its entry in the minds of its clientele.

This venture is further on intending to stress on positive customer relations attitude from the part of its staff. There would also be strategically placed suggestion boxes closer to the customers for their convenience rather than to the staff as that would indirectly be threatening

to both staff concerned and the customers.

ORGANISATIONAL STRUCTURE, SUCCESSION ARRANGEMENT AND SWOT ANALYSIS

To be manned by a staff component of 19 including the Managing Director Ms Kgomotso Ntsatsi, this projects daily grassroots operations are to fall under two supervisors, one per shift, who would report directly to her. Ms Ntsatsi would in turn report to the two-member Board of directors made up of herself (99%) and Tefo Ntsatsi (1%).

We suggest that the supervisors be in possession of at least certificates in any course related to the Hospitality Industry. Five years experience is suggested. Any further qualifications in especially Human Resources or Customer Relations will be added advantages.

There will also be a need for a professional and energetic Sales and Marketing Manager with at least a Diploma in either Sales or Marketing, a combination of both of which will be an added advantage. A minimum of 3 years post-qualifications experience in the Hospitality Industry are preferred. His/Her job description would include events managements, customer/public relations, indoor/outdoor advertising, etc.

Ordinary Level qualification in which Accountancy and Mathematics were subjects as well as Computer Literacy and Reception/Secretarial course are suggested for each of the two Receptionists/Bookkeepers, who will work on shift basis. Three years experience in any industry is preferred. We suggest 2 Chefs (one per shift), 2 Cooks and 2 Waiters/Waitresses, all apportioned one per shift as well. While we do not stress professional qualifications here, any relevant one will be added advantages. The most important criterion will be uppermost practical experiences in the industry including in restaurants. Knowledge of Setswana food would be favoured.

We further suggest one Gardener to handle the two plots as envisaged. A minimum of a Primary School Leaving Certificate and physical fitness are suggested with a minimum of 2 years relevant experience in any industry. A Driver with at least a light duty drivers license to cater for the projects multi-dimensional needs is suggested. At least 3 years are preferred in any industry. We suggest that the project better engage the service of a hired security guard who would be from local security companies including their alarm system.

With this span in mind, we foresee no mission impediments. This is the projects potential strength. On the other hand, the project is to be directed by its owner, who is new in the industry, at least to this magnitude. Still we foresee light at the end of the tunnel, as a host of relevantly qualified and experienced team would surround her.

Ms Kgomotso Ntsatsi as the Head of the project on the other hand possesses a Masters degree in Accounting and Finance from the University of Birmingham in the United Kingdom which followed her attainment of Postgraduate Diploma in Finance from the same university. She previously obtained a Bachelor of Arts degree majoring in Accounting and Economics from the University of Botswana. She is a Banker working for Bank of Botswana having held various portfolios whose current one being that of Manager in the Department of Payments and Settlement. She attended various seminars and traveled widely, an experience that would go a long way in running a hospitality venture of this nature.

There are opportunities for this project in recognition that it has just one competitor in the vicinity. Should this project intensify advertising and promotion aspects to the planned optimum level, we foresee it reaping fruits even from the seemingly distant Gaborone city centre due to the privacy and quietness of the Gaborone North and Phakalane areas. Should future competition emerge, at least the business would have passed its teething stage earlier, thus fit enough to challenge any newcomer.

6.PROJECTED 5-YEAR INCOME STATEMENT

(ANNUAL TOTALS IN PULA)

2008/92009/102010/112011/122012/13TOTAL

REVENUE2 327 9802 490 9392 665 3052 851 8763 015 50713 387 607

Less Operating Expenses

MDs Salary120 000127 200134 832142 922151 497676 451

Other Salaries402 000426 120451 687478 788507 5152 266 110

Food and Beverages70 00072 10074 26376 49178 786 371 640

Electricity and Water60 00061 80063 65465 56467 531318 549

Stationery, Telephone and Fax15 00015 30015 60615 91816 23678 060

Repairs and Maintenance5 0005 1005 2025 3065 41226 020

Insurance20 00020 40020 80821 22421 648104 080

Transport35 00036 40037 85639 37040 945189 571

Advertising and Promotion10 0005 0005 2005 4085 624 31 232

Cleaning Materials/Uniforms15 0004 0004 90017 0005 20046 100

Auditing and Consultancy10 0007 7257 9578 1968 44242 320

Other Expenses (including Security)6 0006 1806 3656 5566 75331 854

Total Operating Expenses768 000787 325828 330882 743915 5894 181 987

Profit Before Depreciation, Interest and Taxes1 559 9801 703 6141 836 9751 969 1332 135 9189 205 620

Less Depreciation10 00010 00010 00010 00010 00050 000

Profit Before Interest and Taxes1 549 9801 693 6141 826 9751 959 1332 125 9189 155 620

Less Interest (20.5%)748 353673 517598 682523 847449 0122 993 411

Profit Before Taxes801 6271 020 2931 228 2931 435 2861 676 9066 162 209

Less VAT (10%)208 198225 693242 350259 085279 4931 214 819

Profit Before Corporate Tax593 429749 404985 9431 176 2011 397 4134 947 390

Less Corporate Tax (25%)148 357198 601246 486294 050349 3531 236 847

Profit After Corporate Tax445 072595 803739 457882 151 1 048 0603 710 543

Balance Brought Down0445 0721 035 8751 767 8322 639 9830

Funds Available to Shareholders445 0721 040 8751 775 3322 649 9833 688 0433 710 543

Less Dividends05 0007 50010 00012 50035 000

Balance Carried Down445 0721 035 875 1 767 832 639 9833 675 5433 675 543

7.PROJECTED 5-YEAR CASH FLOW STATEMENT

(ANNUAL TOTALS IN PULA)2008/92009/102010/112011/122012/13TOTAL

Loan3 650 5003 650 500

Revenue2 327 9802 490 9392 665 3052 851 8763 051 50713 387 607

Total Inflows5 978 4802 490 939 2 665 3052 851 8763 051 50717 038 107

Less Outflows:

Land and Buildings3 100 0003 100 000

Furniture/Air cons/TVs 200 000 200 000

Bedding/Cutlery 100 000 100 000

Walls/Gates 100 000 100 000

Telephones/Fax 10 000

MDs Salary120 000127 200134 832142 922151 497676 451

Other Salaries402 000426 120 451 687478 788507 514 2 266 110

Electricity/Water60 00061 80063 65465 564 67 531318 640

Food and Beverages70 00072 10074 26376 49178 786371 640

Stationery, Telephone and Fax15 00015 30015 60615 91816 23678 060

Repairs and Maintenance5 0005 1005 2025 306 5 41226 020

Insurance20 00020 40020 80821 22421 648104 080

Transport35 00036 40037 85639 37040 945189 571

Advertising and Promotion10 0005 0005 2005 4085 62431 232

Cleaning Materials/Uniforms15 0004 0004 90017 0005 20046 100

Auditing and Consultancy10 0007 72579578 1968 44242 320

Other Expenses6 0006 1806 3656 5566 753 31 854

Interest on Loan748 353673 517598 682523 847449 0122 993 411

Loan Repayment365 050365 050365 050365 050365 0501825 250

Value Added Tax208 198225 693242 350259 085279 4931 214 819

Corporate Tax 0148 357198 601246 486294 050887 494

Dividends 0 05 0007 50010 00022 500

Total Outflows5 599 6012 199 9422 238 0132 284 7112 313 19414 635 459

Surplus (Deficit)378 879290 997427 292567 165738 3132 402 647

Balance Brought Down 100378 979669 9761 097 2681 664 433 100

Balance Carried Down378 979669 9761 097 2681 664 4332 402 7462 402 746

8.PROJECTED 5-YEAR BALANCE SHEET

(ANNUAL TOTALS IN PULA)

YEAR 02008/92009/102010/112011/122012/13

FIXED ASSETS

Land and Buildings 3 100 000 3 100 000 3 100 0003 100 0003 100 000 3 100 000

Furniture/Air cons/TVs 200 000 200 000 200 000 200 000 200 000 200 000

Bedding/ Cutlery 100 000 100 000 100 000 100 000 100 000 100 000

Walls/ Gates 100 000 100 000 100 000 100 000 100 000 100 000

Telephones/ Fax 10 000 10 000 10 000 10 000 10 000 10 000

Total Gross Fixed Assets 3 510 000 3 510 000 3 510 000 3 510 000 3 510 000 3 510 000

Less Accumulated Depreciation 0 10 000 20 00030 00040 000 50 000

Total Net Fixed Assets 3 510 000 3 500 000 3 490 0003 480 0003 470 000 3 460 000

CURRENT ASSETS

Cash/ Bank 140 600 378 979 669 976 1 097 2681 664 433 2 402 746

CURRENT LIABILITIES

Provision For Taxation 0 148 357 198 601 246 486 294 050 349 353

Provision for Dividends 0 0 5 000 7 500 10 000 12 500

Total Current Liabilities 0 148 357 203 601 253 986 304 050 361 853

Net Current Assets 140 600 230 622 466 375 843 282 1 360 383 2 040 893

Total Net Assets 3 650 600 3 730 622 3 956 375 4 323 282 4 830 383 5 500 893

OWNERS EQUITY

Authorized Share Capital 3 000 3 000 3 000 3 000 3 000 3 000

Issued Shared Capital 100 100 100 100 100 100

Retained Earnings 0 445 072 1 035 8751 767 832 2 639 983 3 675 543

Total Owners Equity 100 445 172 1 035 975 1 767 932 2 640 083 3 675 643

LOAN-TERM LIABILITY

Loan (20.5%) 3 650 500 3 285 450 2 920 400 2 555 350 2 190 300 1 825 250

9. PROJECTED 5-YEAR TRIAL BALANCE( ANNUAL TOTALS IN PULA)2008/92009/102010/112011/122012/13

Dr CrDr CrDr CrDr CrDr Cr

Land and Buildings31000003100000310000031000003100000

Furniture/Air cons/TVs 200000 200000 200000 200000 200000

Bedding/Cutlery 100000 100000 100000 100000 100000

Walls/Gates 100000 100000 100000 100000 100000

Telephones/Fax 10000 10000 10000 10000 10000

Cash/Bank 378979 669976109726816644332402746

Capital 100 100 100 100 100

Loan32854502920400255535021903001825250

Retained Earnings4450721035875176783226399833675543

Depreciation1000020000300004000050000

Provision for Taxation148357198601246486294050349353

Provision for dividends500075001000035000

Totals3888979 38889794179976 41799764607268 46072685174433 51744335912746 5912746

10.

CONCLUSIONSWe did our best to draw a picture objectively appropriate of this project in our quest to assess its economic, operational and technical feasibilities given the conditions and research submissions at hand. Although this Business Plan is primarily meant for a total grant financing to the envisaged tune of P3 650 500.00, we found it better to also be assessed on a most pessimistic position that of test-driving it on a situation where the entire amount is sourced from a private lender at about 20.5% Rate of Interest annually. In that way, we feel we would be test-driving the strength of its pillars.

We also prepared this plan with a tourism licensing application in mind as a Business Plan would be necessary in that aspect. We also found it better to come up with a plan that would practically guide the owners on the situation on the ground. That aspect ranged from pointing out potential competitor(s) operating in the area and their strengths, the magnitude of this projects role in the shaping of the tourist industry in line with Botswana as a country economically, socially and culturally. We do not claim to have touched all these aspects mentioned in details herein as this Business Plan was not specifically meant for that. We are satisfied with our findings; otherwise we would not have produced this Business Plan and handed it over for financial sourcing/licensing in detriment to our clients financial obligations and the financiers risk investment. But business is not necessarily a product of academic and mathematical computations. Most professors are not millionaires out of business. Business is a component of the society in which we live with others being the employees, competitors, the government, technology, changing clients preferences, natural overturns, etc. That can change the terrain forever for either the worst or best either in combination or intoto.

In this Business Plan, we cracked our heads to produce an all in one prescription should the worst hit. While others are seemingly explicit herein, others have their doors unlocked and only to open in cases of emergencies. Staff composition for example, could be shrunk or expanded in response to circumstances.

With all these in mind, we thank you in appreciation!

Board of Directors

Managing Director

Sales/Marketing Manager

Supervisors

(X2)

Chefs

(X2)

Gardner

Receptionists/

Bookkeepers

(X2)

Security

Service

Driver

Assistant

Driver

Cooks

(X2)

Waiters/

Waitresses

(X6)

12

13

14

15

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