Business Plan - Green Ignition

Green Ignition GreenFire Reverse Vending Machine

Hong Kong Social Enterprise Challenge Team 15

Green Ignition 1.0

2.0

3.0

4.0

5.0

6.0

Executive Summary 1.1 Vision 1.2 Mission 1.3 Objectives The Business 2.1 Business Description 2.1.1 Green Fire Reverse Vending Machine 2.1.2 Partnership 2.1.3 Current Setup Status 2.2 Future Relevant Campaign Market Analysis Summary 3.1 Targeted market 3.1.1 Profit Target – Advertising Companies 3.1.2 Social Impact Target – Post-secondary institutions 3.2 Industry Analysis 3.2.1 Current Market Player 3.2.2 Outcomes and Analysis of Market Player’s Business 3.3 Comparison and Differentiation Implementation Summary 4.1 Pilot Plan 4.1.1 Trial of the Business 4.1.2 Logistics in HKUST 4.2 Sources of Revenue 4.3 Promotion Strategy 4.3.1 Promotion 4.3.2 Price 4.4 Coordination 4.5 Assessment of Social Impact 4.6 Analysis of the Campaign 4.6.1 Strengths and Weaknesses 4.6.2 Potential Opportunities and Threats 4.7 Future Development Management Summary 5.1 Organizational Structure 5.2 Management Team Financial Plan 6.1 Cash Flow Statement 6.2 Income Statement 2

Green Ignition 6.3 Balance Sheet 6.4 Monthly Cash Budget 1.0 Executive Summary Introduction Unlike Japan and some European countries, the recycling rate is Hong Kong is comparatively much lower, even though the Hong Kong government and various environmental groups have launched different recycling schemes to educate and encourage the public to take part in.

(Appendix 6)

With no

induction, people in Hong Kong are hardly willing to change their habits towards recycling. As a result, their incentives to recycle remain low.

To tempt people to participate actively, we, the Green Ignition, aim at setting up the Octopus Rewards-based ‘Green Fire Reverse Vending Machines’ in 10 post-secondary institutions. We will have a 5-year plan of development to expand the market to other places phase by phase, such as food courts and high-density public housing estate, and extend the recycling materials from bottles and cans to paper, batteries, glasses and certain metals in the future.

The Company Green Ignition’s vision is to green the Earth and get the involvement of every citizens in daily environmental protection. Through the setup of the more accessible recycling hot spots, the ‘Green Fire Machines’, with Octopus Rewards, it is expected that people’s awareness of recycling in daily life will be risen.

3

Green Ignition Green Ignition is a social enterprise inaugurated by five year-2 students from

the

Hong Kong University of Science and Technology (HKUST). We are from different business fields and all have an aspiration for greening the Earth. Business ideas are added to the environmentally-based projects so that plans

can become both workable

and profitable.

The Business The Green Fire Reverse Vending Machine deals with two recycling materials, bottles and cans. Octopus Rewards Limited is working with us by offering Octopus rewards to people who have participated in the recycling via the use of our machines.

Advertisement can be placed onto the machine, which is the main source of our revenue.

We have already had a primary approach to Octopus Rewards Limited

(Appendix 2)

and

the manufacturer of reverse vending machines, Motion Korea. Further negotiation is possible for the ongoing of the project.

With the rewards system, our machines are able to motivate the public to take part in recycling. With a series of marketing campaigns backing up the launch of the machines, we expect to attract people’s attention successfully and achieve our goals.

The Market Our major targeted markets are separated into 2 groups, the ‘profit target’ and the ‘social impact target’. For ‘profit target’, beverage companies and any companies which target on university students and are willing to contribute to environment protection are 4

Green Ignition our focus. University students are always difficult to be specifically targeted due to limited chances of advertisement on campus. Our machines can thus become a direct channel for these companies to make advertisement and promotion.

For ‘social impact target’, we focus on 10 post-secondary institutions, including HKU, CUHK, HKUST, PolyU, CityU, BU, LU, HKIEd, OpenU and HKSYU. According to the University Grants Committee, these institutions cover around 104,850 people with the composition of 83% post-secondary students and 17% staff. With higher education level, they are more curious about new things and more willing to take part in environmental protection. So the effect of our project is more obvious on them.

Financial Consideration (detail Investment Flow Appendix I) To launch the scheme, $85000 has to be invested for initial investment like purchasing reverse vending machine with the aid of the government funding. It takes about 3 years to break even. The scheme can grow steadily in which its net profit margin can reach 7.3% in year 3. In the foreseeable future, it has got a great investing potential.

1.1 Vision Our vision is to green the Earth and get everyone involved in maintaining a comfortable and healthy environment to live with.

1.2 Mission 5

Green Ignition We encourage people to help greening the Earth by actively participating in recycling.

We cooperate with Octopus Rewards Limited to offer cash rewards for those who participate in recycling using our ‘Green Fire Machines’.

1.3 Objectives Our objectives in the first year of operation are: 

To place 3 machines per institution among 10 post-secondary institutions.



To rise the recycling rate of bottles and cans in these institutions by 80%.

Our objectives in the following four years of operation are: 

To expand the business to places like food court or public housing estate.



To extend the recycling materials to paper, bottles, batteries and metals.



To achieve a 20% growth rate of revenue per year.

2.0 The Business Green Fire Reverse Vending Machines, in co-operation with Octopus Rewards Limited, provide a more convenient and fruitful channel to motivate the public to participate in recycling. Recycling is more than a one-way contribution to environment, it can be mutual beneficial to both the environment and the participants. The more actively one participates, the more electronic money one can obtain.

2.1 Business Description 2.1.1

Green Fire Reverse Vending Machine (RVM) It is a reverse vending machine that is very popular in Europe and Japan. But ours 6

Green Ignition is slightly different as smart card reader is installed. After putting the cans or bottles into ‘Green Fire Machines’, people can get the $0.01 Octopus Rewards on a per-unit basis. Advertisement can be placed onto the machines for promotion.

The machine is user-friendly with only 4 steps to finish.

Select a language  Choose whether to get rewards or not (This is necessary because some people may not have activated their cards for Octopus rewards yet)  Put in the PET bottles or aluminum cans  Place an octopus card on the reader to get the rewards 2.1.2

Partnership To implement the plan we have to cooperate with 4 partners, which are Octopus Rewards Limited, the post-secondary institutions, the advertising companies and agencies and the recycling plants.

7

Green Ignition 2.1.3

Current Setup Status a. Octopus Card Limited We have contacted Mancy Li, Senior Manager, Sales & Business Development of Octopus Card Limited to discuss our business plan. Positive feedback and the cooperation costs were given. Further approach and negotiation is ready for the implementation of the plan. (Appendix 2) b.

Manufacturer of Green Fire RVM, Motion Korea Co. Ltd. We have already discussed the plan, particularly the design and requirement of our machines. Quoted price has been sent to us and coordination is still on progress.

c. HKUST, target market of the pilot plan A pilot plan for the assessment of the social impact outcome and sustainability of the plan will be launched at HKUST. We have contacted the Health, Safety & Environmental Office and our plan is under evaluation. d. Hong Kong Beverage Association We have contacted them for the cooperation of the manufacture of the Green Fire RVM. Our plan is now under evaluation. e. HKSAR government We are currently applying for the ‘Enhancing Self-Reliance Scheme for Social Corporation’ from the government, which is a scheme to sponsor social

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Green Ignition corporation for starting a business with at most HK$3 million. (Appendix 5) 2.2

Future Relevant development Similar campaign can be implemented over food court and high-density public housing estate. The message of everyone’s participation in recycling can be spread to a larger extent in the future when the plan is not just limited to education institutions.

3.0 Market Analysis Summary We divide our targeted market into 2 categories, which are the ‘profit target’ and the ‘social impact target’. Profit targets are the advertising companies that can generate the greatest profits to us. Social impact targets are the targets which have the greatest social effect and outcomes after implementing our plan.

We would also analyze the other market players in the industry by comparing the RVMs and pinpointing our merits over them.

3.1 Targeted Market 3.1.1

Profit Target – Advertised Companies Advertised Companies are contacted either directly or through an agency.

Companies whose business is targeting on university students, and who are willing to contribute to environmental protection would be our focus. Beverage companies like Vitasoy International Holdings Limited, A.S. Watson and Pepsi HK Limited are included, as well as some banks for credit card promotion and suppliers of IT products such as IBM and HP. 9

Green Ignition Generally, the penetration of a company into a university is rather difficult since there are rare chances of placing advertisement at universities. By advertising through our machines, the companies not only can publicize their socially responsible image as driving for environmental protection, but also be able to penetrate into post-secondary institutions.

3.1.2

Social Impact Target – Post-secondary Institutions Post-secondary institutions are chosen as the main social impact target because people there are highly educated, curious to new things and would be willing to support environmental protection. From our observation and estimation, at least one will consume a canned or bottled drink per day out of every five people. So we could expect a high recycling rate is possible. The effect would be the greatest compared to any other areas because people there are of high education level. Moreover, as Universities are non-profit institutions and always supporting environmental protection, the rental cost of our machines at universities would be minimized.

3.2 Industry Analysis 3.2.1

Current Market Player Swire Coca-Cola Ltd. has cooperated with Octopus Rewards Ltd. and Ocean Park to manufacture a reverse vending machine with Octopus rewards. The machines have been already placed in 3 places, namely the 10

Green Ignition Hong Kong Polytechnic University (PolyU), the Chinese University of Hong Kong (CUHK) and the Ocean Park.

3.2.2

Outcomes and Analysis of Market Player’s Business According to a random interview of students from PolyU and CUHK, they can hardly realize the existence of Swire Coca Cola RVM, so the project of Swire fails to raise the public awareness and interests.

Reasons for Swire’s failure:

Swire’s Defects Bar code recognition system Insufficient promotion & network No update for RVMs since 2/12/07 3.3 Comparison and Differentiation

Consequences Less incentives to recycle Lack of public awareness Less appeal to people

We are different from SCCHK in three ways: Our Characteristics Advantages Student background Higher degree of penetration Advertisement on RVMs Tool for income generation Online diagnostics Proper maintenance is available Details of the difference between the two machines can be found in appendix 4 and 6.

4.0 Implementation and Operation Summary (Appendix 3) The RVMs will be placed in post-secondary institutions in Hong Kong. Various stakeholders will share responsibilities and receive rewards in participating. The social impact of our recycling program will be assessed. In the near future, more areas will be covered in this scheme and various materials will be included in the recycling scheme.

4.1 Pilot Plan 11

Green Ignition 4.1.1

Trial of the Business Before launching the scheme, a pilot program will be used to test whether the program will be successful. RVMs will be placed in a university to test their effectiveness.

Our university, the HKUST, is chosen as the testing ground as we have a better relationship with the departments and student societies. Also, we could reduce the assessing and promotion costs because of our network. 3 RVMs will be placed at LG1 canteen, LG 5 canteen and right outside the Oliver Sandwich because they are the most common places that UST students would gather and consume drinks.

The trial will last for 6 months.

To capture the attention of the public, we will cooperate with student environmental societies to promote the machines together. Advertisement on campus radio and campus TV will be air to raise the awareness.

Survey and field observation will be conducted to monitor the process.

If the machines can collect up to 90% full at 98% of the time, the program will be regarded as successful. If not, adjustment will be made according to the survey and field observation results.

The result of the pilot plan will be used for deciding 1) the number of the machines and; 2) the location of the machines in future expansion.

4.1.2 Logistics in HKUST 12

Green Ignition Most of the recycling bins are collected through a recycling company which is contracted with Health, Safety and Environmental Office in HKUST. The company collects the materials in recycling bins 2 days per week. We would cooperate with them and authorize them to collect the materials inside our Green Fire RVM. Through the online diagnosis, we could also give indication to the recycling company to collect the materials if the machines are full.

4.2 Sources of Revenue Our major source of revenue is from advertisement. We would either directly contact our targeted clients or coordinate with advertising agencies.

Another source of revenue is from the partnership with the recycling plants. As our machines have weighing system, we could share the profits (by percentage) from the sales of PET bottles and aluminum cans with them.

4.3 Promotion Strategy 4.3.1

Promotion Marketing campaign will be held in a cost-effective way to 1) increase recycling rate; 2) raise the awareness and interests of the consumers of the reverse vending machines. Four areas will be focused: (i)

On-campus Promotion Reminder notes will be posted on campus to remind consumers that a reverse vending machine is nearby.

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Green Ignition Inter-school recycling competition will be held to make noise and boost short-term recycling rate. (ii)

Internet Online community, such as forums, Youtube, Facebook and official website will be set up to increase the sense of commitment and social bonding concerning recycling.

(iii)

Word-of-mouth

Focused groups, such as opinion leaders, will be targeted. They are encouraged to help spreading the message of frequent recycling. Incentive, such as monetary rewards or gifts, will be given. This is to increase the persuasiveness of the message.

4.3.2

Price The main source of income will be from advertisement placed on the machines. The initial pricing will be based on the advertising rate of convention vending machines.

The second source of income will be from the selling of the recycling materials collected. The selling price will be the market price of the materials collected.

4.4 Coordination We will be the mediators of the following parties: 14

Green Ignition 1) Manufacturers of reverse vending machines Job1: Manufacture Reverse vending machines Job2: Transport the machines to post-secondary institutions Job3: Maintenance support 2) Campus Job1: Provide space for the reverse vending machines Job2: Daily cleaning of the machines Job3: Report on machines defects 3) Recycling plants Job1: Transport the collected materials 4) Octopus Holding Ltd Job1: Give permission to use Octopus Rewards system 4.5 Assessment of Social Impact Before the start of the campaign, a face-to-face survey about people’s recycling habit is conducted. This survey helps in estimating the current recycling rate and attitude before the launch of the project.

Six months after the launch, the same survey will be conducted to check if people’s habit has changed and the proportion of recycling participation can be estimated. The survey is done twice a year to make sure we are able to achieve the social impact.

Adjustment and innovation will be made if the current course deviates from our goal.

A field observation will also be conducted every 6 months to monitor the rate of 15

Green Ignition recycling and attitudes towards recycling before, during and after the implementation of our plan. Adjustment of the number and the location of the machines will be made to increase recycling rate.

4.6 Analysis of the Plan 4.6.1

Strengths and Weaknesses Strengths Areas that recycling bins are not present are now covered; this can increase the overall recycling rate in Hong Kong.

Conventional recycling bins do not provide incentive for consumers to recycle. The reverse vending machines can now provide an incentive and boost the recycling rate. As the reward is intangible, space of the machine for tangible reward (the coins) can be saved.

Weakness The cost is very large due to the huge manufacturing costs.

4.6.2

Potential Opportunities and Threats Opportunities The increasing emphasis on social responsibility and the call for more recycling creates opportunities for our business.

University students have very high purchasing power, yet many companies find them hard to reach. It is very likely companies are willing to

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Green Ignition place advertisement on reverse vending machines to increase their exposures to university students.

Besides that, the Hong Kong Beverage Association in the past has launched a scheme which places recycling bins in many different spots but it failed eventually. It’s possibly that we can cooperate with them that they could give us sponsorship in manufacturing the machine in the future and we could work as a partner to help them to continue the scheme.

Threats The advertising placement is insecure due to current economic downturn.

There is also the threat of new market entry.

Public’s interest does not last long.

4.7 Future Development

Phase I

Actions Pilot plan (6 months)

Phase II

Place 3 machines in Hong Kong University of Science and Technology Place machines in 10 post-secondary institutions in Hong Kong (1 year). The

Phase III

budget and amount of promotion will depend on the result of the pilot plan.

Place machines in food courts or public housing estates (5 years). The number of machines and materials to be collected will depend on the

popularly of the machines in phase II and continuous monitoring.

5.0 Management Summary Green Ignition is consisted of an administrative team of 5 year-2 students from HKUST, 17

Green Ignition who come from different business fields, including Marketing, Accounting, Management and Economics and Finance. We have an extensive networking with consultants from various business backgrounds.

5.1 Organizational Structure There are mainly 2 departments in Green Ignition, namely the Marketing Department and the Accounting & Finance Department. We have 10 people working for Green Ignition, and each of us has multiple roles. As we are from different business areas, knowledge of a specific area can easily be exchanged among the talents.

5.2 Management Team 5.2.1

5.2.2

Administrative team Anna Leung

Double Major in Marketing and Management

Eric Yim

Major in Accounting

Irene Chan

Major in Economics and Finance

Oscar Tsang

Double Major in Marketing and Management

Tom Cheung

Double Major in Accounting and Information System

Advisors Alan To

Project Manager of Bayer Material Science

Daniel Ho

Trustful Technical Support (回收公司)

Dom Chan

Chief Operation Officer of Hung Thai Crocodile Meat Wholesale Company

John Lau

Retired Vitaory Ltd. CFO

Teresa Chu

Doctor of Law; Solicitors of Victor Chu & Co.

5.3 Duties of Departments 5.3.1

Marketing The Marketing Department is responsible in 3 major areas: Public Relation & 18

Green Ignition Promotion; Contact & Coordinate stakeholders and Service Innovation.

5.3.2 Accounting and Finance This department is responsible for cost and profit projection of various projects.

They also prepare financial reports for various purpose.

6.0 Financial Plan Green Ignition Budgeted cash flow statement for the year ($ in HKD) Year 1 Year 2 Year 3 $ $ $ Cash flows from operating activites Recepits from recycled materials Recepit from advertisment Less: Cash paid to Octupas company Cash paid for salaries and allowance Cash paid for rent and rate Cash paid for other operatiing expenses (Note 1) Net cash from(used in ) operating activites (A)

120000 72000 25200 72000 39600 46000 9200

552600 216000 109746 144000 39600 146800 328454

Cash flows from investing activities Purchase of machine, equipment, furniture Testing charge Net cash from(used in ) investing activites (B)

1265000 40000 (1305000)

2430000 0 (2430000)

85000 1200000 40800 0 0 1325800 30000 0 30000

0 1800000 301546 0 0 2101546 0 30000 30000

Cash flows from financing activities Contributed capital Government funding Loan borrowing Loan repayment Interest expenses paid Net cash from(used in ) financing activites ( C) Net increase/(decrease) in cash and cash equivalents (A+B+C) Cash and cash equivalents at the begaining year Cash and cash equivalents at the ending year

733650 216000 126630 144000 43560 188780 446680

0 0 0

0 0 0 342346 36275 (378621) 68059 30000 98059

Note 1) Other operating expenses include insurance, utilities, repairs, advertisment

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Green Ignition Green Ignition Budgeted income statement for the year ($in HKD) Year 1 $ Revenue Cost of sales Gross profit Gross margin in % Operating expenses Salaries and allowance Ren and rate Utilities Advertisment Repairs and maintenance Interest expense Insurance Depreciation for furniture and equpiment Net profit/(Loss) Net profit ratio

Year 2 $

Year 3 Toatal $ $ 969750 2061000 495130 1124076 474620 936924 48.94% 45.46%

222000 150700 71300 32.12%

869250 478246 391004 44.98%

72000 39600 18000 20000 5000 2040 3000 10000 169640 (98340)

144000 39600 19800 50000 50000 17117 27000 10000 357517 33487

144000 43560 21780 60000 80000 17117 27000 10000 403457 71163

-44.30%

3.85%

7.34%

360000 122760 59580 130000 135000 36275 57000 30000 930615 6309

Green Ignition Budgeted balance sheet( $ inHKD) Year 1 Year 2 Year 3 $ $ $ Assets Non-current assets Reverse vending machine (net) Furniture and equipment (net) Toal non-current assets (A) Current asstes Accounts receviable-recycled materials Bank Total current asstes (B) Liabilities Current liabilities Interest payable Total current liabilities ( C) Non-current liabilities Loan borrowing Total non current liabilities (D) Net assets (A+B-C-D) Capital Contributed capital Government funding Add: Retained earning Total capital

1129500 40000 1169500

3191000 30000 3221000

2822500 20000 2842500

30000 30000 60000

130650 30000 160650

150750 98059 248809

2040 2040

19157 19157

0 0

40800 40800

342346 342346

0 0

1186660

85000 1200000 1285000 (98340) 1186660

3020147

3091309

85000 3000000 3085000 (64853) 3020147

85000 3000000 3085000 6309 3091309

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Green Ignition Appendices Appendix I Investment Flow

21

Green Ignition Total Cost: Phase I – Pilot plan (HKUST)

Months 1 month

2-5 months

6 months

Phase II – Other postsecondary institutions

6–9 months

9 – 18 months

Phase III – Food Court/public housing estates

19 – 79 months (5 years)

What to do Pre-assessment: - Survey - Measure the recycling rate in the recycling bin -Reverse vending machine purchased - Testing charge (machine adaptability with Octopus system) Launch the scheme: –Promotion -Reverse vending machine purchased -Octopus system purchased

Estimated cost Conduct Survey

1500

Inspection of recycling rate Testing charge

5000

Promotion Octopus system purchased Reverse vending machine purchased Survey conducting

1500 4500

40000

360000

Post- assessment: - Survey - compare recycling rate before and after the Inspection of launch of the test recycling rate

1500

Machines production Contact stakeholders - Reverse vending machine purchased - Octopus system purchased

Octopus system purchased

10500

Reverse vending machine purchased

840000

Launch the scheme Promotion

Maintenance

5000

Monitor progress (every 6 months)

Promotion

15000

1.Material expansion 2.Expand to : - Food Court; OR - Public estates **Depends on Phase I & Phase II

Production Cost Promotion

To be determined after Phase I and II

5000

Logistic Maintenance

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Green Ignition Appendix II - Octopus related cost 4 costs paid to Octopus Rewards Limited: (1) Octopus Rewards (the electronic money given to participants) (2) Commission for Octopus Rewards Limited on a percentage basis of the rewards (3) Cost of testing whether our machines match the Octopus card reader (4) Cost of Octopus Machine Source: Mancy Li, Senior Manager of Sales & Business Development, Octopus Cards Ltd.

Appendix III Timeframe

Pilot plan

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Green Ignition

Phase II

Phase III

19inch LCD Monitor for advertisement and instruction

Appendix IV Technology: a. Outline of the machine Two sides for advertisement

Input of the PET bottles or Aluminum cans

Octopus Reward Machine

24

Green Ignition

b. Mechanism of the machine 1. Input: Aluminum can and PET bottles can be put in 2.

Compression: volume process compression

85% reduction lead crush

3. Separation: Classify matter other PET, can to a sensor applied to a machine 4. Crush: PET crush; Crush size: 15mm x15mm

c. Comparison of the machines Comparison

Swire Coca Cola RVM

Green Fire RVM

Storage Capacity

~500 x 500mL of crunched PET bottles

~350 x 500mL of crunched PET bottles and 700 compacted aluminum cans

Recycling material

Swire bottles only

Bottles and cans of different brands

Material recognition system Read-only bar code system (recognize only bar code)

Material recognition system (can recognize the materials inserted) 25

Green Ignition Registration Rate

~9 sec./bottle

~7sec./bottle or can

Online support

nil

- Data and program are updated through online support centre - Online diagnostics & maintenance with active triggering function

Smart card reader

Available

Available

Machine dimension

1.01 Width x 1.075 Depth x 1.83 Height

1.01 Width x 0.65Depth x 1.83 Height

Appendix V The Enhancing Self-Reliance Through District Partnership Programme (伙伴倡自強) Introduction The Enhancing Self-Reliance Through District Partnership Programme (Programme) is established under the Home Affairs Department in response to an initiative of the Commission on Poverty (CoP) to reinforce its work in preventing and alleviating poverty through a district-based approach. It has also taken into account the renewed emphasis on district partnership contained in the consultation document on Review on the Role, Functions and Composition of District Councils published on 27 April 2006. We believe that districtbased projects and solutions can help identify local needs more precisely, mobilize community resources more effectively and create employment opportunities and support services on a more sustainable basis.

Objectives The Programme seeks to promote sustainable poverty prevention and alleviation efforts at the district level that help enhance self-reliance, targeting socially disadvantaged groups. Instead of providing welfare or short-term relief, the Programme aims at increasing the skills and capacities of the employable and providing opportunities for the disadvantaged to upgrade themselves and to be effectively integrated into community.

Eligibility The applicant should be a bona fide non-profit making organization which shall be – a) a statutory organization or an organization registered under the laws of the Hong Kong Special Administrative Region (e.g. the Companies Ordinance (Cap. 32), the Societies Ordinance (Cap. 151), etc.); and b) an approved charitable institution and trust of a public character under section 88 of the Inland Revenue Ordinance (Cap. 112).

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Green Ignition Joint applications involving more than one organization or the District Council are also welcome.

Amount of grant and funding period The funding ceiling for each approved project is $3 million. The project shall commence operation within six months after approval of the grant and the maximum funding period is two years from the commencement of operation of the project.

27

Green Ignition

Appendix VI -

Comparison of the operation flows (tradition, Swire Coca

Cola, ours):

Traditional recycling: The recycling rates are low and most useful materials would go into landfill. Besides, the production cost and maintenance cost are also paid by the recycling companies. So it’s not cost-effectiveness as it could not arouse the public incentives and the cost related to the bins is high.

Swire Coca Cola Ltd.: They give rewards only to their bottles with bar code but it does build up some incentives to targets. After collected the Coca Cola bottles, they will use their truck to carry them into a recycling factory to make the bottles and then send to Coca Cola factory to produce new drinks. But in general, As the delivering cost have to be paid by them and they have to be responsible to the whole supply chain process, their operation cost are very high.

Green Fire RVM: we welcome any kinds of PET bottles and Aluminum cans. People, no matter recycling any brands, could gain a reward based on our material recognition system.

Also, we will cooperate with the existing recycling companies in the Universities and they 28

Green Ignition would carry our machines to the recycling factory. So our costs are relatively low compared with the traditional and Coca Cola Model and the social impact is much greater.

Furniture and equpment

Appendix -- Financial Report

Year 1 Year 2 Year 3 $ $ $ Cost 50000 50000 50000 Less: Accumulated depreciation 10000 20000 30000 Net book value 40000 30000 20000

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Green Ignition

Monthly Cash budget for year 1 ($ in HKD)

Cash balance, begaining Add: Recepits Recepits from recycled materials Recepits from advertisment Capital introduction Government funding Total cash available Less: disbursements Cash paid for using the Octupas system Purchase of reverse vending machine Purchase of Octupas recognization system Purchase of furniture and equpiment Testing charge Rent and rates Salaries and allowance Advertisment Repair and maintenance Insurance Utilities Total disbursements Excess/(deficiency) of cash Financing: Loan borrowing Loan repayment Interest paid (5%) Cash balance, ending (1)

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total $ $ $ $ o 45000 34200 24972 20844 16716 12588 (6540) (3552) 7336 (1776) 14112 o 0 0 85000 0 85000

0 4800 0 2880 0 0 0 360000 45000 401880

4800 2880 0 0 32652

4800 2880 0 0 28524

4800 4800 2880 2880 0 0 0 840000 24396 860268

19200 11520 0 0 24180

19200 11520 0 0 27168

19200 11520 0 0 38056

19200 11520 0 0 28944

19200 1200 11520 72 0 85 0 12000 44832 14770

0 0 0 25000 40000 3300 6000 5000 0 0 1500 80800 4200

0 1008 0 360000 0 4500 0 0 0 0 3300 3300 6000 6000 0 0 0 0 0 600 1500 1500 10800 376908 34200 24972

1008 0 0 0 0 3300 6000 0 0 0 1500 11808 20844

1008 0 0 0 0 3300 6000 0 0 0 1500 11808 16716

1008 1008 0 840000 0 0 0 0 0 0 3300 3300 6000 6000 0 15000 0 0 0 0 1500 1500 11808 866808 12588 (6540)

4032 10500 0 0 3300 6000 0 0 2400 1500 27732 (3552)

4032 0 0 0 0 3300 6000 0 5000 0 1500 19832 7336

4032 0 0 25000 0 3300 6000 0 0 0 1500 39832 (1776)

4032 0 0 0 0 3300 6000 0 0 0 1500 14832 14112

4032 25 0 12000 0 15 0 50 0 40 3300 39 6000 72 0 20 0 50 0 30 1500 18 14832 14878 30000 (108

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

40800 0 0 40800 45000

0 0 0 34200

0 0 0 24972

20844

16716

0 0 0 12588

0 0 0 (6540)

(3552)

7336

(1776)

14112

Notes 1) Revenue ratio (month2-7 to month 8-12)

2 to 8

30

0 0 0 30000

40

40 30

Green Ignition Cash budget for the year ($ in HKD)

Cash balance, begaining Add: Recepits Recepits from recycled materials Recepits from advertisment Capital introduction Government funding(2) Total cash available Less: disbursements Cash paid for using the Octupas system Purchase of reverse vending machine Purchase of Octupas recognization system Purchase of furniture and equpiment Testing charge Rent and rates Salaries and allowance Advertisment Repair and maintenance Insurance Utilities Total disbursements Excess/(deficiency) of cash Financing: Loan borrowing (3) Loan repayment (2) Interest paid (5%) Cash balance, ending (1)

Year 1 $ o

Year 2 $

Year 3 $ 30000

Total $ 30000 o

120000 72000 85000 1200000 1477000

552600 216000 0 1800000 2598600

733650 216000 0 0 979650

1406250 504000 85000 3000000 4995250

25200 1200000 15000 50000 40000 39600 72000 20000 5000 3000 18000 1487800 (10800)

109746 2400000 30000 0 0 39600 144000 50000 50000 27000 19800 2870146 (271546)

126630 0 0 0 0 43560 144000 60000 80000 27000 21780 502970 476680

261576 3600000 45000 50000 40000 122760 360000 130000 135000 57000 59580 4860916 134334

301546 0 0 301546 30000

0 342346 36275 (378621) 98059

342346 342346 36275 (36275) 98059

40800 0 0 40800 30000

Note 1) minimum cash balance : $30000 3) loan borrowed at the begaining year before the cash short fall 2) loan and interest repaid when cash is available 2) Gov funding from Enhancing Self-Reliance Through District Partnership Programme

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Green Ignition

Cost of sales budget Cost of sales

Cost of using the Octupas system (Note 1) Annual depreciation charge for reverse vending machine( from fixed assets purchase budget)

Year 1 Year 2 Year 3 Total $ $ $ $ 25200 109746 126630 261576 125500 368500 368500 862500

Total cost of sales

150700

478246

495130

1124076

Octupas charge (Note 1) No. of aluminium can collected annually No of bottle collected annually total no cans and bottles collected Octupas cash reward per can/bottle Octupas charge before service charge Service charge by Octupas company(20%) Total cost paid using the Octupas system

Year 1 Year 2 Year 3 Total 600000 2613000 3015000 6228000 450000 1959750 2261250 4671000 1050000 4572750 5276250 10899000 0.02 0.02 0.02 0.02 21000 91455 105525 217980 4200 18291 21105 43596 25200 109746 126630 261576

The cost will be deduted automatically at the end of the month

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Green Ignition Reverse vending machine purchase budget Reverse vending machine

$ in HKD Year 1 $

Year 2 Year 3 $ $ 1255000 3685000 3685000 125500 494000 862500 1129500 3191000 2822500

Year 1 $

Year 2 Year 3 $ $ 1255000 3685000 2400000 0 30000 0 0 0

Cost (Note 1) Less: Accumulated depreciation (Note 2) Net book value Notes 1) Total cost for reverse vending machine

Balance at the begaining year Reverse vending machine purchased Octupas recognization system purchased Testing charge capitalized (testing for adaptability of Octupas system on the Balance at the ending year

0 1200000 15000 40000 1255000

3685000

3685000

2) Total accumulated depreciation for reverse vending machine Year 1 Year 2 Year 3 $ $ $ Balance at the begaining year 0 125500 Annual Depreciation charge (economic life: 10 years) 125500 368500 Balance at the ending year 125500 494000

3) Green Fire Reverse vending machine purchase Unit price $ Year 1 Year 2 Year 3 Total

Unit 120000 120000 120000

10 20 0 30

494000 368500 862500

Unit acqired at year Amount end $ 10 1200000 30 2400000 30 0 3600000

4) Unit cost per machine $ Retail price for reverse vending machine Octupas recognization system Cost per reverse vending machine

120000 1500 121500

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Green Ignition Revenue budget Revenue Commission revenue from selling aluminium can (Note 1) Commission revenue from selling plastic bottle (Note 2) Commission revenue from recycled materials Revenue from advertisment (Note 3) Total revenue

Year 1 Year 2 Year 3 $ $ $ 120000 522600 603000 30000 130650 150750 150000 653250 753750 72000 216000 216000 222000 869250 969750

Total $ 1245600 311400 1557000 504000 2061000

Cash recepits Year 1 $ Commission recepits from recycled materials (Note 4) Year 1 Year 2 Year 3 Total recepits from recycled materials Recepit from advertisment (Note 5) Total cash recepits from revenue Account receviable-recycled materials commission Begaining balance Commission revenue from recycled materials Less: Cash recepits from recycled materials Ending balance Notes 1)Commission revenue from selling aluminium can No. of total targeted people (university students+staff) Recycling rate Annual aluminium can disposed per person in the university No. of aluminium can collected annually Price per can ($), after sharing with partner Total revenue from selling aluminium can in $ 2) Commission revenue from selling plastic bottle No. of total targeted people (university students+staff) Recycling rate Annual bottle disposed per person in the university (A) No of bottle collected annually No of bottle per kg (B) bottle dispoesd per person (A/B) in kg bottle collected annually in kg ( C ) Price per kg in $ (D), after sharing with partner Total revenue from selling plastic bottle in $ (C*D) 3) Revenue from advertisment No of reverse vending machine No of advertisment placed its both sides and screen per machine Annual price per advertisment Total revenue from advertisment

120000

Year 2 $ 30000 522600

Year 3 $

120000 72000 192000

552600 216000 768600

130650 603000 733650 216000 949650

0 150000 120000 30000

30000 653250 552600 130650

130650 753750 733650 150750

Year 1 Year 2 Year 3 25000 100500 100500 60% 65% 75% 40 40 40 600000 2613000 3015000 0.2 0.2 0.2 120000 522600 603000

Year 1 Year 2 Year 3 25000 100500 100500 60% 65% 75% 30 30 30 450000 1959750 2261250 15 15 15 2 2 2 30000 130650 150750 1 1 1 30000 130650 150750

Year 1 10 6 1200 72000

Year 2 30 6 1200 216000

Year 3 30 6 1200 216000

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4) 80% revenue from recycled materials will be collected in the month recognized, the remaining will be collected in the next month

5) All advertisment revenue will be collected at the begaining of the month 6) Revenue sharing ration (Green Ignition: partner) 6 to 4

Revenue/bottle = 0.03