MAGLOVEC, LLC, Volgogradská 9, 080 01 Prešov, SK page 1

Business Plan
A manufacturing of thin-walled vibro-pressed
blocks, dividing fittings and further concrete
products.
MAGLOVEC LLC
Prešov - Vyšná Šebastová
SK

Created by: Ing.Viktor Čop - the feasor

MAGLOVEC, LLC, Volgogradská 9, 080 01 Prešov, SK page 2

CONTENTS:
page

1. The MAGLOVEC, LLC foundation and history 3

2. Strategy and basic goals 3

3. Business - production conditions 4

a. Products description
b. Advantages and parameters of thin-walled vibro-pressed concrete blocks
c. Manufacturing technique
d. Price costing of products

4. Environmental Impact Assessment 8

5. External enviroment analysis and price strategy 8

6. Industry analysis, competition and sales promotion 8

a. Evaluation of competitiors products - considered as complemetary products
b. Evaluation of competitin according to the products - substitutional products

7. Evolution of economical and financial situation 9

8. Characteristics of risks 9

9. Actual status of preparation on 31stOct 2009 10

10. Contact information 10

MAGLOVEC, LLC, Volgogradská 9, 080 01 Prešov, SK page 3

1. Foundation and history of MAGLOVEC, LLC

MAGLOVEC LLC was founded in 2004 by Stanislav Hrabčák as ECHOFIN, LLC. After joining of
the new members - Ing. arch. Jozef Bačinský, Mr. Jozef Gerčák and Ing. Viktor Čop on the date of
2008-05-07 the field of interrest was extended by manufacturing of concerete blocks and the share
capital raised to 2 mil. SK. From this date the preliminary activities regarding the project of vibro-
pressed thin-walled concrete blocks manufacturing have started. Early in the year 2009 the
MAGLOVEC has become involved in low-energy building construction.

2. The company strategie and basic goals

The basic strategy of MAGLOVEC is producing of the concrete brick systems. Due to above
mentioned reason the manufacturing corporation is strategically situated nearby Maglovec
quarry (the name of MAGLOVEC LLC is derived from Maglovec quarry). The quarry is to
be found in Vyšná Šebastová municipality - about 4km far from Prešov and in good
accessibility via major highway (I/18-E371 cca 4km).

Prešov is advantageous located as it makes it to be one of the strategic point of the middle Europe and
the European Union to enter the eastern markets generally. In the area of 100 km it is possible to reach
the Polish, Hungarian and Ukrainian markets. By the one day truck driving investor can easily reach
the 350 mil. market - actually it is more than in the USA and Canada together.
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The closest sorrounding according to the air distance:

 Košice (38 km) SK

 Užhorod (96 km) - The Ukraine
 Miškolc (115 km) - Hungary
 Tarnow (128 km) - Poland
 Budapešť (250 km) - Hungary
 Bratislava (345 km) - the capital
city of the Slovak Republic

Strategical intention of manufacturing is

based on the building materials demand
and on the possibilities to offer new
alternative and profitable building-up
opportunities particulary. Nowadays the
thin-wall vibro-pressed concrete blocks
are used all over the Europe partically (so
called shell blocks of the new
generation.) E.g. in France 70% of all
building material sales are represented by
concrete blocks purchases. The method
of vibro-pressed thin-wall concrete
blocks has been already innovated for
more than 50 years and the European
Union admitted it as an "absolute
reference".

3. Business - production conditions

a. The product description
Maglovec offers concrete blocks of new generation, which create 20cm broad carrying wall,
ceiling- and annular concrete blocks. After that, an isolating complex is sticked from inside.
The complex consists of expanded polystyrene with sticked plaster board. Windows are
embed in this isolating complex, there is therefore no widow case, which could freeze. In the
house, there is no need to heat, when nobody is at home. Heating begins after coming home
and the house is heated in cca 15mins, which satisfies the requirements of European Union for
heating.
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The following picture shows a basic production line of thin-wall vibro-pressed concrete
blocks:

Another important products commodity are shuttering blocks. They are inteded as substitution
of ordinary moulds or used for walling of fences, supporting walls or acoustic shieldings etc.

The picture below shows two products – through and terminal (corner) block – shuttering plot:

The third alternative manufacturing segment are concrete blocks intended for decorative walls,
fences, interlocking pavement, palisades, edge-stones and further concrete products. Technologically -
manufacturing of thise products requires its own compression mould and individual prescriptions of
concrete mix only.

b. Advantages and parameters of thin-wall vibro-pressed concrete blocks:

Advantages are as follows:

• low price – the cheaper walling material on market

• low weight
• low moisture absorption
• high consistence
• accurate dimensions
• long persistence / life span
• fast and easy building-up
• capital expenditure lower by 20-40% as compared with brick material
• energy savings up to 40% less
• climate changes resistant
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• forced entry resistant

• sound insulation
• enviromentally friendly

Parameters:

Concrete in a block contains only 5-6% cement. If we take then poorest possible concrete and blow it
with air, so that the surface stays incredibly 14mm thick, we get the cheapest concrete block on the
world. Basic model of a concrete block of new generatin weights 16-18kg measuring 20x20x50cm
(width x height x length). This hollow concrete block has a sound insulation of 56dB (for
a comparison – solid concrete block has a sound insulation of 59dB).

Methods of walling and use:

Concrete block has a uniqe characteristic – in a thin wall, a moisture climbs only to half of the height
of a block, after that the block dries. A builder therefore uses first row as an isolation against water,
second row stays dry all the time. Walling is set up on mortar – concrete blocks are laid bottom up.
Corner block has a hole, which creates armour concrete pillaret after filling with concrete. Thus the
construction allows creation of pillars and horizontal armatures too. Construction of a house is
therefore more stable and qualitative.

Concrete blocks resist atmospheric exposures, that is why they are used also on fences, garages,
workshops, plants, fundaments, bottom wallings. Walling after that isn’t mostly plastered, nor from
outside, only coadjacent kerfs are modified. In addition there is also an advantage, that one can keep it
clean excellently, because it is enough to wash the wall from time to time from inside and outside with
power water.

c. Manufacturing technique

Production of concrete blocks is simple, but possible only in top stacionary presses. French
manufacturers have presses, which were made after 80 years of developement. Three companies are
known on the market – ADLER(Fr.), QUADRA(Fr.) and HESS(Ger.). Their sophisticated presses are
very successful – they are sold all over the world (till now there were sold over 1000 of them into 27
countries).

Planned mill of our company consists of hall, measuring 19x59m, 11m high, where all the concrete
preparation and whole production with stock room will be located. Second architectural object is
a shelter 25x58m, 9m high, isolated from the first one by reinforced asphaltic surface, which will serve
as a manouvre place. Shelter will be used partially as a resereve gravel storage bin and partially as
a stock room for finished goods.
MAGLOVEC, LLC, Volgogradská 9, 080 01 Prešov, SK page 7

Manufacturing technique consists of preparation of concrete, production line and stock room
for goods.
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d. Price costing of products

Average production cost is around 40cents/piece and average selling price is about 1€/piece without
VAT.

Total maximum capacity when having average sizes of goods:

-single-shift 7h operation: 5 600 pieces/day and 1 400 000 pieces/year–

extended single-shift operation: 8 800 pieces/day and 2 200 000 pieces/year.

4. Enviromental Impact Assessment

According to the fact, that by manufacturing products there will be used only raw materials, which
exist in nature in natural form, there will be no impact on enviroment, neither by their processing.
They can be easily recycled into original input material.

5. External enviroment analysis and price strategy

Strategic suppliers
In order to maintain the production of cement bricks, the main thing we need is a strategic gravel
supplier. Our gravel supplier will be the quarry in Maglovec. In a good distance we have also at least
two alternatives – quarries in Fintice and Žehňa. The needed amounts of cement are normally bought
from cement mill in Turňa nad Bodvou, about 75km distant from a mill.

Goods sale and price strategies

Goods will be offered through projects of particular builders and construction companies, especially
by building low-energy to passive buildings and through other building material dealers. EU projects
of social support already use this building material. Price of these goods is in range 1.2-1.6 € without
VAT. According to our calculations we count with average price 1.1-1.2 € without VAT. The break-
even point (costs = income) is according to our calculations placed relatively shallowly, only about 35-
40% of production capacity by one-work shift operation (7 hours).

6. Industry analysis, competition and sales promotion

a. Evaluation of competitors products – considered as complementary products

According to the fact, that we are talking about almost exclusively regional matter (the efficiency
of production and delivery is less than 100km), we define in this category of East Slovakia market
following competitors:

- PEBEK, s.r.o. Poprad

- JMJ, s.r.o. Veľký Šariš
- PREMAC, spol. s r.o. s výrobou v Košiciach
- LADEN, s.r.o. Janovce

The production of all these companies is during last years set to maximum possible value. From the
view of shell shaped bricks, the only competitor on the market is company LADEN s r.o. in Jánovce.
Other enterprise subjects are located outside economical action radius. In France, for example, there
are hundreds of such manufacturers, a fact, that some of them are in close neighbourhood, is not very
rare.
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b. Evaluation of competition according to the products – substitutional products

Alternative goods are the classic building systems. Main competitory advantage of shaped shell bricks
is their price, simpleness of building and the complexity of supplies of building systems – from
fundament to the wreathework – whole gross building except framework and roof.

7. Evolution of economical and financial situation

Project of production of thin-wall vibro-pressed concrete blocks can divided from time and
economical point of view into three phases:

a. Phase of preparation:

-Planning phase

-Funding assurance
-Realisation of construction setouts
-Transport, installation and implementation of manufactural technology
-Launching pilot run and certification of goods
-Launching of ordinary running
Whole phase of preparation should not last longer than 5 months.

b. Start-up phase – from launching ordinary running until the circular running

In this phase, the capital costs raise, becasue input materials and raw materials will be bought,
also there will be investments into semi-finished production. We assume, the this phase will last two,
maximum three months.

c. Phase of production and profitability

In this phase, a manufactural loop will be closed, also financial flows will be closed. It means,
that company will pay for all obligations before maturity date and the rest of resources will be
gathered on the companys accounts. This phase should start according to expectations after 2-3 months
of ordinary running.

8. Characteristics of risks – critical factors, which influence bussiness activities

The biggest risk is raw materials delivery breakdown, particulary delivery of gravel and its present
advantage of traffic distance. Considering technology. Todays there are already possibilities of fast
servicing and delivery of supply parts, therefore a production does not have to be stopped in a long
term.

Flats for young families, family houses for the price of 3 or 4-room flat + estate will be surely more
and more attractive. According to constatation of Slovak Building Constructors Association, building
industry of Slovakia is going on well, obviously this sector will be perspecive also during next years.
MAGLOVEC, LLC, Volgogradská 9, 080 01 Prešov, SK page 11

9. Actual status of preparation on 31stOct 2009

a. Production area
Workshop is nowadays leased from company Družstvo Agroplus Prešov, which our company has a
contract of future contract of purchase with, including already paid deposit 50.000€. A shelter with
covered area of 1070m2, used for storaging gravel and expedition of finished goods, is also an object
of contract.
For full buyout we need to pay cca 150.000Eur.

b. Grounds
District of Družstvo Agroplus Prešov is built on grounds of private owners. The company has a long-
term contract of lease with these owners. Areas, which are related to preparated activities of out
company, are the objects of already discussed Contracts of future contracts of purchase with specific
owners with temporal lease till year 2012.
A part of district is a ground belonging to the village, which a lease-relation is agreed with. Village
supports prepared production considered from the point of local employment and taking finished
goods for developement of public place. However, at the same time the village plans its ground, in
consistency with Ground plan, to be a future accessible way to other adjacent grounds for the next
expansion of production zone.
Whole area of grounds, ready for buyout, is cca 12.500 m 2. Assumed price after discussions with
owners is expected to be minimum 70.000Eur.

c. Building costs
For architectural modifications of a hall and adjacent areas we need cca 100.000Eur. These are related
to roof repairing, inner installations, fundaments under technology and hard surfaces.

d. Technology costs

The technology of producing concrete blocks is performed by vibropress Sigma 1000 from own
resources, cost of acquisition is cca 70.000€. It still remains to buy mixing plant, to finance an
installation and starting-up the technology, which will cost cca 70 000 € . A company has nowadays
dormant reserve capital 40.000€, which wants to be used on financing project, especially manipulating
technique, raw materials, resp. financing debts.

The sum of needed financial resources, after lowering own realized and prepared investments for
realization, is cca 390.000 Eur

10. Contact informations

Ing.Viktor Čop-konateľ

e-mail: [email protected], Mob: +421917309103

http:// www.maglovec.sk,

e-mail: [email protected],
MAGLOVEC, LLC, Volgogradská 9, 080 01 Prešov, SK page 12

Tel./Fax: +421517783455

Jozef Gerčák

e-mail: [email protected]

Ing.arch.Jozef Bačinský

e-mail: [email protected]