Evolution Developments Business Plan
2010
Evolution Developments
Business Plan
Jasmin Brown
Jodi Marshall
Angela Schmid
Sheleen Summach
7/7/2010
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Evolution Developments Business Plan
Table of Contents
Executive Summary
4
1.0 Introduction
1.1 Mission Statement
1.2 Goals and Objectives
6
6
2.0 Operations Plan
2.1 Net-zero Homes Concept
2.2 Net-zero Building Features
2.3 Description of Operations
2.4 Organizational Structure
2.5 Board of Directors
2.6 Management
2.7 Location of Sarilia
2.8 Sarilia Site Plan
2.9 Sarilia Home Design
2.10 Capacity
2.11 The Building Process
2.12 Contractors and Suppliers
2.13 Common Activities
2.14 Working Capital Planning
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11
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14
15
17
17
20
21
21
3.0 Human Resources
3.1 Shareholders and Board of Directors
3.2 Shareholder Agreement
24
25
4.0 Marketing Plan
4.1 Marketing Strategy
4.2 Competition
4.3 Customers and Target Market
4.4 Product Strategy
4.5 Pricing Strategy
4.6 Placement Strategy
4.7 Promotion Strategy
4.8 Promotion Expenses
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28
28
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29
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5.0 Financial Plan
5.1 Start-up
5.2 Development Costs
5.3 Property, Plant and Equipment
5.4 Sales
5.5 Expenses
5.6 Projected Income Sensitivity Analysis
5.7 Financing
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31
31
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32
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6.0 Conclusion
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Evolution Developments Business Plan
LIST OF APPENDICES
Appendix A: Balance Sheet
Appendix B: Debt Financing
Appendix C: Income Statement
Appendix D: CCA Schedule
Appendix E: Statement of Cash Flows
Appendix F: Projected Income Statement – Best Case Scenario
Appendix G: Projected Income Statement – Worst Case Scenario
Appendix H: Cost per Unit
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Evolution Developments Business Plan
Executive Summary
Evolution Developments (ED) was created in 2007 to introduce net-zero housing to
Saskatchewan. All four owners bought into the business by purchasing 25% of the voting
common shares for $100,000 each. Each shareholder was given a position on the Board of
Directors. The members’ wide array of experience and educational backgrounds are key success
factors for Evolution Developments.
The shareholders have performed extensive market research and determined that there are an
increasing number of consumers who are willing to pay a premium for products that are
environmentally sound. A net-zero home produces as much energy as it consumes, reducing
utility costs and contributing to the long-term health of the environment. Sarilia Estates,
located twenty minutes from the city of Saskatoon on the banks of the North Saskatchewan
River, has been chosen for the net-zero housing development. The close proximity to the City
and the beautiful scenery attract established professionals from the community. In addition,
the South-facing landscape is a perfect fit for a home powered by solar technology.
In the first year of operations, a prototype house was successfully designed and built. Nine
more net-zero homes were fully constructed and sold in the following two years at a gross
profit of approximately 17%. ED’s architect has designed three net-zero home plans, ranging in
size from 1,100 square feet to 1,500 square feet, with modifications available upon demand.
Prices are set at approximately $260 per square foot, which represents a 30% premium above
the average house price in Saskatoon. The market research performed by Evolution shows that
the average consumer will recoup this cost through reduced utility bills over a period of ten to
twelve years. In a period of rapidly increasing energy costs, this premium could be recovered in
as little as six years. These long-term savings, along with the environmental benefits, are what
make net-zero houses attractive.
110 lots are currently available for purchase at Sarilia. Evolution intends to purchase these lots
for the housing development, and construct approximately twenty-two homes per year over
the next five years. The lots are currently priced at $55,000, which is much lower than the
average price in Saskatoon. However, the shareholders’ believe that this land price will rise
significantly over the five-year period, especially as the development begins to grow. In order to
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Evolution Developments Business Plan
control this variable, Evolution would like to purchase all of the land in the current year. An
offer has been made “subject to financing”, which means that Evolution has the option to
purchase the land if the necessary financing can be gathered. The four shareholders are willing
to contribute $2,000,000 in equity, and are looking for $3,000,000 in financing. A financial
analysis indicates that Evolution Developments will continue to generate positive cash flows
while making debt and interest payments over this five year period.
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Evolution Developments Business Plan
1.0 Introduction
Evolution Developments was incorporated in 2007 by the four current shareholders, Sheleen
Summach, Angela Schmid, Jodi Marshall and Jasmin Brown. The focus of the company is to
provide affordable, environmentally friendly housing in Saskatoon and the surrounding area.
The company specializes in the design, construction, and maintenance of net-zero housing,
which is a new concept involving the construction of homes that produce as much energy as
they consume. The homes are meant to appeal to all families and individuals interested in a
lifestyle that contributes to the health of our planet. Evolution Developments is known for its
innovative technologies supporting the company objectives of reducing energy consumption
and profitably creating the first net-zero development in Saskatchewan.
1.1 Mission Statement
Evolution Developments defines its mission as follows:
“To design, build, and maintain green homes.”
The company is dedicated to the designing, building, and maintaining of net-zero homes.
Evolution Development’s innovative technologies, management expertise, and environmentally
friendly housing initiatives promise to solidify a profitable position in the development industry
in Saskatoon while maintaining the company goal of being green.
1.2 Goals and Objectives
Evolution Developments’ objective is to profitably create and maintain the first net-zero
residential development in Saskatchewan. A long-term goal is to continue to create such
developments in Alberta, Saskatchewan, and Manitoba in the future.
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Evolution Developments Business Plan
2.0
Operations Plan
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Evolution Developments Business Plan
2.1 The Net-Zero Homes Concept
Net-Zero Defined
A net-zero home is a home that generates as much energy as it uses on a yearly basis.
A home uses energy in three areas:

Space heating/cooling – the energy used to heat or cool the home

Domestic hot water – the energy used to heat hot water for use in baths/showers,
washing clothes, and in the kitchen

Lights, appliances and mechanical – the energy used to run lights and all appliances such
as the fridge, stove, washer and dryer
Energy Reduction Strategies
There are three basic energy reduction strategies:
1. Reduce - reduce the amount of energy used through improved building design, reduced
hot water consumption and efficient appliances
2. Reuse - reuse waste energy through the technologies such as Heat Recovery Ventilation
and Drain Water Heat Recovery
3. Recycle - replace conventional energy with alternative energy such as passive solar,
solar hot water, wind, geothermal and photovoltaic.
Why Build Green?

It's the right thing to do for the environment

Have a healthier, more comfortable home

Save on energy costs
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Evolution Developments Business Plan
2.2 Net-Zero Building Features
Compact Design
A smaller home takes less building materials to construct and requires less energy consumption
than a larger home. A home should be just the right size for its occupants and their activities.
Orientation of the Home
The best way to orient a home is with its long axis running east to west. With this orientation,
the longest side of the home faces south. The south is the sunniest direction and hence the
warmest, so orienting a building this way maximizes solar heat gain.
In Canada, the sun is quite low during the coldest months when you need it most for heating.
As such, it is important to consider the location of evergreen trees, neighboring homes, etc to
the south of the home.
Passive Solar Design
Passive design is an approach to building set up that uses architectural design to reduce
traditional energy consumption and provide thermal comfort to the home. Passive design is
very specific to the location of the home in terms of climate, orientation, etc. A key element of
passive solar design is the use of south facing windows.
Exterior Surface of the Home – Features

Double wall construction with cellulose fiber insulation

High performance building panels used in floors, walls, and roofs for residential and light
commercial buildings.

A number of insulation materials

Windows – properly designed as a source of light, passive heat, and ventilation

Air and vapor barriers

Green roofs
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Evolution Developments Business Plan
Space Heating

Forced air

Hot water

Electric

Wood burning
Heating and Water

Energy star water heaters

Tank-less water heaters

Restricted shower heads

Tap aerators

Energy star clothing and dishwashers

Drain water heat recovery
Alternative Energy

Geothermal – using the earth as a source of heat in the winter and a source of cooling in
the summer

Solar hot water
o Active systems – use electronic pumps to circulate fluid through the collectors
o Passive systems – rely on thermo-siphoning to circulate water
o Open-loop systems – circulates potable water through the collector
o Closed-loop systems – use glycol and a heat exchanger to transfer the heat to
potable water

Wind – source of clean renewable energy

Photo voltaic – used to convert the sun’s energy into electricity

Wood burning – used a source of energy
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Evolution Developments Business Plan
2.3 Description of Operations
Evolution Developments specializes in the designing & planning, building and maintaining of
net-zero homes in the Sarilia development of the North Saskatchewan River Valley.
Designing & Planning – assisting clients in determining the options available in constructing a
home that will significantly reduce or eliminate energy consumption for space heating,
domestic hot water and/or appliances.
Building - hiring contractors with the necessary expertise in housing construction and the
installation of the recommended available technologies.
Maintaining – assisting in the application for available grants, learning how to use the new
technologies, dealing with warranty issues, and monitoring client energy savings.
Evolution Developments is dedicated to providing homes whose energy consumption is
equivalent to the energy generated by the home through on-site renewable energy.
2.4 Organizational Structure
Evolution Developments operates as a corporation in order to take advantage of the small
business deduction and limited legal liability. The shares in the company are equally held by:

Jasmin Brown, M.Arch, MRAIC, 2008 Pug Award Winner

Jodi Marshall, MPAcc, CA

Angela Schmid, MSc (Environmental Management), P.Eng

Sheleen Summach, CRU, Saskatchewan Real Estate Association Director
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Evolution Developments Business Plan
Sheleen
Summach
25%
Angela
Schmid
25%
Jodi
Marshall
25%
Jasmin
Brown
25%
Evolution
Developments
Each of the four shareholders contributed $100,000 initially. An additional equity investment of
$2,000,000 is planned for 2010.
2.5 Board of Directors
The board of directors consists of Sheleen Summach, Angela Schmid, Jodi Marshall, and Jasmin
Brown. The diverse backgrounds of the board members assist the company in analyzing its
strengths and weaknesses, identifying industry trends and emerging markets, and provide the
company with the required knowledge and financial expertise to make it a success. The
personal and professional experiences of the board members help to advance the mission of
the company.
2.6 Management
As this company is just beginning to develop, the management of the company has been taken
on by the shareholders. Each member of the management team brings both financial expertise,
as well as knowledge, to a different area of the business.
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Evolution Developments Business Plan
2.7 Location of Sarilia
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Evolution Developments Business Plan
2.8 Sarilia Site Plan
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Evolution Developments Business Plan
2.9 Sarilia Home Design
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Evolution Developments Business Plan
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Evolution Developments Business Plan
2.10 Capacity
Sarilia Estates has been sub-divided into 120 lots. Evolution Developments has purchased and
built homes on ten of these lots. The remaining lots will be purchased in 2010 to secure the site
for future development. It is Evolution Development’s plan to build the next 110 homes over
five years, constructing 22 net-zero homes per year.
2.11 The Building Process
Evolution Developments is involved in three main stages of the development of net-zero
homes:
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Evolution Developments Business Plan
Designing &
Planning
Building
Maintaining
Designing & Planning
Evolution Developments’ design services assist clients in determining the options available in
constructing a home that will significantly reduce or eliminate energy consumption for space
heating, domestic hot water and/or appliances.
Throughout this process, Evolution Developments is able to perform cost benefit analyses of
each green building technology available. This assists the customer in comparing the short and
long term costs to the economic, social, and environmental benefits of building green. The
customer will then have the knowledge needed to invest only in the right technologies.
The cost benefit process allows Evolution to understand the customer’s goals and objectives,
and define their selection criteria. The costs as well as the economic, social, and environmental
benefits will be documented. Also provided for the client are a calculation of Net Present Value,
Internal Rate of Return and Pay Back Period.
The design of a low energy or net-zero home requires the integration of as many as 20 different
energy saving technologies. Throughout the preliminary planning process, Evolution
Developments

Determines the client’s specific targets for energy efficiency
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Evolution Developments Business Plan

Identifies design constraints (client budget, local building requirements, architectural
design standards)

Develop preliminary plan to meet goals and objectives

Identifies potential federal, provincial and other grants available

Prepares a draft planning report for review and approval
The integrated design of a low energy or net zero home requires very detailed construction
plans. Evolution Developments currently has 3 net-zero home plans, ranging in size from 1,100
square feet to 1,500 square feet. Modifications can be made to these homes in order to suit the
client’s needs. The plan package includes the following:

Site plan

Foundation plan

Floor plan(s)

Electrical plan(s)

Building sections (2 minimum)

Exterior elevations (4 elevations)
Building
Evolution Developments takes full responsibility for hiring contractors with the necessary
expertise in housing construction and the installation of the recommended available
technologies. Evolution tenders for contractors in order to hire the best contractor at the
lowest cost to the company. The contractor is provided with a construction budget and
construction schedule.
Throughout the process, Evolution Developments takes on the following responsibilities:

Project and quality control

Cost control and change order management

Contractor and supplier payment
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Evolution Developments Business Plan
Evolution Developments takes on the risk of the project and provides the client with a quality
home at a predetermined price.
Maintaining
A highly integrated low energy home is inherently more complex than a standard home.
Evolution Developments is available after the client moves into the home, to help them with
any issues that may arise. Examples of the maintenance with which we assist the client:
applying for available grants, learning how to use the new technologies, dealing with warranty
issues, and monitoring client energy savings.
2.12 Contractors and Suppliers
Evolution Developments has the following options of “Green Contractors” and “Green
Suppliers:”
Green Contractors

Legacy Homebuilders

Bryant Construction

Castle Hill Construction
Green Technology Suppliers

Nexsan Technologies

Code Green Ltd

EnvioStar Systems
Home Building Suppliers

JH Builders Warehouse

RONA

Home Hardware
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Evolution Developments Business Plan
2.13 Common Activities
Daily

Planning and designing

Site supervision
Weekly

Materials purchases

Show-home tours and presentations
Monthly

Progress payment to contractors

Financial report preparations

Budget preparation

Actual-to-budget investigation
Yearly

Financial statement preparation

Tax return preparation and planning

Actual-to-budget preparation
2.14 Working Capital Planning
Upon decision to purchase a home and mortgage approval from a financial institution, the
customer makes a deposit of 15%. Evolution Developments provides the cash to build the home
and takes care of paying the contractors and suppliers on a monthly basis. At the possession
date, the client is responsible for providing Evolution Developments with the remainder of the
payment for the home.
Inventory Management
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Evolution Developments Business Plan

Evolution Development purchases the building supplies from one of its building supply
stores, at a discount due to the quantity of supplies purchased on an annual basis

Building supplies will only be purchased at the time that they are needed to begin
building the home, and on an as-needed basis
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Evolution Developments Business Plan
3.0
Human Resources Plan
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Evolution Developments Business Plan
3.1 Shareholders and Board of Directors
Evolution has the following Shareholders and Board of Directors:
Jasmin Brown – 25% Shareholder and Board member
M. Arch, MRAIC, 2008 Pug Award winner
Before forming Evolution Developments with Jodi, Angela and Sheleen, Jasmin worked as a
Principal with Crosby Hanna & Associates where she specialized in residential developments
and environmental planning. Jasmin has a strong background in environmentally sustainable
housing initiatives including providing advisory services on the Alstonvale Net Zero Home built
in Hudson, Quebec from 2007 to 2008. Jasmin has developed the design schemes and floor
plans for our development site.
Jodi Marshall – 25% Shareholder and Board member
MPAcc, CA
Jodi Marshall obtained the prestigious MPAcc degree from the University of Saskatchewan and
is a Chartered Accountant. Jodi was formally a partner with Myers Norris Penny LLP in
Saskatoon. She brings to the business over 17 years of experience in consulting. In addition,
Jodi sits on the board of the Canadian Green Builders Council of Saskatchewan. Jodi has used
her strong financial and consulting background to develop a solid business case for Evolution
Developments.
Angela Schmid – 25% Shareholder and Board member
MSc (Environmental Management), P.Eng
Before joining Evolution Developments, Angela was a Principal at Dumont and Associates in
Saskatoon where she specialized in energy efficient buildings, and indoor air quality. She has
been involved in a wide range of energy efficiency activities including energy audits, and
developing standards for housing agencies. Angela was also a lecturer research associate at the
University of Saskatchewan. Angela will bring her extensive environmental efficiency expertise
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Evolution Developments Business Plan
to the building of our net zero development. She will also use her teaching background to
assist Sheleen in promoting net zero homes in Saskatoon.
Sheleen Summach - 25% Shareholder and Board member
CRU, Saskatchewan Real Estate Association Director
Sheleen has been selling real estate for over 18 years in Saskatoon. Through this she has
established herself as a key member of the community and has collected extensive contacts.
Sheleen has been recognized by her peers with a “Realtor of Distinction” award and has
maintained the spot of “#1 Realtor” in Saskatoon for several years. Sheleen brings to the
business the expertise to attract our target market and successfully sell the homes in our
development.
3.2 Shareholders Agreement
The above four shareholders have formed a Shareholders Agreement, with each of the owners
having a 25% interest. Each shareholder, since they are also an employee, will take a
management salary of $100,000 per year over the five year project. Each of the shareholders
has invested $100,000 into the Company, and will contribute another $500,000 each in 2010.
Profits after debt servicing from the sale of homes in the development will be distributed
through dividends.
Decisions will be made by the Board based on a majority vote. If all of the Board members
exercise their right to vote, three votes are required to pass a decision. If there are only three
voters then two votes are necessary to hold a majority. Quorum at all meetings will be at least
three Board members in attendance.
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Evolution Developments Business Plan
4.0
Marketing Plan
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Evolution Developments Business Plan
4.1 Marketing Strategy
Saskatoon is a rapidly growing city with growing industries and an increasing number of
residents. In 2006 the City had a population of 233,923 according to the Canada 2006 Census.
This has grown to 257,300 in 2009 according to estimates by Statistics Canada and the City is
estimated to continue growing. In addition, many residents of Saskatoon are concerned with
environmentally sustainable living. As a result, a need for new environmentally sustainable,
net-zero homes has been identified.
Although there are several new developments in Saskatoon and the surrounding area, none
have filled the niche of net-zero living. Further, the planned development is on the
Saskatchewan River; prime real estate that is in high demand by home buyers.
4.2 Competition
As mentioned above, there are no direct competitors to Evolution Developments as no
companies in the Saskatoon area have explored the market for net-zero homes. However,
competition still exists as follows:
-
Rental homes
-
Conventional developments (i.e. non net-zero)
-
Individual homes (i.e. not in a development community)
The main factor that separates Evolution Developments from the competition listed above and
is the concept of net-zero homes. Evolution Developments will also set itself apart from the
competition with its prime location, in Sarilia Country Estates, on the Saskatchewan River.
4.3 Customers and Target Market
Evolution Development’s target market is environmentally-conscious families looking to live in
homes that are different from all the rest; homes that will make a positive contribution to the
environment. Homes in the development will range in price from $300,000 - $450,000, and
therefore the target market encompasses both young and established professionals, with
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Evolution Developments Business Plan
household income of $70,000 to $100,000. This group is highly educated, and recognizes the
need to make changes in the way we live and use resources.
4.4 Product Strategy
As discussed above, the main differentiator of Evolution Developments is the offering of net
zero homes. These homes are attractive to the target market because of their minimal impact
on the environment, their long-term energy savings and their attractive location. The homes
will be high quality and modern in all aspects, from the floor plans to the appliances and
finishing. These homes have been designed by Jasmin Brown, Evolution Developments’
Architect. Homebuyers will be able to choose between three different floor plans, and four
different colour scheme and design plans.
4.5 Pricing Strategy
In order to create lasting quality, highly energy-efficient homes, Evolution Developments is
employing a premium pricing strategy as compared to similar, non-energy efficient homes. The
premium in the price will be significantly offset in the long-run for home owners as a result of
the energy cost savings they will experience. The average home uses 40,000 kWh of energy
each year, resulting in utilities costs of over $5,000 per year. In contrast, because a net zero
home creates its own energy, these costs will be saved. It will also be offset by the lower
property costs of Sarilia Country Estates as compared to properties in Saskatoon.
4.6 Placement Strategy
The original net zero development will be part of Sarilia Country Estates, located 25 minutes
northwest of Saskatoon, near Langham, SK. This location means that it is close to all of the
amenities of the city, with all of the luxury of a relaxing country home. Nearby Langham also
hosts several stores, as well as an elementary and secondary school.
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Evolution Developments Business Plan
4.7 Promotion Strategy
The promotion strategy will be primarily internally generated. Sheleen Summach, the in-house
Realtor, will use her well established name and contacts to spread the word about the net zero
development. She will do this by the following means:
-
Promotion on her personal realty listings website. The development will be presented
conspicuously on the home page of her website with links to educational information
about net zero homes, their benefits, and current listings in the development.
-
A fully functioning show home will be built in the 2010 on the development. This home
will act as a sales tool to show people how net zero homes operate and to act as
tangible proof that a net zero home can be built. Sheleen will have the home open on
weekends for open houses and will also be available for viewings by appointment. While
costly, we believe that this home will be one of our most powerful marketing tools and
the home will be sold when the development is completed.
-
Radio advertising with Wired 96.3 and Magic 98.3. Wired 96.3 is a hits music station
that is extremely popular with the young population, including 25 to 35 year olds and
Magic 98.3, Saskatoon’s soft rock station is popular with young to middle-aged
individuals. Advertising with both of these stations will help us reach more of our target
market. On air advertisements will include a brief description of net zero homes, their
positive impact on the environment, open house times and location, and contact
information of [Insert Name]. Advertisements will be aired Friday to Sunday as studies
have found that people are most likely to attend open houses when told about them on
weekends, when they have a greater amount of free time.
4.8 Promotion Expenses
Projected Promotional Expenses
2010
2012, and thereafter
5,000
5,000
Show Home*
335,400
10,000
Radio
40,000
40,000
Realty Website
* Cost of the Show Home in 2011 includes cost of building the home and maintenance for the year. Costs in 2012 and thereafter (i.e.
until all homes in the development are sold) relate to maintenance and costs to disassemble Show Home after selling phase is completed.
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Evolution Developments Business Plan
5.0
Financial Plan
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Evolution Developments Business Plan
5.1 Start-up
Evolution Developments began operations in 2007 by performing marketing research to
determine the potential demand for net zero housing. Initial financing of $400,000 was
provided by the owners through a purchase of common shares.
5.2 Development Costs
Housing blueprints for three different floor plans were drafted by Jasmin Brown with the
related development costs being deferred and amortized over the length of the development
project (8 years).
5.3 Property, Plant and Equipment
Construction equipment was purchased in years 1 and 2, and is amortized using a CCA rate of
10% per year.
5.4 Sales
With the average home in Saskatoon selling for $200 per square foot, a net-zero home is a
premium product with a selling price of $260 per square foot. The increase in the cost is the
outcome of high efficiency products used in the development of the housing. These products
reduce future utility costs to the owner and have a significantly lower impact on the
environment. A prototype house was built and sold at a gross profit of $67,600. Over 2008 and
2009, sales were primarily made through word-of-mouth advertising. The sale is made before
construction begins, and revenue is recognized on a percentage-of-completion basis. This
decreases the risk of houses sitting in inventory, and the related maintenance costs that would
be incurred. An average gross margin of 17% has been realized on the ten houses sold to date.
5.5 Expenses
Labour is contracted for each house, and materials are purchased as needed. Labour and
materials costs account for approximately 80% of total costs per house. Other costs include
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Evolution Developments Business Plan
interest, advertising, liability insurance, and legal fees involved with incorporation in the first
year.
5.6 Projected Income Sensitivity Analysis
A sensitivity analysis was performed for a best and worst case scenario. Exhibit F looks at the
best case scenario in which case 22 net-zero homes are developed and sold each year for the
next five years until the 110 lots are developed. Costs of building the net-zero homes has been
projected at 80% of the selling price, which has been the historical cost of development. Any
increase to the costs will flow through to an increased sale price. There is a positive net income
in 2010 of $327,000, and net income remains positive until the completion of the project in
2014. The free cash flow is in a negative position in 2010 due to the initial purchase of the 110
lots; however, it quickly turns around in 2011. It is important to purchase all the lots in 2010 to
guarantee the low price and the lots to continue the development.
The worst case scenario considers a change in the sales per year, as well as the cost per unit.
Decreased annual sales would extend the project an additional two years, resulting in
additional fixed costs overall. If costs per unit were to increase by 5%, the negative cash flow in
2010 would increase to $5.2 million. However, this scenario does not take into consideration
the annual increase in housing prices. The shareholders believe that if costs were to increase by
5%, that the sale price could be increased by the same amount. In addition, the land held for
development is likely to increase in value, which means that it could be sold if demand for netzero housing is slower than anticipated.
5.7 Financing
In 2008 additional financing was obtained through a bank loan of $500,000, repayable over 7
years at a rate of 10%. These funds were used to purchase additional equipment, and to
support the development of nine houses over the following two years. Ending inventory
consists of houses in varying stages of completion. To date, all houses that have been built have
been sold, and cash flows have remained positive over the three years of operation (see Exhibit
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Evolution Developments Business Plan
E). Thus far, the owners have been able to remove $300,000 from the business in the form of
salaries for work performed.
The project is expected to yield an internal rate of return of 21%; however, additional cash is
needed to finance the purchase of land in 2010. To address this cash shortfall, each shareholder
will contribute an additional $500,000 in exchange for common shares of Evolution
Developments. Debt financing of $3,000,000 will be repaid over five years at an interest rate of
10% (see Exhibit B). Significant returns in subsequent years will allow the Company to repay the
debt and earn an internal rate of return of 25%.
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Evolution Developments Business Plan
6.0 Conclusion
Sarilia will be the first net-zero residential development in Saskatchewan. Evolution
Developments is a pioneer in environmentally-friendly living solutions and has opened up a
niche market in residential building in Canada. Saskatchewan is an ideal place to build the first
net-zero development as a result of its increasingly environmentally conscious population, its
rising population of young professionals, and its affordable land prices.
With the cash injection obtained by the bank loan of $3,000,000, the development will earn an
average of $600,000 per year in after-tax profits and a return on investment of 21%, making the
investment very profitable. The Sarilia development is not only a safe investment for any
portfolio, but also an invaluable investment in the environment and an innovative way of life in
Saskatchewan.
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Evolution Developments Business Plan
NOTE:
Information for the “Operating Plan” was taken from the following website: www.vereco.ca
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