Annual Report 2002 Page 1: Highlights Page 2: Managing Director’s Report

1. Annual Report 2002 Page 1: Highlights Page 2: Managing Director’s Report Page 4: Personnel Report Page 5: Production Report Page 8: Technology Report Page 9: Marketing Report Page 12: Finance Report LIMBO have entered the hair product market with a high quality but reasonably priced beeswax-based hair wax. In a market that is increasingly image conscious and dominated by young people such as ourselves, our wax is well designed and is presented with style, with stainless steel cans, and eye-catching labels. Send us an email at limbowax@orcon.net.nz or visit us on-line at http://www.limbowax.orcon.net.nz LIMBO Wax can be purchased at pharmacies and hair salons We are pleased to announce a current return on shareholders’ equity of 7.5%, with forecasts of this increasing to 30.9% by liquidation date. This exceeds LIMBO’s target of 20%

2. The implementation of the company’s business plan to date has been both very challenging as well as very rewarding for all of its Directors. The year has certainly not been easy, but that has not made it difficult to find motivation. In fact, the prospect of creating one’s own completely original solution to a complex situation is in itself an inspiration. The heart of any business plan is the company’s objectives. We thus took the time necessary to ensure that we had a succinct set of objectives that was a fair representation of the feelings of the five Directors. To achieve this set of objectives we followed the following process: 1. Conducted general discussion about why we had been interested in Young Enterprise Scheme and our visions of the company. 2. Formalised this general discussion into actual on-paper ideas/objectives. 3. Discussed this list and subsequently rewrote the list with some ideas being changed and/or merged into other ideas. 4. We then voted on each objective, with unanimity being required for the objective to be passed as it is necessary for all five Directors to be committed to passionately pursuing those objectives. From this we came up with the following list of company objectives: To be in a financial position to distribute dividends to investors that equate to at least a 20% return (after tax) on their initial investment after the liquidation (no later than October 14th) of the company. To sell at least 300 units of the product before operations cease. To sell a product that is of a high quality both in safety and performance. To be ready to begin selling the product by June 3rd. To create an example to the community of how an ethical and sustainable company can be successful through innovation, creativity, meticulousness, and hard work. For the group of students to gain knowledge of the correct etiquette in many areas such as letter, business documents, formal meetings, approaching others, etc., thus gaining valuable skills for use in a business environment. For the group of students to gain confidence in a performance driven team environment by taking on individual responsibility whilst still receiving support from the rest of the team, and succeeding. These objectives were summed up by our vision: To run an all-round successful company, making the most of the resources and technology available to us, with a particular focus on forming procedures and systems that could continue to keep the company successful and productive indefinitely, whilst taking all opportunities to reflect, thus learning greatly from our experiences. Since the creation of LIMBO, all Directors have learned a lot, much of which being to do with time. We have since realised that some of our objectives, particularly those based on measurable figures, were unrealistic on top of heavy academic, sporting, and cultural workloads of the five Directors. For example, after following the full product development process (see Production Section), we then still had to wait another four weeks for our product to arrive ready to be labelled and then ready for sale. This occurred well after the target of June 3rd. The late arrival of the product combined with the early liquidation of the company means that selling our target of 300 units will be very difficult, particularly when we have to wait another four weeks if a further order is made. However, the financial section of the report remains positive, forecasting achieving up to 30.9% returns on investments. Annual Report 2002 Managing Director’s Report

3. We have also learned many of the ins and outs of the commercial world – communicating with companies, conducting and recording meetings, and keeping financial records. Using a beeswax-based recipe for the hair product has certainly helped us achieve the rest of the objectives. The beeswax-based product is of a very high quality, giving excellent styling potential to the hands of any young male with a bit of creativity and artistic vision. Being beeswax based has also meant that the product is very safe, with no medical complaints of, for example, an allergic rash. Although it is not at all encouraged by the company, LIMBO WAX has even proven to be edible! Participating in the Young Enterprise Scheme has had a significant effect on all five Directors. The Directors have gained many practical business skills such as report writing as well as more general skills such as time management and planning. Also, the Directors have developed their own personal confidence in taking on responsibility, and following this up with often exceptional results. LIMBO has proven to be a company whose culture encourages creativity and initiative and nurtures the Directors in their follow through of ideas and responsibilities. LIMBO is a company of which I am proud to be the Managing Director, because of its strong vision, and the skill, effort and passion employed to realise that vision. Day-to-Day Operations Across the period of LIMBO’s operation, there have been situations that have often occurred out of left field, and from which many unconsidered problems have arisen. Thus we have found that a combination of flexibility, procedure, and monitoring have all been crucial to the success of LIMBO. Since the writing of the business plan, many things have changed. To deal with the fact that LIMBO would not have stock on-hand until mid-August, the Directors decided to beghin seling the product before its arrival through discounted pre-orders. This proved a scuuess with 24 pre-order sales made the week before the product’s arrival. The Directors of LIMBO meet every Friday at 1:00pm. After reporting on the week’s events and issues, the Directors are able to come up with more ideas and make decisions to change things or just to confirm what needs to be done in the following week in order to continue on the same positive path. This has also proved to be a good time to discuss both the positive and negative feedback of consumers and thus what facets of the company need to be improved, or just amplified. Because the five Director’s are all equal and full shareholders of the company, the Friday meetings are also, effectively a shareholder’s meeting. For this aspect of the agenda, all Directors report back on what they have done since the last meeting and how their portfolio is progressing. This has been particularly relevant in the case of the Director of Finance, with regular financial updates required. The Board of Directors have worked extremely well together, and with strong processes of delegation and team work ethics, LIMBO has been run to the highest degree of efficiency. Annual Report 2002 Managing Director’s Report

4. At the beginning of the year our HOD Commerce called a meeting for all those interested in being involved in the Young Enterprise Scheme 2002. Five people attended the meeting, all seeking Directorships. Following discussions of the various management roles, five specific roles were chosen to fill all the requirements for a Board of Directors, and to specifically match the skill sets of each candidate. LIMBO comprises the following Board Of Directors: Annual Report 2002 Personnel Report Tim Hewitt, Managing Director: Tim has had huge academic success during his time at HIBS. In his sixth form year, he gained a scholarship in University Bursary Economics, and now has a strong desire to put his theoretical skills into practice. He has impressive logic and problem solving skills, which has immensely helped the company and its directors in overcoming the various obstacles that arise in any business. Tim’s role is to provide overall leadership and support to the Directors, as well as chairing meetings, and to lead in decision making processes. Matt Fairweather, Production Director: During his Seventh Form year, Matt has undertaken a paper at Massey University in Coaching and Sport Management. This has added to Matt’s skills in initiative and creativity, which have proved invaluable to the running of LIMBO as a business. Matt’s experience and contacts in the pharmaceutical area have also proved a huge asset to LIMBO. Having worked in a pharmacy for many years, he has not only an awareness of things chemical, but has also been able to enlist specialised help in our production process, which otherwise would not have been found. Matt is also a great public speaker. Michael Kirker, Finance Director: Michael was the only candidate for Directorship who had finance experience, making him ideally suited to the role of Finance Director. He has maintained excellent academic success, sitting exam papers ahead of his year level, and his accountancy skills have been well developed at HIBS. Michael’s role is to manage all cashflows, and report on a regular basis to the Directors on matters of financial position and performance. He is the contact person for our account at ANZ Bank, and oversees the smooth operation of all our banking transactions. Lewis Holden, Marketing Director: Lewis has great skills in the area of graphics design and public speaking, making him an ideal choice for the Marketing Portfolio. He is responsible for the promotion of LIMBO Wax, as well as carrying out vital market research. Lewis has designed all our promotional material, including logos and advertisements and oversees the promotion of LIMBO WAX to the general community. Lewis is also a Deputy School Captain, and his role has seen him promoting events such as the 40 Hour Famine and various charity appeals throughout the year. This has furthered his suitability for the role of Marketing Director . Nayan Gain, Communications Director: Nayan has also been accelerated in his time at HIBS. In his sixth form year, he sat two Bursary papers and gained very good marks in both, while this year, he is sitting two Media Studies papers at Massey University. Nayan is a very motivated person, and thrives on interaction with a wide range of people. He is well suited to the role of Communications Director as he has good written and oral communication skills and has the confidence to raise issues when required.

5. When LIMBO was first formed, The Directors had a large pool of ideas from which to select a product. It was thanks to a meeting where someone commented on one of the Director’s hairstyles that the idea of hair product was brought up. Hair product is both Consumable: if a consumer likes LIMBO WAX, they will buy more Popular: as shown through our market research. Hair Wax indeed fitted the criteria of a product that the Directors wanted to base their company around. Discussions were held regarding what type of hair product LIMBO would focus on. At this stage it had been narrowed down to two options – gel or wax. Gel is often considered to be a ‘budget’ product and has steadily decreased in popularity with the youth market over time. Wax, however, is currently very popular with teenagers who are increasingly concerned with their ‘image’. Ultimately it is perceived to be a superior product to Gel, and this was a major factor in the final decision – made unanimously to produce Hair Wax. In a Directors’ Meeting, the following objectives were set for LIMBO WAX as a successful hair product: -High visual appeal -Good quality product -Presented as professionally as possible -To be seen as a value for money product whilst avoiding the ‘budget’ category Step One was investigating the current products on the market. The Production Director went to several local hairdressers and researched the different types of Hair Wax on sale. He reported that there were literally dozens of products on the market, ranging from $9.95 for 100g to upwards of $30 for 150g. Some of the brands available had a very high brand profile which is partially why they attract such high prices. LIMBO WAX would not have this advantages, and this was identified as an obstacle the Directors would face in its Marketing of LIMBO WAX. Step Two involved the conducting of market research to identify LIMBO’s target market and the features most important to consumers of Hair Product in general. Key points that were identified through the research were: strong hold affordable price presentation (i.e. ‘image’) With Step Three the Directors encountered their most pressing problem to date - the production of the wax. One option was to contact the manufacturer of a New Zealand produced brand of hair wax and investigate the possibility of bulk buying an already produced product, and re-branding and packaging it for retail sale. However, this was never followed up for reasons of impracticality. Rather, our Production Director sourced a formula for a pomade (wax) from a Pharmacist, and the decision was made that LIMBO would market its own hair wax. Armed with a formulation, the next step was to produce a trial batch and test it. A major problem at this stage was the sourcing of ingredients. Acacia in particular proved to be an especially difficult ingredient to locate. It was difficult to find in suitable quantities and qualities (grades), and there were no generic substitutes available. Contacts at local Pharmacies were used and local chemical supply companies were approached. Eventually a small amount of the final missing ingredient was obtained and a trial batch was produced in the School Chemistry Laboratory. Though a bit ‘rough and ready’, the product showed promise and was a good indicator of what the final product would be like. It was tested on LIMBO’s potential market, and we received valuable feedback. Annual Report 2002 Production Report

6. The feedback was generally very positive and possible refinements for future production were identified, notably improving texture and aroma. In attempts to locate Acacia in quantities large enough for mass production of LIMBO WAX, having little success in Wellington, the Directors went on to contact Chemical Companies throughout New Zealand. One particular company, Cosmecutical Creations Corporation (CCC), a subsidiary of Neways International NZ, was extremely helpful and after initial forays into testing the formulation, they agreed to source the scarce ingredient and produce a sample. During this period, packaging possibilities were also being investigated. This proved to be another challenging task. Little is available in terms of ready-to-use packaging in New Zealand, and most companies have minimum orders of around 1000 were it to be specifically manufactured for LIMBO WAX. Persistence, however, paid off. LIMBO were able to obtain three hundred tins which were left over after being imported for a large production run by a home decorating company. They were perfect – excellent size, good quality, and made out of burnished stainless steel, giving them a very modern and professional presentation. They were locally made by National Can Industries, a multi-national corporation with a Wellington branch. After receiving the sample tin from CCC, the Directors faced the decision of whether to pursue production themselves or whether to contract CCC to produce to our formulation. We needed to consider: Whether the location of CCC would have an impact on our actions if there were problems with production The comparable quality of the final product The Financial implications of the two options. Before making a final decision, LIMBO asked CCC to make a second sample with the instructions to alter the aroma and improve texture. After receiving this sample and being very pleased with the changes, the Directors made their final decision to contract CCC to produce the Hair Wax. LIMBO’s initial order was for two hundred units. Packaging was freighted to Auckland to await production. The lead time for completion of LIMBO’s order was four weeks, which took the Directors up to just days before the Wellington Trade Fair. Whilst awaiting the final product, the Directors busied themselves with finalizing label design and production and beginning marketing of LIMBO WAX. After investigating a number of possibilities, the labels were produced on a colour laser printer. This option was chosen as the quality was superior and ink was less likely to fade or smudge when handled. It was also more suitable for our market. Printing the labels was surprisingly time consuming as the printer turned out to be very temperamental, with problems with alignment and colour Annual Report 2002 Production Report

7. Cosmecutical Creation Company went through a lot of changes whilst the order for LIMBO WAX was lodged with them. Some staff members, including the Production Administrator the Directors had been liasing with, resigned, and because of this LIMBO’s order was placed at the back of the list. Information received ranged considerably and the Directors had growing concerns as to whether the order would be completed and received in Wellington in time for Trade Fair. Fortunately through the Communication Director’s persistence, an assurance was given that the order would arrive on time. It arrived twenty minutes before the end of school on the Friday before trade fair. The product we received though differed slightly from that which we had tested on our consumers, and we received mixed feedback about this. We also faced a small obstacle of having to cool the product once received, as the overnight courier had seen the cans heating up while in transit. Our order had also been reduced to 160 units instead of the 200 units ordered and packaging sent up for. Evidently, the LIMBO WAX order had been too small for CCC to use conventional filling methods, which saw them filling the cans manually by jug. It was unfeasible for them to produce 200, due to the higher costs involved in production. These costs were not passed on to LIMBO. It must be said that LIMBO are very grateful for the support of CCC in the supply of LIMBO WAX. CCC are a company whose clientele includes exclusively large overseas and domestic customers, meaning that they are used to orders in the region of thousands. For them to run an order of 200 units was a very rare occurrence. The Directors believe that they received a very good deal from CCC, and for this reason and more, believe that there is significant potential for the continuation of LIMBO WAX on a slightly larger scale. Annual Report 2002 Production Report The Final Product.

8. Although LIMBO has not endeavoured to sell a technology product, technology has formed the basis of much of our communication, both internal and external. limbowax@orcon.net.nz Having a company email address has increased the effectiveness of our company communication significantly. All Directors have their own personal email addresses, and all email communication between Directors was copied to this address. The Communications Director was responsible for clearing the company email account, and any emails were forwarded to the relevant Director: Production, Marketing, Finance or General, or where matters concerned all Directors, everyone. Email has been by far the most common method of communication for the following reasons: it is instantaneous: numerous emails can be sent and replies received within the space of one day. Email was found suitable even in urgent matters. It is cheap or, in many situations, free: with constant access to the school’s Local Area Network and JetStream Internet, there was no cost to us for sending or receiving emails. email is easier to track than ‘snail mail’ copies of all emails sent are automatically saved on our account. Incoming emails can easily be forwarded The convenience of email meant that phone or post were only used in the rare occasions that access to a computer was not possible, or where we required an even more immediate response than that which email could provide. http://www.limbowax.orcon.net.nz This website has provided LIMBO with an easy, very cost-effective outlet for promoting our company and product to the general public. Young people in particular use the Internet frequently, and will often prefer to visit a website than read a paper advertisement. Currently, we have on our website: information about our company Profiles of its Directors Order information A photo gallery Company contact details Copies of the Business Plan and Constitution available for download (in PDF file format) As of September 12, Our annual report will be able to be viewed as an online document at http://www.limbowax.orcon.net.nz/annualreport We have submitted our website for listing in search engines, including New Zealand NZ City Search, Search NZ, and Google. Both our email address and website address are printed on the reverse of each can to ensure customers have a variety of ways of contacting LIMBO should they have any need to speak with us. Facsimiles have also been used, where specific forms and contracts have needed to be sent, as these are faster and more convenient than postal mail. Technology plays an increasingly important part in the running of LIMBO, as we are competing in a market where more and more consumers are technologically advanced, and the old-fashioned mediums of banners and brochures no longer suffice. For a very low cost, LIMBO has been able to provide a varied communication and marketing system that has ensured the maximisation of our reachable market, as well as a sustainable framework for feedback and information. Annual Report 2002 Communication & Technology Report

9. Target Market The target consumer for LIMBO WAX is an adolescent male, who is concerned with the way his hair looks, wants his hair to look cool, and has a medium (for this age level) disposable income. This target was identified in initial market research. A major factor in the decision to produce LIMBO WAX was that hair products appeared to be a highly consumable item within our schools’ demographics. By surveying our own school in particular, it was found that 74% of our school population used some form of hair product, with the majority of these consumers falling within the 13-18 year old range (our school includes intermediate year levels). This also revealed the extent of market saturation by beauty product manufacturing into teenage male’s consumption habits. It was found that most of the surveyed students didn’t worry about the brand, rather the function of the product was more important. Students were concerned whether or not the product performed to their requirements. The lack of so-called ‘brand loyalty’ was revealed in a question related to competing products. Other questions in the survey dealt with The preferred style students used with their hair products. How much they paid. Who bought the product for them. The results of this survey formed the basis of our target market. In most cases it was the parents of the student who purchased the product, but our survey revealed this was at the ‘coersion’ of the student. Prices paid were not rated highly in the purchasing decision if the student got a parent to purchase the product for them. In most cases (54%) though, a price range of around $10-15 was seen as reasonable. It is important to note that being a Decile 10 School, many of the students and hence consumers surveyed have relatively medium-high disposable incomes. The results of this survey have proven to be invaluable and have formed the basis of LIMBO’s marketing plan. Total Quality Management LIMBO’s experiments with various producers and processes of the product, as outlined in the Production Section formed the core of LIMBO’s Total Quality Management. Each batch of hair wax was duly tested on potential customers for their comments. Feedback from these trials was evaluated at Directors’ meetings, and suggested improvements made. Once Cosmecutical Creation Company (CCC) had agreed to manufacturer the hair wax, the process became far easier. Potential clients received the final test tin from CCC very well, and the final form of LIMBO’s Hair wax was agreed upon. Total Quality Management became especially relevant once the discrepancy between the sample product and the final retail product was discovered. There was no opportunity for feedback to CCC after the shipment had been received, so the Managing Director wrote to CCC to raise these concerns. Annual Report 2002 Marketing Report

10. Sales Strategy and promotion LIMBO launched its hair wax on the 19th August in the following way: Pre-orders were used to guarantee the sale of the product before it arrived so that we had some short term working capital. Pre-orders were at a discounted price of $9.50 to encourage consumers to buy early. This working capital was used then to pay for the printing of many posters, displayed prominently around the school, indicating LIMBO WAX’s pending launch and the special pre-order price. All Directors carried pre-order forms for LIMBO WAX and an order box was set up at the school office. Regular notices where posted in the daily school notices. The school newsletter, which went out on Thursday 15th August carried an article about LIMBO and LIMBO WAX’s upcoming launch, and included a pre-order form. This was specifically targeted at raising LIMBO’s awareness with parents, who proved to be the main purchasers of the Hair Wax on the student’s ‘advice’. Since the closing of pre-orders, LIMBO WAX has been sold at school during every lunch hour. LIMBO is currently left with 46 unsold units. With liquidation time constraints in mind, any product not sold by 22 September will be discounted to $7.00 in a clearance sale. We are printing special posters for this. LIMBO is currently investigating possible markets for the remaining packaging as we move towards liquidation. Outside of the school market, LIMBO has concentrated its efforts on approaching hairdressers and pharmacies, whilst also pursuing public relations opportunities. The Communications Director contacted several local newspapers, including the Upper Hutt Leader and Hutt News both of whom ran articles about LIMBO and our hair product, along with information on the Young Enterprise Scheme. The regional daily newspaper The Dominion Post also ran a small mention of LIMBO’s participation at the Johnsonville Trade Fair day. An important element of our marketing has been to extend LIMBO WAX beyond the parameters of the school environment. LIMBO WAX is currently on sale at: Mana Pharmacy Taita Pharmacy Aspects of Hair. While negotiations are currently in progress with: Rodney Wayne North City Whitby Pharmacy. Negotiations were also undertaken with the Centre Management of North City Shopping Centre in Porirua. This is the largest mall in the Wellington Region, and has a phenomenal amount of foot traffic in peak shopping times. Negotiations provided LIMBO with an exlusive 75% discount on the hirage of a stall for a Saturday in the middle of the holidas, but it was ultimately considered financially unviable to pursue this. This is a great disappointment to the Directors to have to make this decision, as, through hard work at negotiating, we were offered a prime venue and time, and had we more capital to work with, this option would have been an ideal element of our marketing. Similarly, local council-organised fairs were considered, but these were considered too pricy and an inefficient use of the Directors’ time. And besides, 4:00am starts required to secure a place did not appeal! Annual Report 2002 Marketing Report

11. LIMBO used the Wellington Young Enterprise Trade Fair to launch LIMBO WAX. LIMBO won the Merchandising Award, whilst also launching our product successfully. The effectiveness of the company’s logo and general presentation of our product was commented on frequently by customers and judges alike. Marketing Challenges The most significant of LIMBO WAX’s marketing challenges was consumer ignorance of our product. It was very important to ensure that students within our own school were kept informed of the product’s development. LIMBO offered free samples of trail batches of LIMBO WAX, ensuring constant consumer feedback and curiosity. Outside of the school, the Directors compared LIMBO WAX with other competing products. It had to be known that this was not an expensive gel, rather a low cost wax. LIMBO’s marketing plan was not a total success. The use of ‘word of mouhth’ marketing was not always the best form of selling a product as the Directors had hoped. Customers didn’t always encourage others to purchase LIMBO WAX. The discrepancy between the sample and final products threatened to detract from the market appeal and credibility of LIMBO WAX, but this has not eventuated into an issue as yet. Customer satisfaction with the product has been positive, and in many cases customers purchased several tins of LIMBO WAX. LIMBO’s price structure was based on the market research data that suggested a price of around $10-$15 was reasonable. The product has sold well at $9.95 and the Directors hope that all wax will be cleared after the clearance sale. However, overall the Directors feel that LIMBO’s marketing plan has worked to a satisfactory level. The challenges have been far outweighed by the rewards of sales, market exposure, and valuable experience. Annual Report 2002 Marketing Report The LIMBO Team with Westfield Merchandising Coordinator Stefanie Ritchie, after presentation of the Top Merchandising Award.

12. Annual Report 2002 Finance Report

13. Annual Report 2002 Finance Report Overall Results LIMBO is pleased to report a Net Profit after tax to date of $58.66. This provides a Return on Shareholders Equity of 7.5%. Projections show that the final Net Profit after tax is expected to be $273.87, giving a Return on Shareholders Equity of 30.9%. The Directors are pleased to note that this is higher than the target of 20%. The Directors have also been careful in their management of liquidity, always ensuring that adequate working capital is on hand. The current ratio is 3:1.

14. Capital Formation and Shareholders Information As outlined in LIMBO’s Constitution, the Board of Directors agreed that LIMBO would sell its shares for $1.00 per share and that all shares would be sold in equal proportions to the Directors, giving them an equal vote in all decisions of the business. A total of 750 shares were issued to the Directors as early forecasting showed that LIMBO would require a relatively high level of initial working capital due to expenses being incurred before any revenue would be received. These expenses included registration, research and development and packaging costs. The Company continued to operate throughout with its initial goal of a 20% return on investment for shareholders in mind and is currently on target for achieving higher than this return. Budget It was vital to the Company that the initial budget was as accurate as possible to ensure that we had enough working capital to allow the Company to operate until the first sales were received. By discussing with our Mentor and Teacher who had both worked with last year’s Young Enterprise group, we were able to have some indication of the likely expenses we would incur. Additional research was conducted by the Directors into the research, development and manufacturing costs of the product. We have used our budget as a working document. It has been revised regularly to take into account any new information that would affect either costs or revenue. It has been important to us to have the most up-to-date information available to aid us in our decision making. When the Directors decided to commission CCC in Auckland to produce LIMBO WAX, the budget was altered to take into account the final quoted costs as well as the transport costs of getting the packaging to Auckland and the finished product back to Wellington. A new breakeven point was calculated at the same time. The budget was produced using Microsoft Excel. This made it easy to adjust the figures when the budget needed revising. Annual Report 2002 Finance Report Verifiability LIMBO has kept accurate records of all expenses it incurred. All proposed expenditure was authorised in Directors meetings and receipts for all expenses have been kept. Regular banking of all moneys and use of cheques are part of LIMBO’s internal control system.

15. System Control Internal control was adopted by LIMBO for the purpose of: Protecting its resources against waste, fraud and inefficiency. Ensuring accuracy and reliability of accounting data. Ensuring compliance with the policies of the business. To better manage our stock and money a ordering system was set up to insure all orders were delivered and paid for. This included a table set up in which was recorded the students name, quantity orders, money paid, change needed, and the signature of the student upon delivery. A roster was also set up for selling during lunchtime to students. All Directors take turns, ensuring at least one director was present to take orders at lunchtime. Our internal Controls include procedures for the handling of money. Cash received: All cash is banked daily All cheques received are made safe by ‘Crossing’ with “Not Transferable” Division of jobs Cash paid: Where possible all payments were made by cheque All cheques require two signatories and are crossed with Not Transferable The cheque book is held securely when not required Division of jobs Risk Management Examples of financial risks include: Poor quantity of sales: While there could be no guarantees of the quantity of sales, LIMBO was able to obtain an estimate through market research. LIMBO offered advance orders of the product as not only a marketing tool but also as a way to better gauge the demand for the product. Loss of stock or money: All our stock is stored at school in a locked room secured with the school’s security system. All cash is banked on the day of receiving. The float which is necessary to deal with day to day sales is stored in a locked filing cabinet in another room. Bad debts: LIMBO’s policy on selling product is to only sell for cash (notes, cheques). By not selling on credit we insure ourselves against financial losses incurred due to bad debts. Annual Report 2002 Finance Report