Disclosure Document 2013

...Skilled Renewable Energy Companies are in high demand. We are actively screening eco-preneurs with a desire to serve available regional markets. Join our rapidly growing network of trained solar professionals meeting the needs of the new green economy.

• Start a business where little professional competition exists.• Fill a critical shortage for professional solar contracting.• Become a leader in the new and rapidly growing green economy.• Take advantage of solar rebates, credits and incentives to help you drive sales.• Help South Africa to become energy-independent.

“Over the next 12 years 2 million South Africans will move to Solar Water Heating…this represents a40 billion rand opportunity…sure it’s not going to be easy to tap into25% of that, but so what?”

Why can’t preserving our Planet be profitable as well? It can be, when you partner with a company that has the intellect and ambition needed to deliver profitable solar energy solutions countrywide. At Solartech, we serve South Africa’s energy needs by providing dependable solar energy solutions backed by a network of brand partners committed to results. We pride ourselves in meeting customers’ needs by using the power of the Sun to increase return on investment, freeze power costs, improve profitability and drive environmental accountability.

Publication date: Version 6. 01 October 2013

Company registered as: Solartech Energy Technologies Pty Ltd (2010/010823/07)

Nature of business: Residential and Light Commercial Thermal, Heat Pump and PhotovoltaicTechnology

(Consulting, Design, Installation and Maintenance)

Banking details: Solartech First National Bank – Current Account

Account No: 62424123793

Branch Code: 252-445

Solartech address: Solartech House, 23 Venturi Crescent, Hennopspark, Centurion, Gauteng

Tel: 0861 618 618

Email: gm@setsa.co.za

Web Address: www.setsa.co.za

Created by Solartech Energy Technologies South Africa

Introduction

The following document has been developed with the sole purpose of introducing potential Brand partners to the concept of theRenewable Energy Industry. While due diligence and full disclosure from all parties involved are important aspects of the development of a successful relationship moving forward, it must however be secondary to the importance of the discussions and open dialogue, which ultimately this document is designed to initiate. It is important to note however that certain information pertaining to the business system has been omitted from this document in order to protect Solartech proprietary rights. By appointment, these areas can be discussed in detail should we feel you have the right core competencies to align with our vision.

Background

Solartech was formed in 2006; its primary goal being the Reduction and Offsetting of “Green House Gas Emissions” into what has become a fragile atmosphere. With a systematic methodology in taking companies to Carbon Neutral, it became apparent that the methodical and consistent application of solar technology was essential, and thus Solartech Energy Technologies was created.

Current energy providers in South Africa are struggling to keep up with the ever increasing demand, thus opening the door forentrepreneurs to become part of the solution. Solartech was created with a simple mandate –to develop a brand that would patiently develop the required systems and expertise needed to position itself as the market leader in Southern Africa within 3 years of inception. After 7 years of relevant research, over 8000 residential installations and the implementation of systems, Solartech have developed a business system and the relevant relationships enabling us to roll out a successful business modelwithin Southern Africa. Thus, Solartech was developed drawing on various talents and core competencies, such as marketing, technical, R&D and legal expertise to develop a business with a focused strategy to educate and challenge the consumer to theobvious advantages of Renewable energy.

Our Advantage

Solartech was launched in response to a need for a focused and professional Solar Geyser and Heat Pump consultancy specialising in developing solutions in both the public and private sector. Developed in 2006, our Network has grown to 35 owner-managed offices and currently enjoys a 17% market share. Solartech Brand Partners are entrepreneurs that see the benefits of being part of a stable and growing concern.

• Unless you are furiously independent and self-confident entrepreneur and have a unique idea which consumes your life or have abundant expertise in a specific area, being part of a “Branded Distribution Model” is always a safer way to go.

• The main advantage of “Solartech Association” is the reduced risk of failure and collaboration within a proven system.

• Part of the TriVest group of companies.

• Close collaboration with Africa’s leading Solar System integrator Solsquare.

• The reality of dealing with hot water under pressure at elevated work spaces is in itself a complex task. Solartech have installed more than 8000 residential Solar Geysers successfully since inception, we have made all the mistakes, and hopefully we can help each other fast track success together.

• Solartech Head Office collectively manages the business to the benefit of all its Distributors and Clients.

Making a decision to invest in any business opportunity is a serious matter. By investigating a Brand opportunity through Solartech, you will have taken the first step in securing your financial freedom.

The Solartech team wants you to take the time you need for this process. In order for us to supply you with insight and available opportunities, review the documentation and schedule a meeting with us. Before you invest in a business venture, it is important to invest time before you invest money.

Associations

• FASA

• SESSA – Solar Water Heating Division

• Watersmith Training Academy

• Solsquare Photovoltaic Training Academy

• Eskom DSM Programme

Business ObjectivesTo be the most respected solar energy consultancy in South Africa

Main Services

Solartech introduces consultation, energy auditing and installation of Solartech Water Heating systems, Heat Pumps along with Photovoltaic solutions to both the Public and Private Sector.

These solutions vary from client to client dependant on individual needs.

Market Potential

On the edge of an energy crisis, a warming climate and ahead of inevitable legislation (some of which has already been implemented, SANS 10400 PART XA: ENERGY USAGE IN BUILDINGS ), less than 1% of the population use renewable energy in their homes and businesses, with 4.5 million potential customers, the market potential is obvious.

Market Potential

Herewith is the solar demographic for Centurion (as an example), outlining economically active households in the LSM 8, 9 and 10

bracket. (Over 1 Billion Rand of business potential in one market)

Why is Eskom supporting the programme?

Public Enterprises Minister Barbara Hogan says government is in favour of Eskom’s proposed tariff hike as there are no other alternatives. Eskom announced its annual price hike proposal of 80 percentages for the next five years, 100 percentages for the following five years and an additional 45 percentages for the following five years!!!! That takes an average suburban home bill from around R1000 a month to R7746. Hogan says this is necessary in order to secure electricity supply in the future. As we know the first five year proposal was limited to an 8 percentage increase, resulting in an average increase for consumers of 11% year on year for the next five years. It is our belief that the 15 year proposal will be met by simply averaging out the increases over this time period.

“If we do need to provide energy for the future, this is the pain we have to take as the economy and as South Africans. We have been sitting for months going through every possible option on this,” says Hogan. The minister says the reality is that a tariff increase is necessary. “We would not be imposing this if there was not an absolute necessity to secure energy for the future,” says Hogan.

There are a couple main reasons for the solar water heating programme According to energy experts, water heating accounts for 30%- 50% of the electricity consumed by an average household, therefore it is easy to understand the savings potential of warming water with solar energy. Another reason is that Eskom cannot produce enough energy to meet demand, and support of the programme helps reduce peak demand, therefore assisting Eskom to try meet demand.

Is success guaranteed?

The success of any business to a large degree is based on an individual’s drive, ambition, willingness to acquire and apply new knowledge and adherence to various essential success principles. Solartech understands the need for the development

and maintenance of public confidence in the Solartech brand, and sees this as one of our primary roles. With regards to the concept and the business model, Solartech is focused on the development of a critical path, which will provide the Solartech

partner with a system for success, negating to a large extent, the risks generally associated with business start-ups.

There are numerous benefits in choosing to Franchise as opposed to “stand alone” ventures.

Benefits such as: Proven business systems.

Training.

Brand Recognition.

Mass purchasing.

Lead generation.

The list is comprehensive, so instead consider this simple fact based on the latest available statistics.

Less than 12% of start ups survive their first five years, while over 89% of franchised businesses become profitable over the same period of time.

Why we are different

Why do we have the Best Business System in South Africa….Getting the customer to say “YES” and getting you “off the Roof” in 10 years…

24 hour Eskom Rebates (Remove the Clients Doubt)

Solartech Distributors enjoy a unique opportunity to offer our customers the Eskom rebate paid to the customer on the same day as the installation as opposed to the customer waiting the prescribed 10-12 weeks. This strategy assists in the sales process and was exclusive to Solartech, meaning we have being doing this for longer, allowing you to differentiate your offer in the market.

Solfin (it doesn’t have to cost the customer anything!)

If affordability is an issue, Solartech make available Solfin, enabling the customer to finance the Solartech System with the savings from the Energy Cost Reduction.Our Product becomes self-liquidating from day 1

Solsure

Solartech Head office invites your customers to invest in our annual service plan called Solsure, ensuring the efficiency of the system for a period of 20 years. Solsure creates an annuity based revenue stream for our distributors and this product is exclusive to Solartech. 2 in 3 customers opt in for Solsure within the first three years of installation. Solsure also creates a mechanism for Brand Protection within our network.

We teach you how to build a money pipeline…whilst our competitors argue over whose solar system is best: we help you build an income producing asset.

Solcom (we don’t use Google as a search engine)

7 years ago we decided that….Whoever owns the Google Search Engine term for “Solar Geyser” and has the footprint to deal with the leads will own this industry. The Google Term “Solar Geysers” is searched for over 6000 times per month in South Africa

Of a possible 1.6 million results Solartech dominate page 1

Technology

Solartech employ three different technologies in respect to residential and commercial energy solutions.

Solar Geysers

Heat pumps

Photovoltaic Systems

Solartech provides Solar Water Heating systems and Heat Pumps that are manufactured and supplied by our technology partners. These Solar water heating systems carry the SABS Mark of Approval to indicate its compliance to product specifications SANS 1307 and SANS 151. This includes mechanical and thermal testing. Our national warehouse system allows for order to delivery in less than 96 hours, negating the need for our partners to carry stock thus improving cash flow and increasing profitability.

Solar GeysersSolar Geyser technology can come in various forms, is a proven technology that offers the best returns on client investment. Solar Geysers typically offer over an 80% Solar Fraction (80% saving on electricity cost). Solartech has been installing solar geysers for longer than anyone else in RSA, with over 8000 successful installations to date. We understand this technology better than anyone, and pass this knowledge and understanding onto our Franchisees.

German engineering

Simple and quick installation via ‘Plug & Play’ connections between the collector and the tank, and pre-assembled tube connections

Long life favoured by vitreous enamel lined steel with sacrificial anode

60 mm Polyurethane tank insulation maximizes heat retention

Durable Colorbond® and Polypropylene casing

Superior design, technology, materials and workmanship

Highest efficiency through full jacket heat exchanger

Specially designed to withstand extreme weather conditions

Food grade heat exchange fluid prevents from freezing and corroding

Quality: ISO 9001 controlled production

SABS approved

10 year Warranty

Heat Pumps

Heat pumps have been around for some time, but recently burst onto the scene through the Eskom rebate programme. Heat pumps can be applied in various applications from domestic water heating through to Pool heating. Heat pumps indirectly make use of solar energy as they extract energy our of the surrounding air.

Heat pumps can offer a maximum saving of around 65% of electricity usage. They can operate day and night, as they are not directly reliant on the sun. While they do not offer the same saving or independence as Solar Geysers, there is a large market for Heat pumps in our current market. Solartech has partnered with the leading suppliers of this technology in RSA and offer the highest quality product available in this segment.

Can be used in conjunction with solar geysers.

Quiet Operation. Our heat pumps operate like a standard air-conditioning unit and generate minimal noise. They can be installed in a secluded area on your property making them ‘invisible’.

Environmentally friendly - Great energy efficiency, with no green-house gas emissions.

Fully automated anti-freeze

Beautiful finish – maintains look and finish despite years of exposure to outside elements.

Superior corrosion resistance – use of high purity metals and quality finishes in the manufacturing of our heat pumps.

5 Year Warranty – Our heat pumps have a limited extended 5 year warranty and an exclusive 1 year warranty. With a system life expectancy of more than 10 years

Photovoltaic Solutions

Southern Africa has some of the highest levels of direct normal irradiance in the world! This is an ideal environment for solar solutions because every Rand spent on solar solutions is more productive than in most other parts of the world. …by harnessing this radiation and converting this to electricity - Total energy independence (no more power failures, power surges) is within reach with a Solartech solar system, engineered to meet external power sources such as wind, diesel or even the national grid.

Imagine switching on the lights during a power failure, leaving your neighbours in the dark.

Solartech follows certified energy needs analysis process designed to help match clients power needs to the best suited solar solution. Thereafter, we measure clients energy needs to ensure the correct system size is recommended. Finally, our trained installers ensure a hassle free installation scheduled at a time convenient to the client.

Solartech makes use of our sister company Solsquare for the procurement and engineering of all our PV systems. www.solsquare.com

Solartech PV solutions cater to all four need requirements of the market.

• Savings

• Power independence

• Lack of power

• Moral obligation

Photo Voltaic Solutions – a brief overview of systems and benefits.

Solar PV - DC Solar PV - Grid Tie Solar PV - Multi

HybridSolar PV - Island

Typical Use

Camping

Small Holiday Home

Staff quarters

Residential

Commercial

Industrial

Reduction of electricity cost

Back-up power needed

Continuous power needed

Remote locations (farms, parks)

Grid independent

No grid power available

System Specifications

PV panels

Inverter

Charge Controller

Battery

12V

220V

Advantages

Cost effective (short payback)

Simple

Staged, modular expansion

Easy installation

Compact

Grid independence

Reduced carbon footprint

Grid parity today

No serious lifestyle changes

Battery storage acts as backup only, maximising useful life

Low maintenance

High efficiencies

Batteries sized only for essential power users

Batteries only used during grid power failure

No power storage losses

Option of external power source (grid, generator, wind)

Solartech Recommendation

Investment Required

Initial franchise fee

The initial franchise fee is R 75 500 Excluding vat and is made up of the following:

• Franchise Fee R 47 500 ex vat

• Vehicle branding x1 R 2 000 ex vat

• Welcome pack R 3 000 ex vat

• 3 day Brand orientation training R 3 000 ex vat

• 3 day Introduction to Photovoltaic’s course R 2 500 ex vat

• Contribution to cost for franchise key installer to attend Watersmith training R 2 500 ex vat

• 4 x Data Loggers (part of the business model and income generating equipment) R 15 000 ex vat

An initial R5, 000 ex VAT deposit is payable to secure a franchise territory. This deposit is held in a separate Bank Account as per the new requirements of the CPA (Consumer Protection Act) and is FULLY refundable in the event that you decide to cancel the transaction up to the date that Brand orientation training commences.

The remaining balance of the franchise fee is due 15 days prior to the commencement of the initial 4 day training programme.

“Consumer Protection Act 68 of 2008 - right of cancellation in terms of Section 7(2)

The Franchisor herewith specifically wishes to draw to the attention of the Franchisee the provision of Section 7(2) of the CPA which states the following: In terms of Section 7(2) of the Consumer Protection Act, a Franchisee may cancel a franchise agreement without cost or penalty within 10 business days after signing such agreement, by giving written notice to the Franchisor.”

Estimated Start up costs

In addition to the franchise fee, we estimate an additional amount of R 25 000 will be required for start up costs.

Registrations R 5 000

Tools and equipment R 12 000

Office equipment R 8 000

It is also compulsory for new franchises to purchase a minimum of two Solartech geyser systems within their first month of trade. This allows for an installation at your own home (we can’t expect to sell it if we don’t have it ourselves) and an additional unit to carry as stock on hand for those midnight emergency calls.

Monthly Brand Management Fee (BMF) The Solartech partner is required to pay Solartech a fixed monthly management fee of R3 100 .00 ex vat monthly (linked annually to CPI) for the on-going business support. Brand management fee shall commence 30 days after signature of contract.

Working capitalWhile this amount will vary dependant on a number of factors, we suggest that our partner gives due consideration to the amount they believe they will require.

Financial Analysis (Based on 200L unit, Average PV system and Domestic Energy Audits)The following table is an indicative model based on the historical performance of 3 separate branches in Southern Africa from various demographics. This projection is to assist the Solartech partner and should be used as a guideline only. We cannot guarantee that the figures set out herein will be achieved. System cost to Solartech at the time of document Publication.

System cost to Distributor 200L (incl vat) R 17 079.00

System installed to Client (Average Price ) R 23,599.00

Gross Profit per Installation to Distributor R 6 520.00

Eskom Rebate to Client R 5,253.00

Total Investment to Client R 18 346.00

Average PV System cost to Distributor (incl vat) R 127 500.00

System installed to Client (Average Price ) R 159 400.00

Gross Profit per Installation to Distributor R 32 875.00

Total Investment to Client R 159 400.00

Average Energy Audit cost to Distributor (incl vat) R 500.00

System installed to Client (Average Price ) R 2 500.00

Gross Profit per Installation to Distributor R 2 000.00

Total Investment to Client R 2 500.00

Our Difference• ISO 9001 manufacturing Platform in Germany

• 10 Year warranty on Tanks and panels

• Exit strategy through Solsure

• Largest Owner managed network in Africa

• Over 8000 successful residential Installations since 2006

• National warehousing

• Strict operating procedures

• Intensive on-going training

• Recognised national Branding

• National footprint

• Shared intellect

“Let’s Make Solartech the most relevant Renewable Energy Network in the world today”

Solartech Partnership Criteria

The following is a general guideline, which may determine the suitability of an applicant to become a qualified Solartech Partner.

• Passionate about Renewable Energy and the Environment?

• Understand excellent client service and quality?

• Ethical in your approach to business?

• Willing to learn?

• Understand Team Work?

• Strong Sales and Marketing intellect?

• Driven by success?

• Ability to focus all your energy on building your business?

• Intention to embrace the Solartech Brand?

Solartech Initial TrainingIncluded in the initial fee and prior to commencing operation, initial training will be given by Solartech. Technical, Business and Marketing training will be updated on a regular basis enabling all concerned to keep abreast with current market trends. Solartech will also ensure that all partners are capable to carry out their business operations with adequate knowledge and develop their business from a marketing and administrative viewpoint.

Training

• Brand Orientation: 3 days (Centurion)

• Technical Theory: 4 days (JHB, KZN, CPT)

• Intro to PV: 3 days (Centurion)

• Installation Training: 10 installations with nearest Distribution partner (JHB, KZN CPT)

Content

• Climate Change Science

• Success and Entrepreneurship

• Legal and Liability

• Sales and Marketing

• Customer Experience Management

• Technical Theory

• Practical Training

Solartech Support System

The National Business Building Seminar (BBS)

All Solartech partners within the national network will be required to attend business workshops per year, to assist the Solartech

network in developing new strategies and ideas with regards to technical, marketing and business skills.

Weekly Updates

You will receive via email a weekly newsletter from the various divisions of the Solartech Head Office, outlining interesting articles with

regard to Business Development, updates on the industry and various opportunities available to the network from time to time.

Solcom National Web based Referral System

Solartech brand development includes an ever increasing web based referral system whereby potential clients will be encouraged to

request a quote from you directly based on the location of the enquiry.

Head office Direct

As long as you adhere to the Solartech system for success, each division head of the Solartech team (technical, business, marketing,

financial and legal) are available to you via email and or mobile phone to discuss any and all relevant questions and on-going support

pertaining to the on-going success of your business.

CRM software

CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers’ needs and

behaviours in order to develop stronger relationships with them. CRM is a process that will help bring together lots of pieces of

information about customers, sales, marketing effectiveness, responsiveness and market trends. CRM helps businesses use technology

and human resources to gain insight into the behaviour of customers and the value of those customers.

Competitive AdvantageThe possibility of relevant competition emerging in the market place is very limited at present. In the event of future localinvolvement, Solartech does not see any problems since the available market is so large that any competition would merely stimulate the demand for Solartech services. This would pre-empt coexistence within the industry in order to uphold and maintain the highest possible standard.

She has her mother’s eyes... and your sense of humour

Will she inherit your carbon footprint as well?

Recommended Reading

• Watchman’s Rattle - Rebecca Costa

• An Age of Consequence

• Good to Great by - Jim Collins

• Think and Grow Rich - Napoleon Hill

• The Tipping Point - Malcolm Gladwell

• Outliers - Malcolm Gladwell

Essential Viewing

• An Inconvenient Truth – UIP (Al Gore)

• The 11th Hour – UIP (Leonardo de Caprio)

This Disclosure Document should assist you in assessing the Brand. While it includes some information about your contract agreement do not rely on it alone to understand your contract; read your entire contract carefully. Buying a Franchise is a serious undertaking; take your time to decide. It is recommended that you have the contract explained to you by an attorney and you should seek accountancy andfinancial advice on the Brand proposition. For the calendar year 2013, Solartech is a Member in good standing of the Franchise Association of Southern Africa.

If required, further information on this membership can be obtained from:

The Executive Director

Franchise Association of Southern Africa

Postnet 256 Private Bag X4

Bedfordview

2008

Thank you for your Interest. Before taking the next step you are encouraged to gather all the facts necessary for you to make anintelligent decision, after which time we can meet to discuss the association in more detail.

Warm Regards,

Shaun Allbon

Solartech Energy Technologies

C. +2783 645 4180 | E. gm@setsa.co.za

All documentation and information disclosed by Solartech is confidential and copyright thereof vests with Solartech. The contents of such information may not be used by or disclosed to any person without the written consent of Solartech.