Investment Office ANRS

Project Profile on the Establishment
Amusement and Recreation Parks
At the major urban centers

Development Studies
Associates (DSA)

October 2008
Addis Ababa

Table of Contents
1.Executive Summary...................................................................................1
2.Product Description and Application.......................................................1
3.Market Study, Plant Capacity and Production Program.......................2
3.1Market Study...............................................................................................................2
3.1.1Present Demand and Supply................................................................................2
3.1.2Projected Demand................................................................................................2
3.1.3Pricing .................................................................................................................5
3.2Plant Capacity.............................................................................................................5
3.3Service Program..........................................................................................................5

4.Raw Materials and Utilities.......................................................................6
4.1Availability and Source of Raw materials..................................................................6
4.2Annual Requirement and Cost of Utilities..................................................................6

5.Location and Site........................................................................................6
6.Technology and Engineering ....................................................................6
6.1Machinery and Equipment..........................................................................................6
6.2Civil Engineering Cost................................................................................................7

7.Human Resource and Training Requirement.........................................8
7.1Human Resource ........................................................................................................8
7.2Training Requirement.................................................................................................8

8.Financial Analysis......................................................................................9
8.1Underlying Assumption .............................................................................................9
8.2Investment.................................................................................................................10
8.3Production Costs.......................................................................................................10
8.4Financial Evaluation.................................................................................................11

9.Economic and Social Benefits and Justification....................................12
ANNEXES....................................................................................................13

1. Executive Summary
This project profile deals with the opening of amusement and recreation centers in the
major urban centers of Amhara National Regional State: Bahir Dar, Dessie, and Gonder.
The following presents the main findings of the study.
Demand projection divulges that the demand for the proposed facility is substantial and is
increasing with time. Accordingly, the project is set to open up amusement and
Recreation Park that provides service to 350 visitors per day. The total investment cost
of the project including working capital is estimated at Birr 2.7 million and creates 30
jobs and Birr 350,640 thousand of income.
The financial result indicates that the project will generate profit beginning from the first
year of operation. Moreover, the project will break even at 35.3% of capacity utilization
and it will payback fully the initial investment less working capital in 3 years and 5
months. The result further shows that the calculated IRR of the project is 22% and NPV
discounted at 18% is Birr 407,946.02.
In addition to this, the proposed project possesses wide range of economic and social
benefits such as increasing the level of investment, tax revenue and employment creation.
Generally, the project is technically feasible, financially and commercially viable as well
as socially and economically acceptable. Hence the project is worth implementing.

2. Product Description and Application
The Amusement Park is a facility that provides outdoor physical entertainment to people.
Major product in this case would be the service, which would be provided through selling
joy rides and providing pleasant environment to the people visiting the facility. In order
to attract a cross section of population, a combination of 5 different rides is anticipated in
this study. This combination can, however, vary according to the final site selection and
1

amount of investment. For this particular project study provision of beverage stalls is
included as another source of revenue in addition to joy rides. However, video games,
swimming pools; table and ground tennis courts, foods and others are some of the other
options that can also be incorporated in the project.

3. Market Study, Plant Capacity and Production
Program
3.1

Market Study
3.1.1 Present Demand and Supply

At present there is no such facility in the Amhara region similar to the one being
proposed. Thus, the opportunity of setting up the Amusement Park can be linked with the
gap of amusement facilities existing in different areas of the region, total population of a
specific urban area requiring recreational activities and the spending capability of the
targeted people in that area.
According to the report of CSA, Annual Abstract (2008) the population is 183,489 in
Bahir Dar, 185,512 in Dessie and 213,673 in Gonder, in 2007. This represents the
existence of huge demand that can be attracted by the establishment of small amusement
park. In contrast to this, the available amusement options at various levels in the major
towns is mainly indoors that comprise of Video Games (Play Station), billiard and the
like that are provided by bars, hotels and small businesses. This provides the presence of
opportunity for any investor that can design a well researched amusement park in the
major towns of the region mentioned above.

3.1.2 Projected Demand
The proposed plant shall have facilities that attract mainly kids and youngsters (up to the
age of 20). Thus, while forecasting the future demand for the service, the number of
people with in this group in the major towns stated earlier is considered. According to the
2

1994 Population and Housing Census of Ethiopia the number of people less or equal to
20 years of age has been 49%, 51% and 53% for Bahir Dar, Dessie and Gonder towns
respectively. Taking this ratio as it is, if we apply it to the recent population number
stated earlier, we obtain 89.9 thousand for Bahir Dar, 94.6 thousand for Dessie and 113.2
thousands for Gonder towns. Furthermore, if we conservatively assume that only 10% of
this group will be attracted by the envisaged project, the population number reduces to
8,991 for Bahir Dar, 9,461 for Dessie and 11,325 for Gonder towns. In forecasting the
future demand it is assumed that these numbers will grow by 3%, parallel to the
population growth rate. Accordingly, the following figure is obtained.
Table 1: Projected Demand for Amusement Park in the Major Towns Per Year
Year
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19

Bahir Dar
9,261
9,539
9,825
10,119
10,423
10,736
11,058
11,389
11,731
12,083
12,446
12,819

Dessie
9,745
10,037
10,338
10,649
10,968
11,297
11,636
11,985
12,345
12,715
13,096
13,489

Gonder
11,664
12,014
12,375
12,746
13,128
13,522
13,928
14,346
14,776
15,219
15,676
16,146

3

The result points out the presence of substantial demand for the service being proposed
and grows further as time goes by. If we assume that the plant resumes providing the
service by 2009/10 and each targeted customer visits the center once in a month, the
average daily visit of customers will be 327 for Bahir Dar, 345 for Dessie and 412 for
Gonder towns. This number grows substantially in the subsequent periods.

4

3.1.3 Pricing
The payment for the service per person per visit is set to be Birr 12. This payment will
allow the visitor to access 2 facilities each one time only per visit. If the customer
demanded more facilities or playing again, additional payment of Birr 6 per facility is
required. Moreover, the price for a bottle of soft drink is set to be Birr 5. The assumption
here is that 50 percent of the visitors will consume a bottle of soft drink per visit.

3.2

Plant Capacity

As discussed earlier, the number of targeted customers is not the same in the three major
towns of the region. Thus, in investigating the feasibility of the service in all places, this
profile considered the minimum potential demand. Accordingly, the envisaged center is
set to operate 10 hours a day (8:30 A.M up to 6-30 P.M) and attract 350 individuals that
will make use of the service in a single day. Basically, the installed playing machineries
totally accommodate 30 individuals at a time where the time allotted for a single play is
on average 20 to 25 minutes. Therefore, at full capacity the proposed plant provides
service on average for about 70 individuals per hour and 700 per day. Since an individual
is entitled to access 2 facilities per visit, the number of visitors at full capacity of
operation will be 350 individuals per day.

3.3

Service Program

The program is scheduled based on the consideration that the envisaged center will work
300 days in a year, where the remaining days will be allocated for maintenance and
service interruption due to rainy weather condition. During the first year of operation the
plant will operate at 75 percent capacity and then it grows to 90 percent in the 2 nd year.
The capacity will grow to 100 percent starting from the 3 rd year. Since the proposed
center will be unique in terms of the types of services, it will easily attract the planned
number of customers in a short period of time. Thus, the market and logistic barriers
would be eliminated within the first two years operation.

5

4. Raw Materials and Utilities
4.1

Availability and Source of Raw materials

Since the proposed project is a service catering center, no raw material is needed in
providing the service. Nonetheless, it makes use of various utilities whose quantity and
cost is estimated in the following section.

4.2

Annual Requirement and Cost of Utilities

The annual utility requirement and the associated cost for the envisaged center is
estimated in table 2 here under.
Table 2 Material and Utility Requirement

Material and Input
Electricity
Water
Total Utility Cost

Quantity
130,000kwh
9000m3

L.C.

Total Cost
F.C.

71,500
23,850
86,425

The annual cost of utility at full capacity of operation is estimated to be Birr 95,350

5. Location and Site
The appropriate locations for the envisaged project are major towns of the region. These
are Bahir Dar, Gonder and Dessie. These towns do have huge population so that it is
possible to attract a portion of the society that has spending power and willingness to the
envisaged service. Moreover, in these towns there is ample infrastructure facilities that
can materialize the envisaged center.

6. Technology and Engineering
6.1

Machinery and Equipment

The machineries and equipment required in providing the service is detailed in table 3
below.

6

Table 3: Machinery and Equipment
Machinery and Equipment
Kiddy Rides
Samba Tower
Giant Wheel
Crazy Bus
Mono Rail without Track
Security monitoring and surveillance system

Quantity
set
1
1
1
1
1

The total cost of machinery and equipment including freight insurance and bank cost is
estimated to be about Birr 1,500,000.
The proposed center shall import most of the facilities while it will construct the required
steel structure domestically with acceptable quality and safety standards. The alternative
technological option that involves importing every part of the item is not considered due
to the high cost involved.
The following is machineries supplier address for the envisaged project
SUPER AMUSEMENT GAMES
DARSHIL ESTATE, NR. GOTA RAILWAY CROSSING,
GOTA, AHMEDABAD - 382481, GUJARAT, INDIA
Phone : 91-79-65218778/64508778
Mobile : +919825008076
Fax : 91-79-65218778

6.2

Civil Engineering Cost
7

The total site area for the envisaged plant is estimated to be 2,000m 2 where 1,600m2 is
allocated to the joy rides and the remaining 400m2 will be used to ticketing booths,
security office at gate, administration block, security and surveillance area, first aid room,
public toilets, workshop and store rooms. The joy ride area shall be decorated with
landscaping work.

7. Human Resource and Training Requirement
7.1

Human Resource

The required manpower for the envisaged plant is stated in table 4 below.
Table 4: Human Resource Requirement

Position
Manager
Accountant
Secretary
Store Keeper
Cashier
Technician and Electrician
Machine Operators and Machine
attendance
Waitress
Cleaners
Guards
Benefit (20%)
Total

No.
Required
1
1
1
1
1
2

Monthly
Salary
4000
1200
850
750
750
1000

Total Annual
Salary
48000
14400
10200
9000
9000
24000

14
2
3
4

800
400
400
400

134400
9600
14400
19200
58440
350640

30

The envisaged plant creates 30 jobs opportunity and about Birr 350,640 of income. The
professionals and support staffs for the envisaged plant shall be recruited from Amhara
region.

7.2

Training Requirement

Training of key personnel shall be arranged in collaboration with similar centers
operating in the country; such as Bora Amusement Center located in Addis Ababa. The
8

training should primarily focus on the technology and machinery maintenance and
trouble shooting. Moreover, customer handling training shall be provided to the staff.
Totally Birr 30,000 will be allocated for training expense.

8. Financial Analysis
8.1

Underlying Assumption

The financial analysis of amusement and recreation park is based on the data provided in
the preceding sections and the following assumptions.
A. Construction and Finance
Construction period
Source of finance
Tax holidays
Bank interest rate
Discount for cash flow
Value of land
Spare Parts, Repair & Maintenance

2 years
40% equity and 60% loan
2 years
12%
18%
Based on lease rate of ANRS
1% of fixed investment

B. Depreciation
Building
Machinery and equipment
Office furniture
Vehicles
Pre-production (amortization)

5%
10%
10%
20%
20%

C. Working Capital (Minimum Days of Coverage)
Raw Material-Local
Raw Material-Foreign
Factory Supplies in Stock
Spare Parts in Stock and Maintenance
Work in Progress
Finished Products
Accounts Receivable
Cash in Hand
Accounts Payable

30
120
30
30
10
15
30
30
30

9

8.2

Investment

The total investment cost of the project including working capital is estimated at Birr 2.7
million as shown in table 5 below. The Owner shall contribute 40% of the finance in the
form of equity while the remaining 60% is to be financed by bank loan.
Table 5: Total initial investment
Items
Land
Building and civil works
Office equipment
Vehicles
Plant machinery & equipment
Total fixed investment cost
Pre production capital expenditure*

L.C
6,000
950,000
25,000
0
400,000
1,381,000

F.C

1,100,000
1,100,000

124,050

Total
6,000
950,000
25,000
0
1,500,000
2,481,000
124,050

Total initial investment

1,505,050

1,100,000

2,605,050

Working capital at full capacity

103,338
1,608,388

0
1,100,000

103,338
2,708,388

Total

*Pre-production capital expenditure includes - all expenses for pre-investment studies, consultancy fee
during construction and expenses for company‘s establishment, project administration expenses,
commission expenses, preproduction marketing and interest expenses during construction.

The foreign component of the project accounts for 40.6 % of the total investment cost.

8.3

Production Costs

The total production cost at full capacity operation is estimated at Birr 849,188 as
detailed in table 6 below.
Table 6: Production Cost

Items
1.
2.
3.
4.

Raw materials
Utilities
Wages and Salaries
Spares and Maintenance
Factory costs

Cost
86,425
350,640
24,810
461,875
10

5. Depreciation
6. Financial costs

Total Production Cost
8.4

224,810
162,503
849,188

Financial Evaluation
I.

Profitability

According to the projected income statement attached in the annex part (see annex 4) the
project will generate profit beginning from the first year of operation. Ratios such as the
percentage of net profit to total sales, return on equity and return on total investment are
4%, 4% and 18% respectively in the first year and are gradually rising. Furthermore, the
income statement and other profitability indicators show that the project is viable.
II.

Breakeven Analysis

The breakeven point of the project is estimated by using income statement projection.
Accordingly, the project will break even at 35.3% of capacity utilization.
III.

Payback Period

Investment cost and income statement projections are used in estimating the project
payback period. The projects will payback fully the initial investment less working
capital in 3 years and 5 months.
IV.

Simple Rate of Return

For the envisaged plant the simple rate of return equals to 19.7%.
V.

Internal Rate of Return and Net Present Value

Based on cash flow statement described in the annex part, the calculated IRR of the
project is 22% and the net present value at 18 % discount is Birr 407,946.02.
VI.

Sensitivity Analysis

11

The envisaged plant is profitable even with considerable cost increment. That is, the plant
maintains to be profitable starting from the first year when 10 % cost increment takes
place in the sector.

9. Economic and Social Benefits and Justification
The envisaged project possesses wide range of benefits that help promote the socioeconomic goals and objectives stated in the strategic plan of the Amhara National
Regional State. It also plays positive role in diversifying the economic activity of the
region. The other major benefits are listed as follows:
A. Profit Generation
The project is found to be financially viable and earns a profit of Birr 4.25 million within
the project life. Such result induces the project promoters to reinvest the profit which,
therefore, increases the investment magnitude in the region.
B. Tax Revenue
In the project life under consideration, the region will collect about Birr 1.62 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result
creates additional fund for the regional government that will be used in expanding social
and other basic services in the region.
C. Employment and Income Generation
The proposed project is expected to create employment opportunity to several citizens of
the region. That is, it will provide permanent employment to 30 professionals as well as
support staff. Consequently the project creates income of Birr 350,640 per year. This
would be one of the commendable accomplishments of the project.
D. Pro Environment Project
The proposed project is environment friendly.

12

E. Diversification and InterSectoral linkage.
The proposed project helps to diversify ANRS’ and Ethiopian economy. It contributes to
industrialization of the region as well as the county’s economy.

ANNEXES

13

Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION

PRODUCTION

Year 1

Year 2

1

2

3

4

Capacity Utilization (%)

0.00

0.00

75%

90%

100%

100%

1. Total Inventory

0.00

0.00

44723.30

53667.95

59631.06

59631.06

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Local

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Foreign

0.00

0.00

0.00

0.00

0.00

0.00

Factory Supplies in Stock

0.00

0.00

515.01

618.02

686.69

686.69

Spare Parts in Stock and Maintenance

0.00

0.00

5582.25

6698.70

7443.00

7443.00

Work in Progress

0.00

0.00

12875.34

15450.41

17167.13

17167.13

Finished Products

0.00

0.00

25750.69

30900.83

34334.25

34334.25

2. Accounts Receivable

0.00

0.00

106312.50

127575.00

141750.00

141750.00

3. Cash in Hand

0.00

0.00

32779.88

39335.85

43706.50

43706.50

0.00

0.00

183815.67

220578.80

245087.56

245087.56

4. Current Liabilities

0.00

0.00

106312.50

127575.00

141750.00

141750.00

Accounts Payable

0.00

0.00

106312.50

127575.00

141750.00

141750.00

TOTAL NET WORKING CAPITAL REQUIRMENTS

0.00

0.00

77503.17

93003.80

103337.56

103337.56

INCREASE IN NET WORKING CAPITAL

0.00

0.00

77503.17

15500.63

10333.76

0.00

Raw Materials in Stock- Total

CURRENT ASSETS

Annex 1: Total Net Working Capital Requirements (in Birr)

(continued)

PRODUCTION
5

6

7

8

9

10

100%

100%

100%

100%

100%

100%

59631.06

59631.06

59631.06

59631.06

59631.06

59631.06

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Local

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Foreign

0.00

0.00

0.00

0.00

0.00

0.00

Factory Supplies in Stock

686.69

686.69

686.69

686.69

686.69

686.69

Spare Parts in Stock and Maintenance

7443.00

7443.00

7443.00

7443.00

7443.00

7443.00

Work in Progress

17167.13

17167.13

17167.13

17167.13

17167.13

17167.13

Finished Products

34334.25

34334.25

34334.25

34334.25

34334.25

34334.25

2. Accounts Receivable

141750.00

141750.00

141750.00

141750.00

141750.00

141750.00

3. Cash in Hand

43706.50

43706.50

43706.50

43706.50

43706.50

43706.50

245087.56

245087.56

245087.56

245087.56

245087.56

245087.56

4. Current Liabilities

141750.00

141750.00

141750.00

141750.00

141750.00

141750.00

Accounts Payable

141750.00

141750.00

141750.00

141750.00

141750.00

141750.00

TOTAL NET WORKING CAPITAL REQUIRMENTS

103337.56

103337.56

103337.56

103337.56

103337.56

103337.56

0.00

0.00

0.00

0.00

0.00

0.00

Capacity Utilization (%)
1. Total Inventory
Raw Materials in Stock-Total

CURRENT ASSETS

INCREASE IN NET WORKING CAPITAL

2

Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION

PRODUCTION

Year 1

Year 2

1

2

3

4

1302525.00

1405862.56

1169437.50

1297012.50

1431675.00

1417500.00

1302525.00

1405862.56

106312.50

21262.50

14175.00

0.00

Total Equity

521010.00

562345.02

0.00

0.00

0.00

0.00

Total Long Term Loan

781515.00

843517.54

0.00

0.00

0.00

0.00

0.00

0.00

106312.50

21262.50

14175.00

0.00

2. Inflow Operation

0.00

0.00

1063125.00

1275750.00

1417500.00

1417500.00

Sales Revenue

0.00

0.00

1063125.00

1275750.00

1417500.00

1417500.00

Interest on Securities

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

TOTAL CASH OUTFLOW

1302525.00

1302525.00

983656.52

929804.46

1097021.08

1049761.87

4. Increase In Fixed Assets

1302525.00

1302525.00

0.00

0.00

0.00

0.00

1240500.00

1240500.00

0.00

0.00

0.00

0.00

62025.00

62025.00

0.00

0.00

0.00

0.00

5. Increase in Current Assets

0.00

0.00

183815.67

36763.13

24508.76

0.00

6. Operating Costs

0.00

0.00

360608.89

427198.67

471591.85

471591.85

7. Corporate Tax Paid

0.00

0.00

0.00

0.00

167578.47

177328.66

8. Interest Paid

0.00

0.00

439231.97

195003.90

162503.25

130002.60

9.Loan Repayments

0.00

0.00

0.00

270838.76

270838.76

270838.76

10.Dividends Paid

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

0.00

103337.56

185780.98

367208.04

334653.92

367738.13

Cumulative Cash Balance

0.00

103337.56

289118.54

656326.58

990980.49

1358718.62

TOTAL CASH INFLOW
1. Inflow Funds

Total Short Term Finances

3. Other Income

Fixed Investments
Pre-production Expenditures

3

Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5
1417500.00

6
1417500.00

7
1417500.00

8
1417500.00

9
1417500.00

10
1417500.00

0.00

0.00

0.00

0.00

0.00

0.00

Total Equity

0.00

0.00

0.00

0.00

0.00

0.00

Total Long Term Loan

0.00

0.00

0.00

0.00

0.00

0.00

Total Short Term Finances

0.00

0.00

0.00

0.00

0.00

0.00

2. Inflow Operation

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

Sales Revenue

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

1027011.42

1011703.96

988953.51

695364.30

695364.30

695364.30

0.00

0.00

0.00

0.00

0.00

0.00

Fixed Investments

0.00

0.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

6. Operating Costs

471591.85

471591.85

471591.85

471591.85

471591.85

471591.85

7. Corporate Tax Paid

187078.86

204272.05

214022.25

223772.45

223772.45

223772.45

8. Interest Paid

97501.95

65001.30

32500.65

0.00

0.00

0.00

9. Loan Repayments

270838.76

270838.76

270838.76

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

390488.58

405796.04

428546.49

722135.71

722135.71

722135.71

Cumulative Cash Balance

1749207.20

2155003.24

2583549.73

3305685.44

4027821.14

4749956.85

TOTAL CASH INFLOW
1. Inflow Funds

Interest on Securities
3. Other Income
TOTAL CASH OUTFLOW
4. Increase In Fixed Assets

5. Increase in Current Assets

10.Dividends Paid

4

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION

PRODUCTION

Year 1

Year 2

1

2

3

4

TOTAL CASH INFLOW

0.00

0.00

1063125.00

1275750.00

1417500.00

1417500.00

1. Inflow Operation

0.00

0.00

1063125.00

1275750.00

1417500.00

1417500.00

Sales Revenue

0.00

0.00

1063125.00

1275750.00

1417500.00

1417500.00

Interest on Securities

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

TOTAL CASH OUTFLOW

1302525.00

1302525.00

438112.06

442699.30

649504.07

648920.51

3. Increase in Fixed Assets

1302525.00

1302525.00

0.00

0.00

0.00

0.00

Fixed Investments

1240500.00

1240500.00

0.00

0.00

0.00

0.00

62025.00

62025.00

0.00

0.00

0.00

0.00

4. Increase in Net Working Capital

0.00

0.00

77503.17

15500.63

10333.76

0.00

5. Operating Costs

0.00

0.00

360608.89

427198.67

471591.85

471591.85

6. Corporate Tax Paid

0.00

0.00

0.00

0.00

167578.47

177328.66

NET CASH FLOW

-1302525.00

-1302525.00

625012.94

833050.70

767995.93

768579.49

CUMMULATIVE NET CASH FLOW

-1302525.00

-2605050.00

-1980037.06

-1146986.36

-378990.43

389589.05

Net Present Value (at 18%)

-1302525.00

-1103834.75

448874.56

507020.38

396123.75

335953.18

Cumulative Net present Value

-1302525.00

-2406359.75

-1957485.18

-1450464.81

-1054341.05

-718387.88

2. Other Income

Pre-production Expenditures

5

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

(Continued)

PRODUCTION
5

6

7

8

9

10

TOTAL CASH INFLOW

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1. Inflow Operation

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

Sales Revenue

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

658670.71

675863.90

685614.10

695364.30

695364.30

695364.30

3. Increase in Fixed Assets

0.00

0.00

0.00

0.00

0.00

0.00

Fixed Investments

0.00

0.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

5. Operating Costs

471591.85

471591.85

471591.85

471591.85

471591.85

471591.85

6. Corporate Tax Paid

187078.86

204272.05

214022.25

223772.45

223772.45

223772.45

NET CASH FLOW

758829.29

741636.10

731885.90

722135.71

722135.71

722135.71

CUMMULATIVE NET CASH FLOW

1148418.35

1890054.44

2621940.34

3344076.05

4066211.75

4788347.46

Net Present Value (at 18%)

281094.30

232818.14

194709.58

162809.88

137974.47

116927.52

Cumulative Net present Value

-437293.57

-204475.44

-9765.86

153044.02

291018.50

407946.02

Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW

4. Increase in Net Working Capital

Net Present Value (at 18%)
Internal Rate of Return

407,946.02

22.0%

6

Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1

2

3

4

5

75%

90%

100%

100%

100%

1063125.00

1275750.00

1417500.00

1417500.00

1417500.00

1063125.00

1275750.00

1417500.00

1417500.00

1417500.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

227756.89

273308.27

303675.85

303675.85

303675.85

835368.11

1002441.74

1113824.15

1113824.15

1113824.15

78.58

78.58

78.58

78.58

78.58

357662.00

378700.40

392726.00

392726.00

392726.00

477706.11

623741.34

721098.15

721098.15

721098.15

44.93

48.89

50.87

50.87

50.87

4. Less Cost of Finance

439231.97

195003.90

162503.25

130002.60

97501.95

5. GROSS PROFIT

38474.15

428737.43

558594.90

591095.55

623596.20

0.00

0.00

167578.47

177328.66

187078.86

38474.15

428737.43

391016.43

413766.88

436517.34

Gross Profit/Sales

4%

34%

39%

42%

44%

Net Profit After Tax/Sales

4%

34%

28%

29%

31%

Return on Investment

18%

23%

20%

20%

20%

Return on Equity

4%

40%

36%

38%

40%

Capacity Utilization (%)
1. Total Income
Sales Revenue

VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)

6. Income (Corporate) Tax
7. NET PROFIT
RATIOS (%)

7

Annex 4: NET INCOME STATEMENT (in Birr):Continued

8

PRODUCTION
6

7

8

9

10

100%

100%

100%

100%

100%

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

1417500.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

303675.85

303675.85

303675.85

303675.85

303675.85

1113824.15

1113824.15

1113824.15

1113824.15

1113824.15

78.58

78.58

78.58

78.58

78.58

367916.00

367916.00

367916.00

367916.00

367916.00

745908.15

745908.15

745908.15

745908.15

745908.15

52.62

52.62

52.62

52.62

52.62

4. Less Cost of Finance

65001.30

32500.65

0.00

0.00

0.00

5. GROSS PROFIT

680906.85

713407.50

745908.15

745908.15

745908.15

6. Income (Corporate) Tax

204272.05

214022.25

223772.45

223772.45

223772.45

7. NET PROFIT

476634.79

499385.25

522135.71

522135.71

522135.71

Gross Profit/Sales

48%

50%

53%

53%

53%

Net Profit After Tax/Sales

34%

35%

37%

37%

37%

Return on Investment

20%

20%

19%

19%

19%

Return on Equity

44%

46%

48%

48%

48%

Capacity Utilization (%)
1. Total Income
Sales Revenue

VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)

RATIOS (%)

Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION

PRODUCTION

9

TOTAL ASSETS
1. Total Current Assets
Inventory on Materials and Supplies
Work in Progress
Finished Products in Stock
Accounts Receivable
Cash in Hand
Cash Surplus, Finance Available
Securities
2. Total Fixed Assets, Net of Depreciation
Fixed Investment
Construction in Progress
Pre-Production Expenditure
Less Accumulated Depreciation
3. Accumulated Losses Brought Forward
4. Loss in Current Year
TOTAL LIABILITIES
5. Total Current Liabilities
Accounts Payable
Bank Overdraft
6. Total Long-term Debt
Loan A
Loan B
7. Total Equity Capital
Ordinary Capital
Preference Capital
Subsidies
8. Reserves, Retained Profits Brought Forward
9.Net Profit After Tax
Dividends Payable
Retained Profits

Year 1
1302525.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1302525.00
0.00
1240500.00
62025.00
0.00
0.00
0.00
1302525.00
0.00
0.00
0.00
781515.00
781515.00
0.00
521010.00
521010.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 2
2708387.56
103337.56
0.00
0.00
0.00
0.00
0.00
103337.56
0.00
2605050.00
1240500.00
1240500.00
124050.00
0.00
0.00
0.00
2708387.56
0.00
0.00
0.00
1625032.54
1625032.54
0.00
1083355.02
1083355.02
0.00
0.00
0.00
0.00
0.00
0.00

1
2853174.21
472934.21
6097.26
12875.34
25750.69
106312.50
32779.88
289118.54
0.00
2380240.00
2481000.00
0.00
124050.00
224810.00
0.00
0.00
2853174.21
106312.50
106312.50
0.00
1625032.54
1625032.54
0.00
1083355.02
1083355.02
0.00
0.00
0.00
38474.15
0.00
38474.15

Annex 5: Projected Balance Sheet (in Birr):

2
3032335.38
876905.38
7316.72
15450.41
30900.83
127575.00
39335.85
656326.58
0.00
2155430.00
2481000.00
0.00
124050.00
449620.00
0.00
0.00
3032335.38
127575.00
127575.00
0.00
1354193.78
1354193.78
0.00
1083355.02
1083355.02
0.00
0.00
38474.15
428737.43
0.00
428737.43

3
3166688.05
1236068.05
8129.69
17167.13
34334.25
141750.00
43706.50
990980.49
0.00
1930620.00
2481000.00
0.00
124050.00
674430.00
0.00
0.00
3166688.05
141750.00
141750.00
0.00
1083355.02
1083355.02
0.00
1083355.02
1083355.02
0.00
0.00
467211.58
391016.43
0.00
391016.43

4
3309616.18
1603806.18
8129.69
17167.13
34334.25
141750.00
43706.50
1358718.62
0.00
1705810.00
2481000.00
0.00
124050.00
899240.00
0.00
0.00
3309616.18
141750.00
141750.00
0.00
812516.27
812516.27
0.00
1083355.02
1083355.02
0.00
0.00
858228.00
413766.88
0.00
413766.88

Continued

PRODUCTION

10

TOTAL ASSETS
1. Total Current Assets
Inventory on Materials and Supplies
Work in Progress
Finished Products in Stock
Accounts Receivable
Cash in Hand
Cash Surplus, Finance Available
Securities
2. Total Fixed Assets, Net of Depreciation
Fixed Investment
Construction in Progress
Pre-Production Expenditure
Less Accumulated Depreciation
3. Accumulated Losses Brought Forward
4. Loss in Current Year
TOTAL LIABILITIES
5. Total Current Liabilities
Accounts Payable
Bank Overdraft
6. Total Long-term Debt
Loan A
Loan B
7. Total Equity Capital
Ordinary Capital
Preference Capital
Subsidies
8. Reserves, Retained Profits Brought Forward
9. Net Profit After Tax
Dividends Payable
Retained Profits

5
3475294.76
1994294.76
8129.69
17167.13
34334.25
141750.00
43706.50
1749207.20
0.00
1481000.00
2481000.00
0.00
124050.00
1124050.00
0.00
0.00
3475294.76
141750.00
141750.00
0.00
541677.51
541677.51
0.00
1083355.02
1083355.02
0.00
0.00
1271994.89
436517.34
0.00
436517.34

6
3681090.80
2400090.80
8129.69
17167.13
34334.25
141750.00
43706.50
2155003.24
0.00
1281000.00
2481000.00
0.00
124050.00
1324050.00
0.00
0.00
3681090.80
141750.00
141750.00
0.00
270838.76
270838.76
0.00
1083355.02
1083355.02
0.00
0.00
1708512.23
476634.79
0.00
476634.79

7
3909637.29
2828637.29
8129.69
17167.13
34334.25
141750.00
43706.50
2583549.73
0.00
1081000.00
2481000.00
0.00
124050.00
1524050.00
0.00
0.00
3909637.29
141750.00
141750.00
0.00
0.00
0.00
0.00
1083355.02
1083355.02
0.00
0.00
2185147.02
499385.25
0.00
499385.25

8
4431773.00
3550773.00
8129.69
17167.13
34334.25
141750.00
43706.50
3305685.44
0.00
881000.00
2481000.00
0.00
124050.00
1724050.00
0.00
0.00
4431773.00
141750.00
141750.00
0.00
0.00
0.00
0.00
1083355.02
1083355.02
0.00
0.00
2684532.27
522135.71
0.00
522135.71

9
4953908.70
4272908.70
8129.69
17167.13
34334.25
141750.00
43706.50
4027821.14
0.00
681000.00
2481000.00
0.00
124050.00
1924050.00
0.00
0.00
4953908.70
141750.00
141750.00
0.00
0.00
0.00
0.00
1083355.02
1083355.02
0.00
0.00
3206667.97
522135.71
0.00
522135.71

10
5476044.41
4995044.41
8129.69
17167.13
34334.25
141750.00
43706.50
4749956.85
0.00
481000.00
2481000.00
0.00
124050.00
2124050.00
0.00
0.00
5476044.41
141750.00
141750.00
0.00
0.00
0.00
0.00
1083355.02
1083355.02
0.00
0.00
3728803.68
522135.71
0.00
522135.71

11