Investment Office ANRS

Project Profile on the Establishment

Amusement and Recreation Parks At the
major urban centers

Development Studies Associates

(DSA)

July 2016
Bahir Dar
 Table of Contents

1. Executive Summary................................................................................1
2. Product Description and Application....................................................1
3. Market Study, Plant Capacity and Production Program...................2
3.1 Market Study.......................................................................................................2
3.1.1 Present Demand and Supply........................................................................2
3.1.2 Projected Demand........................................................................................2
3.1.3 Pricing..........................................................................................................4
3.2 Plant Capacity......................................................................................................4
3.3 Service Program...................................................................................................4
4. Raw Materials and Utilities....................................................................5
4.1 Availability and Source of Raw materials...........................................................5
4.2 Annual Requirement and Cost of Utilities...........................................................5
5. Location and Site.....................................................................................5
6. Technology and Engineering.................................................................5
6.1 Machinery and Equipment...................................................................................5
6.2 Civil Engineering Cost........................................................................................6
7. Human Resource and Training Requirement......................................7
7.1 Human Resource..................................................................................................7
7.2 Training Requirement..........................................................................................7
8. Financial Analysis...................................................................................8
8.1 Underlying Assumption.......................................................................................8
8.2 Investment............................................................................................................8
8.3 Production Costs..................................................................................................9
8.4 Financial Evaluation..........................................................................................10
9. Economic and Social Benefits and Justification.................................11
ANNEXES....................................................................................................12
 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 amount of investment.

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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 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

4
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 Bahir Dar Dessie Gonder

2016/17 12,083 12,715 15,219
2018/19 12,446 13,096 15,676
2019/20 12,819 13,489 16,146
2020/21 13,204 13,894 16,630
2021/22 13,600 14,311 17,129
2022/23 14,008 14,740 17,643
2023/24 14,428 15,182 18,172
2024/25 14,861 15,637 18,717
2025/26 15,307 16,106 19,279
2026/27 15,766 16,589 19,857
2027/28 16,239 17,087 20,453
2028/29 16,726 17,600 21,067

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.

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 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 3rd 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.

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 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

Total Cost
Material and Input Quantity L.C. F.C.
Electricity 130,000kwh 71,500  
Water 9000m3 23,850  
Total Utility Cost   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.

Table 3: Machinery and Equipment

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 Machinery and Equipment Quantity
Kiddy Rides set
Samba Tower 1
Giant Wheel 1
Crazy Bus 1
Mono Rail without Track 1
Security monitoring and surveillance system 1

The total cost of machinery and equipment including freight insurance and bank cost is estimated
to be about Birr 3,849,000.

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

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.

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 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

No. Monthly Total Annual

Position Required Salary Salary
Manager 1 10,264 123,168
Accountant 1 3079.2 36950.4
Secretary 1 2181.1 26173.2
Store Keeper 1 1924.5 23094
Cashier 1 1924.5 23094
Technician and Electrician 2 2566 61584
Machine Operators and Machine
attendance 14 2052.8 344870.4
Waitress 2 1026.4 24633.6
Cleaners 3 1026.4 36950.4
Guards 4 1026.4 49267.2
Benefit (20%)   149957
 Total 30 899,742.2

The envisaged plant creates 30 jobs opportunity and about Birr 899,742 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 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 79,980 will be allocated for
training expense.

8. Financial Analysis
8.1 Underlying Assumption

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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 2 years

Source of finance 40% equity and 60% loan
Tax holidays 2 years
Bank interest rate 12%
Discount for cash flow 18%
Value of land Based on lease rate of ANRS
Spare Parts, Repair & Maintenance 1% of fixed investment

B. Depreciation

Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
Pre-production (amortization) 20%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local 30
Raw Material-Foreign 120
Factory Supplies in Stock 30
Spare Parts in Stock and Maintenance 30
Work in Progress 10
Finished Products 15
Accounts Receivable 30
Cash in Hand 30
Accounts Payable 30

8.2 Investment

The total investment cost of the project including working capital is estimated at Birr 6.9 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 L.C F.C Total

Land 15396 15396

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 Building and civil works 2437700 2437700
Office equipment 64150 64150
Vehicles 0 0
Plant machinery & equipment 1026400 2822600 3849000
Total fixed investment cost 3543646 2822600 6366246
Pre production capital expenditure*
318312.3 318312
Total initial investment 3861958 2822600 6684558
Working capital at full capacity 265165.3 265165
Total 4,127,124 2,822,600 6,949,724
*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 2,043,675 as detailed in
table 6 below.

Table 6: Production Cost

Items Cost
1. Raw materials
2. Utilities 86,425
3. Wages and Salaries 899,742.24
4. Spares and Maintenance 63,662.46
Factory costs 1,049,829.7
5. Depreciation 576,862.46
6. Financial costs 416,982.698
  Total Production Cost 2,043,674.858

8.4 Financial Evaluation

I. Profitability

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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 1,046,789.48.

VI. Sensitivity Analysis

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

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The envisaged project possesses wide range of benefits that help promote the socio-economic
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 10.9 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 4.1 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 899,742 per year. This would be one of
the commendable accomplishments of the project.

D. Pro Environment Project

The proposed project is environment friendly.

E. Diversification and Inter Sectoral 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.

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ANNEXES

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 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 114760 137712 153013.3 153013.3

Raw Materials in Stock- Total 0.00 0.00 0 0 0 0
Raw Material-Local 0.00 0.00 0 0 0 0
Raw Material-Foreign 0.00 0.00 0 0 0 0
Factory Supplies in Stock 0.00 0.00 1321.5 1585.839 1762.047 1762.047
Spare Parts in Stock and Maintenance 0.00 0.00 14324 17188.86 19098.74 19098.74
Work in Progress 0.00 0.00 33038 39645.75 44050.86 44050.86
Finished Products 0.00 0.00 66076 79291.53 88101.69 88101.69
2. Accounts Receivable 0.00 0.00 272798 327357.5 363730.5 363730.5
3. Cash in Hand 0.00 0.00 84113 100935.8 112150.9 112150.9
CURRENT ASSETS 0.00 0.00 471671 566005.2 628894.7 628894.7
4. Current Liabilities 0.00 0.00 272798 327357.5 363730.5 363730.5
Accounts Payable 0.00 0.00 272798 327357.5 363730.5 363730.5
TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 198873 238647.8 265164.2 265164.2
INCREASE IN NET WORKING CAPITAL 0.00 0.00 198873 39774.62 26516.43 0

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 Annex 1: Total Net Working Capital Requirements (in Birr) (continued)
PRODUCTION
  5 6 7 8 9 10

Capacity Utilization (%) 100% 100% 100% 100% 100% 100%

1. Total Inventory 153013 153013.3 153013.3 153013.3 153013.3 153013.3

Raw Materials in Stock-Total 0 0 0 0 0 0
Raw Material-Local 0 0 0 0 0 0
Raw Material-Foreign 0 0 0 0 0 0
Factory Supplies in Stock 1762 1762.047 1762.047 1762.047 1762.047 1762.047
Spare Parts in Stock and Maintenance 19099 19098.74 19098.74 19098.74 19098.74 19098.74
Work in Progress 44051 44050.86 44050.86 44050.86 44050.86 44050.86
Finished Products 88102 88101.69 88101.69 88101.69 88101.69 88101.69
2. Accounts Receivable 363731 363730.5 363730.5 363730.5 363730.5 363730.5
3. Cash in Hand 112151 112150.9 112150.9 112150.9 112150.9 112150.9
CURRENT ASSETS 628895 628894.7 628894.7 628894.7 628894.7 628894.7
4. Current Liabilities 363731 363730.5 363730.5 363730.5 363730.5 363730.5
Accounts Payable 363731 363730.5 363730.5 363730.5 363730.5 363730.5
TOTAL NET WORKING CAPITAL REQUIRMENTS 265164 265164.2 265164.2 265164.2 265164.2 265164.2
INCREASE IN NET WORKING CAPITAL 0 0 0 0 0 0

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 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 3342279 3607443 3000777 3328134 3673678 3637305
1. Inflow Funds 3342279 3607443 272797.9 54559.58 36373.05 0
Total Equity 1336912 1442977 0 0 0 0
Total Long Term Loan 2005367 2164466 0 0 0 0
Total Short Term Finances 0 0 272797.9 54559.58 36373.05 0
2. Inflow Operation 0 0 2727979 3273575 3637305 3637305
Sales Revenue 0 0 2727979 3273575 3637305 3637305
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 3342279 3342279 2524063 2385878 2814956 2693689
4. Increase In Fixed Assets 3342279 3342279 0 0 0 0
Fixed Investments 3183123 3183123 0 0 0 0
Pre-production Expenditures 159156.2 159156.2 0 0 0 0
5. Increase in Current Assets 0 0 471671 94334.19 62889.48 0
6. Operating Costs 0 0 925322.4 1096192 1210105 1210105
7. Corporate Tax Paid 0 0 0 0 430006.4 455025.3
8. Interest Paid 0 0 1127069 500380 416983.3 333586.7
9.Loan Repayments 0 0 0 694972.3 694972.3 694972.3
10.Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 0 265164.2 476714 942255.8 858722 943616
Cumulative Cash Balance 0 265164.2 741878.2 1684134 2542856 3486472

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 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 3637305 3637305 3637305 3637305 3637305 3637305
1. Inflow Funds 0 0 0 0 0 0
Total Equity 0 0 0 0 0 0
Total Long Term Loan 0 0 0 0 0 0
Total Short Term Finances 0 0 0 0 0 0
2. Inflow Operation 3637305 3637305 3637305 3637305 3637305 3637305
Sales Revenue 3637305 3637305 3637305 3637305 3637305 3637305
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 2635311 2596032 2537655 1784305 1784305 1784305
4. Increase In Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production Expenditures 0 0 0 0 0 0
5. Increase in Current Assets 0 0 0 0 0 0
6. Operating Costs 1210105 1210105 1210105 1210105 1210105 1210105
7. Corporate Tax Paid 480044.4 524162.1 549181.1 574200.1 574200.1 574200.1
8. Interest Paid 250190 166793.3 83396.67 0 0 0
9. Loan Repayments 694972.3 694972.3 694972.3 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 1001994 1041273 1099650 1853000 1853000 1853000
Cumulative Cash Balance 4488466 5529738 6629389 8482389 10335389 12188389

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

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 CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 2727979 3273575 3637305 3637305
1. Inflow Operation 0 0 2727979 3273575 3637305 3637305
Sales Revenue 0 0 2727979 3273575 3637305 3637305
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 3342279 3342279 1124196 1135966 1666627 1665130
3. Increase in Fixed Assets 3342279 3342279 0 0 0 0
Fixed Investments 3183123 3183123 0 0 0 0
Pre-production Expenditures 159156.2 159156.2 0 0 0 0
4. Increase in Net Working Capital 0 0 198873.1 39774.62 26516.43 0
5. Operating Costs 0 0 925322.4 1096192 1210105 1210105
6. Corporate Tax Paid 0 0 0 0 430006.4 455025.3
NET CASH FLOW -3342279 -3342279 1603783 2137608 1970678 1972175
CUMMULATIVE NET CASH FLOW -3342279 -6684558 -5080775 -2943167 -972489 999685.5
Net Present Value (at 18%) -3342279 -2832440 1151812 1301014 1016454 862055.9
Cumulative Net present Value -3342279 -6174719 -5022907 -3721893 -2705439 -1843383

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)

  PRODUCTION

19
 5 6 7 8 9 10
TOTAL CASH INFLOW 3637305 3637305 3637305 3637305 3637305 3637305
1. Inflow Operation 3637305 3637305 3637305 3637305 3637305 3637305
Sales Revenue 3637305 3637305 3637305 3637305 3637305 3637305
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1690149 1734267 1759286 1784305 1784305 1784305
3. Increase in Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production Expenditures 0 0 0 0 0 0
4. Increase in Net Working Capital 0 0 0 0 0 0
5. Operating Costs 1210105 1210105 1210105 1210105 1210105 1210105
6. Corporate Tax Paid 480044.4 524162.1 549181.1 574200.1 574200.1 574200.1
NET CASH FLOW 1947156 1903038 1878019 1853000 1853000 1853000
CUMMULATIVE NET CASH FLOW 2946841 4849880 6727899 8580899 10433899 12286900
Net Present Value (at 18%) 721288 597411.3 499624.8 417770.2 354042.5 300036
Cumulative Net present Value -1122095 -524684 -25059.2 392711 746753.5 1046789
Net Present Value (at 18%) 1,046,789

Internal Rate of Return 22.0%

Annex 4: NET INCOME STATEMENT ( in Birr)

  PRODUCTION

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 1 2 3 4 5
Capacity Utilization (%) 75% 90% 100% 100% 100%

1. Total Income 2727979 3273575 3637305 3637305 3637305

Sales Revenue 2727979 3273575 3637305 3637305 3637305
Other Income 0 0 0 0 0
2. Less Variable Cost 584424 701309 779232.2 779232.2 779232.2
VARIABLE MARGIN 2143555 2572266 2858073 2858073 2858073
(In % of Total Income) 78.58 78.58 78.58 78.58 78.58
3. Less Fixed Costs 917761 971745.2 1007735 1007735 1007735
OPERATIONAL MARGIN 1225794 1600520 1850338 1850338 1850338
(In % of Total Income) 44.93 48.89 50.87 50.87 50.87
4. Less Cost of Finance 1127069 500380 416983.3 333586.7 250190
5. GROSS PROFIT 98724.7 1100140 1433355 1516751 1600148
6. Income (Corporate) Tax 0 0 430006.4 455025.3 480044.4
7. NET PROFIT 98724.7 1100140 1003348 1061726 1120103
RATIOS (%)  
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%

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

PRODUCTION
  6 7 8 9 10

21
 Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 3637305 3637305 3637305 3637305 3637305

Sales Revenue 3637305 3637305 3637305 3637305 3637305
Other Income 0 0 0 0 0
2. Less Variable Cost 779232.2 779232.2 779232.2 779232.2 779232.2
VARIABLE MARGIN 2858073 2858073 2858073 2858073 2858073
(In % of Total Income) 78.58 78.58 78.58 78.58 78.58
3. Less Fixed Costs 944072.5 944072.5 944072.5 944072.5 944072.5
OPERATIONAL MARGIN 1914000 1914000 1914000 1914000 1914000
(In % of Total Income) 52.62 52.62 52.62 52.62 52.62
4. Less Cost of Finance 83396.67 0 0 0 83396.67
5. GROSS PROFIT 1830604 1914000 1914000 1914000 1830604
6. Income (Corporate) Tax 549181.1 574200.1 574200.1 574200.1 549181.1
7. NET PROFIT 1281423 1339800 1339800 1339800 1281423
RATIOS (%)  
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%

Annex 5: Projected Balance Sheet (in Birr)

CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL ASSETS 3342279.2 6949722 7321245 7780973 8125722 8492475

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 1. Total Current Assets 0 265164.2 1213549 2250139 3171751 4115367
Inventory on Materials and Supplies 0 0 15645.57 18774.7 20860.78 20860.78
Work in Progress 0 0 33038.12 39645.75 44050.86 44050.86
Finished Products in Stock 0 0 66076.27 79291.53 88101.69 88101.69
Accounts Receivable 0 0 272797.9 327357.5 363730.5 363730.5
Cash in Hand 0 0 84113.17 100935.8 112150.9 112150.9
Cash Surplus, Finance Available 0 265164.2 741878.2 1684134 2542856 3486472
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 3342279.2 6684558 6107696 5530833 4953971 4377108
Fixed Investment 0 3183123 6366246 6366246 6366246 6366246
Construction in Progress 3183123 3183123 0 0 0 0
Pre-Production Expenditure 159156.15 318312.3 318312.3 318312.3 318312.3 318312.3
Less Accumulated Depreciation 0 0 576862.5 1153725 1730587 2307450
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 3342279.2 6949722 7321245 7780973 8125722 8492475
5. Total Current Liabilities 0 0 272797.9 327357.5 363730.5 363730.5
Accounts Payable 0 0 272797.9 327357.5 363730.5 363730.5
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 2005367.5 4169833 4169833 3474861 2779889 2084917
Loan A 2005367.5 4169833 4169833 3474861 2779889 2084917
Loan B 0 0 0 0 0 0
7. Total Equity Capital 1336911.7 2779889 2779889 2779889 2779889 2779889
Ordinary Capital 1336911.7 2779889 2779889 2779889 2779889 2779889
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 98724.67 1198865 2202213
9.Net Profit After Tax 0 0 98724.67 1100140 1003348 1061726
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 98724.67 1100140 1003348 1061726

Annex 5: Projected Balance Sheet (in Birr): Continued

PRODUCTION
  5 6 7 8 9 10
TOTAL ASSETS 8917606 9445679 10032129 11371930 12711729.72 14051530
1. Total Current Assets 5117360 6158633 7258283 9111284 10964283.72 12817284
Inventory on Materials and Supplies 20860.78 20860.78 20860.78 20860.78 20860.78454 20860.785

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 Work in Progress 44050.86 44050.86 44050.86 44050.86 44050.85558 44050.856
Finished Products in Stock 88101.69 88101.69 88101.69 88101.69 88101.6855 88101.686
Accounts Receivable 363730.5 363730.5 363730.5 363730.5 363730.5 363730.5
Cash in Hand 112150.9 112150.9 112150.9 112150.9 112150.879 112150.88
Cash Surplus, Finance Available 4488466 5529738 6629389 8482389 10335389.05 12188389
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 3800246 3287046 2773846 2260646 1747446 1234246
Fixed Investment 6366246 6366246 6366246 6366246 6366246 6366246
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 318312.3 318312.3 318312.3 318312.3 318312.3 318312.3
Less Accumulated Depreciation 2884312 3397512 3910712 4423912 4937112.3 5450312.3
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 8917606 9445679 10032129 11371930 12711729.72 14051530
5. Total Current Liabilities 363730.5 363730.5 363730.5 363730.5 363730.5 363730.5
Accounts Payable 363730.5 363730.5 363730.5 363730.5 363730.5 363730.5
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 1389944 694972.3 0 0 0 0
Loan A 1389944 694972.3 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 2779889 2779889 2779889 2779889 2779888.981 2779889
Ordinary Capital 2779889 2779889 2779889 2779889 2779888.981 2779889
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 3263939 4384042 5607087 6888510 8228310.011 9568110.2
9. Net Profit After Tax 1120103 1223045 1281423 1339800 1339800.232 1339800.2
Dividends Payable 0 0 0 0 0 0
Retained Profits 1120103 1223045 1281423 1339800 1339800.232 1339800.2

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