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Table of Contents
1.0 Executive Summary.............................................................................................................................1
Chart: Highlights ......................................................................................................................2
1.1 Objectives ...................................................................................................................................2
1.2 Mission........................................................................................................................................3
1.3 Keys to Success ........................................................................................................................3
2.0 Company Summary.............................................................................................................................4
2.1 Company Ownership .................................................................................................................4
2.2 Company History........................................................................................................................4
Chart: Past Performance .......................................................................................................5
Table: Past Performance .......................................................................................................6
2.3 Company Locations and Facilities ..........................................................................................6
3.0 Services................................................................................................................................................7
3.1 Service Description ...................................................................................................................7
3.2 Competitive Comparison..........................................................................................................7
3.3 Sales Literature ..........................................................................................................................7
3.4 Sourcing ......................................................................................................................................8
3.5 Technology..................................................................................................................................8
3.6 Future Services ..........................................................................................................................8
4.0 Market Analysis Summary..................................................................................................................8
4.1 Market Segmentation ................................................................................................................9
Table: Market Analysis .........................................................................................................10
Chart: Market Analysis (Pie)................................................................................................10
4.2 Target Market Segment Strategy...........................................................................................10
4.3 Service Business Analysis .....................................................................................................11
4.3.1 Major Local Players ....................................................................................................11
4.3.2 Major Foreign Players ................................................................................................12
4.3.3 Competition and Buying Patterns .............................................................................12
5.0 Strategy and Implementation Summary..........................................................................................12
5.1 Competitive Edge....................................................................................................................13
5.2 Sales Strategy..........................................................................................................................13
5.2.1 Sales Forecast ............................................................................................................14
Chart: Sales Monthly ...................................................................................................14
Chart: Sales by Year ...................................................................................................15
Table: Sales Forecast.................................................................................................15
6.0 Management Summary ....................................................................................................................15
6.1 Personnel Plan.........................................................................................................................16
Table: Personnel ...................................................................................................................16
6.2 Legal, Financial and Accounting Status ................................................................................16
7.0 Financial Plan ....................................................................................................................................17
7.1 Important Assumptions............................................................................................................17
Table: General Assumptions ...............................................................................................17
7.2 Break-even Analysis................................................................................................................18
Chart: Break-even Analysis .................................................................................................18
Table: Break-even Analysis .................................................................................................18
7.3 Projected Profit and Loss .......................................................................................................19
Chart: Gross Margin Yearly..................................................................................................19
Table: Profit and Loss ..........................................................................................................20
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Table of Contents
Chart: Profit Monthly .............................................................................................................20
Chart: Profit Yearly................................................................................................................21
Chart: Gross Margin Monthly ...............................................................................................21
7.4 Projected Cash Flow...............................................................................................................21
Chart: Cash ...........................................................................................................................22
Table: Cash Flow..................................................................................................................23
7.5 Projected Balance Sheet ........................................................................................................24
Table: Balance Sheet ...........................................................................................................24
7.6 Business Ratios .......................................................................................................................25
Table: Ratios .........................................................................................................................26
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: General Assumptions ....................................................................................................................3
Table: Profit and Loss ...............................................................................................................................4
Table: Cash Flow .......................................................................................................................................5
Table: Balance Sheet ................................................................................................................................6

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Indonesia Energy Engineering & Construction

1.0 Executive Summary
Introduction
This business plan seeks to generate a significant increase in c ompany sales and profits from the
services of engineering, proc urement and construction (EPC) of power generation and power
delivery projects over the preceding year. This plan highlights a sales- revenue target for the
next five years. This target is seen as attainable through a proactive approach, by teaming up
with a project financing provider, partnering with reputable loc al and regional engineers,
suppliers, and construction firms to reduce competition, and improving pricing while reducing
risks. The required marketing budget for the duration of this plan will grow somewhat eac h
year. Based on the company's cash flow and previous profits, the company's expansion can be
carried out without any further increase in financial leverage.
The Company
Indonesia EEC was founded in 1996 and is based in Jakarta, Indonesia. The company is a
subsidiary of United States Energy Engineering & Construction (U.S. EEC). Indonesia EEC offers
good quality and cost effective service in engineering, design, proc urement, project
management, construction and construction management, environmental consulting, and other
consulting services in relation to the design, building and management of electrical power plants.
In the near future, Indonesia EEC will establish a joint venture company with a reputable loc al
company who has experience and capability in performing EPC works of power projects, as well
as financial capability, and will broaden the coverage by expanding into additional service areas.
Indonesia EEC currently has an admin staff of seventeen individuals that cover sales,
marketing, ac counting etc. Once projects have been secured, then project offices will be
established and project personnel and staff will be recruited. Project office organization and staff
will encompass the engineering, proc urement, and construction divisions.
The Market
At the moment there is a real opportunity to increase Indonesia's power infrastructure as the
government owned power utility (PLN) has not been able to deliver a reliable and cost
effective power system. However, the current situation in Indonesia is charac terized by a
continuing downward economic drift. It seems reasonable, however, that the company's
target market sectors have strength to be credible buyers in the Indonesian power business,
since their business orientation is foc used in the export market. The company fac es significant
rivalry from a variety of direct and indirect competitors.
In Indonesia, there are twelve market sectors of power generation business in which Indonesia
EEC will be seeking prospec ts on a foc used and proactive approach.

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Indonesia Energy Engineering & Construction

1.1 Objectives
The financial and marketing objectives of Indonesia EEC follow.
Financial Objectives
1.

Sales starting at $XXXX, and growing eac h year to $XXXX, $XXXX, $XXXX, and $XXXX by
Year 5.

2.

High average gross margin precent of sales revenue for EPC jobs. When the joint
venture company has been established and has been in operation for four years, it will
also produce excellent IRR for 25 years, which will create different types of jobs: build,
own, operate (BOO), build, operate, transfer (BOT), build, lease, transfer (BLT), build and
rent (B&R), and energy conversion contrac t (ECC).

3.

Net income of more than XX% of sales by the fifth year.

Marketing Objectives
The financial objectives are converted into marketing objectives. If the company wants to earn
its targets for gross margin and sales revenue from the EPC works then it must set an average
profit margin on sales from the EPC works of average XX%. When the joint venture company has
been established and has been in operation for four years, then the joint venture company will
also produce an average XX% IRR for 25 years BOO, BOT, BLT, B&R, and ECC jobs. To ac hieve
these targets, the company will have to set certain goals for customer awareness, such
as proactively approaching the prospec tive clients including project financing providers,
establishing a joint venture with a reputable loc al company who has experience and capability
in performing EPC works of power projects, as well as the financial capability to be equal

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Indonesia Energy Engineering & Construction

partners with Indonesia EEC.
Thus the marketing objective might read:

Ac hieve a targeted sales revenue of $XXXX in Year 1, $XXXX in Year 2, $XXXX in Year
3, $XXXX in Year 4, and $XXXX in Year 5 from the EPC works.

Expand customer awareness over the planning period.

Reduce competition, reduce risks, and lower price levels by establishing a joint venture
with a reputable loc al company who has experience in performing EPC works of power
projects, as well as the financial capability to be equal partners with Indonesia EEC .

Pursuing not only EPC prospec ts, but also BOO, BOT, BLT, B&R, and ECC prospec ts.

Utilizing the joint venture company as the main entity of Indonesia EEC to conduct
business in Indonesia.

1.2 Mission
The mission of the Indonesia EEC is to establish a strong presence in Indonesia to implement all
provisions of the Energy Engineering & Construction (EEC) mission statement with the specific
mission of bec oming the leading full service EPC in Indonesia. Also, Indonesia EEC's role to be the
leader in the business of BOO, BOT, BLT, B&R, and ECC in the Indonesian captive power
sector, will be built through a joint venture approach.
The broad mission requires the following objectives within Indonesia:
1.

To obtain projects in all areas of EEC services.

2.

Reduce the costs of performing work to the point that the Indonesian operation can
provide engineering, proc urement, and support services at a lower cost than
those provided by the U.S. office.

1.3 Keys to Success

1.

Marketing power. Indonesia EEC needs to have its services on the shelves as the most
reliable, high-quality, cost effective services in the industry, with enough marketing
power to maintain an eight percent market share of EPC services in the Indonesian
captive power sector.

2.

Excellence in fulfilling the promise. To realize a benefit, a claim must be made and proof
presented.

3.

Providing clients with both solutions and value creations. Helping the clients to increase
their own profit potential.

4.

Quality service and customer satisfac tion. Everything we sell is guaranteed, so the
services have to do what the customers want. Long-term customer satisfac tion is critical
to our survival.
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Indonesia Energy Engineering & Construction

5.

Leveraging from a single pool of expertise into multiple revenue-generating

opportunities: Engineering & Architect (E&A), project consulting, project management,
Engineering & Proc urement (E&P), and Engineering & Construction (E&C).

6.

The right management team, with strong foundations in marketing, management, finance,
and services development.

2.0 Company Summary

Indonesia EEC is a subsidiary company of United States Energy Engineering & Construction (U.
S. EEC) that provides services including engineering, design, proc urement, project
management, construction and construction management, environmental consulting,
management consulting, quality assurance and quality control, information management,
operations and maintenance, and proc ess technology development.
U.S. EEC's management wants Indonesia EEC to deliver a good financial performance. As a
subsidiary company of U.S. EEC, Indonesia EEC sets the following objectives for the products
and services lines of EPC power generation and power delivery projects:
1.

Expand customer awareness over the planning period.

2.

Reduce competition and risks while lowering price levels by establishing a joint venture
with a reputable loc al company who also has experience in performing EPC power
projects.

3.

Pursuing not only EPC prospec ts, but also BOO, BOT, BLT, B&R, and ECC prospec ts.

4.

Utilizing the joint venture company as the main entity of EEC to conduct business in
Indonesia, and to provide all aspec ts of energy engineering services.

2.1 Company Ownership

Indonesia EEC was created as an Indonesian "Perseroan Terbatas" (PT.) corporation based in
Jakarta, Indonesia, under the Foreign Investment Laws of Republic of Indonesia. The company
is owned entirely by the Energy Engineering & Construction company of U.S (U.S. EEC).

2.2 Company History

EEC has been establishing its presence in the Indonesian market since the 1980s by opening
and operating a representative office in Jakarta. It recognized the need for establishing a
presence as a loc al company who meets the spec ific needs of its prospec tive customers, as well
as its larger, long-term U.S. customers who invested in both Indonesia and the Southeast Asia
Region.
Indonesia EEC was founded in 1996. Shares in the company are owned entirely by U.S. EEC.

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Indonesia Energy Engineering & Construction

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Indonesia Energy Engineering & Construction

Table: Past Performance
Past Performance
1996
$50,000,000
$23,000,000
46.00%
$4,800,000
72

1997
$65,000,000
$29,900,000
46.00%
$4,850,000
63

1998
$87,500,000
$40,250,000
46.00%
$4,645,000
63

1996

1997

1998

$15,000,000
$6,112,981
$525,931
$21,638,912

$19,500,000
$7,946,875
$683,710
$28,130,585

$26,250,000
$10,697,716
$920,380
$37,868,096

Long-term Assets
Long-term Assets

$710,837

$924,089

$1,243,965

Accumulated Depreciation
Total Long-term Assets

$0
$710,837

$0
$924,089

$0
$1,243,965

$22,349,749

$29,054,674

$39,112,061

$2,478,188
$0
$0
$2,478,188

$3,221,644
$0
$0
$3,221,644

$4,336,828
$0
$0
$4,336,828

Sales
Gross Margin
Gross Margin %
Operating Expenses
Collection Period (days)
Balance Sheet

Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets

Total Assets
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities (interest free)
Total Current Liabilities
Long-term Liabilities

$0

$0

$0

Total Liabilities

$2,478,188

$3,221,644

$4,336,828

Paid-in Capital

$1,996,500

$3,295,460

$4,743,900

Retained Earnings
Earnings
Total Capital

$116,967
$17,758,094
$19,871,561

$952,048
$21,585,522
$25,833,030

$1,781,333
$28,250,000
$34,775,233

Total Capital and Liabilities

$22,349,749

$29,054,674

$39,112,061

Other Inputs
Payment Days
Sales on Credit
Receivables Turnover

30
$31,098,365
5.09

30
$40,427,875
5.09

30
$54,422,140
5.09

2.3 Company Locations and Facilities

The office is loc ated in downton Jakarta, Indonesia. This loc ation provides convenience, being
near the airport, but also allows the company room to grow. Currently, Indonesia EEC oc cupies
an 800-square meter spac e, with offices for eac h department.

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Indonesia Energy Engineering & Construction

3.0 Services
Indonesia EEC offers good quality and cost effective service in engineering, design, proc urement,
project management, construction and construction management, environmental consulting,
management consulting, quality assurance and quality control, information management,
operations and maintenance and proc ess technology development.

3.1 Service Description

Indonesia EEC offers expertise in the services it offers. With its variety of services, the company
sells them so as to allow clients to choose their preferred benefit(s). These include:
1.
2.
3.
4.

Engineering & Architect (E&A).

Engineering & Proc urement (E&P).
Engineering & Construction (E&C).
Project Management (PM).

3.2 Competitive Comparison

The approach Indonesia EEC will take to differentiate itself is to convert its features into the
client's benefits; the company needs to offer real benefits rather than only define the features
to its clients.
The benefits it sells shall include many intangibles: reliability, optimizing the client's profit
potential, confidentiality, guaranteed quality, continuous improvements, technology transfer, and
cost effectiveness. Long-term customer satisfac tion is the most critical component of the
services offered by the company.
It is vital to establish presence in the market and to start making sales on the growing
segment. Personal relationships are important and memories are long. It is also vital to keep in
mind that it is wrong to wait for recovery before establishing market presence. Project and
market development timeframes in Indonesia are lengthy: three to four years or more;
however, this timeframe can be compressed by a strong loc al partner. This implies the need for
establishing a joint venture company rather than going it alone. Even under normal
circumstances, the company needs to enter the market on the basis of a long-term strategic
calculus, with c ommitment and resources. To every firm which is interested in participating in the
Indonesian market, now is the time to enter.

3.3 Sales Literature

The business begins with a general corporate and technical broc hure establishing the positioning.
This broc hure will be provided by U.S. EEC.

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Indonesia Energy Engineering & Construction

3.4 Sourcing
Indonesia EEC works with all the major power plants and power transmission equipment
suppliers on a project-by- project basis and will not represent any of them under an exclusive
agreement.
It also works with a number of reputable and experienced loc al engineering and construction
companies under either a project-by- project or consortium basis. This is done to reduce
competition and risks and to provide clients with c ompetitive pricing without cutting profits, as
well as maximizing the loc al contents, and shifting the responsibility to provide bid bonds,
performance bonds, and credit lines to the loc al partner.

3.5 Technology
As a subsidiary company of U.S. EEC, Indonesia EEC will utilize its parent company's
capabilities, experience, resources, and technologies as follows:
1.

The world-class leaders in the design and construction of power generation and power
transmission fac ilities.

2.

Full Engineering, Proc urement, and Construction (EPC) capabilities.

3.

Fossil-fueled power plants EPC, hydropower plants EPC, geothermal power plants EPC,
nuclear power plants EPC, and plant services.

4.

Power plant engineering software and power transmission system engineering software
both help ensure lowest cost and design of power generation and transmission fac ilities.

3.6 Future Services

In the near future, Indonesia EEC will establish a joint venture company with a reputable loc al
company who has experience and capability in performing EPC works of power projects, as well
as financial capability, and will broaden the coverage by expanding into additional service
areas, e.g., captive power project development and operation.

4.0 Market Analysis Summary

In Indonesia, there are twelve market sectors of power generation business in which Indonesia
EEC will be seeking prospec ts on a foc used and proactive approach.
The Market Analysis table shows the estimated captive power project values in the dollar per
year, within the period of 1999-2003, based on the present circumstances. This table is a live
and dynamic table. The numbers of dollars eac h year could increase as the economy corrects
itself.

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Indonesia Energy Engineering & Construction

4.1 Market Segmentation
The potential clients/c ustomers during the five-year implementation of this plan for power
generation EPC services are composed of twelve groups:
1.

Captive power developers (this type of client could be any industrial fac ilities owner
who needs power supply for its own fac ilities or their subsidiaries in the form of IPP
developers)

2.

Pulp and paper producers

3.

Textile producers

4.

Cement mills

5.

Mining industries

6.

Shrimp farming

7.

Sugar producers

8.

Palm oil producers

9.

Fertilizer manufacturing

10.

Petroc hemicals

11.

Oil & Gas Exploration & Production Companies

12.

Oil Refinery Complexes

It seems reasonable, based on strong fundamentals, that the above twelve sectors have
strength to be credible buyers in the Indonesian power business, since their business
orientation is foc used in the export market leads ac ceptable development risks.

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Indonesia Energy Engineering & Construction

Table: Market Analysis
Market Analysis
Potential Customers
Captive Plant Developer
Pulp & Paper Mills
Textile Manufacturers
Cement Mills
Mining
Shrimp Farms
Sugar Mills
Palm Oil Processing
Fertilizer Manufacturers
Petrochemical Processing
Oil & Gas Fields
Oil Refineries
Total

1999

2000

2001

2002

2003

Growth
3%

54,000,000

55,620,000

57,288,600

59,007,258

60,777,476

CAGR
3.00%

15%
11%
5%
18%
20%
4%

272,000,000
218,000,000
22,000,000
41,000,000
191,000,000
14,000,000

312,800,000
241,980,000
23,100,000
48,380,000
229,200,000
14,560,000

359,720,000
268,597,800
24,255,000
57,088,400
275,040,000
15,142,400

413,678,000
298,143,558
25,467,750
67,364,312
330,048,000
15,748,096

475,729,700
330,939,349
26,741,138
79,489,888
396,057,600
16,378,020

15.00%
11.00%
5.00%
18.00%
20.00%
4.00%

5%
16,000,000
16,800,000
17,640,000
18,522,000
19,448,100
7% 136,000,000 145,520,000 155,706,400 166,605,848 178,268,257
5%
27,000,000
28,350,000
29,767,500
31,255,875
32,818,669
5%
22,000,000
23,100,000
24,255,000
25,467,750
26,741,138
5% 109,000,000 114,450,000 120,172,500 126,181,125 132,490,181
12.16% 1,122,000,00 1,253,860,00 1,404,673,60 1,577,489,57 1,775,879,51
0
0
0
2
6

5.00%
7.00%
5.00%
5.00%
5.00%
12.16%

4.2 Target Market Segment Strategy

Indonesia EEC will foc us on major electricity consumers in Indonesia who are very demanding
regarding reliability of their power supply systems.
The current situation in Indonesia can be charac terized by commercial paralysis, policy paralysis,
and for the moment, a continuing downward economic drift. But it seems reasonable that the
previously listed twelve sectors have strength to be credible buyers in the Indonesian power
business, since their business orientation is foc used in the export market leads ac ceptable
development risks. The uncertainty lies in how long the country's economic recovery will take
and with what twists and turns in the political and economic structure will offer tremendous
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Indonesia Energy Engineering & Construction

opportunities for the the company in developing badly needed, inside-the-fence captive power
projects to satisfy the demand. This requirement has not diminished bec ause of the crisis. It
even increases due to the government owned power utility (PLN) absence to deliver a reliable
and cost effective power system.
For the short term, the company needs to be flexible and creative in pricing and financing its
services. Indonesian buyers are likely to be more dependent than ever on supplier financing,
and looking for bargains; unfortunately, the current economic erosion situation has put them in
a compromising position for bargaining. The company needs to be proactive in assisting its
customers in finding sources of financing, inventing creative payment terms or offering a more
lenient repayment period, if possible, and looking for ways to cut the price of supplies and
services. Barter trade has often been a required element of major government projects, but it
would be no surprise to see more emphasis on barter trade in the coming period.

4.3 Service Business Analysis

EPC Contrac tors in power business range from major global Original Equipment Manufac turers
(OEM) of the power generation and transmission plants to the loc al engineering and construction
firms.

4.3.1 Major Local Players

Some major domestic players who are estimated as Indonesia EEC's potential competitors in
the power EPC business are listed below. They are politically well-connected at this time and
seem to be aggressively pursuing expansion into other infrastructure markets in Indonesia,
most notably in power and industrial plants.
1.

PT. ABB Energy System Indonesia (PT. ABB-ESI), a joint venture of ABB-CE and PT.
PAL, a member of BPIS.

2.

PT. Rekayasa Industry (PT. RI), a government-owned EPC contrac tor company under
the management of the Directorate of Machineries and Base Metals Industries, Ministry of
Industry and Trade. PT. RI is well established in the fertilizer proc essing field.

3.

PT. Inti Karya Persada Tehnik (PT. IKPT), a loc al EPC contrac tor company. PT. IKPT is
well established in the petroleum, petroc hemical, and geothermal fields.

4.

Indonesia Power (previously "PT. PLN (Persero) Pembangkitan Tenaga Listrik Jawa BaliI), a subsidiary operating company of PT. PLN (Persero) for the western part of
the Java- Bali power system.

5.

PT. PLN (Persero) Pembangkitan Tenaga Listrik Jawa Bali-II (PLN PJB-II), a subsidiary
operating company of PT. PLN (Persero) for the eastern part of the Java- Bali power
system.

6.

PT. Tripatra.

7.

PT. Gunanusa.

8.

PT. Truba Jurong.

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Indonesia Energy Engineering & Construction

9.
10.

PT. Pertafenikki.
PT. Aalborg Sunrod Indonesia.

4.3.2 Major Foreign Players

The following companies are major foreign players in Indonesian power business:
1.

Original Equipment Manufac turers. They are not fully recognized as competitors;
however, these companies are seen to be the strongest competitors in Indonesia: ABB,
GE, Westinghouse, Siemens, Rolls- Royce, Ansaldo, Mitsubishi, Fuji, Toshiba, Babc oc k &
Wilcox, GEC Alsthom, Foster Wheeler, Austrian Energy, Coc kerill Mechanical Industries
(CMI), John Brown Ltd., Kvaerner, Lurgi, Ishikawajima Harima (IHI), Wartsila, Caterpillar,
Pielstick, MAN, and Niigata.

2.

Foreign Engineering/EPC companies: Duke Fluor/Daniels, Stone & Webster, Bechtel,

Blac k & Veatch, Sargent & Lundy, Raytheon (EBASCO), Daelim, Hyundai, SsangYong,
Balfour Beatty, Jaako Poyry, BE&K Bechtel, Pekka Hemmi, Simons, JGC Corporation, Kajima
Corp., SNC Lavallin, and Chiyoda.

3.

Trading Companies : Sumitomo Corporation, Marubeni, Mitsubishi Heavy Industries,

Kanematsu Corporation, and Mitsui.

4.3.3 Competition and Buying Patterns

Recent analysis indicate that total design cost of power plants in Indonesia has dec reased by
12%, while total construction cost of power plants in Indonesia has dec reased by 23.59% during
this economic turmoil, compared to data recorded in 1996. This analysis is based on the
assumptions that the loc al engineers and laborers salary was increased by 25% at the average
exchange rate of US$1 = Rp 7,200. By having a loc al production capability in Indonesia,
Indonesia EEC will be able to take advantage of this situation.
When the joint venture company between Indonesia EEC and its loc al partner has been
established, it will be able to reduce costs and increase profits by having a full-service
production office in Indonesia.
The critical issue for establishing a loc al production capability is the ability of Indonesia EEC to
hire, train, and retain highly qualified and motivated Indonesian engineers.

5.0 Strategy and Implementation Summary

One of the reasons why captive power has bec ome the most important sector in the
Indonesian power market is that the customers need the most reliable and efficient power
system to reduce the costs. The PLN subsidized electricity tariff is approximately 40% more
expensive, and its disturbance rate is high and getting worse.
Furthermore, PLN's inability to pay power and natural gas at the prevailing exchange rate has put
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Indonesia Energy Engineering & Construction

both PLN and independent power producer (IPP) developers into a very difficult position to
move forward with their project implementation between 1999 and 2003. Meanwhile, in line
with the government's export increasing program to strengthen the national reserve funds, many
big electricity consumers will fac e their fast growing demand. This situation will compel many
electricity consumers (especially large industrial fac ilities) to set up their own c aptive power
plants.
As a result of this need, Indonesia EEC will foc us its marketing directive on those large, exportoriented, industrial companies.

5.1 Competitive Edge

Indonesia EEC's overall competitive edge in Indonesia is that it brings its parent company's
name recognition as a "one-stop" services provider encompassing engineering, proc urement,
construction, and trade financing services. The parent company is seen as having more than
one hundred years' experience in the global industry.
One of the most important key fac tors in Indonesia EEC's competitive edge is its expertise in
providing ac cess to the trade financing, as follows:
1.

Obtaining low-cost financing specific to the buyer's country.

2.

Obtaining commercial and political risk insurance for non-guaranteed loans.

3.

Furnishing and proc essing loan documentation for export credit agencies.

4.

Preparing grant proposals and feasibility studies required by the funding institution when a
company moves into new markets.

5.

Conducting studies to establish project feasibility.

6.

Applying for and obtaining final commitment of funds based on feasibility studies.

7.

Arranging for the best available financing through private national and international
banking institutions.

The establishment of a joint venture company between Indonesia EEC and a strong, experienced
loc al engineering and construction company is the most strategic step to overcome the
competition by reduced production costs as well as to improve flexibility in penetrating the
markets in developing countries, especially the Asia Region.

5.2 Sales Strategy

The captive power market in Indonesia will be foc used and integrated with the private customers
outside the multilateral/bilateral aid programs. To sell to this type of market, Indonesia EEC
needs to have these seven important propositions:
1.

Proven expertise in project financing arrangements, espec ially under the barter trade
arrangements.
Page 13

Indonesia Energy Engineering & Construction

2.

Direct negotiation approaches with the clients.

3.

Strategic alliances with a reputable loc al company who has experience as either an EPC
company or developer in Indonesian power sector, capability, and the in-house fac ilities
to perform the detailed engineering, proc urement, and construction of power projects.

4.

Competitiveness in pricing.

5.

Creative payment terms.

6.

Contributions in enhancing the loc al manufacturing sector by making it more efficient

and competitive.

7.

Proven expertise in the EPC of reliable and efficient power system.

5.2.1 Sales Forecast

We are planning to increase sales substantially in 2001. This is considered reasonable due to
the opportunities available in the industry.
January through March 2001 will offer the highest sales, as many clients will begin the
implementation of their projects.

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Indonesia Energy Engineering & Construction

Table: Sales Forecast

Sales Forecast
Sales
Engineering & Architect (E&A)
Engineering & Procurement
Engineering & Construction
Project management (PM)
Total Sales
Direct Cost of Sales
Engineering & Architect (E&A)
Engineering & Procurement
Engineering & Construction
Project management (PM)
Subtotal Direct Cost of Sales

1999

2000

2001

2002

2003

$25,000,000

$26,250,000

$29,000,000

$31,250,000

$33,750,000

$40,000,000
$15,000,000
$20,000,000
$100,000,000

$42,000,000
$15,750,000
$21,000,000
$105,000,000

$46,400,000
$17,400,000
$23,200,000
$116,000,000

$50,000,000
$18,750,000
$25,000,000
$125,000,000

$54,000,000
$20,250,000
$27,000,000
$135,000,000

1999

2000

2001

2002

2003

$13,500,000
$21,600,000
$8,100,000
$10,800,000
$54,000,000

$14,175,000
$22,680,000
$8,505,000
$11,340,000
$56,700,000

$15,660,000
$25,056,000
$9,396,000
$12,528,000
$62,640,000

$16,875,000
$27,000,000
$10,125,000
$13,500,000
$67,500,000

$18,225,000
$29,160,000
$10,935,000
$14,580,000
$72,900,000

6.0 Management Summary

Prior to the revenue, Indonesia EEC is led by one president director and two vice presidents
(vice president of sales and marketing and vice president of internal business management
(IBM)). They will be assisted by one sales manager (who is primarily responsible for sales and
market development in power sector), one marketing and business development manager (who is
primarily responsible for business development, services development, and research and
design), one finance manager, one human resources manager, one ac countant, two shared
secretaries, one legal officer, one administrative officer, one bookkeeper, and four clerks.
When projects have been secured, then project offices will be established and project
personnel and staff will be recruited. Project office organization and staff will encompass the
Page 15

Indonesia Energy Engineering & Construction

engineering, proc urement, and construction divisions.
The administrative section obtains outside services from Indonesian professional firms for tax
reporting, legal and contrac t consulting, and immigration "consultants." It is expec ted that these
services will continue to be contrac ted out as the cost of full-time staff positions in these
specialists will be large.

6.1 Personnel Plan

Prior to the revenue, the team includes 17 employees, under a president and two vice
presidents.
Indonesia EEC's main management divisions are Sales & Marketing (the marketing, sales, services
research and development, and public relations operations will be managed by this division) and
Internal Business Management (the legal, ac counting, administration, and human resources
development sections will be managed by this division).
The following table summarizes our personnel plan for the five years of this business plan.

Table: Personnel
Personnel Plan
President Director/Chief Representative
Executive Secretary
VP Sales & Marketing
Sales Manager
Marketing & Business Dev. Manager

1999
$54,000
$6,480
$25,992
$15,600
$15,600

2000
$59,400
$7,150
$28,600
$17,160
$17,160

2001
$65,340
$7,865
$31,460
$18,876
$18,876

2002
$71,874
$8,651
$34,606
$20,764
$20,764

2003
$79,061
$9,516
$38,066
$22,840
$22,840

Secretary
VP Internal Business Management (IBM)
Finance Manager/Senior Accountant

$3,900
$25,992
$15,600

$4,290
$28,600
$17,160

$4,719
$31,460
$18,876

$5,191
$34,606
$20,764

$5,710
$38,066
$22,840

Accountant
Human Resources Manager
Administrative Officer
Legal Officer
Bookkeeper
Clerical

$12,000
$15,600
$12,000
$12,000
$3,900
$1,296

$13,200
$17,160
$13,200
$13,200
$4,290
$1,430

$14,520
$18,876
$14,520
$14,520
$4,719
$1,573

$15,972
$20,764
$15,972
$15,972
$5,191
$1,730

$17,569
$22,840
$17,569
$17,569
$5,710
$1,903

Clerical
Clerical
Clerical
Total People

$1,296
$1,296
$1,296
0

$1,430
$1,430
$1,430
0

$1,573
$1,573
$1,573
0

$1,730
$1,730
$1,730
0

$1,903
$1,903
$1,903
0

Total Payroll

$223,848

$246,290

$270,919

$298,011

$327,808

6.2 Legal, Financial and Accounting Status

1.

Legal Structure: Indonesia EEC is a limited liability Indonesian-registered corporation

under Foreign Investment Laws of the Republic of Indonesia.

2.

Financial and Ac counting Status: Operations in Indonesia are not kept in a separate
ac counting system and the current system does not allow any disc rete or ac curate
Page 16

Indonesia Energy Engineering & Construction

information about total costs for loc al operations.

7.0 Financial Plan

The following sections present the financial analysis for Indonesia EEC.

7.1 Important Assumptions

The ac companying table lists Indonesia EEC's main assumptions for developing its financial
projections. The most sensitive assumption is collection days. Indonesia EEC would like to
improve collection days to take pressure off of its working capital.

Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

1999
1
8.50%
9.00%
25.00%
0

2000
2
8.50%
9.00%
25.00%
0

2001
3
8.50%
9.00%
25.00%
0

2002
4
8.50%
9.00%
25.00%
0

2003
5
8.50%
9.00%
25.00%
0

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Indonesia Energy Engineering & Construction

7.2 Break-even Analysis
The following table and chart summarize the Break-even Analysis, including monthly units and
sales break-even points.

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$905,693

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

54%
$416,619

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Indonesia Energy Engineering & Construction

7.3 Projected Profit and Loss
The detailed monthly pro-forma income statement for the first year is included in the appendix.
The annual estimates are included below.

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Indonesia Energy Engineering & Construction

Table: Profit and Loss
Pro Forma Profit and Loss
1999
$100,000,000
$54,000,000

2000
$105,000,000
$56,700,000

2001
$116,000,000
$62,640,000

2002
$125,000,000
$67,500,000

2003
$135,000,000
$72,900,000

Power System Studies

Total Cost of Sales

$58,000
$54,058,000

$60,900
$56,760,900

$63,945
$62,703,945

$67,142
$67,567,142

$70,499
$72,970,499

Gross Margin
Gross Margin %

$45,942,000
45.94%

$48,239,100
45.94%

$53,296,055
45.94%

$57,432,858
45.95%

$62,029,501
45.95%

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other

$223,848
$4,610,000
$0
$6,000
$72,000
$6,000
$48,000
$33,577
$0

$246,290
$4,875,000
$0
$6,500
$72,000
$6,000
$48,000
$36,944
$0

$270,919
$5,430,000
$0
$7,000
$72,000
$7,000
$48,000
$40,638
$0

$298,011
$5,850,000
$0
$7,500
$84,000
$7,000
$48,000
$44,702
$0

$327,808
$6,310,000
$0
$8,000
$84,000
$8,000
$48,000
$49,171
$0

Total Operating Expenses

$4,999,425

$5,290,734

$5,875,557

$6,339,213

$6,834,979

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

$40,942,575
$40,942,575
$0
$10,235,644

$42,948,367
$42,948,367
$0
$10,737,092

$47,420,498
$47,420,498
$0
$11,855,125

$51,093,645
$51,093,645
$0
$12,773,411

$55,194,521
$55,194,521
$0
$13,798,630

Net Profit
Net Profit/Sales

$30,706,931
30.71%

$32,211,275
30.68%

$35,565,374
30.66%

$38,320,234
30.66%

$41,395,891
30.66%

Sales
Direct Cost of Sales

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Indonesia Energy Engineering & Construction

7.4 Projected Cash Flow

Cash flow projections are critical to the company's success. The monthly cash flow is shown in
the chart, with one bar representing the cash flow per month and the other representing the
monthly balance. The annual cash flow figures are included here in the following table.

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Indonesia Energy Engineering & Construction

Detailed monthly numbers are included in the appendix.

Page 22

Indonesia Energy Engineering & Construction

Table: Cash Flow
Pro Forma Cash Flow
1999

2000

2001

2002

2003

Cash from Operations

Cash Sales
Cash from Receivables
Subtotal Cash from Operations

$50,000,000
$53,281,049
$103,281,049

$52,500,000
$52,129,167
$104,629,167

$58,000,000
$57,184,167
$115,184,167

$62,500,000
$61,832,500
$124,332,500

$67,500,000
$66,758,333
$134,258,333

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received

$0
$0
$0
$0
$0
$0
$0
$103,281,049

$0
$0
$0
$0
$0
$0
$0
$104,629,167

$0
$0
$0
$0
$0
$0
$0
$115,184,167

$0
$0
$0
$0
$0
$0
$0
$124,332,500

$0
$0
$0
$0
$0
$0
$0
$134,258,333

1999

2000

2001

2002

2003

$223,848
$66,791,937
$67,015,785

$246,290
$73,194,155
$73,440,445

$270,919
$79,537,301
$79,808,220

$298,011
$85,870,683
$86,168,694

$327,808
$92,709,626
$93,037,434

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment

$0
$0
$0
$0

$0
$0
$0
$0

$0
$0
$0
$0

$0
$0
$0
$0

$0
$0
$0
$0

Purchase Other Current Assets

Purchase Long-term Assets
Dividends

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

Subtotal Cash Spent

$67,015,785

$73,440,445

$79,808,220

$86,168,694

$93,037,434

Net Cash Flow

Cash Balance

$36,265,265
$62,515,265

$31,188,721
$93,703,986

$35,375,946
$129,079,932

$38,163,806
$167,243,738

$41,220,899
$208,464,638

Cash Received

Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations

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Indonesia Energy Engineering & Construction

7.5 Projected Balance Sheet
The following Balance Sheet table shows healthy growth of net worth and a strong financial
position. The monthly estimates are included in the appendix.

Table: Balance Sheet

Pro Forma Balance Sheet
1999

2000

2001

2002

2003

Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets

$62,515,265
$7,416,667
$920,380
$70,852,311

$93,703,986
$7,787,500
$920,380
$102,411,866

$129,079,932
$8,603,333
$920,380
$138,603,645

$167,243,738
$9,270,833
$920,380
$177,434,952

$208,464,638
$10,012,500
$920,380
$219,397,518

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$1,243,965
$0
$1,243,965
$72,096,276

$1,243,965
$0
$1,243,965
$103,655,831

$1,243,965
$0
$1,243,965
$139,847,610

$1,243,965
$0
$1,243,965
$178,678,917

$1,243,965
$0
$1,243,965
$220,641,483

1999

2000

2001

2002

2003

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities

$6,614,112
$0
$0

$5,962,392
$0
$0

$6,588,798
$0
$0

$7,099,870
$0
$0

$7,666,545
$0
$0

Subtotal Current Liabilities

$6,614,112

$5,962,392

$6,588,798

$7,099,870

$7,666,545

Long-term Liabilities
Total Liabilities

$0
$6,614,112

$0
$5,962,392

$0
$6,588,798

$0
$7,099,870

$0
$7,666,545

Assets

Liabilities and Capital

Paid-in Capital

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

Retained Earnings
Earnings
Total Capital

$30,031,333
$30,706,931
$65,482,164

$60,738,264
$32,211,275
$97,693,439

$92,949,539
$35,565,374
$133,258,813

$128,514,913
$38,320,234
$171,579,046

$166,835,146
$41,395,891
$212,974,937

Total Liabilities and Capital

$72,096,276

$103,655,831

$139,847,610

$178,678,917

$220,641,483

Net Worth

$65,482,164

$97,693,439

$133,258,813

$171,579,046

$212,974,937

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Indonesia Energy Engineering & Construction

7.6 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 8711, Engineering Services, are shown for
comparison.

Page 25

Indonesia Energy Engineering & Construction

Table: Ratios
Ratio Analysis
1999
14.29%

2000
5.00%

2001
10.48%

2002
7.76%

10.29%
1.28%
98.27%
1.73%
100.00%

7.51%
0.89%
98.80%
1.20%
100.00%

6.15%
0.66%
99.11%
0.89%
100.00%

5.19%
0.52%
99.30%
0.70%
100.00%

4.54%
0.42%
99.44%
0.56%
100.00%

35.40%
38.30%
77.40%
22.60%
100.00%

9.17%
0.00%
9.17%
90.83%

5.75%
0.00%
5.75%
94.25%

4.71%
0.00%
4.71%
95.29%

3.97%
0.00%
3.97%
96.03%

3.47%
0.00%
3.47%
96.53%

44.50%
11.70%
56.20%
43.80%

100.00%
45.94%
15.24%
0.03%
40.94%

100.00%
45.94%
15.26%
0.04%
40.90%

100.00%
45.94%
15.29%
0.04%
40.88%

100.00%
45.95%
15.29%
0.04%
40.87%

100.00%
45.95%
15.28%
0.04%
40.88%

100.00%
0.00%
81.80%
0.20%
2.50%

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth

10.71
10.71
9.17%
62.52%

17.18
17.18
5.75%
43.96%

21.04
21.04
4.71%
35.59%

24.99
24.99
3.97%
29.78%

28.62
28.62
3.47%
25.92%

1.69
1.37
56.20%
6.00%

Pre-tax Return on Assets

56.79%

41.43%

33.91%

28.60%

25.02%

13.60%

Sales Growth
Percent of Total Assets
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes

2003 Industry Profile

8.00%
7.10%

Additional Ratios

1999

2000

2001

2002

2003

Net Profit Margin

Return on Equity

30.71%
46.89%

30.68%
32.97%

30.66%
26.69%

30.66%
22.33%

30.66%
19.44%

n.a
n.a

6.74
60

6.74
53

6.74
52

6.74
52

6.74
52

n.a
n.a

10.44
29
1.39

12.17
32
1.01

12.17
29
0.83

12.17
29
0.70

12.17
29
0.61

n.a
n.a
n.a

Debt Ratios
Debt to Net Worth

0.10

0.06

0.05

0.04

0.04

n.a

Current Liab. to Liab.

1.00

1.00

1.00

1.00

1.00

n.a

$96,449,474 $132,014,848 $170,335,081 $211,730,972

0.00
0.00
0.00
0.00

n.a
n.a

Activity Ratios
Accounts Receivable Turnover
Collection Days
Accounts Payable Turnover
Payment Days
Total Asset Turnover

Liquidity Ratios
Net Working Capital
Interest Coverage

$64,238,199
0.00

Additional Ratios
Assets to Sales
Current Debt/Total Assets

0.72
9%

0.99
6%

1.21
5%

1.43
4%

1.63
3%

n.a
n.a

Acid Test
Sales/Net Worth
Dividend Payout

9.59
1.53
0.00

15.87
1.07
0.00

19.73
0.87
0.00

23.69
0.73
0.00

27.31
0.63
0.00

n.a
n.a
n.a

Page 26

Appendix
Table: Sales Forecast
Sales Forecast
Sales
Engineering & Architect (E&A)
Engineering & Procurement
Engineering & Construction
Project management (PM)
Total Sales
Direct Cost of Sales

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

0%

$6,250,000

$3,750,000

$2,500,000

$1,250,000

$1,250,000

$1,250,000

$1,250,000

$1,250,000

$1,250,000

$1,250,000

$1,250,000

$2,500,000

0%
0%
0%

$10,000,000
$3,750,000
$5,000,000

$6,000,000
$2,250,000
$3,000,000

$4,000,000
$1,500,000
$2,000,000

$2,000,000
$750,000
$1,000,000

$2,000,000
$750,000
$1,000,000

$2,000,000
$750,000
$1,000,000

$2,000,000
$750,000
$1,000,000

$2,000,000
$750,000
$1,000,000

$2,000,000
$750,000
$1,000,000

$2,000,000
$750,000
$1,000,000

$2,000,000
$750,000
$1,000,000

$4,000,000
$1,500,000
$2,000,000

$25,000,000

$15,000,000

$10,000,000

$5,000,000

$5,000,000

$5,000,000

$5,000,000

$5,000,000

$5,000,000

$5,000,000

$5,000,000

$10,000,000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Engineering & Architect (E&A)

$3,375,000

$2,025,000

$1,350,000

$675,000

$675,000

$675,000

$675,000

$675,000

$675,000

$675,000

$675,000

$1,350,000

Engineering & Procurement

Engineering & Construction
Project management (PM)
Subtotal Direct Cost of Sales

$5,400,000
$2,025,000
$2,700,000
$13,500,000

$3,240,000
$1,215,000
$1,620,000
$8,100,000

$2,160,000
$810,000
$1,080,000
$5,400,000

$1,080,000
$405,000
$540,000
$2,700,000

$1,080,000
$405,000
$540,000
$2,700,000

$1,080,000
$405,000
$540,000
$2,700,000

$1,080,000
$405,000
$540,000
$2,700,000

$1,080,000
$405,000
$540,000
$2,700,000

$1,080,000
$405,000
$540,000
$2,700,000

$1,080,000
$405,000
$540,000
$2,700,000

$1,080,000
$405,000
$540,000
$2,700,000

$2,160,000
$810,000
$1,080,000
$5,400,000

Page 1

Appendix
Table: Personnel
Personnel Plan
President Director/Chief Representative
Executive Secretary

0%
0%

Jan
$4,500
$540

Feb
$4,500
$540

Mar
$4,500
$540

Apr
$4,500
$540

May
$4,500
$540

Jun
$4,500
$540

Jul
$4,500
$540

Aug
$4,500
$540

Sep
$4,500
$540

Oct
$4,500
$540

Nov
$4,500
$540

Dec
$4,500
$540

VP Sales & Marketing

0%

$2,166

$2,166

$2,166

$2,166

$2,166

$2,166

$2,166

$2,166

$2,166

$2,166

$2,166

$2,166

Sales Manager
Marketing & Business Dev. Manager

0%
0%

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

$1,300
$1,300

Secretary
VP Internal Business Management (IBM)
Finance Manager/Senior Accountant

0%
0%
0%

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

$325
$2,166
$1,300

Accountant
Human Resources Manager

0%
0%

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

$1,000
$1,300

Administrative Officer

0%

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

Legal Officer
Bookkeeper
Clerical

0%
0%
0%

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

$1,000
$325
$108

Clerical
Clerical
Clerical

0%
0%
0%

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

$108
$108
$108

Total People

Total Payroll

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

Page 2

Appendix
Table: General Assumptions
General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Jan
1
8.50%

Feb
2
8.50%

Mar
3
8.50%

Apr
4
8.50%

May
5
8.50%

Jun
6
8.50%

Jul
7
8.50%

Aug
8
8.50%

Sep
9
8.50%

Oct
10
8.50%

Nov
11
8.50%

Dec
12
8.50%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

Page 3

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Jan
$25,000,000
$13,500,000

Sales
Direct Cost of Sales
Power System Studies

Feb
$15,000,000
$8,100,000

Mar
$10,000,000
$5,400,000

Apr
$5,000,000
$2,700,000

May
$5,000,000
$2,700,000

Jun
$5,000,000
$2,700,000

Jul
$5,000,000
$2,700,000

Aug
$5,000,000
$2,700,000

Sep
$5,000,000
$2,700,000

Oct
$5,000,000
$2,700,000

Nov
$5,000,000
$2,700,000

Dec
$10,000,000
$5,400,000

$5,000

$5,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$0

$0

Total Cost of Sales

$13,505,000

$8,105,000

$5,406,000

$2,706,000

$2,706,000

$2,706,000

$2,706,000

$2,706,000

$2,706,000

$2,706,000

$2,700,000

$5,400,000

Gross Margin
Gross Margin %

$11,495,000
45.98%

$6,895,000
45.97%

$4,594,000
45.94%

$2,294,000
45.88%

$2,294,000
45.88%

$2,294,000
45.88%

$2,294,000
45.88%

$2,294,000
45.88%

$2,294,000
45.88%

$2,294,000
45.88%

$2,300,000
46.00%

$4,600,000
46.00%

Expenses
Payroll

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$18,654

$388,500

$382,000

$382,000

$388,500

$382,000

$382,000

$388,500

$382,000

$382,000

$388,500

$382,000

$382,000

$0
$500

$0
$500

$0
$500

$0
$500

$0
$500

$0
$500

$0
$500

$0
$500

$0
$500

$0
$500

$0
$500

$0
$500

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$6,000
$500
$4,000

$2,798

$2,798

$2,798

$2,798

$2,798

$2,798

$2,798

$2,798

$2,798

$2,798

$2,798

$2,798

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$420,952

$414,452

$414,452

$420,952

$414,452

$414,452

$420,952

$414,452

$414,452

$420,952

$414,452

$414,452

Profit Before Interest and Taxes

$11,074,048

$6,480,548

$4,179,548

$1,873,048

$1,879,548

$1,879,548

$1,873,048

$1,879,548

$1,879,548

$1,873,048

$1,885,548

$4,185,548

EBITDA
Interest Expense

$11,074,048
$0

$6,480,548
$0

$4,179,548
$0

$1,873,048
$0

$1,879,548
$0

$1,879,548
$0

$1,873,048
$0

$1,879,548
$0

$1,879,548
$0

$1,873,048
$0

$1,885,548
$0

$4,185,548
$0

Taxes Incurred

$2,768,512

$1,620,137

$1,044,887

$468,262

$469,887

$469,887

$468,262

$469,887

$469,887

$468,262

$471,387

$1,046,387

$8,305,536
33.22%

$4,860,411
32.40%

$3,134,661
31.35%

$1,404,786
28.10%

$1,409,661
28.19%

$1,409,661
28.19%

$1,404,786
28.10%

$1,409,661
28.19%

$1,409,661
28.19%

$1,404,786
28.10%

$1,414,161
28.28%

$3,139,161
31.39%

Sales and Marketing and Other

Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating Expenses

Net Profit
Net Profit/Sales

15%

Page 4

Appendix
Table: Cash Flow
Pro Forma Cash Flow
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Cash from Operations

Cash Sales
Cash from Receivables

$12,500,000
$5,348,858

$7,500,000
$5,765,525

$5,000,000
$12,333,333

$2,500,000
$7,416,667

$2,500,000
$4,916,667

$2,500,000
$2,500,000

$2,500,000
$2,500,000

$2,500,000
$2,500,000

$2,500,000
$2,500,000

$2,500,000
$2,500,000

$2,500,000
$2,500,000

$5,000,000
$2,500,000

Subtotal Cash from Operations

$17,848,858

$13,265,525

$17,333,333

$9,916,667

$7,416,667

$5,000,000

$5,000,000

$5,000,000

$5,000,000

$5,000,000

$5,000,000

$7,500,000

Cash Received

Additional Cash Received

Sales Tax, VAT, HST/GST Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Current Borrowing

New Other Liabilities (interest-free)

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Long-term Liabilities

Sales of Other Current Assets

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

Subtotal Cash Received

$0
$17,848,858

$0
$13,265,525

$0
$17,333,333

$0
$9,916,667

$0
$7,416,667

$0
$5,000,000

$0
$5,000,000

$0
$5,000,000

$0
$5,000,000

$0
$5,000,000

$0
$5,000,000

$0
$7,500,000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Cash Spending
Bill Payments

$18,654
$4,892,688

$18,654
$16,457,314

$18,654
$10,011,793

$18,654
$6,737,681

$18,654
$3,576,398

$18,654
$3,571,685

$18,654
$3,571,848

$18,654
$3,576,398

$18,654
$3,571,685

$18,654
$3,571,848

$18,654
$3,576,248

$18,654
$3,676,352

Subtotal Spent on Operations

$4,911,342

$16,475,968

$10,030,447

$6,756,335

$3,595,052

$3,590,339

$3,590,502

$3,595,052

$3,590,339

$3,590,502

$3,594,902

$3,695,006

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

Other Liabilities Principal Repayment

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Long-term Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

Dividends

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$4,911,342

$16,475,968

$10,030,447

$6,756,335

$3,595,052

$3,590,339

$3,590,502

$3,595,052

$3,590,339

$3,590,502

$3,594,902

$3,695,006

Net Cash Flow

$12,937,516

($3,210,444)

$7,302,886

$3,160,332

$3,821,615

$1,409,661

$1,409,498

$1,404,948

$1,409,661

$1,409,498

$1,405,098

$3,804,994

Cash Balance

$39,187,516

$35,977,072

$43,279,958

$46,440,290

$50,261,905

$51,671,566

$53,081,064

$54,486,013

$55,895,674

$57,305,172

$58,710,270

$62,515,265

Expenditures

0.00%

Expenditures from Operations

Subtotal Cash Spent

Page 5

Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Starting Balances

Current Assets
Cash
Accounts Receivable

$26,250,000
$10,697,716

$39,187,516
$17,848,858

$35,977,072
$19,583,333

$43,279,958
$12,250,000

$46,440,290
$7,333,333

$50,261,905
$4,916,667

$51,671,566
$4,916,667

$53,081,064
$4,916,667

$54,486,013
$4,916,667

$55,895,674
$4,916,667

$57,305,172
$4,916,667

$58,710,270
$4,916,667

$62,515,265
$7,416,667

Other Current Assets

Total Current Assets

$920,380
$37,868,096

$920,380
$57,956,754

$920,380
$56,480,785

$920,380
$56,450,338

$920,380
$54,694,003

$920,380
$56,098,952

$920,380
$57,508,612

$920,380
$58,918,111

$920,380
$60,323,059

$920,380
$61,732,720

$920,380
$63,142,219

$920,380
$64,547,317

$920,380
$70,852,311

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$1,243,965

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$1,243,965
$39,112,061

$1,243,965
$59,200,719

$1,243,965
$57,724,750

$1,243,965
$57,694,303

$1,243,965
$55,937,968

$1,243,965
$57,342,917

$1,243,965
$58,752,577

$1,243,965
$60,162,076

$1,243,965
$61,567,024

$1,243,965
$62,976,685

$1,243,965
$64,386,184

$1,243,965
$65,791,282

$1,243,965
$72,096,276

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$4,336,828

$16,119,950

$9,783,571

$6,618,462

$3,457,341

$3,452,629

$3,452,629

$3,457,341

$3,452,629

$3,452,629

$3,457,341

$3,448,279

$6,614,112

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$4,336,828

$16,119,950

$9,783,571

$6,618,462

$3,457,341

$3,452,629

$3,452,629

$3,457,341

$3,452,629

$3,452,629

$3,457,341

$3,448,279

$6,614,112

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Liabilities

$4,336,828

$16,119,950

$9,783,571

$6,618,462

$3,457,341

$3,452,629

$3,452,629

$3,457,341

$3,452,629

$3,452,629

$3,457,341

$3,448,279

$6,614,112

Paid-in Capital

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

$4,743,900

Retained Earnings

$1,781,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

$30,031,333

Earnings
Total Capital

$28,250,000
$34,775,233

$8,305,536
$43,080,769

$13,165,947
$47,941,180

$16,300,608
$51,075,841

$17,705,394
$52,480,627

$19,115,055
$53,890,288

$20,524,716
$55,299,949

$21,929,501
$56,704,734

$23,339,162
$58,114,395

$24,748,823
$59,524,056

$26,153,609
$60,928,842

$27,567,770
$62,343,003

$30,706,931
$65,482,164

Total Liabilities and Capital

$39,112,061

$59,200,719

$57,724,750

$57,694,303

$55,937,968

$57,342,917

$58,752,577

$60,162,076

$61,567,024

$62,976,685

$64,386,184

$65,791,282

$72,096,276

Net Worth

$34,775,233

$43,080,769

$47,941,180

$51,075,841

$52,480,627

$53,890,288

$55,299,949

$56,704,734

$58,114,395

$59,524,056

$60,928,842

$62,343,003

$65,482,164

Page 6