Investment Office ANRS

Project Profile on the Establishment

of Wild Life Parks and Sanctuaries

Development Studies
Associates (DSA)

October 2008
Addis Ababa
 Table of Contents

1. Executive Summary............................................................................................1
2. Product Description and Application..............................................................1
3. Market Study, Plant Capacity and Production Program..............................2
3.1 Market Size......................................................................................................................2
3.1.1 Present Demand and Supply....................................................................................2
3.1.2 Projected Demand....................................................................................................3
3.1.3 Pricing......................................................................................................................4
3.2 Capacity...........................................................................................................................4
3.3 Production Program.........................................................................................................4
4. Raw Materials and Utilities..............................................................................4
4.1 Availability and Source of Raw Materials.......................................................................4
4.2 Annual Requirement and Cost of Raw Materials and Utilities.......................................5
5 Location and Site...............................................................................................5
6 Technology and Engineering............................................................................5
6.1 Service Process................................................................................................................5
6.2 Auxiliary Facilities..........................................................................................................6
6.3 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........................................................................................................................9
8.3 Production Costs............................................................................................................10
8.4 Financial Evaluation......................................................................................................10
9 Economic and Social Benefit and Justification.............................................11
ANNEXES...............................................................................................................13
 1. Executive Summary
This project profile deals with the establishment of establishment of wild life parks and
sanctuaries in Amhara National Regional State. The following presents the main findings of the
study

Demand projection divulges that the domestic demand for wild life sanctuaries is substantial and
is increasing with time. Accordingly, the planned plant is set to serve 4000 tourist annually. The
total investment cost of the project including working capital is estimated at birr 5.58 million and
creates job opportunity for 30 citizens.

The financial result indicates that the project will generate profit beginning from the first year of
operation. Moreover, the project will break even at 12.60% of capacity utilization and it will
payback fully the initial investment less working capital in third year. The result further shows
that the calculated IRR of the project is 61.3%; the NPV at 18% annual discount rate is Birr
11.95 million.

In addition to this, the proposed project possesses wide range of economic and social benefits
such as increasing the level of investment, tax revenue, employment creation, environmental,
protection and positive image building.

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

There are eighty four developed and operating destinations in the Amhara National Regional
State. Of these fifteen are Eco-tourism or nature-based sites.

There is consensus that these attractions have been, and are, greatly under-commercialized. This
has not been only undermining the impact of tourism on the economy of the surrounding
communities, but also the objective to optimize spending from the visitors has been
compromised.

This project aims at addressing this problem by establishing a wild life park on private business
initiative.

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 3. Market Study, Plant Capacity and Production Program

3.1 Market Size

3.1.1 Present Demand and Supply

The number of tourists who visit the region has been increasing; the number of international
tourists who visit the region counts in hundreds of thousands. The following table shows the
number of tourists visited the region and the future forecast.

Table 1: Tourist Arrivals in ANRS

Year Total Domestic International

2005 117900 57720 60180

2006 172212 76872 95340
2007 246550 103021 143529
2008 343891 137254 206637
2009 467212 180657 286555
2010 619491 234319 385172
2011 803704 299326 504378
2012 1022829 376765 646064
2013 1279844 467725 812119
2014 1577726 573291 1004434
Source: Tourism Potential Report

The Semen Mountains National Park (SMNP) is the only developed, wildlife-based park serving
as a tourism destination. It was declared a national park in 1969 and as reiterated above
UNESCO named it a World Heritage Natural Site in 1978. The park was established based on the
criteria set by the International Union for the Conservation of Nature and Natural Resources of
Wild Flora and Fauna (IUCN), World Conservation Strategy (WCS), and the national
Conservation Strategy of 1997.

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Table 2: Endemic Mammals of the SMNP

Spp.Common Name Scientific Name

1 Walia Ibex Capra walie
2 Semien Fox (Jackal) Canis seminesis
3 Gelada Baboon Thercopithicus gelada
4 Abyssinian Hare Lepus abyssinicus
5 Giant Mole-rat Tachyoryctes macrocephalus
6 Menelik’s Bush-buck Tragelaphus scriptus meniliki

Source: SMNP

Table 3: Endemic Bird Species of the SMNP

Spp. Common Name Scientific Name

1 Rouget’s Rail
2 White-Collared Pigeon
3 Black-winged Love Bird
4 Thick-billed Raven
5 Blue-winged Goose
6 Abyssinian Long-Claw
Rougettus rougetii
Columba albitorques
Corvus crassirostris
Cyanochen Cyanoptera
Heruundo megaelensis

Source: SMNP

This project envisages forming other smaller parks based on private business initiatives.

3.1.2 Projected Demand

If we assume that only 5% of the domestic tourists and 20% of the international tourist are
willing to visit the wild life parks, then the projected demand will be as shown in Table below.
Note that, this project envisages only 4000 visitors in a year.

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 Table 4: Projected Demand
No. Tourists Willing
Year to Visit Wild Life Park
Domestic International Total
2009 9,033 57,311 66,344
2010 11,716 77,034 88,750
2011 14,966 100,876 115,842
2012 18,838 129,213 148,051
2013 23,386 162,424 185,810
2014 28,665 200,887 229,551
2015 30,098 210,931 241,029
2016 31,603 221,478 253,080
2017 33,183 232,552 265,734
2018 34,842 244,179 279,021

3.1.3 Pricing

The major objective in pricing was to make it affordable and attractive to international tourists.
Thus, it is set at Birr 2000 (approximately USD 200) per person. Further studies on pricing,
especially with regards to domestic tourists should be carried out by the project implementer.

3.2 Capacity

The envisage park plans to serve 4000 international tourists in year.

3.3 Production Program

The production program should take the seasonal nature of the market into consideration. During
the first year of operation it will operate at 60%, 70%, 80% and 90% of its capacity during the
1st, 2nd, 3rd and 4th year. Starting from the 5th year, it will attain full capacity. This consideration is
developed based on the assumption that market requires intensive promotion and experience.

4. Raw Materials and Utilities

4.1 Availability and Source of Raw Materials

All the required raw materials are available in region.

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 4.2 Annual Requirement and Cost of Raw Materials
and Utilities

The annual raw material and utility requirement and the associated cost for the envisaged plant
are listed in Tables 4 and 5 here under.

Table 5: Raw material Requirement at Full Capacity

Price
No. Material Qty Unit Local Total
1 Animal fodder 10 tons 50000 500,000 500,000
Total 500,000 500,000

Table 6: Utilities Requirement at Full Capacity

Item Total
Electricity 2000 kw 1,100
Water (for the animals, lodges …) 20000 m3 53,000
Office Rent 5000/m X 12 60,000
Miscellaneous Costs 500,000
614,100

5 Location and Site

The appropriate locations for the envisaged project in view of the availability of the wildlife, and
infrastructure as well as market for the service are the Nothern and western parts of the region.

6 Technology and Engineering

6.1 Service Process

A survey has to be undertaken to determine which localities in the Region have the highest
potential of becoming wild life parks. Main criteria for the first phase evaluation will be the
presence of wild life (animals) in the area, absence of human settlement and agricultural
activities around the potential areas. Once these areas are identified, additional criteria will be
developed to select one or two sites where wild life parks will be developed. The development of

5
the sites will entail the protection of the sites from human interference, provision of adequate
water and food supplies within the parks establishing observation center in the sites, if necessary
bringing in some wild animals from other areas of similar climatic conditions.

Alternatives:
1. State owned national parks.
2. Traditional do-it-yourself game by unlicensed hunters.

6.2 Auxiliary Facilities

The service requires the following auxiliary facilities. Water points should be preserved to the
animals; otherwise, they will not survive the dry seasons or migrate. In addition, mini lodges
should be made available so that tourists get refreshments. Table 7 shows the items and their
estimated costs.

Table 7: Auxiliary Facilities

No Items Cost
(Birr)
1 Building water points for the animals 200,000
2 Establishing mini restaurants* 2,000,000
Total 2,400,000
*They are assumed to be autonomous business entities and therefore the human
resources and working capital requirement to run them is not included this
project profile.

6.3 Civil Engineering Cost

The civil engineering costs are shown in Table 8.

Table 8: Civil Engineering Costs

No Item Cost
(Birr)
1 Constructing feeder roads 1,000,000
2 Constructing foot paths for visitors 200,000
1,200,000

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7 Human Resource and Training Requirement

7.1 Human Resource

Table 9 depicts the human resource requirements for the proposed wild life sanctuary.

Table 9: Human Resource Requirements

Salary/Wage (Birr)

Job Title No. Monthly Annual

1 General Manager 1 4,000 48,000
2 Secretary 1 850 10,200
3 Accountant 1 1,500 18,000
4 Casher 1 850 10,200
5 Clerks 3 700 25,200
6 Tour Guides 5 1,500 90,000
7 Receptionists 3 1,000 36,000
8 Drivers 5 1,000 60,000
9 Security 10 500 60,000
10 Clerks 0
11 Genitor 0
Total 30 357,600
Employment Benefits 20% of Annual
Salary 71,520
429,120

7.2 Training Requirement

Periodic trainings are essential, especially in areas of preservation of nature and wild life, and
customer handling. An annual budget of Birr 70,000 is allocated in working capital for this
purpose.

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8 Financial Analysis
8.1 Underlying Assumption

The financial analysis is based on the data provided in the preceding chapters and the following
assumptions.
A. Construction and Finance

Construction period 2 year

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 3% of fixed investment

B. Depreciation

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

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 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 at full capacity is estimated at
Birr 5.58 million as shown in Table 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 10: Total Initial Investment and Working Capital

Total Initial Investment

Item Cost (Birr)
Royalty Fee 3,000.00
Civil Engineering Costs 1,200,000.00
Office equipment 100,000.00
Vehicles 1,250,000.00
Construction of Auxiliary Facilities 2,400,000.00
Total Fixed Investment 4,953,000.00
Pre production capital expenditure 247,650.00
Total Initial Investment 5,200,650.00
Working capital at full capacity 375,363.10
Total 5,576,013.10
*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.

9
 8.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 2.7 million as detailed in
table 11 below.

Table 11: Total Production Costs

Total Production Cost at Full Capacity

Items Cost
1. Raw materials 500,000.00
2. Utilities 614,100.00
3. Wages and Salaries 429,120.00
4. Spares and Maintenance 148,590.00
Factory costs 1,691,810.00
5. Depreciation 609,530.00
6. Financial costs
401,472.94
Total Production Cost 2,702,812.94

8.4 Financial Evaluation

I. Profitability
According to the projected income statement attached in the annex part (see annex 3) 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 47.92%, 58.97% and
103.12% in the first year and are gradually rising to 75.91%, 76.24%, and 190.59%. Annual
profit starts at Birr 2.3 million and reach Birr 4.25 million. The profit generates a total profit of
Birr 37 million during 10 years period. 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 12.60% of capacity utilization.
III. Payback Period

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Investment cost and income statement projection are used in estimating the project payback
period. The projects will payback fully the initial investment less working capital in three years.

IV. Simple Rate of Return

For the envisaged plant the simple rate of return equals to 73.6%.

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
61.3% and the net present value at 18 % discount is Birr 11.53 million.

VI. Sensitivity Analysis

The sensitivity analysis shows that the mild shock in cost or number of customers will not make
the business infeasible. For instance, if a 10% increment in prices is observed, the business
remains to viable will a total profit of Birr 36 million; a 10 reduction in number of customer –
Birr 31,000.

9 Economic and Social Benefit and Justification

The envisaged project possesses wide range of benefits where it promotes the socio-economic
goals and objectives stated in the strategic plan of the Amhara National Regional State. These
benefits are listed as follows

A. Profit Generation
The project is found to be financially viable and Birr 37 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 13.42 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
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

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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
staffs.

D. Diversification of the Economy

This project diversifies the region economy by utilizing untapped opportunity.

E. Preservation of Nature

The projects augments to the on going efforts to preserve the nation’s natural resources,
especially the wild life.

F. Creating Better Image

The project can play an important role in changing the present poor image of the country.

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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 0 60% 70% 80% 90%

1. Total Inventory 0 0 189,662 221,272 252,882 284,492

Raw Materials in Stock- Total 0 0 32,727 38,182 43,636 49,091

Raw Material-Local 0 0 32,727 38,182 43,636 49,091

Raw Material-Foreign 0 0 0 0 0 0

Factory Supplies in Stock 0 0 1,506 1,757 2,008 2,259

Spare Parts in Stock and Maintenance 0 0 9,726 11,347 12,968 14,589

Work in Progress 0 0 37,658 43,935 50,211 56,487

Finished Products 0 0 75,317 87,869 100,422 112,975

2. Accounts Receivable 0 0 523,636 610,909 698,182 785,455

3. Cash in Hand 0 0 68,283 79,664 91,045 102,425

CURRENT ASSETS 0 0 748,854 873,663 998,472 1,123,281

4. Current Liabilities 0 0 523,636 610,909 698,182 785,455

Accounts Payable 0 0 523,636 610,909 698,182 785,455

TOTAL NET WORKING CAPITAL REQUIREMENTS 0 0 225,218 262,754 300,290 337,827

INCREASE IN NET WORKING CAPITAL 0 0 225,218 37,536 37,536 37,536

1
 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 316,103 316,103 316,103 316,103 316,103 316,103

Raw Materials in Stock-Total 54,545 54,545 54,545 54,545 54,545 54,545

Raw Material-Local 54,545 54,545 54,545 54,545 54,545 54,545

Raw Material-Foreign 0 0 0 0 0 0

Factory Supplies in Stock 2,511 2,511 2,511 2,511 2,511 2,511

Spare Parts in Stock and Maintenance 16,210 16,210 16,210 16,210 16,210 16,210

Work in Progress 62,764 62,764 62,764 62,764 62,764 62,764

Finished Products 125,528 125,528 125,528 125,528 125,528 125,528

2. Accounts Receivable 872,727 872,727 872,727 872,727 872,727 872,727

3. Cash in Hand 113,806 113,806 113,806 113,806 113,806 113,806

CURRENT ASSETS 1,248,090 1,248,090 1,248,090 1,248,090 1,248,090 1,248,090

4. Current Liabilities 872,727 872,727 872,727 872,727 872,727 872,727

Accounts Payable 872,727 872,727 872,727 872,727 872,727 872,727

TOTAL NET WORKING CAPITAL REQUIREMENTS 375,363 375,363 375,363 375,363 375,363 375,363

INCREASE IN NET WORKING CAPITAL 37,536 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 2,600,325 2,975,688 5,323,636 5,687,273 6,487,273 7,287,273
1. Inflow Funds 2,600,325 2,975,688 523,636 87,273 87,273 87,273
Total Equity 1,040,130 1,190,275 0 0 0 0
Total Long Term Loan 1,560,195 1,785,413 0 0 0 0
Total Short Term Finances 0 0 523,636 87,273 87,273 87,273
2. Inflow Operation 0 0 4,800,000 5,600,000 6,400,000 7,200,000
Sales Revenue 0 0 4,800,000 5,600,000 6,400,000 7,200,000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 2,600,325 2,600,325 2,639,304 2,231,202 3,566,503 3,869,301
4. Increase In Fixed Assets 2,600,325 2,600,325 0 0 0 0
Fixed Investments 2,476,500 2,476,500 0 0 0 0
Pre-production Expenditures 123,825 123,825 0 0 0 0
5. Increase in Current Assets 0 0 748,854 124,809 124,809 124,809
6. Operating Costs 0 0 990,695 1,147,318 1,303,942 1,460,565
7. Corporate Tax Paid 0 0 0 0 1,245,590 1,458,677
8. Interest Paid 0 0 899,755 401,473 334,561 267,649
9.Loan Repayments 0 0 0 557,601 557,601 557,601
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 0 375,363 2,684,332 3,456,071 2,920,770 3,417,972
Cumulative Cash Balance 0 375,363 3,059,695 6,515,766 9,436,536 12,854,508

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 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 8,087,273 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000
1. Inflow Funds 87,273 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 87,273 0 0 0 0 0
2. Inflow Operation 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000
Sales Revenue 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 4,172,099 4,090,310 4,043,472 3,439,032 3,439,032 3,439,032
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 124,809 0 0 0 0 0
6. Operating Costs 1,617,188 1,617,188 1,617,188 1,617,188 1,617,188 1,617,188
7. Corporate Tax Paid 1,671,764 1,781,696 1,801,770 1,821,843 1,821,843 1,821,843
8. Interest Paid 200,736 133,824 66,912 0 0 0
9. Loan Repayments 557,601 557,601 557,601 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 3,915,174 3,909,690 3,956,528 4,560,968 4,560,968 4,560,968
Cumulative Cash Balance 16,769,682 20,679,372 24,635,900 29,196,868 33,757,836 38,318,804

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 4,800,000 5,600,000 6,400,000 7,200,000

1. Inflow Operation 0 0 4,800,000 5,600,000 6,400,000 7,200,000

Sales Revenue 0 0 4,800,000 5,600,000 6,400,000 7,200,000

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 2,600,325 2,600,325 1,215,913 1,184,855 1,341,478 2,956,778

3. Increase in Fixed Assets 2,600,325 2,600,325 0 0 0 0

Fixed Investments 2,476,500 2,476,500 0 0 0 0

Pre-production Expenditures 123,825 123,825 0 0 0 0

4. Increase in Net Working Capital 0 0 225,218 37,536 37,536 37,536

5. Operating Costs 0 0 990,695 1,147,318 1,303,942 1,460,565

6. Corporate Tax Paid 0 0 0 0 0 1,458,677

NET CASH FLOW -2,600,325 -2,600,325 3,584,087 4,415,145 5,058,522 4,243,222

CUMULATIVE NET CASH FLOW -2,600,325 -5,200,650 -1,616,563 2,798,582 7,857,104 12,100,326

Net Present Value (at 18%) -2,600,325 -2,203,665 2,574,036 2,687,194 2,609,129 1,854,751

Cumulative Net present Value -2,600,325 -4,803,990 -2,229,955 457,239 3,066,368 4,921,120

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000

1. Inflow Operation 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000

Sales Revenue 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 3,326,488 3,398,885 3,418,958 3,439,032 3,439,032 3,439,032

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 37,536 0 0 0 0 0

5. Operating Costs 1,617,188 1,617,188 1,617,188 1,617,188 1,617,188 1,617,188

6. Corporate Tax Paid 1,671,764 1,781,696 1,801,770 1,821,843 1,821,843 1,821,843

NET CASH FLOW 4,673,512 4,601,115 4,581,042 4,560,968 4,560,968 4,560,968

CUMULATIVE NET CASH FLOW 16,773,838 21,374,953 25,955,995 30,516,963 35,077,931 39,638,899

Net Present Value (at 18%) 1,731,216 1,444,405 1,218,732 1,028,298 871,439 738,508

Cumulative Net present Value 6,652,336 8,096,741 9,315,473 10,343,771 11,215,210 11,953,718

Net Present Value (at 18%) 11,953,717.60

Internal Rate of Return 61.3%

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 Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1 2 3 4 5
Capacity Utilization (%) 60% 70% 80% 90% 100%

1. Total Income 4,800,000 5,600,000 6,400,000 7,200,000 8,000,000

Sales Revenue 4,800,000 5,600,000 6,400,000 7,200,000 8,000,000
Other Income 0 0 0 0 0
2. Less Variable Cost 836,751 976,210 1,115,668 1,255,127 1,394,585
VARIABLE MARGIN 3,963,249 4,623,790 5,284,332 5,944,873 6,605,415
(In % of Total Income) 82.57 82.57 82.57 82.57 82.57
3. Less Fixed Costs 763,474 780,639 797,803 814,968 832,133
OPERATIONAL MARGIN 3,199,775 3,843,152 4,486,528 5,129,905 5,773,282
(In % of Total Income) 66.66 68.63 70.10 71.25 72.17
4. Less Cost of Finance 899,755 401,473 334,561 267,649 200,736
5. GROSS PROFIT 2,300,020 3,441,679 4,151,967 4,862,256 5,572,545
6. Income (Corporate) Tax 0 0 1,245,590 1,458,677 1,671,764
7. NET PROFIT 2,300,020 3,441,679 2,906,377 3,403,579 3,900,782
RATIOS (%)
Gross Profit/Sales 47.92% 61.46% 64.87% 67.53% 69.66%
Net Profit After Tax/Sales 47.92% 61.46% 45.41% 47.27% 48.76%
Return on Investment 58.97% 70.34% 58.92% 66.29% 73.56%
Return on Equity 103.12% 154.31% 130.31% 152.60% 174.89%

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 Annex 4: NET INCOME STATEMENT (in Birr): Continued
PRODUCTION
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000

Sales Revenue 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000
Other Income 0 0 0 0 0
2. Less Variable Cost 1,394,585 1,394,585 1,394,585 1,394,585 1,394,585
VARIABLE MARGIN 6,605,415 6,605,415 6,605,415 6,605,415 6,605,415
(In % of Total Income) 82.57 82.57 82.57 82.57 82.57
3. Less Fixed Costs 532,603 532,603 532,603 532,603 532,603
OPERATIONAL MARGIN 6,072,812 6,072,812 6,072,812 6,072,812 6,072,812
(In % of Total Income) 75.91 75.91 75.91 75.91 75.91
4. Less Cost of Finance 133,824 66,912 0 0 0
5. GROSS PROFIT 5,938,987 6,005,899 6,072,812 6,072,812 6,072,812
6. Income (Corporate) Tax 1,781,696 1,801,770 1,821,843 1,821,843 1,821,843
7. NET PROFIT 4,157,291 4,204,130 4,250,968 4,250,968 4,250,968
RATIOS (%)
Gross Profit/Sales 74.24% 75.07% 75.91% 75.91% 75.91%
Net Profit After Tax/Sales 51.97% 52.55% 53.14% 53.14% 53.14%
Return on Investment 76.96% 76.60% 76.24% 76.24% 76.24%
Return on Equity 186.39% 188.49% 190.59% 190.59% 190.59%

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 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 2,600,325 5,576,013 8,399,669 11,371,020 13,807,068 16,740,319
1. Total Current Assets 0 375,363 3,808,549 7,389,430 10,435,008 13,977,789
Inventory on Materials and Supplies 0 0 43,959 51,286 58,613 65,939
Work in Progress 0 0 37,658 43,935 50,211 56,487
Finished Products in Stock 0 0 75,317 87,869 100,422 112,975
Accounts Receivable 0 0 523,636 610,909 698,182 785,455
Cash in Hand 0 0 68,283 79,664 91,045 102,425
Cash Surplus, Finance Available 0 375,363 3,059,695 6,515,766 9,436,536 12,854,508
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 2,600,325 5,200,650 4,591,120 3,981,590 3,372,060 2,762,530
Fixed Investment 0 2,476,500 4,953,000 4,953,000 4,953,000 4,953,000
Construction in Progress 2,476,500 2,476,500 0 0 0 0
Pre-Production Expenditure 123,825 247,650 247,650 247,650 247,650 247,650
Less Accumulated Depreciation 0 0 609,530 1,219,060 1,828,590 2,438,120
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 2,600,325 5,576,013 8,399,669 11,371,020 13,807,068 16,740,319
5. Total Current Liabilities 0 0 523,636 610,909 698,182 785,455
Accounts Payable 0 0 523,636 610,909 698,182 785,455
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 1,560,195 3,345,608 3,345,608 2,788,007 2,230,405 1,672,804
Loan A 1,560,195 3,345,608 3,345,608 2,788,007 2,230,405 1,672,804
Loan B 0 0 0 0 0 0
7. Total Equity Capital 1,040,130 2,230,405 2,230,405 2,230,405 2,230,405 2,230,405
Ordinary Capital 1,040,130 2,230,405 2,230,405 2,230,405 2,230,405 2,230,405
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 2,300,020 5,741,699 8,648,076
9.Net Profit After Tax 0 0 2,300,020 3,441,679 2,906,377 3,403,579
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 2,300,020 3,441,679 2,906,377 3,403,579

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 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL ASSETS 20,170,772 23,770,462 27,416,990 31,667,958 35,918,926 40,169,895
1. Total Current Assets 18,017,772 21,927,462 25,883,990 30,444,958 35,005,926 39,566,895
Inventory on Materials and Supplies 73,266 73,266 73,266 73,266 73,266 73,266
Work in Progress 62,764 62,764 62,764 62,764 62,764 62,764
Finished Products in Stock 125,528 125,528 125,528 125,528 125,528 125,528
Accounts Receivable 872,727 872,727 872,727 872,727 872,727 872,727
Cash in Hand 113,806 113,806 113,806 113,806 113,806 113,806
Cash Surplus, Finance Available 16,769,682 20,679,372 24,635,900 29,196,868 33,757,836 38,318,804
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 2,153,000 1,843,000 1,533,000 1,223,000 913,000 603,000
Fixed Investment 4,953,000 4,953,000 4,953,000 4,953,000 4,953,000 4,953,000
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 247,650 247,650 247,650 247,650 247,650 247,650
Less Accumulated Depreciation 3,047,650 3,357,650 3,667,650 3,977,650 4,287,650 4,597,650
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 20,170,772 23,770,462 27,416,990 31,667,958 35,918,926 40,169,895
5. Total Current Liabilities 872,727 872,727 872,727 872,727 872,727 872,727
Accounts Payable 872,727 872,727 872,727 872,727 872,727 872,727
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 1,115,203 557,601 0 0 0 0
Loan A 1,115,203 557,601 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 2,230,405 2,230,405 2,230,405 2,230,405 2,230,405 2,230,405
Ordinary Capital 2,230,405 2,230,405 2,230,405 2,230,405 2,230,405 2,230,405
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 12,051,655 15,952,437 20,109,728 24,313,858 28,564,826 32,815,794
9. Net Profit After Tax 3,900,782 4,157,291 4,204,130 4,250,968 4,250,968 4,250,968
Dividends Payable 0 0 0 0 0 0
Retained Profits 3,900,782 4,157,291 4,204,130 4,250,968 4,250,968 4,250,968

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