Project Profile on the Establishment of lodge

and Restaurant at deberetabor

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..............................1
3.1 Market Study...................................................................................................................1
3.1.1 Present Demand and Supply....................................................................................1
3.1.2 Projected Demand....................................................................................................2
3.1.3 Pricing and Distribution...........................................................................................4
3.2 Plant Capacity..................................................................................................................4
3.3 Production Program.........................................................................................................5
4. Raw Materials and Utilities..............................................................................5
4.1 Availability and Source of Raw materials.......................................................................5
4.2 Annual Requirement and Cost of Raw Materials and Utilities.......................................5
5. Location and Site...............................................................................................6
6. Technology and Engineering............................................................................6
6.1 Production Process...........................................................................................................6
6.2 Machinery and Equipment...............................................................................................6
6.3 Civil Engineering Cost....................................................................................................7
7. Human Resource and Training Requirement................................................7
7.1 Human Resource..............................................................................................................7
7.2 Training Requirement......................................................................................................8
8. Financial Analysis.............................................................................................8
8.1 Underlying Assumption...................................................................................................8
8.2 Investment......................................................................................................................10
8.3 Production Costs............................................................................................................10
8.4 Financial Evaluation......................................................................................................11
9. Economic and Social Benefit and Justification.............................................12
ANNEXES...............................................................................................................13

1
 1. Executive Summary

The project envisages the establishment of modern lodge and restaurant plant with 24 self
contend bed rooms at Eyerussalem lodge in deberetabor south gonder zone.
Since there is no modern lodge and restaurant at Eyerussalem lodgein south gonder zone that
accommodate the required services of foreign and local tourists, the demand for the service is
very attractive.
The total initial investment requirement is estimated at birr 48.5 million, of which 65% is for
lodge building construction.
The project will create employment opportunities for 65 persons.and it requires the total land
100000 m2
The project is financially viable with an internal rate of return (IRR) of 20% and a net present
value ( NPV) is Birr 19.34 million discounted at 10.5% .

Product Description and Application

A lodge is place which provides temporary accommodation at a reasonable cost and without the
luxurious service popular in hotels. This Lodge Management System will manage all the records
and most functions of the lodge at a reduced cost The Lodge Management System begins its
work from the booking of the room. Users can use the system from any location to book rooms
and schedule their arrival. The Lodge Management System will inform the lodge, reserve the
room and schedule cleaning. The lodge can upload details about the different types of rooms and
pictures of each room. Users can browse these pictures along with comments left by other users.
After room booking is done, the user can make the payment via any of the various payment
gateways available. The user can also receive all bills and information online. This will help in
the case of guests travelling for corporate needs as the system will provided a verified electronic
receipt.

1
Modern lodge and restaurants are facilities where food, drinks, bed rooms and other services are
provided in an efficient, cordial and pleasant manner and style. Operating lodge and restaurant
businesses, especially at tourist sites, require cleanliness and neatness of services to be provided
and efficiency, cordiality and good manner on the part of lodge and restaurant workers.

2. Market Study, Plant Capacity and Production Program

3.1Market Study

3.1.1 Present Demand and Supply

Ethiopia is encompasses the major tourist attraction centers of the country. So south gonder zone
is on of atse Tewodros industry pleace near to Bahir Dar town. Castles of King Fassile Dess in
Gondar and Lalibella Hewn Churches in Lalibella towns. These tourist attraction sites are
registered under UNESCO as world heritage centers. A number of domestic and foreign tourists
visit these sites every day.

Eyerussalem lodge is one of the most centers of attraction for both domestic and local tourists
which is visited almost every day throughout the year.
If there were lodge and restaurants, many tourists could have made overnight stay near the fall.
They would have preferred to watch at sunset or sunrise. They could have wanted to hear the
sound of the bird during the night. They could have experienced what it feels during the night in
rural Ethiopia where there are no noises of urban life. Since the significance of tourism ana the
role that tourism plays in economic development is widely recognized.

3.1.2 Projected Demand

Tourism industry is one of the potential sectors of the country to generate foreign currency. Its

contribution towards export and GDP growth is increasing. For example in 1996 tourism has
contributed 19% and 1.2% to the country's export and GDP growth, respectively.


2
As indicated in table 1 bellow, the number of tourists arriving in Ethiopia and receipts from
international inbound tourism is increasing from year to year.
Table 1
Tourists arrived in Ethiopia and corresponding Receipts
(2005-2012)
Year Arrivals Receipts (in "000" Birr)
2005 114,000 252,000
2006 135,954 577,800
2007 148,438 542,000
2008 156,327 676,000
2009 179,910 778,000
2010 184,878 991,200
2011 227,298 1,177,816
2012 236,890 2,763,567
Source: Ministry of Culture and Tourism, tourism Statistics, 2005-2012

The numbers of domestic and foreign tourists who visit the those constitution is increasing year
to year vary based on the source. The lodge and the restaurant do not have to be very
sophisticated and expensively built. All they need is to be extremely clean and comfortable with
reasonable prices and efficient services.
Besides serving tourists, the lodge and restaurant at Eyerussalem could be a good recreational
center for wedding and also for occasional ceremonies like labor day, graduation day, short
conferences tons like Gondar, Debere-Tabor etc
On the other hand, as GDP and per capita income of the population increase local people will try
to spend their leisure time with their families in such a resort, just like "ferenjis” do.

Pricing and Distribution

Pricing of a lodge and restaurant services could be classified into three main categories i.e.
food, beverage and bed rent. In this regard the daily average price by category of service is

3
given in table 2 bellow. Type of food to be prepared at this site is both of "ferenji" culture
domistic

Table 2
Average price of service by category

Type of Service Unit Price in Birr

Food 50 / meal / person
Beverage 50/bottle(excluding whisky)

Bed Rent 305/night/ person

3.2Plant Capacity

Working days are assumed to be 365/year for food and beverage and 300/ year. The
attainable capacity and revenue of the proposed lodge and restaurant for each category of
service is estimated as follows.

4
Table 3
Capacity and Revenue of the Hotel and Restaurant by category
Of Service in 365 Days

Annual
Type of Service Quantity/day Capacity Revenue In Birr
3.3 Food 35 persons 10,800 842,931 Produ
Beverage 40 bottles 20,200 749,272 ction
Bed night 24 beds 3,000 1,154,700
Total - - 2,746,903
Program

The service program of the proposed logde and restaurant is assumed to start at 70% in the
first year and increases by 10% until 100% is reached in the second year.

3. Raw Mate rials and Utilities

3.1 Availability and Source of Raw materials

Required raw materials for lodge and restaurant service include food items, beverages (hot
and cold), room clothing beds, detergents and the likes. All raw materials are available in the
domestic market.

5
Bed rooms A total of 80 classes are allotted for room with options to avail two different types
of accommodations. Actually the standard requires allowing maximum 30% from the total
while the rest can remain with big double bed rooms or any other smaller rooms.

3.2 Annual Requirement and Cost of Raw Materials and Utilities

The cost of annual requirement of raw materials of the project is estimated as percentage of
the respective service revenue as indicated in table 4 bellow.

6
 Table 4
Cost of raw materials as percentage of Revenue

Service Revenue Percentage Cost

Food 328,500 40 337,172
Beverages 292,000 60 449,717
Bed rent 450,000 10 115,470
Total 902,360

Utility cost of the project is estimated to be about Birr 30,000 per annum and cost of office
furniture is Birr 5,000.

4. Location and Site

The location of the proposed project is at around debretabor town and these view like this.

7
 5. Technology and Engineering

5.1 Production Process

The main processes of establishing modern hotels and restaurants at Blue Nile Falls include
studying the market, securing land, constructing buildings, equipping and furnishing the
buildings and starting the operations of the businesses.

5.2 Machinery and Equipment

Machinery and equipment required for a modern hotel and restaurant could broadly be classified
into four categories. These are;
 Bed room furniture,(includes beds, mattress, blankets, bed sheets, tables, chairs, cap
boards, etc)
 Hotel furniture and equipments (tables ,chairs, glasses etc)

8
  Restaurant furniture and equipments ( tables, chairs, refrigerator, glasses, etc)
 Kitchen utensils ( forks, spoons, trays, dish, deep freezer, etc)

Estimated cost of such furniture and fixture for a traditional hotel and restaurant is estimated in
table 5 bellow.
Table 5

9
 Estimated cost of furniture and fixture of the project

Cost center Quantity Cost in Birr

Bed room For 10 beds 51,320
lodge For 10 tables 25,660
Restaurant For 10 tables 25,660
lodge 40 chairs 20,528
Restaurant 40 chairs 20,528
Kitchen Sets 128,300
Total 271,996
Office Furniture 12,830

5.3 Civil Engineering Cost

Eyerusalem lodge and restaurant will require about 10000m2 of land, of which 500m2 is for the
construction of 10 self contend bed rooms and 300 m2 for hotel and restaurant. Assuming that
the hotel and restaurant will be made from traditional materials, the investment cost for 10 bed
rooms is about Birr 1,026,400 (Birr 2,000/m2) and for hotel and restaurant is Birr 1.026,400 (Birr
2,000/m2), Land lease will be Birr 60 /m sq. The plant will require additional Birr 120,000.00 for
land preparation and park decoration, which totals to about Birr 2,181,100

6. Human Resource and Training RequirementT

The organizational structure of the project is designed by including all the necessary personal
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activity of plant. Depending up on the
nature of the center and the amount of work to be performs under each will be supervised by the
unit head that is accountability for general manager

6.1 Human Resource

For smooth and efficient operation of the organization, it has been anticipated that each units will
have adequate number of qualified and experienced manpower. The labor component of the

10
International lodge and restaurant Service G/manager will hire qualified and experienced in
management whose main responsibility is to coordinate the overall activity of the project. The
distinct units have their own operational teams under them. To fill in all these work units with
the required manpower The project will provide 65 permanent. For smooth operation of the
project, employees will be given on job training, clear duties and responsibilities under the direct
supervision of their respective units.

Human Resources Requirement

6.2 Training Requirement

For Hotel and Restaurant services trained manpower is available in the market

7. Financial Analysis

7.1 Underlying Assumption

The financial analysis of milk powder producing plant is based on the data provided in the
preceding chapters and the following assumptions.

11
 A. Construction and Finance

Construction period 2 year

Source of finance 30% equity and 70% 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%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local 30 days

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

12
 7.2 Investment

The total investment cost of the project including working capital is estimated at Birr 2.9 million
as shown in table 7 below. The Owner shall contribute 30% of the finance in the form of equity
while the remaining 70% is to be financed by bank loan.

Table 7: Total initial investment

  LC FC Total
Land 120,000   120,000
Building 2,181,100 0 2,181,100
Office equipment 12,830 0 12,830
Vehicles 0 0 0
machinery & equipment 271,996 0 271,996
Total Fixed Investment 2,585,926 0 2,585,926
Pre production 123,617 0 123,617
Total Initial Investment 2,709,543 0 2,709,543
Working capital 230,417 0 230,417
Total 2,939,960 0 2,939,960

*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.

7.3 Production Costs

The summary of the production costs at full capacity is show in Table 8. The total production
cost including depreciation will amount to about Birr 1,984 thousands. Of the total production
cost, raw materials will account for 48.7%.

13
Table 8

Total Production Cost at full Capacity

Items Cost
1.      Raw materials 902,360
2.      Utilities 30,000
3.      Wages and Salaries 469,270
4.      Spares and Maintenance 74,170
Factory costs 1,475,800
5.      Depreciation 162,261
6.      Financial costs 169,582
  Total Production Cost 1,807,643
7.4 Financial
Evaluation

I. Profitability
The financial projections made reveal that the project is economically viable and social desirable.
According to the income statement of the plant the project will generate profit beginning from
first year operation. Important ratios such as the percentage of net profit to equity (return on
equity) and net profit and interest on total investment (return on total investment) are 347% and
30% in the first year and are gradually increasing.

II. Breakeven Analysis

The break even point of the project is estimated by using income statement projection. The plant
breaks evens at 25.7% of capacity utilization.

III. Payback Period

The Initial investment of the project will be recovered before the end of the third year operation

IV. Simple Rate of Return

It is a ratio of net profit and interest to total capital invested for a single year at full capacity
utilization. Thus the simple rate of return of the project is about 28.1%

14
 V. Internal Rate of Return and Net Present Value
Base on the cash fallow statement, the project is anticipated to have a net present value of Birr
907 thousands when discounted at 18% discounting factor where as its IRR is 25.6%.

VI. Sensitivity Analysis

An increase in costs of raw materials by 10% will not affect the profitability of the pant

8. Economic and Social Benefit and Justification

Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained earlier. In
general the envisaged project promotes the socio-economic goals and objectives stated in the
strategic plan of the Amhara National Regional State as well as promote tourisms of the country.
These benefits are listed as follows

A. Profit Generation

The project is found to be financially viable and earns on average a profit of birr 0.59 million per
year and birr 5.9 million within the project life. Such result induces the project promoters to
reinvest the profit which, therefore, increases the investment magnitude in the region.

B. Tax Revenue

In the project life under consideration, the region will collect about birr 2,217 thousands 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

The proposed project is expected to create employment opportunity to 14 citizens of the country.
This would be one of the commendable accomplishments of the project.

15
 D. Pro Environment Project

The proposed production process is environment friendly.

16
ANNEXES

17
Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTIO
N PRODUCTION
  Year 1 Year 2 1 2 3 4

Capacity Utilization (%) 0.00 0.00 80% 90% 100% 0%

1. Total Inventory 0.00 0.00 207749.3 233718 259686.6 0

Raw Materials in Stock- Total 0.00 0.00 59333.23 66749.9 74166.53 0

Raw Material-Local 0.00 0.00 59333.23 66749.9 74166.53 0

Raw Material-Foreign 0.00 0.00 0 0 0 0

Factory Supplies in Stock 0.00 0.00 1107.973 1246.46 1384.973 0

Spare Parts in Stock and Maintenance 0.00 0.00 4876.94 5486.57 6096.175 0

Work in Progress 0.00 0.00 27699.3 31161.71 34624.12 0

Finished Products 0.00 0.00 55398.61 62323.42 69248.26 0

2. Accounts Receivable 0.00 0.00 180618.3 203195.6 225772.8 0

3. Cash in Hand 0.00 0.00 35917.82 40407.55 44897.28 0

CURRENT ASSETS 0.00 0.00 364952.1 410571.2 456190.2 0

4. Current Liabilities 0.00 0.00 180618.3 203195.6 225772.8 0

Accounts Payable 0.00 0.00 180618.3 203195.6 225772.8 0

TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 184333.9 207375.6 230417.3 0

INCREASE IN NET WORKING CAPITAL 0.00 0.00 184333.9 23041.73 23041.73 -230417

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 259686.6 259686.6 259686.6 259686.6 259686.6 259686.6

Raw Materials in Stock-Total 74166.53 74166.53 74166.53 74166.53 74166.53 74166.53

Raw Material-Local 74166.53 74166.53 74166.53 74166.53 74166.53 74166.53

Raw Material-Foreign 0 0 0 0 0 0

Factory Supplies in Stock 1384.973 1384.973 1384.973 1384.973 1384.973 1384.973

Spare Parts in Stock and Maintenance 6096.175 6096.175 6096.175 6096.175 6096.175 6096.175

Work in Progress 34624.12 34624.12 34624.12 34624.12 34624.12 34624.12

Finished Products 69248.26 69248.26 69248.26 69248.26 69248.26 69248.26

2. Accounts Receivable 225772.8 225772.8 225772.8 225772.8 225772.8 225772.8

3. Cash in Hand 44897.28 44897.28 44897.28 44897.28 44897.28 44897.28

CURRENT ASSETS 456190.2 456190.2 456190.2 456190.2 456190.2 456190.2

4. Current Liabilities 225772.8 225772.8 225772.8 225772.8 225772.8 225772.8

Accounts Payable 225772.8 225772.8 225772.8 225772.8 225772.8 225772.8

TOTAL NET WORKING CAPITAL REQUIRMENTS 230417.3 230417.3 230417.3 230417.3 230417.3 230417.3

INCREASE IN NET WORKING CAPITAL 230417.3 0 0 0 0 0

2
Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 1297979 1528396 2378141 2494790 2769480 -225773
1. Inflow Funds 1297979 1528396 180618.3 22577.28 22577.28 -225773
Total Equity 519191.6 611358.5 0 0 0 0
Total Long Term Loan 778787.4 917037.8 0 0 0 0
Total Short Term Finances 0 0 180618.3 22577.28 22577.28 -225773
2. Inflow Operation 0 0 2197522 2472213 2746903 0
Sales Revenue 0 0 2197522 2472213 2746903 0
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1297979 1297979 2020040 1878440 2267618 -10116.1
4. Increase In Fixed Assets 1297979 1297979 0 0 0 0
Fixed Investments 1236171 1236171 0 0 0 0
Pre-production Expenditures 61808.53 61808.53 0 0 0 0
5. Increase in Current Assets 0 0 364952.1 45619.02 45619.02 -456190
6. Operating Costs 0 0 1200139 1346685 1493231 27770.54
7. Corporate Tax Paid 0 0 0 0 276548.7 0
8. Interest Paid 0 0 454949.3 203499 169582.5 135666
9. Loan Repayments 0 0 0 282637.5 282637.5 282637.5
10. Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 0 230417.3 358100.6 616349.8 501861.9 -215657
Cumulative Cash Balance 0 230417.3 588518 1204868 1706730 1491073

3
4
Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 2972676 2746903 2746903 2746903 2746903 2746903
1. Inflow Funds 225772.8 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 225772.8 0 0 0 0 0
2. Inflow Operation 2746903 2746903 2746903 2746903 2746903 2746903
Sales Revenue 2746903 2746903 2746903 2746903 2746903 2746903
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 2630706 2158192 2134450 1828071 1828071 1828071
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 456190.2 0 0 0 0 0
6. Operating Costs 1493231 1493231 1493231 1493231 1493231 1493231
7. Corporate Tax Paid 296898.6 314490.6 324665.5 334840.4 334840.4 334840.4
8. Interest Paid 101749.5 67833.01 33916.52 0 0 0
9. Loan Repayments 282637.5 282637.5 282637.5 0 0 0
10. Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 341969.5 588711.3 612452.9 918832 918832 918832
Cumulative Cash Balance 1833042 2421754 3034207 3953039 4871871 5790703

5
6
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 2197522 2472213 2746903 0

1. Inflow Operation 0 0 2197522 2472213 2746903 0

Sales Revenue 0 0 2197522 2472213 2746903 0

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 1297979 1297979 1384472 1369726 1792821 -202647

3. Increase in Fixed Assets 1297979 1297979 0 0 0 0

Fixed Investments 1236171 1236171 0 0 0 0

Pre-production Expenditures 61808.53 61808.53 0 0 0 0

4. Increase in Net Working Capital 0 0 184333.9 23041.73 23041.73 -230417

5. Operating Costs 0 0 1200139 1346685 1493231 27770.54

6. Corporate Tax Paid 0 0 0 0 276548.7 0

NET CASH FLOW -1297979 -1297979 813050 1102486 954082 202646.8

CUMMULATIVE NET CASH FLOW -1297979 -2595958 -1782908 -680422 273660.3 476307.1

Net Present Value (at 18%) -1297979 -1099982 583919.8 671007.3 492104.9 88578.78

Cumulative Net present Value -1297979 -2397961 -1814041 -1143034 -650929 -562350

7
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 2746903 2746903 2746903 2746903 2746903 2746903

1. Inflow Operation 2746903 2746903 2746903 2746903 2746903 2746903

Sales Revenue 2746903 2746903 2746903 2746903 2746903 2746903

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 2020546 1807721 1817896 1828071 1828071 1828071

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 230417.3 0 0 0 0 0

5. Operating Costs 1493231 1493231 1493231 1493231 1493231 1493231

6. Corporate Tax Paid 296898.6 314490.6 324665.5 334840.4 334840.4 334840.4

NET CASH FLOW 726356.5 939181.9 929006.9 918832 918832 918832

CUMMULATIVE NET CASH FLOW 1202664 2141845 3070852 3989684 4908516 5827348

Net Present Value (at 18%) 269065.4 294832.7 247151.3 207156.2 175556.1 148776.4

Cumulative Net present Value -293285 1547.555 248698.8 455855.1 631411.2 780187.6
780,187.63
Net Present Value (at 18%)

Internal Rate of Return 25.6%

8
9
Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
  1 2 3 4 5
Capacity Utilization (%) 80% 90% 100% 0% 100%

1. Total Income 2197522 2472213 2746903 0 2746903

Sales Revenue 856400 963450 1070500 0 1070500
Other Income 0 0 0 0 0
2. Less Variable Cost 398363.8 448159.3 497954.8 0 497954.8
VARIABLE MARGIN 458036.2 515290.7 572545.2 0 572545.2
(In % of Total Income) 53.48 53.48 53.48 #DIV/0! 53.48
3. Less Fixed Costs 132579.1 139894.3 147209.5 74057.5 147209.5
OPERATIONAL MARGIN 325457.1 375396.4 425335.7 -74057.5 425335.7
(In % of Total Income) 38 39 40 #DIV/0! 40
4. Less Cost of Finance 177299 79305.93 66088.28 52870.62 39652.97
5. GROSS PROFIT 148158 296090.5 359247.4 -126928 385682.7
6. Income (Corporate) Tax 0 0 107774.2 0 115704.8
7. NET PROFIT 148158 296090.5 251473.2 -126928 269977.9
RATIOS (%)  
Gross Profit/Sales 17% 31% 34% #DIV/0! 36%
Net Profit After Tax/Sales 17% 31% 23% #DIV/0! 25%
Return on Investment 30% 34% 29% -7% 28%
Return on Equity 34% 67% 57% -29% 61%

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

1. Total Income 2746903 2746903 2746903 2746903 2746903

Sales Revenue 2746903 2746903 2746903 2746903 2746903
Other Income 0 0 0 0 0
2. Less Variable Cost 1277752 1277752 1277752 1277752 1277752
VARIABLE MARGIN 1469151 1469151 1469151 1469151 1469151
(In % of Total Income) 135.998 135.998 135.998 135.998 135.998
3. Less Fixed Costs 353016.2 353016.2 353016.2 353016.2 353016.2
OPERATIONAL MARGIN 1116135 1116135 1116135 1116135 1116135
(In % of Total Income) 105.206 105.206 105.206 105.206 105.206
4. Less Cost of Finance 67833.01 33916.52 0 0 0
5. GROSS PROFIT 1048302 1082218 1116135 1116135 1116135
6. Income (Corporate) Tax 314490.6 324665.5 334840.4 334840.4 334840.4
7. NET PROFIT 733811.3 757552.8 781294.4 781294.4 781294.4
RATIOS (%)  
Gross Profit/Sales 38% 39% 41% 41% 41%
Net Profit After Tax/Sales 27% 28% 28% 28% 28%
Return on Investment 28% 28% 28% 28% 28%
Return on Equity 65% 67% 69% 69% 69%

11
Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL ASSETS 1297979 2826375 3387167 3886875 4272095 3763685
1. Total Current Assets 0 230417.3 953470.1 1615439 2162920 1491073
Inventory on Materials and Supplies 0 0 65318.15 73482.93 81647.68 0
Work in Progress 0 0 27699.3 31161.71 34624.12 0
Finished Products in Stock 0 0 55398.61 62323.42 69248.26 0
Accounts Receivable 0 0 180618.3 203195.6 225772.8 0
Cash in Hand 0 0 35917.82 40407.55 44897.28 0
Cash Surplus, Finance Available 0 230417.3 588518 1204868 1706730 1491073
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 1297979 2595958 2433697 2271436 2109175 1946914
Fixed Investment 0 1236171 2472341 2472341 2472341 2472341
Construction in Progress 1236171 1236171 0 0 0 0
Pre-Production Expenditure 61808.53 123617.1 123617.1 123617.1 123617.1 123617.1
Less Accumulated Depreciation 0 0 162261 324522 486783 649044
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 325697.6
TOTAL LIABILITIES 1297979 2826375 3387167 3886875 4272095 3763685
5. Total Current Liabilities 0 0 180618.3 203195.6 225772.8 0
Accounts Payable 0 0 180618.3 203195.6 225772.8 0
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 778787.4 1695825 1695825 1413188 1130550 847912.6
Loan A 778787.4 1695825 1695825 1413188 1130550 847912.6
Loan B 0 0 0 0 0 0

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7. Total Equity Capital 519191.6 1130550 1130550 1130550 1130550 1130550
Ordinary Capital 519191.6 1130550 1130550 1130550 1130550 1130550
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 380173.5 1139942 1785222
9. Net Profit After Tax 0 0 380173.5 759768.1 645280.2 0
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 380173.5 759768.1 645280.2 0

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

PRODUCTION
  5 6 7 8 9 10
TOTAL ASSETS 4073886 4525059 4999975 5781269 6562563 7343858
1. Total Current Assets 2289233 2877944 3490397 4409229 5328061 6246893
Inventory on Materials and Supplies 81647.68 81647.68 81647.68 81647.68 81647.68 81647.68
Work in Progress 34624.12 34624.12 34624.12 34624.12 34624.12 34624.12
Finished Products in Stock 69248.26 69248.26 69248.26 69248.26 69248.26 69248.26
Accounts Receivable 225772.8 225772.8 225772.8 225772.8 225772.8 225772.8
Cash in Hand 44897.28 44897.28 44897.28 44897.28 44897.28 44897.28
Cash Surplus, Finance Available 1833042 2421754 3034207 3953039 4871871 5790703
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 1784653 1647115 1509578 1372040 1234503 1096965
Fixed Investment 2472341 2472341 2472341 2472341 2472341 2472341
Construction in Progress 0 0 0 0 0 0

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 Pre-Production Expenditure 123617.1 123617.1 123617.1 123617.1 123617.1 123617.1
Less Accumulated Depreciation 811305.1 948842.7 1086380 1223918 1361455 1498993
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 4073886 4525059 4999975 5781269 6562563 7343858
5. Total Current Liabilities 225772.8 225772.8 225772.8 225772.8 225772.8 225772.8
Accounts Payable 225772.8 225772.8 225772.8 225772.8 225772.8 225772.8
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 565275.1 282637.5 0 0 0 0
Loan A 565275.1 282637.5 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 1130550 1130550 1130550 1130550 1130550 1130550
Ordinary Capital 1130550 1130550 1130550 1130550 1130550 1130550
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 1459524 2152288 2886099 3643652 4424946 5206240
9. Net Profit After Tax 692763.3 733811.3 757552.8 781294.4 781294.4 781294.4
Dividends Payable 0 0 0 0 0 0
Retained Profits 692763.3 733811.3 757552.8 781294.4 781294.4 781294.4

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