Investment Office ANRS

Project Profile on the

Establishment of Zoo

Development Studies Associates

(DSA)

October 2008
Addis Ababa
 Table of Contents

1. Executive Summary..................................................................................1
2. Service Description and Application.....................................................1
3. Market Study, Zoo Capacity and Service Program............................2
3.1 Market Study.......................................................................................................2
3.1.1 Present Demand and Supply........................................................................2
3.1.2 Projected Demand........................................................................................3
3.1.3 Pricing and Distribution...............................................................................4
3.2 Zoo Capacity........................................................................................................4
3.3 Service Provision Program..................................................................................4
4. Sources of Animals, their feed and Utilities..........................................5
4.1 Availability and Source of Animals....................................................................5
4.2 Annual Requirement and Cost of Animal Fodder and Utilities..........................5
5 Location and Site.....................................................................................6
6 Service Delivery and Civil Engineering................................................6
6.1 Service Delivery Process.....................................................................................6
6.2 Civil Engineering and Auxiliary Facilities..........................................................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............................................................................................................9
8.3 Service Costs.....................................................................................................10
8.4 Financial Evaluation..........................................................................................11
9 Economic and Social Benefit and Justification..................................12
ANNEXES....................................................................................................13
1. Executive Summary
This project profile deals with the establishment of zoo in Amhara National Regional State Bair
Dar city. The following presents the main findings of the study.

Demand projection divulges that the domestic demand for zoo visitor is substantial and is
increasing with time. Accordingly, the planned zoo is set to provide a service for 65700 visitors
annually. The total investment cost of the project including working capital is estimated at birr
2.3 million and creates 21 job opportunity and 299520 birr of income.

The financial result indicates that the project will generate profit beginning from the third year of
operation. Moreover, the project will break even at 69% of capacity utilization and it will
payback fully the initial investment less working capital in third operational year. The result
further shows that the calculated IRR of the project is 24.3%.

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

Generally the project is technically feasible, financially and commercially viable as well as
socially and economically acceptable. Hence the project is worth implementing.

2. Service Description and Application

Zoo which is also know as zoological garden or zoological park, is an establishment devoted to
the exhibition, preservation and study of animals. Even though many people visit zoos for
entertainment, zoos are also used to teach the public about animal behavior and natural habits.
A zoo plays a role in the conservation of endangered (in danger of extinction) animals by
developing innovative breeding methods to maintain the species that are in danger of extinct or
decline. It offers a variety of opportunities that teach the behavior and natural history of zoo
animals and their wild counter-parts. It will give the opportunity to the educated young people
(young scientists) of the Region to participate in the programs of breeding animals in the zoo.

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These young scientists will protect animal habits in the wild and carry out research that advances
knowledge of animal biology in the Region. The zoo will also introduce people to their local
wildlife by offering valuable learning experience. Children can learn abut the work involved in
keeping animal and about the differences between domestic and wild animals.

3. Market Study, Zoo Capacity and Service Program

3.1 Market Study

3.1.1 Present Demand and Supply

The Amhara region has various opportunities of tourist attraction, and many visitors come to the
Region from different countries every year. There are also people from Addis Ababa and from
other regions who visit the historical places and natural attractions such as Fasiledes (Gondar),
Lalibela, the Blue Nile Water Fall (Chis Abay), Lake Tana, etc. The visitors form other countries
and from other Part of Ethiopia will be interested to visit the rare creatures that come from
different areas.

Being the first in the region and the consistent popularity of tourism and recreation had shown
growing interest among the residents of the region and our country at large will guarantee
smooth functioning of the business and significant revenue. The following table shows the
number of tourists visited the region and the future forecast.

Table 1: No. of tourists visited the region and future forecast

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

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 2014 1577726 573291 1004434
Source: Tourism Potential Report
The Zoo will be 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. Following this
conventions and the ecology of Bahirdar some of the animal that will be kept in the zoo are
presented here under.

Table 2: Type and number of Animal to be kept in the zoo

No. Types of Animal NO.

1 Lion 2
2 Tortoize 4
3 Monkey 4
4 Midako 4
5 Leopard 4
6 Gureza 4
7 Hyna 4
  Total 26

3.1.2 Projected Demand

The park targets three niche market segments: the first group is the local resident, the second
group is local tourist from other region and the third niche is the international tourist.
Accordingly on average 29,200 local residents, 21,900 local tourists and 14,600 international
tourists will expected to visit the park per year. Apart from this the project will expected to have
other two business segments, special occasion like wedding and Rental of the cafeteria. Based on
the above assumption and 10% annual growth rate of the demand, the projected demand for
visitor of the park alone per annum is presented in the following table.

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 Table 3: Projected Demand

Year Projected Demand for Zoo

2007/08 65700
2008/09 72270
3.1.3 Pricing and
2009/10 79497 Distribution
2010/11 87447
Based on the market 2011/12 96191 research result and
2012/13 105811
the consideration of average per-capita
2013/14 116392
income of the 2014/15 128031 region, the entrance
fee is Birr 20 per 2015/16 140834 visitor, Birr 1000
per wedding 2016/17 154917 ceremony and Birr
2017/18 170409
2000 for monthly rent of the Cafeteria.
2018/19 187450
And these figures have been used for
the revenue projection of the park.

3.2 Zoo Capacity

Thus, given the expected demand for the zoo presented earlier, and the planned service and
accommodations, the envisaged zoo is set to host 65700 local Visitor and International tourist.
Moreover the envisaged zoo will have also a capacity to provide a service for three wedding
ceremony per week with average population of fifty person per wedding.

3.3 Service Provision Program

The program is scheduled based on the consideration that the foreseeable zoo will work 360 days
in a year in 2 shifts. During the first year of operation the park will operate at 85 percent capacity
and then it grows to 100 percent starting from the 2 nd year. This consideration is developed based
on the assumption that market and logistics barriers would take place with in the first years of
operation.

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4. Sources of Animals, their feed and Utilities
4.1 Availability and Source of Animals

The main sources of animals for the Zoo will be other National Parks and zoo of the country, and
the zoos of neighboring countries, like Kenya can also be possible sources for the new Zoo to be
established in the Region. The table 4 shows the number, type and cost of animal acquisition that
will be kept in the zoo.

Table 4: Cost of Animal Acquisitions

No. Types of Animal NO. Unit Price Total price

Lion 2 60,000.0 120000

1 0
Tortoize 4 1,000.0 4000
2 0
Monkey 4 2,000.0 8000
3 0
Midako 4 2,000.0 8000
4 0
Leopard 4 20,000.0 80000
5 0
Gureza 4 6,000.0 24000
6 0
Hyna 4 5,000.0 20000
7 0
  Total 26 96000 264,000.00

4.2 Annual Requirement and Cost of Animal Fodder

and Utilities

The annual animal fodder and utility requirement and the associated cost for the envisaged zoo is
listed in table 5 here under

Table 5: Amount and Cost of Annual Nutrition

Types of Annual Cost of
fodder requirements Fodder
of Animal
Food in ton

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 Meet 65.7 520,125

Fruit 26.28 26,280

Leaf & Grass 17.52 4,380

Total Cost   550,785

Table 6: Annual Utility Requirement

Total Cost (in birr)

Utility Quantity L.C. F.C.
Electricity 2000 KWh 1,100  
Water m3 500 1,325  
Total Utility Cost   2,425  

5 Location and Site

The appropriate locations for the envisaged project in view of the availability of input,
infrastructures, market as well as animal Ecology will be Bahir Dar.

6 Service Delivery and Civil Engineering

6.1 Service Delivery Process

The zoo to be instituted will need different kinds of animals (species) for breeding. These
animals will be brought from other zoos and parks. After collecting the animals, breeding and
domesticating the animals will take place.
The park will provide a service for 12 hour a day with adequate tour guide and tiketers in reception.

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 6.2 Civil Engineering and Auxiliary Facilities

The establishment of the zoo will require a minimum area of about 2000 m 2 whose cost will be
Birr 120,000. And also continuous development of the sites will entail the protection of the sites
from human interference, provision of adequate domestication and breeding within the zoo
establishing surveillance center in the sites will all add up value to the society’s perception and
area expertise.

Other costs such as area preparation Office and Cafeteria building and animal hut is presented in
the following table.

Table 7: Engineering Cost

No. Investment Items Cost
1 Building Shelter for the animals 200,000
Establishing mini Cafeteria &
2 restaurants 1,000,000
3 Office Building 500,000
Site Preparation & Constructing foot
4 paths for visitors 200,000
  Total 1,900,000

The cafeteria will provide only auxiliary activities, but the investor can outsource or run it
himself. However it was not treated as a service package of the zoo and only 2000 monthly rent
was considered in revenue projection.

7 Human Resource and Training Requirement

7.1 Human Resource

The list of required manpower for the envisaged zoo is stated in table 8 below.

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 Table 8: Human Resource Requirement
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 2 800 19,200
6 Tour Guides 4 1,500 72,000
7 Tiketers 3 800 28,800
8 Security 4 500 24,000
9 Genitor 4 400 19,200
  Total 21   249,600
Employment Benefits 20% of Annual
  Salary     49,920
  Grand total     299,520

The envisaged zoo therefore, creates 21 job opportunity and about Birr 299,520 of income. The
professionals and support staffs for the envisaged zoo shall be recruited from Amhara region.

7.2 Training Requirement

Training of key personnel shall be conducted in the first quarter of the year. This can be arranged
with the suppliers of the Regional Agricultural office. The training should primarily focuses on
the animal protection, breeding and tour guide. Birr 120,000 will be allocated as training
expense.

8 Financial Analysis
8.1 Underlying Assumption

The financial analysis of the zoo to be established is based on the data provided in the preceding
chapters and the following assumptions.

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 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%
Pre-service (amortization) 20%

C. Working Capital (Minimum Days of Coverage)

Animals feed-Local 30
Fodder Supplies in Stock 30
Spare Parts in Stock and Maintenance 30
Work in Progress 10
Accounts Receivable 30
Cash in Hand 30
Accounts Payable 30

8.2 Investment
The total investment cost of the project including working capital is estimated at Birr 2.1 million
as shown in table 9 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.

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 Table 9: Total Initial Investment

Total Initial Investment

Item Cost
Land 6,000.00
Building and civil works 700,000.00
Office equipment 80,000.00
Plant machinery & equipment 1,200,000.00
Total Fixed Investment 1,986,000.00
Pre service capital expenditure 99,300.00
Total Initial Investment 2,085,300.00
Working capital at full capacity 241,012.28
Total 2,326,312.28
*Pre-service capital expenditure includes - all expenses for pre-investment studies, consultancy fee during
construction and expenses for zoo‘s establishment, project administration expenses, commission expenses, pre-
service marketing and interest expenses during construction.

8.3 Service Costs

The total service cost at full capacity operation is estimated at Birr 1.53 million as detailed in
table10 below.

Table 10: Total Operation Cost

Total Operation Cost at Full Capacity

Items Cost
1.      Cost of Animals and nutrition 814,785.00
2.      Utilities 2,425.00
3.      Wages and Salaries 299,520.00
4.      Spares and Maintenance 59,580.00
Zoo operation costs 1,176,310.00
5.      Depreciation 182,860.00
6.      Financial costs
167,494.48
  Total operation Cost 1,526,664.48

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 8.4 Financial Evaluation

I. Profitability

According to the projected income statement attached in the annex part (see annex 4) the project
will generate profit beginning from the third year of operation. Ratios such as the percentage of
net profit to total sales, return on equity and return on total investment are –22.2%, 4.08% and -
30.05% in the first year and are gradually rising. Furthermore, the income statement and other
profitability indicators show that the project is viable.

II. Breakeven Analysis

The breakeven point of the project is estimated by using income statement projection.
Accordingly, the project will break even at 69.01% of capacity utilization.

III. Payback Period

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 third
operation year.

IV. Simple Rate of Return

For the envisaged zoo the simple rate of return equals to 5.5%.

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
24.3% and the net present value at 18 % discount is Birr 510,597.81.

VI. Sensitivity Analysis

The envisaged zoo is profitable even with considerable cost increment. That is the zoo maintains
to be profitable starting from the first year when 10 % cost increment takes place in the sector.
This result is accompanied by declining total project life profit to Birr 1.06 with same payback
period.

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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 earns on average a profit of birr 248,429
per year and birr 2.48 million within the project life. Such result induces the project promoters to
reinvest the profit which, therefore, increases the investment magnitude in the region.

B. Tax Revenue

In the project life under consideration, the region will collect about birr 1.19 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

The proposed project is expected to create employment opportunity to several citizens of the
region. That is, it will provide permanent employment to 21 professionals as well as support
stuffs. Consequently the project creates income of Birr 299,520 per year. This would be one of
the commendable accomplishments of the project.

D. Pro Environment Project

The proposed service process is environment friendly.

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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 85% 100% 1000% 90%

1. Total Inventory 0 0 252,415 296,958 2,969,585 267,263

Raw Materials in Stock- Total 0 0 75,553 88,886 888,856 79,997

Raw Material-Local 0 0 75,553 88,886 888,856 79,997

Raw Material-Foreign 0 0 0 0 0 0

Factory Supplies in Stock 0 0 1,260 1,483 14,827 1,334

Spare Parts in Stock and Maintenance 0 0 5,525 6,500 64,996 5,850

Work in Progress 0 0 31,508 37,068 370,683 33,361

Finished Products 0 0 63,016 74,137 741,365 66,723

2. Accounts Receivable 0 0 137,422 161,673 1,616,727 145,505

3. Cash in Hand 0 0 27,999 32,939 329,395 29,646

CURRENT ASSETS 0 0 342,282 402,685 4,026,850 362,417

4. Current Liabilities 0 0 137,422 161,673 1,616,727 145,505

Accounts Payable 0 0 137,422 161,673 1,616,727 145,505

TOTAL NET WORKING CAPITAL REQUIREMENTS 0 0 204,860 241,012 2,410,123 216,911

-
INCREASE IN NET WORKING CAPITAL 0 0 204,860 36,152 2,169,110 2,193,212

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 296,958 296,958 296,958 296,958 296,958 296,958

Raw Materials in Stock-Total 88,886 88,886 88,886 88,886 88,886 88,886

Raw Material-Local 88,886 88,886 88,886 88,886 88,886 88,886

Raw Material-Foreign 0 0 0 0 0 0

Factory Supplies in Stock 1,483 1,483 1,483 1,483 1,483 1,483

Spare Parts in Stock and Maintenance 6,500 6,500 6,500 6,500 6,500 6,500

Work in Progress 37,068 37,068 37,068 37,068 37,068 37,068

Finished Products 74,137 74,137 74,137 74,137 74,137 74,137

2. Accounts Receivable 161,673 161,673 161,673 161,673 161,673 161,673

3. Cash in Hand 32,939 32,939 32,939 32,939 32,939 32,939

CURRENT ASSETS 402,685 402,685 402,685 402,685 402,685 402,685

4. Current Liabilities 161,673 161,673 161,673 161,673 161,673 161,673

Accounts Payable 161,673 161,673 161,673 161,673 161,673 161,673

TOTAL NET WORKING CAPITAL REQUIREMENTS 241,012 241,012 241,012 241,012 241,012 241,012

INCREASE IN NET WORKING CAPITAL 24,101 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 1,042,650 1,283,662 1,397,122 1,506,251 16,275,055 -137,422
1. Inflow Funds 1,042,650 1,283,662 137,422 24,251 1,455,055 -1,471,222
Total Equity 417,060 513,465 0 0 0 0
Total Long Term Loan 625,590 770,197 0 0 0 0
-
Total Short Term Finances 0 0 137,422 24,251 1,455,055 1,471,222
2. Inflow Operation 0 0 1,259,700 1,482,000 14,820,000 1,333,800
Sales Revenue 0 0 1,259,700 1,482,000 14,820,000 1,333,800
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1,042,650 1,042,650 1,698,790 1,613,560 16,273,792 -2,280,140
4. Increase In Fixed Assets 1,042,650 1,042,650 0 0 0 0
Fixed Investments 993,000 993,000 0 0 0 0
Pre-production Expenditures 49,650 49,650 0 0 0 0
5. Increase in Current Assets 0 0 342,282 60,403 3,624,165 -3,664,434
6. Operating Costs 0 0 983,483 1,153,032 11,325,927 1,040,000
7. Corporate Tax Paid 0 0 0 0 951,490 0
8. Interest Paid 0 0 373,024 167,494 139,579 111,663
9.Loan Repayments 0 0 0 232,631 232,631 232,631
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 0 241,012 -301,668 -107,309 1,262 2,142,718
Cumulative Cash Balance 0 241,012 -60,656 -167,965 -166,703 1,976,015

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 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 1,498,167 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000
1. Inflow Funds 16,167 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 16,167 0 0 0 0 0
2. Inflow Operation 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000
Sales Revenue 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1,528,387 1,474,535 1,454,994 1,202,822 1,202,822 1,202,822
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 40,269 0 0 0 0 0
6. Operating Costs 1,153,032 1,153,032 1,153,032 1,153,032 1,153,032 1,153,032
7. Corporate Tax Paid 18,708 33,041 41,416 49,790 49,790 49,790
8. Interest Paid 83,747 55,831 27,916 0 0 0
9. Loan Repayments 232,631 232,631 232,631 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) -30,220 7,465 27,006 279,178 279,178 279,178
Cumulative Cash Balance 1,945,795 1,953,260 1,980,265 2,259,443 2,538,621 2,817,799

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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 1,259,700 1,482,000 14,820,000 1,333,800

1. Inflow Operation 0 0 1,259,700 1,482,000 14,820,000 1,333,800

Sales Revenue 0 0 1,259,700 1,482,000 14,820,000 1,333,800

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 1,042,650 1,042,650 1,188,344 1,189,184 13,495,037 -1,153,212

3. Increase in Fixed Assets 1,042,650 1,042,650 0 0 0 0

Fixed Investments 993,000 993,000 0 0 0 0

Pre-production Expenditures 49,650 49,650 0 0 0 0

4. Increase in Net Working Capital 0 0 204,860 36,152 2,169,110 -2,193,212

5. Operating Costs 0 0 983,483 1,153,032 11,325,927 1,040,000

6. Corporate Tax Paid 0 0 0 0 0 0

NET CASH FLOW -1,042,650 -1,042,650 71,356 292,816 1,324,963 2,487,012

CUMULATIVE NET CASH FLOW -1,042,650 -2,085,300 -2,013,944 -1,721,127 -396,165 2,090,847

Net Present Value (at 18%) -1,042,650 -883,602 51,247 178,217 683,401 1,087,096

Cumulative Net present Value -1,042,650 -1,926,252 -1,875,005 -1,696,788 -1,013,387 73,709

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000

1. Inflow Operation 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000

Sales Revenue 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 1,195,841 1,186,073 1,194,447 1,202,822 1,202,822 1,202,822

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 24,101 0 0 0 0 0

5. Operating Costs 1,153,032 1,153,032 1,153,032 1,153,032 1,153,032 1,153,032

6. Corporate Tax Paid 18,708 33,041 41,416 49,790 49,790 49,790

NET CASH FLOW 286,159 295,927 287,553 279,178 279,178 279,178

CUMULATIVE NET CASH FLOW 2,377,006 2,672,933 2,960,486 3,239,664 3,518,841 3,798,019

Net Present Value (at 18%) 106,002 92,899 76,500 62,942 53,341 45,204

Cumulative Net present Value 179,711 272,610 349,110 412,053 465,394 510,598

Net Present Value (at 18%) 510,597.81

Internal Rate of Return 24.3%

Annex 4: NET INCOME STATEMENT ( in Birr)

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 PRODUCTION
  1 2 3 4 5
Capacity Utilization (%) 85% 100% 1000% 90% 100%

1. Total Income 1,259,700 1,482,000 14,820,000 1,333,800 1,482,000

Sales Revenue 1,259,700 1,482,000 14,820,000 1,333,800 1,482,000
Other Income 0 0 0 0 0
Annex 4: NET INCOME STATEMENT (in Birr): Continued
2. Less Variable Cost 858,937 1,010,514 10,105,137 909,462 1,010,514
PRODUCTION
VARIABLE MARGIN 400,763 471,486 4,714,863 424,338 471,486
  6 7 8 9 10
(In % of Total Income) 31.81 31.81 31.81 31.81 31.81
Capacity Utilization (%) 100% 100% 100% 100% 100%
3. Less Fixed Costs 307,407 325,378 1,403,650 313,397 325,378
1. Total Income 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000
OPERATIONAL MARGIN 93,357 146,108 3,311,213 110,940 146,108
Sales Revenue 1,482,000 1,482,000 1,482,000 1,482,000 1,482,000
(In % of Total Income) 7.41 9.86 22.34 8.32 9.86
Other Income 0 0 0 0 0
4. Less Cost of Finance 373,024 167,494 139,579 111,663 83,747
2. Less Variable Cost 1,010,514 1,010,514 1,010,514 1,010,514 1,010,514
5. GROSS PROFIT -279,668 -21,386 3,171,634 -723 62,361
VARIABLE MARGIN 471,486 471,486 471,486 471,486 471,486
6. Income (Corporate) Tax 0 0 951,490 0 18,708
(In % of Total Income) 31.81 31.81 31.81 31.81 31.81
7. NET PROFIT -279,668 -21,386 2,220,144 -723 43,653
3. Less Fixed Costs 305,518 305,518 305,518 305,518 305,518
RATIOS (%)  
OPERATIONAL MARGIN 165,968 165,968 165,968 165,968 165,968
Gross Profit/Sales -22.20% -1.44% 21.40% -0.05% 4.21%
(In % of Total Income) 11.20 11.20 11.20 11.20 11.20
Net Profit After Tax/Sales -22.20% -1.44% 14.98% -0.05% 2.95%
4. Less Cost of Finance 55,831 27,916 0 0 0
Return on Investment 4.08% 6.28% 52.49% 4.82% 5.48%
5. GROSS PROFIT 110,137 138,053 165,968 165,968 165,968
Return on Equity -30.05% -2.30% 238.59% -0.08% 4.69%
6. Income (Corporate) Tax 33,041 41,416 49,790 49,790 49,790
7. NET PROFIT 77,096 96,637 116,178 116,178 116,178
RATIOS (%)  
Gross Profit/Sales 7.43% 9.32% 11.20% 11.20% 11.20%
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Net Profit After Tax/Sales 5.20% 6.52% 7.84% 7.84% 7.84%
Return on Investment 5.71% 5.35% 4.99% 4.99% 4.99%
Return on Equity 8.29% 10.39% 12.49% 12.49% 12.49%
 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL ASSETS 1,042,650 2,326,312 2,463,734 1,975,686 5,396,867 3,693,014
1. Total Current Assets 0 241,012 281,626 234,720 3,860,147 2,338,431
Inventory on Materials and Supplies 0 0 82,338 96,868 968,680 87,181
Work in Progress 0 0 31,508 37,068 370,683 33,361
Finished Products in Stock 0 0 63,016 74,137 741,365 66,723
Accounts Receivable 0 0 137,422 161,673 1,616,727 145,505
Cash in Hand 0 0 27,999 32,939 329,395 29,646
Cash Surplus, Finance Available 0 241,012 -60,656 -167,965 -166,703 1,976,015
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 1,042,650 2,085,300 1,902,440 1,719,580 1,536,720 1,353,860
Fixed Investment 0 993,000 1,986,000 1,986,000 1,986,000 1,986,000
Construction in Progress 993,000 993,000 0 0 0 0
Pre-Production Expenditure 49,650 99,300 99,300 99,300 99,300 99,300
Less Accumulated Depreciation 0 0 182,860 365,720 548,580 731,440
3. Accumulated Losses Brought Forward 0 0 0 279,668 0 0
4. Loss in Current Year 0 0 279,668 21,386 0 723
TOTAL LIABILITIES 1,042,650 2,326,312 2,463,734 1,975,686 5,396,867 3,693,014
5. Total Current Liabilities 0 0 137,422 161,673 1,616,727 145,505
Accounts Payable 0 0 137,422 161,673 1,616,727 145,505
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 625,590 1,395,787 1,395,787 1,163,156 930,525 697,894
Loan A 625,590 1,395,787 1,395,787 1,163,156 930,525 697,894
Loan B 0 0 0 0 0 0
7. Total Equity Capital 417,060 930,525 930,525 930,525 930,525 930,525
Ordinary Capital 417,060 930,525 930,525 930,525 930,525 930,525
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 -279,668 -301,054 1,919,090
9.Net Profit After Tax 0 0 0 0 2,220,144 0
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 0 0 2,220,144 0
Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL ASSETS 3,519,480 3,363,945 3,227,950 3,344,128 3,460,306 3,576,484
1. Total Current Assets 2,348,480 2,355,945 2,382,950 2,662,128 2,941,306 3,220,484
Inventory on Materials and Supplies 96,868 96,868 96,868 96,868 96,868 96,868
Work in Progress 37,068 37,068 37,068 37,068 37,068 37,068
Finished Products in Stock 74,137 74,137 74,137 74,137 74,137 74,137
Accounts Receivable 161,673 161,673 161,673 161,673 161,673 161,673
Cash in Hand 32,939 32,939 32,939 32,939 32,939 32,939
Cash Surplus, Finance Available 1,945,795 1,953,260 1,980,265 2,259,443 2,538,621 2,817,799 8
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 1,171,000 1,008,000 845,000 682,000 519,000 356,000
Fixed Investment 1,986,000 1,986,000 1,986,000 1,986,000 1,986,000 1,986,000
Construction in Progress 0 0 0 0 0 0