Financial projections model bplans africa by Bplans Africa

Financial Projections Model Sample Plan

Bplans Africa

2/9/18

Course

FINANCIAL ASSUMPTIONS AND NOTES

General First Year of Operations

2017

First Month of Accounting

May 2017

First Month of Sales

October 2017

Company Tax %

28.00%

Employee Tax % (PAYE, UIF, etc.)

20.00%

VAT %

14.00%

VAT Payment Method

Bimonthly

Debtors Days Year

2017

2018

2019

2020

2021

% Sales 30 Days

0.0%

% Sales 60 Days

0.0%

Total Sales on Credit

0.0%

% Sales on Cash

100.0%

Creditors Days Year Cash Purchases % Number of Days Payable

2017

2018

2019

2020

2021

100.0%

Financial Projections Summary

2017

2018

2019

2020

2021

Operating results Total sales

2,755,000

14,050,000

24,366,250

27,105,356

30,189,220

592,325

3,096,269

5,503,955

6,098,705

6,732,196

Gross profit

2,162,675

10,953,731

18,862,295

21,006,651

23,457,024

Operating expenses

8,314,538

6,722,335

7,688,870

8,231,151

8,813,975

-6,151,863

4,231,396

11,173,425

12,775,500

14,643,049

10,417

68,750

Interest on loans

1,247,018

1,313,746

1,006,412

668,575

297,209

Net profit / loss

-7,409,298

2,848,900

10,098,264

12,038,175

14,277,090

1,550,602

3,370,689

3,997,585 10,279,505

Cost of goods sold

EBITDA Depreciation

Company tax Net earnings

-7,409,298

2,848,900

8,547,662

8,667,486

2017

2018

2019

2020

Current assets

4,446,275

4,900,095

11,675,333

Current liabilities

4,424,796

4,206,255

4,833,211

5,683,451

5,246,761

21,479

693,839

6,842,122

12,865,273

20,231,176

Fixed assets (net)

3,239,583

3,170,833

3,102,083

3,033,333

2,964,583

Total assets

7,685,859

8,070,928

14,777,416

21,582,057

28,442,520

Shareholders' equity

-7,409,298

-4,560,397

3,987,264

12,654,751

22,934,256

Capital expenditures

3,250,000 12,180,326

10,307,624

11,232,535

11,483,517

11,726,104

-268.94%

20.28%

35.08%

31.98%

34.05%

37.07%

105.91%

58.65%

47.63%

217.38%

81.23%

3.26

4.86

2021

Financial position

Working capital

18,548,723

25,477,937

Financial ratios Break-even point (R) Return on revenues Return on assets Return on equity Current ratio

1.00

1.16

2.42

Figure 1: Five-Year Profit and Loss Projections

Figure 2: Gross profit versus Operational Expenses

Figure 3: Five-Year Cash Flow Projections

Figure 4: Five-Year Ending Cash (Bank) Balance Projections

Figure 5: Sales Projections by Distribution Channel

Figure 6: Five-Year Personnel (Payroll) Projections

Key Financial Ratios: Liquidity ratios

2017

2018

2019

2020

2021

Current ratio

1.00

1.16

2.42

3.26

4.86

Quick ratio

0.01

0.85

2.23

3.08

4.64

Cash ratio

0.01

0.85

2.23

3.08

4.64

Interest coverage

-5.94

2.17

10.03

18.01

48.04

Solvency ratios

2017

2018

2019

2020

2021

Total assets / Total liabilities

0.51

0.64

1.37

2.42

5.16

Total liabilities / Total assets x 100%

196.40

156.50

73.02

41.36

19.37

Shareholders' capital / Foreign capital

-0.49

-0.36

0.37

1.42

4.16

Shareholders' capital / Total assets x 100%

-96.40

-56.50

26.98

58.64

80.63

Debt to worth ratio

-2.04

-2.77

2.71

0.71

0.24

Net worth (R)

-7,409,297

-4,560,397

3,987,264

12,654,751

22,934,256

Working capital

2017 Net working capital (R)

21,479

2018 693,839

2019 6,842,122

2020 12,865,273

2021 20,231,176

Activity ratios

2017

2018

2019

2020

2021

Inventory turnover

0.13

2.36

5.98

Total asset turnover

0.36

1.74

1.65

1.26

1.06

Dividend payout Operating cash flow and Free cash flow

2017

EBIT

2018

2019

2020

2021

-6,162,279

4,162,646

11,104,675

12,706,750

14,574,299

10,417

68,750

Income tax

-1,725,438

1,165,541

3,109,309

3,557,890

4,080,804

Operating cash flow (OCF)

-4,426,424

3,065,855

8,064,116

9,217,610

10,562,245

Capital expenditure (Capex)

3,250,000

Change in working capital

21,479

672,360

6,148,282

6,023,151

7,365,903

Free cash flow (FCF)

-7,697,903

2,393,495

1,915,834

3,194,459

3,196,342

+ Depreciation & Amortization -

Internal Rate of Return (IRR): Annual Interest Rate (Discount Rate1)

12.900%

Investment/Funding (Investments from External Sources)

17,500,000

Year

Net Cash Flow (Change in Cash)

2017

9,338,600

2018

3,550,088

2019

7,166,645

2020

6,773,976

2021

6,823,324

Net Present Value (NPV2)

6,425,992

Internal Rate of Return (IRR3)

27.664%

1 Discount Rate refers to the interest rate used to discount future cash flows to the present value, which is a key variable in the process of determining

the NPV. A company’s weighted average cost of capital (after tax) is often used, but many people believe that it is appropriate to use higher discount rates to adjust for risk, opportunity cost, or other factors. Another approach to choosing the discount rate factor is to decide the rate which the capital needed for the project/business could return if invested in an alternative venture. If, for example, the capital required for Business A can earn 15.00% elsewhere, use this discount rate in the NPV calculation to allow a direct comparison to be made between Business A and the alternative. For some professional investors, their investment funds are committed to target a specified rate of return. In such cases, that rate of return should be selected as the discount rate for the NPV calculation. In this way, a direct comparison can be made between the profitability of the project/business and the desired rate of return. The higher the potential risk of the Project/Business, the higher the discount rate to be used. Net Present Value (NPV) refers to the different between the present value cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyse the profitability of an investment or project. In finance, the net present value (NPV) or net present worth (NPW) is defined as the sum of the present values (PVs) of incoming and outgoing cash flows over a period. 2

The discount rate often used in capital budgeting that makes the net present value of all cash flows from a project equal to zero. The higher a project's internal rate of return, the more desirable it is to undertake the project. As such, Internal Rate of Return (IRR) can be used to rank several prospective businesses/projects to invest in. Assuming all other factors are equal among the various projects/businesses, the project/business with the highest IRR would probably be considered the best and undertaken first. IRR is sometimes referred to as ‘economic rate of return (ERR)’. 3

One can think of IRR as the rate of growth a project/business is expected to generate. While the actual rate of return that a given project/business ends up generating will often differ from its estimated IRR rate, a project/business with a substantially higher IRR value than other available investment options would still provide a much better chance of strong growth. IRR’s can also be compared against prevailing rates of return in the securities market, e.g. the JSE (Johannesburg Stock Exchange). If an investor can't find any projects/businesses with IRRs greater than the returns that can be generated in the financial markets, it may simply choose to invest its investment funds into the market (in this case, the local Johannesburg Stock Exchange). Over the past 90 years, i.e. since the beginning of 1925, the South African equity market has delivered an average annual real return of 8.4%, which means that a lump sum equivalent of R1,000 today, invested in 1925, would have grown to more than R1,35 million at the end of 2014 after inflation is stripped out. Over the past 10 years (January 2006 to December 2015) annual returns on the FTSE/JSE All-Share averaged 12.900% per annum (before inflation). The FTSE/JSE Top 40 return 12.750% during the same period. The SA All Bond Index (ALBI) returned an average 8.910% per annum and the money market, represented by the three-month interbank lending rate (JIBAR) returned an average 7.300% per annum before any fees and inflation. With the above being said, a potential investor – when comparing an investment into a project/business to the rates of return of the South African equity market – would seek an IRR of at least 12.900%. Index % (ZAR)

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

FTSE/JSE All-Share

41.2%

19.2%

-23.2%

32.1%

19.0%

2.6%

26.7%

21.4%

10.9%

5.1%

FTSE/JSE Top 40

40.9%

19.0%

-23.6%

31.7%

17.2%

22.2%

26.1%

22.8%

9.2%

7.5%

FUNDING/FINANCING (INVESTMENT)

Funding/Financing (Investment) Requirement Foreign Capital

Principal Amount

External Loans

Term in Months

Start Date

Monthly Payment

Interest %

Initial Payment Starts 1 Month after Receipt?

New Assets

3,250,000

May 2017

9.50%

68,256

Yes

Stock/Inventory

5,000,000

May 2017

9.50%

105,009

Yes

Start-Up Expenses

4,300,000

May 2017

9.50%

90,308

Yes

Working Capital

4,950,000

October 2017

9.50%

103,959

Yes

Funding/Financing Allocation (Use of Funds) Start-Up Costs Expenses to be Funded

Amount

Advertising, Marketing and Social Media Unexpected Expenses/Contingencies

3,000,000 300,000

Travel, Project Coordination and Logistics

1,000,000

Subtotal

4,300,000

VAT %

602,000

Total

4,902,000

Investments New Fixed Assets to be Funded

Start Date

Useful Life (Years)

Book Value

January 2018

750,000

April 2018

2,000,000

Buildings and Renovations Setup of Store Within A Store (SWS) Setup of Flagship Retail Store Non-depreciable assets Setup of E-Commerce/Online Store

August 2017

500,000

SALES Sales Projections | Annual | Year 1-5 2017 E-Commerce/Online …… Net sales Cost of goods Cost of goods % Gross profit Shop Within A Shop (SWS) …… Net sales Cost of goods Cost of goods % Gross profit Flagship …… Net sales Cost of goods Cost of goods % Gross profit Overall total sales Total net sales Total cost of goods Total gross profit Total VAT Total sales incl. VAT

2018

2019

2020

2021

2,475,000 2,475,000 532,125 21.5% 1,942,875

5,465,000 5,465,000 1,204,349 22.0% 4,260,651

6,421,375 6,421,375 1,450,488 22.6% 4,970,887

7,545,116 7,545,116 1,697,651 22.5% 5,847,465

8,865,511 8,865,511 1,977,009 22.3% 6,888,502

280,000 280,000 60,200 21.5% 219,800

6,665,000 6,665,000 1,468,799 22.0% 5,196,201

7,164,875 7,164,875 1,618,433 22.6% 5,546,442

7,702,241 7,702,241 1,733,004 22.5% 5,969,236

8,279,909 8,279,909 1,846,420 22.3% 6,433,489

1,920,000 1,920,000 423,120 22.0% 1,496,880

10,780,000 10,780,000 2,435,034 22.6% 8,344,966

11,858,000 11,858,000 2,668,050 22.5% 9,189,950

13,043,800 13,043,800 2,908,767 22.3% 10,135,033

14,050,000 3,096,269 10,953,731 1,967,000 16,017,000

24,366,250 5,503,955 18,862,295 3,411,275 27,777,525

27,105,356 6,098,705 21,006,651 3,794,750 30,900,106

30,189,220 6,732,196 23,457,024 4,226,491 34,415,710

2,755,000 592,325 2,162,675 385,700 3,140,700

Sales Projections | Monthly | Year 1-2 2017 (R) Month

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

E-Commerce/Online ……

240,000

320,000

350,000

320,000

390,000

405,000

450,000

Net sales

240,000

320,000

350,000

320,000

390,000

405,000

450,000

Cost of goods

51,600

68,800

75,250

68,800

83,850

87,075

96,750

0.0%

21.5%

188,400

251,200

274,750

251,200

306,150

317,925

353,250

280,000 60,200

Cost of goods % Gross profit Shop Within A Shop (SWS) …… Net sales Cost of goods

280,000 0

0.0%

21.5%

219,800

Net sales

Cost of goods

0.0%

Total net sales

240,000

320,000

350,000

320,000

390,000

405,000

730,000

Total cost of goods

51,600

68,800

75,250

68,800

83,850

87,075

156,950

Total gross profit

188,400

251,200

274,750

251,200

306,150

317,925

573,050

Cost of goods % Gross profit Flagship ……

Cost of goods % Gross profit Overall total sales

2018 (R) Month

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

E-Commerce/Online ……

350,000

420,000

310,000

410,000

400,000

340,000

420,000

450,000

520,000

590,000

605,000

650,000

Net sales

350,000

420,000

310,000

410,000

400,000

340,000

420,000

450,000

520,000

590,000

605,000

650,000

Cost of goods

77,131

92,558

68,316

90,354

88,150

74,928

92,558

99,169

114,595

130,021

133,327

143,244

Cost of goods %

22.0%

272,869

327,443

241,684

319,646

311,850

265,073

327,443

350,831

405,405

459,979

471,673

506,756

……

475,000

545,000

435,000

535,000

525,000

465,000

645,000

575,000

545,000

615,000

630,000

675,000

Net sales

475,000

545,000

435,000

535,000

525,000

465,000

645,000

575,000

545,000

615,000

630,000

675,000

Cost of goods

104,678

120,104

95,863

117,901

115,697

102,474

142,142

126,716

120,104

135,531

138,836

148,753

Gross profit Shop Within A Shop (SWS)

Cost of goods %

22.0%

370,322

424,896

339,137

417,099

409,303

362,526

502,858

448,284

424,896

479,469

491,164

526,247

……

400,000

420,000

510,000

590,000

Net sales

400,000

420,000

510,000

590,000

Cost of goods

88,150

92,558

112,391

130,021

0.0%

22.0%

311,850

327,443

397,609

459,979

Total net sales

825,000

965,000

745,000

945,000

925,000

805,000

1,065,000

1,025,000

1,465,000

1,625,000

1,745,000

1,915,000

Total cost of goods

181,809

212,662

164,179

208,254

203,847

177,402

234,699

225,884

322,849

358,109

384,554

422,018

Total gross profit

643,191

752,338

580,821

736,746

721,153

627,598

830,301

799,116

1,142,151

1,266,891

1,360,446

1,492,982

Gross profit Flagship

Cost of goods % Gross profit Overall total sales

PERSONNEL REQUIREMENTS

Personnel Plan Personnel Plan

2017

Headcount Net Payroll (Net Earnings) Payroll

Burden4

Total (Gross) Personnel Cost

2018

2019

2020

2021

2,772,500

4,420,200

4,685,412

4,966,537

5,264,529

346,563

552,525

585,677

620,817

658,066

3,119,063

4,972,725

5,271,089

5,587,354

5,922,595

Payroll Burden refers to expense items over and above the net (Cash) salary component, including Employers Pension Fund Contributions, PAYE, UIF, Bonuses, etc.; in other words, Net Payroll (Net Earnings) plus the Payroll Burden results in the Total Personnel Cost to the Company (Cost to Company/Gross Earnings). 4

Job Categories No. of

Start

Staff

date

2017 No. staff

Payroll

Overtime

Bonus

Payroll Burden

Total

Management Co-Founder, Mr John Doe

May 2017

Co-Founder, Mr JJ

May 2017

C, Partnership Manager

May 2017

Design and Operations Head of Creative

May 2017

240,000

30,000

270,000

Designers

May 2017

840,000

105,000

945,000

E-Commerce Representative

Aug 2017

450,000

56,250

506,250

Content and Social Media Designers

Aug 2017

450,000

56,250

506,250

Visual Designer

Aug 2017

157,500

19,688

177,188

Copywriter

Aug 2017

135,000

16,875

151,875

Supply Chain Representative

Jan 2018

140,000

17,500

157,500

HR Manager

Jan 2018

60,000

7,500

67,500

Events Manager

Jan 2018

80,000

10,000

90,000

Retail and Merchandise Planner

Jan 2018

60,000

7,500

67,500

Photographer

Jan 2018

40,000

5,000

45,000

Chinese Business Development Manager

Jan 2018

120,000

15,000

135,000

E-Commerce and Digital

Administrative and General

Payroll Expenses | Annual | Year 1-5 2017 Management Headcount Payroll Bonuses Payroll burden Total cost Design and Operations Headcount Payroll Bonuses Payroll burden Total cost E-Commerce and Digital Headcount Payroll Bonuses Payroll burden Total cost Administrative and General Headcount Payroll Bonuses Payroll burden Total cost Overall total Headcount Payroll Bonuses Payroll burden Total personnel cost

2018

2019

2020

2021

3 0 0 0 0

5 1,080,000 0 135,000 1,215,000

5 1,144,800 0 143,100 1,287,900

5 1,213,488 0 151,686 1,365,174

5 1,286,297 0 160,787 1,447,084

5 1,363,475 0 170,434 1,533,910

12 1,192,500 0 149,063 1,341,563

12 1,685,400 0 210,675 1,896,075

12 1,786,524 0 223,316 2,009,840

12 1,893,715 0 236,714 2,130,430

12 2,007,338 0 250,917 2,258,256

7 500,000 0 62,500 562,500

7 1,590,000 0 198,750 1,788,750

7 1,685,400 0 210,675 1,896,075

7 1,786,524 0 223,316 2,009,840

7 1,893,715 0 236,714 2,130,430

27 2,772,500 0 346,563 3,119,063

27 4,420,200 0 552,525 4,972,725

27 4,685,412 0 585,677 5,271,089

27 4,966,537 0 620,817 5,587,354

27 5,264,529 0 658,066 5,922,595

INCOME STATEMENT

Income Statement | Summary 2017 Revenue on operations Total sales Cost of goods sold Gross profit Operating expenses General & Administrative Personnel Promotion Insurance Transportation Total operating expenses EBITDA Depreciation Interest Net profit / loss Company tax Net business result Break-even sales

2018

2019

2020

2021

2,755,000 592,325 2,162,675

100.0% 21.5% 78.5%

14,050,000 3,096,269 10,953,731

100.0% 22.0% 78.0%

24,366,250 5,503,955 18,862,295

100.0% 22.6% 77.4%

27,105,356 6,098,705 21,006,651

100.0% 22.5% 77.5%

30,189,220 6,732,196 23,457,024

100.0% 22.3% 77.7%

450,375 3,119,063 55,100 240,000 150,000 8,314,538 -6,151,863 10,417 1,247,018 -7,409,298

16.3% 113.2% 2.0% 8.7% 5.4% 301.8% -223.3% 0.4% 45.3% -268.9%

1,045,610 4,972,725 281,000 264,000 159,000 6,722,335 4,231,396 68,750 1,313,746 2,848,900

7.4% 35.4% 2.0% 1.9% 1.1% 47.8% 30.1% 0.5% 9.4% 20.3%

-7,409,298

-268.9%

2,848,900

20.3%

1,658,171 5,271,089 300,670 290,400 168,540 7,688,870 11,173,425 68,750 1,006,412 10,098,264 1,550,602 8,547,662

6.8% 21.6% 1.2% 1.2% 0.7% 31.6% 45.9% 0.3% 4.1% 41.4% 6.4% 35.1%

1,823,988 5,587,354 321,717 319,440 178,652 8,231,151 12,775,500 68,750 668,575 12,038,175 3,370,689 8,667,486

6.7% 20.6% 1.2% 1.2% 0.7% 30.4% 47.1% 0.3% 2.5% 44.4% 12.4% 32.0%

2,006,387 5,922,595 344,237 351,384 189,372 8,813,975 14,643,049 68,750 297,209 14,277,090 3,997,585 10,279,505

6.6% 19.6% 1.1% 1.2% 0.6% 29.2% 48.5% 0.2% 1.0% 47.3% 13.2% 34.1%

12,180,326

442.1%

10,307,624

73.4%

11,232,535

46.1%

11,483,517

42.4%

11,726,104

38.8%

Income Statement | Annual | Year 1-5 2017

Revenue on operations Total sales Cost of goods sold Gross profit Operating expenses General & Administrative Accounting and auditors' fees Bank fees Computer and software Cleaning expenses Electricity and water Rental Security Telephone and mobile Website hosting and Internet Unexpected expenses Personnel Salaries and benefits Payroll burden Promotion Digital and Social Media Conventional Marketing and PR Insurance Public liability Business and merchandise Transportation Fuel and oil Travelling Total operating expenses EBITDA

2018

2019

2020

2021

2,755,000 592,325 2,162,675

100.0% 21.5% 78.5%

14,050,000 3,096,269 10,953,731

100.0% 22.0% 78.0%

24,366,250 5,503,955 18,862,295

100.0% 22.6% 77.4%

27,105,356 6,098,705 21,006,651

100.0% 22.5% 77.5%

30,189,220 6,732,196 23,457,024

100.0% 22.3% 77.7%

180,000 17,775 18,000 9,600 65,000 40,000 18,000 24,000 18,000 60,000

6.5% 0.6% 0.7% 0.3% 2.4% 1.5% 0.7% 0.9% 0.7% 2.2%

198,000 70,250 19,800 10,560 95,000 520,000 19,800 26,400 19,800 66,000

1.4% 0.5% 0.1% 0.1% 0.7% 3.7% 0.1% 0.2% 0.1% 0.5%

217,800 77,275 21,780 11,616 104,500 1,080,000 21,780 29,040 21,780 72,600

0.9% 0.3% 0.1%

0.9% 0.3% 0.1% 0.4% 4.4% 0.1% 0.1% 0.1% 0.3%

263,538 93,503 26,354 14,055 126,445 1,306,800 26,354 35,138 26,354 87,846

0.9% 0.3% 0.1%

0.4% 4.4% 0.1% 0.1% 0.1% 0.3%

239,580 85,003 23,958 12,778 114,950 1,188,000 23,958 31,944 23,958 79,860

2,772,500 346,563

100.6% 12.6%

4,420,200 552,525

31.5% 3.9%

4,685,412 585,677

19.2% 2.4%

4,966,537 620,817

18.3% 2.3%

5,264,529 658,066

17.4% 2.2%

30,305 24,795

1.1% 0.9%

154,550 126,450

1.1% 0.9%

165,369 135,302

0.7% 0.6%

176,944 144,773

0.7% 0.5%

189,330 154,907

0.6% 0.5%

24,000 216,000

0.9% 7.8%

26,400 237,600

0.2% 1.7%

29,040 261,360

0.1% 1.1%

31,944 287,496

0.1% 1.1%

35,138 316,246

0.1% 1.0%

60,000 90,000 8,314,538 -6,151,863

2.2% 3.3% 301.8% -223.3%

63,600 95,400 6,722,335 4,231,396

0.5% 0.7% 47.8% 30.1%

67,416 101,124 7,688,870 11,173,425

0.3% 0.4% 31.6% 45.9%

71,461 107,191 8,231,151 12,775,500

0.3% 0.4% 30.4% 47.1%

75,749 113,623 8,813,975 14,643,049

0.3% 0.4% 29.2% 48.5%

0.4% 4.3% 0.1% 0.1% 0.1% 0.3%

Depreciation Interest on short term loans Interest on long term loans Net profit / loss Company tax Net business result

2017 10,417 227,352 1,019,667 -7,409,298 -7,409,298

0.4% 8.3% 37.0% -268.9%

2018 68,750 396,155 917,591 2,848,900

-268.9%

2,848,900

20.3%

0.5% 2.8% 6.5% 20.3%

2019 68,750 311,661 694,751 10,098,264 1,550,602 8,547,662

% 0.3% 1.3% 2.9% 41.4% 6.4% 35.1%

2020 68,750 218,780 449,795 12,038,175 3,370,689 8,667,486

% 0.3% 0.8% 1.7% 44.4% 12.4% 32.0%

2021 68,750 116,681 180,528 14,277,090 3,997,585 10,279,505

% 0.2% 0.4% 0.6% 47.3% 13.2% 34.1%

Income Statement | Monthly | Year 1-2 2017 (R) Month

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

240,000

320,000

350,000

51,600

68,800

75,250

188,400

251,200

Jan

Feb

Mar

Apr

320,000

390,000

405,000

730,000

68,800

83,850

87,075

156,950

274,750

251,200

306,150

317,925

573,050

Revenue on operations Total sales Cost of goods sold Gross profit Operating expenses General & Administrative Accounting and auditors' fees Bank fees Computer and software expenses Cleaning expenses Electricity and water

15,000

800

1,200

1,600

1,750

1,600

1,950

2,025

3,650

1,500

800

5,000

Rental

7,500

20,000

Security

1,500

Telephone and mobile

2,000

Website hosting and Internet

1,500

Unexpected expenses

5,000

Salaries and benefits

90,000

222,500

347,500

Payroll burden

11,250

27,813

43,438

Digital and Social Media Marketing

2,640

3,520

3,850

3,520

4,290

4,455

8,030

Conventional Marketing and PR

2,160

2,880

3,150

2,880

3,510

3,645

6,570

Personnel

Promotion

Insurance Public liability Business and merchandise

2,000

18,000

5,000

Transportation Fuel and oil Travelling Total operating expenses

7,500

4,466,850

166,850

315,913

321,113

323,113

323,863

463,738

465,488

488,363

496,488

EBITDA

-4,466,850

-166,850

-315,913

-132,713

-71,913

-49,113

-212,538 1,563

1,563

5,729

39,188

38,675

38,158

37,637

37,112

36,583

Depreciation Interest on short term loans Interest on long term loans Net profit / loss

-159,338

-170,438

76,563

99,354

98,054

96,744

95,423

94,092

92,750

91,398

90,035

88,661

87,276

85,880

-4,466,850

-266,204

-264,904

-412,656

-411,336

-226,804

-203,850

-179,185

-342,293

-287,198

-296,388

-51,630

-4,466,850

-266,204

-264,904

-412,656

-411,336

-226,804

-203,850

-179,185

-342,293

-287,198

-296,388

-51,630

Company tax Net business result

Average expenses increase % General & Administrative

10.0%

Promotion

7.0%

Insurance

10.0%

Transportation

6.0%

2018 (R) Month

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr 1,915,000

Revenue on operations Total sales

825,000

965,000

745,000

945,000

925,000

805,000

1,065,000

1,025,000

1,465,000

1,625,000

1,745,000

Cost of goods sold

181,809

212,662

164,179

208,254

203,847

177,402

234,699

225,884

322,849

358,109

384,554

422,018

Gross profit

643,191

752,338

580,821

736,746

721,153

627,598

830,301

799,116

1,142,151

1,266,891

1,360,446

1,492,982

Operating expenses General & Administrative Accounting and auditors' fees

16,500

Bank fees

4,125

4,825

3,725

4,725

4,625

4,025

5,325

5,125

7,325

8,125

8,725

9,575

Computer and software expenses

1,650

880

7,500

10,000

20,000

90,000

Security

1,650

Telephone and mobile

2,200

Website hosting and Internet

1,650

Unexpected expenses

5,500

368,350

46,044

Digital and Social Media Marketing

9,075

10,615

8,195

10,395

10,175

8,855

11,715

11,275

16,115

17,875

19,195

21,065

Conventional Marketing and PR

7,425

8,685

6,705

8,505

8,325

7,245

9,585

9,225

13,185

14,625

15,705

17,235

Cleaning expenses Electricity and water Rental

Personnel Salaries and benefits Payroll burden Promotion

Insurance Public liability Business and merchandise

2,200

19,800

5,300

Transportation Fuel and oil

Travelling

7,950

Total operating expenses

527,799

531,299

525,799

530,799

530,299

527,299

533,799

532,799

613,799

617,799

623,299

627,549

EBITDA

115,392

221,039

55,022

205,947

190,854

100,299

296,502

266,317

528,352

649,092

737,147

865,433

5,729

36,049

35,512

34,970

34,424

33,873

33,318

32,759

32,195

31,627

31,055

30,477

29,896

Interest on long term loans

84,474

83,056

81,627

80,186

78,734

77,271

75,796

74,310

72,811

71,301

69,779

68,245

Net profit / loss

-10,860

96,743

-67,304

85,608

72,518

-16,019

182,217

154,083

418,184

541,007

631,161

761,563

-10,860

96,743

-67,304

85,608

72,518

-16,019

182,217

154,083

418,184

541,007

631,161

761,563

Depreciation Interest on short term loans

Company tax Net business result

CASH FLOW STATEMENT

Cash Flow | Annual | Year 1-5 2017 Beginning balance Credit/Debit Cash in Cash sales Sales tax in Short term loans Long term loans Subtotal Cash paid out Cash purchases Suppliers payments Operating expenses General & Administrative Personnel Promotion Insurance Transportation Interest payment Stock issue costs Capital investments Buildings Non-depreciable assets Other payments Short term loans repayment Long term loans repayment Income tax payment Sales tax payments/refunds Dividends Subtotal Ending balance Credit/Debit Change in cash

2018

2019

2020

2021

-9,300,000

38,600

3,588,688

10,755,333

17,529,309

2,755,000 -717,500 4,950,000 12,550,000 19,537,500

14,050,000 1,916,684

24,366,250 2,640,705

27,105,356 2,941,921

30,189,220 3,285,907

15,966,684

27,006,955

30,047,277

33,475,127

5,112,549

6,098,705 99,414

6,732,196 105,890

1,045,610 4,972,725 281,000 264,000 159,000 1,313,746

1,658,171 5,271,089 300,670 290,400 168,540 1,006,412

1,823,988 5,587,354 321,717 319,440 178,652 668,575

2,006,387 5,922,595 344,237 351,384 189,372 297,209

396,404 1,879,640

851,355 2,245,290

935,850 2,468,129

-588,700

1,283,870

2,628,501

1,028,731 2,713,085 1,550,602 2,883,038

1,130,830 2,982,352 3,370,689 3,218,663

10,198,900

12,416,596

19,840,310

23,273,301

26,651,803

38,600

3,588,688

10,755,333

17,529,309

24,352,633

9,338,600

3,550,088

7,166,645

6,773,976

6,823,324

450,375 3,119,063 55,100 240,000 150,000 1,247,018

2,750,000 500,000

Cash Flow | Monthly | Year 1-2

Figure 7: Ending Cash (Bank) Balance 2017

2017 (R) Month

May

Jun

Jul

Aug

Sep

-9,300,000

2,477,300

2,043,027

2,218,453

1,065,117

Oct

Nov

Dec

Jan

Feb

Mar

Apr

559,482

5,194,546

4,838,951

4,542,706

3,131,285

2,739,015

2,354,270

240,000

320,000

350,000

320,000

390,000

405,000

730,000

29,750

40,950

45,150

-64,050

50,750

52,850

-181,650

360,950

395,150

255,950

440,750

457,850

548,350

Beginning balance Credit/Debit Cash in Cash sales Sales tax in

-605,850

-3,850

-73,850

-3,850

Short term loans

4,950,000

Long term loans

12,550,000

Subtotal

11,944,150

-3,850

-73,850

-3,850

5,219,750

Month

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

33,100

33,500

33,900

34,050

33,900

34,250

56,825

58,450

101,250

250,313

390,938

4,800

6,400

7,000

6,400

7,800

8,100

14,600

Operating expenses General & Administrative Personnel Promotion Insurance

20,000

Transportation

12,500

99,354

98,054

96,744

95,423

94,092

131,938

130,072

128,193

126,298

124,388

122,463

Interest payment Capital investments Buildings

750,000

Non-depreciable assets

2,000,000

500,000

Other payments Short term loans repayment Long term loans repayment

164,219

165,519

166,830

168,150

169,482

64,772

65,284

65,801

66,322

66,847

67,377

170,823

172,176

173,539

174,913

176,297

177,693

Income tax payment Sales tax payments/refunds

-609,700

-77,700

25,900

86,100

-13,300

Dividends Subtotal

166,850

430,423

-179,277

1,079,486

501,786

584,686

716,545

691,395

1,667,370

833,020

842,595

2,864,020

2,477,300

2,043,027

2,218,453

1,065,117

559,482

5,194,546

4,838,951

4,542,706

3,131,285

2,739,015

2,354,270

38,600

Ending balance Credit/Debit

Figure 8: Ending Cash (Bank) Balance 2018

2018 (R) Month

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

Beginning balance Credit/Debit

38,600

208,376

405,452

115,013

289,789

214,051

232,726

307,488

571,464

971,825

1,834,801

2,404,863

Cash sales

825,000

965,000

745,000

945,000

925,000

805,000

1,065,000

1,025,000

1,465,000

1,625,000

1,745,000

1,915,000

Sales tax in

111,307

130,907

100,107

128,107

125,307

108,507

144,907

139,307

200,907

223,307

240,107

263,907

Subtotal

936,307

1,095,907

845,107

1,073,107

1,050,307

913,507

1,209,907

1,164,307

1,665,907

1,848,307

1,985,107

2,178,907

Cash in

Month

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

Operating expenses General & Administrative

61,655

62,355

61,255

62,255

62,155

61,555

62,855

62,655

134,855

135,655

138,755

139,605

Personnel

414,394

Promotion

16,500

19,300

14,900

18,900

18,500

16,100

21,300

20,500

29,300

32,500

34,900

38,300

Insurance

22,000

Transportation Interest payment

13,250

120,523

118,567

116,597

114,610

112,608

110,589

108,555

106,505

104,439

102,356

100,257

98,141

Other payments Short term loans repayment

67,910

68,448

68,989

69,536

70,086

70,641

71,200

71,764

72,332

72,905

73,482

74,063

Long term loans repayment

179,100

180,518

181,947

183,387

184,839

186,302

187,777

189,264

190,762

192,272

193,794

195,329

Income tax payment Sales tax payments/refunds

-128,800

242,214

228,214

233,814

284,214

424,214

Dividends Subtotal

766,531

898,831

1,135,545

898,331

1,126,045

894,831

1,135,145

900,331

1,265,545

985,331

1,415,045

995,081

208,376

405,452

115,013

289,789

214,051

232,726

307,488

571,464

971,825

1,834,801

2,404,863

3,588,688

Ending balance Credit/Debit

BALANCE SHEET

Balance Sheet | Annual | Year 1-5 ASSETS Current assets Cash/Bank Stock/Inventory Total current assets Fixed assets Buildings Non-depreciable assets Less: Accumulated depreciation Total fixed assets TOTAL ASSETS LIABILITIES AND EQUITY Current liabilities Sales tax payable Income tax payable Short term loans Total current liabilities Long term liabilities Long term loans Total long term liabilities Shareholders' equity Retained earnings Total shareholders' equity TOTAL LIABILITIES AND EQUITY

30-04-18

30-04-19

30-04-20

30-04-21

30-04-22

38,600 4,407,675 4,446,275

3,588,688 1,311,406 4,900,095

10,755,333 920,000 11,675,333

17,529,309 1,019,414 18,548,723

24,352,633 1,125,304 25,477,937

2,750,000 500,000 10,417 3,239,583 7,685,859

2,750,000 500,000 79,167 3,170,833 8,070,928

2,750,000 500,000 147,917 3,102,083 14,777,416

2,750,000 500,000 216,667 3,033,333 21,582,057

2,750,000 500,000 285,417 2,964,583 28,442,520

-128,800

504,014

4,553,596 4,424,796

3,702,241 4,206,255

516,218 1,550,602 2,766,391 4,833,211

575,101 3,370,689 1,737,660 5,683,451

642,345 3,997,585 606,831 5,246,761

10,670,360 10,670,360

8,425,070 8,425,070

5,956,941 5,956,941

3,243,855 3,243,855

261,503 261,503

-7,409,298 -7,409,298 7,685,859

-4,560,397 -4,560,397 8,070,928

3,987,264 3,987,264 14,777,416

12,654,751 12,654,751 21,582,057

22,934,256 22,934,256 28,442,520

SENSITIVITY ANALYSIS (WHAT-IF SCENARIO STUDY) Methodology5

2019

What if Sales

-45.0%

Cost of goods sold

Operating expenses General & Administrative

15.0%

Personnel

15.0%

Promotion

15.0%

Insurance

15.0%

Transportation

15.0%

A technique used to determine how different values of an independent variable will impact a dependent variable under a given set of assumptions. This technique is used within specific boundaries that will depend on one or more input variables, such as the effect that changes in interest rates will have on a bond's price. What-if Analysis (also known as Sensitivity Analysis) is a way to predict the outcome of a decision if a situation turns out to be different compared to the key prediction(s). Sensitivity analysis is very useful when attempting to determine the impact the actual outcome of a variable will have if it differs from what was previously assumed. By creating a given set of scenarios, the analyst can determine how changes in one variable(s) will impact the target variable. For the purposes of this Business Plan and Financial Projections Model, the ‘Projections Model’ or Expected Case Financial Projections have been used as a point of departure. The Financial Model’s ‘sensitivity’ to changes has been tested to determine the outcome on the company’s profitability. 5

Projected Income Statement vs. What-If Scenario

Income statement (R) Projected Revenue on operations Total sales Cost of goods sold Cost of goods sold % Gross profit Gross profit margin % Operating expenses General & Administrative Personnel Promotion Insurance Transportation Total operating expenses % of total sales Depreciation Interest on short term loans Interest on long term loans Net profit / loss Net profit margin % Company tax Net business result % of total sales

What if

Change

24,366,250 5,503,955 22.6% 18,862,295 77.4%

13,401,438 3,027,175 22.6% 10,374,262 77.4%

-45.00% -45.00%

1,658,171 5,271,089 300,670 290,400 168,540 7,688,870 31.6% 68,750 311,661 694,751 10,098,264 41.4% 1,550,602 8,547,662 35.1%

1,906,897 6,061,752 345,771 333,960 193,821 8,842,200 66.0% 68,750 311,661 694,751 456,901 3.4%

15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 34.42% -95.48% -38.03% -100.00% -94.65% -31.67%

456,901 3.4%

-45.00% -

Projected Cash Flow Statement vs. What-If Scenario

Cash flow (R) Beginning balance Cash in Cash sales Sales tax in Subtotal Cash paid out Cash purchases Operating expenses Interest payment Loans repayment Sales tax payments/refunds Subtotal Ending balance Change in cash

Projected 3,588,688

What if 3,588,688

24,366,250 2,640,705 27,006,955

13,401,438 1,676,546 15,077,983

-45.00% -36.51% -44.17%

5,112,549 7,688,870 1,006,412 3,403,979 2,628,501 19,840,311 10,755,333

2,811,902 8,842,200 1,006,412 3,403,979 1,668,797 17,733,290 933,381

-45.00% 15.00% -36.51% -10.62% -91.32%

7,166,644

-2,655,307

-137.05%

Change -

DISCLAIMER ............................................................................................

Bplans Africa™ (trading as Bplans Africa) or any of its agents, contractors, member companies, assignees or employees, do not accept liability of any nature whatsoever for any loss sustained by any person which makes use of the information contained herein and any person who uses it, does so entirely at his or her own risk. The business plan and supporting documentation have been prepared based on the information received from the client or through secondary market research conducted. The accuracy and validity of this information cannot be guaranteed or confirmed by Bplans Africa. Any information that has not been received from the client at the time of compiling the business plan will be omitted from the final document. Upon completion of the business plan, Bplans Africa will provide the client with advice and clear guidance notes as to any information that may still be required. Bplans Africa can only complete a business plan by using the information it has received from the client. A comprehensive summary of the information that is required from a client to compile a business plan is discussed/dealt with during the first step of Bplans Africa’s Client Engagement Process. It remains the responsibility of the client to provide Bplans Africa with all the necessary information to deliver the respective business plan document. Bplans Africa will make minor amendments to the completed business plan during a period not exceeding 2 weeks following submission of the business plan to the client. Such amendments will be limited to changes to the narrative, updates to the financial model, updates of graphs, addition of the additional information received from the client (based on the guidance notes provide to the client). Any amendments that require a change in the business model or strategy of the client’s company will not be made free of charge. Any amendments required after the 2-week post-project period will be charged for at our standard rates. As a client you understand that Bplans Africa can in no way be held responsible for what takes place once you have contacted a potential investor. As a client you further understand and acknowledge that it is your sole responsibility to conduct a due diligence on any investor you deal with. Any decision made or action taken because of the information contained herein (including any information contained in the financial statements, projections and models) is entirely at your own risk and Bplans Africa will not accept responsibility for any loss, damage or liability whatsoever in this regard. Due to various unknown changing factors, Bplans Africa cannot propose or warrant that all results are completely accurate in all respects or that reliance can be placed on the results contained herein. The completion of this business plan by Bplans Africa does not in any way whatsoever guarantee that funding and or investment capital will be received by any thirdparty, e.g. commercial banks, funding specialists, government, VC’s, and or angel investors. Although every care is taken to ensure the accuracy of the market research, statistics, trends, conclusions, and so forth, Bplans Africa does not accept responsibility for any act, omission, loss, damage or the consequences thereof occasioned by a reliance by any person upon the contents hereof. All market research conducted is secondary/desktop research, the information of which is obtained from secondary sources and/or primary research conducted by third-party institutions. The market and industry research contained in this business plan is provided for general information purposes only and does not constitute the provision of legal or professional advice in any way. Before making any decision or taking any action, a professional advisor should be consulted. No responsibility for loss to any person acting or refraining from action because of any material in this document can be accepted by the Bplans Africa and any of its representatives. The information in this document is provided “as is” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind. In no event, will Bplans Africa be liable for any losses arising from any decision made or action taken in reliance on the information