5 YEAR FINANCIAL PROJECTIONS (Income Statement)

Calendar Year Yr 1(N‘000) Yr 2(N‘000) Yr 3(N‘000) Yr 4(N‘000) Yr 5(N‘000)

Capital 300,000 300,000 300,000 300,000 300,000

Borrowings
- Individual 150,000 300,000 550,000 750,000 1, 100,000
- Bank 300,000 400,000 450,000 500,000 600,000

Available funds 750,000 1,000,000 1,300,000 1,550,000 2,000,000

General Loans and Advances

(80% of available funds) 600,000 800,000 1,040,000 1,240,000 1,600,000

(Interest Income @27% p.a 162,000 216,000 280,800 334,800 432,000

Other Operating Income 18,600 24,800 32,240 37,440 49,600

(Commissions and fees @ 3% flat
And N1 per mille)
Total Income 180,600 240,800 313,040 372,240 481,600

Interest Expenses
(Interest paid on Fixed Deposit 19,500 39,000 71,500 97,500 143,000
@13%p.a)
(Bank Interest @ 19% & COT) 57,300 76,400 86,355 95,950 114,600

Gross Profit 103,800 125,400 155,185 178,790 224,000

Salaries and Wages 67,000 71,020 75,281 79,797 84,584

Administrative Expenses
Advertisement and Publicity 2,000 2,000 2,000 2,000 2,000
Training 1,500 1,500 1,500 1,500 1,500
Depreciation Charges 3,000 3,000 3,000 3,000 3,000
Insurance 1,000 1,000 1,000 1,000 1,000
Rent 3,000 3,000 3,000 3,000 3,000
Repairs and Maintenance 1,000 1,000 1,000 1,000 1,000
Diesel and Oil 1,500 1,500 1,500 1,500 1,500
Water, Gas, Electricity 1,000 1,200 1,400 1,600 2,000
Provision for Tax
Sundry Expenses 1,000 1,000 1,000 1,000 1,000
(Medical, subscription, fees etc.)
Profit before Tax 21,800 39,180 64,504 83,393 123,416
Income Tax 6,540 11,754 19,351 25,017 37,024

Net Profit After Tax 15,260 27,426 45,153 58,375 86,392

Five Year Financial Projections(Income Statement)

 5 YEAR FINANCIAL PROJECTIONS (Balance Sheet)

Calendar Year Yr 1(N‘000) Yr 2(N‘000) Yr 3(N‘000) Yr 4(N‘000) Yr 5(N‘000)

Assets

Cash and short term funds 150,260 230,686 338,839 450,214 629,606
- - - -

General loans and advances 600,000 800,000 1,040,000 1,240,000 1,600,000

Other Assets

Loans Receivable 6,000 8,000 10,400 12,400 16,000

Fixed Assets 15,000 12,000 9,000 6,000 3,000

Total Assets 771,260 1,050,686 1,398,239 1,708,614 2,248,606

Liabilities

Borrowings (Fixed Deposit)

- Individual 150,000 300,000 550,000 750,000 1, 100,000

- Bank 300,000 400,000 450,000 500,000 600,000

Other Liabilities

Provision for Loan loss 6,000 8,000 10,400 12,400 16,000

Total Liabilities 456,000 708,000 1,010,400 1,262,400 1,716,000

Shareholder’s funds

Capital 300,000 300,000 300,000 300,000 300,000

Reserves 15,260 42,686 87,839 146,214 232,606

Total Shareholder’s Funds 315,260 342,686 387,839 446,214 532,606

Total 771,260 1,050,686 1,398,239 1,708,614 2,248,606

Five Year Financial Projections (Balance Sheet)

The following estimates illustrate figures in the projections above:

 Capital: The estimated capital in the financial projection is N300 million for the five financial
years considered.

 Borrowings: Borrowings are in the form of time deposits from individuals and funds sourced
from other financial institutions. A growth in borrowings from about N450 million in year 1 to
about N2 billion in year 5 is projected.

 Loans and other assets: Out of the total funds available for lending (Capital and borrowings),
80% will be made available to book various risk assets. From the projections, the risk asset
portfolio of the company will witness a growth of from N600 million to N1.6billion during the
projected period.

 Interest: Interest on loans and other risk assets is charged at 27% (this can be increased
depending on the facility type), while time deposits are booked at an average of 13%. The high
time deposit rate is required to attract borrowings from individuals and corporate institutions.
The interest on funds borrowed from banks is estimated to be 19% based on current market
indices. This figure can be negotiated downwards with the banks thereby improving the bottom
line.

 Commissions and Fees: Fees are charged at an average of 3% flat (1% Mgt. fee, 1% facility fee
and 1% Legal fees). However, these figures will significantly increase for facilities that are rolled
over once or more in the course of a year. A commission of N1 per mille will also be charged to
offset any such charges on funds borrowed from commercial banks.

 Gross Profit: An estimated growth in Gross profit from N104 million in year 1 to N225 million in
year 5 is projected.

 Salaries and Wages: With an estimate of between 20 and 25 staff, salaries are calculated in line
with industry standards. There is a year on year increase of about 10% in salaries and wages to
allow for increased staffing as required, promotions and inflation.
 Net Profit: A net profit after tax growth from N18 million to N86 million is projected within the
period. This represents a growth of about 500% in five years. It is believed that with the right
management team, this is quite achievable.

 Net Profit Margin: The Company’s net profit margin grew in the projected figures from 10% in
year 1 to about 18% in year 5. This shows an acceptable impact of revenue on net profits. Also,
this requires effective management of expenses, so that the company will witness a greater
impact of revenues on the bottom line.

 Return on Equity (ROE): The Company’s ROE is also projected to grow from 6% in year 1 to 30%
in year 5. This gives an indication of a continued growth in the value of the business to its
stakeholders.
OPTION A

SALARIES SCHEDULE

MANAGING DIRECTOR

- N36,000,000 per annum (Divided into 26M salary: N10M Performance)

- Official car (N8 million amortized over four years Ie N2 million per annum)

- Fuel (N500,000 per annum)

Vacation Expenses (1 Business class ticket +N1million per annum)

HEAD (BUSINESS DEVELOPMENT)

- N6,000,000 per annum

HEAD (CREDIT)

- N5,000,000 per annum

HEAD (TREASURY)

- N2,500,000 per annum

HEAD (ACCOUNTS /ADMIN)

- N4,000,000 per annum

HEAD (LEGAL/COMPANY SECRETARY)

- N5,000,000 per annum

HEAD (RISK MANAGEMENT)

- N2,500,000 per annum

2 Credit Officers @ N1,200,000 each per annum

3 Treasury Officers @ N1,200,000 each per annum

1 IT Officer @ N2,500,000 per annum

1 Junior Legal staff @ N1,200,000 per annum

2 Accounts/Admin Officers @N600,000 each per annum

1 Receptionist @ N600,000 per annum

2 Cleaners @ N360,000 each per annum

3 Drivers @ N540,000 per annum each

3 Security Guards @ N360,000 per annum each