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Fabrica
7. Financial Plan

7.1 Highlights of results

7.1.1. Income statement

Year20002001200220032004
Net Sales935,4767,115,4745,870,8987,776,92812,470,861
Cost of Goods412,6611,421,6191,286,8641,754,9502,320,684
Gross margin %55.9880.0278.0877.4381.39
Net income after tax40,6512,902,6272,430,5983,280,7085,949,583
Net income % of sales4.3540.7941.442.1947.71

7.1.2. Balance Sheet

Year20002001200220032004
Current Assets391,3192,084,0521,996,3741,274,25212,143,432
Fixed Assets513,625756,2541,105,1681,719,2251,074,940
Total Assets1,004,9442,940,3063,201,5433,093,4773,318,372
Total Liabilities64,472234,446174,564207,553284,459
Net worth940,4722,705,8593,026,9782,885,9243,033,913

7.1.3. Cashflow

Year20002001200220032004
Cash from Operations2,04,2833,165,687844,5153,949,4826,593,869
Net Cashflow242,4471,301,5071,357,439449,269830,039
Dividends-1,137,2392,109,4793,421,7625,801,595

7.2 Key assumptions

Inflation

We have not attempted to incorporate inflation 'in our projections. Although there will undoubtedly be inflation in Thailand, it will not have any major or predictable impact on our business. All costs are shown in real 1999 amounts.

Currency

Our working financial plans were produced 'in US dollars, the currency in which most revenues will occur and many costs will occur. Capital equipment costs will be 'incurred in baht, affected by any change in the baht : dollar exchange rate. We have assumed a conservative rate of 3 5 : 1, which applied for most of the first quarter of 1999.

Personnel Costs

All personnel costs show a real increase of 8% per year, reflecting our need to reward our workers exceptionally well in order to keep their performance at levels that will hold waste and defects to absolute minimums. This again is the highest expense that can reasonably be projected.

Key Equipment Costs

All KS loom models will be made in Thailand. As the installed base grows, we expect a decrease in unit cost ultimately reaching 20%.

Capacity Utilization

As operation of a KS loom is essentially similar to running a large production loom, we anticipate no learning delays wherever experienced skilled labor is concerned. There is practically no need to allow for downtime, so the only important consideration 'in capacity planning is the uncertainty of order flow. For our Bangkok sample center, we have planned a two-shift operation, with 30% excess capacity; this would be able to handle 195% of forecast volume on a three-shift basis. For licensees, we have projected capacity enough to meet forecast requirements plus 30% on a single shift. We will be able to confirm whether or not these allowances are enough to meet our service standards during the period when we are selling only in Thailand, with capacity for the US launch already installed.

7.3 Sources and uses of funds

YEAR199920002001200220032004
Sources of Funds      
Initial capital - founders510,00000000
Investors0490,0000000
TOTAL510,000490,0000000
Uses of Funds      
Deposit for buildings14,28600000
Machinery91,429502,857497,143754,2861,274,2860
Factory Equipment37,14314,2860000
Patents100,00000000
Office Furniture28,5714,5710000
Vehicles33,71412,8570000
Pre-operating Expenses42,73000000
TOTAL347,873534,571497,143754,2861,274,2860

7.4 Performance and Sensitivity Analysis

7.4.1 Ratios

Ratio20002001200220032004
Current Ratio6.078.8911.446.147.54
Debt: Equity0.070.090.060.070.09
Return on Equity %4.32107.2780.3113.68196.1

7.4.2 NPV Sensitivity Analysis (US$)

 NPVIRR
CASESRevenueExpensesRevenueExpenses
15% increase5,170,7433,847,627201.15159.57
10% increase4,868,6183,989,980193.18165.39
5% increase4,566,2414,128,479184.73170.90
Base Case4,263,8654,263,865176.14176.14
5% decrease3,9614884,399,250167.42181.42
10% decrease3,657,1464,530,055158.36186.73
15% decrease3,348,3764,669,486148.73192.08
20% decrease3,0396064,804,292138.96197.46

Sensitivity Analysis

Change


Fabrica Co., Ltd.
Table of ContentsAppendices
0. Executive Summary
1. Company
2. People
3. Product
4. Market
5. Marketing Strategy
6. Operations Strategy
7. Financial Plan
8. The Deal
Sample Production Costs
Glossary of Terms
Patentable Features
Sample Order Flow
Financial Assumptions
Investment Structure
Yearly Income Statement
Yearly Cash Flow
Yearly Balance Sheet
Monthly & Quarterly
Proprietary to Fabrica Co., Ltd.