datapoint business plan diamond bank

8/3/2019 Datapoint Business Plan Diamond Bank

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A

DETAILED BUSINESS PLAN

OF

DATA-POINT INSTITUTE OF INFORMATION TECHNOLOGY (DIIT)

SUBSIDIARY OF

DATA-POINT MICRO SYSTEMS LIMITED (DMSL

(ACCRDITED TRAINING CERTRE BY EC-COUNCIL UNIVERSTY)

34, KUDAISI STREET, OFF APAPA OSHODI EXPRESSWAY

APAPA, LAGOS STATE, NIGERIAWebsite: www.datapointonline.com.ng

E-Mail: [email protected]

PHONE NUMBERS; 01-7614402 and 08039262657

SUBMITTED TO

THE BRANCH MANAGERDIAMOND BANK NIGERA PLC

IBAFOR APAPA, LAGOS STATE, NIGERIA

SEEKING FOR:TWO MILLION NAIRA TERM LOAN FACILITY

REQUIRED FOR EDUCATIONAL BUSINESS EXPANSION

ICT EGUIPMENT PROCUREMENT AND WORKING CAPITAL.

PREPARED BY:

DATA-POINT MICROSYSTEMS LTD

(Certified Information Security Consultants)

34 kudaisi street, Olodi Apapa Lagos State

GSM PHONE NOS: 01-7614402, 08039262657.

Email: [email protected]

MAY 2011.

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mailto:[email protected]:[email protected]


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TABLE OF CONTENTS

CHAPTER TOPIC PAGE

EXECUTIVE SUMMARY

I THE INSTITUTION-DIIT

1.1 The Background and Profile 3

1.2 The vision and Mission 4

1.3 The Corporate Banker(s) 4

1.4 Business Plan Purposes 4

1.5 Socio-economic Contribution 4

1.6 Government Support and incentive 4

II MANAGEMENT AND ORGANIZATION STRUCTURE

2 .1 Ownership and Board of Directors 5

2.2 Management Profile 5

2.3 Organization Chart 6

2.4 Staff Requirements 7

2.5 Actual Staff Salary Structure 7

2.6 Budgeted Costs of Operations 8

III MARKET ANALYSIS AND FORECAST

3.1 Services/Courses offered and Certificates Awarded. 8

3.2 Target Markets 9

3.3 Advertisement 9

3.4 Pricing objectives 9

3.5 Competitors and Competitive Strategy 9

3.6 Innovations and Special Attributes 10

3.7 Critical Success Factors (CSFs). 10

3.8 Actual, and Projected, Students Enrolment Capacity 11

3.9 SWOT Analysis Summary 11

IV FINANCIAL ANALYSIS AND FORECAST

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4.1 Loan Facility Needs Analysis 12

4.2 Financing Plan 12

4.3 Sales Revenues Forecast 13

4.4 Profit and Loss Accounts Budget 14

4.5 Balance Sheet Budget 15

4.6 Cash Flow Statement Budget 15

4.7 Assumptions 16

4.8 Risk Analysis 16

4.8.1 Return on Investment (ROI) 16

4.8.2 Net Present Value (NPV) 17

4.8.3 Profitability Summary (PS) 17

4.8.4 Sensitivity Analysis (SA) 17

4.9. Notes on the Accounts 18

V CONCLUSIONS AND RECOMMENDATION

5.1 Summary of Findings and Conclusions 20

5.2 Recommendation 20

APPENDIX LIST

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DATA POINT INSTITUTE OF INFORMATION TECHNOLOGY

EXECUTIVE SUMMARY

1. This report covers three (3) years of business operations of the institute,Data-

Point Institute of Information Technology (DIIT).

2. DIIT is a subsidiary of the parent company,Data-point Micro Systems Ltd,

(DMSL). RC No: 481145, incorporated in Nigeria on the 15th day of May, 2003

under Companies and Allied Matters Act 1990.

3. The parent company has authorized share capital of N 200,000 (Five Hundred

Thousand Naira) divisible into 500,000 ordinary shares of N 1 each.

4. DMSL is a limited liability company and the liability of its members is limited

by shares.

5. DIIT is a major player not only in I.T training and ICT consultancy services,

but also in the Solar Energy, Power Solutions, printing and publishing industry.

6. DIIT is a member of the following professional associations:

a. Member, Computer Professionals Registration Council of Nigeria (MCPN).

b. Member, Computer Society of Nigeria (MCSN)

c. Member, Nigeria Association of Small and Medium Enterprises (NASME)

See Appendices B1, B2, B3.

7. DIIT was the winner of the Regional and Continental prestigious Awards in2004, and 2010, respectively. That is:

a. The best ICT training Institute Award of the year, 2004, by the Commoners

News Paper...

b. The Outstanding ICT Training Institute Award of the year, 2010, by African

CEO Council.

8. DIIT has four major campuses at Lagos State, and FCT Abuja.

9a Website: www.datapointonline.com.ng.

b. E-Mail Address: [email protected].

c. Phone No: 01-7614402 and 08039262657

10. DIIT also venture into Primary and Nursery School with uncompleted school

building and Ten flats of two bed room each in Alagbadon area of Lagos.

11. DIIT current actual enrolment capacity is 920 (Nine Hundred and Twenty)

Students.

12. DIIT actual total annual sales revenue amounted to N30, 800,000 (Thirty

Million and Eight Hundred Thousand Naira) only.

13. DIIT have current work force of twenty-two (22) Academic and Non-

Academic Staff.

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14. The proposed financial structure is:

a. Equity N 95 Million

b. Debt (Applied Loan) N 2 million

c. Total company value N 100 million

15. Some selected financial highlights and ratios indicators are:

Description: Yr 1 Yr 2 Yr 3

N000 N000 N000

a. Sales Revenue 46,360 54,589 65,976

b. Net Profit 18,655 24,018 31,826

c. Gross Profit Margin 85% 85.3% 87%

d. Net Profit Margin 40.2% 44% 48.2%

e Return on Investment (ROI) 32% 48% 78%

f. Net Present Value (NPV) @ 8% = N18, 465,050 and @ 15% = N7, 955,966

16. DIIT has graduated more than Ten Thousand (> 10,000) students since

inception.

17. The Loan Guarantor is:

Mr. Lucky O. Uduikhue, MD/CEO, Data-Point Micro Systems Ltd.

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CHAPTER I

THE INSTITUTE - DIIT

1.1 The Background and Profile

Data-Point Institute of Information Technology (DIIT) is a Subsidiary of

Data-Point Micro Systems Ltd (DMSI), Arc. No. 481145, legally incorporated in

Nigeria on the 15th day of May, 2003, under the Companies and Allied Matters Act

1990. The Parent company, DMSL, has authorized share capital of N500, 000 (Five

Hundred Thousand Naira) divisible into 500,000 ordinary shares of N1 each. DMSL

is a limited liability company, and the liability of its members is limited by shares.

DIIT provides not only I.T training, and ICT consultancy services, but also

awards proficiency certificate as well as Diploma and Advance Diploma certificates in

specialized areas. Besides, DIIT is the publishers of the Contact Business Magazine,

and the Contact Sports News paper, which are circulated nationally and widely read

by many people. DIIT is a member of various reputable professional associations,

supra, and the winner of the Best ICT Training Institute Award of the year, 2004,

2006, 2009 and the outstanding ICT Training Institute Award of the year, 2010,

respectively.

DIIT campuses are strategically located are:

1. Apapa Campus: 34, Kudaisi Street, Off Apapa Oshodi Express Way, Apapa,

Lagos State.

2. Olodi Campus:2, Ojoku street, off New Road Bus Stop, Olodi Apapa, Lagos

State.

3. Ajegunle Campus:61/65, Cardoso Street, Ajegunle, Apapa, Lagos State.

4. Abuja Liaison Office:401 Road, 4th Avenue, A close, Kubwa, Abuja Federal

Capital Territory (FTC).

DIIT have professionally qualified I.T Instructors, well equipped ICT

laboratory, fully air conditioned class rooms, standby generators, recreational

facilities, library and research materials, and conducive learning environment where

the value for money is quantified and justified.

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1.2 The Vision and Mission:

1.2.1 Vision:

Our vision is to foster the ICT training and development of human capital

aimed at creating mass employment opportunities for the youths.

1.2.2 Mission:

Our Mission is to maximize the shareholders wealth in the long-rum.

1.3 The Corporate Bankers:

1. First Bank Nigeria Plc, Trinity Branch Apapa, Lagos State, Nigeria.

2. Diamond Bank Plc, Trinity Branch Apapa, Lagos State, Nigeria.

3. United Bank for Africa plc, Ibafor Apapa, Lagos Nigeria

1.4 The Business Plan Purposes are to:

1. Assist DIIT Management to obtain financing.

2. Serve as a tool or reference point for evaluation of the plan progress.

1.5 The Socio-economic Contributions Include:

1. Human Capital Development.

2. Generation of mass employment opportunities.

3. Eradication of computer illiteracy in Nigeria.

4. Youth empowerment.

5. Alleviation of Poverty6. Contribution to the Gross National Product (GNP).

7. Combating of crimes in the society.

8. Improvement of the standard of living of the citizens.

1.6 Government Support and Incentives Include:

1. CBN Credit Guarantee Scheme for the private educational institutions.

2. Provision of the basic infrastructure to attract investment.

3. Police security for protection of life and property

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4. Fiscal incentive in the form of tax shelter.

CHAPTER II

2.0 MANAGEMENT AND ORGANIZATION STRUCTURE

2.1 Ownership and Board of Directors

DIIT is wholly owned, operated, managed and controlled by Nigerians.

Members of the Board of Directors/Management are:

2.2 Management Profile

2.2.1 Magistrate W. A. O Meigbope is the Chairman, Board of Trustees,

Data-point Institute of Information Technology

1. Magistrate W. A. O Meigbope, Chairman, Board of Trustees.

2. Mr. Lucky O. Uduikhue, Director of Studies/CEO.

3. Mr. Uduikhue Eric, Director,

B.sc Economics

4. M r. Uduikhue Smart, Director.

B.sc Mathematic/ Statistics

5. Mrs. Uduikhue Stella, Head, Business Development,

B.Sc Computer Science

6, Miss Olubunmi Daniel, Secretary/ Head Administration

HND, Business Administration

Magistrate W. A. O Meigbope is the Chairman, Board of Trustees. He is a holder of

HND in Public Administration from Institute of Management and Technology (IMT)

Enugu; AIM Certificate from Institute of Bankers Lombard, London; B.sc. (Hons)

degree in Business Administration from Lagos State University, and LLB (Hons)

degree from University of Lagos.

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He has worked in several reputable organizations including Mobil Nigeria Plc,

United Bank for Africa Plc, and Dam Ayo Chambers where he held senior

management positions. Presently, he is the Magistrate, Lagos State Judiciary High

Court, Ikeja, Lagos State. Magistrate W. A. O Meigbope has made substantial

financial contributions for and immense personal sacrifice/commitment to the growth

of DIIT.

2.2.2 Mr. Lucky O. Uduikhue is the Founder and Managing Director / CEO of

DMSL, and the Director of Studies / CEO of DIIT. He is also the Founder and

president of Nigeria Youth Initiative for Better World International; and the Publisher

and Editor-in-Chief of the Contact Business Magazine, and the Contact Sport News

Paper.

Mr. Uduikhue is a holder of B.sc degree in Computer Science from University

of Lagos, (PGD Education) in view from National Open University Lagos and M.Sc

degree (In-view) in Information Security Science from EC Council University India.

Professionally, he is a Certified Ethical Hacking (CEH) and Certified Information

Security Analyst (ECSA) and Computer Cyber Hacking and Forensic Investigator

(CHFI) and Licence Penetration Tester (LPT) from EC Council University, India. Mr.

Uduikhue is a professional India IT Training professional and Member of the

following Professional Associations:

1. Member, Computer Society of Nigeria (MCSN)

2. Member Chartered Nigeria Institute of Management (CNIM).

3. Member, Nigeria Association of Small and Medium Enterprises. (NASME)

4. Member, Fate Foundation.5. Member, Full Gospel Businessmen Fellowship (FGME)

6. Member, African CEO Council. (ACC)

7. Member, Police Community Relations Committee (PCRC).

8. president and Founder, Nigeria Youth Initiative for Better World IntL.

Mr. Uduikhe is a visionary Technocrat, an innovative Entrepreneur, a seasoned

Systems Engineer, a professionally qualified ICT Security Consultant, a distinguished

Industrialist, an accomplished Philanthropist, and a successful Corporate Management

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Executive with more than fifteen (10) years of experience in the ICT industry. He is a

devoted Christian, God fearing, hardworking, honest, and happily married.

2.3 DATA-POINT INSTITUTE OF INFORMATION TECHNOLOGY

ORGANIZATIONAL CHART

FUNCTIONAL STRUCTURE

DIIT is strategically organized into five major functional areas of Accounts,

Administration, Academic Admission & Records, I.T Training, ICT Laboratory,

Library, and Bursary), Marketing and Publishing departments to ensure:

1. Efficient resource allocation.

2. Ease of functional co-ordination

3. In-depth development of expertise.

4. Specialization of Labour.

5. Maximum output performance.

2.4 Staff Requirements

2.4.1 Current Labour Force

A total of Twenty-two (22) trained, skilled, professionally qualified and

technically competent Academic and non-academic staff with B.sc, MSc, MCSE,

10

Board of Trustees

Director of Studies / CEO

Secretary

Accounts Dept. Admin. Dept. Academic Dept. Marketing Dept. Publishing Dept.

Admission &

RecordsI. T. Training BursaryLibrary

ICT

Laboratory


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B.Eng; PGDE, HND, ND, WASC, NCE and GCE from reputable institutions are

currently employed at DIIT.

2.4.2 Current Staff Analysis:

No. of Staff

1. Permanent Academic Staff = 15

2. Permanent Non-Academic Staff = 7

3. Total Number of Current Staff = 22 Work Force

2.4.3 Additional Staff Required:

Eight (8) additional Staff is required to effectively run D11T. This includes:

1. Academic Staff 5

2. Non-Academic Staff 3

Total Current and additional staff required = 30 Staff Strength

2.5 Current Annual Staff Salary:

N4, 145,000 (Four Million, One Hundred and Forty-Five Thousand Naira) per

annum.

2.6 Budgeted Cost of Operations:

2.6.1 Direct Materials Cost Budget:

N2,058 Million in year one, N2,367 Million in year two, and N2,485 Million in

year three for educational, printing and publishing materials.

2.6.2 Direct Labour Cost Budget:

N5,145 Million in year one, N5,660 Million in year two, and N6,226 Million

in year three respectively.

2.6. 3. Administrative & Selling Overhead Cost Budget:

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N2,207 Million in year one, N2,428 Million in year two, and N2,549 Million in

year three for office salaries of the non-academic staff, marketing and selling

overhead expenses respectively.

CHAPTER III

3.0 MARKET ANALYSIS AND FORECAST

3.1 Services/Courses offered and Certificates Awarded

3.1.1 Services Offered

1. I. T. Training (Educational Service).

2. Printing & Publishing

3. ICT Consultancy Services

4. Energy & Power Solutions Services

5. Nursery & Primary School

3.1.2 Courses Offered include:

1. Web Application Design. 7. Desktop & Graphic Technology

2. Data Management Technology 8. Computer Engineering

3. Computer Technology 9. AUTOCAD

4. Computer Ethical Hacking 10. Microsoft Certifications

5. Internet Technology (e-Business) 11. Peach tree Accounting

6. Data base Management 12. VB, JAVA, C++Programming Languages.

3.1.3 Certificates Awarded include:

1. Proficiency Certificate

2. Professional Certification

3. Diploma Certificate

4. Advance Diploma Certificate

3.2 Target Markets:

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Youths, Students, Graduates, Civil Servants, Entrepreneurs, Investors, Analyst,

Professionals, Government Agencies, and Corporate Organizations.

3.3 Advertisement

Bill Boards, Business Magazines, News Papers, Websites such as Face book,

Twitter, Link in, Hand bills, Posters, Radio Jingles, and Television advertisement

methods are used to create public awareness about DIIT I.T Training Programmes andallied products/services.

3.4 Pricing Objectives

DIIT Pricing Objectives are intended to:

1. Maximize the current sales revenues.

2. Recover sufficient cash early enough to pay off operating expenses.

3. Maximize the shareholders wealth in the long-run.4. Sustain the growth of DIIT as a going concern.

3.5 Competitors and Competitive Strategy

3.5.1 Competitors

The major competitors of DIIT are:

1. AP Technology 4. NIIT

2. Jidaw Systems 5. Computer Warehouse Training.

3. Net Solutions 6. New Horizon Systems, etc.

3.5.2 Competitive Strategy:

DIIT Management adopts Cost Leadership Competitive strategy. We provide

high quality I.T training, publication, and ICT Consultancy and Power solutions

services at lower unit cost of operations than our competitors.

3.6 Innovations and Special Attributes

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3.6.1 Innovations:

DIIT designed, installed and implemented e-learning Programme called

Data-Point Net City online Training where:

1. Students are trained online by the best professionally qualified I.T and ICT

Instructors.

2. Students are exposed to vast research materials from different libraries around

the world.

3. Students are able to communicate easily through internet.

3.6.2 Special Attributes include:

1. Distinctive Performance in professional Certification examinations by DIITgraduates.

2. Excellent moral character by DIIT students/graduates

3. Winner of the Prestigious Regional and Continental Awards in 2004, and 2010.

4. Higher output performance on the Job by DIIT trained staff.

3.7 Critical Success Factors (CSFs)

The key CSFs in the ICT training industry include:1. Balanced and Complete Curriculum

2. Qualified I. T. Instructors

3. Well equipped ICT Library and Laboratory

4. The safety of students.

5. Conducive learning environment

6. Uninterrupted Power supply standby generator.

7. Good structures, and fully air conditioned classrooms.

8. Goodwill and reputation of the school management

DIIT have met and is poised to surpass these expectations.

3.8 Students Enrollment Capacity:

3.8.1 Actual Students enrollment capacity:

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Nine Hundred and Twenty (920) Students are currently enrolled in the different

programme offered by DIIT. The analysis of the students distribution shows:

1 Programme Duration 3 Months 4 Months 6 Months One Year Total

2 Number of Students 350 100 350 120 920

3.8.2 Projected Students Enrollment Capacity

The projection is predicated on the recent market survey, and upon the base-

year or current actual students population of DIIT. Therefore, the students current

enrollment capacity is estimated to increase by 40% in year one, 45% in year two, and

by 50% on year three. This represents a total of 1288 students in year one, 1335

students in year two, 1380 students in year three, and a combined total of 4,002

students for the three years under review as tabulated below:

S/N Programme Duration Actual Nos. Yr 1 Nos. Yr 2 Nos. Yr 3 Nos. Total Nos

1 Three (3) Months 350 490 508 525 1,523

2 Four (4) Months 100 140 145 150 435

3 Six (6) Months 350 490 508 525 1,523

4. One (1) Year 120 168 174 180 522

5 Total Enrollment 920 1,288 1,335 1,380 4,003

*** Nos: = Number of Students

3.9 SWOT Analysis Summary

DIIT strengths (S), Weaknesses (W), Opportunities (O), and Threats (T), (SWOT), are

summarized as follows:

S = Strengths: 1. Qualified ICT Instructors

2. Competent Management

W = Weaknesses: 1 Limited classroom

2. Inadequate working capital

O = Opportunities: 1 Fast market growth2 Prospects of Opening a private I. T University

T = Threats: 1. High interest rate increases cost of operations

2. High inflation rate erodes purchasing power of the Naira

In summary, DIIT will capitalize on its Strengths and Opportunities to neutralize its

weaknesses and threats.

CHAPTER IV

4.0 FINANCIAL ANALYSIS AND FORECAST 4.1 Loan Facility Needs Analysis:

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S/

N

Description Capital Investment

N000

Additional Capital

Needed

N000

Total

N000

1 Fixed Assets 65,000 1,500 67,500

2 Working Capital 30,000 500 30,500

3 Total Amount N95,000 N2,000 N97,000

4.2 Financing Plan

4.2.1 Proposed Financial Structure is:

1. Equity N 95 Million

2. Debt (Applied Loan) N 2 Million

3. Total Company Value N 97 Million

4.2.2 Purposes of the Loan are to:1. Procure additional modern ICT equipment

2. Supplement our working capital

4.2.3 Outstanding Liability:

None

4.2.4 Loan Tenure

Maximum of two (2) years maturity

4.2.5 Loan Repayment PlanThe Principal and interest will be repaid monthly for twenty-four (24)

consecutive months period.

4.2.6 Collateral Security

DIIT land and uncompleted school building or as may be require by Bank.

4.2.7 Loan Guarantor:

Mr. Lucky O. Uduikhue,

MD/CEO, Data Point Micro-System Ltd.

4.3 Sales Revenue Forecast:

4.3.1 Analysis of Revenue Sources:

DIIT operates three I.T. Training sessions: Morning, Evening and Night

respectively. The students apply for and are admitted into the 3 Months, 4 Months, 6

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Months, and one year Certification Programme. The school fees for the various

Certificate programmes are:

1. N16, 000 per student in the 3 Months Programme

2. N27, 000 per Student in the 4 Months Programme

3. N32, 000 per Student in the 6 Months Programme

4. N50, 000 Per Student in the one year Programme

Additionally, DIIT earns revenues from ICT consultancy and Power solutions

services, and the Publications of the following:

1. The Contact Business Magazine

2. The Contact Sports News Paper.

4.3.2 Actual Annual Revenues Earned:

N30, 800,000 (Thirty Million and Eight Hundred Thousand Naira) only was

the total actual annual revenues earned by DIIT. The analysis of the earned revenue

sources is tabulated below:

S/

N

REVENUE SOURCES AMOUN

T

TOTAL

A. SCHOOL FEES: N000 N000

1 Three Months Programme: 350 Students x N16,000/student 5,600

2 Four Months Programme: 100 Students x N27,000 / student 2,700

3 Six Months Programme: 120 Students x N50,000 / Student 5,600

4 One Year Programme: 120 Students x N50,000 / Student 6,000

5 Sub Total Amount 19,900

B THE CONTACT PUBLICATIONS:

1 Business Magazines: 15,000 copies @ N300 / copy 4,500

2 Sports Newspaper: 80,000 copies @ N50 copy 4,000

3 Sub Total Amount 8,500

C SERVICES:1 ICT Consultancy and Power solutions Services 2,400 2,400

D Grand Total Annual Revenue Earned N30,800 N30,800

4.3.3 Sales Revenues Forecast:

The school fees per student and the unit selling price of each publication are

held constant for simplicity of analysis, and to avoid overstating the revenues and

profits, in compliance with the conservatism constraints in accounting. The projected

sales revenue streams for three years under review are tabulated below:

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S/

N

REVENUE SOURCES Yr 1 Yr 2 Yr 3

A. SCHOOL FEES: N000 N000 N0001 Three Months Programme 7,840 8,112 8,400

2 Four Months Programme 3,780 3,915 4,050

3 Six Months Programme 7,840 8,112 8,400

4 One Year Programme 8,400 8,700 9,000

B PUBLICATION:

1 The Contact Business Magazine 6,750 10,125 15,188

2 The Contact Sports Newspaper 8,000 10,000 12,500

C SERVICES:

1 ICT Consultancy Services 3,750 5,625 8,438

D Total Projected Annual Revenues N46,36

0

N54,58

9

N65,97

6


PROFIT AND LOSS ACCOUNTS BUDGET

FOR THE YEAR ENDING DECEMBER 31, YEAR 3

ACCOUNTS TITLE NOTES YR 1

N000

YR 2

N000

YR 3

N000

Sales Revenues (Net) 46,360 54,589 65,976Less: Cost of Services 1 (7,203) (8,027) (8,711)

Gross Profit 39,157 46,562 57,265

Less: Admin & Selling Overhead Exp. 2 (2,207) (2,428) (2,549)

Depreciation Expense (9,250) (9,250) (9,250)

Operating Profit 27,700 34,884 45,466

Interest Expense (1,050) (572) ---o---

Profit before Tax 26,650 34,312 45,466

Taxation @ 30% Rate (7,995) (10,294) (13,640)

Net Profit (Loss) N18,655 N24,018 N31,826

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BALANCE SHEET BUDGET

AS AT DECEMBER 31, YEAR 3ASSETS NOTES YR 1

N000

YR 2

N000

YR 3

N000

Cash balances 36,043 76,119 130,010

Debtors (Net) 1,739 1,965 2,474

Stocks 5,166 5,633 6,286

Fixed Assets (Net) 3 59,250 50,000 40,750

Total Current & Fixed Assets N102,198 N133,717 N179,520

LIABILITIES & EQUITY

Liabilities:Taxes Payable 7,995 10,294 13,640

Interest Payable 1,050 572 ---o---

Loan Payable 4 2,278 2,722 ---o---

Total Liabilities N11,323 N13,588 N13,640

CAPITAL & RESERVES

Share Capital 500 500 500

Retained Earnings 18,655 42,673 74,499

Shareholders Funds 71,720 76,956 90,881

Total Liabilities & Capital N102,198 N133,717 N179,520


CASHFLOW STATEMENT BUDGET

FOR THE YEAR ENDING DECEMBER 31, YEAR 3

CASH FLOWS FROM: YR 1 YR 2 YR 3

A Operating Activities: N000 N000 N000

Net Income after Taxes 18,655 24,018 31,825

Depreciation 9,250 9,250 9,250

Working Capital Changes 5,135 6,808 12,815

Net Cash Inflow (Out flow) 33,043 40,076 53,891B Investing Activities:

Purchase of ICT Equipment (3,500) ---0--- ---0---

Net Cash inflow (Out flow) 29,543 40,076 53,891

C Financing Activities:

Loan BOI 5,000 ---0--- ---0---

Net increase (decrease) in cash 34,543 40,076 53,891

Cash Opening balances 1,500 36,043 76,119

Cash Closing balances N36,043 N76,119 N130,010

4.7 AssumptionsThe underlying assumptions are:

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1. Demand for DIIT Products / services is constant and certain

2. 95% of the total sales are on cash basis

3. 5% of the total sales are on credit

4. 75% of the credit sales are debtors

5. 25% of the credit sales represent bad debts6. The students enrollment capacity is increased by:

a. 40% in year one from the base year

b. 45% in year two from the base year

c. 50% in year three from the base year

7. All debtors payoff their debts within the year

8. The students school fees and the unit selling price of each publication are

constant.

9. The annual staff salaries are increased by:

a. 10% in year 2 from year 1

b. 10% in year 3 from year 2

10. The work force is constant. No labour turnover

11. Stocks are valued at lower of cost and net realizable value.

12. Fixed assets are depreciated on a straight line basis at rates calculated to

write off the cost of each asset over its estimated useful life.

13. The annual profits are retained in the business without reinvestment.

14. No payment of cash dividend to the shareholders.

15. Taxation is imposed on, DIIT profit, at a Corporate tax rate of 30% annually,as if DIIT is a limited liability Company separate from the parent company,

Data-Point Micro System Ltd.

16. The Prime Lending Rate (PLR) is 21% Per Annum.

4.8 Risk Analysis:

4.8.1 Return of Investment (ROI)

ROI = Net Income x 100

Capital Investment 1

YR 1 = 18,655,000 x 100 = 32%59,250,000 1

YR 2 = 24,018,000 x 100 = 48%

50,000,000 1

YR 3 = 31,826,000 x 100 = 78%

40,750,000 1

Average ROI= 32 + 48 + 78 = 53%3

4.8.2 Net Present Value (NPV):ANNUAL DISCOUNT FACTOR NET PRESENT VALUE

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YEAR CASHFLOWS 8% 15% 8% 15%

N N

1 N27,905,000 0.926 0.870 25,840,030 24,277,350

2 N33,268,000 0.857 0.756 28,510,676 25,150,608

3 N41,076,000 0.794 0.658 32,614,344 27,028,008

Present Value of Cash Inflows: 8% 15%

YEAR N N

Yr 1 25,840,030 24,277,350

Yr 2 28,510,676 25,150,608

Yr 3 32,614,344 27,028,008

TOTAL PRESENT VALUE N86,965,050 N76,455,966

Less: Initial Capital Investment (68,500,000) (68,500,000)

Net Present Value (NPV) = N18,465,050 N7,955,966

4.8.3 Profitability Summary:

SN Profitability Ratios YR 1 % YR2 % YR3 % AVERAG

E

1 Gross Profit Margin 85 85.3 87 86

2 Net profit Margin 40.2 44 48.2 44.13

3 Return on Investment 32 48 78 53

4.8.4 Sensitivity Analysis (SA)

Now, we relax the hypothetical assumptions Nos 1 and 14, supra, for sensitivity

analysis to determine the effects on the net profits of DIIT when:

1. The sale revenues drop by 20% without change in costs

2. The costs rise by 20% without change in sales.

3. 50% cash dividend of the historical net profit is paid to the shareholders.

DATA-POINT INSTITUTE OF INFORMATION TECHNOLOGY

HISTORICAL DATA FROM:PROFIT AND LOSS ACCOUNTS BUDGET

Accounts Title Yr 1

N000

Yr 2

N000

Yr 3

N000

Sales Revenues (Net) 46,360 54,589 65,976

Costs of services 7,203 8,027 8,711

Admin & Selling Overhead Exp. 2,207 2,428 2,549

Depreciation 9,250 9,250 9,250

Interest Expense 1,050 570 ---o---


1. No. 1 SCENERIO DIIT

21


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20% drop in sales at constant costs:

Accounts Title Yr 1

N000

Yr 2

N000

Yr 3

N000

Sales 37,088 43,671 52,782

Less: Costs of services (7,203) (8,027) (8,711)

Gross Profit 29,885 35,644 44,070

Less: Admin & Selling Expense (2,207) (2,428) (2,549)

Depreciation (9,250) (9,250) (9,250)

Profit from operations 18,428 23,966 32,271

Interest Expenses 1,050 570 ---o---

Profit before Taxes 17,378 23,394 32,271

Taxation @ 30% Rate (5,213) (7,018) (9,681)


2. No. 2 SCENERIO DIIT20% rise in costs at constant sales:

Account Title Yr 1

N000

Yr 2

N000

Yr 3

N000

Sales 46,360 54,589 65,976

Less: Costs of services (8,644) (9,632) (10,453)

Gross Profit 37,716 44,957 55,523

Less: Admin & Selling Expense (2,648) (2,914) (3,059)

Depreciation (11,100) (11,100) (11,100)

Profit from operations 23,968 30,943 41,364

Interest Expenses (1,260) (680) ---o---Profit before Taxes 22,708 30,257 41,364

Taxation @ 30% Rate (6,812) (9,077) (12,409)


3. No. 3 SCENERIO DIIT

50% Cash dividend payment to shareholders:

Account Title Yr 1

N000

Yr 2

N000

Yr 3

N000

Net Profit (Historical) 18,655 24,018 31,826

Less: 50% Cash Dividend (9,328) (12,009) (15,913)



NOTES ON THE ACCOUNTS

DECEMBER 31, YEAR 31 Cost of Services: Yr 1

N000

Yr 2

N000

Yr 3

N000

1 Academic Staff Salaries 5,145 5,660 6,226

2 Stocks: Educational and Publication Materials 2,058 2,367 2,485

3 Total Amount N7,203 N8,027 N8,711

2 Admin & Selling Overhead Exp: Yr 1N000

Yr 2N000

Yr 3N000

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1 Rental Expenses 450 450 450

2 Non-Academic Staff Salaries 340 374 411

3 Electricity Bill NEPA 85 74 62

4 Petrol, Oil and Diesel 106 110 116

5 Telephone & Communications 72 76 68

6 Printing & Stationery Supplies 94 98 567 Advert & Public Relations 110 150 115

8 Repairs and Maintenance (RAM) 86 120 125

9 Professional & Consultancy Fees 75 75 75

10 Bad debts Expenses 580 682 825

11 Transport and Logistics 65 72 84

12 Insurance Expenses 60 60 60

13 Misc. Admin & Selling overhead Exp. 84 87 102

1

4

Total Amount N2,207 N2,428 N2,549

3. Fixed Assets Schedule:

Fixed Assets: LAND BLDG P & M C &OE F & F M V TOTAL

N000 N000 N000 N000 N000 N000 N000

Cost as at 1/1/Yr 1 2,500 10,000 15,000 23,0000 13,000 5,000 68,500

Additions during the year ---0--- ---0--- ---0--- ---0--- ---0--- ---0---

Cost on 31/12/Yr 1 2,500 10,000 15,000 23,0000 13,000 5,000 68,500

Depreciation on 1/1/ Yr 1 ---0--- ---0--- ---0--- ---0--- ---0--- ---0---

Current Charge ---0--- 500 3,000 3,450 1,300 1,000 9,250

Depreciation on 31/12/Yr 1 ---0--- 500 3,000 3,450 1,300 1,000 9,250

Net Book Value (NBV)on

31/12/Yr 1

N2,500 N9,500 N12,000 N19,55

0

N11,700 N4,000 N59,250

N/B: **BLDG = Building, ***P&M = Plant and Machinery,

***C &OE = Computers and Office Equipment, ***F&F = Furniture and Fittings

*** MV = Motor Vehicles

4. Loan Amortization Schedule Yr 1

N

Yr 2

N

Principal at start of period 5,000,000 2,722,500Add: Interest for the Period. 1,050,000 571,725

Balance: 6,050,000 3,294,225

Less: Payment (3,327,500) (3,294,225)

Principal start of next period. 2,722,500 ---o---

MONTHLY PAYMENT CALCULATION

Total Principal + Interest Payments = N6, 621,725

Total Number of Periods = 24 Months (2 Years)

Monthly Payments = N6, 621,725 = N275, 905 / Month

24

CHAPTER V

5.0 CONCLUSIONS AND RECOMMENDATION

23


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5.1 Summary of Findings and Conclusions

The investment in DIIT vividly shows:

1. Net profits of N18,655 Million in year one, N24,018 Million in year two, and

N34,826 Million in year three respectively.

2. Positive Net Present Value (NPV) of N18, 465 Million at 8% discount, and N7,

956 Million at 15% discount respectively.

Moreover, the Return on Investment (ROI) of 32% in year one, 48% in year

two, 78% in year three and an annual average of 53% further buttress the overall

profitability of DIIT project investment. Continuing, the sensitivity analysis tests

conducted strongly amplified and justified the profitability of the DIIT investmentbecause the results under three different Scenarios still shows high net profits when:

1. The sales drop by 20% at constant costs

2. The costs rise by 20% at constant sales.

3. 50% of the historical net profit is paid as cash dividend to the shareholders of

the institution.

In view of the foregoing results, therefore, we hereby conclude that the DIIT

investment is lucrative, profitable, and that otherwise the future of DIIT is undoubtedly

prosperous.

5.2 Recommendation

The applied loan facility of N2 Million should be granted to enable the institution,

DIIT, to procure additional modern ICT equipment and to supplement its working

capital.

Signed

LUCKY UDUIKHUE, (B.Sc, CEH, ECSA, LPT, MNIM, MNCS).

Managing Director/CEO

(Certified Ethical Hacking & Information Security Analyst).

For: Data-point Microsystems Limited.

[email protected]

+234-01-7614402, 08039262657,

June 27th, 2011

The Branch Manager,

24
mailto:[email protected]:[email protected]


25/25

Diamond Bank Plc,

Ibafor Apapa, Lagos State,

Nigeria.

Sir,

APPLICATION FOR TWO MILLION (N2, 000,000) TERM LOAN FACILITY:

We humbly apply for a term loan facility of N2, 000,000 (Two Million Naira

only) for a subsidiary Data-Point Institute of Information Technology, (DIIT),

through your reputable Bank. The loan is required to procure additional modern ICT

laboratory equipment, Branch Network Expansion and to supplement our working

capital.

The principal and interest will be paid monthly for twenty-four (24) consecutive

month period, and the loan will be liquidated at the end of the two years maturity.

Personal guarantee of the Managing Director/CEO, Mr. Lucky O. Uduikhue, of the

parent company, Data-Point Microsystems Ltd.

Please find enclosed herewith a copy of our detailed Business plan for the loan

applicant, DIIT and 10th School convocation magazine for your perusal. We are

looking forward to having mutual and profitable business relationship with your

reputable bank.

Thank you for your anticipated favourable response.

Yours Faithfully,

Mr. Lucky O. Uduikhue

Managing Director/CEOFor: Data-Point Microsystems Ltd.

[email protected]

datapoint business plan diamond bank

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