PATIncome Statement Forecast for 2006-2010 (all figures in
$)References(When Mountain Man produces only the Lager
Beer)200520062007200820092010Revenues5044000049,431,20048,442,57647,473,72446,524,25045,593,765Exhibit
1 Page 8. 2006 onwards 2% decrease in revenue per
yearCOGS3480360034,107,52833,425,37732,756,87032,101,73231,459,698Assuming
69% of revenue is COGS (66.93/97=0.69) pg8, Exhibit 1Gross
Margin156364001532367215017198.5614716854.588814422517.49702414134067.1470835Gross
Margin = Revenues - COGSSG&A Non
Adv8,221,7208,221,7208,221,7208,221,7208,221,7208,221,720Given non
adv SG&A remain constantSG&A
Adv1,361,8801,334,6421,307,9501,281,7911,256,1551,231,032Assuming
2.7% of revenue - pg8, Exhibit 1Other
Expenses14123201384073.61356392.1281329264.285441302678.99973121276625.41973658Assuming
2.8% of revenue - pg8, Exhibit 1Operating
Margin4,640,4804,383,2364,131,1373,884,0803,641,9643,404,690Operating
Margin = Gross Margin - SG&A - Other ExpensesOther
Income151,320148,294145,328142,421139,573136,781Assuming 0.3% of
revenue - pg8, Exhibit
1PBT4,791,8004,531,5304,276,4654,026,5013,781,5363,541,471PBT =
Operating Margin + Other IncomeIncome
Tax16771301586035.361496762.61281409275.3205441323537.774133121239514.97865046Assuming
35% of PBT (2005 Data of Exhibit1
page8)PAT3,114,6702,945,4942,779,7022,617,2262,457,9992,301,956PAT
= PBT - Income TaxProfit
Percentage6.185.965.745.515.285.05(PAT*100)/Revenue(When Mountain
Man produces only the Light Beer)Selling Price/lager
beer979797979797Revenues = 50440000 (Exhibit 1), Volume = 520,000
(pg2.para3), SP = Revenue/VolumeBase Market Share46860.7618744303
Exhibit 5A Page 10 and Base mkt share = .25% (Page7, para2
line6)Market Increase4.00%4.00%4.00%4.00%4.00%Page7 para2
line5Total Market Revenue of
Light18744303.0019494075.1220273838.1221084791.6521928183.3222805310.65Mkt
Share Increase0.25%0.50%0.75%1.00%1.25%Page7 para2 line6. Also
Increasing @ 0.25% every yearSales of Light
Beer048,735101,369158,136219,282285,0664% . 2006 onwards mkt grows
at 4%. Product growth increases at .25%.Revenues Total
(Light)04,727,3139,832,81115,339,18621,270,33827,651,439Revenue=
Sales Volume * SPIncome Statement Forecast for 2006-2010 (all
figures in
$)200520062007200820092010Revenues04,727,3139,832,81115,339,18621,270,33827,651,439As
Calculated above in
RevenuesTotalCOGS03,488,7577,256,61511,320,31915,697,50920,406,762Assuming
73.8% COGS (as % revenue): (66.93+4.69)/97 = 0.738Gross
Margin01,238,5562,576,1974,018,8675,572,8297,244,677Gross Margin =
Revenues - COGSSG&A Non
Adv0900,000900,000900,000900,000900,000Fixed Non SG&A of 900000
- pg6 para4SG&A Adv0750,000265,486414,158574,299746,589Adv.
Expense of 2.7% of revenue after first year. 1st year = 750000 -
pg6 para 4Other Expenses132,365275,319429,497595,569774,240Exhibit1
Page8 (2.8% of Revenue)Operating
Margin0-543,8091,135,3922,275,2113,502,9604,823,848Operating Margin
= Gross Margin - SG&A - Other
ExpensesPBT0-529,6271,164,8902,321,2293,566,7714,906,802PBT =
Operating Margin +Other IncomeIncome
Tax00407711.64812430.171248369.831717380.78Assuming 35% of
PBTPAT0-529,627757,1791,508,7992,318,4013,189,421PAT = PBT - Income
TaxProfit Margin0-11.207.709.8410.9011.53(PAT*100)/RevenueIncome
Statement Forecast for 2006-2010 (all figures in $) after
considering cannibalisation of lager in first year (12.5%)After
considering cannibalisation of lager in first year (12.5%)Revenue
from Light4727313.229832811.4915339185.9321270337.8227651439.16From
Revenue of Only Ligh Case AboveRevenue from Lager without
canb50440000.0049431200.0048442576.0047473724.4846524249.9945593764.99From
Revenue of Only Lager Case
AboveCannibalization12.50%10.00%8.00%6.00%5.00%Page6 para3 line5
(5+20)/2=12.5%. Then assuming lesser cannib in further yearsRevenue
from Lager WITH
canb50440000.0047979613.2253431129.8959015012.4565003132.8170965515.90Rev
from Lager * (100 - Canb. Rate)200520062007200820092010Total
Revenues50,440,00047,979,61353,431,13059,015,01265,003,13370,965,516Assuming
2% decrease in revenue per year; 2006 cannibalisatino of 12.5%.
Cannibalization Rate reduced each
year.COGS34,803,60033,105,93336,867,48040,720,35944,852,16248,966,206Assuming
69% of revenue is COGS (66.93/97=0.69) pg8, Exhibit 1Gross
Margin15,636,40014,873,68016,563,65018,294,65420,150,97121,999,310Gross
Margin = Revenues - COGSSG&A Non
Adv8,221,7209,121,7209,121,7209,121,7209,121,7209,121,720Given non
adv SG&A remain constantSG&A
Adv1,361,8801,295,4501,442,6411,593,4051,755,0851,916,069Assuming
2.7% of revenue - pg8, Exhibit 1Other
Expenses14123201343429.17006481496071.636934781652420.348511061820087.718604011987034.44526344Assuming
2.8% of revenue - pg8, Exhibit 1Operating
Margin4,640,4803,113,0814,503,2185,927,1087,454,0798,974,487Operating
Margin = Gross Margin - SG&A - Other ExpensesOther
Income151,320143,939160,293177,045195,009212,897Assuming 0.3% of
revenue - pg8, Exhibit
1PBT4,791,8003,257,0204,663,5126,104,1537,649,0889,187,383PBT =
Operating Margin +Other IncomeIncome
Tax16771301139957.073458981632229.029114682136453.623948182677180.892497943215584.08597459Assuming
35% of
PBTPAT3,114,6702,117,0633,031,2823,967,7004,971,9075,971,799PAT =
PBT - Income TaxProfit Percentage6.184.415.676.727.658.42Total
Revenue50,440,00047,979,61353,431,13059,015,01265,003,13370,965,516Total
PAT (Light
+Lager)3,114,6702,117,0633,031,2823,967,7004,971,9075,971,799Total
Profit
Percentage6.184.415.676.727.658.42200520062007200820092010PAT(Lager
only)3,114,6702,945,4942,779,7022,617,2262,457,9992,301,956PAT(Light
only)0-529,627757,1791,508,7992,318,4013,189,421PAT(Combination)3,114,6702,117,0633,031,2823,967,7004,971,9075,971,799
PAT
PAT(Lager only)PAT(Light only)PAT(Combination)
BreakEvenBreakeven analysis (No Cannibalization)Assumption:
price is same for Light and lager (page 6, para 4, line 11 )Fixed
cost$ReferencesAdvertising750000Line 8, Para 4, Page
6,SG&A900000Line 9, para 4, page 6Total fixed
cost1650000Variable cost/barrelVariable cost66.93Line 12, para 4,
page 6Additional VC4.699Line 12, para 4, page 6Total variable
cost/barrel71.629price/barrel97Net Revenue (Exhibit 1)/ 520000
(line2, para3, page2)Breakeven (no. of light
barrels)65034.88TFC/(SP-TVC)DemandNo of barrels of
Light150,104=SUM(PAT!C24:D24) Sum of sales volumes of 2005 &
2006As Breakeven barrels is less than the demand, it can be
conculded that the Light beer will be able to recover its fixed
costs within two years which was consistent with the company's
expectations
NPVCash flowYearReferenceRate(r )0.12Footnote 6, Page 712%Annual
Discount rateFootnote 6, Page 7Year(Y)Discount factor (D)PV =
D*Y-1,650,000Initial InvestmentLine 8 &9, Para 4, Page
601-16500003,114,670Cash flow from Year 1PAT from Combination
200510.89285714292780955.35714286D = 1 / (1.12)^YP = D *
Y2,117,063Cash flow from Year 2PAT from Combination
200620.79719387761687709.770746033,031,282Cash flow from Year 3PAT
from Combination 200730.71178024782157606.996687053,967,700Cash
flow from Year 4PAT from Combination
200840.63551807842521544.817429094,971,907Cash flow from Year 5PAT
from Combination 200950.56742685572821193.766894325,971,799Cash
flow from Year 6PAT from Combination
201060.50663112123025499.23133205$13,344,509.94=A4+NPV(A3,A5,A6,A7,A8,A9,A10)NPV13344509.9402314Formula
for NPV
