Adrenaline Paintball

Krzysztof MajewskiCollin RonaldMohamed Abbas

Agenda

• Company introduction • Required Materials• Business plan• Financial Report• Corporate Decision

Company introduction

• Adrenaline paintball will be an inner city indoor/outdoor paintball course in Poznan.

• Up to 20 players will compete in teams or individually to eliminate other competitors by marking them with paint capsules.

• Open year round.

Required Materials• Land (4 hectares) - PLN 180000• Buildings – PLN 350000• Markers and equipment

– PLN 60000• Obstacles – PLN 40000• Air compressor – PLN 10000• Computer software and

webpage – PLN 10000• Paintballs – PLN 2000/ month

Business Incentives• Paintball can be seen as

a means to create:– teamwork skills– physical health– Stamina– Perseverance

• Growing popularity of the sport has created a high level of demand for paintball venues

• 9.8 million player all over the world

Business Plan• We will begin by purchasing our land and fixed assets.• Needed capital PLN 700000, 43% direct owner

investment and 57% bank loan with a interest rate of 14% p.a.

• Yearly bank loan payments will be PLN 80000• Financial structure to minimize taxes and to take

advantage of the leverage effect• Inventory: Paintballs from a Chinese manufacturer at PLN

20/2000 balls• Labor costs are PLN 348180/ year• To attract our customer base, we will re-invest PLN 50000

additionally each year in marketing.

Business Plan

• Operating with 4 separate playing fields• Each game will run for 2 hours, business hours:

– Monday to Friday 16:00-22:00, 3 Units per field– Saturday and Sunday 10:00-22:00, 6 Units per field

– 110 possible games a week– 6160 games per year, with max. 20 players– 123200 customers– Price of each game for customers PLN 80

• Assuming that we are selling 10% of the maximum allotted games in the first year, we will have almost 12320 customers with a estimated revenue PLN 985600 in the first year.

Balance sheet (PLN)

  Period 0 Year 1 Year 2 Year 3 Year 4 Year 5

Assets            

Intangible assets 10.000 8.000 6.000 4.000 2.000 0

Tangible assets 640.000 594.250 548.500 502.750 457.000 411.250

Fixed assets 650.000 602.250 554.500 506.750 459.000 411.250

Inventories 15.000 10.256 10.864 11.752 14.326 16.867

Receivables 0 0 0 0 0 0

Cash 50.000 7.328 6.037 73.314 221.594 538.954

Current assets 65.000 17.584 16.902 85.066 235.920 555.821

Total assets 715.000 619.834 571.402 591.816 694.920 967.071

Equity & Liabilities            

Capital stock 300.000 300.000 300.000 300.000 300.000 300.000

Retained earnings 0 0 -14.525 16.192 115.363 294.864

Net income 0 -14.525 30.716 99.171 179.501 348.594

Total owner's equity 300.000 285.475 316.192 415.363 594.864 943.458

Long-term credit 400.000 320.000 240.000 160.000 80.000 0

Short-term credit 15.000 0 0 0 0 0

Payables 0 14.359 15.210 16.453 20.056 23.613

Total liabilities 415.000 334.359 255.210 176.453 100.056 23.613

Equity + liabilities 715.000 619.834 571.402 591.816 694.920 967.071

Assets - (Equity+liabilities) 0 0 0 0 0 0

Income statement (PLN)

  Period 0 Year 1 Year 2 Year 3 Year 4 Year 5

Revenues   985.600 1.106.927 1.268.954 1.488.483 1.816.544

Cost of materials   246.154 260.740 282.051 343.820 404.800

Energy cost   30.000 30.780 31.519 32.307 33.017

Cost of labor + labor overheads   348.180 360.714 372.979 386.033 398.386

Cost of services   80.000 82.080 84.050 86.151 88.046

Depreciation   47.750 47.750 47.750 47.750 47.750

Property tax   140.841 140.841 140.841 140.841 140.841

Other operating costs   50.000 101.300 153.731 207.574 262.141

Total operating costs   942.925 1.024.206 1.112.921 1.244.477 1.374.982

Operating income   42.675 82.721 156.033 244.006 441.563

Financial costs   57.200 44.800 33.600 22.400 11.200

Gross profit   -14.525 37.921 122.433 221.606 430.363

Income tax   0 7.205 23.262 42.105 81.769

Net income   -14.525 30.716 99.171 179.501 348.594

Revenues PLN

Period 0 Year 1 Year 2 Year 3 Year 4 Year 5

Quantity dynamics 0,00 0,10 10,00% 12,50% 15,00% 20,00%

Quantity 123.200 12.320 13.552 15.246 17.533 21.039

Price dynamics     2,1% 1,9% 2,0% 1,7%

Prices (PLN)   80,00 81,68 83,23 84,90 86,34

Revenues (PLN)   985.600 1.106.927 1.268.954 1.488.483 1.816.544

Cash flow statement (PLN)

  Period 0 Year 1 Year 2 Year 3 Year 4 Year 5

Net income   -14.525 30.716 99.171 179.501 348.594

Net working capital change -15.000 19.103 243 355 1.029 1.016

Interest   57.200 44.800 33.600 22.400 11.200

Depreciation   47.750 47.750 47.750 47.750 47.750

Cash flows from operating activities -15.000 109.528 123.509 180.876 250.681 408.560

Investment expenditures -650.000          

Long-term credit inflow 400.000          

Long-term credit repayment 0 -80.000 -80.000 -80.000 -80.000 -80.000

Short-term credit inflow 15.000 0 0 0 0 0

Short-term credit repayment 0 -15.000 0 0 0 0

- financial costs paid   -57.200 -44.800 -33.600 -22.400 -11.200

Capital issue 300.000          

Cash flows from financial activities 715.000 -152.200 -124.800 -113.600 -102.400 -91.200

Total cash flows 50.000 -42.672 -1.291 67.276 148.281 317.360

Cash at end of the period 50.000 7.328 6.037 73.314 221.594 538.954

Investment Appraisal

  Period 0 Year 1 Year 2 Year 3 Year 4 Year 5

special tax rate   0% 0% 0% 0% 0%

Operating cash flow (PLN) -15.000 109.528 123.509 180.876 250.681 408.560

- tax shield (PLN) 0 0 0 0 0 0

- investment expenditures (PLN) -650.000          

+ Liquidation value (scrapp value) (PLN)           404.503

Free cash flow (PLN) -665.000 109.528 123.509 180.876 250.681 813.064

Real discount rate 8,82% 8,82% 8,82% 8,82% 8,82% 8,82%

Nominal discount rate 11,00% 11,33% 11,65% 11,44% 11,54% 11,22%

Discount coefficients 1 0,90 0,80 0,72 0,65 0,58

Discounted cash flows (PLN) -665.000 98.384 99.365 130.584 162.249 473.165

   

Net Present Value NPV 298.747  

Internal rate of return IRR 23,06%  

Modified Internal Rate Of Return MIRR 20,02%  

Profitability index PI 1,45  

     

return on assets ROA -2,34% 5,38% 16,76% 25,83% 36,05%

return on common equity ROE -4,84% 10,24% 33,06% 59,83% 116,20%

return on sales -1,47% 2,77% 7,82% 12,06% 19,19%

Corporate Decision• IRR (23,06%)> Opportunity cost(11%)• PI (1,45)> 1%• Profitable within 2 years• Low start-up Costs (700000)• Low competition• Net present value is PLN 298747• Forecasts sales may be closer to capacity than 10%• A small re-investment in marketing could have a dramatic

impact on future revenues Accept investment

Thank you for your attention

Questions???