Board Meeting: December 2014

Contents
1. Introduction
2. Operating Environment
3. Internal analysis
4. Strategy
I. Overview
II. Broad line Business Goals
III. Initiatives
5. Marketing Framework
I. Corporate Branding Strategy
II. Product Strategy
III. Product Delivery & Customer Service
6. Branch and Channel Expansion Strategy
7. Risk Management Framework
8. Financial Projections
I. Revenue
II. Balance Sheet
III. Key Ratios
IV. Assumptions
 Introduction
Principal Capital Microfinance Limited (PCML) was incorporated on the 18th of
June, 2012 under the companies code, 1963 (ACT 179); and is licensed and
regulated by the Bank of Ghana as a Non-banking Financial Institution.
The companys core business includes the provision of loan facilities, the creation
of profitable avenues for the investing public and the provision of business
advisory services to a diversified client base broadly categorized as retail and
institutional clients.
Aware of the challenges facing, especially the SME sector in Ghana and is keen to
leverage on the underlying opportunities it presents to develop robust tailor-
made financial solutions to the sector albeit ardently streamlining inherent risks
and other mitigating factors.
 Introduction
The key objectives of the Principal Capital are expressed in terms of the
expectations of all the major stakeholders.
To Our Customers- A compelling place to transact business (continuous innovation and
partnership with customers)
We seek to become partners to our customers as we work with them to design solutions to their
financing needs and provide advice on growing their businesses.
Being competitive in pricing terms.
Ensuring a friendly, effective and most efficient customer service.
Optimizing the benefits of our relationship with the customer.
To Our Staff- A compelling place to work (attracting, recruiting and retaining best talent)
Ensure adequate and competitive remuneration / compensation package to all staff.
Create an atmosphere that is conducive to work and that allows for adequate recreation.
Provide adequate training, which will ensure at least 3 days training per annum for each member
of staff.
Promote the quality of life of staff and their family.
Foster team spirit.
 Introduction
To Shareholders A compelling place to invest
Create a company with a low risk profile, medium return and high growth in shareholder
value. This will be done by ensuring;
Profitability ensure a highly profitable Bank.
Strong balance sheet that is well leveraged.
Good return on assets in excess of industry average.
Return to shareholders in excess of industry average.
To Society
Secure community confidence and trust and not to be regarded as element of exploitation in
society something banks have lost.
To be a good corporate citizen.
Abide by the laws of the country.
Comply with all statutory and prudential guidelines.
Contribute to societal development particularly in our selected areas of education, health and the
environment.
Awareness of societal needs and respond appropriately.
 Operating Environment
Economy
Remarkable progress has also been made in the achievement of a relatively stable
macroeconomic environment, as macroeconomic stability has been pursued vigorously
through fiscal discipline, combined with a tight monetary policy stance.
The relative macroeconomic stability and strong showing in real and fiscal sectors of the
economy have reflected in a stable Cedi, sliding and lower interest rates and a significant
drop in inflation.
Tighter fiscal policy, a more stable exchange rate and lower food prices owing to strong
agricultural production should lead to a further decline in inflation. Additional oil exports
from new discoveries will boost liquidity. Year-on-year inflation is expected to fall further. The
2013 Budget projects a year-end inflation rate of 8.0%.
2013 2014 2015 2016 2017
GDP 7.7 7.4 7.4 7.2 7.5
Agriculture 3.4 4.5 5 5 5.5
Industry 13.2 10 9 8 8
Services 6.7 7.2 7.6 7.8 8.2
 Operating Environment
Industry Structure
Tier 1 activities
Rural and Community Banks, Finance Houses and Savings and Loans Companies
Tier 2 activities
Susu companies and other financial service providers, including Financial Non-Governmental
Organizations (FNGOs) that are deposit taking and profit making.
Credit Unions
Tier 3 Activities
Money lenders
Non-deposit taking Financial Non-Governmental Organizations (FNGOs)
Tier 4 activities
Susu collectors
Individual money lenders.
 Operating Environment
Principal is regulated as under the Tier 2 category
The industry has undergone significant changes and regulation has had to be strengthened.
Examples of guiding operational requirements include;
No single deposit shall exceed 5% of the Companys paid up capital.
Make loans to their customers as follows:
ceiling of 5% of the companys net worth for unsecured exposures;
ceiling of 20% of the companys net worth for secured exposures; and
ceiling of 1% of the Companys net worth per member of the group for group loans
Tier 2 institutions shall submit periodic prudential reports to the Bank of Ghana, of varying
periodicity as may be determined by the Bank of Ghana.
Tier 2 institutions may be subject to on-site supervision of such periodicity as may be
determined by the Bank of Ghana.
An operating licence shall be subject to annual renewal upon satisfactory performance and
payment of the appropriate licence renewal fee.
Tier 2 institutions may only undertake any other services with prior written authorization of
the Bank of Ghana.
 Internal Analysis - SWOT
Strengths

Strengths Which means So action to be taken

Efficient service delivery to improve on our

Well trained staff More capable to render efficient services.
Should be able to offer inspiring leadership
Experienced management
to drive for the achievement of the
team
objectives in the plan period
Relatively young staff Potentially productive workforce
credit appraisal process and cash
withdrawals and deposit mobilization drive.
Manage proactively and empower staff to
raise productivity.
Continuously develop strategies to attract,
recruit and retain young people.

Easy access to management Good working relationships with junior staff Open to all staff members

Skills for Trade Finance

Potential to increase non funded income Market trade finance facility of the Bank
 Internal Analysis - SWOT
Weaknesses
Weaknesses
Limited branch network
Lack of appropriate IT infrastructure
No brand image /Market Presence
Which means
Limited deposit taking potential; high cost of funds
Inefficient processing and lack of capacity to support
further growth
Low recognition, inability to attract talented recruits,
loss of business to competitors
Actions to be taken
Open more branch outlets
Invest in IT infrastructure
Develop and implement a branding
programme, increase PCMLs visibility and
ensure brand equity. This should
complement the marketing process for our
products.
 Internal Analysis - SWOT
Opportunities
Opportunities
Growth in non-traditional sectors of
the economy.
Changing demographics and social
trends
Access cheaper funds from private
banking
Deregulation of oil industry
Bank the unbanked sector about 50-
55% of cash still outside the banking
sector.
Growing private sector and
opportunities in telecoms, oil and gas,
construction, real estate, consumer
goods etc
Impending consolidation in
microfinance industry given higher
capital requirements
Which means
Opportunities for diversification of business
Opportunities to access new business
segments
More funds available for lending at a lower
cost
More businesses to fund
Opportunity to reach the informal sector
Opportunity to reach the local content
participants in the various sectors who are
predominantly SMEs.
Opportunity to acquire/merge with other
microfinance companies achieve scale and
scope
Actions to be taken
Target expansion of service to identified sectors
Develop infrastructure and appropriate products together with
selling strategies.
Strengthen the private banking to mobilize cheap funds for the
bank
Partner with other banks for oil syndications business
Develop the right products well suited to the informal sector.
Develop relationship with SSNIT Informal Sector fund as part of
retail strategy.
Identify industries to compete in and opportunities in those
industries and develop entry strategies
Position the PMCL strategically to take advantage of opportunities
when they come up
 Internal Analysis - SWOT
Threats

Threats Which means Actions to be taken

Declining margins due to customer awareness Low profitability, encounters with customers for Increase volume of business and develop high
of rate & high bargaining power rate reductions margin products in the retail sector

Capital has become the basis of competition in Better capitalized MFIs will be able to underwrite Fresh injection of capital by shareholders in the near
the industry higher value and profitable transactions. future

Growth of non-bank financial institutions Stiff competition Carve a defensible niche for the PCML.

Ability to design, develop & implement Innovative techniques being utilized to render client Devise appropriate strategy for product
products services. development

Enhanced capacity to make deals and therefore Defend position with excellent customer service and
Increased capacity of peer MFIs
target our key customers product innovation

New entrants Customer poaching Defend existing market share

Increasing customer sophistication Provide responsive and creative service at

More demands from customers
competitive prices
Strategy - Overview

Initiatives will be underpinned by positioning PCML as market leader in service quality and as a reliable partner. This will be communicated to the
micro and SME borrowing public by highlighting benefits of the Companys services and how uniquely it stands out among the competition.

PCMLs growth will be spurred with a combination of market development and penetration initiatives driven by an aggressive branch
expansion programme utilizing a strong ICT backbone developed out of a strong operational and credit practice.

The Company will continue to engage its sales force in an effort to sustain their contribution to the growth agenda.

For clients, the Company will continue to encourage business growth and for defaulting customers constant engagement to continue to
drive the relationship.

Ultimately, PCML will transform itself into a Finance house offering diverse services with niche market in investment product services by
maintaining the micro-finance subsidiary which will assist them deliver high returns to the targeted investors in their portfolio.
 Strategy Broad line Business Goals
To become one of the Top 5 Non-Banking financial institution in Ghana in terms of
Balance Sheet size by 2020
Grow to 3 branches in 24-36 months. Branch expansion informed by the availability of
significant profit pools that ensure branches add value to group performance.
The aim of the company is to achieve a stated capital of GHC5million by 2078 and GHC10
million by 2020
Continuous review of our credit appraisal and continuous streamlining of our credit
delivery processes to ensure quick turnaround time while maintaining the integrity and
soundness of credit decisions.
Attain Profit before tax of at least GHC4.4 million by 2018 growing to a minimum of
GHC5.2million by the end of the plan period
Return on Assets of 15.7% by 2018
Return on Equity that is at least 10% percentage points above average one year Treasury note for
each year of the plan period.
Cost control measures would be vigorously pursued to reduce our cost
 Strategy Broad line Business Goals
Undertake a focused expansion of our credit risk assets in active and growing sectors of
the economy that have a low risk profile
Investing in a robust and state of the art information technology platform that enables us
to deliver quality service to customers
Driving an aggressive expansion in deposits to support our growth in assets and to
ensure the availability of funds to meet maturing obligations. We target to reach at least
GHC17millionin deposits by 2019
Stability
Achieve a strict compliance with all prudential, statutory and regulatory requirements throughout
the plan period achieve a reduction in advances to deposits ratio from 209 % in 2013 to 170% by
the end of the plan period.
Net worth to improve from GHC7.9 million to circa GHC28 million by the end of the plan period.
Grow Deposits from GH7.8 million in 2015 to circa GHC18.1 million by the end of the plan period.
Grow advances from GH16m in 2015 to circa GH30.8m in 2016.
Return appropriate dividend to shareholders over the plan period. Dividend pay-out ratio of 30%.
 Strategy Initiatives
Increase market share and deploy enhanced balance sheet for value creation
Drive a focused expansion of credit
Create new market space
Enhanced Management of Assets and Liabilities
Rigorous Credit Appraisal, Delivery and Recovery platform
Upgrade information technology operating platform
Human resource development to recruit and retain the highest calibre of staff to
drive growth
Sound and effective expenditure control
Re-engineer the Portfolio Mix
 Marketing Framework
As a result of the companys strategic review, Principal Capital developed a
Strategic Marketing Framework to be implemented over the plan period
The Marketing Strategy comprises three legs:
Corporate Brand Strategy;
Product Strategy; and
Product Delivery and Customer Service Strategy.
That are based on information generated from four sources:
Competitor Analysis;
Market Analysis; and
Political, Economic, Social and Technological (PEST) Environment Analysis.
 Corporate Branding Strategy
From the companys inception, Principal has put significant effort into developing
its brand. And research indicates that the companys brand is associated with
client-focus and quality work.
We believe a good framework will provide;
Better recognition
Differentiation so that we are able to stand out in the competitive environment we operate
in
Credibility: so customers believe in our organization
Warranty: of the quality and reliability of our services
Involuntary Referral: so that customers can easily recommend our company, and make it
easier for those hearing the recommendation to remember us.
 Corporate Branding Strategy

Principal Capital No major intentions We intend We critically need to We will on a very

Measure Brand Success

Create Brand

Internalise Brand

Externalise Brand
Current Status

came up with to drastically change internalising the create an awareness regular basis assess
strategies from the the present brand identity, to and understanding the
inception of the company logos make sure we build of the Principal impact/effectiveness
companys among other visuals. belief and Capital brand by of all marketing
operations. It is by We believe it is commitment deploying an initiatives, adjusting
this plan reviewing compelling enough ensuring extensive external as we go along until
and revising some of to achieve the organizational communications we optimize efforts
its original direction results we desire alignment. strategy. accordingly.
We would be looking
to achieve this by
the use of a robust
marketing materials
and a media plan
 Corporate Branding Strategy
Corporate Identity
Our corporate identity is also key to the success of the overall corporate branding
strategy
It is an embodiment of the unique characteristics that all together define our
company on a day-to-day basis. These include;
the design of its offices,
signage,
staff uniforms,
stationary etc.
They also include less tangible things like the way we conduct our business
This is crucial to ensuring consistency through standardisation so that the
customers experience of Principal and its identity is the same irrespective of
which branch they visit.
 Corporate Branding Strategy
Corporate Communications
Our communications strategies will encapsulate the entire essence of the identity
we want to portray in the media
This will be achieved by employing a PR function that will deliberately and
continuously will help us maintain a mutual understanding between our business
and the public by;
Press Relations placing newsworthy information in the media for our target audience
Product Publicity generating positive product-based publicity
Public Affairs develop and maintain strong community relationships
Investor Relations With shareholders/financial community
Special Events: news conferences, press tours, grand openings, education programmes etc
Written Materials: such as brochures, articles , company newsletters/magazines
Audio-visual materials: such as videos, slide shows etc.
Public service activities: such as financial advice for low income families and other training
Sponsorship and Donations
 Product Strategy
We outline here, our strategic approach to developing and enhancing products to
fit the needs of the market and going about activities to optimise sustainable
sales of the products.
We are aware that the development and differentiation of products is a process
of continually and systematically assessing needs of the market and its different
segments
We are guided by the table below;
Modify our current products Design new products that
Sell more of our existing products
and sell more of them to our will appeal to our existing
Existing to our existing types of customers
existing customers (Product customers (New product
(Market penetration) development)
Modification)

Offer and sell modified Design new products for

Enter and sell our products
products to new prospects in new
Geographically Modified in other geographic areas
geographical market geographic areas
(Geographic expansion)

Sell our existing products to new Offer and sell modified Design new products to
types of customers products to new types of sell to new customers
New
(Segment invasion) customers (Diversification)
 Product Strategy - Segmentation
Retail:
Sub-segments Characteristics Product Needs
High Net Worth Individuals earning more than
- Less price sensitive - Deposit Accounts
GHC20,000 per month, employed by formal sector or
- Utilize more transactional products - Call Accounts
self employed (Private Banking)
- Service time conscious - Fixed Deposits
Professionals
- Upper class income - Currency Transfers
Foreign Embassy Staff
- Ego enhancement - Home Finance Loans
Top Executives of companies
- Low credit risk - Security Deposits
Businessmen
High Flying Individuals formally employed earning - Deposit Accounts
between GHC10,000 GH20,000 per month (Executive - Less price sensitive - Call Accounts
Banking) - Utilize more transactional products - Security Deposits
- Senior civil servants - Service time conscious - Currency Transfers
- Senior executives of companies - Low credit risk - Home Finance Loans
- Middle to Senior Staff of NGOs - Consumer Finance
Sub-segments Characteristics Product Needs
Salaried workers - Price sensitive - Deposit Accounts
- Young executives - Location conscious - Savings Accounts
- Middle management - Rising income group - Personal loans
- Consumer Finance
- Not price sensitive
Students
- Technology savvy - Deposit Accounts
- University and other tertiary institutions
- Prefer convenience - Savings Accounts
- Second cycle institutions

- Price sensitive - Deposit products

Retirees, Minors
- location conscious - Savings accounts
 Product Strategy - Segmentation
Sole Proprietorship
Sub-segments Characteristics Product Needs

- Aggressive in credit demands

- Deposit Accounts
- Excess overdrafts
Self-employed/Artisans, Transport Owners, Retail/ - Transfers
- location conscious
Traders Suppliers, Wholesalers, Small Contractors - Loans and Overdrafts
- High risk
- Cash collection
- Not price sensitive

- Not price sensitive
- Medium credit risk
Small Importers/Exporters
- Growing sector
- Attractive transactional income
- Deposit Accounts
- Trade Finance
- Bonds and Guarantees
- Trade Advisory Services
- Overdrafts
- Cash collection
 Product Strategy - Segmentation
Corporate Segment 1
Sub-segments Characteristics Product Needs

- Trade transactions
- Loans and Overdrafts
- Products competing with imports
- Trade Finance
- Selectively growing sector
- Bonds and Guarantees
- Heavy credit users
Manufacturing - Corporate Advisory Services
- High income generation
- Cash Management
- Price sensitive
- Funds Management
- Moderate risk
- Project Finance
- Susceptible to production bottlenecks

- Competitive/ substitutes
- Warehousing
- Growing sector
- Trade Finance products
- Heavy users of forex, trade products
Import - Money transfer
- Good transactional income
- Deposit Accounts
- Medium credit risk
- bridge finance
- Price sensitive

- Trade Products
- Price sensitive
- Deposit Accounts
- High income
- Bonds and Guarantee
Export - High government support
- Money transfer
- Low credit risk
- Advisory Services
- Low allocation of credit
- Short term working capital support
 Product Strategy - Segmentation
Corporate Segment 2
Sub-segments Characteristics Product Needs

- Interest rate risk - Loans and Overdrafts

- Non price sensitive - Project finance
- High risk - Bonds and guarantees
Construction
- Delay in payment of work done - Deposit accounts
- Low profitability - Leasing/asset finance products
- Heavy consumption of credit - Transfers
- Price sensitive
- High government support
- Loans and Overdrafts
- Forex inflow
- Bonds and Guarantees
- Regulated entry
Mining/Quarrying - Corporate Advisory Services
- Growing sector
- Project Finance
- High profitability
- Asset/equipment finance
- High capital expenditure
- Mixed credit risk

- Govt support
- Short Term Loans
- Low growth/profitability
- Deposit Accounts
Agriculture - High risk
- Agricultural Advisory Services
- Heavy credit users
- Project Feasibility Studies
- Less price sensitive
 Product Strategy
We believe selling products would be made considerably easier when
approached in a systematic manner.
A relatively straight-forward method for preparing the key messages for a product
marketing strategy built on
taglines,
unique selling propositions; and
benefit statements
We will employ a balance of pull-push-based strategies over the course of the
plan period. However, over the first few months into the second year, our strategy
would have more of a pull-based approach to be achieved by;
Advertising
Sales Promotions time bound, activity based and segment based
Public Relations
Direct Sales
A push-based strategy uses a heavy sales force to push products to customers
 Product Delivery & Customer Service
Personnel training and development
The fastest and cheapest way to market our products is through our employees
Every employee is being trained to understand that every act in or outside the companys
premises is a marketing act
As a market led MFI, we would focus on the following to optimise quality of
service and client satisfaction:
A well structured programme of human resource development
Attention to the process of team building and maintenance
Development and implementation of a transparent staff incentives scheme
We also be looking to improve our delivery processes by:
Setting and monitoring performance targets
Being alert for sign of stress increasing queues, reduction in ne customers, increasing
customer complaints
Improve our source of information client satisfaction surveys, exit surveys etc.
 Branch and Channel Expansion Strategy
PCML has a key strategy towards the development of branches founded on the
following key considerations, which are generally objectives for branch
expansion:
The profit pools in that particular location justify the setting up of these branches.
The geographic location would enable us create new market space and clearly enhance our
relationship with our existing customers and create fresh opportunities.
The profit pools are not accessible to us from our present locations and require our physical
presence there.
Channel Expansion Mission
Our mission here is to be recognized as the foremost provider of financial solution services to
all segments of the market leveraging our excellent reputation in the SME banking segment.
We are aware that
Some channel locations will contribute towards growing our credit risk portfolio while
Others will present opportunities for growing our deposit liabilities.
We will seek to keep these opportunities in mind and align channel locations with
overall corporate development objectives of the company
 Branch and Channel Expansion Strategy
Our objective is that all branches must be
profitable and
each branch location will be preceded by a rigorous analysis to identify the amount of
business that can be generated in the particular location to justify the capital expenditure.
In the short term, our focus will be to establish branches in areas
That have potential for high volumes of business and
Where we currently do not have physical presence.
That fit into our overall product delivery and growth strategy
 Risk Management Framework
The risk management framework of the company is based on the principles of
ensuring a robust risk environment for our operations.
Our risk management environment ensures that the risks associated with our
operations are adequately identified, These include
Market risk,
Liquidity risk,
Credit risk,
Operational risk
Our risk appetite is carefully designed and reflects the following;
Is reflective of strategy, outlining organizational plan and programme objectives and stakeholder
expectations.
Takes into account key elements of the business module.
Shows a willingness and capacity to take on measured risk.
Considers the skills, resources and technology required to manage and monitor risk exposures in
the context of risk appetite.
 Risk Management Framework
Qualitative Metrics
Metrics
Quantitative Indicators
Earnings Volatility
Return on Equity
Target Capital Ratios
Advance /Deposit Ratio
Deposit Growth
Indicators
Maintain dividend pay-out at a minimum 30% of distributable profit in a particular year.
Ensure that at least 70% of budgeted profit would be delivered annually.
Interest Expense as a percentage of Interest Income should not exceed 50%.
Impairment loss as a percentage of Loans and Advances should not exceed 2%.
Cost/Income ratio not greater than 60%.
Target Return on Equity equivalent of the yield on 1-year fixed note p.a.
Capital adequacy ratio should be in excess of 1%-2% of the statutory limit of 10%
Maintain Advance to Deposit ratio of at less than 80%
Engage in low risk, medium return credit
Cautiously grow risk assets in tandem with deposit target
Ensure that deposit growth is not less than the industry growth rate over the plan period. At
the minimum, we should match the industry growth rate.
 Risk Management Framework
Quantitative Metrics
Qualitative Indicators

Business Growth Monitor indicators for non-sustainability of growth by outsourcing the non-core business processes

Maintain a market share of not less than 10% of industry total assets and pre-tax profit over a five year
Market Share
period

Zero Tolerance Risk

Regulatory Risk No instances of flagrant breaches.

Strategic Risk Consistently chart and follow a growth strategy, harnessing the core competences of the Bank.

Reputational Risk Consistently pursue an agenda to promote a positive image.

Ensure effective management of operational risk by following the tenets in the operational risk
Operational Risk
management framework.

Credit Risk Assume credit risk to be in line with credit policy and underwriting standards

Ensure effective management of liquidity risk, interest rate and exchange rate risks as well as any risks
Market Risk
inherent in the Balance Sheet.
 Financial Projections
PCML will focus on driving an aggressive expansion in deposits to support our
growth in assets; and to ensure the availability of funds to meet maturing
obligations. We target to grow Deposits from GHC4m in 2014 to circa GHC 18m by
the end of the 5 yr plan period.
We also target to grow loan advances from GH8m in 2014 to circa GH30m in
2019
PRINCIPAL CAPITAL - PROJECTED ADVANCES AND DEPOSITS
35 Advances Deposits
MILLIONS

30

25

20

15

10

0
2014 2015 2016 2017 2018 2019
 Financial Projections - Revenue
Years 1 to 5 Year 1 Year 2 Year 3 Year 4 Year 5

Interest Income 4,901,712 5,983,357 7,321,831 8,847,078 10,825,009

Interest Expense 1,596,564 2,039,120 2,567,167 3,035,091 3,748,490

% of Revenues 32.6% 34.1% 35.1% 34.3% 34.6%

GROSS PROFIT 3,305,148 3,944,237 4,754,664 5,811,987 7,076,519

% of Revenues 67.4% 65.9% 64.9% 65.7% 65.4%

OPERATING EXPENSES
General and Administration 478,214 548,511 662,280 769,819 883,020
Total Operating Expenses 478,214 548,511 662,280 769,819 883,020
% of Revenues 10% 9% 9% 9% 8%

EARNINGS FROM OPERATIONS 2,826,934 3,395,726 4,092,383 5,042,168 6,193,499

EXTRAORDINARY INCOME / (EXPENSE) - - - - -

NET EARNINGS BEFORE TAXES 2,826,934 3,395,726 4,092,383 5,042,168 6,193,499

TAXES -706,733 -848,931 -1,023,096 -1,260,542 -1,548,375

NET EARNINGS 2,120,200 2,546,794 3,069,287 3,781,626 4,645,125

% of Revenues 43.3% 42.6% 41.9% 42.7% 42.9%
 Financial Projections B/S
Balance Sheet
Years 1 to 5 Year 1 Year 2 Year 3 Year 4 Year 5

ASSETS
CURRENT ASSETS
Cash and Cash Equivalents -10,816,125 -11,549,706 -13,606,824 -17,616,827 -22,777,766
Interest Receivables 1,985,193 2,114,119 2,777,778 4,800,000 8,077,778
Loans and Advances 16,314,586 19,699,863 24,014,133 29,273,228 35,684,064
Investments and Other Receivables 88,231 86,160 110,000 190,000 320,000
Total Current Assets 7,571,885 10,350,437 13,295,086 16,646,400 21,304,076
PROPERTY & EQUIPMENT -213,952 -160,857 -97,381 -39,286 -24,452
TOTAL ASSETS 7,357,933 10,189,580 13,197,705 16,607,114 21,279,623

LIABILITIES & SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Short Term Debt 3,822,267 4,968,947 6,211,184 7,142,862 8,928,577
Accounts Payable & Accrued Exp. 763,295 749,595 957,000 1,653,000 2,784,000
Other Current Liab. 88,231 86,160 110,000 190,000 320,000
Current portion of long term debt
Total Current Liabilities 4,673,793 5,804,703 7,278,184 8,985,862 12,032,577

LONG TERM DEBT (less current portion)

STOCKHOLDERS' EQUITY
Common Stock 1,200,000 1,500,000 1,500,000 1,500,000 1,500,000
Preferred Stock
Retained Earnings 1,484,140 2,884,877 4,419,521 6,121,252 7,747,046
Total Equity 2,684,140 4,384,877 5,919,521 7,621,252 9,247,046
 Financial Projections Key Ratios
Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Accounts Receivable % of Rev 8.3% 8.3% 8.3% 8.3% 8.3%
Inventory % of Rev 23.1% 23.1% 23.1% 23.1% 23.1%
Accounts Payable % of Rev 8.7% 8.7% 8.7% 8.7% 8.7%
Working Capital % of Rev 22.7% 22.7% 22.7% 22.7% 22.7%
Net Fixed Assets % of Rev -4.4% -2.7% -1.3% -0.4% -0.2%
Current Ratio 1.6 1.8 1.8 1.9 1.8
Debt to Capital (LT Debt + Equity) 0.00 0.00 0.00 0.00 0.00

Profitability
Gross Profit % of Rev 67.4% 65.9% 64.9% 65.7% 65.4%
General & Administration % of Rev 9.8% 9.2% 9.0% 8.7% 8.2%
Operating Expenses % of Rev 9.8% 9.2% 9.0% 8.7% 8.2%
Earnings from Operations % of Rev 57.7% 56.8% 55.9% 57.0% 57.2%
EBIT % of Rev 57.7% 56.8% 55.9% 57.0% 57.2%
Depreciation % of Rev 6.6% 0.8% 1.2% 1.3% 1.2%
EBITDA % of Rev 64.3% 57.5% 57.1% 58.3% 58.4%
Net Earnings % of Rev 43.3% 42.6% 41.9% 42.7% 42.9%

Returns
Return on Assets 28.8% 25.0% 23.3% 22.8% 21.8%
Return on Equity 79.0% 58.1% 51.9% 49.6% 50.2%
Return on Capital (LT Debt + Equity) 79.0% 58.1% 51.9% 49.6% 50.2%

Growth
Revenue Growth Rate - CAGR: 22.1% 22.4% 20.8% 22.4%
Net Earnings Growth Rate - CAGR: 20.1% 20.5% 23.2% 22.8%
 Financial Projections - Assumptions
Assumptions Underlying Projections
Interest income is made up of Registration fees, processing fees, investment income and income
from loan repayment.
Interest Income
This is a function solely driven by sales. This represents the interest component on all the sales received
during the year. We run loan products which yield 6% interest rate per month. These loans run for an
average of approximately 4 months.
Processing Fees
Historical data showed that loan processing fees where 2.7% of loans disbursed. We projected
processing fees with that basis.
Interest on Securities
This is the interest earned whether received or not on all investments placed within the period. All such
investments are risk free government bills. We project investing 3.8% of deposits in government
securities.
Commission Income
This represents monies we received for facilitating loan disbursal to our clients.
Selling General & Administrative Expenses
This is made up of expenses incurred through the normal day to day running of the business. A few
notable mentions are T&T, telephone, electricity and maintenance. We are projecting these expenses as
a percentage of revenues. Salaries however are projected using a different schedule.
 Financial Projections - Assumptions
Provision for Bad Debt
We have a provision for bad debt policy where we charge a 5% straight line provision on our loan
balance.
Taxation
We anticipate that corporate tax rate will remain unchanged at 25% throughout the projected period.
Property Plant & Equipment
We estimate the costs for setting up new branches at GH70,000. We however budget yearly capital
expenditure as shown in the schedule.
Loan Receivable
This represents the principal portion of how much a client owes. This is arrived at by adding
disbursements within the year to the opening loan receivable balance and deducting the principal
component of the sales received It is the companys policy of providing 5% as provision towards doubtful
debt on loan receivables.
Interest Receivable
This represents the interest portion of how much a client owes. This is arrived at by adding the interest
on disbursements within the year to the opening interest receivable balance and deducting the interest
component of the sales received.
Short Term Loan
These are monies we borrow from the banks to use as working capital. They are in the form of amortised
loans and overdraft.