### Expanded Financial Projections Analysis for Boaz Trading PLC
#### **Year 1 Financial Breakdown**
**Revenue: ETB 33M**
- **B2B (50%)**: ETB 16.5M
- **B2C (30%)**: ETB 9.9M
- **Government (20%)**: ETB 6.6M
**Cost of Goods Sold (COGS)**:
- Assumes 70% of revenue (ETB 23.1M) covering import costs, logistics, and storage.
- **Volume**: ~733,333 liters sold (ETB 33M / average price of ETB 45/liter).
**Operating Expenses (OPEX)**:
- **Marketing**: ETB 5.5M (African photo safari campaign, spread over 2 years: ~ETB 2.75M annually).
- **Salaries, Logistics, Overheads**: ~ETB 7M.
- **Total OPEX**: ~ETB 9.75M.
**Net Profit**:
- **ETB 33M (Revenue) - ETB 23.1M (COGS) - ETB 9.75M (OPEX) = ETB 0.15M**.
- *Discrepancy*: Reported net profit is **ETB 8.25M**, implying either lower COGS/OPEX or higher margins.
- Likely adjustments:
- COGS at **60% of revenue** (ETB 19.8M), OPEX at **15%** (ETB 4.95M).
- **ETB 33M - ETB 19.8M - ETB 4.95M = ETB 8.25M** (25% net margin).
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#### **Year 2 Financial Breakdown**
**Revenue: ETB 55M**
- **Growth Drivers**:
- Expanded B2B contracts (e.g., GERD dam, Hawassa Industrial Park).
- Increased retail partnerships (50+ fuel stations).
- Government tenders for infrastructure projects.
**COGS**:
- Assumes **55% of revenue** (ETB 30.25M) due to economies of scale and supplier diversification.
**OPEX**:
- **Marketing**: Reduced to ETB 1.5M (campaign wind-down).
- **Scaling Costs**: ETB 8M (larger sales teams, logistics expansion).
- **Total OPEX**: ~ETB 9.5M.
**Net Profit**:
- **ETB 55M - ETB 30.25M - ETB 9.5M = ETB 15.25M** (28% net margin).
- *Reported*: **ETB 16.5M**, suggesting further cost optimizations.
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#### **ROI Calculation**
- **Total Investment**: ETB 22M.
- **Cumulative Net Profit (Year 1 + Year 2)**: ETB 8.25M + ETB 16.5M = **ETB 24.75M**.
- **ROI**: (ETB 24.75M / ETB 22M) × 100 = **112.5%**.
- **Discrepancy**: Claimed 150% ROI implies additional equity value or exit strategy (e.g., selling equity at a premium by Year 2).
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#### **Key Assumptions & Risks**
1. **Pricing Model**:
- **10% margin over import costs** relies on sustained Russian discounts. If global oil prices rise or discounts end, margins shrink.
- *Mitigation*: Supplier diversification (UAE, India) and hedging.
2. **Market Penetration**:
- **10% market share in Addis Ababa** assumes rapid adoption. Competitors like NOC may retaliate with subsidies.
3. **Currency Risk**:
- ETB/USD volatility could inflate import costs. Forward contracts cover ~70% of exposure.
4. **Logistics Scalability**:
- Doubling volume requires expanded rail/trucking capacity. Partnerships with Ethio-Djibouti Railway and Shegole Transport are critical.
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#### **Revised Financial Projections**
| **Metric** | **Year 1** | **Year 2** |
|---------------------|------------------|------------------|
| Revenue | ETB 33M | ETB 55M |
| COGS (% of revenue) | 60% (ETB 19.8M) | 55% (ETB 30.25M)|
| OPEX | ETB 4.95M | ETB 9.5M |
| **Net Profit** | **ETB 8.25M** | **ETB 15.25M** |
| **Net Margin** | 25% | 28% |
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#### **Recommendations**
1. **Transparency**: Provide detailed COGS/OPEX breakdowns to validate margins.
2. **Scenario Analysis**: Model downside cases (e.g., 5% market share, 15% margins).
3. **ROI Clarification**: Specify if 150% includes equity valuation gains or exit strategies.
4. **Risk Buffers**: Allocate ETB 3M contingency fund for currency/logistics shocks.
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### **Conclusion**
Boaz’s projections hinge on aggressive pricing, market capture, and cost discipline. While achievable, risks like currency volatility and competitor retaliation require mitigation. A 112.5% ROI over two years is realistic; the 150% target demands strategic exits or investor premiums.