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FINANCIAL PROJECTIONS

Gemma Noble Find my Festival

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CONTENTS WHO WE ARE .......................................................................................................................................... 2

OUR MISSION ......................................................................................................................................... 2

FINANCE INTRODUCTION ....................................................................................................................... 2

CASH INCOME ......................................................................................................................................... 3

INITIAL START UP FUNDS .................................................................................................................... 3

GRANT ASSISTANCE—PRODUCT ......................................................................................................... 3

GRANT ASSISTANCE—STAFF ............................................................................................................... 3

APP SALES............................................................................................................................................ 3

FESTIVAL COMISSION .......................................................................................................................... 3

ADVERTISING ...................................................................................................................................... 3

CASH PAYMENTS .................................................................................................................................... 4

PREMISES RENT ................................................................................................................................... 4

START UP EQUIPMENT ........................................................................................................................ 4

INSURANCE ......................................................................................................................................... 4

DEVELOPMENT EXPENDATURE ........................................................................................................... 4

WAGES AND NATIONAL INSURANCE .................................................................................................. 4

ADVERTISING ...................................................................................................................................... 4

SUNDRIES ............................................................................................................................................ 4

CASH FLOW PROJECTION ....................................................................................................................... 5

PROFIT AND LOSS STATEMENT .............................................................................................................. 6

CASH FLOW SUMMARY .......................................................................................................................... 7

PROFIT AND LOSS SUMMARY ................................................................................................................ 7

REFERENCES ............................................................................................................................................ 7

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Find My Festival

WHO WE ARE Music festivals are a huge part of modern social life. Our

managing director, Gemma Noble, has always been

passionate about music and over the years has attended

many music festivals. When comparing prices and music

genres for her own festival selection Gemma noticed a gap

in the market for a festival comparison app which would

allow users to quickly and easily compare thousands of

festivals nationally and internationally.

FMF Ltd was established with the goal of creating an easy

to use app for international festival goers.

FMF Ltd is a private limited company therefore our shares

do not trade on the stock market.

OUR MISSION To make the festival decision process easy and simple for

our customers by allowing them to compare multiple

options nationally and internationally while promoting and

encouraging smaller festivals.

Music is Life.

FINANCE INTRODUCTION This report details FMF Ltd.’s first year Cash Flow Projection

and Profit and Loss Statement with a detailed breakdown of

the cash income and the cash expenditure.

A cash flow projection for the first year of business has

been completed to determine the closing balance after the

first year of business. A cash flow refers to money which

flows into and out of a company over a specific period of

time. The cash flow is a form of budget and will show

approximately when money is expected to flow into and

out of the company (Anderson, 2015).

A Profit and Loss Statement shows how well a company has

been trading over a year timescale, typically. The difference

between trading revenue and expenses is profit (Anderson,

2015).

#MUSICISLIFE

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CASH INCOME

INITIAL START UP FUNDS The initial start-up fund is an investment of £75,000 will come from the following sources:

£25,000 of personal savings from childhood bonds

£25,000 family investment

£25,000 co investment from Apps Central

A contract has been drawn up with each of the investor parties to ensure fair and equitable

treatment of them as creditors. It states that repayment of the investment will begin after year

three, subject to the company operating at a profit and will be made in monthly instalments.

Interest will be payable at Royal Bank of Scotland base rate.

GRANT ASSISTANCE—PRODUCT Grant Assistance for the product branding will come from Scottish Enterprise. This is in the form of

£5,000 in a one off non-refundable grant. This is provided to assist in the design of branding and

marketing materials. To receive the grant the organisation must give a detailed business and

promotional plan to Scottish Enterprise.

GRANT ASSISTANCE—STAFF There is Grant Assistance available for staff of FMF Ltd from Scot Grad. This is in the form of 30% of

salary cost for a graduate to a maximum value of £6,000 per annum for the first year of employment

only. The money is given stages, with payments being made every 2nd month. The main condition of

the grant is that the job is advertised on the Scot Grad website only.

APP SALES The app will be sold in the Apple and Android stores at £1 per download. It is anticipated there will

be a 20% increase in sales after the first quarter as advertising and awareness of the product

spreads. Thereafter a projected 12% sales increased is anticipated from quarter 3 onwards.

Additional promotional activity in year 2 would give an opportunity to project further increases.

FESTIVAL COMISSION FMF Ltd receive between 8% and 10% commission for every ticket sold through the app. It is

anticipated there will be some degree of seasonality profile to the sales in line with the build up to

events. Commission earnings are projected to have a 20% growth profile per quarter after the first

quarter’s sales.

ADVERTISING Within the App a small amount of space will be allocated in the design to support advertising from

festivals organisers and associated relevant organisations. In addition advertising space will be made

in newsletters that will be issued to those who subscribe to the app. The Advertising will be sold on a

cost per impression (CPM) and cost per click (CPC) basis. Anticipated rates are £5 CPM and £20 CPC.

A conservative assumption been made regarding first year revenue based on assumed circulation

lists and newsletter issue frequency.

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CASH PAYMENTS

PREMISES RENT As the organisation is small and will only have two members of staff, there will be no business

premises. The business will be run from a home office in the Lothians. This cuts expenditure down.

START UP EQUIPMENT Initially the company has purchased the following equipment and software for £3,000:

Two Apple MacBook Pros one for the Managing Director and one for the Operations

Manager

An Apple iPad to test the app and analyses app usage

A printer for marketing materials

Internet services

Two Apple iPhone 6’s under a business contract with EE for each FMF employee

One low spec pay as you go android device for testing purposes

Full Microsoft Office for Business

Adobe products such as Photoshop and Illustrator to produce marketing materials

Cloud based payroll service, accountancy using Xero

INSURANCE The company has had to take out insurance policies from Simply Business for the following areas of

business:

Office equipment insurance

Employer Liability insurance

The cost of insurance is £50.

DEVELOPMENT EXPENDATURE App Central require a payment of £9,900 for the development of the product within the second

quarter of trading. Monthly payments of £334 for the maintenance of the app are required.

WAGES AND NATIONAL INSURANCE Initial salary payments of £12,000 per person will be made. As assumption of 5% employer NI has

been made, payable the month after the salary payments.

ADVERTISING Based on the current economic climate £334 per month has been designated to cover both

advertising and marketing for the first 6 months in the build up to launch. A reduced amount of £168

has then been allocated for post launch.

SUNDRIES A small allowance of £25 per month has been allocated for unplanned incidentals and out of pocket

expenses.

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CASH FLOW PROJECTION

JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTALCASH RECIPETS

Invesement £75,000.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £75,000.00

App Sales £0.00 £0.00 £0.00 £167.00 £167.00 £167.00 £200.00 £200.00 £200.00 £234.00 £234.00 £234.00 £1,803.00

Festival Comission £0.00 £0.00 £0.00 £1,000.00 £1,000.00 £1,000.00 £1,200.00 £1,200.00 £1,200.00 £1,440.00 £1,440.00 £140.00 £9,620.00

Advertising £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £167.00 £167.00 £167.00 £200.00 £200.00 £200.00 £1,101.00

Grant Assistance - Product £0.00 £0.00 £0.00 £5,000.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £5,000.00

Grant Assistance - Staff £0.00 £666.00 £0.00 £666.00 £0.00 £666.00 £0.00 £666.00 £0.00 £666.00 £0.00 £666.00 £3,996.00

TOTAL INFLOWS £75,000.00 £666.00 £0.00 £6,833.00 £1,167.00 £1,833.00 £1,567.00 £2,233.00 £1,567.00 £2,540.00 £1,874.00 £1,240.00 £96,520.00

CASH PAYMENTS

Sales and Promotion

Advertising £167.00 £167.00 £167.00 £167.00 £167.00 £167.00 £84.00 £84.00 £84.00 £84.00 £84.00 £84.00 £1,506.00

Marketing £167.00 £167.00 £167.00 £167.00 £167.00 £167.00 £84.00 £84.00 £84.00 £84.00 £84.00 £84.00 £1,506.00

Operations

Salary £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £24,000.00

Employer NI £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £1,100.00

Office Insurances £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £600.00

Equipment £3,000.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £3,000.00

Sundries £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £300.00

Development Expendature

Software £0.00 £0.00 £0.00 £3,300.00 £3,300.00 £3,300.00 £334.00 £334.00 £334.00 £1,160.00 £1,160.00 £1,160.00 £14,382.00

TOTAL OUTFLOWS £5,409.00 £2,509.00 £2,509.00 £5,809.00 £5,809.00 £5,809.00 £2,677.00 £2,677.00 £2,677.00 £3,503.00 £3,503.00 £3,503.00 £46,394.00

NET CASH INFLOWS/OUTFLOWS £69,591.00 -£1,843.00 -£2,509.00 £1,024.00 -£4,642.00 -£3,976.00 -£1,110.00 -£444.00 -£1,110.00 -£963.00 -£1,629.00 -£2,263.00

OPENING BALANCE £69,591.00 £67,748.00 £65,239.00 £66,263.00 £61,621.00 £57,645.00 £56,535.00 £56,091.00 £54,981.00 £54,018.00 £52,389.00

CLOSING BALANCE £69,591.00 £67,748.00 £65,239.00 £66,263.00 £61,621.00 £57,645.00 £56,535.00 £56,091.00 £54,981.00 £54,018.00 £52,389.00 £50,126.00 £50,126.00

Find my FestivalCash Flow Forecast

First Year Projection Ending December 2016

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PROFIT AND LOSS STATEMENT

JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTALApp Sales £0.00 £0.00 £0.00 £167.00 £167.00 £167.00 £200.00 £200.00 £200.00 £234.00 £234.00 £234.00 £1,803.00

Festival Comission £0.00 £0.00 £0.00 £1,000.00 £1,000.00 £1,000.00 £1,200.00 £1,200.00 £1,200.00 £1,200.00 £1,200.00 £1,200.00 £10,200.00

Advertising £0.00 £0.00 £0.00 £0.00 £0.00 £167.00 £167.00 £167.00 £167.00 £167.00 £167.00 £167.00 £1,169.00

REVENUE £0.00 £0.00 £0.00 £1,167.00 £1,167.00 £1,334.00 £1,567.00 £1,567.00 £1,567.00 £1,601.00 £1,601.00 £1,601.00 £13,172.00

COGS £0.00 £0.00 £0.00 £3,300.00 £3,300.00 £3,300.00 £334.00 £334.00 £334.00 £1,160.00 £1,160.00 £1,160.00 £14,382.00

GROSS PROFIT £0.00 £0.00 £0.00 -£2,133.00 -£2,133.00 -£1,966.00 £1,233.00 £1,233.00 £1,233.00 £441.00 £441.00 £441.00 -£1,210.00

Gross Profit £0.00 £0.00 £0.00 -£1.83 -£1.83 -£1.47 £0.79 £0.79 £0.79 £0.28 £0.28 £0.28 -£0.09

Gross Margin Percentage 0.00% 0.00% 0.00% -182.78% -182.78% -147.38% 78.69% 78.69% 78.69% 27.55% 27.55% 27.55% -9.19%

EXPENSESSales and Promotion

Advertising £167.00 £167.00 £167.00 £167.00 £167.00 £167.00 £84.00 £84.00 £84.00 £84.00 £84.00 £84.00 £1,506.00

Marketing £167.00 £167.00 £167.00 £167.00 £167.00 £167.00 £84.00 £84.00 £84.00 £84.00 £84.00 £84.00 £1,506.00

Operations

Salary £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £2,000.00 £24,000.00

Employer NI £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £100.00 £1,200.00

Office Insurances £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £50.00 £600.00

Equipment £3,000.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £3,000.00

Sundries £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £25.00 £300.00

TOTAL EXPENSES £5,509.00 £2,509.00 £2,509.00 £2,509.00 £2,509.00 £2,509.00 £2,343.00 £2,343.00 £2,343.00 £2,343.00 £2,343.00 £2,343.00 £32,112.00

OPERATING PROFIT -£5,509.00 -£2,509.00 -£2,509.00 -£4,642.00 -£4,642.00 -£4,475.00 -£1,110.00 -£1,110.00 -£1,110.00 -£1,902.00 -£1,902.00 -£1,902.00 -£33,322.00

Interest

PROFIT BEFORE TAX -£5,509.00 -£2,509.00 -£2,509.00 -£4,642.00 -£4,642.00 -£4,475.00 -£1,110.00 -£1,110.00 -£1,110.00 -£1,902.00 -£1,902.00 -£1,902.00 -£33,322.00

Find my Festival

Profit and Loss Forecast

First Year Projection ending in December 2016

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CASH FLOW SUMMARY The initial injection of £75,000 provides the working capital to start the business and sufficient funds

to cover the operating costs of the business for the first year of trading. The income generated from

sales of £21,520 is sufficient to minimise the first year’s net negative cash flow to leave a closing

balance of £50,126.

PROFIT AND LOSS SUMMARY In its first year, while the company is in start-up and developing its product and market position the

company will trade at a loss. The monthly operating cost projections are not being met by the

projected sales revenues.

The founders and trade creditors are aware of this position and will continue to financially support

the company during its start-up and development.

REFERENCES Anderson, S. (2015). Financial Accounts