Annexure

PROFORMA BALANCE SHEET

(Amount in ZMK '000')

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

LIABILITIES
Shareholders' Funds
Equity Share Capital 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000
Reserves (843,672) 1,787,107 4,996,760 8,045,767 10,744,886 13,849,700 17,306,515
Loan Funds
Rupee Loans - - - - - - -
Foreign Currency Loans - - - - - - -
Deposit from Franchisees 750,000 1,000,000 1,050,000 1,100,000 1,150,000 1,200,000 1,250,000
Bank Borrowings for Working Capital - - - - - - -

TOTAL 2,906,328 5,787,107 9,046,760 12,145,767 14,894,886 18,049,700 21,556,515

ASSETS
Gross Fixed Assets 611,164 618,414 625,699 633,019 640,379 647,784 655,234
Less: Accumulated Depreciation 123,325 220,250 297,225 358,829 408,572 449,148 482,627
Net Fixed Assets 487,839 398,164 328,474 274,190 231,807 198,636 172,607
Margin for Bank Gurantee 722,459 2,054,156 2,625,052 2,979,832 3,355,269 3,751,305 4,171,664
Net Current Assets 964,936 1,790,117 2,096,654 2,387,419 2,623,480 2,976,302 3,368,992
Cash & Bank Balances 118,806 1,085,454 3,690,436 6,351,254 8,684,329 11,123,457 13,843,253
Miscellaneous Expneses
Net Loss - - - - - -
Pre-Launch Expenses 612,288 459,216 306,144 153,072 - -

TOTAL 2,906,328 5,787,107 9,046,760 12,145,767 14,894,886 18,049,700 21,556,515

Debt Equity Ratio 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Annexure
PROFORMA CASH FLOW STATEMENT

(ZMK in '000)
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

SOURCES

Net Cash Accurals (567,275) 2,880,776 3,439,700 3,263,682 2,901,934 3,145,391 3,490,294
Equity Share Capital 3,000,000 - - - - - -
Term Loans
Zambian Kwacha Loans - - - - - - -
Foreign Currency Loans - - - - - - -
Deposits from Franchisees 750,000 250,000 50,000 50,000 50,000 50,000 50,000
Working Capital
TOTAL INFLOW 3,182,725 3,130,776 3,489,700 3,313,682 2,951,934 3,195,391 3,540,294

USES

Capital Expenditure 466,164 - - - - - -

Normal Capital Expenditure 145,000 7,250 7,285 7,320 7,360 7,405 7,450
Expense Capitalised 765,360 - - - - - -
Net Loss - - - - - - -
Repayment of Term Loans
Rupee Loans - - - - - - -
Foreign Currency Loans - - - - - - -
Margin for Bank gurantee 722,459 1,331,697 570,895 354,780 375,437 396,036 420,359
Repayment of Franchisee Deposit - - - - - - -
Increase in Net Current Assets 964,936 825,181 306,537 290,765 236,062 352,822 392,689
TOTAL OUTFLOW 3,063,919 2,164,128 884,718 652,865 618,859 756,263 820,498

Opening Balance - 118,806 1,085,454 3,690,436 6,351,254 8,684,329 11,123,457

Addition/ (Reduction) 118,806 966,648 2,604,982 2,660,818 2,333,075 2,439,128 2,719,796

Closing Balance 118,806 1,085,454 3,690,436 6,351,254 8,684,329 11,123,457 13,843,253

Debt Service Coverage Ratio (4.34) 18.38 24.48 27.59 30.35 33.27 35.44

Interest Cover (4.34) 18.38 24.48 27.59 30.35 33.27 35.44

 Amount in ZMK'000
FINALCIAL EXTRACTS Year 01 Year 02 Year 03 Year 04 Year 05 Year 06 Year 07

Gross Revenue 52818750 150631250 192495000 218708750 246487500 275831250 306740000

Sale Realization 47008688 134061813 171320550 194650788 219373875 245489813 272998600

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Prize Payouts 26369761 74976705 95814386 108763861 122467314 136922633 152265736

56% 56% 56% 56% 56% 56% 56%

Contribution to Good Causes & VAT

including Secondary Contribution 12086120 37003857 47518968 53223792 60460831 66546940 72853591
25.71% 27.60% 27.74% 27.34% 27.56% 27.11% 26.69%

Direct Cost 1811367 5904378 7468573 9261369 10141030 12415809 14807705

3.43% 4.40% 4.36% 4.76% 4.62% 5.06% 5.42%

Operating Cost 7769103 13715792 15881134 17625975 19618399 21636285 24022108

14.71% 9.11% 8.25% 8.06% 7.96% 7.84% 7.83%

Finance Charges & Depreciation 258325 276925 265975 259604 256743 256576 258479
0.49% 0.18% 0.14% 0.12% 0.10% 0.09% 0.08%

Profit Before Taxation -843672 4835887 7914142 9452583 10948042 12593676 14020672
-1.60% 3.21% 4.11% 4.32% 4.44% 4.57% 4.57%

Corporate Taxation 0 1805035 3553200 4249500 4923223 5663285 6304567

0.00% 1.20% 1.85% 1.94% 2.00% 2.05% 2.06%

Profit After Taxation -843672 3030852 4360942 5203083 6024819 6930391 7716104
-1.60% 2.01% 2.27% 2.38% 2.44% 2.51% 2.52%

Equity Capital 3000000 3000000 3000000 3000000 3000000 3000000 3000000

% of Operating cost + FC+ Dep+ PBT/SALE 13.60% 12.50% 12.50% 12.50% 12.50% 12.50% 12.49%
100

PROJECTED COST OF OPERATION AND PROFITABILITY

(Amount in ZMK '000')
Particulars Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
INCOME
Sale Realization of Lottery Tickets
Net Revenue from Lottery Operation 47,008,688 134,061,813 171,320,550 194,650,788 219,373,875 245,489,813 272,998,600
Total Amount (A) 47,008,688 134,061,813 171,320,550 194,650,788 219,373,875 245,489,813 272,998,600
Less: Direct Cost
Prize Money 26,369,761 74,976,705 95,814,386 108,763,861 122,467,314 136,922,633 152,265,736
Charitable towards Good Causes 11,752,172 33,515,453 42,830,138 48,662,697 54,843,469 61,372,453 68,249,650
Draw Expenses 52,500 175,000 175,000 175,000 175,000 175,000 175,000
Printing Charges of Lottery Tickets 1,449,597 4,699,165 5,987,771 7,457,804 8,185,930 10,051,627 12,015,749
Frieght Inwards 309,269 1,030,213 1,305,802 1,628,566 1,780,100 2,189,182 2,616,956
Total Direct Cost (B) 39,933,300 114,396,535 146,113,097 166,687,927 187,451,813 210,710,894 235,323,091
84.95% 85.33% 85.29% 85.63% 85.45% 85.83% 86.20%
Income Before Operations (A-B) 7,075,388 19,665,277 25,207,453 27,962,860 31,922,062 34,778,918 37,675,509
% of inc bef operation/revenue 15.05% 14.67% 14.71% 14.37% 14.55% 14.17% 13.80%
COST OF OPERATIONS
SPV incorporation expenses 75000 - - - - - - -
Application fees 36000 - - - - - - -
Distribution 221,095 736,492 933,509 1,164,251 1,272,582 1,565,032 1,870,845
System Admn. & Maintenance 925,550 2,637,748 3,370,555 3,829,929 4,316,336 4,830,697 5,372,009
Marketing Costs 654360 2,029,604 2,052,967 1,862,533 1,892,700 1,975,800 2,051,600 2,112,500
Administrative Expenses 4,105,834 5,791,906 6,412,594 7,096,600 7,885,415 8,869,545 10,062,813
Value Added Tax 333,948 2,343,607 3,148,870 3,489,423 4,015,194 4,319,410 4,603,941
Miscellaneous Expenses 153,072 153,072 153,072 153,072 153,072 - -
Total Cost of Operations 765,360 7,769,103 13,715,792 15,881,134 17,625,975 19,618,399 21,636,285 24,022,108
% of operation cost/ Gross revenue 14.71% 9.11% 8.25% 8.06% 7.96% 7.84% 7.83%
Net Profit before FC and Depreciation (693,716) 5,949,486 9,326,319 10,336,885 12,303,664 13,142,633 13,653,401
Net Profit before FC and Dep./ Gross Revenue -1.31% 3.95% 4.84% 4.73% 4.99% 4.76% 4.45%
Finance Charges 135,000 180,000 189,000 198,000 207,000 216,000 225,000
Depreciation 123,325 96,925 76,975 61,604 49,743 40,576 33,479
% of FC & Depreciation/ Gross Revenue 0.49% 0.18% 0.14% 0.12% 0.10% 0.09% 0.08%
Operating Profit (OP) (952,041) 5,672,561 9,060,344 10,077,281 12,046,920 12,886,057 13,394,922
% of Operating profit/ Gross Revenue -1.80% 3.77% 4.71% 4.61% 4.89% 4.67% 4.37%
Interest Received (Margin money with Bank) 108,369 308,123 393,758 446,975 503,290 562,696 625,750
Profit before secondary contribution (843,672) 5,980,684 9,454,102 10,524,256 12,550,211 13,448,753 14,020,672
Estimated secondary contribution - 1,144,798 1,539,960 1,071,673 1,602,169 855,077 -
Profit before tax (843,672) 4,835,887 7,914,142 9,452,583 10,948,042 12,593,676 14,020,672
Provision Corporate Taxation - 1,805,035 3,553,200 4,249,500 4,923,223 5,663,285 6,304,567
% of Profit before tax/ Gross Revenue -1.60% 3.21% 4.11% 4.32% 4.44% 4.57% 4.57%
% of Operating cost + Profit before tax 13.60% 12.50% 12.50% 12.50% 12.50% 12.50% 12.49%
Profit after Tax (PAT) (843,672) 3,030,852 4,360,942 5,203,083 6,024,819 6,930,391 7,716,104
Dividend (%) 12% 24% 36% 48% 48% 48%
Dividend (Amount) 363,702 1,046,626 1,873,110 2,891,913 3,326,588 3,703,730
Corprate Dividend Tax 36,370 104,663 280,967 433,787 498,988 555,560
Reserves (843,672) 2,630,779 3,209,653 3,049,006 2,699,119 3,104,815 3,456,815
Net Cash Accruals (567,275) 2,880,776 3,439,700 3,263,682 2,901,934 3,145,391 3,490,294
Return on Capital Employed (%) -32.17% 124.28% 116.63% 93.58% 89.51% 78.00% 67.24%
Return on Equity (%) -39.13% 63.31% 54.53% 47.10% 43.83% 41.13% 38.00%
Annexure

Revenue Projections
Amount in ZMK '000
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Retailers Network at Beginning of Year 0 750 1000 1050 1100 1150 1200
Retailers appointed during the Year 750 250 50 50 50 50 50
Retailers at the end of Year 750 1000 1050 1100 1150 1200 1250

Average No. of Retailers 375 875 1025 1075 1125 1175 1225

No. of Operational Days 313 313 313 313 313 313 313

Avg. Sale per Retailer per day 450 550 600 650 700 750 800

Gross Revenue 52,818,750 150,631,250 192,495,000 218,708,750 246,487,500 275,831,250 306,740,000

Agents and Retailers Commission 5,810,063 16,569,438 21,174,450 24,057,963 27,113,625 30,341,438 33,741,400
Net Revenue 47,008,688 134,061,813 171,320,550 194,650,788 219,373,875 245,489,813 272,998,600
Percentage of Growth 185.19% 27.79% 13.62% 12.70% 11.90% 11.21%
ZAMBIA LOTTERY PROJECT

Amount in ZMK '000

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
Game type
Scratch
Sale 36973125 116739218.75 149183625 169499281 191027813 213769219 237723500
Prize Payout 50% 50% 50% 50% 50% 50% 50%
Price Payout 18486562.5 58369609.375 74591812.5 84749640.6 95513906.3 106884609 118861750
Net Revenue 18486562.5 58369609.375 74591812.5 84749640.6 95513906.3 106884609 118861750

Paplu- Weekly lottery

Sale 6602344 11297344 13474650 14216069 14789250 13791563 15337000
Prize Payout 52.0% 52.0% 52.0% 52.0% 52.0% 52.0% 52.0%
Price Payout 3433219 5874619 7006818 7392356 7690410 7171613 7975240
Net Revenue 3169125 5422725 6467832 6823713 7098840 6619950 7361760

Monthly Lottery
Sale 5281875 11297344 15399600 17496700 19719000 23445656 26072900
Price Payout 52.0% 52.0% 52.0% 52.0% 52.0% 52.0% 52.0%
Prize Payout 2746575 5874619 8007792 9098284 10253880 12191741 13557908
Net Revenue 2535300 5422725 7391808 8398416 9465120 11253915 12514992

Festival Bumper
Sale 3961406.25 11297344 14437125 17496700 20951438 24824813 27606600
Price Payout 43% 43% 43% 43% 43% 43% 43%
Prize Payout 1703404.6875 4857858 6207964 7523581 9009118 10674669 11870838
Net Revenue 2258001.5625 6439486 8229161 9973119 11942319 14150143 15735762

Gross Revenue from Lottery 52818750 150631250 192495000 218708750 246487500 275831250 306740000

Prize Payout 26369761 74976705 95814386 108763861 122467314 136922633 152265736

Net Revenue 26448988 75654544 96680613 109944888 124020185 138908617 154474263

Scratch card Printing & Consumables
Amount in ZMK '000
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
Revenue from Scratch Card Game
Name of the Game Face Value
Game 01 ### 9,243,281 23,347,844 22,377,544 25,424,892 19,102,781 21,376,922 23,772,350
Game 02 ### 7,394,625 35,021,766 44,755,088 50,849,784 57,308,344 64,130,766 71,317,050
Game 03 ### 9,243,281 35,021,766 44,755,088 50,849,784 66,859,734 74,819,227 83,203,225
Game 04 ### 11,091,938 23,347,844 37,295,906 42,374,820 47,756,953 53,442,305 59,430,875
Gross Revenue from Scratch card 36,973,125 116,739,219 149,183,625 169,499,281 191,027,813 213,769,219 237,723,500
Number of Scratch card sold 15,898,444 50,197,864 57,435,696 65,257,223 65,904,595 73,750,380 82,014,608
Buffer Stock of Scratch card 2,384,767 7,529,680 8,615,354 9,788,583 8,238,074 9,218,798 8,201,461
Total Number of Scratch Cards 18,283,210 57,727,544 66,051,050 75,045,807 74,142,670 82,969,178 90,216,068
Cost per Scratch Card 65.00 71.50 78.65 86.45 94.90 104.65 115.05
Cost of Scratch Card sold 1,033,399 3,589,147 4,517,317 5,641,487 6,254,346 7,717,977 9,435,781
Cost of Buffer Stock 155,010 538,372 677,598 846,223 781,793 964,747 943,578
Total Cost of Scratch card 1,188,409 4,127,519 5,194,915 6,487,710 7,036,139 8,682,724 10,379,359
3.21% 3.54% 3.48% 3.83% 3.68% 4.06% 4.37%
Ticket Printing & Consumables
Revenue from Paper Lottery Face Value
Gross Revenue from weekly lottery ### 6,602,344 11,297,344 13,474,650 14,216,069 14,789,250 13,791,563 15,337,000
Number of weekly lottery Sold 3,301,172 5,648,672 6,737,325 7,108,034 7,394,625 6,895,781 7,668,500
Buffer Stock of Weekly Lottery 495,176 847,301 1,010,599 1,066,205 924,328 861,973 766,850
Total Number of Weekly Lottery 3,796,348 6,495,973 7,747,924 8,174,240 8,318,953 7,757,754 8,435,350
Cost Per Ticket 0.04 0.04 0.05 0.05 0.06 0.06 0.07
Gross Revenue from Monthly Lottery### 5,281,875 11,297,344 15,399,600 17,496,700 19,719,000 23,445,656 26,072,900
Number of Monthly Lottery Sold 1,056,375 2,259,469 3,079,920 3,499,340 3,943,800 4,689,131 5,214,580
Buffer stock of Monthly Lottery 158,456 338,920 461,988 524,901 492,975 586,141 521,458
Total Number of Monthly Lottery 1,214,831 2,598,389 3,541,908 4,024,241 4,436,775 5,275,273 5,736,038
Cost Per Ticket 0.06 0.07 0.07 0.08 0.09 0.10 0.11
Gross Revenue from Festival Bumper### 3,961,406 11,297,344 14,437,125 17,496,700 20,951,438 24,824,813 27,606,600
Number of Festival Bumper Sold 396,141 1,129,734 1,443,713 1,749,670 2,095,144 2,482,481 2,760,660
Buffer stock of Festival Bumper 59,421 169,460 216,557 262,451 261,893 310,310 276,066
Total Number of Festival Bumper 455,562 1,299,195 1,660,269 2,012,121 2,357,037 2,792,791 3,036,726
Cost Per Ticket 0.08 0.09 0.10 0.11 0.12 0.13 0.14
Cost of Paper lottery sold 227,120.63 497,083.13 689,440.09 843,559.65 1,022,035.77 1,216,801.98 1,487,627.65
Cost of Buffer Stock 34,068.09 74,562.47 103,416.01 126,533.95 127,754.47 152,100.25 148,762.77
Total cost of Paper Lottery 261,188.72 571,645.59 792,856.11 970,093.60 1,149,790.24 1,368,902.22 1,636,390.42
1.65% 1.69% 1.83% 1.97% 2.07% 2.21% 2.37%
Annexure

Distribution Costs - Scratch Card

Annual Inflation Index 1.00 1.10 1.21 1.33 1.46 1.61 1.77
Amount on ZMK '000
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Gross Revenue 52,818,750 150,631,250 192,495,000 218,708,750 246,487,500 275,831,250 306,740,000

Gross Weight of Tickets to be 20,618 62,437 71,945 81,632 81,283 90,649 98,567

Cost per Delivery of 1 kg Pack 10.72 11.80 12.98 14.26 15.66 17.26 18.98

Total Delivery Cost 221,095 736,492 933,509 1,164,251 1,272,582 1,565,032 1,870,845
Cost as % of Sales 0.42% 0.49% 0.48% 0.53% 0.52% 0.57% 0.61%
System Administration & Maintenance
Annual Inflation Index 1.00 1.10 1.21 1.33 1.46 1.61 1.77
Amount in Zambian Kawcha
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Application Software support - - - - - - -

Gaming SW dev & maint 924,328,125 2,636,046,875 3,368,662,500 3,827,403,125 4,313,531,250 4,827,046,875 5,367,950,000
System Operation Expenses 1,222,328 1,700,639 1,892,739 2,525,746 2,804,860 3,650,263 4,059,175

925,550,453 2,637,747,514 3,370,555,239 3,829,928,871 4,316,336,110 4,830,697,138 5,372,009,175

% of Sys Adm & Main/revenue 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75%

Fixed Asset Additions 611164000 7250000 7285000 7320000 7360000 7405000 7450000
Cumulative Fixed Asset 611164000 618414000 625699000 633019000 640379000 647784000 655234000
AMC Repairs & Maintenance 1,222,328 1,700,639 1,892,739 2,525,746 2,804,860 3,650,263 4,059,175

Assumptions
Gross Revenue in ZMK'000 52818750 150631250 192495000 218708750 246487500 275831250 306740000
Gaming SW dev & maint 1.75% of rev 1.75% of rev 1.75% of rev 1.75% of rev 1.75% of rev 1.75% of rev 1.75% of rev
AMC Repairs & Maintenance 0.2% of FA 0.25% of FA 0.25% of FA 0.3% of FA 0.3% of FA 0.35% of FA 0.35% of FA
Retail Costs
Amount in ZMK '000
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Gross Revenue 52,818,750 150,631,250 192,495,000 218,708,750 246,487,500 275,831,250 306,740,000

Retailer Margin 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Agents Margin 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Retailer Margin 5,281,875 15,063,125 19,249,500 21,870,875 24,648,750 27,583,125 30,674,000

Area Stockist Commission 528,188 1,506,313 1,924,950 2,187,088 2,464,875 2,758,313 3,067,400

Total 5,810,063 16,569,438 21,174,450 24,057,963 27,113,625 30,341,438 33,741,400

Cost as % of Sales 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00%

Annexure
Marketing & Promotion Cost
Amount in ZMK '000
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Gross Revenue 52,818,750 150,631,250 192,495,000 218,708,750 246,487,500 275,831,250 306,740,000

Marketing Expenditure
Media
Television 841,521 892,000 945,500 973,900 1,003,100 1,033,200 1,064,200
Radio 85,488 90,600 96,000 101,800 107,900 114,400 117,800
Print Media 266,490 282,500 299,500 317,500 336,600 356,800 367,500
Others 100,000 106,000 112,400 119,100 126,200 133,800 137,800
1,293,499 1,371,100 1,453,400 1,512,300 1,573,800 1,638,200 1,687,300

Sales Retailer Support 39,200 41,600 44,100 46,700 49,500 51,000 52,500
Market Research 7,840 8,300 8,800 9,300 9,900 10,200 10,500
Communications 19,600 20,800 22,000 23,300 24,700 25,400 26,200
Public Relations 14,700 15,600 16,500 17,500 18,600 19,200 19,800
Agency Fee 194,025 205,700 218,000 231,100 245,000 252,400 260,000
Misc/Contingencies 24,500 26,000 27,600 29,300 31,100 32,000 33,000
1,593,364 1,689,100 1,790,400 1,869,500 1,952,600 2,028,400 2,089,300
3.02% 1.12% 0.93% 0.85% 0.79% 0.74% 0.68%
Launch Expenditure
Market Reseach Game Design 15,000 5,000 1,000 1,000 1,000 1,000 1,000
Advertising Concept/Testing 12,000 4,000 200 100 100 100 100

Sales/Retailer Support Play Station 20,000 6,700 1,400 1,400 1,400 1,400 1,400
Sales Portfolio 10,000 3,400 200 100 100 100 100

Communications POS Display Material/Kiosk 300,000 100,000 20,000 20,000 20,000 20,000 20,000
Merchandise 8,000 2,700 600 600 600 600 600
Launch Event 12,500 4,167 833 - - - -
Agency Fee 20,000 6,667 1,333 - - - -

Advertising Design & Production 31,850 10,700 2,200 - - - -

Television 400,000 133,333 26,667 - - - -
Print Media 125,000 41,700 8,400 - - - -
Radio 75,000 25,000 5,000 - - - -
Outdoor 12,250 4,100 900 - - - -

Public Relations 9,800 3,300 700 - - - -

Misc/Contingencies 39,200 13,100 2,700 - - - -

1,090,600 363,867 72,133 23,200 23,200 23,200 23,200
2.06% 0.24% 0.04% 0.01% 0.01% 0.01% 0.01%
Total 2,683,964 2,052,967 1,862,533 1,892,700 1,975,800 2,051,600 2,112,500
5.08% 1.36% 0.97% 0.87% 0.80% 0.74% 0.69%
###

Administrative Costs
Amount in ZMK '000
Units Rate Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
Inflation Index 1.00 1.10 1.21 1.33 1.46 1.61 1.77

Personnel Cost 2,010,000 3,123,000 3,435,300 3,778,830 4,156,713 4,572,384 5,029,623

Allowances to Employees 703,500 1,093,050 1,202,355 1,322,591 1,454,850 1,600,335 1,760,368

Office Operations
Training Expenses 5 2500 12,500 13,750 15,125 16,625 18,250 20,125 22,125
Vehicle Expenses 3 9600 28,800 31,680 34,848 38,304 42,048 46,368 50,976
Membership & Subscriptions 1 10000 10,000 - - - - - -
Computer Consumables 5 5000 25,000 27,500 30,250 33,250 36,500 40,250 44,250
Office Supplies 5 2500 12,500 13,750 15,125 16,625 18,250 20,125 22,125
Printing & Stationery 5 1200 6,000 6,600 7,260 7,980 8,760 9,660 10,620
Repair & Maintenance 5 2400 12,000 13,200 14,520 15,960 17,520 19,320 21,240
Postage & Freight 5 800 4,000 4,400 4,840 5,320 5,840 6,440 7,080
Books & Periodicals 5 500 2,500 2,750 3,025 3,325 3,650 4,025 4,425
License fees -
Telephone Charges 5 4000 20,000 22,000 24,200 26,600 29,200 32,200 35,400
Telecom One time cost 2 21146 42,292 - - - - - -
Telecom Charges 2 120000 240,000 264,000 290,400 319,200 350,400 386,400 424,800
Insurance of fixed assets 12,223 13,605 15,142 16,838 18,699 20,859 23,195
Insurance of Man Power 20,100 31,230 34,353 37,788 41,567 73,615 50,296
Audit and Legal fees 30,000 33,000 36,300 39,900 43,800 48,300 53,100
Security Expense 120,000 132,000 159,720 212,428 310,144 499,332 883,818

Sub Total 597,915 609,465 685,108 790,143 944,628 1,227,019 1,653,451

Travelling Expenses
Local 10 3000 30,000 33,000 36,300 39,900 43,800 48,300 53,100
Overseas 2 120000 240,000 264,000 290,400 319,200 350,400 386,400 424,800
Sub Total 270,000 297,000 326,700 359,100 394,200 434,700 477,900
Rent & Office Overheads
Central Office 1 240000 240,000 264,000 290,400 319,200 350,400 386,400 424,800
Site Office 1 60000 60,000 66,000 72,600 79,800 87,600 96,600 106,200
Employee house 1 153600 153,600 168,960 185,856 204,288 224,256 247,296 271,872
Utitlities Electricity Etc 3 6000 18,000 19,800 21,780 23,940 26,280 28,980 31,860
Sub Total 471,600 518,760 570,636 627,228 688,536 759,276 834,732

Bad Debts 52,819 150,631 192,495 218,709 246,488 275,831 306,740

Total Administrative Cost 4,105,834 5,791,906 6,412,594 7,096,600 7,885,415 8,869,545 10,062,813
Cost as % of Sales 7.77% 3.85% 3.33% 3.24% 3.20% 3.22% 3.28%
Staffing and Remuneration
Amount in ZMK in '000
Rate Rate Nos. Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
p.m. p.a.
CEO 25,000 300,000 1 300,000 330,000 363,000 399,300 439,230 483,153 531,468

Administration & Liasion

Senior Management 10,000 120,000 1 120,000 132,000 145,200 159,720 175,692 193,261 212,587
Middle Management 6,000 72,000 2 144,000 158,400 174,240 191,664 210,830 231,913 255,105
Supporting Staff 2,500 30,000 5 150,000 165,000 181,500 199,650 219,615 241,577 265,734
Finance & Accounts
Middle Management 10,000 120,000 1 120,000 132,000 145,200 159,720 175,692 193,261 212,587
Supporting Staff 6,000 72,000 1 72,000 79,200 87,120 95,832 105,415 115,957 127,552
Marketing
Middle Management 10,000 120,000 1 120,000 132,000 145,200 159,720 175,692 193,261 212,587
Supporting Staff 6,000 72,000 4 288,000 316,800 348,480 383,328 421,661 463,827 510,210
Operations
Senior Management 15,000 180,000 1 180,000 198,000 217,800 239,580 263,538 289,892 318,881
Middle Management 6,000 72,000 1 72,000 79,200 87,120 95,832 105,415 115,957 127,552
Supporting Staff 3,000 36,000 1 36,000 39,600 43,560 47,916 52,708 57,978 63,776
Inventory Management 6,000 72,000 1 72,000 79,200 87,120 95,832 105,415 115,957 127,552
Technical Management
Middle Management 10,000 120,000 1 120,000 132,000 145,200 159,720 175,692 193,261 212,587
Supporting Staff 6,000 72,000 3 216,000 237,600 261,360 287,496 316,246 347,870 382,657
Additional Staff for paper Lottery
Sales & Marketing
Middle management 10000 120,000 1 120,000 132,000 145,200 159,720 175,692 193,261
Supporting staff 6000 72,000 4 288,000 316,800 348,480 383,328 421,661 463,827
Operations
Supporting staff 6000 72,000 4 288,000 316,800 348,480 383,328 421,661 463,827
Inventory Management 6000 72,000 3 216,000 237,600 261,360 287,496 316,246 347,870

Total Salary 2,010,000 3,123,000 3,435,300 3,778,830 4,156,713 4,572,384 5,029,623

Cost as % of Sales 3.81% 2.07% 1.78% 1.73% 1.69% 1.66% 1.64%
Annexure
PROVISION FOR VALUE ADDED TAX
(Amount in ZMK '000)
Particulars Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Face value of the Tickets sold 52818750 150631250 192495000 218708750 246487500 275831250 306740000
Prize Payment 26369761 74976705 95814386 108763861 122467314 136922633 152265736
Charitable to Good causes 11752172 33515453 42830138 48662697 54843469 61372453 68249650
Retailers cost 5810063 16569438 21174450 24057963 27113625 30341438 33741400
Net Sale receipts including VAT 8886755 25569655 32676026 37224229 42063092 47194727 52483214
Rate of VAT 17.50% 17.50% 17.50% 17.50% 17.50% 17.50% 17.50%

VAT Collection from sale of lottery Tickets 1323559 3808246 4866642 5544034 6264716 7029002 7816649
VAT Collection 1323559 3808246 4866642 5544034 6264716 7029002 7816649

LESS:
VAT Credit on Capital Goods 106954 1269 1275 1281 1288 1296 1304

VAT Credit on Expenditure

Printing of Tickets 253680 822354 1047860 1305116 1432538 1759035 2102756
Marketing Expenditure 469694 359269 325943 331223 345765 359030 369688
Electricity & Utility Charges 3150 3465 3812 4190 4599 5072 5576
Distribution Cost 2 2 2 2 3 3 3
Telecom One time charges 7401 0 0 0 0 0 0
Telecom Charges 42000 46200 50820 55860 61320 67620 74340
Freight Charges 54122 180287 228515 284999 311517 383107 457967
Administrative Expenses 52609 51794 59545 71941 92492 134430 201075

VAT Credit 989611 1464640 1717772 2054611 2249522 2709592 3212708

VAT Payable 333948 2343607 3148870 3489423 4015194 4319410 4603941

Annexure

Depreciation Schedule
(As Per Companies Act)

Amount in ZMK
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
Addition
Dep. Rate % Block
10.00% 125,000,000 6,250,000 6,270,000 6,290,000 6,315,000 6,345,000 6,375,000
20.00% 214,314,000 1,000,000 1,015,000 1,030,000 1,045,000 1,060,000 1,075,000
25.00% 271,850,000 - - - - - -
Total 611,164,000 7,250,000 7,285,000 7,320,000 7,360,000 7,405,000 7,450,000

Gross Fixed Assets

10.00% 125,000,000 131,250,000 137,520,000 143,810,000 150,125,000 156,470,000 162,845,000
20.00% 214,314,000 215,314,000 216,329,000 217,359,000 218,404,000 219,464,000 220,539,000
25.00% 271,850,000 271,850,000 271,850,000 271,850,000 271,850,000 271,850,000 271,850,000
Total 611,164,000 618,414,000 625,699,000 633,019,000 640,379,000 647,784,000 655,234,000

Depreciation
10.00% 12,500,000 11,562,500 11,032,250 10,557,025 10,131,573 9,751,415 9,412,274
20.00% 42,862,800 34,390,240 27,713,692 22,375,454 18,107,863 14,696,790 11,970,932
25.00% 67,962,500 50,971,875 38,228,906 28,671,680 21,503,760 16,127,820 12,095,865
Total 123,325,300 96,924,615 76,974,848 61,604,159 49,743,196 40,576,025 33,479,071

Accumulated Depreciation
10.00% 12,500,000 24,062,500 35,094,750 45,651,775 55,783,348 65,534,763 74,947,037
20.00% 42,862,800 77,253,040 104,966,732 127,342,186 145,450,049 160,146,839 172,117,771
25.00% 67,962,500 118,934,375 157,163,281 185,834,961 207,338,721 223,466,541 235,562,406
Total 123,325,300 220,249,915 297,224,763 358,828,922 408,572,118 449,148,143 482,627,214

Net Fixed Assets

10.00% 112,500,000 107,187,500 102,425,250 98,158,225 94,341,652 90,935,237 87,897,963
20.00% 171,451,200 138,060,960 111,362,268 90,016,814 72,953,951 59,317,161 48,421,229
25.00% 203,887,500 152,915,625 114,686,719 86,015,039 64,511,279 48,383,459 36,287,594
Total 487,838,700 398,164,085 328,474,237 274,190,078 231,806,882 198,635,857 172,606,786
Annexure
Depreciation Schedule
(As Per Income Tax Act)
Amount in ZMK
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
Addition
Dep. Rate % Block
10.00% 125,000,000 6,250,000 6,270,000 6,290,000 6,315,000 6,345,000 6,375,000
25.00% 216,714,000 - - - - - -
50.00% 154,450,000 1,000,000 1,015,000 1,030,000 1,045,000 1,060,000 1,075,000
60.00% 115,000,000 - - - - - -
Total 611,164,000 7,250,000 7,285,000 7,320,000 7,360,000 7,405,000 7,450,000

Gross Fixed Assets

10.00% 125,000,000 131,250,000 137,520,000 143,810,000 150,125,000 156,470,000 162,845,000
25.00% 216,714,000 216,714,000 216,714,000 216,714,000 216,714,000 216,714,000 216,714,000
50.00% 154,450,000 155,450,000 156,465,000 157,495,000 158,540,000 159,600,000 160,675,000
60.00% 115,000,000 115,000,000 115,000,000 115,000,000 115,000,000 115,000,000 115,000,000
Total 611,164,000 618,414,000 625,699,000 633,019,000 640,379,000 647,784,000 655,234,000

Depreciation
10.00% 12,500,000 11,875,000 11,314,500 10,812,050 10,362,345 9,960,611 9,602,049
25.00% 54,178,500 40,633,875 30,475,406 22,856,555 17,142,416 12,856,812 9,642,609
50.00% 77,225,000 39,112,500 20,063,750 10,546,875 5,795,938 3,427,969 2,251,484
60.00% 69,000,000 27,600,000 11,040,000 4,416,000 1,766,400 706,560 282,624
Total 212,903,500 119,221,375 72,893,656 48,631,480 35,067,099 26,951,952 21,778,766

Accumulated Depreciation
10.00% 12,500,000 24,375,000 35,689,500 46,501,550 56,863,895 66,824,506 76,426,555
25.00% 54,178,500 94,812,375 125,287,781 148,144,336 165,286,752 178,143,564 187,786,173
50.00% 77,225,000 116,337,500 136,401,250 146,948,125 152,744,063 156,172,032 158,423,516
60.00% 69,000,000 96,600,000 107,640,000 112,056,000 113,822,400 114,528,960 114,811,584
Total 212,903,500 332,124,875 405,018,531 453,650,011 488,717,110 515,669,062 537,447,828

Net Fixed Assets

10.00% 112,500,000 106,875,000 101,830,500 97,308,450 93,261,105 89,645,494 86,418,445
25.00% 162,535,500 121,901,625 91,426,219 68,569,664 51,427,248 38,570,436 28,927,827
50.00% 77,225,000 39,112,500 20,063,750 10,546,875 5,795,937 3,427,968 2,251,484
60.00% 46,000,000 18,400,000 7,360,000 2,944,000 1,177,600 471,040 188,416
Total 398,260,500 286,289,125 220,680,469 179,368,989 151,661,890 132,114,938 117,786,172
Annexure

Interest Charges & Repyament Schedule

Amount in ZMR '000
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

New Agents 750 250 50 50 50 50 50

Franchisee Deposit Per Agent 1000 1000 1000 1000 1000 1000 1000
Rate of Interest on Franchisee Deposit 18% 18% 18% 18% 18% 18% 18%

Franchisee Deposit
Start Of Period - 750,000 1,000,000 1,050,000 1,100,000 1,150,000 1,200,000
Add: Deposit During the year 750,000 250,000 50,000 50,000 50,000 50,000 50,000
Repayment During the year - - - - - - -
End of Period 750,000 1,000,000 1,050,000 1,100,000 1,150,000 1,200,000 1,250,000

Finance Charges

Interest on Franchisee Deposit 135,000 180,000 189,000 198,000 207,000 216,000 225,000

Total Interest Charges 135,000 180,000 189,000 198,000 207,000 216,000 225,000
Project Cost Estimates
Amount in ZMR
Units Rate Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
New Terminals 0 0 0 0 0 0 0
Telecom Infracture
Modem cost 2 1200000 2,400,000 - - - - -
Network Control Centre
Server 1 15000000 15,000,000
LNS / router/NW 0 2000000 -
Peripherals 0 500000 -
LAN at server colocation 0 700000 -
Server at central office 0 400000 -
Telephone system 0 725000 -
Lottery Application software
Server end application-retail 1 - - - - - - -
Server end application-gaming 1 -
Server end application-back office 1 - - - - - - -
Terminal end application 1000 3300 - - - - - - -
Licensed software -servers 1 - - - - - - -
Licensed software -terminals 1000 Incl in terml cost - - - - - -
Customization & Integration - - - - - - - -
Terminals
POS Terminals 0 80000 - - - -
Terminal Installation 0 1700 - - - -
Other Fixed Assets
Motor Cars 3 50000000 150,000,000 - - - - - -
Tata Delivery Van - 207 DI 1 64314000 64,314,000
Computers 10 6500000 65,000,000 - - - - - -
Software 10 2000000 20,000,000 - - - - - -
Other Software 1 15000000 15,000,000 - - - - - -
Printers 3 3250000 9,750,000 - - - - - -
Office LAN 1 7500000 7,500,000 - - - - - -
Peripherals 1 16200000 16,200,000 - - - - - -
GSM Phones 5 2000000 10,000,000 - - - - - -
Security Gadgets 1 81000000 81,000,000
Office EPABX 1 10000000 10,000,000 - - - - - -
448,764,000 - - - - - -
Ongoing Capital Expenses
Leasehold Improvements 25,000,000 1,250,000 1,255,000 1,260,000 1,270,000 1,285,000 1,300,000
Furniture & Fixtures 100,000,000 5,000,000 5,015,000 5,030,000 5,045,000 5,060,000 5,075,000
Machinery & Equipments 20,000,000 1,000,000 1,015,000 1,030,000 1,045,000 1,060,000 1,075,000
145,000,000 7,250,000 7,285,000 7,320,000 7,360,000 7,405,000 7,450,000
Total Fixed Assets 611,164,000 7,250,000 7,285,000 7,320,000 7,360,000 7,405,000 7,450,000
Margin for Bank Guarantee
Reserve for Prize Stabilization Fund 722,459,204 1,331,697,089 570,895,385 354,780,140 375,437,068 396,036,113 420,359,000
Deposits & Guarantees
Secutity Deposit 1 25000000 25,000,000 - - - - - -
Telephone Deposits 5 500000 2,500,000 - - - - - -
Premise Deposits 3 50000000 150,000,000 - - - - - -
177,500,000 - - - - - -
Working Capital 787,435,900 825,180,700 306,537,400 290,764,700 236,061,700 352,821,800 392,689,300
PROJECT COST 2,298,559,104 2,164,127,789 884,717,785 652,864,840 618,858,768 756,262,913 820,498,300
Total Project Cost 8,195,889,500
 Annexure

Calculation of Income Tax Provision

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Profit (Before Tax) (843,672) 4,835,887 7,914,142 9,452,583 10,948,042 12,593,676 14,020,672

ADD: Depreciation As per Companies Act 123,325 96,925 76,975 61,604 49,743 40,576 33,479
Deferred Marketing expenses 153,072 153,072 153,072 153,072 153,072 - -

(567,275) 4,932,812 7,991,117 9,514,187 10,997,785 12,634,252 14,054,151

LESS: Depreciation As per Income Tax Act 212,904 119,221 72,894 48,631 35,067 26,952 21,779
Marketing Expenditure incurred - during pre incorporation 765,360
(780,178) 4,813,590 7,918,223 9,465,555 10,962,718 12,607,300 14,032,372

LESS: Net Loss Carried/Brought Forward - (780,178) - - - - -

Net Income/ (Loss) (780,178) 4,033,412 7,918,223 9,465,555 10,962,718 12,607,300 14,032,372

Income Tax there on - 1,805,035 3,553,200 4,249,500 4,923,223 5,663,285 6,304,567

Total Provision for Income Tax - 1,805,035 3,553,200 4,249,500 4,923,223 5,663,285 6,304,567
Fixed Assets
Rate of Rate
-----------------------------------------------------------------------Additions
of during the year----------------------------------------------------------------
Depre. Depre. Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
(Co. Act) (I. Tax)
Telecom Infracture
Modem cost 25.00% 25.00% 2,400,000 - - - - - -
V SAT 25.00% 25.00% - -
Network Control Centre
Server 25.00% 60.00% 15,000,000
LNS / router/NW 25.00% 60.00% -
Peripherals 25.00% 60.00% -
LAN at server colocation 25.00% 100.00% -
Server at central office 25.00% 100.00% -
Telephone system 25.00% 100.00% -
Lottery Application software
Server end application-retail 33.33% 100.00% - - - - - - -
Server end application-gaming 33.33% 100.00% - - - - - - -
Server end application-back office 33.33% 100.00% - - - - - - -
Terminal end application 33.33% 100.00% - - - - - - -
Licensed software -servers 33.33% 100.00% - - - - - - -
Licensed software -terminals 33.33% 100.00% - - - - - - -
Customization & Integration 0 33.33% 100.00% - - - - - - -
Terminals
POS Terminals 33.33% 100.00% - - - - - - -
Terminal Installation 33.33% 100.00% - - - - - - -
Other Fixed Assets
Motor Cars 20.00% 25.00% 150,000,000 - - - - - -
Tata Delivery Van - 207 DI 20.00% 25.00% 64,314,000
Computers 25.00% 60.00% 65,000,000 - - - - - -
Software 25.00% 60.00% 20,000,000 - - - - - -
Other Software 25.00% 60.00% 15,000,000 - - - - - -
Printers 25.00% 50.00% 9,750,000 - - - - - -
Office LAN 25.00% 50.00% 7,500,000 - - - - - -
Peripherals 25.00% 50.00% 16,200,000 - - - - - -
GSM Phones 25.00% 50.00% 10,000,000 - - - - - -
Security Gadgets 25.00% 50.00% 81,000,000
Office EPABX 25.00% 50.00% 10,000,000 - - - - - -
448,764,000 - - - - - -
Ongoing Capital Expenses
Leasehold Improvements 10.00% 10.00% 25,000,000 1,250,000 1,255,000 1,260,000 1,270,000 1,285,000 1,300,000
Furniture & Fixtures 10.00% 10.00% 100,000,000 5,000,000 5,015,000 5,030,000 5,045,000 5,060,000 5,075,000
Machinery & Equipments 25.00% 50.00% 20,000,000 1,000,000 1,015,000 1,030,000 1,045,000 1,060,000 1,075,000
145,000,000 7,250,000 7,285,000 7,320,000 7,360,000 7,405,000 7,450,000
Total Addition 611,164,000 7,250,000 7,285,000 7,320,000 7,360,000 7,405,000 7,450,000
Annexure

Ratios

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Return on Equity (%) -39% 63% 55% 47% 44% 41% 38%

Return on Capital Employed (%) -32% 124% 117% 94% 90% 78% 67%

Debt to Equity 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Interest Cover (4.34) 18.38 24.48 27.59 30.35 33.27 35.44

Debt Service Coverage Ratio (4.34) 18.38 24.48 27.59 30.35 33.27 35.44
Details of Assumptions
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
General Inflation Index 1.00 1.10 1.21 1.33 1.46 1.61 1.77
Gross Revenue Face value of the tickets sold is taken as Gross
Revenue
Net Revenue Sale price of the Tickets to the Distributors is
taken as the Net Revenue. i.e., the net revenue
is equal to the Gross Revenue less Distributors
and Retailers Margin
Prize Money Prize money is the total of the prize payouts of
the Individual Games as per the scheme. 49.93% 49.78% 49.78% 49.73% 49.69% 49.64% 49.64%
Contribution towards Charitable Contribution is arrived @ 25% on
Good Causes the Net Revenue. Gross Revunue 52818750000 150631250000 192495000000 218708750000 246487500000 275831250000 306740000000
Retailing Cost 5810062500 16569437500 21174450000 24057962500 27113625000 30341437500 33741400000
Net Revenue 47008687500 134061812500 171320550000 194650787500 219373875000 245489812500 272998600000
Contribution to Good
Causes 11752171875 33515453125 42830137500 48662696875 54843468750 61372453125 68249650000

Draw Expenses ZMK 2500000 is taken as the estimated expenses for conductiing a Draw.
Distribution Cost Total Kilo Grams of the Tickets to be
despatched 20617.96 62437.12 71945.01 81632.36 81283.10 90649.35 98567.06
Cost of Delivery per Year in ZMK'000 10.72 11.80 12.98 14.26 15.66 17.26 18.98
Secutity Deposit Franchisee Deposit Per Terminal (Amount in
Kwacha) 1000000 1000000 1000000 1000000 1000000 1000000 1000000
Cost of Borrowing Rate of Intt.on Franchisee Deposit 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
(At present approximate rate applicable in
Zambia)
Interest on Margin Rate of Interest 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
Money with Bank (At approximate rate as applicable in Zambia)

Dividend Policy % of Allocable Surplus 0% 12% 24% 36% 48% 48% 48%
Bad Debts 0.1% of the Revenue is estimated as the Bad Debts
Taxation Corporate Income Tax Provision made for the Corporate taxation @ 35% of the taxable Income upto ZMK 100 Million and @45% on the
profits in excess of ZMK 100 Millions.
Value Added Taxation
Value added tax is applied at the rate of 17.5% on the net value of gross realisation and Price Payout,
contribution to good causes, retailing cost. The provision is made after adjusting the VAT Credit.
Misc. Expenses First Year's Pre-Launch Expenses, SPV
Registration Expenses and Application Fees 60% of first year's pre-launch expenses, SPV Registration expenses and Application fees have been capitalised
are taken as Misc Expenses and amortised in 5 Equal Instalments.
Depreciation Rate of Depreciation (Co. Act) Schedule as per Companies Act annexed, taken on WDV basis(As per Zambian companies act)
Rate & Method Rate of Depreciation (IT Act) Schedule as per Income Tax Act annexed, taken on WDV basis (As per Zambian Income Tax law)
Distributors & Retailers Tickets with the face value of K1000 will be sold to the distributors at K890 leaving K10 as the profit to the
Margin distributor and K100 to Retailer.