MOROBE AIRE Investment Proposal
Prepared by: Date: Version:
Kaltane Pty Ltd Sept 2015 2
i
1
Investment Proposal – Morobe Aire Business aims This proposal aims to replace the current fleet (1 x Cessna) in operation by the proponent Mr. Herschman to include the lease (purchase/lease-back), of a Pilatus Porter (P6) aircraft. The P6 has Short Take-Off and Landing (STOL) capabilities, making it ideal for remote mountainous regions of Papua New Guinea (PNG), where it is currently deployed by other air operators. Mr. Robert Herschman- PNG Minerals Exchange Ltd and PNG Highlands Summit Coffee Co.), has been operating a remote (bush) air operation servicing communities across Morobe Province PNG since 2011. He operates a Cessna light aircraft to conduct business transactions for coffee, gold, cargo. Since then there has been an overwhelming increase in demand for his aircraft services across all business channels including for passenger transfers.
Lease offer This has motivated Mr Herschman to seek an aircraft lease option, to replace his Cessna with the more superior capabilities of the Pilatus Porter P6 and upgrade to Part 135 (CASA compliance) commercial airline services. This proposal seeks an investor to secure a suitable P6 aircraft, which Mr. Herschman (through a broker), has sourced in the US at best value for price. Through the broker, the investor will be invited to enter into a sale contract with the seller (owner) of the P6. Morobe Aire (lessee) will then enter into a lease agreement with the investor (lessor) over a five year or sixty (60) month period. The broker will manage the purchase transaction between the investor (purchaser) and the seller (owner) including sale contract, insurance cover, de-registration in US jurisdiction, bank-to-bank international payment transactions, shipping from the US to PNG and all additional related transaction procedures. On arrival in PNG Mr. Herschman will secure aircraft insurance through a broker in PNG (Australian agent) and register the aircraft and lease (under the investor), with Civil Aviation and Safety Authority PNG (CASA PNG). This new airline is to be incorporated through the Investment and Promotion Authority PNG (IPA PNG) under the trading name Morobe Aire. Morobe Aire (including the P6) will be based at Wau airport in Morobe Province, PNG. Morobe Aire will continue to service all urban and rural regions across Morobe Province, short term (2015-16) and to expand to include other Provinces in the longer term (2016 beyond).
2
Investment Proposal – Morobe Aire Market opportunities The P6 aims to capture some of the current and future increased market demand for remote (bush) airline services:
§
Passenger travel – Remote village communities across Morobe Province and PNG, rely on third level (bush) airlines for transportation to major cities and towns for medical, business and social needs. This market segment presents major business opportunities for Morobe Aire as most of the Province (and PNG), is poorly serviced by road networks.
§
Farmer’s goods transport – Morobe Province is an established agricultural base for PNG with widespread small scale farming across most districts (coffee, cocoa, fruit and vegetables). Coffee in particular currently suffers from lack of road networks to connect growers to markets in Lae. The need for air transport services is urgently required to connect farmers to markets.
§
Freight business– Remote communities require air transport for their stores and provisions bought in from Lae and other major townships, due to the lack of effective road networks connect their communities to these centers. Most remote communities buy stock for their trade stores and Churches/Missions need to bring in similar supplies to service their facilities. Mr. Herschman’s current cargo deliveries total over 200 flying hours/annum at forecasted revenues around PGK4,000/hour or PGK2 million/annum.
§
Medical related business– There is a growing need for remote (bush) air services to provide emergency evacuations from remote villages to major cities and towns in Morobe (and PNG). Mr. Herschmans’ demand for medivacs from his Morobe regional destinations averages 2 flights per week. He has also been consulted through Australian Foreign Aid body DFAT, to enter into contracts to deliver medical aid supplies across Morobe Province remote destinations.
§
Government business – Mr. Herschman has received feedback from his various discussions with remote placed teachers and health personnel, of their need for his flights. Missionary Aviation Fellowship (MAF) reported providing over 3,500 passenger seats for teachers and health workers (over one year of operations), into its’ remote community regions across PNG.
3
Investment Proposal – Morobe Aire EAST SEPIK Fisheries, forestry, vanilla, cocoa
S E
Fish processing, sugar, nickel, cobalt
ENGA Gold, silver
HELA
Mount Hagen
WES
Coffee, tea
H I G H L A N D S
CHIMBU (SIMBU) Coffee
SOUTHERN HIGHLANDS Oil/gas
E
Madang
WESTERN HIGHLANDS Coffee, tea JIWAKA
Oil/gas
l
Bismarck Sea
MADANG
Pa
Goroka
EASTERN HIGHLANDS Coffee
Manufacturing, logistics, coffee, livestock, fish processing, forestry, gold, copper
GULF Oil/gas, marine products
S O U T H E R N
n bs for ltural
Lae
MOROBE
Gulf of Papua
(Source: Made In PNG_2014, Business Advantage PNG)
CENTRAL Fisheries, forestry, gold, rubber
NORTHERN
(ORO PROVINCE) to the fibre-optic network which connects PNG to the worldwide Morobe Provincial Growth Daru Palm oil, coffee, web via Madang. coprain the Lae The (Morobe capital) hub, activity biggestProvincial infrastructure projectisofPng’s all, theindustrial expansion of Lae’swith considerablecocoa, sectors of manufacturing, trading, fisheries. (Made In PNG Port Moresby port, is expected to be completed by theagribusiness end of 2014. and, more recently, 2014 – Business Advantage PNG)
ort activity nd, more
Strait
s here, gs and (100 idiaries il,
ed by the impact goods elds, but from the nificant
past abelle nd Majestic
NATIONAL
Lae facts
This project aims to capture economic opportunities present in Morobe Province as framed CAPITAL DISTRICT in the Strategic Plan (2008-2012), specifically the infrastructure, economic development Manufacturing, logistics and rural growth objectives being implemented by this ambitious planning agenda of the Morobe Provincial Government: • Official urban population of just 120,000 (2000 census) • Situated on the Huon Gulf and is the capital of Morobe §Province Enabling infrastructure – Morobe Province is strategically developing opportunistic infrastructure assets including airstrips across rural and urban regions, to encourage • Lae’s Nadzab Airport is a 30-to-40 minute drive from town increased transport connections between rural production centres and commercial • PNG’s largest port facilities markets. • PNG’s major road hub, located at the start of the Highlands Highway • Regular flights to Port Moresby and other domestic centres
Mount Hagen
4
Mount Hagen is Papua New Guinea’s third-largest city, with a population of 46,250. It is the capital of Western Highlands Province. The Highlands Highway is the main arterial route to connect Mount Hagen with the coastal cities of Lae and Madang. Centrally positioned in the country’s fertile Highlands
Investment Proposal – Morobe Aire §
Economic growth – Morobe Provincial Government is pro-development in encouraging and facilitating increased economic activity through promoting linkages between Morobe’s significant wealth creation centres – agriculture, mining, fisheries and resources production, to the manufacturing and export hubs in Lae the capital city.
§
Rural development – Morobe Province is aligning these two aims to direct flow-on benefits to rural regions in wealth and subsequent social development of remote communities.
Major industrial hub Apart from being the manufacturing and export hub, Lae is also strategically located in PNG with close access to the other major agricultural hub of Mount Hagen (Western Highlands Province). Lae (Morobe Province) is also the base for many of PNG’s largest companies – Manufacturing þ K K Kingston – largest industrial manufacturer in PNG þ Laga Industries – largest food manufacturer þ SP Brewery – beer Agriculture þ Mainland Holdings – diverse agribusiness þ Ramu Agri Industries – agribusiness Fisheries þ Frabelle (Philippines) þ International Food Corporation (Malaysia) þ Majestic Foods (Thailand International subsidiaries þ Nestlé SA (Switzerland) þ Coca-Cola Amatil (US) þ DuluxGroup (Britain) þ PNG Taiheiyo Cement (Japan)
5
Investment Proposal – Morobe Aire Financial feasibility The business plan calls for total investment funding (from Morobe Aire perspective) around PGK3.03m: – 1. P6 leasing (operating) costs - (PGK2.03m), 2. Equity (shareholder) investment of PGK1m: i. PGK350k for construction of (capital items) facilities- office, accommodation, hangar ii. PGK365k for P&E (capital) items - vehicles and equipment, iii. PGK295k is required to support first year operating costs. Full financial statement modeling has also been developed to support the business feasibility case and will be presented to investors (once they submit an EOI). Sales are forecasted based on payload transport using Mr. Hershman’s set fee rate PGK5/kg (passengers/cargo). In summary two financial feasibility forecasts demonstrate the soundness of this business plan:
§
Capital cost comparison – The financial cost-benefit analysis undertaken demonstrates the superior returns (20% discount rate), for the P6 when compared to other optional craft: o
Lower cost – The P6 purchase cost will be the lowest for all craft with payload capacity over 1,000kg’s (effective payload 700kg’s), at PGK 1.7m /US$650k. This is due to the negotiation efforts achieved through Mr Hershman with sellers in the US/Guatemala.
o
Superior profitability – The P6 delivers stronger profit comparisons against the other craft modelled and at the second lowest overall cost.
o
Stronger break-even – This craft also demonstrates the lowest break-even analysis when measured against the average yearly payload at just under 300k (kg’s).
6
Investment Summary – Morobe Aire Financial feasibility
Purchase Price Used Pilatus Porter PC-6
K1,710,526
Used Super Otter
K2,631,579
Used King Air 90
K921,053
Used Std Caravan
K2,302,632
New Grand Caravan
K5,000,000
PAC 750 XL
K4,078,947
Net Profit, per Year, (Average Load)
Pilatus Porter PC-6
K807,523
Super Otter
Used King Air 90
K1,618,779
K(977,276)
Used Std Caravan
K2,665,362
New Grand Caravan
K(758,728)
PAC 750 XL
K(734,215)
7
Investment Summary – Morobe Aire Financial feasibility
Break Even Pay Load
Pilatus Porter PC-6
538.5
Super Otter
Used King Air 90
796.2
433.5
Used Std Caravan
656.9
New Grand Caravan
1271.7
PAC 750 XL
1056.8 No. Payloads
§
Standard analysis – Drawing from detailed financial statement (Income; Balance Sheet; Cash-flows) forecasting model developed (to be disclosed on submission of investor EOI), this proposal supports the planned business operations period of five years: o
Capital costs – Capital investment funds totaling PGK0.71m (vehicles, equipment and facilities) have been assessed against standard CBA (ROI, IRR, NPV, CF) and P6 has been assessed using CBA model using required discount rate of 20%, to provide maximum dividend returns to investors.
o
Operating costs – Annual Cost of Sale - Salaries and wages averaging PGK0.38m and fixed costs averaging PGK0.40m over the five year period, provide improved profitability performances to the business operations, allowing strong investor returns to be generated.
o
Sales revenue – Forecasted sales based on set fee rates PGK5/kg (cargo/passengers), will provide strong revenue growth over the five-year period. Average annual sales of PGK4.38m at average of 820,000 kgs payload lifts p.a., supports strong revenue performances.
8
Investment Summary – Morobe Aire Financial feasibility o
Dividends – EBIT (Net profits) are forecasted to average PGK2.35m over the five-year period, from which annual dividends will be provided. This is the basis for investment returns. To ensure costs are managed, allowances will be made for subsequent years annual operating costs from net sales prior to declared dividends.
MOROBE&AIRE&(PGKm)&/base&case Capital'funds Operating'Costs
Yr&1& -2.75 -0.3
Yr&2&
Yr&3&
Yr&4&
Yr&5&
Projected'Sales'Forecast Cost'of'Sales Expenses EBITDA Tax,'Amort'&'Depreciaton NET&
3.36 1.00 0.85 1.51 0.57 0.94
3.8 1.03 0.87 1.90 0.69 1.21
4.31 1.06 0.90 2.35 0.82 1.53
4.88 1.09 0.93 2.86 0.98 1.89
5.53 1.12 0.95 3.45 1.15 2.30
MOROBE&AIRE&(US$m)&/&base&case Capital'funds Operating'Costs
Yr&1& -1.05 -0.11
Yr&2&
Yr&3&
Yr&4&
Yr&5&
Projected'Sales'Forecast Cost'of'Sales Expenses EBITDA Tax,'Amort'&'Depreciaton NET&
1.28 0.38 0.32 0.57 0.22 0.36
1.44 0.39 0.33 0.72 0.26 0.46
1.64 0.40 0.34 0.89 0.31 0.58
1.85 0.41 0.35 1.09 0.37 0.72
2.10 0.43 0.36 1.31 0.44 0.87
9
Investment Summary – Morobe Aire Financial feasibility
PGKm% 25.0#
Morobe%Aire-Financial%Forecasts%
20.0# 15.0# 10.0# 5.0# 0.0#
Yr#1##
Yr#2##
Yr#3##
Yr#4##
Yr#5##
Sales#
3.4#
7.2#
11.5#
16.4#
21.9#
Costs#
2.42#
5.01#
7.79#
10.78#
14.01#
US$m% 9.0#
Morobe%Aire-Financial%Forecasts%
8.0# 7.0# 6.0# 5.0# 4.0# 3.0# 2.0# 1.0# 0.0#
Yr#1##
Yr#2##
Yr#3##
Yr#4##
Yr#5##
Sales#
1.3#
2.7#
4.4#
6.2#
8.3#
Costs#
0.92#
1.90#
2.96#
4.10#
5.32#
10
MOROBE AIRE Salaries and Wages Salaries and Related Expenses
#
Assumptions
Year One
Percent Change Salaries and Wages Owner's Compensation D Salaries Wages Full-Time Employees Estimated Hours Per Week Estimated Rate Per Hour D Full-Time Employees Estimated Hours Per Week Estimated Rate Per Hour Independent Contractors D Management Fee Total Salaries and Wages Payroll Taxes and Benefits Payroll Tax (Training Levy) Superannuation Contributions Management Fee Witholding Tax (WFWT) Training Levy (Payroll Tax) Employee Pension Programs Worker's Compensation Employee Health Insurance Other Employee Benefit Programs Total Payroll Taxes and Benefits
Total Salaries and Related Expenses
0 2 1
4
Year Two
Year Three
Year Four
Year Five
3.00%
3.00%
3.00%
3.00%
K K
110,000
K K
113,300
K K
116,699
K K
120,200
K K
123,806
Administration staff 40.00 K 5 Ground crew 40.00 K 3 Mgt (inc. acct) Chief Pilot
K
10,000
K
10,300
K
10,609
K
10,927
K
11,255
K
25,000
K
25,750
K
26,523
K
27,318
K
28,138
K K K
150,000 35,000 330,000
K K K
154,500 36,050 339,900
K K K
159,135 37,132 350,097
K K K
163,909 38,245 360,600
K K K
168,826 39,393 371,418
2.00% 8.40% 17.00% 0.00% 0.00% 0.00% 0.00% 0.00%
K K K K K K K K K
2,900 12,180 5,347 20,427
K K K K K K K K K
6,798 28,552 5,347 40,696
K K K K K K K K K
7,002 29,408 5,347 41,757
K K K K K K K K K
7,212 30,290 5,347 42,849
K K K K K K K K K
7,428 31,199 5,347 43,974
K
350,427
K
380,596
K
391,854
K
403,449
K
415,392
Chief & Co-Pilot
7
11
MOROBE AIRE Fixed Operating Expenses - base case Fixed Operating Expenses
Year One
Percent Change Expenses Advertising Piatus Porter P6 Lease Aircraft Maintenance (inc.fuel) Aircraft Fees (insurance/registration) Vehicle Maintenance (inc.fuel) Bank & Merchant Fees Contract Labor Conferences & Seminars Customer Discounts and Refunds Dues and Subscriptions Miscellaneous Insurance (Liability and Property) Licenses/Fees/Permits (Co., vehicles) Legal and Professional Fees Office Expenses & Supplies Postage and Delivery Rent (on business property) Gen Sets Maintenance (inc.fuel) Sales & Marketing Taxes-Other Telephone and Communications Travel Utilities Expenses (taxable) Taxes-Other (VAT/GST) Total Expenses Other Expenses Depreciation Interest Commercial Loan Commercial Mortgage Line of Credit Credit Card Debt Vehicle Loans Other Bank Debt Total Other Expenses Total Fixed Operating Expenses
Year Two
Year Three
Year Four
Year Five
3.00%
3.00%
3.00%
3.00%
K K K K K K K K K K K K K K K K K K K K K K K K K K
648,068 140,000 40,000 15,000 22,000 10,000 5,000 50,000 20,000 50,000 30,000 1,030,068 103,007 1,133,075
K K K K K K K K K K K K K K K K K K K K K K K K K K
667,510 144,200 41,200 15,450 22,660 10,300 5,150 51,500 20,600 51,500 30,000 1,060,070 103,007 1,163,077
K K K K K K K K K K K K K K K K K K K K K K K K K K
687,536 148,526 42,436 15,914 23,340 10,609 5,305 53,045 21,218 53,045 30,000 1,090,972 103,007 1,193,979
K K K K K K K K K K K K K K K K K K K K K K K K K K
708,162 152,982 43,709 16,391 24,040 10,927 5,464 54,636 21,855 54,636 30,000 1,122,802 103,007 1,225,808
K K K K K K K K K K K K K K K K K K K K K K K K K K
729,407 157,571 45,020 16,883 24,761 11,255 5,628 56,275 22,510 56,275 30,000 1,155,586 103,007 1,258,592
K
56,500
K
56,500
K
56,500
K
56,500
K
56,500
K K K K K K K
56,500
K K K K K K K
56,500
K K K K K K K
56,500
K K K K K K K
56,500
K K K K K K K
56,500
K
1,189,575
K
1,219,577
K
1,250,479
K
1,282,308
K
1,315,092
12
MOROBE AIRE Projected Sales Forecast Air Services Remote Community Segments Price Per Unit Variable Cost Per Unit Gross Margin Per Unit Projected Revenue Variable Costs Gross Margin Overhead Expenses Profit (EBIT) Breakeven Sales Revenue Breakeven Sales Units (Kg's)
K K K K K K K K K
Year One 5.00 1.49 3.51 3,360,000 998,068 2,361,932 850,068 1,511,863 1,209,277 241,855
K K K K K K K K K
Year Two 5.15 1.39 3.76 3,806,880 1,028,010 2,778,870 874,670 1,904,199 1,244,275 241,607
Assumptions- Base case Max. Payloads (1,400Kgs/Hr) Payload/Day (2,800kgs) Price & Costs: 3% annual growth Variable costs- Direct air services costs (Salaries-Pilots, Wages-G/Crew, P6 -Lease/Maint/Fuel)
13
K K K K K K K K K
Year Three 5.30 1.30 4.00 4,313,195 1,058,851 3,254,344 900,010 2,354,334 1,280,323 241,365
K K K K K K K K
Year Four 5.46 1.22 4.24 4,886,850 1,090,616 3,796,234 926,111 2,870,123 1,317,452 241,131
K K K K K K K K K
Year Five 5.63 1.14 4.49 5,536,801 1,123,335 4,413,466 952,994 3,460,472 1,355,695 240,904
MOROBE AIRE Projected Income Statement - base case Year One
Year Two
Year Three
Year Four
Year Five
Income (Air Services) Remote Community Segments
K
3,360,000
K
3,806,880
K
4,313,195
K
4,886,850
K
5,536,801
Total Income
K
3,360,000
K
3,806,880
K
4,313,195
K
4,886,850
K
5,536,801
Cost of Sales Remote Community Segments
K
998,068
K
1,028,010
K
1,058,851
K
1,090,616
K
1,123,335
Total Cost of Sales
K
998,068
K
1,028,010
K
1,058,851
K
1,090,616
K
1,123,335
Gross Margin
K
2,361,932
K
2,778,870
K
3,254,344
K
3,796,234
K
4,413,466
K
10,000
K
10,300
K
10,609
K
10,927
K
11,255
K
150,000
K
154,500
K
159,135
K
163,909
K
168,826
K K
20,427 180,427
K K
40,696 205,496
K K
41,757 211,501
K K
42,849 217,685
K K
43,974 224,055
K K
648,068
K K
667,510
K K
687,536
K K
708,162
K K
729,407
K K K K K K K K K K K K K K K K K K K K
15,000 22,000 10,000 5,000 50,000 20,000 50,000 30,000 850,068
K K K K K K K K K K K K K K K K K K K K
15,450 22,660 10,300 5,150 51,500 20,600 51,500 30,000 874,670
K K K K K K K K K K K K K K K K K K K K
15,914 23,340 10,609 5,305 53,045 21,218 53,045 30,000 900,010
K K K K K K K K K K K K K K K K K K K K
16,391 24,040 10,927 5,464 54,636 21,855 54,636 30,000 926,111
K K K K K K K K K K K K K K K K K K K K
16,883 24,761 11,255 5,628 56,275 22,510 56,275 30,000 952,994
K K
59,000 56,500
K K
59,000 56,500
K K
59,000 56,500
K K
59,000 56,500
K K
59,000 56,500
K K K K K K K K
453,559 569,059
K K
571,260 686,760
K K
706,300 821,800
K K
861,037 976,537
K K
1,038,142 1,153,642
K
942,804
K
1,217,440
K
1,532,534
K
1,893,586
K
2,306,831
Salaries and Wages Owner's Compensation Salaries Full-Time Employees Full-Time Employees Independent Contractors Management Fee Payroll Taxes and Benefits Total Salary and Wages Fixed Business Expenses Advertising Piatus Porter P6 Lease Aircraft Maintenance (inc.fuel) Aircraft Fees (insurance/registration) Vehicle Maintenance (inc.fuel) Bank & Merchant Fees Contract Labor Conferences & Seminars Customer Discounts and Refunds Dues and Subscriptions Miscellaneous Insurance (Liability and Property) Licenses/Fees/Permits (Co., vehicles) Legal and Professional Fees Office Expenses & Supplies Postage and Delivery Rent (on business property) Gen Sets Maintenance (inc.fuel) Sales & Marketing Taxes-Other Telephone and Communications Travel Utilities Total Fixed Business Expenses Other Expenses Amortized Start-up Expenses Depreciation Interest Commercial Loan Commercial Mortgage Line of Credit Credit Card Debt Vehicle Loans Other Bank Debt Taxes Total Other Expenses Net Income
14
MOROBE AIRE Projected Cash Flow Statement- base case Year One Beginning Cash Balance
K
Cash Inflows Income from Sales Accounts Receivable Total Cash Inflows
K K K
Year Three
Year Four
Year Five
K
1,295,539
K
2,428,934
K
3,867,601
K
5,656,693
3,080,000 3,080,000
K K K
3,769,640 3,769,640
K K K
4,271,002 4,271,002
K K K
4,839,045 4,839,045
K K K
5,944,039 5,944,039
K
320,833
K
1,025,515
K
1,056,281
K
1,087,969
K
1,214,219
K K K
160,000 850,068 453,559
K K K
164,800 874,670 571,260
K K K
169,744 900,010 706,300
K K K
174,836 926,111 861,037
K K K
180,081 952,994 1,038,142
K K K K K
1,784,461
K K K K K
2,636,245
K K K K K
2,832,335
K K K K K
3,049,953
K K K K K
3,385,437
Cash Flow
K
1,295,539
K
1,133,395
K
1,438,667
K
1,789,092
K
2,558,602
Operating Cash Balance
K
1,295,539
K
2,428,934
K
3,867,601
K
5,656,693
K
8,215,295
K
1,295,539
K
2,428,934
K
3,867,601
K
5,656,693
K
8,215,295
Cash Outflows Investing Activities New Fixed Assets Purchases Inventory Addition to Bal.Sheet Cost of Sales Operating Activities Salaries and Wages Fixed Business Expenses Taxes (Corporate 30%) Financing Activities Loan Payments Line of Credit Interest Line of Credit Repayments Dividends Paid Total Cash Outflows
-
Year Two
Line of Credit Drawdowns Ending Cash Balance
15
MOROBE AIRE Balance Sheet= base case Base Period Assets Current Assets Cash Accounts Receivable Inventory Prepaid Expenses Other Current Total Current Assets
End of Year One
K K K K K K
295,000 295,000
K K K K K K
Fixed Assets Aircraft (Pilatus Porter P6) Real Estate-Land Buildings (Office/accomm/hangar) Leasehold Improvements Vehicles (4wd & truck) Equipment (Gen Set) Furniture and Fixtures Other Fixed Assets Other Fixed Assets Total Fixed Assets
K K K K K K K K K K
350,000 240,000 100,000 25,000 715,000
K
Less: Accumulated Depreciation
K
Total Assets
K
Liabilities and Owner's Equity Liabilities Accounts Payable Loan Payable Mortgage Payable Credit Card Debt Vehicle Loans Other Bank Debt Line of Credit Balance Total Liabilities
K K K K K K K K
Owner's Equity Common Stock Retained Earnings Dividends Dispersed Total Owner's Equity Total Liabilities and Owner's Equity
1,010,000
-
1,295,539 280,000 236,000 1,811,539
-
End of Year Two
K K K K K K
2,428,934 317,240 177,000 2,923,174
K
-
End of Year Three
K K K K K K
K
3,867,601 359,433 118,000 4,345,034
-
End of Year Four
K K K K K K
K
5,656,693 407,237 59,000 6,122,931
-
End of Year Five
K K K K K K
K
8,215,295 8,215,295
-
K K K K K K K K
350,000 240,000 100,000 25,000 715,000
K K K K K K K K
350,000 240,000 100,000 25,000 715,000
K K K K K K K K
350,000 240,000 100,000 25,000 715,000
K K K K K K K K
350,000 240,000 100,000 25,000 715,000
K K K K K K K K
350,000 240,000 100,000 25,000 715,000
K
56,500
K
113,000
K
169,500
K
226,000
K
282,500
K
2,470,039
K
3,525,174
K
4,890,533
K
6,611,930
K
8,647,795
K K K K K K
677,235 -
K
677,235
K K K K K K K K
679,730 679,730
K K K K K K K K
682,300 682,300
K K K K K K K K
684,947 684,947
K K K K K K K K
594,063 594,063
K K K K
3,038,421 3,038,421
K K K K
3,038,421 942,804 3,981,225
K K K K
3,038,421 2,160,244 5,198,665
K K K K
3,038,421 3,692,778 6,731,199
K K K K
3,038,421 5,586,364 8,624,785
K K K K
3,038,421 7,893,194 10,931,616
K
3,038,421
K
4,658,460
K
5,878,395
K
7,413,498
K
9,309,732
K
11,525,678
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Investment Summary – Morobe Aire Investment calling This plan details the market segments opportunities that will be targeted, the risk profiles attached and the financial forecasts and assumptions to support the business operations over a five-year period. A detailed business plan and financial feasibility analysis has been developed to support this proposal for a third (bush) airline to capture unmet market demand in Morobe Province, PNG. The business plan will be presented to investors that have submitted an Expression of Interest (EOI), to the proponent Mr Herschman and team. The investment strategy will focus on dividend returns to equity investors annually or as agreed between the shareholders of the proposed company. Options to retain the company after the five-year period, will remain open to investors. This plan intends to build market share, regional growth, management and operational capabilities to support the ongoing viability and value of Morobe Aire to existing and potential investors after year five. This business plan calls for two separate investments:
§
Pilatus Porter P6- An investor is sought for PGK2.03m (US$771k) for the purchase of the Pilatus Porter – P6 from an option of sellers- that the proponent Mr Herschman has sourced (US and Guatemala). This price will be the landed cost from point of purchase to PNG. It is intended that the purchase will also include one shipping container of spare parts/tooling and the P6 has had a recent engine replacement which provides extended operational life and reduced maintenance costs. Morobe Aire will enter into a five-year leasing agreement with the investor/owner of the P6 as outlined in ‘Lease offer’ p.2.
§
Equity investor – Morobe Aire is also seeking equity funding (to 51% shareholding) to PGK1m (US$380k)- required to fund construction of facilities (office, accommodation, hangar), vehicles and equipment (Inc. furnishings) and first years operating costs (Inc. P6 insurance and registration in PNG).
Investor lease returns
MOROBE&AIRE&(PGKm) Operating*Lease:*(20%*rate) P6(aircraft((investor(returns)
Yr&1& !2.03 0.65
Yr&2&
Yr&3&
Yr&4&
Yr&5&
0.67
0.69
0.71
0.73
MOROBE&AIRE&(US$m) Operating*Lease:*(20%*rate) P6'aircraft'(investor'returns)
Yr&1& !0.77 0.25
Yr&2&
Yr&3&
Yr&4&
Yr&5&
0.25
0.26
0.27
0.28
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Investment Summary – Morobe Aire Investment calling
MOROBE&AIRE&(PGKm) Capital'Costs: Facilities 4wd0&0Truck Equipment Operating'Costs: P60aircraft0(lease) Salaries/Wages Fixed0costs Total&investment: MOROBE&AIRE&(US$m) Capital'Costs: Facilities 4wd0&0Truck Equipment Operating'Costs: P60aircraft0(lease) Salaries/Wages Fixed0costs Total&investment:
Yr&1& 0.35 0.24 0.12 2.03 0.16 0.13 PGK&&&&&&&&&&3.03 Yr&1& 0.13 0.09 0.05 0.77 0.06 0.05 USD&&&&&&&&&1.15
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Investment Summary – Morobe Aire Investor lease returns
Morobe%Aire-P6%Lease%Returns%
PGKm% 0.74#
4.00# 3.50#
0.72#
3.00#
0.70#
2.50#
0.68#
2.00# 0.66#
1.50#
0.64#
1.00#
0.62#
0.50#
0.60#
0.00# Yr#1##
Yr#2##
Yr#3##
Yr#4##
Yr#5##
Morobe%Aire-P6%Lease%Returns%
US$m% 0.28#
1.40#
0.28#
1.20#
0.27#
1.00#
0.27# 0.26#
0.80#
0.26# 0.60#
0.25# 0.25#
0.40#
0.24#
0.20#
0.24# 0.23#
0.00# Yr#1##
Yr#2##
Yr#3##
Yr#4##
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Yr#5##
Investment Summary – Morobe Aire Contacts: Mr Chris Marshall – Proponent team member Mobile: +61 498 613 986 (AUS) Email: chrism@kaltanepl.com
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Expression Of Interest – Morobe Aire EOI process: Morobe Aire business proposal calls for EOIs from any interested party/ies, with the aim to secure presentation opportunities to these parties from the proponent team. This will include an overview of the detailed business feasibility case/plan to inform interested parties, of the market opportunities, risk profiles and financial analysis, for the establishment of Morobe Aire. The intention will be to secure presentation sessions to those parties who have submitted EOIs, in Port Moresby, PNG, at dates to be advised. Further interest will then be secured through a formal nomination process to short-list potential investors (subject to proponent team due diligence). Final investor partners will then be accepted following due diligence and formal investment proposal contract approval/acceptance processes.
Investor details: Company/Investor Name:
_____________________________________
Company/Investor Address:
_____________________________________
Company Investor Contacts:
_____________________________________
Company/Investor Web Address: _____________________________________
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Expression Of Interest – Morobe Aire Investor details: Company/Investor Details: (outline the nature of your company/investor status and your interest in this business investment proposal) ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________
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