Abuja London Clinic_Strategic Investment and Business Plan_Issued March 2014

The cost per unit sums in the column above comprises the total costs for undertaking the
surgery. Hence, this cost per unit item will cover all the contract fees and expenses of the
engagement of the expatriate surgeons such as flights, professional fees, expenses etc.
Hence this cost per unit amount is the total provision for the cost of undertaking the surgery.
The costs of the local RMS Nigeria team are provided for in the headcount analysis in
Section 6.6.
The profit per item sum is therefore pure operational profit that accrues to the business.

The volume of monthly operations at the ALC Facility conducted during selected months of
the first year is shown below – no sales are assumed in first month. This demonstrates the
conservative approach adopted to sales generation:

Breast Surgery Month 1 Month 2 Month 6 Month 7 Month 11 Month 12
Fibroid Embolisation 0 10 20 25 35 40
Renal Dialysis 0 10 20 25 35 40
Cataract/Eye Surgery 0 20 60 80 100 120
Gynaecological 0 10 20 25 35 40
Surgery 0 10 20 25 35 40

Procedure Totals 0 60 140 180 240 280

This volume profile provides the sales income for the first year at the ALC Facility and
represents a 74% occupancy rate of the operating theatre as calculated in Section 3.5 of
this document.

The annual growth rate pattern assumed is a 12% increase in the second year falling to
10% for the next 2 years. The growth rate is further modeled conservatively by showing
further falls in the growth rates in subsequent years. Please note that the income growth is
achieved by a combination of volume increases as well as appropriate increases in prices
charged for the surgical procedures.

The 5 Year sales projection for the ALC Facility is shown below;

Year 2015 2016 2017 2018 2019
Growth (%) 0.0% 12.0% 10.0% 10.0% 8.0%
Breast Surgery
Fibroid embolization $1,215,000 $1,360,800 $1,496,880 $1,646,568 $1,778,293
Renal Dialysis $1,237,500 $1,386,000 $1,524,600 $1,677,060 $1,811,225
Cataract Eye Surgery
Gynaecological Surgery $117,000 $131,040 $144,144 $158,558 $171,243
Totals $810,000 $907,200 $997,920 $1,097,712 $1,185,529
$1,080,000 $1,209,600 $1,330,560 $1,463,616 $1,580,705
$4,459,500 $4,994,640 $5,494,104 $6,043,514 $6,526,996

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A3C Facility
The unit rates for consultations at the A3C Clinic in central Abuja are as follows:

Activity Type Cost per Unit
Assessment for Surgery $75
General Clinical Consultations $50
Wellness Clinic $50
Ultrasound Scans $100
Sexual Health Clinic $50
Diagnostic Tests $50

The growth in volume of monthly consultations at the A3C Facility conducted during

selected months of the first year is shown below:

Assessment for Surgery Month 1 Month 2 Month 6 Month 7 Month 11 Month 12
General Consultations 0 10 20 20 30 35
Wellness Clinic 0 20 40 40 60 60
Ultrasound Scans 0 10 20 25 40 40
Sexual Health Clinic 0 20 25 25 35 40
Diagnostic Tests 0 10 25 25 35 40
0 10 20 20 30 35
Totals 0 80 150 155 230 250

This volume profile provides the sales income for the first year.
The annual growth rate pattern assumed provides for an 8% increase from Year 2 – 4 and a
reduction in the annual growth rate to 5% for subsequent years. The income growth is
achieved by a combination of volume increases as well as appropriate increases in prices
charged for the clinical consultations and medical services.

The 5 Year sales projection for the A3C Facility is shown below;

Year 2015 2016 2017 2018 2019
Growth (%) 0.0% 8.0% 8.0% 8.0% 5.0%
Assessment for Surgery
General Consultations $17,625 $19,035 $20,558 $22,202 $23,979
Wellness Clinic $21,750 $23,490 $25,369 $27,399 $29,591
Ultrasound Scans $13,500 $14,580 $15,746 $17,006 $18,367
Sexual Health Clinic $31,000 $33,480 $36,158 $39,051 $42,175
Diagnostic Tests $14,250 $15,390 $16,621 $17,951 $19,387
Totals $11,750 $12,690 $13,705 $14,802 $15,986
$109,875 $118,665 $128,158 $138,411 $149,484

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7.5 5 Year Costs Projection

The 5 Year cost and expenses are modeled below. Whereas the income line for both the
ALC Facility and the A3C Facility were modeled separately, the costs and expenses for both
facilities are combined.

Personnel Summary (Unit Salary + Benefits) Growth 2015 2016 2017 2018 2019
(%) $28,000 $28,840 $29,705 $30,596 $31,514
Position 3.0% $40,000 $41,200 $42,436 $43,709 $45,020
Senior Management 3.0% $20,000 $20,600 $21,218 $21,855 $22,510
Staff Doctors 3.0% $4,944
Nurses 3.0% $4,800 $3,296 $5,092 $5,245 $5,402
Administrative (Finance Officer) 3.0% $3,200 $98,880 $3,395 $3,497 $3,602
Receptionist/Drivers/Security/Cleaners $96,000 $101,846 $104,902 $108,049
Total 3.0% 2016
2015 $20,500
Anticipated Yearly Expenses Growth $20,000 $25,000 2017 2018 2019
Year 2.5% $40,000 $2,525 $21,013 $21,538 $22,076
2.5% $10,250 $25,625 $26,266 $26,922
General and Administrative 1.0% $2,500 $25,625
Marketing Expenses 2.5% $10,000 $25,625 $2,550 $2,576 $2,602
Medical Board Registration and Fees 2.5% $25,000 $10,506 $10,769 $11,038
Insurance Costs 2.5% $25,000 $51,250 $26,266 $26,922 $27,595
Accommodation for Medical Staff $76,875 $26,266 $26,922 $27,595
Lease of City Centre Clinic Premises 2.5% $50,000 $30,750
Maintenance + Med Supplies (inc A3C 2.5% $75,000 $10,100 $52,531 $53,845 $55,191
Facility) 2.0% $30,000 $278,500 $78,797 $80,767 $82,786
Utilities (Inc Gen Fuel) 1.0% $10,000 $31,519 $32,307 $33,114
Staff Training (Medical & Administrative) $287,500 $10,201 $10,303 $10,406
$285,273 $292,214 $299,326
Miscellaneous Costs
Totals

Please see Section 6.7 of the business plan for detailed explanation of the above costs
lines. For instance, in addition to security guards allowed for in headcount, the General and
Administration cost provision will fund any supplemental security provision. Also, the cost of
expatriate surgeons (flights, expenses, professional fees etc) is already accounted for in the
“Cost per Item” provision as explained in Section 7.4 above.
Key payroll assumptions are as follows:
• Annual salary + benefits for 1 local RMS Nigeria Senior Manager is NGN4.2m;
• Annual salary + benefits for 1 local RMS Nigeria Doctor is NGN6m;
• Annual salary + benefits for 1 local RMS Nigeria Nurse is N3m;
• Annual salary + benefits for Administrative class staff is NGN720,000;
• Annual salary + benefits for Receptionist class staff (drivers, security staff, cleaners, etc)

is NGN480,000;

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7.6 5 Year Profit and Loss Statement

The 5 Year Profit and Loss Statement is shown below. The P&L analysis for both facilities is
combined.

Year 2015 2016 2017 2018 2019
Sales $4,459,500 $4,994,640 $5,494,104 $6,043,514 $6,526,996
Cost of Goods Sold $1,017,975 $1,068,874 $1,122,317 $1,178,433
Gross Margin $969,500
A3C Facility Income Stream 78.26% 79.62% 80.55% 81.43% 81.95%
$118,665 $128,158 $138,411 $149,484
$109,875

Net Operating Income $3,599,875 $4,095,330 $4,553,388 $5,059,608 $5,498,046

Expenses $292,867 $304,056 $313,178 $322,573 $332,250
Payroll $20,000 $20,500 $21,013 $21,538 $22,076
General and Administrative $40,000 $25,000 $25,625 $26,266 $26,922
Marketing Expenses $2,500 $2,525 $2,550 $2,576 $2,602
Medical Board Registration and Fees $10,000 $10,250 $10,506 $10,769 $11,038
Insurance Costs $25,000 $25,625 $26,266 $26,922 $27,595
Accommodation for Medical Staff $25,000 $25,625 $26,266 $26,922 $27,595
Lease of City Centre Clinic Premises
Maintenance + Med Supplies (inc A3C $50,000 $51,250 $52,531 $53,845 $55,191
Facility) $75,000 $76,875 $78,797 $80,767 $82,786
Utilities (Inc Gen Fuel) $30,000 $30,750 $31,519 $32,307 $33,114
Staff Training (Medical & Administrative) $10,000 $10,100 $10,201 $10,303 $10,406
Miscellaneous Costs $21,965 $22,804 $23,488 $24,193 $24,919
$602,332 $605,360 $621,939 $638,980 $656,495
Payroll Taxes

Total Operating Costs

EBITDA $2,997,543 $3,489,970 $3,931,449 $4,420,628 $4,841,551

Interest $0 $0 $0 $0 $0
Depreciation $120,000 $130,000 $140,000 $150,000 $160,000

Earnings Before Taxation $2,877,543 $3,359,970 $3,791,449 $4,270,628 $4,681,551

Taxation $863,263 $1,007,991 $1,137,435 $1,281,188 $1,404,465
Corporation Tax $0 $0 $0 $0 $0
State Income Tax
$2,014,280 $2,351,979 $2,654,015 $2,989,440 $3,277,086
Profit after Tax, Interest & Depreciation 44.08% 46.00% 47.21% 48.36% 49.08%
Profit Margin

Corporation tax is assumed at 30%.

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7.7 Depreciation Analysis

The depreciation analysis over a 5 year period is shown below. Key assumptions are:
(a) Medical equipment and furniture depreciated over 5 years;
(b) Annual capital expenditure to purchase and refresh new equipment is $50,000 (from

Year 2) with the exception that every 5 years, a sum of $300,000 is budgeted for
expenditure to replace key medical equipment – this amounts to $700,000 over 10
years. These annual capital amounts are financed directly from operational cash flow
without external borrowing or cash call from investors

Expenditure/Acquisitions 2015 2016 2017 2018 2019
Equipment Purchase at Startup $600,000 $50,000 $50,000
Subsequent Equipment Purchases $600,000 $50,000 $50,000 $50,000 $50,000
$120,000 $120,000 $50,000 $50,000
Total Asset Value $10,000 $120,000
$120,000 $10,000 $120,000 $120,000
Annual Depreciation $120,000 $130,000 $10,000 $10,000 $10,000
Medical Equipment/FFE bought at start $250,000 $10,000 $10,000
up $140,000 $10,000 $10,000
Medical Equipment/FFE purchased 2016 $390,000 $10,000
Medical Equipment/FFE purchased 2017 $150,000
Medical Equipment/FFE purchased 2018 $540,000 $160,000
Medical Equipment/FFE purchased 2019 $700,000
Medical Equipment/FFE purchased 2020
Medical Equipment/FFE purchased 2021
Medical Equipment/FFE purchased 2022
Medical Equipment/FFE purchased 2023
Medical Equipment/FFE purchased 2024
Annual Depreciation
Cummulative Depreciation

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7.8 Balance Sheet Analysis

The 5 year balance sheet analysis is shown below:

Proforma Balance Sheet - Yearly 2015 2016 2017 2018 2019
Year
$600,000 $0 $0 $0 $0
Assets $0 $50,000 $50,000 $50,000 $50,000
Start-Up Medical Equipment & Furniture $50,000 $50,000 $50,000 $50,000
Additional Med Equipment Furniture $600,000
$50,000 $50,000 $50,000
Total Med Equipment & Furniture $700,000 $750,000 $800,000

Annual Asset creation $600,000 $50,000 $390,000 $540,000 $700,000
Cummulative Assets $600,000 $650,000
$310,000 $210,000 $100,000
Cummulative Depreciation $120,000 $250,000 $54,880 $61,789 $67,742

Net Book Value $480,000 $400,000 $146,205 $207,994 $275,736
Add cash retained in business $42,686 $48,640 $456,205 $417,994 $375,736
Cummulative Cash retained in business $42,686 $91,325
Total Assets $0 $0 $0
$522,686 $491,325 $0 $0 $0
$0 $0 $0
Liabilities $0 $0 $0 $0 $0
Account Payable $0 $0
Long Term Liabilities $0 $0 $456,205 $417,994 $375,736
Other Liabilities $0 $0
Total Liabilities

Net Worth/Net Assets $522,686 $491,325

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7.9 Cash Flow Analysis
The 5 Year Cash Flow Analysis is shown below:

Year 2015 2016 2017 2018 2019
Cash From Operations $2,014,280 $2,351,979 $2,654,015 $2,989,440 $3,277,086
Add back Depreciaton
Cash From Receivables $120,000 $130,000 $140,000 $150,000 $160,000
Operating Cash Inflow $0 $0 $0 $0 $0

Other Cash Inflows $2,134,280 $2,481,979 $2,794,015 $3,139,440 $3,437,086
Equity Investment
Increased Borrowings $1,000,000 $0 $0 $0 $0
Sales of Business Assets
A/P Increases $0 $0 $0 $0 $0
Total Other Cash Inflows
$0 $0 $0 $0 $0

$0 $0 $0 $0 $0

$1,000,000 $0 $0 $0 $0

Total Cash Inflow $3,134,280 $2,481,979 $2,794,015 $3,139,440 $3,437,086

Cash Outflows $0 $0 $0 $0 $0
A/P Decreases $0 $0 $0 $0 $0
A/R Increases
Purchase of Medical Equipment & $600,000 $50,000 $50,000 $50,000 $50,000
FFE $250,000 $0 $0 $0 $0
Working Capital $150,000 $0 $0 $0 $0
Other Start-Up Costs $1,000,000
Total Cash Outflows $50,000 $50,000 $50,000 $50,000

Free Cash Flow for Dividends $2,134,280 $2,431,979 $2,744,015 $3,089,440 $3,387,086
Cumulative Free Cash Balance $2,134,280 $4,566,259 $7,310,274 $10,399,713 $13,786,799

DIVIDEND DISTRIBUTIONS $2,091,595 $2,383,339 $2,689,134 $3,027,651 $3,319,344
Total Dividend Distributed $1,882,435 $2,145,005 $2,420,221 $2,724,886 $2,987,410
RMS Nigeria Dividend $1,882,435 $4,027,441 $6,447,661 $9,172,547 $12,159,957
Cummulative RMS Nigeria Dividend
Equity Investor Dividend $209,159 $238,334 $268,913 $302,765 $331,934
Cummulative Equity Investor
Dividend $209,159 $447,493 $716,407 $1,019,172 $1,351,106
Return on Equity 20.9% 23.8% 26.9% 30.3% 33.2%

Cash Retained in Business $42,686 $48,640 $54,880 $61,789 $67,742

The following assumptions underpin the dividend distribution intention:
(a) 98% of free cash is made available for dividend distribution;
(b) Share of dividend for RMS Nigeria is 90%;
(c) Share of dividend for equity investor(s) is 10% ($1m investment) modeled;
(d) Payback period is between Years 3 – 4.

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7.10 Summary

The financial case for investment in the ALC Facility has been described in a detailed
fashion in this document. RMS Nigeria believes that it is on the verge of introducing a new
concept in Nigerian given the economic capability of an increasing number of Nigerians.
RMS Nigeria believes that high quality ambulatory surgical services will be in high demand.
The income modeled in conservative and this produces a highly profitable operation – RMS
Nigeria expects to exceed the income forecast. The costs forecasts are robust. The
business is highly cash generative and the reward to the equity investor is a significant and
considerable annual cash flow. Furthermore, the opportunity presented is strongly suited to
expansion on a franchise basis to other cities within Nigeria. The investment case is
STRONG.

RMS Nigeria hereby invites the discerning equity investor to be a part of this exciting
venture. A minimum of USD $1m equity investment is sought and in return, RMS Nigeria will
release 10% of the equity interest in the venture. The amount of equity interest released will
depend on the equity investment offered and RMS Nigeria is willing to engage in
discussions and negotiations on this matter. This is a fantastic investment opportunity for the
equity investor.

Any requirement for additional information or preliminary meetings to discuss terms of any
proposed equity investment, or any other matter related to this investment opportunity
should be channelled to:

Dr Abidoye Ojeikere
CEO, Resuscitate Medical Services
Tel: +44(0) 7768 506570 – London
Email: [email protected]

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