What a project report is
A project report projects a venture year by year from what you expect it to sell, spend, buy and borrow: a projected Profit & Loss, Balance Sheet and Cash Flow, the schedule of each loan, the corporate tax, and the ratios a bank reads. It is what you prepare for a new branch, a new company, or a loan application.
A projection is not the books. Nothing here posts, and nothing in the books changes because of a report. The venture starts from nothing: no balances are brought in from the ledger. For a venture that has no company yet, an agency creates a client company for it first (Agency › Clients).
Starting a report
- Open Reports › Project Reports and press New report.
- Give it a Name, choose the First month and how many Years it covers (3 to 10; 5 unless you change it), and press Start the report.
- The report opens on Assumptions. Fill them in, then press Save at the bottom.
The assumptions
| Panel | What you type, and how it is used |
|---|---|
| Cover and summary | Prepared for (the bank or investor), the Purpose, and your Summary — the venture, the people behind it and what is asked for. They print on the pack's first page. All optional; leave a blank line between paragraphs. |
| The project | The First month, the number of Years, and the Discount rate for the NPV (% a year). |
| Revenue | One line for each thing sold: its Unit (covers, hours, rooms), Units a year and Price a unit in year 1, Volume growth and Price growth (% a year, applied once a year), and the month it Starts. A year's units are spread evenly over its months, from the month it starts. |
| Variable costs | Costs that move with sales, as a % of revenue — of one revenue line or of All revenue. |
| Fixed costs | Costs that do not move with sales, as an Amount a year, growing once a year by Growth, from the month they Start. |
| Capital spending | What is bought to set up: its Amount, the month it is Bought in, and its Useful life in years. Each is depreciated evenly, month by month from the month it is bought, down to nil. |
| Equity | Money the owners put in, and the month they Put in it. |
| Loans | Each term loan's Amount, Rate (% a year), Term and Grace (months), the month it is Drawn in, and whether it is Repaid by Equal instalments or Equal principal. Interest is charged monthly on what is owed; in the grace period only interest is paid. |
| Working capital | Debtor days (how long customers take to pay), Stock days and Creditor days. Each month, debtors are that month's revenue × 12 × debtor days ÷ 365; stock and creditors are worked out the same way on the variable costs. |
| Tax | Corporate tax at 9% above AED 375,000 of taxable income, or None, and whether to Take Small Business Relief in each year it is available. |
Amounts are in the company's currency and before VAT. While you change the assumptions, Projections shows them worked through without saving them, a moment after you stop typing. If something cannot be worked out — a price that is not a number, a grace period as long as the loan — a box above the tabs names every problem, and the projections keep showing the last figures that could be.
Reading the projections
- The figures at the top are year 1's revenue, the last year's profit after tax, the Lowest cash and the month it falls in, the Average DSCR, the Project IRR with the NPV, and the Payback.
- Any warning is listed beneath: cash falling below nil, a loan still owed after the last year, a relief year's loss that cannot be carried forward, negative equity.
- A line says whether the balance sheet balances in every year and the cash flow ends at the balance sheet's cash. It always should; if it ever does not, please tell us.
- Years shows each year; Year 1 by month shows the same figures for year 1, month by month. Year 1's column is the sum of its months.
- Below the three statements, each loan has its yearly schedule; Every month shows each instalment.
- At the bottom, two break-even charts: the Break-even chart for one year — revenue, total costs and fixed costs against sales, crossing where revenue covers every cost — and Revenue and break-even revenue, by year. Table shows either as figures.
The one-year chart is drawn for the first year with revenue in every month (a year that starts trading in March would understate a normal year). Its fixed costs include depreciation and interest, and its variable costs are that year's share of revenue.
Cash below nil is shown as it is — it is not filled in by an imaginary overdraft. It means the venture needs more money, or later spending.
Corporate tax in a projection
Each projection year is treated as a tax period, worked out with the same rules as the Corporate Tax page: 9% of taxable income above AED 375,000; Small Business Relief in a year whose revenue, and every earlier year's, is AED 3,000,000 or less and that ends by 31 December 2029; and losses carried forward, used against at most 75% of a later year's taxable income. A loss made in a year the relief is taken cannot be carried forward — switch the relief off to keep it.
The tax is charged at the year end and paid on its due date, nine months later, so the balance sheet shows it as owed in between. Taxable income is the profit before tax, with no other adjustments. A company whose books are not in dirhams has no corporate tax in its projections.
How the ratios are worked out
| Ratio | How |
|---|---|
| Debt service cover (DSCR) | (Profit after tax + depreciation + interest) ÷ (principal repaid + interest), for each year that repays or pays interest on a loan. The Average DSCR is the total of the first over the total of the second. |
| Break-even revenue | (Fixed costs + depreciation + interest) ÷ the contribution margin — revenue less variable costs, as a share of revenue. Margin of safety is how far revenue is above it, as a % of revenue. |
| Gross and net margin | Gross profit, and profit after tax, as a % of revenue. |
| Current ratio | Cash, debtors and stock ÷ creditors, tax owed, the loan principal due in the next twelve months, and any cash below nil. |
| Debt to equity | Loans owed ÷ equity (capital put in plus retained earnings). |
| Payback | Years until the cash from operations before interest, less capital spending, adds up to nil. Capital spending in the first month counts at the start. |
| Project IRR and NPV | On the same yearly cash flows, plus a value at the end: the assets' book value and the net working capital at the last year end. The NPV uses the discount rate on The project. |
Saving, versions and final
- Save keeps the assumptions as the next version; type What changed beside it to say why. Saving what is already the latest version adds nothing.
- Versions lists every version. Open shows an older one with its projections; Restore this version makes it the newest version. Nothing is deleted.
- Mark final locks the report: no new version, name or notes until someone presses Reopen.
- Copy starts a new draft report from the latest version — a slower start, a smaller loan — leaving this one as it is.
- Delete report removes a draft and all its versions. A final report must be reopened first.
The pack to hand over
The pack is the report as a document for a bank or an investor, printed on your letterhead, with an Excel copy.
- Fill in Cover and summary on Assumptions, and press Save.
- Press Download at the top and choose PDF or Excel. The pack is of the version on screen — the latest, or an older one you have opened from Versions.
| Part | What it holds |
|---|---|
| Cover | The report's name, who it is prepared for and why, the years it covers, the version, and your summary |
| Key figures | Revenue in the first and last year, the last year's profit, the lowest cash, capital spending, equity and loans, DSCR, IRR, NPV and payback, and any warnings |
| Assumptions | Everything you typed, panel by panel |
| Statements | The projected Profit & Loss, Balance Sheet and Cash Flow, one column a year |
| Loans | Each loan's schedule, by year and month by month |
| Corporate tax | Each year's profit, losses used, Small Business Relief, taxable income, tax and when it is due |
| Ratios | Each year's ratios, the whole projection's, and the cash flows behind payback, IRR and NPV |
| Break-even | Both break-even charts, with their figures |
| Appendix | Year 1 month by month: the Profit & Loss and the Cash Flow |
Every figure in the pack is the same figure the page shows: both are worked out from the saved version in the same way. Changes you have not saved are not in it — Download waits until you save. Excel has one sheet for each part, with amounts as numbers. On paper, more than six years print in two halves, and the monthly appendix prints January to June, then July to December.