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p. 180 of 203 BACK | NEXT Foreword 1. Introduction to the Guidelines 2. User Instructions 3. Preparing and Appraising Investment Project 4. Financial Management of Executing Agencies 5. Reporting and Auditing 6. Financial Institutions 7. Knowledge Management 7.1. Useful Websites 7.2. Operations Manual (OM) 7.3. Project Administration Instructions (PAIs) 7.4. International Standards 7.5. International Accounting and Auditing Architecture 7.6. Financial Review Checklist for RRPs 7.7. Appraisal Checklist: Nonrevenue-Earning Project 7.8. Appraisal Checklist: Revenue-Earning Project 7.9. Appraisal Checklist: Private Sector Project 7.10. Appraisal Checklist: Financial Institution 7.11. Undertaking Sensitivity and Risk Analyses 7.12. Model Operating Covenants 7.13. Model Capital Structure Covenants 7.14. Model Liquidity Covenants 7.15. Commonly Used Ratios 7.16. Model Financial Statements: Service Organization 7.17. Model Financial Statements: Manufacturing Organization 7.18. Model Terms of Reference for an Auditor 7.19. Audit Report Questionnaire Addendum

Financial Management and Analysis of Projects : 7. Knowledge Management

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7.16. Model Financial Statements: Service Organization

7.16.1. The following model set of summary financial statements is appropriate for use by a service-type organization. When using these financial statements, it is essential that:

• An appropriate Statement of Accounting Policies be developed and agreed between ADB and the borrower (see section 5.2)
• Appropriate Notes to the Financial Statements supplement the financial statements.
• Where appropriate, the Financial Statements should be tailored so that they adequately reflect the performance and position of the organization.

7.16.2. The format used for this particular model set of summary financial statements is appropriate for forecasting (projecting) financial statements (for instance, during project preparation), the forecast period will be determined by the financial analyst (see section 3.4.1)

Example Service Organization Forecast Income Statements [Format for PPTA financial projections] For the years ended 31 December
		20X1	20X2	20X3	20X4	20X5	20X6	20X7
($'000s)	Notes	Actual	Actual	Actual	Actual	Actual	Forecast	Forecast
Operating Revenues
Revenues from services	1	35,052	36,748	39,288	41,202	41,202	41,202	41,202
Investment income		1,157	1,073	1,126	1,243	1,243	1,243	1,243
Other operating revenue		317	332	279	269	269	269	269
		36,526	38,153	40,693	42,714	42,714	42,714	42,714
Operating Expenses
Wages, salaries, and employee benefits		8,214	8,309	8,799	9,480	9,480	9,480	9,480
Supplies and consumables used		4,022	4,285	4,582	4,687	4,687	4,687	4,687
Repairs and maintenance		1,000	1,000	1,000	1,000	1,000	1,000	1,000
Depreciation and amortization expenses		791	872	918	926	926	926	926
Other operating expenses		18,677	20,395	20,601	21,280	21,280	21,280	21,280
		32,704	34,861	35,900	37,373	37,373	37,373	37,373
Surplus/(Deficit) from Operating Activities		3,822	3,292	4,793	5,341	5,341	5,341	5,341
Project-related interest costs		2,373	2,527	2,588	2,512	2,512	2,512	2,512
Other interest costs		..	..	..	..	..	..	..
Gains on sale of fixed assets		..	..	..	..	..	..	..
Total non-operating expenses
		2,373	2,527	2,588	2,512	2,512	2,512	2,512
Surplus/(Deficit) from Ordinary Activities
		1,449	765	2,205	2,829	2,829	2,829	2,829
Minority interest share of surplus/(deficit)
		..	..	..	..	..	..	..
Net surplus/(deficit) before extraordinary items
		1,449	765	2,205	2,829	2,829	2,829	2,829
Extraordinary items
		..	..	..	..	..	..	..
Income tax expense		..	..	..	..	..	..	..
Net Surplus/(Deficit) for the Year after Tax
		1,449	765	2,205	2,829	2,829	2,829	2,829

Example Service Organization Forecast Balance Sheets [Format for PPTA financial projections] As at 31 December
		20X1	20X2	20X3	20X4	20X5	20X6	20X7
($'000s)	Notes	Actual	Actual	Actual	Actual	Actual	Forecast	Forecast
Current Assets
Cash and cash equivalents		210	93	97	100	100	100	100
Marketable securities		10,440	11,279	9,929	9,473	9,473	9,473	9,473
Receivables		5,520	5,490	5,559	5,593	5,593	5,593	5,593
Inventories		274	329	348	379	379	379	379
Work in progress		3,995	4,768	5,519	6,032	6,032	6,032	6,032
Investments		338	341	954	2,210	2,210	2,210	2,210
		20,777	22,300	22,406	23,787	23,787	23,787	23,787
Less: Current Liabilities
Payables and provisions		4,716	4,588	4,428	4,401	4,401	4,401	4,401
Short-term borrowings		2,236	2,413	2,413	2,413	2,413	2,413	2,413
Current portion of borrowings		7,208	7,648	7,533	7,528	7,528	7,528	7,528
Employee benefits		832	857	857	856	856	856	856
WORKING CAPITAL
		14,992	15,506	15,231	15,198	15,198	15,198	15,198
		5,785	6,794	7,175	8,589	8,589	8,589	8,589
Plus: Noncurrent Assets
Investments		14,392	15,204	16,102	16,930	16,930	16,930	16,930
Property, plan and equipment		25,252	25,861	25,787	25,851	25,851	25,851	25,851
Intangible assets		2	302	830	1,322	1,322	1,322	1,322
		39,646	41,367	42,719	44,103	44,103	44,103	44,103
Less: Noncurrent Liabilities
Payables		524	510	492	489	489	489	489
Borrowings		28,833	30,591	30,131	30,113	30,113	30,113	30,113
Employee benefits		7,491	7,710	7,716	7,706	7,706	7,706	7,706
		36,848	38,811	38,339	38,308	38,308	38,308	38,308
Net Assets		8,583	9,350	11,555	14,384	14,384	14,384	14,384
EQUITY
Issued and paid-up capital		1,000	1,000	1,000	1,000	1,000	1,000	1,000
Reserves		7,201	7,190	7,190	7,190	7,190	7,190	7,190
Accumulated surpluses/(deficits)		382	1,160	3,365	6,194	6,194	6,194	6,194
Total Equity
		8,583	9,350	11,555	14,384	14,384	14,384	14,384

Example Service Organization Forecast Cash Flow Statements [Format for PPTA financial projections] For the years ended 31 December
		20X1	20X2	20X3	20X4	20X5	20X6	20X7
($'000s)	Notes	Actual	Actual	Actual	Actual	Actual	Forecast	Forecast
OPERATING CASH FLOWS
Receipts
Cash receipts from customers		34,793	36,603	39,177	41,118	41,118	41,118	41,118
Other receipts		341	265	289	279	279	279	279
Payments
Employees		-12,615	-13,043	-13,428	-13,917	-13,917	-13,917	-13,917
Suppliers		-19,750	-20,920	-20,848	-21,167	-21,167	-21,167	-21,167
Other payments		-369	-490	-1,088	-1,684	-1,684	-1,684	-1,684
Net Cash Flows from Operating Activities 2
		2,400	2,415	4,102	4,629	4,629	4,629	4,629
INVESTING CASH FLOWS
Receipts
Interest received		1,070	835	834	901	901	901	901
Sales of fixed assets		250	125	68	59	59	59	59
Sales of investments		1,983	57	1,071	244	244	244	244
Payments
Interest paid		-2,507	-2,516	-2,516	-2,502	-2,502	-2,502	-2,502
Purchases of fixed assets		-1,469	-2,459	-2,808	-3,181	-355	-355	-355
Purchases of investments		-130	-55	-102	-98	-98	-98	-98
Net Cash Flows from Investing Activities
		-803	-4,013	-3,498	-4,577	-1,751	-1,751	-1,751
FINANCING CASH FLOWS
Receipts
Capital contributions from owners		..	..	..	..	..	..	..
Proceeds from new borrowings		275	1,477	353	56	56	56	56
Payments
Capital withdrawals		..	..	..	..	..	..	..
Repayment of borrowings		-1,900	..	-953	-105	-105	-105	-105
Dividends paid		..	..	..	..	-2,829	-2,829	-2,829
Net Cash Flows from Financing Activities
		-1,625	1,477	-600	-49	-2,878	-2,878	-2,878
CASH AND CASH EQUIVALENTS
Balances as at 1 January		230	210	93	97	100	100	100
Currency changes on opening balances		8	4	..	..	..	..	..
Net increases/(decreases) for period		-28	-121	4	3	..	..	..
Balances as at 31 December
		210	93	97	100	100	100	100

Back 7.15.3. Liquidity Indicators	Next 7.17. Model Financial Statements: Manufacturing Organization