Al Nahda College

Al Nahda College established in 2014 and located in Khartoum the capital of Sudan. The College is established on a total area of 1,040 square meters at No.452, Block No.37 Khartoum (3).

The College offers a diversity of programs from Medicine, Engineering and other Humanitarian and Information Technology programs. The market for education in Sudan is growing and the gap between supply and demand is wide despite the fact that there are over 100 university and educational institute in the country.

Al Nahda College is working towards qualifying into a full University recognition by The Ministry of Higher Education. For this purpose they prepared their second strategic plan from 2023 to 2027. The five year strategy among other objectives calls for completing the infrastructure of the college, building qualified and skillful academic staff and updating its curricula to match international research and science.

The past financial performance indicators of the College from 2015 to 2022 show average growth rate on total Assets of 19%, (table 1).

Revenue increased on average by 36%, while expenses grow approximately by 20% on average, (Table 2).

Cash flows on average increased by 1.42%, return on equity by 31%, and average return on Assets was 23% (Table 3).

To implement phase one of its strategy the College requires fixed assets amounts to US$14,750,222, and working capital of US$470,490 (US$235,144 general & administrative cost and US$195,921 human resource cost plus US$39,425, repairs & maintenance costs) i.e. total capital of US$15,220,713, (table 4).

8% of this capital is to be funded by the owners of the business i.e. US$1,220,713, and 92% i.e. US$14,000,000 to be funded by a long term loan, (table 5).

Based on the above mentioned financial indicators for 2015-2022, revenue, expenses, profits and cash flows were forecasted for the five year strategy as follows.

The expansion project using 36% growth rate is expected to generate revenue of US$3,674,814, in the first year of implementation, US$4,997,747, US$6,796,936, US$9,243,833 and US$12,571,612 respectively in the rest of the plan period, (table 6).

Revenue also forecasted by calculating the tuition & registration fees per student per program, (table 7, 8 and 9), producing similar result with minor differences.

The main categories of expenditure as classified in the financial reports of the College are general and administrative costs, human resources cost and repair & maintenance costs. Using the average rate of increase of 20% from the past performance, the general & administrative costs for the five year strategic plan is as follows: US$470,490 for the first year of implementation, US$564,589, US$677,506, US$813,007, and US$975,609 respectively over the rest of the strategic plan period, (table 10).

Expenses details for the 1st. year of implementation are as follows: General & administrative Costs amounts to US$235,144, Human resource costs US$195,921 and Repairs & Maintenance amounts to US$39,425 as shown on (tables 11, 12 & 13).

Details of the Assets required for the expansion are shown on (table 14) which amounts to US$14,750,222.

A proforma income statement and a proforma balance sheet were also prepared for the first year of the strategic plan, profits for the first year of implementing the plan amounts to US$1,971,401, (tables 15 & 16).

Phase one of the five year strategy gives the following profits for each year of the plan: US$1,971,401, US$3,235,236, US$4,956,507, US$7,302,903 and US$10,503,081 respectively, (table 17).

This projection generates a stream of cash flows of US$1,924,814, US$4,642,973, US$9,082,402, US$16,778,227, and US$26,764,230 respectively over the five year plan, (table 15).

The business breakeven at a revenue (different programs) of US$23,504,897, a breakeven quantity of 13,679 students. The contribution at breakeven point amounts to US$23,504,897, and the total fixed costs are US$23,504,897, (table 19).

The feasibility of the business is measured by the NPV, IRR, and discounted payback period. The discount rate used is Return on Equity (ROE) of 31% to compensate for inflation & the risk of the future cash flows.

The result of the study is a positive NPV at 31% of US$4,296,806, an internal rate of return (IRR) of 42% and a discounted payback period of approximately three years and three month.

A sensitivity analysis of the NPV was conducted using higher discount factors of 35%, and 41% to accommodate for unforeseen risk in the future and the result is still positive NPV and IRR of 42% (i.e. NPV = 0), (table 20).

The expansion's Net profit margin is 54%, Return on Assets (ROA) 14% and Return on invested capital (ROI) is 13%.