Naledi Threads Business Plan — Financial Plan

Five-year projections: revenue building to R2.90m and EBITDA to R202,071, with gross margin rising from 48.5% to 52.2%.

Financial Plan

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11.1 Basis of preparation
11.2 Revenue drivers
11.3 Operating cost base, Year 1
11.4 Capital expenditure
11.5 Pre-opening costs and working capital
11.6 Funding requirement and reconciliation
11.7 Projected income statement
11.8 Projected cash flow statement
11.9 Projected balance sheet
11.10 Year 1 monthly cash flow

11.1 Basis of preparation

All figures are in South African Rand and exclude VAT. The company is assumed VAT-registered from opening.
Year 1 runs from 1 September 2026 to 31 August 2027, aligned to the buying calendar rather than the tax year.
Revenue is built from transaction volume and average transaction value, not from a growth rate applied to an assumed starting figure.
Owner remuneration is charged as an operating cost. EBITDA is therefore presented both before and after it, because the two measures answer different questions.
Depreciation is straight-line: five years on fit-out and equipment, three years on IT hardware. Maintenance capital from Year 3 is depreciated over five years alongside the original fit-out, so the charge rises rather than remaining flat.
Tax is calculated at Small Business Corporation rates with the Year 1 assessed loss carried forward. The section 20 set-off restriction does not bite because both the loss and the profits sit well below the R1 million floor.
Pre-opening costs of R86 000 are funded at day zero and charged to the Year 1 income statement as a non-recurring item below EBITDA, so that EBITDA remains comparable across years.
No inflation is applied to revenue beyond the 4 per cent a year assumed in average transaction value. Occupancy escalates at 7.0 per cent subject to the turnover clause, payroll at 5.5 per cent and other operating costs at 4.5 per cent.

11.2 Revenue drivers

Driver	Year 1	Basis
Trading days per month	30	Seven-day trading
Transactions per trading day at maturity	13.2	Reached in month 12; ramped from 62% of that level in month 1
Average transaction value	R438	Grown at 4% a year thereafter
Units per transaction	1.62	Accessory attachment is the primary lever
Average unit retail	R270	Derived: transaction value divided by units
Mature monthly revenue at index 1.00	R173 448	Before seasonality and ramp
Year 1 revenue	R1 812 670	Sum of twelve months after seasonality and ramp

11.3 Operating cost base, Year 1

Cost line	Year 1 (R)	% of sales	Escalation
Occupancy — base or turnover rent	163 680	9.0%	7.0% or the turnover clause, whichever is greater
Occupancy — recoveries and marketing levy	49 500	2.7%	7.0%
Owner remuneration	168 000	9.3%	Stepped; see Section 14.3
Staff wages	201 600	11.1%	5.5%
Statutory contributions and skills levy	7 392	0.4%	2% of payroll; skills levy above R500 000
Sales commission	22 658	1.2%	Variable at 1.25% of sales
Card acquiring fees	30 453	1.7%	Variable at 1.68% of sales, 82% card mix
Other operating costs	243 480	13.4%	4.5%
Total operating costs	886 781	48.9%

Figure 13. Cost structure as a percentage of revenue.

11.4 Capital expenditure

Figure 14. Capital expenditure by category.

Item	Amount (R)	Depreciation
Shopfitting, ceilings, flooring and partitioning	148 000	5 years
Racking, gondolas, shelving and mannequins	62 000	5 years
Shopfront, glazing and illuminated signage	38 000	5 years
CCTV, alarm, EAS pedestals and security tags	38 000	5 years
Air-conditioning installation	28 000	5 years
Furniture, cash desk, steamer and stockroom racking	22 000	5 years
Fitting rooms, mirrors and curtaining	20 000	5 years
Track LED lighting upgrade	18 000	5 years
Electrical and data reticulation	16 000	5 years
POS hardware, tablets, printer and card terminal	15 000	3 years
Professional fees, space planner and lease review	12 000	5 years
Total capital expenditure	417 000	R7 582 per m²

Maintenance capital of approximately R24 000 to R26 000 a year is provided from Year 3 and is depreciated over five years alongside the original fit-out. The depreciation charge therefore rises from R80 400 in Year 4 to R85 205, and to R90 226 in Year 5, rather than remaining flat as it would if the maintenance spend were treated as an expense.

11.5 Pre-opening costs and working capital

Item	Amount (R)	Treatment
Opening inventory, approximately 1 450 units	225 000	Balance sheet — inventory
Cash and working-capital buffer	265 000	Balance sheet — cash
Rental deposit, two months gross	35 530	Balance sheet — non-current asset
Pre-opening marketing and launch	34 000	Charged to Year 1 income
Pre-opening payroll and training	26 000	Charged to Year 1 income
Company registration, legal and professional	12 000	Charged to Year 1 income
Stock management and POS setup	8 000	Charged to Year 1 income
Opening consumables, packaging and uniforms	6 000	Charged to Year 1 income
Municipal and utility deposits	7 500	Balance sheet — non-current asset
Total	619 030

Of this total, R43 030 of deposits is recoverable and sits on the balance sheet, R225 000 is inventory, R265 000 is retained as cash, and R86 000 is genuinely spent — charged to the Year 1 income statement as a non-recurring item. That last figure is money gone before a single garment is sold, and plans that capitalise it overstate first-year profitability.

11.6 Funding requirement and reconciliation

	R
Fit-out and equipment	417 000
Pre-opening costs and working capital	619 030
Total funding requirement	1 036 030
Founder equity	600 000
Term loan	440 000
Total committed	1 040 000
Surplus of sources over uses	3 970
Stated cash and working-capital buffer	265 000
Opening cash balance	268 970

11.7 Projected income statement

R, excluding VAT	Year 1	Year 2	Year 3	Year 4	Year 5
Revenue	1 812 670	2 283 965	2 535 201	2 725 341	2 902 488
Cost of sales	(933 525)	(1 141 983)	(1 237 178)	(1 313 614)	(1 387 389)
Gross profit	879 145	1 141 982	1 298 023	1 411 727	1 515 099
Gross margin	48.5%	50.0%	51.2%	51.8%	52.2%
Occupancy costs	(213 180)	(228 103)	(246 813)	(265 040)	(282 571)
Payroll and commission	(399 650)	(453 571)	(596 676)	(653 611)	(711 345)
Other operating costs	(273 951)	(275 274)	(290 157)	(304 493)	(319 111)
EBITDA	(7 636)	185 034	164 377	188 582	202 071
EBITDA margin	-0.4%	8.1%	6.5%	6.9%	7.0%
EBITDA before owner remuneration	160 364	389 034	418 291	479 462	529 977
Pre-opening costs, non-recurring	(86 000)	—	—	—	—
Depreciation	(85 400)	(85 400)	(85 400)	(85 205)	(90 226)
Operating profit / (loss)	(179 036)	99 634	78 977	103 377	111 845
Finance costs	(58 378)	(49 509)	(37 801)	(24 411)	(9 097)
Profit / (loss) before tax	(237 414)	50 125	41 176	78 966	102 748
Taxation	—	—	—	—	—
Profit / (loss) after tax	(237 414)	50 125	41 176	78 966	102 748
Net margin	-13.1%	2.2%	1.6%	2.9%	3.5%

11.8 Projected cash flow statement

R	Year 1	Year 2	Year 3	Year 4	Year 5
Profit / (loss) after tax	(237 414)	50 125	41 176	78 966	102 748
Add back: depreciation	85 400	85 400	85 400	85 205	90 226
Add back: pre-opening costs funded at opening	86 000	—	—	—	—
(Increase) / decrease in working capital	(73 783)	1 245	26 825	26 605	15 168
Cash generated from operations	(139 797)	136 770	153 401	190 776	208 142
Maintenance capital expenditure	—	—	(24 025)	(25 106)	(26 235)
Term loan capital repaid	(36 822)	(81 490)	(93 198)	(106 588)	(121 902)
Net movement in cash	(176 619)	55 280	36 178	59 082	60 005
Opening cash	268 970	92 351	147 631	183 809	242 891
Closing cash	92 351	147 631	183 809	242 891	302 896

Figure 16. Cash flow — operations turn positive in Year 2.

11.9 Projected balance sheet

R, at year end	Year 1	Year 2	Year 3	Year 4	Year 5
Property, plant and equipment	331 600	246 200	184 825	124 726	60 735
Deposits	43 030	43 030	43 030	43 030	43 030
Inventory	359 048	380 661	374 902	364 893	365 102
Trade and other receivables	9 932	12 515	13 892	14 933	15 904
Cash and cash equivalents	92 351	147 631	183 809	242 891	302 896
Total assets	835 961	830 037	800 458	790 473	787 667
Share capital	600 000	600 000	600 000	600 000	600 000
Retained earnings / (accumulated loss)	(237 414)	(187 289)	(146 113)	(67 147)	35 601
Total equity	362 586	412 711	453 887	532 853	635 601
Term loan — non-current portion	321 688	228 490	121 902	—	—
Term loan — current portion	81 490	93 198	106 588	121 902	—
Trade payables	70 197	95 638	118 081	135 718	152 066
Total equity and liabilities	835 961	830 037	800 458	790 473	787 667

Total equity falls from R362 586 at the end of Year 1 to a trough at that same point and recovers thereafter, turning positive on retained earnings only in Year 5. Accumulated losses of R237 414 in Year 1 are not recovered until the fifth year of trading, which is the balance-sheet expression of the finding in Section 1.5 that a funder is financing roughly fifteen months of losses before the store stands on its own.

11.10 Year 1 monthly cash flow

The annual statements conceal the risk that actually kills stores. The monthly view does not.

Figure 17. Year 1 month-end cash. The balance never recovers to its opening level.

The cash balance falls in every month except December, reaching a trough of R116 922 in June before the pre-festive stock build begins again. That trough is 43 per cent of the opening balance and it occurs in the tenth month, which is precisely when a first-time retailer is most likely to conclude that the business is working and to relax the open-to-buy discipline. It is not, and it is the month in which the standby overdraft exists.

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