Torque Precision Auto Business Plan — Financial Plan

Five-year projections with a fully articulated income statement, cash flow and balance sheet: revenue to R28.43m and EBITDA to R5.52m.

Financial Plan

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9.1 Basis of preparation
9.2 Projected income statement
9.3 Projected cash flow statement
9.4 Projected balance sheet
9.5 Capital requirement and funding

9.1 Basis of preparation

▪ All figures are in Rand and exclude VAT. The model is built from bays, clock hours, utilisation, efficiency against book time and effective labour rate rather than from a growth rate applied to an assumed base.

▪ Labour revenue is book hours invoiced at an effective R739 an hour — a posted R795 less 7% leakage. Parts revenue is struck at a parts attachment ratio to labour rising to 1.14. Sundries and consumables are a small percentage of revenue.

▪ Gross margin is struck at stream level: labour 66%, parts 27%, sundries around 40%. Technician cost is the principal labour direct cost.

▪ Depreciation is built from a phased asset schedule: lifts, fit-out and solar over ten years, alignment and specialist tools over eight, diagnostics and vehicles over five, and the workshop management system over three.

▪ Asset finance is drawn progressively against equipment as it is bought, at 13.75% over five years per tranche with a two-year capital moratorium. Interest is paid from Year 1; principal from Year 3.

▪ Corporate income tax is 27%, with assessed losses carried forward subject to the section 20 limitation capping the set-off at the higher of R1 million or 80% of taxable income.

▪ Working capital assumes 18 debtor days, 30 creditor days and 35 days of parts stock held tight against a fast-moving list.

▪ No grant funding is assumed.

9.2 Projected income statement

R	Year 1	Year 2	Year 3	Year 4	Year 5
Labour revenue	2 400 000	5 368 000	8 801 000	10 987 000	12 912 000
Parts revenue	2 280 000	5 476 000	9 506 000	12 305 000	14 719 000
Sundries and consumables	149 000	334 000	548 000	684 000	803 000
Total revenue	4 829 000	11 178 000	18 855 000	23 975 000	28 434 000
Cost of sales	(3 439 000)	(6 790 000)	(10 593 000)	(13 247 000)	(15 446 000)
Gross profit	1 390 000	4 388 000	8 262 000	10 728 000	12 988 000
Gross margin	28.8%	39.3%	43.8%	44.7%	45.7%
Overhead	(3 529 000)	(4 764 000)	(6 156 000)	(6 922 000)	(7 465 000)
EBITDA	(2 139 000)	(376 000)	2 106 000	3 806 000	5 523 000
EBITDA margin	-44.3%	-3.4%	11.2%	15.9%	19.4%
Depreciation	(473 300)	(600 200)	(626 600)	(639 800)	(653 000)
Interest on asset finance	(247 756)	(317 593)	(337 547)	(275 321)	(182 815)
Profit / (loss) before tax	(2 860 056)	(1 293 793)	1 141 853	2 890 879	4 687 185
Taxation	—	—	(38 300)	(156 107)	(1 038 431)
Profit / (loss) after tax	(2 860 056)	(1 293 793)	1 103 553	2 734 772	3 648 754
Net margin	-59.2%	-11.6%	5.9%	11.4%	12.8%
Cumulative profit / (deficit)	(2 860 056)	(4 153 849)	(3 050 296)	(315 524)	3 333 230

Figure 14. Cumulative profit after tax and the peak deficit.

9.3 Projected cash flow statement

R	Year 1	Year 2	Year 3	Year 4	Year 5
Profit / (loss) after tax	(2 860 056)	(1 293 793)	1 103 553	2 734 772	3 648 754
Add back: depreciation	473 300	600 200	626 600	639 800	653 000
(Increase) / decrease in working capital	174 970	(159 890)	(233 706)	(167 327)	(163 506)
Cash generated from operations	(2 211 786)	(853 483)	1 496 447	3 207 245	4 138 248
Capital expenditure	— (funded at close)	(924 000)	(264 000)	(132 000)	(132 000)
Asset finance drawn	— (drawn at close)	507 907	145 116	72 558	72 558
Debt capital repaid	— (moratorium)	— (moratorium)	(525 109)	(745 328)	(890 101)
Net movement in cash	(2 211 786)	(1 269 576)	852 454	2 402 475	3 188 705
Opening cash	3 923 861	1 712 075	442 499	1 294 953	3 697 428
Closing cash	1 712 075	442 499	1 294 953	3 697 428	6 886 133

Figure 15. Cash flow — two years of consumption before the business pays for itself.

Opening cash after the Year 1 equipment and fit-out and the first finance drawdown is R3 923 917. Cash generated from operations is negative R2.21 million in Year 1 and negative R0.85 million in Year 2, then turns to R1.50 million in Year 3 and R4.14 million by Year 5. Closing cash reaches its low point of R442 553 at the end of Year 2, when the second wave of bay capital and the parts stock build coincide with the last year of the loss. That trough is what the working capital provision is sized against.

9.4 Projected balance sheet

R, at year end	Year 1	Year 2	Year 3	Year 4	Year 5
Equipment and fit-out, net of depreciation	2 804 700	3 128 500	2 765 900	2 258 100	1 737 100
Parts stock	159 600	383 320	665 420	861 350	1 030 330
Trade receivables	238 142	551 244	929 836	1 182 329	1 402 225
Cash	1 712 075	442 499	1 294 953	3 697 428	6 886 133
Total assets	4 914 517	4 505 563	5 656 109	7 999 207	11 055 788
Share capital	5 400 000	5 400 000	5 400 000	5 400 000	5 400 000
Retained earnings / (accumulated loss)	(2 860 056)	(4 153 849)	(3 050 296)	(315 524)	3 333 230
Total equity	2 539 944	1 246 151	2 349 704	5 084 476	8 733 230
Asset finance — non-current	1 801 861	1 784 659	1 184 447	366 904	263 677
Asset finance — current	0	525 109	745 328	890 101	175 785
Trade payables	572 712	949 644	1 376 630	1 657 726	1 883 096
Total liabilities	2 374 573	3 259 412	3 306 405	2 914 731	2 322 558
Total equity and liabilities	4 914 517	4 505 563	5 656 109	7 999 207	11 055 788

Figure 16. Balance sheet — asset composition.

Net book value of equipment and fit-out peaks at R3.13 million at the end of Year 2 once the second wave of bays and the alignment equipment are in service, then declines as depreciation outruns the residual capital programme. Total equity falls from R5.40 million at inception to a low of R1.25 million at the end of Year 2, and recovers to R8.73 million by Year 5. Gearing peaks at 72.3 per cent in Year 2 — the moment of maximum accumulated loss against a facility not yet amortising — and falls to 21.0 per cent by Year 5.

9.5 Capital requirement and funding

Item	R	Note
Vehicle lifts and bay equipment, 10 bays	1 320 000	Two-post and four-post lifts, jacks, stands, bay tooling; phased with bay commissioning
Diagnostic equipment and initial data subscriptions	680 000	Multi-marque scan platform, oscilloscope, programming capability, first-year subscriptions
Wheel alignment, balancing and tyre equipment	420 000	Alignment bay is a high-margin attachment to routine servicing
Aircon, brake, press, welding and specialist tools	460 000	Including gas handling and calibration-sensitive equipment
Premises fit-out, oil bay, waste and compressed air	780 000	Lease improvements, drainage, bunding, reception and customer area
Solar and backup power	410 000	Compressors, lifts and diagnostics cannot run on an unstable supply
Workshop management system and IT	180 000	Job cards, book times, parts, invoicing, service history
Courtesy and parts vehicles	480 000	Customer retention tool and parts collection
Parts stock and working capital	2 870 000	Fast-moving stock plus the operating deficit through the ramp
Contingency	400 000	Equipment commissioning and unforeseen fit-out
Total capital deployed over five years	8 000 000	Funded by R5.40m equity and R2.60m asset finance

Year	Capital deployed (R)	Asset finance drawn (R)	Equity applied (R)
Year 1	3 278 000	1 801 861	1 476 139
Year 2	924 000	507 907	416 093
Year 3	264 000	145 116	118 884
Year 4	132 000	72 558	59 442
Year 5	132 000	72 558	59 442
Total	4 730 000	2 600 000	2 130 000

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