Torque Precision Auto Business Plan — Break-Even and Debt Service
Break-even crossed during Year 3 at 65.7% of Year 5 revenue, and debt service across the two-year capital moratorium.
Break-Even and Debt Service
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- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. Market and Opportunity
- 3. How a Workshop Actually Makes Money
- 4. Accreditation and Compliance
- 5. SWOT and Competitive Position
- 6. Operations and the Bay Build
- 7. Route to Market
- 8. Management and Governance
- 9. Financial Plan
- 10. Break-Even and Debt Service
- 11. Investment Analysis
- 12. Sensitivity and Scenario Analysis
- 13. Risk Analysis
- 14. Implementation Roadmap
- 15. Key Performance Indicators
- 16. Key Assumptions
- 17. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital and Operating Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 10.1 Break-even
- 10.2 Debt service
10.1 Break-even
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|---|---|---|---|---|---|
|
Gross margin |
28.8% |
39.3% |
43.8% |
44.7% |
45.7% |
|
Overhead plus debt service, R |
3 776 756 |
5 081 593 |
7 018 656 |
7 942 649 |
8 537 916 |
|
Break-even revenue including debt service, R |
13 113 736 |
12 930 262 |
16 024 329 |
17 768 790 |
18 682 530 |
|
Planned revenue, R |
4 829 000 |
11 178 000 |
18 855 000 |
23 975 000 |
28 434 000 |
|
Break-even as a share of planned revenue |
271.6% |
115.7% |
85.0% |
74.1% |
65.7% |
|
Headroom, R |
(8 284 736) |
(1 752 262) |
2 830 671 |
6 206 210 |
9 751 470 |
Break-even is crossed during Year 3, when planned revenue of R18.86 million clears a break-even of R16.03 million. By Year 5 break-even sits at 65.7 per cent of planned revenue — a margin of safety of R9.75 million, or in operating terms a utilisation of 53.2 per cent and 11 474 book hours against a plan of 81 per cent and 17 463.
|
Break-even measure at Year 5 |
Value |
Interpretation |
|---|---|---|
|
Gross margin |
45.7% |
Blended across labour at 66% and parts at 27% |
|
Break-even revenue including debt service |
R18 682 530 |
Against R28 434 000 planned |
|
Break-even as a share of planned revenue |
65.7% |
A margin of safety of 34.3 points |
|
Break-even utilisation |
53.2% |
Against a plan of 81%, holding efficiency and rate at plan |
|
Break-even book hours |
11 474 |
Against a plan of 17 463 |
10.2 Debt service
|
R |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Asset finance drawn in the year |
1 801 861 |
507 907 |
145 116 |
72 558 |
72 558 |
|
Interest at 13.75% |
247 756 |
317 593 |
337 547 |
275 321 |
182 815 |
|
Capital repaid |
— (moratorium) |
— (moratorium) |
525 109 |
745 328 |
890 101 |
|
Total debt service |
247 756 |
317 593 |
862 656 |
1 020 649 |
1 072 916 |
|
Balance outstanding at year end |
1 801 861 |
2 309 768 |
1 929 775 |
1 257 005 |
439 462 |
|
of which current portion |
0 |
525 109 |
745 328 |
890 101 |
175 785 |
|
of which non-current portion |
1 801 861 |
1 784 659 |
1 184 447 |
366 904 |
263 677 |
|
EBITDA |
(2 139 000) |
(376 000) |
2 106 000 |
3 806 000 |
5 523 000 |
|
Debt service cover |
n/a — moratorium |
n/a — moratorium |
2.44x |
3.73x |
5.15x |
|
Gearing |
41.5% |
65.0% |
45.1% |
19.8% |
4.8% |
Gearing peaks at 72.3 per cent at the end of Year 2 — the moment the accumulated loss is deepest and the facility has not yet begun to amortise — and falls to 21.0 per cent by Year 5. That peak is uncomfortable but transient, and it is the arithmetic consequence of financing equipment against a business that loses money for two years by design.