Mr Bakery Master Business Plan — Returns
What the founders and growth equity investor earn across the horizon, and the return on capital deployed.
Returns
Jump to section
- Overview & contents
- i. Important Notice
- 1. Executive Summary
- 2. A Note on the Name
- 3. The Market and Why Scale Is the Enemy
- 4. The Product Strategy
- 5. SWOT and Competitive Position
- 6. Route to Market
- 7. Unit Economics and Prime Cost
- 8. Returns: The Wholesale Bakery Tax
- 9. Energy
- 10. The Five-Year Build and Its Gates
- 11. Funding
- 12. People and Production
- 13. Food Safety and Compliance
- 14. Financial Projections
- 15. Break-Even
- 16. Sensitivity and Scenarios
- 17. Risk Management
- 18. Implementation Timeline
- 19. Returns
- 20. Key Performance Indicators
- 21. Key Assumptions
- 22. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
|
Measure |
Value |
Basis |
|---|---|---|
|
Founder equity |
R1.62m |
Year 1 |
|
Growth equity |
R1.85m |
Year 3, at the second oven line |
|
Total equity subscribed |
R3.47m |
|
|
Year 5 EBITDA |
R1.92m |
At an 11.2% margin |
|
Exit multiple applied |
5.0x |
Central assumption for a food manufacturer of this scale |
|
Terminal enterprise value |
R9.60m |
|
|
Net debt at Year 5 |
R2.02m |
Loans of R2.79m less cash of R0.77m |
|
Terminal equity value |
R7.58m |
|
|
Money multiple on equity |
2.18x |
|
|
Equity IRR |
21.4% |
On the two subscriptions at their actual timing |
|
Project IRR |
27.1% |
On free cash flow with the terminal enterprise value |
|
Exit multiple at which equity returns its subscription |
2.86x |
|
Exit multiple |
Enterprise value |
Terminal equity |
Project IRR |
Equity IRR |
Money multiple |
|---|---|---|---|---|---|
|
3.0x |
R5.76m |
R3.74m |
10.8% |
1.9% |
1.08x |
|
3.5x |
R6.72m |
R4.70m |
15.5% |
7.9% |
1.35x |
|
4.0x |
R7.68m |
R5.66m |
19.7% |
13.0% |
1.63x |
|
4.5x |
R8.64m |
R6.62m |
23.6% |
17.5% |
1.91x |
|
5.0x |
R9.60m |
R7.58m |
27.1% |
21.4% |
2.18x |
|
5.5x |
R10.55m |
R8.54m |
30.4% |
24.9% |
2.46x |
|
6.0x |
R11.51m |
R9.50m |
33.5% |
28.2% |
2.74x |
19.1 Free cash flow
|
R’000 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
EBITDA |
(288) |
64 |
438 |
1 043 |
1 919 |
|
Pre-opening cost |
(96) |
— |
— |
— |
— |
|
Movement in working capital |
(190) |
(110) |
(108) |
(98) |
(104) |
|
Taxation |
— |
— |
— |
— |
— |
|
Capital expenditure, net of allowance |
(2 215) |
(568) |
(1 140) |
(1 125) |
(1 330) |
|
Free cash flow to the firm |
(2 789) |
(614) |
(810) |
(180) |
485 |
Free cash flow to the firm is negative in Years 1 to 4 and turns positive only in Year 5 at R674 000, cumulatively minus R3.71 million across the five years. Substantially all of the value in the project therefore sits in the terminal value rather than in the cash generated within the window, which is the ordinary position for a manufacturer building capacity across its first five years. It is also why the exit multiple sensitivity above matters more than any single operating assumption.