Conclusion and Recommendation

Jump to section

• 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

Torque Precision Auto is an investable business for a specific and narrow reason. The Competition Commission’s aftermarket guidelines released a pool of in-warranty servicing work that was previously locked to franchised dealers, and most independent workshops cannot take that work because they lack the diagnostic capability, the qualified technicians and the documentation discipline it requires. The opportunity is not that the law changed; it is that the law changed and the market did not follow.

The plan is deliberately honest about three things. The opening excludes insured accident repair on warranty vehicles, so the addressable pool is mechanical work only. The guidelines are interpretive guidance rather than statute, so the durable protection is capability rather than entitlement. And the enterprise consumes cash for two years before it produces any, recovering its start-up losses during Year 5.

17.1 What the numbers support

▪ A pricing position that undercuts the dealer by 28 per cent at a 66 per cent labour gross margin. On a four-hour job the saving is R1 220 before parts, on work that does not affect the warranty.

▪ A capital-light structure. R5.52 million of Year 5 EBITDA on R8.00 million of capital deployed across five years, with a bay costing roughly R132 000 to equip and generating R2.84 million of revenue at maturity.

▪ A financeable structure, with the right moratorium. Interest paid from Year 1, principal from Year 3, cover of 2.44 times in Year 3 rising to 5.15 times by Year 5.

▪ Operating leverage that carries the margin. Gross profit moves from 0.39 times overhead to 1.74 times, and revenue per bay from R1.21 million to R2.84 million, without adding bays faster than the diary fills.

17.2 What the numbers do not support

▪ Building capacity ahead of the diary. A workshop at 50 per cent utilisation across ten bays loses more than one at 80 per cent across five.

▪ Managing on turnover. Parts revenue exceeds labour revenue and carries less than half the gross profit. Turnover can rise while the labour business deteriorates.

▪ Servicing principal in Years 1 and 2. EBITDA is negative in both years and no operational improvement available to a four-bay workshop closes that gap.

▪ Distributions before Year 4. The business is loss-making in Years 1 and 2 and recovers its cumulative start-up losses during Year 5.

17.3 Recommendation