Precision Coachworks Business Plan — Investment Analysis
The project and equity returns, the exit assumption behind them, and what the numbers do and do not support.
Investment Analysis
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. Market and Structure
- 3. Accreditation and Compliance
- 4. How a Panel Shop Actually Makes Money
- 5. SWOT and Competitive Position
- 6. Operations and the Capacity 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 Capacity Schedules
- C. Appendix C: Funding, Debt and Working Capital Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 11.1 Returns
- 11.2 Sensitivity of the return to the exit assumption
- 11.3 What would improve the return
11.1 Returns
|
Measure |
Base case |
Comment |
|---|---|---|
|
Capital deployed over five years |
R17 300 000 |
Equipment, fit-out, accreditation and working capital |
|
Promoter and investor equity |
R12 100 000 |
70% of capital deployed |
|
Asset finance |
R5 200 000 |
Drawn against equipment at 13.25% over seven years per tranche, three-year moratorium |
|
Project internal rate of return |
11.2% |
Five years plus a terminal value at 5 times Year 5 EBITDA |
|
Return to equity |
11.0% |
No distributions in the projection period; value realised on the terminal position |
|
Money multiple on equity |
1.68x |
Terminal equity of R20 349 162 against R12 100 000 subscribed |
|
Terminal value |
R20 505 000 |
5x Year 5 EBITDA of R4 101 000 |
|
Net present value at 12% |
R-451 910 |
Marginally negative at the cost of capital most investors would apply |
|
Cumulative profit after tax, Years 1 to 5 |
(R3 474 450) |
Start-up losses are not recovered inside the plan period |
|
Cumulative project cash flow before terminal value |
(R12 317 301) |
The return sits in the accredited asset, not in five-year cash |
|
Assessed loss carried forward at Year 5 |
R3 789 041 |
A real shelter against future profits, not reflected in the terminal value |
11.2 Sensitivity of the return to the exit assumption
|
Exit multiple of Year 5 EBITDA |
Terminal value (R) |
Project IRR |
Terminal equity (R) |
Equity IRR |
|---|---|---|---|---|
|
4x |
16 404 000 |
6.0% |
16 248 162 |
6.1% |
|
5x |
20 505 000 |
11.2% |
20 349 162 |
11.0% |
|
6x |
24 606 000 |
15.7% |
24 450 162 |
15.1% |
|
7x |
28 707 000 |
19.8% |
28 551 162 |
18.7% |
The base case applies five times Year 5 EBITDA. Motor body repairers are valued on a multiple of sustainable earnings, with the multiple driven by accreditation standing, the breadth of panel listings and manufacturer approvals, and the durability of the production team rather than by bay count or booth count. At four times the project returns 8.7 per cent; at seven times it returns 15.7 per cent. Readers should substitute their own multiple, and should form a view on the panel listings before they do.
11.3 What would improve the return
|
Lever |
Effect on Year 5 EBITDA |
Assessment |
|---|---|---|
|
Cycle time at 8.5 days rather than 9.0 |
+R676 734 |
The last productive half-day. Below 8.5 the booth binds and further gains stop paying |
|
Average repair value 12% higher |
+R1 388 677 |
Through the structural mix and the share of manufacturer-approved warranty work |
|
Utilisation at 87% rather than 81% |
+R856 239 |
A panel-listing and allocation outcome. More listings, more consistent flow |
|
Parts margin at 27% rather than 23% |
+R609 780 |
The variable management controls least. A plan that assumes this is optimistic |
|
A third manufacturer approval |
Included in Years 4 to 5 |
Higher average repair values and access to a further warranty pool |
|
Holding beyond Year 5 |
Removes the terminal value dependency |
R3.79m of assessed loss remains as shelter, and the accreditation stack is already paid for |