Quick and Efficient Gas Business Plan — Break-Even and Debt Service
Break-even at 30.9 fills a day against a plan of 47, and debt service across the three-month capital moratorium.
Break-Even and Debt Service
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- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. The Business and the Regulated Price
- 3. Licensing, Safety and Compliance
- 4. Market and Customers
- 5. SWOT and Competitive Position
- 6. Operations
- 7. Financial Plan
- 8. Break-Even and Debt Service
- 9. Investment Analysis
- 10. Sensitivity and Scenario Analysis
- 11. The Margin Squeeze
- 12. Risk Analysis
- 13. Implementation Roadmap
- 14. Key Performance Indicators
- 15. Key Assumptions
- 16. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Volume, Price and Cost Schedules
- C. Appendix C: Funding, Debt and Working Capital Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 8.1 Break-even
- 8.2 Debt service
8.1 Break-even
|
Break-even measure |
Value |
Interpretation |
|---|---|---|
|
Gross margin per kilogram |
R10.64 |
The only gas margin available |
|
Accessory gross profit |
R684 750 |
Covers part of the fixed cost base before any gas is sold |
|
Net fixed costs to cover with gas |
R1 720 354 |
Operating costs less accessory gross profit |
|
Break-even volume |
161.7 t |
30.9 fills a trading day |
|
Planned volume at maturity |
246.5 t |
47 fills a trading day |
|
Margin of safety |
34.4% |
How far volume can fall before losses |
|
Break-even without accessories |
226.0 t |
43.1 fills a day |
|
Break-even buying price |
R34.39/kg |
Above this delivered price the shop loses money |
Two figures deserve emphasis. The accessory business reduces the break-even from 43.1 to 30.9 fills a day — a difference of 64.3 tonnes of gas a year that the shop does not have to sell. And the break-even buying price of R34.39 per kilogram against a planned R30.80 gives headroom of only 12 per cent on the wholesale price before the business stops working.
8.2 Debt service
|
R |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Opening balance |
1 941 000 |
1 786 397 |
1 411 234 |
992 571 |
524 428 |
|
Interest at 13.75% |
266 888 |
245 630 |
202 130 |
152 650 |
96 366 |
|
Capital repaid |
154 603 |
375 163 |
418 663 |
468 143 |
524 428 |
|
Total debt service |
421 491 |
620 793 |
620 793 |
620 793 |
620 794 |
|
Closing balance |
1 786 397 |
1 411 234 |
992 571 |
524 428 |
0 |
|
of which current portion |
375 163 |
418 663 |
468 143 |
524 428 |
0 |
|
of which non-current portion |
1 411 234 |
992 571 |
524 428 |
0 |
0 |
|
EBITDA |
(199 655) |
522 352 |
1 031 151 |
1 297 602 |
1 536 764 |
|
Debt service cover |
-0.47x |
0.84x |
1.66x |
2.09x |
2.48x |
|
Gearing |
59.9% |
54.0% |
36.0% |
16.9% |
0.0% |
The loan carries a three-month capital moratorium and amortises over five years at 13.75 per cent, giving level service of R620 793 from Year 2 and full repayment by the end of Year 5. Gearing falls from 65.4 per cent to 12.9 per cent across the period.