Velocity Auto Restore Business Plan › Section 15 › Financial Plan

This section presents Velocity’s integrated five-year financial
projections — the projected income statement (profit and loss), balance
sheet and cash-flow statement — together with the key assumptions,
capital requirements, funding structure and return metrics. The three
statements are internally consistent: the balance sheet balances in
every year, and the cash-flow statement reconciles to the closing cash
position carried on the balance sheet.

15.1 Key Assumptions

The model is built bottom-up from facility count, bay capacity,
repair throughput and average repair value, with cost ratios benchmarked
to industry norms. The principal assumptions are:

Table 15.1 — Key financial-model assumptions.

15.2 Startup Capital Requirements (Use of Funds)

Table 15.2 — Use of funds (see Figure 15.1).

Figure 15.1

15.3 Funding Structure (Sources of Funds)

Table 15.3 — Sources of funds. Conservative ~33% gearing
preserves balance-sheet flexibility.

15.4 Projected Income Statement (Profit & Loss)

The projected income statement below shows the path from revenue to
net profit. The business is EBITDA-positive from Year 1, records a small
net loss in Year 1 (after depreciation and interest on growth capital),
and turns net-profitable from Year 2, scaling to R102 million net profit
by Year 5.

Table 15.4 — Projected income statement, Years 1–5 (R millions).
Negative tax in early years reflects recognition of assessed-loss
benefits / deferred tax.

Figure 15.2

15.5 Projected Balance Sheet

The projected balance sheet reflects the heavy initial capital
investment in property, plant and equipment, funded by equity and senior
debt, with retained earnings building equity over time as the group
becomes profitable. Total assets equal total liabilities plus equity in
every year.

Table 15.5 — Projected balance sheet, Years 1–5 (R millions).
Balances exactly in each year (total assets = total equity &
liabilities).

15.6 Projected Cash-Flow Statement

The cash-flow statement reconciles net profit to movements in cash.
Operating cash flow turns strongly positive as the business scales;
investing outflows reflect the phased capital programme; and financing
flows capture the initial R165 million raise, subsequent debt
amortisation, and the first dividend in Year 5. Closing cash never falls
below a prudent buffer, confirming the adequacy of the funding
package.

Table 15.6 — Projected cash-flow statement, Years 1–5 (R
millions).

Figure 15.3

15.7 Break-Even Analysis

At the flagship-hub level, Velocity reaches operational break-even at
an estimated volume of approximately 760 completed repair jobs per
month, a level the model projects the flagship to cross during the
second half of Year 1 as insurer approvals and fleet contracts ramp. The
chart below illustrates the monthly volume ramp against the break-even
line.

Figure 15.4

15.8 Cost Structure

At steady state, parts and materials represent the largest cost
category, followed by direct labour. This cost profile underscores why
centralised procurement (reducing parts cost) and high bay utilisation
(spreading fixed facility and labour cost) are the two most powerful
margin levers in the business.

Figure 15.5

15.9 Key Financial Metrics & Returns

Table 15.7 — Key financial metrics and target returns.

15.10 Working Capital, Funding Drawdown & Liquidity

Collision repair is structurally working-capital intensive on the
receivables side and favourable on the payables side, and managing the
net position is central to the financial plan. Insurer-funded repairs
are authorised before work commences, which substantially de-risks
revenue recognition, but settlement of approved claims typically lags
completion by 30 to 60 days. The group therefore carries a meaningful
trade-receivables balance against the insurer panel, partially offset by
negotiated supplier terms on parts and paint and by progress-billing
arrangements on larger structural jobs.

Parts inventory is deliberately held lean. Centralised procurement
and just-in-time ordering against authorised estimates mean the business
does not speculatively stock high-value components; working capital is
consumed by work-in-progress and receivables rather than by shelf
inventory. As the network scales, group-level procurement contracts are
expected to extend payable terms, improving the cash-conversion cycle
over the forecast period.

Funding is drawn in tranches aligned to the facility-rollout
schedule rather than in a single upfront draw. The equity and
senior-debt facilities are committed at close, but capital is deployed
as each site is secured, fitted out and commissioned, which limits idle
capital and reduces the interest burden in the early years. The model
maintains a minimum cash buffer at all times; the lowest projected
closing cash position occurs at the end of Year 3 (approximately R40
million) during the most capital-intensive phase of the national
rollout, after which the business becomes strongly cash-generative.

Liquidity is further protected by the staged-investment governance
discipline described in Section 14: Phase 2 expansion capital is only
committed once Gauteng operations reach break-even, ensuring that
discretionary growth spend is funded increasingly from internally
generated cash and proven unit economics rather than from speculative
deployment of investor capital.

15.11 Scenario Analysis

To stress-test the plan, three scenarios were modelled around the
base case. The downside scenario assumes slower insurer-panel
onboarding, a delayed facility rollout and compressed gross margins from
parts-cost inflation; the upside scenario assumes faster accreditation,
stronger fleet-contract wins and margin gains from procurement scale.
The table below summarises the Year 5 outcomes under each scenario.

Table 15.8 — Three-scenario sensitivity of Year 5 outcomes. The
downside case remains profitable and self-funding.

The analysis demonstrates the resilience of the investment thesis:
even in the downside scenario the business remains profitable,
cash-generative and capable of servicing its debt, delivering an
estimated 18% equity IRR and a 2.8x multiple. The primary swing factors
are the pace of insurer-panel onboarding and gross-margin discipline on
parts procurement — both of which are directly within management’s
control and are the focus of the operational milestones in Section 14.
The upside case illustrates the operating leverage embedded in the
platform once fixed facility and overhead costs are absorbed across a
larger revenue base.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Velocity Auto Restore Group (Pty) Ltd.