Ascend Strength & Conditioning Business Plan — Financial Plan

Five-year projections with full income statement, cash flow and balance sheet: revenue to R12.88m and EBITDA to R3.69m.

Financial Plan

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9.1 Basis of preparation
9.2 Projected income statement
9.3 Projected cash flow statement
9.4 Projected balance sheet
9.5 Capital requirement and funding

9.1 Basis of preparation

▪ All figures are in Rand and exclude VAT. The model is built from the timetable — studios multiplied by classes, days and places — rather than from a growth rate applied to an assumed base.

▪ Capacity is studios times seven classes a day times six days a week times sixteen places, at 70% average occupancy and 2.3 visits a member a week, supporting 613 members at full build.

▪ Membership revenue is average members multiplied by average revenue per member. Personal training is contracted on a revenue share; corporate wellness is contracted annual value; joining fees and retail are modelled with member intake.

▪ Direct costs carry coach remuneration, personal training revenue share, member acquisition and a 3.8% provision for debit order collections failing and not being recovered.

▪ Lifetime value is average revenue multiplied by the gross margin actually earned in the year, divided by monthly churn. Payback is acquisition cost divided by monthly gross-margin contribution.

▪ Depreciation is built from a phased asset schedule: solar over ten years, fit-out and the third studio over eight, equipment over seven, systems over four, and branding and launch over three.

▪ Term debt is R2 400 000 at 13.5% over five years with a twelve-month capital moratorium. Interest is paid from Year 1; principal from Year 2.

▪ Corporate income tax is 27%, with assessed losses carried forward subject to the section 20 limitation capping the set-off at the higher of R1 million or 80% of taxable income.

▪ Working capital assumes 6 debtor days, 30 creditor days and 30 days of retail stock.

9.2 Projected income statement

R	Year 1	Year 2	Year 3	Year 4	Year 5
Membership revenue	2 683 000	5 356 000	7 393 000	9 245 000	9 775 000
Personal training	464 000	871 000	1 125 000	1 331 000	1 336 000
Corporate wellness	180 000	420 000	720 000	960 000	1 120 000
Joining fees and retail	412 000	507 000	659 000	675 000	650 000
Total revenue	3 739 000	7 154 000	9 897 000	12 211 000	12 881 000
Direct costs	(2 703 000)	(3 167 000)	(4 250 000)	(4 541 000)	(4 508 000)
Gross profit	1 036 000	3 987 000	5 647 000	7 670 000	8 373 000
Gross margin	27.7%	55.7%	57.1%	62.8%	65.0%
Overhead	(2 780 000)	(3 090 000)	(4 120 000)	(4 440 000)	(4 680 000)
EBITDA	(1 744 000)	897 000	1 527 000	3 230 000	3 693 000
EBITDA margin	-46.6%	12.5%	15.4%	26.5%	28.7%
Depreciation	(657 657)	(716 718)	(935 693)	(948 407)	(956 036)
Interest	(324 000)	(324 000)	(257 679)	(182 405)	(96 969)
Profit / (loss) before tax	(2 725 657)	(143 718)	333 628	2 099 188	2 639 995
Taxation	—	—	—	(113 356)	(481 572)
Profit / (loss) after tax	(2 725 657)	(143 718)	333 628	1 985 832	2 158 423
Net margin	-72.9%	-2.0%	3.4%	16.3%	16.8%
Cumulative profit / (deficit)	(2 725 657)	(2 869 375)	(2 535 747)	(549 915)	1 608 508

Figure 16. Cumulative profit after tax and the peak deficit.

9.3 Projected cash flow statement

R	Year 1	Year 2	Year 3	Year 4	Year 5
Profit / (loss) after tax	(2 725 657)	(143 718)	333 628	1 985 832	2 158 423
Add back: depreciation	657 657	716 718	935 693	948 407	956 036
Movement in working capital	373 957	3 965	122 959	11 588	6 926
Cash generated from operations	(1 694 043)	576 965	1 392 280	2 945 827	3 121 385
Capital deployed	— (funded at close)	(431 800)	(1 716 200)	(89 000)	(53 400)
Debt capital repaid	— (moratorium)	(491 264)	(557 585)	(632 859)	(718 292)
Net movement in cash	(1 694 043)	(346 099)	(881 505)	2 223 968	2 349 693
Opening cash	3 360 400	1 666 357	1 320 258	438 753	2 662 721
Closing cash	1 666 357	1 320 258	438 753	2 662 721	5 012 414

Figure 17. Cash flow — the third studio lands in the year cash is tightest.

Opening cash after the Year 1 fit-out and the debt drawdown is R3 360 400. Cash generated from operations is negative R1.69 million in Year 1, turns to R0.58 million in Year 2 and reaches R3.12 million by Year 5. Closing cash reaches its low point of R438 753 at the end of Year 3, when the third studio build of R1 716 200 coincides with the first full year of principal repayment. That trough is what the equity provision is sized against.

9.4 Projected balance sheet

R, at year end	Year 1	Year 2	Year 3	Year 4	Year 5
Fit-out, equipment and systems, net of depreciation	3 681 943	3 397 025	4 177 532	3 318 125	2 415 489
Retail stock	15 238	18 752	24 374	24 966	24 041
Trade receivables	61 463	117 600	162 690	200 729	211 742
Cash	1 666 357	1 320 258	438 753	2 662 721	5 012 414
Total assets	5 425 001	4 853 635	4 803 349	6 206 541	7 663 686
Share capital	5 300 000	5 300 000	5 300 000	5 300 000	5 300 000
Retained earnings / (accumulated loss)	(2 725 657)	(2 869 375)	(2 535 747)	(549 915)	1 608 508
Total equity	2 574 343	2 430 625	2 764 253	4 750 085	6 908 508
Term debt — non-current	1 908 736	1 351 151	718 292	0	0
Term debt — current	491 264	557 585	632 859	718 292	0
Trade payables	450 658	514 274	687 945	738 164	755 178
Total liabilities	2 850 658	2 423 010	2 039 096	1 456 456	755 178
Total equity and liabilities	5 425 001	4 853 635	4 803 349	6 206 541	7 663 686

Figure 18. Balance sheet — asset composition.

Net book value of the fit-out, equipment and systems peaks at R4.18 million at the end of Year 3 once the third studio is commissioned, then declines as depreciation outruns the residual capital programme. Total equity falls from R5.30 million at inception to a low of R2.43 million at the end of Year 2 and recovers to R6.91 million by Year 5. Gearing peaks at 47.6 per cent in Year 2 and falls to 9.9 per cent by Year 5 as the facility amortises.

9.5 Capital requirement and funding

Item	R	Note
Premises fit-out — studios, change rooms, reception	2 450 000	Flooring, rigging, mirrors, sound, ventilation, ablutions and showers
Strength and conditioning equipment	1 780 000	Racks, barbells, plates, rowers, bikes, kettlebells; phased with studio openings
Third studio build-out	1 320 000	Year 3 expansion including equipment
Solar and backup power	480 000	Lighting, sound, ventilation, water heating and access control
Branding, signage and pre-opening marketing	390 000	Including founding member recruitment before opening
Member management and access systems	210 000	Bookings, debit order collections, attendance tracking and reporting
Fit-out, equipment and launch	6 630 000	Phased with studio openings
Working capital and pre-opening costs	1 070 000	Coach salaries, rent and marketing ahead of trading, plus the Year 1 and Year 2 trading losses
Total capital deployed over five years	7 700 000	Funded by R5.30m equity and R2.40m term debt

Year	Capital deployed (R)	What is commissioned
Year 1	4 339 600	Two studios, change rooms, reception, systems, solar and launch
Year 2	431 800	Equipment completion and fit-out balance
Year 3	1 716 200	Third studio build-out and equipment
Year 4	89 000	Equipment top-up
Year 5	53 400	Equipment residual
Total	6 630 000

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