Financial Projections

Jump to section

• Overview & contents
• i. Important Notice
• 1. Executive Summary
• 2. Why Ekurhuleni
• 3. The Market and the Segment Trap
• 4. Contribution by Segment
• 5. SWOT and Competitive Position
• 6. Winning and Keeping Contracts
• 7. Tendering Into the Public Sector
• 8. Unit Economics and Prime Cost
• 9. Working Capital
• 10. The Five-Year Build and Its Gates
• 11. Funding
• 12. People and Production
• 13. Food Safety and Compliance
• 14. Financial Projections
• 15. Break-Even
• 16. Sensitivity and Scenarios
• 17. Risk Management
• 18. Implementation Timeline
• 19. Returns
• 20. Key Performance Indicators
• 21. Key Assumptions
• 22. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Capital Schedules
• C. Appendix C: Funding and Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

14.1 Basis of preparation

• All amounts are in nominal South African rand. Revenue is built from meals served by segment at the price per meal shown, plus event covers.
• Meal volumes are converted to a daily rate on a consistent 260 operating days a year across all five years.
• Food cost is modelled by segment, ranging from 26.7 per cent on events to 57.2 per cent on government school feeding, and blends to 40.5 per cent by Year 5.
• R165 000 of the Year 1 fit-out is met by a landlord installation allowance and is presented once, as a reduction in the cost of the fit-out.
• R210 000 of Year 1 capital funds opening stock and pre-contract working capital and is carried as working capital rather than capitalised.
• Depreciation is charged on capitalised expenditure net of the allowance, over the useful lives of the fit-out, kitchen equipment, cold chain and vehicles.
• Trade debtors are modelled separately for private clients at 32 to 38 days and public clients at 68 to 74 days.
• Interest and capital derive from the facility-level schedules in Appendix C across eight instruments; the three working capital tranches revolve against the debtor book rather than amortising.
• Corporate income tax is applied at 27 per cent with assessed losses carried forward subject to the section 20 limitation. No tax arises within the projection.
• The balance sheet is derived rather than plugged; shareholders’ funds roll forward from the two equity subscriptions and retained earnings, and the closing cash position reconciles exactly to the cash flow statement.

14.2 Projected income statement

EBITDA turns positive in Year 3 at R225 000 and reaches R2.11 million in Year 5 at a 6.6 per cent margin. Profit after tax arrives only in Year 5, at R363 000, after depreciation of R873 000 and interest of R874 000. Assessed losses of R3.20 million accumulate across Years 1 to 4 and shelter the Year 5 taxable profit entirely, so no tax is payable and R2.84 million of loss remains unutilised.

14.3 Projected cash flow

Operating cash flow is negative in Years 1 to 3 and turns positive in Year 4 at R379 000, reaching R1.53 million in Year 5. Closing cash never falls below R455 000, which occurs at the end of Year 1. Working capital absorbs R2.41 million across the five years, and in Year 5 the R577 000 absorbed is more than a quarter of that year’s EBITDA — which is the arithmetic behind the working capital facility in Section 9.

14.4 Projected balance sheet

Shareholders’ funds fall from R1.22 million at the end of Year 1 to R300 000 at the end of Year 2 as accumulated losses erode the founder’s subscription, recover to R1.51 million on the Year 3 growth equity, and reach R1.41 million by Year 5. The debtor book grows from R369 000 to R3.05 million and becomes the largest current asset by a wide margin — by Year 5 it exceeds cash by five and a half times, which is the balance-sheet expression of the collection problem described in Section 9.