Essence Premium Catering Business Plan — Funding

R2.15m founder equity, R2.10m growth equity at the capacity step and R8.89m of loans and contract-backed facilities.

Funding

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11.1 Use of funds
11.2 Year 1 capital
11.3 Year 2 capital
11.4 Year 3 capital
11.5 Year 4 capital
11.6 Year 5 capital
11.7 Debt and cover

Source	Amount	What to know
Founder equity	R2.15m	A production kitchen is capital-intensive before a single meal is sold
SEDFA small enterprise loan	R1.15m	Requires CIPC registration, SARS tax compliance and a proposal in their format
Equipment finance	R3.94m across four tranches	Asset-backed on combi ovens, cold rooms and vehicles. Accessible early because the security is tangible
Contract-backed working capital facility	R3.80m cumulative across three tranches	Advanced against signed contracts and certified invoices. This is the instrument that funds the debtor book, and it revolves rather than amortising
Growth equity, Year 3	R2.10m	Funds the kitchen capacity step rather than adding debt to a thin-margin business
Landlord installation allowance	R165’000	Negotiated as a stated figure in the lease; presented once, as a reduction in the cost of the fit-out

Source	R’000	Share	Character
Founder equity	2 150	16.4%	At inception
Growth equity	2 100	16.0%	Year 3, at the capacity step
Loans and facilities	8 890	67.7%	Eight instruments across the build
Total funding raised	13 140	100.0%	Against R7 940k of capital deployed

Total funding of R13.14 million exceeds capital deployed of R7.94 million by R5.20 million. That difference is not a surplus: it funds the operating deficit across Years 1 to 3, absorbs R2.41 million of working capital growth, and services the interest on the debt that funds both.

11.1 Use of funds

11.2 Year 1 capital

Item	R’000	Treatment	Share of year
Production kitchen fit-out, floors, drainage and extraction	585	Capitalised	18.8%
Combi ovens, bratt pans, boiling pans and ranges	640	Capitalised	20.5%
Cold room, freezer room and blast chiller	420	Capitalised	13.5%
Preparation, stainless steel and wash-up	265	Capitalised	8.5%
Hot boxes, bain-maries, insulated transport containers	185	Capitalised	5.9%
Delivery vehicle, refrigerated	465	Capitalised	14.9%
Solar and inverter backup	165	Capitalised	5.3%
Certificate of Acceptability, fire and municipal compliance	96	Capitalised	3.1%
Licences, professional fees and deposits	84	Capitalised	2.7%
Opening stock and pre-contract working capital	210	Working capital	6.7%
Total Year 1	3 115		100.0%
Less landlord installation allowance	(165)	Reduction in cost
Net cash requirement, Year 1	2 950

11.3 Year 2 capital

Item	R’000	Treatment	Share of year
Second delivery vehicle	380	Capitalised	55.1%
Additional hot boxes and equipment	145	Capitalised	21.0%
Cold chain expansion	165	Capitalised	23.9%
Total Year 2	690		100.0%

11.4 Year 3 capital

Item	R’000	Treatment	Share of year
Kitchen capacity expansion and second line	620	Capitalised	43.8%
Third vehicle	420	Capitalised	29.7%
Serving counters and site equipment	265	Capitalised	18.7%
Systems and menu costing software	110	Capitalised	7.8%
Total Year 3	1 415		100.0%

11.5 Year 4 capital

Item	R’000	Treatment	Share of year
Bulk production upgrade	480	Capitalised	38.7%
Fourth vehicle	440	Capitalised	35.5%
Site equipment for new contracts	320	Capitalised	25.8%
Total Year 4	1 240		100.0%

11.6 Year 5 capital

Item	R’000	Treatment	Share of year
Kitchen and cold chain expansion	560	Capitalised	37.8%
Fifth vehicle	460	Capitalised	31.1%
Site equipment	340	Capitalised	23.0%
Systems	120	Capitalised	8.1%
Total Year 5	1 480		100.0%

11.7 Debt and cover

R’000	Year 1	Year 2	Year 3	Year 4	Year 5
Loans and facilities drawn	1 930	2 070	1 480	2 090	1 320
Interest	112	357	545	717	874
Capital repaid	—	348	486	486	716
Total debt service	112	705	1 031	1 203	1 590
Loans outstanding	1 930	3 652	4 647	6 251	6 855
Shareholders’ funds	1 219	300	1 506	1 046	1 409
Gearing, debt to debt plus equity	61.3%	92.4%	75.5%	85.7%	83.0%
EBITDA	(476)	(143)	225	968	2 110
Debt service cover	n/m	n/m	0.22x	0.80x	1.33x

Cover is not meaningful in Years 1 and 2 because EBITDA is negative. It is 0.22 times in Year 3, 0.80 in Year 4 and 1.33 in Year 5, clearing the 1.30 times gate in the final year with very little to spare. Debt service is met from further drawings and from the growth equity subscription until Year 5. Gearing peaks at 92.4 per cent in Year 2 — the point at which accumulated losses have reduced shareholders’ funds to R300 000 against R3.65 million of debt — and falls to 83.0 per cent by Year 5. A lender should note that Year 2 is the structurally weakest point in the plan and that the growth equity in Year 3 is what repairs it.

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