Mainstreet Junction Business Plan — Capital Requirement and Funding Structure
R14.5m equity, R24.0m senior bank debt at 12.0% and a R6.0m oil company and equipment facility at 10.5%.
Capital Requirement and Funding Structure
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- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. How Fuel Retail Economics Actually Work
- 3. The Business and Its Revenue Streams
- 4. Market and Site Analysis
- 5. SWOT and Competitive Position
- 6. Regulatory Pathway and Licensing
- 7. Operations Plan
- 8. Management and Organisation
- 9. Capital Requirement and Funding Structure
- 10. Financial Projections
- 11. Break-Even Analysis
- 12. Debt Service and Working Capital
- 13. Investment Returns
- 14. Sensitivity and Scenario Analysis
- 15. Risk Management
- 16. Implementation Timeline
- 17. Exit Options for Investors
- 18. Key Performance Indicators
- 19. Key Assumptions
- 20. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital and Depreciation Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 9.1 Uses of funds
- 9.2 Sources of funds
- 9.3 Gearing and the capital structure
9.1 Uses of funds
|
Capital item |
Amount (R) |
% of total |
Treatment |
|---|---|---|---|
|
Land acquisition, 2 400 m² arterial corner site |
8 500 000 |
19.1% |
Not depreciated |
|
Site preparation, earthworks and civils |
3 200 000 |
7.2% |
Depreciated over 15 years |
|
Underground tanks, 4 x 46 000 litres, pipework and leak detection |
5 800 000 |
13.0% |
Depreciated over 15 years |
|
Dispensers, 8 pumps and 16 nozzles, and forecourt controller |
3 600 000 |
8.1% |
Depreciated over 15 years |
|
Canopy, pylon, branding and signage |
4 200 000 |
9.4% |
Depreciated over 15 years |
|
Shop building and quick-service restaurant shell, 450 m² |
5 800 000 |
13.0% |
Depreciated over 15 years |
|
Shop fit-out, refrigeration, point of sale and back-office |
3 400 000 |
7.6% |
Depreciated over 15 years |
|
Automatic car wash bay and equipment |
1 400 000 |
3.1% |
Depreciated over 15 years |
|
Electrical reticulation, 60 kWp solar PV and battery backup |
1 900 000 |
4.3% |
Depreciated over 15 years |
|
Professional fees: town planning, environmental, traffic, engineering |
1 800 000 |
4.0% |
Depreciated over 15 years |
|
Licensing, legal, branding rights and pre-opening costs |
900 000 |
2.0% |
Depreciated over 15 years |
|
Opening fuel and shop inventory |
2 600 000 |
5.8% |
Opening inventory |
|
Working capital buffer |
1 400 000 |
3.1% |
Working capital |
|
Total project cost |
44 500 000 |
100.0% |
9.2 Sources of funds
|
Source |
Amount (R) |
% of total |
Terms |
|---|---|---|---|
|
Promoter and investor equity |
14 500 000 |
32.6% |
Ordinary shares; no preferential return modelled |
|
Senior bank term debt |
24 000 000 |
53.9% |
12.0% a year, prime plus 1.5%; 10-year term with a twelve-month capital moratorium then amortising |
|
Oil company and equipment facility |
6 000 000 |
13.5% |
10.5% a year; 5-year amortising, secured on equipment |
|
Total funding |
44 500 000 |
100.0% |
9.3 Gearing and the capital structure
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|---|---|---|---|---|---|
|
Debt outstanding, R’000 |
29 027 |
26 327 |
23 320 |
19 970 |
16 237 |
|
Shareholders’ funds, R’000 |
14 181 |
15 995 |
17 888 |
20 626 |
24 099 |
|
Gearing, debt to debt plus equity |
67.2% |
62.2% |
56.6% |
49.2% |
40.3% |
|
Net debt, R’000 |
25 508 |
21 929 |
18 224 |
13 613 |
8 230 |
|
Net debt to EBITDA |
4.79x |
2.77x |
1.75x |
1.10x |
0.59x |
Gearing opens at 67.2 per cent and falls to 40.3 per cent by Year 5 as the facilities amortise and retained earnings accumulate. Net debt to EBITDA falls from 5.2 times to 1.4 times over the same period. Both trajectories are what a lender would want to see, and both depend entirely on the throughput assumption holding — Section 14 shows what happens to them if it does not.