Mr Bakery Master Business Plan — Funding

R1.62m founder equity, R1.85m growth equity at the second oven line and R5.17m of loans and facilities across the build.

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	Drawn	What to know
Founder equity	R1.62m	Year 1	Meaningful owner contribution is expected where there is no trading history
SEDFA small enterprise loan	R950’000	Year 1	The merged Small Enterprise Development and Finance Agency. Requires CIPC registration, SARS tax compliance and a proposal in their format
Equipment finance, ovens and mixers	R620’000	Year 1	Asset-backed against ovens, mixers and refrigeration. Underwritten on the equipment rather than the borrower, which makes it accessible early
Working capital facility	R1.10m	Year 2	Wholesale customers pay on 32 days while flour is bought on 30
Equipment finance, second vehicle	R260’000	Year 2	The second route vehicle, financed on the asset
Equipment finance, second oven line	R720’000	Year 3	The capacity step that supports 1 950 units a day
Growth equity	R1.85m	Year 3	A partner at the second oven line rather than more debt
Bank term loan, retail outlet	R900’000	Year 4	Available once there is a two-year trading record
Equipment finance, capacity expansion	R620’000	Year 5	Oven, proofer and fourth vehicle
Total funding raised	R8.64m		Against R6.78m of capital deployed

Total funding raised across the five years is R8.64 million against R6.78 million of capital deployed. The R1.86 million difference funds the operating deficit in Years 1 and 2 and services the interest on the debt that funds it.

11.1 Use of funds

11.2 Year 1 capital

Item	R’000	Treatment	Share of year
Bakery premises fit-out, floors, drainage and extraction	465	Capitalised	17.8%
Rack oven, deck oven and proofer	620	Capitalised	23.7%
Spiral mixer, dough divider and moulder	285	Capitalised	10.9%
Refrigeration, cold room and dough retarder	210	Capitalised	8.0%
Tables, racks, trays, tins and small equipment	165	Capitalised	6.3%
Delivery vehicle, panel van	285	Capitalised	10.9%
Solar and inverter backup	195	Capitalised	7.4%
Health, fire and municipal compliance works	92	Capitalised	3.5%
Licences, professional fees and deposits	78	Capitalised	3.0%
Opening ingredients and pre-opening payroll	96	Expensed at opening	3.7%
Working capital reserve	128	Working capital	4.9%
Total Year 1	2 619		100.0%
Less landlord installation allowance	(180)	Reduction in cost
Net cash requirement, Year 1	2 439

11.3 Year 2 capital

Item	R’000	Treatment	Share of year
Second delivery vehicle	305	Capitalised	53.7%
Additional racks, trays and tins	118	Capitalised	20.8%
Cold room extension	145	Capitalised	25.5%
Total Year 2	568		100.0%

11.4 Year 3 capital

Item	R’000	Treatment	Share of year
Second oven line and proofer	560	Capitalised	49.1%
Third delivery vehicle	315	Capitalised	27.6%
Mixer and depositor	180	Capitalised	15.8%
Premises extension and services	85	Capitalised	7.5%
Total Year 3	1 140		100.0%

11.5 Year 4 capital

Item	R’000	Treatment	Share of year
Retail outlet fit-out, counters and display	520	Capitalised	46.2%
Retail equipment and point of sale	165	Capitalised	14.7%
Production capacity, racks and trays	145	Capitalised	12.9%
Vehicle	295	Capitalised	26.2%
Total Year 4	1 125		100.0%

11.6 Year 5 capital

Item	R’000	Treatment	Share of year
Capacity expansion: oven and proofer	590	Capitalised	44.4%
Fourth delivery vehicle	325	Capitalised	24.4%
Solar expansion	235	Capitalised	17.7%
Racks, trays and small equipment	180	Capitalised	13.5%
Total Year 5	1 330		100.0%

11.7 Debt and cover

R’000	Year 1	Year 2	Year 3	Year 4	Year 5
Loans drawn in the year	1 570	1 360	720	900	620
Interest	92	276	381	412	417
Capital repaid	—	282	554	698	848
Total debt service	92	558	935	1 110	1 265
Loans outstanding	1 570	2 648	2 813	3 015	2 787
EBITDA	(288)	64	438	1 043	1 919
Debt service cover	n/m	0.11x	0.47x	0.94x	1.52x
Gearing, debt to debt plus equity	64.6%	89.8%	61.8%	63.1%	52.6%

Cover is not meaningful in Year 1 because EBITDA is negative. It is 0.11 times in Year 2, 0.47 in Year 3 and 0.94 in Year 4, clearing the 1.30 times gate only in Year 5 at 1.52 times. Debt service is met from further drawings and from the growth equity subscription until Year 5, which is the honest position for a business building capacity ahead of the volume that pays for it. A lender should note that Year 4 at 0.94 times is the tightest point and that the facilities should carry the flexibility to defer amortisation if the retail outlet takes longer than six months to trade profitably.

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