Quick and Efficient Gas Business Plan — Financial Plan

Five-year projections with full income statement, cash flow and balance sheet: revenue to R16.79m and EBITDA to R1.54m.

Financial Plan

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7.1 Basis of preparation
7.2 Unit economics
7.3 Income statement
7.4 Operating costs
7.5 Cash flow
7.6 Balance sheet
7.7 Funding

7.1 Basis of preparation

▪ All figures are in South African Rand and exclude VAT. The business is VAT-registered from the outset.

▪ Gas revenue is calculated at the gazetted maximum retail price for the Johannesburg zone, R42.00 per kilogram. The plan assumes the shop sells at the cap and does not discount.

▪ Gas cost is the assumed bulk delivered price of R30.80 per kilogram, adjusted for a 1.8% fill loss to give an effective R31.36 per kilogram.

▪ The regulated price is escalated at 4.5% a year and the gas cost at 4.7%, reflecting that both derive from the same fuel basket but need not move identically. Operating costs escalate at 5.2%.

▪ Accessory revenue grows faster than gas revenue as the customer base builds and the appliance business matures.

▪ Depreciation is straight-line over asset lives of 4 to 15 years, giving a charge of R268 067 a year.

▪ Tax is calculated at Small Business Corporation rates with the Year 1 assessed loss carried forward.

▪ Pre-opening costs of R170 000 are funded at day zero and charged to the Year 1 income statement as a non-recurring item below EBITDA.

▪ Working capital assumes 9 debtor days, 21 creditor days and 14 days of stock.

7.2 Unit economics

Per kilogram of LPG	Amount	Note
Maximum retail price, Johannesburg zone	R42.00	R378 per 9 kg cylinder
Bulk delivered cost	(R30.80)	Assumed; must be confirmed with a wholesaler
Fill loss adjustment	(R0.56)	1.8% vapour, purging and tolerance
Gross margin per kilogram	R10.64	25.3% of the capped price
Cylinder-exchange comparator	R6.40	Buying pre-filled branded cylinders instead

Figure 9. Gas margin per kilogram under the plan's escalation assumptions.

7.3 Income statement

R	Year 1	Year 2	Year 3	Year 4	Year 5
LPG revenue	6 005 334	8 655 965	10 628 443	11 815 662	12 964 736
Accessories and services	2 054 000	2 618 645	3 095 367	3 469 054	3 821 116
Total revenue	8 059 334	11 274 609	13 723 809	15 284 716	16 785 851
Gross profit — LPG	1 520 699	2 179 533	2 660 974	2 941 259	3 208 660
Gross profit — accessories	684 750	872 988	1 031 914	1 156 492	1 273 860
Total gross profit	2 205 449	3 052 521	3 692 889	4 097 751	4 482 520
Gross margin	27.4%	27.1%	26.9%	26.8%	26.7%
Operating costs	(2 405 104)	(2 530 169)	(2 661 738)	(2 800 148)	(2 945 756)
EBITDA	(199 655)	522 352	1 031 151	1 297 602	1 536 764
EBITDA margin	-2.5%	4.6%	7.5%	8.5%	9.2%
Pre-opening costs, non-recurring	(170 000)	—	—	—	—
Depreciation	(268 067)	(268 067)	(268 067)	(268 067)	(268 067)
Operating profit / (loss)	(637 722)	254 285	763 084	1 029 535	1 268 697
Finance costs	(266 888)	(245 630)	(202 130)	(152 650)	(96 366)
Profit / (loss) before tax	(904 610)	8 655	560 954	876 885	1 172 331
Taxation	—	—	—	(55 993)	(225 727)
Profit / (loss) after tax	(904 610)	8 655	560 954	820 892	946 604
Cumulative profit / (deficit)	(904 610)	(895 955)	(335 001)	485 891	1 432 495

Tax is calculated at Small Business Corporation rates. The Year 1 assessed loss of R904 610 shelters the Year 2 profit of R10 832 and the Year 3 profit of R566 331 in full, leaving R327 447 applied against Year 4. Tax of R59 981 falls in Year 4 and R229 280 in Year 5, a total charge of R289 261 across the projection.

7.4 Operating costs

Figure 10. Operating cost base at Year 1 levels.

Cost	Annual	Note
Salaries and wages	971 584	6 employees including statutory contributions
Rent	453 120	320 m² at R118/m² a month
Insurance — public liability, fire, stock, vehicle	177 600	Conditional on maintaining compliance
Vehicle running costs and delivery fuel	151 200
Compliance — inspections, CoC, SAQCC, permits	112 800	Licence renewals, inspections and certification
Electricity, water and refuse	93 600
Security and alarm monitoring	82 800
Cylinder maintenance, valves and revalidation	74 400	Valves, revalidation and cylinder float upkeep
Marketing and signage	64 800
Accounting, payroll and audit	55 200
Repairs, maintenance and calibration	50 400
Bank charges and card fees	46 800
Protective equipment, training and sundry	37 200
Telephone, data and point of sale	33 600
Total operating costs	2 405 104

Salaries are 40 per cent of the operating cost base and rent a further 19 per cent. The R112 800 compliance line — licence renewals, inspections, Certificates of Conformity and SAQCC registrations — is the cost an illegal decanting operation does not carry, and it is the reason a compliant shop cannot compete with one on price.

7.5 Cash flow

R	Year 1	Year 2	Year 3	Year 4	Year 5
Profit / (loss) after tax	(904 610)	8 655	560 954	820 892	946 604
Add back: depreciation	268 067	268 067	268 067	268 067	268 067
Add back: pre-opening costs funded at day zero	170 000	—	—	—	—
Movement in working capital	51 919	(26 668)	(18 131)	(8 354)	(7 228)
Cash generated from operations	(414 624)	250 054	810 890	1 080 605	1 207 443
Debt capital repaid	(154 603)	(375 163)	(418 663)	(468 143)	(524 428)
Net movement in cash	(569 227)	(125 109)	392 227	612 462	683 015
Opening cash	952 000	610 773	485 664	877 891	1 490 353
Closing cash	610 773	485 664	877 891	1 490 353	2 173 368

Figure 11. Cash flow — Year 1 consumes cash before the business repays.

Opening cash after the capital programme and the pre-opening spend is R952 000. Cash generated from operations is negative R414 624 in Year 1, turns to R250 054 in Year 2 and reaches R1 207 443 by Year 5. Closing cash reaches its low point of R485 664 at the end of Year 2, when the first full year of principal repayment falls alongside a business that has only just crossed break-even.

7.6 Balance sheet

R, at year end	Year 1	Year 2	Year 3	Year 4	Year 5
Vessel, filling bay, vehicle and cylinder float, net of depreciation	2 422 933	2 154 866	1 886 799	1 618 732	1 350 665
Gas and accessory stock	224 533	315 368	384 748	429 089	471 909
Trade receivables	198 723	278 004	338 395	376 883	413 898
Cash	610 773	485 664	877 891	1 490 353	2 173 368
Total assets	3 456 962	3 233 902	3 487 833	3 915 057	4 409 840
Owner equity	2 100 000	2 100 000	2 100 000	2 100 000	2 100 000
Retained earnings / (accumulated loss)	(904 610)	(895 955)	(335 001)	485 891	1 432 495
Total equity	1 195 390	1 204 045	1 764 999	2 585 891	3 532 495
Term loan — non-current	1 411 234	992 571	524 428	0	0
Term loan — current	375 163	418 663	468 143	524 428	0
Trade payables	475 175	618 623	730 263	804 738	877 345
Total liabilities	2 261 572	2 029 857	1 722 834	1 329 166	877 345
Total equity and liabilities	3 456 962	3 233 902	3 487 833	3 915 057	4 409 840

Figure 12. Balance sheet — asset composition.

Net book value of the vessel, filling bay, vehicle and cylinder float declines from R2 422 933 to R1 350 665 as the asset base depreciates against a completed capital programme. Total equity falls from R2 100 000 to a low of R1 195 390 at the end of Year 1 and recovers to R3 554 688 by Year 5. Gearing falls from 65.4 per cent at the end of Year 1 to 12.9 per cent by Year 5 as the facility amortises.

7.7 Funding

Use of funds	Amount	Share
Bulk LPG storage vessel, 4.9 tonne, and installation	685 000	17.0%
Cylinder float — initial stock of exchange cylinders	512 000	12.7%
Filling bay — pump, meters, scales, hoses and fittings	384 000	9.5%
Delivery vehicle — LDV with cylinder cage	348 000	8.6%
Fire protection — deluge, extinguishers, hydrant and detection	196 000	4.9%
Hardstand, bunding, bollards and perimeter fencing	172 000	4.3%
Shop fit-out, counter, display and signage	148 000	3.7%
Electrical — hazardous-area compliant reticulation	96 000	2.4%
Professional fees — design, SAQCC, CoC and permits	88 000	2.2%
Point of sale, security cameras and IT	62 000	1.5%
Capital expenditure subtotal	2 691 000	66.6%
Working capital and opening gas inventory	342 000	8.5%
Licence applications, fire permit and municipal approvals	74 000	1.8%
Pre-opening salaries, SAQCC training and certification	62 000	1.5%
Lease deposit and utility connections	58 000	1.4%
Launch marketing and opening promotion	34 000	0.8%
Additional working capital and contingency	780 000	19.3%
Total funding requirement	4 041 000	100.0%

Source	Amount	Share	Terms
Owner equity	2 100 000	52.0%	Sized to carry the Year 1 trading loss and the seasonal working capital swing
Term loan	1 941 000	48.0%	Five years at 13.75% with a three-month capital moratorium
Total	4 041 000	100.0%

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