£100K. The wife of the owner is also paid by the business but does not work in the business for £25K. The Owner also made a pension contribution of £40 during the year. - Depreciation is £50K but the capital refresh expense (purchases going on the balance sheet to keep capital equipment productive) is £60K - The owner has £60K of benefits including gym, a holiday and other non-operational expenses. - The company did a trade show last year which was a disastrous one-off and will not be repeated for a cost of £10K - The company had a legal dispute that has never happened before and is unlikely to happen again that cost £15K - The Seller owns the property the business runs from through his pension and charges the company rent of £40K a year. However, if he sells the property he would like the new owner to pay £60K of rent per year.
Based on the above data, a recast would look like this:
- Operating Profit - £750K - Add/Take Backs: - Owner Salary - £12K - Owner Pension Contribution - £40K
- Wife Salary - £25K - Deprecation - £50K
- Other Owner Benefits - £60K - Trade Show One Off - £10K - Legal Dispute One Off - £15K - Replacement Salary for Owner - (£100K) - Capital Refresh - (£60K) - Market Rent Normalisation - (£20K)
Normalised EBITDA using this period = £782K
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