SerenOx Sulphuric Solutions — Financial Projections
The financial projections presented in this section are based on management’s best estimates and assumptions regarding market conditions, pricing, production volumes, cost structures, and macroeconomic factors. All projections are denominated in South African Rand (ZAR) and are presented on a nominal basis.…
Section 8 · Business Plan
Financial Projections
The financial projections presented in this section are based on management’s best estimates and assumptions regarding market conditions, pricing, production volumes, cost structures, and macroeconomic factors. All projections are denominated in South African Rand (ZAR) and are presented on a nominal basis.…
Growing from ZAR 1,800 million in Year 1, reaching ZAR 395 million EBITDA (a 15.5% margin) and ZAR 230 million net profit after tax by Year 5.
The financial projections presented in this section are based on management’s best estimates and assumptions regarding market conditions, pricing, production volumes, cost structures, and macroeconomic factors. All projections are denominated in South African Rand (ZAR) and are presented on a nominal basis. Key assumptions are disclosed in Section 8.7.
8.1 Revenue & Profitability Summary
| Metric | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) | Year 4 (2029) | Year 5 (2030) |
|---|---|---|---|---|---|
| Revenue (ZAR m) | 1,800 | 1,950 | 2,100 | 2,300 | 2,550 |
| Cost of Sales (ZAR m) | (1,404) | (1,502) | (1,596) | (1,725) | (1,887) |
| Gross Profit (ZAR m) | 396 | 449 | 504 | 575 | 663 |
| Gross Margin (%) | 22.0% | 23.0% | 24.0% | 25.0% | 26.0% |
| Operating Expenses (ZAR m) | (176) | (194) | (219) | (245) | (268) |
| EBITDA (ZAR m) | 220 | 255 | 285 | 330 | 395 |
| EBITDA Margin (%) | 12.2% | 13.1% | 13.6% | 14.3% | 15.5% |
| Depreciation & Amortisation | (55) | (55) | (55) | (55) | (55) |
| EBIT (ZAR m) | 165 | 200 | 230 | 275 | 340 |
| Interest Expense (ZAR m) | (40) | (36) | (32) | (28) | (24) |
| Profit Before Tax (ZAR m) | 125 | 164 | 198 | 247 | 316 |
| Income Tax (27%) | (34) | (44) | (53) | (67) | (85) |
| Net Profit After Tax (ZAR m) | 90 | 115 | 145 | 180 | 230 |
| Net Profit Margin (%) | 5.0% | 5.9% | 6.9% | 7.8% | 9.0% |
8.2 Projected Balance Sheet
| Balance Sheet Item | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) | Year 4 (2029) | Year 5 (2030) |
|---|---|---|---|---|---|
| NON-CURRENT ASSETS | |||||
| Property, Plant & Equipment | 310 | 280 | 255 | 235 | 215 |
| Intangible Assets | 15 | 13 | 11 | 9 | 7 |
| Total Non-Current Assets | 325 | 293 | 266 | 244 | 222 |
| CURRENT ASSETS | |||||
| Inventories | 95 | 105 | 115 | 125 | 140 |
| Trade Receivables | 220 | 245 | 265 | 290 | 320 |
| Cash & Cash Equivalents | 245 | 340 | 450 | 580 | 755 |
| Total Current Assets | 560 | 690 | 830 | 995 | 1,215 |
| TOTAL ASSETS | 885 | 983 | 1,096 | 1,239 | 1,437 |
| EQUITY | |||||
| Share Capital | 270 | 270 | 270 | 270 | 270 |
| Retained Earnings | 90 | 205 | 310 | 440 | 610 |
| Total Equity | 360 | 475 | 580 | 710 | 880 |
| NON-CURRENT LIABILITIES | |||||
| Long-Term Borrowings | 360 | 310 | 270 | 230 | 190 |
| Deferred Tax Liability | 25 | 28 | 31 | 34 | 37 |
| Total Non-Current Liabilities | 385 | 338 | 301 | 264 | 227 |
| CURRENT LIABILITIES | |||||
| Trade Payables | 95 | 110 | 130 | 150 | 175 |
| Short-Term Borrowings | 20 | 30 | 40 | 50 | 60 |
| Provisions & Accruals | 25 | 30 | 45 | 65 | 95 |
| Total Current Liabilities | 140 | 170 | 215 | 265 | 330 |
| TOTAL EQUITY & LIABILITIES | 885 | 983 | 1,096 | 1,239 | 1,437 |
8.3 Projected Cash Flow Statement
| Cash Flow Item | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) | Year 4 (2029) | Year 5 (2030) |
|---|---|---|---|---|---|
| OPERATING ACTIVITIES | |||||
| Net Profit After Tax | 90 | 115 | 145 | 180 | 230 |
| Add: Depreciation & Amortisation | 55 | 55 | 55 | 55 | 55 |
| Working Capital Changes | 40 | 65 | 80 | 95 | 110 |
| Net Cash from Operations | 185 | 235 | 280 | 330 | 395 |
| INVESTING ACTIVITIES | |||||
| Capital Expenditure | (320) | (25) | (15) | (20) | (10) |
| Other Investments | 0 | (20) | (20) | (20) | (20) |
| Net Cash from Investing | (320) | (45) | (35) | (40) | (30) |
| FINANCING ACTIVITIES | |||||
| Equity Raised | 270 | 0 | 0 | 0 | 0 |
| Debt Raised / (Repaid) | 180 | (30) | (30) | (30) | (30) |
| Dividends Paid | 0 | 0 | (40) | (50) | (60) |
| Interest Paid | (40) | (36) | (32) | (28) | (24) |
| Net Cash from Financing | 380 | (50) | (60) | (70) | (80) |
| NET CHANGE IN CASH | 245 | 140 | 185 | 220 | 285 |
| Opening Cash Balance | 0 | 245 | 385 | 570 | 790 |
| Closing Cash Balance | 245 | 385 | 570 | 790 | 1,075 |
8.4 Capital Expenditure Breakdown
| Capital Item | Amount (ZAR m) | % of Total | Description |
|---|---|---|---|
| Plant & Equipment | 250 | 55.6% | DCDA sulphur burner, catalyst beds, absorption towers, tank farm |
| Utilities & Infrastructure | 70 | 15.6% | Power connection, water supply, cooling systems, site preparation |
| Working Capital | 50 | 11.1% | Initial raw material inventory, trade debtors, operating float |
| Logistics & Bonded Terminal | 25 | 5.6% | Rail siding, bonded warehouse, fleet deposits |
| Contingency | 55 | 12.2% | Scope changes, cost escalation, regulatory compliance buffer |
| TOTAL | 450 | 100.0% |
8.5 Break-Even Analysis
SerenOx anticipates reaching operational break-even in the third quarter of Year 2, based on achieving approximately 60% capacity utilisation. The break-even analysis below illustrates the relationship between capacity utilisation, revenue generation, and total cost coverage. The relatively low break-even point reflects the Company’s competitive cost structure, favourable pricing, and efficient operational design.
8.6 Investment Returns
| Return Metric | Value | Commentary |
|---|---|---|
| Internal Rate of Return (IRR) | 18–22% | Pre-tax, levered equity IRR based on 10-year DCF model |
| Payback Period | 4.2 years | Simple payback on total invested capital of ZAR 450m |
| Return on Equity (Year 5) | 26.1% | Net profit / average equity; improving trajectory |
| Return on Assets (Year 5) | 16.0% | Net profit / total assets |
| Debt Service Coverage Ratio | 2.8x (Yr 3) | EBITDA / total debt service; minimum covenant: 1.5x |
| Dividend Yield (from Year 3) | 7–9% | Targeted annual distribution of 30–40% of net profit |
8.7 Key Assumptions
-
Average selling price: ZAR 8,200–8,900 per tonne (escalating at 3–4% annually)
-
Capacity utilisation: 55% (Year 1), 65% (Year 2), 75% (Year 3), 82% (Year 4), 90% (Year 5)
-
Sulphur input cost: USD 90–120 per tonne (market-linked)
-
ZAR/USD exchange rate: ZAR 18.50–19.50 (range based on forward curves)
-
South African corporate tax rate: 27%
-
Annual CPI inflation: 5.0–5.5%
-
Annual payroll escalation: CPI + 1.0%
-
Depreciation: Straight-line over 20 years (plant), 5 years (vehicles and equipment)
-
Working capital cycle: 45 days receivables, 30 days payables, 20 days inventory
-
Debt terms: Prime + 2.5%, 7-year tenor with 12-month grace period
8.8 Sensitivity Analysis
The following sensitivity analysis illustrates the impact of key variable changes on the project’s base-case IRR of 20%:
| Variable | Change | Impact on IRR | Revised IRR |
|---|---|---|---|
| Selling Price | +10% | +3.5 pp | 23.5% |
| Selling Price | -10% | -4.0 pp | 16.0% |
| Capacity Utilisation | -10% (absolute) | -2.8 pp | 17.2% |
| Input Costs (Sulphur) | +20% | -2.2 pp | 17.8% |
| ZAR Depreciation | +15% (weaker ZAR) | +1.8 pp | 21.8% |
| Capital Cost Overrun | +15% | -1.9 pp | 18.1% |
| Combined Downside | Price -5%, Costs +10% | -4.5 pp | 15.5% |
This document contains proprietary and confidential information. Distribution without written consent is prohibited.