CIDB grade

1GB

6GB

The lower of financial and works capability, per class

Turnover

R4.20m

R52.00m

Contracts run multiplied by average contract value

Contracts run in the year

6

18

Average contract rises from R700 000 to R2.89m

Public share of turnover

25.0%

53.8%

Private first; public as capital and grade allow

Gross margin

15.8%

18.7%

At final account across the completed book

Materials

38.7% of turnover

37.4%

Refreshed quotations at bid

Site labour

22.7% of turnover

21.9%

Labour constants from the company’s own contracts

Subcontractors

16.0% of turnover

15.4%

Written, scoped quotations valid for the tender period

Plant hire and site establishment

6.7% of turnover

6.5%

Own the daily items; hire the specialised ones

Overhead

R0.87m

R6.21m

Falls from 20.7% to 11.9% of turnover

Public debtor days

68 days

Against a 30-day statutory requirement; practice extends to 75

Private debtor days

38 days

Materially faster, which is the basis of the Section 4 strategy

Retention

10% of every certificate

Half released at practical completion, half after the defects liability period

Work in progress

19 to 24 days of direct cost

Work done on site but not yet certified

Trade creditors

42 days on materials and subcontractors

Merchants at 30 days at best, increasingly cash on delivery

Net working capital

18.5% of turnover at Year 5

R9.62m; the dominant call on capital

Capital expenditure

R8.97m over five years

7.6% of cumulative turnover; deliberately low

Founder equity

R3.20m

At inception

Growth equity

R6.50m

At Year 3, when public work scales

Asset finance

12.5%, five years, straight-line capital

R9.40m drawn across the five years

Invoice discounting

14.5% plus a 0.85% service fee, 85% advance

Against certified, undisputed certificates only

Corporate income tax

27% of taxable profit

Assessed losses carried forward under the section 20 limitation

Exit multiple

4.0 times Year 5 EBITDA

Tested from 3.0 to 6.0 times in Section 19