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AfriServ — Financial Plan & Projections

Key operating assumptions, the projected three-statement model, the profitability trajectory, capex, working capital, customer-mix evolution, key ratios and sensitivity analysis.

AfriServ Business Plan › Section 12 › Financial Plan & Projections

Section 12 · Business Plan

Financial Plan & Projections

Key operating assumptions, the projected three-statement model, the profitability trajectory, capex, working capital, customer-mix evolution, key ratios and sensitivity analysis.

This section presents AfriServ’s full 7-year integrated financial
model — projected income statement, balance sheet and cash flow —
together with the operating assumptions that drive each line. All
figures are in ZAR millions unless stated; FY ends 30 June; ZAR/USD
opening rate 18.7; long-run depreciation 7%/yr.

12.1 Key Operating Assumptions

Assumption Y1 Y2 Y3 Y5 Y7
Active customers (#) 750 1,650 3,200 6,800 10,500
Avg revenue / customer (ZAR k/yr) 913 897 838 968 1,088
Gross margin % 18.0% 19.0% 20.5% 22.5% 24.0%
Logistics & warehouse % rev 12.5% 11.0% 9.5% 8.5% 8.0%
SG&A % rev 10.2% 8.5% 7.0% 5.5% 5.0%
D&A % rev 4.5% 3.5% 3.0% 2.5% 2.5%
Effective tax rate 0% 0% 20% 27% 27%
Capex % rev 60.6% 22.3% 10.8% 3.3% 1.4%

12.2 Projected Profit & Loss

ZAR millions Y1 Y2 Y3 Y4 Y5 Y7
Revenue 685 1,480 2,680 4,380 6,580 11,420
Cost of goods sold (562) (1,199) (2,131) (3,439) (5,100) (8,679)
Gross profit 123 281 549 941 1,480 2,741
Gross margin % 18.0% 19.0% 20.5% 21.5% 22.5% 24.0%
Logistics & warehouse (86) (163) (255) (372) (559) (914)
Selling, general & admin (70) (126) (188) (263) (362) (572)
Other operating items 1 4 7 11 13 24
EBITDA (32) (4) 113 317 572 1,279
Depreciation & amortisation (31) (52) (80) (110) (165) (285)
EBIT (63) (56) 33 207 407 994
Net interest expense (4) (22) (40) (62) (78) (98)
Profit before tax (67) (78) (7) 145 329 896
Tax (27%) 0 0 1 (39) (89) (242)
Net profit after tax (67) (78) (6) 106 240 654
Net margin % (9.8%) (5.3%) (0.2%) 2.4% 3.6% 5.7%

Note: For consistency with the Year 1–7 EBITDA/Net charts in the
Executive Summary, EBITDA values shown are pre-IFRS-16 lease cost of
central HQ and certain non-recurring start-up items, which are included
separately in operating expense in this presentation. EBITDA reconciles
to ZAR 559m in Year 5 and ZAR 1,130m in Year 7 in cash-flow form
(Section 12.4).

12.3 Projected Balance Sheet

ZAR millions (year-end) Y1 Y2 Y3 Y4 Y5 Y7
Property, plant & equipment 395 588 755 895 985 1,140
Intangibles & goodwill 70 105 125 140 155 290
Other non-current assets 15 24 38 55 78 120
Total non-current assets 480 717 918 1,090 1,218 1,550
Inventory 58 142 242 372 540 878
Trade receivables 79 162 279 432 613 1,002
Cash & equivalents 425 258 198 288 486 1,212
Other current assets 25 38 52 78 110 180
Total current assets 587 600 771 1,170 1,749 3,272
TOTAL ASSETS 1,067 1,317 1,689 2,260 2,967 4,822
Trade payables 52 118 228 396 628 1,142
Short-term borrowings 20 40 60 70 80 90
Other current liabilities 32 48 72 102 142 230
Total current liabilities 104 206 360 568 850 1,462
Long-term borrowings 180 380 580 680 720 780
Other non-current liabilities 20 32 52 72 92 160
Total non-current liabilities 200 412 632 752 812 940
Issued capital 900 900 900 900 900 900
Retained earnings (137) (201) (203) 40 405 1,520
Total equity 763 699 697 940 1,305 2,420
TOTAL LIABILITIES & EQUITY 1,067 1,317 1,689 2,260 2,967 4,822

Net debt (long-term + short-term borrowings less cash) peaks at ~ZAR
442m in Year 3 and declines thereafter as free cash flow is deployed to
deleverage. Net debt / EBITDA peaks at 1.4x in Year 3 (well within
typical lender covenants of 3.0x) and falls below 0.6x by Year 5.

12.4 Projected Cash Flow Statement

ZAR millions Y1 Y2 Y3 Y4 Y5 Y7
EBITDA (cash-form) (32) 67 188 350 559 1,130
Working-capital movement (28) (68) (102) (128) (165) (212)
Tax paid 0 0 0 (35) (80) (220)
Other operating items 5 8 12 18 22 36
Cash from operations (55) 7 98 205 336 734
Capex (net of disposals) (415) (330) (290) (240) (215) (165)
Acquisitions (M&A) (70) (35) (20) (15) (15) (140)
Cash from investing (485) (365) (310) (255) (230) (305)
Equity issued 900 0 0 0 0 0
Net debt drawn / (repaid) 180 195 195 95 50 60
Interest paid (4) (20) (38) (60) (75) (95)
Cash from financing 1,076 175 157 35 (25) (35)
Net change in cash 536 (183) (55) (15) 81 394
Cash, opening 0 536 353 298 283 818
Cash, closing 536 353 298 283 364 1,212
Figure 11.
Figure 11. Year-5 free cash flow bridge — EBITDA to free cash to equity (ZAR m).

12.5 Profitability Trajectory

Figure 12.
Figure 12. Margin progression — gross, EBITDA and net (%), Years 1–7.

Margin expansion is driven by three reinforcing factors: (i) gross
margin expansion from procurement scale and private-label penetration;
(ii) operating leverage on warehouse and fleet costs as utilisation
rises from ~62% in Year 1 to ~80% by Year 5; (iii) SG&A leverage as
headcount scales sub-linearly with revenue (Section 10.5).

12.6 Capex Plan

Figure 13.
Figure 13. Capital expenditure profile by category, ZAR m, Years 1–7.

Capex tracks the DC and fleet rollout timeline. Year-1 capex is
heaviest (ZAR 415m) covering Gauteng DC fit-out, fleet acquisition and
core ERP build. Capex declines steadily as a share of revenue from 60%
in Year 1 to 1.4% by Year 7 — at which point AfriServ’s capital
intensity matches global best-in-class peers.

12.7 Working Capital Cycle

Figure 14.
Figure 14. Working capital cycle — days sales outstanding, days inventory, days payable and cash conversion cycle, Years 1–7.

Working capital is the largest non-EBITDA driver of cash generation.
Through procurement-scale negotiation of supplier credit and disciplined
receivables management, AfriServ targets a cash-conversion cycle that
improves from 46 days in Year 1 to 12 days by Year 7. Each one-day
improvement in cash-conversion cycle releases approximately ZAR 31m of
cash at Year-5 revenue scale.

12.8 Customer Mix Evolution

Figure 15.
Figure 15. Customer segment mix — Year 3 vs Year 5.

No single customer segment exceeds 30% of revenue, supporting
concentration-risk discipline (Section 14). The shift from Year 3 to
Year 5 reflects faster growth in QSR and hotel segments as anchor
contracts mature, partially offset by lower share of full-service
restaurants as the business intentionally focuses on higher-volume
channels.

12.9 Key Financial Ratios

Ratio Y1 Y2 Y3 Y4 Y5 Y7
Revenue growth % n/a 116% 81% 63% 50% 36%
Gross margin % 18.0% 19.0% 20.5% 21.5% 22.5% 24.0%
EBITDA margin % (4.7%) 4.5% 7.0% 8.0% 8.5% 9.9%
Net margin % (9.8%) (1.5%) 2.2% 4.0% 5.1% 7.0%
ROIC % n/a 0.4% 5.7% 12.6% 18.7% 24.4%
Net debt / EBITDA n/a 2.7x 2.4x 1.3x 0.6x <0x (cash)
Interest coverage (EBIT/I) n/a n/a 0.8x 3.3x 5.2x 10.1x
Current ratio 5.6x 2.9x 2.1x 2.1x 2.1x 2.2x
Asset turnover 0.8x 1.2x 1.7x 2.0x 2.3x 2.4x

AfriServ moves from cash-burn to cash-generation in Year 4. Net debt
/ EBITDA peaks at 2.7x in Year 2 (within typical SA project-finance
covenants of 3.5x) and improves rapidly thereafter. Interest coverage
exceeds 5x by Year 5 and over 10x by Year 7, indicating headroom to take
on additional acquisition-finance debt for Phase 3 expansion.

12.10 Sensitivity Analysis

Figure 16.
Figure 16. Sensitivity of equity IRR to ±10% stress on key variables (percentage-point delta vs base case).

A ±10% stress on each key variable, holding others at base, produces
the IRR sensitivities above. The two largest drivers are revenue ramp
speed and gross margin, jointly accounting for 14 percentage points of
IRR sensitivity. ZAR/USD volatility is the smallest sensitivity,
reflecting AfriServ’s policy of natural hedge through local sourcing
(>72% of COGS sourced in ZAR by Year 3) and forward-cover policy on
imports.

Related sections

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of AfriServ (Pty) Ltd.