TitanCrete Readymix — Financial Plan

Key assumptions, the projected income statement, balance sheet and cash flow, the revenue and EBITDA-margin trajectory, plant-level economics and the key financial ratios.

Section 16 · Business Plan

Financial Plan

Key assumptions, the projected income statement, balance sheet and cash flow, the revenue and EBITDA-margin trajectory, plant-level economics and the key financial ratios.

This section presents the integrated three-statement financial plan —
projected income statement, balance sheet and cash-flow statement —
derived from a single financial model in which every figure is
internally consistent and the balance sheet ties to zero in each year.
Revenue and EBITDA are preserved at the sponsor’s headline levels;
depreciation, financing cost and tax are modelled in full, producing the
conservative net-profit path on which we recommend the transaction be
underwritten.

16.1 Key modelling assumptions

Assumption	Basis
Price escalation — 5.0% p.a.	In line with observed construction-materials inflation (~6.5% in 2024).
Opening ASP — R1,850/m³	Mid-point of observed ex-plant standard-mix pricing (R1,500–R2,200/m³).
Plant nameplate — 55,000 m³/yr	Modern wet/dry batch plant; utilisation held below nameplate for surge capacity.
Materials cost — 58%→54% of revenue	Cement-led input cost easing with procurement scale and recycling.
Senior debt — 12.5% (prime + 2.25%)	Prime 10.25%; Year-1 principal grace, 8-year tenor.
Expansion finance — 12.75%	Asset-backed; ~60% of growth capex; amortising over asset life.
Revolver — 13.25%, R120m limit	Maintains R15m minimum cash through the ramp.
Corporate tax — 27%	South African rate, with assessed-loss carry-forward.
Working capital — DSO 60 / DPO 45 / DIO 25	Sector-typical receivable, payable and inventory days.
Dividends — nil through Year 5	Covenant-restricted until net debt / EBITDA < 2.0×; returns via exit.

Table 23. Core assumptions; each is deliberately
conservative or evidence-anchored to support bankability.

Figure 8.

Figure 8. Revenue and EBITDA trajectory with margin expansion over the five-year plan.

16.2 Projected income statement

The income statement below preserves the sponsor’s revenue and EBITDA
while charging full depreciation and amortisation, the full interest
cost of the true funding stack, and tax at 27%. The result is a loss in
Year 1, near-breakeven in Year 2, and a build to R116 million of net
profit by Year 5. The final memo line shows the sponsor’s materially
higher stated net profit for contrast.

Table 24. Projected income statement (ZAR millions)

	Year 1	Year 2	Year 3	Year 4	Year 5
Revenue	180	360	620	980	1,380
Materials	(104)	(203)	(344)	(537)	(745)
Logistics & distribution	(15)	(30)	(50)	(76)	(105)
Employee costs	(23)	(41)	(67)	(112)	(147)
Other operating costs	(19)	(34)	(55)	(92)	(121)
EBITDA	18	52	104	162	262
EBITDA margin	10.0%	14.4%	16.8%	16.5%	19.0%
Depreciation & amortisation	(29)	(33)	(42)	(52)	(60)
EBIT	(11)	19	62	110	202
Net finance costs	(21)	(21)	(29)	(38)	(44)
Profit before tax	(32)	(2)	33	72	158
Taxation (27%)	-0	-0	-0	(16)	(43)
Net profit after tax (conservative)	(32)	(2)	33	56	116
Memo: sponsor stated net profit	4	21	58	108	182

Table 24. Conservative re-derivation: full
D&A, full interest and 27% tax produce Year-1–2 losses the sponsor
figures omit.

Figure 9.

Figure 9. Sponsor stated net profit versus conservative re-derivation — the central bankability adjustment.

ANALYST CALLOUT — Read the conservative line, underwrite
to the conservative line

The R36m gap in Year 1 and the R66m gap in Year 5 between sponsor and
conservative net profit are not errors — they are the cost of honestly
loading depreciation, interest and tax. A lender or investor who
underwrites to the sponsor’s headline profit would over-state coverage
and equity value. Every coverage ratio, covenant and return in this
document is computed on the conservative line.

Figure 10.

Figure 10. Year-5 bridge from EBITDA to net profit, showing the impact of D&A, interest and tax.

16.3 Projected balance sheet

The balance sheet reflects the asset-heavy nature of the business:
property, plant and equipment dominate the asset base, funded by a
balanced mix of equity and term, expansion and revolving debt. The model
is fully articulated — total assets equal total liabilities plus equity
in every year, with the residual check at machine-precision zero.
Retained earnings are negative in the early years as the ramp losses
accumulate, then recover as profitability builds.

Table 25. Projected balance sheet (ZAR millions)

	Year 1	Year 2	Year 3	Year 4	Year 5
Assets
Property, plant & equipment	309	364	440	496	509
Intangible assets	12	9	6	3	0
Accounts receivable	30	59	102	161	227
Inventory	7	14	24	37	51
Cash & equivalents	35	15	15	15	15
Total assets	392	461	586	712	802
Liabilities
Accounts payable	15	29	49	76	105
Term & expansion debt	170	197	233	252	239
Revolving facility	0	30	66	90	48
Total liabilities	185	256	348	418	392
Equity
Share capital	250	250	250	250	250
Retained earnings	(42)	(45)	(11)	44	160
Total equity	208	205	239	294	410
Total liabilities & equity	392	461	586	712	802

Table 25. Fully articulated balance sheet; total
assets equal liabilities plus equity in every year (balancing check ≈
0).

Figure 11.

Figure 11. Net debt and net debt / EBITDA deleveraging path from 7.5× to roughly 1.0× by Year 5.

16.4 Projected cash-flow statement

The cash-flow statement shows the defining feature of the ramp:
operating cash flow is negative in Year 1 and modest in Year 2 while the
business invests heavily in growth capital. The financing line —
expansion-finance drawdowns and the revolver — bridges this gap and
holds cash at the R15 million minimum through the trough, before
operating cash flow turns strongly positive and begins repaying the
revolver from Year 5.

Table 26. Projected cash-flow statement (ZAR millions)

	Year 1	Year 2	Year 3	Year 4	Year 5
Operating cash flow	(25)	8	43	62	125
Investing cash flow (growth capex)	-0	(85)	(115)	(105)	(70)
Financing cash flow	0	57	72	43	(55)
Net change in cash	(25)	(20)	(0)	0	0
Closing cash	35	15	15	15	15

Table 26. Financing bridges a negative
operating-cash ramp; cash held at the R15m floor before turning positive
in Year 5.

Figure 12.

Figure 12. Operating, investing and financing cash flows across the plan.

16.5 Cost structure and capital programme

Materials are the dominant cost, easing as a share of revenue with
scale; the remaining cost base provides the operating leverage behind
margin expansion. The growth-capital programme — nil in Year 1, then
building through Years 2–5 — is what lifts the true capital requirement
well above the opening raise and is funded predominantly by asset-backed
expansion finance rather than equity.

Figure 13.

Figure 13. Cost structure as a share of revenue, showing materials easing and operating leverage emerging.

Figure 14.

Figure 14. Growth-capital programme by year and cumulative invested capital.

16.6 Year-1 monthly ramp

The first year is modelled monthly to make the launch ramp explicit.
Revenue builds steadily as plants commission and orders convert, and
monthly EBITDA crosses into positive territory only in the second half
of the year — the granular view behind the full-year Year-1 loss and the
structural need for the grace period and revolver.

Figure 15.

Figure 15. Year-1 monthly revenue and EBITDA ramp.

16.7 Break-even & operating leverage

The business is characterised by high operating leverage: a
substantial fixed-cost base (plant, fleet, employees and financing)
against a variable materials-and-logistics cost of roughly two-thirds of
revenue. This is why the early-year losses are steep and why
profitability accelerates sharply once volume crosses the break-even
threshold. On the conservative cost structure, the company moves from an
EBITDA-positive position early but only reaches net-profit break-even in
Year 3, when revenue and utilisation are sufficient to cover full
depreciation, interest and tax.

Table 27. Break-even and operating-leverage indicators

Indicator	Y1	Y2	Y3	Y4	Y5
Capacity utilisation	35%	42%	50%	59%	70%
EBITDA margin	10.0%	14.4%	16.8%	16.5%	19.0%
EBITDA positive?	Yes	Yes	Yes	Yes	Yes
Net-profit positive?	No	No	Yes	Yes	Yes
Contribution margin (approx.)	~33%	~35%	~37%	~38%	~40%

Table 27. High operating leverage: EBITDA is
positive throughout, but net-profit break-even is reached only in Year 3
as fixed costs are covered.

The practical implication for investors is that value is created
disproportionately in the back half of the plan. The first two years
consume capital and absorb losses to build the platform; Years 3–5
convert that platform into rapidly compounding profit and free cash
flow. Any assessment of the transaction that stops at Year 2 will
mis-price it — the return is earned by holding through the
operating-leverage inflection.

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 TitanCrete Readymix South Africa (Pty) Ltd.