BuildCore Retail Group Business Plan › Section 12 › Financial Plan

12.1 Basis of Preparation & Key Assumptions

The financial projections are built bottom-up from store-level
economics and consolidated into integrated income statement, balance
sheet and cash-flow statements. All figures are in nominal South African
Rand. The projections are illustrative and depend on the assumptions set
out below; sensitivities to the principal variables are presented in
Section 12.7.

Table 12.1 — Key modelling assumptions.

Three principles govern the projections. First,
conservatism: revenue per store is held below the
mature run-rate of listed peers and ramps gradually, while cost ratios
improve only as genuine operating leverage and procurement scale are
earned. Second, integration: the income statement,
balance sheet and cash-flow statement are fully linked, so that every
assumption flows consistently through profit, working capital, capital
expenditure and funding — the balance sheet balances to the cent in each
year. Third, fundability: the capital structure and
contingency are sized so that the Group retains a positive cash balance
in every period of the plan under the base case, removing refinancing
risk during the build-out. The sensitivity analysis in Section 12.7
stress-tests the plan against adverse movements in the variables to
which outcomes are most exposed.

12.2 Projected Income Statement (Profit & Loss)

The Group reaches positive EBITDA from Year 1 and net profitability
in Year 4 as the maturing store base delivers operating leverage.
Early-year losses reflect the deliberate front-loading of network and
infrastructure investment ahead of the associated revenue ramp — a
normal characteristic of a greenfield retail build-out.

Table 12.2 — Projected income statement (ZAR million).

Figure 12.1

12.2.1 Year 1 Quarterly Phasing

Because the network is built progressively through the year, Year 1
performance is not linear. The quarterly view below illustrates the
expected ramp as the first store cluster and distribution centre come
online, with revenue building each quarter while the cost base — much of
it established up front — is absorbed over a growing sales base. This
phasing explains the first-year EBITDA profile and the associated
funding draw.

Table 12.2a — Indicative Year 1 quarterly phasing (ZAR
million).

12.3 Projected Balance Sheet

The balance sheet reflects the capital programme and the build-up of
working capital alongside the store network. Property, plant and
equipment grows from R329 million to R841 million as stores and
distribution assets are commissioned. The Group maintains a positive
cash position throughout and conservative gearing, with the balance
sheet balancing exactly in every year.

Table 12.3 — Projected balance sheet (ZAR million).

Figure 12.2

12.4 Projected Cash Flow Statement

Operating cash flow turns positive from Year 3 and scales strongly
thereafter as profitability and working-capital efficiency improve. The
Year 1 financing inflow reflects the equity and debt raise; subsequent
years show scheduled debt amortisation and, from Year 4, the
commencement of dividends. The Group ends every year with a positive
cash balance, confirming that the plan is fully funded.

Table 12.4 — Projected cash flow statement (ZAR
million).

Figure 12.3

Figure 12.4

12.4.1 Working Capital Dynamics

Working capital is a defining feature of building-materials retail
economics. BuildCore’s predominantly cash-based sales mean receivables
stay low relative to revenue, while disciplined supplier terms fund a
meaningful share of inventory. The net working-capital build is
therefore modest relative to the sales it supports, and improves as a
percentage of revenue as the network scales and procurement leverage
strengthens.

Table 12.4a — Working-capital build and efficiency (ZAR
million).

The combination of low receivables, lengthening payable terms and
tightening inventory days means that, as the business matures, growth
becomes progressively less working-capital intensive — reinforcing the
strengthening operating cash generation evident from Year 3 onward.

12.5 Capital Expenditure & Funding

Total capital expenditure across the plan is approximately R1.30
billion, weighted toward store development and distribution
infrastructure in the early years. Combined with opening inventory and
working-capital requirements and a contingency reserve, this underpins
the R1.45 billion capital raise.

Table 12.5 — Capital expenditure programme (ZAR
million).

Figure 12.5

12.5.1 Use of Funds

Table 12.6 — Use of funds.

Figure 12.6

12.6 Key Financial Ratios

The ratio profile confirms a conservative, improving credit and
returns trajectory. Gearing peaks below 0.6x debt-to-equity and
de-levers steadily; interest cover strengthens to comfortably
serviceable levels by Year 4–5; and return on capital employed inflects
positive from Year 3, reaching mid-teens by Year 5.

Table 12.7 — Key financial ratios.

Figure 12.7

12.7 Sensitivity Analysis

The plan’s Year 5 EBITDA is most sensitive to gross margin, revenue
per store and store operating costs. The tornado chart below quantifies
the impact of plausible movements in each key variable. Even under
adverse combinations, the conservative gearing and contingency reserve
preserve solvency; management retains levers — rollout pace, capex
phasing and cost actions — to protect cash.

Figure 12.8

Table 12.8 — Illustrative scenario outcomes.

12.8 Debt Service & Covenant Headroom

The senior debt facility is sized and structured to remain
comfortably serviceable throughout the build-out. The R500 million
facility amortises over the plan, with the balance reducing from R500
million to R230 million by Year 5. Interest cover, weak in the
investment-heavy early years by design, strengthens decisively from Year
4 as EBITDA scales and the cash balance generates interest income. The
Group’s positive cash position in every year provides additional
liquidity headroom over and above operating cash generation.

Table 12.9 — Debt service profile and covenant metrics (ZAR
million).

Net debt turns negative (net cash) in the early years owing to the
large opening liquidity buffer from the raise, before normalising as
cash is deployed into the rollout. By Year 5 the Group carries modest
net leverage of well under 1.0x EBITDA, leaving substantial covenant
headroom against the levels typically required by senior lenders and
supporting the conservative credit profile presented in Section
12.6.

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