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FerroGlobe Resources Group — Financial Plan & Projections

Key financial assumptions, the projected income statement, balance sheet and cash flow over the seven-year horizon, the margin trajectory and the key financial ratios.

FerroGlobe Resources Group Business Plan › Section 15 › Financial Plan & Projections

Section 15 · Business Plan

Financial Plan & Projections

Key financial assumptions, the projected income statement, balance sheet and cash flow over the seven-year horizon, the margin trajectory and the key financial ratios.

15.1 Approach & Assumptions

The financial model is constructed on a fully integrated
three-statement basis (P&L, Balance Sheet, Cash Flow) at quarterly
granularity for Years 1–3 and annual granularity thereafter. Projections
are denominated in USD with a parallel ZAR view available. The base-case
assumptions reflect management’s central expectations and have been
benchmarked against publicly available data from comparable global
merchants and integrated producers. Sensitivity and scenario analysis is
provided in Section 16.

Key macro & operating assumptions

  • ZAR/USD trading band: 17.5–22.0 (base case mid-point
    19.5)
  • HRC steel price band: USD 650–850/tonne (base case mid-point
    740)
  • Iron ore price band: USD 95–125/tonne (base case mid-point
    105)
  • Trading margin: 3.5% Y1 → 5.5% Y4 → 5.5% Y7 (blended)
  • Processing margin: 14% Y3 → 17% Y7 (capacity-utilisation
    linked)
  • Effective tax rate: 27% (SA corporate rate); blended Group ETR
    25–28%
  • Discount rate (WACC): 13.5% USD-equivalent for project
    IRR

15.2 Projected Profit & Loss

Revenue scales from USD 192 million (Year 1) to USD 4.3 billion (Year
7), driven by progressive increase in trading volume and the layered
addition of processing, logistics and energy revenues. EBITDA grows from
USD 14 million (7.3% margin) to USD 870 million (20.2% margin),
reflecting both volume scale and the structural margin uplift from
vertical integration. Net income turns positive in Year 2 and reaches
USD 480 million by Year 7.

USD millions Y1 Y2 Y3 Y4 Y5 Y6 Y7
Revenue 192 500 995 1620 2430 3360 4300
COGS (168) (425) (828) (1305) (1900) (2535) (3170)
Gross profit 24 75 167 315 530 825 1130
Gross margin % 12.5% 15.0% 16.8% 19.4% 21.8% 24.6% 26.3%
Operating expenses (10) (27) (55) (97) (150) (213) (260)
EBITDA 14 48 112 218 380 612 870
EBITDA margin % 7.3% 9.6% 11.3% 13.5% 15.6% 18.2% 20.2%
Depreciation & Amortisation (2) (8) (22) (52) (82) (118) (155)
EBIT 12 40 90 166 298 494 715
Net interest (5) (15) (28) (42) (55) (68) (75)
Profit before tax 7 25 62 124 243 426 640
Tax @ 27% (2) (7) (17) (33) (66) (115) (160)
Net income 5 18 45 91 177 311 480

Note: Y1 figures reflect partial-year operations; Year 2 onwards
reflects full-year run-rates following operational ramp-up.

15.3 Revenue Build by Pillar

Figure 15.1
Figure 15.1 — Revenue build, Years 1–7 (USD M). Trading is the cashflow engine; processing, logistics and energy add layered margin.

15.4 EBITDA Trajectory

Figure 15.2
Figure 15.2 — EBITDA growth and margin progression. Margin improves from 7.3% (Y1) to 20.2% (Y7) as the processing layer matures.

15.5 Projected Balance Sheet

Total assets grow from USD 285 million (Year 1 close) to USD 2.8
billion (Year 7 close), funded through a combination of equity (rising
from USD 150M to USD 1.45B as retained earnings accumulate), senior debt
(USD 100M to USD 480M, with progressive amortisation from Year 4), and
working-capital facilities. Net debt/EBITDA peaks in Year 4 at 1.9x
before declining to 0.4x by Year 7, well within
investment-grade-equivalent metrics for the steel sector.

USD millions Y1 Y2 Y3 Y4 Y5 Y6 Y7
ASSETS
Cash & equivalents 38 52 95 165 290 510 800
Trade receivables 42 110 218 355 535 740 945
Inventory 55 122 215 320 462 625 790
Property, Plant & Equip 150 235 410 685 905 1 015
Other assets 0 12 25 35 50 70 95
Total assets 285 531 963 1,560 2,242 2,960 3,750
LIABILITIES & EQUITY
Trade payables 22 60 122 195 290 395 490
Senior debt 100 195 295 480 460 410 350
Mezzanine 0 35 75 75 70 55 30
Other liabilities 13 23 38 60 87 120 152
Total liabilities 135 313 530 810 907 980 1,022
Equity (paid-in) 150 150 225 225 225 225 225
Retained earnings 0 18 63 154 331 642 1,122
Total equity 150 168 288 379 556 867 1,347
Total liab & equity 285 481 818 1,189 1,463 1,847 2,369
Net debt / EBITDA (×) 7.1 4.1 2.6 1.9 1.2 0.6 0.4

15.6 Projected Cash Flow

Figure 15.3
Figure 15.3 — Operating, Investing and Free Cash Flow projection (USD M). Free cash flow turns positive in Year 4 and accelerates strongly thereafter.
USD millions Y1 Y2 Y3 Y4 Y5 Y6 Y7
Net income 5 18 45 91 177 311 480
+ D&A 2 8 22 52 82 118 155
+/- Working capital (22) (50) (85) (120) (130) (135) (140)
+ Other adj. 0 6 8 12 16 22 28
Operating cash flow (15) (18) (10) 35 145 316 523
Capex (180) (160) (130) (110) (85) (50) (25)
Other investing 0 0 (25) (45) (50) (30) (15)
Investing cash flow (180) (160) (155) (155) (135) (80) (40)
Equity raised 150 0 75 0 0 0 0
Debt drawn / (repaid) 83 152 168 290 (50) (50) (100)
Interest & dividends 0 (10) (25) (40) (55) (68) (85)
Financing cash flow 233 142 218 250 (105) (118) (185)
Net change in cash 38 (36) 53 130 (95) 118 298
Free cash flow (195) (178) (140) (75) 60 266 498
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