Frost & Roll Creamery Business Plan — Financial Plan & Projections

15.1 Basis of preparation

Sponsor headline revenue and EBITDA are preserved exactly as briefed. Everything beneath EBITDA is independently re-derived: component depreciation from the capital-expenditure register, South African corporate tax at 27% with assessed-loss carry-forward, and working capital. The base case is funded entirely with the sponsor’s R16 million of equity (no debt), so there is no interest charge; a debt-capacity analysis for lenders is provided in Section 16. The three statements are integrated so the balance sheet ties to zero in every year, enforced by an automated assertion. All figures are nominal rand millions unless stated.

15.2 Key assumptions

Assumption	Value	Basis
Corporate tax rate	27%	SA rate; turnover exceeds SBC thresholds
Working capital	5% of revenue	Cash retail offset by inventory & supplier credit
Funding	R16m equity	As briefed; all-equity base case
Depreciation	Component approach	Fit-out 10-yr; equipment 8-yr; kitchen 10-yr; mobile 6-yr; cold chain 8-yr; tech 4-yr; kiosk 7-yr
Cumulative capex	~R44m over 5 years	Flagship, central kitchen, stores, kiosks & mobile
Repo / prime	7.0% / 10.5%	SARB, mid-2026
Exit valuation	8×–12× EV/EBITDA	Branded QSR / franchise comparables

Analyst flagRe-derived net profit versus the sponsor’s illustrative figures

Preserving revenue and EBITDA exactly, the fully-loaded model produces net profit of approximately R1.2m, R3.7m, R7.7m, R13.2m and R21.2m across Years 1–5, very close to the sponsor’s illustrative R1.2m to R23.8m, and modestly below only in later years. The small later-year gap is depreciation: a genuine multi-format rollout requires roughly R44m of cumulative capex, and depreciating it in full (rather than the lighter capex the illustrative figures imply) is the honest cost of building the network. It is disclosed rather than smoothed.

Figure 13. *Net profit after tax: re-derived vs sponsor illustrative.*

15.3 Projected profit & loss

R millions	Year 1	Year 2	Year 3	Year 4	Year 5
Revenue	18	35	58	87	125
EBITDA	3.0	7.2	13.8	22.4	34.6
Depreciation & amortisation	(1.3)	(2.2)	(3.2)	(4.4)	(5.5)
EBIT	1.7	5.0	10.6	18.0	29.1
Net interest (all-equity)	0.0	0.0	0.0	0.0	0.0
Profit before tax	1.7	5.0	10.6	18.0	29.1
Taxation (27%)	(0.5)	(1.4)	(2.9)	(4.9)	(7.9)
Net profit after tax	1.2	3.7	7.7	13.2	21.2
Net margin	6.9%	10.5%	13.3%	15.1%	17.0%

Figure 14. *EBITDA and margin trajectory.*

Figure 15. *Illustrative store unit economics (per R100 of retail revenue).*

15.3a Flagship store ramp

The flagship store’s illustrative ramp underpins the retail line: rising covers and average ticket as the brand establishes, translating into a maturing store-level contribution that anchors the wider rollout economics.

Flagship metric	Year 1	Year 2	Year 3	Year 4	Year 5
Covers (000s)	180	210	235	255	275
Average ticket (ZAR)	62	66	70	74	78
Implied flagship revenue (R m)	11.2	13.9	16.4	18.9	21.4

15.4 Projected cash flow statement

R millions	Year 1	Year 2	Year 3	Year 4	Year 5
EBITDA	3.0	7.2	13.8	22.4	34.6
Taxation paid	(0.5)	(1.4)	(2.9)	(4.9)	(7.9)
Working-capital movement	(0.9)	(0.8)	(1.1)	(1.4)	(1.9)
Operating cash flow	1.6	5.0	9.8	16.1	24.8
Capital expenditure	(10.4)	(6.5)	(7.9)	(8.9)	(9.9)
Equity drawn	16.0	0.0	0.0	0.0	0.0
Net movement in cash	7.2	(1.5)	1.9	7.2	14.9
Closing cash	7.2	5.7	7.6	14.8	29.7

Analyst flagLiquidity tightens as the rollout is self-funded

Operating cash flow is positive from Year 1, but the Pretoria, Cape Town and Durban store rollout consumes most of it: closing cash falls from about R7m in Year 1 to roughly R6m in Year 2 before rebuilding strongly to nearly R30m by Year 5. The R16m funds Phase 1 and a measured rollout from reinvested cash, but a faster pace, a build overrun or a soft ramp would erode the buffer, which is why committed follow-on capital or a working-capital facility is recommended (Section 16).

Figure 16. *Operating cash flow, capex and closing cash.*

Figure 17. *Closing cash runway across the investment phase.*

15.5 Projected balance sheet

R millions	Year 1	Year 2	Year 3	Year 4	Year 5
Net property, plant & equipment	9.1	13.4	18.1	22.7	27.1
Net working capital	0.9	1.8	2.9	4.3	6.3
Cash & equivalents	7.2	5.7	7.6	14.8	29.7
Total assets	17.2	20.9	28.7	41.8	63.1
Share capital	16.0	16.0	16.0	16.0	16.0
Retained earnings	1.2	4.9	12.7	25.8	47.1
Total equity / funding	17.2	20.9	28.7	41.8	63.1

StrengthThe balance sheet ties to zero every year

Total assets equal total equity in every projection year (all-equity structure), enforced by an automated assertion (maximum difference: 0.0). The business carries no debt and holds a net-cash position throughout, so it is financially resilient even as it invests, the constraint is the quantum of cash available for expansion, not solvency.

Figure 18. *Balance-sheet build: asset composition.*

15.6 Key financial ratios

The ratio summary distils the plan’s trajectory: expanding EBITDA and net margins as the higher-margin franchise and packaged mix matures, a consistently net-cash position, and a rising return on the equity invested as the business scales.

Ratio	Year 1	Year 2	Year 3	Year 4	Year 5
EBITDA margin	16.7%	20.6%	23.8%	25.7%	27.7%
Net margin	6.9%	10.5%	13.3%	15.1%	17.0%
Net cash (R m)	7.2	5.7	7.6	14.8	29.7
Return on equity	7.2%	17.6%	27.0%	31.5%	33.7%
Franchise & packaged share	3.0%	9.0%	12.0%	17.0%	22.0%