Frost & Roll Creamery Business Plan — Funding Requirement & Capital Structure

Sources and uses

Uses	R m	Sources	R m
Flagship store fit-out	2.8	Equity	16.0
Production equipment	2.1
Central production kitchen	2.5
Mobile catering units (2)	1.6
Cold-chain equipment	0.8
Technology & POS systems	0.6
Marketing launch	1.0
Initial inventory	0.7
Working capital	2.5
Contingency	1.4
Total	16.0	Total	16.0

Figure 19. *Use of funds across the R16m raise.*

Capital adequacy and the rollout

The R16 million funds Phase 1 in full, the flagship fit-out, production equipment, the central production kitchen, mobile catering units, cold-chain equipment, technology, launch marketing, initial inventory and working capital. The multi-city store rollout, kiosks and packaged build in later phases are funded predominantly from reinvested operating cash flow, complemented by the asset-light franchise model (franchisees fund their own outlets). As Section 15 shows, this is achievable at the modelled pace but leaves thinner liquidity in Years 2–3. The plan should therefore be structured with either committed follow-on equity or a working-capital facility to protect the rollout against timing and cost variance.

Debt capacity — an option for the lender audience

Although the sponsor seeks equity, the business has meaningful unused debt capacity that founders may elect to use to reduce dilution or to provide the recommended liquidity buffer. Secured against the fit-out, kitchen and equipment and sized conservatively against early cash flow, an illustrative term facility of roughly R8 million would be serviced comfortably, indicative Year-2 debt-service cover well above 1.5×, without threatening the balance sheet. This is presented as an option, not the base case.

Debt-capacity illustration	Value
Indicative term facility	~R8m
Pricing	~13.5% (prime + 300bps)
Indicative Year-2 DSCR	~1.8×
Effect	Reduces equity dilution / funds liquidity buffer

NoteA financeable structure for both audiences

For equity investors, the all-equity base case is clean, debt-free and net-cash throughout. For lenders, the equipment and kitchen base and the cash generation support a modest secured facility with comfortable cover. Either way, the key recommendation is the same: size committed capital to the true peak funding need of the rollout, not merely the Phase 1 headline, and hold a working-capital buffer through the early expansion years.