Lesedi Solar Care Business Plan — Financial Plan & Projections

The sponsor’s capacity, revenue, direct cost, overhead, EBITDA, depreciation, finance cost, cash flow and balance sheet figures are preserved across the…

Financial Plan & Projections

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15.1 Basis of preparation

The sponsor’s capacity, revenue, direct cost, overhead, EBITDA, depreciation, finance cost, cash flow and balance sheet figures are preserved across the seven-year projection. Beneath them the analyst has independently re-derived taxation at 27% with the year-one assessed loss carried forward, tested the equity roll-forward against retained profits, reconciled the service mix to the stated price list, tested working-capital adequacy against the facility, reconstructed the downside case to test the solvency claim, and recomputed investor returns from the stated exit assumption. All figures are in millions of rand.

StrengthThe model's financial mechanics reconcile — an important starting point

Before the findings, what testing confirmed. The balance sheet ties in each presented year to within rounding: Year 1 assets of R50.5 million against payables, asset finance and equity of R50.5 million, and the same in years three, five and seven. The cash flow statement reconciles line by line, EBITDA less working capital and tax gives operating cash flow, less capital expenditure plus financing gives the net movement, which accumulates to the stated closing cash. Revenue per megawatt is stable at R110,500 to R112,500 across seven years, indicating the revenue build is driven by capacity rather than by unstated price assumptions. The re-derived tax charge tracks the sponsor’s within R0.5 million in every year. This is a model that has been built rather than assembled.

15.2 Projected profit and loss

R million	Y1	Y2	Y3	Y4	Y5	Y6	Y7
MW under management	240	450	700	950	1250	1560	1880
Revenue	27.0	50.0	78.0	105.0	139.0	175.1	211.5
Direct costs	(17.6)	(31.0)	(47.6)	(63.0)	(82.0)	(102.4)	(122.7)
Gross profit	9.4	19.0	30.4	42.0	57.0	72.7	88.8
Contribution margin	34.8%	38%	39%	40%	41%	41.5%	42%
Overheads	(6.2)	(9.5)	(12.5)	(15.8)	(20.9)	(25.8)	(30.9)
EBITDA	3.2	9.5	17.9	26.2	36.1	46.9	57.9
EBITDA margin	11.9%	19%	22.9%	25%	26%	26.8%	27.4%
Depreciation	(4.1)	(5.3)	(6.4)	(7.6)	(9.1)	(10.8)	(12.3)
Net finance cost	(1.6)	(1.9)	(2.0)	(1.8)	(1.5)	(1.1)	(0.6)
Profit before tax	(2.5)	2.3	9.5	16.8	25.5	35.0	45.0
Taxation (re-derived)	—	(0.1)	(2.4)	(4.5)	(6.9)	(9.5)	(12.2)
Net profit (re-derived)	(2.5)	2.2	7.1	12.3	18.6	25.5	32.8
Net profit (sponsor)	(2.5)	1.7	6.9	12.3	18.6	25.6	32.9

Figure 20. Year-5 revenue-to-net-profit bridge.

Year one is loss-making by design: depots, fleet and the platform are built ahead of the contract book. Breakeven occurs in month sixteen, and the business is cash-generative from year two onward. The re-derived tax charge differs from the sponsor’s by no more than R0.5 million in any year, the difference arising from the timing of assessed-loss utilisation under the 80% set-off restriction.

15.3 Margin architecture

It is worth being precise about where the margin expansion comes from, because it is frequently misread in service businesses. Contribution margin rises from 34.8% to 42.0%, roughly seven points, while overheads fall from 23.0% of revenue to 14.6%, roughly eight points. The EBITDA margin improvement of fourteen points is therefore split almost evenly between route density improving contribution and fixed-cost absorption diluting overhead. Neither depends on raising prices. That is a healthier margin story than one built on assumed price increases, and it is testable early: if revenue per field employee is not rising on plan by year two, contribution margin will not reach 42%.

15.4 Projected cash flow

R million	Y1	Y2	Y3	Y4	Y5	Y6	Y7
EBITDA	3.2	9.5	17.9	26.2	36.1	46.9	57.9
Working capital movement	(6.4)	(3.8)	(4.6)	(4.4)	(5.6)	(5.9)	(6.0)
Tax paid	—	(0.4)	(2.4)	(4.4)	(6.7)	(9.2)	(11.9)
Operating cash flow	(3.2)	5.3	10.9	17.4	23.8	31.8	40.0
Capital expenditure	(31.4)	(6.8)	(8.2)	(9.6)	(12.4)	(13.9)	(15.2)
Asset finance drawn / (repaid)	14.0	(2.8)	(2.8)	(2.8)	(2.8)	(2.8)	0.0
Equity drawn	38.0	—	—	—	—	—	—
Net cash movement	17.4	(4.3)	(0.1)	5.0	8.6	15.1	24.8
Closing cash	17.4	13.1	13.0	18.0	26.6	41.7	66.5

Figure 21. Operating cash flow, capex and closing cash.

15.5 Projected balance sheet

R million	Year 1	Year 3	Year 5	Year 7
Property, plant & equipment (net)	27.3	32.0	38.4	45.9
Trade receivables	5.8	14.6	25.4	38.2
Cash	17.4	13.0	26.7	66.6
Total assets	50.5	59.6	90.5	150.7
Trade payables & accruals	3.6	7.9	13.1	19.4
Asset finance liability	14.0	8.4	2.8	0.0
Shareholders’ equity	32.9	43.3	74.6	131.3
Balance sheet ties	Yes	Yes	Yes	Yes

Figure 22. Balance-sheet build: asset composition.

15.6 Working capital

Figure 23. Receivables and net working capital against the facility.

Key findingThe R6 million working capital facility is sized for the early years only

Debtor days run at 78 in year one, improving to roughly 66 by year seven, appropriate for a business billing utility clients at 45 to 60 days and commercial clients more slowly. But the receivables book grows with revenue: R5.8 million in year one, R14.6 million in year three, R25.4 million in year five and R38.2 million in year seven. Net of payables, working capital absorbed rises from R2.2 million to R18.8 million. Against that, the R6 million revolving facility covers 2.7 times net working capital in year one but only 0.49 times by year five and 0.32 times by year seven. The business does not become insolvent, accumulated cash covers the gap, reaching R26.7 million by year five, but it means growth is increasingly self-funded from cash that might otherwise support distributions, acquisitions or the De Aar and Gqeberha depots. The facility should be structured to scale with the contracted book, ideally as a receivables-backed line with a borrowing base rather than a fixed limit.

15.7 Equity reconciliation

One minor item warrants clarification. The stated shareholders’ equity does not reconcile exactly to the initial R38 million raise accumulated with retained profits: the difference is R2.6 million at year one, narrowing to R0.4 million by year five and widening again to R2.2 million by year seven. Movements of this size are consistent with share issue costs, the accounting treatment of the vendor-financed community trust, or share-based payment under the employee trust, all legitimate. But the Plan does not explain them, and an investor reconciling the statements will notice. A short note in the financial model would resolve it.