Mainstreet Brick Business Plan — Break-Even Analysis
Cash break-even at 80.4% of installed capacity — an unusually high threshold, and the central risk in the plan.
Break-Even Analysis
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. The Unit Economics of Brick Making
- 3. Market Analysis
- 4. Products and Positioning
- 5. SWOT and Competitive Position
- 6. Site, Plant and Production
- 7. Route to Market and Sales Strategy
- 8. Regulatory, Environmental and Quality Compliance
- 9. Management and Organisation
- 10. Capital Requirement and Funding
- 11. Financial Projections
- 12. Break-Even Analysis
- 13. Debt Service and Working Capital
- 14. Investment Returns
- 15. Sensitivity and Scenario Analysis
- 16. Value Creation Levers
- 17. Risk Management
- 18. Implementation Timeline
- 19. Conditions for Success and Exit Options
- 20. Key Performance Indicators
- 21. Key Assumptions
- 22. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital and Depreciation Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
|
Per cent of installed capacity |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Planned utilisation |
66.0% |
79.0% |
88.0% |
93.1% |
96.0% |
|
Accounting break-even: costs, depreciation and interest |
72.7% |
77.2% |
78.3% |
79.7% |
80.9% |
|
Cash break-even: costs and full debt service |
67.3% |
78.2% |
80.4% |
82.9% |
85.5% |
|
Headroom over cash break-even, percentage points |
-1.3 |
0.8 |
7.6 |
10.2 |
10.5 |
|
Break-even revenue, R’000 |
36 052 |
44 206 |
47 944 |
52 089 |
56 687 |
|
Gross margin |
32.8% |
31.9% |
31.0% |
30.1% |
29.2% |
The thresholds rise across the projection — from 67.3 per cent of capacity in Year 1 to 85.5 per cent in Year 5 — because the cost base and debt service grow faster than the gross margin percentage. That is the compounding effect of the escalation spread described in Section 11.2: prices rise at 5.5 per cent while cement rises at 7.5 per cent, so each year’s break-even requires more units than the last. Headroom nonetheless improves from minus 1.3 points to plus 10.5 points because planned utilisation rises faster still.
12.1 What the plant must sell to survive
|
Measure |
Year 1 |
Year 3 |
Year 5 |
|---|---|---|---|
|
Planned utilisation |
66.0% |
88.0% |
96.0% |
|
Cash break-even utilisation |
67.3% |
80.4% |
85.5% |
|
Break-even units a year |
10.86m |
13.23m |
13.80m |
|
Break-even units a month |
905 000 |
1 102 000 |
1 150 000 |
|
Planned units a month |
888 000 |
1 184 000 |
1 291 000 |
|
Surplus / (shortfall) a month |
(17 000) |
82 000 |
141 000 |
Expressed in monthly output, the plant must produce and sell roughly 905 000 units a month in Year 1 to cover its costs and debt service, against a planned 888 000 — a shortfall of 17 000 units a month, or about two per cent. That is the practical meaning of the Year 1 position: not a catastrophe, but a business that misses its obligations by a fortnight’s production in its first year and depends on the capital moratorium and the working capital facility to bridge it.