Mainstreet Brick Business Plan — Capital Requirement and Funding
R6.30m equity, R8.50m development finance at 11.5%, R3.61m equipment finance at 13.0% and a R1.80m working capital facility.
Capital Requirement and Funding
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- 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
- 10.1 Uses of funds
- 10.2 Sources of funds
- 10.3 Gearing and the capital structure
10.1 Uses of funds
|
Capital item |
Amount (R) |
% of total |
Treatment |
|---|---|---|---|
|
Static hydraulic block machine, semi-automatic pallet system |
2 400 000 |
13.0% |
Depreciated over 10 years |
|
Batching plant, pan mixer, aggregate bins and conveyors |
1 850 000 |
10.0% |
Depreciated over 10 years |
|
Delivery truck, 8 tonne with crane |
1 250 000 |
6.8% |
Depreciated over 10 years |
|
Yard preparation, hardstand, drainage and curing area |
1 450 000 |
7.9% |
Depreciated over 10 years |
|
Forklifts, three units |
1 380 000 |
7.5% |
Depreciated over 10 years |
|
Front-end loader |
850 000 |
4.6% |
Depreciated over 10 years |
|
Site electrical, transformer and reticulation |
780 000 |
4.2% |
Depreciated over 10 years |
|
Cement silo, 50 tonne, and screw conveyors |
680 000 |
3.7% |
Depreciated over 10 years |
|
Curing racks, GRP production pallets and spares |
1 150 000 |
6.2% |
Depreciated over 10 years |
|
Professional fees, environmental authorisation and licensing |
520 000 |
2.8% |
Depreciated over 10 years |
|
Installation, commissioning and operator training |
450 000 |
2.4% |
Depreciated over 10 years |
|
Office, ablutions and workshop, containerised |
420 000 |
2.3% |
Depreciated over 10 years |
|
Water supply, borehole and recycling system |
340 000 |
1.8% |
Depreciated over 10 years |
|
Laboratory and SANS compliance testing equipment |
180 000 |
1.0% |
Depreciated over 10 years |
|
Opening raw material inventory |
950 000 |
5.2% |
Opening inventory |
|
Working capital facility, debtor book funding |
2 400 000 |
13.0% |
Working capital |
|
Contingency at 8% of project cost |
1 364 000 |
7.4% |
Depreciated over 10 years |
|
Total capital budget |
18 414 000 |
100.0% |
10.2 Sources of funds
|
Source |
Amount (R) |
% of total |
Terms |
|---|---|---|---|
|
Promoter and investor equity |
6 300 000 |
31.2% |
Ordinary shares; promoter and investor contribution |
|
Development finance term loan |
8 500 000 |
42.1% |
11.5% a year; 7 years with a twelve-month capital moratorium |
|
Asset-based equipment finance |
3 614 000 |
17.9% |
13.0% a year; 5 years, secured on plant and vehicles |
|
Committed working capital facility |
1 800 000 |
8.9% |
12.5% a year; drawn at commissioning and held against the debtor book |
|
Total funding |
20 214 000 |
100.0% |
Equity at 31.2 per cent of total funding sits at or near the level development finance institutions typically expect from a start-up promoter. The plan assumes a development finance facility rather than commercial bank debt because manufacturing, job creation and localisation fit those mandates, and because the twelve-month capital moratorium a DFI will structure is what makes the Year 1 position survivable.
10.3 Gearing and the capital structure
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|---|---|---|---|---|---|
|
Development finance term loan, R’000 |
8 500 |
7 439 |
6 257 |
4 938 |
3 467 |
|
Equipment finance, R’000 |
3 056 |
2 426 |
1 714 |
909 |
— |
|
Working capital facility, R’000 |
1 800 |
1 800 |
1 800 |
1 800 |
1 800 |
|
Total debt outstanding, R’000 |
13 356 |
11 665 |
9 771 |
7 647 |
5 267 |
|
Shareholders’ funds, R’000 |
5 126 |
5 460 |
7 000 |
8 858 |
10 976 |
|
Gearing, debt to debt plus equity |
72.3% |
68.1% |
58.3% |
46.3% |
32.4% |
|
Net debt to EBITDA |
5.36x |
2.80x |
1.53x |
0.82x |
0.20x |
Gearing opens at 72.3 per cent and falls to 32.4 per cent by Year 5 as the facilities amortise and retained earnings accumulate. Net debt to EBITDA falls from 5.4 times to 0.2 times over the same period. Both trajectories are what a development financier would want to see, and both depend on the utilisation ramp holding — Section 15 shows what happens to them if it does not.