Independent catchment demand study

Annual masonry consumption within 100 km sufficient to absorb the plant’s output at the modelled market share, with named competitor capacity mapped

The addressable market is the circle around the plant. Everything in this document rests on that circle containing enough demand

Contracted offtake covering at least 40% of capacity

Signed merchant supply agreements, a development contract or a housing programme allocation, before construction capital is drawn

Cash break-even sits above 80% of capacity by Year 3 and the plant is below it in Year 1. An uncontracted ramp is not fundable

Negotiated bulk cement supply agreement

Volume-based pricing and, where obtainable, a cap or notice period on increases

Cement is 29% of revenue and a 15% increase takes the project return below zero. This is too large an exposure to leave to spot purchasing

Dual aggregate supply quotations

Delivered pricing confirmed from two sources, with the site located to minimise haul distance

Aggregate is the highest-tonnage input and every kilometre is a permanent cost. Two sources also protect against a single quarry’s pricing

Fixed-price equipment and installation quotations

Performance guarantees on output rate and unit quality, with retention held until proven production

A 15% capital overrun costs roughly two points of return on a project that clears its hurdle by none

A committed working capital facility

R1.80 million beyond the capital budget, in place and undrawn at commissioning

The original R2.40 million provision is exhausted during Year 2. Growth in this business consumes cash before it produces it

Trade sale to a regional building materials group

A consolidator or a larger masonry producer

Catchment position, customer contracts and a certified production history

The base case at 3.5 times EBITDA; acquirers value the position more than the equipment

Sale to a cement producer or vertically integrating supplier

A cement group securing downstream volume

Guaranteed offtake for its own product and a captive channel

May pay above a pure financial multiple because the strategic value differs from the trading value

Management buy-out

The operating team, funded by accumulated cash flow

The going concern

Realistic only from Year 6 once debt has amortised; cash flow to Year 5 will not support it

Platform aggregation

A second plant in an adjacent catchment, built or acquired

Shared overhead and a multi-site group

Materially improves the exit multiple, because multi-site groups trade above single assets

Orderly wind-down

Equipment resale and land lease surrender

Second-hand plant value only

The downside route. Block machines hold value poorly and a forced sale realises a fraction of cost

SANS 1215 certification history

Every batch tested and the certificate file retained. A gap in the record is read as a gap in the quality

Wet mix and cement dosage records

Batching records retained; a buyer testing dosage against strength is testing whether the margin is real or borrowed from quality

Customer contracts and their transferability

Supply agreements written to survive a change of control; a non-transferable book reduces the buyer universe sharply

Breakage and reject history

A daily reject count reconciled to production. An unexplained gap between production and sales is read as either theft or overstated capacity

Debtor ageing and write-off history

Credit control records; a clean book at 40 days is worth a multiple point against one at 60 with write-offs

Environmental and water compliance

Authorisations current, dust and stormwater management documented, abstraction within the registered volume

Land lease terms and renewal

A lease with adequate remaining term and a clean assignment clause; a plant on a short lease is a plant with a deadline