Meridian Industrial Group Business Plan — Projected Balance Sheet

The balance sheet below ties in every year, total assets equal total liabilities plus equity, a consistency the model enforces by construction. Figures in ZAR millions.

	Year 1	Year 2	Year 3	Year 4	Year 5
Net property, plant & equipment	1,274	2,224	2,622	2,542	2,525
Goodwill (acquisitions)	120	200	200	200	200
Net working capital	312	533	819	1,157	1,612
Cash & equivalents	1,280	757	509	521	660
Total assets	2,986	3,714	4,150	4,420	4,996
Senior debt	1,400	2,000	2,130	1,780	1,280
Share capital	1,520	1,520	1,520	1,520	1,520
Retained earnings	66	194	500	1,120	2,196
Total equity	1,586	1,714	2,020	2,640	3,716
Total liabilities & equity	2,986	3,714	4,150	4,420	4,996

Figure 16. *Balance-sheet composition by asset class (ZAR millions)*

Figure 17. *Deleveraging profile: net debt / EBITDA*

StrengthA conservatively geared balance sheet

Net debt peaks at 1.85x EBITDA in Year 2 and falls to 0.24x by Year 5, well inside a 3.0x prudential ceiling. The asset base is tangible and collateral-grade, and goodwill is a modest fraction of total assets, the balance sheet a DFI or commercial lender is comfortable to secure against.

Working-capital composition

Net working capital is modelled at 13% of revenue, a level consistent with a diversified industrial and logistics group carrying inventory, extending trade credit and taking supplier terms. The illustrative decomposition below (inventory, trade receivables less trade payables) shows the investment growing with revenue; the R340m working-capital facility funds the Year-1 base, and subsequent growth is funded from operating cash flow, which is why operating cash flow lags EBITDA in the ramp years.

	Year 1	Year 2	Year 3	Year 4	Year 5
Inventory	172	293	450	636	887
Trade & other receivables	265	453	696	983	1,370
Less: trade & other payables	-125	-213	-328	-463	-645
Net working capital	312	533	819	1,157	1,612
NWC as % of revenue	13.0%	13.0%	13.0%	13.0%	13.0%
Change in NWC (cash)	-312	-221	-286	-338	-455