Sakhile Construction Business Plan — Funding

R3.20m founder equity, R6.50m growth equity at Year 3, R9.40m asset finance and a R7.50m invoice discounting facility.

Funding

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10.1 Use of funds
10.2 Year 1 capital
10.3 Year 2 capital
10.4 Year 3 capital
10.5 Year 4 capital
10.6 Year 5 capital

Figure 12. Funding drawn by year and type.

Instrument	What it funds	Terms assumed
Founder equity	Initial working capital, plant deposit, establishment	R3.20m at inception
Invoice discounting	The debtor book. Advanced against certified, undisputed payment certificates.	Revolving, 14.5% plus a 0.85% service fee, 85% advance
Asset finance	Vehicles, plant and scaffolding	12.5%, five years
Growth equity	The working capital step change as public work scales	R6.50m at Year 3
Guarantee facility	Performance bonds. Contingent, not cash.	Fee-based; capacity is the constraint

The structure reflects a real distinction. Asset finance is easy because there is security. Invoice discounting is available because the underlying debtor is a government department or an established private client. Equity is the only instrument that funds the gap neither will cover — retention, work in progress and the unadvanced portion of the debtor book — which is why a construction start-up needs proportionally more of it than most service businesses.

Figure 13. The debtor book against the facility that funds it.

R’000	Year 1	Year 2	Year 3	Year 4	Year 5
Certified trade debtors	524	1 309	2 759	5 021	7 722
Facility drawn at 85% advance	445	1 113	2 345	4 268	6 564
Net movement in the year	445	668	1 232	1 923	2 296
Facility limit	7 500	7 500	7 500	7 500	7 500
Undrawn headroom	7 055	6 387	5 155	3 232	936
Utilisation of limit	5.9%	14.8%	31.3%	56.9%	87.5%

10.1 Use of funds

10.2 Year 1 capital

Item	R’000	Share of year
Two crew bakkies and a tipper truck	720	39.2%
Small plant: mixers, compactors, saws, levels	280	15.3%
Scaffolding and formwork	240	13.1%
Yard lease, container offices and security	285	15.5%
Estimating, project and accounting software	145	7.9%
CIDB, CSD and statutory registrations	65	3.5%
Insurance placement and initial bonds	100	5.4%
Total Year 1	1 835	100.0%

10.3 Year 2 capital

Item	R’000	Share of year
Additional crew vehicle and small plant	420	52.5%
Scaffolding and formwork extension	210	26.3%
Site establishment equipment	120	15.0%
Systems	50	6.3%
Total Year 2	800	100.0%

10.4 Year 3 capital

Item	R’000	Share of year
Concrete plant, compaction and lifting equipment	860	53.8%
Two crew vehicles	480	30.0%
Yard expansion and workshop	180	11.3%
Systems and estimating upgrade	80	5.0%
Total Year 3	1 600	100.0%

10.5 Year 4 capital

Item	R’000	Share of year
Plant fleet expansion	1 080	55.7%
Vehicles	520	26.8%
Formwork and scaffolding	240	12.4%
Systems	100	5.2%
Total Year 4	1 940	100.0%

10.6 Year 5 capital

Item	R’000	Share of year
Plant fleet expansion	1 560	55.9%
Vehicles	720	25.8%
Formwork, scaffolding and site equipment	380	13.6%
Systems and quantity surveying platform	130	4.7%
Total Year 5	2 790	100.0%

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