TitanForge Business Plan › Section 20 › Financial Plan — Assumptions & Methodology

The financial plan applies an honest-analyst methodology. Sponsor
anchors, revenue, EBITDA and the division mix, are preserved exactly as
provided. Every line below EBITDA is independently re-derived from first
principles:

• Depreciation: per-vintage straight-line on each
  project at its asset life (mining 18–20 years, rail/port/energy 25
  years, industrial park 22 years), half-year convention in the
  commissioning year, plus the R24bn opening asset base over 15 years and
  sustaining capex over 12 years. The charge grows from R1.9bn in Year 1
  to R8.6bn in Year 10.
• Interest: full cash interest on opening facility
  balances plus half-year interest on in-year draws, at the
  facility-specific rates in Section 15.1. No interest during construction
  is capitalised. The charge peaks at R3.6bn in Year 5.
• Taxation: 27% South African corporate rate;
  section 20 assessed-loss carry-forward applied with the
  80%-of-taxable-income utilisation cap. The Group is profitable from Year
  1 at the PBT line, so no assessed losses accumulate in the base case,
  but the mechanism is modelled and would engage automatically in the
  downside.
• Working capital: 9.0% of revenue, with the
  year-on-year movement charged against operating cash flow.
• Dividends: 35% of net profit once net
  debt/EBITDA is below 2.0x (from Year 4), stepping to 55% from Year 7,
  always subject to a R1.5bn minimum cash floor.
• Balance sheet integrity: assets minus
  liabilities-plus-equity is programmatically asserted to equal zero in
  every forecast year; the model does not produce output if any year
  fails.

16.1 South African fiscal regime and unmodelled conservatism

The plan taxes profits at the statutory 27% on accounting profit
before tax, with the section 20 assessed-loss mechanism. The actual
South African fiscal regime for this asset class contains several
provisions the model deliberately does not exploit, each of which would
improve early-year cash flow if claimed:

• Section 36 mining capital redemption: qualifying
  mining capex is deductible against mining income as incurred (subject to
  ring-fencing per mine). Applied to Iron Crown’s R18bn, this alone would
  shelter most mining taxable income in Years 1–5, deferring an estimated
  R3–5bn of cash tax into later years.
• Sections 12B/12BA renewable allowances:
  accelerated (and temporarily 125%) deductions for renewable generation
  assets would shelter Helios income substantially in its first
  years.
• Section 12F/rolling-stock allowances and SEZ
  incentives: port and rail asset allowances, and the 15% SEZ
  rate for qualifying Forge Park activities, are similarly
  excluded.
• Mineral royalties: MPRRA royalties (0.5–7% of
  gross sales on a profitability-linked formula, refined vs unrefined) are
  treated as embedded within the sponsor’s EBITDA operating costs rather
  than added below the line — consistent with preserving the sponsor
  anchor, and disclosed here so lenders can test it in due
  diligence.
• Carbon tax: phase 2 carbon tax on process and
  combustion emissions is assumed absorbed within operating costs,
  partially offset by Helios displacement of grid electricity.

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