Umthombo Springs Business Plan — Financial Plan & Projections

The Company's channel volumes, per-litre unit economics, revenue, cost of goods, operating expenses, EBITDA, depreciation, net finance cost and net profit…

Financial Plan & Projections

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15.1 Basis of preparation

The Company’s channel volumes, per-litre unit economics, revenue, cost of goods, operating expenses, EBITDA, depreciation, net finance cost and net profit are preserved as prepared. Beneath them the analyst has verified that the projections reproduce exactly from volumes and unit economics; reconstructed the capitalisation table through both rounds; recomputed investor returns across a range of exit multiples; tested the sufficiency of Series A to month 24; modelled the position without Series B; and tested the exposure to input cost escalation. All figures are in millions of rand.

StrengthThe projections reproduce exactly from the unit economics

In every year, revenue equals domestic litres at R3.80 plus export PET litres at R7.00 plus export glass litres at R20.50; cost of goods and gross profit reproduce identically from the stated per-litre cost structures. The largest divergence across all five years and all three lines is R0.05 million, which is rounding. This means the model has no unexplained residual and no plug, an investor can rebuild it from the volume table and the unit table alone. It is worth saying plainly because it is uncommon.

15.2 Five-year projections

R million	Year 1	Year 2	Year 3	Year 4	Year 5
Domestic PET (m litres)	3.6	9.0	13.5	16.0	18.0
Export PET (m litres)	—	2.2	5.0	8.0	10.5
Export glass (m litres)	—	0.15	0.95	1.80	2.60
Total volume (m litres)	3.6	11.3	19.4	25.8	31.1
Revenue	13.7	52.7	105.8	153.7	195.2
Cost of goods	(7.7)	(28.3)	(55.0)	(78.7)	(99.1)
Gross profit	6.0	24.4	50.8	75.0	96.1
Gross margin	43.8%	46.3%	48%	48.8%	49.2%
Operating expenses	(14.0)	(26.0)	(40.0)	(50.0)	(57.0)
EBITDA	(8.0)	(1.6)	10.8	25.0	39.1
EBITDA margin	-58.4%	-3%	10.2%	16.3%	20%
Depreciation	(3.2)	(4.8)	(8.6)	(9.4)	(9.8)
Net finance cost	(1.4)	(2.1)	(3.8)	(3.9)	(3.5)
Profit before tax	(12.6)	(8.5)	(1.6)	11.7	25.8
Net profit	(12.6)	(8.5)	(1.6)	8.5	18.8

Figure 16. Revenue and EBITDA — breakeven in Year 3, driven by mix.

Figure 17. Year-5 revenue-to-EBITDA bridge.

Figure 18. EBITDA and cumulative EBITDA — the J-curve.

The shape is a classic venture J-curve. EBITDA is negative R8.0 million in Year 1 and negative R1.6 million in Year 2, turns positive at R10.8 million in Year 3 and reaches R39.1 million by Year 5. Cumulative EBITDA turns positive during Year 4. The turn is driven by mix rather than volume alone: export rises from nothing to 65% of revenue, and because export margins per litre are two to seven times domestic, the margin follows the mix.

15.3 A note on price and cost escalation

Figure 19. Year-5 EBITDA if costs escalate while prices are held flat.

Key findingThe model is built in constant Year-1 prices on both sides, and this should be stated explicitly

Every unit price and every unit cost is held flat across the five years, domestic PET is R3.80 in Year 1 and Year 5, and its cost of goods is R2.13 throughout. That is internally consistent and it makes the mix-shift argument clean, because no part of the margin improvement can be attributed to assumed price rises. But it should be disclosed as a real-terms model rather than left for the reader to infer, for two reasons. First, the Plan’s own risk register rates PET resin and glass price inflation as high likelihood, and glass alone is 27% of the premium line’s FOB price. Second, the asymmetry: if input costs escalate at 3% a year while prices are held, Year-5 EBITDA falls from R39.1 million to R19.5 million; at 5%, it falls to R5.4 million. The Company’s position is presumably that export prices would escalate alongside, and in a provenance category that is plausible, but the Plan should say so and show the paired escalation rather than leaving both sides static.