Vela Footwear — Projected Income Statement
The projected income statement over the plan horizon — revenue, cost of sales, operating costs, EBITDA, finance costs and net profit, with the margin trajectory from 0.9% to 17.7%.
Section 11 · Business Plan
Projected Income Statement
The projected income statement over the plan horizon — revenue, cost of sales, operating costs, EBITDA, finance costs and net profit, with the margin trajectory from 0.9% to 17.7%.
The projected income statement traces Vela’s path from a first-year
operating loss to strong profitability at scale. Revenue grows roughly
fourfold, gross margin expands by more than seven percentage points, and
EBITDA margin climbs from below one percent to nearly eighteen percent
as the plant fills and the mix enriches.
Five-year income statement
| R’000 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Revenue | 192,075 | 306,430 | 446,080 | 608,355 | 768,595 |
| Materials | (99,879) | (155,666) | (222,148) | (298,094) | (372,000) |
| Direct labour | (31,692) | (47,803) | (66,466) | (86,995) | (106,835) |
| Manufacturing overhead | (17,671) | (26,966) | (37,917) | (50,494) | (62,256) |
| Cost of goods sold | (149,242) | (230,435) | (326,531) | (435,582) | (541,091) |
| Gross profit | 42,833 | 75,995 | 119,550 | 172,773 | 227,504 |
| Gross margin % | 22.3% | 24.8% | 26.8% | 28.4% | 29.6% |
| Selling & distribution | (12,677) | (20,224) | (29,441) | (40,151) | (50,727) |
| Marketing | (5,762) | (9,193) | (13,382) | (18,251) | (23,058) |
| Administration | (18,500) | (21,000) | (23,500) | (26,000) | (28,500) |
| Design & product development | (4,200) | (5,000) | (5,800) | (6,600) | (7,400) |
| Production incentive income | 0 | 5,654 | 9,237 | 13,962 | 17,847 |
| EBITDA | 1,694 | 26,231 | 56,663 | 95,732 | 135,666 |
| Depreciation | (15,100) | (15,100) | (15,100) | (15,100) | (15,100) |
| Amortisation | (1,400) | (1,400) | (1,400) | (1,400) | (1,400) |
| EBIT | (14,807) | 9,731 | 40,163 | 79,232 | 119,166 |
| Net interest | (13,650) | (13,650) | (15,624) | (16,347) | (15,841) |
| Profit before tax | (28,457) | (3,919) | 24,539 | 62,886 | 103,325 |
| Taxation | — | — | — | (14,863) | (27,898) |
| Net profit / (loss) | (28,457) | (3,919) | 24,539 | 48,023 | 75,427 |
Margin progression
The chart below shows the steady expansion of gross and EBITDA
margins as scale and mix benefits accrue. The widening gap between the
two reflects operating leverage — fixed overhead and operating costs
growing more slowly than revenue.
Reading the trajectory
- Year 1 — revenue of R192m but a net loss of
R28m, as thin EBITDA is overwhelmed by full depreciation and interest.
This is the expected shape of a greenfield ramp year. - Year 2 — EBITDA turns firmly positive at R26m as
volume nearly doubles, though the business remains marginally
loss-making after depreciation and interest. - Year 3 — the inflection: net profit of R25m,
with margins, debt service and incentive income all moving
favourably. - Years 4–5 — profitability scales to R48m and
R75m respectively, on EBITDA margins of 15.7% and 17.7%.
before the inflection
The model shows cumulative losses of roughly R32 million across Years
1 and 2 before the business turns profitable in Year 3. This is funded
by equity, the grant and the working-capital facility — the economic
reason the structure carries a two-year grace period and a funded
reserve. Viability depends on reaching the Year-3 inflection broadly on
schedule; a one-to-two-year delay would materially extend the
loss-funding requirement.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Vela Footwear Manufacturing (Pty) Ltd.