Roof Tile Manufacturing Business Plan Example by Bplans Africa

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TABLE OF CONTENTS TABLE OF CONTENTS ................................................................. 2 CHAPTER 1: EXECUTIVE SUMMARY ............................................... 5 INVESTOR PITCH (BUSINESS MODEL CANVAS).................................................................................... 13 FINANCIAL DASHBOARD (EXPECTATIONS) ......................................................................................... 16

CHAPTER 2: BUSINESS MODEL .................................................... 17 INTRODUCTION ................................................................................................................................ 17 COMPANY OVERVIEW ...................................................................................................................... 18 Problem worth Solving – Market Needs................................................................................................. 18 The Solution – Our Company and Its Products ....................................................................................... 19 The Services Offered ............................................................................................................................... 20 Fulfillment and Support .......................................................................................................................... 21 Milestones .............................................................................................................................................. 22 Management Team and Shareholding ................................................................................................... 23 Organizational Structure......................................................................................................................... 24 Supplier Analysis ..................................................................................................................................... 25 STRATEGIC OBJECTIVES..................................................................................................................... 26 KEYS TO SUCCESS ............................................................................................................................. 27 SWOT ANALYSIS ............................................................................................................................... 28 STRATEGIC RISK ANALYSIS (360° STRATEGIC DIAGNOSTICS) ............................................................... 30 INDUSTRY AND MARKET ................................................................................................................... 33 Industry Highlights and Synopsis ............................................................................................................ 33 The Construction Industry ...................................................................................................................... 34 Home Improvement in South Africa ....................................................................................................... 35 Housing Backlog in South Africa ............................................................................................................. 36 The RDP Program .................................................................................................................................... 37 The E-Commerce Industry ...................................................................................................................... 40 2017 © All Rights Reserved. Business Plan and Financial Model Prepared by Bplans Africa™ Page 2 of 120

The Retail Industry .................................................................................................................................. 57 A Macro-Economic Analysis of South Africa........................................................................................... 58 A Risk Analysis of the Global Economy ................................................................................................... 66 Major Disruptive Global Trends (That Will Impact All Industries) .......................................................... 68 HIGH-LEVEL MARKETING PLAN.......................................................................................................... 72 Marketing Objectives.............................................................................................................................. 72 Market Segments.................................................................................................................................... 72 Key Differentiators (Competitive Advantage) ........................................................................................ 73 Competitive Analysis .............................................................................................................................. 74 Marketing Initiatives (Programmes) ....................................................................................................... 75 Digital (Online) Marketing Strategy ........................................................................................................ 77 EXTERNAL ENVIRONMENTAL FORCES ANALYSIS ................................................................................ 80 Political Analysis ..................................................................................................................................... 82 Economic Analysis .................................................................................................................................. 83 Social Analysis ......................................................................................................................................... 85 Technological Analysis ............................................................................................................................ 87 Environmental Analysis .......................................................................................................................... 88 Legal Analysis .......................................................................................................................................... 89 SOCIO-ECONOMIC DEVELOPMENT .................................................................................................... 90

CHAPTER 3: FINANCIAL MODEL ................................................... 94 FINANCIAL ASSUMPTIONS AND NOTES.............................................................................................. 94 General ................................................................................................................................................... 94 Debtors Days........................................................................................................................................... 94 Creditors Days......................................................................................................................................... 94 FUNDING/FINANCING (INVESTMENT) ............................................................................................... 95 Funding/Financing (Investment) Requirement ...................................................................................... 95 Funding/Financing Allocation (Use of Funds) ......................................................................................... 95 Investments to be made on fixed assets (Use of Funds) ........................................................................ 96 Beginning Balance Sheet ........................................................................................................................ 97 SALES ............................................................................................................................................... 98 Sales Projections | Annual | Year 1-5 ..................................................................................................... 98 Sales Projections | Monthly | Year 1-2 .................................................................................................. 99 PERSONNEL REQUIREMENTS .......................................................................................................... 101 Personnel Plan ...................................................................................................................................... 101 2017 © All Rights Reserved. Business Plan and Financial Model Prepared by Bplans Africa™ Page 3 of 120

Job Categories....................................................................................................................................... 102 Payroll Expenses | Annual | Year 1-5 ................................................................................................... 103 INCOME STATEMENT ...................................................................................................................... 104 Income Statement | Summary ............................................................................................................. 104 Income Statement | Annual | Year 1-5 ................................................................................................ 105 Income Statement | Monthly | Year 1-2 .............................................................................................. 107 CASH FLOW STATEMENT................................................................................................................. 111 Cash Flow | Annual | Year 1-5 .............................................................................................................. 111 Cash Flow | Monthly | Year 1-2 ........................................................................................................... 112 BALANCE SHEET.............................................................................................................................. 116 Balance Sheet | Annual | Year 1-5 ....................................................................................................... 116 SENSITIVITY ANALYSIS (WHAT-IF SCENARIO STUDY)......................................................................... 117 Projected Income Statement vs. What-If Scenario .............................................................................. 118 Projected Cash Flow Statement vs. What-If Scenario .......................................................................... 119

DISCLAIMER ......................................................................... 120

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CHAPTER 1: EXECUTIVE SUMMARY Business Model Overview: The purpose of this Business Plan is to provide investors and financial institutions with the information necessary to evaluate the scope of Kentile Roofing’s offering in the market and its strategic priorities for its future growth. Additionally, it will serve as a guide for the management by establishing goals against which performance can be measured. Our pre-market research has shown the market to have sufficient room for a business such as Kentile Roofing intends to run. The management style is flexible, progressive and energetic. The enthusiasm of the management, as well as the employees, will greatly stimulate the envisioned growth. Kentile Roofing is a newly established Company that was formed to close the gap and break the monopoly nature of the roof tiling market in the KZN (Kwazulu-Natal) region in South Africa. The company identified its opportunity through its involvement in the construction industry by its founders and management. There is a huge demand for concrete roof tiles in the RDP housing market with only a few big companies controlling the market now due to the prohibitive cost associated with the machinery and equipment to set up a concrete roof tile business. With many of previously disadvantaged individuals not having access to capital markets, controlling the value chain of the roof tile market can only be a pipeline dream. Kentile Roofing has taken a step further than secondary market analysis to secure its target market through letters of intent to do business with the company and off-take agreements with key customers. Key to the company’s success will be its highly organized operations as detailed in this plan coupled with management experience and key contacts (relationships) in the industry.

Opportunity Rationale: One of the key questions that raises up when one is planning to start a business is how the opportunity of business was identified and why that particular business is the one they are starting than any other? In this particular case, the biggest motivation behind the business is that all shareholders run successful construction companies and have seen an opportunity within their value chain that is worth exploiting and doing so in a profitable and sustainable way. The construction companies (owned or run by management) all use concrete roof tiles in some of the projects they are involved in. Besides their own construction companies, a lacuna exists within the region for a new black owned company that will produce quality products at market related prices. Under Michael Porter’s Five Forces Analysis, the establishment of Kentile Roofing will lower the bargaining power of suppliers for the construction companies and thereby increase industry attractiveness of the businesses they currently run. Roof tile manufacturing will be a complementary vertical integration proposition to the partners of the business.

Market Research: Detailed Market Research has been conducted on the Primary Industry in which the company operates, i.e. Construction and Tiling Industry of South Africa. The findings of the research are included under the Industry Analysis section of this Business Plan. Further supporting Market Research that has been conducted (Secondary- and Tertiary Industries) is included in the Industry and Market Section of this Business Plan. The Secondary- and Tertiary Industries referred to are those markets/industries that have either a direct/indirect impact on Kentile Roofing.

Financial Model Overview: It has been assumed that Non-Equity Funding (Business Loan/Debt Financing) will be applied for by the Kentile Roofing. For the purposes of this Business Plan and Financial Projections Model, the company has prepared its projected financial performance over a five (5) year, sixty (60) month period. Private Investor sources (equity financing) may be considered by Kentile Roofing. The investment could be in the form of a shareholders’ loan with an equity component. The extent of the equity taken in the business could be calculated in proportion to the contribution made by the investor(s) and would be for a minority stake (less than 50.0%). During the period of the investment agreement, the investor(s) would share in both the risks and rewards of the venture, receiving dividends and benefiting from capital appreciation. Once the shareholders’ loan(s) have been repaid in full, the investor(s) will provide Kentile Roofing with first right of refusal in the event of the investor(s) wishing to sell their shares and exit the business/project. The required funding assumes that the repayment of the business loan will be completed within no more than ten (10) years for buildings and land whilst equipment and vehicles will be repaid over five (5) years, with monthly Capital- (Principal Amount) and Interest Repayments accounted for (as detailed in both the Profit and Loss and Cash Flow Statements). For the purposes of the Financial Projections Model, the annual interest rate is expected not to exceed 9.50% per annum (Prime Lending Rate1 minus 1.0%). Included in Kentile Roofing’s funding requirement is an amount needed to acquire various Fixed Assets. This loan could be treated as Senior Secured Debt2. The balance of the company’s funding requirement will be allocated towards Start-Up Expenses, Inventory, and Working Capital. Kentile Roofing requires Funding to establish its operations and initiate various marketing initiatives, acquire fixed assets, and fund its start-up costs. An amount has been allocated towards Working Capital to sustain the company during the first year of the projected Financial Model. Kentile Roofing’s funding requirement from External Sources amounts to R50,000,000.00. The owners are looking to obtain its first instalment of funding by the end of December 2017. The currency used throughout the Financial Projections Model is South African Rand (ZAR). 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0

2018

2019

2020

2021

2022

Total sales

79,375,000

97,477,600

104,359,519

111,727,301

119,615,248

Gross profit

29,567,453

38,415,146

41,305,109

44,404,326

47,734,405

Operating expenses

5,139,950

4,894,095

5,202,415

5,531,023

5,881,282

Net business result

12,569,908

19,457,816

21,690,948

24,097,290

26,695,107

Figure 1: Five-Year Profit and Loss Projections

The Prime Lending Rate as at January 2017 amounts to 10.50%, with the 3-month average JIBAR (Johannesburg Interbank Average Rate) at 7.30%; Repo Rate at 6.75%; and the South African Treasury Bills (364 day) averaging 7.38%. Currently, institutions like the IDC, NEF and DBSA are providing financing through either preference shares or standard business loans. It is expected that debt is currently priced at 6-9% above JIBAR, equating to a range of 13-16% at the time of writing, and is typically repaid through periodic (e.g. annual, quarterly, etc.) project/business dividends and/or monthly capital- and interest repayments. 1

Senior Secured Debt refers to debt backed or secured by collateral to reduce the risk associated with lending. An example would be a mortgage; the house is considered collateral towards the debt. If one default on repayment, the bank seizes the house, sells it and uses the proceeds to pay back the debt. Assets backing debt or a debt instrument are considered security, which means they can be claimed by the lender if default occurs. Obviously unsecured debt is higher risk, and as such lenders of unsecured money typically require a much higher return. 2

Financial Projections Model Summary: (R)

2018

2019

2020

2021

2022

Total

Operating results

Kentile Roofing Compound annual growth rates

Total sales

79,375,000

97,477,600

104,359,519

111,727,301

119,615,248

512,554,667

10.80%

Discounts & returns

-1,587,500

-1,949,552

-2,087,190

-2,234,546

-2,392,305

-10,251,093

10.80%

Cost of goods sold

48,220,047

57,112,902

60,967,220

65,088,429

69,488,538

300,877,135

9.56%

Gross profit

29,567,453

38,415,146

41,305,109

44,404,326

47,734,405

201,426,438

12.72%

5,139,950

4,894,095

5,202,415

5,531,023

5,881,282

26,648,765

3.43%

24,427,503

33,521,050

36,102,694

38,873,303

41,853,123

174,777,673

14.41%

Operating expenses EBITDA Non operating income (expense) Depreciation and amortization Interest on loans

2,423,259

12,116,297

4,546,036

4,073,048

3,553,117

2,981,584

2,353,327

17,507,113

-15.18%

17,458,207

27,024,743

30,126,318

33,468,459

37,076,537

145,154,264

20.72%

Company tax

4,888,299

7,566,927

8,435,370

9,371,169

10,381,430

40,643,195

20.72%

Net earnings

12,569,908

19,457,816

21,690,948

24,097,290

26,695,107

104,511,069

20.72%

438,884

955,192

1,056,633

1,175,977

1,303,570

4,930,255

31.28%

Current assets

29,862,701

48,550,020

67,061,614

87,380,332

109,627,557

342,482,224

38.42%

Current liabilities

22,817,961

22,932,943

20,974,094

18,792,137

16,350,714

101,867,849

-7.99%

Net profit / loss

Dividends

Financial position

Working capital

7,044,740

25,617,077

46,087,520

68,588,195

93,276,844

240,614,375

90.76%

Fixed assets (net)

36,945,231

34,521,972

32,098,713

29,675,453

27,252,194

160,493,563

-7.33%

Total assets

66,807,932

83,071,992

99,160,327

117,055,786

136,879,751

502,975,787

19.64%

Shareholders' equity

12,131,024

30,633,648

51,267,963

74,189,277

99,580,814

267,802,727

69.27%

Capital expenditures

Shareholders' capital Number of shares issued

1,000

EBITDA per share

24,427.50

33,521.05

36,102.69

38,873.30

41,853.12

14.41%

Earnings per share

12,569.91

19,457.82

21,690.95

24,097.29

26,695.11

20.72%

Net asset value per share

66,807.93

83,071.99

99,160.33

117,055.79

136,879.75

19.64%

25,482,366

22,298,854

21,678,883

20,990,495

20,222,000

Return on revenues

16.16%

20.37%

21.21%

22.01%

22.77%

Return on assets

25.14%

29.13%

26.11%

24.30%

22.81%

160.40%

70.81%

47.00%

35.98%

2.12

3.20

4.65

6.70

Financial ratios Break even point (R)

Return on equity Current ratio

1.31

Gross profit vs. Operating expenses 60,000,000 50,000,000 40,000,000 Gross profit

30,000,000 20,000,000 10,000,000 0 2018

2019

2020

2021

2022

Figure 2: Gross profit versus Operational Expenses

160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0

2018

2019

2020

2021

2022

Cash in

84,477,500

108,871,085

116,557,383

124,786,335

133,596,250

Cash out

68,642,009

90,483,449

98,366,626

104,811,172

111,716,835

Figure 3: Five-Year Cash Flow Projections

120,000,000 104,049,973

100,000,000

82,170,558

80,000,000

62,195,395

60,000,000 44,004,637

40,000,000 25,617,001 20,000,000

0 2018

2019

2020

2021

2022

Figure 4: Five-Year Ending Cash (Bank) Balance Projections

140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0

2018

2019

2020

2021

2022

Tile Manufacturing

77,175,000

94,894,380

101,593,923

108,766,454

116,445,366

Supporting Services

2,200,000

2,583,220

2,765,595

2,960,846

3,169,882

Figure 5: Sales Projections by Distribution Channel

14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0

2018

2019

2020

2021

2022

2,592,000

2,947,520

3,112,371

3,287,113

3,472,340

General & Administrative

200,200

211,432

223,338

235,958

249,336

Sales & Marketing

413,500

437,260

462,446

489,142

517,441

Management

Drivers Production

824,600

871,256

920,711

977,134

1,034,702

10,405,400

11,024,024

11,679,765

12,374,851

13,111,642

Figure 6: Five-Year Personnel (Payroll) Projections

Key Financial Ratios: Profitability ratios & Break even

2018

Gross profit margin %

38.0%

Return on assets

25.1%

Return on equity

2019

2020

2021

2022

40.2%

40.4%

40.6%

40.7%

29.1%

26.1%

24.3%

22.8%

160.4%

70.8%

47.0%

36.0%

Break even point (R)

25,482,366

22,298,854

21,678,883

20,990,495

20,222,000

Break-even sales monthly average (R)

1,779,879

1,860,478

1,808,428

1,749,208

1,685,167

2018

2019

2020

2021

2022

Liquidity ratios Current ratio

1.31

2.12

3.20

4.65

6.70

Quick ratio

1.31

2.12

3.20

4.65

6.71

Cash ratio

1.12

1.92

2.97

4.37

6.36

Interest coverage

3.84

6.64

8.48

11.23

15.75

Solvency ratios

2018

2019

2020

2021

2022

Total assets / Total liabilities

1.22

1.58

2.07

2.73

3.67

Total liabilities / Total assets x 100%

81.84

63.12

48.30

36.62

27.25

Shareholders' capital / Foreign capital

0.22

0.58

1.07

1.73

2.67

Shareholders' capital / Total assets x 100%

18.16

36.88

51.70

63.38

72.75

Debt to worth ratio

4.51

1.71

0.93

0.58

0.37

Net worth (R)

12,131,024

30,633,649

51,267,964

74,189,277

99,580,813

Working capital

2018 Net working capital (R)

Activity ratios

2019

7,044,740

2018

2020

25,617,077

2019

2021

46,087,520

2020

2022

68,588,195

2021

93,276,844

2022

Inventory turnover Average collection period

19.79

17.25

Total asset turnover

1.16

1.15

1.03

0.94

0.86

Dividend payout

0.05

Sustainable Growth Rate (SGR)

2018

2019

ROE x Earnings retention ratio ROA x Retention ratio x Debt-to-equity

Z-score Bankruptcy Prediction Model

107.6%

2018

Z-score ratio

2020

2022

152.4%

67.3%

44.7%

34.2%

47.4%

23.2%

13.3%

8.1%

2019

2.51

2021

2020

3.09

2021

3.30

2022

3.58

3.97

(R)

Operating cash flow & Free cash flow

2018

EBIT

2019

2020

2021

2022

22,004,244

31,097,791

33,679,435

36,450,043

39,429,864

2,423,259

Income tax

6,161,188

8,707,382

9,430,242

10,206,012

11,040,362

Operating cash flow (OCF)

18,266,315

24,813,669

26,672,452

28,667,290

30,812,761

Capital expenditure (Capex)

Change in working capital

7,044,740

18,572,336

20,470,443

22,500,675

24,688,649

Free cash flow (FCF)

11,221,575

6,241,333

6,202,009

6,166,615

6,124,112

+ Depreciation & Amortization -

Internal Rate of Return (IRR): Annual Interest Rate (Discount Rate3)

12.900%

Investment/Funding (Investments from External Sources)

50,000,000

Year

Net Cash Flow (Change in Cash)

2018

15,835,491

2019

18,387,636

2020

18,190,758

2021

19,975,163 21,879,415

2022

15,315,056

Net Present Value (NPV4)

24.166%

Internal Rate of Return (IRR5)

3 Discount Rate refers to the interest rate used to discount future cash flows to the present value, which is a key variable in the process of determining

the NPV. A company’s weighted average cost of capital (after tax) is often used, but many people believe that it is appropriate to use higher discount rates to adjust for risk, opportunity cost, or other factors. Another approach to choosing the discount rate factor is to decide the rate which the capital needed for the project/business could return if invested in an alternative venture. If, for example, the capital required for Business A can earn 15.00% elsewhere, use this discount rate in the NPV calculation to allow a direct comparison to be made between Business A and the alternative. For some professional investors, their investment funds are committed to target a specified rate of return. In such cases, that rate of return should be selected as the discount rate for the NPV calculation. In this way, a direct comparison can be made between the profitability of the project/business and the desired rate of return. The higher the potential risk of the Project/Business, the higher the discount rate to be used. Net Present Value (NPV) refers to the different between the present value cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyse the profitability of an investment or project. In finance, the net present value (NPV) or net present worth (NPW) is defined as the sum of the present values (PVs) of incoming and outgoing cash flows over a period. 4

The discount rate often used in capital budgeting that makes the net present value of all cash flows from a project equal to zero. The higher a project's internal rate of return, the more desirable it is to undertake the project. As such, Internal Rate of Return (IRR) can be used to rank several prospective businesses/projects to invest in. Assuming all other factors are equal among the various projects/businesses, the project/business with the highest IRR would probably be considered the best and undertaken first. IRR is sometimes referred to as ‘economic rate of return (ERR)’. 5

One can think of IRR as the rate of growth a project/business is expected to generate. While the actual rate of return that a given project/business ends up generating will often differ from its estimated IRR rate, a project/business with a substantially higher IRR value than other available investment options would still provide a much better chance of strong growth. IRR’s can also be compared against prevailing rates of return in the securities market, e.g. the JSE (Johannesburg Stock Exchange). If an investor can't find any projects/businesses with IRRs greater than the returns that can be generated in the financial markets, it may simply choose to invest its investment funds into the market (in this case, the local Johannesburg Stock Exchange). Over the past 90 years, i.e. since the beginning of 1925, the South African equity market has delivered an average annual real return of 8.4%, which means that a lump sum equivalent of R1,000 today, invested in 1925, would have grown to more than R1,35 million at the end of 2014 after inflation is stripped out. Over the past 10 years (January 2006 to December 2015) annual returns on the FTSE/JSE All-Share averaged 12.900% per annum (before inflation). The FTSE/JSE Top 40 return 12.750% during the same period. The SA All Bond Index (ALBI) returned an average 8.910% per annum and the money market, represented by the three-month interbank lending rate (JIBAR) returned an average 7.300% per annum before any fees and inflation. With the above being said, a potential investor – when comparing an investment into a project/business to the rates of return of the South African equity market – would seek an IRR of at least 12.900%. Index % (ZAR)

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

FTSE/JSE All-Share

41.2%

19.2%

-23.2%

32.1%

19.0%

2.6%

26.7%

21.4%

10.9%

5.1%

FTSE/JSE Top 40

40.9%

19.0%

-23.6%

31.7%

17.2%

22.2%

26.1%

22.8%

9.2%

7.5%

INVESTOR PITCH (BUSINESS MODEL CANVAS)

Key Partners

Key Activities

Construction Company Owners

Design and Manufacturing of Concrete Roof Tiles

Implementation Agents

Reaching the Target Market through Online and Retail Distribution Channels

Hardware Stores

Key Resources

Marketing Companies

Designers and Production Engineers

Protile Manufacturers (Plant Supply)

Raw Material Suppliers Marketing and PR Expertise (Management Team/Shareholders)

Value Proposition 100% Black Owned Company High-Quality Products Customisation of product quality to suit different environments when necessary Add to low-cost housing capabilities Price of products in comparison to the market but with a service advantage Accessibility of products through leading retailers Convenience/Usability

FINANCIAL DASHBOARD (EXPECTATIONS)

24.166% IRR R79.4 million R119.6 million (Year 5)

(Year 1)

R50 million Repayment Period: 120 Months for Building and Land | 60 Months for Equipment Annual Interest Rate: 9.50%

Funding Required

Sales

(R24.4 million)

R41.8 million

(Year 1)

(Year 5)

EBITDA

R29.6 million R47.7 million (Year 1)

(Year 5)

Gross Profit

Around - R1,8 million on first year

Company Tax

Break-Even Point

Operational Expenses

R4.8 million

R10.3 million

(Year 1)

(Year 5)

R5.1 million

R5.8 million

(Year 1)

(Year 5)

With Start-up Expenses

...............................................................................................

CHAPTER 2: BUSINESS MODEL INTRODUCTION The successful delivery of the government and the private sector infrastructure programmes depends on the effective functioning of many stakeholders - including the building and construction materials sector. Without the necessary building and construction materials being available and delivered timeously, and at an appropriate price and quality, these infrastructure delivery programmes could well falter. Against the need for a healthy building and construction materials sector, Kentile Roofing was formed. Economic Cooperation According to SADC regional standardisation president Dr Eve Gadzikwa, industrialisation is the most effective driver of structural poverty reduction, owing to its capacity to expand employment opportunities, boost productivity and increase wages. She stresses that industrialisation can contribute to transformation in the agriculture, trade and transport sectors, and is key to economic development. “Industrialisation requires a focus on improving competitiveness and ease of doing business, as well as enhancing the quality of products that can compete internationally,” she says, adding that it is crucial to strengthen economic cooperation among SADC countries. Strengthening regional economic cooperation, however, also requires reforming the business environments in SADC member States. Barriers to Entry It is evident that the market power of large firms within the roof tiling industry of South Africa, whether exerted unilaterally or through coordination with each other, harms economic development and low-income groups. Such power means higher prices for goods and services and distorts the development path of economies where it relates to the pricing of important inputs. The recent work of the South African competition authorities has highlighted the extent of such arrangements and the regional and international scope that many take. For example, cartels have operated across southern Africa in cement, concrete products and fertilizer. Barriers to entry, by creating and reinforcing the market power of large firms, tend to lead to higher prices, lower levels of innovation and a less competitive economy. In a country like South Africa where there are significant challenges of unemployment, poverty, and inequality, it is critical to understand the nature and extent of barriers to entry in the economy, in order to ensure that regulatory and policy interventions have a meaningful impact on creating inclusive and shared growth. We are a small player within a small and fast-growing market and we do not want to be part of the cartels of the industry. By offering a unique solution to our customers coupled with service and operational excellence, we expect to break barriers to entry within this industry.

COMPANY OVERVIEW

Problem worth Solving – Market Needs Kentile Roofing is a newly established Company that was formed to create a Truly African High-Quality Tile Manufacturing Brand aimed at an African market. With a strong focus on the development of Skills and the creation of jobs for Local People, the company seeks to penetrate the South African Stage with bespoke roof tiling solutions distributed through three unique platforms, i.e. E-Commerce, Retail Stores (e.g Hardware Stores), and direct sales from the manufacturing site to large entities like construction companies. Our market opportunity has been evaluated on these 10 key points: 1. Growing Urbanization of cities like Durban in South Africa can only grow the housing backlog of the local government. As early as in 2012, the city of Durban had a housing backlog of over 410 000 units6. While the private housing market in South Africa has generally catered for the upmarket segment, new policies have had a positive effect on the democratization of access to secure housing across the country. These include offering low-income families access to mortgages. 2. There is an increase in infrastructural development spending by the government of South Africa. Govt budgets R987bn for infrastructure spending. National Treasury has budgeted R987.4bn for infrastructure over the next three years, with investments set to be made in energy, transport, and telecommunications7. This is according to Treasury’s medium-term budget, which outlined how the government plans to prioritise infrastructure investment to ease bottlenecks and boost growth. In many types of infrastructure, primary construction materials like roof tiling are needed and the impetus is that an increase in spending is a positive indicator for the success of our company. 3. RDP Housing will continue for the foreseeable future. Ever since the RDP Housing program was started in 1994, it has continued to enjoy success as a key government socioeconomic initiative to undo the effects of apartheid. As long as RDP Houses are being built, the need for the products produced by Kentile Roofing will continue to be present. How we price ourselves and serve the market will, however, remain the key to this market. 4. B-BBEE procurement policies have shifted the way business is done in South Africa. Although completely voluntary, companies now prefer to procure services and products from other companies that comply with the relative legislation. Kentile Roofing which is at B-BBEE level 1, has positioned itself as a viable alternative and partner of first choice for construction companies in the KZN region. 5. B-BBEE Levels of our competitors show that the industry is not yet fully transformed. By analyzing a few of our competitors, we find that they are B-BBEE level 3-6 contributors and this shows how the industry is not yet transformed. 6. Recent reports in the media show that major players in the industry are consolidating to save costs and streamline operations and efficiency. However, we as Kentile Roofing see consolidation as being two faced in that although it reduces costs for both players, it tends to lean towards building industry monopolies. Industry Consolidation will leave a few key players to control the market and hence increase monopolization in all aspects. 7. Legislation meant to support the construction industry in South Africa shows an increase in standards of building materials used on buildings. Accreditation of building material through SABS can only mean that quality will consistently be a need in the market; a need we can fulfill. 8. We have industry contacts and Industry Experience that uniquely qualifies us to run this business. We will not sit down and watch numerous opportunities along our value chain disappearing before us.

6 7

https://www.iol.co.za/dailynews/news/city-housing-backlog-will-take-82-years-to-clear-1312608 http://www.fin24.com/Budget/Budget-and-Economy/govt-budgets-r987bn-for-infrastructure-spending-20161026-2 2016 © All Rights Reserved. Business Plan and Financial Model Prepared by Bplans Africa™ Page 18 of 120

Management Team and Shareholding

Details of shareholders

Shareholder A

Shareholder B

Shareholder C

Shareholder D

Name and Surname or Name of Institution

Edwin Pillay

Lebogang Zulu

Sydwell Zulu

Kessa Pillay Family Trust

Shareholding (%)

40.00%

20.00%

10.00%

30.00%

Details of Directors and/or Management Team

Manager A

Manager B

Manager C

Manager D

Manager E

Name and Surname

Sydwell Zulu

Michele Pillay

Edwin Pillay

TBA

Position

Director

Production Manager

Sales Manager

Monthly basic salary

R20,000

R30,000

Responsibilities

Name and Surname

Position

Responsibilities and job specifications

Manager A

Sydwell Zulu

Director

Sales and Marketing

Manager B

Michele Pillay

Director

Day to Day Financial Management

Manager C

Edwin Pillay

Director

Overall running of the company

Manager D

TBA

Production Manger

Production Management

Manager E

TBA

Sales Manager

Sales and Marketing Management

Shareholder E

Management Team Gaps We believe that the only outstanding management team member is the production manager whom we are currently in search of. The machinery we use is semi-automated which should make it easier for the new production manager to use and manage. However, we do realize the importance of experience in production management and that is why we offer a higher salary for such a position.

Organizational Structure

Director(s)

Secretary

Administration

Accounting/Financial staff

Purchasing/Procurement

Procurement staff

Production

Sales & Marketing

Sales staff Marketing & PR staff

Production staff Quality control

Support

Distribution

Distribution staff

Service staff

The E-Commerce Industry Growth in Mobile E-Commerce ‘Immense’ Opportunity for Retailers Mobile spend projected to increase by 123% by 2018, according to PayPal and Ipsos. TechCentral/20 February 2017 Online spending in South Africa is expected to reach R53 billion by next year, from R37.1 billion in the past 12 months, according to new research commissioned by PayPal and conducted by Ipsos. It’s the third time the companies have done the annual research, which focuses on cross-border e-commerce. It surveyed online domestic and cross-border shopping habits of more than 28 000 consumers in 32 countries, including South Africa. Online shopping has been slow to take off in South Africa, but in recent years has picked up steam, the researchers found. “The research indicated that 58% of online adults in South Africa shopped online over the past 12 months, amounting to an estimated total spend of R37.1 billion,” the companies said. “The increase in online spending is also forecast to continue, with over half of online adults interviewed (53%) saying they will increase their online spending in the next 12 months.” Respondents cited convenience of shopping online, planning to save more money and change in disposable income as reasons for the expected increase. When it comes to buying products online, the most popular online categories for South African consumers were downloadable digital entertainment and education items (purchased by 53% of online shoppers in the past 12 months), event tickets (47%), and clothing, apparel and footwear (45%). Cross-border online spending is common in South Africa, with 43% of South African online shoppers stating that they shopped online from websites in another country in the past 12 months. The main drivers encouraging South African online shoppers to buy cross-border online were free shipping (60% of online shoppers say this would make them more likely to shop from websites in another country), availability of local currency for payment (58%) and secure ways to pay (56%). An estimated 1.4 million South Africans shopped internationally, spending an estimated R8.8 billion. Cross-border shopping is estimated to grow by 38% in 2017 based on shoppers’ own predictions. Cross-border shoppers from South Africa are making purchases all over the world, with the US being the most popular destination (24% of online shoppers claim to have made a purchase from websites in America in the past 12 months) followed by China (13%) and the UK (12%). The research shows that South African cross-border shoppers who buy from the US did so instead of purchasing from local websites because of access to products that they can’t find here (selected by 71% of those who shop in the US). Other reasons cited for shopping on US websites included discovery of new and interesting products (59%) and the reputation of online stores in the US (59%). The top reason to buy from China was better prices (selected by 88% of those who shopped in China). Mobile E-Commerce With high rates of mobile penetration in South Africa, online shoppers are increasingly opting to make purchases on their mobile devices, resulting in an estimated 65% growth in online spend via mobile devices (smartphone or tablet) between 2015 and 2016, to reach about R9.5 billion, with momentum expected to continue. This provides an immense opportunity for online retailers, as mobile spend is projected to increase by 123% by 2018, PayPal and Ipsos said. In the past 12 months, 43% of cross-border shoppers stated that they shopped cross-border via smartphone, while 21% stated they used a tablet for their cross-border purchases. For cross-border shopping, 72% of online shoppers admitted to abandoning a cross-border purchase. The main reasons for this abandonment included high shipping costs (a reason for 55% of those who abandoned a purchase), uncertainty about duties/taxes/customs fees (33%) and long delivery times (32%). Those who do not shop cross-border cited delivery or shipping costs (48%) as concerns. Customs fees and concerns that they might not receive the item also featured highly.

Key Findings: Effective Measure14 surveyed over 12,000 Internet users in South Africa on their online shopping habits and uncovered the following key insights: 56% of respondents have shopped online. 48% are 25-44 years old. Both men and women shop online. Respondents live in Gauteng, KZN and the W Cape. 50% of respondents have a household income of R20,000+. The respondents are educated, with 58% having a post matric qualification and they are economically active, with over 60% working full-time. 57% are in a relationship or are married, and 20% have children aged 4-10, while 21% have no children. They are joint decision makers with 48% being a joint decision maker and 40% being the main decision maker. 87% accessed the internet yesterday and 26% spend 5+ hours on the Internet on an average day - a significantly higher proportion than those who spend 5+ hours a day on TV, radio or print. 38% are accessing the Internet via a mobile phone and 29% access from a work or personal computer. 59% of online shoppers prefer to do their online shopping on a desktop computer or laptop and 27% prefer to use their mobile phone. 55% are digital natives, being very similar to people who are at ease with computers, cell phones and new technology. 87% are very or quite similar. Email, search, banking, social networking, checking the weather and finding directions are the top six activities that online shoppers partake in online. 56% shop weekly or monthly. Books, tickets for events, travel tickets, hotel reservations and DVDs, videos or music are the top five items they purchased via the Internet. 59% say that an “on delivery” payment option would motivate them to do more online purchases. 58% of respondents prefer to pay on card and 23% would prefer to pay on delivery. Guaranteed returns at 41% is the overriding assurance that would make them feel most comfortable shopping online. They felt most comfortable doing their first online payment with bill payment merchants and least comfortable with automobile merchants. Travel tickets and books were the items most online shoppers purchased last. 45% received their online purchases within 1-2 working days. 74% received their purchase within 5 working days. 58% were very satisfied with the speed of delivery. 49% pay for delivery and 38% did not pay any delivery fee. Of those that paid, 58% paid between R200-299. Saving time, access to product reviews, special offers and price comparisons are the four main reasons online shoppers like to shop online. 72% use price comparison sites. Cheaper or free delivery, a payment method they can trust and an easy return policy are the three most important improvements that would make them shop online even more. Credit cards, bank transfers and debit cards are their preferred method of payment. Purchase discounts are the overriding incentive which would motivate online shoppers to do online shopping with a card. 65% shop online occasionally or only for certain products or services. 60% are happy with the level of online shopping they are doing at the moment.

14 Effective Measure is a leading provider of digital audience, brand and advertising effectiveness measurement and targeting solutions, bringing best practice

online measurement data to premium publishers, agencies, networks, advertisers and researchers. The EM solutions offer brands, media and agencies invested in Oceania, Europe, Southeast Asia, Middle East North Africa and South Africa, a clear insight into their online audience and the ever-growing Internet population. www.effectivemeasure.com.

Visa Inc. (NYSE: V) is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world’s most advanced processing networks — VisaNet — that is capable of handling more than 65,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead with prepaid or pay later with credit products. The Interactive Advertising Bureau South Africa, formerly the DMMA, is an independent, voluntary, non-profit association focused on growing and sustaining a vibrant and profitable digital industry within South Africa. The IAB South Africa represents the digital industry across all sectors including the media, the marketing community, government and the public, and also acts as the channel through which international bodies can enter the South African digital market. The IAB South Africa currently represents over 96 local online publishers and over 93 creative, media and digital agencies, between them accounting for more than 16 million local unique browsers and 440 million page impressions. The IAB South Africa strives to provide members with a platform through which they can engage, interact and address digital issues of common interest, thereby stimulating learning and commerce within the South African digital space. SAARF is the name by which the South African Audience Research Foundation is familiarly known (following a name change in July 2012 from the South African Advertising Research Foundation, to correctly reflect what the company does: audience research). SAARF’s main objective is to direct and publish media audience and product/brand research for the benefit of its stake-holders, thereby providing data for target marketing and a common currency for the buying and selling of media space and time. SAARF has thus the responsibility to measure the audiences of all traditional media such as newspapers, magazines, radio, television, and cinema and out of home media. This is done by ensuring that the necessary joint industry research surveys are conducted every year to provide updated audience information for all traditional media (AMPS, RAMS, TAMS and OHMS). 2016 © All Rights Reserved. Business Plan and Financial Model Prepared by Bplans Africa™ Page 42 of 120

Competitive Analysis Main Competitors Name Location

Key Strengths

Key Weaknesses

Competitor A Monier Coverland

Competitor B Marley Roofing

Competitor C Kulucrete Roofing

Durban, South Africa

Trurolands, KwaZulu-Natal, South Africa

Durban, South Africa

Well branded with own retail stores

High level quality designs. Classified as closest practical competitor

Designs can be competitively capitalised on

Lack of local skills development

Competitor D Timber Rooftech

Competitor E Durban Waterproofing

Phoenix Industrial Park, Durban

Durban, South Africa

Relatively cheaper products than most of the market. Good customer support

Strong history and emphasis on timber for roofing

Well-designed website and multiple complementary offerings for the construction industry

Highly expensive and not market related. Very high overheads. Very small customer base.

Expensive materials and only suited for a few segments like Gazebos and any thatched roofing solutions.

Their lack of specializing makes them a jack of all trades and master of none

Kentile Roofing will as part of its continuous market research; employ the following strategies to combat competitive pressures: 1.

Detailed Analysis of our Competitors: Who they are, what they are offering and what their unique selling point (USP) is. This will identify the areas we need to compete in, as well as giving us a platform for differentiating ourselves.

Detailed Analysis of our Customers: Our customer expectations, establishing what matters to our customers and revising our marketing strategy accordingly.

Communicating a Tangible Differentiation Strategy: It's essential to give our customers good reasons to use our products/services rather than a rivals’ products/services. Our USP (Unique Selling Proposition) will tap into what customers want and it will be clear and obvious; no-one should have to ask what makes you different.

We will Step up our Marketing: We will make every effort to tell people who we are, what we sell and why they should buy from us.

We will Continuously Update our Image: Simple steps such as the design of our business cards, stationery, and our website and email correspondence will reflect our USP.

We will look after our Existing Customers: They will be our competitors’ target market. We will provide better customer service by being more responsive to their needs and expectations. If feasible, we will consider offering low-cost extras such as improved credit terms, discounts or loyalty schemes. We understand that it's cheaper and easier to keep customers than to find new ones.

We will Target New Markets: Selling into a greater number of markets can increase our customer base and spread our risk.

We will have a Long-Term Outlook: Businesses that plan for growth are more successful than those that are happy to follow the status quo. We will keep up with developments in our sector, follow consumer and industry trends, invest in new technology and - crucially - have a clear idea of where we want to be in one, three and five years' time.

Marketing Initiatives (Programmes) All “first prospective customer contacts” will be loaded onto Kentile Roofing’s CRM software platform. An Elevator Pitch Script, professional introduction and/or welcome script will be crafted for all scenarios where new business contacts may occur. This systematic information gathering will focus on obtaining five (5) key pieces of data – first name, email address, contact number, enquiry details and outcome. The capturing of such information will state where such contacts originate from and who they are. All staff will be trained on and provided with these scripts for use at any points of contact to ensure that the core message being conveyed is homogenous, yet allowing for individual tweaking to match individual personalities. Pre- and Post-Purchase Communications will be vital to identify the level of satisfaction of customers to ensure that referrals are obtained from highly satisfied clients. Crucial to this will be the capturing of pertinent information such as level of satisfaction, overall customer experience and customer recommendations. Further strategies to assist in building brand awareness include:    

Client testimonial page on the website; Search Engine Optimisation (SEO) and Web Optimisation to ensure high search engine listings; Defined Complaint and Resolution Policy as well as on-going staff training to empower them to take corrective measures at time of incidents as well as to define parameters and code of conduct; and Contact details and a personal undertaking by management detailing processes, procedures and promises for the prompt and personal resolution of any dissatisfaction/complaints.

Initial market penetration, branding and exposure will require both direct-response and conventional advertising to achieve rapid market share and develop appropriate barriers to entry. Consistent and methodical tracking of the result of each advertising campaign (through media statistics and the tracking of lead sources) will ensure that such campaigns and choice of media are focussed on the sole objective of ROI maximisation from such activities. Kentile Roofing will research the media industry in the target market area to focus on and endeavour to form relationships with credible and reputable media partners. Media and Communications Companies are always looking for partnerships and most of these can be utilised at minimal or low cost. Kentile Roofing will seek co-branding initiatives that spread advertising costs while increasing brand awareness and expanding the organisational footprint. There are numerous companies within the target market area that are willing to pay to co-brand, provided you have the right deal/or marketing opportunity for them in place. Kentile Roofing will explore new and innovative ways to increase online exposure by advertising on partner websites, search engines, business directories and online newsletters. Kentile Roofing will use several relationships to promote the company. Through participation in Chambers of Commerce and relevant Business Associations, the company will contact key stakeholders across various industries.

EXTERNAL ENVIRONMENTAL FORCES ANALYSIS

Evaluation Methodology: As an integral qualitative input to this market analysis, and considering the difficulty to quantify certain of the identified market segments uptake potential, the inclusion of a detailed PESTEL Analysis is deemed to be of importance. The purpose of this analysis is to assist in the isolation of the behaviours and habits of institutions in this industry and market, as evaluated from a macro industry perspective. PEST stands for ‘Political, Economic, Social, and Technological’ and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. Some analysts added Legal and Environmental factors expanded it to PESTEL. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro environmental factors that the company should take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. Political factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or are provided (merit good) and those that the government does not want to be provided (demerit good or merit bad). Furthermore, governments have great influence on the health, education, and infrastructure of a nation. Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers). Technological factors include technological aspects such as research and development activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation. Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products. Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones. The ‘tool’ consists of a library of statements that the prospective entrepreneur (user) must consider. Each statement is linked to a specific category. Prior to awarding a rating to each component, the user must firstly answer the question as to whether he/she agrees or disagrees with the statement. In answering each statement, the ‘tool’ will determine whether the statement is in fact an external environmental force that may impact the business. For example, a statement under the category of ‘Economic’ may read: “The unreliability of electricity provision and periodic, unscheduled load shedding impacts my business”. If the user agrees with the statement, the ‘tool’ will classify the statement as an external (economic) force. Subsequently, each potential external force must be rated by rank of importance. In evaluating the external forces (e.g. technological), the following components are to be considered:   

Importance. Importance shows how important each external force is to the prospective entrepreneur in its industry as some might be more important than others. A number from 0.01 (not important) to 1.0 (very important) should be assigned to each force. Probability. Probability of occurrence is showing how likely the external force will have any impact on the business. It should be rated from 1 (low probability) to 3 (high probability). Score. Importance multiplied by probability (Importance x Probability) will give a score by which a prospective entrepreneur can prioritise all the external forces. The highest scores will be earmarked as the external forces of highest priority. Attention should primarily be given to forces that have the highest score.

External forces with the highest priority should be addressed by applying the relevant resources and strategies. 2017 © All Rights Reserved. Business Plan and Financial Model Prepared by Bplans Africa™ Page 80 of 120

Rating Key: No/Low Probability of Occurrence

Medium Probability of Occurrence

High Probability of Occurrence

0.1

0.2

0.3

0.2

0.4

0.6

0.3

0.6

0.9

0.4

0.8

1.2

0.5

1.5

0.6

1.2

1.8

0.7

1.4

2.1

0.8

1.6

2.4

0.9

1.8

2.7

Importance to Business

Probability of Occurrence

High Probability of Occurrence

Political Analysis Timing of Strategic Action

Category

Statement

High Probability of Occurrence

BBBEE

Medium Probability of Occurrence

Geopolitical Environment

Medium Probability of Occurrence

Government Confidence

Medium Probability of Occurrence

Government Economic Policies

No/Low Probability of Occurrence/Not Applicable

Government Grants

Government grants exist for certain industries to apply for

No/Low Probability of Occurrence/Not Applicable

Government Pressure

Unwarranted pressure from government

Medium Probability of Occurrence

Government Service Delivery

Effective government service delivery is lacking

Medium Probability of Occurrence

Government Trade Policies

Restrictive government trade policies hamper economic growth

Medium Probability of Occurrence

Government's Incentives

Government’s incentives for ‘specific’ industries exist

No/Low Probability of Occurrence/Not Applicable

Lobbyists and Activists

Lobbyists and activist activity are preventing the business from implementing certain strategies

High Probability of Occurrence

Political Instability

The local political environment is very unstable

High Probability of Occurrence

Social Instability

The local economy us plagued by political unrest and social instability

Broad-Based Black Economic Empowerment (BBBEE) legislation has an impact on our business The geopolitical environment lends itself to further economic uncertainty and challenges The private sector’s confidence in the local government is low which impacts strategic decisions and investments The current government economic policies do not support economic growth

CHAPTER 3: FINANCIAL MODEL FINANCIAL ASSUMPTIONS AND NOTES

General First Year of Operations

2018

First Month of Accounting

January 2018

First Month of Sales

February 2018

Company Tax %

28.00%

Employee Tax % (PAYE, UIF, etc.)

20.00%

VAT %

14.00%

VAT Payment Method

Bimonthly

Debtors Days Year

2017

2018

2019

2020

2021

% Sales 30 Days

50.0%

% Sales Credit Card

25.0%

Total Sales on Credit

75.0%

% Sales on Cash

25.0%

Creditors Days Year Cash Purchases % Number of Days Payable

2017

2018

2019

2020

2021

100.0%

FUNDING/FINANCING (INVESTMENT)

Funding/Financing (Investment) Requirement (R) Short term or Long term

Principal amount

Start date

Term in months

Interest %

Monthly payment

Initial payment starts 1 month after receipt?

Property Bond

Long term

8,000,000

Jan 2018

120

9.50%

103,518

Yes

Building Finance

Long term

10,000,000

Jan 2018

120

9.50%

129,398

Yes

Machinery and Equipment

Long term

16,000,000

Jan 2018

120

9.50%

207,036

Yes

Vehicle Finance Working Capital + Inventory

Short term

6,000,000

Jan 2018

9.50%

126,011

Yes

Short term

10,000,000

Jan 2018

9.50%

210,019

Yes

Funding/Financing Allocation (Use of Funds) Start-Up Costs

Expenses to be Funded

Amount

Marketing and Advertising

200,000

Conveyancing Fees

300,000

Architect / Engineer

300,000

Company Identity

50,000

Subtotal

850,000

VAT %

119,000

Total

969,000

Investments to be made on fixed assets (Use of Funds) (R)

New fixed assets

DISINVEST Remaining life in years

Original book value

Accumulated depreciation

Salvage value

Depreciation method

Buildings Main building

10,000,000

SLN

50,000

SLN

300,000

SLN

300,000

SLN

Jessop Tile Plant

14,370,291

SLN

Bobcat

500,000

SLN

5,848,200

SLN

Office equipment Office equipment

Electronic equipment Workshop Equipment

Furniture & Fixtures Desks, Chairs etc

Machinery

Vehicles Powerstar Trucks

Non-depreciable assets Land

8,000,000

Date of sale

Sales amount

Beginning Balance Sheet Kentile Roofing (R)

ASSETS

01/01/18

Current assets Cash/Bank

9,781,509

Start-up costs

850,000

Stock/Inventory Short term investments Other Total current assets

10,631,509

Fixed assets Bonds & Securities Buildings

10,000,000

Office equipment

350,000

Furniture & Fixtures

300,000

Machinery

14,870,291

Vehicles

5,848,200

Goodwill Non-depreciable assets

8,000,000

Less: Accumulated depreciation Total fixed assets

39,368,491

TOTAL ASSETS

50,000,000

LIABILITIES AND EQUITY Current liabilities Suppliers' credit Short term loans

16,000,000

Other short term liabilities Total current liabilities

16,000,000

Long term liabilities Long term loans

34,000,000

Other long term debts Total long term liabilities

34,000,000

Shareholders' equity Common stock TOTAL LIABILITIES AND EQUITY

50,000,000

Job Categories No. of

Start

End

Staff

date

Monthly rate

Overtime

wkday hrs

wkend hrs

2018 No. staff

Payroll

Overtime

Bonus

Burden

Total

Management Managers

20,000.00

720,000

144,000

864,000

Sales Manager

30,000.00

720,000

144,000

864,000

Production Manager

30,000.00

720,000

144,000

864,000

Office Manager

8,000.00

96,000

8,000

19,200

123,200

Receptionist

5,000.00

60,000

5,000

12,000

77,000

General & Administrative

13,000 Sales & Marketing Sales Rep

10,000.00

240,000

10,000

48,000

298,000

Accounts Clerk

7,500.00

90,000

7,500

18,000

115,500

17,500 Drivers Truck Drivers

12,000.00

288,000

24,000

57,600

369,600

Tipper Driver

8,000.00

192,000

16,000

38,400

246,400

Driver Assistants

3,500.00

168,000

7,000

33,600

208,600

47,000 Production Dry Stack Area Staff

3,500.00

504,000

21,000

100,800

625,800

Plant Operators

15,000.00

1,080,000

45,000

216,000

1,341,000

Dispatch Clerk

144,000

6,000

28,800

178,800

6,000.00

Workshop Mechanic

6,000.00

144,000

6,000

28,800

178,800

Machine Assistant

5,000.00

2,400,000

5,000

480,000

2,885,000

Machine Operator

12,000.00

4,320,000

12,000

864,000

5,196,000

Payroll Expenses | Annual | Year 1-5 Kentile Roofing

(R)

2018

2019

2020

2021

2022

Total

Management Headcount Payroll

2,160,000

2,289,600

2,426,976

2,572,595

2,726,950

12,176,121

200,000

800,000

Overtime Bonuses Payroll burden Total cost

432,000

457,920

485,395

514,519

545,390

2,435,224

2,592,000

2,947,520

3,112,371

3,287,113

3,472,340

15,411,345

General & Administrative Headcount

156,000

165,360

175,282

185,798

196,946

879,387

Bonuses

13,000

65,000

Payroll burden

31,200

33,072

35,056

37,160

39,389

175,877

200,200

211,432

223,338

235,958

249,336

1,120,264

Payroll Overtime

Total cost

Sales & Marketing Headcount

330,000

349,800

370,788

393,035

416,617

1,860,241

Bonuses

17,500

87,500

Payroll burden

66,000

69,960

74,158

78,607

83,323

372,048

413,500

437,260

462,446

489,142

517,441

2,319,789

Payroll Overtime

Total cost

Drivers Headcount Payroll

648,000

686,880

728,093

771,778

818,085

3,652,836

Overtime Bonuses

47,000

51,000

53,000

245,000

Payroll burden

129,600

137,376

145,619

154,356

163,617

730,567

Total cost

824,600

871,256

920,711

977,134

1,034,702

4,628,403

8,592,000

9,107,520

9,653,971

10,233,209

10,847,202

48,433,903

Production Headcount Payroll Overtime Bonuses

95,000

475,000

1,718,400

1,821,504

1,930,794

2,046,642

2,169,440

9,686,781

Total cost

10,405,400

11,024,024

11,679,765

12,374,851

13,111,642

58,595,683

Overall total

14,435,700

15,491,492

16,398,632

17,364,199

18,385,461

Payroll burden

Headcount Payroll

110

11,886,000

12,599,160

13,355,110

14,156,416

15,005,801

67,002,487

Overtime Bonuses Payroll burden Total personnel cost

172,500

372,500

376,500

378,500

1,672,500

2,377,200

2,519,832

2,671,022

2,831,283

3,001,160

13,400,497

14,435,700

15,491,492

16,398,632

17,364,199

18,385,461

82,075,484

INCOME STATEMENT Income Statement | Summary Kentile Roofing

(R)

2018

2019

2020

2021

2022

Revenue on operations Total sales

77,787,500

100.0%

95,528,048

100.0%

102,272,328

100.0%

109,492,755

100.0%

117,222,943

100.0%

Cost of goods sold

48,220,047

62.0%

57,112,902

59.8%

60,967,220

59.6%

65,088,429

59.4%

69,488,538

59.3%

Gross profit

29,567,453

38.0%

38,415,146

40.2%

41,305,109

40.4%

44,404,326

40.6%

47,734,405

40.7%

2,680,250

3.4%

3,099,823

3.2%

3,317,890

3.2%

3,551,298

3.2%

3,801,125

3.2%

Personnel

613,700

0.8%

648,692

0.7%

685,784

0.7%

725,101

0.7%

766,777

0.7%

Promotion

300,000

0.4%

309,000

0.3%

318,270

0.3%

327,818

0.3%

337,653

0.3%

Insurance

204,000

0.3%

210,120

0.2%

216,424

0.2%

222,916

0.2%

229,604

0.2%

Transportation

108,000

0.1%

219,420

0.2%

232,585

0.2%

246,540

0.2%

261,333

0.2%

Production

384,000

0.5%

407,040

0.4%

431,462

0.4%

457,350

0.4%

484,791

0.4%

5,139,950

6.6%

4,894,095

5.1%

5,202,415

5.1%

5,531,023

5.1%

5,881,282

5.0%

24,427,503

31.4%

33,521,050

35.1%

36,102,694

35.3%

38,873,303

35.5%

41,853,123

35.7%

Depreciation & Amortization

2,423,259

3.1%

2,423,259

2.5%

2,423,259

2.4%

2,423,259

2.2%

2,423,259

2.1%

Interest

4,546,036

5.8%

4,073,048

4.3%

3,553,117

3.5%

2,981,584

2.7%

2,353,327

2.0%

17,458,207

22.4%

27,024,743

28.3%

30,126,318

29.5%

33,468,459

30.6%

37,076,537

31.6%

4,888,299

6.3%

7,566,927

7.9%

8,435,370

8.2%

9,371,169

8.6%

10,381,430

8.9%

Net business result

12,569,908

16.2%

19,457,816

20.4%

21,690,948

21.2%

24,097,290

22.0%

26,695,107

22.8%

Break-even sales

25,482,366

32.8%

22,298,854

23.3%

21,678,883

21.2%

20,990,495

19.2%

20,222,000

17.3%

EBITDA per share

24,427.50

33,521.05

36,102.69

38,873.30

41,853.12

Earnings per share

12,569.91

19,457.82

21,690.95

24,097.29

26,695.11

Operating expenses General & Administrative

Total operating expenses EBITDA Non operating income (expense)

Net profit / loss Company tax

Income Statement | Annual | Year 1-5 Kentile Roofing

(R)

2018

2019

2020

2021

2022

Revenue on operations Total sales

79,375,000

100.0%

97,477,600

100.0%

104,359,519

100.0%

111,727,301

100.0%

119,615,248

100.0%

Discounts & returns

-1,587,500

-2.0%

-1,949,552

-2.0%

-2,087,190

-2.0%

-2,234,546

-2.0%

-2,392,305

-2.0%

Cost of goods sold

34,398,047

44.2%

42,270,102

44.2%

45,254,372

44.2%

48,449,330

44.2%

51,869,853

44.2%

Labor cost

13,822,000

17.8%

14,842,800

15.5%

15,712,848

15.4%

16,639,099

15.2%

17,618,685

15.0%

Total cost of goods sold

48,220,047

62.0%

57,112,902

59.8%

60,967,220

59.6%

65,088,429

59.4%

69,488,538

59.3%

Gross profit

29,567,453

38.0%

38,415,146

40.2%

41,305,109

40.4%

44,404,326

40.6%

47,734,405

40.7%

Operating expenses General & Administrative Bank interests/charges

18,000

Printing and Stationery

54,000

Website Hosting

12,000

12,840

13,739

14,701

15,730

Computer Expenses

36,000

38,520

41,216

44,102

47,189

Media Subscriptions

24,000

25,680

27,478

29,401

31,459

Maintenance/repairs

30,000

32,100

34,347

36,751

39,324

Office expenses

16,200

17,334

18,547

19,846

21,235

Professional fees

42,000

0.1%

44,940

48,086

51,452

55,053

180,000

0.2%

192,600

0.2%

Staff Training Telephone/fax/mail

19,260 0.1%

57,780

20,608 0.1%

61,825

22,051 0.1%

206,082

0.2%

66,152

23,594 0.1%

220,508

0.2%

70,783

0.1%

235,943

0.2%

60,000

0.1%

64,200

0.1%

68,694

0.1%

73,503

0.1%

78,648

0.1%

Security

144,000

0.2%

154,080

0.2%

164,866

0.2%

176,406

0.2%

188,755

0.2%

Fuel and Oil

600,000

0.8%

642,000

0.7%

686,940

0.7%

735,026

0.7%

786,478

0.7%

12,058,500

15.5%

12,971,660

13.6%

13,727,610

13.4%

14,532,916

13.3%

15,384,301

13.1%

2,377,200

3.1%

2,519,832

2.6%

2,671,022

2.6%

2,831,283

2.6%

3,001,160

2.6%

-13,822,000

-17.8%

-14,842,800

-15.5%

-15,712,848

-15.4%

-16,639,099

-15.2%

-17,618,685

-15.0%

Personnel Salaries and benefits Payroll burden Adjustment labor cost

Other Promotion Digital Marketing

180,000

0.2%

185,400

0.2%

190,962

0.2%

196,691

0.2%

202,592

0.2%

Conventional Marketing & PR

120,000

0.2%

123,600

0.1%

127,308

0.1%

131,127

0.1%

135,061

0.1%

42,000

0.1%

43,260

162,000

0.2%

166,860

Insurance Public Liability Business and Merchandise

44,558 0.2%

171,866

45,895 0.2%

177,022

47,271 0.2%

182,332

0.2%

Transportation Travel

36,000

Vehicle costs

72,000

38,160 0.1%

181,260

180,000

0.2%

60,000

40,450 0.2%

192,136

190,800

0.2%

0.1%

63,600

120,000

0.2%

5,139,950

42,877 0.2%

203,664

202,248

0.2%

0.1%

67,416

127,200

0.1%

6.6%

4,894,095

24,427,503

31.4%

2,423,259

Interest on short term loans Interest on long term loans

45,449 0.2%

215,884

0.2%

214,383

0.2%

227,246

0.2%

0.1%

71,461

0.1%

75,749

0.1%

134,832

0.1%

142,922

0.1%

151,497

0.1%

5.1%

5,202,415

5.1%

5,531,023

5.1%

5,881,282

5.0%

33,521,050

35.1%

36,102,694

35.3%

38,873,303

35.5%

41,853,123

35.7%

3.1%

2,423,259

2.5%

2,423,259

2.4%

2,423,259

2.2%

2,423,259

2.1%

1,407,669

1.8%

1,147,175

1.2%

860,828

0.8%

546,061

0.5%

200,054

0.2%

3,138,368

4.0%

2,925,873

3.1%

2,692,289

2.6%

2,435,523

2.2%

2,153,273

1.8%

17,458,207

22.4%

27,024,743

28.3%

30,126,318

29.5%

33,468,459

30.6%

37,076,537

31.6%

4,888,299

6.3%

7,566,927

7.9%

8,435,370

8.2%

9,371,169

8.6%

10,381,430

8.9%

Net business result

12,569,908

16.2%

19,457,816

20.4%

21,690,948

21.2%

24,097,290

22.0%

26,695,107

22.8%

Break-even sales

25,482,366

32.8%

22,298,854

23.3%

21,678,883

21.2%

20,990,495

19.2%

20,222,000

17.3%

EBITDA per share

24,427.50

33,521.05

36,102.69

38,873.30

41,853.12

Earnings per share

12,569.91

19,457.82

21,690.95

24,097.29

26,695.11

Production Research & development Electricity Costs Cleaning Expenses Repairs and Maintenance Total operating expenses EBITDA

24,000

25,440

26,966

28,584

30,299

Non operating income (expense) Depreciation Amortization

Net profit / loss Company tax

CASH FLOW STATEMENT Cash Flow | Annual | Year 1-5 Kentile Roofing

(R)

2018

2019

2020

2021

2022

Total

Beginning balance Credit/Debit

9,781,509

25,617,001

44,004,637

62,195,395

82,170,558

Cash sales

18,256,250

22,419,848

24,002,689

25,697,279

27,511,507

117,887,573

Collections from debtors

55,756,250

72,841,685

77,984,308

83,447,234

89,338,608

379,368,085

10,465,000

13,609,552

14,570,386

15,641,822

16,746,135

71,032,895

84,477,500

108,871,085

116,557,383

124,786,335

133,596,250

568,288,553

7,861,575

9,677,595

10,360,832

11,093,496

11,876,696

50,870,194

Suppliers payments

23,155,275

31,331,636

33,543,647

35,910,707

38,459,945

162,401,209

Other cost of goods

883,047

1,084,438

1,161,000

1,242,966

1,330,720

5,702,171

2,680,250

3,099,823

3,317,890

3,551,298

3,801,125

16,450,386

Personnel

14,435,700

15,491,492

16,398,632

17,364,199

18,385,461

82,075,484

Promotion

300,000

309,000

318,270

327,818

337,653

1,592,741

Insurance

204,000

210,120

216,424

222,916

229,604

1,083,064

Transportation

108,000

219,420

232,585

246,540

261,333

1,067,878

Production

384,000

407,040

431,462

457,350

484,791

2,164,644

4,546,036

4,073,048

3,553,117

2,981,584

2,353,327

17,507,113

Short term loans repayment

2,624,688

2,885,182

3,171,530

3,486,296

3,832,303

16,000,000

Long term loans repayment

2,141,053

2,353,547

2,587,131

2,843,898

3,126,147

13,051,776

4,888,299

7,566,927

8,435,370

9,371,169

30,261,765

8,879,500

13,497,616

14,450,547

15,470,756

16,562,991

68,861,410

Dividends

438,884

955,192

1,056,633

1,175,977

1,303,570

4,930,255

Subtotal

68,642,009

90,483,449

98,366,626

104,811,172

111,716,835

474,020,090

Credit/Debit

25,617,001

44,004,637

62,195,395

82,170,558

104,049,973

Change in cash

15,835,491

18,387,636

18,190,758

19,975,163

21,879,415

Cash in

Non operational income (expense) Sales tax in Sale of common stock Subtotal Cash paid out Cash purchases

Operating expenses General & Administrative

Interest payment Stock issue costs Other payments

Income tax payment Sales tax payments/refunds

Ending balance

94,268,463

Cash Flow | Monthly | Year 1-2 30,000,000 25,617,001

25,000,000 22,895,726

22,115,951 20,000,000

19,442,126

18,662,351 15,768,576

15,207,736

15,000,000 12,313,961

11,534,187 10,000,000 8,616,787

7,512,078

7,004,287

5,000,000

0 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Figure 7: Ending Cash (Bank) Balance 2017

2018 (R) Month

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Beginning balance Credit/Debit

9,781,509

7,512,078

7,004,287

8,616,787

11,534,187

12,313,961

15,207,736

15,768,576

18,662,351

19,442,126

22,115,951

22,895,726

Cash sales

891,250

1,736,500

Collections from debtors

968,750

3,825,000

5,662,500

271,250

799,750

1,057,000

Cash in

Non operational income (expense) Sales tax in

-119,000

Subtotal

-119,000

2,131,250

6,361,250

8,456,000

1,500

371,450

741,775

749,650

Suppliers payments

4,500

1,211,250

2,416,725

2,440,350

Other cost of goods

43,109

83,994

101,350

172,400

240,650

Personnel

1,188,600

1,361,100

Promotion

25,000

Insurance

17,000

9,000

32,000

395,833

392,824

389,790

386,733

383,652

380,546

377,415

374,260

371,080

367,874

364,643

361,387

Short term loans repayment

209,363

211,021

212,691

214,375

216,072

217,783

219,507

221,245

222,996

224,761

226,541

228,334

Long term loans repayment

170,785

172,137

173,500

174,873

176,258

177,653

179,060

180,477

181,906

183,346

184,797

186,260

Cash paid out Cash purchases

Operating expenses General & Administrative

Transportation Production Interest payment Stock issue costs Capital investments Vehicles Non-depreciable assets Other payments

Income tax payment Sales tax payments/refunds

423,500

2,114,000

Dividends Subtotal

2,114,000

218,935

2,114,000 219,949

2,150,431

2,639,041

4,748,750

5,538,600

7,676,225

5,562,225

7,895,160

5,562,225

7,676,225

5,782,174

7,676,225

5,734,725

7,512,078

7,004,287

8,616,787

11,534,187

12,313,961

15,207,736

15,768,576

18,662,351

19,442,126

22,115,951

22,895,726

25,617,001

Ending balance Credit/Debit

50,000,000 45,000,000

44,004,637 41,219,018

40,324,147

40,000,000 37,410,772

36,515,902

35,000,000

33,357,782

32,706,541 30,000,000

29,772,920

25,000,000

29,548,422

28,653,551

26,463,408

25,748,472

20,000,000 15,000,000 10,000,000 5,000,000 0 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Figure 8: Ending Cash (Bank) Balance 2018

2019 (R) Month

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

25,617,001

26,463,408

29,772,920

25,748,472

28,653,551

29,548,422

32,706,541

33,357,782

36,515,902

37,410,772

40,324,147

41,219,018

Cash sales

1,933,944

1,894,936

1,859,097

Collections from debtors

5,877,113

6,263,938

6,140,183

6,062,273

1,117,092

1,165,311

1,142,532

1,131,624

Beginning balance Credit/Debit Cash in

Subtotal

8,928,148

9,324,184

9,141,811

9,052,994

832,892

818,616

802,909

802,575

Suppliers payments

2,440,350

2,711,768

2,664,768

2,613,640

2,612,639

Other cost of goods

93,544

91,657

89,924

263,560

260,473

257,579

Personnel

1,259,916

1,632,416

Promotion

25,750

Insurance

17,510

9,540

19,080

33,920

358,105

354,796

351,462

348,101

344,714

341,300

337,858

334,390

330,894

327,370

323,819

320,239

Short term loans repayment

230,142

231,964

233,800

235,651

237,517

239,397

241,292

243,203

245,128

247,068

249,024

250,996

Long term loans repayment

187,735

189,221

190,719

192,229

193,751

195,285

196,831

198,389

199,960

201,543

203,138

204,746

Cash paid out Cash purchases

Operating expenses General & Administrative

Transportation Production Interest payment Stock issue costs Capital investments Vehicles Non-depreciable assets Other payments

Income tax payment Sales tax payments/refunds Dividends Subtotal

4,888,299 2,114,000

2,330,622

214,778

2,263,248

252,039

2,263,248

243,630

2,263,248 244,745

8,081,741

6,014,671

13,166,259

6,147,915

8,158,123

5,894,874

8,401,753

5,894,874

8,158,123

6,139,619

8,158,123

6,267,374

26,463,408

29,772,920

25,748,472

28,653,551

29,548,422

32,706,541

33,357,782

36,515,902

37,410,772

40,324,147

41,219,018

44,004,637

Ending balance Credit/Debit

BALANCE SHEET

Balance Sheet | Annual | Year 1-5 Kentile Roofing

(R)

ASSETS

31/12/18

31/12/19

31/12/20

31/12/21

31/12/22

Current assets Cash/Bank Debtors/Accounts receivable Stock/Inventory Total current assets

25,617,001

44,004,637

62,195,395

82,170,558

104,049,973

4,303,500

4,607,327

4,932,604

5,280,846

5,653,674

-57,800

-61,944

-66,385

-71,072

-76,089

29,862,701

48,550,020

67,061,614

87,380,332

109,627,557

Fixed assets Buildings

10,000,000

Office equipment

350,000

Furniture & Fixtures

300,000

14,870,291

5,848,200

8,000,000

8,000,000 12,116,297

Machinery Vehicles Goodwill Non-depreciable assets Less: Accumulated depreciation

2,423,259

4,846,519

7,269,778

9,693,037

Total fixed assets

36,945,231

34,521,972

32,098,713

29,675,453

27,252,194

TOTAL ASSETS

66,807,932

83,071,992

99,160,327

117,055,786

136,879,751

Suppliers' credit

2,440,350

2,612,639

2,797,091

2,994,566

3,192,040

Sales tax payable

2,114,000

2,263,248

2,423,034

2,594,100

2,777,243

Income tax payable

4,888,299

7,566,927

8,435,370

9,371,169

10,381,430

13,375,312

10,490,129

7,318,599

3,832,303

22,817,961

22,932,943

20,974,094

18,792,137

16,350,714

Long term loans

31,858,947

29,505,400

26,918,269

24,074,372

20,948,224

Total long term liabilities

31,858,947

29,505,400

26,918,269

24,074,372

20,948,224

Retained earnings

11,941,413

30,426,338

51,032,738

73,925,164

99,285,516

Dividends payable

189,611

207,310

235,225

264,112

295,298

Total shareholders' equity

12,131,024

30,633,648

51,267,963

74,189,277

99,580,814

TOTAL LIABILITIES AND EQUITY

66,807,932

83,071,992

99,160,327

117,055,786

136,879,751

1,000

66,807.93

83,071.99

99,160.33

117,055.79

136,879.75

LIABILITIES AND EQUITY Current liabilities

Short term loans Other short term liabilities Total current liabilities Long term liabilities

Shareholders' equity Common stock

Number of shares issued Net asset value per share

SENSITIVITY ANALYSIS (WHAT-IF SCENARIO STUDY) Methodology18

2019 What if Sales

-45.0%

Cost of goods sold

15.0%

Operating expenses General & Administrative

15.0%

Personnel

15.0%

Promotion

15.0%

Insurance

15.0%

Transportation

15.0%

Production

15.0%

A technique used to determine how different values of an independent variable will impact a dependent variable under a given set of assumptions. This technique is used within specific boundaries that will depend on one or more input variables, such as the effect that changes in interest rates will have on a bond's price. What-if Analysis (also known as Sensitivity Analysis) is a way to predict the outcome of a decision if a situation turns out to be different compared to the key prediction(s). Sensitivity analysis is very useful when attempting to determine the impact the actual outcome of a variable will have if it differs from what was previously assumed. By creating a given set of scenarios, the analyst can determine how changes in one variable(s) will impact the target variable. For the purposes of this Business Plan and Financial Projections Model, the ‘Projections Model’ or Expected Case Financial Projections have been used as a point of departure. The Financial Model’s ‘sensitivity’ to changes has been tested to determine the outcome on the company’s profitability. 18

Projected Income Statement vs. What-If Scenario

(R) Projected

What if

Change

Revenue on operations Total sales

95,528,048

52,540,426

-45.00%

Cost of goods sold

57,112,902

39,293,160

-31.20%

59.8%

74.8%

15.00%

38,415,146

13,247,266

-65.52%

40.2%

25.2%

-15.00%

3,099,823

3,126,148

0.85%

Personnel

648,692

745,996

15.00%

Promotion

309,000

355,350

15.00%

Insurance

210,120

241,638

15.00%

Transportation

219,420

252,333

15.00%

Cost of goods sold % Gross profit Gross profit margin %

Operating expenses General & Administrative

Production

407,040

468,096

15.00%

4,894,095

5,189,560

6.04%

5.1%

9.9%

4.75%

2,423,259

Interest on short term loans

1,147,175

Interest on long term loans

2,925,873

27,024,743

1,561,398

-94.22%

28.3%

3.0%

-25.32%

7,566,927

437,192

-94.22%

19,457,816

1,124,207

-94.22%

20.4%

2.1%

-18.23%

Total operating expenses % of total sales

Non operating income (expense) Depreciation Amortization

Stock issue costs Net profit / loss Net profit margin % Franchise fee Company tax Net business result % of total sales

Projected Cash Flow Statement vs. What-If Scenario

(R) Projected Beginning balance

What if

Change

25,617,001

Cash sales

22,419,848

12,330,916

-45.00%

Collections from debtors

72,841,685

40,062,927

-45.00%

13,609,552

7,485,254

-45.00%

108,871,085

59,879,097

-45.00%

9,677,595

6,658,098

-31.20%

31,331,636

21,555,882

-31.20%

Other cost of goods

1,084,438

746,084

-31.20%

Operating expenses

19,736,895

20,928,446

6.04%

4,073,048

5,238,730

Cash in

Non operational income (expense) Sales tax in Sale of common stock Loans Loans Subtotal Cash paid out Cash purchases Suppliers payments Royalties payments

Interest payment Stock issue costs Capital investments Loans repayment Change in other current assets Income tax payment

4,888,299

13,497,616

7,423,689

-45.00%

Dividends

955,192

55,188

-94.22%

Subtotal

90,483,448

71,567,463

-20.91%

Ending balance

44,004,637

13,928,635

-68.35%

Change in cash

18,387,636

-11,688,366

-163.57%

Sales tax payments/refunds