XTXFX Business Plan

Investor-ready micro-lending business plan: R45m seed, NCR-registered digital originator, Year 5 revenue R138.5m on a R283.6m loan book.

XTXFX Financial Technologies — platform code behind a digitally-originated micro-lending business

Business Plan & Investment Proposal · South Africa

Fintech & Micro-Lending Business Plan — South Africa

XTXFX Financial Technologies South Africa · Every Rand Of Value Is Made In Underwriting, Not In Pricing.

A digitally-originated micro-lending business for South Africa, regulated under the
National Credit Act 34 of 2005 — mobile web, WhatsApp and USSD origination with DebiCheck collections, lending
to formally employed customers earning R6 000 to R25 000 a month. R45 million of seed equity and an
R85 million Series A in Year 3, alongside a senior debt facility scaling to roughly R132 million drawn
against eligible receivables.

R45mSeed equity

R283.6mYear 5 loan book

R138.5mYear 5 revenue

11.6%Base credit loss rate

Read the executive summary →

In regulated micro-lending, price is not a lever. The National Credit Act caps what
a lender may charge, so every competitor prices in roughly the same band and the only variable that separates them
is who they approve. XTXFX puts that on its cover — every rand of value is made in underwriting, not in pricing
— and the numbers show why. Credit losses run at R55.6 million against R138.5 million of Year 5
revenue: forty cents in every rand earned is written off, which is normal for unsecured lending to formally
employed borrowers and is precisely the point. The base case assumes an 11.6 per cent loss rate against a
break-even rate of 15.3 per cent, leaving 3.7 percentage points of headroom. That single gap matters more than
every other assumption in the plan combined.

The plan at a glance

Six measures that determine whether this lender and its funding stand up.

R45mSeed equity requirementWith an R85m Series A in Year 3 and a senior facility scaling to about R132m drawn against eligible receivables.

11.6%Base-case credit loss rateOf value disbursed at Year 5, improving from 16.5% in Year 1 as the scorecard matures on real repayment data.

15.3%Break-even credit loss rateThe rate at which the business stops making money. The headroom between this and 11.6% is the entire margin of safety.

R283.6mYear 5 gross loan bookBuilt from R480m of cumulative value disbursed across 75,000 loans in Year 5 alone.

R55.6mYear 5 credit lossesAgainst R138.5m of revenue — 40 cents in every rand earned is written off. That is normal here, and it is why underwriting is the business.

R16.0mYear 5 profit after taxOn an 11.6% net margin, after two funded loss-making years and R14.2m of interest expense.

The one number that decides everything

What the book is assumed to lose against what it can afford to lose — and how little sits between them.

11.6%Base-case credit lossWhat the plan assumes it will write off at maturity, improving from 16.5% in Year 1 as the scorecard learns from real repayment behaviour.

against a

15.3%Break-even loss rateThe point at which the business stops earning. Just 3.7 percentage points of headroom — which is why underwriting, not pricing, decides the outcome.

Five years of trading

Revenue and EBITDA on the base case. The credit loss rate and origination volume are the two assumptions that matter most, and both are stressed in Section 13.

Revenue build, and the loans behind it

Revenue is interest, initiation fees, service fees and credit life commission on a book that grows from 6,550 loans a year to 75,000. Value disbursed reaches R480m.

Year 1

R9.1m · 6 550 loans

Year 2

R32.0m · 20 600

Year 3

R65.9m · 39 200

Year 4

R102.2m · 57 500

Year 5

R138.5m · 75 000

EBITDA and margin, Year 3 onward

Years 1 and 2 run EBITDA deficits of R9.8m and R6.8m while the book is built. Profit after tax stays negative until Year 3 — the losses are funded by the seed round, not by trading.

Year 3

R5.1m · 7.8%

Year 4

R18.5m · 18.1%

Year 5

R33.2m · 23.9%

Why this plan works the way it does

Underwriting is the business, not pricingThe National Credit Act caps what a lender may charge, so price is a constrained variable. The only lever that moves the return is who gets approved — which is why the plan says so on its cover.

Three point seven points of headroomBase-case credit losses of 11.6% against a 15.3% break-even. That gap is the entire margin of safety, and every other assumption in the plan matters less than this one.

Forty cents in every rand is written offR55.6m of credit losses against R138.5m of Year 5 revenue. In unsecured micro-lending that is normal rather than alarming — but it means the scorecard carries the whole investment.

Regulation is the moat and the ceilingNCR registration, affordability assessment duties and rate caps raise the barrier to entry and cap the upside at the same time. The plan treats compliance as infrastructure, not overhead.

Two funded loss years before it turnsEBITDA is negative in Years 1 and 2 and profit after tax until Year 3. The seed round funds the book build; trading does not pay for it.

Financial snapshot

Four charts from the plan. The full set of twenty-four appears throughout the sections below.

Figure 9. Credit losses and the vintage effect.

Figure 15. Cash flow — the book absorbs cash faster than operations generate it.

Figure 17. Cumulative profit after tax and the peak deficit.

Figure 20. Year 5 profitability against the credit loss rate.

Nineteen sections and six appendices. Every page carries full navigation, a section outline and links to the sections either side of it.

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Important Notice and Basis of PreparationBasis of preparation, data sources and forward-looking statement caveats. Please read first.

Appendices

Confidential. This document is provided for the purpose of evaluating an
investment in XTXFX Financial Technologies South Africa and may not be reproduced or distributed without written consent. Projections are
forward-looking statements based on the assumptions registered in Section 18 and are not guarantees of future
performance.