Switchpoint Payments Business Plan — Cash, Funding and the Balance Sheet

The R22m seed, why an R85m Series A is required rather than optional, and the cash runway across four loss-making years.

Cash, Funding and the Balance Sheet

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  • 8.1 The cash path
  • 8.2 The funding gap is the central structural feature
  • 8.3 Use of the seed proceeds
  • 8.4 Balance sheet

8.1 The cash path

Modelled monthly cash balance including the Series A
Figure 15. Modelled monthly cash balance including the Series A.

R million

FY2027

FY2028

FY2029

FY2030

FY2031

Opening cash

23.1

10.7

78.8

59.9

50.1

EBITDA

(11.4)

(15.6)

(16.7)

(6.6)

19.2

Terminal fleet capital expenditure

(0.1)

(0.4)

(0.8)

(1.4)

(2.0)

Other capital expenditure

(0.9)

(0.9)

(1.4)

(1.8)

(2.0)

Taxation paid

(0.9)

Equity raised

85.0

Closing cash

10.7

78.8

59.9

50.1

64.4

Cash waterfall — the Series A is what bridges to breakeven
Figure 16. Cash waterfall — the Series A is what bridges to breakeven.

8.2 The funding gap is the central structural feature

The awkward feature of the timetable is that the Series A must be raised at month 16 while the evidence that justifies it — measured migration of manual transfer volume onto the rail at the first trade integrations — does not arrive convincingly until month 18. The round is therefore raised on a partial reading. That is a real tension in the plan rather than an oversight, and it is why the month 10 trigger contemplates cutting the acquisition plan as an equally valid response to commencing the round.

8.3 Use of the seed proceeds

Sources and application of the seed round
Figure 17. Sources and application of the seed round.

Application of seed proceeds

R million

Share

Platform engineering and integration build

8.6

39%

Commercial, partner enablement and merchant acquisition

3.9

18%

Sponsor bank, scheme certification and PCI DSS Level 1

3.4

15%

Risk, compliance and legal establishment

2.3

10%

Working capital and contingency

2.2

10%

Terminal fleet and equipment

1.6

7%

Total

22.0

100%

Approximately 65 per cent of the round is applied to build and regulatory establishment before any material revenue is generated. This is the characteristic cost shape of a regulated payments business and is the principal reason the round does not reach profitability. A merchant acquirer cannot process a single transaction until the sponsorship is executed, the scheme registrations are granted and the PCI DSS Level 1 attestation is issued, and none of that work generates revenue.

8.4 Balance sheet

R million, at year end

FY2027

FY2028

FY2029

FY2030

FY2031

Platform and terminal fleet, net

0.8

1.6

2.7

4.0

5.2

Trade receivables

0.2

1.1

3.1

6.5

11.5

Merchant settlement funds

2.2

13.4

38.1

82.1

148.6

Company cash

11.9

80.9

63.4

55.1

70.5

Total assets

15.1

97.0

107.3

147.7

235.8

Share capital and premium

23.1

108.1

108.1

108.1

108.1

Accumulated deficit

(11.6)

(27.6)

(45.1)

(52.9)

(36.3)

Total equity

11.5

80.5

63.0

55.2

71.8

Merchant settlement liability

2.2

13.4

38.1

82.1

148.6

Trade and other payables

1.4

3.1

6.2

10.4

15.4

Total liabilities

3.6

16.5

44.3

92.5

164.0

Total equity and liabilities

15.1

97.0

107.3

147.7

235.8

Balance sheet — asset composition
Figure 18. Balance sheet — asset composition.

The settlement liability line is the largest single item on the balance sheet from FY2029 onward, reaching R148.6m by FY2031. It is matched exactly by the merchant settlement funds asset above it, carries no interest, and is not available to the company for any purpose. Company cash — the figure that determines runway and against which every trigger in this plan is tested — is R64.4m at FY2031, less than half the settlement float.