NexAura Packaging Technologies Business Plan — Financial Plan & Projections

This section presents the full re-underwritten financial model. Sponsor revenue and EBITDA are preserved exactly; depreciation, financing, tax, the balance sheet, cash flow, coverage and returns are independently derived, and the net-profit line, which the sponsor does not provide, is built here. The model is fully integrated, the balance sheet reconciles to zero in every year, and denominated in rand millions.

12.1 Key assumptions

Assumption	Basis
Revenue & EBITDA	Sponsor projections preserved (R420m→R1.28bn; 18%→26% margin)
Gross margin	34%→40% (resin-heavy COGS, improving with automation)
Depreciation	~11-yr blended life on existing + R485m expansion base
IDC senior debt	R250m at 11.5%; 2-yr grace, amortising from Year 3
IDC asset finance	R100m at 11.0%, ~6-yr amortisation
Working-capital facility	R50m commercial revolver, repaid before distributions
Tax	27% corporate rate with assessed-loss carry-forward
Working capital	DSO 55 / DIO 60 / DPO 45 days (manufacturing)
Dividends	Coverage-gated surplus distribution from Year 4

Table 12.1 Principal modelling assumptions.

12.2 Projected income statement

R million	Year 1	Year 2	Year 3	Year 4	Year 5
Revenue	420	560	760	980	1,280
Cost of sales	(277)	(358)	(471)	(598)	(768)
Gross profit	143	202	289	382	512
Operating expenses	(67)	(84)	(106)	(137)	(179)
EBITDA	76	118	182	245	333
Depreciation	(33)	(46)	(57)	(64)	(66)
EBIT	42	72	126	181	267
Net interest	(20)	(34)	(39)	(38)	(33)
Profit before tax	23	38	87	143	234
Tax	(6)	(10)	(24)	(39)	(63)
Net profit (re-underwritten)	17	28	64	104	171

Table 12.2 Projected income statement (re-underwritten below EBITDA).

Figure 12.1 *Year-1 earnings bridge — EBITDA to net profit*

Key findingNet profit re-underwritten — the sponsor gave EBITDA only

Sponsor materials provide EBITDA but no net profit. Applying full depreciation on the enlarged asset base, cash interest across the IDC senior, asset-finance and working-capital facilities, and 27% tax yields net profit of about 17m in Year 1 rising to 171m by Year 5, a net margin of 4.0% climbing to 13.4%.

The business is solidly profitable, but the thin early net margin relative to the 18–26% EBITDA margin is the key point: depreciation and financing on a R485 million programme absorb most of EBITDA during the build-out. Underwriting should anchor on this re-underwritten net-profit path, not the EBITDA line alone.

Figure 12.2 *Re-underwritten net profit & margin*

12.3 Projected balance sheet

R million	Year 1	Year 2	Year 3	Year 4	Year 5
Net PP&E	333	426	485	506	459
Inventory	46	59	78	98	126
Receivables	63	84	115	148	193
Cash	61	53	20	20	55
Total assets	502	622	697	772	833
Payables	34	44	58	74	95
IDC senior debt	130	210	214	179	143
IDC asset finance	70	83	67	50	33
Existing debt	56	42	28	14	0
Working-capital facility	0	0	22	39	0
Deferred tax	2	4	7	10	13
Equity	211	238	302	406	549
Total equity & liabilities	502	622	697	772	833
Balance check	0.00	0.00	0.00	0.00	0.00

Table 12.3 Projected balance sheet. The balance-check row confirms the model ties to zero every year.

12.4 Projected cash-flow statement

R million	Year 1	Year 2	Year 3	Year 4	Year 5
Operating cash flow	41	52	88	133	188
Investing cash flow	(186)	(138)	(116)	(85)	(19)
Financing cash flow	186	79	(5)	(49)	(134)
Net change in cash	41	(7)	(33)	0	35
Closing cash	61	53	20	20	55

Table 12.4 Projected cash-flow statement.

12.5 Funding structure & deployment

The R485 million is funded by R250m of IDC senior debt, R100m of IDC asset finance, R85m of shareholder equity and a R50m commercial working-capital facility. The R85m equity contribution is only 17.5% of project cost, so the structure leans heavily on IDC concessional debt, workable given the developmental mandate and the established cash-generating base, but a thin cushion that concentrates risk on delivery.

Key findingThe equity contribution is thin — the structure depends on IDC concessional debt

Shareholder equity of R85 million funds just 17.5% of the R485 million programme; the remaining 82.5% is debt (R350 million of IDC senior and asset finance plus a R50 million commercial facility). Even including the existing business’s equity base, gearing peaks around 58% and gross debt/EBITDA opens at 3.4x.

This is not unusual for IDC-anchored industrial finance, but it should be understood clearly: the concessional IDC debt is load-bearing, and the thin equity leaves limited buffer against a resin shock or a slower ramp. A larger equity contribution, or additional sponsor support, would materially strengthen the credit, and is worth negotiating.

12.6 Debt profile & coverage

Coverage metric	Year 1	Year 2	Year 3	Year 4	Year 5
CFADS (R m)	63	99	148	192	250
Debt service (R m)	50	66	107	102	94
DSCR	1.26x	1.50x	1.38x	1.89x	2.66x
Gross debt / EBITDA	3.39x	2.85x	1.81x	1.15x	0.53x
Net debt / EBITDA	2.59x	2.40x	1.70x	1.07x	0.36x
Gearing (%)	54.9%	58.4%	52.3%	41.0%	24.3%

Table 12.5 Coverage and leverage. Senior principal carries a two-year construction grace.

Key findingCoverage is tighter than the sponsor states — but bankable and improving

The sponsor cites an average DSCR of 1.9x. On a full CFADS basis, EBITDA less maintenance capex and tax, over senior, asset-finance and existing-debt service, the re-underwritten DSCR averages about 1.7x and dips to roughly 1.3x in the early amortisation years, close to a typical 1.30x covenant floor.

This is bankable, but with less headroom than the sponsor implies, which matters given the thin equity. The offsetting positive is the trajectory: DSCR climbs to 2.7x and gross debt/EBITDA falls from 3.4x to below 1.0x by Year 5 as the ramp completes. Lenders should focus covenant headroom and the debt-service reserve on the tighter Year 2–Year 3 window.

12.7 Margin build & working capital

Figure 12.8 *EBITDA and margin trajectory*

The EBITDA-margin expansion from 18% to 26% is driven by operating leverage as fixed manufacturing costs spread across higher volumes, automation reducing unit labour and scrap costs, an improving product mix toward premium cosmetic and sustainable ranges, and green-energy self-generation lowering electricity cost. Investors should test the pace of this build, since it is the single largest swing factor in the model’s profitability.

Rigid-packaging manufacturing is working-capital-intensive: resin and finished-goods inventory (~60 days) and business-to-business receivables (~55 days) are only partly funded by supplier payables (~45 days), leaving a cash-conversion cycle of roughly 70 days. The R50 million commercial facility funds this cycle and its seasonal peaks; disciplined inventory and receivables management is important to keep the facility within its limit as revenue scales.

12.8 Scenario & break-even analysis

Scenario	Y5 revenue	Y5 EBITDA	Assessment
Upside	R1,408m	R387m	Faster ramp, stronger mix & pricing
Base case	R1,280m	R333m	Sponsor plan preserved
Downside	R1,088m	R250m	–15% revenue, –3pp margin

Table 12.6 Scenario summary.

12.9 Project returns

Figure 12.11 *Incremental project cash-flow profile*

Figure 12.12 *Project IRR versus the sponsor’s figure*

Return metric	Base case	Conservative	Sponsor
Project IRR (incremental)	25.1%	18.2%	23.8%
Project NPV @ 15% (R m)	94	27	~615*
Payback (years)	~5.0	~5.5	5.2
Equity IRR (levered)	79%	—

Table 12.7 Project returns. *Sponsor NPV reflects a whole-business basis and lower discount rate; the independent figures are incremental and conservatively discounted at 15%.

StrengthRe-underwritten returns bracket the sponsor — the equity IRR reflects thin equity

The incremental project IRR of ~25% (base) / ~18% (conservative) brackets the sponsor’s 23.8% and confirms an attractive expansion; NPV is positive at a conservative 15% hurdle. The levered equity IRR is very high, but that is a direct consequence of the thin R85 million equity base, high leverage amplifies equity returns and equity risk in equal measure. The sensible reading is that the project economics are sound and the sponsor’s headline is corroborated, while the equity-return figure should be seen through the lens of the aggressive gearing rather than as a stand-alone attraction.

12.10 Base-case KPI dashboard

KPI	Year 1	Year 2	Year 3	Year 4	Year 5
Revenue growth	—	33%	36%	29%	31%
Gross margin	34%	36%	38%	39%	40%
EBITDA margin	18%	21%	24%	25%	26%
Net margin	4.0%	5.0%	8.4%	10.7%	13.4%
Units (m)	55	72	92	108	120
DSCR	1.26x	1.50x	1.38x	1.89x	2.66x
Gross debt / EBITDA	3.39x	2.85x	1.81x	1.15x	0.53x
Closing cash (R m)	61	53	20	20	55

Table 12.8 Base-case key performance indicators.

Figure 12.13 *Coverage and leverage dashboard*

12.11 Covenant & lender-protection framework

The financing is structured to give lenders robust, monitorable protection appropriate to a phased industrial programme with a thin equity cushion.

Protection	Proposed structure
Minimum DSCR covenant	≥ 1.30x, tested from first amortisation (Year 3)
Leverage cap	Gross debt/EBITDA ceiling stepping down over the tenor
Debt-service reserve	DSRA funded to ~40m (forward debt service)
Construction grace	Interest-only on IDC senior debt through Years 1–2
Milestone drawdowns	Capital released against verified procurement/commissioning
Security	Plant, machinery, tooling, inventory, debtors, insurance cessions
Distribution lock-up	No dividends until coverage and reserve tests are met

Table 12.9 Proposed covenant and lender-protection framework.

StrengthThe structure protects lenders where the risk is greatest

The lender-protection framework concentrates on the tighter Year 1–3 window: interest-only grace preserves cash through the build, milestone drawdowns prevent capital release ahead of progress, and the debt-service reserve and distribution lock-up ring-fence cash for debt service before any equity reward. The comprehensive security package, plant, tooling, inventory, debtors and insurance cessions, provides asset cover. Once the ramp completes, the strengthening DSCR and rapid de-leveraging make the covenants comfortable.