Polar Nexus Integrated Cold Storage Business Plan › Section 14 › Financial Plan

This section presents the full financial model: the key assumptions,
the projected income statement, balance sheet and cash flow over five
years, the capital and funding structure, debt service coverage,
break-even and sensitivity analysis, and the resulting valuation and
investor returns. All figures are in South African Rand thousands
(R’000) unless stated. The model is built bottom-up from operational
drivers and is internally consistent — the balance sheet balances in
every period and cash remains positive throughout.

14.1 Key assumptions

14.2 Revenue projections

Revenue grows from R106.0 million in Year 1 to R222.3 million in Year
5, driven by the occupancy ramp, contractual rate escalation and the
rising share of value-added services. The build-up by stream is shown
below.

14.3 Operating cost structure

Operating costs are dominated by electricity (net of solar) and
salaries. Costs are a mix of fixed and semi-variable items; as revenue
scales, operating leverage drives the EBITDA margin from approximately
30% to 54%. Representative years are shown below.

14.4 Projected income statement

NPAT is negative in the first three years — a normal feature of a
capital-intensive greenfield asset carrying full depreciation and
interest during ramp-up — and turns positive in Year 4. Importantly,
EBITDA is strongly positive from Year 1, and cash flow (below) is
managed through the funding structure. Accumulated assessed losses
shelter taxable income through Year 5.

Figure 11

14.5 Projected balance sheet

Figure 12

14.6 Projected cash flow

The Year-1 operating cash outflow during the ramp is fully funded by
the opening cash position, which includes the dedicated ramp-up reserve
raised at financial close. The closing cash balance is positive in every
period, reaching R133.5 million by Year 5, providing comfortable
liquidity headroom above the ring-fenced DSRA.

Figure 13

14.7 Capital expenditure and funding

Total fixed capital expenditure is R673.9 million, comprising R599.0
million of direct costs plus professional fees (7.5%) and a 5%
contingency. Including pre-opening costs, working capital, the debt
service reserve and the ramp-up reserve, the total funding requirement
is R780.0 million, funded equally by equity and senior debt.

Figure 14

Figure 15

14.8 Debt service and coverage

The senior facility of R390.0 million is structured over 12 years at
an indicative 11.5%, with a two-year principal moratorium so that
amortisation begins only as occupancy and cash flow build. The debt
service coverage ratio (DSCR) — cash available for debt service divided
by scheduled debt service — is the key lender metric. After the
interest-only grace period, the minimum DSCR is 1.25x (Year 3), rising
steadily to 1.77x by Year 5 and above 2.0x thereafter, comfortably above
a typical 1.25x covenant. The Year-1 ratio of 0.71x falls within the
grace period and is covered by the ring-fenced ramp-up reserve.

Figure 16

Figure 17

14.9 Break-even analysis

The facility reaches cash break-even at approximately 38.7% occupancy
— well below the Year-1 operating assumption of 62% and far below the
stabilised 90%. This wide margin of safety means the project can absorb
a materially slower ramp or a significant demand shock while still
covering its cash operating costs, a key source of downside protection
for both lenders and equity.

Figure 18

14.10 Sensitivity analysis

The equity IRR was stress-tested against the principal value drivers.
The return is most sensitive to the blended tariff achieved and to the
pace of the occupancy ramp — the two commercial variables the
anchor-tenant strategy is specifically designed to protect. Sensitivity
to construction cost, electricity cost, exit multiple and interest rate
is more contained. Even under adverse single-variable movements, the
equity return remains attractive on a risk-adjusted basis.

Figure 19

14.11 Valuation and investor returns

On the base case, the project delivers an unlevered (project) IRR of
17.1% and a levered (equity) IRR of 21.7% over a ten-year horizon,
assuming an exit at 7.5× Year-10 EBITDA. The net present value to equity
is R129.6 million at an 18% discount rate, with a money-on-money
multiple of 6.4x. These returns are commensurate with greenfield
infrastructure development risk and compare favourably with stabilised
cold-storage asset yields, reflecting the development premium captured
by building rather than buying the asset.

Figure 20

The cumulative equity position turns positive as the terminal value
is realised at exit; on an operating basis, distributable cash builds
steadily from Year 4 as the debt amortises and margins mature. Investors
therefore benefit from a combination of growing yield and a substantial
capital-gain component on exit, with the option to extend the hold and
compound returns through the platform’s later phases.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Polar Nexus Integrated Cold Storage (Pty) Ltd.