PrimePork Foods — Financial Plan

The basis of preparation, the projected profit and loss, cash flow and balance sheet, the debt-service coverage, the returns and the sensitivity and scenario analysis underpinning PrimePork.

Section 12 · Business Plan

Financial Plan

The basis of preparation, the projected profit and loss, cash flow and balance sheet, the debt-service coverage, the returns and the sensitivity and scenario analysis underpinning PrimePork.

12.1 Basis of preparation

Sponsor anchors preserved; below-EBITDA independently
derived. Revenue, EBITDA, processing capacity, the capital
budget and the proposed funding stack are the sponsor’s figures,
preserved exactly. Depreciation, interest, taxation (27% SA corporate
rate with assessed-loss carry-forward subject to the
80%-of-taxable-income limitation under s20 of the Income Tax Act),
working capital, the revolving facility, the balance sheet and all
ratios are re-derived from first principles. The balance sheet ties to
zero in every projection year. Plant is depreciated over twenty years,
cold storage over fifteen, machinery over ten, fleet over seven and
technology over four.

Where the independent derivation departs from the
sponsor

The sponsor’s headline net profit path ((R12m), R22m, R74m, R162m,
R301m) is broadly reproducible from Year 2 onward, but Year 1 is
understated: once full depreciation on the R318m asset base and interest
on R240m of DFI debt are charged, the independent derivation shows a
R26m Year 1 loss versus the sponsor’s R12m. From Year 2 the re-derived
path (R13m, R66m, R160m, R315m) tracks close to the sponsor, with modest
differences from the assessed-loss and interest treatment. Investors
should anchor on the re-derived figures and, above all, on the revenue
ramp that drives them.

Figure 15

Figure 15 — Sponsor NPAT vs independent derivation, Years 1–5

12.2 Projected profit and loss

R m	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Revenue	245	468	835	1,420	2,150	2,430	2,648	2,807	2,933	3,036
EBITDA	28	74	156	302	512	588	649	693	728	753
EBITDA margin %	11.4	15.8	18.7	21.3	23.8	24.2	24.5	24.7	24.8	24.8
Depreciation	(27)	(34)	(42)	(51)	(54)	(57)	(59)	(54)	(54)	(55)
EBIT	1	40	114	251	458	531	590	640	673	698
Senior interest	(27)	(27)	(24)	(21)	(18)	(15)	(12)	(9)	(6)	(3)
Revolver interest	–	–	(5)	(11)	(9)	–	–	–	–	–
Profit before tax	(26)	14	85	219	431	516	578	631	667	695
Taxation (27%)	–	(1)	(19)	(59)	(116)	(139)	(156)	(170)	(180)	(188)
NPAT	(26)	13	66	160	315	377	422	461	487	507
Assessed loss c/f	26	15	–	–	–	–	–	–	–	–

The Year 1 loss of R26m reflects thin ramp EBITDA (an 11.4% margin at
62% utilisation) carrying full depreciation and interest. The assessed
loss shelters taxation into Year 2; because the s20 limitation caps loss
set-off at 80% of taxable income, a small charge arises from Year 2 even
while the loss is not yet fully utilised.

12.3 Projected cash flow

R m	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
EBITDA	28	74	156	302	512	588	649	693	728	753
Cash taxation	–	(1)	(19)	(59)	(116)	(139)	(156)	(170)	(180)	(188)
Δ Net working capital	(32)	(29)	(48)	(76)	(95)	(36)	(28)	(21)	(16)	(13)
Operating cash flow	(4)	44	89	167	301	412	464	502	531	552
Capital expenditure	(318)	(62)	(78)	(95)	(70)	(45)	(40)	(38)	(36)	(36)
Funding drawdowns	385	–	–	–	–	–	–	–	–	–
Interest paid	(27)	(27)	(29)	(31)	(27)	(15)	(12)	(9)	(6)	(3)
Principal repaid	–	(27)	(27)	(27)	(27)	(27)	(27)	(27)	(27)	(27)
Revolver draw/(repay)	–	46	44	(14)	(77)	–	–	–	–	–
Closing cash	37	12	12	12	112	438	824	1,253	1,715	2,202

Figure 16

Figure 16 — Liquidity: cash and revolver balances

Honest finding — working capital needs a revolver beyond
the R385m

Even with the full R385 million deployed, the working-capital build
across a business scaling from R245m to R2.15bn of revenue requires a
revolving facility peaking near R91m in Year 3 to hold minimum operating
cash while carcass inventory, WIP, frozen stock and retail debtors grow.
A commercial working-capital revolver of at least R100m should be a
condition of financial close, over and above the headline raise. The
revolver is fully repaid during Year 4, and the business turns strongly
cash-generative thereafter, holding over R2.2 billion of cash by Year 10
before any dividends.

12.4 Projected balance sheet

R m	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
PPE (net)	291	319	355	399	415	403	384	368	350	331
Net working capital	32	61	109	185	280	316	344	365	381	395
Cash	37	12	12	12	112	438	824	1,253	1,715	2,202
Total assets	359	392	476	595	807	1,157	1,552	1,986	2,447	2,927
Shareholders’ equity	119	132	198	358	673	1,050	1,472	1,933	2,420	2,927
Senior debt	240	213	187	160	133	107	80	53	27	0
Revolver	–	46	91	77	–	–	–	–	–	–
Total equity & liabilities	359	392	476	595	807	1,157	1,552	1,986	2,447	2,927
Balance check	0	0	0	0	0	0	0	0	0	0

Figure 17

Figure 17 — Asset composition, Years 1–10

Equity dips to R119m at end-Year 1 (the establishment loss against
R145m subscribed) and compounds to over R3.0 billion by Year 10 with no
dividends assumed. Net debt peaks around R247m in Year 1 (a high 7.3x
that year’s thin EBITDA — the ramp-period stress) and turns net-cash
during Year 5.

12.5 Debt structure and service cover

Facility	R m	Rate	Tenor	Grace	Security
IDC senior facility	145	Prime-linked (11.25% modelled)	10 yrs	1 yr principal	First-ranking over plant & equipment
DBSA development loan	95	10.75% modelled	10 yrs	1 yr principal	Second-ranking; cession of contracts
Revolving working capital	≥R100m (proposed)	11.75% modelled	Annual review	—	Cession of inventory & receivables

Figure 18

Figure 18 — DSCR profile with covenant reference lines

Figure 19

Figure 19 — Senior debt balances and annual debt service

Honest finding — ramp-period DSCR requires structural
support

CFADS is negative in Year 1 and covers only 0.83x of debt service in
Year 2, against a typical agro-processing covenant of 1.30x. Cover
clears the covenant in Year 3 (1.60x) and widens rapidly thereafter
(2.88x Year 4). The financing plan therefore requires: (i) the modelled
1-year principal grace on the DFI facilities; (ii) a funded debt-service
reserve of approximately R55m covering Years 1–2; and (iii) covenant
holidays or a sculpted profile until Year 3. Without these, the
sponsor’s stated 1.7x–2.9x DSCR range is only achieved from Year 3
onward.

12.6 Returns, sensitivity and scenarios

Returns. The 10-year unlevered project IRR is 40.0%
and the equity IRR 49.0%, assuming exit at a conservative 6.5x EBITDA
multiple in Year 10 (enterprise value R4.89bn against Year 10 EBITDA of
R753.0m). These sit above the sponsor’s 20–29% guidance because the
re-derived model runs the full 10-year horizon with terminal value, and
because the sponsor’s own aggressive revenue ramp compounds into a large
Year 10 EBITDA. The returns should be read as contingent on that ramp:
the sensitivity below stresses it directly.

Figure 20

Figure 20 — Equity IRR sensitivity tornado

Sensitivity	Equity IRR
Base case (6.5x exit)	49.0%
Exit multiple 5.0x	46.9%
Exit multiple 8.0x	50.8%
EBITDA −10% throughout	45.4%
EBITDA +10% throughout	52.4%
EBITDA −20% (ramp shortfall / disease)	41.5%

Figure 21

Figure 21 — Year 5 cash generation bridge

Figure 22

Figure 22 — Deleveraging path and return on equity

12.9 Ramp-period liquidity detail (Years 1–2)

Because the ramp period carries the plan’s liquidity risk, the
half-yearly view below decomposes the annual figures, showing the
interaction of thin EBITDA, working-capital build, capex and debt
service that the revolver and reserve are sized to bridge.

R m	Y1 H1	Y1 H2	Y2 H1	Y2 H2
EBITDA	(5)	33	30	44
Δ Working capital	(18)	(14)	(30)	(29)
Capex	(210)	(108)	(34)	(28)
Net senior debt service	(13)	(13)	(16)	(16)
Funding / revolver draw	260	110	46	44
Reserve support	14	14	11	10
Closing cash / (revolver)	28	37	(20)	(46)

The pattern is characteristic of a capital-intensive processing ramp:
heavy front-loaded capex and working-capital absorption against thin
early EBITDA, bridged by the drawdown, the revolver and the debt-service
reserve, with organic cash generation only overtaking from Year 3. It is
precisely this shape — not the terminal profitability — that the
financing structure in Section 13 is built to fund.

12.7 Working capital & covenant dashboard

Net working capital is modelled at 13% of revenue, reflecting carcass
and WIP inventory, frozen finished stock, retail debtors (30–45 days)
and export receivables, partly offset by supplier credit. The absorption
scales with the revenue ramp — the driver of the revolver. The dashboard
below confirms covenant compliance on the proposed package.

Test	Y1	Y2	Y3	Y4	Y5	Y6	Y7
DSCR (≥1.30x from Y3)	-0.15	0.83	1.60	2.88	5.63	9.96	12.07
Net debt/EBITDA (≤3.5x from Y3)	7.3	3.3	1.7	0.7	0.0	net cash	net cash
Interest cover (EBITDA/int)	1.1	2.8	5.4	9.7	19.2	39.9	55.0
Status vs package	Holiday	Holiday	Pass	Pass	Pass	Pass	Pass

On the proposed package — testing from Year 3 against a funded
debt-service reserve in Years 1–2 — the enterprise passes every test
from first measurement. Testing conventional covenants from Year 1
produces immediate technical breach: a structuring issue resolved by the
reserve and covenant holiday, not a viability issue.

12.8 Valuation cross-check

As a cross-check on the 6.5x exit, a DCF over the explicit 10-year
horizon at a 16% nominal ZAR WACC with 4% terminal growth yields an
enterprise value of roughly R4.5–5.2 billion — bracketing the R4.89
billion multiple-derived exit. SA food-processing transactions cluster
in a 5–8x EV/EBITDA range depending on brand, integration and growth;
6.5x is mid-range and does not assume a strategic premium. Asset backing
— plant, cold chain and equipment — provides a recovery floor
independent of going-concern multiples.

Resilience and its limits

Returns are resilient in percentage terms — even at EBITDA −20%
throughout, the equity IRR holds around 41.5% — because the terminal
value dominates equity proceeds. But that resilience assumes the shape
of the ramp holds and only its level shifts. The scenario the
sensitivity does not fully capture is a fundamental ramp failure — the
business reaching, say, half the projected Year 5 revenue — which would
materially change the credit and equity story. This, not multiple
compression, is the risk that most warrants diligence, and it is why
contracted offtake is treated throughout as the central de-risking
mechanism.

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 PrimePork Foods South Africa (Pty) Ltd.