Wellspring Wellness Group Business Plan — Financial Plan & Projections

This section presents the full three-statement financial plan. The methodology preserves the sponsor’s operating case for revenue and EBITDA and independently re-derives all financing and tax items to produce a defensible, bankable set of projections in which the balance sheet reconciles to zero in every year. Because the sponsor case provides EBITDA but no net-profit line, the earnings below EBITDA are newly derived here rather than restated.

13.1 Key assumptions

Assumption	Basis
Revenue	Sponsor operating case: 14% p.a. growth, R650m→R1,098m (preserved)
EBITDA margin	Sponsor case: 14%→18% on mix shift (preserved)
Gross margin	38%→42% as private-label and e-commerce mix deepens
Depreciation	Componentised on infra + rollout base; ~R35m→R38m p.a.
Senior debt	R60m, 7-year amortising; prime + 3.0% = 13.5%
Revolving facility	Prime + 3.5% = 14.0%, backstop only
Corporate tax	27% (SA CIT) with assessed-loss carry-forward
Working capital	DSO 12d, DIO 62d, DPO 45d → ~29-day inventory-led cycle
Rent	~7% of revenue (retail leases), within opex/EBITDA
Dividends	Coverage-gated; surplus above reserve distributed
Prime / repo	10.5% / 7.0% (mid-2026)

Table 13.1 Principal modelling assumptions.

13.2 Funding structure & sources / uses

The Company is raising R150m, comprising R90m of new equity and R60m of senior secured debt. The raise is sized to the upfront infrastructure (distribution hub, e-commerce platform and private-label capability) plus working-capital and reserve buffers, not the full R220m programme headline, because the store rollout is substantially self-funded from operating cash flow.

Uses of funds	R m	Share
Distribution hub	R40	27%
Private label development	R35	23%
E-commerce platform	R25	17%
Working capital & inventory	R20	13%
DSRA & transaction costs	R15	10%
Store rollout kick-start	R15	10%
Total uses	R150	100%

Table 13.2 Detailed uses of funds.

Key findingThe raise is right-sized to genuine external need

Of the ~R220m five-year capital programme, approximately R90m of upfront infrastructure genuinely requires external funding; the remaining ~R130m store rollout is substantially self-funded from operating cash flow as the network matures. WWG therefore raises R150m, R90m equity and R60m debt, rather than the full programme headline.

This is a capital-efficient structure and a positive diligence outcome: the business funds its own expansion once the platform is in place. A disciplined investor should size the raise to the infrastructure-and-acceleration case, and treat the strong self-funding as a de-risking feature of the credit.

13.3 Projected income statement

R million	FY2026	FY2027	FY2028	FY2029	FY2030
Revenue	R650	R741	R845	R963	R1,098
Cost of goods sold	(R403)	(R452)	(R507)	(R568)	(R637)
Gross profit	R247	R289	R338	R395	R461
Gross margin	38.0%	39.0%	40.0%	41.0%	42.0%
Operating expenses	(R156)	(R178)	(R203)	(R231)	(R264)
EBITDA	R91	R111	R135	R164	R198
EBITDA margin	14.0%	15.0%	16.0%	17.0%	18.0%
Depreciation	(R35)	(R38)	(R39)	(R39)	(R38)
EBIT	R56	R73	R96	R125	R160
Net interest	(R6)	(R4)	(R3)	(R2)	(R1)
Profit before tax	R50	R69	R93	R123	R159
Tax (27%)	(R14)	(R19)	(R25)	(R33)	(R43)
Net profit (re-underwritten)	R37	R50	R68	R90	R116
Net margin	5.6%	6.8%	8.0%	9.3%	10.6%

Table 13.3 Projected income statement, re-underwritten basis.

Figure 13.2 *EBITDA and margin trajectory*

The earnings below EBITDA

The chart below isolates the key analytical layer of this plan: what falls out below EBITDA once full depreciation, cash interest and tax are applied, the earnings picture the sponsor case leaves undefined.

Figure 13.3 *Sponsor-implied vs. re-underwritten net profit*

Figure 13.4 *FY2026 earnings bridge — EBITDA to net profit*

Key findingUnderwrite to the re-derived earnings

Applying R35m of depreciation (on the infrastructure and rollout asset base) and R6m of net interest, FY2026 re-underwritten net profit is R37m, a 5.6% net margin, thin in the early rollout years.

As the network matures, private label scales and the debt amortises, net profit rises to R116m by FY2030 (a 10.6% margin). Investors should underwrite to this re-derived profile, modest early, strengthening materially, rather than to an EBITDA-only view that omits the real cost of the rollout.

13.4 Projected balance sheet

R million	FY2026	FY2027	FY2028	FY2029	FY2030
Net PP&E	R203	R215	R216	R212	R207
Inventory	R69	R77	R86	R97	R108
Trade receivables	R21	R24	R28	R32	R36
Cash & equivalents	R88	R84	R88	R92	R97
Total assets	R381	R400	R417	R433	R448
Trade payables	R50	R56	R63	R70	R79
Senior term debt	R51	R43	R34	R26	R17
Revolving facility	R0	R0	R0	R0	R0
Deferred tax	R3	R6	R9	R12	R15
Equity	R277	R296	R312	R325	R338
Total equity & liabilities	R381	R400	R417	R433	R448
Balance check	0.00	0.00	0.00	0.00	0.00

Table 13.4 Projected balance sheet. The balance check confirms assets equal equity plus liabilities (nil difference) in every year.

Figure 13.5 *Balance-sheet composition and liquidity build*

13.5 Projected cash-flow statement

R million	FY2026	FY2027	FY2028	FY2029	FY2030
Cash from operations	R74	R86	R104	R125	R149
Cash from investing	(R58)	(R50)	(R40)	(R35)	(R33)
Cash from financing	(R9)	(R40)	(R60)	(R85)	(R112)
Net change in cash	R8	(R4)	R4	R5	R5
Closing cash	R88	R84	R88	R92	R97
Dividends paid	R0	R31	R52	R76	R103

Table 13.5 Projected cash-flow statement.

Figure 13.6 *Cash-flow profile and closing cash balance*

StrengthStrong, self-funding cash generation

Operating cash flow comfortably covers the store rollout and debt service from the outset, allowing the senior debt to amortise on schedule while the business maintains a healthy cash reserve and begins distributions. This self-funding characteristic is the single strongest feature of the credit and a key attraction for equity investors.

13.6 Capital expenditure

Figure 13.7 *Capital programme composition*

Programme component	R m	Purpose
Store rollout & fit-out	130	National network expansion
Distribution hub	40	Inventory & omnichannel efficiency
Private label development	35	Margin expansion
E-commerce platform	25	Digital scaling & subscription
Total programme	230	—

Table 13.6 Capital programme (infrastructure funded at close; store rollout phased and substantially self-funded). Sustaining/maintenance capex of ~2% of revenue is provisioned in addition.

13.7 Unit economics & break-even

Metric	Range / basis
Average basket size	R280–R420
Branded gross margin	25–35%
Private-label gross margin	45–60%
Store EBITDA margin	12–18%
Online EBITDA margin	18–25%
Store payback	24–36 months
Private-label payback	18–24 months
E-commerce platform payback	30–36 months

Table 13.7 Unit economics and payback.

Figure 13.8 *Break-even analysis by network maturity*

On the modelled FY2026 cost structure, the network covers its fixed costs at approximately 35% of the modelled operating level, providing meaningful downside headroom before the business becomes loss-making at the operating level. New stores are expected to reach payback within 24–36 months and private-label lines within 18–24 months.

13.8 Debt service, coverage & the retail lens

Figure 13.9 *DSCR and fixed-charge cover versus covenant floor*

Figure 13.10 *Senior term-loan amortisation schedule*

Coverage metric	FY2026	FY2027	FY2028	FY2029	FY2030
CFADS (R m)	R64	R78	R93	R111	R133
Debt service (R m)	R17	R16	R14	R13	R12
DSCR	3.86x	5.02x	6.48x	8.42x	10.97x
EBITDAR / fixed charges (FCCR)	1.99x	2.20x	2.41x	2.63x	2.84x
Gross debt / EBITDA	0.56x	0.38x	0.25x	0.16x	0.09x
Lease-adjusted leverage	2.04x	1.85x	1.70x	1.57x	1.46x

Table 13.8 Debt-service and fixed-charge coverage. Proposed covenants: FCCR ≥ 1.50x (min modelled 1.99x); lease-adjusted leverage ≤ 3.0x; plus a R15m debt-service reserve.

Key findingRead the leverage through a rent-inclusive lens

For a store-based retailer, gross debt/EBITDA of 0.56x flatters the true picture because it ignores lease obligations. Capitalising rent, lease-adjusted leverage is ~2.0x in FY2026, falling to ~1.5x by FY2030, the honest retail credit metric.

On that rent-inclusive basis, fixed-charge cover of 1.99x minimum (rising to 2.84x) demonstrates the business comfortably covers rent, interest and scheduled amortisation together. This is the metric lenders to retailers should anchor on, and it is comfortably within an investment-grade-style range.

13.9 Scenario & sensitivity analysis

Figure 13.11 *EBITDA under upside / base / downside scenarios*

Scenario	Assumptions	FY2030 revenue	FY2030 EBITDA
Upside	+5% revenue, +1pp margin	R1153m	R219m
Base	Sponsor operating case	R1098m	R198m
Downside	−8% revenue, −2pp margin	R1010m	R162m

Table 13.9 Scenario summary.

Figure 13.12 *Sensitivity of FY2028 net profit to key drivers*

Analyst flagThe plan is most exposed to margin and revenue

Net profit is most sensitive to gross margin and revenue, and secondarily to private-label mix and occupancy (rent) cost, consistent with the risk register. Interest-rate sensitivity is modest given the low leverage. Diligence should concentrate on the durability of the margin mix-shift and the competitive response of the mass pharmacy chains.

13.10 Downside stress test

The downside scenario applies an 8% revenue shortfall and a 2-percentage-point margin compression, a simultaneous demand-and-margin shock of the kind flagged as the dominant risk. The table re-derives fixed-charge cover under this stress, holding the debt schedule constant. The key lender question is whether rent, interest and amortisation remain covered; they do.

Downside (R m)	FY2026	FY2027	FY2028	FY2029	FY2030
Revenue	R598	R682	R777	R886	R1,010
EBITDA (downside)	R72	R89	R109	R133	R162
EBITDAR (rent-incl.)	R117	R141	R168	R200	R239
Fixed charges	R62	R67	R74	R81	R89
FCCR (downside)	1.68x	1.86x	2.05x	2.25x	2.43x

Table 13.10 Downside stress test — fixed-charge cover under a combined revenue and margin shock.

StrengthThe structure survives the stress case

Even under a simultaneous 8% revenue miss and 2pp margin compression, modelled fixed-charge cover remains above 1.0x throughout and comfortably so in the later years. Combined with the R15m DSRA, the maintained cash floor and the modest debt quantum, the credit does not breach its coverage covenant even in the downside, the core reason the debt is bankable notwithstanding the conservative earnings view.

13.11 Base-case KPI dashboard

KPI	FY2026	FY2027	FY2028	FY2029	FY2030
Revenue growth	—	14%	14%	14%	14%
Gross margin	38.0%	39.0%	40.0%	41.0%	42.0%
EBITDA margin	14.0%	15.0%	16.0%	17.0%	18.0%
Net margin	5.6%	6.8%	8.0%	9.3%	10.6%
Private-label share	12%	14%	16%	18%	20%
Store count	30	42	54	66	78
FCCR (rent-incl.)	1.99x	2.20x	2.41x	2.63x	2.84x
Cash conversion (CFO/EBITDA)	82%	77%	77%	76%	76%

Table 13.11 Base-case key performance indicators.

13.12 Returns & valuation

New equity of R90m is modelled to acquire an approximately 11.4% stake at a 7.5x entry EV/EBITDA (pre-money equity value of ~R703m). The returns below assume a five-year hold to FY2030.

Returns metric	Base (8.0x exit)	Conservative (flat 7.5x exit)
Equity IRR (5-yr)	20%	19%
Money multiple (MOIC)	2.4x	2.3x
Exit equity value	R1661m	R1562m
Investor exit proceeds	R189m	R178m

Table 13.12 Equity returns under base and conservative exit assumptions.

Key findingReturns are earnings-driven, with multiple as upside

The base-case ~20% IRR assumes a modest re-rating from a 7.5x entry to an 8.0x exit. Stripping out any re-rating, the IRR is still ~19%, so the return is driven primarily by earnings growth, strong cash generation and distributions, not multiple expansion.

Equity investors should treat the exit multiple as the key upside swing factor and satisfy themselves on comparable multiples for scaled, private-label-rich wellness retail. Returns also depend on delivery of the margin mix-shift, which the private-label and e-commerce programme underpins.

13.13 Store-cohort economics

The store network is the largest single revenue channel, and its economics drive the blended margin trajectory. New stores follow a maturation curve: a modest first-year contribution during ramp, break-even at the store level within 12–18 months, and full maturity by 24–36 months. Because the plan rolls out stores steadily rather than all at once, the network always contains a mix of maturing and mature stores, which is why the blended EBITDA margin climbs gradually rather than stepping up.

Store maturity	Revenue vs mature	Store EBITDA margin	Status
Year 1 (ramp)	55–70%	Low / near break-even	Building footfall & advisory base
Year 2 (maturing)	80–90%	Approaching target	Loyalty & subscription building
Year 3+ (mature)	100%	12–18%	Full productivity

Table 13.13 Illustrative store-cohort maturation.

Analyst flagThe margin glide depends on rollout discipline

The smooth 14%→18% EBITDA-margin path assumes new stores mature on schedule and the rollout pace is matched to the network’s ability to absorb it. An over-fast rollout would load the network with immature, margin-dilutive stores and depress early EBITDA below the plan; too slow would forgo growth. Disciplined, FCCR-gated site selection and a matched rollout cadence are therefore central to delivering the modelled margin curve, and a key diligence and monitoring focus.