XSMLT Nexus Logistics — Financial Plan

The basis of preparation, the projected profit and loss, cash flow and balance sheet, the debt structure and service cover, the returns, sensitivity and scenarios, the working-capital policy, the covenant-compliance dashboard and the valuation cross-check underpinning XSMLT Nexus.

Section 12 · Business Plan

Financial Plan

12.1 Basis of preparation

Sponsor anchors preserved; below-EBITDA independently
derived. Revenue, EBITDA, fleet counts, the capital budget and
the proposed funding stack are the sponsor’s figures, preserved exactly.
Depreciation, interest, taxation (28% 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
fleet-finance and revolving facilities, the balance sheet and all ratios
are re-derived from first principles. The balance sheet ties to zero in
every projection year. Fleet is depreciated over seven years,
infrastructure and warehousing over twenty, technology over four and
security assets over five.

Where the independent derivation departs from the
sponsor

The sponsor’s headline net profit path ((R18m), R52m, R156m, R301m,
R510m) cannot be reproduced from the sponsor’s own EBITDA once full
depreciation on the R655m asset base and interest on R460m of DFI debt
(plus fleet finance) are charged. The independent derivation shows
(R76m), (R30m), R85m, R184m and R370m over Years 1–5 — a cumulative
R262m below the sponsor over five years, driven mainly by depreciation
on a heavy, fast-cycling fleet and by ramp-period interest. Investors
should anchor on the re-derived figures, which remain strongly positive
from Year 3.

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	420	790	1,320	2,010	2,800	3,192	3,511	3,757	3,945	4,103
EBITDA	58	142	298	480	756	868	966	1,041	1,097	1,141
EBITDA margin %	13.8	18.0	22.6	23.9	27.0	27.2	27.5	27.7	27.8	27.8
Depreciation	(83)	(107)	(130)	(154)	(166)	(180)	(194)	(148)	(140)	(134)
EBIT	(25)	35	168	326	590	688	771	893	957	1,006
Senior interest	(52)	(52)	(45)	(38)	(31)	(25)	(18)	(11)	(4)	(2)
Fleet finance interest	–	(13)	(25)	(35)	(40)	(33)	(23)	(14)	(7)	(2)
Revolver interest	–	–	(8)	(11)	(4)	–	–	–	–	–
Profit before tax	(76)	(30)	90	243	514	631	730	868	946	1,002
Taxation (28%)	–	–	(5)	(58)	(144)	(177)	(204)	(243)	(265)	(281)
NPAT	(76)	(30)	85	184	370	454	526	625	681	722

The Years 1–2 losses reflect thin ramp EBITDA (13.8% and 18.0%
margins while the fleet builds utilisation) carrying full depreciation
and interest. The assessed loss shelters taxation into Year 3; because
the s20 limitation caps loss set-off at 80% of taxable income, a small
tax charge arises from Year 3 even while losses remain partially
unutilised.

12.3 Projected cash flow

R m	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
EBITDA	58	142	298	480	756	868	966	1,041	1,097	1,141
Cash taxation	–	–	(5)	(58)	(144)	(177)	(204)	(243)	(265)	(281)
Δ Net working capital	(67)	(59)	(85)	(110)	(126)	(63)	(51)	(39)	(30)	(25)
Operating cash flow	(9)	83	208	311	486	629	710	758	802	835
Capital expenditure	(655)	(180)	(165)	(175)	(150)	(140)	(130)	(120)	(115)	(115)
Funding drawdowns	780	–	–	–	–	–	–	–	–	–
Fleet finance draws	–	105	97	102	88	–	–	–	–	–
Senior interest & principal	(52)	(112)	(105)	(98)	(91)	(85)	(78)	(71)	(24)	(22)
Fleet finance service	–	(13)	(46)	(75)	(101)	(111)	(102)	(71)	(45)	(20)
Revolver draw/(repay)	–	72	19	(55)	(37)	–	–	–	–	–
Closing cash	64	20	20	20	210	503	903	1,399	2,017	2,695

Figure 16

Figure 16 — Liquidity: cash, revolver and fleet-finance balances

Honest finding — the R780m funds the platform, not the
growth

The R780 million establishes the initial 220-truck platform plus
R125m of working capital. Scaling to 520+ combinations requires
approximately R850m of further capital expenditure over Years 1–5. This
is financed as it should be in trucking — through an asset-backed
fleet-finance facility secured on the vehicles themselves (peaking near
R243m outstanding in Year 4) plus a working-capital revolver (peaking
near R91m in Year 3 to fund transit bonds, border deposits and
mining-client DSO). Both facilities must be committed alongside the
R780m at close. The Company turns strongly cash-generative from Year 5
and holds over R2.6 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)	573	645	680	701	686	645	581	554	529	510
Net working capital	67	126	211	322	448	511	562	601	631	656
Cash	64	20	20	20	210	503	903	1,399	2,017	2,695
Total assets	704	792	912	1,043	1,343	1,659	2,046	2,554	3,177	3,861
Shareholders’ equity	244	214	299	483	853	1,307	1,833	2,458	3,139	3,861
Senior debt	460	400	340	280	220	160	100	40	20	0
Fleet finance	–	105	181	243	270	191	113	56	18	–
Revolver	–	72	91	37	–	–	–	–	–	–
Total equity & liabilities	704	792	912	1,043	1,343	1,659	2,046	2,554	3,177	3,861
Balance check	0	0	0	0	0	0	0	0	0	0

Figure 17

Figure 17 — Asset composition, Years 1–10

Equity dips to R244m at end-Year 1 (the establishment loss against
R320m subscribed) and compounds to over R4.0 billion by Year 10 with no
dividends assumed. Net debt peaks around R490m in Year 3 (1.6x that
year’s EBITDA) and turns net-cash during Year 6.

12.5 Debt structure and service cover

Facility	R m	Rate	Tenor	Grace	Security
IDC senior facility	280	Prime-linked (11.50% modelled)	8 yrs	1 yr principal	First-ranking over fleet & fixed assets
DBSA development loan	180	10.75% modelled	10 yrs	1 yr principal	Second-ranking; cession of contracts
Fleet instalment finance	~R243m peak	12.25% modelled	5 yrs / tranche	—	Asset-backed on financed vehicles
Revolving working capital	≥R100m (proposed)	11.75% modelled	Annual review	—	Cession of receivables & bonds

Figure 18

Figure 18 — DSCR profile with covenant reference lines

Figure 19

Figure 19 — Debt balances by facility and annual debt service

Honest finding — ramp-period DSCR requires structural
support

CFADS is negative in Year 1 and covers only 0.67x of total debt
service in Year 2, against a typical logistics covenant of 1.30x. Cover
clears the covenant in Year 3 (1.31x) and widens rapidly thereafter
(1.69x Year 4, 2.47x Year 5). The financing plan therefore requires: (i)
the modelled 1-year principal grace on the DFI facilities; (ii) a funded
interest/debt-service reserve of approximately R110m covering Years 1–2;
and (iii) covenant holidays or a sculpted profile until Year 3. Without
these, the sponsor’s stated 1.9x–3.2x DSCR range is only achieved from
Year 3 onward.

12.6 Returns, sensitivity and scenarios

Returns. The 10-year unlevered project IRR is 33.4%
and the equity IRR 41.1%, assuming exit at a conservative 6.0x EBITDA
multiple in Year 10 (enterprise value R6.84bn against Year 10 EBITDA of
R1,140.6m). These sit above the sponsor’s 21–29% guidance because the
re-derived model runs the full 10-year horizon with terminal value,
whereas the sponsor band appears referenced to the 5-year window and the
payback period.

Figure 20

Figure 20 — Equity IRR sensitivity tornado

Sensitivity	Equity IRR
Base case (6.0x exit)	41.1%
Exit multiple 5.0x	39.5%
Exit multiple 7.0x	42.5%
EBITDA −10% throughout	37.5%
EBITDA +10% throughout	44.4%
EBITDA −20% (severe corridor case)	33.8%

Figure 21

Figure 21 — Year 5 cash generation bridge

Figure 22

Figure 22 — Deleveraging path and return on equity

12.7 Working capital policy

Net working capital is modelled at 16% of revenue — high for a
service business, reflecting the corridor’s structural cash traps:
transit bonds and border deposits held per crossing, fuel and
consumables inventory across depots, and mining-client
days-sales-outstanding of 45–75 days aggravated by DRC repatriation
timing. The absorption is front-loaded and scales with revenue,
consuming R67m in Year 1 and rising to R126m in Year 5 — the proximate
driver of the revolver requirement.

Component	Policy	Basis
Transit bonds & border deposits	Per-crossing, refundable on exit	Structural cash trap; ties up capital per trip
Trade receivables — mining	45–75 days	Majors’ payment terms + DRC repatriation friction
Trade receivables — other	30–45 days	Industrial/FMCG terms
Fuel & consumables inventory	Depot-level buffer	Bulk procurement; supply-security buffer
Trade & toll payables	30 days	Partial offset

12.8 Covenant compliance dashboard

Test	Y1	Y2	Y3	Y4	Y5	Y6	Y7
DSCR (≥1.30x from Y3)	-0.18	0.67	1.31	1.69	2.47	3.21	3.95
Net debt/EBITDA (≤3.0x from Y3)	6.8	3.9	2.0	1.1	0.4	net cash	net cash
Interest cover (EBITDA/int)	1.1	2.2	3.8	5.7	9.9	15.1	23.4
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, with rapidly widening headroom. Testing
conventional covenants from Year 1 produces immediate technical breach:
a structuring issue, not a viability issue, and the reason the reserve
and covenant holiday are conditions of the financing rather than
optional extras.

12.9 Valuation cross-check

As a cross-check on the 6.0x exit, a DCF over the explicit 10-year
horizon at an 18% nominal ZAR WACC (long-bond risk-free, equity-risk
premium and an Africa cross-border logistics loading, blended with
post-tax DFI debt cost) with 4% terminal growth yields an enterprise
value of roughly R6.0–7.0 billion — bracketing the R6.84 billion
multiple-derived exit. Asset backing provides a hard floor independent
of multiples: a large, modern, readily re-saleable fleet plus depot
infrastructure and net PPE underpin recovery value in a capacity-short
market where trucks hold their value.

Resilience and its limits

Returns are resilient in percentage terms — even at EBITDA −20%
throughout, the equity IRR holds around 33.8% — because the terminal
value dominates equity proceeds. That resilience is also the caution:
roughly two-thirds of undiscounted equity value arrives at exit, and
equity investors underwrite a decade-long hold in a corridor exposed to
recurring, sometimes severe, disruption. The scenario that most
threatens the case is not IRR compression but a structural loss of
corridor share to rail combined with a failed or delayed exit.

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 XSMLT Nexus Logistics (Pty) Ltd.