05 · Returns
Returns to Lancaster Group
R5.16m of income in year one on an average drawn balance of R25.7m. The upfront fee is earned on the full limit, so the all-in IRR of 21.3% sits above the coupon.
Exhibit 5.1
Facility income and return, year 1
| Facility limit (revolving, 12 months) | R50m |
| Pricing (Prime 10.75% + 4.00%) | 14.75% |
| Raising fee (2.0% of limit, upfront) | R1.00m |
| Interest income, year 1 | R4.16m |
| Total facility income | R5.16m |
| Total logistics financed | R389m |
| Yield on average drawn balance | 20.1% |
| Return on committed limit | 10.3% |
| All-in lender IRR (daily cash flows) | 21.3% |
Pricing levers
Test how pricing changes Lancaster's return.
Exhibit 5.2 · Advance rate
Lender IRR by advance rate
The 2% fee is earned on the full limit. Lower utilisation therefore raises the IRR.
At a 100% advance peak exposure would be R55.4m, which exceeds the R50m limit (shown in red). The proposed 80% advance keeps 3.1x cargo cover and headroom for overlapping cycles.
Note · IRR solved on daily lender cash flows: fee received at day 0, invoice funding paid out daily, principal and accrued interest received when each LC pays. Interest accrual is calibrated to the proposal's R4.16m year-1 figure.