Two Seasons Garlic Business Plan — Break-Even Analysis
The hectares and saleable tonnage needed to cover the cost base, and when the business crosses break-even.
Break-Even Analysis
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- Overview & contents
- 1. Executive Summary
- 2. Investment Thesis
- 3. Company and Business Overview
- 4. Problem, Customer Need and Value Proposition
- 5. Products and Services
- 6. Industry Analysis
- 7. Market Analysis
- 8. Customer Analysis
- 9. Market and Competitive Landscape
- 10. Business Model
- 11. Go-to-Market Strategy
- 12. Operating Model
- 13. Management and Organisation
- 14. Strategic Plan
- 15. SWOT Analysis and Strategic Implications
- 16. Risk Analysis
- 17. ESG and Sustainability
- 18. Implementation Roadmap
- 19. Financial Model and Revenue Build
- 20. Projected Income Statement
- 21. Projected Balance Sheet
- 22. Projected Cash Flow
- 23. Capital Expenditure and Working Capital
- 24. Funding Requirement and Structure
- 25. Break-Even Analysis
- 26. Investment Case and Returns
- 27. Debt Serviceability
- 28. Sensitivity and Scenario Analysis
- 29. Key Performance Indicators and Management Dashboard
- 30. Conclusion
- A. Appendix A: Assumption Register
- B. Appendix B: Conditions Precedent to the Seed Subscription
- C. Appendix C: Glossary
The company breaks even at R36m of revenue on its FY2031 cost structure, a margin of safety of 32%; at the FY2029 structure break-even is reached in the third season.
|
R million |
FY2027 |
FY2028 |
FY2029 |
FY2030 |
FY2031 |
|---|---|---|---|---|---|
|
Revenue |
3.05 |
10.43 |
21.96 |
36.61 |
52.80 |
|
Variable costs (cost of sales) |
(3.14) |
(5.20) |
(9.88) |
(15.61) |
(21.78) |
|
Contribution |
(0.10) |
5.23 |
12.09 |
21.00 |
31.03 |
|
Contribution margin |
-3.2% |
50.1% |
55.0% |
57.4% |
58.8% |
|
Fixed costs (overheads, depreciation, interest) |
6.41 |
9.30 |
12.72 |
15.60 |
17.73 |
|
Break-even revenue |
0.00 |
18.55 |
23.11 |
27.19 |
30.17 |
|
Break-even saleable volume (t) |
0 |
381 |
438 |
489 |
520 |
|
Margin of safety |
0% |
-78% |
-5% |
26% |
43% |
Table 47. Break-even analysis by year. FY2027 shows no break-even because contribution is negative while planting stock is purchased.
Break-even is first reached during FY2029, the third season, and at the EBITDA level in the first half of that year when the Limpopo crop is marketed. On the FY2031 structure the company would remain profitable at a saleable volume of about 620 tonnes, roughly the FY2030 crop, which is the practical meaning of the halt option in the downside case.