AgriNova Business Plan › Section 13 › Financial Plan

This section presents AgriNova’s integrated five-year financial
projections: the operating assumptions, revenue build-up, projected
income statement, balance sheet and cash-flow statement, unit economics,
capital structure, break-even and sensitivity analysis, and investment
returns. The model is bottom-up and fully articulated — the three
statements reconcile in every period, and the balance sheet balances
each year by construction.

13.1 Key Assumptions

13.2 Revenue Build-Up

Revenue is built bottom-up from volumes and prices for each milled
and feed product, plus the equipment and services streams. Total revenue
grows from R182.5 million in Year 1 to R547.7 million in Year 5, a
compound annual growth rate of approximately 31.6%, driven primarily by
the utilisation ramp rather than by price escalation.

13.3 Projected Income Statement

The projected statement of comprehensive income below shows the
progression from revenue to net profit. Year 1 records a modest net loss
of R9.5 million — an honest reflection of the commissioning year, in
which the plant operates at 30% utilisation while carrying a full
interest charge — turning to profit from Year 2 and reaching R55.4
million by Year 5.

Figure 13.1

13.4 EBITDA & Margin Progression

EBITDA expands from R20.2 million (11.1% margin) in Year 1 to R104.1
million (19.0% margin) in Year 5. The margin expansion is a function of
operating leverage: fixed overheads are spread across rising volume as
utilisation climbs, while the higher-margin equipment and services
streams grow alongside.

Figure 13.2

13.5 Cost Structure

Cost of goods sold is dominated by maize procurement, which is why
maize-price movements are the single largest swing factor in
profitability. Operating expenses comprise administration, selling and
distribution, facility and raw-material handling, marketing and other
overheads. The chart below decomposes the Year-5 cost base.

Figure 13.3

13.6 Projected Balance Sheet

The projected statement of financial position shows total assets
growing from R243.2 million at the end of Year 1 to R333.3 million by
Year 5, funded by retained earnings and progressive debt amortisation.
Equity builds from R110.5 million to R234.7 million as profits
accumulate, while senior debt reduces from R120 million to R60 million.
The balance sheet reconciles exactly in every year.

Figure 13.4

13.7 Projected Cash-Flow Statement

Operating cash flow turns positive from Year 2 and strengthens
steadily as profitability improves and working-capital growth moderates.
Investing outflows reflect maintenance capital expenditure from Year 2,
and financing outflows capture debt amortisation from Year 3 once the
principal moratorium ends. The closing cash balance builds to R81.0
million by Year 5, providing a healthy liquidity buffer.

Figure 13.5

13.8 Capital Expenditure & Funding

Initial capital expenditure of R240 million covers land, plant
construction, milling and feed equipment, the fabrication workshop,
fleet, working capital, licensing and a contingency reserve. The chart
below sets out the capex allocation and the corresponding 50:50
equity-debt funding split.

Figure 13.6

13.9 Unit Economics

At the per-tonne level, the milling spread — the gap between
maize-meal realisations and maize input cost after extraction — is the
engine of milling profitability. In Year 1, white maize at R4,300 per
tonne yields, after a 70% meal extraction, roughly 0.70 tonnes of meal
valued at R8,800 per tonne, supplemented by samp and bran value. This
whole-kernel value capture, net of milling conversion cost, produces the
commodity-milling gross margin of roughly 15–18%, before the blending
effect of the higher-margin equipment streams.

13.10 Break-Even Analysis

On the Year-3 cost base, the business breaks even at approximately
R269.3 million of revenue — below the Year-3 projected revenue of R363.1
million, implying a comfortable margin of safety once the plant is
operating at mid-range utilisation. The chart illustrates the
relationship between fixed costs, variable costs and revenue.

Figure 13.7

13.11 Debt Service & Coverage

The senior facility carries interest-only payments during the
24-month moratorium, amortising thereafter. The debt-service-coverage
ratio (DSCR) remains above the 1.25x lender threshold in every year,
with a minimum of 1.29x in Year 3 — the first year of principal
repayment — providing lenders with consistent coverage headroom.

Figure 13.8

13.12 Sensitivity Analysis

The model’s profitability is most sensitive to maize input cost and
selling prices, and less so to utilisation. A 10% movement in maize cost
shifts Year-5 EBITDA by approximately R22.4 million, and a 5% movement
in selling prices shifts it by a similar R22.5 million. A
5-percentage-point change in utilisation moves Year-5 EBITDA by about
R8.7 million. These sensitivities reinforce the central caveat: the
maize-price assumption is the dominant value driver.

Figure 13.9

13.13 Scenario Analysis

Three scenarios bracket the outlook. The base case delivers Year-5
revenue of R547.7 million and EBITDA of R104.1 million. The upside case
— firmer prices and faster ramp — lifts EBITDA to R131.9 million. The
downside case — softer prices and slower ramp — still produces positive
EBITDA of R59.2 million, demonstrating resilience even under adverse
conditions.

13.14 Investment Returns

The base case generates an unlevered project IRR of 24.8% and an NPV
of R192.2 million at a 10% discount rate (R110.8 million at 15%).
Levered equity returns are higher, benefiting from the debt structure
and an assumed exit at 5.0x Year-5 EBITDA, but are terminal-value
sensitive. The operating payback of 6.4 years is offered as the more
conservative reference for credit assessment.

Figure 13.10

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 AgriNova Milling Technologies (Pty) Ltd.