Executive Summary

Jump to section

• Overview & contents
• i. Important Notice
• 1. Executive Summary
• 2. A Note on the Name
• 3. The Market and the FMD Crisis
• 4. Foot-and-Mouth Disease as a Business Risk
• 5. The Production System
• 6. Herd Performance
• 7. SWOT and Competitive Position
• 8. Grazing, Land and Water
• 9. Unit Economics
• 10. Route to Market
• 11. The Five-Year Build and Its Gates
• 12. Funding
• 13. People, Security and Stock Theft
• 14. Compliance and Traceability
• 15. Financial Projections
• 16. Break-Even
• 17. Sensitivity and Scenarios
• 18. Risk Management
• 19. Implementation Timeline
• 20. Returns
• 21. Key Performance Indicators
• 22. Key Assumptions
• 23. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Capital Schedules
• C. Appendix C: Funding and Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

1.1 The proposition

Cattle Baron Master is a cow-calf enterprise producing weaner calves for the South African feedlot and speculator market. It begins with 120 breeding cows and grows to 450 by Year 5, largely by retaining its own heifers rather than by buying animals.

Total capital deployed is R11.20 million. The founder contributes R2.20 million; R3.40 million is targeted as non-repayable grant through the Blended Finance Scheme, and the balance is Land Bank and asset finance drawn as the herd is built.

1.2 Four things an investor must accept

• This is a herd build, not a trading business. For four of the five years the operation consumes more cash than it generates. Cash EBITDA is negative until Year 5. What accumulates instead is a breeding herd worth R9.89 million. Reported EBITDA of R2.52 million in Year 5 includes R2.41 million of herd growth; cash EBITDA is R112 000. Every table in this plan shows both.
• Break-even is 377 breeding cows. Below that the operation does not cover its fixed cost base on a cash basis. The plan crosses it during Year 5. Cattle is a scale business and the years before scale are funded, not earned.
• One percentage point of weaning percentage is worth R53 000. Weaning percentage rises from 64.0 per cent to 79.8 per cent across the plan. It is the single most valuable operational variable and it costs almost nothing to improve.
• The break-even weaner price is R52.51 a kilogram against a planned R54.51 and a current market of R48.75. The margin of safety on price is 3.7 per cent, which is thin. If foot-and-mouth disease is brought under control and prices normalise toward pre-crisis levels, this plan is exposed.

1.3 Headline numbers

1.4 The honest return position