Evergreen Valley Avocado Estates — Financial Projections

The following financial projections have been prepared on a conservative basis, reflecting realistic yield assumptions, market-based pricing, and industry-standard cost structures. All figures are presented in South African Rand (’000) unless otherwise stated. The projections cover a seven-year horizon to capture the…

Section 16 · Business Plan

Financial Projections

Year 5 Revenue

R52,000,000

As orchards reach maturity, with the operation moving from establishment-phase losses to Year-5 net profit of R19.4 million.

16.1 Key Assumptions

Assumption	Value	Basis
Orchard size	150 hectares	Development plan
Planting density	416 trees/ha	High-density standard
Average farm-gate price	R20,000/ton	Conservative blended estimate
Price escalation	5% per annum from Year 4	Inflation and demand growth
Cost escalation	6% per annum	SA CPI + 1%
Yield at maturity	18–20 tons/ha	Industry benchmark (Limpopo)
Export ratio	65–70% Class 1	Industry average
Corporate tax rate	28%	SA statutory rate (with agricultural relief)
Depreciation	Straight-line over useful life	IFRS / SA GAAP
Discount rate (WACC)	14%	Risk-adjusted for agriculture

16.2 Projected Profit and Loss Statement (Years 1–7)

The following income statement projects the company’s revenue, cost structure, and profitability trajectory from establishment through to full maturity.

Income Statement (R’000)	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7
Revenue	0	0	18,000	35,000	52,000	66,000	74,000
Cost of Sales
Harvesting costs	0	0	(2,700)	(4,900)	(6,800)	(8,200)	(9,000)
Packhouse & logistics	0	0	(3,600)	(6,300)	(8,500)	(10,200)	(11,100)
Crop inputs (fertiliser, chemicals)	(1,500)	(1,800)	(1,800)	(2,800)	(4,200)	(5,100)	(5,600)
Total Cost of Sales	(1,500)	(1,800)	(8,100)	(14,000)	(19,500)	(23,500)	(25,700)
Gross Profit	(1,500)	(1,800)	9,900	21,000	32,500	42,500	48,300
Gross Margin %	n/a	n/a	55.0%	60.0%	62.5%	64.4%	65.3%
Operating Expenses
Staff costs	(3,200)	(3,400)	(3,600)	(3,800)	(4,000)	(4,200)	(4,500)
Farm overheads	(1,200)	(1,300)	(1,400)	(1,500)	(1,600)	(1,700)	(1,800)
Insurance	(800)	(850)	(900)	(950)	(1,000)	(1,050)	(1,100)
Professional fees	(400)	(350)	(300)	(300)	(300)	(300)	(300)
Marketing & industry	(100)	(100)	(200)	(250)	(300)	(350)	(400)
General & administration	(500)	(500)	(550)	(600)	(650)	(700)	(750)
Total Operating Expenses	(6,200)	(6,500)	(6,950)	(7,400)	(7,850)	(8,300)	(8,850)
EBITDA	(7,700)	(8,300)	2,950	13,600	24,650	34,200	39,450
Depreciation & amortisation	(1,800)	(1,800)	(1,800)	(1,800)	(1,800)	(1,800)	(1,800)
EBIT	(9,500)	(10,100)	1,150	11,800	22,850	32,400	37,650
Interest expense	(2,100)	(2,100)	(2,100)	(1,800)	(1,500)	(1,200)	(900)
Profit Before Tax	(11,600)	(12,200)	(950)	10,000	21,350	31,200	36,750
Income tax (28%)	0	0	0	(2,800)	(5,978)	(8,736)	(10,290)
NET PROFIT/(LOSS)	(11,600)	(12,200)	(950)	7,200	15,372	22,464	26,460

Note: Tax losses from Years 1–3 are carried forward and utilised against taxable income in Year 4 onwards, reducing the effective tax charge in that year. The EBITDA margin exceeds 50% from Year 5, reflecting the operating leverage inherent in established avocado orchards with relatively fixed cost bases.

16.3 Projected Balance Sheet (Years 1–7)

The balance sheet reflects the significant biological and fixed asset base of the business, with land and orchards comprising the majority of total assets.

Balance Sheet (R’000)	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7
ASSETS
Non-Current Assets
Land	25,000	25,000	25,000	25,000	25,000	25,000	25,000
Bearer plants (orchards)	12,000	22,000	28,000	28,000	28,000	28,000	28,000
Less: Accumulated depreciation	(900)	(2,700)	(4,500)	(6,300)	(8,100)	(9,900)	(11,700)
Net bearer plants	11,100	19,300	23,500	21,700	19,900	18,100	16,300
Farm infrastructure	8,000	8,000	8,000	8,000	8,000	8,000	8,000
Less: Accumulated depreciation	(400)	(800)	(1,200)	(1,600)	(2,000)	(2,400)	(2,800)
Net infrastructure	7,600	7,200	6,800	6,400	6,000	5,600	5,200
Irrigation systems	4,000	7,500	10,000	10,000	10,000	10,000	10,000
Less: Accumulated depreciation	(200)	(575)	(1,075)	(1,575)	(2,075)	(2,575)	(3,075)
Net irrigation	3,800	6,925	8,925	8,425	7,925	7,425	6,925
Total Non-Current Assets	47,500	58,425	64,225	61,525	58,825	56,125	53,425
Current Assets
Inventory (crop inputs)	300	350	500	700	900	1,000	1,100
Trade receivables	0	0	3,000	5,833	8,667	11,000	12,333
Cash and equivalents	8,600	2,425	1,675	5,075	16,247	34,511	56,771
Total Current Assets	8,900	2,775	5,175	11,608	25,814	46,511	70,204
TOTAL ASSETS	56,400	61,200	69,400	73,133	84,639	102,636	123,629
EQUITY & LIABILITIES
Shareholders’ Equity
Share capital	40,000	55,000	55,000	55,000	55,000	55,000	55,000
Retained earnings	(11,600)	(23,800)	(24,750)	(17,550)	(2,178)	20,286	46,746
Total Equity	28,400	31,200	30,250	37,450	52,822	75,286	101,746
Non-Current Liabilities
Long-term borrowings	25,000	25,000	30,000	25,000	20,000	15,000	10,000
Total Non-Current Liabilities	25,000	25,000	30,000	25,000	20,000	15,000	10,000
Current Liabilities
Trade payables	1,500	2,500	4,150	5,683	5,817	6,350	5,883
Current portion of borrowings	0	0	5,000	5,000	5,000	5,000	5,000
Tax payable	0	0	0	0	1,000	1,000	1,000
Accruals	1,500	2,500	0	0	0	0	0
Total Current Liabilities	3,000	5,000	9,150	10,683	11,817	12,350	11,883
TOTAL EQUITY & LIABILITIES	56,400	61,200	69,400	73,133	84,639	102,636	123,629

16.4 Projected Cash Flow Statement (Years 1–7)

The cash flow statement demonstrates the capital-intensive establishment phase (Years 1–3) followed by strong operating cash generation from Year 4 onwards.

Cash Flow Statement (R’000)	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7
OPERATING ACTIVITIES
Net profit/(loss)	(11,600)	(12,200)	(950)	7,200	15,372	22,464	26,460
Add back: Depreciation	1,800	1,800	1,800	1,800	1,800	1,800	1,800
Add back: Interest expense	2,100	2,100	2,100	1,800	1,500	1,200	900
Changes in working capital
(Increase)/decrease in receivables	0	0	(3,000)	(2,833)	(2,834)	(2,333)	(1,333)
(Increase)/decrease in inventory	(300)	(50)	(150)	(200)	(200)	(100)	(100)
Increase/(decrease) in payables	1,500	1,000	1,650	1,533	1,134	533	(467)
Tax paid	0	0	0	0	(1,800)	(4,978)	(8,290)
Cash from Operations	(6,500)	(7,350)	1,450	9,300	14,972	18,586	18,970
INVESTING ACTIVITIES
Land acquisition	(25,000)	0	0	0	0	0	0
Orchard establishment	(8,000)	(10,000)	(6,000)	0	0	0	0
Irrigation systems	(4,000)	(3,500)	(2,500)	0	0	0	0
Farm infrastructure	(8,000)	0	0	0	0	0	0
Cash used in Investing	(45,000)	(13,500)	(8,500)	0	0	0	0
FINANCING ACTIVITIES
Share capital raised	40,000	15,000	0	0	0	0	0
Borrowings raised	25,000	0	5,000	0	0	0	0
Borrowings repaid	0	0	0	(5,000)	(5,000)	(5,000)	(5,000)
Interest paid	(2,100)	(2,100)	(2,100)	(1,800)	(1,500)	(1,200)	(900)
Dividends paid	0	0	0	0	0	0	(2,000)
Cash from Financing	62,900	12,900	2,900	(6,800)	(6,500)	(6,200)	(7,900)
NET CASH MOVEMENT	11,400	(7,950)	(4,150)	2,500	8,472	12,386	11,070
Opening cash balance	0	11,400	3,450	(700)	1,800	10,272	22,658
CLOSING CASH BALANCE	11,400	3,450	(700)	1,800	10,272	22,658	33,728

Note: The cash flow projection demonstrates that the business requires external funding support through Year 3. The overdraft facility of R5 million (included in the R70m funding structure) provides a buffer for the marginal cash deficit in Year 3. From Year 4, the business generates substantial free cash flow, enabling debt repayment and eventual dividend distributions.

This document contains proprietary and confidential information. Distribution without written consent is prohibited.