Financial Projections

Jump to section

• Overview & contents
• i. Important Notice
• 1. Executive Summary
• 2. Why Limpopo
• 3. The Market and the Commission Problem
• 4. Water: The Binding Constraint
• 5. Open Field Versus Tunnels
• 6. Crop Plan and Rotation
• 7. SWOT and Competitive Position
• 8. Route to Market
• 9. Unit Economics
• 10. The Five-Year Build and Its Gates
• 11. Funding
• 12. People and Operations
• 13. Certification and Compliance
• 14. Financial Projections
• 15. Break-Even
• 16. Sensitivity and Scenarios
• 17. Risk Management
• 18. Implementation Timeline
• 19. Returns
• 20. Key Performance Indicators
• 21. Key Assumptions
• 22. 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

14.1 Basis of preparation

• All amounts are in nominal South African rand. Production is built from hectares by system, yield per hectare per crop, and crops per year.
• Market-equivalent value is the crop valued at fresh produce market prices. The direct-channel premium is shown separately and is earned only on volume sold outside the market floor.
• Commission and agent levy is applied at 12.0 per cent to the share of market-equivalent value sold through market agents, falling from 86.0 per cent to 58.0 per cent of volume.
• Depreciation is charged on capitalised expenditure only. The R1.70 million working capital element funds opening inputs and the growing crop and is reflected in growing crops and debtors.
• Interest and capital derive from the facility-level schedules in Appendix C across seven instruments.
• Growing crops are carried at accumulated input cost and released to the income statement on harvest.
• Corporate income tax is applied at 27 per cent with assessed losses carried forward subject to the section 20 limitation, which caps the set-off at the higher of R1 million or 80 per cent of taxable income.
• The balance sheet is derived rather than plugged; owner’s funds roll forward from founder equity, grants received and retained earnings, and the closing cash position reconciles exactly to the cash flow statement.

14.2 Projected income statement

EBITDA turns positive in Year 3 at R329 000 and reaches R3.42 million in Year 5 at a 16.4 per cent margin. Profit after tax arrives in Year 4 at R84 000 and reaches R1.58 million in Year 5, after depreciation of R1.09 million and interest of R659 000.

Assessed losses of R2.82 million accumulate across Years 1 to 3. Year 4 taxable profit of R84 000 is fully sheltered. In Year 5 the section 20 limitation caps the set-off at 80 per cent of taxable income, R1.34 million against available losses of R2.74 million, so R335 000 remains taxable and R90 000 of tax arises despite R1.40 million of assessed loss still unutilised. That is a common and often-missed feature of the South African regime: a company can pay tax while carrying substantial losses forward.

14.3 The cost base as a share of net revenue

Direct production costs are broadly flat at 58 to 65 per cent of net revenue across the plan, they scale with output almost exactly. The entire margin improvement comes from the fixed cost base, which falls from 55.0 per cent of revenue to 25.5 per cent as the same management, security, lease and administration are spread across 45 hectares instead of 8.

14.4 Projected cash flow

Operating cash flow is negative in Years 1 to 3 and turns positive in Year 4 at R1.08 million, reaching R2.79 million in Year 5. Closing cash never falls below R588 000, which occurs at the end of Year 1. The working capital absorption is substantial and rises every year, R538 000 in Year 5, because growing crops and trade debtors both scale with area and with the direct channel, which settles more slowly than the market floor.

14.5 Projected balance sheet

Owner’s funds fall from R2.54 million at the end of Year 1 to R1.36 million at the end of Year 2 as accumulated losses erode the founder’s contribution and the first grant tranche, recover to R2.63 million on the second grant tranche in Year 3, and reach R4.30 million by Year 5. That dip is the honest shape of an establishing farm, and it is the reason the second Blended Finance tranche is drawn in Year 3 rather than the expansion being funded by further debt: at the end of Year 2 gearing is 74.4 per cent and the balance sheet would not support more.