Karoo Harvest Produce — Investment Returns & Valuation
The break-even analysis demonstrates that the project achieves operational break-even at approximately 3,636 tonnes of annual production, equivalent to utilisation of approximately 50 hectares at base-case yields. This provides a significant margin of safety against the projected 100-hectare cultivation programme.
Section 10 · Business Plan
Investment Returns & Valuation
The break-even analysis demonstrates that the project achieves operational break-even at approximately 3,636 tonnes of annual production, equivalent to utilisation of approximately 50 hectares at base-case yields. This provides a significant margin of safety against the projected 100-hectare cultivation programme.
At a 15% discount rate, with a 25–30% IRR and a payback period of approximately four years.
10.1 Return on Investment Metrics
| Metric | Value | Interpretation |
| Net Present Value (NPV) | R28.5 million | Strong positive NPV at 15% discount rate |
| Internal Rate of Return (IRR) | 27.2% | Exceeds 15% cost of capital hurdle |
| Payback Period | 4.3 years | Capital recovery within 5-year horizon |
| Return on Equity (Year 5) | 14.0% | Competitive agribusiness return |
| EBITDA Multiple (Year 5) | 2.6x | Attractive entry multiple for agriculture |
| Cash-on-Cash Return (Year 5) | 96.5% | Cumulative cash / initial investment |
10.2 Break-Even Analysis
The break-even analysis demonstrates that the project achieves operational break-even at approximately 3,636 tonnes of annual production, equivalent to utilisation of approximately 50 hectares at base-case yields. This provides a significant margin of safety against the projected 100-hectare cultivation programme.
10.3 Sensitivity Analysis
A comprehensive sensitivity analysis was conducted to assess the impact of key variable changes on project NPV. The tornado diagram below illustrates that onion selling price and yield per hectare are the most significant value drivers, while irrigation and labour costs have a more moderate impact.
| Scenario | NPV (R Million) | IRR | Payback |
| Base Case | 28.5 | 27.2% | 4.3 years |
| Conservative (Price -15%, Yield -10%) | 8.2 | 16.5% | 5.8 years |
| Optimistic (Price +10%, Yield +10%) | 48.0 | 35.8% | 3.2 years |
| Drought Scenario (Yield -30%) | -5.5 | 8.2% | >7 years |
| Price Collapse (Price -25%) | -2.8 | 10.1% | >7 years |
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