Lichtenburg Nut Company Business Plan — Working Capital
The working capital cycle through groundnut buying season, processing and retail settlement.
Section 27 of 37
Working Capital
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- 0. Basis of Preparation and Important Notice
- 1. Executive Summary
- 2. Investment Thesis
- 3. The Company
- 4. Problem, Customer Need and Value Proposition
- 5. Products and Services
- 6. Industry Analysis
- 7. Market Analysis
- 8. Customer Analysis
- 9. Competitive Landscape
- 10. Business Model
- 11. Go-to-Market Strategy
- 12. Operating Model
- 13. Raw Material Supply and Contract Farming
- 14. Quality, Food Safety and Aflatoxin Control
- 15. Management and Organisation
- 16. Strategic Plan
- 17. SWOT Analysis and Strategic Implications
- 18. Risk Analysis
- 19. ESG and Development Impact
- 20. Implementation Roadmap
- 21. Financial Model and Assumptions
- 22. Projected Income Statement
- 23. Projected Balance Sheet
- 24. Projected Cash Flow
- 25. Capital Expenditure
- 26. Working Capital
- 27. Funding Requirement and Structure
- 28. Debt Serviceability
- 29. Break-even Analysis
- 30. Scenario and Sensitivity Analysis
- 31. Valuation and Investment Returns
- 32. Key Performance Indicators and Management Dashboard
- 33. Conclusion and Recommendation
- A. Appendix A: Detailed Assumption Register
- B. Appendix B: Ten-Year Financial Summary
- C. Appendix C: Glossary and Sources
The groundnut harvest window forces the company to buy a year’s raw material in four months, which is why a R40 million revolving facility is not optional
Table 59. Working capital schedule
|
R million unless stated |
FY2028 |
FY2029 |
FY2030 |
FY2031 |
FY2032 |
FY2033 |
|---|---|---|---|---|---|---|
|
Trade and other receivables |
0.0 |
10.9 |
16.4 |
22.9 |
28.7 |
33.5 |
|
Groundnut inventory |
3.4 |
3.4 |
3.6 |
3.7 |
3.9 |
4.1 |
|
Packaging inventory |
0.4 |
1.1 |
1.6 |
2.1 |
2.5 |
2.8 |
|
Finished goods inventory |
0.4 |
5.4 |
7.4 |
9.8 |
11.8 |
13.6 |
|
Total inventory |
4.2 |
9.9 |
12.6 |
15.6 |
18.2 |
20.5 |
|
Trade and other payables |
(1.3) |
(4.3) |
(6.3) |
(8.1) |
(9.6) |
(11.0) |
|
Employee accruals |
(0.3) |
(1.0) |
(1.2) |
(1.5) |
(1.7) |
(2.0) |
|
Net working capital |
2.6 |
15.5 |
21.4 |
29.0 |
35.6 |
41.0 |
|
Movement in the year |
2.6 |
12.9 |
5.9 |
7.5 |
6.6 |
5.5 |
|
Debtor days |
n/a |
62 |
55 |
56 |
57 |
57 |
|
Inventory days |
347 |
63 |
53 |
50 |
48 |
47 |
|
Creditor days |
106 |
27 |
27 |
26 |
25 |
25 |
|
Cash conversion cycle (days) |
n/a |
98 |
82 |
80 |
80 |
79 |
26.1 The seasonal position
The company must contract and take delivery of the majority of its annual groundnut requirement between April and July, then convert that inventory to cash over the following twelve months. The model applies a monthly procurement profile in which 53% of the annual in-shell requirement is purchased in those four months. Groundnut inventory peaks at approximately R19.0 million and the revolving facility is drawn to R37.5 million against a R40 million limit, headroom of R2.5 million at the tightest point.