North West Agri Feeds Business Plan — Investment Case and Returns
The return profile, valuation basis and exit assumptions, and what the numbers do and do not support.
Section 21 of 26
Investment Case and Returns
Jump to section
- 1. Executive Summary
- 2. Investment Thesis
- 3. Company and Business Overview
- 4. Problem, Customer Need and Value Proposition
- 5. Industry Analysis
- 6. Market Analysis
- 7. Competitive Landscape
- 8. Business Model
- 9. Products and Services
- 10. Go-to-Market Strategy
- 11. Operating Model
- 12. Management and Organisation
- 13. Strategic Plan
- 14. SWOT Analysis
- 15. Risk Analysis
- 16. ESG and Sustainability
- 17. Implementation Roadmap
- 18. Financial Plan
- 19. Capital Expenditure and Working Capital
- 20. Funding Requirement and Structure
- 21. Investment Case and Returns
- 22. Sensitivity and Scenario Analysis
- 23. KPIs and Management Dashboard
- 24. Long-Term Growth Strategy
- 25. Conclusion
- 26. Appendices
This section states the returns at face value and maps them to the investor types they suit, without smoothing.
Break-even analysis
At the Year 3 cost structure, accounting break-even, including depreciation and interest, sits at approximately 22,471 tonnes, or about 79% of that year’s available capacity. Year 3 production of 17,732 tonnes is below this: the business crosses into net profitability in Year 4. This is an important, unflattering disclosure, there is little margin of safety until two-shift volumes arrive, and management must run the plant hard.
Returns
|
6.1% Project IRR |
4.2% Equity IRR |
1.23x Equity MOIC (5 yr) |
R-33m Project NPV @ 15% |
Table 14. Valuation and returns summary
|
Measure |
Value |
|---|---|
|
Total funding requirement |
R136.3m |
|
Equity invested |
R88.3m |
|
Year 5 EBITDA |
R20.4m |
|
Exit EV (6.5x Year 5 EBITDA) |
R132.4m |
|
Less: net debt at Year 5 |
(R24.0m) |
|
Exit equity value |
R108.4m |
|
Equity MOIC (5-year) |
1.23x |
|
Equity IRR (5-year) |
4.2% |
|
Project IRR (incl. terminal) |
6.1% |
|
Project NPV @ 15% WACC |
R-32.7m |