SA Best Peanut Butter Business Plan — Financial Plan

Five-year projections with full income statement, cash flow and balance sheet: revenue to R161.72m and EBITDA to R17.47m.

Financial Plan

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7.1 Basis of preparation
7.2 Income statement
7.3 Fixed costs and capital
7.4 Working capital
7.5 Cash flow
7.6 Balance sheet
7.7 Funding

7.1 Basis of preparation

▪ All figures are in South African Rand and exclude VAT.

▪ Revenue is built from tonnes produced, product mix and price per kilogram. Volume ramps from 900 t to 2 150 t, reaching 7.8% of the national market.

▪ Kernels are costed at R27 900 a tonne, adjusted for a recipe ratio of 0.905 tonnes of kernel per tonne of product and a 3.8% intake rejection allowance, giving R26 247 a tonne of finished product.

▪ Selling prices escalate at 6.2% a year and kernel costs at 6.8% — the spread compresses gently, reflecting that groundnut prices have historically outpaced food inflation.

▪ The blended selling price nonetheless rises faster than 6.2% because own brand grows from 30% to 49% of volume. Trade spend on own brand is 8.5% of own-brand revenue.

▪ The second shift is added in Year 2, adding R2 700 000 of annual fixed cost and R3 400 000 of capital.

▪ Depreciation is straight-line over five to fifteen years. Corporate income tax is 27%, with assessed losses carried forward subject to the section 20 limitation.

▪ Working capital assumes 48 debtor days, 42 days of kernel stock, 24 days of finished goods and 46 days to pay suppliers.

7.2 Income statement

R	Year 1	Year 2	Year 3	Year 4	Year 5
Tonnes	900	1 380	1 720	1 990	2 150
Blended price per kg	R56.16	R60.97	R65.63	R70.26	R75.22
Revenue	50 543 182	84 139 322	112 889 099	139 826 923	161 719 552
Kernel cost	(23 622 300)	(38 684 160)	(51 493 360)	(63 628 260)	(73 418 200)
Packaging	(5 836 500)	(9 696 126)	(12 973 675)	(16 018 703)	(18 468 017)
Conversion	(4 842 000)	(7 855 015)	(10 358 147)	(12 679 215)	(14 493 171)
Trade spend	(1 288 851)	(2 717 700)	(4 126 097)	(5 467 233)	(6 735 619)
Outbound logistics and additives	(2 790 000)	(4 526 124)	(5 968 449)	(7 305 867)	(8 351 083)
Gross profit	12 163 531	20 660 197	27 969 371	34 727 645	40 253 462
Gross margin	24.1%	24.6%	24.8%	24.8%	24.9%
Fixed cash costs	(15 690 142)	(19 401 600)	(20 468 688)	(21 594 466)	(22 782 161)
EBITDA	(3 526 611)	1 258 597	7 500 683	13 133 179	17 471 301
EBITDA margin	-7.0%	1.5%	6.6%	9.4%	10.8%
Pre-opening costs, non-recurring	(6 720 000)	—	—	—	—
Depreciation	(4 411 667)	(4 751 667)	(4 751 667)	(4 751 667)	(4 751 667)
Finance costs	(4 682 200)	(4 682 200)	(4 209 751)	(3 683 349)	(3 096 831)
Profit / (loss) before tax	(19 340 478)	(8 175 270)	(1 460 735)	4 698 163	9 622 803
Taxation	—	—	—	(253 701)	(519 631)
Profit / (loss) after tax	(19 340 478)	(8 175 270)	(1 460 735)	4 444 462	9 103 172
Cumulative profit / (deficit)	(19 340 478)	(27 515 748)	(28 976 483)	(24 532 021)	(15 428 849)
Kernel cost as % of revenue	46.7%	46.0%	45.6%	45.5%	45.4%

Losses of R19 340 478 in Year 1, R8 175 270 in Year 2 and R1 460 735 in Year 3 accumulate to R28 976 483 of assessed loss. Under the section 20 limitation the set-off in any year is capped at the higher of R1 million or 80 per cent of taxable income, so Year 4 profit before tax of R4 698 163 is sheltered to R3 758 530, leaving R939 633 taxable and a charge of R253 701. Year 5 carries a charge of R519 631. R17 519 710 of assessed loss remains available at the end of Year 5 — a real asset against Year 6 and Year 7 earnings that no line of this plan values.

7.3 Fixed costs and capital

Figure 12. The cash fixed cost base at one shift.

Fixed cost	Annual	Note
Salaries and wages, excluding direct production labour	6 230 142	17 staff; direct labour sits in conversion cost
Factory lease and municipal services	2 460 000
Marketing and brand building	1 680 000	Own-brand building; separate from trade spend
Insurance including product recall cover	1 240 000	Product recall and product liability cover
Plant maintenance contract	1 060 000
Food safety certification, audits and accreditation	720 000	A condition of the pricing assumed, not an overhead
Administration, security and sundry	680 000
Vehicle running and logistics management	580 000
Professional fees, audit and compliance	580 000
Information systems and traceability	460 000	Lot-level traceability from intake to pallet
Total cash fixed costs, one shift	15 690 142	Plus depreciation of R4 411 667
Second shift, from Year 2	R2 700 000	Additional annual fixed cost

Capital expenditure	Amount	Life
Roasting, blanching and cooling line	7 100 000	12 years
Filling, capping and labelling lines, jar and pail	6 400 000	10 years
Grinding, milling and homogenising plant	5 600 000	12 years
Factory building fit-out, floors and food-grade finishes	5 400 000	15 years
Optical sorting and foreign body detection	4 900 000	10 years
Aflatoxin laboratory and analytical equipment	3 400 000	8 years
Raw material intake, silos and conditioned storage	3 300 000	15 years
Steam, compressed air and electrical reticulation	2 600 000	12 years
Finished goods warehouse racking and handling	1 900 000	12 years
Traceability, ERP and quality management systems	1 900 000	5 years
Professional fees, commissioning and validation	1 700 000	10 years
Standby generation	1 600 000	12 years
Metal detection, X-ray and end-of-line inspection	1 600 000	10 years
Total capital expenditure	47 400 000
Second shift capital, Year 2	3 400 000	10 years

Figure 13. Gross profit against the fixed cost base.

Optical sorting at R4 900 000 and the aflatoxin laboratory at R3 400 000 together are R8 300 000, or 17.5 per cent of the capital programme, and neither improves the product a consumer can taste. They exist to keep the plant out of Section 2.2, and they are the clearest illustration in this plan of the distinction between making peanut butter and making it safely.

7.4 Working capital

Figure 14. Working capital employed against the facility.

R	Year 1	Year 2	Year 3	Year 4	Year 5
Trade receivables at 48 days	6 646 775	11 064 897	14 845 690	18 388 198	21 267 229
Kernel stock at 42 days	2 718 182	4 451 328	5 925 263	7 321 608	8 448 122
Finished goods at 24 days	2 523 593	4 173 970	5 583 763	6 910 637	7 986 811
Less trade payables at 46 days	(4 064 232)	(6 667 657)	(8 876 801)	(10 958 439)	(12 632 646)
Working capital employed	7 824 318	13 022 538	17 477 915	21 662 004	25 069 516
As a share of revenue	15.5%	15.5%	15.5%	15.5%	15.5%
Facility drawn at year end	3 633 129	19 791 981	25 565 904	25 689 744	24 964 815
Headroom on the R26 000 000 facility	22 366 871	6 208 019	434 096	310 256	1 035 185

Kernel stock at 42 days rather than a full season is a deliberate decision with a price

Groundnuts are harvested in a season and consumed through the year, which in principle forces a manufacturer to buy and hold most of an annual requirement. This plan holds only 42 days by blending local seasonal purchases with year-round imports from Argentina, Brazil, the United States and elsewhere — the same practice the domestic industry already follows because local production has been constrained by drought. That decision releases several million rand of working capital in a plan where the facility is drawn to R25 689 744 against R26 000 000 committed, and it is what keeps the structure fundable at all. The cost is currency exposure on the imported portion, which should be covered forward on contracted volumes rather than left open.

7.5 Cash flow

R	Year 1	Year 2	Year 3	Year 4	Year 5
Profit / (loss) after tax	(19 340 478)	(8 175 270)	(1 460 735)	4 444 462	9 103 172
Add back: depreciation	4 411 667	4 751 667	4 751 667	4 751 667	4 751 667
Add back: pre-opening costs funded at day zero	6 720 000	—	—	—	—
Movement in working capital	(7 824 318)	(5 198 220)	(4 455 377)	(4 184 089)	(3 407 512)
Cash generated from operations	(16 033 129)	(8 621 823)	(1 164 445)	5 012 040	10 447 327
Capital deployed	— (funded at close)	(3 400 000)	—	—	—
Debt capital repaid	— (moratorium)	(4 137 029)	(4 609 478)	(5 135 880)	(5 722 398)
Net movement before facility	(16 033 129)	(16 158 852)	(5 773 923)	(123 840)	4 724 929
Facility drawn / (repaid)	3 633 129	16 158 852	5 773 923	123 840	(724 929)
Closing cash	7 600 000	7 600 000	7 600 000	7 600 000	11 600 000

Figure 15. Cash flow — three years of consumption before the plant repays.

Opening cash after the capital programme and the non-working-capital soft costs is R16 400 000. Operations consume R16 033 129 in Year 1 and R8 621 823 in Year 2, turn positive at R5 012 040 in Year 4 and reach R10 447 327 by Year 5. The working capital facility is drawn progressively to R25 689 744 by Year 4 and begins to repay in Year 5. Cash is held at R7 600 000 throughout the ramp by drawing against the facility, which is what the facility is for.

7.6 Balance sheet

R, at year end	Year 1	Year 2	Year 3	Year 4	Year 5
Plant, laboratory and building, net of depreciation	42 988 333	41 636 666	36 884 999	32 133 332	27 381 665
Kernel stock	2 718 182	4 451 328	5 925 263	7 321 608	8 448 122
Finished goods	2 523 593	4 173 970	5 583 763	6 910 637	7 986 811
Trade receivables	6 646 775	11 064 897	14 845 690	18 388 198	21 267 229
Cash	7 600 000	7 600 000	7 600 000	7 600 000	11 600 000
Total assets	62 476 883	68 926 861	70 839 715	72 353 775	76 683 827
Share capital	33 120 000	33 120 000	33 120 000	33 120 000	33 120 000
Retained earnings / (accumulated loss)	(19 340 478)	(27 515 748)	(28 976 483)	(24 532 021)	(15 428 849)
Total equity	13 779 522	5 604 252	4 143 517	8 587 979	17 691 151
Term facilities — non-current	36 862 971	32 253 493	27 117 613	21 395 215	15 043 353
Term facilities — current	4 137 029	4 609 478	5 135 880	5 722 398	6 351 862
Working capital facility drawn	3 633 129	19 791 981	25 565 904	25 689 744	24 964 815
Trade payables	4 064 232	6 667 657	8 876 801	10 958 439	12 632 646
Total liabilities	48 697 361	63 322 609	66 696 198	63 765 796	58 992 676
Total equity and liabilities	62 476 883	68 926 861	70 839 715	72 353 775	76 683 827

Figure 16. Balance sheet — asset composition.

Net book value of the plant, laboratory and building declines from R42 988 333 to R27 381 665 as depreciation runs against a capital programme that completes in Year 2. Total equity falls from R33 120 000 at inception to a low of R4 143 517 at the end of Year 3 and recovers to R17 691 151 by Year 5. Gearing peaks at 94.1 per cent at the end of Year 3 — the point at which the accumulated deficit is deepest and the working capital facility most drawn — and falls to 71.8 per cent by Year 5.

7.7 Funding

Source	Amount	Share	Terms
Promoter and investor equity	33 120 000	44.7%	Sized to carry three loss-making years without a further call
DFI facility	16 000 000	21.6%	Eight years at 11.42% with a one-year capital moratorium
Senior debt	25 000 000	33.7%	Eight years at 11.42% with a one-year capital moratorium
Total funding requirement	74 120 000	100.0%
Working capital facility	26 000 000		Committed at drawdown; drawn to R25 689 744 at its peak

Use of funds	Amount	Share
Capital expenditure	47 400 000	64.0%
Working capital: kernel stock and finished goods	16 400 000	22.1%
Retail listing fees and launch trade investment	3 600 000	4.9%
Pre-operational salaries, recruitment and training	2 100 000	2.8%
Brand development, packaging design and launch	1 900 000	2.6%
Commissioning, trial production and shelf-life testing	1 480 000	2.0%
Certification, accreditation and regulatory approvals	1 240 000	1.7%
Total	74 120 000	100.0%

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