SA Premier Poultry Business Plan — Break-Even and Debt Service
The daily throughput needed to cover the cost base, and debt service across the ramp to two shifts.
Break-Even and Debt Service
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- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. Scale and Business Model
- 3. Registration, Food Safety and Compliance
- 4. Market and Customers
- 5. SWOT and Competitive Position
- 6. Operations
- 7. Financial Plan
- 8. Break-Even and Debt Service
- 9. Investment Analysis
- 10. Sensitivity and Scenario Analysis
- 11. Risk Analysis
- 12. Implementation Roadmap
- 13. Key Performance Indicators
- 14. Key Assumptions
- 15. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Throughput, Yield and Cost Schedules
- C. Appendix C: Funding, Debt and Working Capital Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 8.1 Break-even
- 8.2 Debt service
8.1 Break-even
|
Break-even measure |
Value |
Interpretation |
|---|---|---|
|
Contribution per bird, own account |
R18.88 |
25.0% of revenue per bird |
|
Contribution per bird, contract slaughter |
R2.68 |
Fee less cost |
|
Blended contribution at the Year 3 mix |
R15.32 |
78% own account, balance contract slaughter |
|
Fixed cash costs, single shift |
R19 623 884 |
Excludes depreciation |
|
Break-even volume |
1 280 932 birds |
5 065 birds a day |
|
Single-shift capacity |
2 040 000 birds |
8 000 birds a day |
|
Break-even as a share of single-shift capacity |
62.8% |
|
|
Break-even without by-products |
7 620 birds a day |
By-products are 27.6% of contribution |
|
Break-even on contract slaughter alone |
31 961 birds a day |
Far beyond the plant’s capacity on either shift |
|
Break-even live bird price |
R34.17/kg |
Contribution reaches zero; headroom 40% |
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|---|---|---|---|---|---|
|
Fixed cash costs, R |
19 623 884 |
20 703 197 |
21 841 873 |
28 503 398 |
30 071 085 |
|
Blended contribution per bird, R |
12.72 |
14.34 |
15.32 |
15.64 |
15.96 |
|
Break-even birds a year |
1 542 758 |
1 443 738 |
1 425 710 |
1 822 468 |
1 884 153 |
|
Break-even birds a day |
6 050 |
5 662 |
5 591 |
7 147 |
7 389 |
|
Planned birds a day |
4 800 |
6 800 |
8 000 |
11 000 |
14 000 |
|
Margin of safety |
-26.0% |
16.7% |
30.1% |
35.0% |
47.2% |
Break-even of 5 065 birds a day is 62.1 per cent of single-shift capacity on Year 1 fixed costs at the Year 3 mix. Year 1 operates at 4 800 birds a day on a weaker own-account mix and therefore below break-even; the plant crosses into profit during Year 2 and holds a margin of safety above 30 per cent from Year 3 onward.
8.2 Debt service
|
R |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Opening balance |
52 240 000 |
52 240 000 |
52 240 000 |
45 643 087 |
38 318 534 |
|
Interest at 11.03% |
5 762 072 |
5 762 072 |
5 762 072 |
5 034 432 |
4 226 534 |
|
Capital repaid |
— (moratorium) |
— (moratorium) |
6 596 913 |
7 324 553 |
8 132 451 |
|
Total debt service |
5 762 072 |
5 762 072 |
12 358 985 |
12 358 985 |
12 358 985 |
|
Closing balance |
52 240 000 |
52 240 000 |
45 643 087 |
38 318 534 |
30 186 083 |
|
of which current portion |
0 |
6 596 913 |
7 324 553 |
8 132 451 |
9 027 021 |
|
of which non-current portion |
52 240 000 |
45 643 087 |
38 318 534 |
30 186 083 |
21 159 062 |
|
EBITDA |
(4 174 807) |
5 225 414 |
12 387 558 |
22 000 234 |
38 869 531 |
|
Debt service cover |
-0.72x |
0.91x |
1.00x |
1.78x |
3.15x |
|
Gearing |
66.5% |
74.5% |
73.2% |
67.2% |
45.0% |
Interest of R5 762 072 is paid throughout the moratorium from the working capital provision. Principal then amortises over the remaining six years of an eight-year facility, giving level service of R12 358 985 from Year 3. Cover reaches 1.78 times in Year 4 and 3.15 times in Year 5, and gearing falls from a peak of 74.6 per cent to 46.8 per cent.