Tarlton Beetroot Business Plan — Capital Expenditure and Working Capital

R27.87m of capital concentrated in Year 3, and the working capital cycle through planting and harvest.

Section 26 of 37

Capital Expenditure and Working Capital

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R31.6 million of capital expenditure, of which R10.6 million is land and R0.97 million is written off when Phase 1 is vacated.

Tranche A capital expenditure

Table 39 Phase 1 capital expenditure schedule

Item	R	Month	Transfers to Phase 2
Drip irrigation, 1 ha, with 3 ha mainline and filtration	265 000	1	Yes
Borehole equipping, pump, storage and reticulation	310 000	1	No
Land preparation, ripping and soil correction	78 000	1	No
Tractor, 55 kW (used) and implement set	685 000	1	Yes
Precision vacuum seeder, two-row	165 000	1	Yes
Light delivery vehicle, one tonne (used)	340 000	1	Yes
Perimeter fencing, field store and ablutions	210 000	2	No
Scales, harvest crates and field equipment	88 000	2	Yes
IT, farm-management software and connectivity	62 000	1	Yes
Pre-operating: incorporation, water registration, trials	185 000	1	No
Contingency at 8 per cent	186 000	3	No
Total Tranche A capital expenditure	2 574 000

Figure 1. Transferable versus sunk Phase 1 capital.

Thirty-eight per cent of seed capital does not survive the move

Of R2.57 million of Phase 1 capital expenditure, R1.605 million — 62 per cent — is mobile: the tractor, seeder, light delivery vehicle, drip tape and mainline, scales, crates and IT systems all relocate to the Phase 2 farm. The remaining R0.969 million does not. The equipped borehole, the land preparation and soil correction, the perimeter fencing, the field store and ablutions, and the pre-operating costs are all attached to a leased site the Company vacates in Year 3.

This is disclosed prominently rather than buried in a schedule because it changes what a seed investor is buying. The seed tranche is not primarily the purchase of a producing asset. It is the purchase of an option on Phase 2 — an agronomic track record, a market agent relationship, a certification pathway and the credibility to raise Series A — and roughly R0.97 million of the premium on that option is consumed in acquiring it.

Tranche B capital expenditure

Table 40 Phase 2 capital expenditure schedule

Item	R	Month	Class
Farm acquisition, 85 ha (62 ha arable, 55 ha water-entitled)	9 900 000	28	land
Transfer duty, conveyancing and technical due diligence	720 000	27	land
Bulk irrigation: dam, pump station, mainline, filtration	2 900 000	29	farm
In-field irrigation, first 34 ha	1 970 000	30	farm
Land preparation, ripping and liming, 34 ha	1 190 000	30	farm
Packhouse structure with root wash, grade and pack line	2 900 000	31	plant
Cold rooms (two) and forklift	900 000	33	plant
Solar PV, 100 kWp	1 150 000	32	plant
Tractors (two, 75 kW), implements and trailers	1 720 000	30	plant
Refrigerated truck and light delivery vehicle	1 320 000	33	vehicle
Staff housing, internal roads, workshop and security	940 000	32	farm
Certification, ERP and traceability systems	380 000	34	plant
In-field irrigation and land preparation, further 20 ha	1 380 000	42	farm
Contingency at 7 per cent	1 880 000	34	farm
Total Tranche B capital expenditure	29 250 000

Working capital

Table 41 Working capital and cash conversion, R thousand

R’000	Year 1 FY2028	Year 2 FY2029	Year 3 FY2030	Year 4 FY2031	Year 5 FY2032
Trade receivables	22	106	782	1 621	2 463
Growing crop	34	145	674	692	922
VAT receivable	22	47	143	228	308
Trade payables	(177)	(374)	(1 144)	(1 826)	(2 470)
Net working capital	(99)	(76)	456	715	1 223
Debtor days	22	24	60	32	35
Creditor days	214	118	152	69	66
Cash conversion cycle, days	(150)	(49)	(3)	(10)	(7)