Financial Projections

Jump to section

• Overview & contents
• i. Important Notice
• 1. Executive Summary
• 2. The South African Goat Market
• 3. Why the Informal Market Matters More Than the Abattoir
• 4. Seasonality
• 5. SWOT and Competitive Position
• 6. The Five-Stage Roadmap and Gates
• 7. The Funding Ladder
• 8. Herd and Reproduction
• 9. Kid Mortality: The Industry's Named Constraint
• 10. Grazing, Land and Water
• 11. Animal Health
• 12. Route to Market
• 13. People and Operations
• 14. Regulation and Compliance
• 15. Unit Economics
• 16. Capital Expenditure
• 17. Financial Projections
• 18. Break-Even and Sensitivity
• 19. Risk Management
• 20. Implementation Timeline
• 21. Returns and Net Asset Value
• 22. Key Performance Indicators
• 23. Key Assumptions
• 24. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Stage Capital Schedules
• C. Appendix C: Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Funding Application Checklist
• F. Appendix F: Glossary

17.1 Basis of preparation

• All amounts are in nominal South African rand. Revenue is built from goats sold multiplied by a blended price reflecting the channel mix in Section 12, plus the increase in the value of the breeding herd.
• Herd growth is non-cash. It is included in reported EBITDA because it is real value, and it is separately identified so that cash EBITDA can be read directly.
• Depreciation is charged on the infrastructure element of capital only, over a twenty-year straight-line life appropriate to fencing, water reticulation, kraals, shelters and handling facilities.
• Interest and principal derive from the facility-level debt schedule in Appendix C, with a capital moratorium of one to two years on each tranche reflecting the eighteen-month biological lag.
• Corporate income tax is applied at 27 per cent, with assessed losses carried forward subject to the section 20 limitation. No tax arises within the projection and R219 000 of assessed loss remains at Year 5.
• The balance sheet is derived rather than plugged; owner’s funds roll forward from founder capital, grants received and retained earnings, and the closing cash position reconciles to the cash flow statement within R1 000.

17.2 Projected income statement

Reported EBITDA turns positive in Year 4 at R87 000 and reaches R669 000 in Year 5. Cash EBITDA, the number that pays the bank, turns positive only in Year 5, at R364 000. The gap in every year is the increase in the value of the breeding herd, and it is the reason a goat enterprise can be profitable on paper and short of money at the same time.

Assessed losses of R631 000 accumulate across Years 1 to 4. Year 5 taxable profit of R412 000 is fully offset under the section 20 limitation, so no tax is payable within the forecast and R219 000 of assessed loss is carried forward.

17.3 The cost base in detail

Direct costs are variable with the herd; fixed costs step with scale. The build below shows each as a share of cash revenue, which is the only way to see whether a cost is being controlled or merely growing more slowly than the herd.

The total cost base is 237 per cent of cash revenue in Year 1 and 76 per cent by Year 5. That collapse is the whole economic story of the plan, and almost none of it comes from cutting costs: costs rise from R256 000 to R1.13 million across the five years. It comes from cash revenue rising from R108 000 to R1.49 million against a cost base that grows four times rather than fourteen.

17.4 Projected cash flow

Operating cash flow is negative in Years 1 to 4 and turns positive in Year 5 at R22 000. The enterprise is therefore funded rather than self-financing for the first four years, which is the honest description of a herd being built. Closing cash rises from R69 000 to R598 000 because each stage raise is sized to carry the stage rather than merely to buy its assets.

17.5 Projected balance sheet

Owner’s funds fall from R337 000 at the end of Stage 1 to R157 000 at the end of Stage 2 as the accumulated deficit builds, then recover to R1.40 million by Year 5 as grants are received and the enterprise turns profitable. The balance sheet balances in every year and the cash line agrees with the cash flow statement.