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FynbosFarm

Executive Summary

Introduction

FynbosFarm will be a project built around a highly successful businessman and the development and training of skilled and semi-skilled staff in the hydroponics and instant turf market. The project aim is to carry out intensive and high turnover production, off a small area, while providing work and leadership experience for local women.

The company is a combination of cutting edge, high quality, efficient food technology and production. It is committed to the improvement of taste in vegetables and excellent quality and nutritional value. The company will provide education, experience and research in the hydroponic field. It has the experience and extensive knowledge of well-known grower Mike Shelly as a consultant. This project will be KZN-based, and will supply vegetables for the national and international markets, and instant turf for the local market.

Products

The 4 main crops to be grown will be instant turf, long life tomatoes, cucumbers, and coloured peppers.

  • Tomatoes: 4ha under plastic which will produce 2100 000 kgs per year
  • Cucumbers: 1ha under plastic which will produce 205 000 kgs per year
  • Peppers: 1ha under plastic which will produce 250 000 kgs per year
  • Turf: 30ha in the open.

Financial considerations

The company is seeking both short-term and long-term funding to finance the purchase of a new farm and development costs of the project. This will cover startup expenses and first year loses. It is estimated that the company will begin to make a profit in year 2 of operations. The project is expected to begin production within 8 months from start of the first tunnel being erected.

Hydroponics farm business plan, executive summary chart image

1.1 Objectives

The objective of this project is to establish an intensive farm, producing high-quality produce for both the national and international market year round.

1.2 Mission

FynbosFarm is a KZN-based company with a two-fold mission:

  • to produce high quality, nutritional, and flavourful vegetables for consumption in both local and international markets.
  • to create opportunities for leadership and highly productive teamwork for local women who work on the farm.

The women working on the farm will be organized into intensive work groups, and each group will be paid incentives on production and performances, in addition to the standard wages.

1.3 Keys to Success

  • Efficient production utilizing greenhouses.
  • No existing projects of this magnitude in the KZN region.
  • Experience in the vegetable industry goes back to 1996.
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Company Summary

FynbosFarm will be a partnership of successful businessmen developing a small farm into a highly productive hydroponics and instant turf project.

Hydroponics is the growing of high-quality vegetables in high-tech, multi-span greenhouses. The produce is grown in 15L bags with a medium used to support the root system. The plants are automatically fed nutrients through irrigation systems.The plants are grown in the best suitable growing conditions, which allows each plant to produce the maximum fruit possible.

Instant turf will be grown out in open field production. The turf will be irrigated via overhead spray units, using the run-off fertilizer from the multispan tunnels. This fertilizer is highly effective and will provide all the requirements the instant turf will require. The turf will be cut and sold by the square meter, and is harvested with a sod cutter.

The company will concentrate on the production of tomatoes, peppers and cucumbers in the tunnels, and in time will pursue more selective vegetables and the fresh cut flower market.

2.1 Company Ownership

FynbosFarm is owned jointly by its two founders, one of whom will serve as the project manager.

2.2 Start-up Summary

The company is seeking to raise investment for the purpose of financing the acquisition of the vegetable farm, facilities modifications, multi-spans and equipment, and funding operating expenses.

Facilities

The operation will utilise :

  • Six large greenhouses enclosing the vegetable area
  • irrigation, fertilization, temperature control and water treatment devices
  • outdoor production of instant lawn
  • pack houses and washbay facilities
  • business office building

An additional portion of the operation will be the growing of instant lawn. Local landscape operations have trouble with meeting the demands of instant turf supply, and the company has recognised the need in the market. The company plans to supply the local nurseries and landscapers with top quality, premium garden lawn.

The largest portion of the start-up requirements is for purchase of the site and construction of the necessary buildings and infrastructure, including well-digging. These are listed below as long-term assets.

The start-up period is five months long, and includes construction and one and a half months for growing the first crops, to be sold beginning in July.

Hydroponics farm business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal R70,000
Borehole testing R10,000
Seedlings R128,000
Sawdust R155,000
Plant bags R57,753
Twine and clips R28,000
Site leveling R250,000
Other R95,000
Total Start-up Expenses R793,753
Start-up Assets
Cash Required R5,000
Other Current Assets R0
Long-term Assets R20,000,000
Total Assets R20,005,000
Total Requirements R20,798,753

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Products

Hydroponics is the production of vegetables in state-of-the-art, temperature-controlled, multi-span tunnels. The structures being used are richelle multi-spans, which come complete with computer temperature sensors, automatic opening and closing vents, automatic misting units and temperature controlled fans. The advantages of growing in high-tech tunnels are:

  • faster, longer growth
  • harvest labour reduced by 80%
  • harvest time reduced, and by doing so:
    • decrease loss in weight gain
    • eliminate weight loss from shock
  • allow greater yield per plant
  • provide optimum temperature for plant growth

Vegetables

FynbosFarm’s first line of production will be tomatoes, peppers and cucumbers. The farm will have the capacity sufficient to produce in excess of 2 550 000 kg of vegetables per year.

Instant lawn

The company’s outdoor horticultural aspects include the production of 30ha of instant lawn. The company will sell between 20 – 25ha per annum.

Research and development

The company will seek contact with local and international companies in order to learn about and acquire new hybrids of vegetables that are hardier and grow faster in our local climate. These and other available species and systems will be constantly tracked. In addition to the above, the company will seek contacts at universities and researchers that are involved in greens, and will continue the quest for the best flavoured, large, and firm vegetable throughout the year.

Future product plans

In the future the company would like to explore the possibility of flower production. FynbosFarm believes this to be a high revenue venture, which, if successful, could become our number one endeavour.

We are also considering the production of bananas. Currently there is a huge shortage of bananas, and the selling price has been above average for the past 2 years.

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Market Analysis Summary

In an era of big-box food stores, when 4 major grocery chains control the purchase of vegetables, the proliferation of open air markets has come out of nowhere, giving more consumers an option to purchase fresh vegetables. Such markets include retailers such as Fruit and Veg City and VegExpress. FynbosFarm will not only supply the major supermarkets, but also the markets mentioned above.

With these trends in mind, FynbosFarm will also concentrate on wholesale live vegetable markets that sell hydroponic produce, fresh farmers’ markets, and export to neighbouring states and international markets.

4.1 Market Segmentation

For the purposes of this plan, we are focusing on retail outlets and VegCity shops within 45 miles of our location.

Hydroponics farm business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Retail outlets 25% 100 125 156 195 244 24.98%
vegcities 10% 20 22 24 26 29 9.73%
Other 25% 50 63 79 99 124 25.49%
Total 23.62% 170 210 259 320 397 23.62%

4.2 Target Market Segment Strategy

The target customers include the major retail outlets and export markets for the vegetables.

The target customers for instant lawn include nursery and garden centres, landscapers, and private customers.

4.3 Industry Analysis

The hydroponic industry is still fairly new in the S.A. market, in terms of research and the number of completely developed farms. The biggest negative is the start-up costs to erect a fully state-of-the-art project. Therefore, if a project is going to be developed, two major factors need to be taken into account.

  • Selected Markets. Due to high quality, vegetables must be sold retail outlets, etc. to retrieve highest price.
  • Project size. The project must be able to supply produce all year round; if not, retail outlets will not be interested.

The Industry is still small, and therefore a project of this magnitude will create interest among all the major veg outlet markets.

4.3.1 Competition and Buying Patterns

FynbosFarm aims to be the biggest growers of hydroponics in the KZN region. At present there are very few big growers, minimizing the competition. The advantage of hydroponics on a large scale is the availability to produce vegetables all year round in large quantities. This immediately becomes a positive factor with major retail outlets and exporters.

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Strategy and Implementation Summary

The FynbosFarm group strategy is to profitably and efficiently utilize present and future agricultural technology in the production of vegetables. The company, by developing a profitable vegetable farm with all the necessary custom-innovated equipment, will gain a significant industry advantage.

Additional application and utilization of horticultural technology in the production of vegetables will double utilization of the climate controlled portion of the overhead.

The company’s goals in the first year are to:

  • Develop the complete project.
  • To have all 6ha planted and ready for production.
  • To have the instant turf planted and ready for production early in year 2.
  • To have grading and pack shed constructed.

The company’s long term plan is to also produce more selective vegetables as well as looking to get into the fresh flower market. 

5.1 Competitive Edge

FynbosFarm’s main competitive advantages are:

  • Efficient production utilizing greenhouses.
  • No existing projects of this magnitude in the KZN region.
  • Experience in the vegetable industry goes back to 1996.

5.2 Marketing Strategy

FynbosFarm will market and supply its products to the selected outlets aggressively, focusing at first on local markets, and then on export options. We will emphasize the reliable year-round output of our climate-controlled hydroponics facilities, as well as the ability to produce in-demand, non-native vegetables.

Marketing for turf will take place with direct contact between FynbosFarm and regional greenhouses and landscapers.

The company will also eventually develop a website and advertise on the Internet, although these future marketing avenues are not included in this plan.

5.3 Sales Strategy

At FynbosFarm, the sales process is primarily the same for vegetables as it is for instant turf, in that both products will be mainly sold through wholesale marketing. Shipments of vegetables will be transported in refrigerated trucks as per orders, and instant turf will be palletized on open back trucks as per orders. 

5.3.1 Sales Forecast

We expect to have exceptional sales in the first year. Our direct unit costs include the costs for the agricultural labor force who will tend and manage the vegetables and turf, including incentives and bonuses. These costs are roughly 35% of all direct costs each month.

Hydroponics farm business plan, strategy and implementation summary chart image

Hydroponics farm business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Unit Sales
Tomatoes 2,100,000 1,500,000 2,100,000 1,500,000 2,100,000
Peppers 205,000 210,000 205,000 210,000 205,000
Cucumbers 250,000 250,000 250,000 250,000 250,000
Instant Turf 150,000 200,000 200,000 200,000 200,000
Total Unit Sales 2,705,000 2,160,000 2,755,000 2,160,000 2,755,000
Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5
Tomatoes R4.00 R4.25 R4.50 R4.75 R5.00
Peppers R10.00 R10.50 R11.00 R11.50 R12.00
Cucumbers R1.80 R1.90 R2.10 R2.20 R2.30
Instant Turf R10.00 R11.00 R12.00 R13.00 R14.00
Sales
Tomatoes R8,400,000 R6,375,000 R9,450,000 R7,125,000 R10,500,000
Peppers R2,050,000 R2,205,000 R2,255,000 R2,415,000 R2,460,000
Cucumbers R450,000 R475,000 R525,000 R550,000 R575,000
Instant Turf R1,500,000 R2,200,000 R2,400,000 R2,600,000 R2,800,000
Total Sales R12,400,000 R11,255,000 R14,630,000 R12,690,000 R16,335,000
Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5
Tomatoes R2.00 R2.13 R2.25 R2.38 R2.50
Peppers R5.00 R5.25 R5.50 R5.75 R6.00
Cucumbers R0.90 R0.95 R1.05 R1.10 R1.15
Instant Turf R4.80 R5.28 R5.76 R6.24 R6.72
Direct Cost of Sales
Tomatoes R4,200,000 R3,187,500 R4,725,000 R3,562,500 R5,250,000
Peppers R1,025,000 R1,102,500 R1,127,500 R1,207,500 R1,230,000
Cucumbers R225,000 R237,500 R262,500 R275,000 R287,500
Instant Turf R720,000 R1,056,000 R1,152,000 R1,248,000 R1,344,000
Subtotal Direct Cost of Sales R6,170,000 R5,583,500 R7,267,000 R6,293,000 R8,111,500

5.4 Milestones

The following table and chart show the main milestones for the first year.

Hydroponics farm business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Raise funding 11/1/2004 1/15/2005 R0 ABC Department
Begin Construction 2/1/2005 2/5/2005 R15,000,000 ABC Department
Begin First Crop Planting 5/10/2005 5/15/2005 R5,000,000 ABC Department
Begin Sales 7/1/2005 7/10/2005 R0 ABC Department
Begin Turf Sales 10/1/2005 10/10/2005 R0 ABC Department
Total Sales over R12 Million 7/1/2005 6/30/2006 R0 ABC Department
Totals R20,000,000

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Management Summary

The project manager has 10 years of experience in the vegetable industry.

[Proprietary and confidential information removed.]

6.1 Personnel Plan

The personnel plan includes the project manager, who will oversee all design and construction of the hydroponics facilities, and a consultant specializing in hydroponics. Wages for the agricultural laborers who will tend the produce are included in the Sales Forecast table as part of the direct unit costs.

Personnel Plan
Year 1 Year 2 Year 3 Year 4 Year 5
Project manager R420,000 R420,000 R453,600 R489,888 R529,079
Consultant R60,000 R63,000 R66,150 R69,457 R72,930
Total People 2 2 2 2 2
Total Payroll R480,000 R483,000 R519,750 R559,345 R602,009

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Financial Plan

The financial plan is outlined in the following tables and charts. With initial loans, we can construct the hydroponics facilities and begin crop development. Based on the high demand for these products, we expect solid sales in the first year, with improving margins.

7.1 Start-up Funding

FynbosFarm needs to fund its start-up requirements. The owner will provide personal investment, and is seeking long-term borrowing, using as collateral two other successful agricultural ventures he owns.

Start-up Funding
Start-up Expenses to Fund R793,753
Start-up Assets to Fund R20,005,000
Total Funding Required R20,798,753
Assets
Non-cash Assets from Start-up R20,000,000
Cash Requirements from Start-up R5,000
Additional Cash Raised R0
Cash Balance on Starting Date R5,000
Total Assets R20,005,000
Liabilities and Capital
Liabilities
Current Borrowing R0
Long-term Liabilities R18,000,000
Accounts Payable (Outstanding Bills) R0
Other Current Liabilities (interest-free) R0
Total Liabilities R18,000,000
Capital
Planned Investment
Owners R2,798,753
Investor R0
Additional Investment Requirement R0
Total Planned Investment R2,798,753
Loss at Start-up (Start-up Expenses) (R793,753)
Total Capital R2,005,000
Total Capital and Liabilities R20,005,000
Total Funding R20,798,753

7.2 Important Assumptions

We assume:

  • Steady demand for these products
  • No major climate change that would make these products easier to grow without hydroponics in this area

7.3 Break-even Analysis

Based upon our monthly fixed costs we need to sell the number units, shown below, each month to break-even. Given the high demand for these products and our expertise in this industry, we should exceed this amount even in the first month of the plan, after our initial start-up period for construction and first crop growth.

Hydroponics farm business plan, financial plan chart image

Break-even Analysis
Monthly Units Break-even 57,047
Monthly Revenue Break-even R261,511
Assumptions:
Average Per-Unit Revenue R4.58
Average Per-Unit Variable Cost R2.28
Estimated Monthly Fixed Cost R131,388

7.4 Projected Profit and Loss

The following table and charts show our projected Profit and Loss statement. Monthly details for the first year can be found in the appendix.

Hydroponics farm business plan, financial plan chart image

Hydroponics farm business plan, financial plan chart image

Hydroponics farm business plan, financial plan chart image

Hydroponics farm business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales R12,400,000 R11,255,000 R14,630,000 R12,690,000 R16,335,000
Direct Cost of Sales R6,170,000 R5,583,500 R7,267,000 R6,293,000 R8,111,500
Other Costs of Sales R0 R0 R0 R0 R0
Total Cost of Sales R6,170,000 R5,583,500 R7,267,000 R6,293,000 R8,111,500
Gross Margin R6,230,000 R5,671,500 R7,363,000 R6,397,000 R8,223,500
Gross Margin % 50.24% 50.39% 50.33% 50.41% 50.34%
Expenses
Payroll R480,000 R483,000 R519,750 R559,345 R602,009
Marketing/Promotion R10,000 R10,500 R11,025 R11,907 R12,860
Depreciation R666,660 R666,700 R666,700 R666,700 R666,700
H.P.s R120,000 R120,600 R121,203 R121,203 R120,600
Fuel R100,000 R105,000 R110,250 R115,726 R121,550
maintenance R20,000 R21,000 R22,050 R23,153 R24,310
Payroll Taxes R0 R0 R0 R0 R0
Other R180,000 R189,000 R198,450 R208,373 R218,719
Total Operating Expenses R1,576,660 R1,595,800 R1,649,428 R1,706,407 R1,766,748
Profit Before Interest and Taxes R4,653,340 R4,075,700 R5,713,572 R4,690,593 R6,456,752
EBITDA R5,320,000 R4,742,400 R6,380,272 R5,357,293 R7,123,452
Interest Expense R1,759,750 R1,663,000 R1,550,500 R1,413,000 R1,138,000
Taxes Incurred R868,077 R723,810 R1,248,922 R983,278 R1,595,626
Net Profit R2,025,513 R1,688,890 R2,914,150 R2,294,315 R3,723,126
Net Profit/Sales 16.33% 15.01% 19.92% 18.08% 22.79%

7.5 Projected Cash Flow

The following table and chart show our projected cash flow, including estimate repayments of the principal borrowing amount.

Hydroponics farm business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received
Cash from Operations
Cash Sales R1,860,000 R1,688,250 R2,194,500 R1,903,500 R2,450,250
Cash from Receivables R9,471,833 R9,665,383 R12,144,769 R10,953,616 R13,570,761
Subtotal Cash from Operations R11,331,833 R11,353,633 R14,339,269 R12,857,116 R16,021,011
Additional Cash Received
Sales Tax, VAT, HST/GST Received R0 R0 R0 R0 R0
New Current Borrowing R0 R0 R0 R0 R0
New Other Liabilities (interest-free) R0 R0 R0 R0 R0
New Long-term Liabilities R0 R0 R0 R0 R0
Sales of Other Current Assets R0 R0 R0 R0 R0
Sales of Long-term Assets R0 R0 R0 R0 R0
New Investment Received R0 R0 R0 R0 R0
Subtotal Cash Received R11,331,833 R11,353,633 R14,339,269 R12,857,116 R16,021,011
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations
Cash Spending R480,000 R483,000 R519,750 R559,345 R602,009
Bill Payments R8,317,863 R8,899,410 R10,090,933 R9,728,985 R10,716,935
Subtotal Spent on Operations R8,797,863 R9,382,410 R10,610,683 R10,288,330 R11,318,944
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out R0 R0 R0 R0 R0
Principal Repayment of Current Borrowing R0 R0 R0 R0 R0
Other Liabilities Principal Repayment R0 R0 R0 R0 R0
Long-term Liabilities Principal Repayment R870,000 R1,000,000 R1,250,000 R1,500,000 R4,000,000
Purchase Other Current Assets R0 R0 R0 R0 R0
Purchase Long-term Assets R0 R0 R0 R0 R0
Dividends R0 R0 R0 R0 R0
Subtotal Cash Spent R9,667,863 R10,382,410 R11,860,683 R11,788,330 R15,318,944
Net Cash Flow R1,663,970 R971,223 R2,478,586 R1,068,786 R702,067
Cash Balance R1,668,970 R2,640,193 R5,118,779 R6,187,566 R6,889,633

7.6 Projected Balance Sheet

The Balance Sheet shows a steady increase in Net Worth over the next five years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash R1,668,970 R2,640,193 R5,118,779 R6,187,566 R6,889,633
Accounts Receivable R1,068,167 R969,534 R1,260,264 R1,093,148 R1,407,137
Other Current Assets R0 R0 R0 R0 R0
Total Current Assets R2,737,137 R3,609,727 R6,379,044 R7,280,714 R8,296,770
Long-term Assets
Long-term Assets R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000
Accumulated Depreciation R666,660 R1,333,360 R2,000,060 R2,666,760 R3,333,460
Total Long-term Assets R19,333,340 R18,666,640 R17,999,940 R17,333,240 R16,666,540
Total Assets R22,070,477 R22,276,367 R24,378,984 R24,613,954 R24,963,310
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable R909,964 R426,964 R865,430 R306,085 R932,315
Current Borrowing R0 R0 R0 R0 R0
Other Current Liabilities R0 R0 R0 R0 R0
Subtotal Current Liabilities R909,964 R426,964 R865,430 R306,085 R932,315
Long-term Liabilities R17,130,000 R16,130,000 R14,880,000 R13,380,000 R9,380,000
Total Liabilities R18,039,964 R16,556,964 R15,745,430 R13,686,085 R10,312,315
Paid-in Capital R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753
Retained Earnings (R793,753) R1,231,760 R2,920,650 R5,834,800 R8,129,116
Earnings R2,025,513 R1,688,890 R2,914,150 R2,294,315 R3,723,126
Total Capital R4,030,513 R5,719,403 R8,633,553 R10,927,869 R14,650,995
Total Liabilities and Capital R22,070,477 R22,276,367 R24,378,984 R24,613,954 R24,963,310
Net Worth R4,030,513 R5,719,403 R8,633,553 R10,927,868 R14,650,995

7.7 Business Ratios

The following table outlines some of the more important ratios from the Hydroponic Crops Grown Under Cover industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 0182.9902.

Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth 0.00% -9.23% 29.99% -13.26% 28.72% -1.70%
Percent of Total Assets
Accounts Receivable 4.84% 4.35% 5.17% 4.44% 5.64% 2.94%
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 24.83%
Total Current Assets 12.40% 16.20% 26.17% 29.58% 33.24% 39.79%
Long-term Assets 87.60% 83.80% 73.83% 70.42% 66.76% 60.21%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.12% 1.92% 3.55% 1.24% 3.73% 22.33%
Long-term Liabilities 77.61% 72.41% 61.04% 54.36% 37.58% 22.42%
Total Liabilities 81.74% 74.33% 64.59% 55.60% 41.31% 44.75%
Net Worth 18.26% 25.67% 35.41% 44.40% 58.69% 55.25%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.24% 50.39% 50.33% 50.41% 50.34% 46.28%
Selling, General & Administrative Expenses 33.91% 35.39% 30.41% 32.33% 27.55% 29.76%
Advertising Expenses 0.00% 0.00% 0.00% 0.00% 0.00% 0.36%
Profit Before Interest and Taxes 37.53% 36.21% 39.05% 36.96% 39.53% 0.30%
Main Ratios
Current 3.01 8.45 7.37 23.79 8.90 1.08
Quick 3.01 8.45 7.37 23.79 8.90 0.38
Total Debt to Total Assets 81.74% 74.33% 64.59% 55.60% 41.31% 54.22%
Pre-tax Return on Net Worth 71.79% 42.18% 48.22% 29.99% 36.30% 0.29%
Pre-tax Return on Assets 13.11% 10.83% 17.08% 13.32% 21.31% 0.63%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5
Net Profit Margin 16.33% 15.01% 19.92% 18.08% 22.79% n.a
Return on Equity 50.25% 29.53% 33.75% 21.00% 25.41% n.a
Activity Ratios
Accounts Receivable Turnover 9.87 9.87 9.87 9.87 9.87 n.a
Collection Days 29 39 33 40 33 n.a
Accounts Payable Turnover 10.14 19.71 12.17 29.96 12.17 n.a
Payment Days 27 29 22 23 20 n.a
Total Asset Turnover 0.56 0.51 0.60 0.52 0.65 n.a
Debt Ratios
Debt to Net Worth 4.48 2.89 1.82 1.25 0.70 n.a
Current Liab. to Liab. 0.05 0.03 0.05 0.02 0.09 n.a
Liquidity Ratios
Net Working Capital R1,827,173 R3,182,763 R5,513,613 R6,974,628 R7,364,455 n.a
Interest Coverage 2.64 2.45 3.68 3.32 5.67 n.a
Additional Ratios
Assets to Sales 1.78 1.98 1.67 1.94 1.53 n.a
Current Debt/Total Assets 4% 2% 4% 1% 4% n.a
Acid Test 1.83 6.18 5.91 20.22 7.39 n.a
Sales/Net Worth 3.08 1.97 1.69 1.16 1.11 n.a
Dividend Payout 0.00 0.00 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Unit Sales
Tomatoes 0% 100,000 200,000 300,000 300,000 200,000 100,000 0 0 100,000 200,000 300,000 300,000
Peppers 0% 10,000 15,000 20,000 30,000 30,000 30,000 25,000 20,000 15,000 0 0 10,000
Cucumbers 0% 20,000 45,000 45,000 15,000 0 0 20,000 45,000 45,000 15,000 0 0
Instant Turf 0% 0 0 0 30,000 30,000 30,000 30,000 30,000 0 0 0 0
Total Unit Sales 130,000 260,000 365,000 375,000 260,000 160,000 75,000 95,000 160,000 215,000 300,000 310,000
Unit Prices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Tomatoes R4.00 R4.00 R4.00 R4.00 R4.00 R4.00 R4.00 R4.00 R4.00 R4.00 R4.00 R4.00
Peppers R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00
Cucumbers R1.80 R1.80 R1.80 R1.80 R1.80 R1.80 R1.80 R1.80 R1.80 R1.80 R1.80 R1.80
Instant Turf R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00 R10.00
Sales
Tomatoes R400,000 R800,000 R1,200,000 R1,200,000 R800,000 R400,000 R0 R0 R400,000 R800,000 R1,200,000 R1,200,000
Peppers R100,000 R150,000 R200,000 R300,000 R300,000 R300,000 R250,000 R200,000 R150,000 R0 R0 R100,000
Cucumbers R36,000 R81,000 R81,000 R27,000 R0 R0 R36,000 R81,000 R81,000 R27,000 R0 R0
Instant Turf R0 R0 R0 R300,000 R300,000 R300,000 R300,000 R300,000 R0 R0 R0 R0
Total Sales R536,000 R1,031,000 R1,481,000 R1,827,000 R1,400,000 R1,000,000 R586,000 R581,000 R631,000 R827,000 R1,200,000 R1,300,000
Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Tomatoes 50.00% R2.00 R2.00 R2.00 R2.00 R2.00 R2.00 R2.00 R2.00 R2.00 R2.00 R2.00 R2.00
Peppers 50.00% R5.00 R5.00 R5.00 R5.00 R5.00 R5.00 R5.00 R5.00 R5.00 R5.00 R5.00 R5.00
Cucumbers 50.00% R0.90 R0.90 R0.90 R0.90 R0.90 R0.90 R0.90 R0.90 R0.90 R0.90 R0.90 R0.90
Instant Turf 48.00% R4.80 R4.80 R4.80 R4.80 R4.80 R4.80 R4.80 R4.80 R4.80 R4.80 R4.80 R4.80
Direct Cost of Sales
Tomatoes R200,000 R400,000 R600,000 R600,000 R400,000 R200,000 R0 R0 R200,000 R400,000 R600,000 R600,000
Peppers R50,000 R75,000 R100,000 R150,000 R150,000 R150,000 R125,000 R100,000 R75,000 R0 R0 R50,000
Cucumbers R18,000 R40,500 R40,500 R13,500 R0 R0 R18,000 R40,500 R40,500 R13,500 R0 R0
Instant Turf R0 R0 R0 R144,000 R144,000 R144,000 R144,000 R144,000 R0 R0 R0 R0
Subtotal Direct Cost of Sales R268,000 R515,500 R740,500 R907,500 R694,000 R494,000 R287,000 R284,500 R315,500 R413,500 R600,000 R650,000
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Project manager 0% R35,000 R35,000 R35,000 R35,000 R35,000 R35,000 R35,000 R35,000 R35,000 R35,000 R35,000 R35,000
Consultant 0% R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000
Total People 2 2 2 2 2 2 2 2 2 2 2 2
Total Payroll R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales R536,000 R1,031,000 R1,481,000 R1,827,000 R1,400,000 R1,000,000 R586,000 R581,000 R631,000 R827,000 R1,200,000 R1,300,000
Direct Cost of Sales R268,000 R515,500 R740,500 R907,500 R694,000 R494,000 R287,000 R284,500 R315,500 R413,500 R600,000 R650,000
Other Costs of Sales R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Total Cost of Sales R268,000 R515,500 R740,500 R907,500 R694,000 R494,000 R287,000 R284,500 R315,500 R413,500 R600,000 R650,000
Gross Margin R268,000 R515,500 R740,500 R919,500 R706,000 R506,000 R299,000 R296,500 R315,500 R413,500 R600,000 R650,000
Gross Margin % 50.00% 50.00% 50.00% 50.33% 50.43% 50.60% 51.02% 51.03% 50.00% 50.00% 50.00% 50.00%
Expenses
Payroll R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000
Marketing/Promotion R833 R833 R833 R833 R833 R833 R833 R833 R833 R833 R833 R833
Depreciation R55,555 R55,555 R55,555 R55,555 R55,555 R55,555 R55,555 R55,555 R55,555 R55,555 R55,555 R55,555
H.P.s R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000
Fuel R8,333 R8,333 R8,333 R8,333 R8,333 R8,333 R8,333 R8,333 R8,333 R8,333 R8,333 R8,333
maintenance R1,667 R1,667 R1,667 R1,667 R1,667 R1,667 R1,667 R1,667 R1,667 R1,667 R1,667 R1,667
Payroll Taxes 15% R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Other R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000
Total Operating Expenses R131,388 R131,388 R131,388 R131,388 R131,388 R131,388 R131,388 R131,388 R131,388 R131,388 R131,388 R131,388
Profit Before Interest and Taxes R136,612 R384,112 R609,112 R788,112 R574,612 R374,612 R167,612 R165,112 R184,112 R282,112 R468,612 R518,612
EBITDA R192,167 R439,667 R664,667 R843,667 R630,167 R430,167 R223,167 R220,667 R239,667 R337,667 R524,167 R574,167
Interest Expense R149,750 R149,500 R149,000 R148,500 R148,000 R147,250 R146,500 R145,750 R145,000 R144,250 R143,500 R142,750
Taxes Incurred (R3,942) R70,383 R138,033 R191,883 R127,983 R68,208 R6,333 R5,808 R11,733 R41,358 R97,533 R112,758
Net Profit (R9,197) R164,228 R322,078 R447,728 R298,628 R159,153 R14,778 R13,553 R27,378 R96,503 R227,578 R263,103
Net Profit/Sales -1.72% 15.93% 21.75% 24.51% 21.33% 15.92% 2.52% 2.33% 4.34% 11.67% 18.96% 20.24%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales R80,400 R154,650 R222,150 R274,050 R210,000 R150,000 R87,900 R87,150 R94,650 R124,050 R180,000 R195,000
Cash from Receivables R15,187 R469,625 R889,100 R1,268,653 R1,540,852 R1,178,667 R838,270 R497,958 R495,267 R541,903 R713,518 R1,022,833
Subtotal Cash from Operations R95,587 R624,275 R1,111,250 R1,542,703 R1,750,852 R1,328,667 R926,170 R585,108 R589,917 R665,953 R893,518 R1,217,833
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
New Current Borrowing R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
New Other Liabilities (interest-free) R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
New Long-term Liabilities R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Sales of Other Current Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Sales of Long-term Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
New Investment Received R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal Cash Received R95,587 R624,275 R1,111,250 R1,542,703 R1,750,852 R1,328,667 R926,170 R585,108 R589,917 R665,953 R893,518 R1,217,833
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000 R40,000
Bill Payments R14,988 R460,361 R780,955 R1,070,712 R1,274,454 R997,133 R736,304 R475,541 R473,098 R512,296 R643,006 R879,016
Subtotal Spent on Operations R54,988 R500,361 R820,955 R1,110,712 R1,314,454 R1,037,133 R776,304 R515,541 R513,098 R552,296 R683,006 R919,016
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Principal Repayment of Current Borrowing R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Other Liabilities Principal Repayment R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Long-term Liabilities Principal Repayment R30,000 R30,000 R60,000 R60,000 R60,000 R90,000 R90,000 R90,000 R90,000 R90,000 R90,000 R90,000
Purchase Other Current Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Purchase Long-term Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Dividends R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal Cash Spent R84,988 R530,361 R880,955 R1,170,712 R1,374,454 R1,127,133 R866,304 R605,541 R603,098 R642,296 R773,006 R1,009,016
Net Cash Flow R10,599 R93,914 R230,295 R371,991 R376,398 R201,534 R59,866 (R20,433) (R13,181) R23,657 R120,512 R208,817
Cash Balance R15,599 R109,513 R339,807 R711,799 R1,088,197 R1,289,731 R1,349,597 R1,329,164 R1,315,983 R1,339,640 R1,460,153 R1,668,970

Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash R5,000 R15,599 R109,513 R339,807 R711,799 R1,088,197 R1,289,731 R1,349,597 R1,329,164 R1,315,983 R1,339,640 R1,460,153 R1,668,970
Accounts Receivable R0 R440,413 R847,138 R1,216,888 R1,501,185 R1,150,333 R821,667 R481,497 R477,388 R518,472 R679,518 R986,000 R1,068,167
Other Current Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Total Current Assets R5,000 R456,012 R956,651 R1,556,696 R2,212,984 R2,238,530 R2,111,398 R1,831,093 R1,806,552 R1,834,455 R2,019,159 R2,446,153 R2,737,137
Long-term Assets
Long-term Assets R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000 R20,000,000
Accumulated Depreciation R0 R55,555 R111,110 R166,665 R222,220 R277,775 R333,330 R388,885 R444,440 R499,995 R555,550 R611,105 R666,660
Total Long-term Assets R20,000,000 R19,944,445 R19,888,890 R19,833,335 R19,777,780 R19,722,225 R19,666,670 R19,611,115 R19,555,560 R19,500,005 R19,444,450 R19,388,895 R19,333,340
Total Assets R20,005,000 R20,400,457 R20,845,541 R21,390,031 R21,990,764 R21,960,755 R21,778,068 R21,442,208 R21,362,112 R21,334,460 R21,463,609 R21,835,048 R22,070,477
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable R0 R434,654 R745,510 R1,027,921 R1,240,926 R972,290 R720,449 R459,811 R456,162 R491,131 R613,777 R847,638 R909,964
Current Borrowing R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Other Current Liabilities R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal Current Liabilities R0 R434,654 R745,510 R1,027,921 R1,240,926 R972,290 R720,449 R459,811 R456,162 R491,131 R613,777 R847,638 R909,964
Long-term Liabilities R18,000,000 R17,970,000 R17,940,000 R17,880,000 R17,820,000 R17,760,000 R17,670,000 R17,580,000 R17,490,000 R17,400,000 R17,310,000 R17,220,000 R17,130,000
Total Liabilities R18,000,000 R18,404,654 R18,685,510 R18,907,921 R19,060,926 R18,732,290 R18,390,449 R18,039,811 R17,946,162 R17,891,131 R17,923,777 R18,067,638 R18,039,964
Paid-in Capital R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753 R2,798,753
Retained Earnings (R793,753) (R793,753) (R793,753) (R793,753) (R793,753) (R793,753) (R793,753) (R793,753) (R793,753) (R793,753) (R793,753) (R793,753) (R793,753)
Earnings R0 (R9,197) R155,031 R477,109 R924,838 R1,223,466 R1,382,619 R1,397,397 R1,410,950 R1,438,328 R1,534,832 R1,762,410 R2,025,513
Total Capital R2,005,000 R1,995,803 R2,160,031 R2,482,110 R2,929,838 R3,228,466 R3,387,619 R3,402,397 R3,415,950 R3,443,329 R3,539,832 R3,767,410 R4,030,513
Total Liabilities and Capital R20,005,000 R20,400,457 R20,845,541 R21,390,031 R21,990,764 R21,960,755 R21,778,068 R21,442,208 R21,362,112 R21,334,460 R21,463,609 R21,835,048 R22,070,477
Net Worth R2,005,000 R1,995,803 R2,160,031 R2,482,110 R2,929,838 R3,228,466 R3,387,619 R3,402,397 R3,415,950 R3,443,329 R3,539,832 R3,767,410 R4,030,513

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