ccf business model, page-3

Figures are from the analyst report on their website.

http://www.carbonconscious.com.au/files/19/files/Alto%20CCF%20research%20report.pdf

$500 a hectare was my guesstimate of their gross profit per hectare. My concern is with cashflow, I accept that they will report their estimates of profit if they meet their planting targets.

I do not know how much they are paying for the land. From Tonydawe's post however he has said CCF require debt financing to help provide cash to cover the establishment costs.

They would not require debt financing if this element of the business model was cashflow positive given they have also stated they get the establishment fee before the trees are planted.

The second bit of negative cashflow is tax because they are profitable. They are forecasting NPAT of 3.5m so a normal run rate for tax would be 1.5m. They only have 2.3m of accumulated losses so will have to start paying tax.

So we now have 2 negative cashflow elements paying to establish the plantation and to pay the tax from the profit they make from establishment of plantation.

The profit they make from the management fee probably gives them free cash flow but the analyst report says that gross profit is around $15 a hectare vs $800 a hectare for the establishment of the plantation = $240 tax.

So positive cash flow in the near term = ($15 gross profit + non cash elements of expenses for management fees) which I don't see funding the negative cashflow elements.