Highland Elite Seed Potatoes — Sensitivity & Scenario Analysis
The sensitivity analysis evaluates the impact of key variable changes on project NPV. The tornado diagram below illustrates the relative sensitivity of the project to changes in the five most critical variables.
Section 14 · Business Plan
Sensitivity & Scenario Analysis
The sensitivity analysis evaluates the impact of key variable changes on project NPV. The tornado diagram below illustrates the relative sensitivity of the project to changes in the five most critical variables.
14.1 Sensitivity Analysis
The sensitivity analysis evaluates the impact of key variable changes on project NPV. The tornado diagram below illustrates the relative sensitivity of the project to changes in the five most critical variables.
Figure 14.1: Sensitivity Analysis (Tornado Diagram)
The analysis confirms that seed price and production volume are the most significant drivers of project value, followed by input costs. This underscores the importance of securing long-term supply contracts at competitive prices and maintaining high production efficiency.
14.2 Scenario Analysis
| Scenario | Revenue (Yr 5) | EBITDA (Yr 5) | Net Profit (Yr 5) | Project IRR |
|---|---|---|---|---|
| Base Case | R118M | R33.6M | R17.4M | 18.7% |
| Optimistic (+15% price, +10% volume) | R152M | R48.2M | R28.9M | 24.3% |
| Conservative (-10% price, -10% volume) | R95M | R22.1M | R8.5M | 13.2% |
| Downside (-15% price, -15% volume) | R82M | R16.4M | R3.8M | 9.8% |
Even under the downside scenario, the project maintains a positive IRR of 9.8% and generates a net profit, demonstrating the robustness of the business model. The conservative and downside scenarios assume no management intervention to mitigate adverse conditions, which provides an additional margin of safety.
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