Thaba Goats Business Plan — Break-Even and Sensitivity

Break-even at a herd of 129 does, and how the plan responds to price, mortality and grazing cost moving against it.

Break-Even and Sensitivity

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18.1 Break-even
18.2 Sensitivity
18.3 Scenarios

18.1 Break-even

Figure 20. The herd crosses its own break-even during Year 4.

	Year 1	Year 2	Year 3	Year 4	Year 5
Average breeding does	50	65	105	165	250
Gross margin per doe, R	1 120	2 308	3 162	3 824	5 532
Fixed cost base, R’000	204	261	393	544	714
Break-even herd, does	182	113	124	142	129
Headroom / (shortfall), does	(132)	(48)	(19)	23	121

Measure	Value
Break-even herd at the Year 5 cost base	129 breeding does
Average does, Year 3	105
Average does, Year 4	165
Break-even price per goat	R2 438
Modelled blended price, Year 5	R3 292
Headroom on price	25.9%

Measured against its own contemporaneous cost base the herd crosses break-even during Year 4, when 165 average does exceed the 142 the Year 4 cost base requires. At the mature Year 5 cost base the break-even herd is 129 does against 250 held, headroom of 94 per cent. Price headroom of 25.9 per cent at Year 5 volumes is the reward for reaching scale. At Stage 2 there is none, which is why Stages 1 and 2 are structured as funded learning rather than as income.

18.2 Sensitivity

Figure 21. Sensitivity of Year 5 EBITDA.

Driver	Movement tested	Effect on Year 5 EBITDA
Kid survival ±5 percentage points	±R89k	±13%
Blended price ±8%	±R119k	±18%
Kids weaned per doe ±0.15	±R97k	±14%
Doe mortality 4% to 8%	(R71k)	±11%
Direct cost ±15%	±R62k	±9%
Fixed cost base ±10%	±R71k	±11%
Retained doelings ±20%	±R54k	±8%
Year 5 base case EBITDA	R669k

Blended price dominates at R119 000 for an eight per cent movement, followed by kids weaned per doe at R97 000 and kid survival at R89 000. Two of those three are entirely within the farmer’s control and cost nothing but husbandry discipline, which is why they are gate conditions at every stage rather than management aspirations.

18.3 Scenarios

Figure 22. Year 5 EBITDA and cash EBITDA across scenarios.

Scenario	Definition	Year 5 cash revenue	EBITDA	Cash EBITDA
Base	The plan as presented: 300 does, 1.94 kids weaned per doe, R3 292 blended price.	R1.49m	R0.67m	R0.36m
Kid mortality	Kid survival five points below plan across the herd.	R1.34m	R0.58m	R0.28m
Price pressure	Blended price 8% below plan as the channel mix shifts toward traders.	R1.37m	R0.55m	R0.25m
Both together	Kid survival five points down and price 8% below plan in the same year.	R1.23m	R0.44m	R0.14m
Drought	Grazing fails; supplementary feed doubles and 10% of the herd is sold early.	R1.19m	R0.33m	R0.03m

Reported EBITDA survives every scenario; cash EBITDA does not

In the compound case, kid survival five points below plan and price eight per cent below, reported EBITDA is still R440 000, which reads as a comfortably profitable year. Cash EBITDA is R140 000 against Year 5 debt service of R290 000, and the enterprise cannot service its debt. In the drought case cash EBITDA falls to R30 000. This is the single most important thing a funder should take from the sensitivity analysis: a goat enterprise under stress reports profit and runs out of money, because the herd growth that flatters the earnings line is the very thing that cannot be used to make a payment. Every covenant on this transaction should be written against cash EBITDA, and the facilities should carry the capital moratoria set out in Section 7 so that a bad season defers amortisation rather than triggering a default.

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