Risk Management

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

19.1 The risks that matter

Drought is the risk that removes the grazing and the herd in the same season, and no amount of capital protects against it. It is managed by stocking below 85 per cent of assessed carrying capacity, by a lick and supplementary feed budget that can be doubled, by an established trader relationship that will take animals at short notice, and by an explicit rule that followers are sold before breeding does.

Kid mortality is the risk with the highest return on attention. Five percentage points is worth R89 000 a year at Year 5 scale, a quarter of the cash the business generates. It is managed by the kidding protocol in Section 9.2, by strategic dosing verified with faecal egg counts, and by gate conditions at every stage.

Grazing outrun by the herd is the risk that compounds. A herd that outgrows its veld overgrazes, condition drops, parasite burden rises and kid mortality climbs, one mistake producing four consequences. It is managed by fencing camps before the herd that will use them and by independent written confirmation of capacity at Gates 3 and 4.

Cash exhaustion while the herd grows is the risk specific to livestock. Reported EBITDA turns positive a year before cash EBITDA does. It is managed by sizing each stage raise to carry the stage, by reporting cash EBITDA alongside reported EBITDA in every table, and by the rule that breeding does are never sold to cover a shortfall.

Stock theft is endemic in the production provinces and is largely uninsurable at this scale. It is managed by night kraaling, perimeter integrity, a herding presence, registered branding and community relationships, the last of which is worth more than the fence.

19.2 Risks sized against the plan

19.3 Controls

• No stage is drawn until every gate condition for the preceding stage is documented and satisfied.
• Grazing capacity is confirmed in writing by a qualified assessor before each expansion, for the herd being created rather than the herd held.
• Stocking rate is held below 85 per cent of assessed carrying capacity in every year.
• Breeding does are not sold to cover a cash shortfall under any circumstance; followers are sold first and culls second.
• Every birth, death, treatment and sale is recorded on the day it happens, and the register is reviewed monthly.
• Covenants are set against cash EBITDA rather than reported EBITDA, and tested from Year 5.
• No distribution is made to the founder beyond the owner remuneration in the fixed cost base until cover exceeds 1.25 times for four consecutive quarters.