The downside is survivable on one site; opening Site 2 regardless would not be

Table 23.1: Scenario definitions

Each downside driver is individually plausible; the case does not stack worst-case outcomes. The stress case isolates the effect of expanding into a weak market.

Table 23.2: Scenario results

What the downside and stress cases show

In the downside, management declines to open Site 2 and cuts head-office cost. Site 1 remains EBITDA-positive from FY29 but earns only R2.7m by FY32, net profit stays negative until FY32, and the operating DSCR is between 0.52x and 0.92x, a breach in every tested year. The overdraft is first drawn in FY30 and exceeds its R4m limit in month 56, peaking at R4.7m. The Investor recovers 0.30x of Tranche A. The business survives, but only with lender forbearance or a further R3–5m of equity.

In the stress case the same trading conditions apply but Site 2 is opened anyway. The overdraft limit is breached in month 26, within two months of Site 2’s launch, and the funding gap peaks at R19.2m. Equity falls to R7.8m by FY32 and the Investor recovers 0.11x. This is the clearest quantitative argument for the Tranche B gate.

Volume and trading spread are the value drivers; financing terms are second-order

Table 23.3: Single-variable sensitivities

* Lowest month-end cash less peak overdraft in the adverse case. Base case: FY32 EBITDA R15.4m; IRR 18.0%; minimum DSCR 1.96x.

The table also shows how little room the base case has. On its own, a 10% volume shortfall or a one-point fall in trading spread takes the minimum operating DSCR to about 1.02x, below the 1.30x covenant, and pushes the business into its overdraft, even with Site 2 opened on schedule. These are the two variables the Tranche B milestones are designed to test before further capital is committed.

Table 23.4: FY32 EBITDA by volume and trading spread (R million)

Table 23.5: Interest-rate stress