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.

Highland Elite Seed Potatoes (Pty) Ltd Business PlanSection 14 › Sensitivity & Scenario Analysis

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
Sensitivity — visualised from the accompanying data.

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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