This is the most informative section in the document. The base case is one point in a wide and asymmetric distribution, and the analysis below maps that distribution rather than defending the central estimate.

Scenario definitions

Table 59. Scenario assumptions

Neither adverse case assumes any management response. In practice a management team facing a ten per cent throughput shortfall would slow mobilisation, defer the second studio and reduce head office. The downside case as modelled is therefore more severe than the realistic outcome, which is deliberate.

Table 60. Scenario outcomes

Sensitivity to individual drivers

Table 61. Enterprise value sensitivity to individual drivers (R million)

Each driver is flexed independently: pricing by 10%, utilisation by 12.5%, labour cost by 10%, consumables by 15%, exit multiple between 5.0 and 8.0 times, and marketing intensity by 25%. Base enterprise value is R12.6m.

Three of the seven drivers swing enterprise value by more than three times the base-case valuation itself. That is a direct consequence of a thin margin: small proportional movements in revenue or cost produce large proportional movements in EBITDA, which the terminal multiple then amplifies. The practical implication for management is that contract price negotiation and throughput discipline are worth more than any cost-saving initiative available to them.

Two-way sensitivity

Table 62. Enterprise value by utilisation and exit multiple (R million)

Table 63. Project internal rate of return by utilisation and exit multiple

Values below the 16.4% cost of capital are shown in red. The entire 85% and 92.5% utilisation rows fail to clear the hurdle at any exit multiple within the tested range, which is the clearest single statement of where the risk in this investment sits.