Ironveld Heritage Beef — Sensitivity Analysis
The drought scenario represents the most severe downside risk for cattle farming. The Company mitigates this through conservative stocking rates, supplementary feeding capacity, a livestock overdraft facility, and comprehensive livestock insurance. Management has the flexibility to reduce herd numbers through accelerated sales…
Section 14 · Business Plan
Sensitivity Analysis
The drought scenario represents the most severe downside risk for cattle farming. The Company mitigates this through conservative stocking rates, supplementary feeding capacity, a livestock overdraft facility, and comprehensive livestock insurance. Management has the flexibility to reduce herd numbers through accelerated sales…
| Scenario | Year 3 Revenue | Gross Margin | Year 3 EBIT |
|---|---|---|---|
| Base Case | R12.8m | 40.0% | (R630k) |
| Revenue −15% | R10.9m | 40.0% | (R2,550k) |
| Revenue +15% | R14.7m | 40.0% | R1,290k |
| Gross Margin −5pp | R12.8m | 35.0% | (R1,270k) |
| Gross Margin +5pp | R12.8m | 45.0% | R10k |
| Drought Scenario (30% production loss) | R9.0m | 30.0% | (R3,150k) |
| Combined Upside (+15% Rev, +5pp GM) | R14.7m | 45.0% | R1,930k |
The drought scenario represents the most severe downside risk for cattle farming. The Company mitigates this through conservative stocking rates, supplementary feeding capacity, a livestock overdraft facility, and comprehensive livestock insurance. Management has the flexibility to reduce herd numbers through accelerated sales during drought, converting biological assets to cash.
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