Karoo Crown Beef Group Business Plan › Section 20 › Sensitivity & Scenario Analysis

20.1 Scenario Definitions

Three scenarios have been modelled and stress-tested to validate the
resilience of the Group’s financial structure: the base case (presented
above), an upside scenario and a downside scenario. Each scenario varies
a coherent set of operational and financial drivers rather than a single
variable, providing more realistic stress-testing than single-variable
sensitivity.

Upside scenario (probability ~25%)

Assumes: faster-than-base certification timeline (EU approval by
Month 26 rather than Month 30); cattle supply at the upper end of
producer-network capacity (50,000 head reached by Month 42); realised
export prices 8% above base; ZAR depreciation supportive (R19.20/USD
average). Y5 EBITDA: R512m. Equity IRR: 31.8%.

Base scenario (probability ~55%)

As presented in Sections 14-16. Y5 EBITDA: R446m. Equity IRR: 27.4%.
All debt covenants comfortably met; first dividend in Year 4.

Downside scenario (probability ~20%)

Assumes: extended FMD-related EU market access delay (first EU
shipment Month 36 rather than Month 31); slower ramp (50,000 head
reached by Month 54); realised export prices 8% below base; ZAR
strengthening adversely (R16.10/USD average). Y5 EBITDA: R342m. Equity
IRR: 21.6%. All debt covenants remain compliant; no additional capital
raise required.

20.2 Break-even Analysis

The Group’s operating break-even (zero EBIT) is reached at 21,400
head per year throughput, equivalent to 42.8% of full capacity. This
break-even threshold is exceeded during Year 2 in the base case and
during Year 3 in the downside case. The cash break-even (zero net cash
flow before financing) is reached at 27,800 head per year throughput,
equivalent to 55.6% of full capacity, achieved during Year 3 in the base
case and during Year 4 in the downside case.

20.3 Stress Testing

Three independent stress scenarios have been applied:

• Severe FMD shock: 9-month EU market closure in Year 3. Modelled
  outcome: EBITDA falls to R142m in the affected year; no covenant breach
  due to GCC and domestic channel redirection; full recovery to base case
  by Year 5.
• Construction overrun: 6-month delay and 12% capex overrun.
  Modelled outcome: Year 5 IRR falls to 23.1% (still well above hurdle);
  contingency reserve absorbs ~80% of overrun; remainder financed through
  working-capital facility.
• Combined adverse shock: simultaneous 10% price decline, 8% cost
  inflation, 6-month construction delay. Modelled outcome: Year 5 EBITDA
  R268m, equity IRR 16.4%; covenants compliant; mezzanine PIK extension
  required in Year 3.

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