Karoo Meridian — Appendices
Supporting appendices - the key ratio dashboard, the senior-debt amortisation schedules, the Year-1 monthly operating profile, the sources and the downside scenario underpinning the Karoo Meridian business plan and financial model.
Section 16 · Business Plan
Appendices
Supporting appendices – the key ratio dashboard, the senior-debt amortisation schedules, the Year-1 monthly operating profile, the sources and the downside scenario underpinning the Karoo Meridian business plan and financial model.
Appendix A — Key Ratio Dashboard
| Ratio | Y1 | Y2 | Y3 | Y4 | Y5 | Y6 | Y7 | Y8 | Y9 | Y10 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue growth % | – | 82 | 60 | 54 | 55 | 16 | 12 | 9 | 6 | 5 |
| EBITDA margin % | 13.2 | 22.6 | 26.3 | 28.2 | 29.2 | 29.8 | 30.3 | 30.7 | 31.0 | 31.0 |
| NPAT margin % | -23.4 | 1.3 | 10.4 | 13.0 | 16.2 | 17.9 | 18.8 | 19.4 | 20.2 | 20.4 |
| DSCR (x) | -0.03 | 0.85 | 1.15 | 1.66 | 2.65 | 4.15 | 5.28 | 6.34 | 7.38 | 8.42 |
| Net debt / EBITDA (x) | 16.4 | 5.7 | 3.0 | 1.7 | 0.7 | 0.1 | net cash | net cash | net cash | net cash |
| Debt / equity (x) | 2.09 | 2.16 | 1.66 | 1.08 | 0.51 | 0.27 | 0.16 | 0.09 | 0.05 | 0.02 |
| ROE % | -21.5 | 2.2 | 21.3 | 29.2 | 36.0 | 31.6 | 27.1 | 23.3 | 20.5 | 17.8 |
| ROA % | -7.0 | 0.7 | 8.0 | 14.0 | 23.9 | 24.9 | 23.3 | 21.3 | 19.5 | 17.4 |
| Interest cover (EBITDA/int, x) | 0.5 | 1.6 | 2.9 | 4.9 | 8.4 | 13.8 | 20.2 | 27.6 | 38.7 | 58.7 |
| Capex / revenue % | 324 | 11 | 9 | 9 | 6 | 4 | 3 | 2 | 2 | 2 |
Appendix B — Senior Debt Amortisation Schedules
IDC senior facility — R95m, 11.25%, 12-year, 2-year principal
grace
| R m | Y1 | Y2 | Y3 | Y4 | Y5 | Y6 | Y7 | Y8 | Y9 | Y10 |
|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 95.0 | 95.0 | 95.0 | 85.5 | 76.0 | 66.5 | 57.0 | 47.5 | 38.0 | 28.5 |
| Interest | 10.7 | 10.7 | 10.7 | 9.6 | 8.6 | 7.5 | 6.4 | 5.3 | 4.3 | 3.2 |
| Principal | – | – | 9.5 | 9.5 | 9.5 | 9.5 | 9.5 | 9.5 | 9.5 | 9.5 |
| Closing balance | 95.0 | 95.0 | 85.5 | 76.0 | 66.5 | 57.0 | 47.5 | 38.0 | 28.5 | 19.0 |
DBSA development loan — R60m, 10.50%, 10-year, 1-year principal
grace
| R m | Y1 | Y2 | Y3 | Y4 | Y5 | Y6 | Y7 | Y8 | Y9 | Y10 |
|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance | 60.0 | 60.0 | 53.3 | 46.7 | 40.0 | 33.3 | 26.7 | 20.0 | 13.3 | 6.7 |
| Interest | 6.3 | 6.3 | 5.6 | 4.9 | 4.2 | 3.5 | 2.8 | 2.1 | 1.4 | 0.7 |
| Principal | – | 6.7 | 6.7 | 6.7 | 6.7 | 6.7 | 6.7 | 6.7 | 6.7 | 6.7 |
| Closing balance | 60.0 | 53.3 | 46.7 | 40.0 | 33.3 | 26.7 | 20.0 | 13.3 | 6.7 | 0.0 |
Appendix C — Year 1 Monthly Operating Profile
Year 1 revenue of R68m is heavily back-loaded: livestock arrive
through months 4–12, the first shearing occurs in month 8–10 and
cull/early lamb income only builds from month 10. The monthly profile
below illustrates the working-capital reality behind the annual figures
and the case for the seasonal revolver.
| R m | M1 | M2 | M3 | M4 | M5 | M6 | M7 | M8 | M9 | M10 | M11 | M12 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 0.4 | 0.6 | 0.9 | 1.6 | 2.4 | 3.2 | 4.3 | 7.8 | 9.6 | 11.0 | 12.4 | 13.8 |
| Cash opex | (3.1) | (3.4) | (3.8) | (4.4) | (4.8) | (5.1) | (5.3) | (5.6) | (5.7) | (5.8) | (5.9) | (6.1) |
| Net operating | (2.7) | (2.8) | (2.9) | (2.8) | (2.4) | (1.9) | (1.0) | 2.2 | 3.9 | 5.2 | 6.5 | 7.7 |
Appendix D — Sources
- Cape Wools SA — market reports and seasonal indicators (2025/26
season close: all-Merino R270.86/kg clean; certified
R277.95/kg) - Department of Agriculture / DALRRD — national flock statistics
(~21 million sheep) and provincial wool production shares - BFAP Baseline — sheep-meat export trajectory (2.3% of production
2023; 7.6% 2024; ~13% projected by 2034) - Red Meat Producers’ Organisation / RMIS — carcass price series
(A2 lamb >R100/kg, 2026) - NAMC TradeProbe — Middle East sheep-meat trade analysis
- Daily Maverick / Cape Wools — greasy wool exports 44.3m kg,
R4.44bn; China >80% share; certified sustainable wool
leadership - Merino SA and public stud-industry sources — breeding philosophy
and performance-testing practice
Appendix E — Downside Scenario (Five-Year P&L)
The downside case compounds a two-season drought (lambing to 88%,
fleece weights −8%) with a wool price retracement to the 2023/24
indicator level and six-month meat-export slippage: revenue −18% against
base in every year, with operating leverage compressing EBITDA by
approximately 35%. Interest and depreciation are unchanged; the revolver
requirement roughly doubles.
| R m | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|
| Revenue (−18%) | 56 | 102 | 162 | 250 | 387 |
| EBITDA (−35%) | 5.9 | 18.2 | 33.8 | 55.9 | 89.7 |
| EBITDA margin % | 10.5 | 17.9 | 20.8 | 22.4 | 23.2 |
| Depreciation | (8.0) | (9.4) | (11.2) | (13.8) | (16.8) |
| Net interest (revolver 2x) | (17.0) | (17.0) | (19.8) | (20.9) | (20.0) |
| Profit before tax | (19.1) | (8.1) | 2.9 | 21.2 | 52.9 |
| Taxation | – | – | – | – | (13.4) |
| NPAT | (19.1) | (8.1) | 2.9 | 21.2 | 39.5 |
| Cumulative NPAT | (19.1) | (27.2) | (24.4) | (3.2) | 36.3 |
In the downside the enterprise remains a going concern — cumulative
losses trough at approximately R42m against R90m of subscribed equity —
but debt service becomes wholly dependent on the interest reserve and
lender forbearance through Year 4, and the equity IRR compresses to
roughly 27% only because the exit assumption is held; absent an exit the
downside is a single-digit dividend-yield outcome. This is the case
lenders should size security and reserves against.
Appendix F — Glossary
| Term | Definition |
|---|---|
| A2 lamb | SA carcass classification: lamb (0 permanent incisors), lean fat class 2 — the premium retail grade |
| BLUP | Best Linear Unbiased Prediction — statistical estimation of breeding values from performance records |
| CFADS | Cash flow available for debt service: EBITDA less cash tax less ΔNWC (pre-capex convention stated in Section 12.5) |
| Clean yield | Clean wool mass as a percentage of greasy mass after scouring |
| DSCR | Debt service cover ratio: CFADS ÷ (interest + scheduled principal) |
| FMD | Foot-and-mouth disease — controlled animal disease affecting export market access |
| Greasy wool | Shorn wool prior to scouring, the form in which SA wool is predominantly exported |
| Halaal | Certification that slaughter and handling comply with Islamic dietary law — precondition for GCC meat exports |
| Micron | Fibre diameter in micrometres; lower micron = finer, higher-value apparel wool |
| RFID | Radio-frequency identification ear tags enabling individual-animal records and traceability |
| SSU / LSU | Small / large stock unit — standardised grazing-pressure measures used in carrying-capacity norms |
| Weaned lambing % | Lambs weaned per 100 ewes mated — the enterprise’s dominant profit driver |
Appendix G — Assumptions Register
Every material assumption in the model, its source basis and its
sensitivity direction, in one place. Assumptions marked ◆ are sponsor
anchors preserved exactly; all others are analyst-derived.
| # | Assumption | Value | Basis |
|---|---|---|---|
| 1 | Revenue trajectory Y1–Y5 ◆ | R68m → R472m | Sponsor case; SOM cross-check §3.4 |
| 2 | EBITDA Y1–Y5 ◆ | R9m → R138m | Sponsor case; margin band 13.2%→29.2% |
| 3 | Revenue growth Y6–Y10 | 16% decaying to 4.5% | Analyst; maturity glide path |
| 4 | Steady-state EBITDA margin | 29.8–31.0% | Within sponsor 24–33% band |
| 5 | Foundation flock ◆ | 12,000 ewes; 450 rams | Sponsor; R42m livestock budget |
| 6 | Weaned lambing % | 95% → 105% | SA commercial Merino norms |
| 7 | Adult / pre-wean mortality | 4% / 8% | Sector planning norms |
| 8 | Greasy fleece weight | 4.3–4.8 kg adult | Merino production norms |
| 9 | Clean yield | 62% | Karoo clip typical |
| 10 | Wool price (clean, achieved) | ±R250/kg at Y5 | Discount to R270.86 indicator |
| 11 | Lamb carcass price | R100–109/kg A2 | RMPO/RMIS 2026 series |
| 12 | Capex programme ◆ | R220m + R25m WC | Sponsor budget §6.4 |
| 13 | Ongoing capex | R14–30m p.a. | Analyst; maintenance + expansion |
| 14 | Depreciation lives | Infra 20y; mach 8y; tech 5y | Analyst; land & flock not depreciated |
| 15 | IDC facility | R95m, 11.25%, 12y, 2y grace | Analyst structuring assumption |
| 16 | DBSA facility | R60m, 10.50%, 10y, 1y grace | Analyst structuring assumption |
| 17 | Revolver rate | 11.50% | Prime-linked production credit |
| 18 | Corporate tax | 27% + assessed-loss c/f | Income Tax Act s20 |
| 19 | Net working capital | 14% of revenue | §12.7 build-up |
| 20 | Minimum operating cash | R5m | Analyst liquidity floor |
| 21 | Exit multiple | 5.0x EV/EBITDA Y10 | Agri corridor 4–6x; DCF cross-check §12.9 |
| 22 | No dividends in horizon | Full retention | Conservative; funds deleveraging |
| 23 | No biological fair-value gains | Flock at cost | Prudence; ±R40–60m unrecognised by Y5 |
| 24 | Inflation / FX | Implicit in nominal prices | No explicit indexation layer |
Appendix H — Interest Service Reserve Mechanics
The reserve resolves the ramp-period DSCR problem identified in
Section 12.5. R30 million of the equity subscription is escrowed at
close in a lender-controlled account and released quarterly against the
senior interest bill; CFADS shortfalls draw the reserve, surpluses stay
in operations. The schedule below shows the reserve fully covering Years
1–2 interest with a closing buffer, after which organic CFADS takes
over.
| R m | Y1 H1 | Y1 H2 | Y2 H1 | Y2 H2 | Y3 (ref) |
|---|---|---|---|---|---|
| Opening reserve | 30.0 | 21.5 | 13.0 | 6.3 | 0.9 |
| Senior interest due | 8.5 | 8.5 | 8.5 | 8.5 | 16.3 (full yr) |
| CFADS contribution | 0.0 | 0.0 | 1.8 | 3.1 | 18.8 (full yr) |
| Reserve drawn | 8.5 | 8.5 | 6.7 | 5.4 | – |
| Closing reserve | 21.5 | 13.0 | 6.3 | 0.9 | 0.9 released |
Half-yearly figures are illustrative pro-rations of the annual model.
The design intent is auditable simplicity: lenders see a funded,
controlled account rather than a projection; equity sees the reserve
released back into the business once the Year 3 covenant test is passed.
The residual R0.9m plus Year 3 CFADS of R18.8m against R16.3m of
interest restores cover above 1.15x at the first unaided test,
consistent with Figure 16.
Appendix I — Combined-Shock DSCR Matrix
Single-variable sensitivities understate agricultural risk because
shocks correlate. The matrix below shows Year 4 DSCR (base 1.66x — the
first unaided covenant test year) under simultaneous wool-price and
lamb-price shocks, holding volumes at base. Cells at or above the 1.20x
covenant are viable without support; shaded judgement applies below.
| Y4 DSCR (x) | Lamb +10% | Lamb base | Lamb −10% | Lamb −20% |
|---|---|---|---|---|
| Wool +10% | 2.05 | 1.86 | 1.67 | 1.48 |
| Wool base | 1.85 | 1.66 | 1.47 | 1.28 |
| Wool −10% | 1.64 | 1.45 | 1.26 | 1.07 |
| Wool −20% | 1.44 | 1.25 | 1.06 | 0.87 |
Reading: the covenant survives any single −20% price shock and most
combined −10% shocks; it fails only under a combined −20% wool and
−10%-or-worse lamb outcome — a severity comparable to the worst combined
years in the modern price record. Interpolation is linear on the
revenue-to-CFADS pass-through at Year 4 operating leverage; volume
shocks (drought) compound these numbers and are treated in Appendix E.
The matrix is the quantitative case for the trailing-twelve-month
covenant convention and the R35m revolver headroom proposed in Section
13.2.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Karoo Meridian Wool & Livestock (Pty) Ltd.