Khanya Eggs Business Plan — Sensitivity and the Grant Question
What happens to the plan if the R3.65m of targeted grant funding never arrives, plus price, feed and lay-rate sensitivity on the outcome.
Sensitivity and the Grant Question
Jump to section
- Overview & contents
- i. Important Notice
- 1. Executive Summary
- 2. The South African Egg Market
- 3. Avian Influenza: The Risk That Defines This Business
- 4. SWOT and Competitive Position
- 5. The Five-Stage Roadmap
- 6. The Funding Ladder
- 7. Flock Performance
- 8. Feed Strategy
- 9. Point-of-Lay Pullet Sourcing
- 10. Biosecurity
- 11. Route to Market and Pricing
- 12. Operations and People
- 13. Regulation and Compliance
- 14. Unit Economics
- 15. Capital Expenditure
- 16. Financial Projections
- 17. Break-Even
- 18. Sensitivity and the Grant Question
- 19. Risk Management
- 20. Implementation Roadmap
- 21. Returns
- 22. Key Performance Indicators
- 23. Key Assumptions
- 24. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Stage Capital Schedules
- C. Appendix C: Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Funding Application Checklist
- F. Appendix F: Glossary
- 18.1 Single-variable sensitivity
- 18.2 Scenarios
- 18.3 What happens if the grants do not arrive
18.1 Single-variable sensitivity
|
Driver |
Movement tested |
Effect on Year 5 EBITDA |
As a share of base |
|---|---|---|---|
|
Egg price ±5% |
±R870’000 |
±17.0% |
|
|
Feed price ±10% |
±R600’000 |
±12.0% |
|
|
Hen-day production ±4 points |
±R860’000 |
±17.0% |
|
|
Mortality 6% to 12% |
(R620’000) |
±12.0% |
|
|
Pullet cost ±15% |
±R440’000 |
±9.0% |
|
|
Fixed cost base ±10% |
±R280’000 |
±6.0% |
|
|
Direct sales share ±10 points |
±R520’000 |
±10.0% |
|
|
Year 5 base case EBITDA |
R5 065’000 |
Egg price dominates, as it must in a business whose direct costs are largely fixed per bird rather than per egg: a five per cent movement in the blended price is worth R869 000 of Year 5 EBITDA, 17.2 per cent of the base. Feed follows at R597 000 for a ten per cent movement, and hen-day production at R860 000 for four percentage points. Together those three account for the great majority of the variance in the outcome, and all three are tracked as key performance indicators in Section 22.
18.2 Scenarios
|
Scenario |
Definition |
Year 5 revenue |
Year 5 EBITDA |
Margin |
|---|---|---|---|---|
|
Base |
The plan as presented: 21 000 average hens in lay, 80.7% hen-day, R2.81 blended price. |
R18.46m |
R5.07m |
27.4% |
|
Price pressure |
Blended egg price 5% below plan as the mix shifts faster into wholesale. |
R17.59m |
R4.19m |
23.8% |
|
Feed spike |
Feed cost 10% above plan on a poor grain season. |
R18.46m |
R4.47m |
24.2% |
|
Both together |
Price 5% below plan and feed 10% above in the same year. |
R17.59m |
R3.59m |
20.4% |
|
HPAI event, one house |
One of eight houses depopulated; 15% of the flock lost with cleaning, resting and restocking. |
R15.69m |
R3.03m |
19.3% |
Every scenario remains comfortably EBITDA positive at Year 5 scale. The compound case, a five per cent price fall alongside a ten per cent feed increase in the same year, still produces R3.59 million of EBITDA at a 20.4 per cent margin, and the loss of one of eight houses to an avian influenza event produces R3.03 million at 19.3 per cent.
18.3 What happens if the grants do not arrive
R3.65 million of the programme is targeted grant funding. The case below replaces every rand of it with a commercial loan at 11 per cent on the same seven-year amortising terms, and changes nothing else.
|
R’000 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Loans drawn — as planned |
400 |
1 000 |
1 600 |
3 000 |
3 250 |
|
Loans drawn — no grants |
500 |
1 250 |
2 200 |
4 300 |
4 650 |
|
Interest — as planned |
22 |
99 |
210 |
359 |
586 |
|
Interest — no grants |
28 |
124 |
314 |
665 |
1 137 |
|
Debt outstanding — as planned |
400 |
1 400 |
2 959 |
5 812 |
8 713 |
|
Debt outstanding — no grants |
500 |
1 750 |
3 899 |
8 014 |
12 235 |
|
Profit after tax — as planned |
(283) |
(364) |
(265) |
557 |
2 555 |
|
Profit after tax — no grants |
(289) |
(389) |
(369) |
251 |
2 272 |
|
Closing cash — no grants |
64 |
195 |
483 |
1 354 |
2 786 |
|
EBITDA cover — no grants |
— |
— |
0.58x |
1.79x |
3.23x |
|
Measure |
As planned |
No grants |
Movement |
|---|---|---|---|
|
Total loans drawn |
R9 250’000 |
R12 900’000 |
+R3 650’000 |
|
Year 5 interest |
R586’000 |
R1 137’000 |
+R551’000 |
|
Year 5 debt outstanding |
R8 713’000 |
R12 235’000 |
+R3 522’000 |
|
Year 5 profit after tax |
R2 555’000 |
R2 272’000 |
−R283’000 |
|
Year 5 closing cash |
R3 637’000 |
R2 786’000 |
−R851’000 |
|
Year 5 EBITDA cover of debt service |
5.42x |
3.23x |
Still well above the 1.5x gate |
|
Founder money multiple |
45.0x |
35.3x |
Lower, but the business is unchanged |
The business works without the grants. Year 5 debt rises from R8.71 million to R12.24 million, interest nearly doubles from R586 000 to R1.14 million, and profit after tax falls from R2.56 million to R2.27 million — but EBITDA still covers debt service 3.23 times, more than twice the Stage 5 gate requirement, and the enterprise remains cash generative from Stage 3. What the grants buy is not viability; it is speed, headroom and a better outcome for the founder.