Kyalami Surface Business Plan — Risk Analysis

Installer scarcity, film supply and currency, demand cyclicality and quality risk, with controls and trigger points.

Section 17 of 31

Risk Analysis

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Overview & contents

Twelve risks assessed; two of them can independently destroy the investment.

Figure 1. Installer scarcity and rand depreciation sit alone in the top-right quadrant

Residual risk after the mitigations described below.

Table 23. Risk register

Probability and impact assessed on a five-point scale. Rating is the product, banded as Critical (16–25), High (10–15), Medium (5–9) and Low (1–4).

ID	Risk	P	I	Rating	Mitigation	Owner
R1	Installer scarcity and wage inflation	4	5	Critical	Internal certification programme funded from month one; apprentice pipeline; retention incentives linked to quality metrics; wages escalated at CPI+2.5 in the model	Ops Manager
R2	Rand depreciation exceeding price pass-through	3	4	High	Forward cover on 70% of rolling twelve-month imports; quarterly price list review; contractual right to reset dealer pricing on 60 days’ notice	Financial Manager
R3	Utilisation ramp slower than plan	3	4	High	Fleet and livery work retained specifically to fill capacity; tranche 2 gated on observed utilisation; installer hiring phased against actual bookings	MD
R4	Consumer discretionary contraction	3	3	Medium	Track pack entry product; trade and fleet channels which are less cycle-exposed; variable cost structure permits rapid marketing reduction	MD
R5	Film supplier concentration	2	3	Medium	Secondary accreditation with an alternative manufacturer from Year 2; inventory buffer of 72 days	Financial Manager
R6	Rework and warranty cost	2	4	Medium	Master installer sign-off on every full-body job; documented inspection process; rework rate reported monthly and forms part of the tranche 2 gate	Ops Manager
R7	Key-person dependency	4	2	Medium	Documented process; two master installers rather than one; key-person cover on both executives	Board
R8	Price compression from unbranded film	2	2	Low	Positioning and warranty differentiation; the Company does not compete in the price segment	MD
R9	Premises and lease risk	2	3	Medium	Five-year leases with renewal options; fit-out amortised over lease term; landlord contribution negotiated	Financial Manager
R10	Electricity supply interruption	3	2	Medium	Inverter and battery capacity for critical loads; scheduling flexibility around published outage windows	Studio Manager
R11	Regulatory — NRCS window film compliance	1	2	Low	Only compliant transmittance products stocked; installer training includes compliance	Ops Manager
R12	Cyber and customer data	1	2	Low	Cloud DMS with vendor-managed security; POPIA-compliant data handling	Financial Manager

Currency risk — quantified

The Company’s film and chemical purchases are entirely USD-denominated. The rand traded at approximately R16.02 to the dollar in late August 2026, having strengthened roughly 9% over the preceding twelve months. The base case assumes 3.0% annual depreciation, consistent with forward-implied pricing.

Table 24. Sensitivity of FY32 EBITDA to rand depreciation

Annual ZAR depreciation	Implied FY32 rate	FY32 EBITDA	Investor IRR
3% p.a.	R18.57	R8.62m	35.2%
8% p.a.	R23.54	R6.57m	25.3%
14% p.a.	R30.85	R3.66m	4.8%
20% p.a.	R39.86	R0.17m	Negative

Forward cover is available and priced at approximately 4.0% annualised, but only to twelve months. Beyond that horizon the exposure cannot be hedged at any reasonable cost. This is stated plainly because it is a permanent feature of the business rather than a transitional one: over a five-year holding period an investor in this Company is taking unhedged rand risk on roughly a quarter of the cost base.