Lichtenburg Nut Company Business Plan — Risk Analysis

Aflatoxin events, groundnut price and supply, listing risk and the cash absorbed through the ramp, with trigger points.

Section 19 of 37

Risk Analysis

Jump to section

Figure 1. Aflatoxin exceedance and anchor-contract loss are the two risks that can destroy the business

18.1 Prioritised risk register

Table 43. Prioritised risk register with mitigation and ownership

ID	Risk	P	I	Rating	Mitigation	Owner
R1	Aflatoxin exceedance reaching the market, triggering a recall	Med-High	Severe	Critical	Nine-point control architecture (Section 14); internal action limit of 6 ppb against a 10 ppb legal limit; positive release; recall insurance; quarterly mock recalls	Quality Manager
R2	Loss of the anchor private label contract	Medium	Severe	Critical	Multi-year agreement with notice and transition protection; industrial pipeline developed from month 1; own brand launched by month 24 to reduce dependence	Commercial Manager
R3	Groundnut crop failure or price spike	High	Major	Critical	75% of kernels contracted pre-season; four months of storage cover; 25% spot allocation; quality-linked grower pricing to secure delivery priority. No hedging instrument exists.	Supply Chain Manager
R4	Slower volume ramp than plan	Med-High	Major	High	R40m revolving facility absorbs a shortfall of up to about 15%; capital phased so that Phases 2 and 3 can be deferred; switching analysis shows EBITDA survives a 34% shortfall	Managing Director
R5	Retailer margin, rebate and settlement pressure	High	Moderate	High	Board-approved floor price; mix shift toward industrial and own brand; contractual protection within tender periods	Commercial Manager
R6	Incumbent price response resetting category price points	Medium	Major	High	Compete on audit outcome rather than price; accept lower utilisation over unprofitable volume	Board
R7	dtic APSS grant not awarded	Medium	Moderate	Medium	Application submitted and adjudicated before financial close as a condition precedent; downside case models half the grant and the stress case none	Finance Director
R8	Municipal electricity or water interruption	Med-High	Moderate	Medium	250 kWp solar, standby generation sized to chilling and laboratory loads, 48 hours of water storage, dual-fuel roaster	Operations Manager
R9	Interest rate increase	Medium	Moderate	Medium	A 200 bp increase adds roughly R2m a year to finance cost; the base case is priced at a 10.50% prime rate	Finance Director
R10	Reversal or dilution of the 20% import duty	Low	Major	Medium	Monitor the ITAC review cycle; the business must be viable at prices 6% to 9% below plan, which the switching analysis indicates it marginally is	Managing Director
R11	Failure to recruit or retain the executive team	Low-Med	Moderate	Medium	Management equity at 10% plus a 5% incentive scheme; relocation support; appointments as a condition precedent	Board
R12	Withdrawal or non-renewal of the working capital facility	Low	Severe	Medium	Annual renewal negotiated ahead of the intake season; covenant headroom monitored monthly; alternative facility mandated as a contingency	Finance Director
R13	Foreign exchange exposure on imported equipment	Medium	Moderate	Medium	Forward cover taken on equipment orders at the time of placement; approximately 55% of Phase 1 plant is imported	Finance Director
R14	Construction cost overrun or delay	Medium	Moderate	Medium	7% contingency within Phase 1; fixed-price installation contracts where available; the downside case models a 7% capital overrun	Operations Manager

18.2 Residual risk after mitigation

Three exposures that mitigation reduces but does not remove

Crop risk. There is no groundnut futures market in South Africa. Contracts and storage reduce exposure; they cannot transfer it. A season like 2018-19, when the national crop fell to 20,030 tonnes, would force spot purchasing at whatever the market demanded.

Recall risk. Sampling is statistical and contamination is heterogeneous. The February 2026 recall happened at a producer whose own testing found the problem. The company can bound the scope of a recall through lot traceability; it cannot guarantee one never occurs.

Concentration risk in Years 1 and 2. Until the industrial pipeline and own brand mature, the business is dependent on a single customer relationship for close to half its revenue. No amount of contractual drafting changes the operational reality that the plant would be at 30% utilisation without it.