Sensitivity and Scenario Analysis

Jump to section

• Overview & contents
• i. Important Notice and Basis of Preparation
• 1. Executive Summary
• 2. How Fuel Retail Economics Actually Work
• 3. The Business and Its Revenue Streams
• 4. Market and Site Analysis
• 5. SWOT and Competitive Position
• 6. Regulatory Pathway and Licensing
• 7. Operations Plan
• 8. Management and Organisation
• 9. Capital Requirement and Funding Structure
• 10. Financial Projections
• 11. Break-Even Analysis
• 12. Debt Service and Working Capital
• 13. Investment Returns
• 14. Sensitivity and Scenario Analysis
• 15. Risk Management
• 16. Implementation Timeline
• 17. Exit Options for Investors
• 18. Key Performance Indicators
• 19. Key Assumptions
• 20. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Capital and Depreciation Schedules
• C. Appendix C: Funding and Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

14.1 Single-variable sensitivity

Throughput dominates everything. A 15 per cent volume shortfall costs roughly nine points of project return and pushes the project below its hurdle rate; a 15 per cent outperformance adds four. No other single variable moves the outcome as far, which is why the traffic count is described throughout this document as the investment decision rather than a licensing formality.

• The regulated margin is a real risk and it is outside management’s control. A 10 per cent adverse movement in the effective retail margin — through RAS adjustments lagging cost inflation, or through deeper diesel discounting to win fleet volume — takes the return to 15.4 per cent, barely at the hurdle.
• Cost discipline matters more than it looks. A 10 per cent operating cost overrun costs roughly six points of return, more than a 15 per cent capital overrun, because operating costs recur while capital does not.
• The shop is a genuine swing factor. A 20 per cent shortfall in shop gross profit costs 5.6 points of return — confirming that convenience retail execution, not fuel, is where management effort earns its return.

The grid shows the interaction. At the planned shop performance the site needs roughly 400 000 litres a month to hold Year 5 EBITDA above R10 million; with shop gross profit 20 per cent light it needs closer to 460 000. Throughput buys tolerance on the retail ramp and the retail ramp buys tolerance on throughput, and the compound case below is what happens when neither arrives.

14.2 Scenarios