Midrand Print Company Business Plan — Sensitivity and Scenario Analysis

The downside case exhausts the funding package and needs a further R12.4m — and what deferring the second press does.

Section 23 of 28

Sensitivity and Scenario Analysis

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22.1 Single-variable sensitivity

Figure 1. Volume dominates every other variable by a factor of three

Variable	FY2031 EBITDA (R m)	FY2031 NPAT (R m)	MOIC	IRR
Base case	14.2	6.4	2.16x	17.9%
Volume +10%	18.0	10.8	3.27x	28.8%
Volume -10%	10.3	1.8	1.05x	1.0%
Price +5%	16.1	8.7	2.72x	23.8%
Price -5%	12.3	3.9	1.59x	10.5%
Materials +5%	13.0	4.8	1.79x	13.2%
Opex +5%	13.3	5.1	1.86x	14.2%
Capex +10%	14.2	5.7	1.94x	15.3%
Rates +200bp	14.2	5.9	2.08x	16.9%

Table 43: Single-variable sensitivity on investor returns

The asymmetry is instructive. Volume moves the IRR by 27.8 percentage points across a ±10% range; price by 13.3 points across ±5%; every cost and capital variable by under five points. Cost discipline protects the plan but cannot rescue it, and no amount of operational excellence compensates for accounts that do not arrive. This has a direct governance consequence: the board should monitor contracted programme count and order-book coverage monthly, and treat cost variance reporting as second-order.

22.2 Scenarios

Four scenarios are modelled in full, each re-runs the complete sixty-month model rather than flexing an output. Each is constructed to be individually plausible rather than as an aggregation of worst cases.

	Construction	FY2031 revenue	FY2031 EBITDA	IRR	Further equity required
Upside	Volumes 10% above plan; other assumptions unchanged	R77.0m	R20.0m	33.1%	—
Base	The plan as presented	R67.9m	R14.2m	17.9%	—
Downside	Volumes 10% below plan, realised prices 4% lower, materials 2% higher, overheads 1.5% higher, interest rates 10% higher	R58.7m	R8.3m	-17.3%	R12.4m
Downside, mitigated	As downside, with press #2 and roll #2 deferred from month 24 to month 48	R58.7m	R8.3m	-2.5%	R4.0m
Stress	Volumes 22% below plan, prices 7% lower, materials 4% higher, overheads 3% higher, capex 5% higher, rates 20% higher	R49.3m	R2.4m	n/m	R35.7m

Table 44: Scenario outcomes and additional equity requirement

Further equity required is the minimum additional contribution needed to maintain the R1.2m operating cash minimum within the committed facility limits.

Figure 2. The downside case is not self-funding — and mitigation recovers two thirds of the gap

The most important number in this section

On the downside case the committed package is exhausted and a further R12.4m of equity is required, 65% of the investor’s original commitment. The downside is not a severe scenario: it is a 13% revenue miss against a plan with no trading history.

Management mitigation reduces this materially. Deferring press #2 and roll #2 from month 24 to month 48 cuts the requirement to R4.0m and lifts the IRR from -17.3% to -2.5%. The deferral is operationally feasible: under downside volumes a single press runs at 50%, 59%, 84%, 92% and 100% of practical capacity across the five years, so capacity binds only in FY2031.

Both downside outcomes destroy investor capital. The mitigation makes the loss survivable and keeps the business solvent; it does not make the downside an acceptable outcome.

22.3 Break-even

Figure 3. Break-even revenue of R47.4m — the business must reach FY2029 scale to make money

Measure	Value
Contribution margin	59.5%
Annual fixed cost base at steady state	R28.2m
Break-even revenue	R47.4m
Break-even volume (A3 click equivalents)	4.41m
First EBITDA-positive month	Month 8
First net-profit-positive month	Month 30
Margin of safety at FY2029	-0.6%
Margin of safety at FY2031	30.2%

Table 45: Break-even analysis

FY2029 revenue of R47.1m lands almost exactly on the break-even line of R47.4m, a margin of safety of -0.6%, which is to say none at all. No meaningful cushion exists until FY2030, and even the 30.2% at FY2031 is modest given this level of operating leverage.