Sireletso Protective Group Business Plan — Sensitivity and Scenarios

How the plan responds to wage inflation, contract rates, debtor days and utilisation moving against it.

Sensitivity and Scenarios

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15.1 Single-variable sensitivity
15.2 Scenarios
15.3 What management can do inside a bad year

15.1 Single-variable sensitivity

Figure 21. Sensitivity of Year 5 EBITDA.

Driver	Effect on Year 5 EBITDA	As a share of base
Revenue ±15%	±R6.03m	±43%
Gross margin ±200 basis points	±R2.14m	±15%
Direct labour escalation ±100 basis points	±R1.34m	±9%
Overheads ±6%	±R1.57m	±11%
Blended rate ±5%	±R5.36m	±38%
Deployed headcount ±8%	±R3.22m	±23%
Year 5 base case EBITDA	R14.11m

Revenue dominates: a 15 per cent movement is worth R6.03 million of Year 5 EBITDA, 43 per cent of the base case. The blended rate follows at R5.36 million for a 5 per cent movement, which is the same exposure expressed differently — in a business with a 13.2 per cent EBITDA margin, small movements in the top line consume most of the bottom one. Direct labour escalation at R1.34 million for 100 basis points looks modest in a single year but compounds across a contract term, which is the point of Section 6.3.

15.2 Scenarios

Figure 22. Year 5 EBITDA across scenarios, with project IRR.

Scenario	Definition	Year 5 revenue	Year 5 EBITDA	Project IRR
Base	The plan as presented: R107.17m of revenue, 37.5% gross margin, 62 debtor days.	R107.17m	R14.11m	23.1%
Margin compression	Gross margin 200 basis points lower as wage escalation outruns rate escalation.	R107.17m	R11.97m	18.1%
Collections stretch	Debtor days stretch to 78; the facility limit is breached and growth must be funded from cash.	R107.17m	R14.11m	19.6%
Revenue shortfall	Revenue 15% below plan with the overhead base unchanged.	R91.09m	R9.35m	13.4%
Combined downside	Revenue 15% down, gross margin 200bps lower, overheads 6% higher and collections at 78 days.	R91.09m	R7.16m	2.8%

The downside is a moderate underperformance on several fronts at once, not a catastrophe

The combined downside assumes revenue 15 per cent below plan, gross margin 200 basis points lower, overheads 6 per cent higher and collections stretching to 78 days. None of those is extreme in isolation: a 15 per cent revenue miss is two dedicated details not won, 200 basis points of margin is one wage settlement above expectation, and 78 days is a single large client paying slowly. Together they produce a 2.8 per cent project return — a permanent impairment of equity rather than a poor year. That is the honest characterisation of the risk in this transaction: it is not that the business fails dramatically, but that a services business with a 13 per cent margin and a 44 per cent working capital drag has very little tolerance for several things going moderately wrong at the same time.

15.3 What management can do inside a bad year

Lever	Available within	Value	Comment
Accelerate collections by ten days	One quarter	R2.94m of debtor book released	No cost; the credit controller is already appointed
Grow advisory rather than deployment	Two quarters	72% margin on revenue requiring no deployed headcount	The fastest margin lever available
Hold or exit the residential line	At renewal	26% margin against a 37.5% blended	Already grown slowest; can be run off
Defer the fleet replacement cycle	One year	R2.50m to R2.80m of capital expenditure	Deferrable without operational consequence for one cycle
Reduce overhead by 6%	Two quarters	R1.57m a year	Cuts the establishment that corporate procurement is buying
Reprice CPI-linked contracts at renewal	At renewal	Restores the wage differential	Requires the renewal conversation of Section 9.2

The first two are the ones that matter. Ten days of collection is worth R2.94 million of released debtor book — more than the entire Year 5 facility headroom — and it costs nothing but discipline. Growing advisory rather than deployment adds margin without adding either headcount or working capital, which is the only growth in this business that does not consume cash.

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