Sensitivity and Scenario Analysis

Jump to section

• Overview & contents
• i. Important Notice and Basis of Preparation
• 1. Executive Summary
• 2. Market Context and Opportunity
• 3. Regulatory Framework and NCR Registration
• 4. Products and Pricing
• 5. SWOT and Competitive Position
• 6. Credit Policy and Risk Management
• 7. Technology and Operations
• 8. Go-to-Market
• 9. Governance and Team
• 10. Financial Plan
• 11. Funding Structure and Capital
• 12. Break-Even and Credit Sensitivity
• 13. Sensitivity and Scenario Analysis
• 14. Risk Management
• 15. Implementation Roadmap
• 16. Investor Returns and Exit
• 17. Key Performance Indicators
• 18. Key Assumptions
• 19. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Unit Economics and Volume Schedules
• C. Appendix C: Funding and Debt Schedules
• D. Appendix D: NCR Registration Checklist
• E. Appendix E: Risk Register
• F. Appendix F: Glossary

13.1 Single-variable sensitivity

• Credit loss is the dominant variable and the only one that can turn the business loss-making on its own. A two-point movement swings Year 5 profit after tax by R20.8 million against a base of R16.0 million. Nothing else in the model comes close.
• Revenue is the second exposure, and it is partly outside management’s control. A 10 per cent shortfall costs R10.1 million, and the largest component of revenue erosion is not volume but the real decay of prescribed fees that management cannot influence at all.
• Cost discipline matters but cannot rescue a credit problem. A 10 per cent movement in fixed costs is worth R2.2 million and a 15 per cent movement in variable costs R2.2 million. Both are meaningful; neither offsets a single point of loss rate.
• Funding cost is the smallest sensitivity in the table. A 300 basis point movement in the cost of debt moves Year 5 profit by R2.2 million. Cheaper funding is worth having but it is not where this investment is won.

The grid shows the interaction. At the base revenue the business tolerates a loss rate of roughly 15.3 per cent before profit before tax turns negative; at revenue 15 per cent below plan it tolerates only about 11.6 per cent, which is the base case itself. Revenue shortfall and credit deterioration are not independent risks that can be considered separately: a lender that misses volume is under pressure to loosen cut-offs, which produces exactly the loss deterioration the grid says it cannot afford.

13.2 Scenarios