Compact Valuation Model Strictly Confidential

Table of Contents Model Check

Outputs Balance Sheet Balanced? Yes

Inputs
Model

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Sensitivity Analysis

All figures in USD thousands unless stated

Terminal Growth Rate 2.0% Shares Outstanding (FD 000) 34,200

WACC 1 13.5% Current Price ($/sh) 2.71
Enterprise Value 156,975
Net Debt 22,000

ENTERPRISE VALUE 2 EQUITY VALUE PER SHARE

Terminal Growth Rate Terminal Growth Rate

156,975 1.0% 1.5% 2.0% 2.5% 3.0% 1.0% 1.5% 2.0% 2.5% 3.0%
12.5% 12.5% 4.08 #VALUE! #VALUE! #VALUE! #VALUE!
13.0% 13.0% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
WACC

WACC
13.5% 13.5% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
14.0% 14.0% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
14.5% 14.5% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

EQUITY VALUE PREMIUM (DISCOUNT) TO CURRENT PRICE

Terminal Growth Rate Terminal Growth Rate

1.0% 1.5% 2.0% 2.5% 3.0% 1.0% 1.5% 2.0% 2.5% 3.0%
12.5% 139,683 #VALUE! #VALUE! #VALUE! #VALUE! 12.5% 50.7% #VALUE! #VALUE! #VALUE! #VALUE!
13.0% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 13.0% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
WACC

13.5% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 13.5% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
14.0% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 14.0% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
14.5% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 14.5% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

WACC = Weighted Average Cost of Capital. ⁽¹ ⁾

This table requires the workbook calculation to be set to automatic to update. ⁽² ⁾
Model Assumptions

All figures in USD thousands unless stated 2020A 2021A 2022A 2023F 2024F 2025F 2026F 2027F

INCOME STATEMENT

Revenue 45,201 50,164 54,261 58,000 61,500 64,500 68,000 71,500

COGS 24,518 26,589 28,541 30,000 31,000 32,000 34,000 36,000
SG&A 4,800 5,100 5,500 6,000 6,600 7,300 7,700 8,100
Other Expenses 1,987 2,016 2,045 2,000 2,000 2,000 2,000 2,000
Depreciation 3,985 4,005 4,058 4,000 4,000 4,000 4,000 4,000
Interest Expense 1,845 1,652 1,398 1,200 1,000 800 600 400
Current Tax (Levered) 1 987 992 1,000 1,000 1,000 1,000 1,000 1,000
Deferred Tax (Levered) 1 1,957 2,001 2,006 2,000 2,000 2,000 2,000 2,000

CASH FLOW STATEMENT

Cash From Operations

Cash from Accounts Receivable 27 35 31 30 30 30 30 30
Cash from Inventory (185) (203) (220) (200) (200) (200) (200) (200)
Cash from Accounts Payable 168 182 174 175 175 175 175 175

Cash From Investing

Capital Expenditure (3,997) (4,016) (4,002) (4,000) (4,000) (4,000) (4,000) (4,000)

Cash From Financing

Line of Credit Issue / (Repay) (587) (875) (994) (7,000) – – – –
Term Loan Issue / (Repay) (3,000) (3,000) (3,000) (3,000) (3,000) (3,000) (3,000) (3,000)
Equity Issue / (Buyback) – – – (500) (500) (500) (500) (500)
Payment of Dividends (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (1,000)

UNLEVERED FREE CASH FLOW

Current Tax (Unlevered) 2 1,086 1,091 1,104 1,100 1,100 1,100 1,100 1,100

These are levered taxes calculated after the impact of interest expense. ⁽¹ ⁾
These are unlevered taxes calculated before the impact of interest expense. ⁽² ⁾
Income Statement

All figures in USD thousands unless stated 2023F 2024F 2025F 2026F 2027F

Revenue 58,000 61,500 64,500 68,000 71,500

COGS (30,000) (31,000) (32,000) (34,000) (36,000)
Gross Profit 28,000 30,500 32,500 34,000 35,500

SG&A (6,000) (6,600) (7,300) (7,700) (8,100)

Other (2,000) (2,000) (2,000) (2,000) (2,000)
EBITDA 20,000 21,900 23,200 24,300 25,400

Depreciation (4,000) (4,000) (4,000) (4,000) (4,000)

EBIT 16,000 17,900 19,200 20,300 21,400

Interest Expense (1,200) (1,000) (800) (600) (400)

EBT 14,800 16,900 18,400 19,700 21,000

Current Tax (1,000) (1,000) (1,000) (1,000) (1,000)

Deferred Tax (2,000) (2,000) (2,000) (2,000) (2,000)
Total Tax 1 (3,000) (3,000) (3,000) (3,000) (3,000)

Net Income 11,800 13,900 15,400 16,700 18,000

These are levered taxes calculated after the impact of interest expense. ⁽¹ ⁾
Cash Flow Statement

All figures in USD thousands unless stated 2023F 2024F 2025F 2026F 2027F

CASH FROM OPERATIONS

Net Income 11,800 13,900 15,400 16,700 18,000
Depreciation 4,000 4,000 4,000 4,000 4,000
Deferred Tax 2,000 2,000 2,000 2,000 2,000
Cash from Accounts Receivable 30 30 30 30 30
Cash from Inventory (200) (200) (200) (200) (200)
Cash from Accounts Payable 175 175 175 175 175
Subtotal 17,805 19,905 21,405 22,705 24,005

CASH FROM INVESTING

Capital Expenditure (4,000) (4,000) (4,000) (4,000) (4,000)
Subtotal (4,000) (4,000) (4,000) (4,000) (4,000)

CASH FROM FINANCING

Line of Credit Issue / (Repay) (7,000) – – – –
Term Loan Issue / (Repay) (3,000) (3,000) (3,000) (3,000) (3,000)
Equity Issue / (Buyback) (500) (500) (500) (500) (500)
Payment of Dividends (1,000) (1,000) (1,000) (1,000) (1,000)
Subtotal (11,500) (4,500) (4,500) (4,500) (4,500)

CASH BALANCE
Beginning 5,000 7,305 18,710 31,615 45,820
Change in Cash 2,305 11,405 12,905 14,205 15,505
Ending 7,305 18,710 31,615 45,820 61,325
Balance Sheet

All figures in USD thousands unless stated 2022A 2023F 2024F 2025F 2026F 2027F

ASSETS
Cash 5,000 7,305 18,710 31,615 45,820 61,325
Accounts Receivable 6,000 5,970 5,940 5,910 5,880 5,850
Inventory 2,000 2,200 2,400 2,600 2,800 3,000
Property Plant & Equipment 65,000 65,000 65,000 65,000 65,000 65,000
Total Assets 78,000 80,475 92,050 105,125 119,500 135,175

LIABILITIES
Accounts Payable 3,000 3,175 3,350 3,525 3,700 3,875
Line of Credit 7,000 – – – – –
Term Loan 20,000 17,000 14,000 11,000 8,000 5,000
Deferred Taxes 1,000 3,000 5,000 7,000 9,000 11,000
Total Liabilities 31,000 23,175 22,350 21,525 20,700 19,875

EQUITY
Equity Capital 42,000 41,500 41,000 40,500 40,000 39,500
Retained Earnings 5,000 15,800 28,700 43,100 58,800 75,800
Shareholders' Equity 47,000 57,300 69,700 83,600 98,800 115,300

Total Liabilities & Equity 78,000 80,475 92,050 105,125 119,500 135,175

Check – – – – – –
Discounted Cash Flow Schedule

All figures in USD thousands unless stated Valuation Discrete Forecast Term
(YY-MM-DD) (YY-MM-DD) (YY-MM-DD) (YY-MM-DD) (YY-MM-DD) (YY-MM-DD) (YY-MM-DD)
23/01/01 23/12/31 24/12/31 25/12/31 26/12/31 27/12/31 28/12/31

UNLEVERED FREE CASH FLOW

EBITDA 1 20,000 21,900 23,200 24,300 25,400 25,908
Current Taxes (Unlevered) 2 (1,100) (1,100) (1,100) (1,100) (1,100) (1,100)
Capital Expenditure 2 (4,000) (4,000) (4,000) (4,000) (4,000) (4,000)
Cash from Working Capital 3 5 5 5 5 5 –
Unlevered Free Cash Flow 14,905 16,805 18,105 19,205 20,305 20,808

ASSUMPTIONS CASH FLOW PROFILES

First Year of Forecast 2023 Discrete Forecast 14,905 16,805 18,105 19,205 20,305
Terminal Growth Rate 2.0% Terminal Value 4 – – – – 180,939
Weighted Avg. Cost of Capital 13.5% Total Cash Flow 14,905 16,805 18,105 19,205 201,244

ENTERPRISE VALUE EQUITY VALUE PER SHARE

PV of Discrete 60,913 39% Equity Value 134,975
PV of Terminal 96,062 61% Shares Outstanding (FD 000) 34,200
Enterprise Value 156,975 100% Equity Value (USD/sh) 3.95

EQUITY VALUE PREMIUM (DISCOUNT)

Enterprise Value 156,975 Equity Value (USD/sh) 3.95
Less: Net Debt (22,000) Current Price (USD/sh) 2.71
Equity Value 134,975 Premium (Discount) 45.6%

Terminal year EBITDA is equal to previous year grown at the terminal growth rate. ⁽¹ ⁾
Current taxes & capital expenditure in terminal year have been set equal to the previous year. ⁽² ⁾
Cash from working capital has been set to zero in the terminal year. ⁽³ ⁾
The growing perpetuity method was used to calculate the terminal value. ⁽⁴ ⁾