Input -->

Drivers

Selected case 1

Inflation
Expected long-term inflation Italy 1%
Expected long-term inflation Vietnam 3%

Price of production
Price of production in Italy 15,500
Price of production in Vietnam 11,000

Estimated initial investment (in EUR)

Best case 320,000,000
Base case 350,000,000
Worst case 380,000,000

Useful life (years) 10

WC Italy
DIO 25
DPO 30
Net Trading Cycle (days) -5

Company beta 0.9

Financing facilities
Senior Facility (million EUR) 200,000,000
Interest rate Senior Facility 5%
Repay Senior Facility in 10 years

Covenant 1
Production should not be less than 15,000 per year.
Otherwise penalty of $1,000,000 per year.

Tax rate 30%

Residual value of the project 100,000,000

Comparable companies Leverage (D/E) Beta

Company A 80% 0.6
Company B 90% 0.65
Company C 85% 0.57

Market risk premium in Vietnam 6%

Market risk premium in Italy 5%

Risk-free rate in Vietnam 3%

Risk-free rate in Italy 2%
Workings -->
Savings forecast

Best volume 22,000

Base volume 20,000
Worst volume 18,000

Volume (in units) 1 2 3 4 5

Best case 18,700 19,140 19,580 20,240 19,800
Base case 16,000 17,000 17,400 18,000 17,600
Worst case 13,500 14,400 14,760 15,120 14,940
Selected case 18,700 19,140 19,580 20,240 19,800

Productivity (as a %) 1 2 3 4 5
Best case 85% 87% 89% 92% 90%
Base case 80% 85% 87% 90% 88%
Worst case 75% 80% 82% 84% 83%

Expected long-term inflation Italy 1%

Expected long-term inflation Vietnam 3%

Price of production (EUR) 1 2 3 4 5

Price of production in Italy 15,500 15,655 15,812 15,970 16,129
Price of production in Vietnam 11,000 11,330 11,670 12,020 12,381
Savings per unit 4,500 4,325 4,142 3,950 3,749

Total savings (EUR) 1 2 3 4 5

Best case 84,150,000 82,780,500 81,093,507 79,941,290 74,225,552
Base case 72,000,000 73,525,000 72,064,710 71,094,033 65,978,268
Worst case 60,750,000 62,280,000 61,130,754 59,718,988 56,006,553
Selected case 84,150,000 82,780,500 81,093,507 79,941,290 74,225,552
 6 7 8 9 10
19,580 19,140 18,700 18,480 18,260
17,400 17,000 16,600 16,400 16,200
14,760 14,400 14,040 13,860 13,680
19,580 19,140 18,700 18,480 18,260

6 7 8 9 10
89% 87% 85% 84% 83%
87% 85% 83% 82% 81%
82% 80% 78% 77% 76%

6 7 8 9 10
16,291 16,454 16,618 16,784 16,952
12,752 13,135 13,529 13,934 14,353
3,539 3,319 3,089 2,850 2,600

6 7 8 9 10
69,286,590 63,525,413 57,773,378 52,664,453 47,469,001
61,572,353 56,422,780 51,285,458 46,736,852 42,113,791
52,230,341 47,793,414 43,376,376 39,498,339 35,562,757
69,286,590 63,525,413 57,773,378 52,664,453 47,469,001
Fixed asset roll-forward

Estimated initial investment (in EUR)

Best case 320,000,000
Base case 350,000,000
Worst case 380,000,000

Useful life (years) 10

Investment plan 0 1 2 3 4
Year 1 80% 10% 10% 3% 3%

in EUR 1 2 3 4 5
Beginning PP&E 256,000,000 262,400,000 265,600,000 243,200,000 219,840,000
Capex 32,000,000 32,000,000 9,600,000 9,600,000 9,600,000
D&A (25,600,000) (28,800,000) (32,000,000) (32,960,000) (33,920,000)
Ending PP&E 262,400,000 265,600,000 243,200,000 219,840,000 195,520,000

D&A schedule (in EUR) 1 2 3 4 5

Capex Year 1 (25,600,000) (25,600,000) (25,600,000) (25,600,000) (25,600,000)
Capex Year 2 (3,200,000) (3,200,000) (3,200,000) (3,200,000)
Capex Year 3 (3,200,000) (3,200,000) (3,200,000)
Capex Year 4 (960,000) (960,000)
Capex Year 5 (960,000)
Capex Year 6
Capex Year 7
Capex Year 8
Capex Year 9
Capex Year 10
D&A (25,600,000) (28,800,000) (32,000,000) (32,960,000) (33,920,000)
 5 6 7 8 9 10
3% 3% 3% 3% 3% 3%

6 7 8 9 10
195,520,000 170,240,000 144,000,000 116,800,000 88,640,000
9,600,000 9,600,000 9,600,000 9,600,000 9,600,000
(34,880,000) (35,840,000) (36,800,000) (37,760,000) (38,720,000)
170,240,000 144,000,000 116,800,000 88,640,000 59,520,000

6 7 8 9 10
(25,600,000) (25,600,000) (25,600,000) (25,600,000) (25,600,000)
(3,200,000) (3,200,000) (3,200,000) (3,200,000) (3,200,000)
(3,200,000) (3,200,000) (3,200,000) (3,200,000) (3,200,000)
(960,000) (960,000) (960,000) (960,000) (960,000)
(960,000) (960,000) (960,000) (960,000) (960,000)
(960,000) (960,000) (960,000) (960,000) (960,000)
(960,000) (960,000) (960,000) (960,000)
(960,000) (960,000) (960,000)
(960,000) (960,000)
(960,000)
(34,880,000) (35,840,000) (36,800,000) (37,760,000) (38,720,000)
Working capital

WC Italy
DIO 25
DPO 30
Net Trading Cycle (days) -5

WC Vietnam
DIO 45
DPO 25
Net Trading Cycle (days) 20

in EUR 1 2 3 4
Extra production value 205,700,000 216,856,200 228,496,642 243,284,739
Delta net trading cycle (days) 25 25 25 25
Working capital (14,284,722) (15,059,458) (15,867,822) (16,894,774)
Delta Working Capital (14,284,722) (774,736) (808,364) (1,026,951)

DIO Vietnam
Best case 45
Base case 50
Worst case 55

DPO Vietnam
Best case 25
Base case 30
Worst case 35
 5 6 7 8 9 10
245,135,819 249,684,450 251,395,771 252,985,054 257,509,022 262,076,742
25 25 25 25 25 25
(17,023,321) (17,339,198) (17,458,040) (17,568,407) (17,882,571) (18,199,774)
(128,547) (315,877) (118,842) (110,367) (314,164) (317,203)
Financing

Investment in Year 0 256,000,000

Financing facilities
Debt Facility (million EUR) 200,000,000
Interest rate Debt Facility 5%
Repay Debt Facility in 10 years

in EUR 0 1 2 3
Beginning Debt 200,000,000 200,000,000 200,000,000 190,000,000
Repayment - - (10,000,000) (20,000,000)
Repayment % 0% 0% 5% 10%
Ending Debt 200,000,000 200,000,000 190,000,000 170,000,000

Interest expense - (10,000,000) (10,000,000) (9,500,000)

Volume - 18,700 19,140 19,580

Volume lower than 16,000? Yes No No No
Covenant Penalty - - - -

Net Cash Flow (256,000,000) 13,300,278 16,811,614 29,307,091

Equity financing 56,000,000 56,000,000 56,000,000 56,000,000
 4 5 6 7 8 9 10
170,000,000 150,000,000 130,000,000 110,000,000 90,000,000 70,000,000 50,000,000
(20,000,000) (20,000,000) (20,000,000) (20,000,000) (20,000,000) (20,000,000) (20,000,000)
10% 10% 10% 10% 10% 10% 10%
150,000,000 130,000,000 110,000,000 90,000,000 70,000,000 50,000,000 30,000,000

(8,500,000) (7,500,000) (6,500,000) (5,500,000) (4,500,000) (3,500,000) (2,500,000)

20,240 19,800 19,580 19,140 18,700 18,480 18,260

No No No No No No No
- - - - - - -

29,269,952 27,155,339 24,498,736 21,650,947 18,620,997 15,828,952 13,177,098

56,000,000 56,000,000 56,000,000 56,000,000 56,000,000 56,000,000 56,000,000
P&L

in EUR 1 2 3 4 5
Savings (EBITDA) 84,150,000 82,780,500 81,093,507 79,941,290 74,225,552
D&A (25,600,000) (28,800,000) (32,000,000) (32,960,000) (33,920,000)
EBIT 58,550,000 53,980,500 49,093,507 46,981,290 40,305,552
Interest expenses (10,000,000) (10,000,000) (9,500,000) (8,500,000) (7,500,000)
Covenants - - - - -
EBT 48,550,000 43,980,500 39,593,507 38,481,290 32,805,552
Taxes (14,565,000) (13,194,150) (11,878,052) (11,544,387) (9,841,666)
Net Income 33,985,000 30,786,350 27,715,455 26,936,903 22,963,886
 6 7 8 9 10
69,286,590 63,525,413 57,773,378 52,664,453 47,469,001
(34,880,000) (35,840,000) (36,800,000) (37,760,000) (38,720,000)
34,406,590 27,685,413 20,973,378 14,904,453 8,749,001
(6,500,000) (5,500,000) (4,500,000) (3,500,000) (2,500,000)
- - - - -
27,906,590 22,185,413 16,473,378 11,404,453 6,249,001
(8,371,977) (6,655,624) (4,942,013) (3,421,336) (1,874,700)
19,534,613 15,529,789 11,531,364 7,983,117 4,374,301
Cash Flow

in EUR 0 1 2 3 4
Savings per unit (EBITDA) - 84,150,000 82,780,500 81,093,507 79,941,290
Taxes - (14,565,000) (13,194,150) (11,878,052) (11,544,387)
Delta Working Capital - (14,284,722) (774,736) (808,364) (1,026,951)
Capex (256,000,000) (32,000,000) (32,000,000) (9,600,000) (9,600,000)
Operating Cash Flow (256,000,000) 23,300,278 36,811,614 58,807,091 57,769,952
Debt repayment - - (10,000,000) (20,000,000) (20,000,000)
Interest expenses - (10,000,000) (10,000,000) (9,500,000) (8,500,000)
Covenant penalty - - - - -
Net Cash Flow (256,000,000) 13,300,278 16,811,614 29,307,091 29,269,952
 5 6 7 8 9 10 Residual Value
74,225,552 69,286,590 63,525,413 57,773,378 52,664,453 47,469,001
(9,841,666) (8,371,977) (6,655,624) (4,942,013) (3,421,336) (1,874,700)
(128,547) (315,877) (118,842) (110,367) (314,164) (317,203)
(9,600,000) (9,600,000) (9,600,000) (9,600,000) (9,600,000) (9,600,000)
54,655,339 50,998,736 47,150,947 43,120,997 39,328,952 35,677,098
(20,000,000) (20,000,000) (20,000,000) (20,000,000) (20,000,000) (20,000,000)
(7,500,000) (6,500,000) (5,500,000) (4,500,000) (3,500,000) (2,500,000)
- - - - - -
27,155,339 24,498,736 21,650,947 18,620,997 15,828,952 13,177,098 100,000,000
WACC

Cost of debt 5%
Risk-free in Vietnam 3%
Tax rate 30%
Market risk premium in Vietnam 6%

Comparable companies Leverage (D/E) Beta

Company A 80% 0.60
Company B 90% 0.65
Company C 85% 0.57

in EUR 0 1 2 3 4
Debt financing 200,000,000 200,000,000 190,000,000 170,000,000 150,000,000
Equity financing 56,000,000 56,000,000 56,000,000 56,000,000 56,000,000
Total financing 256,000,000 256,000,000 246,000,000 226,000,000 206,000,000

Debt financing % 78.1% 78.1% 77.2% 75.2% 72.8%

Equity financing % 21.9% 21.9% 22.8% 24.8% 27.2%
Total financing % 100.0% 100.0% 100.0% 100.0% 100.0%

Comparable companies:
Average leverage 85%
Average beta 0.61

Project beta:
Debt / Equity 3.57 3.57 3.39 3.04 2.68
Beta unlevered 0.38 0.38 0.38 0.38 0.38
Project beta: 1.33 1.33 1.28 1.19 1.09

Cost of equity 11.0% 11.0% 10.7% 10.1% 9.6%

WACC 5.1% 5.1% 5.1% 5.1% 5.1%

 5 6 7 8 9 10
130,000,000 110,000,000 90,000,000 70,000,000 50,000,000 30,000,000
56,000,000 56,000,000 56,000,000 56,000,000 56,000,000 56,000,000
186,000,000 166,000,000 146,000,000 126,000,000 106,000,000 86,000,000

69.9% 66.3% 61.6% 55.6% 47.2% 34.9%

30.1% 33.7% 38.4% 44.4% 52.8% 65.1%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

2.32 1.96 1.61 1.25 0.89 0.54

0.38 0.38 0.38 0.38 0.38 0.38
1.00 0.90 0.81 0.71 0.62 0.52

9.0% 8.4% 7.8% 7.3% 6.7% 6.1%

5.2% 5.2% 5.2% 5.2% 5.2% 5.2%

Output -->
Discounted Cash Flows

Selected case 1

Residual Value 70,000,000

in EUR 0 1 2
Net Cash Flow (56,000,000) 13,300,278 16,811,614
Net Cash Flow + Residual Value (56,000,000) 13,300,278 16,811,614
Cost of equity 11.0% 10.7%
Discounted Cash Flow (56,000,000) 11,983,586 13,718,194
Present Value Residual Value
Discounted Cash Flow with Residual Value (56,000,000) 11,983,586 13,718,194

Sum of Discounted Cash Flow (NPV) 122,736,134

IRR 37.1%

SENSITIVITY ANALYSIS
37.1%
70000000
80000000
85000000
95000000
115000000
 3 4 5 6 7 8 9
29,307,091 29,269,952 27,155,339 24,498,736 21,650,947 18,620,997 15,828,952
29,307,091 29,269,952 27,155,339 24,498,736 21,650,947 18,620,997 15,828,952
10.1% 9.6% 9.0% 8.4% 7.8% 7.3% 6.7%
21,939,975 20,314,027 17,656,723 15,082,931 12,757,016 10,614,152 8,823,936

21,939,975 20,314,027 17,656,723 15,082,931 12,757,016 10,614,152 8,823,936

 10 Residual Value
13,177,098 70,000,000
83,177,098
6.1%
7,262,959
38,582,633
45,845,592