LBO excel Model

(1)

173432978.xls.ms_office

© CTG • www.ctguk.com

LBO

LBO model

Base data

Checks

Ticker

Debt OK per Maximum total debt / EBITDA

--SIC code

Debt OK per Minimum equity proportion

--FactSet identifier

Senior A amount ok

--Current market price

11.21 Senior B amount ok

--Current year end

30 Sep 09

Senior C amount ok

--Transaction date

15 Jul 09

Mezzanine / HY debt amount ok

--Stub period proportion

20.8%

Stub

No revolver drawn

--NOSH (m)

733.30 Value creation reconciles

--Marginal tax rate

35.00%

TaxRate

Tax losses brought forward

--

TaxLosses

Financing

Maximum total debt / EBITDA

6.0x

Minimum equity proportion

40.00%

3 year swap rate

2.58%

Cash interest rate on revolver

6.08%

RevInt

Cash interest rate on cash

0.50%

CashInt

Valuation

Equity offer premium

20.00%

Implied entry EV / EBITDA

7.8x

Exit at end of year…

4 Exit EV / EBITDA multiple

7.8x

ExitMulti

Exit fees as % of exit EV

3.00%

ExitFees

Management warrants

1.50%

Sources and uses of funds statement

Proportion

EBITDA x

Term Repayment

Cash interest

PIK

Sweep?

% tax

Max cash

Sources of funds

method

Spreads

rate

deductable

available

Senior A

2,541

22.0%

1.75x

7 years

Amortising

3.50%

6.08%

--

Yes

5,188 Amount ok

Senior B

1,307

11.3%

0.90x

8 years

Bullet

3.90%

6.48%

--

No

4,108 Amount ok

Senior C

1,307

11.3%

0.90x

9 years

Bullet

4.30%

6.88%

--

No

4,468 Amount ok

Mezzanine / HY debt

1,743

15.1%

1.20x

11 years

Bullet

4.00%

6.58%

10.00%

No

5,326 Amount ok

Total debt

6,898

59.8%

4.75x

Equity - management

25 0.2%

Shareholder loan

85.00%

3,922

34.0%

17.00%

60.00%

Equity - PE funds

692 6.0%

11,536

100.0%

Uses of funds

Current share price

11.21 Acquisition multiples

Summary financing

Offer premium

20.00%

30 Sep 09

30 Sep 10

Entry EBITDA

1,452

Offer price

13.45 Current

Forecast

Total senior debt / EBITDA

3.6x

NOSH (m)

733 EV / Sales

0.98x

0.90x

Total debt / EBITDA

4.8x

Equity transaction cost

9,864

EV / EBITDA

7.8x

7.0x

Debt / equity

1.5x

ITM share options buy out

--

EV / EBIT

12.4x

10.8x

Debt / capital

59.8%

Total equity transaction cost

9,864

P / taxed EBIT

13.8x

9.5x

Management equity proportion

3.49%

Existing debt

1,433

PE equity proportion

96.5%

Other adjustments

--

Envy ratio

6.7x

Advisory fees

0.60%

68 Debt fees

0.60%

41 Working capital cash requirements

130 11,536

Cash flow forecasts

30 Sep 06

30 Sep 07

30 Sep 08

30 Sep 09

30 Sep 10

30 Sep 11

30 Sep 12

30 Sep 13

30 Sep 14

30 Sep 15

30 Sep 16

30 Sep 17

30 Sep 18

30 Sep 19

(3)

(2)

(1)

--

1

2

3

4

5

6

7

8

9

10 Sales

7,787

9,412

10,383

11,525

12,600

13,598

14,510

15,337

16,077

16,736

17,318

17,828

18,274

18,731

COGS

(6,120)

(7,509)

(8,721)

(9,566)

(10,416)

(11,194)

(11,897)

(12,523)

(13,074)

(13,554)

(13,968)

(14,321)

(14,619)

(14,984)

SG&A

(479)

(489)

(456)

(507)

(562)

(616)

(666)

(714)

(759)

(802)

(842)

(879)

(914)

(937)

ALL YELLOW CELLS SHOULD BE CHANGED. Green cells may (but need

not) be changed.

This is an example of a standard LBO model. The model has been setup

according to CTG's best practice modelling guidelines. The model produces an

equity returns analysis on a private equity investment. The main outputs are exit

IRRs, cash on cash multiples and value creation for both the firm and

management.

All interest is calculated on the balance outstanding at the start of the peiod.

A relativley simple capital structure has been included, but with the ability to add

significant flexibility such as variable paydown, non-cash interest, cash sweep,

tax deductibility of shareholder loan interest, management warrants, etc.

Checks at the top of this sheet indicate when an inappropriate structure is being

used .

Typically, CTG add further functionality in the form of:

* Flexible operating scenaria such as base, management and banking cases

* Equity roll overs

* Asset backed loans

* Capex facilities

* Capital structure scenario management

* Interest rate conventions (opening, closing and average)

* Debt decircularisation

* Dividend payments

* Graph driven assumptions

* Restructuring costs

* Time flexible sensitivity analysis

* Our models can be integrated into FACTSET's =FDS coding and CapIQ

(2)

173432978.xls.ms_office

© CTG • www.ctguk.com

LBO

EBITDA

1,187

1,413

1,207

1,452

1,622

1,788

1,947

2,100

2,244

2,380

2,508

2,628

2,741

2,810

DA

(387)

(467)

(549)

(544)

(581)

(612)

(638)

(658)

(674)

(685)

(692)

(696)

(714)

EBIT

800

946

657

908 1,041

1,176

1,310

1,441

1,570

1,695

1,816

1,933

2,045

2,096

Cash taxes on EBIT

(274)

(342)

(259)

(195)

--

(5)

(27)

(38)

(46)

(36)

(9)

--

--EBIT (1-Tc)

526

604

398

712 1,041

1,170

1,283

1,403

1,524

1,659

1,807

1,933

2,045

2,096

DA

387

467

549

544

581

612

638

658

674

685

692

696

714 Decrease (increase) in NWC

222

159

76

80

74

67

61

54

48

42

36

31

27

27 Net capex

(771)

(1,080)

(985)

(980)

(985)

(978)

(959)

(933)

(899)

(861)

(819)

(775)

(731)

(749)

Unlevered FCF

364

150

39

357

711

872 1,022

1,183

1,347

1,525

1,717

1,884

2,037

2,088

Stub period unlevered free cash flow

74 --

--

--FCF available for debt service

74

711

872 1,022

1,183

1,347

1,525

1,717

1,884

2,037

2,088

Net interest paid

(92)

(455)

(446)

(434)

(413)

(383)

(375)

(389)

(387)

(325)

(279)

Free cash flow available for debt repayment

(17)

257

427

588

769

964 1,150

1,327

1,497

1,712

1,809

Mandatory repayments

--

(363)

--

(1,307)

--Cash flow available for sweep

(17)

(106)

64

225

406

601 1,150

1,327

190

405 1,809

Revolver repayment

--

--Senior A

11

7 --

--

(64)

(225)

(406)

(31)

--

--Senior B

24 --

--

--Senior C

37 --

--

--Mezzanine / HY debt

50 --

--

--(Increase in revolver) / Increase in cash

(17)

(106)

--

570 1,150

1,327

190

405 1,809

Cash flow forecast assumptions

Sales growth rates

20.86%

10.32%

11.00%

9.33%

7.91%

6.71%

5.69%

4.83%

4.10%

3.47%

2.95%

2.50%

COGS as % of sales

78.60%

79.79%

83.99%

83.00%

82.66%

82.32%

81.99%

81.65%

81.32%

80.99%

80.66%

80.33%

80.00%

SG&A as % of sales

6.16%

5.20%

4.39%

4.40%

4.46%

4.53%

4.59%

4.66%

4.72%

4.79%

4.86%

4.93%

5.00%

Tax rates on EBIT

34.25%

36.16%

39.41%

33.00%

33.22%

33.43%

33.65%

33.87%

34.10%

34.32%

34.55%

34.77%

35.00%

Decr (incr) in NWC as incr in sales

9.81%

7.77%

7.00%

6.88%

6.76%

6.65%

6.54%

6.43%

6.32%

6.21%

6.10%

6.00%

Capex as % of sales

9.90%

11.48%

9.48%

8.50%

7.82%

7.19%

6.61%

6.08%

5.59%

5.14%

4.73%

4.35%

4.00%

Capex / Depn multiples

2.0x

2.3x

1.8x

1.80x

1.70x

1.60x

1.50x

1.42x

1.33x

1.26x

1.18x

1.11x

1.05x

Ratios

EBITDA margin

15.25%

15.01%

11.62%

12.60%

12.88%

13.15%

13.42%

13.69%

13.96%

14.22%

14.48%

14.74%

15.00%

EBIT margin

10.27%

10.05%

6.33%

7.88%

8.27%

8.65%

9.02%

9.40%

9.77%

10.13%

10.49%

10.84%

11.19%

EBIT (1-Tc) margin

6.75%

6.42%

3.84%

6.18%

8.27%

8.61%

8.84%

9.15%

9.48%

9.91%

10.44%

10.84%

11.19%

EBITDA growth

19.03%

(14.62%)

20.36%

11.72%

10.21%

8.91%

7.81%

6.87%

6.07%

5.38%

4.79%

4.29%

2.50%

EBIT growth

18.24%

(30.52%)

38.15%

14.70%

12.91%

11.37%

10.06%

8.93%

7.97%

7.14%

6.42%

5.80%

2.50%

EBIT (1-Tc) growth

14.81%

(34.06%)

78.92%

46.18%

12.38%

9.59%

9.38%

8.67%

8.82%

8.96%

6.93%

5.80%

2.50%

(3)

173432978.xls.ms_office

© CTG • www.ctguk.com

LBO

Returns analysis

30 Sep 09

30 Sep 10

30 Sep 11

30 Sep 12

30 Sep 13

30 Sep 14

30 Sep 15

30 Sep 16

30 Sep 17

30 Sep 18

30 Sep 19

0.21

1.21

2.21

3.21

4.21

5.21

6.21

7.21

8.21

9.21

10.21 Total firm returns

EBITDA

1,452

1,622

1,788

1,947

2,100

2,244

2,380

2,508

2,628

2,741

2,810

Exit EV / EBITDA

7.8x

Implied exit EV

11,297

12,622

13,910

15,150

16,334

17,456

18,515

19,512

20,447

21,324

21,857

Less: net debt (funds)

(6,959)

(6,894)

(6,679)

(6,322)

(5,808)

(5,125)

(4,284)

(3,296)

(2,173)

(873)

484 Less: exit fees

(339)

(379)

(417)

(455)

(490)

(524)

(555)

(585)

(613)

(640)

(656)

Implied total equity value

3,999

5,349

6,814

8,373

10,036

11,807

13,676

15,630

17,660

19,812

21,686

Equity invested at entry

4,639

Total equity value created

(640)

710 2,176

3,735

5,397

7,169

9,038

10,992

13,022

15,173

17,047

Cash on cash multiples

0.9x

1.2x

1.5x

1.8x

2.2x

2.5x

2.9x

3.4x

3.8x

4.3x

4.7x

Exit IRR

(51.0%)

12.5%

19.0%

20.2%

20.1%

19.6%

19.0%

18.4%

17.7%

17.1%

16.3%

Management returns

Implied total equity value

3,999

5,349

6,814

8,373

10,036

11,807

13,676

15,630

17,660

19,812

21,686

Less: shareholder loan

(4,060)

(4,751)

(5,558)

(6,503)

(7,609)

(8,902)

(10,416)

(12,186)

(14,258)

(16,682)

(19,518)

Implied pure equity value

(62)

598 1,256

1,870

2,427

2,905

3,260

3,444

3,402

3,130

2,168

Management share of pure equity

4.99%

(3)

30

63

93

121

145

163

172

170

156

108 Management equity invested

25

25 Value created for management

(28)

5

38

68

96

120

138

147

145

131

83 Management cash on cash multiples

nm

1.2x

2.5x

3.7x

4.8x

5.8x

6.5x

6.9x

6.8x

6.2x

4.3x

Management exit IRR

nm

15.7%

51.6%

50.7%

45.5%

40.1%

35.2%

30.6%

26.3%

22.0%

15.4%

PE returns

Implied total equity value

3,999

5,349

6,814

8,373

10,036

11,807

13,676

15,630

17,660

19,812

21,686

Less: management share of pure equity value

3 (30)

(63)

(93)

(121)

(145)

(163)

(172)

(170)

(156)

(108)

Implied pure equity value

4,002

5,319

6,752

8,280

9,915

11,663

13,514

15,458

17,491

19,656

21,578

PE equity and shareholder loan invested

4,614

Value created for management

(612)

705 2,138

3,666

5,301

7,049

8,900

10,845

12,877

15,042

16,964

Management cash on cash multiples

0.9x

1.2x

1.5x

1.8x

2.1x

2.5x

2.9x

3.4x

3.8x

4.3x

4.7x

Management exit IRR

(49.5%)

12.5%

18.8%

20.0%

19.9%

19.5%

18.9%

18.3%

17.6%

17.0%

16.3%

Value creation

25

92

130

56

33

121 (11)

(21)

(184)

--50

100

150

200

250

300

350 Value creation - management

4,639

3,736

1,607

960 10,036

(307)

(599)

--2,000

4,000

6,000

8,000

10,000

12,000

Equity

invested

Sales growth COGS savings SG&A savings

Fees

Deleverage

Exit equity

value

Total equity value created

(4)

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Financing

Financing model

30 Sep 09 30 Sep 10 30 Sep 11 30 Sep 12 30 Sep 13 30 Sep 14 30 Sep 15 30 Sep 16 30 Sep 17 30 Sep 18 30 Sep 19

--

1

2

3

4

5

6

7

8

9

10 Debt summary

Senior A

11

9 2,541

2,178

1,752

1,163

394 --

--

--Senior B

24 1,307

1,307

--

--Senior C

37 1,307

1,307

--

--Mezzanine / HY debt

50 1,917

2,109

2,319

2,551

2,806

3,087

3,396

3,735

4,109

4,520

4,972

Debt outstanding

7,072

6,901

6,685

6,329

5,814

5,701

6,010

6,349

5,416

4,520

4,972

Revolver / (Cash)

1

6 (113)

(6)

(576)

(1,726)

(3,053)

(3,243)

(3,647)

(5,456)

Net debt (funds)

6,959

6,894

6,679

6,322

5,808

5,125

4,284

3,296

2,173

873 (484)

NetDebt

Net debt at entry

6,768

Deleverage

(192)

(127)

89

445

960 1,643

2,484

3,472

4,595

5,895

7,252

Mandatory debt repayment summary

Senior A

11

6 --

363

363 --

--

--Senior B

24 --

--

1,307

--

--Senior C

37 --

--

1,307

--Mezzanine / HY debt

50 --

--

--Total mandatory repayment

--

363

363 --

--

1,307

--Cash interest paid summary

Senior A

11

32

155

132

106

71

24 --

--

--Senior B

24

18

85

67 --

--Senior C

37

19

90

71 --Mezzanine / HY debt

50

24

126

139

153

168

185

203

223

246

270

297 Revolver / (Cash)

(1)

(0)

(3)

(9)

(15)

(16)

(18)

Total cash interest paid

92

455

446

434

413

383

375

389

387

325

279 PIK interest summary

Senior A

11

5 --

--

--Senior B

24 --

--

--Senior C

37 --

--

--Mezzanine / HY debt

50

174

192

211

232

255

281

309

340

374

411

452

(5)

173432978.xls.ms_office

Financing

Financing model

30 Sep 09 30 Sep 10 30 Sep 11 30 Sep 12 30 Sep 13 30 Sep 14 30 Sep 15 30 Sep 16 30 Sep 17 30 Sep 18 30 Sep 19

--

1

2

3

4

5

6

7

8

9

10 Debt schedules

Revolver / (Cash)

maximum drawdown

--Cash interest rate on revolver

6.08%

Cash interest rate on cash

0.50%

Start

(130)

(113)

(6)

(576)

(1,726)

(3,053)

(3,243)

(3,647)

Revolver repayment

--

--Residual cash flow

17

106 --

--

(570)

(1,150)

(1,327)

(190)

(405)

(1,809)

End

(130)

(113)

(6)

(576)

(1,726)

(3,053)

(3,243)

(3,647)

(5,456)

Cash interest paid (opening balance)

--

--Cash interest rec'd (opening balance)

(1)

(0)

(3)

(9)

(15)

(16)

(18)

1 Senior A

Cash interest rate

6.08%

PIK interest rate

--Debt term

7 years Amortising

Start

2,541

2,178

1,752

1,163

394 --

--

--Interest capitalised

--

--Mandatory repayment

--

(363)

--

--Balance available for sweep

2,541

2,178

1,815

1,388

800

31 --

--

--Voluntary repayment

--

(64)

(225)

(406)

(31)

--

--End

2,541

2,178

1,752

1,163

394 --

--

--Amortisation schedule

100.00%

--

14.29%

--

--Cash interest paid (opening balance)

32

155

132

106

71

24 --

--

--2 Senior B

Cash interest rate

6.48%

PIK interest rate

--Debt term

8 years Bullet

Start

1,307

--

--Interest capitalised

--

--Mandatory repayment

--

(1,307)

--

--Balance available for sweep

1,307

--

--Voluntary repayment

--

--End

1,307

--

--Amortisation schedule

100.00%

--

100.00%

--

--Cash interest paid (opening balance)

18

85

67 --

(6)

173432978.xls.ms_office

Financing

Financing model

30 Sep 09 30 Sep 10 30 Sep 11 30 Sep 12 30 Sep 13 30 Sep 14 30 Sep 15 30 Sep 16 30 Sep 17 30 Sep 18 30 Sep 19