TitanCrete Readymix — Returns, Sensitivities & Exit

The returns, sensitivities and exit — the 36.1% base-case equity IRR and 4.67× money multiple, the sensitivity grid that holds the return above 22% in the downside, and the exit pathways.

Section 18 · Business Plan

Returns, Sensitivities & Exit

The returns, sensitivities and exit — the 36.1% base-case equity IRR and 4.67× money multiple, the sensitivity grid that holds the return above 22% in the downside, and the exit pathways.

This section sets out the equity return on a conservative base case,
stress-tests it across the variables that matter, identifies the
principal value drivers, and describes the exit options available at the
end of the hold period. The return is computed on the conservative
net-profit line and the true funding stack — not the sponsor’s headline
figures.

18.1 Base-case return

Applying a conservative 5.5× EV/EBITDA exit multiple to Year-5 EBITDA
of R262 million implies an enterprise value of approximately R1,441
million. Deducting period-end net debt of R272 million yields equity
value of about R1,169 million. Against R250 million of invested equity,
this produces a base-case internal rate of return of 36.1% and a money
multiple of 4.67× over the five-year hold.

Exit enterprise value

R1,441m

Exit equity value

R1,169m

Base-case IRR

36.1%

Money multiple (MOIC)

4.67×

Figure 17.

Figure 17. Value bridge from Year-5 EBITDA to equity value at a 5.5× exit multiple.

18.2 IRR sensitivity

Equity return is most sensitive to two variables: how much of
projected EBITDA the business actually delivers, and the exit multiple
achieved. The grid below crosses EBITDA achievement (70% to 110% of
plan) against exit multiples (4.5× to 6.5×). The base case sits at 100%
achievement and 5.5×. Critically, even at 85% EBITDA achievement the
return ranges from roughly 23% to 35% — a band that brackets the
sponsor’s own 24–31% IRR claim and supports the downside case.

Figure 18.

Figure 18. Equity-IRR sensitivity to EBITDA achievement and exit multiple; base case (100% / 5.5×) outlined.

Table 30. Equity IRR sensitivity grid (%)

EBITDA × / exit	4.5×	5.0×	5.5×	6.0×	6.5×
110% of plan	33.2%	36.7%	39.9%	42.7%	45.4%
100% of plan	29.4%	32.9%	36.1%	39.1%	41.7%
85% of plan	22.6%	26.3%	29.6%	32.6%	35.4%
70% of plan	13.8%	17.9%	21.5%	24.7%	27.6%

Table 30. Return remains above 22% across an
85%-achievement / 4.5×-exit downside; base case 36.1% at 100% /
5.5×.

18.3 EBITDA driver sensitivity

The tornado below isolates the Year-5 EBITDA impact of the key
operating variables. Pricing and volume dominate — a 5% move in average
selling price swings Year-5 EBITDA by roughly R69 million in each
direction, and a 10% move in volume by about R52 million — while
materials and fuel costs, though material, are second-order. This
confirms that commercial execution (price discipline and volume ramp)
drives value more than input-cost management.

Figure 19.

Figure 19. Tornado: sensitivity of Year-5 EBITDA to pricing, volume, materials and fuel.

18.4 Exit options

Trade sale. Sale to an integrated producer (e.g.
a cement major seeking ready-mix density) or a regional consolidator —
the most probable route given sector consolidation dynamics.
Secondary buyout. Sale to a financial sponsor
attracted by a deleveraged, cash-generative platform with regional
growth optionality.
Recapitalisation. A debt-funded recapitalisation
returning capital to equity while retaining ownership, supported by the
~1.0× net-debt / EBITDA position.
Strategic listing. A longer-dated option should
the platform reach the scale and track record to support a public
listing.

ANALYST CALLOUT — The exit multiple is the assumption to
challenge hardest

The base-case return leans on a 5.5× EV/EBITDA exit. That is
conservative relative to integrated-producer valuations but is not
guaranteed for a five-year-old single-country operator. The grid shows
the consequence directly: at 4.5× and full EBITDA the IRR is still
29.4%, but a simultaneous EBITDA miss and multiple compression (85% /
4.5×) takes it to 22.6%. Investors should size their entry valuation and
structure their downside protection against the lower-left of the grid,
not the base case.

18.5 Value-creation summary

The equity value created over the hold period can be decomposed into
three sources: EBITDA growth (volume ramp, margin expansion and the
maturing plant network), debt paydown (the deleveraging from roughly
7.5× to 1.0× net debt / EBITDA), and any change in the exit multiple. On
the conservative base case the return is driven overwhelmingly by
operational EBITDA growth and deleveraging — not by multiple expansion —
which is the more defensible foundation for a return.

Table 31. Sources of equity value creation (illustrative)

Value driver	Contribution	Nature
EBITDA growth (R18m → R262m)	Primary	Operational
Deleveraging (7.5× → 1.0× ND/EBITDA)	Significant	Financial
Multiple re-rating	Not assumed	Market
Base-case equity value at exit	R1,169m	4.67× MOIC

Table 31. Return driven by operational growth
and deleveraging rather than multiple expansion — the more durable basis
for value.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of TitanCrete Readymix South Africa (Pty) Ltd.