HAETAE

VALUE INVESTING IN MICRO CAP AND SMALL CAP COMPANIES

AROUND THE WORLD

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 Equity Research
4 July 2020

Geography: Canada
Business: Gold Custodian Bank
Market Cap: $179M (CAD)

GOLDMONEY
TSE: XAU

Variant Perception

Goldmoney is the only publicly listed full reserve gold custodian bank in the world allowing customers to open allocated deposit accounts fully
backed by gold. The market does not appreciate the multiplier effect that a monetary reset scenario would have on the sales of Goldmoney.

Currently gold prices do not reflect its true intrinsic value under a fiat monetary system, and is used in extreme circumstances as a monetary
anchor to restore confidence in failed currencies. Throughout times, gold has functioned as a hard budget constraint for governments which is
why governments switch out of a gold backed system to a fiat monetary system to achieve more leverage.

During a gold standard, gold prices are fixed to the money supply, constraining the growth of an economy by capping credit capacity. Historically
this gold to money supply ratio has ranged from 20%, set by the Bank of England between 1815-1914 when the British pound was the reserve
currency, to 40% by the Federal Reserve between 1913-1965 when it achieved its reserve currency status.1

It is estimated under a partial gold standard set at 40% of M1 global money supply (euros, dollars, and Chinese RMB), gold prices would be
$10,000 per ounce. The theoretical limit for gold prices under a fully backed gold standard set to 100% of M2 global supply is estimated to be
$50,000 per ounce. These intrinsic value estimates of gold are severely below the current market price levels of around $1,750 per ounce
because gold prices track the money supply growth on a fractional reserve basis. In the same way commercial banks are allowed to operate with
a 10% reserve requirement, central banks are allowed to expand the money supply (directly or indirectly) with far less constraints. Monetary
transitions between a fractional reserve fiat system to a gold backed standard are centered around sovereign budget balances, which may be
voluntarily as done with the Nixon shock in 1971 to prevent an outright default, or involuntarily in order to restore confidence with a monetary
anchor after a default.2 Given the magnitude and simultaneity of sovereign debt levels around the world, structural trade deficits, rapidly
expanding global money supply, supply output shocks, and declining consumption levels, the inevitable outcome towards an onset of triple
crises (banking, sovereign debt and currency) around the world have been accelerated. The first wave of sovereign defaults has already occurred
with Lebanon and Argentina first to go.

In order to restore confidence and wipe out sovereign debt levels as much as possible, central banks must reset the monetary system by writing
up their gold reserve assets to a price as high as possible. During this monetary reset, you will see a one-off event with substantial increase in

1The New Case for Gold, James Rickards

2
Sovereign defaults can take the form of a direct outright default in nominal terms, or as an indirect default in real terms with a hyperinflated currency through
central bank financing of deficits (debt monetization).
 HAETAE
new accounts for Goldmoney as the general public regains interest in gold as official money. Currently the primary customer base of the
company are so called gold bugs, or the early adopters of gold, which is but a marginalized fraction of the potential market. But with an
inflection point nearing, the gold custodian business has the potential to gain significant new customers, increase sales at substantially higher
prices, and reinvigorate its trading fee income through explosive volume gains in trading activities due to increased needs of liquidity.

Gold is the deeply undervalued asset that underpins the economics for this unique business model.

Valuation
The intrinsic value was estimated using a DCF financial model, but growth based valuation estimates are particularly unreliable, which is further
exacerbated by its early stage startup status which is still scaling up to break even from the negative earnings barrier it must overcome in this
stage of its corporate lifecycle. But the idea behind the DCF financial model is to provide a general range of possible outcomes, as well as a
mental aid in thinking about the key value drivers in the business.

18,00 Bull
16,2
16,00

14,00

12,00

10,00

8,00 Base
6,2
6,00
Bear
4,00 Market Price 2,9
2,3
2,00

0,00

The DCF model assumes conservative input assumptions for its core businesses (gold custodian and gold coin brokerage businesses) across all
scenarios with continuous incremental declines in volume growth per year. The other driver of sales growth is the price appreciation of gold,
which is ignored by the market. The scenarios assume different gold prices which multiplies sales levels. In addition to the margin of safety
provided across scenarios, at current valuations Goldmoney offers an additional layer of safety by offering its 37% ownership in Mene, a
disruptive gold jewelry business, for free.

As Luke Gromen points out, the US Federal Reserve is monetizing its own government deficits without any net foreign buyers of Treasury
issuances for the first time in 40 years. Because of the Eurodollar demand abroad determined by OPEC oil pricing in dollars, the dollar is not
allowed to depreciate and stabilize the US structural current account deficits by making its exports more competitive. Without sufficient tax
revenues, capital flight from foreign creditors, and trade deficits that are not allowed adjust to restore equilibrium, the Fed is forced to monetize
its deficits which will lead to inflation and an indirect default through a currency collapse.

Scenario Assumptions
Bear • Gold prices increase 10% per annum, which is far below the historical compound annual growth rate of gold
27% margin of safety prices since the 1971 inception of monetary debasement.
2.92 target price • The bear case assumes the fiat currency system will continue and that there is no monetary reset.
Base • Monetary reset to $10,000 (40% of M1 global money supply) by US Federal Reserve in 2021.
171% margin of safety
6.22 target price
Bull • Monetary reset to $25,000 (50% of M2 global money supply) by US Federal Reserve in 2021.
604% margin of safety
16.2 target price

1
 HAETAE

Business Model
Company Background
Share Price History

The company is institutionally neglected without any analyst coverage and is an undiscovered gem. Most investors are chasing fool’s gold
seeking mining companies, despite its inferior business models characterized by high capital intensity and high degree of speculative risk in
future mining operations.

BitGold, which was one of the earliest ventures for creating a decentralized digital currency that began in 2005, acquired Goldmoney in 2015 for
$51.9M (CAD). BitGold had settlement and payment technology while Goldmoney had over $1.2B (USD) in customer assets under vault
management backed by gold, and over 135,000 customer sign ups since 2006. Eventually Goldmoney has exited completely from the
cryptocurrency space becoming purely focused on gold, platinum and silver.

Industry Economics
Unlike fractional reserve commercial banks that rely on maturity transformation of deposit liabilities into loan assets to generate an interest
spread for its bottom line, a full reserve custodian bank creates its profits primarily through the spread between its storage fees and the cost of
sales to third party vault operators. A full reserve bank has no counterparty risk making if substantially less risky than a commercial bank, but
with much lower margins. Therefore the gold custodian banking business is a high volume, low margin business model that requires significant
scale. From a customer point of view, an allocated gold account can be thought of as savings account with a negative interest rate that is offset
by the appreciation of gold prices.

Unallocated gold account providers are not direct competitors of Goldmoney. The primary direct competitor within the allocated gold custodian
industry is Bullionvault, which was founded in 200 with over 75,000 clients and about $2B (USD) in customer assets. It charges 12 basis points
per year on gold with a monthly minimum of $4 (USD) for insurance, storage and use of its platform. Goldmoney recently changed its pricing
model to converge with Bullionvault’s standards, charging between 12-21 basis points per year (depending on the vault operator), with a
minimum $10 (USD) monthly storage fee. Goldmoney charges a slightly higher premium for a superior platform while Bullionvault focuses on
operational excellence and customer service. Additionally Bullionvault is backed by the World Gold Council while Goldmoney is backed by a well
known thought leader, James Turk and the Soros family office.

There is some customer switching inconvenience similar to a commercial bank and the market is overall a stable duopoly. Many new entrants
have emerged (GoldCore, GoldRepublic, Voima), but the barriers to entry are fairly high given the razor thin margins that require significant
cumulative losses to gain sufficient scale to break even and catch up. Additionally, apart from the regulatory compliance costs, auditing,
platform development and relationships with both vault operators and more importantly gold suppliers, this is a fairly difficult space to compete
in.

2
 HAETAE

Management and Ownership Structure

CEO Roy Sebag was previously a hedge fund manager at Essentia Equity focused on distressed value investing. However he appears to have no
educational credentials. He is a visionary but he does not appear especially strong in operating a business efficiently. In the most recent annual
report that was just published in the end of June 2020, he has written an annual letter for the first time indicating material changes in the
strategy of the business to focus more on improving core operations. He enacted changes to the pricing model to improve its profitability profile
while increasing spending on customer service operations, indicating a commitment to improve its reputation for unresponsive customer service.

Goldmoney is owned primarily by insiders, which aligns shareholders to management. Additionally, Goldmoney retains 36.92% ownership of
Class B shares in Mene, its gold jewelry spinoff. Currently it is also working on launching a new business related to gold covered digital storage
drives.

Strategy
Roy Sebag has a volatile track record of changing the business strategy frequently indicating the firm’s struggle with finding a clear, focused
long term strategy. In the latest shareholder letter published, he disclosed for the first time several clear objectives:

1. Cash and expense optimization: minimize excess fiat cash to 1 year of operating expenditures
2. Transparent investment portfolio: 70% gold, 20% silver, 5% platinum, 5% palladium precious metal bullion investment allocation of excess
cash
3. Exiting the fiat lending business and only accepting collateralized loans backed by precious metals

The key KPI metric used by Roy Sebag is the Return on Metal Weight concept used for gold royalty businesses.

3
 HAETAE

Financial Analysis
Earnings Quality
Sales and Margins

Overall the core businesses of Goldmoney, the custodian bank and gold coin (Schiff Gold) have achieved consistent YoY topline growth and
stable gross margins around 2%.

120.000 4,50%
3,86%
4,00%
100.000
3,50%
80.000 3,00%
2,28% 2,36%
2,20% 2,08% 2,10% 2,16% 2,83% 2,50%
60.000 2,02%
2,43% 1,68% 2,00%
2,12% 2,17% 2,24%
2,07%
40.000 1,87% 1,76% 1,50%
1,70%
1,00%
20.000
0,50%
0 0,00%
2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1

Custodian Bank Gold Coins Custodian Bank Gold Coins

Expense Management

The company has continuously improved its core net income margins by reducing its expense base. As it is still in a growth phase, its advertising
and promo spend will remain important as its growth investment.

8.000 10%

6.783 9%
7.000 6.529 6.436 6.463
8%
6.000 5.546 5.643
5.399

Operating Expenses % Sales

7%
5.000 4.480
Thousands CAD

6%
3.897
4.000 5%

4%
3.000
3%
2.000
2%
1.000
1%

0 0%
2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1

Payroll G&A Service provider fees

Advertising and promos Stock compensation Professional fees
FX gains D&A Technology and development costs
Market and business development Operating expenses

4
 HAETAE
Balance Sheet

The company has a clean balance sheet with no debt with a debt to equity ratio of 7%. It does not provide disclosure on its one-off short term
investment losses which led to negative earnings to the 2019 calendar year, but this seems to be the catalyst for clarifying its new transparent
investment allocation strategy towards precious metal bullion. This will allow shareholders to gain direct exposure to gold through Goldmoney’s
balance sheet as a reserve asset before a monetary reset event.

Financial Forecast
In a monetary reset scenario, Goldmoney along with Bullionvault would have the first mover advantage in a world where commercial banks
would be in a race to acquire as much gold supply as possible. It seems like quite a stretch that Goldmoney in the bull case could achieve $43B
(CAD) in top line sales 10 years from now, which would be roughly slightly less than half the size of JP Morgan’s $115B (USD) top line at
present. But as a theoretical limit in the real of possibilities, it seems it could be a distant possibility of commercial banks must suddenly shift to
a more custodian banking model.

50.000.000 90%
78%
45.000.000 80%
40.000.000 70%
35.000.000
60%
30.000.000 59% 50%
25.000.000
35% 40%
20.000.000 30%
25% 24% 23% 30%
15.000.000 22% 21% 20% 19% 18%
30% 20%
10.000.000 25%
20% 19% 18% 10%
5.000.000 17% 16% 15% 14% 13%
0 0%
2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e

Sales @ 10% gold price growth Sales @ $10k gold price Sales @ $25k gold price Goldmoney Schiff Gold

To build a clearer picture through simplicity, discretionary and non-core one-off costs such as FX revaluations are ignored in the analysis.
Improvements in core operating costs are already seen year over year but it is difficult to forecast precisely how much operational improvement
through cost discipline we can expect management to target as the business matures.

1.000.000 8%
874.635
900.000 7% Operating Expenses as % Sales
777.980
800.000 702.109
6%
700.000 627.177
578.027
Thousands CAD

600.000 525.024 5%
470.456
500.000 416.217 4%
369.364
400.000 3%
300.000
2%
200.000
100.000 24.088 32.665 24.296 1%
0 0%
2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e

Payroll G&A Service provider fees

Advertising and promos Stock compensation Professional fees
FX gains D&A Technology and development costs
Market and business development Operating expenses

5
Pro Forma Financial Statements
FORECAST PERIOD
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
Income Statement 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e
Sales 281,543 458,872 665,069 4,444,416 5,415,452 6,547,080 7,852,892 9,344,509 11,030,713 12,916,531 15,002,297 17,282,764
Goldmoney 186,981 297,374 425,245 2,801,349 3,361,619 4,000,327 4,720,386 5,522,851 6,406,507 7,367,483 8,398,931 9,490,792
Schiff Gold 90,685 161,498 239,825 1,643,067 2,053,833 2,546,753 3,132,506 3,821,658 4,624,206 5,549,047 6,603,366 7,791,972
Cost of sales -275,288 -447,995 -649,370 -4,339,097 -5,286,605 -6,390,671 -7,664,509 -9,119,402 -10,763,857 -12,602,710 -14,636,218 -16,859,189
Goldmoney -183,090 -291,280 -416,740 -2,745,322 -3,294,387 -3,920,320 -4,625,978 -5,412,394 -6,278,377 -7,220,134 -8,230,952 -9,300,976
Schiff Gold -88,909 -156,715 -232,630 -1,593,775 -1,992,218 -2,470,351 -3,038,531 -3,707,008 -4,485,480 -5,382,576 -6,405,265 -7,558,213
Gross margin 6,255 10,877 15,700 105,319 128,847 156,409 188,383 225,107 266,856 313,821 366,080 423,575
Gross margin 2.2% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.5%
Fee revenue 2,356 4,412 9,568 63,030 75,636 90,007 106,209 124,264 144,146 165,768 188,976 213,543
Interest income 1,812 1,296 0 0 0 0 0 0 0 0 0 0
Realised gains on crypto assets 1,520 1 0 0 0 0 0 0 0 0 0 0
Gains on inventory revaluations 437 5,048 0 0 0 0 0 0 0 0 0 0
Gross profit 12,380 16,585 25,268 168,349 204,484 246,416 294,592 349,371 411,003 479,589 555,056 637,118
Gross profit margin 4.4% 3.6% 5.9% 3.8% 3.8% 3.8% 3.8% 3.7% 3.7% 3.7% 3.7% 3.7%
Service provider fees -2,006 -880 -831 -3,333 -4,062 -4,910 -5,890 -7,008 -8,273 -9,687 -11,252 -12,962
Advertising and promos -2,513 -1,968 -2,852 -17,778 -21,662 -26,188 -31,412 -37,378 -44,123 -51,666 -60,009 -69,131
Stock compensation -4,465 -3,118 0 0 0 0 0 0 0 0 0 0
Payroll -3,848 -6,285 -9,109 -58,651 -68,758 -79,852 -91,852 -104,627 -117,991 -131,705 -145,472 -158,943
G&A -3,038 -2,193 -2,993 -17,778 -18,954 -19,641 -19,632 -18,689 -16,546 -12,917 -7,501 -8,641
Professional fees -6,902 -3,841 -4,902 -28,313 -29,084 -28,614 -26,468 -22,151 -15,118 -17,702 -20,561 -23,686
FX gains 1,148 748 0 0 0 0 0 0 0 0 0 0
D&A -1,016 -1,377 -1,996 -13,337 -16,251 -19,647 -23,565 -28,041 -33,101 -38,760 -45,019 -51,863
Technology and development costs -1,448 -1,450 -1,330 -6,667 -5,415 -6,547 -7,853 -9,345 -11,031 -12,917 -15,002 -17,283
Market and business development 0 -195 -283 -1,889 -2,301 -2,782 -3,337 -3,971 -4,688 -5,489 -6,375 -7,344
Operating expenses -24,088 -32,665 -24,296 -147,745 -166,487 -188,182 -210,009 -231,211 -250,871 -280,843 -311,192 -349,854
Operating income -11,708 -6,730 972 20,604 37,997 58,234 84,582 118,160 160,132 198,746 243,864 287,264
EBIT margin -4.2% -1.5% 0.1% 0.5% 0.7% 0.9% 1.1% 1.3% 1.5% 1.5% 1.6% 1.7%
Interest expense -46 -42 0 0 0 0 0 0 0 0 0 0
Income tax -326 -270 -146 -3,091 -5,700 -8,735 -12,687 -17,724 -24,020 -29,812 -36,580 -43,090
Share of net loss from associate -439 -2,923 0 0 0 0 0 0 0 0 0 0
Gain from subsidiary loss of control 31,827 0 0 0 0 0 0 0 0 0 0 0
Gain from investments 2,375 -6,764 0 0 0 0 0 0 0 0 0 0
Unrealised loss on investments 0 -1,411 0 0 0 0 0 0 0 0 0 0
Accretion expense 0 0 0 0 0 0 0 0 0 0 0
Net income 21,683 -9,712 826 17,513 32,297 49,499 71,895 100,436 136,112 168,934 207,284 244,174
Net income margin 7.7% -2.1% 0.1% 0.4% 0.6% 0.8% 0.9% 1.1% 1.2% 1.3% 1.4% 1.4%
 HAETAE
FORECAST PERIOD
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
Assumptions 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e
Sales
Volume growth
Goldmoney 59.0% 30% 25% 20% 19% 18% 17% 16% 15% 14% 13%
Schiff Gold 78.1% 35% 30% 25% 24% 23% 22% 21% 20% 19% 18%
Gold price multiplier 1.1x 5.3x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x
BEAR $1,725 $1,898 $2,087 $2,296 $2,526 $2,778 $3,056 $3,362 $3,698 $4,067 $4,474
BASE $1,725 $1,898 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
BULL $1,725 $1,898 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Fee income % GM sales 1.3% 1.5% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25%
Cost of sales
Goldmoney -97.9% -98.0% -98% -98% -98% -98% -98% -98% -98% -98% -98% -98%
Schiff Gold -98.0% -97.0% -97% -97% -97% -97% -97% -97% -97% -97% -97% -97%
Operating Costs (% sales)
Service provider fees 0.71% 0.19% 0.13% 0.08% 0.08% 0.08% 0.08% 0.08% 0.08% 0.08% 0.08% 0.08%
Advertising and promos 0.89% 0.43% 0.43% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40%
Stock compensation 1.59% 0.68% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Payroll 1.37% 1.37% 1.37% 1.32% 1.27% 1.22% 1.17% 1.12% 1.07% 1.02% 0.97% 0.92%
G&A 1.08% 0.48% 0.45% 0.40% 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.05%
Professional fees 2.45% 0.84% 0.74% 0.64% 0.54% 0.44% 0.34% 0.24% 0.14% 0.14% 0.14% 0.14%
FX gains 0.41% 0.16% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
D&A 0.36% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30%
Technology and development costs 0.51% 0.32% 0.20% 0.15% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
Market and business development 0.00% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04%

7
 HAETAE
Balance Sheet 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e
Cash 33,535 34,361 51,874 84,171 133,670 205,565 306,001 442,113 611,047 818,332 1,062,506
Cash held for dealing 2,993 2,993 2,993 2,993 2,993 2,993 2,993 2,993 2,993 2,993 2,993
Restricted cash 70 70 70 70 70 70 70 70 70 70 70
Inventories - precious metals 16,507 16,507 16,507 16,507 16,507 16,507 16,507 16,507 16,507 16,507 16,507
Inventories - other 0 0 0 0 0 0 0 0 0 0
ST investments 11,751 11,751 11,751 11,751 11,751 11,751 11,751 11,751 11,751 11,751 11,751
Receivables 642 642 642 642 642 642 642 642 642 642 642
Prepaid and other assets 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520
Loans receivable 23,496 23,496 23,496 23,496 23,496 23,496 23,496 23,496 23,496 23,496 23,496
PP&E 4,001 4,001 4,001 4,001 4,001 4,001 4,001 4,001 4,001 4,001 4,001
Right of use assets 668 668 668 668 668 668 668 668 668 668 668
Invesment in associates 31,157 31,157 31,157 31,157 31,157 31,157 31,157 31,157 31,157 31,157 31,157
Intangible assets 21,064 21,064 21,064 21,064 21,064 21,064 21,064 21,064 21,064 21,064 21,064
Goodwill 37,282 37,282 37,282 37,282 37,282 37,282 37,282 37,282 37,282 37,282 37,282
Total assets 184,686 185,512 203,025 235,322 284,821 356,716 457,152 593,264 762,198 969,483 1,213,657
Accounts payable 6,306 6,306 6,306 6,306 6,306 6,306 6,306 6,306 6,306 6,306 6,306
ST securities 695 695 695 695 695 695 695 695 695 695 695
Mortgage payable 4,184 4,184 4,184 4,184 4,184 4,184 4,184 4,184 4,184 4,184 4,184
Lease liabilities 1,067 1,067 1,067 1,067 1,067 1,067 1,067 1,067 1,067 1,067 1,067
Subscription receipts and convertible debentures 0 0 0 0 0 0 0 0 0 0
Liabilities 12,252 12,252 12,252 12,252 12,252 12,252 12,252 12,252 12,252 12,252 12,252
Share capital 170,384 170,384 170,384 170,384 170,384 170,384 170,384 170,384 170,384 170,384 170,384
Contributed surplus 11,361 11,361 11,361 11,361 11,361 11,361 11,361 11,361 11,361 11,361 11,361
Accumulated other comprehensive income 832 832 832 832 832 832 832 832 832 832 832
Retained earnings -10,143 -9,317 8,196 40,493 89,992 161,887 262,323 398,435 567,369 774,654 1,018,828
Other equity 0 0 0 0 0 0 0 0 0 0
Non controlling interest 0 0 0 0 0 0 0 0 0 0
Equity 172,434 173,260 190,773 223,070 272,569 344,464 444,900 581,012 749,946 957,231 1,201,405
Shares outstanding (diluted) 77,682,421 77,682,421 77,682,421 77,682,421 77,682,421 77,682,421 77,682,421 77,682,421 77,682,421 77,682,421 77,682,421
Total funding 184,686 185,512 203,025 235,322 284,821 356,716 457,152 593,264 762,198 969,483 1,213,657
Check 0 0 0 0 0 0 0 0 0 0 0 0

Simplified Cash Flows 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e
Net income -9,712 826 17,513 32,297 49,499 71,895 100,436 136,112 168,934 207,284 244,174
Change in assets -151,151 0 0 0 0 0 0 0 0 0 0
Change in liabilities 12,252 0 0 0 0 0 0 0 0 0 0
Change in equity (excluding NI, dividends) 182,577 0 0 0 0 0 0 0 0 0 0
Dividends
Dividends per share 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Payout ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Change in cash 33,966 826 17,513 32,297 49,499 71,895 100,436 136,112 168,934 207,284 244,174
Starting balance 0 33,535 34,361 51,874 84,171 133,670 205,565 306,001 442,113 611,047 818,332
Ending balance 33,535 34,361 51,874 84,171 133,670 205,565 306,001 442,113 611,047 818,332 1,062,506
Difference with actual cash balance 431
0.071053273 1 2 3 4 5 6 7 8 9 10
DCF 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e TV
Sales 281,543 458,872 665,069 4,444,416 5,415,452 6,547,080 7,852,892 9,344,509 11,030,713 12,916,531 15,002,297 17,282,764 17,801,247
Sales growth 71.2% 63.0% 44.9% 568.3% 21.8% 20.9% 19.9% 19.0% 18.0% 17.1% 16.1% 15.2% 3.0%
Cost of sales -275,288 -447,995 -649,370 -4,339,097 -5,286,605 -6,390,671 -7,664,509 -9,119,402 -10,763,857 -12,602,710 -14,636,218 -16,859,189 -17,320,614
Cost of sales, % sales 97.8% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.5% 97.3%
Operating costs -24,088 -32,665 -24,296 -147,745 -166,487 -188,182 -210,009 -231,211 -250,871 -280,843 -311,192 -349,854 -356,025
Operating costs, % sales 8.6% 7.1% 3.7% 3.3% 3.1% 2.9% 2.7% 2.5% 2.3% 2.2% 2.1% 2.0% 2.0%
EBIT -17,833 -21,788 -8,596 -42,427 -37,640 -31,773 -21,627 -6,104 15,985 32,978 54,888 73,721 124,609
EBIT margin -6.3% -4.7% -1.3% -1.0% -0.7% -0.5% -0.3% -0.1% 0.1% 0.3% 0.4% 0.4% 0.7%
Tax rate 1.8% 1.2% 1.7% 7.3% 15.1% 27.5% 58.7% 290.4% -150.3% -90.4% -66.6% -58.4% -15.0%
Tax on profits -326 -270 -146 -3,091 -5,700 -8,735 -12,687 -17,724 -24,020 -29,812 -36,580 -43,090 -18,691
Tax effected EBIT -18,159 -22,058 -8,742 -45,517 -43,339 -40,508 -34,314 -23,828 -8,034 3,166 18,308 30,631 105,917
Free cash flow -18,159 -22,058 -8,742 -45,517 -43,339 -40,508 -34,314 -23,828 -8,034 3,166 18,308 30,631 105,917
Discount factor 0.92 0.85 0.78 0.72 0.67 8 0.62 0.57 0.52 0.48 0.45
PV of free cash flow -8,063 -38,722 -34,005 -29,316 -22,904 -14,670 -4,562 1,658 8,844 13,648
 HAETAE
DCF Assumptions
Risk free rate 0.5% Canadia 10 year government bond
Risk premium 16.4% Late stage 20-year VC return (Damodaran) of 16.9%
Beta 0.50 Financial times
Cost of equity 8.70%
Market capitalisation (in millions) 179
Equity ratio 94%
Pre-tax cost of debt estimation 5.0%
Tax rate 15.0% Marginal corporate tax rate of Canada
After tax cost of debt 4.3%
Debt ratio 6%
WACC 8.4%
Growth rate in perpetuity 1.0%
PV of terminal value 635,958

DCF Valuation
PV of CFs in forecast period -128,092
PV of TV 635,958
Enterprise value 507,865
Net debt (excess cash) 24,346
Equity value 483,519
DCF value per share 6.22
Shares outstanding 77,682,421
Current share price 2.30
Implied undervaluation 170.6%