project finance modelling - johannesburg

8/8/2019 Project Finance Modelling - Johannesburg

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With a 1-Day extension onPublic - Private Partnerships

(PPP) Modelling J O H A N

N E S B U R G

Public, Sponsored and In-house Financial Training

Project Finance Modelling

Revision of best practice in model structures

Building the cash flow financing section of a model

Calculating the cost of different types of debt capitalCreation of balance sheet

Use of sensitivity analysis - model structures and

advanced Excel tools

Ratios and risk analysis of PPP deals

Review the objectives of PPP, and the implications for

model structure

A 4-day course designed to support analystswithin an organisation’s project finance,

business development and treasury divisions

to create and analyse financial models on a

consistent and focussed basis.

Course Director: Alan Brooke

Date: 28 February – 3 March 2011

Venue: Johannesburg, South Africa

5 easy ways to registeror to make an enquiry

1. Webwww.euromoneytraining.com/AFRICA

2. [email protected]

3. Telephone+44 (0)207 779 8543

4. Facsimile+44 (0)207 779 8140

5. By postEuromoney Training EMEA, NestorHouse, Playhouse Yard, LondonEC4V 5EX, UK



Day 1Introduction & course objectives

Revision of best practice in model structures– Best financial modelling practice– Overall structure of the model– Separation of inputs, calculations and outputs– Logic flow within the model– Use of switches to allow option selection– Use of flags to control timing factors– Set-up to ease flexibility – Accommodating multiple options at early stages of project– Use of corkscrews– Checks and totals, and error reporting

Inputs & assumptions– Building assumptions off the term sheets

– Using the assumptions sheets as a sign-off document– Building-in ability to change and work changes throughthe model

– Restricting ranges of inputs and validation criteria– Version control– Tracking changes

Revenue & cost build-ups– Build-up of construction or other capital costs– Correct matching of units– Treatment of fixed and variable costs– Use of Debt Service Reserve Accounts and Maintenance

Reserve Accounts– Pricing assumptions– Use of lookup functions to change expenditure timings– Building in sensitivities

Exercise – building in flexibility for capital spend timingchanges and sensitivities

Exercise – creating an assumptions input sheet with built-in flexibility

Project Finance Modelling -

Day 2Brief overview of modelling taxes– Tax treatment of costs– Allowing for deductibility and non-deductibility – Capital allowances– Cash versus accounting treatment– Example - Review of an example of tax modelling for an

investment project

Interest and fee calculations– Circularity and consequences– Calculations of interest and fees– Timing of payments– Cash flow payment vs amortisation in the P&L– Capitalised fees and interest

Building the cashflow financing section of a model– Cash flow driven– Cash positive periods and interest earned– Debt service reserve accounts– Fees to be included in drawdown amounts– Use of multiple facilities for different purposes

Financing section– Leverage, risk and the debt/equity equation– Calculating the cost of different types of debt capital– Cost of equity capital– Use of Debt Service Reserve Accounts (DSRA)– Use of the cash flow waterfall– Modelling issues arising:– Timing of debt and equity funding

– Fee costs, upfront and spread– Interest costs, capitalised interest– Interest rate ratchets– Debt repayment profiles– Rate switches or refinancings at various stages of deal– DSRA interest margin– Debt repayment profiles and built-in options– Dividend and other equity returns– Constraints on dividend payments– Overall risk profile

Inflation / escalation factors– Use of indices– Controlling start time of inflationary pattern

– Applying multiple rates to different cost & revenue items– Varying inflation rates over life of the project– Comparing the effect of actual inflation vs modeled– Introduce exercise to do outside class – model multiple, variable

rates and analyse a separate set of actual ratesExercise: from a given P&L

Exercise: creation of simple model to reflect debt costs,DSRA, repayment profiles, and returns to equity underconstraints.

Exercise – from a given term sheet of interest rates andfees, model interest and fee cash flow and P&L effects




3. Telephone+44 (0)207 779 8543

4. Facsimile+44 (0)207 779 8140


Agendacourse exercises

Time will not permit creation of an entire model from scratch.The outline of a model will bepopulated with the requiredfactors, including basicassumptions, input data andcalculations to calculate results.Delegates will then build on themodel to add sensitivities,inflation factors, financialstructures, accountingstatements, equity returns, ratiosand cover factors, and risk assessments.

course methodology

The learning methods used arepractical, as practice of newly-learned techniques enables adeeper and more effectivebuilding of skills. Each section

will be covered briefly as amodule in a traditional classstyle, but the real learningexperience will be found in theexercises within each module.Suggested solutions to eachexercise will be provided anddiscussed, and participants willbe encouraged to review their

work independently. As the timeavailable is limited, and theneeds of the participants will

vary, each section will not becovered in depth, but supportingmaterials will be available forfurther in-depth learning

BiographyAlan Brooke MBA, CA (SA), CA(NZ), Consultant

Alan trained as a Chartered Accountant at KPMG in South Africa andNew Zealand before moving into the automotive industry. He wasresponsible for building and using forecasting models in both financeand supply logistics. After a spell in financial management in Australia,he branched into independent consultancy.

For the past 10 years, Alan has been based in London, working as afreelance financial modelling and analysis expert for a range of blue-chip clients. He has extensive financial modelling experience in manysectors, including property, manufacturing, gas, waste, utilities, rail andgovernment. These have included a number of PFI transactions in thewater, health and support services sectors. This has involved building,



Johannesburg, South Africa

Day 3Creation of balance sheet– Link between modeled cash flow and P&L– Key balance sheet items and their calculation– Non-cash items: depreciation, deferred tax– Assumptions required to be made– Use of existing figures or opening balance sheets– Creation of check totals– Exercise from a given P&L and cash flow statement, calculate

the balance sheet

Derivation of ratios– Cash available for distribution and free cash flow– Debt service coverage ratio– Interest cover ratio– Equity returns: IRR & NPV calculations– Best practice in calculation & presentation of ratios in the model

Comparing different updates & versions of the model– Separate runs and variation of inputs– Ability to compare results– Reviewing future implications of variances

Sensitivity analysis– Break-even calculations– Stress-testing of model– Varying inputs to assess effect on results– Use of goal seek

– Use of statistical techniques – probabilities and Monte Carlosimulations– Version control to allow comparison of outputs– Comparison of actual results against forecast as a

sensitivity analysis

Risk reviews– Use of risk matrices– Relationship to model and sensitivity analysis– Probability analysis– Risk-adjusted returns – equity view & lender’s view

Documenting the model– Setting up base case model– Recording changes to model structure– Recording changes to assumptions– User guides– Running scenarios: descriptions, comparisons to base, version

control

Excercise:–For a given model, calculate risk-adjusted returns from

potential project risks;–Perform a risk assessment applicable to participants’ own

projects, and model probability-weighted outcomes.

Excercise: from a given model of cash flows, P&L andbalance sheet, calculate effect of varying inputs to a givendegree, and stress-test model to break-even.

Example – creating a comparison worksheet to enable variance analysis of any two versions of a model

Exercise – from a given cash flow and balance sheet,calculate the above ratios

Day 4 – Extra dayOverview of PPP– What is PPP and how is it different?– The objectives of PPP deals– The parties to a PPP deal– The structure of a typical PPP deal– Different forms of service delivery and / or construction

delivery: BOT, BOO, BTO, DBFO, BBMT– Risk profiles of PPP deals– Examples of, and reasons for, PPP failure. Only when the nature

of PPP is understood, can modelling of its structure commence.

Structure & layout of models– Review the objectives of PPP, and the implications for

model structure– Implications for deal of fixed deal end-dates– Tax implications and unused capital allowances– Practical tips in building models

Financing section– Simple financial structures used in PPP deals:

– Debt finance:– Local Currency – Foreign Currency – Mezzanine

– Equity finance:– Preference Capital– Convertibles– Contingent– IPOs/Floats at project start or at exit

– Government finance:– Credit Guarantees– Buy-Back/Put Options

– Renationalisation Rights– Leasing/Leveraged Leasing– Monoline Insurers

– Financing constraints:– use of covenants– restrictive ratios– debt service cover factors– loan cover factors– loan to value calculations– Returns to equity – NPV, IRR, other measures

Comparators– Public sector comparators (PSC) and their role– Using comparators to assess overall deal– Review of actual PSC example

Wrap-up– Overall review– Key points to re-iterate– Brief introduction to further exercises– Final questions and issues to discuss




3. Telephone+44 (0)207 779 8543

4. Facsimile+44 (0)207 779 8140


developing and using models to support projects to financial close,analysing risk, testing scenarios and forecasting results.

With an extensive accounting background, Alan brings accounting

knowledge, analytical skills and wide commercial experience totransactions and modelling.

He is course director of the Euromoney course Financial Modellingfor PPP projects, and delivers in-house training for a range of clientson behalf of Euromoney.

about us

Euromoney Training EMEA is adivision of Euromoney InstitutionalInvestor Plc, a leading provider of Business-to-Business financialinformation worldwide.

We deliver over 500 financialtraining courses publicly in Europe,Middle East & Africa. Please visitour website for the latestinformation on these:

www.euromoneytraining.com/Africacustomer service

If you would like to enquire about acourse or you are not sure whichtraining course is best for your levelof experience and current jobrequirements please contact ourcustomer services adviser onTel: +44 207 779 8543customised financial

training for you

If you cannot find the training yourequire at a suitable time or place,

we can also provide you with theopportunity to:• co-host a public course in your

country - choose the subject,location, level and the timing

• have a course delivered in-housethat is customised to therequirements of your staff &clients at a location of yourchoice.

If you would like to discuss thepossibility of co-hosting a publiccourse in your country or having anin-house course delivered for yourstaff, please contact:

Anna JakimovaDirectorTel: +44 207 779 8085E: [email protected]

hotel booking

If you require assistance withbooking accommodation for one of our courses, please contact ourlogistics team on:+44 207 779 8543 or [email protected] the course you willbe attending.



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Cancellation policy A full refund less an administrationfee of £100 will be given forcancellation requests received up to20 working days before the event.Cancellations must be made in

writing (letter or fax) and reach thisoffice before the 20 working day deadline. Delegates who cancel lessthan 20 working days before the

event, or who don't attend, are liableto pay the full course fee and norefunds can be given. However, if youwish to transfer to another course of the same value, and you have paid

your course fee in full, you will only be invoiced for 25% of the new course fee. Please note that you canonly transfer once. Please note thatthe next course must take placewithin 6 months of the initialapplication. Of course, a replacementis always welcome.

DisclaimerEuromoney Training reserves theright to change or cancel any part of its published programme due tounforeseen circumstances.

*The prices quoted here are correctat time of print but may be subjectto change.

A division of Euromoney Institutional InvestorPLC

Registered Office:Euromoney TrainingNestor House, Playhouse YardLondon EC4V 5EX, United KingdomRegistration No. 954730 England

Customer InformationFees include all the tuition, fullcourse documentation, lunches andrefreshments for the duration of theprogramme.

Incidental expenses:Euromoney Training EMEA is NOTresponsible for covering airfare orother travel costs incurred by registrants. Delegates will beresponsible for their ownaccommodation.

An invoice will be sent upon receiptof registration form. Payment mustbe received in full prior to thecourse start.

A four day course featuring:

Project Finance Modelling28 February – 3 March 2011 Johannesburg, South Africa

© Copyright Euromoney Training 2010




3. Telephone+44 (0)207 779 8543

4. Facsimile+44 (0)207 779 8140


Revision of best practice in model structuresBuilding the cash flow financing section of a model

Calculating the cost of different types of debt capital

Creation of balance sheetUse of sensitivity analysis - model structures and advanced Excel tools

Ratios and risk analysis of PPP dealsReview the objectives of PPP, and the implications for model structure

Course Director: Alan Brooke MBA, CA (SA), CA (NZ),Consultant

Booking terms and conditions

project finance modelling - johannesburg

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