Course description Aimed specifically at those with limited or no prior exposure to financial statements, this excellent and time effective course demystifies all the key financial terminologies and enables attendees to build simple financial models from the ground up. Learn to speak the language of finance!
The focus is on the aspects of financial modelling of most relevance in renewable and other energy organisations, both in terms of the topics covered and the case studies used to illustrate the taught principles. The course provides an excellent foundation or revision before more advanced financial planning courses, or simply an invaluable introduction to the essentials of finance for those in non-financial job roles.
Key Learning Objectives
•Understand the key terminology used in corporate finance and financial modelling
•Learn how to read and create financial statements and models (Excel-based practical sessions) and use them for business planning and forecasting
•Analyse the key inputs and outputs into such models
•Appreciate the differences between cash and non-cash financial measures
•Understand how company performance, expected investor returns and business risks are evaluated and how they affect your business model
•Why a company’s capital structure matters and how it is described
•How financial models lead to company valuations and exit strategies
Who Should Attend?
Given the importance of finance and financial planning to the renewable energy (or any other) business, a basic knowledge is of high relevance and career value to a wide variety of roles, including:
•Technicians and Engineers
•Project Planners Legal Representatives
•Policy Makers and Policy Analysts
•Market Analysts
•Marketing & Sales Directors
From:
•Energy Utilities
•Power Generators including IPPs
•Power Project Developers
•Technology Vendors
•Engineering Contractors and EPCs
•Governments and Policymakers Market and Management Consultants
•Investment & Insurance Firms
•Law Firms
Training level and delivery
Led by an experienced financial professional with experience in a variety of sectors, renewable energy included, this course is aimed at the wide variety of personnel who will benefit from a thorough grounding in the fundamentals of finance. It is not aimed at those already actively engaged in financial roles.
Learning is delivered by way of informal, friendly and interactive sessions allowing plenty of time for questions and discussion within a small-sized group. In addition the concepts taught will be demonstrated and quantified using Excel-based models and exercises to allow hands-on application of the concepts learned.
No prior financial qualifications or experience are required for this course, since all concepts are explained from first principles.
Supporting materials you will receive •A comprehensive reading list for further study after the course •Hard and soft copies of presentation materials, including any excel tools and data used in the exercises and group work •Strategic planning, leadership and team-building tools that they can apply within their own workplace •A certificate of attendance Approximate Timings (include lunch plus morning and afternoon refreshment breaks):
About your trainer
John Freeman is a qualified accountant and currently Director of a biofuels company, where he: creates financial models based on the business plan, to demonstrate ROI and evaluate and mitigate investment risks; identifies funding (from banks to private equity and VCs) for scaling up the business and financing their industrial capacity; advises on financial best practice with a prime focus on developing, producing and monetising their product within a sustainable, environmental framework.
John’s extensive and diverse prior experience includes the Palm Oil industry, the UK public sector (defence) and London’s international law firms.
AGENDA
Day 1, Background
•Creating a Financial Model of your Business
•The International Reporting framework
•Understanding financial statements to identify and evaluate potential hidden items
•Example: detailed review of a Biofuel company’s income, balance sheet and supporting statements
•Benchmarking exercise—comparison with similar renewable companies
Introducing Financial Models and Statements
•Accounts structure and models key inputs
•Practical: Excel model provided, Attendees set up Income statement, Balance sheet and cash flow
•Practical: Add Excel Financial functions to the Model (PMT,NPV,IRR,FV, Look up, graphs)
•Practical: Liquidity and Solvency including Unlevered After Tax Cash Flow, Debt and Principal cover
•EBITDA EBIT and their role in providing control and comparison
•Practical: Using model to forecast and test scenarios
Time Value and Discounting
•Discounted cash flow
•Producing a project and equity NPV
•Equity IRR versus Project IRR
Costs: Cash and non-cash Inputs
•Project evaluation: determining relevant and irrelevant costs
•Capex/Opex/Direct and Indirect costs/Variable and Fixed costs
•Fuel & feedstock costs
•Tax allowances, business benefits
•Depletion depreciation and Amortisation: rules and methodologies
•Balance Sheet Revaluation of Biological Assets (IAS 41)
•Accounting Procedure for Impairments to Fixed Assets
•Accounting for Intangible Assets (Brand, IP, Goodwill etc.)
•Debt Service Reserve Accounts
•Unlevered Free Cash Flow
Day 2, Finance: Sources and Impacts on the Model
•Funding and capital structure
•Loans, Equity and Mezzanine Finance
•Practical: Beta Calculation
Determining and Presenting a company’s proposed capital structure
•VC’s Returns Expectation
•Perspective of Funder
•Challenges to Expectations
•Better Presentation
•Types of funds
•Limited Recourse or Balance Sheet
•Gearing Definition
•Leverage Definition
•Cost of Capital
•CAPM
•WACC
•Practical: Cash payments effect on Balance sheet; Dividends, Debt, Principle, interest, cash sweeps
•Off-balance sheet financing
Practical: Key Ratios and Metrics
•The use of ratios, trends, and performance forecasts in operating the organisational resources
•Using ratios to analyse performance
•Accounting ratios - profitability, liquidity, efficiency, structure
•Loan life / project life ratio
•Residual cover
•Annual debt service ratio
•Principal and debt cover
Policy and Renewable Models
•Policy mechanisms and their inclusion in financial models
•Renewable Energy Pricing (Feed-in-Tariffs, PPAs)
•Green certificates and carbon pricing
•Accelerated Tax Depreciation
•Investment Tax Credits
•Production Tax Credits
Financial Planning and Forecasting from the Model
•Capital investment appraisal including payback and the return on investment
•Concepts and terminology used in making financial decisions
•The use of appraisal methods in practice including explaining NPV and IRR
•When and how to adjust benchmarks
•Working capital management
•Measurement of Risk using Traditional Finance Theory
Using Financial Models for Valuation and Growth
•The elements and factors that determine value creation
•Reasons for share valuations
•Asset valuation bases
•Earnings valuation bases
•Cash flow valuation methods
•Evaluating acquisition and divestiture opportunities
•International investment appraisal
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