Best Practice Modelling For Project Finance - Near Future

Best Practice Modelling for Project Finance: Advanced Techniques

Course overview This course is aimed at Project Finance professionals who have completed our Best Practice Modelling for Project Finance course (or individuals who have practical experience and a good understanding of Best Practice Financial Modelling) and would like to build on these skills to tackle more complex elements of Project Finance modelling. The content is well suited to Project Finance analysts and associates working for project sponsors, infrastructure funds, banks or advisors. Learning Outcomes Incorporate advanced financing elements (such as reserve accounts, short-term construction facilities and refinancing) into a Project Finance model using Best Practice principles Use advanced modelling techniques to incorporate complex operational calculations, including depreciation and taxation Optimise the debt size based on key constraints, i.e. tenor, debt service coverage ratio (DSCR) and gearing Prepare integrated financial statements (Balance Sheet, Income Statement and Cash Flow) and learn to debug errors Use an error checking dashboard to monitor integrity, signal and macro issues in the model Registration no. 10321258 10 Margaret Street London, W1W 8RL, United Kingdom

Course Modules Module 1: Debt sizing and advanced ratio analysis Module 2: Project Finance Reserve Accounts Module 3: Cash Flow vs. P&L: forecast timing differences Module 4: Taxation calculations Module 5: Integrated Financial Statements Module 6: Refinancing, mezzanine debt and cash sweeps Module 7: Other construction facilities (working capital & VAT) Registration no. 10321258 10 Margaret Street London, W1W 8RL, United Kingdom

Course content Module 1 – Debt sizing and advanced ratio analysis Understand the key debt ratios relevant to debt sizing in Project Finance Recap and walk through the sculpted debt repayment and DSCR calculations Discuss other frequently used debt ratios in Project Finance Incorporate an LLCR (Loan Life Cover Ratio) calculation into the case study model Walk-through the calculation of a PLCR (Project Life Cover Ratio) and discuss its interpretation Use debt ratios to incorporate debt sizing functionality in a model Discuss the concept of debt sizing and understand how this interacts with sculpted debt repayments Learn how to use a basic copy / paste macro to break the circularity inherent to the funding calculation Calculate the maximum debt which the project can take given the tenor and minimum DSCR proposed by the bank (i.e. sizing the senior debt tranche) Add a flag which indicates if the maximum gearing is breached Discuss how to combine the gearing constraint in the sizing calculation (this is covered in detail in our Advanced VBA for Project Finance course) Debt sizing and different scenarios Discuss the importance of scenario management when sizing debt (Bank vs. Equity and sensitivity cases) Learn how to freeze debt repayments where relevant Module 2 – Project Finance Reserve Accounts Understand the reserve accounts commonly required in a Project Finance transaction Discuss the modelling requirements and financial statement impact of different types of reserves (DSRA, MMRA, Decommissioning reserve) Walk through the various cash flows impacting a Debt Service Reserve Account (additions / releases based on target, releases for shortfalls on CFADS) Discuss the reason the reserve target requirement often results in a circularity Learn how to break the circularity caused by a forward-looking target using VBA Registration no. 10321258 10 Margaret Street London, W1W 8RL, United Kingdom

Module 3 – Cash Flow vs. P&L: forecast timing differences Learn how to model working capital Model debtor (receivable) and creditor (payable) control accounts Incorporate movements and balances in the P&L, CF and BS Develop depreciation calculations Understand the importance of depreciation calculations in a Project Finance transaction Discuss the most commonly used depreciation methods (straight-line, declining balance, units-of-production) Discuss the challenges of modelling depreciation calculations where multiple capex additions occur over time – learn a stream-lined approach to modelling this (eliminating the need for extensive ‘matrix’ calculations) Learn how to develop a dynamic and flexible depreciation calculation block which can be replicated for different categories Module 4 – Taxation calculations Learn how to model current taxation expense, tax paid and tax payable (geared and ungeared) Discuss the most common sources of differences between accounting profit and taxable profit (both timing and permanent differences) Calculate the tax expense in each period Prepare a tax payable control account based on the tax expense and timing of tax payments Understand the impact of tax losses and incorporate functionality to account for this Discuss the impact of deferred tax and how to incorporate this Walk through the differences between a geared and ungeared tax calculation and understand the purpose of each Module 5 – Integrated Financial Statements Discuss the purpose of including a fully integrated set of financial statements (Cash Flow Waterfall, Income Statement / P&L and Balance Sheet) in a Project Finance model Incorporate the Income Statement and Balance Sheet by linking in movements and balances from calculation tabs Incorporate relevant Balance Sheet checks and learn how to trouble shoot imbalances Registration no. 10321258 10 Margaret Street London, W1W 8RL, United Kingdom

Module 6 – Refinancing, mezzanine debt and cash sweeps Understand the purpose of refinancing in a Project Finance transaction Discuss the impact on model assumptions and functionality such as repayments, fees and interest Walk through the approach to modelling a rolling refinance vs. a re-gearing refinance Incorporate a refinancing functionality into the case study model Incorporate a mezzanine debt tranche with cash sweep repayments Understand the rationale for using a mezzanine loan in Project Finance Use the Cash Flow waterfall to calculate mezzanine repayments using a cash sweep functionality Learn how to model PIK interest on the mezzanine loan Discuss how mezzanine debt can be incorporated in a debt sizing Module 7 – Other construction facilities (working capital & VAT) Understand the impact of the timing of payments and receipts on cash flow Discuss the types of construction facilities commonly used in Project Finance Walk through the mechanics of a VAT facility Incorporate a working capital facility in the case study model Registration no. 10321258 10 Margaret Street London, W1W 8RL, United Kingdom

Modelling for Project Finance course (or individuals who have practical experience and a good understanding of Best Practice Financial Modelling) and would like to build on these skills to tackle more complex elements of Project Finance modelling. The content is well suited to Project Finance analysts and associates working for project