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Advanced Financial Analysis Dubai Public Programme 8 - 9 June 2014 Positive economic signals in the GCC are encouraging: for example, in the UAE, GDP growth in 2013 was almost 5.0%, the residential real estate sector is booming and hotel guests are up by 1 million. A word of caution. Bad loans are made in good times….So, it is in these very circumstances that it is necessary to ensure that our lenders, analysts and risk officers are on top of their game and able to utilise in a disciplined manner the techniques delivered in this programme.

What previous delegates have said about the trainer:

Well prepared, knowledgeable, excellent handouts and materials (Investment Banker)

will be referring it both “ Great course, internally and externally “ (Investment Banker)

trainer with excellent “ An experienced teaching skills ” (Restructuring Banker)

trainer, good communication “ Excellent skills and command of subject ” (Senior Corporate Banker)r

Contact Us www.bgcredittraining.com info@bgconsulting.com BG Europe 1 Ivory House Plantation Wharf Battersea London SW11 3TN T: +44 (0) 20 7648 4000 F: +44 (0) 20 7648 402 BG Middle East Level 14 Boulevard Plaza Tower One Emaar Boulevard Downtown Dubai PO Box 334155 T: +971 4 455 8425 BG Asia-Pacific 10F Central Building 1-3 Pedder Street Central Hong Kong T: +852 6343 7594

2014


BG Credit Advanced Financial Analysis

Advanced Financial Analysis 2 Days Overview

Positive economic signals in the GCC are encouraging: for example, in the UAE, GDP growth in 2013 was almost 5.0%, the residential real estate sector is booming and hotel guests are up by 1 million. A word of caution. Bad loans are made in good times…. So, it is in these very circumstances that it is necessary to ensure that our lenders, analysts and risk officers are on top of their game and able to utilise in a disciplined manner the techniques delivered in this programme.

Objectives

By the end of this programme, delegates should be able to: 

Understand the concept of Debt Capacity;

Be able to apply the commonly used measures of Debt Capacity;

Be able to subject a customers’ key numbers (revenues, EBITDA and Cash Flow) to stability/ volatility analysis;

Be able to state the impact of the volatility analysis on our calculation of Debt Capacity;

Be able to make the key debt adjustments to a customer’s balance sheet in respect of off balance sheet items;

Understand the problems of lending to Groups, how to identify structural subordination and analogical issues, structuring robust mitigants;

Be able to develop and use scenarios based upon customer forecasts, and

Be able to conduct sensitivity analysis to understand the conditions under which customer coverage ratios might fall below acceptable levels.

Audience

Experienced financial and credit analysts, risk managers and relationship managers working in the GCC banking market

Methodology

Presentations by trainer well-known to the GCC market, with over 30 years’ experience in financial analysis as a banker and consultant, supported by: 

Powerpoint slides;

Relevant case studies, and

Excel-based exercises


BG Credit Advanced Financial Analysis

Session 1 - Debt Capacity The Debt Capacity of a business can be defined as the maximum level of borrowing that it can sustain over a medium to long term while maintaining acceptable credit standards, such as a target credit rating. If we lend beyond the firm’s debt capacity, we could be taking unacceptable risks for inadequate returns. Conversely, if we are excessively conservative because we do not understand the borrower’s debt capacity, we could be missing good credit opportunities. Thus, the concept of Debt Capacity addresses the following key credit questions: “How much can we safely lend to the customer?”; “How much is too much?”, and “How can we tell if the customer is borrowing too little?” In this session, we analyse the firm’s debt capacity. The Course Director builds up a range of outcomes driven by: 

Leverage: (Net) Debt: EBITDA

Gearing: Total Liabilities: Net Worth and (Net) Debt: Net Worth

Coverage: EBIT(DA): Interest; Debt Service Cover, and Fixed Charge Cover

Target Credit Ratings

Desired interest rates

Weighted Average Cost of Capital

Practical: participants are required to estimate a borrower’s debt capacity

Session 2 - Stability of: Revenues, EBITDA and Cash Flow In our discussion of Debt Capacity in Session 1, we accepted at face value the customer’s disclosures of revenues, EBITDA and Cash Flow. In this session, we “clean up” the numbers and use the adjusted results as drivers of debt capacity. We then move on to consider measures of stability of revenues, EBITDA and Cash Flow. The reason for this is that a business that generates solid, predictable cash flows is a far less risky proposition than one which might enjoy one very good year followed by a number of volatile years (some of which might be cash flow negative). Practical: Excel-based exercises on “cleaning” the numbers, and using statistical techniques to estimate the degree of stability/ volatility of revenues, EBITDA and Cash Flow across the cycle.


BG Credit Advanced Financial Analysis

Session 3 - Adjusting Financial Statements (i) In our discussions of Debt Capacity, we have not yet been fully comprehensive on what constitutes “Debt”. In this session, we adjust the customer’s balance sheet to include the debt equivalence of a range of off balance sheet items from operating leases, to letters of credit and letters of guarantee through to asset securitisations such as receivables financings. Practical: Excel-based exercise whereby delegates are requested to: calculate the debt equivalence of operating leases; make appropriate adjustments to the income statement, and present the impact of such changes on the key financial ratios of the customer.

Session 4 - Group Accounting We consider larger lending situations involving group companies. In such situations, it is essential to identify the extent to which the parent company is able to exercise control over group cash flow, which is of course the source from which centralised debt will be serviced. In this session, we examine: 

Structural Subordination

Leakage of cash and profits

Complexities caused by: 

Subsidiaries in jurisdictions where cash/ profit repatriation is difficult

Minority interests

Practical: Delegates review a Group to identify potential cash flow risks and suggest mitigants.

Session 5 - Financial Forecasting: Scenario Analysis Experienced bankers understand that loans are not repaid from historic profits but from future cash flow. In this session, we critically review a customer-prepared cash flow forecast and generate alternative scenarios as the foundation for structuring the credit. Practical: In Excel, delegates generate Base Case, Best Case and Worst Case scenarios and propose financial covenants to help control the requested advance.

Session 6 – Financial Forecasting: Sensitivity Analysis Building upon our work in the previous session, we subject the forecasts to sensitivity analysis. As bankers, we need to understand the key risks to cash flow (and, by extension, ability to service debt). So, we will examine the forecasts to understand the conditions under which Debt Service Cover Ratio and Fixed Charge Cover ratio fall below the critically important level of 1.0. Practical: Excel-based exercises.


About our Trainer: Adrian Grant, ACIB, DipFS, MBA Adrian is BG Credit’s Managing Director. He has been active in banking and financial services for thirty years, key roles including: VP Loan Workout for Lloyds International Corp., New York; Senior Consultant and Team Leader, UK Know How Fund at Bank Gospodarki Zywnosciowej SA and Regional Director of National Australia’s Corporate & Institutional Banking business in Dublin. Adrian has extensive experience in developing and delivering financial analysis, credit skills and loan workout training programmes to an Advanced Level. Since mid-2007, he has delivered over 700 days of

training across 200+ individual projects, training over 2,000 financial professionals. His style is highly interactive, encouraging participation by delegates in group discussions and team work. He has advised SMEs on their financial and corporate restructurings, delivered major coaching assignments for corporate bankers and provided consulting to banks on credit policy. Adrian holds an MBA (with Distinction) from Manchester Business School, the DipFS from the Institute of Bankers and its Banking Diploma (Order of Merit).

About our Trainer: Andre Lanser Andre has delivered courses for banks around the world in the areas of Credit, Corporate Finance, Valuation and Financial Modelling. Andre qualified as a Chartered Accountant, completing articles with PricewaterhouseCoopers. He started his career with a subsidiary of Commercial Union, involved in the steel manufacturing industry. His experience ranged from systems implementation, credit assessment of the highly risky construction industry customers, heading up the finance functions to successfully turning the business around and then selling the company through a trade sale. He later joined Commercial Union in the investment back-office

function, reengineering the investment back office and later headed-up a team who implemented a new investment management system for both the back office and the front office. His career then spanned over 12 years in the Venture Capital and Private Equity arena, where he has gained a vast amount of experience in the corporate analysis and valuation field. He is a specialist in developing and training finance related courses, including corporate credit related topics, credit analysis and cash flow analysis with a special focus on the banking sector, derivatives, and financial modelling courses. His training experience spans a period of more than 15 years.


BG Credit Registration Form Please send the completed registration form to: Fax: +44 (0)20 7648 4020 or Email: bookings@bgconsulting.com. Group discount: 2 delegates 10%. 3+ delegates 15%. Course fee: £1,995 GBP ($3,300 USD) per delegate.

Early bird discount: Book before 7 April 2014 to get an additional 10% discount.

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Payment Details (please tick as appropriate)  Bank transfer Lloyds Bank Plc, Orchard Brae Branch, Gillingham, ME8 0LS, UK Sort Code: 30-15-99 Account Number: 00251274 IBan Number: GB89 LOYD 3015 9900 2512 74 Swift Ref: LOYDGB2L  Cheque (made payable to BG Consulting Group Ltd)  Invoice For queries call +44 (0) 20 7648 4000 or email: bookings@bgconsulting.com

Disclaimer. BG Consulting Group Ltd. reserves the right to change or cancel any part of its published programme due to unforeseen circumstances. *The prices quoted here are correct at time of print but may be subject to change. Data Protection. The information you provide on this form will be used by BG Consulting Group Ltd. (“we” or “us”) to process your order and deliver the relevant products/services. Cancellation policy. Cancellation or transfer requests must be made in writing (email, letter or fax) and reach this office 30 days before the course commencement date. A full refund less a £100 GBP administration fee will be given. Delegates who cancel less than 30 days before the course commencement date, or who do not attend, are liable to pay the full course fee and no refunds will be granted. You will not incur any additional charges if you wish to send a replacement delegate to the initial course you registered for and your registration meets the above terms. Customer Information. Fees include all the tuition, full course documentation, lunches and refreshments for the duration of the programme. Incidental expenses: BG Consulting is NOT responsible for covering airfare or other travel costs incurred by registrants. Delegates will be responsible for their own accommodation. An invoice will be sent upon receipt of registration form. Payment must be received in full prior to the course start.

BG Credit

www.bgcredittraining.com info@bgconsulting.com


Advanced Financial Analysis Dubai 8-9 June