The heart of all project finance models

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Presentation transcript:

The heart of all project finance models T201 Project Finance Modelling Cash Flow Waterfall The heart of all project finance models Hello, my name is John Richter; I'm one of the instructors here at Financial Mechanics. Or (shorter). Hello, John Richter here from Financial Mechanics and welcome to this video tutorial / next session in your T101 Financial Statement Modelling course. Thanks for watching this video on Excel's Calculation Options. Somewhat to my surprise, as I walked through the various elements, quite a big topic, and we don't really treat it comprehensively enough on most of our courses So if you think there isn't much to know, you might hear a few new things. FAST Modeling Skills

Prioritizes cash receipts / payments during operating period Cash Flow Waterfall Prioritizes cash receipts / payments during operating period Best not to intertwine with pre-conversion cash flows Priority ranking unique to each transaction e.g. Is capital expenditure paid 'ahead' of / above debt service (or below) Not a statutory or presentational cash flow Nor is it set-up to replace sources and uses of cash statement Calculates cash flows at key intermediate points Cash flow available for debt (service), CFADS Cash flow available for shareholders / distributions F1F9 Modelling:

Basic priority of payments Water flow analogy Other income Revenues Debt service (Lenders) Operating costs Capital expenditure DSRA Taxes Distributions (Shareholders) Project Finance Modeling FAST Modeling Skills

The heart of the model Where all agreements and analysis come together Modeling Assumptions Cash Flow Principal Agreements Technical assumptions Product pricing Operations plan Indexation / forex EBITDA EPC contract Revenue contracts (and/or market studies) O&M, fuel supply, O&M, insurance [Capital expenditure] Corporate structure Jurisdiction's tax rules Financing structure Tax payments Tax rules / legislation Incorporation / partnership agreements Project costs; leverage Debt term; Interest rate Ratio sculpting CFADS Facility agreements Inter-creditor agreement Debt service Equity structuring Tax optimization Accounting rules Ratio lock-ups DSRA Debt service cover ratios Equity distributions Returns / valuation Project Finance Modeling FAST Modeling Skills

Contact John Richter Instructor Financial Mechanics info@fi-mech.com FAST Modeling Skills