f i n a n c i a l f o r e c a s t i n G

BEST pracT icE mod El l ing f orproj EcT f inancE(adVancEd TEcHniQUES )

© 2017 Near Future Ltd.Registration no. 10321258

www.nearfuturefinance.cominfo@nearfuturefinance.com

coUrS E o VE rV iE W

lEarning o U T co mE S

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.

Prepare integrated

financial statements

(Balance Sheet, Income

Statement and Cash

Flow) and learn to

debug errors.

Use advanced

modelling techniques

to incorporate complex

operational calculations,

including depreciation

and taxation.

Create an error checking

dashboard to monitor

integrity, signal and macro

issues in the model.

Get to know the VBa

interface and learn how

to write macros to break

circularities.

Optimise the debt size

based on key constraints,

including tenor, debt

service coverage ratio

(DSCR) and gearing.

Incorporate reserve

accounts, short-term

construction facilities and

refinancing into a Project

Finance model using Best

Practice principles.

coUrS E mo dU l E S

Module 1: Debt Sizing and Advanced Ratio Analysis

Module 2: Project Finance Reserve Accounts

Module 3: Cash Flow vs. the Income Statement: 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

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

coUrS E co n T E n T

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)

MODule 3

CASh FLOW VS. The InCOMe STATeMenT:

TIMInG DIFFeRenCeS

understand the purpose of the Income

Statement and Cash Flow Waterfall in a

Project Finance model

• understand the principle of accrual vs.

cash-based accounting

• Discuss the main sources of timing

differences in a Project Finance forecast

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)

• Learn a streamlined approach to

modelling depreciation forecasts where

multiple capex additions occur over

time (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 tax 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

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

f i n a n c i a l f o r e c a s t i n G