Course dates
The course will provide delegates with a thorough understanding of:
-
Investment appraisal techniques.
-
Equity valuation by discounting dividends.
-
Costs of debt and costs of equity.
-
Impact of tax and financial distress costs.
-
Capital asset pricing model.
-
Calculating beta and the risk premium.
-
Measuring the required capex.
-
Preparing the cash flows.
-
Methodologies using EBIT, EBITA, EBITDA, EBITDAX.
-
Alternative multiple-based valuation ratios.
-
The valuation of flexibility.
-
The option to defer.
-
Valuing reserves in the ground using comparables.
-
Using the option valuation methodology for mine expansion.
Who Should Attend
The course will be of value to professionals in the following areas:
-
Executives and managers.
-
Professionals in all functions seeking to enhance their financial knowledge.
-
Investment and commercial bankers (especially those with a single product specialisation needing to understand alternatives).
-
Equity and fixed income investment managers.
-
Investment analysts.
-
Credit analysts.
-
Treasury managers and staff.
-
Lawyers.
-
Accountants.
-
Company brokers and advisers.
Course Methodology
The training course is wholly interactive and participants will be fully involved through discussion, exercises and case studies. Participants will ideally have access to laptop computers with Microsoft Excel for some of the exercises and case studies. A calculator would also be useful.
Course Background
At the end of the course, participants will have a sound understanding of:
-
How decisions about the structure of the balance sheet are made.
-
How to model cash flows that are used in valuation.
-
The effect of the timing of cash flows on value.
-
What sensitivity analysis can do in developing an assessment of risk.
-
How to measure the cost of capital.
-
How valuation ratios can be used to value mineral reserves.
-
How to use valuation ratios when there are no earnings.
-
How to use comparative company financials for valuation.
-
How to measure beta.
-
How the finite life of a mining project impacts valuation.
-
How option valuation methodology can be used for project appraisal.
-
The value of the option to expand, defer or close.
- The particular valuation techniques for reserve based businesses.
Day 1
DCF Valuation techniques
Session 1: Investment Appraisal Techniques
-
Shareholder value as a key management objective.
-
Strategic financial objectives.
-
Appraising investment projects.
-
Alternative measures of value.
-
Payback period, discounted payback period, NPV, IRR.
-
Introductory sensitivity analysis.
-
Using Excel shortcuts.
-
Organising the spread sheet to minimise errors.
-
Spread sheet disciplines.
Case Study: comparing alternative investment opportunities; and developing sensitivities of returns to variations in key project parameters.
Session 2: Equity valuation by discounting dividends
-
Dividend discount models.
-
Gordon growth model.
-
Multi-stage dividend discount models.
-
Weaknesses in these models.
-
Using the growth perpetuity to value cash flows.
Case Study: valuing equity using a 2/3-stage dividend discount model.
Session 3: Cost of Capital
-
Capital Structure Theory: Modigiliani and Miller.
-
Enterprise value concept.
-
Impact of tax and financial distress costs.
-
Cost of debt and cost of Equity.
-
WACC (weighted average cost of capital).
Case Study: calculating the benefit of the tax shield of debt.
Session 4: Capital Asset Pricing Model (CAPM)
-
How CAPM works.
-
How CAPM can be used to identify the cost of equity.
-
The impact of gearing on the cost of equity.
-
Relationship to capital structure.
-
Model inputs and sensitivity.
-
Calculating beta and the risk premium.
-
Sources of error in the model.
Case Study: calculating the cost of equity using beta; and adjusting the beta for changes in gearing.
Day 2
Cash flow modelling
Session 1: Identifying the key drivers in the business model
-
Forecast of sales: the assumptions.
-
Identifying the cost structure.
-
Computing the working capital needed.
-
Measuring the required capex.
-
Analysing capex between maintenance and development.
-
Preparing cash flows.
-
Terminal value assumptions and growth in particular.
-
Testing the reasonableness of the terminal value assumption.
-
Non-operating assets and impact on valuation.
-
Obtaining an equity value using WACC.
Case Study: Preparing cash flow forecasts for a multinational miner.
Session 2: Applying WACC in practice
-
Review of WACC as a valuation tool.
-
Preparation of free cash flows.
-
Alternative terminal value calculations.
-
Iteration using "goal/seek".
-
Selecting the right beta.
-
Creating the sensitivity matrix.
Case Study: valuation involving preparation of cash flows, calculation of WACC, estimating enterprise value and hence equity value.
Session 3: Deriving the financial statements from the cash flow projections
-
Computing depreciation.
-
The tax function and deferred taxation.
-
Working capital.
-
Seasonal factors and working capital.
-
Monthly cash flow forecasting.
-
Debt financing as an overlay.
-
The revolving working capital facility.
-
Deriving P&L accounts from the cash flow projections.
-
Deriving balance sheets from the cash flow projections.
-
Modifying WACC to account for changes in capital structure.
Case Study: preparing projections for a private equity investment opportunity Session 4: Multiples based valuation methodologies.
-
The key valuation ratios.
-
"Proof" of the validity of multiples-based valuation tools.
-
Characteristics of the earnings forecast.
-
Comparable company analysis.
-
Enterprise ratios and their advantages over conventional ratios.
-
Methodologies using EBIT, EBITA, EBITDA, EBITDAX.
-
Alternative multiple-based valuation ratios.
-
Price/book, price/sales, price/pop and other ratios.
-
Accounting scams – the Xerox case.
-
Weaknesses in the model.
-
Reconciling a multiple-based valuation to WACC.
Case Study: IPO valuation using multiples.
Day 3
Option Valuation Methodology
Session 1: Valuing reserves in the ground using comparables
Case Study: The valuation of a project financing for the development of a major mineral resource.
Session 2: Real options
-
Projects as options.
-
The valuation of flexibility.
-
Introduction to option valuation methodology.
-
Payoff charts.
-
Put and call option parity.
-
The binomial model.
-
Black and Scholes.
- Volatility measurement.
Case Study: valuation of an option.
Session 3: The option to defer
-
The value and cost of delay.
-
Impact of the time horizon: limited exploitation license life.
-
Using option valuation methodology to value the delay option.
-
Valuing reserves in the ground before extraction.
-
Value in uneconomic discoveries as an option.
- Volatility of the underlying commodity.
Case Study: Estimating the value of the delay option for a mine.
Session 4: Other option elements: expansion and closure
-
Using the option valuation methodology for mine expansion.
-
Valuing the option to walk away.
-
Using existing market values to obtain valuation benchmarks.
-
Using a combined approach to valuing producing assets and discoveries.
Case Study: Valuation of a major mineral company with a range of developed and undeveloped mining assets.
Course summary and close
-
Paul Richards has taught Masters students at leading business schools in the UK (Cranfield and Cass Business Schools) for more than 15 years. He has also trained successfully for Euromoney for 5 years in more than 100 courses many of which have been customized courses delivered in-house for major banking institutions (eg Barclays, HSBC and other international banking institutions).
Paul has more than 20 years investment banking experience specialising in domestic and international corporate finance at UBS (Warburg), HSBC and Map Securities (part of Skandia Insurance and Mapfre, Spain). He was also the chief executive of the London merchant banking operation of Credit Industriel et Commercial, a major French banking group.
As a result of this experience, Paul has extensive firsthand experience of: mergers and acquisitions; IPOs; bond issues; secondary market issues; privatisation; debt syndications; corporate treasury; equity valuation; investment analysis; security and derivative valuation; private equity; modelling; corporate governance; and compliance. His consulting and training clients have included a wide range of organisations such as Bowring, Industrial Development Company and Association of Corporate Treasurers and he has also been involved in expert witness work.
Currently, Paul is CFO at Affinity Real Estate Private Equity and he also undertakes training assignments for Euromoney. He is a non-executive director of Energy Invest Group, a resource financing company.
Paul won the 2004 Wincott Foundation Prize for his article "Lessons in shareholder value" on the boom and bust in new economy stocks, published in Professional Investor (the journal of the UK Society of Investment Professionals - the UK member society of the CFA Institute).
Paul has been a member of the FTSE Indices Committee, a member of the Accounting Standards Board working party on Operating and Financial Review and has 12 years experience as a non-executive director of a listed UK company.
Paul is a graduate of Cambridge University and London Business School. He is also a CFA charter holder, an Associate of the Chartered Institute of Bankers, a Member of the Association of Corporate Treasurers and a Fellow of UKSIP.
Courses run by this instructor
Johannesburg Hotel, Johannesburg, South Africa
This programme takes place on a non-residential basis at a central Johannesburg hotel. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.
Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.
23-25 Jul 2013 (Johannesburg, South Africa)
3-5 Dec 2013 (Johannesburg, South Africa)
23-25 Jul 2014 (Johannesburg, South Africa)
3-5 Dec 2014 (Johannesburg, South Africa)
A 3 day financial training course on financial modelling in excel.
24-27 Jun 2013 (Nairobi, Kenya)
The course provides participants with a working knowledge of the principles and practices of applied corporate finance including: financial analysis, modelling and valuation. This will enable participants to acquire a sufficiently thorough understanding of the subject in order to be able to use the tools and techniques in an effective manner.
22-24 Nov 2013 (Johannesburg, South Africa)
The aim of this intensive 3-day training course is to provide participants with exposure to leveraged and mezzanine financing techniques in the context of M&A and private equity structures. Delegates will be introduced to international practice in executing leveraged transactions, which will include due diligence, accounting issues and valuation techniques. Case studies will include opportunities to structure leveraged finance transactions.
25-29 Nov 2013 (Johannesburg, South Africa)
A 5-day case study based workshop exploring more advanced issues in company valuation and financial modelling.
23-27 Sep 2013 (Nairobi, Kenya)
A 5-day case study based workshop exploring more advanced issues in company valuation and financial modelling.
26-28 Aug 2013 (Johannesburg, South Africa)
27-29 Jan 2014 (Johannesburg, South Africa)
25-27 Aug 2014 (Johannesburg, South Africa)
A practical and highly interactive 3-day training course, incorporating numerous case studies to enhance delegates understanding on the production and transformation of agricultural products and their distribution.
13-15 Aug 2013 (Johannesburg, South Africa)
A 3–day training course dedicated to the valuation, structuring, financing and negotiating of merger and acquisition transactions.
7-9 Oct 2013 (Accra, Ghana)
This comprehensive 3-day workshop builds a financial analysis and valuation model through a series of practical stages.
3-5 Dec 2013 (Nairobi, Kenya)
This 3-day programme focuses upon how the toolkit of conventional business analysis can be linked sequentially and logically with the principles of financial economics. It will provide critical insight into how the tools and techniques of conventional business analysis can and must be adapted.
4-6 Mar 2014 (Lagos, Nigeria)
9-12 Jul 2013 (Nairobi, Kenya)
This comprehensive 4-day management course will improve the effectiveness and success of your banking branch network.
8-11 Jul 2013 (Johannesburg, South Africa)
This 4–day Corporate Finance Applications course is
a practical "how to" programme dealing with numerous disciplines within the subject of corporate finance.
19-21 Jun 2013 (Nairobi, Kenya)
18-20 Jun 2014 (Nairobi, Kenya)
22-25 Jul 2013 (Lagos, Nigeria)
This 4-day intermediate programme equips investment professionals with practical knowhow of new approaches and new asset classes for today’s investment conditions.
5-8 Aug 2013 (Nairobi, Kenya)
A comprehensive 4-day training course, featuring case studies across a range of industries to help course participants practice corporate valuation techniques.
15-17 Oct 2013 (Lusaka, Zambia)
A 3-day financial training course on corporate loan restructuring. With tough liquidity conditions finance professional are required to quickly identify what is causing borrowers problems and provide the most appropriate and costeffective finance solution.
19-21 Aug 2013 (Johannesburg, South Africa)
A comprehensive 3- day course for all financial professionals in banking, corporate finance,
strategic and financial advisory, consulting, M&A departments and private equity houses.
23-26 Sep 2013 (Johannesburg, South Africa)
This program covers how to design a successful corporate banking strategy and provide the adequate products and services to the different customers groups. It applies to banks in developed and emerging markets.
21-24 Oct 2013 (Johannesburg, South Africa)
This 4-day workshop takes a hands-on approach to financial analysis and cash flow techniques.
23-25 Jul 2013 (Johannesburg, South Africa)
This 3-day course has been designed to provide the participants with a complete overview of the venture capital industry and its workings.
12-14 Aug 2013 (Harare, Zimbabwe)
11-14 Nov 2013 (Johannesburg, South Africa)
This 4-day intermediate programme equips investment professionals with practical knowhow of new approaches and new asset classes for today’s investment conditions.
7-9 Oct 2013 (Lagos, Nigeria)
This comprehensive 3-day workshop builds a financial analysis and valuation model through a series of practical stages.
4-6 Aug 2014 (Accra, Ghana)
This practical and highly interactive 3-day financial training course, which incorporates numerous case studies, provides delegates with a thorough understanding of the syndicated loan market, its process and potential.
Course dates