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Finance Lecture # 6

Finance Lecture # 6. Jan H. Jansen E-mail: jan.jansen@han.nl. Guest lecture ASN BANK (2011.10.20) Main topics Conclusion. Wind energy. Minor Wind Energy Project Management. Programme. Plan the financial chapter. Planning of the financial chapter Data & Assumptions Cash Outflow

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Finance Lecture # 6

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  1. Finance Lecture # 6 Jan H. Jansen E-mail: jan.jansen@han.nl

  2. Guest lecture ASN BANK (2011.10.20) • Main topics • Conclusion

  3. Wind energy

  4. Minor Wind Energy Project Management

  5. Programme

  6. Plan the financial chapter • Planning of the financial chapter • Data & Assumptions • Cash Outflow • Cash Inflow • Calculations • Financial criteria: IRR, NPV, ROI, BET & DSCR • Friday morning in period 2 consultancy • Yellow Hurricane (09.00 – 09.20) • Blue Energy (09.30 – 09.50) • Green Air (10.10 – 10.30) • Red Viventorum (10.30 – 10.50) • Black Offshore(11.10 – 11.30)

  7. Structure Excel model

  8. Recap lectures # 1 - 5

  9. Lecture 1(Wind) Energy MarketAnnual ReportsFinancial RatiosStrategic Information

  10. What is our ambition? • Recognizing trends in the Wind Energy market • Analyzing an annual report of a wind energy supplier; • Constructing an cash flow overview of wind energy project; • Establish risk awareness (project- , exchange -, interest rate- and political risks) • Decision criteria for an investment in a wind energy project (PBP, ROI, NPV, IRR and BET). • Financially sourcing a wind energy project.

  11. Annual reports • Market & Strategy • Corporate Governance • Corporate Social Responsibility (CSR) • Sustainability • Financial ratios • Profitability • Liquidity • Solvency • Activity

  12. Lecture 2ETOTCOQC

  13. Lecture 3Exposures(ER, IR, INFL, EP etc)Excel model

  14. Lecture 4Project FinancePrinciples of Project Finance, Yescomb

  15. Lecture 5Risk & ReturnDOSIT Methodology

  16. Guest lectures • Green Giraffe Bank • ASN BANK

  17. Structure Exam • Assignment 1 (25%) • Excel Investment Model • Theoretical concepts lectures 1 - 5 • Assignment 2 (25%) • Financial Analysis Wind Energy Sector (Annual Reports) • Theoretical concepts lectures 1 - 5 • Assignment 3 (25%) • Analysis Wind Energy Market & Sector • Theoretical concepts lectures 1 - 5 • Assignment 4 (25%) • Guest lectures Green Giraffe Bank & ASN Bank • Theoretical concepts lectures 1 - 5

  18. Project Information • Gazturbeneg SA (Vesoul) • €urozone based SME company in France • Producing & selling components for industrial gas turbines in a B2B market • Investment budget of € 20 million • Production plant or Distribution Centre (in combination with a warehouse and sales department) outside the €urozone • Economic life: 20 years • Annual net cash flows € 2.5 million (in foreign currencies)

  19. What is your job? • You have to write an advice for the management team of Gazturbeneg SA to invest or not • You have to present and defend your report in a management team (MT) meeting

  20. Financial appendix (in MS Excel) • Financial data • Exchange rate (€ 0,75 / $ 1) • Interest rate (EU: 2% and USA: 3%) • Investment: € 20 million • Equity: 30% (Parent company) • Debt: 70% (Bank Loan) • Duration: 20 years • Cash Inflows • € 2.5 million in year 1 (in foreign currency) • Investment in USA (example)

  21. Structure Excel model • Data & Assumptions • Calculations • Results • Payback Period • ROI • NPV • IRR • Break Even Time

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