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Financial Analysis of Gazturbeneg SA Investment Decision

This lecture covers financial planning, analysis of wind energy projects, annual reports, and decision criteria for investments. Excel models and theoretical concepts are utilized for practical understanding. The scenario involves advising Gazturbeneg SA on a potential €20 million investment decision.

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Financial Analysis of Gazturbeneg SA Investment Decision

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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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