RAD X

FROM THE ROOTS UP

Training Academy

presents

Applied
Corporate
Finance Your Course Presenter:

Modelling Hamed Behairy, CFA

Leading international financial

trainer and corporate
governance specialist.
CEO of Radix Corporate
Governance (Pty) Ltd and
Radix Training Academy (Pty) Ltd.

www.radixacademy.com +27 (0)82 621 3077 +27 (0)86 620 2013 training@radixacademy.com
 M
Introduction

ov
e
To
Su
cc
es
s
Corporate Failures: Why and how companies fail?

W
ith
The recent economic environment has forced organisations all over the world to

U
reassess their corporate structure and decision making processes. Now that the

s
ebullient market we had for many years is out of window, mistakes at this stage of
the economic cycle can be very costly to both shareholders and managers. By the
same token, the financial crisis has brought with it many opportunities in terms of
inexpensive assets. Prudence, coupled with the necessary tools, can in fact allow
you to take advantage of the current economic downturn.

All firms, large or small, manufacturing or service, private or public, are involved in
three main corporate finance decisions: financing, investment and dividend.
Without understanding company valuation, the implementation of these principles
will be almost impossible. Hence, the course dedicates more than a day in
covering this important topic. We will walk through these key decisions that
contribute to shareholder value.

Financing decision: executives need to

Key Objectives of
the Course are to:
Ÿ Understand company
valuation modeling
Ÿ Evaluate projects using
different Excel models
Ÿ Optimize the capital structure
of an organization
Ÿ Evaluate the best alternatives
to distribute excess cash of
the business
Ÿ Understand the difference
between dynamic and static
project appraisal
know whether the current mix of debt and
equity is optimal given the objective function
of maximising firm value. How to measure
this optimal level and in case the optimal
level is different from the existing one, how
can a company manage the change in its
capital structure?
Investment decision: firms have scarce
resources that must be allocated among
competing needs. In order to maximise the
firm value, companies need to invest in
certain projects and avoid others. What is
the framework for the decision making
process of analysing projects?

Dividend decision: every business that thrives reaches a stage in its life when the
cash flows generated by existing investments is greater than the funds needed to
take on good investments. In these cases, how do firms manage the different ways
of returning excess cash to owners?

Who should attend?

The knowledge gained from this highly interactive three day course is essential for:

Ÿ Corporate Finance specialists Ÿ Management

Ÿ Chief Executive Officers consultants
Ÿ Chief Financial Officers Ÿ Corporate
Ÿ Board members Finance lawyers
Ÿ Financial analysts
Ÿ Credit analysts
Ÿ Private equity managers
Ÿ Venture Capitalists
Ÿ Risk managers
Ÿ Internal auditors
Ÿ Compliance officers
Course Outline
Day 1
Company Valuation
Introduction to Valuation
The principles and practice of time value for money
Benjamin Graham's safety margin
Introduction to Discounted Cash Flow (DCF)
Risk Parameters and Expected Return
What is risk and how to measure it?
Models of default risk and CAPM
Market risk premium meaning and measurement.
Risk free rates and market risk premium
Estimating risk parameters and cost of financing
What is beta?
Model regression beta calculation of a listed company
Model bottom up beta calculation of the same company
Equity risk and expected returns
Review the country risk premium of various countries
Model the cost of equity of a local and a foreign company
Model synthetic rating for a listed and a private company
Three ways of calculating cost of debt
Book value or market value of debt and equity?
Cost of capital modelling
Explicit and implicit costs of financing.
What happens when a company doesn't meet their cost of capital?
The practice of changing assumptions
Some analysts don't use CAPM. Practical alternatives?
What does Warren Buffet use as cost of capital?
Case study: Calculate the cost of capital of Marriott
Financial Statements Adjustment
The reasons for adjusting financial statements
Capitalizing operating leases (Excel model)
The capitalisation rate
Model the adjustment to EBIT and adjustment to total debt
Capitalizing R&D (Excel model)
Nature of industry and how many years to look back
Model the tax effect of R&D adjustment and final effect on EBIT
Free Cash Flow to Equity (FCFE) vs. Free Cash Flow
to Firm (FCFF)
Meaning, measurement and modelling
Normalizing EBIT, capex and working capital (Excel model)
Why we need the non-cash, non-debt working capital?
Adjustments required if firms have negative working capital
Marginal vs. effective tax rate
Stable debt policy and FCFE
FCFE and leverage. Is there a free lunch?
Calculation of terminal value (TV) (Excel model)
Tying Up Loose Ends (Excel model)
Valuing operating and non-operating assets
Day 2
Continue Valuation:
Case study: Putting It All Together
Full valuation of a cement company covering all the previous topics
Dividend Discount Models (DDM)
Gordon growth model (Excel model)
Versions of the model
Issues in using DDM
Valuing S&P 500 using DDM (Excel model)
Valuing a utility company using DDM (Excel model)
Relative Valuation
Standardized values and multiples
Three different ways to using multiples (Excel model)
Use regression analysis with multiples
Earnings multiples
Book value multiples
Sales multiples
Calculate of terminal value using multiples
Valuing Private Companies
What makes them different?
Estimating the cost of capital for private companies
Charging for higher risk: haircut from valuation or
increasing the cost of capital?
Estimating the size of liquidity discount
Estimating the value of control premium
Investment decision
Going through all the topics with a real life example
Incremental Cash Flow
Hurdle rates for firms and hurdle rates for projects
Modelling differential costs
Modelling sunk costs
Modelling expected depreciation and taxes
Effect of allocated costs
Non-cash working capital requirements
From income to cash flows (Excel model)
Time weighted Incremental cash flows (Excel model)
Closure of cash flows
Project appraisal modelling:
Net Present Value (NPV) and Internal Rate of Return (IRR)
Investment decision rules
NPV profiles at different discount rates
NPV and IRR of projects of different scale
Differences in reinvestment rate assumption (Excel model)
Modified IRR modelling
Capital rationing
Project replication and equivalent annuities (Excel model)
Product cannibalization vs project synergy
Side costs for projects
Real options modelling
Valuation of a financial option (Excel model)
Payoff of put and call options
The option to delay a project
Valuing a patent (Excel model)
Valuing the option to expand (Excel model)
Valuing the option to abandon(Excel model)
Valuing contracts with third parties
Course Info

Day 3
I s ED
The financing decision:
S TOM
The choices: types of financing (debt, equity and hybrid)
Background of the M&M theorems CU In-hours training – we will
Approaches to measure the optimal capital structure:
_Operating income approach (Excel model) come to you!
_Cost of capital approach (Excel model)
_Adjusted present value approach (Excel model) If you have 15 or more delegates who are
_Comparative analysis (Excel model) interested in this course, we can come to you
Calculating beta and WACC before and after restructuring
Back testing with implied growth rate and customise the course content to your
Interest coverage ratio at different debt ratios particular needs. Kindly contact us for more details
Unleveraged firm value (Excel model)
Bankruptcy cost
Tax benefits
How do firms choose their capital structure in practice?
What are the determinants of whether a firm is under risk of bankruptcy? Recent attendees:
What are the determinants of whether a firm is a takeover target?
The presenter has taught delegates on various
topics from over 130 companies worldwide including
Dividend decision: the following. Please contact us for the various
programs that Radix offers
How much does a company afford to distribute? (Excel model)
Approaches to dividend policy analysis: ABSA
Cash flow approach (Excel model) Adcock Ingram
Comparable firm approach (Excel model) Afgri Operations
Dividends vs. share buyback Allan Gray
Corporate governance and dividend policies Astro Media- Malaysia
Real life example of corporate governance failures Banco Commercial De Investimentos- Mozambique
Blue Financial Services
Business Connexion
Day 1 Schedule CBZ Bank Holdings- Zimbabwe
Citigroup
Registeration: 08:00 Department of Public Enterprises
First session: 08:30 - 11:00 Ellies Holdings
Second Session: 11:10 - 13:10
Lunch: 13:10 - 14:10 Eskom Holdings
Third session: 14:10 - 16:00 Exxaro Resources
Fourth session: 16:10 - 17:35 Financial Services Board FSB
Gold Fields Group
Day 2 Schedule Government Institutions Pension Fund- Namibia
Grindrod Bank
First session: 08:30 - 11:00
Second Session: 11:10 - 13:10 Investec Asset Management
Lunch: 13:10 - 14:10 Khazanah (Central Bank)- Malaysia
Third session: 14:10 - 16:00 Metropolitan Life
Fourth session: 16:10 - 17:35
Munich Reinsurance
Day 3 Schedule National Empowerment Fund (NEF)
Nedbank
First session: 08:30 - 11:00 Old Mutual
Second Session: 11:10 - 13:10 RMB
Lunch: 13:10 - 14:10
Third session: 14:10 - 16:00 Standard Bank
Fourth session: 16:10 - 17:35 Symmetry Multi Managers
UBS Investment Bank
Virgin Money

Why Radix Training Academy (Pty) Ltd

Radix Training Academy (Pty) Ltd offers its clients outstanding financial services in three spheres: training, consultation and
modeling solutions. Our clients span from major listed companies and financial institutions to small and medium enterprises.
Radix offers a number of public and in-house financial training courses around the world directly through Radix or through
one of our affiliates. All the courses are intended to be of a practical nature. The common theme of all courses is the heavy
use of modeling and case studies with minimum theoretical discussions. We start from the roots up. However complicated
financial concepts purport to be, we aim to show you exactly how fantastically uncomplicated learning about them or
modeling them can be. Radix also offers Excel modeling and Business Intelligence solutions. There is no modeling task that
is too big or too small. We will ensure that all assignments are adhered to in the most professional way. Radix provides
financial consulting services to corporates, financial institutions and central banks to create effective solutions to the
complicated problems they are facing in various areas.
 About the presenter

Hamed Behairy, CFA, an internationally renowned financial consultant and

trainer over the past 14 years. With more than 14 years of experience in the fields
of financial analysis, modelling, corporate governance, consultation and training,
Hamed has been consistently acclaimed as one of the top financial consultants in
South Africa.

The presenter is widely renowned in different parts of the world as a seasoned

valuation modelling expert. Hamed is the founder and CEO of Radix Training
Academy (Pty) Ltd and cofounder and CEO of Radix Corporate Governance (Pty)
Ltd based in Cape Town, South Africa. Radix shares the spirit of doing things right,
and getting things done in the most professional way.

Hamed has an extensive training experience. His workshops combine professional

knowledge along with excellent presentation skills. Participants' comments of
Hamed's workshops indicate that they leave with deep understanding of the
material covered and conclusive ability to apply these concepts at their workplace
upon completion of his courses. He has substantial experience in training
corporate executives on strategic matters including valuation modelling, corporate
restructuring, M&A modelling, applied corporate finance modelling, financial analysis modelling, attribution analysis
modelling and other modelling courses. Hamed worked as a financial analyst and modeller in an asset management
company. While lecturing accounting and financial analysis at the University of Alexandria, Hamed was awarded the best
teaching talented lecturer.

Hamed is a Chartered Financial Analyst (CFA). He qualified with Bcom (honours) in accounting - cum laude with first class
honour, and Bcom (honours) in Financial Analysis and Portfolio Management - cum laude, with first class honour. Hamed's
hands-on training approach is mixed with energy, humour and continuous interaction with delegates. The systematic build
up of his workshops ensures a bottom-up explanation, leading delegates quickly from the basics through the more
advanced topics.

Other courses by Hamed Behairy, CFA

• Valuation Modelling
• Investment Philosophies
• South African Financial Markets (bond, equity, money, forex, & derivatives)
• Investor Relations
• Corporate Failures: how and why do companies fail?
• Mergers and Acquisitions Modelling
• Performance Measurement, Attribution Analysis and GIPS Modelling
• Private Equity and Venture Capital Modelling and Structuring
• VBA Financial Programming

Kindly contact us for course brochures and booking.

The price of the Course includes:

Course attendance for three days in a minimum of 4-star Conference Facility For More info
All course notes
Visit our Website
CD with all relevant modules HERE
One month window period after the course to ask any question
or
Email us
Daily breakfast, lunch and two coffee breaks with snacks.

If needed, we can assist with finding suitable accommodation nearby

HERE
the Conference Facility
 RAD X
FROM THE ROOTS UP
Training Academy

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Modelling
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www.radixacademy.com +27 (0)82 621 3077 +27 (0)86 620 2013 training@radixacademy.com