financial-building-blocks-2017-2

We make owners and management visualize the

potential with our approach

FINANCE

Copyright © 2017 Beide Forvaltning A/S

EQUITY/VALUATION

BUSINESS/ STRATEGICPLANS

KPI ANDMILESTONES

CapitalStructure OPEX andCAPEXBudget CapitalizationPlans FinancialPro-formas

STRATEGY FINANCE COMMUNICATION

Financial building blocks


EQUITY / VALUATION


KPI ANDMILESTONES

Capital Structure OPEX andCAPEX Budget Capitalization Plans Financial Pro-formas

Our financial building block

structure focuses on making sure

that key financial components of

the strategic plan are in place.

We designe the financial tools for your

organization.

We enable what if scenarios

We identify value potential and milestones.

We lower cost and increase return on equity.

Financial building blocks are the core component of the foundation of the financial planning process. With the right models and assessments,

guiding and monitoring initiatives and investments become a natural part of creating a recurring and sustainable business model.

The more CFOs contribute to strategy, the more relevant their perceptions of growth may become.

The results from a global McKinsey C-level study about emerging challenges indicates that, in the coming years, CFOs will need to

up their game in a wide range of growth-related activities

Executives are extremely or very satisfied with their companies’

effectiveness, CFOs’ resource-allocation role—in processes related to

portfolio management, including capital allocation, capital-

expenditure approval, and profit-and-loss management.

Importance of the CFO role

Nearly half of non-CFO executives report less satisfaction with their

companies’ effectiveness at processes that drive M&A, as well as expansion

into new markets and organic growth (such as new-product development

and expansion to adjacent products and services). Not surprisingly, these

are the same areas where non-CFO respondents think CFOs could more

effectively spend their time.

FINANCE Copyright © 2017 Beide Forvaltning A/S

Financial building blocks – accretive value

BUILDING BLOCKS DESCRIPTION ACCRETIVEVALUE

Capital StructureEvaluation of the absolute mix between equity and debt to absorb return and risk. Type of debt agreements

and working capital that will help the solidity and liquidity of the company.Higher return on equity

OPEXIdentification of operating and capital expenditure items, values and dependencies. Overall composition

and inflationary expectations of fixed and variable expenses.Lowerexpenses

Capitalization PlansDetermination of financing requirements for working capital and liquidity requirements. What is the overall

plan and sources for funding the company (equity and debt) for the planning period.Increasedprobability of

funding

Financial Pro-formaDetailed income statement, balance sheet and cash flow statement for the strategic planning period.

Dynamic tool to evaluate financial impact of changes and new strategic assessments.Identify highest return for

risk

KPI’s & MilestonesCore deliverables, reasoning and methods for meeting important milestones.

Are the KPI definitions and measurements in alignment with the progression and growth of the company.Define accretivegoals

ValuationsPoint in time calculations of overall value of company and plans using various valuation methodologies.

Structured assessment of what input, capitalization and resource utilization will produce accretive valuations.Progressive milestoneplan

T

Financial building block are designed to address their individual and combined

potential to provide accretive value.

FINANCE


EQUITY/VALUATION


KPI ANDMILESTONES



Why finance is Important

Finance impacts choices of what

products, markets and strategic initiatives

to pursue.

By combining finance, strategy and

communicative disciplines in analysis and

plans we aim for better decisions,

improved coordination and accretive

performance.

Our financial program consist of core

building blocks tailored to design

and/or improve the overall solidity and

resources available to grow the

financials of the company in accordance

with expectations.

Finance and strategy walk hand

in hand.

Imagine the importance of proper

financial analysis when;

• Entering new markets.

• Designing your business plan.

• Performing due diligence.

• Assessing cost savings through outsourcing.

• Evaluating an investor portfolio.

• Making big strategic and financial decisions.

• Assessing the value of your company.

• Ongoing business optimization.

Our generic financial building blocks can be

used individually or put together. They can also

be used to evaluate financials of strategic

initiatives.

FINANCE


EQUITY/VALUATION


KPI ANDMILESTONES



Capital Structure

Assessing the strategic

plan and financials, we

focus on the following;

• Return expectations.• Capital expenses and impact.• Methods of raising capital.• Ability to absorb risks.• Strategic control and ownership.• How to create strategic flexibility.

We provide recommendations for combinations of debt and equity.• .

We build on experiences, industrycharacteristics andinvestorexpectations within:

• Capital Management.

• Energy and clean technology.

• Mediacompanies.

• Luxury products and services.

• Retail products and services.

• Innovation and seed companies.projects.

Why choose us among otherconsultants:

We apply senior finance and strategy expertise and experience.

We focus attention on investor, partner,

and client dialog unparalled to other

companies.

We build on international trends and

apply it to local practices.


EQUITY/VALUATION


KPI ANDMILESTONES



Like companies have organizational structures; capital structure matters

Position your company

for the highest return on

equity given your

situation.

The ratio between equity and debt

addresses who absorbs risk and

returns while the opening balance

will be important in assessing how

and what the structure will be in the

distribution among owners.

IAS36 and other accounting

principles determines how the

value will be set for the opening

balance and ownership ratio

betweenowners.

Other types of issues will be what type of

debt agreements, lean on assets and lending

terms will help the solidity, liquidity and

working capital of the company.

Our aim is to optimize financial flexibility, the

ability to refinance, control debt, handle

interest rates and prepare for a variety of

financial situations.

The overall assessment of what capital

structure a company should seek is in

essence an assessment of the

appropriate mix between equity and

debt.

Our task is to determine what the mix

should look like given the expected

risks and the cost effectiveness of

possible ratios between debt and

equity.

Capital Structure - continued


EQUITY/VALUATION


KPI ANDMILESTONES



Operating and Capital expenditure


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KPI ANDMILESTONES



We identify and structure

categories of operating

and capital expenditures.

The overview will be based on:

• Identification of cost componentsanduncertainties.

• Inflation expectationsand cost contingencies/ dependencies / rules.

• How will items be scaled dependenton growth, evolvement ofbusiness.

Assessing the business model and plans

we focus on expensecategories;

• Administrative.• Plant and equipement.• Personell.• PR &Marketing.• M&Aand investments.• Capital and fund raising.• Other.

The operating and capital expenditure overview is formulated in an OPEX model.

We build the opex model based on our cost identification process, experiences and

industry benchmarks within;

• Research• Capital management• Energy and clean technology• Luxory products and services.• Retail products and services.• Innovation and seed projects.

Analysis of expenses that seeks a realistic structure tailored to the operating model.

Operating and Capital expenditure - continued


EQUITY/VALUATION


KPI ANDMILESTONES



Competitive business

models often build on

realistic and effective cost

structures.

The overall composition between

variable and fixed components in

the overall budget addresses the

overall financial risk to outcomes.

Identifying all cost components

and addressing a realistic outlook

for expenditures and revenues

The incorporation of probability measures

important in addressing what the variation

in Opex and Capex looks like.

Realistic expectation and structures

pertaining to type and size of

expenditures, inflationary expectations

important for the overall cost/return

estimation.

The overalll Opex and Capex

composition will enable the user to

evaluate the overall composition of

expenditures to be used in comparable

benchmark studies.

Capitalization Plans


EQUITY/VALUATION


KPI ANDMILESTONES



Capitalization plans addresses why, how, where and when capital will be raised.

To attract investors we

analyze the business model

and strategic plans.

We give a brief and deep evaluations

depending on ambition levels.

• How will the equity portion (cash and

non cash) be raised.

• What financing sources will be

contemplated (grants, loans and

other).

• How will raising efforts for debt,

convertible debt be structured.

• What other short term, credit vehicles

will exist.

In determining the overall efforts for

raising capital we

focuson;

• How much is needed and when.• Possible sources of capital.• Criteria for qualifying for capital

by source.• Probability of raising efforts.• Structured milestones identifying.

what tasks should be included.

The capitalization plans will result in a detailed outline of efforts. We build on strength of the investment case, priorexperiences, company and industryspecifics.

We focuson:

• Level and growth of returns.• Financial risk to outcomes.• Annual direct yield (dividends).• Type of industry.• Proven concepts and technology.• Recent valuations, transactions.

Capitalization Plans - continued


EQUITY/VALUATION


KPI ANDMILESTONES



Probability of gettingfunded increases with a structured evaluation andplan.

Capital requirements should be

scaled to address liquidity and

sudden working capital

requirements when addressing the

overall capital structure.

Plan for financing the company with

cash for working capital

requirements require a structured

overview for funding resources and

the description of an overall plan for

funding.

Financing types, expenses,pros and

cons can provide value in deciding focus

and what to pursue. An overview of

non structured financing resources,

supplier discounts and programs should

be included in the

identification of other credit resources

The plan and it’s components will be

part of an overall milestone schedule

along with other important tasks.

Financial pro-forma


EQUITY/VALUATION


KPI ANDMILESTONES



Financial pro - forma is the strategic scenario planning tool of an organization

We design and create a flexible

tool where cost and revenue

variables are portrayed in

forward looking financials.

• Description of expenses, revenues,

volumes and pricing and

uncertainties.

• Expenditures scaled in relationship

to growth in earnings.

• Ability to evaluate various

pricing strategies (EBITDA

based, fixed, variables etc).

• Confidence interval of after

tax earnings.

In designing the overall financial planning

tool we focuson;

• Structured outline of expenseand revenue items.

• Taxation, depriciation and rulebased representation.

• Summary financials(NPV, IRREtc).

• Ability to perform «what ifscenarios» and changes.

• Integration between income, balance sheet and cash flow statement.

The design of the financial pro-form will results in a excel-based tool.

We tailor the tool to specific situation, industry specifics, organizational modeland taxation system.

• Type of organizational setup andmargin creation.

• Pricing philosophy.• Depreciation schedules.• Industry norms for contracts.• Taxation principles for operating model

in question.

Financial pro-forma - continued


EQUITY/VALUATION


KPI ANDMILESTONES



What if scenarios utilizing a forward looking tool provide strategic information.

Outlining the key revenue drivers

and their relative impact will be

important in addressing overall key

success factors.

Identifying the main assumptions

behind revenue drivers will create a

focus on providing a realistic

representation of expenditures.

Assessment of rate of growth in

earnings and confidence in earnings

volatility can be introduced as

important planning variables.

Strategic pricing strategies should be

explored for driving sales, break even

points and overall

expected EBITDA margin and for the

overall communication of earnings /

company valuation

and possible ways of influencing the

overall earnings band.

The financial pro-forma will be the

guiding financial tool for

communicating expectancy,

performing strategic assessments

and evaluating the financial capacity

of the organization

Key performance indicators – (KPI)


EQUITY/VALUATION


KPI ANDMILESTONES



KPI’s are identifiable and measurable non-financial and financial goals.

We identify, define and describe

key performance indicators for

your organization.

Listed below are some important questions;

How will KPI’s be identified,

measured, monitored and managed.

How well does the established KPI’s

secure overall stakeholder expectations.

Is there a realistic an progressive

expectancy in KPI goals.

Will the timetable for KPI’s be aligned

in relationship to financial capacity.

In identifying KPI’s we focus on;

• Stated vision and objectives.• Stakeholderexpectations.• How they can be measured.• Industry norms and benchmarks.• Alignment with other strategic

documents.• Ability tomeasure.

Progressiveness.

The identification and definition will result in a strategic document

We tailor the document to your specific situation, industry specifics, organizational model and stakeholder expectations.

• Type of organizational setup.• Stakeholders inquestion.• Desired mix between financial and

non-financial KPI’s.• How you would like to be

measured assessing results.

Key performance indicators (KPI) - continued


EQUITY/VALUATION


KPI ANDMILESTONES



Defining key performance

indicators ensures

direction and

performance targets.

Key performance indicators should

be outlined in a concise and clear

document identifying core

deliverables, reasoning and

methods for computing key

indicators.

The formulation and establishment

of KPI’s should have basis

arguments and foundation

anchored to the overall stakeholder

expectations.

Are the KPI definition and measurements

in alignment with the progression,

growth of the company.

The established schedule / timetable

should be accompanied with a detailed

description of how the KPI’s will evolve

over time and with the overall plan.

KPI’s represents in essence an

identification, monitoring and

management of key success critiera

for an organization.

A continiously review and benchmark of

KPI’s and milestones should be

performed

Equity and valuations


EQUITY/VALUATION


KPI ANDMILESTONES



We make owners and management visualize the potential with our approach

Milestone plan that assures

progressive valuation

targets aligned with

stakeholder expectations.

• Valuation drivers given the nature,

size, industry of the company.

• Direct yield and multiple expectations

given successful completion of

milestones.

• Exit & divestiture plans for existingequity interest.

In determining valuation potential we

look at;

• Valuation approach (dcf, asset orfair value method).

• Realistic valuation drivers.• Timeline for when earnings drivers can

be realized.• If earnings drivers can be

realized through organic growthor must be capitalized.

• Tenative evaluation of avenues that secureprogressiveness in valuations.

The assessment of valuation potential willresult in a recommended milestone plan.

We tailor the timeline to your specific

equity situation, working capital and financingpossibilities and resource

situation focusingon;

• Organizational focus and resources.• The most likely targets.• Success criteria.• Historic ability to perform.• Level of risk to identified targets.

Equity and valuations - continued


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KPI ANDMILESTONES



Valuations should be

subject to point in time

calculations for accurate

reflection of revenue and

expenditure projections.

Growth projections and relative position,

stability of earnings within sector,

industry should be included as well as

direct yield and expected multiples.

Prevalent methods for confidence in

outcome and portrayal of earnings

drivers should be covered to provide

sensitivity around estimates.

Valuations should be performed along a

time axis dependent on critical

milestones, supported with valuation

methods and return on capital required to

produce equity multiples.

Methodology for valuations should be

fair value based in accordance with

lates IFRS accounting principles

assessing differences in an earnings,

market and asset based approach if

applicable.

Financial Tool kit – (Models)


EQUITY/VALUATION


KPI ANDMILESTONES



Extensive financial tool kit

We have an extensive financial tool kit consisting of many models to ensure that you have «the

building blocks available» to build a recurring business model and evaluate scenarios.

DCF ModelingComprehensive excel built tool with

income, balance sheet and cash flow

statement

Acquisition – Merger ModelComprehensive excel built tool based on

detailed contribution analysis with embedded

uncertainties to evaluate bid value.

Point Scoring Model - CapabilitiesComprehensive excel built tool addressing

weights and point scoring qualitative

questions ( 1 – 10 ) to arrive at overall score.

Fair Value Modeling

Comprehensive tools and ability to

address FAS157 and FAS133 to valuation

of asset(s), derivatives and portfolios.

«All models are built in excel

and contains an extensive

fomula base that ‘can be

tailored to your organization»

Models - explained


EQUITY/VALUATION


KPI ANDMILESTONES



DCF ModelingComprehensive excel built tool

with income, balance sheet and

cash flow statement

Acquisition – Merger ModelComprehensive excel built tool with income,

balance sheet and cash flow statement

Point scoring capabilitiesComprehensive excel built tool with income,


Fair Value assessmentComprehensive excel built tool with income,


The DCF Model is built to capture many scenarios and represents an integrated income statement, balance

sheet and cash flow model for the next 60 months with the ability to tailor scenarios and financials to the

situation at hand. The model contains project financials to evaluate return to shareholders utilizing varioius

methods as well as based on multiples at the end of modeling period (exit value).

The model is built to value the acquisition price (fair value) for the procurement of a retail natural gas and

electricity portfolio, but can be tailored for many purposes. The model contain a detailed breakdown of

margin attribution, uncertaities as it pertains to prices and volume to assess possible fair value paths.

The model is built around giving weights (%) to defined categories scoring questions within each category

from 1 – 10. The model was orginally built to evaluate external portfolio managers (equity and fixed

income) within a set of categories (weighted) with a set of questions to give a total points score to preferred

bidders. The model can be used for a range of other purposes.

Range of fair value models incoporating quantitative

methodology utilizing linear and non – linear valuation

engines consiting with GAAP 157 and IFRS13 IAS36

methodology to establish valuation modes to periodically

assess earnings risk or/and balance risk to financial

statements.

Prices – Financial building blocks

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All prices are exclusive of VaT, tentative accomodation and travel.

FINANCE


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KPI ANDMILESTONES



Product Description Prices

1) Capital structure, Opex / Capex,

Capitalization plan

Financial section in overall strategic plan

integrated with other elements.

40,000 NOK for up to 40 hours of analysis to

develop overview and tables. 1,000 Nok for

each hour thereafter.

2) Investment memorandum (IM) Assessment, interview to design an

investment memorandum to be used for

capital raising efforts

50,000 NOK for up to 60 hours to develop IM

containing financial models + 3% transaction fee.

3) DCF Model – stand alone Assessment, interview to build a complete

financial model (Income statement, balance

sheet and cash flow statement) covering 3

defined scenarios.

50,000 NOK for up to 60 hours to develop

financial models containing 3 defined and

comparable scenarios. 1,000 Nok for each hour

thereafter.

4) Other models All other models in accordance with scope

and contractual agreements.

50,000 NOK for up to 60 hours to develop

financial models. 1,000 Nok for each hour

thereafter.

financial-building-blocks-2017-2

Documents