The success of any project finance venture requires a good understanding of the structures and which are most appropriate for the sponsoring company, the partners and the risk profile. However, the reporting requirements of certain structures can have a huge impact on whether sponsors utilise the Project Finance route. Also, investors will take into account their ability to recognise profits as well as the impact that accounting losses are likely to have. Practitioners need to be familiar with the various structure options from Joint Ventures to Special Purpose Vehicles as well as being able to foresee the risks and deal with them at the planning stage. The International Financial Reporting Standards (IFRS) as well as equivalent American rules have altered considerably the way that sponsors treat Project Finance deals in their published accounts. Areas that demand attention includes:
Control and risks & rewards of ownership IFRS 10
Joint ventures vs joint arrangements
Proportionate and Equity methods of accounting
Reporting requirements under IFRS 12
Off balance sheet vs on balance sheet debate
There is a concern in the industry that accountants often develop structures without fully understanding or appreciating the risks involved. This course will give accountants a thorough understanding of Project Financing, when it should be used, its
strengths, its limitations and the most appropriate structured vehicle. We examine the risks and rewards of ownership,
allocating the risks amongst the various parties, legal structures and their accounting implications as well as the disclosure requirements that accountants must make to investors.
Apart from identifying the most appropriate structure for the project, the course will examine the key risk factors that will
influence the projects’ success or failure. Today, the structural options open to experts are vast but the key to success is
developing a structure that involves relevant parties and allocates risk accordingly. Modelling and financing are also
covered on the course as well as the accounting and evaluation implications. Excel spreadsheets are used to illustrate the
practicalities of calculating Net Present Value, Internal Rates of Returns, liquidity and capital ratios as well as measuring and
understanding market, business and credit risk.
This course will give you practical guidance on how project financing is different from corporate finance and looks at how
various projects are financed as well as trends in corporate and project financing. The deal is examined in stages as well as risk identification and sources of funding etc. Credit enhancement factors are also considered as is the role of debt and mezzanine financing. The role of the Sponsors is also examined. Numerous case studies and excel spreadsheet examples are used throughout the course. Emphasis is also placed on the accounting and regulatory issues.
Who is this course for?
Financial Reporting Specialists