Training Objectives

By the end of the programme, participants will:

In terms of Knowledge:

• • Describe the purpose, format, and main components of key financial statements, including the Income Statement, Statement of Financial Position, and Cash Flow Statement.
  • List the key principles of revenue recognition under IFRS 15, including contract identification, performance obligations, and revenue recognition criteria.
  • Identify the differences between accounting profits and taxable profits, and understand the implications of temporary and permanent differences for deferred tax.
  • Express the accounting treatment and presentation of non-recurring items such as discontinued operations and unusual or infrequent items.
  • Convey the importance of Earnings Per Share (EPS) as per IAS 33, and explain the differences between basic and diluted EPS.
  • Prepare a consolidated statement of financial position, explaining the concepts of parent-subsidiary relationships, non-controlling interest, and the consolidation process.
  • Describe the characteristics and ownership rights of different types of equity securities, including founder shares, ‘A’ and ‘B’ shares, deferred shares, and preference shares.
  • List the key stages and methods of bringing securities to public listing, such as IPOs, offers for sale, placements, and introductions.
  • Name and explain the types of debt instruments, including redeemable bonds, perpetual bonds, convertible bonds, and green bonds.
  • Identify the fundamental concepts related to the cost of equity, cost of debt, and weighted average cost of capital (WACC), including financial models like CAPM.
  • Express an understanding of different investment appraisal methods, such as NPV, IRR, and adjusted present value (APV), and their respective advantages and disadvantages.
  • Identify the advantages and disadvantages of bringing securities to listing through different methods, such as offers for sale, placings, and intermediaries’ offers.
  • Express an understanding of the various risk factors relevant to bonds, including credit risk, default risk, and currency risk.

In terms of Skills:

• • • Develop the ability to prepare key financial statements, including the Income Statement, Statement of Financial Position, and Cash Flow Statement, in accordance with applicable accounting standards.
    • Explain the application of the matching concept in recognizing expenses and distinguishing between capital and revenue expenditures in financial statements.
    • Show proficiency in computing and accounting for both current and deferred tax amounts, ensuring compliance with relevant accounting and taxation standards.
    • Choose the appropriate methods to calculate depreciation and amortization for tangible and intangible assets, and demonstrate their impact on financial statements.
    • Justify the selection and interpretation of key financial ratios, including liquidity, solvency, profitability, and valuation ratios, when assessing an entity’s financial health.
    • Substantiate your analysis of cash flow classifications by accurately calculating cash flows from operating, investing, and financing activities using the indirect method.
    • Develop the ability to analyze the relative risk and return characteristics of different types of shares using quantitative measures.
    • Explain the process of pricing bonds using market discount rates, spot rates, and the relationship between
    • Substantiate investment recommendations by applying sensitivity analysis, Monte Carlo simulation, and other risk assessment techniques.

In terms of attitude:

• • • Challenge assumptions and existing interpretations in financial reporting to ensure accuracy, transparency, and compliance with ethical standards.
    • Defend ethical practices in financial reporting by ensuring transparency, honesty, and integrity in all aspects of financial documentation and analysis.
    • Justify the need for rigorous financial analysis and reporting standards when making decisions that impact stakeholders.
    • Criticise financial reports and analyses constructively, identifying areas for improvement and suggesting alternative approaches when necessary.
    • Appraise the overall quality of financial statements, considering both the technical accuracy and the clarity of presentation.
    • Compare different approaches to financial reporting and analysis, assessing their effectiveness in providing a true and fair view of an entity’s financial position.
    • Motivate a commitment to continuous learning and staying updated with the latest trends and developments in financial markets and instruments.
    • Analyse the broader implications of financial decisions, particularly in terms of their social, environmental, and governance impacts.
    • Evaluate the effectiveness of different risk management strategies, taking into account both financial performance and ethical considerations.

Training Outline

Module 1 & 2: Financial Reporting and Financial Statement Analysis

The income statement

Accounting for revenue

• • • Principles of revenue recognition
    • Criteria for revenue recognition:
    • Transaction characteristics
    • Deferred and accrued income
    • Ordinary activities vs. other income
    • Differentiating between income from ordinary activities and other items

Accounting for expenses

• • • Matching concept
    • Expense recognition
    • Non-cash expenses

Accounting for taxation

• • • Accounting profits vs. taxable Profits
    • Temporary vs. permanent differences

Non-Recurring Items

• • •  Discontinued operations
    •  Unusual or infrequent items

Earnings Per Share (EPS)

• • • Basic vs. diluted EPS
    • Calculations for basic EPS (share repurchases, additional shares, bonus issues, stock splits)
    • Calculations for diluted EPS (convertible preference shares, convertible bonds, outstanding options, or warrants)

The Statement of Financial Position

Assets

• • • Current vs. non-current assets
    • Types of non-current assets
    • Stranded assets
    • Impact on financial statements

Liabilities

• • • Current vs. non-current liabilities
    •  Types of liabilities

Equity

• • • Components of shareholders’ equity

The Cash Flow Statement and Free Cash Flows

• • • Classification of Cash Flows
    • Cash vs. Non-Cash Transactions
    • Cash Flow classifications
    • Indirect method
    • Cash Flow from Investing Activities (CFI)
    • Cash Flow from Financing Activities (CFF)Free Cash Flows
    • CFO vs. Free Cash Flow

Group accounting

Subsidiaries

• • • Group accounts vs. Company accounts
    • Company group structure
    • Consolidated statement of financial position

Calculations:

• • • Non-controlling interest (NCI)
    • Goodwill review under IFRS 3

Associates

• • • Significant influence and joint control
    • Parent-Associate relationship

Financial analysis

Ratios

• • • Activity ratios
    • Liquidity ratios
    • Solvency ratios
    • Profitability ratios
    • Valuation ratios
    • Limitations of ratios
    • Historical data and reliance on ratios

Analysis considerations

• • • Other sources of information
    • Analytical tools
    • Use of historical and comparative data

Module 3: Equity Capital Markets and Public Equity

Characteristics of different types of equity securities

Overview of share types

• • • Founder shares, ‘A’ and ‘B’ shares, deferred shares, and preference shares
    • Ownership rights associated with each share type

Risk and return Analysis

• • • Analyzing relative risk and return of different share types
    • Quantitative measures for risk and return

Depository receipts

• • • Characteristics of depository receipts (ADRs, GDRs)
    • Investing in non-domestic equity securities via depository receipts

Public Equity

• • • Listing categories: Premium listing, standard listing, and AIM admission differences
    • Initial Public Offering (IPO) Process: Key stages of an IPO

Listing methods:

• • • Offer for sale, placing, intermediaries offer, and introduction
    • Advantages and disadvantages of each method
    • IPO pricing: Methods of setting the offer price in an IPO
    • Greenshoe option: Usage and advantages in share issuance
    • Rights Issues and Open Offers: Procedures, shareholder rights, and pre-emption rights
    • Share Repurchase Rules: General rules and accounting requirements for share repurchase

Module 4: Debt Capital Markets and Bond Valuation

Types and Characteristics of Debt Instruments

• • • Short-Term Debt Finance: Overdrafts, revolving credit facilities, working capital, debt factoring, invoice discounting
    • Debt instruments
    • Characteristics of various bonds (redeemable, perpetual, zero-coupon, convertible, etc.)
    • Overview of medium-term notes, Eurobonds, green/blue/transition bonds, commercial paper, and floating rate notes

Bond Pricing and Returns

• • • Bond pricing: Calculating bond prices using market discount rates
    • Bond yields: Yield to maturity and sources of return in fixed coupon bonds
    • Bond prices vs. Interest rates: Relationship between bond prices and interest rates
    • Spot rates: Bond pricing with spot rates
    • Matrix pricing: Pricing illiquid or infrequently traded bonds
    • Bond characteristics: Time to maturity, coupon effects, and convertible bond valuation

Risk Assessment in Bonds

• • • Duration and convexity: Macaulay and modified duration, bond convexity
    • Bond risk factors: Credit risk, default risk, currency risk, call risk, and reinvestment risk

Module 5: Alternative Sources of Finance and Cost of Capital

Characteristics and Examples of Alternative Sources of Finance

• • • Overview of alternative finance sources: Private equity, venture capital, crowd funding, private placements, banks, leases, project finance, etc.

Appropriate Use Cases for Alternative Finance

• • • Application of alternative finance: Financing for startups, early-stage projects, developmental capital, buyouts, reorganizations, and public companies

The Cost of Capital

The Cost of equity

• • • Dividend growth model: assumptions, pros, cons, and cost of equity analysis
    • Capital Asset Pricing Model (CAPM): systematic/unsystematic risk, beta, and cost of equity analysis
    • The Cost of debt: Debt cost calculation for irredeemable and redeemable bonds, impact of taxation
    • Overall Cost of Capital: Weighted Average Cost of Capital (WACC): analysis, book vs. market value weightings

Capital structure decisions

• • • Gearing impact on cost of equity, debt, and WACC
    •  Project-specific discount rates, Modigliani and Miller’s capital structure theory

Module 6: Investment Appraisal, Valuation, and Risk Management

Capital Budgeting and Investment Appraisal

Investment appraisal methods

• • • Payback periods, return on capital employed (ROCE), net present value (NPV), internal rate of return (IRR), and modified IRR
    • Adjusted Present Value (APV): usefulness, pros, and cons

Option pricing theory

• • • Drivers of option value (underlying value, exercise price, time to expiry, volatility, risk-free rate)
    • Real options in appraisal (delay, expand, withdraw) and Black-Scholes model assumptions
    • Project appraisal and risk: Sensitivity analysis, Monte Carlo simulation, and ESG impact on investment decisions

Company Valuation Methods

• • • Asset-Based valuation: Market value, transaction value, book value, and asset-based equity valuation
    • Dividend-Based Valuation: Dividend valuation: assumptions, limitations, and equity value analysis
    • Earnings-Based Valuation: Earnings-based valuation: intrinsic vs. relative value, P/E multiples, EBIT/EBITDA multiples
    • Cash Flow-Based Valuation: Cash flow-based valuation models and equity value calculation

Derivatives and Risk Management

• • • Types of Risk: Understanding interest rate risk and foreign exchange risk
    • Using Derivatives to Manage Risk: Analysis of forwards, futures, options, and swaps for interest rate and currency risk management

Who Should Attend

This programme is ideal for financial industry professionals seeking advanced knowledge in corporate finance and regulatory frameworks. It will particularly benefit those involved in planning, executing, or advising on corporate transactions, such as:

• • • Finance professionals
    • Investment bankers
    • Corporate strategists
    • Legal advisors
    • Regulatory compliance officers

Training Style

This training course is designed to provide a comprehensive understanding by blending both theoretical and practical elements. Participants will be introduced to key terms and concepts, illustrated with real-world examples from both local and international companies.

The course will also include practical exercises, including mini-cases, to help solidify understanding. Interactive activities and break-out group sessions will further enhance learning, allowing participants to engage actively and apply the concepts discussed in a collaborative environment.

CPD Recognition

This programme may be approved for up to 24 CPD units in Accounting and Auditing. Eligibility criteria and CPD Units are verified directly by your association, regulator or other bodies which you hold membership.

In-house Training

For groups within the same organisation, this course may be customized to meet any specific needs and delivered in-house.