【正文】 ash flow of this business will change substantially if sales and / or collection assumptions change. ? This is very important to understand for management purposes, and also debt repayment purposes. ? Management should run their own sensitivities to test assumptions. 10 Financial projections cont. 11 R mb 39。 ? cash flow shortages are projected for 2020 and 2020. These will have to be funded by additional borrowings or delaying payment of other liabilities。ABC Co Ltd Debt / Financial Restructuring Report June 2020 DRAFT 1 Index 1. Current Financial Position 2. Financial projections 3. Accounts receivable 4. Enterprise restructuring / Debt restructuring 5. Action plan 2 Current financial position Balance sheet 31/12/00 Post due diligence adjustments Rmb’mil Cash 13 A/R () 152 Inventory 28 Other current 29 Fixed assets () 209 Other long term 29 460 Bank loans with interest 385 Bank loans no interest 30 Advances from customers 16 Accounts payable 57 Other not repayable 31 Other 56 575 Net deficiency (115) Notes / issues ? “good” A/R likely much less. Refer later. ? Refer analysis later ? Refer analysis later ? to Parent should be removed ? includes approx. Rmb’21 from Parents 3 Current financial position cont... ? The actual deficiency position of the Enterprise is likely to be substantially worse as “Good” or collectable accounts receivable is estimated to be significantly less than as currently shown in the accounts. ? The Enterprise is paying interest on most bank borrowings. ? If amounts shown as not repayable genuinely do not have to be repaid, they should be removed from the balance sheet to improve the asset position. 4 Financial projections ? A financial model has been prepared for the Enterprise, with monthly assumptions for Y2020, and annual assumptions thereafter. ? The format of the model and initial assumptions have been developed in conjunction with management. ? The work on a financial model never finishes: ? Formats of pages can and should change to meet the requirements of management。 ? the model includes interest on most bank debt, but does not include any repayment assumptions。 ? management’s realistic view。 ? if production and sales of these products stops from Y2020: ? profit will increase by approximately Rmb 46 million up to Y2020 ? cash flow will increase by approximately Rmb 46 million up to Y2020 ? Many other sensitivities can and should be run by management to consider the impact of different business initiatives. 14 Financial projections cont. ? Uses of the financial model: ? as a planning tool: ?general budgets and targets。 ? “l(fā)osses” from sales made with no collections are between Rmb 20 35 million per year. ? Are these assumptions reasonable do they reflect the business now? ? Given that only Rmb 34 million of the opening balance is projected to be collected, and it is likely most of this amount is recent sales (Nov / Dec Y2020), it implies that the collection period for new sales is reasonable. 16 Accounts receivable cont.. 17 R mb 39。 ? debt restructuring issues 19 Enterprise / Debt restructuring cont. ? Clean up the balance sheet: ? Some assets appear over valued: ?accounts receivable (by approx. Rmb 100 million?)。 ? Benefits: ?Banks / State can leave un restructured debts on books of the Factory, . loss not crystallised。 ?limited debt repayments may be able to mence from 2020. ? It is important to understand if the “Base case” model is realistic, or optimistic. Based on the sales growth assumptions, it appears optimistic. ? Accordingly, actual cash flows