ACFS Workshop 27 October 2010 | Australian Centre for Financial Studies

“The old valuations out of WACC – changing risk premia post-GFC”

Presented by the Australian Centre for Financial Studies with Value Adviser Associates and supported by The Finance and Treasury Association.

Date and Time

Wednesday 27 October 2010 – EVENT SOLD OUT

Venue

Queens Loft, located above Old and Rare Wines
133 Queensbridge Street, Southbank, adjacent to Crown Casino

The Program

Techniques such as Weighted Average Cost of Capital (WACC) are commonly used by:

corporations – to help determine the optimal balance sheet mix of debt versus equity;
regulators – to set an appropriate required rate of return on capital invested in regulated industries; and
fund managers – to assist investment decision-making in company shares and discrete projects.

Both the theoretical foundations and practical application of WACC and associated techniques such as CAPM (Capital Asset Pricing Model) have long been matters of debate. Post-GFC, these questions are not merely academic but central to investment decisions and, often, project viability.

Delegates to this workshop will:

Be exposed to various forms of WACC and changes to risk premia;
Learn what is happening in debt markets and implications for the cost of debt;
Understand estimates of MRP and assess the cost of equity using CAPM;
Appreciate the impact of imputation tax on WACC;
Be shown the uses of WACC for corporate decision making; and
Hear from an experienced panel of practitioners.

Who should attend:

CFOs;
Corporate Treasurers;
Fund Managers;
Corporate Advisers;
Government and Regulatory Managers;
Regulators; and
Finance Academics.

Attention FTA members and FTA Congress delegates

The workshop will take place immediately prior to the Welcome Drinks marking the commencement of the 2010 Finance and Treasury Association Congress. On application, FTA Members & FTA Congress delegates receive the ACFS Corporate Sponsors and Supporters rate.

The Workshop Program

Time	Topic	Speaker/s
1.30pm	Registration
2 – 2.05pm	Welcome, Introduction and Current setting The various forms of WACC – what suits in the current environment.	Prof Kevin Davis, Research Director, ACFS
2.05 – 2.25pm	What is happening in debt markets and implications for the cost of debt. Commentary on supply incl. maturity profile available Behaviour of yields and potential explanations Outlook in medium term.	Campbell Dawson, Elstree Investment Management Limited
2.25 – 2.45pm 2.45 – 3.05pm	Estimates of the Market Risk Premium (MRP) to assess the cost of equity using the Capital Asset Pricing Model (CAPM) – especially in the current environment Update on the historical view Challenges in using a long term MRP for equity and a spot rate for debt Forward based views – implied volatility approach and glide path.	Assoc Prof John Handley, Department of Finance, University of Melbourne Mike Fitzsimmons, Managing Director, JF Capital Partners
3.05 – 3.20pm	The various forms of WACC – what suits in the current environment Vanilla WACC Post-tax Pre-tax	Stephen Gray, Professor of Finance, UQ Business School, university of Queensland
3.20 – 3.45pm	Refreshments
3.45 – 4.10pm	The impact of imputation tax on Weighted Average Cost of Capital (WACC) What does it affect? How to adjust for it? Status of current debate about average gamma What should you do	Stephen Gray, Professor of Finance, UQ Business School, University of Queensland
4.10 – 4.40pm	Uses of WACC for corporate decision making Setting targets for planning discussions Considering the return / growth trade off Value plans Interpreting the markets expectation of performance.	Steve Bishop, Executive Director, Value Adviser Associates
4.40 – 5.25pm	Structured Practitioner Panel Discussion – what issues are being faced and who is doing what? Moderator – to manage the duiscussin session with pre-arranged questions to each panelist. Identify particular issues each faces. Aim to address how practitioners are dealing with the issues above. Fund Manager – Mike Fitzsimmons, JP Capital Partners Valuations Business – Steve Bishop, Executive Director, Value Adviser Associates Corporate / Regulated entity 1 – Julie Williams, CFO, Powercor Limited Corporate / Regulated Entity 2 - Karen Smith, Assistant Treasurer, SP AusNet and Lukas Michel, Manager Financial Planning, SP AusNet.	Moderator – Prof Kevin Davis, Research Director, ACFS
5.25 – 5.30pm	Workshop Wrap Up and Conclusion	Prof Kevin Davis, Research Director, ACFS

Registration options (per person):

Category	Investment per person
Student	$ 88.00
Academics	$176.00
ACFS Corporate Sponsors and Supporters	$264.00
FTA Members and Congress delegates	$264.00
Industry Practitioners	$352.00
Group of 3+	$308.00