"We discount the
expected future cash flows using a WACC of 23.8% for 2019, 21.4% for 2020 and a terminal WACC of 19.1%.
At Eleonore and Red Lake, the estimated fair values were negatively impacted following a decrease in Mineral Reserves and Mineral Resources from June 30, 2017, to June 30, 2018 at each mine site; as well as a decrease the estimated mineralization not yet classified as reserves, which reduced the
expected future cash flows. As a result, the Company recognized an impairment expense of $1,633 million ($1,369 million, net of tax) and $664 million ($774 million, net of tax), respectively, against the carrying values of the Eleonore and Red Lake at December 31, 2018.
Rather than requiring physical assets as security, a cash flow loan is backed by the borrower's
expected future cash flows. For many SMEs, especially businesses with minimal tangible assets or those with a contractual debtor book, this makes much more sense than the traditional method of borrowing.
According to the company, when proposing a dividend to the AGM, the board of directors will look at the general macro-economic environment, Sanoma's current and target capital structure, Sanoma's future business plans and investment needs, as well as both previous year's cash flows and
expected future cash flows affecting capital structure.
The yield/discount rate considers all
expected future cash flows (both positive and negative over time) including proceeds from disposition if any.
Taking into account the circumstances causing repayment difficulties, banks estimate the present value of NPLs based upon
expected future cash flows and/or the certainty of collection.
"This repayment is based on DIFCI achieving continued sustainable revenue streams, reaching agreement on the deferment of certain debts due to the government of Dubai, continued support from the government of Dubai and
expected future cash flows based on the utilisation and disposal of its assets and liabilities," Saleh said.
Under the recognition model for cash flow hedges, ineffectiveness is recognized only to the extent that the cumulative change in the fair value of the derivative instrument exceeds the cumulative change in the
expected future cash flows from the hedged transaction.
Valuations are determined by
expected future cash flows adjusted for risk.
So, much work that goes by the name of fiscal risk analysis is devoted to estimating
expected future cash flows related to unrecorded assets and liabilities, such as those associated with pensions, future health spending, and public-private partnerships.
He added: "As an advisor, it is always frustrating when we find clients with financing needs, such as a requirement to borrow against
expected future cash flows, which existing sources of funds are often unable to meet.
The rationale for the model lies in the present value rule--the value of any asset is the present value of
expected future cash flows discounted at a rate appropriate to the riskiness of the cash flows.
