Financial Management 1.1

8/3/2019 Financial Management 1.1

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By

Archil Kublashvili

[email protected] tel: +995 77 138889


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Currently : Deputy General Manager Georgian Public Broadcaster akaChannel 1, 2, 3 and Two FM Radio Stations

Currently: Founder and General manager of INGB GroupCurrently: Founder and GM of Alutech LLC

Formerly Employed by:

General Electric Europe

Heidelberg CementTESA

Archtrade

Sometime in the distant past worked for:

GBDC CaucasiaParliament of Georgia

Burjanadze & Democrats Political party ( not very proud of it)

Areas of Expertise: Pretty much everything that is related to earning money and

wisely spending it.


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Understanding of the basics of financial management Understanding the meaning of regulatory frame

Understanding of the Information flow

Understanding of Cost Structure

Understanding of ProductValue structure Understanding of the Income and profit structure

Understanding of the capital structure

Understanding the language of accountants

Understanding of what you need for the financial report Understanding nature and content of the financial reports

Understand the behaviors behind positions

Importance of planning and proper execution


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Brain Numbing Formulas and ridiculous calculations ontheoretical matters.

Physics, astrophysics, high mathematics and stuff thatcan not be calculated on simple calculator.

Easy grades

Free Schedule

Boring lectures


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1. Write small essay describing your opinion on Georgianbusiness environment. its strength and weaknesses.

- Best 3 will be awarded 5 additional points out of 100 andwill be invited to express their ideas at Radio show My

business at FM 102.4 (Radio 1 GPB)

2. Help with business opportunity Bakery

3. Help with business opportunityRadio 2 Youth Radio

Both business opportunities will award 10points to students, ifdone in theory and in case if executed in reality, financing and20 % of shares will be awarded.


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Regular assignments

Individual financial management projects

Group financial management projects

Group consultancy project Very interesting guest speakers

Killer awesome business models

Very demanding brainstorming sessions

Tons of Caucasus and world based financialmanagement examples


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In terms of unfamiliar and unrelated industry


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5.

EfficientAccountingSystem

6. Budget

Controls

7. Time &

ActivityDocumentation

8. Matching

Requirements & In-kindContributions

EFFECTIVE

FINANCIAL

MANAGEMENT


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Start riding a cycle

Work with team but always remember that you are alone

Operate more based on your logic

Be careful while making assumptions because it mightlead to

Put the controls in place

Ask questions and ask reasons

Keep others informed and avoid informing the outsiders Take your organization as a living organism not a

structure

Be prepared

Not able to do so ? start asking the reasons again !


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What is a legal frame ?

In which cases does the legal frame apply to us andwhen it does not

Is there an insurance against the risks ? Is there a way to avoid the risk ?

What is ethical and what is not ?

How badly can we screw up ?

Seek the exits before you enter ! Minute Test

Homework


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GE Lexan Sf&S and Advanced Materials War Room Heidelberg Cement Strategy Georgia

TNS Global Caucasian Challenge

Archtrade Changing the Style

Acquisition of Romanian Steel Mill

Georgian Public Broadcaster Way to Be

Mc Donalds Annual Report

Microsoft Annual Report

Internet Finance Analyses (Yahoo, MSN)


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Personal Essay Role of Financial Management ? Making of Financial Calendar

Defining the structure and information flow for Sample

LLC

Defining and Designing Internal Reports Mapping Of Chart of Accounts ( Based on structure)

Making P&L

Making BL

Making CF

Making Investor Report

Valuation Challenge


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Definitely makes you smarter

You start seeing and understanding things that you wouldnot have understood otherwise

Good knowledge of FM and good FM skills is definitelyvaluable on any managerial position, including marketing,sales, general management, executive management andother .

Money that you manage does not belong to you.

Dont expect to be coolest and most popular or appreciated

employee (except the day when you pay salaries)

Marketing is in most cases gets paid higher wage than FM

You are not forgiven very often


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Session 1 Constitution

Enterprise Law

Tax Law

Session 2

Budget Code

Law of State Purchasing

Labor Code Civilian Code

Criminal Law

Other (Unwritten but still applicable sucks right??)


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Is creating regulatory environment for you in three maincases:

- If you are sitting at home and doing nothing

- If you are sitting at home and thinking of doing something- If you are not doing something and neither are you sitting

somewhere

- If you are sitting too high and you need reasons to clarify

to others why are you sitting there As to ordinary financial manager this is not your concern, except cases ifyou are sitting too high and you are also a financial manager which is

highly doubtful!
http://www.cheergiver.com/work-jokes/sitting-high-up.htmlhttp://www.cheergiver.com/work-jokes/sitting-high-up.html


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Deals with :

Company Establishment

Merger, Split, Acquisition and Take overs

Process of enterprise management Proper corporate governance

General concepts

All that should or should not be defined by other laws


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Company Statement - Georgian law requires that all thecompanies that operate on Georgian territory should havewritten guideline that defines the basic principles of company'soperations.

Largest part of the company statement pillars is also definedvery clearly by the tax law, especially the pillars that directlyaddress Accountancy, taxes or dividend payout policy.

Pillar, that addresses the rights and responsibilities of theindividual shareholders, voting power of them is not defined by

law and should be agreed by shareholders. Board Meeting Are held in order to resolve urgent matters,

announce share issue, proceed with company closing, mergeror acquisitions, but some of these functions could be proxy toMGMT

-Minute Test Review Company Statement and Board Minutes


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http://www.youtube.com/watch?v=X2N_V2dfS1U&feature=channel

http://www.youtube.com/watch?v=QCVxQ_3Ejkg&feature=related http://www.youtube.com/watch?v=_nOBa0z1BHk
http://www.youtube.com/watch?v=_nOBa0z1BHkhttp://www.youtube.com/watch?v=_nOBa0z1BHkhttp://www.youtube.com/watch?v=_nOBa0z1BHkhttp://www.youtube.com/watch?v=_nOBa0z1BHkhttp://www.youtube.com/watch?v=_nOBa0z1BHkhttp://www.youtube.com/watch?v=_nOBa0z1BHkhttp://www.youtube.com/watch?v=_nOBa0z1BHkhttp://www.youtube.com/watch?v=_nOBa0z1BHk


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General Rules:

Informed Decision Should be made by majority ofshareholders

Decision should be made using the Minutes of generalassembly or board minutes.

Both documents either should be signed in a presence ofcertified notary or in a presence of notary by personholding proxy from shareholders. Most countries acceptwritten signed and sealed proxies but in case of Georgiacertified power of attorney should be presented.

Foreign partners, or participants of the deal shouldpresent the translated version of their passport in a nativelanguage of the country.

All the documents issued outside of the Deal Country

should be legalized or if the country is participant of the


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Company has been crated 3 years ago. And break even

point has not been reached. Shares of the Company is Spitted between 4 partners:

A=40%, B=20%, C=20% D=20%.

CEO holds 40% of the Stock.

On the board meeting that has been arranged after 3years of operations 3 partners vote to increase equity inthe company by 100% and 4 th partner is not present.New distribution of Shares is A=40%, B=30%, C=20%

D=10%. Partner Which was not present, engages in Shareholder

conflict motivated by deceiving nature of CEO andrefuses to proceed with share issue.Q1- What should be initial response from shareholders to rebel partner

Q2 - Role Play the board meeting

Q3 Prepare statement where you describe what procedures should be followedto finalize share issue.


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Basically bunch of dos and donts but at the end all tellingyou that even if you follow the rules there is no guaranteeof success

There is no guarantee to be secure

That you are solely responsible for almost all thedecisions that you make and the results that you get

Results of actions could be:Internal: Profit Loss Conflict Market entre Market exit Growth/ reduction of market

share You becoming king of the

world Other Related

External: Merger Acquisition Takeover Conflict Gods Will Lawsuit Scandal

Other Related


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Internal: Shareholders Employees Suppliers Distributors

Subsidiaries Clients Yourself Other Related

External: Government Regulating Authority NGOs

Media/ Press International Organizations


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Basically another set of dos and donts which give you aguideline of how to deal with various stakeholders.


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Budget Code

Law of State Purchasing

Labor Code

Civilian Code

Criminal Law

Other (Unwritten but still applicable sucks right??)

What do you like about course What you dont like about course

What do you want to see more (or less)?

Expectations so far?


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Tax Law:

VAT = 18% Unless Defined Otherwise Gross=Net*1.18Back Tax (Reverse VAT) = Same as VAT but several rulesapply

Non Resident Tax = 4% ; 10%; from 2011=10%, 15%

Gross=Net/0.96 (if 4%) Gross= Net/0.9 (if 10%)Income Tax = 20% (differs from country to country,sometimes social insurance and employers tax is added to

it).

Gross=Net/0.8Profit Tax = 15%, previously 20% EBT*15%= Net Profit

Dividend Tax = 10 % Might Change from 2011

Double TaxationWhy, why, why.

Corporate Tax = Profit tax= Capital tax


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Company had 10 Transactions during 2010, each amounting

1000 Gel, from Which 3 Transactions where made by PolishEmbassy, and 1 from EBRD and 2 From Foreign CommercialClients.

From received amount 1000 Was paid to Non resident for

telecommunication service.1000 was spent to send CEO for training in Netherlands (traveland living covered by CEO himself).

1000 Was paid to foreign auditors for their valuation service in

Georgia.2000 Gross salaries where paid.

1000 Was paid to local supplier, and another 200 to Non Vatapplicable supplier, 200 to Driver (not employed by Company)


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Start reading the tax code of Georgia- comes in twovolumes (2010 and 2011) of thrilling literature ..

Homework 2 Please write 1 pg essay describing

- role of the taxes in economic development of the country

- what should be entrepreneurs moral code towards taxes

- should or should not government regulate business

pros and cons- why do you think finance manager should have

knowledge in tax regulations?

Documents

Financial Management 1.1