Nova Chemicals Business CaseDevelopment Financial Model

TOOLBOX:

Toolbox enables easy analysis ofalternatives

• Foster creative thinking to develop uniquealternatives

• Provide consistent analysis between projectalternatives as well as for projects across thecompany

• Provide a better understanding of thebenefits, risks, and strategic fit

IdeaFraming

Analysis ofAlternatives

Selection ofBest Option

Toolbox:A Complete Business Case Package

Cover Input (for Financial Model)

CB (Crystal Ball Uncertainties) Calcs (Cash Flow Spreadsheet)

Scratch Pad (benefit calculations) Strategy (Questionnaire)

Risk (Summary of Risk Factors) Plan (Implementation)

Toolbox Outputs

• Calculates median case NPV, PI, and IRR

• Calculates the expected NPV and PI through amonte carlo simulation with Crystal Ball and10-50-90 data

• Generates tornado diagram and cumulativeprobability curves

• Provides graphs for each section (revenues,variable and fixed cost, cash flow, capital,etc)

Cover SheetGeneral projectinformation

Expected quarterlycapital spending

Financial analysisand crystal ballsummary

Project descriptionand benefits

Input Page - Cash Flow

Set project timeline sliders Select 1 of 4 model:• Cash flow• Price volume• Flexible price volume• Product replacement

Enter 10-50-90 data

Enter peak revenuedata (or margin)Enter final revenuedata (or margin)Enter variable costsavingsEnter fixed costsavings

Input Page (cont’d)

Capital cost and timeline(timeline start date from above)

R&D capital cost and timeline

R&D expenses and timeline

Commercialization expensesand timeline

Probability of technical success

Probability of commercial success

Input Page (cont’d)

Facts and GlobalParameters

Strategic value

Risk reduction

Working Capital

50 case values

Run Crystal BallInput Crystal BallResults

Simulation resultsPrint Sheets

Tornado Diagram

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4130.0

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Create / Recalculate

k$ U

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$3,551.3

Net Cash Flow

-600-718 -735

397

813

990

1307

14261496

15671611 1656

1725

-1000

-500

0

500

1000

1500

2000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year

K$ U

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All Variables Are at Their 50% Points and All Figures Include Inflation

Net Cash FlowPrintOK

Input Page - Flexible Price-Volume

Select flexible price-volume model

Input Page - Flexible Price VolumeEnter Price (ormargin) data

Enter volume data

Graph depicts data

Adjust rate slidersfor each year

Select 10 and 90case relationship

Select 10 and 90case relationship

Graph depicts data

Adjust rate slidersfor each year

Enter variable andfixed cost savings

Input Page - Flexible Volume

Business Case Training

• Provide two day Business Case Developmenttraining course across the company

• Stress Framing/Alternatives Generation

• Work through examples of each of the fourfinancial models within Toolbox

• Discuss uncertainty and expert interviews

• Provide ongoing support throughout theorganization

Toolbox provides many benefits forNova Chemicals:

• A wide range of alternatives can easily beexplored and evaluated for all projects at theproject team level (without a DRA facilitator)

• Consistency of project evaluation across thecompany

• Decision makers have the correct informationto make a good decision

• Allows trained DRA facilitators to focus onlarge and complex decision analysis projects