Hello everybody and welcome to the Chemical Company Model, run through.

What we're going to do in this series of videos is build a working model for a chemical company and hopefully along the way learn what's different about chemical companies, how to build models for them and how to value them.

In this video, we are going to take a little tour of the model, and so if you open it up with me, you can find it in downloads.

You can see just like a lot of our models, there is an information sheet which contains the styles and a circular switch, which we'll keep on zero while we're building, and then we'll switch to one when we're ready for circularity to come into the model.

You can see we've got detailed segmental reporting, and that enables us to build detailed segmental forecast.

This will probably be where we spend the most time in these videos because this is probably where a chemical model will be the most distinct.

And you can see there are some concepts such as drop through bridges and multiple segments, which make this perhaps more detailed than you might be used to.

In other models, you can see the overall aim of this is to create totals, so total revenue and total ebitda, total EBIT, and they will feed into the main model page.

And the main model page looks a lot like a regular three statement model.

You can see we have assumptions and we have an income statement, and this is where lots of the information from the segmental page is going to feed in.

But let's say we do the projection for 2024, this number will be a lot better informed than had we just said say 2% revenue growth.

It will be the product of lots and lots of detailed work that we do here to try and figure out what Axo is doing with its different segments, how its paint is going versus is other segments as is common.

With our models, we'll have an income statement, a balance sheet, and a cashflow statement, so an integrated three statement model, and that will mean circularity, which we'll use that switch that we saw before.

We're also going to use parts of the model for valuation.

We're going to do a sum of the parts valuation using a forward year one, so 2024.

We're going to use the different segments and their performance to put together an overall valuation for this company.

Then we're going to deal with some quirks that you might see in chemical companies such as pension deductions, and we're going to come to an overall assessment of how Axo looks in terms of a share price, and we'll be able to compare that to the share price.

And what you might notice is that we're doing this analysis as of the end of 2023.

Okay, so if we're ready, we'll start diving in and building.