Cash Flow Forecasting

Chapter 6

Pro forma forecasts

using AMADEUS

electronic databases

Subscription services via the Internet provide information on nearly

anything anybody might need. Such information can be particularly

useful to see what a company has been doing since its last published

annual report. For example, a company could have changed its corporate

structure, dismissed certain members of management, sold or acquired a

subsidiary, entered into an alliance or cooperative agreement with a com-

petitor to market or distribute a product, or availed itself of the services

of a rival bank in closing a transaction.

One such on-line database is AMADEUS. AMADEUS (Analyse MAjor

Database from EUropean Sources) is a comprehensive, pan-European

database containing financial information on 7 million public and

private companies in 38 European countries. It combines data from over

30 information providers (IPs). AMADEUS is a modular product; you can

choose the level of coverage that you require – the top 250,000 com-

panies, the top 1.5 million, or all companies. AMADEUS is available on

CD/DVD-ROM, as an intranet feed and on the Internet.

AMADEUS is exclusive to BvDEP and its information providers, and is not

available via any other platform. BvDEP identifies the best source of

information in each country and applies strict inclusion criteria to

prevent any bias in coverage.

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A standard company report includes:

■ twenty-two balance sheet items

■ twenty-five profit and loss account items

■ twenty-six ratios

■ descriptive information, including trade description and activity codes

(NACE 1, NAICS or US SIC can be used across the database)

■ ownership information, which is researched by BvD’s own team of

consultants

■ Reuters’ news, security and price information

■ links to an executive report with integral graphs

■ a report comparing the financials of the company’s default peer group.

In addition to the existing ratios you can also create your own, which you

can display in the reports and also use in your searches and analyses.

Each company is part of a default peer group based on its activity codes,

and integral graphs illustrate its position in this peer group. A company

tree diagram instantly illustrates the structure of the group.

The advantage of AMADEUS is that it provides the ability to undertake peer

group analysis. Typically it comes to the fore when there is a wealth of data

to work with. The financial ratios calculated on the spreadsheet can be

compared with published data, such as lists of industry standard ratios.

The problem here is that you do not know how the spreadsheets and

resulting calculations from the published sources have been arrived at,

which would render comparison between the published work and the

analysts’ spreadsheet meaningful.

The screencap in Figure 6.1 illustrates the company search mechanism.

Such on-line databases are rapidly supplanting traditional paper-based

annual reports and idiosyncratic and heterogeneous spreadsheet models.

The on-line database can be accessed by web browser, and reports con-

verted into exportable RTF or XL format for subsequent manipulation.

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Forecasts can therefore be prepared quickly by extracting the financial

statements for, say, two companies, and combining them into a spread-

sheet model (see Chapter 4) to effect hypothetical merger projections.

It should be remembered, however, that you become completely depend-

ent on the accuracy of the accounts classified by BVD into its database.

Here, we provide the full spreadsheet for a major EU corporate,

Vodafone, the mobile telephone operator (see Table 6.1).

Figure 6.1 The company search mechanism

Source: Bureau Van Dijk, AMADEUS 2004

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