e A leader in market and risk management services to commodity-based business An introduction to our business
Who are we? An Australian Financial Services Licence holder (AFSL #: 304792) Advising and Dealing to the Wholesale Market Lead by Don Prentis, commodity market executive of 25+ years experience Network of partners world-wide in the commodity and financial services industries Experience and contact in agricultural, energy and environmental commodity sectors
What do we do? Provide ad hoc or long term services to a diversified group of clients that participate in commodity markets Market research and analysis Value chain/supply chain analysis Strategic planning (marketing, procurement or trading of commodities) Risk management (policy, procedures, process mapping, facilitation of hedging) Training or mentoring (staff, executives or board) Product Development
Industry skills & coverage Agriculture Grain Cotton Sugar Livestock Processing Fertiliser Environment & Regulatory RECs NGACs GECs CO 2 Trading, marketing and procurement management Price risk management Energy Electricity Gas Renewable Bio-fuels Risk policy and procedures systems and documentation Corporate Risk Management (all-risks) Business planning and financial modelling
Clients goals Maintenance of expertise Lowered risk Good management Good market research and analysis Good governance Strong strategy, planning and implementation Liquidity planning & management How can e contribute?
Maintenance of expertise Organisation objectives Staff with broad trading skills Understanding market dynamics Understanding trading instruments and methodologies Risk management understanding and culture e Staff and executive training Fundamental and technical analysis Trading instruments and methodologies Risk management processes
Lowered risk Organisation objectives Direct operations in a manner that lowers risk Provide instruments and knowhow to reduce risk Maintain systems that highlight risk and allow it to be controlled e Documented risk management policy and procedures Facilitate risk management culture through education Training in trading and risk management techniques Contribute to maintenance and design of systems: trading and risk management (eg: Value-atrisk)
6% 5% 4% 3% 2% 1% Innovative reporting 0% MTM -$13,000,000 -$11,000,000 -$9,000,000 -$7,000,000 -$5,000,000 -$3,000,000 -$1,000,000 $1,000,000 $3,000,000 $5,000,000 $7,000,000 $9,000,000 $11,000,000 $13,000,000 $15,000,000 $17,000,000 $19,000,000 $21,000,000 $23,000,000 $25,000,000 $27,000,000 trading profit The new adjusted position (green bars) has forfeited upside gain to protect against the potential downside. Report potential profit outcomes to the Board or Risk Committee, instead of a single at risk or MTM figure probability The maroon coloured bars indicate the results of simulating the likely (probable) MTM for a future period (eg: week, month, quarter or year) given the same open trading position. The single red line indicates the current MTM and the dark green bars indicate the result of altering the position to reduce risk. Modelling Value-at-risk enables more proactive shaping of trading position to address damaging risk scenarios.
Good management Organisation objectives Development of staff Enablement Empowerment Good systems Position keeping & monitoring Position reporting e Support for staff development Mentoring Systems design and review Systems implementation and training
Research & analysis Organisation objectives Have well organised information gathering and storage Value-adding analysis of information Contributes to trading success e Thorough description of market supply and demand (S&D) variables Analysis of S&D interaction, with regression analysis to price guides Probability and scenario analysis
Good governance Organisation objectives Board and executive able to make informed decisions Prudent direction of trading operations e Discrete education of board members in trading and risk management issues Independent assistance to board to interpret specific technical trading and risk management issues
Organisation objectives e Strong strategy Strategy Appropriate Documented Robust Easily communicated Benchmarking Review of strategy Strategy or business plan documentation Workshopping or facilitation of strategy process Design of benchmark or Key Performance Indicators (KPI)
Liquidity planning & management Organisation objectives Preserve cash for trading operations Forecasting cash position e System design scenario and stress testing Value-at-risk
Contact information e Mail: GPO Box 2378 Brisbane Q 4001 Phone: +61 (0) 419 714 609 Email: don.prentis@commodity.com.au