Using advanced data analytics to understand financial performance
Our client, a global soft commodity company, engaged Calimere Point to leverage our advanced analytics and financial markets expertise to deliver a cutting-edge P&L attribution solution.
Industry: Commodities - Trading/Exchange
Building a better P&L process
An automated process had to have a standard set of rules. Working with finance to identify some of the inconsistencies, reduce redundancies and duplication and streamline the logical processes was key.
Mark to observable market calculations were streamlined, formulae were made consistent for the different pricing combinations and the number of intermediate calculations was reduced.
P&L explain is simply a re-run of the P&L calculation but with carefully controlled variations of input data. Our modular data analytical tool can easily share developed logic across multiple processes.
The existing output was in excel and static ppt slides which have limited flexibility. Historical trend data was also not available.
The client chose to use Tableau as its data visualisation tool so our P&L process outputted data in the optimal format for Tableau.
Calimere Point’s finance expertise was used to design and develop the dashboards for subsequent review by the client: it was faster than asking users to provide the design ideas from scratch.
Implementation of a full reval P&L explain
The client was calculating its P&L and P&L explain in excel across multiple locations. It needed a standard process that worked with and accepted the data nuances across all centres, complicated by a mix of trading and physical processing.
Calimere Point designed and implemented a full reval P&L explain with 200+ single and pairwise components for volume, plan and market data variations. Results were displayed in a dynamic dashboard.
Average 99+% P&L explain.
The detail: what does our P&L process do?
- Location variables
- Starting stock
- Yield assumptions
- Conversion costs
- Forecast processing
- Logistics and grade premiums
- Market variables
- Exchange prices
- Conversion factors
- Contract data
- Cost price
Ship to/from port
- Processing waterfall of inventory and physical contract delivery
- Contract allocation to waterfall and prices
- Carry costs based on contract delivery schedule
- Contract cost calculation
- Isolating changes in plan from changes in supply and scheduling of such supply
- Application of custom limitations of physical processing
- Diversion of physical to cash settlement and re-calculation of logistics costs
- Processing P&L
- KPIs eg P&L:sell side contract ratio
- Contract analysis and breakdown into new, expired, amended and unchanged contracts
- Input variable analysis and delta calculated
- Full revaluation P&L attribution for each scenario