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BPM Financial Modelling

Best Practice Model Example:

Property Model (bpmToolbox 6.0)

www.bestpracticemodelling.com

PROPERTY MODEL USER GUIDE – bpmToolbox 6.0

This document is based on bpmToolbox 6.0 as at 29th March 2012. Please check www.bestpracticemodelling.com for any updates to this document.

Copyright © BPM Analytical Empowerment Pty Ltd and associated entities.

This is a Best Practice Modelling publication. This User Guide is the subject of ongoing development with updates being made available at www.bestpracticemodelling.com.

To stay informed about updates and amendments to all best practice modelling resources, join the Best Practice Modelling Network at www.bestpracticemodelling.com/network/overview.

BEST PRACTICE MODELLING (BPM)

Best Practice Modelling (BPM) is a business modelling organisation that specialises in the provision of best practice modelling resources including tools, training and consulting services. BPM can be contacted as follows:

Address: Best Practice Modelling Level 5 South Tower, 459 Collins Street Melbourne, Victoria 3000, Australia Telephone: +61 3 9244 9800 Email: [email protected] Website: www.bestpracticemodelling.com


www.bestpracticemodelling.com Page 1 of 46

Table of Contents

Chapter 1. BPM Financial Modelling ..................................................................... 3

1.1. Introducing BPM Financial Modelling .............................................. 3

Chapter 2. Model Objective ................................................................................. 5

2.1. Model Objective .......................................................................... 5

2.2. Model Keys ................................................................................ 5

2.2.1. Formats & Styles Key ..................................................... 5

2.2.2. Sheet Naming Key ......................................................... 6

2.2.3. Range Naming Key ......................................................... 7

2.2.4. Hyperlinks .................................................................... 7

2.2.5. Worksheets ................................................................... 8

2.3. Using the Model .......................................................................... 9

2.3.1. Data Entry .................................................................... 9

2.3.2. Groupings .................................................................... 10

2.3.3. Error, Alert & Sensitivity Checks ...................................... 11

Chapter 3. Model Overview ............................................................................... 15

3.1. Model Schematic........................................................................ 15

Chapter 4. Assumptions .................................................................................... 17

4.1. Time Series Assumptions ............................................................ 17

4.2. General Assumptions .................................................................. 18

4.3. Operational Assumptions ............................................................ 18

4.4. Financing Assumptions ............................................................... 21

4.4.1. Debt Facilities ............................................................... 21

4.4.2. Equity Assumptions ....................................................... 24

4.4.3. Dividend Assumptions ................................................... 24

4.5. Taxation Assumptions................................................................. 25

4.6. Actual Assumptions .................................................................... 27



4.6.1. Time Series Assumptions ............................................... 27

4.6.2. Operational Actuals ....................................................... 28

4.6.3. Income Statement Actuals ............................................. 29

4.6.4. Balance Sheet Actuals ................................................... 30

4.6.5. Cash Flow Statement Actuals .......................................... 31

Chapter 5. Outputs ............................................................................................ 33

5.1. Operational Cost Outputs ............................................................ 33

5.2. Financing Outputs ...................................................................... 34

5.3. Taxation Outputs ....................................................................... 36

5.4. Cost of Sales Outputs ................................................................. 37

5.5. Investor Returns and Project Cash Flow ........................................ 38

5.6. Income Statement ..................................................................... 39

5.7. Balance Sheet ........................................................................... 39

5.8. Cash Flow Statement ................................................................. 40

5.9. Summary Financial Statements .................................................... 40

Chapter 6. Dashboards ...................................................................................... 43

6.1. Dashboards .............................................................................. 44

6.1.1. Project Summary Dashboard .......................................... 44

6.1.2. Leverage Dashboard ...................................................... 45

6.1.3. Operations Dashboard ................................................... 46



Chapter 1. BPM Financial Modelling

1.1. Introducing BPM Financial Modelling

BPM Financial Modelling (BPM) is a business that focuses exclusively on the provision of Best Practice spreadsheet modelling products and services to the market including:

Standards (Best Practice Spreadsheet Modelling Standards)

Tools (bpmToolbox and bpmTraverse for Microsoft Excel)

Training (training courses for beginner to advanced)

Services (spreadsheet model development, advice or reviews for any purpose)

Support (email, telephone, on-site)

BPM is the first spreadsheet modelling service provider to develop, apply and make freely available comprehensive, universal Best Practice Spreadsheet Modelling Standards and methodologies, which we apply to all of our services and products. In this regard BPM is causing a revolution in the spreadsheet modelling sector by significantly raising expectations as to spreadsheet modelling quality, efficiency, user-friendliness and functionality, whilst simultaneously reducing the time and cost associated with spreadsheet model development, maintenance and usage.

BPM’s people have extensive experience at the forefront of the spreadsheet modelling sector, having worked closely with governments, companies, banks, property developers, rating agencies and other organisations in many industry sectors all over the world. BPM can build any form of Microsoft Excel-based spreadsheet model for any purpose in any industry.

BPM also provides spreadsheet modelling training courses and support services to investment banks, commercial banks, advisors, corporate entities, property developers and Governments. We have also developed the world’s most comprehensive set of spreadsheet development tools (bpmToolbox and bpmTraverse for Microsoft Excel). BPM training, tools and support are already being used by a number of large companies, investment banks, accounting firms, commercial banks, governments and global advisors.

BPM has established itself as not only a leading spreadsheet modelling service provider in its own right, but as the provider of training, tools and support to the peak spreadsheet modelling service providers in the market. As a result, BPM is in a unique position to deliver the highest quality spreadsheet modelling standards tools, training, services and support at a low cost to clients.

For more information, see:

www.bestpracticemodelling.com/standards/overview (Standards) www.bestpracticemodelling.com/software/overview (Software) www.bestpracticemodelling.com/downloads/example_models (other Sample Models)



Chapter 2. Model Objective

2.1. Model Objective

The Property Model has been created for the purpose of assessing the feasibility and subsequent delivery of a real estate development project. The model takes into account the monthly allocation of expenditure and income as well as providing for flexible financing arrangements, taxes, distributions and loan covenants.

Following the analysis on each of these specific areas the model will create integrated financial statements and dashboards.

This revised version is based on BPM’s original Property Feasibility Model, with the key change being a conversion to our latest software release bpmToolbox 6.0, which now allows for far more structured data and projection modelling. With this new functionality a comprehensive Actuals section was added, which converted the original feasibility-only design into a feasibility and delivery, e.g. a comprehensive Property Model.

2.2. Model Keys

2.2.1. Formats & Styles Key

Formats and Styles Key

The table above summarises the color scheme used throughout the model for the purpose of communicating important information about the nature of the worksheet or the cell. For example, blue text indicates that content of the cell has been hard-coded, while black indicates that the values or text area is the result of a formula or calculation. The plum colour indicates a Hyperlink for navigation between sheets and errors are coloured red.

Formats & Styles Key

Color Name Color Description / Purpose

Font Colors

Fill Colors

Color B Used to distinguish assumption sheets and/or cells. May also be used for a custom purpose.

Color A Used to distinguish assumption sheets and/or cells.

Work In Progress Indicates ranges contain data or formulas that remain uncertain or are subject to change.

Check Indicates operative checks – normally used as a conditional format. Check

HyperlinkHyperlink Indicates ranges contain hyperlinks to other ranges within the workbook or to other linked models.

Formula Indicates ranges contain pure formulas / output calculations. Formula

MixedMixed Indicates ranges contain a mixture of formulas and constants (e.g. formulas that contain embedded text or numbers).

Example

Constant Indicates ranges contain 100% constant (e.g. text/numbers). Constant



2.2.2. Sheet Naming Key

Sheet Naming Key

The worksheet naming conventions in the table above have been applied in the model. The above suffixes are to inform the user of the type of content contained in each worksheet.

Sheet Naming Key

Base Sheet Type Sheet Description / Purpose

Notes:* The names of the Cover and Contents sheets are always "Cover" and "Contents" respectively.** Model Import, Model Export and Presentation Sheet suffixes are used in addition to the other sheet naming suffixes.

MEModel Export** Contains worksheet ranges that are referenced by formulas in another workbook.

PPresentation** Contains presentation outputs that are exempt from the requirements of the best practice modelling standards and conventions.

Chart Contains a chart. Cht

MIModel Import** Contains formulas that reference worksheet ranges in another workbook.

LULookup Contains lookup data for use in forms / controls and in worksheet formulas.

Model Schematic Contains model diagrams and flow charts. MS

Blank Output Residual category (contains outputs). BO

TOTime Series Output Contains time series titles for calculating outputs over a set time frame.

Blank Assumption Residual category (contains assumptions). BA

TATime Series Assumption Contains time series titles for entering assumptions over a set time frame.

Section Cover Indicates the start of a workbook section. SC

Sub-Section Cover Indicates the start of a workbook sub-section. SSC

Suffix

Cover* Indicates the start of a workbook. Cover

Contents* Contains the workbook Table of Contents. Contents



2.2.3. Range Naming Key

Range Naming Key

The range name prefix methodology in the above table has been applied within the model. It is not crucial for the user to understand the range naming methodology. However, any changes to the model should follow the above approach for consistency. Consistency is the key to robust and secure modelling.

2.2.4. Hyperlinks

Example Table of Contents

The model makes use of two click navigation. Two click navigation ensures that no worksheet will take more than two clicks to reach from any other worksheet in the workbook. This is achieved via the use of hyperlinks on every worksheet and a table of contents.

The Table of Contents presents a hyperlinked list of all the worksheets in the workbook. To navigate from the table of contents to another worksheet the user need only click on the relevant worksheet’s title.

Range Naming Key

Range Type / Purpose Range Description / Purpose

Scroll Bar Scroll bar cell link. SB_

Residual Residual category (i.e. single cell non-base cells, etc). No Prefix

Option Button Option button cell link. OB_

Spin Button Spin button cell link. S_

Drop Down Box Drop down box cell link. DD_

List Box List box cell link. LB_

Hyperlink Hyperlink cell reference. HL_

Check Box Check box cell link. CB_

Base Cell Single cell base cell (for OFFSET function reference, etc). BC_

Lookup Names a Lookup Table Array on a Lookup Sheet. LU_

Block Array Single area, multiple cell, non-row, non-column array. BA_

Multiple Area Array Multiple area (includes areas of any type). MAA_

Prefix

Row Array Single row, multiple column, single area array. RA_

Column Array Single column, multiple row, single area array. CA_

Table of ContentsProperty Model (bpmToolbox 6.0)

Section & Sheet Titles

Go to Cover Sheet

Model Schematic

2. Model Assumptions

Financing Assumptions

a. Time Series Assumptionsb. General Assumptionsc. Operational Assumptionsd.e. Taxation Assumptions

1. Model Schematica.



Example of Operational – Assumptions

Example of Operational – Cost Outputs

All of the other worksheets have hyperlinks back to the Table of Contents as well as to those other worksheets that directly relate to them, such as in the above example, the Operational assumptions and outputs of the model.

2.2.5. Worksheets

Example of Assumptions Worksheet

All assumptions worksheets are consistently styled with white cells for assumption entry on a grey background. Assumption entry refers to any area of the model that it is intended for the user to change in order to alter the outputs of the model. This includes drop down boxes and check boxes as well as the aforementioned white cells.

Operational AssumptionsProperty Model (bpmToolbox 6.0)

Month Ending Aug-12 Sep-12 Oct-12 Nov-12 Month M2 (A) M3 (A) M4 (F) M5 (F)

Go to Operational OutputsGo to Table of Contents

Operational Cost OutputsProperty Model (bpmToolbox 6.0)

Month Ending Jul-12 Aug-12 Sep-12 Oct-12 Month M1 (A) M2 (A) M3 (F) M4 (F)

Go to Operational AssumptionsGo to Table of Contents

Taxation AssumptionsProperty Model (bpmToolbox 6.0)


Closing Balances ($'000)

Tax Losses

Closing Tax Losses - - - - -

Go to Table of ContentsGo to Taxation Outputs

Closing Balance



Example of Outputs Worksheet

Outputs worksheets are characterised by a white background with black and green font for the outputs. This indicates that there are no inputs to be made on this sheet as all cells are calculated from values entered on the assumptions worksheets.

Some headings are coloured using a blue font as they have been entered directly into the cell, e.g. entered as a constant.

2.3. Using the Model

For the best performance of the model a few guidelines should be followed.

2.3.1. Data Entry

The workbook has been set up so that the colour of the cells will indicate the cells purpose. For example: white cells on a worksheet with a grey background are assumptions entry cells. However, if certain assumptions are changed then these assumption cells may become ‘inactive’.

Inactive and Active Assumptions

Taxation OutputsProperty Model (bpmToolbox 6.0)


Taxation - Summary ($'000)

Tax Expense

Tax Expense / (Benefit) - - - -

Tax Payable and Paid

Opening Balance - - - - -Tax Payable - Created During Period - - - - -Tax Payable - Paid During Period - - - - -Closing Tax Payable - - - - -

Go to Table of ContentsGo to Taxation Assumptions

Operational (Actuals) AssumptionsProperty Model (bpmToolbox 6.0)

Month Ending Jul-12 Aug-12 - -Month M1 (A) M2 (A) - -

Construction Costs ($'000)

Land & Acquisition Costs

Direct Land & Acquisition Costs Income / (Expenditure)Cost of Land (2,500.0) (2,500.0) - -Direct Land & Acquisition Costs 1 - - - -Direct Land & Acquisition Costs 2 - - - -Direct Land & Acquisition Costs 3 - - - -


Change which periods are treated as Actuals



In this example, the model currently only has two periods of actuals (see Time Series Assumptions section) and therefore only the first two periods of Land & Acquisition Costs are relevant, as the subsequent (forecast) periods are all determined by the forecast assumptions. Data should only be entered into white cells. Entering data into grey cells should be avoided as they are inactive assumptions and will have no impact on the outputs.

Output Worksheet

Data should not be entered into outputs worksheets as this may result in overwriting a formula, thus disabling that section of the calculation and breaking the flexibility of the output. If the user wishes to change a value within an output worksheet then the related field on an assumptions worksheet should be located and used.

2.3.2. Groupings

Many of the worksheets within the model have been set so that the user can adjust the level of detail displayed. The model has three preset levels of detail, being a summary view, a detailed view and a full details view (with time series content visible). To change the default view, use the numbers 1, 2 and 3 in the top of the left panel in the Excel window. The number 1 is used for the summary view, 2 for the detailed view and 3 for the full details view.

Example Grouped and Ungrouped

If the user wants to customise what information is hidden or revealed the [+] and [-] buttons in the left panel will reveal or hide the corresponding sections of the output.

Balance SheetProperty Model (bpmToolbox 6.0)


Balance Sheet ($'000)

Assets

Opening Cash - - - -Net Change in Cash Held - - - -

Cash - - - -Work In Progress 2,606.8 5,405.3 6,017.5 6,996.9Deferred Tax Assets - - - -

Go to Balance Sheet (Actuals) AssumptionsGo to Table of Contents



2.3.3. Error, Alert & Sensitivity Checks

Example Check Message

While using the model, errors and alerts may appear next to the model name at the top of each worksheet. When an error or an alert shows, the user is advised to investigate the cause of the warning before continuing with further analysis. By understanding the cause of the error or alert as they occur, the user can decide what action, if any, needs to be taken to resolve it and thus avoid compounding future errors.

Failure to check the cause of errors and alerts early on may make their cause harder to isolate as more data is entered and more analysis is performed.

To navigate to the error or alert worksheet the user can utilise the hyperlink via the table of contents or click on the hyperlinks at the top of each worksheet. The symbol will take the user to the Errors Checks worksheet and the symbol will take the user to the Alerts Checks worksheet.

The model also contains sensitivity checks which will inform the user when the model is operating with an active sensitivity. Clicking on the symbol will take the user to the sensitivity checks worksheet.

Project Cash FlowProperty Model (bpmToolbox 6.0) (Error in Financing Outputs)


Project Cash Flow ($'000) Total

Project Cash Flow (Pre-Interest) 5,924.5 (2,609.3) (2,806.2) (605.1) (947.2)

Go to Table of Contents



Error Check Worksheet

When viewing the Error Checks worksheet, worksheets with errors will be highlighted in bold in error red and italic font. By clicking on the worksheet name the user will be taken to the relevant worksheet in order to investigate the error.

Alert Check Worksheet

The Alert Checks worksheet operates in the same way as the Error Checks worksheet.

Error Checks

##

Errors Detected - Summary

Total Errors: 1Error Message (Empty if None): (Error in Financing Outputs)

Error Checks

Error Checks Check Include? Flag

Income Statement (Actuals) - Assumptions - Yes -Balance Sheet (Actuals) - Assumptions - Yes -Balance Sheet (Actuals) - Assumptions - Yes -Operational Cost Outputs - Yes -Financing Outputs 1 Yes 1Cost of Sales Outputs - Yes -Project Cash Flow - Yes -Income Statement - Yes -Balance Sheet - Yes -Cash Flow Statement - Yes -Semi-Annual Financial Statements - Yes -Semi-Annual Financial Statements - Yes -Semi-Annual Financial Statements - Yes -

Total Errors: 1

Include summary in model name?

Alert Checks

##

Alerts Detected - Summary

Total Alerts: -Alert Message (Empty if None):

Alert Checks

Alert Checks Check Include? Flag

Financing Assumptions - Yes -Taxation Assumptions - Yes -Taxation Assumptions - Yes -Balance Sheet (Actuals) - Assumptions - Yes -Balance Sheet (Actuals) - Assumptions - Yes -Financing Outputs - Yes -Balance Sheet - Yes -Senior Debt Covenant Breached - Debt to Equity - Yes -Senior Debt Covenant Breached - Loan to Cost - Yes -Senior Debt Covenant Breached - Loan to Value - Yes -Mezzanine Debt Covenant Breached - Debt to Equity - Yes -Mezzanine Debt Covenant Breached - Loan to Cost - Yes -Mezzanine Debt Covenant Breached - Loan to Value - Yes -

Total Alerts: -




Alerts and errors communicate different information with an error often being more fundamental and urgent to address than an alert.

An error would result when the model shows a value which is not expected. In normal financial forecasting for example, if the model shows a balance sheet that does not balance or a negative balance for debt, an error would be flagged.

An alert would show when the model has a result which might be an issue but also may be theoretically correct, such as a negative cash balance.

Sensitivity Check Worksheet

The Sensitivity Checks worksheet operates in the same way as the Error & Alert Checks worksheets.

Sensitivities communicate that the model is operating with a sensitivity applied to the assumptions.

A sensitivity is a factor that is applied by the model user via the sensitivity assumptions area that will increase or decrease the related operating assumptions.

A sensitivity check will let the user know that results they are viewing are subject to these sensitivity adjustments.

Sensitivity Checks

##

Sensitivities Detected - Summary

Total Sensitivities: -Sensitivity Message (Empty if None):

Sensitivity Checks

Sensitivity Checks Check Include? Flag

Land & Acquisition Costs - Yes -Construction & Design - Yes -Professional Fees - Yes -Project Management - Yes -Statutory Fees - Yes -Project Contingency - Yes -Marketing and Legal Fees - Yes -Rent Incentives - Yes -Land Holding Costs - Yes -Misc Costs - Other - Yes -Realisation - Yes -Rental - Yes -Realisation Costs - Yes -Rental Costs - Yes -

Total Sensitivities: -




Chapter 3. Model Overview

3.1. Model Schematic

Model Schematic

All BPM models are structured with a clear distinction between assumptions and outputs.

The model has four key assumption areas which cover Operations, Financing, Dividends and Tax. The assumption worksheets feed into the Operations, Financing, Dividend and Tax outputs. These outputs then form the basis for the financial reports.

The final outputs of the model are the dashboards which present a number of summary aspects of the project and its overall performance.

Model SchematicProperty Model (bpmToolbox 6.0)

Go to Dashboards

Go to Financing Assumptions

Go to Dividend Assumptions

Go to Operational Outputs

Go to Financing Outputs

Go to Dividend Outputs

Go to Operational Assumptions

Go to Financial Statement Actuals


Go to Financial Reports

Go to Taxation Outputs

Go to Taxation Assumptions



Chapter 4. Assumptions

4.1. Time Series Assumptions

Time Series Assumptions Worksheet

The Time Series Assumptions worksheet is the entry point for setting up the overarching parameters of the model such as Start Date, Model denomination, and Forecast Start Date. This worksheet also allows the user to control which values are used in which periods of the outputs, e.g. actuals or calculated forecast amounts.

Once the Model Denomination has been set the user should always enter in the hard coded assumptions in the corresponding denomination. For example, if the model is set to $’000 then the number $50,000 should be entered as “50”.

Changing the denomination will not result in changes to their hard coded values but the relationship will remain correct and consistent with the respect to the outputs in the new denomination. That is, if the assumption has been entered as “50” when the denomination is set to $’000, when the denomination is changed to $, the assumption and output will remain as “50”.

Time Series AssumptionsProperty Model (bpmToolbox 6.0)

Time Series Assumptions

Core Time Series Assumptions

TitlePeriodicityFinancial Year End 30 6 30 6

Start DatePeriodsDenomination

Historical & Forecast Period Titles

Include in Period Titles?

Forecast Start Date 2 3

PrimaryMonthly

1-Jul-1224

3

TRUE

SecondarySemi-Annual

1-Jul-128

-

3


TRUE

30 June

$'000

1-Sep-12



4.2. General Assumptions

The General Assumptions worksheet is the entry point for setting up the overarching parameters of the model such as Category Names, Annual Escalation and Sensitivity.

Naming Convention, Escalation and Sensitivity

The selected Category Names that the user can enter will be used as the headings for the various costs and revenues as well as funding sources.

The Annual Escalation is a rate at which the cost or revenue should increase over time. The escalation can be applied on an annual, semi-annual, quarterly or monthly basis with a full years compounded growth equalling the Annual Escalation rate.

Sensitivity can be applied to individual cost categories within the range of -100% to +100%. When the sensitivity is active the model will increase all relevant costs or revenues by the corresponding sensitivity rate. This is applied to custom costs as well as allocated costs. A detailed discussion of custom and fixed costs is contained in the following section.

4.3. Operational Assumptions

Land Rates Assumptions

General AssumptionsProperty Model (bpmToolbox 6.0)

Project Name

Project Name:

Naming Conventions, Escalations and Sensitivity

Categories

Cost Category Names Annual Escalation

Apply Escalation

Activate Sensitivity Sensitivity Sensitivity

Check

Category 1 - 1 FALSE - -








Construction & Design

Professional Fees

Project Management

Statutory Fees

Annual

Annual

Annual

Annual

Annual

Construction Costs

Land and Rates Quantity

Units Rate ($'000) Start Period DurationAllocation

BasisLand Area Acquired (Square Metres) 1,000 1 2 1

Land Price Per Square Metres $5.0

Land & Acquisition Costs TRUE

Direct Land & Acquisition Costs Units Rate ($'000) Start Period DurationAllocation

BasisCost of Land - - - - 1

Direct Land & Acquisition Costs 1 - - - - 1



Flat

Flat

Flat

Flat

Flat

Capitalise?



The Operational Assumptions worksheet is the entry point for the operating costs and revenues of the project.

The first assumptions area relates to the purchase price of land which is entered on a rates and units basis. The units relate to the land size. For example, if 10,000 square metres of land are purchased the assumption entered would be 10,000. The next assumption relates to the price per unit of land acquired. For example $200 would be entered if the rate is $200 per square metre (and the model denomination is set to $’s).

The Start Period relates to when the first payment should be made and the Duration relates to the period of time in months over which the payments are made.

The model allows three different allocation profiles for land acquisition. These are Flat, S-Curve, and Custom. Flat and S-Curve allocate the cost evenly over the acquisition period and over an S-Curve respectively. The Custom option will allow the user to enter in a profile based on units and price on a month by month basis.

Under all options the model will multiply the rates and unit prices to establish the dollar cost of the acquisition in each month. If escalations and sensitivities are active the rates will be adjusted accordingly.

If the user would rather enter the cost of land in the same method as a regular cost a fourth option Direct Assumption may be selected. Under this option the user will be able to enter the entire purchase price in the Land & Acquisition Costs section under Cost of Land.

Operational Assumption

Cost can be entered as direct or allocated costs. With direct costs being the defined dollar value and allocated costs being a percentage of a relevant base.

Each cost can be allocated over three profiles being Flat, S-Curve or Custom. In all cases the user will need to enter a Start Period and Duration to allocate the cost over.

The Start Period is the month in which the cash flow is expected to start and the Duration assumption reflects the number of months over which the cash flow should be allocated over.

For the Flat and S-Curve profiles the user should enter the total units and rates in their respective fields, whereas for the Custom allocation option a series of white active assumption cells will become active to the right side of the worksheet allowing the user to enter project costs in their corresponding months.

Note: these cells will only become active assumptions for forecast periods and remain inactive for actual periods.

The user has a further option to Capitalise costs to the balance sheet or expense them as incurred via a check box located at the top of each cost block.

Construction & Design TRUE

Direct Construction & Design Units Rate ($'000) Start Period DurationAllocation

BasisDirect Construction & Design 1 10,000 $2.0 2 16 2

Direct Construction & Design 2 - - - - 1



Allocated Construction & Design PercentAllocated Construction & Design 1 2.00% of

Allocated Construction & Design 2 - of 12

1

S-Curve

Flat

Flat

Flat


Exclude

Capitalise?



The Allocated Cost Categories in each block allows the user to include a cost or cost based on the direct cost of another cost category or total cost. The base cost includes all costs of the selected category with the exception of any allocated costs. Selection of a cost category can be made via a drop down box.

Realisation Assumptions

The entry methodology for revenue items is similar to that of cost items, however revenue cannot be capitalised. It is important to note that there are two different sections on this assumptions worksheet for recognising revenue and that using one over the other will cause the model to calculate in different ways.

The first revenue recognition category relates to the sale of constructed assets and therefore constitutes the basis for the cost of sales allocation calculation.1 The second revenue category will not impact on the cost of sales allocation and is suited to purely rental style revenues. If the user omits the sale of the constructed asset there will be no cost of sales allocation which will leave the capitalised costs on the balance sheet.

Cost of Revenue Assumptions

Below the revenue category entry fields are assumption entry fields for costs that are likely to be incurred whilst earning this revenue. These costs will be deducted from revenue in the income statement to calculate Net Proceeds from revenue. This would ideally be suited to costs such as agent fees.

1 Cost of Sales are calculated based on a percentage of the total project realisation.

Project Realisation ($'000)

Realisation

Units Rate ($'000) Start Period DurationAllocation

BasisDirect Realisation 1 10 $3,333.1 15 4 2

Direct Realisation 2 - - - - 1




S-Curve

Flat

Flat

Flat

Flat

Realisation Costs

Direct Realisation Costs Units Rate ($'000) Start Period DurationAllocation

BasisRealisation Costs 1 - - - - 1

Realisation Costs 2 - - - - 1




Allocated Realisation Costs PercentAllocated Realisation Costs 1 5.00% of

Allocated Realisation Costs 2 - of

1

7

Flat

Flat

Flat

Flat

Flat

Direct Realisation 1

Exclude



These costs operate in the same way as the other costs discussed above. The only difference being that the allocated costs are based on the respective revenue item and the ability to capitalise this cost is not available.

NB: for Flat and S-Curve costs, the original forecast figure will be in use for forecast periods even after Actuals (see section 4.6) have been entered in earlier periods, e.g. there is no rebasing or spreading of the initial forecast amount (less Actuals-to-date) across the remaining forecast periods.

4.4. Financing Assumptions

Financing Assumptions Worksheet

The Financing Assumptions worksheet is the central entry point for all assumptions relating to the funding and financing of the project and has capacity for two debt and one equity facility.

The first selection that the user will need to make is the drawdown method for the funding. The model provides three options for drawdowns which are Custom, Percent and Tranches.

If the user selects the Custom method then each drawdown will need to be entered in the custom profile cells on a month by month basis. The entry cells for the custom profile will become available when the custom profile is selected, again only available for forecast periods. Actual amounts are entered into the relevant line of the historical financial statement worksheets.

Selecting the Percent drawdown method will allow the user to allocate a percentage funding requirement to be drawn from each of the debt sources, with the percent of equity calculated as the remainder to make the total funding equal to 100%. This is not a ‘waterfall’ drawdown mechanism; the percentages apply in each period.

The final option of drawing down funding in Tranches will first draw equity funding until the committed equity is reached, followed by the secondary debt source up to the facility limit and then finally drawing from the remaining debt source until its facility limit is reached. If all funding sources are exceeded the model will raise an alert or draw additional funding from equity if the Fund Shortfall from Equity check box is checked.

4.4.1. Debt Facilities

The narrative in the following section applies to both debt facilities.

Financing AssumptionsProperty Model (bpmToolbox 6.0)



Financing Assumptions - ($'000)

Drawdown Method

Drawdown Method Selection: 2 Enter in the percent to drawdown debt and


Percent



Timing Assumption

The first option the user has is to include or exclude the debt facility from the model. To activate the debt facility the user need only check the include debt facility check box and uncheck it to exclude the facility.

The user can set an earliest date as well as a latest date to impact the periods over which either debt facility can be drawn on.

Interest Assumptions

If the user checks the Ignore Facility Limit for Interest check box the model will continue to drawdown debt in each facility to the extent that interest is being calculated on that debt facility, i.e. it will continue to capitalise interest into the facility.

The interest rate that is charged on the facility is calculated by summing the values entered as the Base Rate and Margin to give an All Up Rate which will be used to calculate interest throughout the project.

Facility Limit Assumptions

The Facility Limit assumption area has an entry cell for the percent of funds to be drawn from each funding source as discussed above. Below this cell is the Limit Drawdowns to Facility Limit check box which gives the user the option to cease drawing down debt where the debt facility limit is reached under the percent drawdown method.

The final Facility Limit assumption is the Facility Limit itself. This assumption should reflect the maximum amount of funding that can be drawn from this funding source. The facility limit will be important in capping the amount of funding that can be drawn and in calculating the commitment fees.

The model utilises two methods for determining the facility limit. The first of which is to have the model calculate the facility limit based on the covenants and another method is to enter a facility limit directly.

Senior Debt

Include Senior Debt? TRUE The Senior Debt is included in the project fun

Earliest Date For Drawdowns 1 Drawdowns of Senior Debt can be made at a

Latest Date For Drawdowns 24

Jul-12

Jun-14

Interest

Ignore Facility Limit for Capitalising Interest into the Facility TRUE The Senior Debt drawdowns will continue be

Base Rate 4.50% The base rate for the Senior Debt funding is Margin 4.00% A margin of 4.00% on base rate will be appAll Up Rate 8.50% The all up interest rate which will apply to th

Facility LimitCustom Drawdown Profile ($'000) - (Inactive) - - - - -Custom Repayment Profile ($'000) - (Inactive) - - - - -Percent of Funding 60.00% The percentage of the total funding required

Limit Drawdowns to Facility Limit FALSE The facility limit may be exceeded by drawdo

Facility Limit Methodology 2 Calculation is based on the Loan to Cost and

Custom Facility Limit ($'000) - (Inactive) - Assumption inactiveCalculated Facility Limit 19,210.3 Calculated as 80.00% of Loan to Cost.Facility Limit In Use 19,210.3 The limit to the Senior Debt facility is $19,21

Calculate



If the covenants method is selected the model will determine and use the facility limit which correlates to the lowest limit produced by an active covenant.

Commitment Fees

The next assumptions area for the debt facilities is the Commitment Fee. The Commitment Fee can be capitalised or expensed (see below). The Commitment Fee can be charged as an upfront percentage of the facility limit and as a monthly percent on the undrawn balance of the facility limit.

Covenant Assumptions

The debt facilities have inputs for certain Covenants that may need to be monitored whilst undertaking the project. There is a check box for the user to select whether the model should alert them if the project is forecast to exceed these covenants at any time.

If the user is using the loan to value ratio alert the Custom Valuation option allows entry of a custom valuation figure rather than a default valuation based on project cash flow (excluding interest) realisation.

Debt Cost Capitalisation Assumptions

It is possible for the user to model the Financial Statement Impact of finance costs (interest and commitment fees) in two different ways. When the Capitalise Interest box is checked, the interest on debt will be capitalised into the work-in-progress (“WIP”) asset values and expensed through the Income Statement in line with the release of that asset values. When unchecked, the interest on debt will be expensed through the Income Statement as incurred.

The same is true of the Capitalise Commitment Fee checkbox with respect to the cost of the commitment fees.

Commitment FeeFee on Facility Limit 0.10% The upfront commitment fee will be $19,210 Fee on Undrawn Amount (Annualised) - A monthly 0.00% fee will apply to any undra

Debt Covenants Include Alert?

Debt to Equity FALSE - Alert inactive

Loan to Cost TRUE 80.00% An alert will show if the Loan to Cost covena

Loan to Value FALSE - Alert inactive

Use Custom Valuation - (Inactive) TRUE

Custom Valuation For Loan to Value - (Inactive) - Assumption inactive

Financial Statement Impact

Capitalise Interest TRUE Interest will be capitalised and expensed as

Capitalise Commitment Fee TRUE The commitment fee will be capitalised and e



4.4.2. Equity Assumptions

Equity Assumptions

The Equity Funding sub-section has similar assumptions to the debt sections, although interest expense and commitment fee assumptions are not included. The equity assumptions area has two different assumptions. These assumptions are a Required Rate of Return on Equity, which will be used for calculating a project net present value, as well as a Fund Shortfall from Equity check box.

If the Fund Shortfall from Equity check box is selected, the project will fund any cash deficit from equity after all other sources of funds are exhausted.

4.4.3. Dividend Assumptions

Dividend Assumptions

The Dividend Assumptions follow the equity assumptions on the financing worksheet and are the entry point for all assumptions relating to the payment of dividends.

For forecast periods, dividends can be paid as either a % of NPAT or an Assumed Dividend Amount. The model default is to pay out dividends when cash flow is available. This will result in a return of cash, subject to the following two check box impacts.

The Include Opening Retained Profits in NPAT check box will allow the user to select whether opening retained profits can be paid out as dividends or should be left out of the dividend calculations.

The Limit Dividends to Prevent Negative Cash at Bank check box will limit dividend payments to available cash.

Equity

Include Equity? TRUE The Equity is included in the project funding.

Project Required Return 15.0% The required rate of return on Equity is 15.0

Facility Limit

Fund Short Fall From Equity TRUE Any project funding shortfall will be funded f

Custom Drawdown Profile ($'000) - (Inactive) - - - - -Custom Repayment Profile ($'000) - (Inactive) - - - - -Percent of Funding 30.0% The percentage of the total funding required

Limit Drawdowns to committed equity TRUE The committed equity will not be exceeded b

Committed Equity ($'000) 12,000.0 The limit to the Equity facility is $12,000,000

Dividends - Assumptions ($'000)

Dividend Determination Method:

Dividend Declaration Period? No No No NoDividend Payout Ratio - % of NPAT - - - -Assumed Dividends -Not Applied - - - -

## Include Opening Retained Profits in NPAT?

## Limit Dividends to Limit Cash at Bank?

1% of NPAT



4.5. Taxation Assumptions

Taxation Assumptions

The Taxation Assumptions worksheet is the entry point for taxation assumptions relating to the project. Note: The model has been prepared excluding any sales tax analysis.

An assumptions area exists for any Closing Tax Losses which the entity may be holding as at the latest point of actuals.2 These again are only active for actual periods, as opposed to forecast periods.

Following these assumptions the model user should enter in the Corporate Taxation Rate, which is set as a default of 30%.

Differences Profiles

The Permanent Differences assumptions area relates to any differences that may have resulted from variation between accounting and tax treatment of items that are not expected to reverse. These only apply for forecast periods.

2 Closing tax losses are not tax effected.

Taxation AssumptionsProperty Model (bpmToolbox 6.0)


Closing Balances ($'000)

Tax Losses

Closing Tax Losses - - - - -

Taxation Rate

Corporate Taxation Rate -

Go to Table of ContentsGo to Taxation Outputs

Closing Balance

Permanent Differences ($'000)

CategoriesTax Perm. Diff. 1 Name - - - -

Differences - Deferred Tax Assets ($'000)

CategoriesTax Diff. DTA 1 Name - - - -

Differences - Deferred Tax Liabilities ($'000)

CategoriesTax Diff. DTL 1 Name - - - -



To make an adjustment to deferred tax assets or liabilities the difference between the accounting and tax treatment of the items which go into calculating these balances can be profiled in the Differences – Deferred Tax Asset and Differences – Deferred Tax Liabilities assumption areas. These figures also only apply to forecast figures.

Tax Payment Timing

The Tax Payment and Timing and Delay assumptions area allows the user to set the periods in which the cash component of any corporate tax is actually paid, as well as the delay between initial determination and subsequent payment (Tax Payment Delay assumption).

The final assumption set allows the user to determine the Payment of Opening Tax Payable, based on a percentage profile.

Tax Expense Recognition Basis Assumptions

The treatment of expenses may differ for accounting and taxation. To address these differences the user can select between using a cash or accrual accounting basis via the Use Cash Basis for Tax check box. If the check box is checked then the cash basis timing is used for the purposes of the tax computations. Conversely, if left unchecked then the accounting treatment will be used for the basis of tax purposes (see section 4.3).

Tax Payment Timing

Tax Payment Timing & Delay

Periods in which tax is paid Yes Yes Yes Yes Yes

Tax Payment Delay 2 2 Periods Tax will be paid 2 months after being recognised.

Opening Tax Payable - Payment Timing

Payment of Opening Tax Payable - - 100.0% - -

Tax Treatment

Tax Treatment by CategoryUse Cash Basis for Tax

Land & Acquisition Costs Categories FALSE For tax purposes the Land & Acquisition Cos

Construction & Design Categories FALSE For tax purposes the Construction & Design

Professional Fees Categories FALSE For tax purposes the Professional Fees Cate

Project Management Categories FALSE For tax purposes the Project Management C

Statutory Fees Categories FALSE For tax purposes the Statutory Fees Catego



4.6. Actual Assumptions

4.6.1. Time Series Assumptions

The Time Series Assumptions also includes functionality that allows users to update the start date of forecasts, simply by changing the Forecast Start Date assumption.

For example, as shown in the following image, Start Date is set to 1 July 2012, whilst the Forecast Start Date is set to 1 September 2012. This implies that users can enter in actual figures for the first two months and the model will start making projections of outputs from the start of September 2012 onwards (based on forecast assumptions).

Forecast Start Date in Time Series Assumptions

The model also distinguishes between ‘Actual’ periods and ‘Forecast’ periods according to the values entered in the Time Series Assumptions. This is done through labelling each period’s name with (A) for actuals and (F) for forecasts.

The reference (A/F) is also used in the summary outputs where figures are a combination of actual and forecast.

Actuals Period Assumptions

Time Series AssumptionsProperty Model (bpmToolbox 6.0)

Time Series Assumptions

Core Time Series Assumptions

TitlePeriodicityFinancial Year End 30 6 30 6

Start DatePeriodsDenomination

Historical & Forecast Period Titles

Include in Period Titles?

Forecast Start Date 2 3

PrimaryMonthly

1-Jul-1224

3

TRUE

SecondarySemi-Annual

1-Jul-128

-

3


TRUE

30 June

$'000

1-Sep-12








As noted, conditional formatting is applied to assist the user in understanding which assumptions are active.

4.6.2. Operational Actuals

The Operational (Actuals) Assumptions worksheet contains the entry point for all of the operational actuals figures. The key point to note is that these figures relate to cash flow only and not the Income Statement recognition.

Operational (Actuals) Assumptions

Operational (Actuals) AssumptionsProperty Model (bpmToolbox 6.0)





Allocated Land & Acquisition CostsAllocated Land & Acquisition Costs 1 (25.0) (25.0) - -Allocated Land & Acquisition Costs 2 - - - -

Total Land & Acquisition Costs (2,525.0) (2,525.0) - -





4.6.3. Income Statement Actuals

Income Statement Actuals Assumptions

The Income Statement (Actuals) Assumptions worksheet is the entry point for actual Income Statement figures relating to the project. Consistent with previous sections, forecast periods have been formatted as grey, inactive assumptions.

The actual figures down to Net Proceeds are entered in the Operational (Actuals) Assumptions worksheet (see section 4.6.2) and flow into the Income Statement Actuals worksheet for presentation purposes.

Income Statement (Actuals) - AssumptionsProperty Model (bpmToolbox 6.0)


Income Statement (Actuals) - Assumptions ($'000)

Revenue

Realisation - - - -Rental - - - -Revenue - - - -

Realisation Costs - - - -Rental Costs - - - -Sales Costs - - - -

Net Proceeds - - - -

Cost of Sales (Income) / Expenditure

Land & Acquisition Costs - - - -Construction & Design - - - -Professional Fees - - - -Project Management - - - -Statutory Fees - - - -

Go to Income StatementGo to Table of Contents




4.6.4. Balance Sheet Actuals

Balance Sheet Actuals Assumptions

The Balance Sheet (Actuals) Assumptions worksheet is the entry point for actual Balance Sheet figures relating to the project, with forecast period cells formatted as inactive.

These actual figures will feed into Balance Sheet Outputs and will be used as inputs for re-forecasting, e.g. these will be the base off which the Balance Sheet is forecast.

Balance Sheet (Actuals) - AssumptionsProperty Model (bpmToolbox 6.0)


Balance Sheet (Actuals) - Assumptions ($'000)

Assets Positive number entry

Opening Cash - - - - -Net Change in Cash Held - - - - -

Cash - - - - -Land & Acquisition Costs - 2,525.0 5,050.0 - -Construction & Design - 50.0 292.1 - -Professional Fees - 12.6 26.2 - -Project Management - - 3.8 - -

Go to Balance SheetGo to Table of Contents

Opening Balance




4.6.5. Cash Flow Statement Actuals

Cash Flow Statement Actuals Assumptions

The Cash Flow Statement (Actuals) Assumptions worksheet is the entry point for actual Cash Flow Statement figures relating to the project. Consistent with previous sections, forecast periods have been presented as grey, inactive cells.

The Operating Expenditure Cash Receipts line actuals are taken from the detailed assumptions entered into the Operational (Actuals) Assumptions worksheet (see section 4.6.2).

Cash Flow Statement (Actuals) - AssumptionsProperty Model (bpmToolbox 6.0)

Go to Cash Flow Statement


Cash Flow Statement (Actuals) - Assumptions ($'000)

Cash Flow from Operating Activities Cash Inflow / (Cash Outflow)

Realisation - - - -Rental - - - -Total Revenue - - - -

Cash Receipts - - - -

Land & Acquisition Costs (2,525.0) (2,525.0) - -Construction & Design (50.0) (242.1) - -Professional Fees (12.6) (13.6) - -Project Management - (3.8) - -Statutory Fees (21.7) (21.7) - -Project Contingency - - - -Marketing and Legal Fees - - - -Rent Incentives - - - -Land Holding Costs - - - -Misc Costs - Other - - - -Realisation Costs - - - -Rental Costs - - - -Total Operating Expenditure (2,609.3) (2,806.2) - -

Senior Debt Interest - (11.2) - -Mezzanine Debt Interest - (2.7) - -Senior Debt Commitment Fee (19.2) - - -Mezzanine Debt Commitment Fee - - - -Total Interest & Commitment Fee Expenditure (19.2) (13.9) - -





Chapter 5. Outputs

As the assumptions are entered they will flow through the model to their specific output calculations and then on to the financial reports.

The output worksheets contained in the model are Operational Cost, Financing, Taxation, Cost of Sales, Investor Returns, Project Cash Flow and the financial statements Income Statement, Balance Sheet, Cash Flow Statement and [Quarterly/Semi-Annual/Annual] Financial Statements. A brief discussion of these worksheets follows.

5.1. Operational Cost Outputs

Operational Cost Outputs

The Operational Cost Outputs worksheet is the main project calculations page. On this worksheet the model will work through all of the operational calculations to determine the cash needs and sources for the project on a month-by-month basis for the duration of the model.

The worksheet is structured so that the project expenditures are at the top of the worksheet, followed by the project revenues and cost of revenues.

Operational Cost OutputsProperty Model (bpmToolbox 6.0)


Escalation Calculations

S-Curve Calculations

Construction Costs $'000

Land & Acquisition Costs Total 1

Land Area Acquired (Square Metres) - - - - -Land Price Per Square Metres - - - - -

Cost of Land (5,000.0) (2,500.0) (2,500.0) - -Direct Land & Acquisition Costs 1 - - - - -Direct Land & Acquisition Costs 2 - - - - -Direct Land & Acquisition Costs 3 - - - - -Allocated Land & Acquisition Costs 1 (50.0) (25.0) (25.0) - -Allocated Land & Acquisition Costs 2 - - - - -Total Land & Acquisition Costs (5,050.0) (2,525.0) (2,525.0) - -

Go to Operational AssumptionsGo to Table of Contents



The amounts all have split sources that change by period; with the actuals typically sourced from a direct assumptions sheet (see section 4.6) and the forecast amounts based on detailed calculations, themselves driven by the forecast assumptions.

5.2. Financing Outputs

The Financing Outputs are the most complex part of the workbook and a full description of the permutations, combinations and interactions is difficult to describe concisely. However, the model contains an active, descriptive narrative for the user alongside the Financing Assumptions.

Active Financing Narrative

This information is then summarised in the Financing Outputs at the start of each facility section, along with summary movement accounts (“T-accounts”) for each facility. The most complex area of model relates to the Drawdown and Repayment, which will reflect the options chosen on the Financing Assumptions worksheet.

Financing Outputs

If the user is having difficulty in understanding what is driving the calculations, then we recommend the use of bpmTraverse to understand any of the outputs (in the Property Feasibility Model or any Excel workbook):

www.bestpracticemodelling.com/software/bpmtraverse

Enter in the percent to drawdown debt and equity for funding the monthly cash needs.

The Senior Debt is included in the project funding.

Drawdowns of Senior Debt can be made at any time from Jul-12 until Jun-14 .

The Senior Debt drawdowns will continue beyond the facility limit in regards to interest.

The base rate for the Senior Debt funding is 4.50%.A margin of 4.00% on base rate will be applied to the Senior Debt facility.The all up interest rate which will apply to the Senior Debt is 8.50%.

Financing OutputsProperty Model (bpmToolbox 6.0)


Financing - Summary($'000)

Senior Debt

Drawdown Method PercentInclude Senior Debt? YesEarliest Date For Drawdowns Jul-12 Latest Date For Drawdowns Jun-14 Custom Facility Limit ($'000) - (Inactive) 19,210.3Ignore Facility Limit For Interest YesPercent of Funding 60.0%Limit Drawdowns to Facility Limit No

Opening Balance - - 1,577.1 3,269.2 3,649.5Drawdowns 14,940.7 1,577.1 1,692.1 380.3 587.6Repayment (14,940.7) - - - -Closing Balance - 1,577.1 3,269.2 3,649.5 4,237.1

Go to Financing AssumptionsGo to Table of Contents



bpmTraverse Formula Review Tool

The bpmTraverse tool allows the user to more easily understand how a formula is evaluating, based on which precedents and calculations are active. The tool also enables the user to easily navigate to the precedents of a formula by clicking on the desired element in the user interface.

Furthermore, double-clicking a formula component within the bpmTraverse window takes the user to that formula, loads it into the user interface and therefore allows the user to ‘drill down’ from an initial formula into the entire underlying calculation tree.

For more information, see:

www.bestpracticemodelling.com/software/bpmtraverse

Dividend Outputs

The Dividend Outputs are located on the Financing Outputs worksheet and will determine the timing and amount of dividends that the project can pay based on retained earnings, available cash and the target dividend assumptions.

Dividends - Summary ($'000) Go to Dividend Assumptions

Dividends Payable & Paid

Dividend Determination Method: % of NPATDividend Declaration Period? No No No No

Opening Retained Profits - (21.7) (43.3) (65.0)Net Profit After Tax (NPAT) (21.7) (21.7) (21.7) -Maximum Dividends Allowed - - - -



5.3. Taxation Outputs

Taxation Outputs

The Taxation Outputs are located on a dedicated worksheet. This section collates financial statement data and the Taxation Assumptions to calculate the tax payable, tax expense, deferred tax asset and deferred tax liability.

Taxation OutputsProperty Model (bpmToolbox 6.0)


Taxation - Summary ($'000)

Tax Expense

Tax Expense / (Benefit) - - - -

Tax Payable and Paid

Opening Balance - - - - -Tax Payable - Created During Period - - - - -Tax Payable - Paid During Period - - - - -Closing Tax Payable - - - - -

Deferred Tax Assets

Opening Balance - - - - -Change in Deferred Tax Assets - - - - -Closing Deferred Tax Assets - - - - -

Deferred Tax Liabilities

Opening Balance - - - - -Change in Deferred Tax Liabilities - - - - -Closing Deferred Tax Liabilities - - - - -

Go to Table of ContentsGo to Taxation Assumptions



5.4. Cost of Sales Outputs

Cost of Sales Outputs

The Cost of Sales Outputs are also located on their own dedicated worksheet. The Total Cash Flow by Category calculations present the underlying cash flow calculations for each operational line.

The remainder of the worksheet then converts these calculations to either (a) capitalised WIP balance, with subsequent release through the Income Statement based on the Percent of Sales to Date, or (b) immediate recognition of the cost through the Income Statement. The user can select between the two treatments by checking the relevant Capitalise Cost checkbox for each cost area (see section 4.3).

Cost of Sales OutputsProperty Model (bpmToolbox 6.0)

Go to Operational Assumptions Go to Income Statement


Cost of Sales Calculations ($'000)

Total Cash Flow by CategoryTotal

Land & Acquisition Costs 5,050.0 2,525.0 2,525.0 - -Construction & Design 20,100.0 50.0 242.1 569.1 924.1Professional Fees 125.3 12.6 13.6 3.0 4.6Project Management 400.0 - 3.8 11.4 18.5Statutory Fees 65.0 21.7 21.7 21.7 -Project Contingency - - - - -Marketing and Legal Fees - - - - -Rent Incentives - - - - -Land Holding Costs - - - - -Misc Costs - Other - - - - -Interest - Senior Debt 890.6 - 11.2 23.2 25.9Interest - Mezzanine Debt 248.9 - 2.7 5.7 6.3Commitment Fee - Senior Debt 19.2 19.2 - - -Commitment Fee - Mezzanine Debt - - - - -Total Cash Flows 26,899.1 2,628.5 2,820.1 633.9 979.4




5.5. Investor Returns and Project Cash Flow

Investor Returns

The Investor Returns worksheet shows the cash flows to and from equity and calculates a rolling IRR based on this. The primary source for this report is the Cash Flow Statement.

Project Cash Flow

The Project Cash Flow worksheet shows some of the key cash flows in summary format, along with cumulative outputs. For a more comprehensive presentation of the project cash flows, see the dedicated Cash Flow Statement in the Financial Statement section of the model (Section 5 via the Table of Contents).

Investor ReturnsProperty Model (bpmToolbox 6.0)



Investor Returns ($'000)

Equity Cash Flow Returns

Equity Drawdowns (788.5) (846.0) (190.2) (293.8)Equity Repayments - - - -Dividends - - - -Cash Flow to Equity (788.5) (846.0) (190.2) (293.8)

Entire ProjectNominal Rolling IRR (Post-Tax) 70.6% - - - -

Project Returns

Pre-Tax Free Cash Flow (2,609.3) (2,806.2) (605.1) (947.2)Entire Project

Nominal Rolling IRR (Pre-Tax) 32.4% - - - -


Project Cash FlowProperty Model (bpmToolbox 6.0)


Project Cash Flow ($'000) Total

Project Cash Flow (Pre-Interest) 5,924.5 (2,609.3) (2,806.2) (605.1) (947.2)

Cumulative Project Cash Flow (Pre-Interest) (2,609.3) (5,415.5) (6,020.6) (6,967.8)

Interest and Commitment Fees

InterestSenior Debt (890.6) - (11.2) (23.2) (25.9)Mezzanine Debt (248.9) - (2.7) (5.7) (6.3)Commitment FeesSenior Debt (19.2) (19.2) - - -Mezzanine Debt - - - - -Total Loan Costs (1,158.7) (19.2) (13.9) (28.8) (32.2)




5.6. Income Statement

Income Statement

The Income Statement worksheet presents a view of the project performance on a monthly basis on a recognition, i.e. not cash flow, basis.

5.7. Balance Sheet

Balance Sheet

The Balance Sheet shows the financial position of the project on a monthly basis. The Balance Sheet draws on the operating outputs, taxation outputs, dividend outputs, Cash Flow and Income Statement in determining the balances of all the key accounts.

At the base of the Balance Sheet worksheet are alerts which will flag if the cash balance is negative in any period or if a loan covenant is breached. In the event that the balance sheet does not balance an error check will also bring this to the attention of the user.

Income StatementProperty Model (bpmToolbox 6.0)

Go to Income Statement (Actuals) Assumptions


Income Statement ($'000)

Revenue

Realisation - - - -Rental - - - -Revenue - - - -

Realisation Costs - - - -Rental Costs - - - -Sales Costs - - - -

Net Proceeds - - - -


Balance SheetProperty Model (bpmToolbox 6.0)


Balance Sheet ($'000)

Assets

Opening Cash - - - -Net Change in Cash Held - - - -

Cash - - - -Work In Progress 2,606.8 5,405.3 6,017.5 6,996.9Deferred Tax Assets - - - -

Go to Balance Sheet (Actuals) AssumptionsGo to Table of Contents



5.8. Cash Flow Statement

Cash Flow Statement

The Cash Flow Statement shows the cash inflow and outflow for the project on a monthly basis. This worksheet essentially presents the main outputs from the calculations worksheet. This information differs from that presented on the Income Statement as it reflects actual cash flows as opposed to accounting amounts, which depend largely on the recognition and capitalisation options chosen by the user.

5.9. Summary Financial Statements

Semi-Annual Financial Statement

Cash Flow StatementProperty Model (bpmToolbox 6.0)

Go to Cash Flow Statement (Actuals) - Assumption


Cash Flow Statement ($'000)

Cash Flow from Operating Activities

Realisation - - - -Rental - - - -Total Revenue - - - -

Cash Receipts - - - -

Land & Acquisition Costs (2,525.0) (2,525.0) - -Construction & Design (50.0) (242.1) (569.1) (924.1)Professional Fees (12.6) (13.6) (3.0) (4.6)Project Management - (3.8) (11.4) (18.5)Statutory Fees (21.7) (21.7) (21.7) -


Semi-Annual Financial StatementsProperty Model (bpmToolbox 6.0)

Half Year Ending Dec-12 Jun-13 Dec-13 Jun-14 Half Year H1 (A/F) H2 (F) H1 (F) H2 (F)

Income Statement ($'000)

Revenue

Realisation 33,331.4 - - 33,331.4 -Rental - - - - -Revenue 33,331.4 - - 33,331.4 -

Realisation Costs (1,666.6) - - (1,666.6) -Rental Costs - - - - -Sales Costs (1,666.6) - - (1,666.6) -

Net Proceeds 31,664.8 - - 31,664.8 -




The Summary Financial statements provide a summary of the project financial reports based on a selection of Annual, Semi-Annual and Quarterly time periods. The model user can select the periodicity for the summary via a drop down box and the worksheet will update accordingly.



Chapter 6. Dashboards

The final section of the model contains the dashboard outputs. The dashboards will present the financial information calculated through the model in various ways to communicate the different characteristics of the project.

The dashboards presented in the model are Project Summary, Leverage and Operations dashboards.



6.1. Dashboards

6.1.1. Project Summary Dashboard

Project Summary Dashboard

The Project Summary Dashboard presents Asset, Capital, Inventory Build Up and Cash Inflow and Cash Outflow profiles along with key statistics for debt, equity and project performance. This dashboard is ideally suited for giving a single A3 page summary of the entire project.

Dashboard Project SummaryProperty Model (bpmToolbox 6.0)

Interest Senior Debt Mezzanine Debt EquityCapitalise Interest Yes Yes N/ABase Rate 4.5% 4.5% N/AMargin 4.0% 8.0% N/AAll Up Rate 8.5% 12.5% N/A

Drawdown MethodPercent 60.0% 10.0% 30.0%Limit Drawdowns to Facility Limit No No YesIgnore Facility Limit For Interest Yes Yes N/ACustom Facility Limit ($'000) $19,210.3 - $12,000.0Maximum Drawdown ($'000) $14,940.7 $2,490.1 $7,470.3

Commitment FeeCapitalise Commitment Fee Yes Yes N/AFee on Facility Limit 0.1% - N/AFee on Undrawn Amount (Annualised) - - N/A

$'000 % of Revenue % of CostsRevenueRealisation 33,331.4 105.3% 123.9%Rental - - -Realisation Costs (1,666.6) 5.3% 6.2%Rental Costs - - -Net Proceeds 31,664.8 100.0% 117.7%

Cost of SalesLand & Acquisition Costs (5,050.0) 15.9% 18.8%Construction & Design (20,100.0) 63.5% 74.7%Professional Fees (125.3) 0.4% 0.5%Project Management (400.0) 1.3% 1.5%Statutory Fees - - -Project Contingency - - -Marketing and Legal Fees - - -Rent Incentives - - -Land Holding Costs - - -Misc Costs - Other - - -Interest - Senior Debt (890.6) 2.8% 3.3%Interest - Mezzanine Debt (248.9) 0.8% 0.9%Commitment Fee - Senior Debt (19.2) 0.1% 0.1%Commitment Fee - Mezzanine Debt - - -Total Cost of Sales (26,834.1) 84.7% 99.8%

Gross Margin 4,830.7 15.3% 18.0%

Total Operating Expenditure (65.0) 0.2% 0.2%

EBIT 4,765.7 15.1% 17.7%

Interest - Senior Debt - - -Interest - Mezzanine Debt - - -Commitment Fees - - -Tax Expense - - -

Net Profit After Tax 4,765.7 15.1% 17.7%

Profitability Ratios

Developer Margin 17.7%Equity IRR 70.6%Project Returns 32.4%Net Present Value (at 15.00%) 3,041.4


Cash Outflows ($'000)

Asset Profile ($'000) Cumulative Inventory Build Up ($'000)

Capital Profile ($'000) Financing Summary

Total Summary P/L - ( Jul 09 Through Jul 11 ) Cash Inflows ($'000)

($5,000.0)

-

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0

Cash Work In Progress

-

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0

Land & Acquisition Costs Construction & Design Professional Fees Project Management

Statutory Fees Project Contingency Marketing and Legal Fees Rent Incentives

Land Holding Costs Misc Costs - Other Interest Commitment Fees

-

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0

Senior Debt Mezzanine Debt Total Equity

-

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0

Cash Receipts Senior Debt Mezzanine Debt Ordinary Equity Raisings

($14,000.0)

($12,000.0)

($10,000.0)

($8,000.0)

($6,000.0)

($4,000.0)

($2,000.0)

-

Total Operating Expenditure Total Interest & Commitment Fee Expenditure

Senior Debt Mezzanine Debt

Ordinary Equity Repayments Ordinary Equity Dividends Paid



6.1.2. Leverage Dashboard

Leverage Dashboard

The Leverage Dashboard presents a profile of the debt and equity drawdowns relative to the Work in Progress balance as well as common covenants such as the Debt to Equity, Loan to Cost and Loan to Value ratios. The dashboard will profile these ratios over time and compare them to the projects covenants.

Dashboard Leverage SummaryProperty Model (bpmToolbox 6.0)Go to Table of Contents

Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14

Debt to Equity Forecast RatiosSenior Debt 2.1x 2.1x 2.1x 2.1x 2.1x 2.0x 2.0x 2.0x 2.0x 2.0x 2.0x 2.0x 2.0x 2.0x 1.4x 0.1x - - - - - - - -Total Debt 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x 0.3x - - - - - - - -

Loan to CostSenior Debt 0.60 0.60 0.61 0.61 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.51 0.07 - - - - - - - -Total Debt 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.11 0.19 - - - - - - - -

Loan to ValueSenior Debt - - - - - - - - - - - - - - - - - - - - - - - -Total Debt 0.05 0.10 0.11 0.13 0.15 0.18 0.21 0.25 0.29 0.32 0.36 0.39 0.42 0.45 0.34 0.03 - - - - - - - -

Loan to Cost Loan to Value

Debt Covenant Ratios

Capital Profile vs Work in Progress ($'000)

Debt to Equity

-

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x


Senior Debt - Debt to Equity Total Debt - Debt to Equity Covenants Senior Debt Covenants Total Debt

($5,000.0)

-

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0


Senior Debt Mezzanine Debt Equity Work In Progress

Narrative:

-

0.1x

0.2x

0.3x

0.4x

0.5x

0.6x

0.7x

0.8x

0.9x

Senior Debt - Loan to Cost Total Debt - Loan to Cost Covenants Senior Debt Covenants Total Debt

-

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

Total Debt - Loan to Value Senior Debt - Loan to Value Covenants Senior Debt Covenants Total Debt



6.1.3. Operations Dashboard

Operations Dashboard

The Operations Dashboard shows the quantity of cash spent on the project each month by each category of expenditure as well as a Gantt Chart showing which categories are active each month. A Cumulative Spending chart is provided as well as a breakdown of total revenue by source and total costs by category over the life of the project

Dashboard Operations SummaryProperty Model (bpmToolbox 6.0)


Land & Acquisition CostsConstruction & DesignProfessional FeesProject ManagementStatutory FeesProject ContingencyMarketing and Legal FeesRent IncentivesLand Holding CostsMisc Costs - OtherInterest - Senior DebtInterest - Mezzanine DebtCommitment Fee - Senior DebtCommitment Fee - Mezzanine Debt


Land & Acquisition Costs $2,525.0 $2,525.0 - - - - - - - - - - - - - - - - - - - - - -Construction & Design $50.0 $242.1 $569.1 $924.1 $1,243.6 $1,515.4 $1,728.9 $1,875.9 $1,950.9 $1,950.9 $1,875.9 $1,728.9 $1,515.4 $1,243.6 $924.1 $569.1 $192.1 - - - - - - -Professional Fees $12.6 $13.6 $3.0 $4.6 $6.2 $7.6 $8.6 $9.4 $9.8 $9.8 $9.4 $8.6 $7.6 $6.2 $4.6 $2.8 $1.0 - - - - - - -Project Management - $3.8 $11.4 $18.5 $24.9 $30.3 $34.6 $37.5 $39.0 $39.0 $37.5 $34.6 $30.3 $24.9 $18.5 $11.4 $3.8 - - - - - - -Statutory Fees $21.7 $21.7 $21.7 - - - - - - - - - - - - - - - - - - - - -Project Contingency - - - - - - - - - - - - - - - - - - - - - - - -Marketing and Legal Fees - - - - - - - - - - - - - - - - - - - - - - - -Rent Incentives - - - - - - - - - - - - - - - - - - - - - - - -Land Holding Costs - - - - - - - - - - - - - - - - - - - - - - - -Misc Costs - Other - - - - - - - - - - - - - - - - - - - - - - - -Interest - Senior Debt - $11.2 $23.2 $25.9 $30.0 $35.6 $42.4 $50.1 $58.6 $67.4 $76.2 $84.8 $92.8 $99.9 $105.8 $80.6 $6.2 - - - - - - -Interest - Mezzanine Debt - $2.7 $5.7 $6.3 $7.4 $8.7 $10.4 $12.3 $14.4 $16.5 $18.7 $20.8 $22.7 $24.5 $25.9 $25.9 $25.9 - - - - - - -Commitment Fee - Senior Debt $19.2 - - - - - - - - - - - - - - - - - - - - - - -Commitment Fee - Mezzanine Debt - - - - - - - - - - - - - - - - - - - - - - - -

TOTAL $2,628.5 $2,820.1 $633.9 $979.4 $1,312.1 $1,597.6 $1,824.9 $1,985.3 $2,072.6 $2,083.6 $2,017.8 $1,877.7 $1,668.8 $1,399.1 $1,079.0 $689.8 $229.1 - - - - - - -


Gantt Chart of Project Costs

Project Expenditure by Month ($'000)

Cumulative Monthly Cash Flow By Cost Category ($'000)

Revenue Breakdown by Source Work In Progress Breakdown By Cost Type

Project Expenditure by Month ($'000)

-

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0


-

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0


Commitment Fee - Mezzanine Debt

Commitment Fee - Senior Debt

Interest - Mezzanine Debt

Interest - Senior Debt

Misc Costs - Other

Land Holding Costs

Rent Incentives

Marketing and Legal Fees

Project Contingency

Statutory Fees

Project Management

Professional Fees

Construction & Design


100%

0%

Realisation

Rental

19%

75%

0%2%0%0%0%0%0%0%3% 1%0%0%

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