Technical Guides

Service Charge Modelling

Service charge, the recoverable costs a landlord incurs to operate and maintain the common parts of a multi-let asset and bills back to tenants, should be modelled as its own budget, apportionment, and reconciliation cycle, distinct from the landlord's own non-recoverable operating costs. This guide sets out how the service charge budget should be built, how it should be apportioned across tenants, and how the year-end reconciliation between budget and actual expenditure should be represented.

Service Level Agreement Models

A service level agreement (SLA) financial model represents the multiple, individually defined service quality metrics an infrastructure operator commits to meet, the credit or penalty calculation triggered when a metric falls short, and the reporting cadence against which performance is measured. This guide covers how to build an SLA model: structuring each metric independently, avoiding a single composite score, and connecting SLA credits and penalties to the broader operations financial model.

Service Line Financial Models

A service line financial model isolates the revenue, cost, and contribution margin of an individual clinical service, cardiology, oncology, orthopaedics, or another specialty, within a hospital or health system's broader operations. This guide covers how to build a service line model: direct revenue and cost attribution, shared and overhead cost allocation methodology, and how service line contribution margin should be used and, importantly, not misused in strategic decision-making.

Share Acquisition Models

A share acquisition model transfers the entire target legal entity — every asset, every liability disclosed or undisclosed, and every contract — as a single unit, in contrast to an asset deal's itemized transfer. This structural simplicity is also the source of a share deal's central risk: because the buyer inherits the target's full tax and liability history along with its operations, undiscovered historical liabilities become the buyer's own, making comprehensive due diligence the primary structural safeguard rather than the itemization discipline an asset deal relies on.

Social Infrastructure Operations Models

A social infrastructure operations financial model represents the ongoing facilities management, lifecycle replacement, and soft service (catering, cleaning, security) contract structure of schools, hospitals, courts, and similar civic buildings, whether held under an availability payment PPP or direct public ownership. This guide covers how to build that operations-phase model as the general framework specialised by the healthcare and education facility guides, addressing the hard and soft facilities management split and lifecycle replacement across a diverse building portfolio.

Solar PV Financial Models

A solar PV financial model specializes the base power project model structure with a technical output chain specific to photovoltaic generation: irradiance converted through DC array output, inverter clipping at a chosen DC:AC ratio, and location-specific soiling losses, on top of the resource yield and degradation mechanics common to renewable technologies generally. This guide covers each of these solar-specific technical mechanics and how they should be built into the model.

Sources and Uses Modelling

The sources and uses statement is typically the first schedule built in a project finance model and the first schedule a lender reviews. Building it as a live, formula-driven reconciliation rather than a static summary requires resolving the circularity between total uses (which includes interest during construction, itself dependent on the debt drawn) and total sources (which includes the debt sized against that same total uses figure). This guide sets out the construction sequence and common errors in building a sources and uses statement that reconciles automatically as assumptions change.

Sovereign Wealth Fund Models

A sovereign wealth fund manages national wealth across a diversified, multi-asset-class portfolio against a long-horizon mandate, rather than the balance-sheet spread of a bank or the fee-driven AUM model of a conventional asset manager. This guide covers how a sovereign wealth fund model should represent strategic asset allocation across asset classes, the long-horizon mandate's effect on liquidity and risk tolerance, and the co-investment and direct investment structures common to this institution type.

Spreadsheet Engineering

Spreadsheet engineering is the application of systematic engineering principles to the construction and maintenance of spreadsheet-based financial models. It treats a financial model as a software artefact subject to design principles, structural requirements, and quality standards analogous to those applied in software engineering, rather than as an ad hoc calculation tool built without formal discipline. The core principles of spreadsheet engineering are: separation of inputs, calculations, and outputs; consistent formula construction; avoidance of circular dependencies; complete documentation; and systematic version control. These principles are codified in recognised standards including the ICAEW Financial Modelling Code and the FAST Standard.

Statement Linking Mechanics

Statement linking mechanics are the specific formulas and connections that turn three independently understandable statements into one integrated three-statement model. This guide walks through each linkage step by step: net income flowing to retained earnings and to the top of the cash flow statement, the sign conventions that govern working-capital adjustments, capex and debt movements connecting the statements, and the final ending-cash-to-balance-sheet tie-out that confirms the whole structure holds together. It closes with the specific linking errors most responsible for an out-of-balance model.

Storage Terminal Financial Models

Storage terminal financial models are built around tank capacity, working capacity available for active use versus total shell capacity, and revenue structures typically based on capacity reservation fees rather than pure throughput. This guide sets out how storage terminal economics are modelled, including the effect of forward curve shape (contango and backwardation) on storage demand, and how terminalling agreements provide the revenue certainty underlying terminal financing.

Strategic Planning Model Structure

A strategic planning model projects a company's financial position over a multi-year horizon, typically three to five years, to test whether a set of strategic choices — market entry, capacity expansion, an acquisition programme, a shift in capital allocation policy — is financially achievable and what capital and financing it would require. This guide covers how a strategic plan differs structurally from a budget (single fixed year, high assumption precision) and a rolling forecast (short window, updated every cycle), how to frame the plan around a small number of strategic scenarios rather than a single base case, the appropriate level of granularity for a multi-year horizon, and how the plan links into the capital allocation model that governs how the resulting cash is actually deployed.

Stress Testing Models

A bank stress test should vary the same volume, rate, and credit-loss drivers already present in the base model under a defined adverse macroeconomic scenario, rather than being built as a separate, structurally disconnected stress workbook that cannot be reconciled back to the base case. This guide covers how to structure a stress test as a set of parameter overlays on the existing model, how to translate a macroeconomic scenario into the specific driver changes it implies, and how the resulting capital and liquidity impact should be presented against the base case.

Student Housing Model Structure

Purpose-built student accommodation is structurally distinct from both conventional residential and hotel models because it operates on an academic-year occupancy cycle, is frequently secured through a nomination agreement with a university guaranteeing a minimum occupancy level, and prices and reports its economics per bed space rather than per unit. This guide sets out how each of these mechanics should be represented.

Sum-of-the-Parts (SOTP) DCF Valuation

Sum-of-the-parts (SOTP) DCF valuation values a multi-segment or multi-asset business by discounting each segment's cash flows separately, at a discount rate that reflects that segment's own risk profile, and summing the resulting segment enterprise values before applying a single company-wide enterprise-to-equity bridge. This guide sets out when a single consolidated DCF misrepresents such a business, how segment-level cash flow and discount-rate construction works, the most common pitfalls — a single blended WACC applied across segments of dissimilar risk, double-counted or omitted corporate overhead, and a missing holding-company discount — and the structural audit checks that confirm an SOTP build has been assembled correctly.

Sustainable Aviation Fuel Models

Sustainable aviation fuel (SAF) project economics are driven by feedstock cost and availability risk, a blending mandate or offtake structure that determines demand, and a cost premium over conventional jet fuel that current production economics have not yet closed. This guide covers how to model each of these drivers and the incentive dependency many current SAF projects carry.

Sustainable Finance

Sustainable finance is the broadest of the climate-adjacent capital allocation frames, financial activity that integrates environmental, social, and governance factors into investment and lending decisions generally, rather than restricting capital to a defined list of eligible green projects or a defined transition pathway. This guide sets out sustainable finance's scope, sustainability-linked instruments (where terms adjust to performance against ESG-linked KPIs rather than restricting use of proceeds), and its relationship to taxonomy-based disclosure.

Sustainable Real Estate Models

Sustainable real estate investment economics are shaped by green certification's effect on achievable rent and asset value, retrofit capital expenditure required to reach certification or compliance standards and its payback profile, and stranded asset risk for buildings that do not meet tightening energy performance standards. This guide covers how each of these drivers should be modelled, building on the general real estate modelling conventions covered elsewhere in this Knowledge Centre.

Tax Due Diligence

Tax due diligence investigates a target's historical tax compliance, identifies contingent or undisclosed tax liabilities, and informs how the transaction itself should be structured for tax efficiency. Its findings feed the transaction model in two distinct ways: historical exposures become a quantified liability adjustment (similar to a legal due diligence finding), while structuring findings — asset versus share deal, jurisdictional considerations, tax attribute preservation — directly affect the transaction structure itself and, through it, the financing and post-transaction cash flow assumptions in the model.

Tax and Depreciation in Project Finance Models

Tax and depreciation modelling in project finance carries construction-specific complications a standard corporate model does not need to represent, capital allowances applied to costs incurred before the project generates any taxable income, and, in some structures, a tax equity investor whose return is driven substantially by depreciation benefit rather than operating cash flow. This guide sets out how to model capital allowances during construction, how tax equity structures are typically represented, and how tax calculations interact circularly with debt sizing.