Organisations issue share capital (effectively certificates of ownership) often as a means of raising funds. This guide assumes a specific situation relating to a single purpose vehicle (“SPV”). An SPV is a company established for a particular project and then wound up once that project is complete. In this guide, we assume that: 1. Share capital is issued at the start of and during the project; and 2. Shareholders are paid dividends; and 3. Share capital is cancelled at the end of the project in return for a final cash distribution. Dividends are assumed to be declared and paid on the same date.

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Komal Aggarwal is a Financial Modeller at F1F9. She works mostly on projects in the oil & gas, mining and energy sectors.
She likes doing adventurous sports.
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4. Organisations issue share capital (effectively certificates of ownership) often as a means of raising funds.
This guide assumes a specific situation relating to a single purpose vehicle (“SPV”). An SPV is a company established for a particular project and then wound up once that project is complete.
In this guide, we assume that:
1. Share capital is issued at the start of and during the project; and
2. Shareholders are paid dividends; and
3. Share capital is cancelled at the end of the project in return for a final cash distribution.
Dividends are assumed to be declared and paid on the same date.
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SHARE CAPITAL INJECTION
Calculate share capital injected during the forecast period by multiplying share capital injection (set up as a series input) with the forecast period flag.
Formula in Cell R18 = R16 * R17
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1

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SHARE CAPITAL REDEMPTION
Calculate share capital redemption by multiplying the beginning share capital balance with the last forecast period flag.
Share capital redemption is equal to the last period's beginning balance.
Note that we assume no issue of share capital in the last period. Commercially, it would be odd for an SPV to issue share capital in the same period that it redeems it.
Formula in Cell Z23 = Z21 * Z22
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2

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SHARE CAPITAL BALANCE
The share capital balance increases with additional share issues. It decreases with the share capital redemption.
Note the share capital initial balance. This is the initial injection of capital into the project.
The formula in cell J33 is:
= IF( J28 = 1, $F27, J30 + J31 - J32)
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3

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DIVIDENDS
Our single purpose vehicle has a specific dividend policy: pay out as much and as early as possible. It operates in a jurisdiction that requires companies to run a profit test: dividends may only be paid if there is both cash available and profits available to distribute.
Different jurisdictions have different tests. Good modellers will check that they are modelling according to the test appropriate for their jurisdiction.
Cash available for dividends in the current period is the sum of (i) the beginning retained cash balance and (ii) the current period’s cash flow available for dividends.
The formula in cell J41 = MAX(0, SUM(J39:J40)). Note the use of the MAX function: this formula picks up positive numbers only.
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4

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DIVIDENDS (cont.)
Earnings available for dividends in the current period is the sum of (i) the beginning retained earnings balance and (ii) the current period’s profit after tax.
The formula in cell J46 = MAX(0, SUM(M44:M45))
The dividend to be declared and paid is calculated by taking the lower of accumulated earnings and accumulated cash.
The formula in cell JM51 = MIN(M49, M50)
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RETAINED CASH BALANCE
The retained cash balance is calculated using a corkscrew.
Retained cash increases with cash flow available for dividends; retained cash decreases with dividends declared and paid.
Formula in Cell J63 = IF( J58 = 1, $F57, J60 + J61 - J62)
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RETAINED EARNINGS BALANCE
The retained earnings balance is also calculated using a corkscrew.
Retained earnings increase with profit after tax; retained earnings decrease with dividends declared and paid.
Formula in cell J74 = IF( J69 = 1, $F68, J71 + J72 - J73)
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