Scenarios and Sensitivities 
General Sensitivity
Analysis
This is not an additional piece of analysis but a vehicle for
re-running the package of projections and analysis already established
and discussed on earlier pages.
Once a forecast plan has been created it can be modified by changing any
single assumption or combination of assumptions to test the sensitivity
impact on the plan. There are approximately 25 general assumptions, 40
for each relevant housing-based business stream and 3 or 4 for each non-housing
based business streams plus Homebuy, many of which can be flexed throughout
the 30-year period. Associations or other users are therefore able to
carry out detailed changes to the full set of input assumptions and assess
the sensitivity effect on all the outputs of the model.
Minor Balance Sheet and Income and Expenditure items, not included in
the assumption input screens cannot be flexed when CAPACITY is used to
generate an original forecast. When used in reconciliation mode these
sundry items can be changed via the projected Business
Plan Accounting Data input screen.
It is possible to save as many different versions of the whole of the
model as required by the user under different file names.
Using the Scenarios
and Sensitivities Tool
This facilitates analysis of sensitivity to detailed changes
in a limited number of pre-selected input variables, essentially concerned
with macro-economic factors and levels of development activity. It also
presents a summary of pre-selected key output variables concerned with
financial solvency and balance sheet capacity.
Up to three different scenarios, each based on a different set of input
assumptions, can be saved, in addition to the base-case scenario, under
the names association case, base case, best case or worst case.
As discussed above there is the facility for saving three additional scenarios
besides the "base case", in "short-form", or any number
of permutations can be saved as "long form" under different
file names.
The designated input variables which can be flexed are as follows:
General assumptions
| Inflation: | RPI Management cost inflation Service cost inflation Care and support cost inflation Building cost inflation Major repairs and maintenance cost inflation Ongoing repairs and maintenance cost inflation |
Interest rates: |
Average interest rate on fixed rate debt Average interest rate on floating rate debt |
Business Stream Assumptions (for each relevant business stream)
| Development: | Number of units completed during the year Build cost per unit SHG received % capital expenditure |
The designated output variables are
as follows:
21 - Operating Margin
22 - SBIT % Total Assets
44 - Total Debt per Unit
45 - Cash Interest Cover
47 - Net Debt/EBITDA
52 - Adjusted Net Leverage
The Scenario Manager is an input “wizard” which further facilitates
a more automated flexing of each input variable across the whole forecast
period by given percentages or absolute amounts.
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