This area of the model is quite uncomfortable at times. And the reason is we need to flip between cash flows, cash and different types of cash flows. And so we'll find ourselves doing some quite error prone stuff. And so it's a good idea to slow down a little bit and think about what we're doing.

What we're going to happen now is we're going to create the debt waterfall. We're gonna say, what are the cash flows available for debt service? And we're gonna start that with EBITDA because if we start it with net income, there will be interest in there. And CFADs should be debt service. And so it should be servicing the debts, including paying the interest. So this waterfall will look different to some of the other waterfalls you may have seen in our materials. What we'll find is that when we do our running total down here in the waterfall, we will bring in interest into our cash flows as we move from one to the other, which in other models you will not have done.

As we go down here, we're going to have to worry for the first time about the debt service reserve account.

And then we're going to try and marry up this cashflow statement with our other cashflow statement. And we're gonna make sure that they meet each other. And it's one of the big checks in this model is to make sure that the balance sheet balances and that the two cashflow statements are in agreement with each other.

The starting point for CFADs then is EBITDA, which we can go and grab from the bottom of operations.

We've effectively calculated cash taxes within our cash flow statement with the combination of net income, which included the expense and the change in the payable. But we can do it in a more direct way because we've calculated cash taxes over here in the P&L on tax at the bottom. You've now effectively seen two ways of looking at tax. One from an expense point of view, two from a cash point of view, and that's useful to see the interplay.

Some of this stuff we can go and grab from the cash flow statement direct, because the receivables, payables, if we just check that's pointing at the right thing, so that should be trade payables and is.

And then the investing cash flows, these will all make up the cash flow available for debt servicing. And if we copy that to the right, see if it's sensible. What we're starting to build up is a picture where initially the CFADs doesn't seem to make any sense. You could argue that CapEx and in the investing cash flow should be missing.

Really it should just be the topping up or maintenance CapEx that's in years to come, not the great big, we are putting the wind farm in place here. Now we are not gonna make any attempt to try and analyze the CapEx or include some of it and exclude some of it, which you may end up doing in the real world. What we are going to eventually do is say in these initial years, this is all not something we're gonna worry about. And this flag will govern that. And lots of the metrics that we do later will be on CFADs. But if we're gonna put together a waterfall, we do need to take into account that we might have some cash that's not reserved for other purposes, especially if we end up not paying out everything as dividends.

So we need to make a grand base account.

And so if we unify this with the last ending cash, add together, the cash balance and the flow within the year, that brings us to the start of the waterfall ready to service our senior debt. Again, in initial years that won't work, but then again, there's nothing to service and initially that will be fulfilled by equity and then by borrowing. And then in subsequent years, once the grace period has expired, we'll have to use our flows and any remaining cash to both pay the principal and pay the interest. And if we can't or if we start to break our rules, then we'll have breaches.