geothermal power plant projects in central america - Orkustofnun

eakdown of the total investment cost is exploration & confirmation, drilling and power plant.However, the total capital is higher due to the addition of the working capital estimation.6.2.3 Operating statementAn Operating Statement or Income Statement Sheet is used for calculating the revenue and expensesover a specific period. The income statement includes several sections. One of particular importance isEBITDA (Earnings before Interests, Taxes, Depreciation and Amortization) or operating surplus,which summarizes earnings before taxes and financing costs. EBITDA is calculated by subtractingproduction costs from revenue. EBIT (Earnings before Interest and Taxes) can then be calculated byextracting depreciation and amortization from the EBITDA. Profit before tax is calculated byextracting the interest on the loan from EBIT. Income tax is a percentage of the taxable profit, in thisanalysis loss transfer is not considered, therefore, profit before tax is considered as the taxable profit.Appropriation of profit (dividends) is calculated as a percentage of the profit after tax. The last item onthe statement is net profit/loss, calculated by extracting the dividends from the profit after tax.6.2.4 Balance sheetIn this model, the balance sheet is used as a corroborative instrument as many logical errors wouldresult in a difference between total assets and total debt and capital.6.2.5 Cash flowThe Cash Flow Sheet for calculation requires information from investment & financing, an operatingstatement and a balance sheet. Cash flow before tax is calculated by subtracting debtor and creditorchanges (changes in working capital) from EBITDA. Cash flow after taxes is calculated by subtractingthe taxes that are paid a year later from Cash flow before tax. Cash flow after taxes together with thetotal invested capital (equity and the loan) is a measure of the profitability of the project regardless ofhow it will be financed.Net cash flow or free cash flow (FCF) is calculated by subtracting the financing cost (interest and loanmanagement fees) and the repayment of loans from the cash flow after tax. Net cash flow is used tomeasure the profitability of the equity. The last item on the statement is cash movements, which arecalculated by adding the difference between financing (drawdown of equity and loans) and capitalexpenditure (i.e. the Working Capital) to the net cash flow, and then subtracting the paid dividend. TheFCF calculation in this model can be summarized asFCF = EBITDA − ∆ Working Capital − Taxes − Financial Cost − Repayments (51)Hillier et al. (2010) pointed out that the name (FCF) refers to the cash that the firm is free to distributeto creditors and shareholders because is it not needed for working capital or investment.6.2.6 ProfitabilityThe profitability sheet calculates the NPV and the IRR. The profitability measures for evaluating theproject and equity are calculated from these two relevant cash flow series:• Capital Cash Flow (CCF)• Free Cash Flow to Equity (FCFE)Capital Cash Flow (CFF)Capital Cash Flow is defined by Pinto et al. (2010) as the cash flow (available for the company´ssuppliers) of the capital after all operating expenses (including tax) have been paid and necessaryinvestments in working capital and fixed capital have been made. The CCF calculation in this modelcan be summarized as44