When you apply for a new appointment we will assess its financial viability on a case-by-case basis, looking at both your company and your proposal at a site level. You should demonstrate how you have ensured that your company and any associated group companies have sufficient financial resources to meet your obligations as an appointed water or sewerage company and why you consider the site to be financially viable in its own right.

Financial viability risk assessment pro-forma

When submitting proposals to us, you must include a completed financial viability risk assessment pro-forma. This allows us to capture key financial information in a standard way. You should also provide copies of your spreadsheet models where you think this will support your application.

In completing the pro-forma it is important that you use the assumptions that we have specified (e.g. in relation to metered consumption). However, if you wish us to use different assumptions when assessing your application, you should both

• explain why your preferred assumptions provide a better basis for the assessment and
• provide sufficient information to allow us to make the assessment on the basis of these assumptions

Financial projections

Your financial projections must be based on central estimates of revenues and costs. All your assumptions should be fully documented and supported. Your application must explain the source of the inputs to our pro-forma and any other spreadsheet models you provide. Your financial projections and assumptions must be consistent with the rest of your application.

Sensitivity analysis

Your application must include a detailed sensitivity analysis. You should identify those variables to which your plan is most sensitive, and outline the effect that changes in these variables would have on the proposal's financial position. Variables might include:

• phasing the development of large sites
• planning permission not being granted for the whole site
• consumption rates
• under-occupancy and bad debt
• the eligibility of large user tariffs.

If your application is not supported by a comprehensive sensitivity analysis in line with our working policy as set out above, then we may ask you further questions about the financial position of your proposal. A comprehensive sensitivity analysis is particularly relevant where the site is small, as any change in the detailed assumptions could have more of an impact on the financial position than for a larger site.

Financial risks

You must also set out an assessment of the financial risks faced by your proposal (this should be linked to the sensitivity analysis). You must also explain how you would deal with those risks.