Case Study: Enhancing Financial Projections for a Geospatial Service Firm

This case study is about developing of a comprehensive financial modeling solution for a leading geospatial service and engineering firm. The geospatial service firm faced challenges in consolidating financials across multiple international subsidiaries with different currencies, structures, and financial reporting needs. Our solution streamlined financial projections and reporting for them and enhanced their expansion and investment planning.

Client Overview

Business and Industry: The client offers its services to capture high-fidelity data and create digital twins using advanced 3D modeling and AR/VR technologies. They operate in diverse terrains and provide solutions that bridge the gap between engineering, operational data, and IT.

Challenges: The client struggled with consolidating financials from six subsidiaries, each with different currencies and starting dates. Their financial statements lacked proper cost segmentation, and the companies experienced long cash cycles that resulted in complicating the projection and investment estimation process.

Objectives

The primary goal was to prepare a detailed financial modeling template for each subsidiary and the consolidated group company that incorporates multi-currency calculations and projected regional expansion and investment requirements.

Client Background

The client is a leader in geospatial service and engineering solutions. They offer a range of services, from 3D laser scanning to drone inspection surveys. They approached Oak Business Consultant to develop a financial model that accommodates the unique needs of each subsidiary. Additionally, they required a financial model capable of handling multi-currency calculations and projections based on historical financial data. This model was crucial for their planned regional expansion and capital investment plans.

An Introduction to Geospatial Service and Engineering Solutions Firm

Geospatial services use geospatial technology and geospatial solutions for data collection, analysis and visualization. These services utilize different tools and techniques that include Geographic Information Systems (GIS), digital twins, and remote sensing services. Among these techniques, 3D modeling using laser technology is a vastly utilized technique. 3D modeling specifically utilizes LIDAR (Light Detection and Ranging) for 3D mapping for a number of applications. 

Our client is one of the leading geospatial service providers that offers cutting-edge geospatial solutions. These solutions include laser-based 3D modeling and digital twin creation. Multiple industries, such as environmental consulting services, infrastructure engineering, and land management, are dependent on geospatial products to make informed business decisions.

Especially in geospatial services, laser scanning or LiDAR is a game changer. LiDAR enables edge data collection with unparalleled precision and generates high-quality cartographic products. Many government agencies, federal agencies and civilian agency programs require this highly precise spatial data for land management decisions and environmental permit applications. Moreover,  laser-based 3D modeling helps to create highly precise digital twins that are further used for predictive maintenance and operational optimization.  Digital twins are specifically important for complex solutions where custom solutions are necessary for the effective management of resources and projects. 

The geospatial services offered by our client encompass a full suite of offerings, from mapping services and remote sensing to UAS (Unmanned Aerial Systems) services. They cater to diverse industries with tailored geospatial solutions globally. The provided solution ensures clients can make informed decisions based on reliable, high-quality spatial data. By integrating geospatial technology with the precision of laser-based 3D modeling, our geospatial service firm client empowers organizations to visualize their environments in three dimensions. This visualization facilitates better planning, management, and execution of their projects.

Problem Statement

The client’s main challenge was to consolidate financials across subsidiaries with different currencies and starting dates. The lack of cost segmentation in their financial statements, combined with structural variations across companies and a lengthy cash cycle, necessitated a robust and adaptable financial modeling solution.

Solutions Provided

Objective

The purpose of the financial model was to provide a comprehensive, user-friendly tool for the client to evaluate financials individually and collectively. The model is designed in such a way that it aligns with the client’s expansion and investment strategies.

Approach

We developed a financial model that encompasses all relevant accounts across the client’s subsidiaries. By allowing input in local currencies and converting all figures to USD, we ensured consistency in financial reporting. This approach facilitated accurate calculations and projections while aligning with the investment requirements in USD. Additionally, we prepared financial statements and assumption tables in a consistent structure with uniform calculations to allow easy adjustments by the client.

Features

• Dynamic Inputs: The model accommodated varying inputs in local currencies, converting them to a unified reporting currency (USD).
• Cost Segmentation: Detailed cost segmentation, especially for direct costs, with flexibility in operating expense projections.
• Consistent Structure: Financial statements and assumption tables consistent across all subsidiaries to simplify the adjustment process for the client.
• Break-Even Analysis: Break-even analysis to identify revenue needed to maintain profitability to help our client understand the financial threshold for sustaining operations.
• Cash Requirements Analysis: Annual and monthly analyses of ‘Cash Requirements’ were conducted based on main cost segmentations such as direct costs, indirect costs, and capital expenditure. Each cost segment was calculated as a percentage of revenue. This allowed the client to compare current operational results with expected ones.
• Cash Availability Assessment: ‘Cash Availability’ analysis to evaluate available cash against requirements and identify sources of cash inflows.
• Investment Projections: Projections for dividends and profitability indices based on expected investments that offer insights into potential returns for investors.

Outcome

The financial model provided the client with a comprehensive tool for analyzing and projecting financials across subsidiaries. Its consistent structure and user-friendly design allowed the client to make efficient adjustments and understand financial impacts. Additionally, it empowered the client to present a compelling financial analysis to potential investors, demonstrating clear expected returns on investment. The streamlined process improved coordination and communication between our team and the client, which resulted in time-efficient and effective solutions.

Implementation

Week 1: Requirement Gathering
Dedicated to understanding and documenting the client’s needs and requirements.

Week 2: Model Structure Development
Developed a model structure that met all client requirements while being user-friendly and navigable.

Week 3: Historical Data Analysis
Analyzed historical data and integrated it into the financial model. Converted financial figures from local currencies to the main model currency (USD) and aligned cost accounts with the new structure.

Week 4: Projection Strategy Development
Developed and implemented projection strategies. Integrated flexible assumptions tables, allowing adjustments such as annual increases with a fixed rate or revenue growth rate for each expense line item. Tested all integrations to ensure accurate results based on input assumptions.

Weeks 5 & 6: Analysis Development and Client Coordination
Focused on developing the analysis sections and coordinating with the client through regular meetings. Made adjustments based on client feedback to align operational strategies with financial projections strategies.

Results

User-Friendly Tool: The client received a tool that is easy to understand and use independently and minimizes the need for continuous support.

Consistent Structure: The model provided a clear, consistent structure for all the client’s companies. It also facilitated easier comparisons and analysis in one centralized location.

Investment Estimates and Presentation: The model delivered estimates of investment requirements along with comprehensive numbers and analysis. This analysis helped the client to effectively present their investment needs, planned expenditures, and expected returns to potential investors.

Enhanced Clarity and Projections: The financial model includes a historical financials section that comprises detailed cost segmentation to provide greater clarity. This detailed breakdown made it easier to estimate projections and understand how individual expense segments might change with operational expansion.

Conclusion

Overall, the project was a significant success. The client was extremely pleased with the final output, particularly given the initial complexity of the project. Despite the challenges of consolidating financials from multiple subsidiaries with varying currencies and structures, the end result was a model that was easy to understand. It was also user-friendly. This clarity and usability made a substantial difference for the client, enabling them to efficiently manage and present their financials.

The project demonstrated that it is possible to simplify complex problems by adopting a structured and strategic approach. By maintaining consistency throughout the process—both in our coordination with the client and in the design of the financial model—we were able to deliver a solution that met all requirements and exceeded expectations.

Future Recommendations 

• Regular Updates: Continuously update the financial model to reflect changes in business operations, market conditions, and strategic goals. This will help review how evolving factors impact results and make informed adjustments.
• Monitor Cash Flow: Given the lengthy cash cycle, regularly review and update cash flow projections to better understand the impact of operational changes on liquidity and investment needs.
• Enhance Cost Segmentation: Incorporate more detailed cost segmentation in financial statements to provide deeper insights into cost drivers and operational efficiency.
• Scenario Analysis: Utilize the model to run various scenario analyses, including changes in market conditions or business strategies, to evaluate potential impacts on financial performance.
• Investor Communication: Regularly update investment analysis and projections to ensure that the information presented to potential investors reflects the most current financial status and future expectations.
• Training and Support: Consider ongoing training and support for staff to ensure they can effectively use and adapt the financial model as needed.

These recommendations will help maintain the accuracy and relevance of financial insights, supporting better decision-making and strategic planning.

Lessons Learned

• Structured Approach: A well-organized methodology and clear planning can transform a complex project into a manageable and successful outcome.
• Consistency is Key: Consistent structuring and alignment throughout the project ensure that the final product is cohesive and user-friendly.
• Effective Coordination: Regular communication and collaboration with the client are essential to understanding their needs and making necessary adjustments efficiently.

The success of this project underscores the importance of a strategic approach and the value of delivering a solution that simplifies complex financial analysis for the client. 

Unlock the potential of your business with our advanced financial modeling solutions and strategic market insights. If you are seeking a comprehensive solution to enhance your investment returns and achieve sustainable growth, our expertise can guide you. Explore how our tailored approaches can drive your business forward. Reach out to Oak Business Consultant today to find out more!