Risk Management and Governance in the Public Sector
Preliminary Data on assigned entity
STUDENT NAME and ID:
Group or Corporation Name:
Date of most recent Annual Report:
Stock Exchange symbol:
Data from latest Annual Report:
1. Annual revenue: [See the Income statement]
2. Operating Profit before INTEREST and TAX:
(Interest charges sometimes referred to as Finance costs): [See the Income statement]
3. Profit after INTEREST and TAX [See Income Statement]
4. Interest(Finance costs): [See Income Statement]
5. Current Ratio(Current Assets divided by Current Liabilities): [See Balance Sheet]
6. Total Longterm debt: [See Balance Sheet]
7. Any covenants(conditions)imposed by lender(s)? – see Notes accompanying the F/Ss
8. Total Shareholders’ Capital(also called Owner’s Equity): [See Balance Sheet]
9. Amount of dividends(if any) paid out: [usually mentioned in the financial highlights]
10. Cashflow from operating activities: [See the Cash flow Statement]
11. Increase or Decrease in overall Cashflow: [See the Cash flow Statement]
12. Name of Independent Auditor:
13. Independent auditor’s opinion: UNQUALIFIED OR QUALIFIED?
Find the Directors Report and determine if it contains a discussion on INTERNAL CONTROLS. Yes or NO?
How many times did the Board of Directors meet during the year under review?
Is the role of Chairperson and CEO(Managing Director) held by separate individuals?
Has a board member (director) been appointed as a Senior Non-executive Director?
Is there a majority of Non-executive Directors on the board?
Is it clear that the internal auditor reports to the Audit Committee?(assuming there is an A/C)
Entity assigned Bellway plc
A publicly traded entity has been assigned to each of you. Please proceed to download the latest annual report for your assigned entity. You can access the corporate website fairly quickly(usually) if you search using the corporate name followed by the letters plc.
Once in the website, look out for Investor Relations or Investors or perhaps Investor Centre and click on it. The latest Annual Report will be found there.
Most corporate entities are made up of a group of companies and the resulting financials are captured in the Consolidated financial statements. These are statements from which you gather the financial data.
You may find a Company statement of financial position(the balance sheet) among the financial statements. This belongs to the parent company and its inclusion is a legal requirement and does not impact our studies. Please ignore it.
The Preliminary Data Sheet is also attached and must be completed and attached to your assignment when it is submitted emailed on November 23rd, 2015. It is a good idea to complete it now as this will familiarise you with your company very quickly.
AC6061/11 Financial Analysis and Governance 2015
Assignment TWO: Guidelines
40% of final grade
You are required to study the corporation that has been assigned to you and to make a number of determinations.
There are three parts to be addressed in your final report:
1. Corporate Transparency
2. Financial analysis
3. Suggested future development
Clearly, you must avail of a number of resources to bring this to fruition. These may include but are not confined to:
• Lecture content and tutorial exercises.
• Module textbook
• Google Finance http://finance.google.com/finance
• Yahoo Finance http://finance.yahoo.com/
• Financial Times
• Entity’s annual report
PART 1 Corporate Transparency
Determine if the function of transparency to deliver credible reporting is sufficiently present in your corporate entity. This will require a perusal of financial and governance disclosures, their intensity and timeliness. The credibility of this information will rest upon your assessment of key control mechanisms and structures. Such structures are influenced by the UK Corporate Governance Code(applicable in both UK and Irish jurisdictions), Turnbull Guidelines on internal control and the COSO framework.
PART 2 Financial Analysis
Assess the financial picture of the corporation by analysing its financial performance and position. This will involve understanding the liquidity, solvency and profitability of the entity and how these indicators, when assessed together, allow you to comment on its financial strength. Pursuing the following issues will assist in your assessment:
• Is it possible to detect how financial accounting information affected economic performance?
• Is the overall assessment in line with marketplace expectations as reflected in its p/e ratio and its market capitalisation?
• What is the value or worth of the entity?
• Is the stock a “value” or a “growth” type?
• Is it capable of handling additional debt?
• Is free cashflow present in the entity?
• Is it capable of making an acquisition or is it vulnerable to a takeover?
Identification of a possible systemic risk in the corporation should be highlighted. Avail of your assessment to determine whether or not to advise investing in the corporation.
PART 3 Suggested Future Development
This third component avails of determinations and assessments derived from the two components above and attempts to speculate on a new direction for the corporation. It will require an understanding of key value drivers, some of which may not be present in your corporation, but which you may recommend to facilitate this fundamental(not incremental) and strategic change. Some possible changes may include:
• Making acquisitions
• Entering new markets
• Selling off subsidiaries
• Exiting markets
• Making strategic alliances
Much will depend on the corporation’s financial strength and indeed, whether its survival as distinct from growth is a priority. How this change is financed must be explained and subsequently disclosed on a summarised balance sheet. A three-year income statement projection containing summarised detail is also required.
Your report should be circa. 3,500 – 3,750 words in length, excluding appendices and presented in the following layout:
• Executive summary
• PART 1 Corporate Transparency: Analysis and Comment
• PART 2 Financial Analysis: Analysis, Interpretation and Comment
• PART 3 Suggested future development
Appendices should contain these key items
• Ratio calculations as at the latest annual report
• Copies of the Income statement, Balance sheet and Cashflow statement from latest annual report.
Due: Monday, November 23rd, 2015
Please note: You must not access or use any information that if doing so would be considered illegal.
Students must maintain an electronic copy of the project report presented and if requested by the lecturer, transmit it to the lecturer, at his request.
October 14th, 2015
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