financial forecasting - carillion plc carillion plc is one of the uk’s leading support services and construction companies. the company operates across britain and in europe, canada, the middle east, north africa and caribbean. carillion has a unique approach that builds long-term relationships with its customers, based on their values of openness, collaboration, mutual dependency, professional delivery, sustainable, profitable growth and innovation. the company continues to provide high quality, cost effective and sustainable solutions to the needs of its customers. you are required: 1. carry out research into the financial performance of carillion plc, use the information provided by the company’s published financial statements to forecast the income statement and the balance sheet for the next year. 2. write a report to the management of the carillion plc to analyse the predicted financial position and performance of the company and comment on the company’s financing strategy. the company’s current and previous years’ annual report and summary of financial statements can be obtained from the following website: http://www.carillionplc.com/investors/investors_reports.asp Calculation of ratios should be presented in appendix attached to the report. Notes: Projected financial statements 1. The projected financial statements should be prepared according to International Accounting Reporting Standard (IARS). 2. All workings of projected financial statements should be presented in the form of an appendix attached to the projected financial statements. Guidance to Course Work: Financial Forecasting – Carillion Group. This course work has two parts. Part 1: Forecast the consolidated income statement and balance sheet for the year to 31st December 2007 Step 1: Calculate the growth rate of sales revenue. This requires at least a five years review of sales revenues from 2002 to 2006. Use the company’s total sales revenue figures. Step 2: Use the company 2006’s consolidated income statement and the consolidated balance sheet to break down the growth rate into accounts: You need to: - Identify the Additional Fund Needed - Make a finance decision: How to finance the Additional Fund Needed? Step 3: Complete the final predicted balance sheet for 2007 Step 4: Calculate total finance costs for the predicted year showing additional finance costs. Also you need to calculate predicted tax and dividend, complete the final income statement for the year to 2007. (Need to do workings) Some students may be interested in applying correlation and regression analysis to find out the costs of sales and operation expenses. Notes to projected financial statements: Make assumptions where needed Provide reasons for the treatment of exceptional items. Balance sheet must be balanced. Provide reasons if you can’t balance the projected balance sheet. Part 2: Write a report analyzing the company’s financial position and performance for the predicted year 2007. Ratios analysis approach is recommended. Analysis of predicted performance should be compared with the performance in 2006 for the company. A formal report is required. Please check all requirements presented in the course work question paper.