Essays on Financial Assets Assignment

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Company analysis-Liberty International Plc Executive summaryThis is the analysis of financial report of the Liberty International Plc which is listed in the London Stock Exchange. The year under review is 2007. Liberty International Plc is a property holding company having rental income from its city and regional shopping centres with high occupancy levels and business from non-shopping centres. It has been able to maintain steady business consistently in spite challenges to real estate market growth due to sub-prime crisis emanating from the U. S. The company has operations in the U. S. and South Africa besides the U. K.

The UK regional shopping centres are worth £ 6.5 billion which the company relies on for business stability and resilience. Its compounded total return for 10 years is 12.4 percent with 15.1 % in 20006. The company has strong financial health indicated by 42 percent debts to assets ratio. After its conversion into a Real Estate Investment Trust, it has the potential for creating wider investor base. During the year, assets have increased from £ 8.2 billion to 8.6 billion. Net rental income that is the revenue for the company increased by 10% from £ 340.6 million to £ 374.

3 million. Loss for the year because of downward revaluation of £ 279.1 million, is £ 105 million. Earning per share (adjusted) is 36 p as against the previous year’s earning of 33. 9 p, an increase of 6%. Dividend also increased by 10% from 31 p per share for the last year to 34.1 p this year under review. Given the level playing field, its performance compares well with the UK’s top ranking company of British Land Company.

With all these positive features, the company remains an ideal destination for prospective investors and the existing shareholders. IntroductionLiberty International Plc is a UK based listed company. It is a FTSE-100 ranking and the third largest property holding company in the UK with 91% stake in retail property, next only to British Land and Gecina. (Schiller et al, 2005, p 105, 484) The company was converted into Real Estate Investment Trust (REIT) from 1 January 2007 to be eligible for special treatment in taxation as a non-Paid Income Distribution (non-PID) company.

With 100% ownership in Capital Shopping Centres, the UK regional shopping centre businesses both in the capital and counties and a retail and commercial property investment company, Liberty International has £ 8.6 million worth properties as at 31 December 2007(Annual Report 2007) Some of its major tenants include Marks & Spencer, Debenhams & Boots. 15 regional shopping centres of the company have a total area of about 12 million sq. ft. (Hoovers) The company’s origin dates back to 1980 when Sir Donald Gordon started it in 1980 as Transatlantic Insurance Holdings Plc as a subsidiary of his parent company Life Association of Africa, South Africa established in 1957.

After some 10 years of operations in 1980 in life business which it abandoned later and diversified into property development company in 1990s. Sir Gordon, a South African by birth and a Chartered Accountant by profession holds 21% stake in the company as his family holding. The website of the company states that it was founded in 1980 with Head Quarters in London, England. It has posted revenue of £ 374 million and an operating income £129 million and a net loss of £ 105 million for the year 2007 details of which can be seen in the following pages.

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