Sample Accounting Paper

SAMPLE

ACCOUNTING ANALYTICAL REPORT OF

GREAT PORTLAND ESTATES PLC:

2013 – 2015

BY: HUSSEIN HIJAZI

© Hussein Hijazi 2016 1

Contents 1. Introduction ............................................................................................................................................................................................................................ 2

2. Company Overview ................................................................................................................................................................................................................. 2

3. Ratio Analysis ......................................................................................................................................................................................................................... 2

3.1 Profitability .................................................................................................................................................................................................................... 2

3.2 Efficiency ........................................................................................................................................................................................................................ 3

3.3 Liquidity ......................................................................................................................................................................................................................... 5

3.4 Solvency/Financial Gearing ........................................................................................................................................................................................... 6

3.5 Investment ..................................................................................................................................................................................................................... 7

4. Capital Structure .................................................................................................................................................................................................................... 9

5. Classification of Properties ................................................................................................................................................................................................... 11

6. Conclusion ............................................................................................................................................................................................................................ 12

7. References ............................................................................................................................................................................................................................. 13

8. Appendices ............................................................................................................................................................................................................................ 14

Appendix 1: Definition of REIT ................................................................................................................................................................................................ 14

Appendix 2: Extracts and Ratio Calculations from Great Portland Estate Annual Statement at 31 March 2015 ................................................................. 14




1. INTRODUCTION This is a financial accounting analysis report of Great Portland Estates plc (GPE), a Real Estate Investment Trust (REIT) based in London that manages a

property portfolio focusing on the Central London property market. This report analyses the performance of GPE in 2013, 2014 and 2015 (the examined

period) based on Ratio Analysis of GPE’s annual results statements under the examined period. The analysis will examine the main trend in the results

obtained and will aim to provide adequate recommendations (if any). An explanation of any risks borne to a UK investor are also included as part of the

analysis as well as an examination of GPE’s capital structure. References and Appendices are at the end of the report.

2. COMPANY OVERVIEW Great Portland Estates (GPE) is a FTSE250 REIT based in London and focuses on the Central London property market. GPE currently has a property

portfolio of 68 properties on 43 sites comprising of office, retail and residential properties valued at over £3.5billion. GPE works with 430 tenants and has a

rent roll of over £100million as of 30 September 2015.

GPE was founded in the 1959 by Basil and Howard Samuel with 41 properties valued at £5.5million. GPE became a publicly quoted company in the same

year with a focus on the development of residential and commercial buildings. In March of 2000, GPE announced a major shift in its portfolio strategy by

refocusing its investments and developments entirely on the Central London market and in December 2006, the company converted to become a UK – REIT.

Today, GPE is one of Central London’s prominent real estate organisations with a mix of office, retail and residential properties valued at over £2.5billion,

£840million and £200million respectively as of 30 September 2015.

3. RATIO ANALYSIS 3.1 Profitability Looking at GPE’s profitability ratios of Net Profit Margin (NPM) and Return on Capital Employed (ROCE), a similar pattern has emerged throughout the

examined period. As shown in Graph 1 below, the ROCE ratio over the examined period shows a mixed trend, similarly, the NPM also shows a mixed trend.

The percentages suggest that in 2013, GPE was generating 16.48p and 49.13p for every £1 spent on capital employed and operating profit generated

respectively, whereas in 2015 GPE was generating 8.63p and 44.26p for every £1 spent on capital employed and operating profit generated respectively.


GPE’s profitability ratios patterns are unfavourable. The patterns above suggest that GPE’s costs are either increasing, or the company is not generating

sufficient revenue from its property transactions. Upon examination of the accounts, it is clear that GPE’s net rental income and joint venture fee income

has increased from 2013 to 2014, and conversely declined from 2014 to 2015. Similarly, property expenses increased from 2013 to 2014, while remaining

stable in 2015, and there was an increase in the cost of sales from £0m in 2013 to £4.8m in 2015. Furthermore, there has been a continuous increase in the

value of non-current and current assets throughout the examined period, while rental incomes have increased from 2013 to 2014, but decreased from 2014

to 2015.

Based on the above profitability ratios, it is suggestive the GPE is experiencing operational inefficiencies with falling rental incomes and increasing costs

while the values of its property holdings are increasing in value. It is evident, therefore, the GPE must improve its profitability ratios through the

implementation of cost cutting and operational efficiency measures, and review its rental income position with its tenants and joint venture schemes to

increase shareholder returns.

3.2 Efficiency In analysing GPE’s efficiency, the stock turnover, asset turnover and debtors turnover ratios were examined. As per Graph 2 below, the trend in GPE’s stock

turnover ratio is mixed. With no inventory or properties sold in 2013, the stock turnover ratio is zero. Whereas in 2014, GPE gained planning permission to

develop its site at Rathbone Square, W1 (Great Portland Estates, 2014, p126) and was categorised as a trading property for sale, which was carried over as

inventory into 2015 (Great Portland Estates, 2015, p138). The stock turnover ratios are extremely high if taken at face value. But as GPE is a REIT, the

length of time taken to develop and sell or let a development is considerably longer than other organisations such as a supermarket or a restaurant.

Additionally, accounting data does not take into account the actual project development period from initiation to completion, thus it is advised that GPE is

contacted directly in order to attain information regarding the completion date of developments and corresponding start of income stream or sale date.

49.13

50.12

44.26

16.4818.33

8.63

0.00

5.00

10.00

15.00

20.00

40.00

42.00

44.00

46.00

48.00

50.00

52.00

31/03/2013 31/03/2014 31/03/2015

RO

CE

(%

)

Net

Pro

fit

Ma

rg

in (

%)

Date

Graph 1; Net Profit Margin|ROCE Comparative

TrendNet Profit Margin (%)

Return on Capital Employed including investment properties and joint ventures (%)


The debtors’ turnover ratio demonstrates a different scenario. The trend from 2013 to 2014 is decreasing with a slight increase in 2015. In the case of GPE,

trade receivables include service charge and rent payments from tenants, which are paid quarterly with no credit period (Great Portland Estates, 2015,

p141). Therefore, GPE’s debtor turnover ratio has improved from 2013 to 2015 and has thus met its target of receiving payments within 3 months as it is

expected.

Based on Graph 3 below, GPE’s asset turnover ratio has a non-changing trend over the examined period. This demonstrates that for every £1 of capital

employed, only 3p of sales revenue is generated. A higher ratio is generally preferred to a lower ratio, meaning that the organisation is utilising its assets in

generating larger amounts of sales. In the case of GPE, however, the very low ratio is due to the low revenue it has generated throughout the examined

period compared to the value of its net assets, which have increased in value significantly from 2013 to 2015 due to the increase in property values. An asset

turnover ratio of 3p is commonplace within REITs, with The British Land Company and Land Securities Group demonstrating similar asset turnover ratios

throughout 2013 to 2015. For unlike other companies, within the manufacturing sector for example, an increase in asset values is what is required in REITs

as property is considered a long-term investment, rather than utilising the asset to generate a product that will generate a sale in the short-term.

0.00

21284.06

8813.23

270.84

114.38

115.50

0.00

50.00

100.00

150.00

200.00

250.00

300.00

0.00

5000.00

10000.00

15000.00

20000.00

25000.00

31/03/2013 31/03/2014 31/03/2015

Deb

tors T

urn

ov

er (d

ay

s)S

tock

Tu

rn

ov

er (

da

ys)

Date

Graph 2; Stock Turover|Debotrs Turover Comparative

Trend

Stock Turnover (days) Debtors Turnover (days)


3.3 Liquidity The current and quick ratios were used to analyse GPE’s liquidity position. From Graph 4 below, the trend of the current ratio shows an increase from 2013

to 2014 which was followed by a drop in 2015. The rise and fall in the current ratio is due to GPE’s current liability values decreasing and increasing over

the examined period, while the value of its current assets continued to rise, thus explaining the current ratio trend.

GPE’s quick ratio, however, shows a continuously decreasing trend from 2013 to 2015 as shown in Graph 4 below. This is primarily due to the continuous

decline of current assets excluding inventory. Furthermore, the value of cash and cash equivalents decreased from 2014 to 2015 after a slight increase from

2013 to 2014. Additionally, a significant decrease of trade receivables from 2013 to 2014 rising only slightly in 2015 was observed.

Generally, higher liquidity ratios suggest that a business is more liquid and is thus in a better financial position to cover its short term liabilities in difficult

times. While GPE’s current ratio improved, suggesting that by 2015 it can cover its short term liabilities twice over its current assets, the decreasing trend

in its quick ratio is unfavourable. This is because without any inventory, GPE does not have enough assets that can be easily liquidated to cover short term

liabilities. With the decrease in the ratio being primarily due to a significant decrease in trade receivables in 2015 compared to 2013, for which trade

receivables includes rent and service charge payments to GPE, this suggests that GPE’s short term income from its properties is also decreasing, putting

GPE and its shareholders in a vulnerable position if there is a “calling-in” of GPE’s debts from its creditors.

0.03 0.03 0.03

0.00

0.01

0.02

0.03

0.04

31/03/2013 31/03/2014 31/03/2015Asset

Tu

rn

ov

er

Ra

tio

(ti

mes)

Date

Graph 3; Asset Turnover Ratio (times)


3.4 Solvency/Financial Gearing The gearing and interest cover ratio were analysed to examine the level of GPE’s solvency position for the examined period. Upon examining the trend of the

gearing ratio in Graph 5 below, it is clear that GPE’s debt position has improved from 2013 to 2015 due to the decreasing trend in the gearing ratio. This

trend can be explained from examining the value of long term borrowing that GPE holds, particularly the value of bank loans – revolving credit facilities in

GPE’s accounts, which decreased significantly from 2013 to 2015. This is coupled with a steady increase in the value of total equity that GPE holds throughout

the examined period.

GPE’s interest cover position showcases a mixed trend from 2013 to 2015 as shown in Graph 5 below. With GPE’s pre-tax and interest profits slightly rising

and falling within the examined period, the interest cover ratio trend exhibited can be mainly attributed to the fluctuating finance costs (interest payments)

that GPE experienced throughout the examined period. Finance costs increased significantly from 2013 to 2014 and decreased significantly again in 2015.

GPE’s solvency position has continuously improved throughout the examined period. The drop in its financial gearing ratio showcases that GPE’s dependence

on debt to finance its assets and operations has decreased, making the business less risky to investors and shareholders alike. The reduction in interest

payments experienced throughout the examined period has allowed GPE to be in a position that it can cover interest payments by up to 4 times over in 2015,

which means that during difficult financial periods, GPE will be able to commit to its interest payment obligations, which cannot be adjusted to match the

financial position of a company as they are set within a legally binding contractual obligation.

0.74

2.18

2.04

0.74

0.590.45

0.00

0.20

0.40

0.60

0.80

0.00

0.50

1.00

1.50

2.00

2.50

31/03/2013 31/03/2014 31/03/2015

Qu

ick

Ra

tio

(:1

)

Cu

rren

t R

ati

o (

:1)

Date

Graph 4; Current Ratio|Quick Ratio

Comparative Trend

Current Ratio (:1) Quick Ratio (:1)


3.5 Investment Examining GPE’s investment ratios provides for a mixed picture throughout the examined period. GPEs earnings per share (EPS) ratio shows a continuous

increase from 2013 to 2015 as shown in Graph 6 below. This upward trend can be attributed to the continuous increase in after interest and tax profits

throughout the examined period, while the number of ordinary shares issued by GPE remained relatively unchanged. The increase in after interest and tax

profit can be attributed mainly to the increase in value of surpluses from investment property, which increased from £99m in 2013 to £380.6m in 2015.

As per Graph 6 below, GPE’s price earnings ratio (P/E ratio) on the other hand, experienced a downward trend from 2013 to 2014 before a slight increase in

2015. The main contributing factor to the trend in the P/E ratio is the increasing market value of GPE’s shares at the times examined, while the number of

shares issued has been relatively unchanged throughout the examined period.

30.22

24.4021.08

1.58

0.69

4.37

0.00

1.00

2.00

3.00

4.00

5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

31/03/2013 31/03/2014 31/03/2015

Inte

rest

Co

ver (

tim

es)

Gea

rin

g R

ati

o (

%)

Date

Graph 5; Gearing and Interest Cover

Ratio Comparative Trend

Gearing Ratio (%) Interest Cover (times)


As for the dividend yield and dividend cover ratios of GPE, Graph 7 below shows a consistent downward trend of the dividend yield, on the other hand, the

dividend cover ratio showed a continuous upward trend. The downward trend of the dividend yield ratio can be explained as a result of the nominal increase

in the total value of dividends paid out to shareholders throughout the examined period compared to a more significant rise in the market value per share of

GPE at the examined periods.

56.30

123.00

148.308.81

5.13 5.47

0.00

2.00

4.00

6.00

8.00

10.00

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

31/03/2013 31/03/2014 31/03/2015

P/E

Ra

tio

(ti

mes)

Ea

rn

ing

s p

er S

ha

re (

p)

Date

Graph 6; Earnings per Share and P/E

Ratio Comparative Trend

Earnings Per Share (p) Price Earnings Ratio (times)

1.73

1.38

1.08

6.54

14.26 16.88

0.00

5.00

10.00

15.00

20.00

0.00

0.50

1.00

1.50

2.00

31/03/2013 31/03/2014 31/03/2015

Div

iden

d C

ov

er (

tim

es)

Div

iden

d Y

ield

(%

)

Date

Graph 7; Dividend Yield and

Dividend Cover Comparative Trend

Dividend Yield (%) Dividend Cover (times)


4. CAPITAL STRUCTURE GPE’s capital structure is based on a mixture of debt and equity capital. As stated in their accounts, “The current capital structure of the Group consists of

a mix of equity and debt. Equity comprises issued share capital, reserves and retained earnings as disclosed in the Group statement of changes in equity.

Debt comprises long-term debenture stock, private placement notes, convertible bonds and drawings against committed revolving credit facilities from banks”.

(Great Portland Estates, 2015, p143).

In terms of debt capital, GPE’s has a diversified mix of debt financing. Selected individual components and their percentage of the total debt capital are

shown in Graph 8 below.

The components that make up GPE’s equity capital and their corresponding percentages of total equity capital are shown in Tables 1 and 2 below respectively.

31.93%33.59% 33.12%

16.08%

16.91%

16.65%

0.00%

18.93%21.15%

26.12%

1.29%2.89%

25.68% 26.83% 26.19%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

31/03/2013 31/03/2014 31/03/2015

Percen

tag

e o

f T

ota

l D

eb

t (%

)

Date

Graph 8; Share of Debt Capital

Private Placement Debntures Convertible Bonds Bank Debt Joint Ventures


Table 1: Extract of Individual Components of GPE’s Equity Capital Structure

Date Share

Capital

Share

Premium

Capital

Redemption

Reserve

Retained

Earning

Investment

in own shares

Total Equity

31 March 2013 £43.00m £352.00m £16.40m £1,130.00m £-3.70m £1,537.70m

31 March 2014 £43.00m £352.00m £16.40m £1,519.50m £1.00m £1,931.90m

31 March 2015 £43.00m £352.00m £16.40m £1,991.20m £-11.70m £2,390.90m

Table 2: Individual Components Percentage of Total Equity of GPE’s Equity Capital Structure

Date Share

Capital

Share Premium Capital Redemption

Reserve

Retained

Earnings

Investment in

Own Shares

31 March 2013 2.80% 22.89% 1.07% 73.49% -0.24%

31 March 2014 2.23% 18.22% 0.85% 78.65% 0.05%

31 March 2015 1.80% 14.72% 0.69% 83.28% -0.49%

A bar chart of the percentage share of debt and equity capital that make up GPE’s capital structure are shown in Chart 1 below.

36.82% 30.61% 26.57%

63.18% 69.39% 73.43%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

31/03/2013 31/03/2014 31/03/2015

Percen

tag

e o

f T

ota

l C

ap

ita

l

Date

Chart 1; GPE's Debt and Equity Capital Distribution of

Total Capital Structure

Debt Finance Equity Finance


GPE has been aiming to reduce the cost of its debt financing by restructuring its capital structure. (Great Portland Estates, 2015, p39). Graph 8 clearly

demonstrates GPE’s shift from debt financing from banks to debt financing in the form of convertible bonds, which is reflected in the declining trend in the

percentage of bank financing compared to the increasing trend in the percentage of convertible bond financing. On the other hand, Tables 1 and 2 and Chart

1 above demonstrate GPE’s continued accumulation of retained earnings throughout the examined period, demonstrating that GPE has not been issuing

more shares into the market in order to raise capital for its operations, rather it is financing its operations internally from its income. GPE’s capital structure

is increasingly being financed internally through equity finance, while reducing the percentage of debt finance within its capital structure. This shift in GPEs

capital structure limits the external risk exposure, protecting GPE’s shareholders and potential investors from external pressure in difficult times, if any

arise, and reducing the value of finance costs that may be incurred. This puts GPE in a relatively low risk category for potential investors.

5. CLASSIFICATION OF PROPERTIES Table 3: Classification of GPE’s Properties and Corresponding Accounting Treatment as at 31 March 2015

Property Type Investment

Property

Investment

Property Under

Development

Investment

Property from

Joint Ventures

Trading Property Owner occupied

Purpose Held to earn

Income

Under

Construction

Share of

Properties Held

to Earn Income

Held for Resale Plant and

Equipment

(Head office

building)

Classification

on balance sheet

Non-current

Asset.

Book value at 31

March 2015

£1,936.0m

Non-current

asset due for

retention after

completion

Book value at 31

March 2015

£412.2m

Non-current

Asset.

Book value at 31

March 2015

£765.3m

Current asset

Book value at 31

March 2015

£115.9m

Non- current

asset

Book value at 31

March 2015

£0.2m

Depreciation? Not depreciated Not depreciated

because not in

use

Not depreciated Not depreciated

because not in

use

Depreciated at

£3.5m as at 31

March 2015


6. CONCLUSION An analysis of GPE’s financial statements and corresponding ratio analysis for the examined period provides for a mixed conclusion into the “investibility”

potential of GPE to the UK investor. GPE can be qualified as a good investment for investors who are seeking long-term returns, as it is a feature of REITs

to act as long-term investment opportunities, due to the length of time it takes liquidate and to realise returns from property. Furthermore, GPE stands as

a good investment for the investor who is not highly susceptible to risk, due to GPE’s low gearing position and its continuous move from debt financing to

internal equity financing through earnings retention. This makes GPE a low geared organisation. However, with GPE focusing its entire operation in the

Central London property market, a geographical risk exists, in that appropriate geographical diversification has not been applied.

Conversely, GPE is not a good investment opportunity for investors seeking short-term returns and high dividend payments. The continuous decrease in

GPE’s dividend yield and P/E ratio over the examined period, with little increase in the total dividend payments, puts shareholders and investors’ capital

tightly locked in GPE’s property portfolio value, which is subject to ever-changing market conditions and property cycles. Thus, with the illiquid nature of

properties, it may be difficult for investors to realise a repayment or any repayment of their investment in times of recession and decreasing property values.

In summation, the decision to invest in GPE is solely dependent on the preferences of the individual investor and their susceptibility to the inherent risk

associated with GPE. It is important to note that this report contains significant limitations in that the entirety of GPE’s accounts were not analysed, such

as GPE’s Cash Flow statement. Furthermore, interpretation of the accounts were taken at face value with little reference to the current market accounting

norms of REITs.


7. REFERENCES

Atrill, P. and McLaney, E. (2015). Accounting and Finance for Non-Specialists. 9th ed. Harlow: Pearson Education Limited.

Atrill, P. and McLaney, E. (2011). Financial Accounting for Decision Makers. 6th ed. Essex: Pearson Education Limited.

Bpf.org.uk, (2015). REITs and property companies | British Property Federation (BPF). [online] Available at: http://www.bpf.org.uk/reits-and-property-

companies [Accessed 19 Nov. 2015].

Gpe.co.uk, (2015). Key facts | Great Portland Estates. [online] Available at: http://www.gpe.co.uk/about-us/key-facts.aspx [Accessed 19 Nov. 2015].

Gpe.co.uk, (2015). 1959 -1969 | Great Portland Estates. [online] Available at: http://www.gpe.co.uk/about-us/our-history/1959-1969.aspx [Accessed 19 Nov.

2015].

Gpe.co.uk, (2015). 1990 - 1999 | Great Portland Estates. [online] Available at: http://www.gpe.co.uk/about-us/our-history/1990-1999.aspx [Accessed 19 Nov.

2015].

Gpe.co.uk, (2015). 2000 - 2009 | Great Portland Estates. [online] Available at: http://www.gpe.co.uk/about-us/our-history/2000-2009.aspx [Accessed 19 Nov.

2015].

Gpe.co.uk, (2015). 2010 - present | Great Portland Estates. [online] Available at: http://www.gpe.co.uk/about-us/our-history/2010-present.aspx [Accessed 19

Nov. 2015].

Great Portland Estates, (2015). Great Portland Estates plc Annual Report 2015. Unlocking potential. [online] London. Available at: http://asp-gb.secure-

zone.net/v2/index.jsp?id=1134/2482/10148&lng=en [Accessed 27 Nov. 2015].

Great Portland Estates, (2014). Great Portland Estates plc Annual Report 2014. Unlocking potential. [online] London. Available at:

http://www.gpe.co.uk/ar2014 [Accessed 27 Nov. 2015].

Great Portland Estates, (2013). Great Portland Estates plc Annual Report 2013. Unlocking potential. [online] London. Available at:

http://www.gpe.co.uk/ar2013/ [Accessed 27 Nov. 2015].

Land Securities Group plc, (2014). Land Securities Annual Report 2014. [online] London. Available at:

http://annualreport2014.landsecurities.com/pdf/Financial_Statements/Financial_Statements_Full.pdf [Accessed 28 Nov. 2015].

Land Securities Group plc, (2015). Land Securities Annual Report 2015. [online] London. Available at:

http://annualreport2015.landsecurities.com/pdf/03_Financial%20Statements/Financial_Statements.pdf [Accessed 28 Nov. 2015].

Leiwy, D. and Perks, R. (2010). Accounting: Understanding and Practice, 3rd ed. Maidenhead, Berkshire: McGraw-Hill Higher Education.


Londonstockexchange.com, (2015). GREAT PORTLAND ESTATES PLC ORD 12 1/2P - London Stock Exchange. [online] Available at:

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary-

chart.html?fourWayKey=GB00B01FLL16GBGBXSTMM [Accessed 24 Nov. 2015].

The British Land Company plc, (2014). Annual Report and Accounts 2014. [online] London. Available at:

http://www.britishland.com/~/media/Files/B/British-Land-V2/downloads/2014/financial-statements-and-other-info-2014.pdf [Accessed 28 Nov. 2015].

The British Land Company plc, (2015). Annual Report and Accounts 2015. [online] London. Available at:

http://www.britishland.com/~/media/Files/B/British-Land-V2/documents/ar-2015/pdf/annual-report-and-accounts-2015.pdf [Accessed 28 Nov. 2015].

8. APPENDICES Appendix 1: Definition of REIT A REIT is an organisation that manages real estate portfolios on behalf of shareholders to earn them profit, but pays no corporation tax as it must pay out

90% of its taxable income to its shareholders. The income received by shareholders from REITs are then taxed accordingly as property rental income.

(Bpf.org.uk, 2015)

Appendix 2: Extracts and Ratio Calculations from Great Portland Estate Annual Statement at 31 March 2015

Accounting Item Figure Ratio Ratio Formula and Calculation Result Non-Current Assets £2,985,100,000.00 Current Ratio 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

=149,100,00073,100,000

2.04:1

Current Assets £149,100,000.00 Quick Ratio 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦


= 149,100,00 − 115,900,00073,100,000

0.45:1

Current Liabilities £73,100,000.00 Net Profit

Margin (

𝐸𝐵𝐼𝑇|𝑃𝑟𝑜𝑓𝑖𝑡 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥

𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒) 100

= (39,300,000

88,800,000) 100

44.26%

Non-Current Liabilities £670,200,000.00 Return on

Capital

Employed

(excluding

investment

(𝐸𝐵𝐼𝑇|𝑃𝑟𝑜𝑓𝑖𝑡 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥

𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑) 100

= (39,300,000

3,061,100,000) 100

1.28%


properties and

joint ventures)

Inventory (Trading Property) £115,900,000.00 Return on

Capital

Employed

(including

investment

properties and

joint ventures)



= (504,600,000

3,061,100,000) 100

16.48%

Total Revenue (Sales) £88,800,000.00 Gearing Ratio (

𝐷𝑒𝑏𝑡

𝐷𝑒𝑏𝑡 + 𝐸𝑞𝑢𝑖𝑡𝑦) 100

= (638,500,000

638,500,000 + 2,390,900,000) 100

21.08%

Cost of Sales £4,800,000.00 Interest Cover 𝐸𝐵𝐼𝑇

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡

=39,300,000

9,000,000

4.37 times

EBIT/Profit Before Interest

and Tax (excluding

investment properties and

joint ventures)

£39,300,000.00 Earnings Per

Share

𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑛 𝑖𝑠𝑠𝑢𝑒

=508,200,000

342,747,989

148.30p


and Tax (including


joint ventures)

£504,600,000.00 Price

Earnings

Ratio

𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒

=811.50

148.30

5.47 times

Profit after interest and tax £508,200,000.00 Dividend

Yield (

𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒

𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒) 100

= (8.78

811.50) 100

1.08%

Equity £2,390,900,000.00 Dividend

Cover


𝑇𝑜𝑡𝑎𝑙 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 𝑝𝑎𝑖𝑑 𝑡𝑜 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠

=508,200,000

30,100,000

16.88 times

Debt (Interest bearing loans

and borrowings)

£638,500,000.00 Stock

Turnover (

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠) 365

8814 days


(=115,900,000

4,800,000) 365

Finance Costs (Interest) £9,000,000.00 Debtors

Turnover (

𝑇𝑟𝑎𝑑𝑒 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

𝑆𝑎𝑙𝑒𝑠(𝑅𝑒𝑣𝑒𝑛𝑢𝑒)) 365

= (28,100,000

88,800,000) 365

116 days

Number of Shares on Issue

(Weighted average number of

ordinary shares) - Basic

342,747,989 Asset

Turnover (

𝑆𝑎𝑙𝑒𝑠

𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑)

= (88,800,000

3,061,100,000)

0.03 times

Market Price Per Share as 31

March 2015

811.50p Dividend Per

Share (

𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 𝑃𝑎𝑖𝑑 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑌𝑒𝑎𝑟

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠 𝑜𝑛 𝐼𝑠𝑠𝑢𝑒)

= (30,100,000

342,747,989)

8.78p

Total Dividends Paid to

Shareholders

£30,100,000.00

Dividend Per Share 8.78p

Trade Receivables £28,100,000.00

Capital Employed (Non-

Current Assets + Current

Assets - Current Liabilities)

£3,061,100,000.00





=127,800,00058,700,000

2.18:1



=127,800,000 − 93,300,000

58,700,000

0.59:1


Margin (



= (42,700,000

85,200,000) 100

50.12%


Capital

Employed

(excluding

investment

properties and

joint ventures)



= (42,700,000

2,585,200,000) 100

1.65%

Inventory (Trading Property) £93,300,000.00 Return on

Capital

Employed

(including

investment

properties and

joint ventures)



= (473,900,000

2,585,200,000) 100

18.33%


𝐷𝑒𝑏𝑡


= (623,500,000

623,500,000 + 1,931,900,000) 100

24.40%

Cost of Sales £1,600,000.00 Interest Cover 𝐸𝐵𝐼𝑇


=42,700,000

61,600,000

0.69 times



and Tax (excluding


joint ventures)


Share

Profit after interest and tax


=422,200,000

342,042,722

123.00p


and Tax (including


joint ventures)

£473,900,000.00 Price

Earnings

Ratio



=631.00

123.00

5.13 times


Yield (



= (8.68

631.00) 100

1.38%


Cover



=422,200,000

29,600,000

14.26 times


and borrowings)

£623,500,000.00 Stock

Turnover (



= (93,300,000

1,600,000) 365

21284 days


Turnover (



= (26,700,000

85,200,000) 365

115 days




342,042,722 Asset

Turnover (



= (85,200,000

2,585,200,000)

0.03 times


March 2014


Share


𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠 𝑜𝑛 𝐼𝑠𝑠𝑢𝑒

=29,700,000

342,042,722

8.68p



Shareholders

£29,600,000.00






£2,585,200,000.00





=57,500,00078,200,000

0.74:1



=57,500,000 − 0

78,200,000

0.74:1


Margin (



= (33,900,000

69,000,000) 100

49.13%


Capital

Employed

(excluding

investment

properties and

joint ventures)



= (33,900,000

2,244,400,000) 100

1.51%

Inventory (Trading Property) Nil (zero) Return on

Capital

Employed

(including

investment

properties and

joint ventures)



= (193,600,000

2,244,400,000) 100

8.63%


𝐷𝑒𝑏𝑡


(=666,000,000

666,000,000 + 1,537,700,000) 100

30.22%

Cost of Sales Nil (zero) Interest Cover 𝐸𝐵𝐼𝑇


=33,900,000

21,400,000

1.58 times



and Tax (excluding


joint ventures)


Share

Profit after interest and tax


=180,600,000

320,960,820

56.3p


and Tax (including


joint ventures)

£193,600,000.00 Price

Earnings

Ratio



=495.90

56.3

8.81 times


Yield (



= (8.60

495.90) 100

1.73%


Cover



=180,600,000

27,600,000

6.54 times


and borrowings)

£666,000,000.00 Stock

Turnover (



(=0

0) 365

0 (zero)


Turnover (



= (51,200,000

69,000,000) 365

271 days




320,960,820 Asset

Turnover (



= (69,000,000

2,244,400,000)

0.03 times


March 2013


Share


𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠 𝑜𝑛 𝐼𝑠𝑠𝑢𝑒

=27,600,000

320,960,820

8.60p



Shareholders

£27,600,000.00






£2,244,400,000.00

Documents

Sample Accounting Paper