Exhibit 4 Selected Balance Sheet Items of U.K.
Real Estate Companies (₤million)
Company BLND CWG CLF CYD GPOR HMSO LAND
Date of Last Annual Report Mar-02 Jun-02 Dec-01 Sep-01 Mar-02 Dec-01 Mar-02
Beta (June 2002) 0.378 0.636 0.914 1.238 0.656 0.758 0.27
Market Capitalization (June
2002) 2887 2,707 785 152 505 1550 4525
Accounts payable 46 63 5 88 0 39 29
Short term debt 447 80 26 97 0 24 23
Long term debt 3760 3871 601 10 417 1529 1987
Shareholder equity 4 102 1 860 966 113 702 2 049 6 037
NAV 4791 1,585 967 113 700 2041 6165
Difference Between NAV
and Market Cap 1,904.00 -1,122.00 182.00 -39.00 195.00 491.00 1,640.00
% of Market Cap 0.66 -0.41 0.23 -0.26 0.39 0.32 0.36
Net Income 159.00 193.00 -44.00 21.00 5.00 60.00 264.00
Eenterprise Value 7,094.00 6,658.00 1,412.00 259.00 922.00 3,103.00 6,535.00
EBITDA 515.00 256.00 17.00 41.00 74.00 174.00 475.00
EV/EBITDA 13.77 26.01 83.06 6.32 12.46 17.83 13.76
P/E Ratio 18.16 14.03 -17.84 7.24 101.00 25.83 17.14
LII MNR SLOU
Dec-01 Jun-02 Dec-01
0.364 0.423 0.842
1674 428 1727
10 0 99
6 7 48
1778 607 1494
2 399 563 2 388
2342 563 2237
Average Excluding British Land
668.00 135.00 510.00 295.56
0.40 0.32 0.30 0.18
76.00 5.00 49.00
3,458.00 1,042.00 3,269.00
215.00 50.00 181.00
16.08 20.84 18.06 23.82 Company is undervalued compared to its Peers
22.03 85.60 35.24 32.25 Company is undervalued compared to its Peers
ed to its Peers
ed to its Peers
British Land
Harvard Business School Case 9-208-064
Courseware 9-212-701
This courseware was prepared solely as the basis for class discussion. Cases are not
intended to serve as endorsements, sources of primary data, or illustrations of effective or
ineffective management. Copyright © 2011 President and Fellows of Harvard College.
This product may not be digitized, photocopied, or otherwise reproduced, posted or
transmitted, without the permission of Harvard Business School.
Exhibit 1 British Land Company Balance Sheets, 1993–2002 (₤million)
2002 2001 2000 1999 1998 1997 1996 1995
Assets
Cash 367 94 118 120 117 82 96 149
Short term investments 0 0 0 0 0 3 8 11
Loans, claims and advances 0 0 0 0 0 0 0 0
Investment property 7,528 7,150 6,778 5,290 4,604 4,143 3,992 2,651
Accounts receivable 26 97 39 16 26 29 28 16
Real estate held for sale 47 53 58 137 186 218 226 218
Permanent investments 748 806 721 707 635 318 70 179
Net fixed assets CF CF 11 11 1 2 2 2
Other assets 12 25 3 7 11 5 12 16
TOTAL 8,727 8, 227 7,728 6,288 5,582 4,799 4,434 3,241
LIABILITIES
Short term borrowings 447 290 168 106 100 19 212 283
Long term debt 3,760 3,521 3,713 2,722 2,315 2,214 2,126 1,192
Accounts payable 46 57 64 115 47 50 64 43
Deferred taxes 90 0 0 0 12 8 0 0
Accrued expense and
187 282 239 110 104 101 101 82
deferred income
Taxes payable 45 31 56 30 25 30 27 38
Proposed dividends 45 41 39 75 35 33 29 24
TOTAL 4,620 4,222 4,279 3,158 2,637 2,453 2,558 1,662
Minority interest 0 0 0 12 12 8 7 0
SHAREHOLDERS’ EQUITY
Common stock 130 130 130 130 129 119 108 92
Capital surplus 1,106 1,105 1,105 1,105 1,092 1,099 887 679
Retained earnings 713 680 598 523 446 240 214 207
Revaluation reserve 2,165 2,092 1,619 1,369 1,271 796 591 528
Other (5) (1,900) (1) (8) (6) 83 68 74
TOTAL 4,108 4,005 3,450 3,118 2,932 2,337 1,869 1,580
Common Shares
518 518 518 518 516 475 431 368
Outstanding
4,107
7.9285714286
1994 1993
Long Term Growth Rate 3%
257 94 Debt to Equity 50%
9 1
0 0
1,982 1,497
26 10
154 173
132 84
1 1
14 16
2,575 1,876
50 30
1,061 946
32 29
0 0
60 57
46 28
19 11
1,268 1,101
0 0
75 59
463 312
198 187
491 142
79 76
1, 07 776
302 248
Exhibit 2 British Land Company Income Statements, 1993–2002 (₤million)
DATE: 2-Mar 1-Mar Mar-00 Mar-99 Mar-98 Mar-97 Mar-96 Mar-95
REVENUES
Investment income 415 388 368 312 287 300 240 191
Development revenue 16 22 124 62 67 29 31 33
Commissions and fees CF CF CF CF CF 3 2 4
Other income 10 0 0 0 0 0 0 0
Interest and dividends 25 26 36 25 32 5 12 14
Sundry 126 131 76 72 12 13 3 2
TOTAL 591 567 604 472 397 349 287 245
EXPENSES
Investment 29 18 21 15 20 23 19 17
Development 9 19 83 49 46 19 29 31
Other 0 0 0 0 0 0 0 0
Interest 342 337 320 261 206 197 153 118
Administrative 39 29 27 24 23 21 20 20
Sundry 0 0 0 0 0 0 0 0
TOTAL 420 398 451 349 295 259 221 186
Pretax income 171 86 153 123 102 90 66 59
Income axes 12 10 27 16 16 15 12 14
Minority interest 0 0 0 1 0 0 0 0
Income before ex. items 159 75 126 106 86 75 54 45
Extraordinary items 0 0 0 0 0 0 0 0
Source: Standard & Poor’s Compustat® Global Vantage.
Notes: CF – consolidated figure.
Mar-94 Mar-93
155 147
45 20
1 1
0 0
13 17
1 8
215 193
16 18
32 15
0 0
94 112
19 14
0 0
161 158
54 35
12 5
0 1
42 29
0 0
Exhibit 3 Profiles of Selected U.K. Real Estate Companies in 2002
Company
BLND
CWG
CLF
CYD
GPOR
HMSO
LAND
LII
MNR
SLOU
Source:
Notes:
xhibit 3 Profiles of Selected U.K. Real Estate Companies in 2002
Description
British Land Company (founded in 1856) lets, manages and deals in commercial property across the U.K. Flagship properties include the Broadgate Office
London, covering 120 000 square meters, and the Meadowhall Shopping Centre in Sheffield.
Canary Wharf Group develops and manages property primarily in the U.K.. Its primary business is developing and leasing office space and high quality reta
the Canary Wharf Estate in London.
Chelsfield holds a portfolio of shopping malls and other retail developments in the U.K. It is developing London’s largest shopping center at White City. It
Global Switch, a data center company.
Countryside Properties specializes in developing and selling residential properties in southeast England.
Great Portland Estates is a real estate management and investment company with both industrial and commercial properties. Its activities are heavily centere
although it has ventures also in other U.K. cities such as Cardiff.
Hammerson operates in several major European economies, including the U.K., France, Germany and Italy. Hammerson manages numerous shopping cente
extensive prime office space, including flagship developments in London, Berlin and Paris.
Land Securities holds a large portfolio of industrial, commercial and residential properties scattered across many major cities in the U.K. It derives its incom
letting, managing and dealing in property. An important part of its business plan involves working closely with local and national government to transform
environments.
Liberty International holds a portfolio of shopping malls and other retail and commercial properties in the U.K., such as the Lakeside Shopping Centre near
the MetroCentre in Gateshead (in redevelopment).
Minerva (founded in 1988) develops properties for either resale or rent. Properties may be commercial or industrial but are mainly situated in central Londo
geared towards blue chip clients such as Barclays Bank, British Telecom and Lloyds-TSB Bank.
Slough Estates Group (founded in 1920) is a major international property developer operating all over Europe and North America. From the outset it has he
portfolio of commercial and industrial properties. Flagship projects include the Cambridge Research Park in the U.K., the Pegasus Park Office Complex in
the Willingdon Park in Vancouver. It also operates Slough Heat and Power.
Company annual reports.
Tickers: BLND – British Land Company; CWG – Canary Wharf Group; CLF – Chelsfield; CYD – Countryside Properties; GPOR – Great Portland Estates; HMSO – Hamm
Land Securities; LII – Liberty International; MNR – Minerva; SLOU – Slough Estates Group.
Exhibit 4 Selected Balance Sheet Items of U.K. Real Estate Companies (₤million)
Company BLND CWG CLF CYD GPOR HMSO LAND
Mar-02 Jun-02 Dec-01 Sep-01 Mar-02 Dec-01 Mar-02
Date of Last Annual Report
0.378 0.636 0.914 1.238 0.656 0.758 0.27
Beta (June 2002)
2887 2,707 785 152 505 1550 4525
Market Capitalization (June 2002)
46 63 5 88 0 39 29
Accounts payable
447 80 26 97 0 24 23
Short term debt
3 760 3 871 601 10 417 1 529 1 987
Long term debt
4 102 1 860 966 113 702 2 049 6 037
Shareholder equity
4791 1,585 967 113 700 2041 6165
NAV
Difference Between NAV and
Market Cap 1904 -1122 182 -39 195 491 1640
Net Income 159 193 -44 21 5 60 264
LII MNR SLOU
Dec-01 Jun-02 Dec-01
0.364 0.423 0.842
1674 428 1727
10 0 99
6 7 48
1 778 607 1 494
2 399 563 2 388
2342 563 2237
668 135 510
76 5 49
Exhibit 5 Income Statements of selected U.K. Real Estate Companies (₤million)
BLND CWG CLF CYD GPOR HMSO LAND
Date of Last Annual Report 37316 37408 37226 37135 37316 37226 37316
Revenues
Investment income 415 207 86 0 85 176 526
Development revenue 16 0 52 388 0 0 40
Commissions and fees CF 0 0 0 0 0 411
Other income 10 0 18 0 0 0 0
Interest and dividends 25 49 11 0 2 13 4
Sundry 126 77 (63) 2 0 19 30
TOTAL 591 332 104 389 88 208 1, 011
Expenses
Investment 29 39 76 0 11 16 118
Development 9 0 0 320 0 0 35
Other 0 0 0 0 2 0 325
Interest 342 232 43 9 42 96 168
Administrative 39 38 11 29 0 18 56
Sundry 0 0 0 0 0 0 2
TOTAL 420 310 130 359 55 130 648
Special items 0 181 0 0 (30) (8) 0
Other provisions 0 0 0 0 0 0 5
Pretax income 171 203 (26) 30 2 69 364
Income taxes 12 10 17 10 (2) 8 100
Minority interest 0 0 1 0 0 1 0
Income before ex. items 159 193 (44) 21 5 60 264
Extraordinary items 0 0 0 0 0 0 0
Total Revenues 592 333 104 390 87 208 1011
Operating expense 77 77 87 349 13 34 536
EBITDA 515 256 17 41 74 174 475
LII MNR SLOU
37226 37408 37226
299 48 234
11 0 30
0 0 0
0 0 0
12 5 8
13 8 74
335 61 346
95 4 22
5 0 21
0 0 13
128 44 114
20 7 0
0 0 109
248 54 279
4 0 0
9 0 0
91 6 67
15 1 20
1 NA (1)
76 5 49
0 0 0
335 61 346
120 11 165
215 50 181
Exhibit 6 U.K. Government Bond Yields (%)
1 month 1 year 2 year 20 year 30 year
3.88 4.41 4.49 4.89 4.73
Source: Thomson Datastream International.
Exhibit 7a Market Value of British Land and Other Property Companies versus the FTSE 350 Real Estate Index
Source: Standard & Poor’s Compustat® Global Vantage.
Exhibit 7b Market Value of British Land and Other Property Companies versus the FTSE 100 Share Index
Source: Standard & Poor’s Compustat® Global Vantage.
Exhibit 8 Discount of Selected Property Companies’ Market Values to their Net Asset Values
50%
40% Britis h Land
Land Se curitie s
30%
Gre at Portland
20% Libe rty Inte rnational
M ine rva
10%
Slough Es tate s
0% Countrys ide
-10%
-20%
-30%
-40%
Source: Company Annual Reports and Standard & Poor’s Compustat® Global Vantage.
is h Land
d Se curitie s
at Portland
e rty Inte rnational
e rva
ugh Es tate s
untrys ide
Exhibit 10a Directors’ Emoluments and Staff Costs, March 2002 Annual Report
Directors’ emoluments for the year ended March 31, 2002
Salary Annual Bonus Benefits 2002 Total
£ £ £ £
J. H. Ritblat 697,250 350,000 19,526 1,066,776
C. Metliss 201,950 125,000 22,156 349,106
J. H. Weston Smith 331,500 125,000 22,728 479,228
P. W. Simon
N. S. J. Ritblat 265,500 125,000 20,772 411,272
M. J. Cassidy 29,569 29,569
R. E. Bowden 251,500 125,000 14,836 391,336
S Adam
R. W. A. Swannell 29,569 29,569
D. A. Higgs 33,461 33,461
Lord Burns 27,141 27,141
G. C. Roberts 56,625 4,606 61,231
1,924,065 850,000 104,624 2,878,689
On appointment, the Company undertook to pay Mr. G. C. Roberts, who joined the Company in January 2002, a bonus of £75,000 in
the year ending March 31, 2003.
2002 2001
Staff costs (including Directors)
£million £million
Wages and salaries 19.7 17
Social security costs 1.9 1.5
Pension contributions 3.4 1.7
25 20.2
Average number of employees of the Group during the year was 638 (2001: 602) of which some 487 (2001: 469) were employed
directly at the Group’s properties and their costs recharged to tenants.
Source: British Land Annual Report, 2002.
2001 Total
£
951,605
296,572
396,481
8,320
335,541
25,000
293,540
247,823
25,000
17,820
17,820
2,615,522
2, a bonus of £75,000 in
2001
£million
17
1.5
1.7
20.2
69) were employed
Exhibit 10a Directors' Emoluments and Staff Costs (continued)
Directors and their interests in share and loan capital
Beneficial interests of the Directors in the share and loan capital of the Company.
6% Irredeemable
12½% Bonds 2016* Options over Ordinary Shares
Fully Paid Ordinary Convertible Bonds
Shares
(£ nominal) (£ nominal) Sharesave Scheme
31-Mar-01 31-Mar-02 31-Mar-01 31-Mar-02 31-Mar-01 31-Mar-02 31-Mar-01 31-Mar-02
J. H. Ritblat 2,303,039 2,307,754 4,753 4,753
C. Metliss 1,100,080 111,776 4,753 4,753
J. H. Weston Smith 86,503 88,170 4,753 4,753
N. S. J. Ritblat 11,097 17,634 280,500 374,250 4,295 3,554
M. J. Cassidy 5,000 5,000
R. E. Bowden 31,239 38,246 50,000 81,250 5,340 2,427
R. W. A. Swannell 3,750 3,750
Lord Burns 1,190 1,505
D. A. Higgs 5,000 5,652
G. C. Roberts 10,000
*on May 1, 2001, the 12½% Bonds 2016 were repurchased by the Company.
Source: British Land Annual Report, 2002.
Rights under Restricted Share Plan
6% Irredeemable
ptions over Ordinary Shares
Convertible Bonds
Ordinary Shares
1984 Option Scheme (£ nominal)
31-Mar-01 31-Mar-02 31-Mar-01 31-Mar-02 31-Mar-01 31-Mar-02
295,783 295,783 200,000 250,000 411,943
150,283 150,283 100,000 125,000 205,971
59,201 59,201 75,000 135,000 215,971
184,250 184,250 65,000 115,000 195,971
75,000
Exhibit 10b Directors’ Options and Restricted Share Plan Interests by Date of Grant and Exercise Price (March 2002 Annual Report)
(i) 1984 Share Option Scheme
Beneficial interests of the Directors’ under the Company’s 1984 Share Option Scheme in Ordinary Shares of the Company
J. H. Ritblat J. H. Weston Smith N. S. J. Ritblat
Date Price Exercise Expiry
1-Apr-01 31-Mar-02 1-Apr-01 31-Mar-02 1-Apr-01
Granted (pence) Date Date
06.07.94 380 06.07.97 05.07.04
06.07.94 322 06.07.99 05.07.04
06.07.94 380 06.07.97 05.07.04
23.01.96 394 23.01.99 22.01.06 132,418 132,418 60,092 60,092 11,244
23.01.96 394 23.01.01 22.01.06 163,365 163,365 90,191 90,191 47,957
295,783 295,783 150,283 150,283 59,201
No options were granted or were exercised by directors during the year.
*These options are linked to corresponding grants of options. Accordingly the exercise of one linked option over a number of shares autom
its counterpart to lapse in respect of the same number of shares; therefore these options do not increase the total number of shares under op
in the table reflect the number of shares under option. All new grants of options are subject to a performance target which has been a
Association of British Insurers and the National Association of Pension Funds. The middle market quotation for the Ordinary 25p shares of t
the close of business on 29 March 2001 was 517.50p. The highest and lowest middle market quotations during the year to 31 March 2002
395p.
(ii) Sharesave Scheme
Beneficial interests of the Directors under the Company’s Sharesave Scheme in Ordinary Shares of the Company
J. H. Ritblatt C. Metliss J. H. Weston Smith
Date Price Exercise Expiry
1-Apr-01 31-Mar-02 1-Apr-01 31-Mar-02 1-Apr-01 31-Mar-02
Granted (pence) Date Date
01.03.96 323 01.03.01 31.08.01
01.03.99 355 01.03.02 31.08.02
01.03.99 355 01.03.04 31.08.04 4,753 4,753 4,753 4,753 4,753 4,753
01.09.01 399 01.09.04 28.02.05
01.03.02 377 01.03.05 31.08.05
4,753 4,753 4,753 4,753 4,753 4,753
On 7 June 2001 Mr. R. E. Bowden exercised his option over 5,340 shares at an option price of 323p per share. The middle market quotation
of the Company on 7 June 2001 was 528p. On 31 August 2001 Mr. N. S. J. Ritblat exercised his option over 3,204 shares at an option p
middle market quotation for the Ordinary 25p shares of the Company on 31 August 2001 was 500p.
Source: British Land Annual Report, 2002.
March 2002 Annual Report)
of the Company
N. S. J. Ritblat R. E. Bowden
31-Mar-02 1-Apr-01 31-Mar-02
60,600 60,600
20,200 20,200
20,200* 20,200*
11,244 103,450 103,450
47,957
59,201 184,250 184,250
on over a number of shares automatically causes
e total number of shares under option. The totals
rmance target which has been approved by the
n for the Ordinary 25p shares of the Company at
uring the year to 31 March 2002 were 528p and
mpany
N. S. J. Ritblat R. E. Bowden
1-Apr-01 31-Mar-02 1-Apr-01 31-Mar-02
3,204 5,340
1,091 1,091
1,456 2,427
1,007
4,295 3,554 5,340 2,427
are. The middle market quotation for the Ordinary 25p shares
over 3,204 shares at an option price of 323p per share. The
Exhibit 11 Analysis of Shareholders in 2002
Number of Number of
Number of shares Shareholders % Shares %
1-1,000 6,927 54.93 3,270,811 0.63
1,001-5,000 4,010 31.8 8,613,911 1.66
5,001-20,000 822 6.52 7,992,655 1.54
20,001-50,000 273 2.17 9,040,426 1.75
Over 50,000 578 4.58 489,561,662 94.42
12,610 100.00 518,479,465 100.00
Individuals 7,369 58.44 11,133,858 2.15
Banks or nominees 4,792 38 485,425,827 93.62
Insurance companies 5 0.04 5,292,445 1.02
Other companies 295 2.34 11,255,118 2.17
Pension trusts 5 0.04 10,801 0.01
Local/National authorities and other institutions 144 1.14 5,361,416 1.03
12,610 100.00 518,479,465 100.00
Source: British Land Annual Report, 2002.
