Assignment on Main founder(s) of the Hammerson Real estate investment trust company

Hammerson PLC is the largest property business of United Kingdome and it was founded in 1942 by Lewis W. Hammerson after his name. After the establishment of the Hammerson develop the residential property other than the expansion of the commercial property in 1948. Hammerson became public company in the year of 1954 and started its functions in the UK’s cities (Hammerson.com, 2020).

A.    The main shareholders of the Hammerson Real estate investment trust company

Shareholders are those people who invest in the companies by purchasing their shares from the market and invest the amount in the companies to get maximum profit per share.  The shareholders of Hammerson include all insiders from almost 25% share of it. Some institutions also working with them in terms of financing a higher amount to the company.  (Finance.yahoo.com, 2020)

B.     The current CEO and board of directors’ members of Hammerson Real estate investment trust company

The board members are those people who manage the workings and productivity in the organization or firms. There are many of the board members in this company that are highly qualified and well deserved to be the board members of any company. (Hammerson.Com, 2020)

C.    When was the company listed in the stock exchange?

Stock Exchange is the kind of place where companies wanted to be registered as a stock exchange manages the stocks and provides profit on them. There are many of the things that need to be done to get a place in the stock exchange.

Part 2

A.    Is the current CEO one of the main founders of the firm?

Many of the times all the things go on smoothly with expectations of getting higher grades in the organizations. Other shareholders include the International stock index total intl stock index and many other heavy investors were the shareholders of Hammerson PLC because the housing scene was very up at that time.

B.      Is the current CEO one of the main shareholders?

They all are highly qualified and well deserved to be the board members of a company as they are highly professional and very well deserved. Member's name is as follows GWYN Burr, Piere Boucher, Andrew Formica, Adam Maize, Carol Welch, and many other highly qualified members too.

C.        What has been the main advantage of being listed in the stock exchange? (hint: compare the change in shareholders’ equity)

Stock exchange gives a percentage that companies need to be meeting in terms of getting a good place in the stock market. Many different aspects make Hammerson PLC at a higher place in the Stock Market by getting a good earning instead of profit. (londonstockexchange.com, 2020)

D.    What has been the disadvantages of being listed in the stock exchange?

Companies will have several disadvantages of being listed in the local or international stock exchanges. Key disadvantages associated with the being listed companies on stock exchange are presented below:

1)      Undervaluation risk: First of all, companies face undervaluation risk after being listed on stock exchanges. Shares can cause lack of liquidity for the company. Sometimes lack of shares demands in the market result in the decrease of share prices therefore company faces issues in getting the desired amount of investment from external markets even while selling the majority of its outstanding shares.

2)      Increase in the cost: Another major disadvantage of being listed in the stock exchange is an increase in the cost. Costs associated with management time, ongoing listing, and flotation can result in the increase of cost and reduction of profit margin generated from the financing activities. Sometimes, flotation process can take several month. Moreover, constant announcement of quarter and annual financial results consume time of finance department and auditing team and support increment of cost for Murray Income Trust Plc and Hammerson Plc.

3)      Accountability and standards of reporting

The third major disadvantage of being listed on the stock market is increased accountability for the listed companies. Companies offering their shares on stock exchanges are required to fulfil the requirements of the relevant stock exchange.For instance, when a company offer its shares at a stock exchange they have to follow up the financial reporting styles and standards suggested by the stock exchange for fair reporting and investment process. Internationality accepted accounting standards recommended by the stock exchanges result in the increase of accountability of the company but at the same time, it causes to increase the effort of the finance department. Therefore, Murray Income Trust Plc and Hammerson Plc which are listed on London stock exchange have to meet the reporting standards and auditing systems suggested by the London Stock exchange even when they have a different reporting system for internal operations. Thus, developing special reports for stock exchange require additional time and result in the increase of cost.

Part 1

MURRAY INCOME TRUST PLC

A.    The main founder(s) of the company.

In the UK equities, as clear by the name Murray Income Trust PLC is that kind of investment institution many different aspects deals in the best way to manage things more effectively and more productive. The founder is Patrick Gifford that establishes in 1932 and it is listed in the stock exchange as well in that year only.

B.     The main shareholders of the company.

Shareholders are the people who invest in people and make the financial position strong of the company. The affairs of the currently issued by Murray Trust there are highly recommended that makes the workings of the organization better and improved. Followings are the detail of shareholders:

C.     The current CEO and board of directors’ members.

CEOand other board members of the Murray Trust company make things more productive and more demanding as there may be very much growth in making the workings more developed and more demanding in terms of keeping the things highly productive and highly growing as a must. Board members include Jean C. Park, Peter Jackson, and Stephine Easement and CEO of the company is Patrick Gifford.

D.     When was the company listed in the stock exchange?

In 1932 the company was also listed in the stock exchange as a listed company.

Part 2:

A.    Is the current CEO one of the main founders of the firm?

Yes the current CEO is also the founder of the company as he started the company and led the company towards high betterment and highly improved working among other listed companies and this makes the country more developed and more groomed as well.

B.     Is the current CEO one of the main shareholders?

Yes, he is among the main shareholders as he was the founder of the company and the CEO makes the growth of the company more productive and more developed as well. The shareholders invest a lot of finance in the company to run its functions properly and effectively.

C.    What has been the main advantage of being listed in the stock exchange? (hint: compare the change in shareholders’ equity)

When a company is listed in Stock exchange that company needs to be at a higher place and hence, they are going to manage the things more productive as Stock exchange gives profit to the companies on their shares.

Part 1:Answer all the following questions about these 2 companies

1.      HAMMERSON PLC

a.       How much was the total shareholders’ equity of the firm once it was listed and how much is now?

Ans. the firm was listed in 2016 and give notice to stock exchange about its listing. Before listing its shareholder's equity was 5517 million.  And after listing its shareholders’ equity going to increase 5776 and in the next year it goes to 6024 million.

b.      How much is TSR (Total shareholders return) of the firm within the last five years?

Ans. the Total Shareholder return of the HAMMERSON plc is given as; 6.89%, 6.99%, 5.99%, 6.58% and 6.08 % in the last five years. (markets.ft, 2018)

2.      MURRAY INCOME TRUST PLC

a.       How much was the total shareholders’ equity of the firm once it was listed and how much is now?

Ans. the total shareholder’s equity of the firm before its listed is very low which was in millions and now its total shareholder’s equity is 514478000 and 57092900 according to current information.

b.      How much is TSR (Total shareholders return) of the firm within the last five years?

Ans. the total shareholder return of the firm within the five years include 3.94%, 3.89%, 2.98%, 3.54%, and 3.67%. And this total shareholder return is estimated according to the company's information. (Aberdeen standard, 2018)

Part 2: Based on the above information, you need to explain:

1.      HAMMERSON PLC

a.       Based on the trend of TSR and the capital structure (Long term debt + Equity) in the last five years, what is your general view about the performance of this firm? (hint: you can use other financial ratios and valuation techniques to support your analysis).

Ans.  According to the TSR and capital structure of the company, it is explained that the performance of the company is improved and also generates good revenue for the shareholders. It provides sufficient return to the shareholders and also manages all the expenses of the company. 

2.      MURRAY INCOME TRUST PLC

a.       Based on the trend of TSR and the capital structure (Long term debt + Equity) in the last five years, what is your general view about the performance of this firm? (hint: you can use other financial ratios and valuation techniques to support your analysis).

Ans. according to its TSR and capital structure, the company performances satisfactory and its generate enough revenue to cover the need of the shareholders and also manage sufficient format to overcome all the expenses. 

Question 2

1.      Collect the weekly share price data (adjusted close) and the price data for the FTSEALL market index for the period of one year. Calculate the weekly returns and graph the returns of the share prices and the index over the period (assume no dividends). Interpret the graph.

In the following table, return values are calculated for FTSE, Hammerson, and Murray. Return values are calculated by dividing the previous week return value with the current week return. The formula used for the calculation of weekly return is presented below:

In the above line graph,the FTSE market index weekly returns are presented. From the line graph, it is can be said that the weekly returns are showing fluctuations. In the period of one year, the weekly returns fluctuate consistently. High fluctuations indicate a significant amount of risk(Chandra, 2007).According to the above graph, FTSE all market index was below 0.04 all the time. However,during November and December2019return was decreased below the minimum limit of -0.02.FTSE weekly return is calculated by the use of monthly closing prices of shares for the whole index.Somehow, average return projected on monthly basis in a year represent that average return was around 0.01 most of the time. Therefore, FTSE has more points near the lines of 0.01 and 0.02 in the above plotted line graph.

In the above line graph, Hammerson Plc's weekly returns are presented. From the line graph, it is can be said that the weekly returns are showing fluctuations. In the period of one year, the weekly returns fluctuate but the intensity of fluctuation is lower than FTSE all market index. The fluctuations indicate a significant amount of risk in share prices(Chandra, 2007).Somehow, return was increased in the mid-year. Highest return values are recorded in the month of July and August. While the least return value was recorded in the month of September. During this time, return was almost negative for the whole listed stock of Hammerson Plc.

The share prices of Murray Income Trust do not show much fluctuation like the FTSE market index and Hammer Plc. However, in the first quarter of the year, the share prices have shown a significant amount of increase.The weekly income of Murray was inclined up to 90 during the weeks 13, 14 15.  The highest value was of weekly return for Murray investors is recorded in the week 14. However, again it was below 20 for the rest of whole year.

2.      Is there any market or industry-specific factors that you think explain the share price movement of your companies over the period of one year?

The UK is going through the issues immerged from Brexit. Brexit has influenced the London stock exchange and the prices of stocks get affected. The changes in the external environment factors due to the Brexit are the main reason for changes in the stock prices(Somanath, 2011).

3.      Using the same companies, you have used in Question 1 calculate the average weekly returns and the standard deviation of the 2 companies and the index over the last year. Which of the companies has a higher risk? Which factors specific to that company might explain the fact that the company has a higher risk?

FTSE All market index has the lowest standard deviation. Murray Income Trust Plc has the highest standard deviation. It can be said that Murray Income Trust Plc is the riskiest of all the stocks(Chandra, 2007).Somehow, average weekly returns are calculated for both companies by calculating mean values of their market returns in a week.Average weekly return values for Hammerson Plc and Murray Income Trust Plc are 0.0094079 and 1.7522 respectively.  

References of Hammerson Real estate investment trust company

Aberdeenstandard. (2018, december 31). Murray Income Trust PLC. Retrieved from aberdeenstandard.com/docs?editionId=61654971-0500-4d8d-a8f1-c4272df83af2

Chandra, P. (2007). Financial Management. Tata McGraw-Hill Education.

Finance.yahoo.com. (2020). Hammerson plc (HMSO.L). Retrieved from https://finance.yahoo.com/quote/HMSO.L/holders/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAMI7t6VFdLiO2INUQKywt4bk-ri4vT7T1T1Lj6diQAv0NG8swKT5AHREpNzs9idVuawh1W7CEKZwQW68zf3zScTtInv7Nhp2BBct1yibNa1GDxs9KsvZYMAy6K-tvU

Hammerson.Com. (2020). Board Members. Retrieved from https://www.hammerson.com/about/board-governance/board-members/

Hammerson.com. (2020). Shareholder Information. Retrieved from https://www.hammerson.com/about/board-governance/board-members/

londonstockexchange.com. (2020). HMSO HAMMERSON PLC ORD 25P. Retrieved from https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB0004065016GBGBXSTMM.html

markets.ft. (2018). Hammerson PLC. Retrieved from markets.ft.com/data/equities/tearsheet/financials?s=HMSO:LSE&subview=BalanceSheet

Somanath, V. S. (2011). International Financial Management. I. K. International Pvt Ltd.