Marks and Spencer 1998 Annual Report Download - page 48

The directors have pleasure in submitting their report and the financial
statements of the Company and its subsidiaries for the year ended
31 March 1998.
PRINCIPAL ACTIVITIES
The principal activities of the Group are Retailing and Financial
Services.
Financial Services consists of the operations of the GroupÕs Retail
Financial Services companies, which provide account cards, personal
loans, unit trust management, life assurance and pensions. The
GroupÕs Captive insurance company is also included in this segment as
a significant par t of its business is generated from the provision of
related insurance ser vices.
REVIEW OF ACTIVITIES AND FUTURE PERFORMANCE
A review of the GroupÕs activities and of the future development of the
Group is contained in the ChairmanÕs statement on pages 2 to 5.
PROFIT AND DIVIDENDS
The profit for the financial year, after tax ation and minority interests,
amounts to £828.9m. The directors have declared dividends as
follows:
£m
Ordinar y shares
Interim paid, 3.6p per share (last year 3.3p) 102.7
Proposed final, 10.7p per share (last year 9.7p) 306.4
Total ordinary dividends, 14.3p per share (last year 13.0p) 409.1
The final dividend will be paid on 31 July 1998 to shareholders whose
names are on the Register of Members at the close of business on
1 June 1998.
CHANGES IN SHARE CAPITAL
During the year ended 31 March 1998, 25,641,432 ordinar y shares in
the Company were issued as follows:
A4,316,027 to the Trustees of the United Kingdom EmployeesÕ
Profit Sharing Schemes at 495p each, in respect of the allocation
from the profits of the year ended 31 March 1997.
B1,962,613 under the terms of the 1984 Senior Staff Share Option
Scheme at prices between 175p and 404p each.
C1,762,189 under the terms of the 1987 Senior Staff Share Option
Scheme at prices between 206p and 404p.
D7,894,621 under the terms of the United Kingdom EmployeesÕ
Save As You Earn Share Option Scheme at prices between
151p and 467p.
E9,705,982 issued under the scrip dividend scheme ( 6,041,605
in respect of the final dividend for 1996/ 97 and 3,664,377 in
respect of the interim dividend for 1997/ 98).
SUBSTANTIAL SHAREHOLDINGS
The Company has been notified that as at 11 May 1998, the
Prudential Corporation and its subsidiaries (Òthe PrudentialÓ) held
145,095,785 ordinar y shares which represented 5.1% of the issued
ordinar y share capital of the Company. In accordance with current
legislation the notification ex cludes 23,158,605 ordinary shares in
which the Prudential has no beneficial interest but over which it has
voting control. If these shares were included
with the shares notified,
the PrudentialÕs ordinary shareholding in the Company would be
168,254,390 shares (5.9% Ð last year 5.4%). The Company has not
received notification that any other person holds 3% or more of the
issued ordinar y share capital.
CREDITOR PAYMENT POLICY
The CompanyÕs policy concerning the payment of its trade creditors is
as follows:
In the UK, General Merchandise is automatically paid for 11 working
days from the end of the week of deliver y. Foods are paid for 13
working days from the end of the week of delivery (based on the
timely receipt of an accurate invoice).
UK distribution suppliers are paid monthly, for costs incurred in that
month, based on estimated annual contracts, and payments are
adjusted quar terly to reflect any variations to estimate.
Trade creditor days of the Company for the year ended 31 March 1998
were 14.9 days (10.6 working days), based on the ratio of Company
trade creditors at the end of the year to the amounts invoiced during
the year by trade creditors.
Suppliers to overseas subsidiaries (for merchandise and distribution)
and foreign merchandise suppliers of the UK Company are paid on
average within 30 days of the receipt of invoice or deliver y
documentation.
For all trade creditors, it is the CompanyÕs policy to:
Ð Agree the terms of payment at the star t of business with that
supplier,
Ð Ensure that suppliers are aware of the terms of payment,
Ð Pay in accordance with its contractual and other legal
obligations.
UNITED KINGDOM EMPLOYEES’ PROFIT SHARING SCHEMES
The amount of profit which will be allocated this year, in the form of
ordinar y shares in the Company, has been fixed at £22.5m (last year
£23.5m), representing 5% of the earnings of 42,505 (last year
40,830) eligible employees.
DIRECTORS AND THEIR INTERESTS
The present directors are listed on pages 32 and 33.
The responsibilities of the Managing Directors were changed in
March 1998 and are now as shown on page 32.
Mr D G Trangmar retired as an ex ecutive director on 31 March 1998.
In accordance with A rticle 85 of the CompanyÕs A rticles of
Association, Mrs C E M Freeman, Sir Martin Jacomb, Mr P G
McCracken,
Mr S J Sacher CBE, Mr P L Salsbury, Mr P P D Smith and Lord Stone
of Blackheath retire by rotation and, being eligible, offer themselves
for re-election. Brief biographical details are given on pages 32 and
33.
No director seeking re-election has a Ser vice Contract with the
Company or any of its subsidiaries.
The beneficial interests of the directors and their families in the shares
of the Company and its subsidiaries, together with their interests as
trustees of both charitable and other trusts, are given on page 44.
EMPLOYEE INVOLVEMENT
We have maintained our commitment to employee involvement
throughout the business.
Staff are kept well informed of the per formance and objectives of
the Group through personal briefings and regular meetings. These
are supplemented by our staff publications,
St Michael News and
M&S World, and video presentations. ÔFocus teamsÕ in stores,
distribution centres and head office provide opportunities for staff
representatives to contribute to the ever yday running of the business.
REPO RT OF TH E DIRECTO RS
46