Marks and Spencer 1998 Annual Report Download - page 67

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Set out below is a comparison of current and book values of all the GroupÕs financial instruments by category. Where market prices are
not available for a particular instrument, fair values have been calculated by discounting cash flows at prevailing interest rates and
ex change rates.
THE GROUP
1998 1997
Book value Fair value Book value Fair value
Assets/(liabilities) £m £m £m £m
Trade debtors 54.7 54.7 55.2 55.2
Customer advances( 1) 1,572.2 1,571.1 1,308.1 1,307.7
Trade creditors (230.2) (230.2) (223.4) (223.4)
Current asset investments( 1) 242.3 242.3 361.8 361.8
Fix ed asset investments( 1) 46.3 46.2 15.6 15.6
Cash at bank and in hand( 1) 614.9 614.9 671.5 671.5
Borrowings due within one year(1) (1,010.7) ( 1,008.2) (497.5) (497.4)
Borrowings due after more than one year( 1) (165.8) (160.3) (474.3) (472.5)
Interest rate swaps(2) – (6.9) Ð (1.5)
For ward foreign currency contracts(2) – 22.4 Ð 22.1
FTSE 100 put options(3) 5.6 4.2 3.0 2.3
(1) Interest bearing assets are predominantly shor t-term deposits placed with banks, financial institutions and on money markets, and
investments in short-term securities. Borrowings are at floating rates. Therefore, fair values closely approx imate book values.
(2) Interest rate swaps and for ward exchange contracts have been marked to market to produce a fair value figure.
(3) FTSE 100 put options provide no loss guarantees on certain Unit Trust offers. The options are on a fully matched basis and are not
traded. They have been marked to market to produce a fair value figure.
As described in the Financial Review on page 36, the GroupÕs policy is to maintain foreign ex change cover in respect of ex por ts from
the UK to subsidiaries. It does this using forward foreign currency contracts. A t 31 March 1998 the Group had hedged approx imately
90% of the foreign currency ex por ts ex pected in the following 12 months.
At 31 March 1998 there were £22.4m of net gains on forward foreign currency contracts (last year £22.1m of net gains) . None of
these were recognised at the balance sheet date. All outstanding net gains are ex pected to be dealt with in the profit and loss account
for the period ending 31 March 1999.
During the period ended 31 March 1998, all of the net gains not recognised at 31 March 1997 were dealt with in the profit and loss
account.
THE COMPANY
1998 1997
£m £m
Authorised:
3,200,000,000 ordinary shares of 25p each 800.0 800.0
Allotted, called up and fully paid:
2,862,299,548 ordinary shares of 25p each (last year 2,836,658,116) 715.6 709.2
15,935,450 ordinary shares having a nominal value of £4.0m were allotted during the year under the terms of the CompanyÕs share
schemes which are described in note 9. The aggregate consideration received was £48.9m. Contingent rights to the allotment of shares
are also described in note 9.
During the year, the Marks and Spencer p.l.c. Qualifying Employee Share Ownership Trust (the ÒQUESTÓ) was established under a deed
of trust dated 17 December 1997. The purpose of the QUEST is to acquire shares in the Company for employees, including ex ecutive
directors, in satisfaction of their options under the Marks and Spencer United Kingdom EmployeesÕ Save A s You Earn Share Option
Scheme (the ÒSchemeÓ).
Of the 15,935,450 ordinary shares referred to above, 6,324,939 ordinar y shares were subscribed for by the QUEST at market value of
£37.6m. These shares were allocated to employees, including executive directors, in satisfaction of options ex ercised under the
Scheme. The Company provided £23.4m to the QUEST for this purpose. The cost of this contribution has been transferred by the
Company directly
to the profit and loss account reserve (see note 26).
In addition, 9,705,982 shares with a nominal value of £2.4m were allotted to shareholders making an election for scrip dividends.
The nominal value of £2.4m in respect of scrip dividends was funded out of the share premium account.
23 FAIR VALUES OF FINANCIAL INSTRUMENTS
25 CALLED UP SHARE CAPITAL
24 HEDGES OF FUTURE TRANSACTIONS
NO TES TO TH E FIN AN CIAL STATEM EN TS
MA RKS A ND SPENCER p.l.c. 65