Marks and Spencer 1999 Annual Report Download - page 5

ANNUAL REPORT AND FIN ANCIAL STATEMENTS 1999
FIN AN CIAL REVIEW
– Impairment of European Fixed Assets
Following the recent deterioration in the performance of our
European business we reviewed the book values of our European
properties in accordance with FRS11,‘Impairment of Fixed Assets
and Goodwill’.This resulted in a provision of £• m being made
against the value of European properties in the first half of the year.
– Recovery of overpaid VAT
£• m was received last year in respect of VAT overpaid on sales in
earlier accounting periods. This followed the Court of Appeal decision
in a case brought by Littlewoods Home Shopping.
INTEREST
N et interest income • to £• m from £27.9m last year. This was caused
by the fall in sterling interest rates and a reduction in average sterling
cash balances (including interest-bearing investments) to £• m (last
year £820m).
Interest payments on intra group and external borrowings for
the Financial Services business are charged to that business as cost
of sales.The operating profit for Financial Services is shown in the
segmental analysis on page • .The total interest cost incurred by
Financial Services was £• m. In the consolidated accounts, the excess
of intra group interest over third party interest payable, has been
added back in the segmental analysis to arrive at total operating profit.
TAXATION
The Group tax charge for the year is £• m, giving an effective rate of
• % after exceptional charges.This is an increase on the previous year’s
rate of • %.The increase results from exceptional charges and
unrelieved losses arising overseas, both of which are not allowable for
UK tax purposes.The amount is offset by capital allowances in excess
of depreciation and a reduction in the rate applicable to deferred tax.
EARN INGS PER SHARE
An adjusted earnings per share figure of • p (last year 15.8p)
has been calculated to give a clearer understanding of the trading
performance of the Group. It excludes the effect of the exceptional
items noted above. D etails of the calculation are given in note •
on page • .
CASH FLOW
The analysis of the increase in net debt shows the operating cash
flows within retailing and Financial Services activities.The cash outflow
from Financial Services operating activities includes a £• m increase in
loans and advances to customers.
O f the resulting net debt of £• m, £• m relates to Financial
Services. (See Balance Sheet commentary on page • .)
Cash flow analysis £m
Net debt at 31 March 1999 (1,182)
Cash inflow from retail operating activities
Cash outflow from Financial Services
operating activities
Capital expenditure (net of disposals)
D ividends
Tax
O ther non-operating cash inflows
Increase in net debt
Net debt at 31 March 2000
NEW FOOTAGE
D uring 1999/2000 there was an unprecedented increase in footage
both in the UK and overseas.Total worldwide footage increased
by • million sq ft as shown below:
Total UK footage increased by nearly • million sq ft. O f this additional
footage, • sq ft related to the opening of 16 of the 19 Littlewoods
stores, which were acquired during 1998. N ew store openings account
for a further • sq ft including Bluewater in Kent (146,000 sq ft),
N ewton Breda in N orthern Ireland (34,000 sq ft) and Covent Garden,
London (19,000 sq ft).The resulting shape of the UK chain is shown
below:
N ine European stores were opened. Four new stores in Germany –
D ortmund, Essen,W uppertal and Frankfurt – added around 150,000
sq ft. W e also opened stores in Spain, France, Eire and Luxembourg.
Brooks Brothers US opened 19 new stores, resulting in net
additional footage of around 100,000 sq ft.
O n average, we traded on 6.7% more footage in the UK in
1998/99 and on an additional 12.2% footage overseas.
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MARKS AN D SPEN CER p.l.c.
Worldwide footage expansion 1999/2000
• million sq ft
■Littlewoods stores • %
■O ther UK footage development • %
■Continental Europe • %
■Republic of Ireland • %
■N orth America • %
■Hong Kong • %
UK shape of the chain (based on footage)
■D epartmental stores • %
■Regional centres • %
■High street • %
■Small • %