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MARKS AND SPENCER GROUP PLC 1
At the start of the year the business was underperforming.
This prompted an unsolicited approach on 27 May by
Revival Acquisitions. The Board was determined to make
sure value was achieved for shareholders and that the
business was not bought on the cheap. We took two
immediate decisions.
The first was that Luc Vandevelde, who had already
indicated he wanted to leave the Company early, should step
down as Chairman and that I should take his place on an
interim basis. The second was that we should employ new
executive leadership to accelerate the process of restoring
the Company’s fortunes. On 31 May, Stuart Rose succeeded
Roger Holmes as Chief Executive. Charles Wilson was also
appointed to the Board as an executive director.
The new executive team was charged by the Board
with drawing up plans to improve business performance.
Six weeks later, Stuart and his team laid these plans
before institutional shareholders and analysts. Individual
shareholders were given the same presentation at the
Annual General Meeting two days later. It was on the
strength of these plans that the Board rejected Revival
Acquisitions’ indicative offer of 400p a share, which we
believe undervalued the Company.
We are refocusing the business on its core values,
Quality, Value, Service, Innovation and Trust. We are confident
that progress is being made, albeit against a more challenging
retail environment.
We also said we would acquire per una, dispose of
M&S Money and return £2.3bn to shareholders by way of
a Tender Offer. Together with the return in 2002, we have
returned over £4bn to shareholders in the last four years.
The Tender Offer strike price of 362p emerged close to the
market price of the shares, thereby avoiding a transfer of
value to exiting shareholders. Our balance sheet remains
strong, underpinned by the property portfolio, which was
independently revalued at £3.6bn in July 2004.
There were additional Board changes during the course of
the year. Brian Baldock and Dame Stella Rimington retired
as non-executives in July, to be replaced by Anthony
Habgood and Steven Holliday. Vittorio Radice, Maurice
Helfgott, Mark McKeon and Laurel Powers-Freeling stepped
down as executive directors as Stuart and his team set a new
course for the Company with the Board’s full endorsement.
More recently, Alison Reed has stepped down as Finance
Director after 20 years with the Company. Ian Dyson has
been appointed in her place. We thank our former colleagues
for their contribution and welcome the new Board members.
Our relationship with Marks & Spencer investors – both
individual and institutional – is high on the Board’s list of
priorities. Last year, we made sure a far greater proportion
of shareholders had access to the Company’s management
than ever before. We also launched a shareholder voucher
scheme in summer 2004, which proved very popular, offering
discounts in-store during the autumn. We will be repeating
this in July 2005 and extending our offer to those who hold
shares through nominee accounts. We are also improving
virtual audiovisual access to the Annual General Meeting and
we launched an improved version of the corporate website
earlier this year.
In May 2005, we announced that Lord Burns will be
joining the Board as Deputy Chairman with effect from
1 October 2005 and will become Chairman from the Annual
General Meeting in July 2006, when I will step aside from
the Board. I am delighted that he is joining the Board and
that he will succeed me as Chairman. With the appointment
of Terry, the Board can now work on completing the task of
broadening the diversity and skills present around the table.
The Board would like to thank shareholders for their
continued support and our employees and suppliers for their
hard work, commitment and passion, which has been and
remains crucial to the delivery of Marks & Spencer’s strategy.
Paul Myners, Chairman
LAST YEAR WAS ONE OF THE MOST CHALLENGING MARKS & SPENCER HAS EVER
FACED. BUT WE HAVE EMERGED AS A LEANER, BETTER RUN BUSINESS.
Chairman’s statement
PAUL MYNERS