Marks and Spencer 2006 Annual Report Download - page 24

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22 Marks and Spencer Group plc
Financial review continued
UK Retail continued
Total footage for the year has increased by 1.5% with the
opening of seven retail parks and seven ‘Simply Food’ stores.
Twenty-three stores are now in the new, modernised format
and we plan to accelerate the roll-out of this format in 2006/07.
By the end of March 2007 we expect c.35% of the chain to be
in the new format.
We are also set to open 28 new ‘Simply Food’ stores in the
summer which were acquired from Iceland.
International Retail
2006 2005
52 weeks52 weeks
Revenue (£m) 522.7 455.8
Operating profit1(£m) 65.7 60.7
Number of stores at year end
– Owned 19 18
– Franchises 198 191
Selling space at year end (m sq ft)
– Owned 586 586
– Franchises 1,433 1,317
1Before exceptional items and asset disposals.
Revenue for the year increased by 14.7% to £522.7m. The
Franchise business performed particularly well, helped by
organic growth, the replacement of some older stores with
newer footage and new store openings. International operating
profit increased by 8.2% to £65.7m. The Republic of Ireland,
where we have 11 stores with a further store in the pipeline,
continues to perform well, although the results for the year were
impacted by the cost of opening new stores. Like-for-like results
in Hong Kong were good but the overall result was affected by
the loss of the Pacific Place store and the relocation of the
Times Square store.
Following the announcement on 31 March 2006, the results
for Kings Super Markets have been disclosed within
discontinued operations. For the year, revenue was £228.2m
(up 0.3% at constant exchange rates) with operating profit
down by 33% to £3.0m as a result of decisions taken to close
underperforming stores.
Exceptional items
2006 2005
£m £m
Head office relocation – (8.8)
Head office restructuring programme – (6.3)
Board restructure – (8.4)
Closure of Lifestore – (29.3)
Defence costs – (38.6)
Sale of head office premises – 31.1
Release of provision held against
European closure – 9.7
– (50.6)
Interest
Net interest expense was £104.4m compared to £93.0m for last
year. Excluding the impact of the increase in pension finance
income, interest expense was up 16.8% to £121.9m following
last year’s corporate and balance sheet restructuring.
2006 2005
£m £m
Interest payable (134.9) (120.9)
Interest receivable 13.0 16.5
Net interest payable (121.9) (104.4)
Other finance income 17.5 11.4
Total (104.4) (93.0)
The average interest rate for the year was 5.8% (last year 5.7%).
The average interest on fixed debt was 6.1%, which represents
half of total debt, whilst the average rate of floating debt was
5.4%. Interest cover was 7.0x compared to 5.7x for the same
period last year. Proportionately higher profits in the year have
more than offset the increase in the interest charge following last
year’s corporate restructuring, resulting in an overall increase in
interest cover.
Taxation
The tax charge reflects an effective tax rate for the full year of
30.2% compared to 29.7% last year.
UK Retail Stores (owned)
2006
Simply
Food 99
Simply
Food 101
High St
246
Out of
Town 24
Outlets
24
Outlets
22
Retail
Park 13
Retail
Park 6
Out of
Town 24
2005
High St
248