Marks and Spencer 2007 Annual Report Download - page 31

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www.marksandspencer.com/annualreport2007 MARKS AND SPENCER GROUP PLC 29
A breakdown of UK operating costs for the year is shown below:
52 weeks ended
1 April 2006 31 March 2007 Increase
£m £m %
Retail staffing 741.0 810.1 +9.3
Retail occupancy 682.1 717.3 +5.2
Distribution 306.2 321.6 +5.0
Marketing and related 113.8 144.7 +27.2
Support 414.3 438.0 +5.7
Total before bonus 2,257.4 2,431.7 +7.7
Bonus 73.0 91.0 +24.7
Total after bonus 2,330.4 2,522.7 +8.3
The increase in retail staffing costs reflects the impact of the
changes made to pay structures last year, as well as space
growth and investment in additional staffing in our stores to
improve service for our customers. The increase in retail
occupancy costs reflects space growth and higher energy
costs. Distribution costs increased at a rate well below volume
growth. Further investment in marketing has contributed
towards our top line sales growth. Support costs, which include
non-store related overheads, were impacted by increased
pension contributions. We will be paying a record bonus of
£91.0m (last year £73.0m), which includes a £26m reward for
our store staff and reflects the very strong performance of the
business in 2006/07.
The UK operating profit includes a contribution of £19.5m
(last year £9.6m) from the Group’s continuing economic interest
in M&S Money. This strong growth came from additional
account holders and lower costs.
International operating profit before property disposals was
£87.5m, up 33.2%, reflecting the strong sales performance of
the business. Franchised operating profits grew by 40.8% to
£42.1m. Owned store operating profits (Ireland and Hong
Kong), increased by 26.8% to £45.4m.
Net finance costs
Net finance costs for the year, before exceptional items and
pension finance income, were down 18.3% at £99.6m reflecting
the reduction in average net debt. The average interest rate for
the year was 5.9% (last year 5.8%). Fixed charge cover was
5.9x (last year 4.9x). Pension finance income, which reflects the
difference between the expected return on pension scheme
assets and the interest on scheme liabilities, was £20.8m.
The exceptional finance costs of £30.4m represent a one-off
make-whole premium arising on the redemption of £317.2m
of secured bonds, together with the write-off of unamortised
transaction costs. This redemption enabled us to release the
secured properties for their transfer into a limited partnership
with the UK Pension Scheme (see Pensions on page 30).
Taxation
The tax charge reflects a pre-exceptional effective tax rate for
the year of 29.4% (last year 30.2%). This reflects the refund of
prior year tax.
Earnings per share
Adjusted earnings per share from continuing operations, which
excludes the effect of property disposals and exceptional items,
has increased by 28.7% to 40.4p per share. The weighted
average number of shares in issue during the period was
1,688.6m (last year 1,667.0m).
Dividend per share
The Board is recommending a final dividend of 12.0p per share.
This will result in a total dividend of 18.3p per share (last year
14.0p per share), an increase of 30.7%. This is in line with the
dividend policy announced in May 2006, to grow each half year
dividend in line with adjusted EPS growth.
15
10
5
0
-5
-10
-15
Q1 Q2 Q3
2005/06 2006/07
Q4 Q1 Q2 Q3Q4
Total UK Retail
Food
General Merchandise
UK Retail like-for-like sales growth
%
1,000
900
800
700
600
500
2005/06
751.4
156.5 21.8 9.9 25.6 965.2
UK
International
M&S Money
Interest
2006/07
Group profit before tax
£m
Executive Team Your Board Financial
Review Governance Financials
Shareholder
Information