Marks and Spencer 2009 Annual Report Download

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125 years of Quality, Value, Service, Innovation and Trust
Annual report and
financial statements 2009
Quality
worth every
penny

Table of contents

  • Page 1
    125 years of Quality, Value, Service, Innovation and Trust Quality worth every penny Annual report and financial statements 2009

  • Page 2
    ...Our International business 4. UK property 5. Plan A Our people Financial review 36 38 40 42 46 48 Governance 50 62 72 Corporate governance Remuneration report Other disclosures Financial statements and other information 77 Independent auditors' report to the members of Marks and Spencer Group plc...

  • Page 3
    ...If you haven't already tried it, visit our easy-to-use, fully interactive online Annual Report. Many shareholders are now benefiting from more accessible information and helping the environment too. It's a more engaging and interactive experience It's printable as individual pages It saves paper and...

  • Page 4
    ... our brand will continue to offer Quality, Value, Service, Innovation and Trust. 1. Our core UK business See page 26 With an annual turnover of £8.16bn our UK business has a broadly even split between General Merchandise (clothing and home) and Food. General Merchandise £3.9bn sales (-3.5%) With...

  • Page 5
    ... Spencer Group plc Annual report and financial statements 2009 Directors' report 1 Our Plan for the future Overview by Sir Stuart Rose Sir Stuart Rose Chairman We have spent the last five years putting in place strong foundations in line with our long-term plan. We have introduced new products...

  • Page 6
    ... and Spencer Group plc Annual report and financial statements 2009 Directors' report Chairman's overview continued 125 YEARS OF SERVICE Above: Florence Chittick has spent her entire working life at our flagship Marble Arch store in London. In 47 years she's seen recessions, watched our customers...

  • Page 7
    125 YEARS OF INNOVATION This page: Womenswear In the last quarter of 2008/09, we enticed an additional 200,000 under35s into store, with the majority drawn to our high fashion brand - Limited Collection. +200,000

  • Page 8
    125 YEARS OF TRUST This page: Menswear We offer four menswear brands - everything from a £4 pack of pants to a £499 luxury suit. £4 to £499

  • Page 9
    ... and Spencer Group plc Annual report and financial statements 2009 Directors' report 5 Chairman's overview continued Context, progress, and new challenges It is five years since I returned to M&S as Chief Executive. At the time the business was suffering from a lack of investment and offering...

  • Page 10
    ... closely with our employee representative groups to manage the closure of 26 under-performing - mostly Simply Food - stores and to reduce roles across Head Office at the start of 2009. At the same time we looked carefully at our final salary pension scheme, which is a substantial cost to the Company...

  • Page 11
    125 YEARS OF INNOVATION This page: Food The relaunch of our Italian range is one of the clearest examples of innovation at its best, with average growth of 15% on the year. +15%

  • Page 12
    8 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report 125 YEARS OF VALUE This page: Kidswear In just a year we have grown our market share in kidswear by 0.6% pts, putting us fourth in the market - the highest level in seven years. +0.6% pts

  • Page 13
    ..., whichever channel they wish to use; Driving our International business, particularly China, India and Southern and Eastern Europe, balancing investment and returns; and Reinvigorating our brand communication with our customers, highlighting our ethical and sustainability objectives. In order to...

  • Page 14
    10 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Chairman's overview continued 9 10 8 2 7 3 4 5 1 Our Executive Committee 1. Sir Stuart Rose Chairman 2. Ian Dyson Group Finance and Operations Director 3. Steven Sharp Executive Director, Marketing ...

  • Page 15
    ... to inform our future. This is a strong, resilient business and we are working hard to deliver our plans. M&S is not a fair-weather brand. We are here for our customers in the bad times as well as in the good. It would be impossible to deliver against our brand values without staff and suppliers who...

  • Page 16
    ... 2008. He is a non-executive director of Land Securities plc and Chairman of Business in the Community. Stuart began his career in retail at Marks & Spencer in 1972 where he remained until 1989, before going on to become the Chief Executive of a number of well known UK retailers, including Argos plc...

  • Page 17
    ... brand values, Plan A and code of ethics. Our investors are rewarded with profitable returns Our customers experience Quality, Value, Service, Innovation and Trust every time they shop with us Our employees are proud to work at M&S Our suppliers are engaged in profitable partnerships Our communities...

  • Page 18
    ... plc Annual report and financial statements 2009 Directors' report Managing through the recession by Ian Dyson, Group Finance and Operations Director Ian Dyson Group Finance and Operations Director During 2008/09 we took decisive actions to manage the business through the recession. We invested...

  • Page 19
    ... cost base in 2009/10. We closed 26 of our smaller, under-performing stores in order to focus on sites better suited to our customers needs. We also reduced headcount across our Head Offices by 15%, redeploying as many colleagues as possible; and made changes to our UK defined benefit pension scheme...

  • Page 20
    16 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Managing through the recession by Ian Dyson, Group Finance and Operations Director Net debt £2.5bn 125 YEARS OF SERVICE 1939 At the outbreak of World War II M&S stores totalled 234. By 1945 over 100 of ...

  • Page 21

  • Page 22
    ...and Spencer Group plc Annual report and financial statements 2009 Directors' report Our key performance indicators Financial performance Group revenue £9,062.1m +0.4% 2008/09 2007/08 2006/07 2005/06 £9,062.1m £9,022.0m £8,588.1m £7,797.7m £m 05/06 06/07 07/08 08/09 UK International...

  • Page 23
    ...are building M&S Direct as part of our commitment to become a multi-channel retailer and to reach our target of £500m annual sales by 2010/11. Become carbon neutral CO2 emissions tonnes £324m Analysis: We calculate carbon emissions from our UK and Republic of Ireland stores, offices, warehouses...

  • Page 24
    20 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Our brand by Steven Sharp, Executive Director of Marketing Steven Sharp Executive Director of Marketing This has been another year about listening and responding to our customers. Nowhere is this more ...

  • Page 25

  • Page 26
    ... store choice so they could cherry pick the best offers, and use deals to 'trade up' to better quality items for less money. Under-35 customers are more unpredictable in their approach to spending. While spending initially slowed at the start of 2008/09, they quickly returned to the impulse shopping...

  • Page 27
    ... improvements goods to spruce up the home. Entertainment goods such as televisions, laptops and video gaming consoles sold well in 2008/09, reinforcing the trend to stay in - although in the early months of 2009/10 many retailers have reported a softening of sales in this category. Food Customers...

  • Page 28

  • Page 29
    Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report 25 Our heritage 125 years of M&S Over the last 125 years...we have built Your M&S into a brand that is the envy of businesses worldwide. Our five founding principles - Quality, Value, Service, Innovation ...

  • Page 30
    26 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report 1 Kate Bostock Executive Director of Clothing Womenswear value market share How are we investing in and growing our core UK retail business? Womenswear: It has been a challenging year in womenswear, but ...

  • Page 31
    ... OF INNOVATION Right: 'per una' In November 2008, George Davies - the innovative founder of 'per una'- retired as part-time Chairman of the brand. In his seven years of working with M&S, George built 'per una' into a significant brand and encouraged younger shoppers into our stores to buy the 'per...

  • Page 32
    28 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Core UK business: Womenswear continued 125 YEARS OF INNOVATION Below: Flower power When Sex and The City stylist Patricia Field produced her capsule collection for M&S, her clothes flew off the rails, ...

  • Page 33
    ... bra. We were also In Style magazine's Best Shop for Lingerie in 2008. We have continued to refresh and broaden our ranges during the year to ensure our brands offer a well-balanced collection to suit different needs and tastes. As part of our segmentation work we have reduced duplication and filled...

  • Page 34
    ...Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Core UK business continued 125 YEARS OF QUALITY Right: High fashion, low price We continue to collaborate with designers to bring high fashion style to the High Street, including Jeffrey West shoes, and Mark...

  • Page 35
    ... important and we have been working with our suppliers to ensure we get new products into store every month. Value Customers know M&S provides value that they can trust. This is clearly demonstrated in schoolwear where we offer great value at a starting price point of £6.50 for an entire uniform...

  • Page 36
    32 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Core UK business continued 125 YEARS OF INNOVATION Left: Start from scratch The launch of Cook Asian 1234 bridges the gap between scratch cooking and prepared meals. Customers can rustle up a fresh ...

  • Page 37
    ... these local tastes as possible. However we still have significant work to do, with much of our future capital investment focused on system developments to further improve on-shelf availability and reduce food waste. Delivering great service is about ensuring customers have the right information to...

  • Page 38
    34 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Core UK business: Food continued 125 YEARS OF TRUST Below: Say cheese! M&S won more than 400 dairy awards in 2008/09 including seven gold awards at the prestigious Nantwich Cheese Show. 125 YEARS OF M&S ...

  • Page 39
    ... financial year in Cheltenham, Tunbridge Wells and Aberdeen. Expanding the range We continue to add new products and ranges to our home offer as a way of introducing our brand to new customers. This year we launched nursery furniture, white goods and M&S Energy. Beauty Our Beauty business has long...

  • Page 40
    ... to our growing share of the online market. A year in review M&S Direct is central to our commitment to becoming a multi-channel retailer. It goes beyond merely selling our products online; encompassing our Home catalogue, flower and wine delivery, Food to Order party catering service and lunchtogo...

  • Page 41
    ... 2008, reviewed products have received an average rating of 4.1 out of 5. As a result, sales of well-received products have increased by as much as 20%. Looking ahead Our focus remains squarely on improving our online shopping experience and on integrating our sales channels to give our customers...

  • Page 42
    ... Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report 3 M&S International sales How are we expanding our International business? £897.8m +25.9% M&S International as a share of Group revenue 9.9% +2.0% pts M&S International: In 2007/08 we announced our plan...

  • Page 43
    ... in Mumbai in April 2009 1 store Other: Bermuda 125 YEARS OF QUALITY Above: Shanghai store Trading over four floors, our Shanghai store has one of the widest food ranges of M&S International stores, with 1,000 lines including a full wine shop, grocery products and frozen lines. We will continue...

  • Page 44
    ...Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report 4 Total space (14.9m sq ft) How are we strengthening our UK property portfolio? +5.6% Total stores 668 New stores 75 Property and store environment: We remain committed to our plan to invest in our store...

  • Page 45
    ... our new builds and remodels. 125 YEARS OF QUALITY Below: Westfield style Unveiled by Twiggy and Erin O'Connor, our Westfield store includes appetising new features such as a cheese shop and Mediterranean deli. FOCUS ON: PROPERTY TOTAL UK PORTFOLIO OF 668 +46 PREMIERE 10 0 MAJOR 43 +3 RETAIL PARK...

  • Page 46
    42 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report 5 100 39 24 Commitments Commitments achieved so far Achieved commitments that now go even further OUR PLEDGE: BY 2012 M&S WILL: CLIMATE CHANGE BECOME CARBON NEUTRAL WITH MINIMAL OFFSETTING WASTE SEND NO ...

  • Page 47
    ... our commitment to work with local communities to encourage small third-party suppliers to develop renewable electricity. M&S buys, through npower, any renewable electricity generated by farmers (see above). The 'Plan A way to save' campaign is a collection of simple green changes designed to save...

  • Page 48
    ... and Spencer Group plc Annual report and financial statements 2009 Directors' report Integrating Plan A continued 125 YEARS OF TRUST Below: Strength in numbers From WWF and Groundwork to WRAP and Oxfam, our partners are vital to the way we do business. By recycling 175 tonnes or Christmas cards...

  • Page 49
    ...key role in local communities; and, perhaps most importantly, listen to what our customers want and communicate with them every step of the way. Doing the right thing. Find out more Read our How We Do Business Report 2009 at www.marksandspencer.com/ annualreport09 125 YEARS OF INNOVATION Left: Fair...

  • Page 50
    ...coaching cards. In addition, section managers and store managers receive targeted workshops, designed to improve selling and cost management skills. Rewarding our people The M&S benefits package remains one of the best in the retail sector. New membership to the final salary pension scheme closed in...

  • Page 51
    ...STAFF WHO HAVE EXCELLED IN THEIR ROLE Communication We have had to make some difficult decisions this year, and we recognise that it is more important than ever to clearly communicate with our employees. We have a range of channels to do this: The Top 100 briefing is designed to deliver Head Office...

  • Page 52
    ....3m (last year £95.0m) has arisen due to the changes made in the terms of the UK defined benefit plan relating to how members' future benefits build up. Employees' annual increases in pensionable pay have been capped to 1%, and early retirement benefits for members who joined the scheme before 1996...

  • Page 53
    ..., South London and the new Westfield Centre at White City, West London, as well as improving the quality of space in a number of major out of towns and city centre stores through store extensions. We stepped up the investment in our supply chain and technology in line with our strategy to build an...

  • Page 54
    ... Committee - to implement Plan A, our 100 social, environmental and ethical commitments Business Involvement Groups - to represent employee views to management to influence business decisions Capital Approval Committee - to approve capital expenditure within Board limits and optimise investment

  • Page 55
    ... our investors are rewarded with profitable returns; - our customers experience Quality, Value, Service, Innovation and Trust every time they visit M&S; - our employees are proud to work at M&S; - our suppliers are engaged in profitable partnerships; and - our communities and the environment benefit...

  • Page 56
    52 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Corporate governance continued Board effectiveness continued Of course good governance is also a matter of the Board working effectively as it goes about meeting its accountabilities. To this end we have ...

  • Page 57
    ... from its Board review and agreed actions for 2009/10 within three key areas: 1. An independent Board: harness the experience and talent of the non-executive directors to invest in the business for the long term, to be well placed when the market improves; 2. An informed Board: improve the depth...

  • Page 58
    ...Spencer Group plc Annual report and financial statements 2009 Directors' report Corporate governance continued From the boardroom to the shop floor Governance is not just about the Board - it's about how governance is understood and acted on throughout the business. The Board sets out the Company...

  • Page 59
    ... - communication of the Group's strategy, objectives and targets, values and standards; - annual operating and capital plans and future projections; - operating policies and procedures; - clearly defined capital investment control guidelines; - review of treasury policies by the Board; and - review...

  • Page 60
    ... effect on business and financial results - Progressive hedging policy - Close liaison with suppliers to mitigate adverse currency impact - Continued drive of economies of scale We fail to react to changes in foreign currency exchange or inflation rates We fail to maintain cost efficient funding...

  • Page 61
    ... Selling channels We have ambitious plans for our M&S Direct and International businesses as part of our commitment to broadening our multi-channel offer. M&S Direct We fail to meet customer expectations when they buy online Adverse effect on financial results Adverse effect on market share...

  • Page 62
    58 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Corporate governance continued Committee effectiveness The Nomination and Governance Committee "We need to maintain the right skills and experience on the Board and to develop tomorrow's leaders, to ...

  • Page 63
    ... the Group. In October 2008 the Committee reviewed and updated its terms of reference in line with new Financial Reporting Council Guidance on Audit Committees. Its activities during the year included a review of: - finance reports and accounting policies relating to full year and half year results...

  • Page 64
    ... to the financial statements. Internal audit Internal audit's work is focused on areas of priority as identified by the Group Risk Profile and in accordance with an annual audit plan approved each year by the Audit Committee and by the Board. The Board receives a full report from internal audit each...

  • Page 65
    ...auditors Our Code of Ethics; Our Articles of Association; and Our response to the FRC's latest consultation on the effectiveness of the Combined Code. Governance of the Group pension schemes The Group operates a defined benefit scheme for all employees with an appointment date prior to 1 April 2002...

  • Page 66
    62 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Remuneration report The significant change in the economy has impacted not only on the performance of the Company, but also the decisions taken by the Remuneration Committee during the year. Based on the ...

  • Page 67
    ... salaries and benefits; - ratification of any salary increases for senior managers in line with Company principles; - design and targets for the 2009/10 Annual Bonus Scheme; - consideration of the targets to be applied to the 2009 Performance Share Plan; and - review of Committee performance in 2008...

  • Page 68
    ...the role and responsibility of the individual director. Benefits - provided on a market competitive basis - aligned to total reward structure for all employees - affordability Delivery - monthly in cash - reviewed annually with any increases normally awarded from 1 January - Group's Pension Scheme...

  • Page 69
    ... benefits other than employee product discount. What are the current short-term and long-term incentive schemes? Annual Bonus Scheme - short-term incentive Deferred Share Bonus Plan - long-term incentive The Annual Bonus Scheme is reviewed each year and is designed to drive profitability and sales...

  • Page 70
    ...Group plc Annual report and financial statements 2009 Directors' report Remuneration report continued Performance Share Plan (PSP) - long-term incentive This continues to be the primary long-term incentive for executive directors and senior managers in the Company. The plan normally allows awards...

  • Page 71
    ...with the terms of their service agreement, on payment of a sum equal to the contractual notice entitlement of 12 months' salary and specified benefits. For all current executive directors, the Company reserves the right on termination to make phased payments which are paid in monthly instalments and...

  • Page 72
    ... information regarding employee share option schemes is given in note 12 to the financial statements on page 95 of the Annual Report. There have been no changes in the directors' interests in shares or options granted by the Company and its subsidiaries between the end of the financial year and...

  • Page 73
    ...year cash bonus retention arrangement. The final instalment of this bonus arrangement will be paid in 2009/10. Her cash allowance and benefits include a 25% supplement on her salary earned above the Group's Pension Scheme cap as she was a member of the Retirement Plan until June 2008. Post June 2008...

  • Page 74
    ...Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Remuneration report continued Directors' long-term incentive schemes Share Schemes Maximum shares receivable at Date of award 30 March 2008 Shares awarded during the year Shares vested during the year Shares...

  • Page 75
    ... the tables on pages 70 and 71, the explanation of the performance criteria attached to the the Performance Share Plan and the Executive Share Option Scheme can be found on page 66 and have been audited. Approved by the Board Louise Patten Chairman of the Remuneration Committee London 18 May 2009

  • Page 76
    72 Marks and Spencer Group plc Annual report and financial statements 2009 Directors' report Other disclosures Business review The Companies Act 2006 requires the Company to set out in the Directors' report a fair review of the business of the Group during the financial year ended 28 March 2009 ...

  • Page 77
    ... on any annual payments that Marks and Spencer plc has elected to defer. The Company does not have agreements with any director or employee that would provide compensation for loss of office or employment resulting from a takeover except that provisions of the Company's share schemes and plans may...

  • Page 78
    ... Czech Republic and Greece. Directors and senior management regularly visit stores and discuss with employees matters of current interest and concern to them and the business through listening groups, meetings with BIG members and informal discussion. Share schemes are a long-established part of our...

  • Page 79
    ...the start of business with that supplier; - ensure that suppliers are aware of the terms of payment; and - pay in accordance with its contractual and other legal obligations. The main trading company, Marks and Spencer plc, has a policy concerning the payment of trade creditors as follows: - general...

  • Page 80
    ...financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and the Company; and - the Business review contained in this report includes a fair review of the development...

  • Page 81
    ...' report to the members of Marks and Spencer Group plc We have audited the Group and parent company financial statements (the 'financial statements') of Marks and Spencer Group plc for the year ended 28 March 2009 which comprise the Consolidated and Company income statements, the Consolidated and...

  • Page 82
    ... Consolidated statement of recognised income and expense 52 weeks ended 28 March 2009 £m 52 weeks ended 29 March 2008 £m Profit for the year Foreign currency translation differences Actuarial (losses)/gains on retirement benefit schemes Cash flow and net investment hedges - fair value movements...

  • Page 83
    ... the Marks & Spencer UK Pension Scheme Derivative financial instruments Provisions Deferred tax liabilities Total liabilities Net assets Equity Called-up share capital - equity Share premium account Capital redemption reserve Hedging reserve Other reserve Retained earnings Total shareholders' equity...

  • Page 84
    ... syndicated bank facility Issue of medium-term notes Payment of liability to the Marks & Spencer UK Pension Scheme Repayments under finance leases Equity dividends paid Shares issued on exercise of employee share options Shares purchased in buy back Purchase of own shares by employee trust Net cash...

  • Page 85
    ... used for internal reporting. It is required to be implemented by the Group from 29 March 2009, and will have no impact on the results or net assets of the Group but management is still considering the impact on disclosures. IFRIC 16 - 'Hedges of a Net Investment in a Foreign Operation' was issued...

  • Page 86
    ... statements 2009 Financial statements Notes to the financial statements continued 1 Accounting policies continued Revenue Revenue comprises sales of goods to customers outside the Group less an appropriate deduction for actual and expected returns, discounts and loyalty scheme voucher costs...

  • Page 87
    ... value using the retail method, which is computed on the basis of selling price less the appropriate trading margin. All inventories are finished goods. Share-based payments The Group issues equity-settled share-based payments to certain employees. A fair value for the equity-settled share awards...

  • Page 88
    ... and Spencer Group plc Annual report and financial statements 2009 Financial statements Notes to the financial statements continued 1 Accounting policies continued G. Equity instruments Equity instruments issued by the Company are recorded at the consideration received, net of direct issue costs...

  • Page 89
    ... details. D. Post-retirement benefits The determination of the pension cost and defined benefit obligation of the Group's defined benefit pension schemes depends on the selection of certain assumptions which include the discount rate, inflation rate, salary growth, mortality and expected return...

  • Page 90
    ... UK Retail is an operating profit of £24.8m (last year £28.3m) in respect of fees received from HSBC in relation to M&S Money. Other segment items: 2009 United Kingdom International £m £m Total £m United Kingdom £m International £m 2008 Total £m Revenue General merchandise Food Expenditure...

  • Page 91
    ... and exceptional items £m 2008 Total £m Total £m Revenue Cost of sales Gross profit Selling and marketing expenses Administrative expenses Other operating income Profit on property disposals Exceptional costs (see note 5) Exceptional pension credit (see note 5) Operating profit 9,062.1 (5,690...

  • Page 92
    ... due to changes in the UK defined benefit pension plan relating to how members' benefits build up. In January 2009 the Group announced that it had made changes to the scheme by capping employees' annual increases in pensionable pay to 1% and changing the early retirement benefits for members who...

  • Page 93
    ... Marks & Spencer UK Pension Scheme Finance costs Net finance costs 7 Income tax expense A. Taxation charge 14.6 35.4 50.0 6.2 41.0 113.9 4.9 10.5 38.0 214.5 164.5 5.5 58.9 64.4 1.9 30.0 84.0 3.4 - 27.3 146.6 82.2 2009 £m 2008 £m Current tax UK corporation tax at 28% (last year 30%) - current...

  • Page 94
    ... Marks and Spencer Group plc Annual report and financial statements 2009 Financial statements Notes to the financial statements continued 8 Earnings per share The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue...

  • Page 95
    ... salaries Social security costs Pension costs Share-based payments Employee welfare and other personnel costs Ex-gratia costs Capitalised staff costs Aggregate remuneration Exceptional redundancy costs (see note 5) Exceptional pension credit (see note 5) Total Details of key management compensation...

  • Page 96
    ... and Spencer Group plc Annual report and financial statements 2009 Financial statements Notes to the financial statements continued 11 Retirement benefits The Group provides pension arrangements for the benefit of its UK employees through the Marks & Spencer UK Pension Scheme. This has a defined...

  • Page 97
    ... year end, the UK scheme indirectly held 369,793 (last year 479,356) ordinary shares in the Company through its investment in an Aquila Life UK Equity Index Fund. E. Analysis of amount charged against profits 2009 £m 2008 £m Operating cost Current service cost Curtailment gain Exceptional pension...

  • Page 98
    ... Spencer Group plc Annual report and financial statements 2009 Financial statements Notes to the financial statements continued 11 Retirement benefits continued F. Scheme assets Changes in the fair value of the scheme assets are as follows: 2009 £m 2008 £m Fair value of scheme assets at start...

  • Page 99
    ...option and share schemes that the Group operates are provided in the Remuneration report on pages 62 to 71. A. Save As You Earn Share Option Scheme Under the terms of the scheme, the Board may offer options to purchase ordinary shares in the Company once in each financial year to those employees who...

  • Page 100
    ...Group plc Annual report and financial statements 2009 Financial statements Notes to the financial statements continued 12 Share-based payments continued B. Executive Share Option Scheme Under the terms of the Executive Share Option Scheme, last approved by shareholders in 2005, the Board may offer...

  • Page 101
    ... Restricted Share Plan The Restricted Share Plan was established in 2000 as part of the reward strategy for retention and recruitment of senior managers who are vital to the success of the business. The plan operates for senior managers below executive director level. Awards under the plan are made...

  • Page 102
    ... for future market developments. Cash flows beyond this three year period are extrapolated using a growth rate of 2%, which does not exceed the long-term average growth rate for the Group's retail businesses. The Group's pre-tax weighted average cost of capital is used to discount the future...

  • Page 103
    ..., plant and equipment during the year amounting to £32.8m (last year £23.5m) were financed by new finance leases. 15 Investment property 2009 £m 2008 £m Cost At start and end of year Depreciation At start of year Depreciation charge At end of year Net book value 25.3 (0.3) (0.2) (0.5) 24.8 25...

  • Page 104
    100 Marks and Spencer Group plc Annual report and financial statements 2009 Financial statements Notes to the financial statements continued 16 Investment in joint ventures 2009 £m 2008 £m At start of year Investment in new joint venture Share of (loss)/profit At end of year 9.6 4.4 (0.2) 13.8...

  • Page 105
    ... medium-term notes 20373,5 Finance lease liabilities Partnership liability to the Marks & Spencer UK Pension Scheme Total 1 Bank loans and overdrafts includes a £5.0m (last year £5.0m) loan from the Hedge End Park Limited joint venture (see notes 16 and 30). 2 Relates to a £1.2bn committed bank...

  • Page 106
    ... of Marks and Spencer plc in relation to financial years 2010/11 onwards. This discretion is exercisable if the Group does not pay a dividend or make any other form of return to its shareholders. As a result, the distributions to the Pension Scheme in 2009 and 2010 remain as financial liabilities...

  • Page 107
    ...with secure long-term credit ratings A+/A1 or better assigned by Moody's and Standard & Poor's respectively, unless approved on an exception basis by a Board director. Limits are reviewed regularly by senior management. The credit risk of these financial instruments is estimated as the fair value of...

  • Page 108
    ... leases, and amounting to 71% (last year 75%) of the Group's gross borrowings. The effective interest rates at the balance sheet date were as follows: 2009 % 2008 % Committed and uncommitted borrowings Medium-term notes Finance leases Partnership liability to the Marks & Spencer UK Pension Scheme...

  • Page 109
    ... assigned. During the year the Group entered into energy swap contracts to fix a portion of the forecast energy usage for the 2009/10 financial year. These swaps are accounted for as cash flow hedges. Fair value of financial instruments With the exception of the Group's fixed rate bond debt, there...

  • Page 110
    ... paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. 23 Provisions UK Overseas restructuring restructuring £m £m Total £m At 1 April 2007 Provided in the year Released in the year Utilised during the year Exchange differences At 29 March 2008...

  • Page 111
    ... of these claims. 25 Share capital 2009 Shares £m Shares 2008 £m Authorised ordinary shares of 25p each Allotted, called up and fully paid ordinary shares of 25p each: At start of year Shares issued on exercise of share options Shares purchased in buy-back At end of year 3,200,000,000 1,586...

  • Page 112
    ...Foreign currency translation Shares issued on exercise of employee share options Shares purchased in buy-back Actuarial loss on retirement benefit scheme Deferred tax on retirement benefit scheme Deferred tax on share schemes Charge for share-based payments Cash flow and net investment hedges - fair...

  • Page 113
    ... year nil). B. Other material contracts In the event of a material change in the trading arrangements with certain warehouse operators, the Group has a commitment to purchase property, plant and equipment, at values ranging from historical net book value to market value, which are currently owned...

  • Page 114
    ... notes (see note 21) - net of US dollar hedging derivatives1 Finance lease liabilities (see note 21) Partnership liability to the Marks & Spencer UK Pension Scheme (see note 21) Interest payable included within related borrowing Total net debt 1 Medium-term notes have been restated for this note to...

  • Page 115
    ...& Spencer Pension Scheme Details of other transactions and balances held with the Marks & Spencer Pension Scheme are set out in notes 11 and 21. E. Key management compensation 2009 £m 2008 £m Salaries and short-term benefits Post-employment benefits Termination benefits Share-based payments Total...

  • Page 116
    112 Marks and Spencer Group plc Annual report and financial statements 2009 Financial statements Company income statement Notes 52 weeks ended 28 March 2009 £m 52 weeks ended 29 March 2008 £m Other operating income Operating profit Income from shares in Group undertakings Profit for the year...

  • Page 117
    113 Company statement of changes in shareholders' equity 52 weeks ended 28 March 2009 £m 52 weeks ended 29 March 2008 £m Profit attributable to shareholders Dividends Capital contribution for share-based payments Shares purchased in buy-back Shares issued on the exercise of employee share ...

  • Page 118
    ... cost. The loans are non-interest bearing. C2 Employees The Company had no employees during the current or prior year. Directors received emoluments in respect of their services to the Company during the year of £597,000 (last year £822,000). The Company did not operate any pension schemes...

  • Page 119
    ... Share premium account £m Capital redemption reserve £m Merger reserve £m Retained earnings £m Total £m At 1 April 2007 Profit for the year attributable to shareholders Dividends Capital contribution for share-based payments Shares purchased in buy-back Shares issued on exercise of employee...

  • Page 120
    ...Spencer Group plc Annual report and financial statements 2009 Financial statements Group financial record 2009 52 weeks £m 2008 52 weeks £m 2007 52 weeks £m 2006 52 weeks £m 2005 52 weeks £m Income statement Revenue - continuing operations UK Retail International Retail Operating profit...

  • Page 121
    ... operating activities Generated from operating activities1 Taxation paid Cash flows from operating activities Cash flows from investing activities Acquisitions and disposals Capital expenditure and financial investment Interest received Cash flows from investing activities Cash flows from financing...

  • Page 122
    118 Marks and Spencer Group plc Annual report and financial statements 2009 Financial statements Key performance measures 2009 52 weeks 2008 52 weeks 2007 52 weeks 2006 52 weeks 2005 52 weeks Gross margin1 Net margin1 Gross profit/ Revenue Operating profit/ Revenue 37.2% 9.6% 38.6% 13.4%...

  • Page 123
    ... receive communication electronically receive information from the Company more quickly. They also have access, via our website, to information that is not mailed to shareholders e.g. half year results, trading statements, results presentations, news updates and more. Even though substantial changes...

  • Page 124
    120 Marks and Spencer Group plc Annual report and financial statements 2009 Shareholder information continued Shareholder security Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount, or offers of free reports about the Company. The number of so ...

  • Page 125
    ... Governance Committee P People Plan A Principal risks and uncertainties R Remuneration Committee Remuneration report S Shareholder information Share capital Share schemes Simply Food Sourcing & supply chain Statement of recognised income & expense Stores Subsidiary undertakings T Taxation TSR Trade...

  • Page 126
    ...% off Get your 10% off voucher for marksandspencer.com and enter our prize draw to win a laptop computer. See inside for details Read our online Annual Report and How We Do Business Report at marksandspencer.com/annualreport09 Marks and Spencer Group plc Annual report and financial statements 2009