Marks and Spencer 2009 Annual Report Download - page 53

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49
Taxation
The taxation charge is based on the full year pre-exceptional effective
tax rate of 27.0% (last year 27.0%).
Earnings per share
Adjusted earnings per share from continuing operations, which
excludes the effect of property disposals and exceptional items,
decreased by 35.8% to 28.0p per share. The weighted average
number of shares in issue during the period was 1,573.2m
(last year 1,671.3m).
Dividend
The Board has taken the decision to rebase the Group’s dividend
payment to 15.0p per share from the current level of 22.5p per
share, a reduction of 33.3%. This will be achieved through a 33.1%
reduction in the 2008/09 final dividend to 9.5p per share, followed
by a reduction in the 2009/10 interim dividend to 5.5p per share.
Having re-based the dividend to 15.0p per share, the Board’s policy
regarding future dividends is to re-build cover towards two times
and, thereafter, to grow dividends in line with adjusted earnings
per share.
Share buyback
Since 29 March 2008, we have bought-back 10.9m shares for
cancellation, for a consideration of £40.9m. This now takes the total
of shares bought back as part of the buy back programme
announced in November 2007 to 136.6m representing 8.0%
of the shares in issue in July 2007.
Capital expenditure
52 weeks ended
28 March 29 March
2009 2008
£m £m
Modernisation programme 216 536
New stores 150 203
International 40 48
Supply chain and technology 188 162
Maintenance 58 106
Total capital expenditure 652 1,055
Capital expenditure was £652m compared with £1,055m last year.
Since March 2008 we have added 5.6% of trading space,
representing over 623,000 square feet. This included the opening
of two major flagship stores in Colliers Wood, 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 infrastructure fit to support the future growth of
the business.
Cash flow and net debt
52 weeks ended
28 March 29 March
2009 2008
£m £m
Cash flow from operations 1,371.9 1,236.0
Capital expenditure and disposals (604.1) (927.4)
Interest and taxation (265.7) (250.3)
Dividends and share issues (349.3) (312.0)
Share buyback (40.9) (555.9)
Other movements (4.4) (107.9)
Net cash flow 107.5 (917.5)
Opening net debt (3,077.7) (1,949.5)
Partnership liability to the UK Pension Scheme 539.6 (199.0)
Exchange and other non-cash movements (60.2) (11.7)
Closing net debt (2,490.8) (3,077.7)
The Group reported a net cash inflow of £107.5m (last year outflow
£917.5m). Cash inflow from operations increased by £135.9m,
reflecting a working capital inflow of £194.0m compared with an
outflow of £170.9m last year. Capital expenditure, net of disposals,
was £604.1m (last year £927.4m) reflecting further investment
in our modernisation programme as well as new space growth.
We generated £58.3m during the year from disposal of properties
and equipment.
As part of actions taken to better manage our debt and balance
sheet, the Group agreed changes to the property partnership with
the pension fund on 25 March 2009. These changes make the
annual distributions to the pension scheme at the discretion of the
Group 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 fund in 2009 and 2010 remain as financial liabilities
while the remaining balance of £571.7m is now an equity instrument.
£539.6m of this was previously included in net debt. The Group’s
interest charge will therefore no longer reflect the unwinding of the
discount from 2010/11. The valuation of the pension asset relating to
the interest in the property partnership remains unchanged reflecting
amounts that would accrue to the pension fund on a deferral.
Pensions
At 28 March 2009 the IAS 19 net retirement benefit deficit was
£152.2m (29 March 2008 surplus of £483.5m). The decrease in
value is largely due to the impact the economic downturn on the
market value of the pension asset portfolio, partly offset by a
decrease in inflation and the exceptional pension credit.