Marks and Spencer 2010 Annual Report Download - page 111

Directors’ report p01 
Financial statements 
Other information p117 
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22 Financial instruments continued
The following table presents the changes in Level 3 instruments for the year ended 3 April 2010.
2010
£m
2009
£m
Opening balance (53.3) (49.2)
Gains and losses recognised in profit or loss (7.2) (4.1)
Closing balance (60.5) (53.3)
A reasonably possible change in assumptions is unlikely to result in a significant change in the fair value of the Level 3 instruments.
Fair value of financial instruments
With the exception of the Group’s fixed rate bond debt, there were no material differences between the carrying value of non-derivative
financial assets and financial liabilities and their fair values as at the balance sheet date.
The carrying value of the Group’s fixed rate bond debt was £2,183.9m (last year £2,018.5m); the fair value of this debt was £2,107.7m
(last year £1,616.6m).
Capital policy
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide optimal returns
for shareholders and to maintain an efficient capital structure to reduce the cost of capital.
In doing so the Group’s strategy is to maintain a capital structure commensurate with an investment grade credit rating and to retain
appropriate levels of liquidity headroom to ensure financial stability and flexibility. To achieve this strategy the Group regularly monitors key
credit metrics such as the gearing ratio, cash flow to net debt (see note 29) and fixed charge cover to maintain this position. In addition the
Group ensures a combination of appropriate committed short-term liquidity headroom with a diverse and smooth long-term debt maturity
profile.
During the year the Group maintained an investment grade credit rating of Baa3 (stable) with Moody’s and BBB- (stable) with Standard &
Poor s, and through the successful tender of £200m of existing short-dated bonds in conjunction with a new £400m 10 year bond issue
extended the average fixed debt maturity by one year to ten years and increased short-term liquidity by £200m.
In order to maintain or re-align the capital structure, the Group may adjust the number of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell assets to reduce debt.
23 Provisions
UK
restructuring
£m
Overseas
restructuring
£m
Total
£m
At 30 March 2008 18.2 7.5 25.7
Provided in the year 86.6 – 86.6
Released in the year (0.7) – (0.7)
Utilised during the year (8.5) (0.6) (9.1)
Exchange differences – 1.3 1.3
At 28 March 2009 95.6 8.2 103.8
At 29 March 2009 95.6 8.2 103.8
Provided in the year 5.1 –5.1
Released in the year (11.2) (3.0) (14.2)
Utilised during the year (43.0) (0.4) (43.4)
Exchange differences – (0.2) (0.2)
At 3 April 2010 46.5 4.6 51.1
Analysis of total provisions:
2010
£m
2009
£m
Current 25.6 63.6
Non-current 25.5 40.2
Total provisions 51.1 103.8
The provision for UK restructuring is comprised of exceptional costs related to the strategic restructure in 2008/09 (see note 5), including
onerous leases and redundancies, as well as costs of closing Lifestore. An element of the provision for closing Lifestore was released during
the year. The provision for overseas restructuring costs primarily relates to future closure costs in respect of discontinued operations in
continental Europe.
The current element of the provision primarily relates to costs relating to the rationalisation of IT and logistics networks.
The non-current element of the provision relates to store closures, primarily onerous leases, and the closure costs of discontinued operations
in continental Europe, and are expected to be utilised over a period of seven years.
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