Marks and Spencer 2013 Annual Report Download - page 108

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Financial statements Marks and Spencer Group plc Annual report and financial statements 2013 106
Notes to the financial statements continued
21 Financial instruments continued
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 27) 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
balanced long-term debt maturity profile. As at the balance sheet date the Group’s average debt maturity profile was eight years
(last year nine years). During the year the Group maintained an investment grade credit rating of Baa3 (stable) with Moody’s and
BBB- (stable) with Standard & Poor’s.
In order to maintain or realign 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.
22 Provisions
2013
£m
2012
£m
At start of year 32.4 44.7
Provided in the year 13.9 7.8
Released in the year (1.3) (3.4)
Utilised during the year (9.8) (16.5)
Exchange differences –(0.2)
At end of year 35.2 32.4
Analysis of provisions:
Current 19.2 8.4
Non-current 16.0 24.0
Total provisions 35.2 32.4
The provisions primarily comprise of one-off costs related to the strategic restructure in the UK in 2008/09, including onerous leases
and costs in relation to the current restructure of the logistics distribution network.
The current element of the provision primarily relates to onerous leases and redundancies. The non-current element of the provision
relates to store closures, primarily onerous leases, and is expected to be utilised over a period of ten years.
23 Deferred tax
Deferred tax is provided under the balance sheet liability method using a tax rate of 23% (last year 24%) for UK differences and local
tax rates for overseas differences. Details of the changes to the UK corporation tax rate and the impact on the Group are described
in note 7.
The movements in deferred tax assets and liabilities (after offsetting balances within the same jurisdiction as permitted by IAS 12 –
‘Income Taxes’) during the year are shown below.
Deferred tax (liabilities)/assets
Non-current
assets temporary
differences
£m
Accelerated
capital
allowances
£m
Pension
temporary
differences
£m
Other
short-term
temporary
differences
£m
Total
UK
deferred
tax
£m
Overseas
deferred
tax
£m
Total
£m
At 3 April 2011 (63.8) (104.8) (27.8) 10.0 (186.4) (10.1) (196.5)
Credited/(charged) to the income statement 5.6 4.2 4.4 (2.9) 11.3 (1.5) 9.8
(Charged)/credited to equity – – (5.1) (0.6) (5.7) (3.3) (9.0)
At 31 March 2012 (58.2) (100.6) (28.5) 6.5 (180.8) (14.9) (195.7)
At 1 April 2012 (58.2) (100.6) (28.5) 6.5 (180.8) (14.9) (195.7)
Credited/(charged) to the income statement 5.7 10.0 (6.5) 0.7 9.9 1.3 11.2
(Charged)/credited to equity – – (51.7) (0.7) (52.4) 6.2 (46.2)
At 30 March 2013 (52.5) (90.6) (86.7) 6.5 (223.3) (7.4) (230.7)
The deferred tax liability on non-current assets is stated net of the benefit of capital losses with a tax value of £62.0m (last year
£71.4m). No benefit has been recognised in respect of unexpired trading losses carried forward in overseas jurisdictions with a tax
value of £30.8m (last year £26.8m).
In addition, the Group is claiming UK tax relief for losses incurred by some of its current and former European subsidiaries. In light of
the continuing litigation no asset has been recognised in respect of these claims.
No deferred tax has been recognised in respect of undistributed earnings of overseas subsidiaries and joint ventures, as no material
liability is expected to arise on distribution of these earnings under applicable tax legislation.