Marks and Spencer 2015 Annual Report Download - page 21

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GOVERNANCEFINANCIAL STATEMENTS OUR PERFORMANCE OUR BUSINESS
19
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015
52 weeks ended
28 Mar 15
£m
29 Mar 14
£m
UK store environment 92.7 163.2
New UK stores 63.5 89.4
International 37.5 69.0
Supply chain and technology 273.8 346.2
Maintenance 94.5 67.2
Proceeds from property disposals (35.4) (25.0)
Total capital expenditure 526.6 710.0
52 weeks ended
28 Mar 15
£m
29 Mar 14
£m
Underlying EBITDA 1,312.6 1,219.7
Working capital 179.5 47.9
Pension funding (143.0) (92.0)
Capex and disposals (664.4) (616.6)
Interest and taxation (177.1) (175.2)
Share transactions 16.6 44.1
Free cash fl ow pre dividends 524.2 427.9
Dividends paid (280.7) (273.6)
Free cash fl ow 243.5 154.3
Opening net debt (2,463.6) (2,614.3)
Exchange and other non-cash
movements (3.1) (3.6)
Closing net debt (2,223.2) (2,463.6)
Group capital expenditure was down £183.4m versus last year,
as many of our large infrastructure projects have now been
completed.
The largest proportion of spend continued to be on supply chain
and technology as we developed our single tier distribution
network and continued to roll out our GM4 commercial systems.
We also continued to invest in our UK store estate to create a more
inspiring environment, including the launch of our new look and
feel Menswear departments.
The proceeds from property disposals mainly relate to the
deferred consideration from the sale of the White City warehouse,
which is being received over three years.
The business delivered strong free cash fl ow pre dividends of
£524.2m which, after the payment of dividends, led to a reduction in
net debt of £240.4m. The improved free cash fl ow refl ects stronger
business performance resulting in £1,312.6m of underlying EBITDA,
an increase of £92.9m (7.6%) on last year. In addition, there was a
£179.5m reduction in working capital, due to lower inventory levels
and also higher creditor levels, in part due to the earlier timing of
Easter this year. In addition, it includes an ex-gratia payment of
£40.0m (last year nil) from HSBC following agreement reached over
a number of issues in connection with the Relationship Agreement.
These movements are partially o set by capital expenditure cash
payments of £664.4m. These are higher than our actual capital
expenditure as a result of high prior year end capex accruals which
were paid in the fi rst half of this year. Pension funding includes
£56.0m of additional defi cit reduction funding contributions paid
into the UK defi ned benefi t scheme during the year.
SUPPLIER INCOME
The Financial Reporting Council (FRC) has asked retailers “to
provide investors with su cient information on their accounting
policies, judgements and estimates arising from their complex
supplier arrangements”. Due to our focus on own brand products,
supplier income is a relatively small proportion of our value of
stock expensed. As at the year end, accrued income in relation
to supplier income was £13.5m (last year £9.3m).
Further details are disclosed in note 1, on p94, note 17, on p112 and in
the Audit Committee Report on p49.
PENSION
At 28 March 2015 the IAS 19 net retirement benefi t surplus was
£449.0m (last year £189.0m). The increase is due to movement in
the UK defi ned benefi t surplus, specifi cally an increase in the
market value of scheme assets attributable to higher than
expected returns. This is partly o set by an increase in the present
value of scheme liabilities due to a decrease in the discount rate
from 4.45% to 3.10% from the movement in corporate bond yields.
The Strategic Report, including the market context on pages 20-21
and risk management on pages 23 to 25, was approved by a duly
authorised Committee of the Board of the Directors on 19 May
2015, and signed on its behalf by
Helen Weir Chief Finance O cer
19 May 2015
UNDERLYING EARNINGS PER SHARE
Underlying basic earnings per share increased by 2.8% to 33.1p
per share. The weighted average number of shares in issue during
the period was 1,635.6m (last year 1,615.0m).
DIVIDEND
We are pleased by the improvement in cash generation over the
year. Following the increase in the interim dividend, the Board has
proposed a 7.4% increase in the fi nal dividend to 11.6p. This will
result in a total dividend of 18.0p, up 5.9% on last year.
CAPITAL EXPENDITURE
CASH FLOW AND NET DEBT