Issued: 23 May 2018

Press Release

                                                                   

Marks and Spencer Group Plc

Full Year Results For 52 Weeks Ended 31 March 2018

Transformation Underway

 

 

52 weeks ended	31 Mar 18		1 Apr 17	Change %
Group revenue		£10,698.2m	£10,622.0m	0.7
Profit before tax & adjusting items1		£580.9m	£613.8m	-5.4
Free cashflow before adjusting items		£582.4m	£666.3m	-12.6
Adjusting items1,2		£(514.1)m	£(437.4)m	17.5
Profit before tax		£66.8m	£176.4m	-62.1
Profit after tax		£29.1m	£115.7m	-74.8
Basic earnings per share before adjusting items1		27.8p	30.4p	-8.6
Basic earnings per share		1.6p	7.2p	-77.8
Net debt		£1.83bn	£1.93bn	-5.5
Ordinary dividend per share		18.7p	18.7p	Level

¹ Adjusted results are consistent with how business performance is measured internally. ² Refer to adjusting items table below for further details.  See glossary for definitions.

 

Steve Rowe, Marks & Spencer CEO said:

" At our half year results in November I outlined the need for accelerated change at M&S. T he first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business. These changes come with short term costs which are reflected in today's results.

 

"There are a number of structural issues to address and we are taking steps towards fixing these. The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business. This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years."

 

Financial Summary

·   Profit before tax & adjusting items down 5.4% impacted by the decrease in Food gross margin.

·   Significant adjusting items of £514.1m including £321.1m for our UK store estate closure programme. Cash costs of transformation remain in line with plan.

·   Strong cash generation even after restructuring costs reduced net debt by £107.2m, enabling the maintenance of a full year dividend, unchanged at 18.7p.

·   Clothing & Home gross margin up 50 basis points with full price sales level. Revenue down 1.4% due to planned removal of two clearance sales, and unseasonal second half trading conditions.

·   Food revenue growth of 3.9% driven by new stores. Gross margin down 140bps, as we continued to absorb input cost inflation.

·   UK costs up 1.8% due to costs of new space, inflation and channel shift offset by efficiencies and lower incentive costs.

·   International profit before adjusting items more than doubled to £135.2m, as a result of the successful exit of loss-making owned markets and favourable currency effects.

 

TRANSFORMATION UNDERWAY

 

Facing Facts

At our half year results we set out a hard-headed diagnosis of the headwinds faced by M&S and the change which is needed. The continued migration of clothing and home online, the development of global competition, the growth of home delivery in food and the march of the discounters all amount to threats to our business and market position. These, together with a challenging UK consumer market, mean that we have to modernise our business to ensure we are competitive and reignite our culture. Accelerated change is the only option.

 

Developments in the retail industry since then have reinforced our conviction about the need for the transformation of M&S. Changes in the high street and migration online mean that we have to be decisive with our store estate, renewing and closing stores more quickly. Our supply chains in both Clothing & Home and in Food require significant upgrades, so that we can be faster to market, reduce high stock levels in Clothing, and improve availability and waste in Food.

 

Although our online sales are growing, our online capability is behind the best of our competitors and our website is too slow. Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated. In both businesses we need to revitalise our ranges and reassert our reputation for value for money.

 

Restoring the basics

The first phase of our transformation is about restoring the basics, getting the architecture and infrastructure of the business fit for the future. This programme is now underway and gathering pace.

 

We have made a rapid start with the enabling steps to deliver our ambition of reducing costs by at least £350m and provide a platform for growth in later phases of our plan as we improve our ways of working and reduce unnecessary waste.

 

We have accelerated our store estate programme and are on the way to closing some 25% of our legacy Clothing & Home space. The success of this programme will be supported by sales transfer rates which have been higher than expectations and by the growth of online.

 

The website is being improved and we are investing to increase and improve e-commerce capacity, including at our Castle Donington site in order to support our ambition to double the online share of our Clothing & Home sales to over 33%. We are also building a new retail distribution centre at Welham Green. Teams have been established to address the supply chain issues in both main businesses, to deliver a faster, lower cost network.

 

We have established a long-term technology partnership with TCS to improve our technology base and we are migrating off legacy systems and an old mainframe.

 

Delivering shareholder value

The purpose of the transformation plan is to restore the business to sustainable, profitable growth.  In doing so, the board remains committed to maintaining the right balance between investment in the business, dividends for shareholders and balance sheet strength. Given the continued net cash generation by the business and our strong belief in the potential of the transformation, we intend to maintain the dividend at its current level.

 

MAKING M&S SPECIAL AGAIN

 

Building a faster, lower cost, more commercial M&S

It is imperative that we simplify our culture - as this is the only way to drive change right through our business. We need to change our organisation, move on from the structure of a single business led by functional directors. This created a top-heavy business that was inward looking and too "corporate".

 

We are moving to a family of accountable businesses each led by its own integrated management team. We start with our Food and Clothing & Home businesses, which are now very different in shape, each with their own leadership teams and support functions. Jill McDonald has already started to rebuild a top calibre team in Clothing & Home and Stuart Machin joined to lead the Food business in April. We have restructured our marketing teams, appointing directors for both Clothing & Home and Food.

 

Looking forward, our property assets need proactive management and Sacha Berendji will lead the development of an active property management team alongside his other responsibilities.

 

All of our businesses sit under the M&S brand and are united by a common set of values, trading style, shared infrastructure and draw on the same customer data. Our focus remains to be an own brand retailer with quality, innovation, traceability and trusted value at our core.  At the centre we are building a streamlined corporate team including a very strong data analytics and customer insight function.  In addition, we look forward to welcoming Humphrey Singer as our new CFO in July.

 

Restoring broader customer appeal

In both businesses our customer base has narrowed and we have lost share of younger family-age customers and larger households. However, we retain leading market shares in key categories and occasions across all age groups. These are joining moments that attract new customers to our brand and present a real opportunity to restore popular appeal and grow our business. 

 

We are taking steps to recover our appeal to family-age customers in Clothing & Home, reducing the number of lines and phases, buying more stylish product in greater depth and emphasising value.  In 2017/18 we grew customers for the first time in five years.

 

In Food we are embarking on a programme to refresh the offer with relevant innovation, improved value for money, and a refocusing on more popular family product.  This will better exploit our unique credentials for freshness, taste, and traceability. Meanwhile we are slowing our new store opening programme while we review the format for the future.

 

Our International business has already been rationalised and we are now building a much more competitive network of mainly franchise led businesses in territories where we believe we can grow.

 

We are in the first phase of our transformation plan, restoring the basics to enable sustainable profitable growth in future years. It is our ambition to restore both Food and Clothing & Home to like-for-like growth and to build a much more competitive International proposition. As we remove legacy and structural costs such as those in our store estate and supply chain, this should enable a reduction in costs and working capital.  

 

Full year guidance 2018/19

·     In Clothing & Home we expect a year end space reduction of c.5%, as we accelerate our programme to close less productive stores. We anticipate gross margin to be level to up 50 bps, with the first half of the year adversely affected by currency and sale timing.

·     In Food, we expect year end space to be broadly level, as we open new Simply Food stores, but close less productive Full Line space. We anticipate gross margin to decrease by between 0 and 50 bps, with the combination of price investment and the annualisation of input cost inflation in the first half of the year.

·     We expect UK costs to decrease by up to 1%, as a result of cost efficiencies and lower depreciation offsetting the costs of new space, channel shift and inflation.

·     The effective tax rate on profit before tax and adjusting items is expected to be around 22%.

·     Capital expenditure is expected to be c.£350-400m.

 

Group revenue: constant currency

Q4 group revenue declined by 2.1% at constant currency. Revenue was negatively impacted by unseasonal weather conditions which we estimate at c.1% in Food and c.2% in Clothing & Home.  Conversely revenue benefited from Easter timing by an estimated c1.7% in Food and c.0.3% in Clothing & Home. International revenue reflects the closure of stores in loss-making owned markets and the sale of our retail operations in Hong Kong to a franchise partner at the end of December.

 

% change	FY	Q1	Q2	Q3	Q4
Food	3.9	4.5	4.4	3.6	3.2
-     Like-for-like	-0.3	-0.1	-0.1	-0.4	-0.6
Clothing & Home	-1.4	-0.5	0.6	-2.3	-3.1
-     Like-for-like	-1.9	-1.2	-0.1	-2.8	-3.4
Total UK sales	1.8	2.6	2.8	1.1	0.9
-     Like-for-like	-0.9	-0.5	-0.1	-1.4	-1.6
International	-10.2	-4.0	-2.2	-10.4	-24.1
Total Group	0.4	1.8	2.2	-0.2	-2.1
M&S.com (Memo only)	5.2	5.3	6.0	2.9	8.0

See glossary for definitions.

 

We will report our first half results on 7 November 2018.

 

For further information, please contact:

Investor Relations:                                       

Fraser Ramzan:                      +44 (0)20 3884 7080

 

Media enquiries:

Corporate Press Office:          +44 (0)20 8718 1919

 

 

 

 

Investor & Analyst webcast:

Investor and analyst presentation will be held at 9am on 23 May 2018. This presentation can be viewed live on the Marks and Spencer Group plc website.

 

Fixed Income Investor Conference Call:

This will be hosted by Scilla Grimble, Interim Chief Finance Officer, at 2pm on 23 May 2018:

 

Dial in number: +44 (0)330 336 9411             Access code: 5847983

 

A recording of this call will be available until 5pm on 30 May 2018:

Dial in number: +44 (0)207 660 0134              Access code: 5847983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULL YEAR REVIEW

 

		52 weeks ended
			31 Mar 18 £m	1 Apr 17 £m		Change  %
	Group revenue		10,698.2	10,622.0		0.7
	Food		5,869.9	5,649.0		3.9
	Clothing & Home		3,741.1	3,792.7		-1.4
	UK		9,611.0	9,441.7		1.8
	International		1,087.2	1,180.3		-7.9
	Group operating profit before adjusting items		670.6	690.6		-2.9
	UK		535.4	626.2		-14.5
	International		135.2	64.4		109.9
	Net finance costs		(89.7)	(76.8)		16.8
	Profit before tax & adjusting items		580.9	613.8		-5.4
	Adjusting items		(514.1)	(437.4)		17.5
	Profit before tax		66.8	176.4		-62.1

Consumer & Retail environment

 

In 2017/18, consumer confidence remained broadly stable according to data from GFK. However, there continued to be a divergence between consumers' views on their personal financial situation which remained strong and their views on the economy as a whole, which were more fragile.  Against this backdrop the clothing market declined 1.5% (Kantar Worldpanel, 52 w/e 9 April 2018), with a more challenging trend in the second half of the year. The grocery market returned to growth of 4% (Kantar Worldpanel, 52 w/e 25 March 2018), although this was largely driven by inflation.

 

UK: Clothing & Home

 

Clothing & Home revenue declined 1.4% with like-for-like revenue down 1.9%, as we removed two clearance sales.  Full price sales were broadly level.  Revenue declined in the second half in a more challenging market with unseasonal weather conditions. We delivered solid growth in strategic focus areas such as Childrenswear, Bras and Footwear. 

 

Gross margin was in line with expectations, up 50bps year on year.  We offset significant currency headwinds by working with our supply base and through our direct sourcing programme. We put c.8% less stock into sale across the year, as a result of the planned removal of two clearance sales.  However, challenging trading conditions in the second half resulted in an increased depth of cut.

 

M&S.com revenues increased by 5.2% at constant currency. Performance was adversely impacted by the reduction in the number of clearance sales and capacity remained constrained at our Castle Donington warehouse in quarter three.

In the year ahead, we are building on early improvements in Clothing & Home by further focusing our ranges and building our style credentials, our offer in Wardrobe essentials and our appeal to family-age customers. We are also investing selectively in value as we buy fewer items in greater depth.

 

In this first phase we are undertaking enabling actions including fixing core elements of our website, improving our delivery proposition and investing to increase the capacity of Castle Donington at peak.

 

We have accelerated the reshaping of our store portfolio to address the decline of the legacy estate and move to a more cohesive, modern space and layout, resulting in a charge to adjusting items of £321.1m. We anticipate further accounting charges of up to £150m as we complete this programme. We continue to expect the cash costs of the programme to be c.£200m. We have been encouraged by the proportion of sales transferred to nearby stores from those which have closed.

UK: Food

Food revenue increased 3.9% as we opened 62 new Simply Food stores, however like-for-like revenue was down 0.3%.  While performance in key events was strong our everyday performance was poor, with intense competition and reflecting a progressive decline in competitiveness in the core ranges. Market share was level year on year. (Source Kantar Worldpanel, 52 w/e 25 March 2018)

 

The decline in gross margin of 140bps year-on-year was more than expected. During the second half we continued to absorb input cost inflation.

 

In the year ahead, our focus is on repositioning the business to be more relevant, more often to our customers, to drive sustainable sales growth. We are changing our approach to product development to ensure we shift back to our strength in key shopping missions with new lines which have a broad appeal to family age customers and everyday occasions.

 

Our repositioning will require renewed investment in trusted value. We believe however that this will be offset by cost reduction, volume optimisation opportunities, removing excessive packaging costs, and tackling issues which impact availability and waste.

 

As indicated at the half year we have reviewed our Simply Food opening programme to limit future store expansion to only the highest returning locations. In addition, our accelerated UK store estate closure programme will result in a further reduction in the number of Full Line stores.

 

UK operating costs

 

52 weeks ended	31 Mar 18 £m	1 Apr 17 £m	Change %
Store staffing	1,070.6	1,010.3	6.0
Other store costs	992.1	1,000.7	-0.9
Distribution & warehousing	538.0	519.6	3.5
Marketing	151.6	162.7	-6.8
Central costs	698.0	697.1	0.1
Total	3,450.3	3,390.4	1.8

UK operating cost growth was 1.8%, which was below expectations. Costs associated with new space and volume drove a c.2% increase overall. Wage and other inflation related increases and investment in store staffing were largely offset by marketing and retail efficiencies.

 

Other store costs reduced. Favourable rates settlements, lower depreciation and reduced charges for utilities helped to offset the costs of new space.

 

The growth in distribution and warehousing costs was largely driven by inflation, volume and the costs of channel shift. In Clothing & Home we delivered improved costs per single as we increased utilisation of our Bradford warehouse.

 

Central costs increased in a number of areas including IT and the introduction of the Government's apprentice levy, however these were offset by reduced costs following the head office restructuring and lower incentive costs year on year.

 

M&S Bank

 

M&S Bank income before adjusting items was down £9.9m to £40.3m.  This was a result of changes to the assumed effective interest rate in both years and the implementation of IFRS 9, which resulted in higher bad debt provisioning.  There was also a modest reduction in underlying interest-bearing balances.

 

International

52 weeks ended       Revenue	31 Mar 18 £m		1 Apr 17 £m	Change %	Change CC %	Change CC % excl. Hong Kong
Franchise	360.6		314.0	14.8	13.3	9.3
Owned Retained 1	660.2		674.0	-2.0	-4.8	-1.1
Total Retained	1,020.8		988.0	3.3	0.9	2.8
Owned Exit 1	66.4		192.3	-65.5	-66.7	-66.7
Total	1,087.2		1,180.3	-7.9	-10.2	-10.4
Operating profit before adjusting items
Franchise	86.1		81.9	5.1
Owned Retained 1	53.1		16.8	216.1
Total Retained	139.2		98.7	41.0
Owned Exit 1	(4.0)		(34.3)	88.3
Total	135.2		64.4	109.9

¹ Last year restated for closure of our online business in China. Hong Kong results reported in owned retained until the business was sold to our franchise partner.

Reported International revenue decreased 7.9%. This was driven by the exit from loss making owned markets and the sale of our operations in Hong Kong to our franchise partner.

 

Excluding these effects, revenue at constant currency increased 2.8%. We generated strong growth in franchise revenue, with an improved performance in the Middle East, Russia and Turkey and from expansion of our Food business.  Revenue in owned retained markets was down 1.1% with a strong performance in India where we opened 7 new stores, offset by difficult trading in the Republic of Ireland.

International operating profit before adjusting items more than doubled. We completed the planned exit of loss-making markets and generated improved margins in owned retained markets, largely driven by transactional currency gains.

 

Net finance cost

	52 weeks ended		31 Mar 18 £m	1 Apr 17 £m		Change £m
	Interest payable		(95.4)	(100.2)		4.8
	Interest income		6.0	6.6		(0.6)
	Net interest payable		(89.4)	(93.6)		4.2
	Pension net finance income		17.7	29.3		(11.6)
	Unwind of discount on Scottish Limited Partnership liability		(10.9)	(12.6)		1.7
	Unwind of discount on provisions		(5.2)	(0.2)		(5.0)
	Hedge ineffectiveness on financial instruments		(1.9)	0.3		(2.2)
	Net finance cost		(89.7)	(76.8)		(12.9)

Net finance cost increased by £12.9m to £89.7m, largely due to reduced pension net finance income as a result of the lower UK defined benefit pension scheme surplus at the start of the year and the unwind of discount on property provisions. Net interest payable reduced by £4.2m primarily due to the repayment of the US$500m bond which matured in December 2017.

 

Group profit before tax & adjusting items

 

Group profit before tax and adjusting items was £580.9m, down 5.4% on last year. The decrease was due to the reduction in UK gross profit and the increase in operating costs in the year.

 

Adjustments to profit before tax

 

The Group makes certain adjustments to statutory profit measures in order to derive alternative performance measures that provide stakeholders with additional helpful information on the performance of the business. For further detail on adjusting items and the Group's policy for adjusting items please see Note 3 and Note 1 to the financial information respectively.

 

52 weeks ended	31 Mar 18 £m	1 Apr 17 £m	Change £m
Strategic programmes
- UK store estate	(321.1)	(51.6)	(269.5)
- UK organisation	(30.7)	(24.0)	(6.7)
- IT restructure	(15.5)	-	(15.5)
- UK logistics	(13.1)	9.8	(22.9)
- Changes to pay and pensions	(12.9)	(156.0)	143.1
- International store closures and impairments	(5.0)	(132.5)	127.5
UK store impairments, asset write-offs and onerous lease charges	(63.4)	(48.8)	(14.6)
M&S Bank charges incurred in relation to the insurance mis-selling provision	(34.7)	(44.1)	9.4
Other	(17.7)	9.8	(27.5)
Adjusting items	(514.1)	(437.4)	(76.7)

 

We have recognised a number of charges in the period relating to the implementation of our strategic programmes: 

 

-     A charge of £321.1m in relation to the impairment of assets, accelerated depreciation and estimated onerous lease and closure costs relating to our UK store estate programme;

-     A charge of £30.7m primarily relating to the consolidation of our central London Head Office buildings;

-     A charge of £15.5m in relation to our technology transformation programme reflecting costs associated with the simplification and consolidation of our technology supplier base;

-     A net charge of £13.1m a s we continue to transition to a single tier Clothing & Home UK distribution network;

-     A charge of £12.9m for the first year of transitional payments to employees impacted by the closure of the UK defined benefit pension scheme to future accrual; and

-     A charge of £5.0m relating to the International exit programme.

 

UK store impairments, asset write-offs and onerous lease charges : since the announcement of the new UK store estate strategy, the Group conducted a review of the £4.8bn net book value of the property, plant and equipment on its balance sheet as at 1 April 2017. A one-off non-cash adjustment to depreciation of leasehold buildings assets was made of £45.8m. Additionally, we recognised charges in relation to UK store impairments and other asset disposals.

 

We continue to incur charges in relation to M&S Bank insurance mis-selling provision resulting in a reduction in income of £34.7m during the year.

 

On 30 December 2017, we completed the disposal of the retail business in Hong Kong and Macau to the Al Futtaim Group resulting in a net profit on disposal of £5.8m. We also incurred charges for potential liabilities for certain employee related matters.

 

Taxation

 

The effective tax rate on profit before tax and adjusting items was 21.6% (last year 19.9%). This is higher than the UK statutory rate of 19.0% (last year 20.0%) due to the recapture of previous tax relief under the Marks and Spencer Scottish Limited Partnership ("SLP") structure. The effective tax rate on statutory profit before tax was 56.4% (last year 34.4%) due to the impact of the SLP structure and disallowable adjusting items.

 

Earnings per share

 

Basic earnings per share decreased by 77.8% to 1.6p, as a result of the lower adjusted operating profit, the increase in adjusting items due to the Group's strategic transformation programmes and the increase in effective tax rate. The weighted average number of shares in issue during the period was 1,624.0m (last year 1,623.1m).

 

Basic earnings per share before adjusting items decreased by 8.6% to 27.8p due to the lower adjusted profit generated in the year.

 

 

 

 

 

Capital expenditure

 

52 weeks ended	31 Mar 18 £m	1 Apr 17 £m	Change £m
UK store environment	26.6	22.6	4.0
New UK stores	72.1	75.0	(2.9)
International	11.6	13.4	(1.8)
Supply chain	23.8	34.0	(10.2)
IT & M&S.com	91.9	122.9	(31.0)
Property maintenance	72.9	90.3	(17.4)
Capital expenditure before disposals	298.9	358.2	(59.3)
Proceeds from property disposals	(3.2)	(27.0)	23.8
Capital expenditure	295.7	331.2	(35.5)

 

Group capital expenditure remains well controlled resulting in a 17% reduction year on year, before disposal proceeds. 

 

UK store environment spend reflects the rebalancing of in-store layouts towards strategic growth priorities such as Childrenswear and the rebranding of a number of Foodhalls.

 

Spend on UK store space was slightly down. Whilst we opened 40 new owned stores compared with 35 last year, the reduction reflects a freehold purchase in the prior year and slightly higher landlord contributions.

 

Supply chain expenditure reduced, reflecting the completion of larger projects such as the Bradford distribution centre in the prior year. During the second half we began investment in the new Welham Green distribution centre as we move towards completing our single tier network for Clothing & Home.

 

The decline in IT and M&S.com expenditure reflects the on-going move towards more cloud-based software solutions and the investment in handheld devices and store technology in retail in the prior year. We are also investing to migrate from our mainframe system.

 

Lower property disposal proceeds reflect the receipt of the final instalment from the sale of the White City warehouse received in the prior year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cashflow & net debt

 

52 weeks ended	31 Mar 18 £m	1 Apr 17 £m	Change £m
Adjusted operating profit	670.6	690.6	(20.0)
Depreciation and amortisation before adjusting items	580.6	589.5	(8.9)
Working capital	(96.8)	(7.5)	(89.3)
Defined benefit scheme pension funding	(41.4)	(36.6)	(4.8)
Capex and disposals	(346.0)	(383.2)	37.2
Interest and taxation	(200.5)	(202.6)	2.1
Non-cash share based payment charges	18.9	10.6	8.3
Share transactions	(3.0)	5.5	(8.5)
Free cash flow before adjusting items	582.4	666.3	(83.9)
Adjusting items cash outflow	(164.9)	(80.9)	(84.0)
Free cash flow	417.5	585.4	(167.9)
Ordinary dividends paid	(303.4)	(303.0)	(0.4)
Special dividend	-	(74.5)	74.5
Free cash flow after shareholder returns	114.1	207.9	(93.8)
Opening net debt	(1,934.7)	(2,138.3)	203.6
Exchange and other non-cash movements	(6.9)	(4.3)	(2.6)
Closing net debt	(1,827.5)	(1,934.7)	107.2

 

The business generated free cash flow before adjusting items of £582.4m, down £83.9m on last year primarily as a result of lower adjusted operating profit and a higher cash outflow on working capital partially offset by lower capex. The working capital outflow is driven by the impact of International market exits, a lower incentive accrual year on year and higher Clothing & Home stock at year end. The higher stock level was partly due to growth initiatives and the timing of intake.

 

Defined benefit scheme pension funding in the year reflects the £36.4m second limited partnership interest distribution to the pension scheme in the current year as well as the final contribution for the defined benefit scheme paid after the prior year end.

 

Adjusting items in cashflow during the year include amounts relating to the closure of stores in International markets of £85.7m, the transition payments in respect of pensions and pay premia of £36.7m and M&S Bank of £34.7m. These were partially offset by the cash inflow associated with the disposal of the Hong Kong retail business of £22.9m.

 

Despite the significant cash outflows associated with our strategic programmes, net debt was down £107.2m on last year.

 

 

Dividend

 

We have announced a final dividend of 11.9p (full year dividend 18.7p, level year-on-year). This will be paid on 13 July 2018 to shareholders on the register of members as at close of business on 1 June 2018, subject to approval of shareholders at the Annual General Meeting, to be held on 10 July 2018.

 

 

Pension

 

At 31 March 2018, the IAS 19 net retirement benefit surplus was £948.2m (last full year £692.8m). The increase in the surplus is largely due to an increase in the discount rate and a change in mortality assumptions.

 

In March 2018, the UK defined benefit pension scheme entered into pensioner buy-in policies with two insurers for £1.4bn which reduced its longevity exposure to around one third of the pensioner cash flow liabilities. 

 

Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences and prospects are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect Marks & Spencer's current expectations concerning future events and actual results may differ materially from current expectations or historical results. Any forward-looking statements are subject to various risks and uncertainties, including, but not limited to, failure by Marks & Spencer to predict accurately customer preferences; decline in the demand for products offered by Marks & Spencer; competitive influences; changes in levels of store traffic or consumer spending habits; effectiveness of Marks & Spencer's brand awareness and marketing programmes; general economic conditions or a downturn in the retail or financial services industries; acts of war or terrorism worldwide; work stoppages, slowdowns or strikes; and changes in financial and equity markets. For further information regarding risks to Marks & Spencer's business, please consult the risk management section of the 2017 Annual Report (pages 30-33).

 

The forward-looking statements contained in this document speak only as of the date of this announcement, and Marks & Spencer does not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

- Ends -