Annual report and financial statements 2011 - Analist.nl

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90 Notes to the financial statements continued 11 Retirement benefits continued In 2007/08 the Group agreed to pre-fund £200.0m of its annual contributions to the UK Defined Benefit Pension Scheme. The prepayment is in respect of annual contributions to the UK scheme at the rate of 17.9% of pensionable salaries. The remaining £19.0m of the prepayment will be utilised during the year ended 31 March 2012 to fund the annual contributions, as well as c.£16m of cash. In addition to this, a further £35.0m of cash contributions was made in April 2011 per the funding plan agreed in May 2010. G. Retirement benefit obligations Changes in the present value of retirement benefit obligations are as follows: Present value of obligation at start of year 5,315.1 4,129.2 Current service cost 59.0 56.3 Curtailment charge 1.0 1.0 One-off pension credit (see note 5) (10.7) – Interest cost 285.5 270.6 Contributions from scheme members 0.2 – Benefits paid (256.3) (257.0) Actuarial (gain)/loss (161.9) 1,119.3 Exchange movement (2.3) (4.3) Present value of obligation at end of year 5,229.6 5,315.1 Analysed as: Present value of pension scheme liabilities 5,215.5 5,298.6 Unfunded pension plans 0.9 0.9 Post-retirement healthcare 13.2 15.6 Present value of obligation at end of year 5,229.6 5,315.1 2011 £m 2010 £m H. Cumulative actuarial gains and losses recognised in equity Loss at start of year (1,508.9) (1,257.3) Net actuarial gains/(losses) recognised in the year 286.0 (251.6) Loss at end of year (1,222.9) (1,508.9) 2011 £m 2010 £m I. History of experience gains and losses Experience adjustments arising on scheme assets 124.1 867.7 (1,280.3) (422.6) (80.4) Experience (losses)/gains arising on scheme liabilities (8.4) 36.2 81.2 (61.5) 18.8 Changes in assumptions underlying the present value of scheme liabilities 170.3 (1,155.5) 272.0 1,089.5 53.0 Actuarial gains/(losses) recognised in equity 286.0 (251.6) (927.1) 605.4 (8.6) 2011 £m 2010 £m 2009 £m 2008 £m 2007 £m Fair value of scheme assets 5,398.1 4,948.6 3,977.0 5,045.5 5,227.5 Present value of scheme liabilities (5,215.5) (5,298.6) (4,112.4) (4,542.3) (5,487.0) Pension scheme asset/(deficit) 182.6 (350.0) (135.4) 503.2 (259.5) 12 Marks & Spencer UK Pension Scheme interest in the Scottish Limited Partnership Marks and Spencer plc is a general partner and the Marks & Spencer UK Pension Scheme is a limited partner of the Marks and Spencer Scottish Limited Partnership. As such, the partnership is consolidated into the results of the Group. The Marks and Spencer Scottish Limited Partnership holds £1.5bn of properties which have been leased back to Marks and Spencer plc at market rates. The Group retains control over these properties, including the flexibility to substitute alternative properties. The limited partnership interest (held by the Marks & Spencer UK Pension Scheme) entitles the Pension Scheme to receive an annual distribution of £71.9m from the profits of the Partnership earned from rental income, discretionary at the instance of Marks and Spencer plc. The discretionary right is exercisable if the Group does not pay a dividend or make any other form of return to its shareholders. This is an equity instrument, disclosed within other reserves. Since the Group has paid an interim dividend in relation to 2010/11, the associated distribution of £71.9m is payable to the Pension Scheme and has been recognised as a liability (last year £71.9m), and is reflected as reduction in other reserves. When such reserves are no longer sufficient, this distribution will be charged to retained earnings. The future value of total discretionary scheduled payments is approximately £791m (last year £862m). Under IAS 19, the partnership interest of the Pension Scheme in the Marks and Spencer Scottish Limited Partnership is included within the UK pension scheme assets, valued at £656.0m (last year £631.7m). For further details see note 11. The market value of this nonquoted financial asset is measured based on the expected cash flows and benchmark asset-backed credit spreads. Marks and Spencer Group plc Annual report and financial statements 2011
91 12 Marks & Spencer UK Pension Scheme interest in the Scottish Limited Partnership continued As general partner, Marks and Spencer plc has a right of pre-emption in respect of a transfer by the Pension Scheme of its limited partnership interest to another party. This allows the general partner to direct that, instead of transferring the limited partnership interest to such a party, the general partner can instead nominate the transferee. In addition, the partnership agreement includes a clause such that, following a default event (including the appointment of an administrator, liquidator, receiver or similar officer in respect of Marks and Spencer plc or Marks and Spencer Group plc) or on a relevant change of law, the net present value of the outstanding distributions becomes payable to the Pension Scheme by the Scottish Limited Partnership at the option of the Pension Scheme. On the basis of the expected cash flows associated with such an event, the related financial liability has been fair valued at £nil. 13 Share-based payments The charge for share-based payments for the year was £31.7m (last year £28.5m). Of the total share-based payments charge , £11.4m relates to the Save As You Earn Share Option scheme. The remaining charge is spread over the other schemes. Further details of the option and share schemes that the Group operates are provided in the Remuneration report on pages 52 to 67. A. Save As You Earn Share Option Scheme Under the terms of the scheme, the Board may offer options to purchase ordinary shares in the Company once in each financial year to those employees who enter into an HM Revenue & Customs (HMRC) approved Save As You Earn (SAYE) savings contract. HMRC rules limit the maximum amount saved to £250 per month. The price at which options may be offered is 80% of the average midmarket price for three consecutive dealing days preceding the offer date. The options may normally be exercised during the six month period after the completion of the SAYE contract, either three or five years after entering the scheme. Number of options Weighted average exercise price 2011 2010 Number of options Weighted average exercise price Outstanding at beginning of the year 52,560,561 249.9p 57,863,061 252.2p Granted 8,162,499 319.0p 8,566,762 292.0p Exercised (1,210,770) 324.7p (3,544,310) 260.9p Forfeited (3,755,659) 266.4p (5,052,662) 277.6p Expired (1,460,710) 530.6p (5,272,290) 309.8p Outstanding at end of the year 54,295,921 249.9p 52,560,561 249.9p Exercisable at end of year 2,150,364 446.6p 1,705,532 486.7p For SAYE share options exercised during the period, the weighted average share price at the date of exercise was 366.3p (last year 360.4p). The fair values of the options granted during the year have been calculated using the Black-Scholes model assuming the inputs shown below: 2011 2010 3-year plan 3-year plan Grant date Nov 10 Nov 09 Share price at grant date 399p 365p Exercise price 319p 292p Option life in years 3 years 3 years Risk-free rate 1.5% 1.6% Expected volatility 44.5% 44.1% Expected dividend yield 4.0% 4.1% Fair value of option 125p 113p Volatility has been estimated by taking the historic volatility in the Company’s share price over a three year period. The resulting fair value is expensed over the service period of three years on the assumption that 20% of options will lapse over the service period as employees leave the Group. Outstanding options granted under the UK Employees’ SAYE Scheme are as follows: Number of options Weighted average remaining contractual life (years) Options granted 2011 2010 2011 2010 Option price January 2005 – 312,805 – 0.2 280p January 2006 538,403 1,471,579 0.2 1.2 349p January 2007 630,926 2,016,402 1.2 0.9 559p January 2008 2,178,087 2,440,739 0.9 2.0 517p January 2009 35,826,944 38,009,851 2.0 3.0 203p January 2010 7,253,289 8,309,185 2.2 3.2 292p January 2011 7,868,272 – 3.2 – 319p 54,295,921 52,560,561 2.2 2.9 250p Strategy Performance & Marketplace Operating review Financial review Governance Financial statements & other information To find out more visit marksandspencer.com/annualreport2011 Financial statements
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Annual report and financial stateme
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What’s in this report? P04 Read a
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How we’re governed Group Board Th
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05 Overview Investment in our UK bu
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07 Overview Total investment in our
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09 Overview Do Your Thing In April
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11 Overview Underlying Group profit
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13 Overview Consumer confidence ind
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Our campaigns highlight how we adap
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Lingerie and Beauty Value lingerie
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Fun fashion Our Autograph striped s
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We are never complacent and we cont
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Terribly Clever In September we lau
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Try it - then buy it In November we
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27 Overview Myleene’s Makeovers
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Made to measure Shoppers in our Sky
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31 Overview Autograph Leaves collec
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33 Overview Keeping up to date We
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35 Overview Summary of results Grou
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37 Overview Capital expenditure Yea
Page 41 and 42: 39 Overview Progress has begun on s
Page 43 and 44: 41 Overview What is our approach to
Page 45 and 46: 43 Overview Ensuring the Board is r
Page 47 and 48: Accountability 45 Overview We belie
Page 49 and 50: 47 Overview Risk description Mitiga
Page 51 and 52: Governance report Our Pensions 49 O
Page 53 and 54: Audit Committee 51 Overview Chairma
Page 55 and 56: 53 Chairman’s introduction PART 1
Page 57 and 58: 55 Chairman’s introduction For ex
Page 59 and 60: 57 Chairman’s introduction Deputy
Page 61 and 62: 59 Chairman’s introduction Execut
Page 63 and 64: 61 Chairman’s introduction Contra
Page 65 and 66: 63 Chairman’s introduction PART 2
Page 67 and 68: 65 Chairman’s introduction Share
Page 69 and 70: 67 Chairman’s introduction Direct
Page 71 and 72: 69 Overview A special resolution wi
Page 73 and 74: 71 Overview treatment regardless of
Page 75 and 76: Independent auditors’ report to t
Page 77 and 78: 75 Consolidated statement of financ
Page 79 and 80: 77 Consolidated cash flow informati
Page 81 and 82: 79 1 Accounting policies continued
Page 83 and 84: 81 1 Accounting policies continued
Page 85 and 86: 83 3 Expense analysis Underlying £
Page 87 and 88: 85 7 Income tax expense A. Tax char
Page 89 and 90: 87 10 Employees A. Aggregate remune
Page 91: 89 11 Retirement benefits continued
Page 95 and 96: 93 14 Intangible assets Goodwill £
Page 97 and 98: 95 16 Investment property Cost At s
Page 99 and 100: 97 22 Borrowings and other financia
Page 101 and 102: 99 23 Financial instruments continu
Page 103 and 104: 101 23 Financial instruments contin
Page 105 and 106: 103 25 Deferred tax Deferred tax is
Page 107 and 108: 105 29 Analysis of net debt A. Reco
Page 109 and 110: 107 Company statement of financial
Page 111 and 112: 109 C5 Investments continued B. Pri
Page 113 and 114: Shareholder information 111 Overvie
Page 115 and 116: Index A Page Accountability 45 Acco
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