FINANCIAL REPORTING

Presentation By Wasim Group

Group D
MBA- Innovative Management
Group Members

Wasim (Leader)
 Arshad (Secretary)
 Ranjith
 Bandhu
 Issudeen
 Asma
About

 Major British retailer

 895 stores- 40 territories
 Clothing, food, home ware, hospitality, furniture,
technology, beauty, financial services, energy
 Geographic Segments- UK & International
 Ian Dyson- Group Finance and Operations Director
 Year 1998-the first British retailer to make a pre-tax profit
of over £1 billion
 Financial Position

 Until 1999 M&S's financial year ended on 31 March

 After 1999 the company has changed to reporting for 52 or 53
week periods, ending on variable dates.

Turnover Profit
Net Profit Basic EPS
Year Ended Before Tax
(£ M) (£ M) (P)
(£ M)
28 March
9,062.1 706.2 506.8 32.3
2009
29 March
9,022.0 1,129.1 821.0 49.2
2008
Quarter 4- 2009/10
Trading Statement

 Sales £4.3bn, +2.8%

 Profit before tax* £298.3m, +0.2%
 Adjusted earnings per share* 13.7p, level
 Net cash inflow £69.7m
 Net debt £2.4bn
 Interim dividend 5.5p
INTERNATIONAL FINANCIAL
REPORTING STANDARD
Chairman’s Letter to Shareholders.
Operational Review.
Director’s Report: business review.
Director’s Report: Corporate Governance.
Financial Statements
Accounting Policies. (GAAP)
Income Statement.
Balance Sheet.
Cash Flow Statement.
Statement of Change in Equity.
Notes to Accounts.
Auditors Report.
 Financial Highlights

 Year 2009 dividends paid per share is 22.5p and the total
dividends paid is £354.6 million
 In 2009, Marks and Spencer Group PLC increased its cash
reserves by 153.01%, or 180.40m. The company earned 1.29bn
from its operations for a Cash Flow Margin of 14.24%.
 Marks and Spencer Group PLC has a Debt to Total Capital ratio of
0.62%
M&S Balance Sheet

Current assets
2009(£m) 2008(£m)
 Cash 422.8 317.8
 Net receivables 285.1 307.4
 Other current assets 145.7 67.2
 Inventories/stock 535.9 488.6
 Total Current assets 1389.8 1181.7
 Non current assets 5868.3 5979.3

 Total assets 7256.3 7157.0

Liabilities
 Current liabilities (2306.9) (1988.9)

Non current liabilities

 Retirement benefit deficit (1152.2) (20.5)
 Other non current liabilities (2698.4) (3187.6)

 Total liabilities (5156.2 ) (5194.1)

 Net assets 2100.6 1964.0
M&S Income Statement

2009 2008
52 weeks 52 weeks

£m £m
 Revenue 9062.1 9022.0
 Cost of goods & operating expenses (8192.1) (7811)
 Operating profit 870.0 1211.3
 Finance income 50.0 64.4
 Finance cost (214.5) (146.6)
 Profit on ordinary activities before taxation 706.2 1129.1
 Income tax expense (199.4) (308.1)
 Profit after taxation 506.8 821.0
 Profit for the attributable to:
 Equity shareholders of the company 508.0 821.7
 Minority interest (1.2) (0.7)
 Profit attributable to shareholders 506.8 821.7
 M&S Cash Flow Statement
2008(£m) 2007(£m)
Cash flow from generating activities
 Generated from operating activities 1371.9 1236.0
 Taxation paid (81.3) (166.2)
 Cash flow from operating activities 1290.6 1069.8

Cash flow from investing activities

 Acquisition and disposals --------- (46.4)
 Capital expenditure and financial investment (609.6) (924.6)
 Interest received 12.7 4.8
 Cash flow from investing activities (596.9) (966.2)

Cash flow from financing activities

 Interest paid (197.1) (88.9)
 Other debt financing 66.2 954.45
 Equity dividend paid (354.6) (343.6)
 Other equity financing (35.6) (556.2)
 cash flow from financing activities (521.1) (34.2)

Net cash inflow from activities 172.6 69.4

Financial Ratios
Ratio is the comparison of the two variables.

Financial ratio's is the tool to measure the financial

performance of the companies.

Liquidity, profitability and efficiency ratios are the

important ratios to check company performance.
Liquidity Ratio
This is the measure of the company’s ability to pay
back the investors, creditors and share holders money.
Current ratio is the ratio of the current assets to the
current liabilities.
Acid test ratio is the similar to the current ratio but
less stock from the current assets.
Higher the number in both ratios, the better the
financial position.
Liquidity Analysis

2009 2008

Current ratio 3.8 5.20

 Acid test ratio 2.39 3.05

The company’s liquidity position is strong but down

as compared to last year
Profitability Ratio

Profitability ratios are used to determine the profit

earned on invested money and sales made.
 Profitability ratios are useful to find out if the
company is utilizing its resources efficiently and
increasing its profit.
Profitability Analysis
2009 2008

 ROCE 20% 31%

 EBTIDA ratio 8.0% 12.51%

 Net profit ratio 5.59% 9.09%

The company’s profit has decreased sharply as

compared to the other retailers as well as the profit
earned last year
Efficiency Ratios

2009 2008

Stock turnover 15 times 16 times

Fixed asset turnover 1.5 times 1.7 times

Debtors day 11 days 12 days

Creditors day 16 days 10 days

Efficiency Analysis

The company has managed the debtors and

creditors very well but the stock turn over is slower
than last year and the fixed asset turn over is
decreasing as the fixed asset increased slightly.
Investment Ratios

2009 2008

 Debt equity ratio 2.45 2.64

 Earning per share 32.3 49.2

Investment Analysis
The company’s gearing ratio is improving as
compared to last year but still very high as compared
to other retailers in the same industry.
Suggestions for M&S
Company’s net profit is just 5% of the generated
revenue so the cost of the sales is really high, this is
probably due to expensive supply chain and suppliers.
The sources should be reviewed to decrease the cost.

Finance interest is gone up from £88m to £197 which

should be cleared as soon as possible to increase the
profit.

The stock turn over is good but its only four times a
year when new designs are injected, it has to be
increased to 8 to 10 times to be versatile and
innovative to generate more profit.
Conclusion
The financial crises has effected almost all the
businesses which could be a major reason for the less
profit as the buying power of the customers has
effected.

 The customer focused and innovation along with the

proper management of the resources leads the
organisation to top of the industry.
References
 http://marksintime.marksandspencer.com/Main/#/era=TheBeginning access on
10/11/2009.

 http://www.bized.co.uk/learn/business/accounting/busaccounts/notes/sto-
th1.htm access on 29/11/2009.

 http://www.mindtools.com/pages/article/newLDR_90.htm access on
29/11/2009

 Mott, D; (1994) accounting for non accounting students: ratio analysis.

 http://en.wikipedia.org/wiki/Next_(clothing) access on 29/11/2009.

 http://www.irishtimes.com/blogs/pricewatch/2009/01/12/price-is-still-not-right/
access on 30/11/2009.