11th Oct 2005 07:01
Marks & Spencer Group PLC11 October 2005 Issued: Tuesday 11 October 2005 MARKS AND SPENCER GROUP PLC ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS Marks & Spencer previously reported under UK Generally Accepted AccountingPrinciples (UK GAAP). In May 2005 as part of its preparation for the adoptionof International Financial Reporting Standards (IFRS), the Group made availablefinancial information for the year ended 2 April 2005 prepared in accordancewith the measurement rules of IFRS. Since May, IFRS have been subject to ongoing review and further interpretation.One of the areas subject to such review has been leases that containpredetermined, fixed rental increases. Recent comments by the InternationalFinancial Reporting Interpretations Committee (IFRIC) have indicated that underIFRS, it is necessary to account for these leases such that the predetermined,fixed rental payments are recognised on a straight-line basis over the life ofthe lease. Under UK GAAP, the Group accounted for these property lease rentalssuch that the increases were charged in the year that they arose. Thisrepresents a change from the IFRS information previously announced. The impactof this change is a reduction in profit before tax of £4.5m for the 52 weeksended 2 April 2005. Set out below is a revised summary of the impact of the accounting policychanges arising from the adoption of IFRS on the results for the 52 weeks ended2 April 2005, together with the impact on the results for the 26 weeks ended 2October 2004. Summary of changes 52 weeks ended 2 April 2005 UK GAAP IFRS Fixed Revised Total Change (As previously Rentals IFRS Change % reported Turnover (£m) 7,942.3 7,942.3 - 7,942.3 - - Operating Profit beforeExceptionals (£m) 709.4 689.2 (4.5) 684.7 (24.7) (3.5) Profit before Tax andExceptionals (£m) 618.5 596.0 (4.5) 591.5 (27.0) (4.4) Adjusted EPS (pence) 21.9 21.0 (0.2) 20.8 (1.1) (5.0) 26 weeks ended 2 October 2004 UK GAAP IFRS Change Change % Turnover (£m) 3,819.7 3,819.7 - - Operating Profit before Exceptionals (£m) 323.2 312.8 (10.4) (3.2) Profit before Tax and Exceptionals (£m) 292.7 281.2 (11.5) (3.9) Adjusted EPS (pence) 8.9 8.5 (0.4) (4.5) Appendix 1 to this release sets out income statements for the 26 weeks ended 2October 2004 and the 52 weeks to 2 April 2005 in IFRS format. These reflectboth the adjustments detailed above, which are required to apply the accountingpolicy changes arising from the adoption of IFRS, and also the reclassificationsrequired to comply with the IFRS format of presentation. In particular: • The results of discontinued operations (including the profit or loss ondisposal), are now presented below profit after tax as a single line on an aftertax basis; and • Certain exceptional items required by FRS 3 to be presented belowoperating profit are now included within operating profit. Appendix 2 provides a segmental analysis of operating profit between UK Retailand International operations under previously reported UK GAAP and revised IFRS. Contacts: Investor Relations:Amanda Mellor +44 (0) 20 8718 3604Sarah McGlyne +44 (0) 20 8718 1563 Statements made in this announcement that look forward in time or that expressmanagement's beliefs, expectations or estimates regarding future occurrences andprospects are "forward-looking statements" within the meaning of the UnitedStates federal securities laws. These forward-looking statements reflect Marks &Spencer's current expectations concerning future events and actual results maydiffer materially from current expectations or historical results. Any suchforward-looking statements are subject to various risks and uncertainties,including failure by Marks & Spencer to predict accurately customer preferences;decline in the demand for products offered by Marks & Spencer; competitiveinfluences; 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 servicesindustries; acts of war or terrorism worldwide; work stoppages, slowdowns orstrikes; and changes in financial and equity markets. Appendix 1 Consolidated income statement 26 weeks ended 52 weeks ended 2 Oct 2004 2 April 2005 As restated As restated £m £m Revenue (1) 3,628.6 7,710.3 Operating Profit Before exceptional charges (2) 289.4 653.2 Exceptional operating charges (81.0) (50.6) 208.4 602.6 Interest payable and similar charges (47.1) (121.3) Interest receivable 15.5 28.1 Profit on ordinary activities before taxation (3) 176.8 509.4 Analysed between Before exceptional charges 257.8 560.0 Exceptional operating charges (81.0) (50.6) Income tax expense (68.3) (150.5) Profit on ordinary activities after taxation 108.5 358.9 Profit from discontinued operations 21.9 227.3 Profit for the period attributable to shareholders 130.4 586.2 (1) Relates to continuing operations only and therefore excludes the revenue derived from discontinued operations. 26 weeks ended 52 weeks ended 2 Oct 2004 2 April 2005 As restated As restated £m £m (2) Operating profit before exceptionals As previously reported 323.2 709.4 IFRS adjustments (10.4) (24.7) Operating profit from discontinued operations (24.5) (32.3) IFRS adjustments from discontinued operations 1.1 1.2 Reclassification of exceptional items - (0.4) 289.4 653.2 (3) Profit before tax and exceptionals As previously reported 292.7 618.5 IFRS adjustments (11.5) (27.0) Operating profit from discontinued operations (24.5) (32.3) IFRS adjustments from discontinued operations 1.1 1.2 Reclassification of exceptional items - (0.4) 257.8 560.0 Appendix 2 26 weeks ended 2 October 2004 ChangeOperating Profit - Continuing UK GAAP IFRS Change % UK Retail:Before exceptional operating charges 269.9 260.2 (9.7) -3.6%Exceptional operating charges (81.0) (81.0) - - 188.9 179.2 (9.7) -5.1%International Retail:M&S 27.6 27.7 0.1 0.4%Kings 1.2 1.5 0.3 25.0% 28.8 29.2 0.4 1.4%Total - continuing:Before exceptional operating charges 298.7 289.4 (9.3) -3.1%Exceptional operating charges (81.0) (81.0) - - 217.7 208.4 (9.3) -4.3% 52 weeks ended 2 April 2005 ChangeOperating Profit - Continuing UK GAAP IFRS Change % UK Retail:Before exceptional operating charges 612.1 588.3 (23.8) -3.9%Exceptional operating charges (91.4) (60.3) 31.1 34.0% 520.7 528.0 7.3 1.4%International Retail:M&S 60.7 60.4 (0.3) -0.5%Kings 4.3 4.5 0.2 4.7%Exceptional operating income - 9.7 9.7 65.0 74.6 9.6 14.8% Total - continuing:Before exceptional operating charges 677.1 653.2 (23.9) -3.5%Exceptional operating charges (91.4) (50.6) 40.8 44.6% 585.7 602.6 16.9 2.9% This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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