presentation of M.S &S

FINANCIAL REPORTING

Presentation By Wasim Group

Group D MBA- Innovative Management

Group Members

y Wasim (Leader) y Arshad (Secretary) y Ranjith y Bandhu y Issudeen y Asma

About

y Major British retailer y 895 stores- 40 territories y Clothing, food, home ware, hospitality, furniture, technology,

beauty, financial services, energy y Geographic Segments- UK & International y Ian Dyson- Group Finance and Operations Director y Year 1998-the first British retailer to make a pre-tax profit of over £1 billion

Financial Position

y Until 1999 M&S's financial year ended on 31 March y After 1999 the company has changed to reporting for 52 or 53 week

periods, ending on variable dates. Turnover (£ M) 9,062.1 9,022.0 Profit Before Net Profit (£ Basic EPS (P) Tax (£ M) M) 706.2 1,129.1 506.8 821.0 32.3 49.2

Year Ended 28 March 2009 29 March 2008

Quarter 4- 2009/10 Trading Statement

y Sales £4.3bn, +2.8% y Profit before tax* £298.3m, +0.2% y Adjusted earnings per share* 13.7p, level y Net cash inflow £69.7m y Net debt £2.4bn y 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
y Year 2009 dividends paid per share is 22.5p and the total dividends paid is

£354.6 million y 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%. y Marks and Spencer Group PLC has a Debt to Total Capital ratio of 0.62%

M&S Balance Sheet
Current assets 2009(£m)
y y y y y y y

Cash Net receivables Other current assets Inventories/stock Total Current assets Non current assets Total assets

2008(£m) 422.8 285.1 145.7 535.9 1389.8 5868.3 7256.3

317.8 307.4 67.2 488.6 1181.7 5979.3 7157.0

Liabilities y Current liabilities Non current liabilities y Retirement benefit deficit y Other non current liabilities
y y

(2306.9)

(1988.9)

(1152.2) (2698.4) (5156.2 ) 2100.6

(20.5) (3187.6) (5194.1) 1964.0

Total liabilities Net assets

M&S Income Statement
2009 52 weeks £m 9062.1 (8192.1) 870.0 50.0 (214.5) 706.2 (199.4) 506.8 508.0 (1.2) 506.8 2008 52 weeks £m 9022.0 (7811) 1211.3 64.4 (146.6) 1129.1 (308.1) 821.0 821.7 (0.7) 821.7

y y y y y y y y y y y y

Revenue Cost of goods & operating expenses Operating profit Finance income Finance cost Profit on ordinary activities before taxation Income tax expense Profit after taxation Profit for the attributable to: Equity shareholders of the company Minority interest Profit attributable to shareholders

M&S Cash Flow Statement
2008(£m) Cash flow from generating activities y Generated from operating activities y Taxation paid y Cash flow from operating activities Cash flow from investing activities y Acquisition and disposals y Capital expenditure and financial investment y Interest received y Cash flow from investing activities Cash flow from financing activities y Interest paid y Other debt financing y Equity dividend paid y Other equity financing y cash flow from financing activities Net cash inflow from activities 1371.9 (81.3) 1290.6 2007(£m) 1236.0 (166.2) 1069.8

--------(609.6) 12.7 (596.9)

(46.4) (924.6) 4.8 (966.2)

(197.1) 66.2 (354.6) (35.6) (521.1) 172.6

(88.9) 954.45 (343.6) (556.2) (34.2) 69.4

Financial Ratios
y Ratio is the comparison of the two variables. y Financial ratio's is the tool to measure the financial

performance of the companies.
y Liquidity, profitability and efficiency ratios are the important

ratios to check company performance.

Liquidity Ratio
y This is the measure of the company·s ability to pay back the

investors, creditors and share holders money. y Current ratio is the ratio of the current assets to the current liabilities. y Acid test ratio is the similar to the current ratio but less stock from the current assets. y Higher the number in both ratios, the better the financial position.

Liquidity Analysis

2009
y Current ratio y

2008 5.20 3.05

3.8 2.39

Acid test ratio

The company·s liquidity position is strong but down as compared to last year

Profitability Ratio
y Profitability ratios are used to determine the profit earned on

invested money and sales made. y Profitability ratios are useful to find out if the company is utilizing its resources efficiently and increasing its profit.

Profitability Analysis
2009
y ROCE

2008 20% 31%

y EBTIDA ratio

8.0%

12.51%

y 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
y Stock turnover y Fixed asset turnover y Debtors day y Creditors day

2008 16 times 1.7 times 12 days 10 days

15 times 1.5 times 11 days 16 days

Efficiency Analysis
y 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
y y

2008 2.64 49.2

Debt equity ratio Earning per share

2.45 32.3

Investment Analysis
y 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
y 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.
y Finance interest is gone up from £88m to £197 which should

be cleared as soon as possible to increase the profit.
y 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
y 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.
y The customer focused and innovation along with the proper

management of the resources leads the organisation to top of the industry.

References
y http://marksintime.marksandspencer.com/Main/#/era=TheBeginning access on

10/11/2009.

y http://www.bized.co.uk/learn/business/accounting/busaccounts/notes/sto-th1.htm

access on 29/11/2009.

y http://www.mindtools.com/pages/article/newLDR_90.htm access on 29/11/2009 y Mott, D; (1994) accounting for non accounting students: ratio analysis. y http://en.wikipedia.org/wiki/Next_(clothing) access on 29/11/2009. y http://www.irishtimes.com/blogs/pricewatch/2009/01/12/price-is-still-not-right/

access on 30/11/2009.

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