Final Results - Part 2

Marks & Spencer PLC
22 May 2001


PART 2



Consolidated profit and loss account
                                    52 weeks ended 31       53 weeks ended 1
                                        March 2001             April 2000
                                   Before         After    Before         After
                                   excep- Excep- excep-   excep-  Excep- excep-
                                   tional tional tional   tional  tional tional
                                    items  items  items     items  items  items
                                       £m     £m     £m        £m     £m     £m

Turnover (see note 2)             8,075.7      - 8,075.7  8,195.5      - 8,195.5

Operating profit (see note 3)       467.0 (26.5)   440.5    543.0 (72.0)   471.0

Loss on sale of property and other      - (83.2)  (83.2)        - (22.3)  (22.3)
fixed assets (see note 6A)
Loss on sale / termination of           -  (1.7)   (1.7)        - (45.4)  (45.4)
operations (see note 6B)
Provision for loss on operations        -(224.0) (224.0)        -      -      -
to be discontinued (see note 6C)

Net interest income (see note 4)     13.9      -   13.9      14.2      -   14.2
Profit on ordinary activities       480.9(335.4)  145.5     557.2 (139.7) 417.5
before taxation
Taxation on ordinary activities   (151.2)   8.5 (142.7)   (177.2)   19.0 (158.2)
Profit on ordinary activities      329.7 (326.9)    2.8     380.0 (120.7)  259.3
after taxation
Minority interests (all equity)    (1.5)      -   (1.5)     (0.6)      -   (0.6)
Profit attributable to             328.2 (326.9)    1.3     379.4 (120.7)  258.7
shareholders
Dividends (see note 9)           (258.3)      - (258.3)   (258.6)      - (258.6)
Retained profit/(loss) for the      69.9 (326.9)(257.0)     120.8 (120.7)    0.1
period

Earnings per share (see note 8)                    0.0p                    9.0p
Fully diluted earnings per share                   0.0p                    9.0p
(see note 8)
Adjusted earnings per share (see                  11.4p                   13.2p
note 8)
Fully diluted adjusted earnings                   11.4p                   13.2p
per share (see note 8)
Dividend per share (see note 9)                    9.0p                    9.0p


Consolidated statement of total
recognised gains and losses
                                                           52weeks           53
                                                             ended        weeks
                                                                          ended
                                                           31 March           1
                                                                          April
                                                               2001        2000
                                                                 £m          £m

Profit attributable to                                          1.3       258.7
shareholders
Exchange differences on foreign                                13.3       (16.8)
currency translation
Unrealised (deficit) / surplus on                             (1.7)         3.0
revaluation of investment properties
Total recognised gains and losses                              12.9       244.9
relating to the period

Notes

1. Basis of preparation

The results comprise those of Marks and Spencer p.l.c. and its UK and
international subsidiaries for the year ended 31 March 2001 and have been
prepared using accounting policies consistent with those adopted last year. The
results for the year comprise store sales and related costs for the 52 weeks to
31 March 2001 (last year 53 weeks to 1 April 2000). All other activities are
for the year to 31 March 2001. This summary of results does not constitute the
full Financial Statements within the meaning of s240 of the Companies Act 1985.
The full Financial Statements have been reported on by the Company's auditors,
but have not yet been delivered to the Registrar of Companies. The audit report
was unqualified and did not contain a Statement under s237(2) or s237(3) of the
Companies Act 1985.

2. Turnover

Turnover (excluding sales taxes for
international operations) is analysed as
follows:-
                                         52 weeks          53 weeks
                                            ended             ended
                                         31 March           1 April        Inc/
                                             2001              2000       (Dec)
                                               £m                £m           %
UK Retail (incl. VAT)
Clothing, Footwear and Gifts (1)          3,649.5           3,939.0        (7.3)
Home (1)                                    355.8             328.8         8.2
Foods                                     2,925.9           2,880.4         1.6
                                          6,931.2           7,148.2        (3.0)

Less: United Kingdom VAT                  (638.2)           (665.5)        (4.1)
                                          6,293.0           6,482.7        (2.9)

International Retail
Europe (excl. UK)
Continental European subsidiaries           285.0             294.3       (3.2)
Other European operations (2)               263.3             261.3         0.8
                                            548.3             555.6       (1.3)

North America
Brooks Brothers (incl. Japan)               448.1             395.5        13.3
Kings Super Markets                         313.1             273.7        14.4
                                            761.2             669.2        13.7
M&S Canada                                      -              22.2
                                            761.2             691.4        10.1

Far East                                    110.1             101.2         8.8

Total International (see note 7)          1,419.6           1,348.2         5.3

Financial Services (UK)                     363.1             364.6       (0.4)

Total turnover                            8,075.7           8,195.5       (1.5)
Turnover is analysed as follows:-
United Kingdom                            6,656.1           6,847.3       (2.8)
International                             1,419.6           1,348.2        5.3
                                          8,075.7           8,195.5       (1.5)

(1) Since the last financial year, sales of certain lines have been transferred
from Clothing, Footwear and Gifts to Home. Comparatives for the last financial
year have been restated accordingly.
(2) Other European Operations include the Republic of Ireland and Franchises.
The value of goods exported from the UK, including shipments to international
subsidiaries, amounted to £436.0m (last year £460.2m).

3. Operating profit

Operating profit arises as follows:-
                                                52 weeks               53 weeks
                                                   ended                  ended
                                                31 March                1 April
                                                    2001                   2000
                                                      £m                     £m
UK Retail
Before exceptional operating charges (1)           334.8                  420.1
Exceptional operating charges (see note 5)        (26.5)                 (63.3)
                                                   308.3                  356.8

Financial Services (1)                              96.3                  115.9

International Retail

Europe (excluding UK)
Continental European subsidiaries before          (34.0)                 (24.8)
exceptional operating charges (2)
Exceptional operating charges (see note 5)             -                  (8.7)
                                                  (34.0)                 (33.5)
Other European operations                           22.6                   18.7
                                                  (11.4)                 (14.8)

North America
Brooks Brothers (incl. Japan)                       20.2                    7.9
Kings Super Markets                                 11.9                   11.1
Corporate Expenses                                 (0.1)                  (2.6)
                                                    32.0                   16.4
M&S Canada                                             -                      -
                                                    32.0                   16.4

Far East                                             7.4                  (3.3)

Total International - analysed between:
Profit before exceptional operating                 28.0                    7.0
charges
Exceptional operating charges (see note 5)             -                  (8.7)
                                                    28.0                  (1.7)

Total segmental operating profit                   432.6                  471.0
Excess interest charged to cost of sales of          7.9                      -
Financial Services (see note 4)

Total operating profit                               440.5                471.0

Analysis of segmental operating profit
Operating profit before exceptional                  467.0                543.0
items
Excess interest charged to cost of sales             (7.9)                    -
of Financial Services
Segmental operating profit before                    459.1                543.0
exceptional items
Exceptional operating charges                       (26.5)               (72.0)
Total segmental operating profit                     432.6                471.0

Retailing before exceptional items                   362.8                427.1
Exceptional operating charges                       (26.5)               (72.0)
Retailing after exceptional items                    336.3                355.1
Financial Services                                    96.3                115.9
Total segmental operating profit                     432.6                471.0

(1) Operating profit for Financial Services includes £16.2m of merchant fee
income (last year £ nil) arising on Marks & Spencer C+A183hargecard
transactions. This fee is payable by UK Retail and has been deducted in
arriving at UK Retail operating profit.
(2) Operating loss for Continental Europe is stated after charging £1.0m (last
year £2.0m) for pre-opening costs.

4. Interest charged to cost of sales

Financial Services operating profit is stated after charging £115.3m (last year
£105.5m) of interest to cost of sales. This interest represents the cost of
funding the Financial Services business as a separate segment, including both
intra group interest and third party funding. The amount of third party
interest payable by the Group during the year was £107.4m (last year £107.4m).
Intra group interest of £7.9m (last year £nil), being the excess over third
party interest payable, has been added back in the segmental analysis to arrive
at total operating profit.

5. Exceptional operating charges
                                                 52 weeks              53 weeks
                                                    ended                 ended
                                                  31 March              1 April
                                                      2001                 2000
                                                        £m                   £m
UK restructuring costs (1)                          (26.5)               (63.3)
European restructuring costs (2)                         -                (8.7)
Total exceptional operating charges                 (26.5)               (72.0)

(1) The £26.5m is in respect of the closure of the 'Direct' catalogue business
(£16.5m) and the reduction of roles at the Group's head office (£10.0m). The £
63.3m charge last year was in respect of the restructuring of UK Retail into
customer business units, the rationalisation of store management and the
re-focussing of existing store roles to customer facing activities, and the
closure of two distribution centres.
(2) The European restructuring costs last year were in respect of store
closures in France and Germany.

6. Non-operating exceptional charges

6A Loss on sale of property and other fixed assets

                                                  52 weeks             53 weeks
                                                     ended                ended
                                                  31 March              1 April
                                                      2001                 2000
                                                        £m                   £m

Disposal of European stores (1)                          -                (8.3)
Provision for loss on 'Direct' assets (2)           (19.0)                    -
Loss on sale of investment properties (3)                -               (16.1)
Other asset disposals (4)                           (64.2)                  2.1
(Loss)/profit on sale of property and               (83.2)               (22.3)
other fixed assets

(1)The loss of £8.3m last year relates to European store closures last year.
Including the restructuring cost of £8.7m disclosed in note 5 above this gave
rise to total closure costs last year of £17.0m.
(2) Including the restructuring cost of £16.5m disclosed in note 5 above, this
gives rise to total closure costs for the 'Direct' catalogue business of £
35.5m.
(3) The loss on sale of investment properties last year was in respect of the
disposal of The Gyle shopping centre and a property in Newcastle.
(4) Other asset disposals relates to the closure of UK stores, £40.2m of which
is in respect of satellite store closures and was announced at the half year.

6B Loss on sale / termination of operations
                                                  52 weeks             53 weeks
                                                     ended                ended
                                                  31 March              1 April
                                                      2001                 2000
                                                        £m                   £m

Loss on sale of Splendour.com Ltd                    (1.7)                    -
Loss on termination of Canadian                          -               (45.4)
operations
Loss on sale / termination of operations             (1.7)               (45.4)

6C Provision for loss on operations to be discontinued

                                                  52 weeks             53 weeks
                                                     ended                ended
                                                  31 March              1 April
                                                      2001                 2000
                                                        £m                   £m

Net closure costs                                  (225.3)                    -
Goodwill previously credited to reserves               1.3                    -
Provision for loss on operations to be             (224.0)                    -
discontinued

The provision for loss on operations to be discontinued represents the
estimated cost of the intended closure of the Group's Continental European
subsidiaries. Net closure costs include future trading losses, losses on
disposal of fixed assets, property exit costs and redundancy costs.

7. Foreign Currencies

The results of international subsidiaries have been translated using average
rates of exchange ruling during the period. The movements in exchange rates
used for translation, compared to the same period last year, have increased
international sales (excluding Canada) by £57.4m. The effect on international
operating profit is not significant. When expressed at constant rates for
translation, turnover increases / (decreases) on last year become:

                                                           Turnover Inc/(Dec) %
                                                                 As          At
                                                           reported    constant
                                                                          rates
Europe                                                        (1.3)         1.5
North America                                    
Brooks Brothers (incl.Japan)                                   13.3         3.5
Kings Super Markets                                            14.4         4.2
Far East                                                        8.8         2.3
Total International Retail                                      5.3         2.7

8. Earnings per share

The calculation of earnings per ordinary share is based on earnings after tax
and minority interests of £1.3m (last year £258.7m), and on 2,872,370,247
ordinary shares (last year 2,872,055,200), being the weighted average number of
ordinary shares in issue during the year ended 31 March 2001. The weighted
average number of ordinary shares used in the calculation of fully diluted
earnings per ordinary share is 2,882,233,080 ordinary shares (last year
2,885,697,100).
An adjusted earnings per share figure has been calculated in addition to the
earnings per share required by FRS 14 and is based on earnings excluding the
effect of the exceptional items. It has been calculated to allow the
shareholders to gain a clearer understanding of the trading performance of the
Group. Details of the adjusted earnings per share are set out below:

                                                  52 weeks             53 weeks
                                                     ended                ended
                                                  31 March              1 April
                                                      2001                 2000

Earnings per share                                    0.0p                 9.0p
Exceptional operating charges                         0.7p                 1.8p
Loss on sale of property and other fixed              2.9p                 0.8p
assets
Loss on sale / termination of operations              0.1p                 1.6p
Provision for loss on operations to be                7.7p                    -
discontinued
Adjusted earnings per share                          11.4p                13.2p

The IIMR earnings per share is 10.7p (last year 11.4p). Under this measure
standard earnings are adjusted to eliminate certain capital items.

9. Dividend

The Directors have proposed a final dividend of 5.3p per share (last year
5.3p). This makes a total ordinary dividend for the year of 9.0p (last year
9.0p). The total cost of dividends is £258.3m (last year £258.6m). The ordinary
shares will be quoted ex dividend on 30 May 2001. The final dividend will be
paid on 20 July 2001 to shareholders whose names are on the Register of Members
at the close of business on 1 June 2001. Shareholders may choose to take this
dividend in shares or in cash.

10. Date of approval

The financial statements for the year ended 31 March 2001 were approved by the
Directors on 21 May 2001.

Consolidated balance sheet

                                                     As at                As at
                                                  31 March             31 March
                                                      2001                 2000
                                                        £m                   £m
Fixed assets
Goodwill                                                 -                  1.3
Tangible assets                                    4,118.9              4,242.1
Investments                                           58.3                 55.0
                                                   4,177.2              4,298.4
Current assets
Stocks                                               472.5                474.4
Debtors                                            2,629.3              2,555.2
Cash and investments                                 414.4                687.5
                                                   3,516.2              3,717.1
Current liabilities
Creditors: amounts falling due within            (1,981.6)            (2,162.8)
one year
Net current assets                                 1,534.6              1,554.3
Total assets less current liabilities              5,711.8              5,852.7
Creditors: amounts falling due after               (735.1)              (804.3)
more than one year
Provisions for liabilities and charges             (315.7)              (126.6)
Net assets                                         4,661.0              4,921.8
Capital and reserves
Called up share capital                              716.9                718.6
Share premium account                                375.6                369.4
Revaluation reserve                                  455.6                457.9
Capital redemption reserve                             2.6                    -
Profit and loss account                            3,094.7              3,359.4
Shareholders' funds (all equity)                   4,645.4              4,905.3
Minority interests (all equity)                       15.6                 16.5
Total capital employed                             4,661.0              4,921.8
Reconciliation of movements in
shareholders' funds
                                                     As at                As at
                                                  31 March             31 March
                                                      2001                 2000
                                                        £m                   £m

Profit attributable to shareholders                    1.3                258.7
Dividends                                          (258.3)              (258.6)
                                                   (257.0)                  0.1
Other recognised gains and losses                     11.6               (13.8)
relating to the period
New share capital subscribed                           7.1                 11.8
Purchase of own shares                              (20.3)                    -
Amounts deducted from profit and loss account            -                (1.1)
reserve in respect of shares issued to QUEST
Goodwill transferred to the profit and loss          (1.3)                 24.4
account in respect of the closure of businesses
Net movement in shareholders' funds                (259.9)                 21.4
Shareholders' funds at 1 April                     4,905.3              4,883.9
Shareholders' funds at 31 March                    4,645.4              4,905.3
Consolidated cash flow statement
                                                  52 weeks             53 weeks
                                                     ended                ended
                                                  31 March              1 April
                                                      2001                 2000
                                                        £m                   £m
Operating activities
Operating profit                                     440.5                471.0
Exceptional operating items                           26.5                 72.0
Operating profit before exceptional                  467.0                543.0
items
Depreciation                                         275.9                261.6
Increase in working capital (see note               (36.2)              (113.9)
(i))
Net cash inflow before exceptional items             706.7                690.7
Exceptional operating cash outflow                  (30.3)               (49.2)
Cash inflow from operating activities                676.4                641.5
Returns on investments and servicing of               12.6                 15.2
finance
Taxation                                           (164.6)              (145.7)
Capital expenditure and financial                  (258.2)              (167.0)
investment (see note (ii))
Acquisitions and disposals (see note                   5.9               (21.1)
(iii))
Equity dividends paid                              (258.6)              (413.5)

Cash inflow/(outflow) before management of            13.5               (90.6)
liquid resources and financing
Management of liquid resources                       263.7              (162.5)
Financing (see note (iv))                          (265.4)                260.3
Increase in cash                                      11.8                  7.2

Notes
                                                  52 weeks             53 weeks
                                                     ended                ended
                                                  31 March              1 April
                                                      2001                 2000
                                                        £m                   £m
(i) Increase in working capital
Decrease in stocks                                    14.7                 40.3
Increase in customer advances                      (117.8)              (206.2)
Increase in creditors                                 23.1                 51.1
Other working capital movements                       43.8                  0.9
                                                    (36.2)              (113.9)
(ii) Capital expenditure and financial
investment
Purchase of tangible fixed assets                  (269.8)              (447.5)
Sale of tangible fixed assets                         18.9                266.0
Net (purchase) / sale of fixed asset                 (7.3)                 14.5
investments
                                                   (258.2)              (167.0)
(iii) Acquisitions and disposals
Closure of Canadian operations                       (0.9)               (15.4)
Sale of Splendour.com Ltd                            (0.8)                    -
Repayment of loan by joint venture                     7.6                  0.5
Acquisition of minority interest                         -                (6.2)
                                                       5.9               (21.1)
(iv) Financing
Debt financing as shown in movement of             (245.9)                250.9
net debt
Purchase of own shares                              (20.3)                    -
Shares issued under employees' share                   0.8                  9.4
schemes
                                                   (265.4)                260.3

Reconciliation of net cash flow to
movement in net debt
                                                  52 weeks             53 weeks
                                                     ended                ended
                                                  31 March              1 April
                                                      2001                 2000
                                                        £m                   £m
Increase in cash                                      11.8                  7.2
Cash (inflow) / outflow from (decrease) /          (263.7)                162.5
increase in liquid resources
Cash outflow / (inflow) from decrease /              245.9              (250.9)
(increase) in debt financing (see note
(iv))
Exchange movements                                  (20.4)                 11.4
Movement in net debt                                (26.4)               (69.8)
Net debt at beginning of the period              (1,251.4)            (1,181.6)
Net debt at end of the period                    (1,277.8)            (1,251.4)