Defined Benefit PensionScheme
Marks & Spencer Group PLC
07 March 2008
MARKS & SPENCER ANNOUNCES PRE-FUNDING OF CONTRIBUTIONS FOR UK DEFINED BENEFIT
PENSION SCHEME
Marks & Spencer has agreed to pre-fund £200m of its annual contributions to its
UK Defined Benefit Pension Scheme for the next three years by increasing the
value of the Scheme's interest in the property-backed partnership between itself
and Marks & Spencer. This partnership was set up in March 2007 as part of the
funding plan agreed with the Pension Trustee to address the Scheme's deficit.
To meet this £200m contribution of value, Marks & Spencer will place additional
M&S properties into the partnership with a current market value of approximately
£400m. These properties will be leased back to Marks & Spencer and the fixed
annual distribution made out of partnership profits to the Pension Scheme will
be increased from £50m to approximately £72m for the remaining 14 year period.
The arrangements enable Marks & Spencer to fund the £200m contribution at an
effective financing rate of approximately 6.1%. The Pension Scheme will hold the
enhanced partnership interest (worth around £700m representing the net present
value of the future distributions), as part of its total investment portfolio.
Marks & Spencer will continue to retain control over the properties held as part
of this arrangement, including the flexibility to substitute alternative
properties.
The partnership will continue to be consolidated in the Group's accounts with no
impact on its net assets. The amortising liability in respect of the obligations
of the partnership to the Pension Scheme shown on the Group's balance sheet will
increase by £200m matched by a prepayment which will be released over time as
the annual contributions would otherwise have fallen due. The impact of the
funding plan on the Group's Income Statement is not expected to be material.
Statements made in this announcement that look forward in time or that express
management's beliefs, expectations or estimates regarding future occurrences and
prospects are 'forward-looking statements' within the meaning of the United
States federal securities laws. These forward-looking statements reflect Marks &
Spencer's current expectations concerning future events and actual results may
differ materially from current expectations or historical results. Any such
forward-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; competitive
influences; 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 services
industries; acts of war or terrorism worldwide; work stoppages, slowdowns or
strikes; and changes in financial and equity markets.
Contacts:
Amanda Mellor, IR +44 (0)20 8718 3604
Majda Rainer , IR +44 (0)20 8718 1563
Corporate Press Office: +44 (0)20 8718 1919
This information is provided by RNS
The company news service from the London Stock Exchange
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