Skip Links

Notes to the financial statements

21 Borrowings and other financial liabilities

2009
£m		 2008
£m
Current
Bank loans and overdrafts1 147.9 257.4
Syndicated bank facility2 781.2 615.0
Finance lease liabilities 13.7 6.2
942.8 878.6
Partnership liability to the Marks and Spencer UK Pension Scheme 71.9 50.0
1,014.7 928.6
Non-current
Bank loans 11.2 –
6.375% £375m medium-term notes 20113 382.6 382.0
5.875% £400m medium-term notes 20123 417.9 421.4
5.625% £400m medium-term notes 20143 399.0 398.8
6.250% US$500m medium-term notes 20174 354.4 253.0
7.125% US$300m medium-term notes 20374 212.0 151.1
6.875% £250m puttable callable reset medium-term notes 20373,5 252.6 252.9
Finance lease liabilities 88.2 77.3
2,117.9 1,936.5
Partnership liability to the Marks and Spencer UK Pension Scheme 68.0 673.2
2,185.9 2,609.7
Total 3,200.6 3,538.3
  1. Bank loans and overdrafts includes a £5.0m (last year £5.0m) loan from the Hedge End Park Limited joint venture (see notes 16 and 30).
  2. Relates to a £1.2bn committed bank revolving credit facility set to mature on 26 March 2013.
  3. These notes are issued under Marks and Spencer plc’s £3bn European Medium-Term Note Programme and all pay interest annually.
  4. Interest on these bonds is payable semi-annually.
  5. These notes include an investor put and issuer call option exercisable in December 2012.

Finance leases

The minimum lease payments under finance leases fall due as shown in the table in note 22. It is the Group’s policy to lease certain of its properties and equipment under finance leases. The average lease term for equipment is six years and 125 years for property. Interest rates are fixed at the contract rate. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent payments. The Group’s obligations under finance leases are secured by the lessors’ charges over the leased assets.

Partnership liability to the Marks and Spencer UK Pension Scheme

Last year the partnership liability of £723.2m related to an amortising liability in respect of obligations of the Marks and Spencer Scottish Limited Partnership to the Marks and Spencer UK Pension Scheme. During the year an interest charge of £38.0m was taken to the income statement representing the unwinding of the discount included in this obligation at an implied average interest rate of 5.7% (last year 5.7%).

On 25 March 2009 the terms of the Scottish Limited Partnership agreement were amended to make the payment by the Scottish Limited Partnership of annual distributions to the Pension Scheme discretionary at the instance of Marks and Spencer plc in relation to financial years 2010/11 onwards. This discretion is exercisable if the Group does not pay a dividend or make any other form of return to its shareholders. As a result, the distributions to the Pension Scheme in 2009 and 2010 remains as financial liabilities, while the remaining financial instrument is now an equity instrument (see note 26).

The agreement includes a clause such that, following a default event (including the appointment of an administrator, liquidator, receiver or similar officer in respect of Marks and Spencer plc or Marks and Spencer Group plc and the winding up or dissolution of Marks and Spencer plc or Marks and Spencer Group plc) or on a relevant change of law, the net present value of the outstanding distributions becomes payable to the Pension Scheme by the Scottish Limited Partnership at the option of the Pension Scheme. On the basis of the expected cash flows associated with such an event, the related financial liability has been fair valued at nil.