Corporate Actions

On 18 May 2015 we announced our intention to engage in an ongoing and sustainable programme of returns of capital to shareholders. The buyback programme was financed using the surplus cash generated by the business in prior years.

For more information regarding the 2015 share buyback programme please refer to our FAQ.

Summary of transactions (shares bought back) to date, please click here. 

What is a share buyback?

In its simplest terms, a buyback is a company buying back its own shares. It can do this in one of two ways. The first, and by far the most common, is when a company instructs its broker to buy its shares on the open market, just as a private investor does when they buy shares through a broker. A company has to get authority from its shareholders in order to buy back its shares. This is usually done at its annual general meeting. Marks & Spencer obtains this authority at the AGM each year.

Secondly, and far less common, a company can announce a tender offer. This involves all shareholders submitting a price they would be prepared to accept for their shares. In both instances once the company buys back the shares it will normally cancel them.

In 2007/08 Marks & Spencer ran a programme to repurchase up to 10% of its issued share capital, representing around £1bn at the time. As in 2007/08, in 2015 we will again be instructing our brokers to buy shares in the open market. It is our current intention to cancel any shares repurchased in this way.

Summary of share transactions relating to the share buyback

Total shares bought back to date: 31,647,148

Value of shares purchased to date: £149,894,496

All transactions shown below are subject to the normal T+2 settlement period. Once the trade has settled the shares will be cancelled.

On 6 November 2007 we announced a programme to repurchase up to 10% of the Company’s issued share capital, representing around £1bn, using the authority given by shareholders at the AGM held in July 2007. The buyback programme was to be financed in the short term out of existing resources. In due course we expect to raise additional finance to complete the programme and maintain appropriate liquidity levels going forward.

The £1bn buyback programme was over and above the 31.7% increase in the 2007 interim dividend and an addition to the £1bn planned for investment in the business in 2007/08 and the similar amount planned in 2008/09.

The objective was to create shareholder value by improving the balance sheet efficiency (debt/equity ratio) and reducing the overall weighted average cost of capital. It also increases the earnings per share and indirectly returns value to existing shareholders by increasing the percentage of the Company that they own, through there being fewer shares in issue. 

Summary of transactions (shares bought back).

For more information regarding- close periods please see the FAQs.

What is a share buyback?

In its simplest terms, a buyback is a company buying back its own shares. It can do this in one of two ways. The first, and by far the most common, is when a company instructs its broker to buy its shares on the open market, just as a private investor does when they buy shares through a broker. A company has to get authority from its shareholders in order to buy back its shares. This is usually done at its Annual General Meeting. Marks & Spencer obtains this authority at the AGM each year.

Secondly, and far less common, a company can announce a tender offer. This involves all shareholders submitting a price they would be prepared to accept for their shares. In both instances once the company buys back the shares it will normally cancel them.

In 2004 Marks & Spencer returned £2.3bn by way of a tender offer and bought back some 28% of the shares in issue. This time we are instructing our brokers to buy shares in the open market. These will then be cancelled.

Tender Offer (Return of £2.3bn in 2004)

At the Annual General Meeting, on 12 July 2004, we announced the plan to return a further £2.3bn to shareholders by way of a Tender Offer. 

The return of £2.3 billion was equivalent to £1 per share as there were 2.3 billion shares in issue. Only shareholders who chose to sell some or all of their shares received money for their shares, at what is known as the 'strike price’. This was determined as 362p – a price within the tender offer range of 332p to 380p set by the Board. As a result, on 28 October 2004 approximately 635.36m ordinary shares were repurchased by the Company and cancelled at a price of 362p per share at a total cost of £2.3 billion. This represented approximately 27.9% of the issued share capital at that time.

The consideration for the Tender Offer was sent to those shareholders who successfully tendered shares by 28 October 2004.

Those that did not sell their shares back to the Company in 2004 would still have held the same number as the did before the tender offer. However, in percentage terms, they would have held a bit more of the Company than they did before.

Share Consolidation and B Shares (Return of £2bn in 2002)

Overview

In 2002 Marks & Spencer underwent a capital reorganisation. This was part of a project to return £2bn to shareholders.  Shareholders were given a new ‘B share’, valued at 70p, for every ordinary share they owned at the time of the re-organisation.  To make this possible the ordinary shares were consolidated at a ratio of 17 for 21, meaning that for every 21 ordinary shares held you received 17 new ordinary shares in Marks and Spencer Group plc.

The creation of B shares gave shareholders the opportunity to either redeem their entire holding of B shares at the time of creation and take the money, or to hold their B share allocation and receive dividends semi-annually.  If we had simply paid an increased dividend or made a one-off capital payment we might have put many of our shareholders in a position where they had been liable to pay capital gains tax. This could have reduced the amount of money they were able to receive.

The B shares gave the flexibility to redeem the shares twice a year, for 70p per share, allowing shareholders to manage their tax liabilities in accordance with their situation.  The value of the B shares would not have changed over the period that they were held.  At the first redemption date more than 80% of the B shares were redeemed by shareholders who chose to take the cash.

Shares split at a ratio of 17 new shares in Marks and Spencer Group plc for every 21 shares held in Marks and Spencer plc.  B shares created and allocated on a basis of 1 new B share for every 1 share held in Marks and Spencer plc (pre-reorganisation)

 Not all calculations would have been as simple as that shown above and fractional amounts would have been created. Shareholders were sent a cheque representing the value of this fractional entitlement.

Following the capital re-organisation, all old share certificates (dated pre March 2002) became invalid and new certificates were sent to all shareholders.

Final redemption

All outstanding B shares (74,184,314) were redeemed at par value (70 pence per share) on 5 May 2006. On Redemption the B shares were cancelled and the Company requested that the Financial Services Authority removes the B Share listing from the stock exchange. 

The decision by the Company to redeem all outstanding B shares was consistent with the rights and restrictions attaching to the B shares contained in the circular sent to shareholders in February 2002 prior to approval at the Extraordinary General Meeting of the Company on 28 February 2002.

The proceeds of the redemption

This would generally be treated in the hands of a shareholder as the proceeds of a disposal for the purposes of the UK taxation of chargeable gains. This applies even if you elected to invest the proceeds in Marks & Spencer shares or donate it to ShareGift.

Following the Marks & Spencer capital reorganisation in March 2002, the base cost for CGT purposes was 372.35p (81.43%) for each ordinary share and 68.75p (18.57%) for each B share.