On 18 May 2015 we announced our intention to engage in an ongoing and sustainable programme of returns of capital to shareholders. This year the Company will spend up to £150m buying back its shares, using the authority given by shareholders at the AGM held in July 2014. The buy back programme will be financed in the short term using the surplus cash generated by the business in recent years.
The buy back programme is in addition to 7.4% increase in the 2015 final dividend. The objective is to maintain our commitment to strong capital management disciplines and a strong balance sheet position whilst ensuring that shareholders are able to share in the surplus cash generated by the Company.
For more information regarding the 2015 share buy back programme please refer to our FAQ.
For a summary of transactions (shares bought back) to date, please click here.
In its simplest terms, a buy-back 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.