Marks and Spencer Finals

[idpickering]

Transformation - good progress

· Accountable businesses established with substantial changes in leadership

· Food business on track with Q4 like-for-like revenue of 0.4% and volume growth of c.1.8% adjusted for Easter timing. Transition to trusted value and wider appeal underway

· Underlying progress in Clothing in changing 'shape of buy', sizing, customer focus and style plus 14% reduction in stock into sale

· Improving the basics of dotcom, download speeds, fulfilment; 22% of UK Clothing & Home revenue now online compared with 19% last year

· UK store portfolio reshaping progressing with 26 full-line stores closed and 48 new store openings in the year. Programme expanded and larger store redevelopment planning initiated

· Good progress on cost savings delivering c.£100m, in addition to the operating costs of stores which have closed

· Transformational Joint Venture ("JV") with Ocado announced; a strategically compelling route to unlock profitable growth for M&S Food

· Proactive steps taken to strengthen and secure the balance sheet for future growth; final dividend for 2018/19 of 7.1 pence

· Announced terms of a 1 for 5 Rights Issue at 185 pence per New Ordinary Share to raise gross proceeds of approximately £601.3m

And later,

Dividend

On February 27 we announced the Board's decision to reduce our dividend per share by 40% to a sustainable level, which we aim to grow in line with earnings over time. We are declaring a final dividend of 7.1p (full year dividend 13.9p). This will be paid on 12 July 2019 to shareholders on the register of members as at close of business on 31 May 2019, subject to approval of shareholders at the Annual General Meeting, to be held on 9 July 2019. The 2018/19 final dividend per share and prior dividends per share will be restated in future accounts to reflect the bonus factor adjustment resulting from the rights issue in due course. The bonus factor adjustment arises due to the Rights Issue involving an element of bonus shares because the rights issue price is below the Closing Price of 271.2 pence per share.

https://www.investegate.co.uk/marks---3 ... 00057731Z/

Rights issue announcement here= https://www.investegate.co.uk/marks---3 ... 00067725Z/

[tjh290633]

Assuming that next years interim is reduced, pro rata to the reduction in Final, the yield on the rights issue will be about 6%, and I intend to take it up in full.

TJH

[Bouleversee]

Having regretted taking up various rights issues in the past (e.g. Lonmin, Mothercare) as all that did was to increase my losses, I was debating whether to take up or sell these but as TJH is taking up all of his, perhaps I should follow suit. Is everyone else of the same mind?

[Breelander]

I was debating whether to take up or sell these but as TJH is taking up all of his, perhaps I should follow suit. Is everyone else of the same mind?

There are rights issues, and then there are rights issues. The 'bad' type are to plug a gap in the accounts to keep the company afloat (a bit longer). The 'good' type are to fund expansion plans. This seems to be the second type.

On 27 February 2019, Marks and Spencer Group Plc ("M&S", or the "Company") announced the creation of a new 50/50 Joint Venture with Ocado Group Plc ("Ocado"), the UK's leading pure play digital grocer (the "Joint Venture"). It was announced that the transaction would be primarily equity financed via a rights issue which was fully underwritten...

https://www.investegate.co.uk/marks---3 ... 00067725Z/

I've yet to make up my mind about taking up my rights, but the Ocado JV looks (on the face of it) to be a reasonable idea.

[IanTHughes]

I was debating whether to take up or sell these but as TJH is taking up all of his, perhaps I should follow suit. Is everyone else of the same mind?

There are rights issues, and then there are rights issues. The 'bad' type are to plug a gap in the accounts to keep the company afloat (a bit longer). The 'good' type are to fund expansion plans. This seems to be the second type.

On 27 February 2019, Marks and Spencer Group Plc ("M&S", or the "Company") announced the creation of a new 50/50 Joint Venture with Ocado Group Plc ("Ocado"), the UK's leading pure play digital grocer (the "Joint Venture"). It was announced that the transaction would be primarily equity financed via a rights issue which was fully underwritten...

https://www.investegate.co.uk/marks---3 ... 00067725Z/

I've yet to make up my mind about taking up my rights, but the Ocado JV looks (on the face of it) to be a reasonable idea.

I agree with you. I do not hold Marks & Spencer (MKS) in my own HYP but there are holdings in a couple of family member HYP's that I manage and I am minded to exercise these rights. MKS would appear to be the one Retail share with what looks like a reasonable future. Maybe famous last words of course but an investment in this joint venture with Ocado Group PLC (OCDO) does appear to me to be moving in the right direction, bearing in mind our increasingly online retail world. I shall read the prospectus with interest.


Ian

[Bouleversee]

Thanks, Bree. Keep us posted. I am not totally convinced that the Ocado tie up will prove to be a resounding success. It might do something for the food side of the business but the last time I was looking at their clothes, I thought the quality and styles had gone downhill and didn't buy anything and the same applied to household goods. Also, if they follow the trend of charging for returns, customers might revert to visiting stores rather than buying on-line. They could score environmental brownie points and improve sales if they reverted to products which lasted.

[IanTHughes]

I am not totally convinced that the Ocado tie up will prove to be a resounding success. It might do something for the food side of the business but the last time I was looking at their clothes, I thought the quality and styles had gone downhill and didn't buy anything and the same applied to household goods.

Your personal experience aside, you are right and thank you for reminding me. Marks & Spencer (MKS) is not simply a supermarket. This rights issue is undoubtedly aimed at increasing the earnings from food, but any purchase of MKS should be based on overall earnings, not simply food.


Ian

[MDW1954]

Assuming that next years interim is reduced, pro rata to the reduction in Final, the yield on the rights issue will be about 6%, and I intend to take it up in full.

TJH

Has anyone done the 'tail swallow' on this?

MDW1954

[IanTHughes]

Assuming that next years interim is reduced, pro rata to the reduction in Final, the yield on the rights issue will be about 6%, and I intend to take it up in full.

Has anyone done the 'tail swallow' on this?

Give us a chance, the nil paid shares have not been issued yet!

https://www.investegate.co.uk/marks---3 ... 00067725Z/

It is expected that admission of the New Ordinary Shares (nil paid) will occur and that dealings in the New Ordinary Shares (nil paid) on the London Stock Exchange will commence at 8.00 a.m. on 29 May 2019.

Ian

[TUK020]

Having regretted taking up various rights issues in the past (e.g. Lonmin, Mothercare) as all that did was to increase my losses, I was debating whether to take up or sell these but as TJH is taking up all of his, perhaps I should follow suit. Is everyone else of the same mind?

I don't hold M&S, but if I did, I would be wary of taking up a rights issue in the presence of significant shorting activity.
https://shorttracker.co.uk/companies/?sort=2&d=desc
On the front page, with 7 funds shorting 9.1% of the stock

[PinkDalek]

I don't hold M&S, but if I did, I would be wary of taking up a rights issue in the presence of significant shorting activity.
https://shorttracker.co.uk/companies/?sort=2&d=desc
On the front page, with 7 funds shorting 9.1% of the stock

Presumably less wary than 12 months ago (when the short percentage was over 12%):

https://shorttracker.co.uk/company/GB0031274896/

We are taking up the rights issue, fwiiw.

[csearle]

We...

Royal? C.

[kempiejon]

Not for me, dividend cut. I'll take any cash inactivity throws up. I see I bought in 2008 with 22.5p per share dividend, it's never been that high in my holding history and offered me 18.7p last year and 13.9p next year.

[IanTHughes]

We...

Royal? C.

No I do not believe so but, having met the delightful Mrs PinkDalek, I can confirm she is like a Princess


Ian

[MDW1954]

Assuming that next years interim is reduced, pro rata to the reduction in Final, the yield on the rights issue will be about 6%, and I intend to take it up in full.

Has anyone done the 'tail swallow' on this?

Give us a chance, the nil paid shares have not been issued yet!

https://www.investegate.co.uk/marks---3 ... 00067725Z/

It is expected that admission of the New Ordinary Shares (nil paid) will occur and that dealings in the New Ordinary Shares (nil paid) on the London Stock Exchange will commence at 8.00 a.m. on 29 May 2019.

Ian

My apologies. It was the calculation I was interested in, not whether people had actually done it. I've been frenetically busy these last few days, but I thought that all the relevant information was in the public domain..? Apologies if not.

MDW1954

[IanTHughes]

Has anyone done the 'tail swallow' on this?

Give us a chance, the nil paid shares have not been issued yet!

https://www.investegate.co.uk/marks---3 ... 00067725Z/

It is expected that admission of the New Ordinary Shares (nil paid) will occur and that dealings in the New Ordinary Shares (nil paid) on the London Stock Exchange will commence at 8.00 a.m. on 29 May 2019.

My apologies. It was the calculation I was interested in, not whether people had actually done it. I've been frenetically busy these last few days, but I thought that all the relevant information was in the public domain..? Apologies if not.

For what it is worth, based on a current share price for Marks & Spencer PLC (MKS) of 238.20p, my calculation of the Ex-Rights Price is 229.34p. Please be aware though that this part of my Share Database Workbook has not been thoroughly tested - not enough Rights Issues - so treat this value with care. If I am right, the value of each nil-paid share will be a little over 44p.

We shall see


Ian

[MDW1954]

For what it is worth, based on a current share price for Marks & Spencer PLC (MKS) of 238.20p, my calculation of the Ex-Rights Price is 229.34p. Please be aware though that this part of my Share Database Workbook has not been thoroughly tested - not enough Rights Issues - so treat this value with care. If I am right, the value of each nil-paid share will be a little over 44p.

We shall see.


Ian

Thanks!

MDW1954

[NeilW]

The retail sector is dying in place. It may recover, or M&S may get sold off for its property assets, but I certainly won't be bothering with the rights issue. The shares are fully Dorised in the back of the drawer.

[pds2008]

M&S represent about 2% of my HYP and my holding has not changed since 2007. Back then I used to be a regular customer of food, clothing, even currency. Now I am, at best, a monthly food shopper. However, I have noticed an positive change in the clothing options (personal choice) and have started to buy clothes there. I also think the tie-up with Ocado offers potential but only if it is marketed in the right way.

That being said, it only persuades me to retain my current holding - I will not be participating in the rights issue.

Yell

[PrefInvestor]

M&S represent about 2% of my HYP and my holding has not changed since 2007.

Wow 2007, that’s a long time. Just hope that you didn’t pay 7xx for them.....?. Which was their pre 2008 price by the look of it.

Ocado sounds like an innovative company and should be a useful addition to the company. But whether it’s worth the asking figure is another matter.

ATB

Pref