FINANCIAL MANAGEMENT

Financial Management

Financial Management

PART A: Marks Spencer's

Marks & Spencer, the high street retail chain, first took formation as a retail venture in 1894, becoming a listed company in 1926. The group generates almost all of its revenue from UK clothing and food sales, with about half of total turnover coming from the clothing arm.

There is an extra risk of losing money when shares are bought in some smaller companies including 'Penny Shares'. There is a big difference between the buying price and the selling price of these shares. If they have to be sold immediately, you may get back much less than you paid for them or you may have difficulty in selling them. Past performance is not a reliable indicator of future results. The price may change quickly and it may go down as well as up. You could lose every penny put into a particular share.

Up until July 2008, the Company generally issued B Shares to its ordinary shareholders twice a year in lieu of a cash dividend. B Shares were redeemable convertible preference shares of 0.1p each in the capital of Rolls-Royce Group plc (the Company. This was in lieu of a cash dividend.  Shareholders could opt for one of the following:

redeem all B shares for cash;

convert B shares directly into ordinary shares;

keep the B Shares.

However, following approval of C Shares at the 2008 annual general meeting of shareholders, the Company no longer issues B shares.

B share scheme, involved a bonus issue of stock to existing shareholders followed by immediate redemption and share consolidation. The second method, a capital repayment via a court-approved scheme of arrangement, involved creating a new holding company which then acquired the outstanding share capital of the existing group using a combination of shares and cash. A feature of both transactions is that they were treated as capital repayments rather than income distributions for tax purposes and as a consequence did not generate an ACT liability, Despite being entirely overlooked by mainstream research, B share schemes and court-approved capital repayments accounted for some of the largest cash payouts to shareholders in recent years. In aggregate, UK firms paid out nearly 18 billion through these two methods during the seven-year window ending April 2003. This figure represents half the aggregate value of open market share repurchases over the same period (Oswald and Young. 2006); and as revealed by results reported later in this paper, it dwarfs the corresponding value of funds distributed through conventional self-tender offers (2.2 billion) and special dividends (14.8 billion). The first schemes appeared in 1996 but it was not until the abolition of repayable dividend tax credits to taxexempt pension funds in July 1997 that the methods became a truly viable payout option.

Prior to that date, tax-exempt institutions had little interest in payouts structured to avoid ACT because such distributions did not carry a refundable tax credit. The abolition of repayable tax credits on 2 July 1997 reduced pension funds' strict preference for ordinary dividends, thereby increasing the relative attractiveness of ACT-minimising payout ...