Marks and Spencer Group plc
Annual Report & Financial Statements 2024
Reshaping
LOTS
TO DO
LOTS
DONE
LOTS OF
OPPORTUNITY
M&S
Our purpose is to bring the magic of M&S through
exceptional quality, value, service and innovation to
every customer, whenever, wherever and however
they want to shop with us. Our vision is to be the
most trusted retailer, doing the right thing for
customers, with quality products at the heart of
everything we do. This is underpinned by our
strategy to Reshape M&S for Growth, and through
this, we are seeing the beginnings of a new M&S.
Reshaping
M&S
COVER:
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INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
1
Annual Report & Financial Statements 2024
1
INTRODUCTION
2
Highlights for the Year
3
Chairman’s Letter
4
Chief Executive’s Review
6
Our Markets
8
Our Business Model and Stakeholder
Engagement
STRATEGIC REPORT
12
Strategic Progress
28
Our Key Performance Indicators
29
Financial Review
38
People & Culture
42
ESG review
44
TCFD
59
Non-Financial and Sustainability
Information statement
62
Risk Management
64
Principal Risks and Uncertainties
71
Our Approach to Assessing
Long-Term Viability
GOVERNANCE
72
Chairman’s Governance Overview
74
Our Board
76
Our Governance Framework
78
Board Activities
80
S.172 Statement
83
Board Review
84
Nomination Committee Report
87
ESG Committee Report
89
Audit & Risk Committee Report
95
Remuneration Committee Report
114
Other Disclosures
118
Directors’ Responsibilities Statements
FINANCIAL STATEMENTS
120
Independent Auditor’s Report
130
Consolidated Financial Statements
136
Notes to the Financial Statements
187
Company Financial Statements
189
Notes to the Company Financial
Statements
195
Group Financial Record
197
Glossary and APMs
202 Notice of Meeting
214
Shareholder Information
216
Index
OUR ESG REPORT
CONTENTS
LEADING
INNOVATION WITH
THE M&S FOOD X
ZOE GUT SHOT
p18
CELEBRATING 25
YEARS OF THE
M&S MILK PLEDGE
p19
THE DESTINATION
FOR DENIM
p22
WINNING IN
SUMMER
p23
Read more about our approach to
ESG in our ESG Report: corporate.
marksandspencer.com/
ESGReport2024
These icons, used throughout the report, indicate where you can find out more.
Read more
Link to Website
LOTS TO DO
LOTS DONE
LOTS OF
OPPORTUNITY
Marks and Spencer Group plc
ESG Report 2024
Reshaping
M&S
Marks and Spencer Group plc
ESG Report 2024
INTRODUCTION
2
Marks and Spencer Group plc
2
Marks and Spencer Group plc
INTRODUCTION
HIGHLIGHTS OF THE YEAR
FINANCIAL
GROUP REVENUE
£13.0bn
22/23: +9.3%
GROUP PROFIT BEFORE TAX
£672.5m
22/23: +41.4%
NET FUNDS EXCLUDING
LEASE LIABILITIES
£45.7m
22/23: 112.9%
BASIC EARNINGS PER SHARE
21.9p
22/23: +18.4%
GROUP PROFIT BEFORE
TAX AND ADJUSTING ITEMS
£716.4m
22/23: +58.0%
ADJUSTED EARNINGS
PER SHARE
24.6p
22/23: +45.6%
STRATEGIC
FOOD: VOLUME GROWTH
6.8%
22/23: 2.1%
CLOTHING & HOME:
MARKET SHARE
10%
22/23: +0.4%
NEW FULL LINE
STORES
6
22/23: +3
NEW FOOD STORES
8
22/23: +2
APP PERCENTAGE OF
ONLINE ORDERS
44%
22/23: +7%
RAISED FOR
YOUNGMINDS
£1.7m
Strong financial and strategic progress
in 2023/24 as M&S continues to Reshape
for Growth.
ALTERNATIVE PERFORMANCE MEASURES
This report provides alternative performance measures (“APMs”) which are
not defined or specified under the requirements of UK-adopted International
Accounting Standards. We believe these APMs provide readers with important
additional information on our business. We have included a glossary on pages
197 to 201 which provides a comprehensive list of APMs that we use, including an
explanation of how they are calculated, how we use them and how they can be
reconciled to a statutory measure where relevant.
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INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
3
CHAIRMAN’S LETTER
DEAR SHAREHOLDER
When asked to expand on last year’s performance I said that when
the “results are good the Chairman should say less.” That applies
this year too, so this letter will be a short one.
“BEHIND EVERY
SUCCESSFUL
TURNAROUND IS A
RENEWAL OF CULTURE,
TALENT AND
LEADERSHIP.
ARCHIE NORMAN
Chairman
Our objective has always been not just to arrest the long-term
drift in M&S’ performance but to forge a business capable of
sustained growth. This year saw growth in sales, market share
and profit in almost all our main markets and a much
strengthened financial position. We believe however, that we
are in the foothills of what we can achieve. This report sets out
why our success can evolve from a turnaround that surprised
many to a repeatable pattern.
Behind every successful turnaround is a renewal of culture,
talent and leadership. The M&S culture is transitioning from
slow, hierarchical and inward looking, to one of equal respect,
straight talking, closer to stores and closer to customers. A
healthy organisation is one which embraces criticism and is
comfortable with argument and debate, but once a decision
is made, organises to execute with disciplined speed and
efficiency. Progress towards this faster, more dynamic M&S
is the wellspring of our improved competitiveness.
The Board’s role is to help orchestrate and reinforce the
“reshaping programme”. That means having a challenging
engaged Board, close to the business and adding value to the
strategy as well as providing robust governance and awareness
of risk. Our Board is not for the faint hearted, but our work is
important and fulfilling. This year Katie Bickerstaffe is standing
down following the AGM after six years at M&S. She brought a
bolt of electricity to our proceedings and retires from the
Board with our good wishes.
Finally, M&S is a values-led business with a unique colleague
culture. The average hourly paid colleague has now seen
an increase of about 40% in pay during the last years of
transformation. This year many thousands received a welcome
return from the Sharesave scheme. It is very well deserved,
and we are grateful for their remarkable commitment and hard
work. Alongside that, our shareholders are also benefitting
from the resumption of dividends with a modest and initial
3p payment which should put a little kerching in everyone’s
pocket.
Yours sincerely,
ARCHIE NORMAN
Chairman
STRATEGIC REPORT
4
Marks and Spencer Group plc
CHIEF EXECUTIVE’S REVIEW
Two years into our plan to Reshape for Growth we can see the beginnings of a new M&S. Food
and Clothing & Home grew volume and value share ahead of the market and sales increased
across stores and online. Both businesses have now delivered 12 consecutive quarters of
sales growth and this trading momentum gives us wind in our sails, and confidence that
our plan is working. We are becoming more relevant, to more people, more of the time.
We remained unswerving in our commitment to trusted value,
offering customers exceptional quality at the very best price.
Food’s leading quality perception increased even further with
over 1,000 products upgraded and 1,300 new lines launched.
Continued progress was made on value perception with £60m
invested in price. In Clothing & Home, style perception
continued to improve and our decisive lead on quality and
value perception was extended. Our commitment to “First Price
Right Price” supported full price sell through ahead of last year.
Investment in store rotation and the end-to-end supply chain is
beginning to pay off. New stores and renewals are performing
ahead of forecast and attracting new customers. Supply chain
modernisation supported margin growth across both
businesses. In Clothing & Home, stock flow improved enabling
historically low levels of stock cover, and in Food, Gist is
delivering payback ahead of expectations.
Disciplined capital allocation underpins our plan, and the
financial health of the business is as strong as it’s been in
decades. Free cash flow has increased, financial net debt has
been eliminated, and returns on investment have improved.
The strength of the balance sheet, coupled with the sustained
improvement in performance, means we have the headroom
and confidence to invest for future growth as well as introduce
a 3p dividend.
“WE HAVE A CLEAR PLAN,
A CLEAR VISION FOR THE
FUTURE, AND THERE IS
SO MUCH OPPORTUNITY
AHEAD OF US. WE ARE
AT THE BEGINNINGS OF
A NEW M&S.
STUART MACHIN
Chief Executive Officer
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
5
OUR STRATEGIC PRIORITIES
DELIVER
PROFITABLE
SALES
growth
1. EXCEPTIONAL
PRODUCT,
TRUSTED RETAILER
2. CUSTOMER CENTRIC
BUSINESSES
3. EXPANDED
GLOBAL REACH
IMPROVE
OPERATING
margins
4. STRUCTURALLY
LOWER COSTS
5. HIGH PERFORMANCE
CULTURE
DISCIPLINED
INVESTMENT
choices
6. ACCELERATING
STORE ROTATION
7. MODERNISED
SUPPLY CHAIN
8. DATA, DIGITAL AND
TECHNOLOGY
DRIVE
SHAREHOLDER
returns
9. DISCIPLINED CAPITAL
ALLOCATION
Read more on our Strategic Progress on pages 12 to 27.
Through the Reshaping M&S strategy, our focus continues to
be on driving volume growth in Food and Clothing & Home to
deliver the market share and margin objectives we set out at
the Capital Markets Day. This year we have made a further
significant investment in colleague pay. This will be funded by
structural cost reductions and other efficiencies. Other cost
inflation will largely be offset by reduced energy costs. Given
our track record of delivering volume growth, market share
and free cash flow, we are confident that we will make further
progress in 2024/25 and beyond.
It has been a good year, and I would like to thank all of our
colleagues for their hard work and commitment. However,
there remains much work to do and that’s a good thing as every
challenge is an opportunity for growth. The soft wiring of the
organisation – who we are and how we show up – is changing
and we are building a culture where everyone is sleeves rolled
up, M&S first, closer to customers and closer to colleagues.
But culture change is a job that is never “done” and it is critically
important to reshaping M&S.
We have made progress on “hardwiring” sustainable change –
how and when we execute our strategic priorities – with
progress in store rotation and supply chain. However, we need
to move faster and be ruthlessly challenging on the areas
where progress has been slower, building a more effective
digital and technology infrastructure, accelerating the move
to a truly personalised customer experience, and resetting
priorities in International.
We have a clear plan, a clear vision for the future, and there is
so much opportunity ahead of us. We are at the beginnings of
a new M&S.
STUART MACHIN
Chief Executive Officer
STRATEGIC REPORT
6
Marks and Spencer Group plc
OUR MARKETS
How M&S is responding to the external environment
FOCUS ON VALUE
76%
of consumers are still concerned about the cost-of-living crisis
Source: M&S Family Matters Index
WHAT’S THE TREND?
– While there are early signs that cost-of-living pressures
are easing, it is still very much front of mind for customers.
In response to our Family Matters Index, 76% of customers
told us that they were still concerned about the cost-of-
living crisis.
– That concern means there is a continued focus on value.
Our Family Matters Index also found that almost half (47%)
of customers see value as the most important consideration
when deciding where to shop.
– But customers want to make sure they are getting the best
quality for the best price. 96% of the M&S Collective – a
community of 40,000 M&S Food customers – told us that
getting “good value from the products I choose” is more
important than choosing the “cheapest products available”.
HOW IS M&S RESPONDING?
– M&S is committed to investing in trusted value and reducing
promotions as part of our right price first time promise to
customers.
– In Food, prices were lowered on more than 40 “Remarksable”
products – our range of everyday grocery staples – with
prices “Dropped and Locked” on a further 90 lines. These
price adjustments have been met with a positive response
from customers, with Remarksable sales up 34%.
– In Clothing & Home, our “Value You Can Trust” campaign,
which puts a spotlight on our quality point of difference,
returned for a second year in January. The campaign
highlights M&S’ commitment to great value which means
creating clothes that are great cost per wear, hand-me-down
quality, and give customers the confidence that it will fit and
wash well.
– We also committed to holding the price on school uniform –
an essential for millions of households across the country –
for the third-year in a row. Every item of school uniform we
sell is designed to be durable and pass the “hand-me-down”
quality test.
– Our colleagues are customers too and we want to make sure
they are incentivised to shop at M&S. This year, our industry-
leading 20% colleague discount was extended to all branded
products across Clothing & Home and Food, both online
and instore.
HEALTHIER LIFESTYLES
4 in 5
people are actively taking steps to be healthier
Source: M&S Plate of the Nation report
WHAT’S THE TREND?
– Health is high on the agenda for customers. Our latest Family
Matters Index shows that customer focus on healthy eating is
a growing priority, with half of consumers planning to eat
more healthily in 2024.
– The definition of “healthy” is also evolving for customers, with
four out of five of the Collective telling us that they have
altered their diet to improve certain aspects of their health.
Trends such as high protein and gut health are influencing
food choices, with almost three quarters of the Collective
telling us that they have made changes to their diet to
improve their gut health.
– There has also been a long-term increase in people being
more active. Two million more adults are getting active on a
regular basis through sport and physical activity than in 2016
(source: Sport England Active Lives Adult Survey report). This
year, searches for “sportswear” on M&S.com increased 143%
year-on-year.
HOW IS M&S RESPONDING?
– Our vision is to make it easier for customers to make healthier
choices, in whatever way is relevant to them and their
families. Through our health strategy, we are developing
innovative product ranges, investing in our marketing to
inspire healthier food choices and prioritising health through
value mechanisms including fresh market specials and
“Remarksable” offers.
– To ensure we offer healthier and affordable options for our
customers, we continue to meet our commitment for at least
a third of our Remarksable Value products to have the Eat
Well seal, which is only given to products which meet
evidence-based criteria developed by our nutritionists.
– We have launched two new sub-brand food ranges called
High Protein and Good Gut. Each range meets strict
nutritional criteria and prominent health claims. Over 50
new food products have been created within these ranges,
and we have redeveloped a further 20 existing food products
to match.
– In January 2024, M&S launched a world-first collaboration
with nutrition-science company ZOE, introducing the M&S x
ZOE kefir-based shot, which quickly became our top-selling
line in drinks. The shot was co-created with ZOE and its
co-founder Professor Tim Spector, combining our expertise
in product development and trusted quality with 30 years of
ZOE’s scientific research.
– In Clothing & Home, M&S welcomed a host of new sportswear
brands to “The Sports Edit on M&S” platform this year,
including adidas and Sweaty Betty. Since “The Sports Edit on
M&S.com” launched in February 2023, M&S has continued to
grow market share and build credibility in sportswear,
catering to a range of customer needs, from specialist
performance footwear to athleisure.
The M&S Collective is a community of c.40,000 of our
top and core M&S Food Customers. These are our M&S
super fans, they are very engaged and eager to get
involved with all things M&S. The Collective is a tool in
which we can provide quick turnaround research, with
a variety of different research tools at our disposal.
The M&S Family Matters Index launched in 2021, in
partnership with research specialists Yonder. Each quarter,
we undertake in-depth research with 5,000 UK adults to
help us understand what really matters to families in the
UK, and to track their feelings, priorities, and ambitions in
the years to come.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
7
SHIFTING SHOPPING BEHAVIOURS
2 in 3
shoppers now say they prefer to shop both in-store and online
Source: Bazaar Voice, The State of Omni-channel Retail report
WHAT’S THE TREND?
– The shift towards omni-channel has irreversibly changed the
way we shop, and customers now expect to be able to shop
with their favourite retailers however and whenever they like.
– Two-thirds of shoppers now say they prefer to shop both
in-store and online with that number rising to almost three
out of four for customers aged 35-44 (source: Bazaar Voice,
The State of Omnichannel Retail report). 62% of non-food
shopping journeys now start online (source: Retail Economics
Top of Mind and Outlook for UK Retail).
HOW IS M&S RESPONDING?
– As M&S continues its transformation, there has been
significant investment in creating more personalised
customer experiences. We know that customers who shop
with M&S through both the online and store channels spend
significantly more than single channel customers, so we want
to make sure they have the best possible experience both in
our stores and online.
– This year, we continued the roll-out of our digital Click &
Collect proposition for our Clothing & Home business, with
customers now able to use the service in 95% of our stores.
A greater focus on efficiency has also reduced the amount
of time customers have to wait for their orders, with 75% of
our customers this year being able to collect their order in
90 seconds.
– Ocado Retail is a key channel to bring together the strength
of M&S’ brand and our leading food quality and product
development, with Ocado’s proprietary technology and
award-winning service to create an unrivalled online grocery
offer for customers. Over the past 12 months, the M&S range
on Ocado has grown by over 1,000 lines, increasing the live
addressable range from 69% to over 86% and meaning that
Ocado shoppers are now able to shop more M&S products
than ever before.
– We also signed an agreement with HSBC to bring together
rewards, Sparks, digital payments and credit to create an
easier to access and more personalised in-app experience for
customers where they can shop, pay, earn and redeem
rewards all in one place.
SUSTAINABLE LIVING
1 in 5
people find it difficult to live sustainably
Source: M&S Family Matters Index
WHAT’S THE TREND?
– While there are continued concerns about the cost-of-living,
customers still see trying to live more sustainably as
important. Over a third of customers told us through our
recent Family Matters Index that they would happily pay
more for sustainably produced products.
– Outside of purchasing behaviours, customers are also taking
other actions to try and live in a more environmentally
friendly way, from reducing both household and food waste
to trying to recycle as much as possible.
– Our quarterly ESG Reputation Tracker has shown that animal
welfare, sustainable sourcing and reducing waste are the
most important issues for customers.
HOW IS M&S RESPONDING?
– As a product-led business, we go to great lengths to source
and make our products with care, to the highest standards.
This approach is at the heart of how we deliver exceptional
product and uphold our trusted brand.
– Our choice of fibres and how they are sourced are important
and within our total Clothing & Home product footprint, the
sourcing of raw materials contributes 32% of these emissions.
This year we made progress, moving from 68% to 76% for
responsibly sourced fibres.
– Our Farming with Nature programme supports the uptake of
nature-friendly farming practices. In the 2023 WWF Basket
Report, M&S was the only retailer to score 100% against the
robust environmental schemes metric for our Farming with
Nature standards, and three years into the programme, we
are making good progress, with our growers now having set
aside 8% of their land to wildlife.
– M&S leads the industry in animal welfare standards. This year,
we have maintained our commitment for all fresh chicken to
be higher-welfare, slower-reared, British and RSPCA Assured.
We are also the only UK retailer to have converted our entire
fresh offer to meet the Better Chicken Commitment, and
always pay our dairy farmers a fair price, based on our
longstanding M&S Milk Pledge.
– In June, we launched our Beauty Takeback Scheme, in
partnership with beauty recycling experts, HANDLE. The
scheme enables hard to recycle beauty packaging materials
and components that commonly end up in landfill to be
recycled and turned into new packaging and products.
Customers can now drop their used beauty packaging
into dedicated boxes located in a number of our store’s
beauty sections.
The M&S quarterly ESG Reputation Tracker surveys
20,000 consumers to understand their views of ESG trends
and their perceptions of retailers in response to those
trends. The insights are collated by Portland, an
independent research consultancy.
STRATEGIC REPORT
8
Marks and Spencer Group plc
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OUR BUSINESS MODEL AND STAKEHOLDER ENGAGEMENT
M&S operates as a family of businesses across
Food, Clothing & Home and International,
each led by its own integrated management
team with accountability for their divisions,
including marketing, supply chain and finance.
WHAT MAKES US M&S?
EXCEPTIONAL OWN-BRAND PRODUCT
M&S offers exceptional quality product, at value customers
can trust. Innovation is at the heart of the design and
development of products. These are sourced with care,
through longstanding trusted supplier partners, with market
leading animal welfare standards, ethical trading programmes
and a sustainable approach to raw materials.
TRUSTED BRAND
A heritage of almost 140 years has built a
unique relationship between M&S and
the British public. M&S is a brand that is
trusted to do the right thing by our
colleagues, customers and the
communities we serve.
CLOSER TO CUSTOMERS
Continuously listening to the 32 million
customers M&S serves every year to
improve our products and deliver
brilliant service. A company-wide culture
that puts colleagues closer to customers
to ask questions and drive change.
CLOSER TO COLLEAGUES
M&S’ 64,000 colleagues all have a role to
play in reshaping M&S and delivering for
our customers. They bring extraordinary
passion for the business and extensive
technical expertise in areas such as
sourcing, design and product
development.
OMNI-CHANNEL ADVANTAGE
M&S has a network of 1,058 UK-owned
and franchise stores, connected to the
digital shopping experience, including
our Clothing & Home website and app, to
make it easier for customers to shop in
the way they want. M&S has a 50%
investment in Ocado Retail and a
presence in 71 international markets.
Read more about our Strategic
Progress on pages 12 to 27.
OUR APPROACH TO ESG
Read more about our approach to ESG in
our ESG Report marksandspencer.com/
ESGreport2024
CREATING VALUE FOR ALL
STAKEHOLDERS
1 Customers
2 Colleagues
3 Shareholders
4 Suppliers
5 Partners
6 Communities
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
9
1
CUSTOMERS
2
COLLEAGUES
WHY THEY ARE IMPORTANT
Maintaining and growing customer loyalty ensures the continued
success of our business. We put customers at the heart of everything
we do and provide great service and exceptional quality product,
at remarkable value however they want to shop with us.
WHY THEY ARE IMPORTANT
Reshaping M&S for growth requires a high-performance culture
where everyone is accountable for delivering performance and driving
change. We are committed to making M&S a great place to work,
where everyone has a voice, can be themselves and be their best.
WHAT WE HEARD AND HOW WE RESPONDED
Customer immersion sessions
Throughout the year, we held customer immersion sessions at our
Support Centre on a range of topics including our “Dine in Tonight”
customer mission. Customers told us one of their weekly struggles was
deciding what their Monday to Thursday dinner was going to be, and
how to keep it interesting and varied. We therefore recently launched
our £10 Cook Menu Dine In, made up of 23 mains and 16 sides to choose
from, adding the variety back into midweek dinners and elevating the
everyday for our customers.
Menswear deep-dive session
In summer 2023, we hosted deep-dive sessions with customers to
better understand their views on our Menswear. The insights gained are
shaping the strategy for the category moving forward and will continue
to inform the way we grow our Menswear range, building on our style
credentials to appeal to our target demographic.
The Collective
This year, we conducted over 200 surveys via our online community
of 40,000 engaged Food customers (“The Collective”) on a wide range
of topics. These surveys typically help us to better understand our
customers preferences in areas such as product development,
category transformation, packaging and sustainability. 97% of
customers told us receiving good value from the products they
choose was important to them. In response, as part of our trusted
value promise, we invested in and locked the prices of over 200 Food
products. Given the growing interest from customers around gut
health, this year we launched our M&S Food x ZOE Gut Shot, in
partnership with nutrition-science company ZOE.
Read more about The Collective on page 6.
WHAT WE HEARD AND HOW WE RESPONDED
Closer to Customers programme
To ensure Support Centre colleagues can directly hear from our
customers and retail colleagues, we have enhanced our Closer to
Customers programme. These colleagues now spend seven days in
store each year, four of them in the lead up to Christmas, which is our
busiest time. This year, Support Centre colleagues spent 103,000 hours
helping our stores and customers over the festive period, and our retail
colleagues told us they were a real support.
Neonatal and enhanced family leave policies
After one of our store colleagues shared her own personal story during
a Closer to Customer day, in May 2023 we introduced a new Neonatal
Leave policy providing up to 12 weeks of additional leave for any M&S
colleague whose baby requires specialist neonatal care. We received
positive feedback through our Business Involvement Group and
colleague networks that this improvement to colleague benefits was
especially meaningful. As a result, we have worked closely with them to
develop our enhanced family leave policies, so from 1 April 2024 new
parents can spend more time on leave with full pay. Read more on
page 40.
Colleague briefings
Through face-to-face briefings and surveys, colleagues told us that
pay and benefits continue to be a priority, especially for our retail
colleagues. To recognise the vital role of our store colleagues, in
February 2024 we announced a record £89m investment in retail pay,
raising the hourly rate to at least £12 per hour in line with the Real
Living Wage.
ShareSave scheme
This year over 9,200 colleagues, the majority being customer service
assistants, benefitted from the vesting of our 2020 ShareSave scheme.
A number of colleagues shared how they were unsure on the options
available to them on maturity, so we partnered with Wealth at Work who
provided financial education sessions, helping everyone understand
their shareholding options and any potential tax implications. Many of
them have told us this was key to realising the benefit of the scheme.
Straight to Stuart
Through our colleague suggestion scheme, “Straight to Stuart”,
almost 4,000 colleagues shared ideas for ways to improve our
business. This year, 120 suggestions have already been implemented,
including development of a range of no/low alcohol cocktail cans.
The new lines, including the M&S Low Alcohol Lime Mojito and M&S Low
Alcohol Golden Spiced & Cola, launched in June and have proven a big
hit with customers.
Read more on colleague engagement in our People and
Culture section on pages 38 to 41.
40,000
Food customers in The Collective
68m
Shares issued to colleagues in 2020 ShareSave scheme
STRATEGIC REPORT
10
Marks and Spencer Group plc
OUR BUSINESS MODEL AND STAKEHOLDER ENGAGEMENT CONTINUED
3
SHAREHOLDERS
4
SUPPLIERS
WHY THEY ARE IMPORTANT
Building shareholders’ trust through continuous engagement helps
secure their ongoing investment and support. Given the scale of our
shareholder base, we operate a bespoke engagement programme
for retail shareholders to enable us to make decisions informed by
their views.
WHY THEY ARE IMPORTANT
Long-term partnerships with M&S allow suppliers to create great
products, build volume at equitable prices and give them confidence
to invest in sustainable solutions and innovation. Our trusted
partnerships with suppliers allow us to deliver the most exciting
innovation, highest quality products in the most sustainable way,
to drive our vision and the magic of M&S forward.
WHAT WE HEARD AND HOW WE RESPONDED
Interactive Investor pilot scheme
We regularly hear from our private shareholders who hold via a
nominee, that they find it difficult to join our Annual General Meetings
(“AGM”). In June 2023, we partnered with Interactive Investor on a pilot
scheme allowing M&S shareholders on their platform to engage and
participate at our AGM with their own unique link. We also offered
nominee shareholders the opportunity to join our private shareholder
panel so they can engage with us directly.
Private shareholder panel
This year, we reset our private shareholder panel, making meetings
more frequent, interactive, and digitally-enabled. To give our private
shareholder panel the opportunity to deepen their understanding of
M&S, we provided strategic updates on our different business areas.
In November, the panel heard from CEO Stuart Machin who updated
them after half-year results, and in March 2024 our Managing Director
of Food, Alex Freudmann hosted a panel session focused on our Food
business, sharing thoughts on innovation, value and quality. Panel
members gave positive feedback, sharing how they found the sessions
interesting and informative. Their product suggestions were shared
with the Food leadership team following the meeting.
AGM
Following the 2023 AGM, a small number of our private shareholders
told us they would appreciate being able to attend our AGMs in-person.
While this year’s meeting will remain digital in line with our digital-first
approach which has driven high engagement in recent years, if a
shareholder wishes to attend in person, there will be seats available at
our Support Centre. These will be allocated on a first-come first-served
basis. Shareholders are requested to register their intention to attend
in advance, to help us manage capacity on the day. More details can be
found in the Notice of Meeting on pages 202 to 213.
Engagement with institutional funds
During the year, members of our Board and Investor Relations team
met over 160 institutional funds, engaging with investors who we
estimate represent close to 40% of our issued share capital. The
resumption of a dividend was amongst the topics discussed, with some
institutions telling us that long-term growth is their top priority. Having
strengthened our balance sheet and reduced our net debt in the first
half of 2023/24, an interim dividend of 1p per share was paid in January
2024, and the Board is recommending a final dividend of 2p per share,
subject to shareholder approval at the AGM. Read more on page 82.
Capital Markets Day
Institutional shareholders have continued to tell us they are interested
in our transformation and how investment in our strategic priorities will
deliver value and long-term sustainable growth. In November 2023, we
held a Capital Markets Day with shareholders, led by the CEO, Co-CEO,
CFO and key M&S leaders, to provide more insight on strategic
progress to date and priorities moving forward.
WHAT WE HEARD AND HOW WE RESPONDED
Food supplier listening groups
We held listening groups and subsequent briefings with our Food
suppliers. Key issues were raised around ways of working and
forecasting demand. To tackle these, we are developing a new process
for setting out our growth targets, and implementing a new system to
improve forecasting accuracy for our supply chain.
C&H Supplier Summit
We invited suppliers to our C&H Supplier Summit in September 2023,
our first since 2007. This was a three-day event with 30 international
suppliers in attendance where we shared our ambitions to accelerate
growth. Feedback highlighted the need to simplify our decision-
making and use supplier expertise to solve issues such as traceability.
In response to the sessions, we will be initiating mini-projects with our
supplier base to share industry knowledge.
Mill Weeks
To build a more engaged relationship with our Tier 2 C&H Suppliers,
we ran “Mill Weeks” in July 2023 and February 2024. Our fabric mill
suppliers (responsible for knitting and weaving our fabric) were invited
to our Support Centre to meet senior leaders and our internal buying
and design teams. In the sessions, suppliers presented their latest
textile innovations which are now feeding into the development of new
garments. We also shared our ambitions for a traceable supply chain by
inviting our traceability tool provider to demonstrate their technology;
the aim being to support our ethical and sustainability journey.
Sri Lanka visit
In February 2024, our CEO, Managing Director of Clothing & Home
(“C&H”) and Director of Sourcing travelled to Sri Lanka to visit
longstanding C&H suppliers, touring the manufacturing facilities and
fabric mills. Developments in product, innovation and sustainability
were discussed, as well as the need to maintain a two-way trusted
relationship. Showing us the everyday operation of the facilities, as
well as sharing fresh ideas, has strengthened our relationships and
positions us to work together on future innovations.
163
Institutional investors engaged
30
International suppliers attended our C&H Summit
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
11
5
PARTNERS
6
COMMUNITIES
WHY THEY ARE IMPORTANT
Our franchise and joint venture partners provide avenues to expand
our reach and access new customers in the UK and internationally.
These relationships provide our partners with benefits, including
access to the M&S brand and distribution of our own-brand product.
WHY THEY ARE IMPORTANT
M&S makes a difference to the causes that matter to our customers and
colleagues. Our continued Community acceptance and mutual respect
ensures we are a force for good for the people in the places we impact.
This includes the wider environment, where considerate use of
resources contributes towards our long-term sustainability.
WHAT WE HEARD AND HOW WE RESPONDED
Voice of the Partner survey
We launched an independent “Voice of the Partner” survey for our
International franchise businesses which allows us to measure “partner
NPS” and understand franchise colleague feedback. Key themes raised
included a desire for better visibility of M&S processes and assortments
for local markets. As a result, we have increased engagement through a
combination of market visits, in-person events with product teams, and
implementation of a multi-drop process to ease product intake and
supply chain pressures.
International Business Boards
Following Voice of the Partner feedback around closer collaboration,
we now periodically invite our franchise partners to our International
Business Board meetings. This allows in-depth discussion and more
frequent engagement between senior leaders.
Convenience Partner Conference
This year for the first time we held a Convenience Partner Conference
to share our strategic direction and receive feedback from our
convenience franchise partners. We used this opportunity to share
many of the initiatives we are launching within our company owned
estate to help our partners, grow our joint profitability and deliver
consistency across our estate.
Partnership Working
We hold quarterly steering groups with our Partners and the M&S
Channels Leadership teams, focused on our medium-term strategy,
growth plans and risks and opportunities. We also hold monthly growth
meetings that focus on the delivery of our in-year Joint Business Plan.
Growth meetings also focus on Retail Standards and the delivery of our
Retail KPIs.
Third-party brands – Nobody’s Child
In 2021, M&S acquired a 27% stake in Nobody’s Child. In May 2023, we
announced fresh funding at a pivotal trading period to support the
eco-conscious fashion brand’s growth. For the Spring/Summer
collection, we also trialled a pop-up shop concept in 30 M&S stores and
saw over 86,000 M&S customers shop the brand. Nobody’s Child is one
of the most-loved brands at M&S and we continue to explore ways to
further develop the partnership.
WHAT WE HEARD AND HOW WE RESPONDED
Headline charity partnership – YoungMinds
This year, we reset our Community Strategy. Through the process of
identifying our headline charity partner, customers and colleagues
told us their number-one priority is the mental health of their family.
In October, we launched our new headline charity partnership with
YoungMinds, the UK’s leading mental health charity for young people.
Our partnership goal is to raise £5m over three years, enabling
YoungMinds to support seven million young people in managing their
mental health. More information on our partnership can be found on
our website.
Go to corporate.marksandspencer.com/media/
marksandspencer-youngminds
M&S Archive
The M&S Archive welcomed record numbers of visitors to the newly
redeveloped exhibition in Leeds showcasing the M&S story which,
in response to visitor feedback and community consultation, now
includes more interactive features. New sessions and resources,
developed in consultation with teachers and learners of all ages, were
added to the Archive’s learning and community programmes. Over
1,150 school pupils took part in workshops at the Archive this year, with
free digital resources also available to be downloaded by teachers and
home educators on the Archive website, focused on M&S case studies
to learn about sustainability, design and innovation.
ESG reputation tracker
This year, for the first time we ran a quarterly reputation tracker
surveying 20,000 consumers on their views on ESG and perceptions
of how well retailers are tackling ESG issues. With a year’s worth of
insight, we now have a much clearer picture of what customers care
most about when it comes to ESG, including animal welfare and
responsible sourcing.
Read more about the ESG reputation tracker on page 7.
16
Global franchise partners
1,150
School pupils participated in the Archive’s
outreach workshops
S.172 STATEMENT
The directors confirm that, during the year, they have acted
in good faith in a way that best promotes the success of M&S
for the benefit of shareholders as a whole. In doing so, they
have had regard for the interests of all M&S stakeholders,
while preserving M&S’ reputation and ensuring our
long-term sustainability.
Our complete s.172 Statement: pages 80-82.
STRATEGIC REPORT
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Marks and Spencer Group plc
STRATEGIC PROGRESS
RESHAPING FOR GROWTH
Over the past two years, the strategy of reshaping
M&S has delivered growth in sales, market share,
margins, return on capital and free cash flow. The
programme is in its early stages with substantial
scope for further operational efficiency and
sustainable growth and we are laser-focused on
the continued execution of the plan which we set
out at the Capital Markets Day in 2022.
CREATING EXCEPTIONAL PRODUCTS
Our vision is to be the UK’s most trusted retailer, with exceptional
quality products at the heart of everything we do. The M&S Food
model is focused on a tightly edited range and concentrated supply
base, consistently innovating and improving products, whilst
investing in trusted value. As we evolve the range and open larger
renewal format stores, customer appeal is broadening to family
shoppers. Clothing & Home’s transition to a new trading model
includes buying more deeply into core lines, translating fashion
trends into greater newness and concentrating supply with strategic
partners and a faster supply chain. This is resulting in improved
perceptions in style, quality and value, and reduced promotion and
markdown. Market share increased to 10.0% (from 9.6%) in Clothing
and 3.7% (from 3.55%) in Food in the 52 weeks ending March 2024.
There are substantial opportunities for growth to achieve our
ambition of a 1% market share increase in both businesses between
FY23 and FY28.
RESHAPING THE CHANNELS OF GROWTH
A more productive store estate is critical to long term growth as
performance is constrained by legacy stores that are more expensive
to operate and do not demonstrate the M&S brand of today. Rotation
towards a target estate of 180 full line and 420 Food stores provides
significant opportunity to invest and grow in the years ahead. New
and renewed stores are attracting new customers and returns on
investment have been strong. Investment is planned to increase
as attractive new sites are secured, and as renewal performance
continues to be robust.
Our long-term objective for M&S.com’s share of Clothing & Home
sales is to grow towards 50%, having increased from 22% five years
ago. Online growth has increased, supported by better product and
more effective marketing. Despite this, profitability is not yet market
leading despite our scale advantage. There is much more to do
to develop the online and M&S App experience and customer
engagement , whilst growing partner brands. All of this will help
retain customers within our M&S eco-system.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
13
Image: M&S Liverpool
One Foodhall
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Marks and Spencer Group plc
STRATEGIC PROGRESS CONTINUED
RESHAPING FOR GROWTH
CONTINUED
Results for Ocado Retail are reported by the Ocado Group, and
are not consolidated in these accounts. We believe the Ocado
Retail model of automated fulfilment powered by Ocado
technology, and M&S product, could be the most competitive
model for online grocery sales in the UK. M&S Food has worked
closely with Ocado Retail to reset the business and we are
now seeing encouraging active customer and sales growth,
although profitability is well below the original business plan
and expectations. There is enormous opportunity to improve
trust in value, website experience, logistics, and supply chain,
which will be the focus for the next two to three years.
The transformation in our International business has not made
as much progress as our UK businesses, so it is now undergoing
a reset. Over time, we plan to leverage our UK business and
trusted brand to increase global reach through capital light
partnerships and a multi-platform online business.
INCREASING EFFICIENCY OF OPERATIONS
In Food, the integration of the Gist acquisition has generated
strong returns and provides the foundation for a ten-year
programme to invest in, and modernise, the supply chain.
The Clothing & Home supply chain is now more focused with
fewer, more strategic suppliers having also rationalised the
number of distribution centres in the UK. There is lots to do
to reduce costs, improve stock flow and drive availability with
plans to modernise our merchandise and range management
technology.
With the evolution towards an omni-channel and personalised
customer experience, a more effective digital and technology
infrastructure is a critical enabling step and progress to date
has been slower than planned. With new leadership soon to
be in place, we expect to accelerate change and increase
investment in core technology infrastructure, including
an upgrade in SAP starting this year.
Overall, these operational improvements mean there is
substantial further scope for structural cost reduction.
With continuing cost headwinds, notably from investment in
colleague pay, the structural cost programme is critical to our
profit progression. The £180m delivered to date has supported
a 0.8% pt. reduction in UK operating costs as a percent of sales.
We are increasing the objective for cost reduction from £400m
to £500m, to be delivered by 2027/28. This will support
continued delivery of our target operating margins of over
4% in Food and over 10% in Clothing & Home, as well as further
investment in quality and value.
GENERATING CASH FOR INVESTMENT AND
SHAREHOLDER RETURNS.
Our financial goals prioritise operating cash flow generation
and a strong balance sheet to provide the capacity for
investment in growth and structural cost reduction. Free
cash flow has increased and we have net funds excluding lease
liabilities at the year end. The returns we are delivering on
recent investments have been in excess of our cost of capital
and the minimum hurdle rates set out at the last Capital
Markets Day. The business now has the capacity to increase
capital allocated to the rotation and renewal of stores, to invest
in the Food and Clothing & Home supply chains and in
improved digital and online capability.
The stronger financial position and performance also provides
the opportunity to restore dividend payments at a sustainable
level, with a proposed final dividend of 2p resulting in a full year
dividend of 3p for 2023/24.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
15
Image: M&S Liverpool One
STRATEGIC REPORT
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Marks and Spencer Group plc
STRATEGIC PROGRESS CONTINUED
FOOD, INVESTING IN
INNOVATION AND
VALUE, ATTRACTING
FAMILY SHOPPERS
M&S Food is gaining new customers and
broadening its appeal. Our objective is to grow
volume and market share by investing in value,
quality, and innovation, growing through new
space, store rotation and renewal, and investing
in the supply chain to improve availability
and efficiency.
STRATEGIC KPI’S: FOOD
Market share of
M&S sales in stores
increased to
3.7%
22/23: 3.6%
Value
NPS
+2%
22/23: -3%
Quality
NPS
+69%
22/23: +66%
LONG TERM CHANGES, IMPROVING THE GROWTH POTENTIAL OF
FOOD INCLUDE:
– Investing in trusted value, with promotions reducing to 12% sales
versus 26% in 2017/18.
– Upgrading and innovating one third of the range each year, driving
volume lines and development in health.
– Developing bigger, ‘fresh market’ style stores in the renewal format
offering a broader range, and improved customer experience,
increasingly catering to family shoppers.
– Increasing the share of larger baskets by a quarter since 2019/20.
MARKET LEADING VOLUME GROWTH IN 2023/24
In 2023/24, Food sales grew 13.0% with LFL sales up 11.3%. As a result of
sales and volume growth, the benefits of sourcing and structural cost
reduction and the acquisition of Gist, adjusted operating profit
increased to £395.3m (4.8% margin) from £248.0m (3.4% margin)
last year.
– Prices were lowered on more of our ‘Remarksable Value’ products,
with over half of the range in M&S’ healthier ‘Eat Well’ range.
Remarksable sales grew 34%. We also ‘Dropped and Locked’ prices
on a further 90 lines, building customer trust in M&S value for
money in an increasingly promotional market.
– 1,300 new lines were launched, including category resets in basket
building products such as biscuits and hot beverages, and product
development in high protein and gut health. We also upgraded the
quality of more than 1,000 customer favourites.
– With the price of eating out increasing, the ‘Dine-In’ offer, which
provides an ‘always on’ restaurant quality alternative, saw sales
growth of over 40%.
– Market share of M&S sales in stores increased to 3.7% (from 3.6% in
2022/23) driven by growth in volume, larger baskets and across all
demographics. Once M&S on Ocado is included, market share
increases to 4.2% (from 4.0% in 2022/23).
– Customer perceptions of value, quality and sustainability
all improved.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
17
Image: M&S Food Ambassador Tom
Kerridge visiting one of our Oakham
Gold slower-reared, higher-welfare,
RSPCA assured chicken farmers.
STRATEGIC REPORT
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Marks and Spencer Group plc
STRATEGIC PROGRESS CONTINUED
FOOD, INVESTING IN INNOVATION AND VALUE,
ATTRACTING FAMILY SHOPPERS
LEADING Innovation WITH
THE M&S FOOD X ZOE GUT SHOT
Awareness of gut health is continuing to grow, and customers
are on the hunt for products that support better digestive
function. In January, searches for ‘gut health’ were up 247%
on Ocado.com compared to 2021 and gut health was named
as a top food trend by Kantar in 2023.
In response to growing demand, M&S leveraged expertise in
product development, quality and innovation, to embark on
a collaboration with leading nutrition-science company ZOE
– the company’s first retail partnership.
The result of this year-long product development journey
was the launch of the M&S Food x ZOE Gut Shot which is
packed with over five billion live cultures from 14 strains
of friendly bacteria, high in fibre and a source of calcium.
The revolutionary new product, which combines
the best of science, taste and innovation to offer
customers a convenient way to improve their gut
health, is proving a hit with customers, with 1.1m
gut shots sold in the three months from launch.
1.1m
gut shots sold in the three
months from launch
In 2024/25, further value investment is planned, with a focus
on driving volume growth further, together with renewing and
developing key product ranges such as the recent ‘Cook’ menu,
‘Dine-In’ launch and further investment in quality.
STORE RENEWAL AND EXPANSION CONTINUES TO PLAN
Six new Foodhalls were opened as part of full line store
rotations, and we opened eight standalone Food stores.
New Simply Food stores averaged c.13,000 sq. ft compared
with a current average of c.8,000 sq. ft, enabling the ranging
of a fuller catalogue, illustrating the growth opportunity for
the business.
– Eight Food stores were also renewed, bringing the total
to 104, with renewal store sales performing ahead of plan.
– Renewals that opened in 2022/23 saw sales increase by a
further 14% in 2023/24, with healthy customer metrics
for frequency and basket size.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
19
CELEBRATING 25 YEARS OF
THE M&S Milk PLEDGE
At M&S, we are committed to trusted value. That means
giving customers confidence in a great everyday price
but more importantly, reassuring them that we will never
compromise on the quality and standards they expect.
This year, we are celebrating 25 years of our milk pledge.
It was introduced as a commitment to pay farmers a
transparent and market-leading price, taking into account
the costs of production and recognising the hard work and
dedication of our farmers to meet our higher welfare,
RSPCA Assured standards.
M&S is the only retailer to sell 100% RSPCA Assured milk.
Our collaborative and supportive approach ensures our
40 M&S Select dedicated milk pool farmers across the UK
have the confidence to invest in their businesses and meet
the higher welfare standards we expect.
We were the first retailer to offer ‘best before’ labelling on
fully recyclable milk bottles, following the removal of
coloured plastic caps, helping customers to tackle food
waste and play their part in a circular economy – two key
areas where customers want to make an impact.
100%
RSPCA Assured milk
40
M&S Select dedicated milk
pool farmers across the UK
– The ten ‘full’ Food renewals opened since 2019 with
annualised trading are expected to pay back the capital
invested in four years.
– This year, we expect to open nine new Food locations and to
accelerate investment in renewal, completing around 25
schemes, strengthening the pipeline of openings.
GOOD PROGRESS ON THE FOOD
‘BACKBONE’ PROGRAMME
The Food supply chain programme is driving a series of
changes to create a more modern cost competitive flow of
product from field or factory through to checkout. This will
drive availability and reduce waste and costs to distribute
whilst creating a more sustainable operation.
– Long term supplier commitments and joint efficiency plans
delivered cost of goods savings enabling investment in value
and quality, with further progress planned this year.
– The Gist acquisition has delivered logistics savings which
were greater than expected and a rapid pay back on invested
capital, largely through integrated management. Despite
this, the network is old and a high cost to serve. This year will
see the first steps in new capacity investment as we develop
the longer-term network plan.
– The roll out of a new forecasting and ordering system
reached c.50% of lines with availability increasing without
increasing waste, although there is substantial scope for
improvement. In 2024/25 we expect to complete roll out to
all categories. Alongside this, we are working on a more
consistent approach to space and range changes.
– A new retail operations programme ‘One Best Way’ was
trialled in the year, succeeding the former ‘Operation
Vangarde’, and started to deliver further availability and
productivity benefits.
– Over 100m pieces of plastic packaging have been removed,
including through the introduction of first-to-market fully
recyclable takeaway cups. £1m is being invested to reduce
carbon emissions in the creation of our RSPCA Assured milk.
M&S Food is a unique model driven by its focussed own label
range, integrated relationships with core suppliers, continuous
focus on quality and innovation and its commitment to provide
better quality and sustainability, at great value for money. Our
confidence in growth is underpinned by the fact that market
share is substantially higher than average in some parts of the
UK, showing the potential.
STRATEGIC REPORT
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Marks and Spencer Group plc
STRATEGIC PROGRESS CONTINUED
CLOTHING & HOME
GROWTH REFLECTING
THE TRANSITION TO
A NEW TRADING MODEL
The improved performance of Clothing & Home
is driven by better product, style and quality
at everyday great value. This is appealing to a
broader customer base, showing the growth
potential from improving the product and online
shopping experience, and the store environment
through renewal.
STRATEGIC KPI’S: CLOTHING & HOME
Market share
increased to
10.0%
22/23: 9.6%
Perception
for style
29%
22/23: 25%
Perception
for value
43%
22/23: 39%
LONG TERM CHANGES, IMPROVING THE GROWTH POTENTIAL
OF CLOTHING & HOME INCLUDE:
– Reducing the long tail of option count, with double digit percentage
reduction in womenswear since 2019/20.
– Buying bolder and deeper, growing lines with over £1m of sales by
c.50% over the last two years.
– A shift to everyday trusted value, with full price sales mix increasing
from 63% to 81% since 2019/20.
– Improving stock flow with stock cover now less than 12 weeks,
compared with 18 weeks in 2018/19.
– Increased focus on availability, with more controls on stock flow into
the UK and onto stores based on demand.
DELIVERING SALES AND MARKET SHARE GROWTH ACROSS
CATEGORIES
In 2023/24, overall Clothing & Home sales grew 5.3% with LFL sales
up 5.2%. As a result of improved gross margin supported by full
price sales growth and the benefits of the structural cost reduction
programme, adjusted operating profit increased to £402.8m (10.3%
margin) from £323.8m (8.7% margin) last year. Sales in heartland
categories of women’s and menswear outperformed, due to improved
product style, quality, and value. Particular highlights were:
– Robust performance in core product in categories such as denim/
casual bottoms, knitwear, and bras.
– Quality improvement translating into top tier sales growth with
men’s Autograph sales up over 50%.
– Growth in holiday sales of c.15%, reflecting a return to travel
and events.
– Clothing market share increased to 10.0% (from 9.6%), and full price
share up to 12.4% (from 11.6%).
– Customer perceptions of style, quality and value all improved
further year on year.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
21
Image: Two members of our
Clothing & Home product
development team in the
pattern room at the M&S
Store Support Centre.
STRATEGIC REPORT
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Marks and Spencer Group plc
STRATEGIC PROGRESS CONTINUED
CLOTHING & HOME GROWTH REFLECTING THE
NEW TRADING MODEL CONTINUED
We remain laser-focused on the growth opportunities across
women’s, men’s, kidswear, and core Home. As part of this, we are
simplifying the bulky ‘two-person’ delivered furniture
operation. This will impact annual online sales by c.£80m but
will release space and resources to expand the growing core
Home business.
STORE ROTATION GENERATING STRONG RETURNS
Store sales increased 4.1%, with a good performance in
shopping centre and retail park stores. We opened six full line
stores, which sell both Clothing & Home and Food and closed
twelve, of which five were relocations. All replacement stores
substantially outperformed the closed stores and exceeded
forecast returns:
– Full line openings included the relocation to five former
Debenhams stores in Leeds, Manchester, Liverpool,
Birmingham and Thurrock and a new store in Purley Way.
– Performance of the relocations to date has been very strong,
with the stores attracting new customers and delivering sales
growth of c.50% from similar space, as we move to the
renewal format in better locations.
– New stores typically require substantially less energy to
operate relative to sales and generate a lower carbon
footprint, supporting reduction in Scope 1 and 2 emissions.
– Since 2019, £100m of capital has been invested into twelve
full line stores, with expected pay back of c.2 years.
– In 2024/25 we anticipate opening up to four new full line
stores and are implementing a refreshed renewal format,
while progressing asset disposals.
– We continue to seek new sites, to enable us to accelerate
store closures and create an estate we are proud of by
2027/28.
THE DESTINATION FOR
Denim
We are number one in the market for womenswear denim.
In fact, one in every five women who bought a pair of jeans
in the past year, bought a pair from M&S, and we sold ten
pairs every minute.
Over the year, our market share has grown by 4%, driven
by the introduction of more fits and trend-led styles,
including wide leg, cargo, crease front flare and carrot.
The resurgence of the flare and wide leg trend has led to
the fit accounting for 15% of jean sales this year vs 10% in
2022/23. To respond to demand, we broadened our range
of wide leg options by 50%, including the on-trend, super
wide-leg fit Palazzo Jeans (£45), selling over 10,000 pairs
since launching in Q4.
We didn’t stop at jeans either. Over the year we elevated our
denim collection with shirts, jackets and shackets, as well
as denim skirts and shorts which have been a huge hit with
customers, with more than 1.7m units sold this year – a 53%
increase vs 2022/23.
Not only do we deliver on denim for our customers, but
we also make and source it in a way that’s good for the
planet. The cotton in our denim is 100% responsibly
sourced, we use technology to reduce water in production
and replace the use of chemicals with laser technology to
create different washes.
4%
growth in market
share for denim
10
pairs of jeans sold
every minute
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
23
Winning
IN SUMMER
The strategy for last summer’s womenswear
collection focused on trend-inspired pieces and
wardrobe essentials that offer the versatility
to be dressed up or down for multiple events,
underpinned by great style and exceptional quality,
at a great price.
We continued to invest in value, with strong opening
price points across summer essentials, including
beach dresses from £15, better cotton tees from
£6.50 and swimsuits from £15.
By leveraging near-shore supply routes, we were
also quicker to respond to emerging trends, like
summer knits which were a big hit with customers
and thanks to improved supply routes, we were able
to respond with 50,000 products sold across
crochet dresses, vests and cardigans.
Another standout growth category was swim with
sales +21% vs the previous summer. Key styles our
customers loved included our tummy control
swimsuits, where we sold 350,000 units.
As a result, we restored our number one market
share position in womenswear during the summer
months for the first time in four years. Our
Spring/Summer marketing campaigns also helped
increase style perceptions by +7ppts over the period.
21%
increase in sales of
swimwear vs
2022/23
+7PPTS
increase in style
perceptions of M&S
across a two-year
period (April
2022- April 2024)
ONLINE GROWTH ACCELERATING
Online sales increased 7.8%. After a slow start, growth
accelerated in the second half, as the effectiveness of online
marketing started to improve, particularly in womenswear.
– Overall participation in C&H sales increased to 32%.
– The M&S App continued to grow, accounting for 44% of online
orders (2022/23: 37%).
– Partner brand sales grew 33%, with new partners added
including adidas, Puma, and Sweaty Betty, supporting the
growth of average basket value.
– The removal of unprofitable lines, logistics efficiencies and
reduced failed deliveries, enabled sales growth to convert to
an increased online operating margin of 8.2% (2022/23: 5.0%).
There is substantial opportunity to improve the online and
M&S App experience, make further improvements to fulfilment,
and invest in systems changes to support delivery of the
brands strategy.
PROGRESS ON PHASE ONE OF THE SUPPLY CHAIN ‘END
TO END’ PROGRAMME.
Our ambition is to move from a slow-moving operation with a
broad supply base and distribution centre’s which store stock,
to a group of strategic suppliers with a rationalised network of
automated DCs, where full visibility enables us to flow stock
more directly to the customer.
– We have begun to consolidate knitwear, denim, and lingerie
across fewer suppliers. The number of fabric mills has also
reduced as volumes are combined.
– In UK logistics, volumes were consolidated into nine core
sites. Investment in omni-channel capability and the
increased use of hub stores for returns consolidation
delivered cost savings. This year, further investment will be
made in boxed storage and hanging goods automation,
creating capacity for growth.
– Investment into a new planning, merchandising and range
management platform starts this year, to deliver efficiencies
in the planning process, in sourcing, and in stock flow.
– Progress on Plan A was made with the use of recycled
polyester increasing to c.70%, and 100% of cotton is now
responsibly sourced in clothing.
We are at the beginnings of a new Clothing, Home and Beauty
business, with a better product and trading model and an
improving customer proposition, which is resonating with a
broader customer base. There is substantial opportunity and
restructuring plans are underway across the product offer,
store estate, online experience, and supply chain which offer
the potential for sustained growth.
24
Marks and Spencer Group plc
STRATEGIC REPORT
STRATEGIC PROGRESS CONTINUED
INTERNATIONAL
RESET TO ADDRESS
SLOW GROWTH
The International business’ objective is to drive
growth by leveraging the UK business and M&S
brand through capital light franchise partnerships
and a multi-platform online business with global
reach. In more recent years, the business has not
delivered consistent growth. This year, priorities
for International have been reset under new
leadership, to provide stronger foundations for
long-term growth. We remain committed to the
opportunity to expand global reach as outlined
at the Capital Markets Day in 2022.
SLOW GROWTH IN PARTNERSHIP MARKETS
International (excluding Republic of Ireland) sales declined 1.0% at
constant currency to £719.1m. As a result of weaker sales growth in
the second half and action to reduce stock levels, adjusted operating
profit declined to £47.7m (6.6% margin) from £67.9m (9.1% margin)
last year.
– Retail sales growth was weaker in the second half, declining 3.6% in
constant currency against tough comparatives and a softer market
backdrop. Action was taken in India to clear overstocks and reduce
inventory holdings.
– Online sales were £118.6m in 2023/24, down 10.2% as promotional
activity was reduced and changes were made to the delivery
proposition to improve profitability.
– Operational investments are focused on reducing delivery times
and cost to serve, for instance through a new e-commerce
distribution centre in Poland for direct shipment of online orders
to the EU from Q4 2024/25.
The business has strong franchise and JV partnerships in high growth
markets. The longer-term opportunity is to work with partners to
deliver the best of M&S on a global scale, with more choice and more
timely flow of new products.
IMPROVED PROFITABILITY IN THE REPUBLIC
OF IRELAND
Sales in the Republic of Ireland were encouraging, growing by 2.4% at
constant currency to £320.7m.
– Operating profit before adjusting items improved to £27.9m from
£16.9m last year.
– Lower supply chain costs in the Food business drove much of the
improvement.
– Food has made progress on local sourcing and has successfully
expanded its presence through franchising with Applegreen, which
now operates ten stores.
From the 2024/25 financial year, the results of the Republic of Ireland
will be reported as part of a new UK and Republic of Ireland segment
within both Food and Clothing & Home.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
25
Image: The Foodhall in our Riyadh
Park Mall store in Saudi Arabia.
STRATEGIC REPORT
26
Marks and Spencer Group plc
STRATEGIC PROGRESS CONTINUED
OCADO RETAIL STARTING
TO DELIVER IMPROVED
REVENUE GROWTH
Results for Ocado Retail are reported by
Ocado Group and are not consolidated in these
accounts. M&S accounts for the joint venture as
an associate interest.
Our vision for Ocado Retail remains to combine the magic of M&S
Food with Ocado’s unique and proprietary technology to offer
unbeatable choice, compelling service, and reassuringly good value,
underpinned by efficient and effective operations.
OCADO RETAIL IS IN THE EARLY STAGES OF DRIVING GROWTH
Revenue increased 11.2% to £2.47bn, and adjusted EBITDA was £26.8m
(2022/23: loss £15.1m). While adjusted EBITDA improved, M&S group’s
share of adjusted loss increased to £37.3m (2022/23: £29.5m) due to
higher interest costs on shareholder loan funding and a write off of
a deferred tax asset in the current year.
The rate of revenue growth accelerated during the year, driven by
increased choice of M&S products, and improved value for money and
service as part of the Ocado Retail ‘Perfect Execution’ programme.
This has been reflected in a sharp improvement in net promoter
scores. Despite this, profitability is well below original expectations
and there is considerable scope to leverage our combined capabilities
in sourcing and marketing, and to develop Ocado’s delivery service
and online experience.
INCREASED CHOICE, AVAILABILITY, AND VALUE
– 4,800 M&S Food products were available on Ocado.com by year
end, a 20% increase on last year. Availability has improved
considerably, although there is further opportunity on the most
important lines and at key event periods.
– Ocado’s price inflation was less than the market, driven by improved
value for money on M&S products, as well as reductions under the
Big Price Drop campaign. As a result of greater choice and improved
value, sales of M&S products grew 15% in Q4 and represented 30% of
basket items.
DEVELOPING MORE EFFECTIVE AND EFFICIENT OPERATIONS
– The new Luton Customer Fulfilment Centre opened in September
2023 and delivered a rapid ramp up in operations as business
transferred from less productive capacity at Hatfield, with the new
site also providing a test bed for on-grid robotic picking. With
capacity fees for Hatfield continuing to be charged by Ocado
Group, we do not currently expect Ocado Retail to reap the full
financial benefit of transferring to the new site.
– Ocado Retail still operates on legacy technology for its website,
last mile delivery and supply chain systems. It will be migrating to
Ocado Technology’s much delayed ‘Ocado Smart Platform’ solution
over the course of the next 18 months, which is anticipated to offer
customers increased convenience and greater personalisation, as
well as long-term operational efficiencies for the business.
Although the financial performance of Ocado Retail remains
disappointing, the revenue improvement this year under the new
management team has been marked. In a world where several
operators have exited the online food delivery market, the potential
competitive advantages of the M&S/Ocado combination are
increasingly evident.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
27
Image: The Ocado retail team delivering
M&S products to a customer.
STRATEGIC REPORT
28
Marks and Spencer Group plc
OUR KEY PERFORMANCE INDICATORS
GROUP REVENUE
£13.0bn 22/23: +9.3%
ADJUSTED RETURN ON CAPITAL EMPLOYED (ADJUSTED ROCE)
14.1% 22/23: +3.5% pts
FREE CASH FLOW FROM OPERATIONS
£413.7m 22/23: + 142.8%
Group statutory revenue was £13.0bn, an increase of 9.3% vs
2022/23. This was driven by Clothing & Home sales up 5.3%
and Food sales up 13.0%.
A focus on operational cashflow generation combined with a
disciplined approach to capital allocation has driven improved
return on capital employed and substantial deleveraging.
In 2023/24, M&S generated free cash flow of £413.7m, compared with
£170.4m last year, as a result of increased profits and supported
by working capital inflows due to the timing of payments over year
end, including the effects of Easter.
23/24
13.0
20/21
9.0
21/22
10.9
22/23
11.9
23/24
14.1
20/21
3.8
21/22
12.2
22/23
10.6
23/24
413.7
20/21
273.7
21/22
739.6
22/23
170.4
APM
APM
GROUP PROFIT BEFORE TAX AND ADJUSTING ITEMS
£716.4m 22/23: +58.0%
ADJUSTED BASIC EARNINGS PER SHARE (EPS)
24.6p 22/23: + 45.6%
DIVIDEND PER SHARE
3.0p
GROUP PROFIT BEFORE TAX
£672.5m 22/23: +41.4%
BASIC EARNINGS PER SHARE
21.9p 22/23: + 18.4%
Group profit before tax and adjusting items was £716.4m,
up 58% vs 2022/23.
Adjusted basic earnings per share was 24.6p due to higher
adjusted profit year on year.
The stronger financial position and performance also provides the
opportunity to restore dividend payments at a sustainable level,
with a proposed final dividend of 2.0p, resulting in a full year
dividend of 3.0p for 2023/24.
Group profit before tax was £672.5m, up 41.4% on 2022/23.
Basic earnings per share was 21.9p (2022/23: 18.5p).
23/24
716.4
20/21
3.1
21/22
509.7
22/23
453.3
23/24
24.6
20/21
(0.1)
21/22
16.2
22/23
16.9
23/24
3.0
20/21
0.0
21/22
0.0
22/23
0.0
23/24
672.5
20/21
(201.2)
21/22
391.7
22/23
475.7
23/24
21.9
20/21
(9.7)
21/22
10.7
22/23
18.5
APM
APM
APM
Read more about our alternative
performance measures on page 2.
FINANCIALS
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
29
FINANCIAL REVIEW
“
A focus on operational cash flow
generation combined with a
disciplined approach to capital
allocation has driven improved
return on capital employed.
JEREMY TOWNSEND
Chief Financial Officer
FINANCIAL SUMMARY
52 weeks ended
30 Mar 24
£m
1 Apr 23
Restated £m1
Change vs
2022/23 %
Group statutory revenue
13,040.1
11,931.3
9.3
Group sales
13,109.3
11,988.0
9.4
UK Food
8,158.8
7,218.0
13.0
UK Clothing & Home
3,910.7
3,715.0
5.3
International
1,039.8
1,055.0
(1.4)
Group operating profit before adjusting items
838.6
626.6
33.8
UK Food
395.3
248.0
59.4
UK Clothing & Home
402.8
323.8
24.4
International
75.6
84.8
(10.8)
Share of result in Ocado Retail Limited
(37.3)
(29.5)
(26.4)
M&S Bank and other segments
2.2
(0.5)
n/a
Interest payable on lease liabilities
(110.5)
(111.1)
0.5
Net financial interest
(11.7)
(62.2)
81.2
Profit before tax and adjusting items
716.4
453.3
58.0
Adjusting items
(43.9)
22.4
(296.0)
Profit before tax
672.5
475.7
41.4
Profit after tax
425.2
364.5
16.7
Basic earnings per share
21.9p
18.5p
18.4
Adjusted basic earnings per share
24.6p
16.9p
45.6
Dividend per share
3.0p
–
n/a
Net debt
(2.17bn)
(2.64bn)
(17.8)
Net funds/(debt) excluding lease liabilities
45.7
(355.6)
112.9
Group capex and disposals
(423.2)
(409.2)
(3.4)
Free cash flow from operations
413.7
170.4
Adjusted return on capital employed
14.1%
10.6%
33.0
Notes:
1. Due to a change in the Group’s classification of pension net finance income as an adjusting item (see note 5 to the financial information), the comparative amounts
have been restated. The impact on the 52 weeks ended 1 April 2023 income statement is a decrease to the adjusting items charge of £28.7m (resulting in a net
adjusting items credit), a decrease to profit before tax & adjusting items of £28.7m, a decrease to adjusted earnings per share of 1.2p. There is no impact on profit
before tax, earnings per share or net assets.
There are a number of non-GAAP measures and alternative profit measures (“APMs”) discussed within this announcement, and a glossary and reconciliation to
statutory measures is provided at the end of this report. Adjusted results are consistent with how business performance is measured internally and presented to aid
comparability of performance. Refer to the adjusting items table below for further details.
STRATEGIC REPORT
30
Marks and Spencer Group plc
FINANCIAL REVIEW CONTINUED
GROUP RESULTS
Group sales were £13,109.3m. This was an increase of 9.4%
versus 2022/23, driven by Food sales up 13.0% and Clothing &
Home sales up 5.3%. Statutory revenue in the period was
£13,040.1m, an increase of 9.3% versus 2022/23.
The Group generated profit before tax and adjusting items of
£716.4m compared with £453.3m in the prior year. Prior year
results have been restated to reflect net finance income on the
IAS19 pension surplus which has been reclassified as an
adjusting item.
Adjusting items were a net charge of £43.9m, compared with a
credit of £22.4m in the prior year. The net charge in the period
primarily consists of costs relating to the UK store rotation
plans and the ceasing of operations at Ocado Retail’s Hatfield
CFC, partially offset by a credit relating to the remeasurement
of Ocado Retail contingent consideration to nil.
As a result, the Group generated a statutory profit before tax of
£672.5m, compared with £475.7m in the prior year.
Adjusted basic EPS was 24.6p, up 45.6% on 2022/23 reflecting
higher adjusted profit in the period. Basic EPS was 21.9p, up
18.4% on 2022/23, reflecting the increased profit in the period.
A final dividend of 2p per share has been declared, payable on
5 July 2024, resulting in a full year dividend of 3p.
For full details of the Group’s related policy and adjusting
items, read more in notes 1 and 5 to the financial statements.
UK: FOOD
UK Food sales increased 13.0%, with like-for-like sales up 11.3%,
underpinned by strong innovation and broadening customer
appeal.
Change vs 2022/23 %
Q1
Q2
Q3
Q4
FY
Food
15.1
14.2
10.5
13.0
13.0
Food like-for-like sales
12.5
11.0
9.9
11.9
11.3
M&S Food has an online grocery presence with Ocado Retail
and these sales are reported through Ocado Retail and are not
included within these numbers.
52 weeks ended
30 Mar 24
1 Apr 23
Change vs
2022/23 %
Transactions, m
(average/week)
9.7
9.0
7.8
Basket value inc VAT (£)
16.0
15.2
5.3
Total sales ex VAT £m1
8,158.8
7,218.0
13.0
1. Includes M&S.com and third-party sales by Gist Limited.
Like-for-like sales growth of 11.3% was driven by volume growth
of 5.2% as customer numbers, particularly those completing
larger shops, increased. Basket value was up 5.3% and larger
basket transactions continued to grow with the value of
baskets over £30 up 15.0%.
52 weeks ended
30 Mar 24
£m
1 Apr 23
£m
Change vs
2022/23 %
Sales
8,158.8
7,218.0
13.0
Operating profit before
adjusting items
395.3
248.0
59.4
Adjusted operating margin
4.8%
3.4%
1.4% pts
Operating profit before adjusting items was £395.3m compared
with £248.0m in 2022/23, with an adjusted operating margin
of 4.8%.
Food adjusted operating margin increased by 1.4% pts. Gross
margin improved 0.7% pts whilst continued investment in
trusted value was funded by the lowering cost programme.
Operating costs as a percent to sales reduced 0.7% pts as sales
growth of 13.0% exceeded cost growth of 9.9%. The impact of
investment in colleague pay and energy headwinds was largely
offset by structural cost savings and other efficiencies, part of
which came from the acquisition of Gist. Cost growth was
therefore largely driven by volume and investments in
colleagues and technology.
The 0.7% pt reduction breaks down as follows:
– Store staffing was down 0.3% pts, with colleague pay
investment partly offset by structural cost savings.
– Other store costs were level, as sales leverage was offset by
energy inflation headwinds.
– Distribution and warehousing costs were down 0.2% pts, with
the effects of inflation and volume growth offset by benefits
from the acquisition of Gist.
– Central costs decreased 0.2% pts as sales leverage was partly
offset by technology investments and colleagues.
Operating profit margin before adjusting items
%
2022/23
3.4
Gross margin
0.7
Store staffing
0.3
Other store costs
0.0
Distribution and warehousing
0.2
Central costs
0.2
2023/24
4.8
UK: CLOTHING & HOME
Clothing & Home sales increased 5.3% driven by strong full
price sales growth, with promotions and markdown reducing.
Sales mix by channel evolved during the year with stronger
online growth in the second half.
Change vs 2022/23 %
Q1
Q2
Q3
Q4
FY
Clothing & Home sales1
7.4
4.1
4.8
5.0
5.3
Clothing & Home
like-for-like sales
7.2
3.8
4.8
5.1
5.2
Clothing & Home
online sales
3.1
6.0
10.9
10.3
7.8
Clothing & Home
store sales
9.4
3.2
2.0
2.4
4.1
Clothing & Home
statutory revenue
7.1
4.1
4.5
4.7
5.0
1. ‘Sales’ are statutory revenue plus the gross value of consignment sales ex. VAT
To enable greater insight into these movements, further detail
is provided on the performance of each channel.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
31
ONLINE
52 weeks ended
30 Mar 24
1 Apr 23
Change vs
2022/23 %
Active customers (m)1
9.4
9.2
2.2
Frequency2
3.5
3.4
2.9
Transactions (m)
33.2
31.1
6.8
Average Basket value £3
63.7
61.7
3.2
Returns rate (%)4
31.3
29.5
1.8% pts
Sales ex VAT £m
1,268.4
1,176.4
7.8
1. Active customers is the count of unique customers who transacted online in
the last 52 weeks.
2. Frequency is the count of purchasing transactions divided by customers.
3. Prior year average basket value has been restated to reflect alternative source
data as a result of cookie compliance tracking.
4. Returns rate represents returns on dispatch sales.
Online sales increased by 7.8%. Active customers increased by
2.2% as ranges have begun to appeal to a more customers.
Average basket value grew 3.2% reflecting higher average
selling price, including a higher mix of brand partner sales,
and reduced promotions.
The online returns rate increased year on year as expected,
driven by a higher sales mix of partner brands and growth in
more trend-led product.
STORES
52 weeks ended
30 Mar 24
1 Apr 23
Change vs
2022/23 %
Transactions, m
(average/week)
1.8
1.8
–
Average basket value
inc VAT pre returns (£)
39.2
37.4
4.8
Sales ex VAT £m
2,642.3
2,538.6
4.1
UK Clothing & Home store sales increased 4.1%, with strong
growth in shopping centres and retail parks, supported by the
opening of six new stores in the renewal format.
TOTAL CLOTHING & HOME
52 weeks ended
30 Mar 24
£m
1 Apr 23
£m
Change vs
2022/23 %
Statutory revenue
3,841.5
3,658.3
5.0
Sales
3,910.7
3,715.0
5.3
Operating profit before
adjusting items
402.8
323.8
24.4
Adjusted operating
margin
10.3%
8.7%
1.6% pts
Operating profit before adjusting items was £402.8m
compared with £323.8m in 2022/23, with an adjusted operating
margin of 10.3%.
Clothing & Home adjusted operating margin increased by
1.6% pts. Gross margin increased 1.5% pts, as buying headwinds
including currency, were more than offset by the annualisation
of pricing action and increased full price sales.
Operating costs as a percent of sales were 0.1% pts lower than
last year, as cost growth of 5.1% was marginally lower than sales
growth. Cost inflation was largely offset by structural cost
reduction. Whilst further cost increases, largely in the second
half, were driven by an increase in investments in technology,
in store service and colleagues.
The 0.1% pt reduction breaks down as follows:
– Store staffing costs increased 0.3% pts, driven by investment
in service and colleague pay, partly offset by structural cost
savings.
– Other store costs decreased 0.7%, structural cost reduction
and one-off savings more than offset inflationary headwinds.
– Distribution and warehousing costs were down 0.5% pts, with
the effects of inflation and volume growth offset by
structural cost savings and efficiencies.
– Central costs increased 0.8% pts, driven by investment in
colleagues and an increase in technology spend, including a
new planning platform and system changes to support the
growth in partner brands.
Operating profit margin before adjusting items
Online %
2022/23
8.7
Gross margin
1.5
Store staffing
(0.3)
Other store costs
0.7
Distribution and warehousing
0.5
Central costs
(0.8)
2023/24
10.3
As outlined above, the overall Clothing & Home adjusted
operating margin increased by 1.6% pts. Store margin increased
0.8% pts to 11.3% and online margin increased 3.3% pts to 8.2%.
INTERNATIONAL
International sales excluding Republic of Ireland, decreased by
3.0% (1.0% at constant currency) to £719.1m. This was
predominantly due to lower shipments to partners as a result
of weaker sales in the second half. Adjusted operating margin
declined 2.6% pts due to lower sales, and action taken to reduce
stock levels in India.
Sales in Republic of Ireland grew 2.2% (2.4% at constant
currency), driven by Food performance. Adjusted operating
margin increased by 3.3% pts, largely driven by lower supply
chain costs in Food.
From 2024/25 financial year the results of the Republic of Ireland
will be reported as part of a new UK and Republic of Ireland
segment within both Food and Clothing & Home.
52 weeks ended
30 Mar 24
£m
1 Apr 23
£m
Change vs
2022/23 %
Change vs
2022/23
CC %
International excl.
Republic of Ireland:
Sales
719.1
741.0
(3.0)
(1.0)
Operating profit
before adjusting
items
47.7
67.9
(29.7)
(26.9)
Adjusted operating
margin
6.6%
9.2%
(2.6% pts)
(2.4% pts)
Republic of Ireland:
Sales
320.7
313.9
2.2
2.4
Operating profit
before adjusting
items
27.9
16.9
65.1
66.7
Adjusted operating
margin
8.7%
5.4%
3.3% pts
3.4% pts
STRATEGIC REPORT
32
Marks and Spencer Group plc
FINANCIAL REVIEW CONTINUED
OCADO RETAIL LIMITED
The Group holds a 50% interest in Ocado Retail Limited (“Ocado
Retail”). The remaining 50% interest is held by Ocado Group Plc
(“Ocado Group”). Full Year Results are consistent with the
quarterly results reported by Ocado Group on behalf of Ocado
Retail for the quarterly periods ended 28 May 2023, 27 August
2023, 3 December 2023 and 3 March 2024.
Revenue increased by £248.3m in the 53 weeks to 3 March 2024.
This was driven by active customer growth and higher average
selling prices, whilst items per basket declined.
M&S penetration of basket increased by 0.2% pts versus the
prior year, with growth increasing to 1.3% pts in the final quarter
reflecting an increased number of M&S products on the Ocado
website and improved availability.
53 weeks ended
3 Mar 24
£m
26 Feb 23
£m
Change
£m
Revenue
2,470.3
2,222.0
248.3
Adjusted EBITDA
26.8
(15.1)
41.9
Adjusting items1
(61.1)
21.2
(82.3)
Depreciation and
amortisation
(61.2)
(69.4)
8.2
Operating loss
(95.5)
(63.3)
(32.2)
Net interest charge
(30.3)
(14.3)
(16.0)
Taxation
(7.9)
18.6
(26.5)
Loss after tax
(133.7)
(59.0)
(74.7)
M&S 50% share
of loss after tax
(67.0)
(29.5)
(37.5)
Reported in M&S Group
adjusted profit before tax
(37.3)
(29.5)
(7.8)
Reported in M&S Group
adjusting items
(29.7)
–
(29.7)
1. Adjusting items are defined within the Ocado Group Plc Annual Report and
Accounts 2023. Adjusting items relating to UK network capacity review, which
is new in the year, have been reported in M&S Group adjusting items. All other
adjusting items have been reported in M&S Group underlying results.
EBITDA before adjusting items improved versus last year driven
by revenue growth and leverage over fixed costs.
Adjusting items within the Ocado Retail results primarily relate
to the ceasing of operations at the Hatfield site. These are
reported within adjusting items in M&S Group share of Ocado
Retail results.
Net interest charge increased, driven by higher interest
expense on loans from shareholders, of which the M&S share
is reported in the Group’s finance income (£6.0m in 2023/24
£0.9m in 2022/23).
Tax was a charge of £7.9m compared with a credit of £18.6m last
year, driven by the write-off of a deferred tax asset in the
current year.
Overall Ocado Retail reported a loss after tax of £133.7m. M&S
group share was £67.0m, of which £37.3m is reported in M&S
Group adjusted profit before tax and £29.7m related to the
ceasing of operations at Hatfield, is reported within M&S Group
adjusting items.
M&S BANK AND SERVICES
M&S Bank and Services generated a profit before adjusting
items of £2.2m, compared with a loss of £0.5m in 2022/23,
largely driven by a provision release following the exit of
M&S Energy.
On 9 April 2024, the Group and HSBC UK agreed a new seven-
year deal focused on enhancing M&S’ credit offering and
payment solutions through M&S Bank and bringing together
digital payments and loyalty for M&S customers.
Net finance cost
52 weeks ended
30 Mar 24
£m
1 Apr 23
£m
Change vs
2022/23 £m
Interest payable
(53.3)
(76.3)
23.0
Interest income
52.3
23.8
28.5
Net interest payable
(1.0)
(52.5)
51.5
Unwind of discount on
Scottish Limited
Partnership liability
(4.1)
(4.3)
0.2
Unwind of discount on
provisions
(6.6)
(5.4)
(1.2)
Net financial interest
(11.7)
(62.2)
50.5
Net interest payable on
lease liabilities
(110.5)
(111.1)
0.6
Net finance costs before
adjusting items
(122.2)
(173.3)
51.1
Adjusting items included
in net finance cost
80.5
133.9
(53.4)
Net finance costs
(41.7)
(39.4)
(2.3)
Net finance costs before adjusting items decreased £51.1m to
£122.2m. This was driven by higher average interest rates on
cash balances, an increase in interest receivable on shareholder
loans to Ocado Retail, and reduced interest expense with 2023
maturing bonds being fully repaid in the period, and part of
2025 and 2026 bonds repurchased.
Adjusting items within net finance costs reflects a credit of
£80.5m, £64.7m relates to the remeasurement of Ocado Retail
contingent consideration to nil; £24.0m net finance income
relating to the IAS19 pension surplus, which was reclassified as
an adjusting item in the period and the comparative restated;
and a charge of £8.2m reflecting the discount unwind on
deferred and contingent consideration on the acquisition of
Gist Limited.
GROUP PROFIT BEFORE TAX AND ADJUSTING ITEMS
Group profit before tax and adjusting items was £716.4m, up
58.0% on 2022/23. The profit increase was primarily due to
strong growth in Food and Clothing & Home and reduced
interest expense, partly offset by an increased share of net loss
of the Ocado Retail investment.
GROUP PROFIT BEFORE TAX
Group profit before tax was £672.5m, up 41.4% on 2022/23. This
includes a net charge for adjusting items of £43.9m (2022/23:
credit of £22.4m).
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
33
ADJUSTING ITEMS
The Group makes certain adjustments to statutory profit
measures in order to derive alternative performance measures
(APMs) that provide stakeholders with additional helpful
information and aid comparability of the performance of the
business. For further detail on these (charges)/gains and the
Group’s policy for adjusting items, please see notes 1 and 5 to
the financial information. These (charges)/gains are reported
as adjusting items on the basis that they are significant in
quantum in current or future years and aid comparability from
one period to the next.
52 weeks ended
30 Mar 24
£m
1 Apr 23
Restated
£m
Change vs
2022/23
£m
Included in share of
result of associate –
Ocado Retail Limited
(42.6)
(14.0)
(28.6)
Ocado Retail Limited – UK
network capacity review
(29.7)
–
(29.7)
Amortisation and fair
value adjustments arising
as part of the investment
in Ocado Retail Limited
(12.9)
(14.0)
1.1
Included in
operating profit
(81.8)
(97.5)
15.7
Strategic programmes
– Store estate
(93.0)
(51.3)
(41.7)
Strategic programmes
- Furniture simplification
(18.3)
–
(18.3)
Strategic programmes
– Organisation
(3.5)
(10.7)
7.2
Strategic programmes
– Structural simplification
–
(16.4)
16.4
Strategic programmes
– UK logistics
5.3
(10.5)
15.8
Store impairments,
impairment reversals and
other property charges
35.1
15.1
20.0
M&S Bank transformation
and insurance mis-selling
provisions
(7.0)
(2.0)
(5.0)
Acquisition of Gist Limited
(0.4)
(22.1)
21.7
Franchise restructure
–
0.4
(0.4)
Included in net finance
income/(costs)
80.5
133.9
(53.4)
Remeasurement of Ocado
Retail Limited contingent
consideration
64.7
108.0
(43.3)
Pension net finance
income
24.0
28.7
(4.7)
Net finance costs incurred
in relation to Gist Limited
deferred and contingent
consideration
(8.2)
(2.8)
(5.4)
Adjustments to
profit before tax
(43.9)
22.4
(66.3)
Adjusting items recognised were a net charge of £43.9m.
These include:
A charge of £29.7m included within the share of result in
associate. This reflects the group share of costs relating to the
ceasing of operations at Ocado Retail’s Hatfield CFC and wider
network review. A non-cash charge of £12.9m with respect to
the amortisation of intangible assets acquired on the purchase
of our share in Ocado Retail is included in the Group results.
A charge of £93.0m in relation to store estate rotation plans.
This reflects the revised view of store exit routes, assumptions,
estimated closure costs, charges relating to the impairment of
buildings, fixtures and fittings, and accelerated depreciation.
A charge of £18.3m in relation to furniture simplification, this
reflects one-off costs relating to the exit of the two-person
furniture delivery operation. The charge primarily relates to
contractual obligations with suppliers and redundancy costs.
A non-cash charge of £3.5m within organisation relating to an
increase in the IFRS 9 impairment held in relation to the finance
lease receivable for the sublet of previously closed Merchant
Square offices.
A credit of £5.3m within logistics. This reflects the latest view
of estimated closure costs of a further distribution centre,
announced in January 2023, part of the long-term strategic
programme to transition to a single-tier UK distribution network.
A non-cash net credit of £35.1m in relation to store impairment
reversals, driven by revised future cash flow projections in
relation to the carrying value of stores.
A charge of £7.0m in relation to M&S Bank transformation and
insurance mis-selling provisions £2.0m of which has been
incurred in relation to M&S Bank insurance mis-selling
provisions. The remaining £5.0m relates to legal and
consultancy costs recognised in the period in connection to
the new seven-year deal with HSBC. Under the terms of the new
agreement, material charges are expected over the next seven
years. For further details see note 5 to the financial statements.
TAXATION
The effective tax rate on profit before tax and adjusting items
was 33.2% (2022/23 restated for pension income: 26.4%). This
was higher than the UK statutory tax rate primarily due to the
impact of the recapture of tax relief on distributions to the
Scottish Limited Partnership (SLP), non-deductible Ocado joint
venture losses, and due to a deferred tax charge arising from
the reduction of buildings residual value to nil.
Without the impact of the above deferred tax item, the effective
tax rate on adjusted profit before tax and adjusting items is
30.2%. In 2024/25 we expect the effective tax rate on profit
before tax and adjusting items to be at a similar rate of c.30%.
The effective tax rate on statutory profit before tax was 36.8%
(2022/23: 23.4%). This is higher than the effective tax rate on
profit before adjusting items due to the impact of non-taxable
adjusting items.
Prior year deferred tax liabilities have been restated as an error
was identified within the Group’s deferred tax calculations
which was triggered by a series of historic changes in the
residual value applied to buildings impacting the portion of
the asset to be recovered through use and the portion through
sale. In line with IAS 8, the Group has restated balances as at
1 April 2023 and 2 April 2022.
The impact on the financial results as at 1 April 2023 was a
£134.1m increase in deferred tax liabilities recognised in relation
to buildings following management’s downwards revision of its
estimate of the residual value of buildings. There is no impact
on cash flow statement in any years. See note 1 to the financial
statements for more detail.
STRATEGIC REPORT
34
Marks and Spencer Group plc
FINANCIAL REVIEW CONTINUED
EARNINGS PER SHARE
Basic earnings per share was 21.9p (2022/23: 18.5p). Adjusted basic earnings per share was 24.6p (2022/23 restated for pension
income: 16.9p) due to higher adjusted profit year on year.
The weighted average number of ordinary shares in issue during the period was 1,973.2m (2022/23: 1,963.5m), with the weighted
average number of diluted ordinary shares 2,075.9m (2022/23: 2,033.9m).
CASH FLOW
30 Mar 24
£m
1 Apr 23
£m
Change vs
2022/23
£m
Operating profit
714.2
515.1
199.1
Adjusting items within operating profit
124.4
111.5
12.9
Operating profit before adjusting items
838.6
626.6
212.0
Depreciation and amortisation before adjusting items
526.3
523.2
3.1
Cash lease and surrender payments
(345.5)
(353.8)
8.3
Working capital
77.2
(14.7)
91.9
Non-cash pension expense
5.3
4.6
0.7
Defined benefit scheme pension funding
(0.4)
(36.8)
36.4
Capex and disposals
(423.2)
(409.2)
(14.0)
Financial interest
(31.2)
(66.5)
35.3
Taxation
(191.2)
(70.6)
(120.6)
Employee-related share transactions
22.2
37.9
(15.7)
Share of result from Associate
37.3
29.5
7.8
Loans to Associates
(62.0)
(30.0)
(32.0)
Share of results in other joint ventures
0.3
–
0.3
Adjusting items in cash flow
(40.0)
(69.9)
29.9
Free cash flow from operations
413.7
170.4
243.3
Acquisitions, investments, and divestments
(2.6)
(106.8)
104.2
Free cash flow
411.1
63.6
347.5
Dividends paid
(19.6)
–
(19.6)
Free cash flow after shareholder returns
391.5
63.6
327.9
Opening net debt excluding lease liabilities
(355.6)
(420.1)
64.5
Free cash flow after shareholder returns
391.5
63.6
327.9
Exchange and other non-cash movements excluding leases
9.8
0.9
8.9
Closing net funds/ (debt) excluding lease liabilities
45.7
(355.6)
401.3
Opening net debt
(2,637.2)
(2,698.8)
61.6
Free cash flow after shareholder returns
391.5
63.6
327.9
Decrease in lease obligations
243.5
231.8
11.7
New lease commitments and remeasurements
(176.0)
(249.4)
73.4
New leases from acquisitions
–
(21.3)
21.3
Exchange and other non-cash movements
12.4
36.9
(24.5)
Closing net debt
(2,165.8)
(2,637.2)
471.4
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
35
The business generated free cash flow from operations of
£413.7m, a year on year improvement of £243.3m. This was
driven by higher operating profit as a result of strong
performance across Food and Clothing & Home, working
capital inflow and reduced interest expense.
Cash inflow from working capital was £77.2m, an improvement
of £91.9m versus the prior year, which was driven by a higher
year-end payables balance partly due to the timing of Easter.
Decreased defined benefit scheme pension funding reflects
a deferral of the SLP payment into the pension scheme.
Increased taxation was principally due to the increased profit
in the year.
Cash outflow from adjusting items was £40.0m. This included
£24.5m relating to the store estate strategy, £5.9m relating
to structural simplification, £2.6m relating to the logistics
strategy, £2.6m in relation to M&S financial services
transformation, £2.0m relating to the M&S Bank insurance
mis-selling provisions, and £1.4m payment to Gist.
Loans to Associates principally reflects a £60.0m drawdown
of the shareholder loan facility by Ocado Retail.
After dividend payments of £19.6m, reflecting payment of an
interim dividend in January, the business generated free cash
flow after shareholder returns of £391.5m, resulting in a further
reduction of net debt.
CAPITAL EXPENDITURE
52 weeks ended
30 Mar 24
£m
1 Apr 23
£m
Change vs
2022/23 £m
UK store remodelling
51.5
70.5
(19.0)
New UK stores
77.4
55.0
22.4
International
18.0
28.9
(10.9)
Supply chain
69.3
36.8
32.5
IT and M&S.com
80.8
109.5
(28.7)
Property asset
replacement
99.1
102.1
(3.1)
Capital expenditure
before property
acquisitions and
disposals
396.1
402.8
(6.7)
Property acquisitions
and disposals
(6.1)
(1.1)
(5.0)
Capital expenditure
390.0
401.7
(11.7)
Movement in capital
accruals and other items
33.2
7.5
25.7
Capex and disposals
as per cash flow
423.2
409.2
14.0
Group capital expenditure before property acquisitions and
disposals decreased £6.7m to £396.1m due to increased
investment in new UK stores and supply chain, partially offset
by reduced spend UK store remodelling, technology and
International.
UK store remodelling costs were primarily driven by eight store
renewals in the period, four of which were full line renewals,
and one extension.
Spend on new UK stores primarily related to the opening of
six full line and eight Food stores in the period.
Supply chain expenditure reflects investment in expanding
Clothing & Home fulfilment capabilities, as well as replacement
of vehicles and handling equipment.
IT and M&S.com spend includes technology replacement,
network upgrades, and continued investment in website and
app development. The reduction versus prior year was largely
due to completion of retail initiatives.
Property asset replacement largely relates to reinvestment
in and replacement of core assets across the store estate,
including building repairs, self-service tills and click-and-
collect facilities, as well as spend on energy efficiency
initiatives and maintenance.
The movement in capital accruals was largely driven by the
timing of payments relating to new stores and remodelling
and property maintenance.
NET DEBT
Group net debt decreased £471.4m since the start of the year
driven by free cash flow after shareholder returns of £391.5m
and a net decrease in lease liabilities of £70.1m.
The composition of Group net debt is as follows:
52 weeks ended
30 Mar 24
£m
1 Apr 23
£m
Change vs
2022/23 £m
Cash and cash equivalents
1,022.4
1,067.9
(45.5)
Medium Term Notes
(921.7)
(1,346.4)
424.7
Current financial assets
and other
26.9
44.8
(17.9)
Partnership liability
(81.9)
(121.9)
40.0
Net funds / (debt)
excluding lease liabilities
45.7
(355.6)
401.3
Lease liabilities
(2,211.5)
(2,281.6)
70.1
Group net debt
(2,165.8)
(2,637.2)
471.4
STRATEGIC REPORT
36
Marks and Spencer Group plc
FINANCIAL REVIEW CONTINUED
The Medium-Term Notes include four bonds, with maturities
out to 2037, and the associated accrued interest. During the
period the maturing 2023 bond was fully repaid, and part of
2025 and 2026 bonds were repurchased. The USD 300m 2037
bond is valued by reference to the embedded exchange rate in
the associated cross currency swaps. The full breakdown of
maturities is as follows:
Bond and maturity date
Value (£m)
Jun 2025, GBP
205.6
May 2026, GBP
200.8
Jul 2027, GBP
248.9
Dec 2037, USD
251.8
Total principal value
907.1
Interest and FX revaluation
14.6
Total carrying value
921.7
Lease
Liabilities
30 Mar 24
£m
1 Apr 23
£m
Change vs
22/23 £m
Average
lease length
to break1
Full line
stores2
(860.1)
(882.2)
22.1
c.19yrs
Simply Food
stores2
(682.2)
(689.9)
7.7
c.9yrs
Offices,
warehouses
and other2
(459.7)
(504.8)
45.1
c.15yrs
International
(209.5)
(204.7)
(4.8)
Total lease
liability
(2,211.5)
(2,281.6)
70.1
1. Liability-weighted average lease length to break.
2. Last year comparative categories have been restated.
New lease commitments and remeasurements in the period
were £176.0m, largely relating to 16 UK lease additions, lease
additions in India, and UK property liability remeasurements.
This was offset by £243.5m of capital lease repayments.
Full-line store lease liabilities include £126.5m relating to stores
identified as part of the store estate strategic programme.
The average lease lengths on these stores are skewed by five
particularly long leases which are trading well in locations
the business wishes to remain in. Excluding these five leases,
the average term to break of leases outside the programme
is c.15 years.
Simply Food store lease liabilities include £28.3m relating
to stores identified as part of the Store estate strategic
programme.
Within offices, warehouses and other lease liabilities, £139.9m
relates to the sublet lease on our Merchant Square offices.
International leases relate primarily to India (c.£117m) and
Ireland (c.£55m).
PENSION
At 30 March 2024, the IAS 19 net retirement benefit surplus
was £77.2m (2022/23: £477.4m). There has been a decrease
of £400.2m since the start of the year largely driven by a
narrowing in the credit spreads of corporate bonds relative to
government bonds. Nevertheless, there has been no material
worsening of the scheme’s overall funding position and the
scheme remains fully funded on a technical provisions basis.
The most recent actuarial valuation of the Marks & Spencer
UK Pension Scheme was carried out as at 31 March 2021 and
showed a funding surplus of £687m. This is an improvement
on the previous position at 31 March 2018 (statutory surplus
of £652m), primarily due to lower assumed life expectancy.
The Company and Trustees have confirmed, in line with the
current funding arrangement, that no further contributions
will be required to fund past service as a result of this valuation
other than those already contractually committed under the
existing Marks and Spencer Scottish Limited Partnership
arrangements.
MARKS AND SPENCER SCOTTISH LIMITED PARTNERSHIP
Marks and Spencer Plc is a general partner of the Marks and
Spencer Scottish Limited Partnership, with the UK defined
benefit pension scheme, which is a limited partner.
The Partnership holds £1.3bn (2022/23: £1.3bn) of properties at
book value which have been leased back to Marks and Spencer
Plc. The first limited Partnership interest held by the scheme
entitled it to receive £73.0m in 2023 and £54.4m in 2024 and is
included as a financial liability in the financial statements as it
is a transferable financial instrument. The second Partnership
interest held by the scheme entitles it to receive a further
£36.4m annually from June 2017 until June 2031. As it is not a
transferable financial instrument, the associated liability is not
included on the Group’s statement of financial position, rather
the annual distribution is recognised as a contribution to the
scheme each year.
The Group and the Pension scheme are in ongoing discussions
to ensure that the distributions to the scheme are appropriate.
During the period, the Group and the Pension Scheme Trustees
agreed to amend the distribution dates in relation to the first
limited partnership interest so that the Pension Scheme
received £40.0m in October 2023 and is scheduled to receive
£89.7m in June 2024. Additionally, the Group and the Pension
Scheme Trustees agreed to amend the distribution dates in
respect of the second interest so that the Pension Scheme is
entitled to £38.3m in June 2024 and is scheduled an annual
distribution of £36.4m from June 2024 to June 2031. If the
ongoing discussions are successfully concluded, the profile
of contributions to the scheme would be revised so that
distributions in the year would substantially reduce and the
Group would commit to extending the distribution profile,
if required, to ensure that the scheme was fully funded.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
37
LIQUIDITY
At 30 March 2024, the Group held cash and cash equivalents of
£1,022.4m (2022/23: £1,067.9m). In the period, the Group bought
back £276.8m of medium-term maturities and subsequently
fully repaid £128.1m for the 2023 maturing bond.
The Group currently has an unused £850m revolving credit
facility, the expiry of which has been extended to June 2027,
on terms linked to delivery of its net zero roadmap. With the
facility undrawn, the Group had total liquidity headroom of
£1.9bn at 30 March 2024.
DIVIDEND
With the Group generating a further improvement in operating
performance, balance sheet and credit metrics, a final dividend
of 2p has been declared, resulting in a full year dividend of 3p in
2023/24. The final dividend is due to be paid on 5 July 2024 to
shareholders on the register of members as at close of
business on 31 May 2024.
STATEMENT OF FINANCIAL POSITION
Net assets were £2,830.1m at the period end. The profit made
in the period and the reduction in borrowings was largely offset
by a decrease in the net retirement benefit surplus, resulting
in an overall increase in net assets of 5.6% since the start of
the year.
38
Marks and Spencer Group plc
STRATEGIC REPORT
Building a high-performance
“sleeves rolled up” culture is
central to reshaping M&S for
growth and progress on
re-setting the culture has
been made in the last year.
INTRODUCING CLEARLY DEFINED BEHAVIOURS
The business’ vision and purpose have been refreshed in the
last year to set out what M&S is aiming to achieve, why it exists,
and the behaviours that are valued, to begin to code and
embed a culture of “positive dissatisfaction.” Today, we are
closer to our colleagues and closer to our customers, and
focused on execution so we offer exceptional quality, value,
service and innovation to every single customer. Openness to
change and feedback is now at the core of “who we are” at M&S.
However, there is more to do to embed the behaviours within
the business, which is why from 2024/25, they will become the
standards against which all 64,000 colleagues are measured.
M&S BEHAVIOURS
We get out there and ask questions, curious and keen to
get CLOSE TO CUSTOMERS, CLOSE TO COLLEAGUES.
WE SAY IT, WE DO IT. We’re bold with our decisions, and
ambitious for growth. We’re hands-on, sleeves rolled up,
and we get the job done.
WE TELL AS IT IS. We’re honest and straight talking.
We’re informal and conversational. No dramas.
We disrupt and innovate. We’re tough on performance, learn from
others to get better every day and WE ALWAYS AIM HIGHER.
WE WORK SELFLESSLY. We put M&S first to make the right calls
for our customers and shareholders, so we all win together.
We’re financially disciplined. We make the right choices with
our money to SPEND WISE, SAVE WELL.
1 – CREATING A HIGH PERFORMING M&S
ROBUST GOAL SETTING
The foundation of a high-performance culture is robust goal
setting and this has been a key area of focus over the past two
years, with every colleague now having clear goals in place.
This year, Performance and Talent reviews were brought
together for the first time to discuss in-year performance and
longer-term career planning and potential as one conversation.
All colleagues are now required to self-evaluate their
performance and take accountability for the part they play
in M&S’ future growth.
RAISING THE BAR ON PERFORMANCE
In the past M&S has been resistant to managing
underperformance. Over the last twelve months serial
underperformance has begun to be addressed, using the
improvements to goal setting and introduction of M&S
behaviours as a framework. Looking ahead, embedding a
feedback culture across the business is a priority so mistakes
are fixed quickly, learnings are taken, and the business moves
on at pace.
REWARDING COLLEAGUES
Colleagues who are fairly rewarded will undoubtedly perform
better for the business. This year, M&S made its biggest ever
investment – £89m – in front line store colleague pay. From
1 April 2024, the rate of pay for UK Customer Assistants, which
accounts for approximately 40,000 colleagues, increased from
£10.90 to £12.00 per hour, representing a 10.1% increase on last
year and a 26.3% increase since March 2022. The increase in pay
is in addition to the business’ wider range of colleague benefits
which have also seen investment this year. M&S’ industry-
leading 20% colleague discount was extended to all branded
products across Clothing & Home and Food, both online
and instore.
PEOPLE AND CULTURE
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
39
Recruiting
FOR THE NEXT GENERATION
OF RETAILER LEADERS
This year, we relaunched, reshaped, and simplified our early
careers programmes with greater focus on getting closer to
customers. We significantly increased the number of places
available on our 2024 intake, reflecting our focus on
developing talent who want early accountability, will bring
fresh perspectives, and build the skills to become the future
leaders of M&S.
With three programmes aligned to three key business areas,
Retail, Food and Clothing & Home, school-leavers and
graduates will be hands on from day one, spending a
minimum of four months working in one of our stores.
By the end of the programme, those on the Retail Leaders
Programme will be managing a store of their own – the
equivalent of running a muti-million-pound business.
We look forward to welcoming the next generation of retail
leaders when they join our business in September.
CLOSER TO CUSTOMERS
Now in its second year, the Closer to Customers programme
brings Store Support Centre colleagues closer to the front line.
Every colleague is now required to spend seven days every year
working in-store, four days of which need to take place during
peak trading at Christmas. Over 4,000 Support Centre
colleagues completed almost 200,000 hours working in stores
in the last year.
However, the programme is more than Store Support
colleagues offering a helping hand in-store; it is about ensuring
the central gravity of the business is close to our customers
in-store; breaking down barriers; giving our store colleagues a
strong voice in the business; encouraging better teamwork; and
helping to solve problems that get in the way of delivering for
customers quicker.
The scheme was extended this year so that supply chain and
logistics colleagues can spend some of their days working in
distribution centres, to get closer to the operation and drive
greater collaboration.
ENGAGING COLLEAGUES THROUGH THE BIG NETWORK
The elected M&S colleague representative network – BIG –
continues to be at the heart of colleague engagement,
providing valuable collective feedback, insights and input to
drive change. This year, BIG has been particularly instrumental
in supporting the implementation of a new working model for
Store Support Centre colleagues with bigger focus on face-to-
face collaboration, the implementation of a retail market
competitive pay strategy; and the ongoing operational
changes arising from the investment and site improvements
being made at Castle Donington. The National BIG Chair
regularly meets CEO Stuart Machin every six weeks and the
Board on a quarterly basis, so the leadership is closely
connected to colleagues across the business.
2 – CLOSER TO OUR COLLEAGUES AND CLOSER TO CUSTOMERS
INTRODUCING THE PULSE ENGAGEMENT SURVEY
In January, we reset our approach to colleague engagement
surveys and introduced The Pulse to give every colleague the
opportunity to tell us how they feel in a short, easy-to-answer
digital survey that gives a monthly “read” of colleague
sentiment. Each month, 33% of our colleagues are asked for
their views on five key questions, along with a few questions
more specific to the part of the business they work in. In its
first three months, just over 23,000 colleagues took part,
providing valuable insight for leaders and their teams to drive
change collaboratively – building an accountable, high
performance culture.
ENGAGING THROUGH TWO-WAY COMMUNICATION
CHANNELS
Through our Straight to Stuart colleague suggestion scheme,
every colleague has the opportunity to share their ideas to
improve the business and drive change. Since launching in May
2022, colleagues have submitted over 15,000 suggestions, with
around over 120 ideas shared this year being taken forward.
94% of stores across the business submitted suggestions this
year. The aim in 2024/25 is for every single store to submit an
idea and to grow the number of “Yeses.”
Regular webinar sessions are also hosted by Stuart Machin and
the wider ExCo team to drive greater colleague engagement
with Straight to Stuart. High engagement sessions this year
included the #ReduceOurWaste campaign, which generated
over 400 suggestions in five weeks.
STRATEGIC REPORT
40
Marks and Spencer Group plc
PEOPLE AND CULTURE CONTINUED
Every M&S colleague has access to Microsoft Teams and over
59,000 colleagues are active on it every week. It is also where
the all-colleague internal social channel, CommUnity, is
hosted. This is where stories from across the business are
shared, creating a two-way conversation between colleagues
and leaders, with regular engagement and posts from leaders
and frontline colleagues. On average, CommUnity posts are
seen by 30,000 colleagues, with announcements related to
People & Culture driving the greatest level of engagement.
RESETTING WAYS OF WORKING
Ways of working at Store Support Centre have been re-set this
year to increase the amount of time colleagues spend with one
another, with customers and with suppliers. Being together
helps to solve problems faster, make new colleagues feel
welcome and settled quicker and supports colleagues to learn
more from one another so that they grow and develop. All
essential components of driving a high performance culture.
That means that from January, the majority of Store Support
Centre colleagues were working in the support centre at least
three days a week. Feedback, particularly from new joiners and
colleagues in the earlier stages of their career, has been
overwhelmingly positive.
3 – RAISING THE BAR ON TALENT AND INVESTING IN THE SKILLS FOR TOMORROW
RESETTING OUR EARLY CAREERS PROGRAMME
This year, M&S reset and revamped its early careers programme
Retail Leaders, tripling the number of places available to 98 for
the 2024 intake. Store and customer-centricity has been put at
the heart of the programme so that M&S can recruit the best
retail leaders of the future. For the first time, CEO Stuart
Machin hosted a call with prospective candidates to give
them a sense of what it is like to work at M&S and answer
their questions about the business.
FAST TRACKING DEVELOPMENT
To encourage progression, a new Fast Track Development
programme launched this year, focused on spotting talented,
ambitious colleagues from across the business and supporting
them through sponsorship and coaching. In stores, the Fast–
Forward programme was launched; M&S’ first ever
management scheme which helps high performing Customer
Assistants to progress to Team Manager in three months. In
December, Spot a Star was introduced to encourage greater
recognition of peak seasonal colleagues and invest in their
careers, fast tracking them though to permanent and first line
management roles.
OFFERING OPPORTUNITIES THROUGH MARKS & START
M&S supported 693 placements this year through the Marks &
Start employability programme which offers opportunities
to young people who face barriers to employment and are
furthest from work. 590 of those placements took place as
part of a partnership with The Prince’s Trust. The programme
welcomed many from diverse backgrounds, with 26% from
ethnic minorities and 29% having a declared a disability. To
support continued social mobility, the year ahead – marking
the twentieth anniversary of the partnership with the Prince’
Trust – will see a focus on translating more placements into
long-term careers at M&S.
IMPROVING DIGITAL SKILLS
Through the BEAM Academy, the home of digital, data and
technology learning at M&S, 70,000 learning sessions have
been completed in 2023/24 – a 169% increase on the previous
year. More than 1,300 colleagues engaged in our first AI
learning events, aiming to help build skills in generative AI
which can be used in their roles to drive productivity and
efficiency.
Twice a year, the BEAM Academy hosts a 24-hour Hackathon,
bringing together store, distribution centre and Store Support
colleagues to solve business challenges through digital or
data-led solutions. This year, 470 colleagues took part in two
events in May and October, with the goal of coming up with
solutions for 38 different colleague or customer-facing
challenges. The response was positive, with 96% of colleagues
who took part reporting they learnt a new skill while 96% said
they were now more confident applying digital and data in
their role.
4 – A PLACE WHERE EVERYONE CAN BE THEMSELVES AND BE THEIR BEST
INTRODUCING LEADING FAMILY LEAVE POLICIES
In May 2023, M&S became one of the first retailers to introduce
a Neonatal Leave policy to give families of premature babies or
babies that need additional care when they are born, extra
leave and pay. The policy, which provides up to 12 weeks’ fully
paid leave to any UK colleague whose baby requires specialist
neonatal care, means that colleagues no longer had to use
maternity, paternity, or adoption leave while in hospital with
their babies.
Substantial improvements to maternity, paternity, and
adoption policies were also announced this year. As of 1 April
2024, M&S colleagues were able to take six weeks’ paternity
leave at full pay, increasing from two weeks previously, with
the business also almost doubling its maternity and adoption
leave to 26 weeks – also at full pay – equating to a £5m
investment annually.
SUPPORTING COLLEAGUES DURING THE MENOPAUSE
M&S continues to invest in the wellbeing of its colleagues and
their families. In 2023/24, M&S gained the Menopause Friendly
Accreditation through menopause workplace training
specialist HenPicked. Managers across the business have been
offered training to support them to help their teams and open
up conversations on the topic.
M&S also offers menopause-friendly uniform items and,
since launching, colleagues have ordered over 98,000 pieces.
Following a listening group with the CEO, this was fast tracked,
so colleagues had access to the products sooner. A “Straight to
Stuart” idea whereby “menopause” is added as a reason for
absence was also actioned.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
41
OFFERING FLEXIBLE WORKING IN STORES
M&S’ flexible working programme Worklife has continued to be
rolled out following its successful trial with store leaders last
year. Through the programme, more than 3,000 retail
managers have additional flexible working options to choose
from including spreading their hours over five days, working a
four-day compressed week or a nine-day compressed
fortnight.
In 2023/24, the Worklife programme was extended to support
students to offer greater flexibility around their studies and
potential need to move between store locations at different
points in the year. There has been a focus on improving the
store and colleague experience for those needing to move to
help stores to plan whilst retaining great talent.
IMPROVING DIVERSITY THROUGH DEVELOPMENT
This year the EMERGE Talent programme was launched, which
aims to equip colleagues from ethnic minority backgrounds
with additional skills, knowledge and confidence to take
ownership of their personal and career development. 26
colleagues joined the first cohort which launched in March
with plans to roll out the programme to store managers in the
coming year.
GROWING COLLEAGUE NETWORKS
Colleague networks are an important way to build communities
in the workplace and help to make everyone feel at home while
at work. M&S operates a number of colleague led networks,
spanning racial, family, cultural, sexual and gender identities
– designed to bring diverse communities together. Executive
Committee (ExCo) sponsorship was introduced this year to
elevate the networks given their importance to the business.
Network membership has grown by 47%, with over 10,000
members across the eight networks. The networks have played
a crucial role in driving our inclusion and diversity strategy and
progress through consistent feedback and challenge, including
in listening sessions with CEO Stuart Machin with actions taken
on the back of each one.
In the coming year, Sponsors and Co-Chairs will be operating
to a new Charter so that we have a clear framework and always
aim higher in how we represent our colleague communities.
LOOKING AHEAD
Looking ahead, a priority for 2024/25 is to better equip leaders
and line managers to give them accountability for inclusion
and diversity at a local level. To measure progress, we have
established more robust framework of KPIs aligned to the
commitments we have made to drive more diverse and
representative teams.
COLLEAGUE REPRESENTATION MEASUREMENTS
TOTAL EMPLOYEES
SENIOR MANAGERS FROM
ETHNIC MINORITIES
4.3%
2022/23: 5.4%*
*This year, M&S has aligned its reporting of
ethnic minority representation at senior
management level to ensure compliancy
with the FCA listing rules and Parker Review
recommendations. Therefore, the
population of colleagues captured in the
2023/24 figure, and moving forwards, now
only includes colleagues with the greatest
influence and responsibility in driving,
managing and delivering the Group’s
business strategy.
Read more in our Nomination
Committee Report on pages 84 to 86.
COLLEAGUE ENGAGEMENT
(THE PULSE)
64%
Main stats for current year
NPS score across the quarter – percentage
of those who agree/strongly agree that
“M&S is a great place to work”. In January, a
new programme of employee surveying
called “Closer to Colleagues – The Pulse”
was introduced to replace the former “Your
Voice” survey. The Pulse aims to provide a
temperature check of how colleagues are
feeling on a more regular basis.
GENDER PAY GAP
12.6%
22/23: 12.5%
Figure provided is mean pay gap.
We’re committed to driving equal
opportunities and making M&S a
great place to work for women.
We are making progress with the
launch of new initiatives, talent
programmes, and policies, including
our flexible working offer – Worklife,
a Job Share Finder, and our
industry-leading family leave offer.
Read more in our
Remuneration Report on
page 99.
TOTAL SENIOR MANAGERS
2023/24
Female
44,822
Male
21,026
2022/23
Female
44,035
Male
20,226
2023/24*
Female
47
Male
47
*Like-for-like figures cannot be provided
due to change in population size. 2023/24
includes ExCo and ExCo direct reports,
but excludes Board members. The
gender breakdown of the Board is 55%
female and 45% male.
Read more on ExCo and Board
director gender data on
page 73.
STRATEGIC REPORT
ESG REVIEW
From the very beginning, M&S has built trust by doing the right thing by our
colleagues, customers and the communities which we serve. This remains the
case today – 140 years later – and we express this commitment through our
vision to be the most trusted brand, doing the right thing for our customers,
with exceptional quality products at the heart of everything we do.
Our approach to ESG – which we badge Plan A – underpins our
vision and is our promise to always source and make our
products with care, so customers can trust us to do the right
thing. It is also an integral enabler to our strategy to Reshape
M&S for sustainable, profitable Growth so that we become a net
zero business across our value chain by 2040 and conserve the
precious resources our business relies on.
Delivery of Plan A and our ESG strategy is embedded across
our nine strategic priorities and through our business-unit led
operating model. We utilise data, digital and technology
solutions and innovation to support the delivery of our ESG
strategy, and data aids ESG decision-making so we focus on the
issues that are material to our business, and matter most to
customers and wider stakeholders.
There is a clear governance framework in place to support
delivery of our strategy. The Executive Committee (ExCo),
led by the CEO, is accountable for setting and delivering the
strategy, with individual Directors accountable for delivery
within their areas, and the Corporate Affairs Director
accountable for overall delivery of the programme. The ESG
Committee provides a strategic oversight role in challenging
strategy and supporting delivery plans. The ESG Business
Forum, a cross-functional group of senior leaders and subject
matter experts across M&S, plays a key role in tracking ESG
progress against targets, supporting the accountability and
decision-making functions of the ExCo and ESG Committee.
More broadly, effective and robust governance underpins how
we do business. We expect every colleague to play their part
through living our behaviour to “act selflessly” – always acting
in the best long-term interests of M&S and respecting their
colleagues and our customers so we can win together – and
by doing the right thing through compliance with our policies
and standards.
Further information on our ESG strategy is outlined in our
ESG Report 2024 and ESG Committee overview on page 87.
Plan A. Because there is no plan b.
42
Marks and Spencer Group plc
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INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ESG HIGHLIGHTS OF THE YEAR
ESG PROGRESS OVERVIEW
£1.7m
raised for YoungMinds
144m
pieces of plastic removed
from our packaging portfolio 33%
reduction in Scope 1
& Scope 2 emissions
vs 2016/17 baseline
70m
meals donated through our
partnership with Neighbourly
since 2015
100%
of cotton used in clothing
products from more
responsible sources
58%
of the Remarksable range
designated as “Eat Well”
Annual Report & Financial Statements 2024
43
LOTS TO DO
LOTS DONE
LOTS OF
OPPORTUNITY
Marks and Spencer Group plc
ESG Report 2024
Reshaping
M&S
Marks and Spencer Group plc
ESG Report 2024
Our ESG Report gives a full
update on our progress,
data and 2023/24 actions
corporate.marksandspencer.
com/ESGReport2024
Issue
Metric
Target
Assessment
of progress
ENVIRONMENT
NET ZERO
Total location-based Scope 1 & Scope 2 GHG emissions.*
55% reduction by 2029/30
(vs 2016/17 base year)
Total Scope 3 GHG emissions.
55% reduction by 2029/30
(vs 2016/17 base year)
RESPONSIBLE
SOURCING
RSPO Certified Sustainable Palm Oil with Segregated
status (% of all palm oil).*
100% by 2025/26
Soy sourced from verified deforestation and conversion-free
(vDCF) supply chains (% of total direct and indirect soy).
100% by 2025/26
Cotton used in Clothing & Home products from more
responsible sources (% of all cotton used).
100% by 2025/26
Polyester used in Clothing & Home products from verified
recycled sources (% of all polyester used).**
100% by 2025/26
WASTE &
CIRCULARITY
Number of individual pieces of plastic (units) that have been
removed from the M&S own-brand packaging portfolio.
Remove 1bn units by the
end of 2027/28 from
2016/17
Food waste.*
50% reduction by 2029/30
(vs 2016/17 base year)
Food not sold that was fit for human consumption which
was redistributed to charities, community organisations
or colleagues.*
100% by 2025/26
Operational waste to landfill.*
Maintain 0%
SOCIAL
ANIMAL WELFARE
Ranking among retailers, with highest number of species
within M&S Food product range adhering to RSPCA
Assured certification.
Maintain #1 position
PEOPLE
Senior managers who are female.
50% by 2025/26
COMMUNITY
Funds raised for YoungMinds.
£5m by 2026/27 from
2023/24
* Assured by DNV.
** This data is subject to a discrete assurance process linked to our financing and is scheduled to be published in autumn 2024.
Target missed
Behind or pathway in progress
On track or achieved
STRATEGIC REPORT
44
Marks and Spencer Group plc
TASKFORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES REPORT
This section outlines how M&S has complied with the requirements of LR
9.8.6(8)R by including climate-related financial disclosures consistent
with the TCFD recommendations and recommended disclosures. The
below disclosure also complies with the requirements of the Companies
Act 2006 as amended by the Companies (Strategic Report) (Climate-
related Financial Disclosure) Regulations 2022.
TCFD DISCLOSURES INDEX
TCFD pillars
TCFD recommendation
Consistency status
Reference
Governance
A) Describe the board’s oversight of climate-related
risks and opportunities.
Read more on
page 45.
B) Describe management’s role in assessing and
managing climate-related risks and opportunities.
Strategy
A) Describe the climate-related risks and opportunities
the organisation has identified over the short-,
medium-, and long-term.
Read more on
pages 48-53.
B) Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning.
C) Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Read more on
pages 54-56.
Risk
Management
A) Describe the organisation’s processes for identifying
and assessing climate-related risks.
Read more on
page 47.
B) Describe the organisation’s processes for managing
climate-related risks.
Read more on
pages 62-63 in
Risk Management.
C) Describe how processes for identifying, assessing
and managing climate-related risks are integrated
into the organisation’s overall risk management.
Metrics and
Targets
A) Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in line
with its strategy and risk management process.
Read more on
pages 57-58.
B) Disclosure Scope 1, Scope 2 and, if appropriate Scope 3
greenhouse gas emissions and the related risks.
C) Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets.
Read more in the
ESG Report.
Consistent
Partially consistent
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
45
Last year, M&S highlighted our focus areas for the 2023/24 year;
progress against these are highlighted below.
2023/24 action
Progress update
Develop detailed
financial framework
for carbon reduction
initiatives
Built a model to map carbon reduction
initiatives and relevant costings for
our near-term target. The resulting
costs have been incorporated into
the three-year plan. This model
will continue to be refined as we
deepen our understanding of our
emissions and explore additional
initiatives to reduce them.
Work towards plan
for transition in line
with TPT1 guidance
This is a continued area of focus. As we
work towards resubmitting our
science-based target, we will build out
this plan, including the consideration
of agriculture emissions. More
information on page 53.
Enhance Scope 3
reporting
The emissions from Food and Clothing
& Home products we purchase are
over 85% of our Scope 3 emissions.
Reporting for both has been enhanced
with more robust data for emissions
calculations. More information on this
on page 57.
GOVERNANCE
BOARD’S OVERSIGHT OF CLIMATE-RELATED RISKS
AND OPPORTUNITIES (TCFD GOVERNANCE A)
The Board has ultimate responsibility for both risk
management and our ESG framework, including those risks
and opportunities related to climate change.
Responsibilities in relation to risk management are discharged
to the Audit & Risk Committee. The Committee reviews the
principal risks twice a year, including climate change and
environmental responsibility. As part of the Group’s risk
management framework:
– the Board sets risk appetite for key areas of activity
across the business, including ESG.
– the Audit & Risk Committee receives periodic updates
from the leadership team responsible for overseeing ESG
commitments and responsibilities, including performance
against risk appetite through key reporting metrics.
An overview of our risk management process and governance,
including for climate change, is set out on pages 62-63. More
information of the Audit & Risk Committee’s responsibilities
can be found in the Governance Structure on page 46.
In addition to the role played by the Board and the Audit & Risk
Committee, responsibilities in relation to ESG matters are
discharged to the ESG Committee. The ESG Committee meets
at least quarterly and is responsible for:
– ensuring that the Company’s ESG purpose aligns with the
business strategy and customer proposition;
– ensuring the Company’s ESG strategy and associated
governance, including management of climate-related
issues, is fit for purpose;
– overseeing progress against targets via a quarterly
ESG report;
– overseeing control activities mitigating climate risks; and
– supporting the risk management process by reviewing and
providing the Audit & Risk Committee with recommendations
on all ESG-related risks.
All members of both the ESG and Audit & Risk Committees are
non-executive directors (Committee membership and meeting
attendance is outlined in the respective Committee Reports on
page 87 for the ESG Committee and page 89 for the Audit &
Risk Committee).
MANAGEMENT’S ROLE IN ASSESSING AND MANAGING
CLIMATE-RELATED RISKS AND OPPORTUNITIES (TCFD
GOVERNANCE B)
As outlined in our risk management process (see page 47),
climate risks, including emerging areas, are considered as part
of each business and functional risk review. Each business area
considers the capital expenditure required for projects to
mitigate the likely near-term climate-related risks within the
annual budget.
Executive Committee members are individually responsible for
reviewing and confirming climate risks in their own areas and
subsequently reviewing the Group’s principal risks and
uncertainties at the half year and year end. This process
provides the Audit & Risk Committee with assurance that
significant risks are appropriately monitored and managed
throughout the year.
The ESG Business Forum, chaired by a member of the Executive
Committee, is made up of the accountable business leaders for
ESG-related issues. The Forum is responsible for managing
climate-related risks and opportunities and driving progress
against targets of the Company’s ESG programme, which
mitigate our climate risks. Updates on key ESG issues and
trends including those related to climate change are shared
with the Forum via the central ESG team. The Forum meets on a
quarterly basis to review progress against targets. Quarterly
updates from these meetings are provided to the Executive
Committee and the ESG Committee (see Governance Structure
for further detail on the Management Forums on page 46).
1. Transition Plan Taskforce: https://transitiontaskforce.net/
STRATEGIC REPORT
46
Marks and Spencer Group plc
TASKFORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES REPORT CONTINUED
GOVERNANCE STRUCTURE
Ultimate responsibility for both risk management and ESG framework,
including those risks and opportunities related to climate change. Approves the Company’s
ESG strategy, including the business-wide target to become net zero.
– The CEO is responsible for overseeing the development
of business-wide ESG strategic goals and is accountable
for the delivery of the Company’s business-wide ESG
programme (including the roadmap towards net zero).
– Executive Committee members are individually
responsible for setting the ESG strategy in their
respective areas to achieve business-wide strategic
goals, and putting in place mechanisms to deliver their
strategy. This supports the management of the climate-
related risks and opportunities impacting their business
areas.
– Executive Committee members are individually
responsible for reviewing and confirming risks in their
own areas as part of our risk management process,
including climate risks.
– The Corporate Affairs Director, a member of the
Executive Committee, is responsible for the
coordination, reporting and aggregation of the business-
wide ESG programme, as well as horizon scanning and
issues management. The Corporate Affairs Director is
also accountable for governance and overall delivery of
the ESG strategy.
BUSINESS AND FUNCTIONAL LEADERSHIP
– Responsible for managing risks within their areas,
including those relating to climate, and implementing
appropriate mitigation activities.
– Responsible for monitoring emerging risks.
– Responsible for monitoring and reporting on key
ESG-related indicators.
– Responsible for ensuring climate-related opportunities
are realised as part of their ESG strategy.
ESG COMMITTEE
– Responsible for ensuring that the Company’s ESG
strategy aligns with the business strategy and customer
proposition.
– Responsible for ensuring the Company’s ESG strategy
and associated governance is fit for purpose, and that
plans are in place and reported on.
– Advises the Audit & Risk Committee on ESG-related risks
and opportunities, including climate-related issues.
ESG BUSINESS FORUM
– Responsible for driving progress against the targets of
the Company’s ESG programme, which mitigate our
climate risks. Meets quarterly to review progress and
agree the right metrics and targets on a forward-looking
basis.
– Updates the Executive Committee and ESG Committee
on a quarterly basis on progress against targets and
emerging risks.
– Accountable for managing climate-related risks and
opportunities. Includes representatives from Group
Finance and Group Risk to ensure ESG considerations are
reviewed and considered within risk management and
financial planning.
AUDIT & RISK COMMITTEE
– Responsible for ensuring the effectiveness of the risk
management process.
– Receives updates from the business leadership on how
principal risks and uncertainties of the business are
being appropriately addressed.
– Reviews the principal risks twice a year, of which climate
change and environmental responsibility is one.
– Receives periodic updates on business performance
against ESG objectives, as well as compliance and
responsibility metrics.
EXECUTIVE COMMITTEE
MANAGEMENT FORUMS
BOARD COMMITTEES
BOARD
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
RISK MANAGEMENT
STRATEGY
NET ZERO TRANSITION ROADMAP
PROCESS FOR IDENTIFYING, ASSESSING AND MANAGING
CLIMATE RISK, AND HOW THIS IS INTEGRATED INTO
OVERALL RISK MANAGEMENT (TCFD RISK MANAGEMENT
A, B AND C)
The identification, assessment and management of climate-
related risks is integrated into our overall Group risk
management process, with climate risks being assessed and
measured using consistent criteria that is applied to all other
risks. A description of the Group risk management process can
be found on pages 62 to 63.
As part of this process, specifically linked to climate, each of
the accountable businesses and functions have evaluated the
potential consequences of risks using the TCFD Guidance
Tables A1.1 and A1.2 for reference. Specifically, they:
– considered how current and emerging climate-related issues
may impact their strategy both in the near-term and beyond;
– used stakeholder insight to assess the potential size and
scope of the climate risks in line with our Group risk
assessment criteria;
OUR NET ZERO AMBITION
We have committed to being net zero across our entire value
chain by 2039/40. The relevant net zero priority areas can be
found below and the net zero tag highlights how the specific
priority areas support the impacts identified in Table 1.
– prioritised risks based on materiality and time horizon;
– evaluated the design and operating effectiveness of
mitigating controls in place;
– allocated a designated risk owner; and
– engaged the relevant leadership teams of the relevant
business or function.
The summary output of this process can be found in Table 1 on
pages 49 to 53.
At a Group level, management oversight of the overall process
is provided by the ESG Business Forum, which supports an
aggregated view of the different risks faced by the business as
well as transparency of progress against underlying priorities.
Updates are provided to the Executive Committee following
each ESG Business Forum.
At a Board level, governance over the output of this overall
process is provided by the ESG and Audit & Risk Committees.
Climate change and environmental responsibility continues to
be considered one of the principal risks and uncertainties for
the business, as set out on page 69.
OUR TRANSITION PLAN
Looking ahead we will continue to build upon our 10 priority
areas and work towards a detailed transition plan that is aligned
with the Transition Plan Taskforce. More information on page 53.
OUR BASELINE
5.5m
tonnes of carbon
emitted in 2016/171
Near-term: <3 years
2025/26 TARGET
34% reduction
in carbon emissions
(1.9m tonnes)
Medium-term: 3-10 years
2029/30 TARGET
55% reduction
in carbon emissions vs
our baseline
SBTi APPROVED2
Long-term: 10+ years
2039/40 TARGET
Net zero
across entire value chain
1. Restated in line with methodological
changes and improved data.
2. See Metrics and Targets C) for official
science-based target wording.
Suppliers and business
partners on net zero journey
Look beyond our own
operations to spark change
and support decarbonising
across our full value chain.
Reduce and recycle packaging
– 100% of packaging to be
recyclable by 2025/26.
– Remove 1bn units of plastic
packaging by 2027/28.
Zero emissions transport
Move to low-carbon logistics
with reduced dependency on
diesel and increased use of
new technologies and cleaner
fuels. Contribute to cross-
industry action through
collaboration.
NET ZERO
10 IMMEDIATE PRIORITY AREAS
FOR TRANSFORMATION
RESPONSIBLE SOURCING
Zero deforestation
– 100% of soy to be sourced from
verified deforestation and
conversion-free regions by 2025/26.
– 100% segregated responsibly
sourced palm oil by 2025/26.
Sustainable sourcing
100% verified recycled
polyester by 2025/26.
OPERATIONAL EFFICIENCIES
SUSTAINABLE MANUFACTURING
WASTE AND CIRCULARITY
Increasing the range of
plant-based protein
Double the sales of vegan
and vegetarian products
by 2024/25.
Zero emissions
property
Deliver a more efficient
store estate.
Circular economy
Support Oxfam with
Shwopping, our clothes
recycling scheme.
Low-impact farming
Support our farmers to enable
them to grow low-carbon,
responsible food, use fewer
pesticides, enhance their soil,
protect natural resources
and drive innovation.
Reduce food waste
– 100% of edible surplus to be
redistributed by 2025/26.
– Food waste reduced by 50% by
2029/30.
Annual Report & Financial Statements 2024
47
NET
ZERO
STRATEGIC REPORT
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TASKFORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES REPORT CONTINUED
IDENTIFIED CLIMATE-RELATED RISKS AND OPPORTUNITIES (TCFD STRATEGY A)
IMPACT OF CLIMATE-RELATED RISKS AND OPPORTUNITIES ON OUR BUSINESSES, STRATEGY, AND FINANCIAL
PLANNING (TCFD STRATEGY B)
In addition to summarising the risks and opportunities
identified in Strategy A), Table 1, found on the next page,
outlines our business response to the impact on our
businesses, strategy, and financial planning. In line with
2022/23, we also show relevant targets and metrics mapped to
the impact areas to highlight how we are building resilience into
our business strategy.
We continue to monitor our climate-related risks and
opportunities, considering both physical and transition risks
and opportunities and how we manage these over the near-,
medium- and long-term time horizon. The following definitions
of time horizons were used for the purposes of identifying and
managing climate risks and opportunities and were informed
by the Paris Agreement, which influences global policy
responses, the UNFCC data on physical risks and our own
Company’s science-aligned net zero target.
TIME HORIZONS
Near
<3 years
Aligned to our risk management and financial planning processes.
Medium
3-10 years
Captures transition risk and opportunities, linked to both our
science-based target and the emerging risks included in our risk
management disclosure.
Long
>10 years
Captures physical risks and opportunities over the long-term.
Linked to our long-term net zero goal and the emerging risks
included in our risk management disclosure.
Processes used to determine which risks and opportunities
could have a material financial impact on the organisation
Last year, workshops were held with risk, finance and
sustainability leads across the accountable businesses to
identify key risks and opportunities. The outcome of this was
mapping potential impact and likelihood over the different
time horizons to determine relative materiality. This year, as
part of the risk management process, we reviewed these
climate risks and opportunities over the near-, medium- and
long-term to ensure relevance and consideration of any
key changes.
The business determines the severity of a risk by considering
two factors: the likelihood of the risk materialising in a given
timeframe and the potential impact(s) such as financial,
reputational, operational or regulatory. A combination of these
two factors provides an overall risk severity score of either
“minor”, “moderate”, “major” or “critical” which aids the business
in determining the materiality of a risk. We ensure this is the
same criteria used for both business-wide risks, and climate-
related risks.
GROUP RISK ASSESSMENT CRITERIA
4
Likelihood
3
2
1
Impact
1
2
3
4
Key
Minor
Moderate
Major
Critical
A summary of our climate-related risks and opportunities in
line with TCFD Guidance Table A1.1 and A1.2 can be found in
Table 1 on the next page. M&S splits risks by sectors into
Agriculture, Food, Clothing & Home, Property, Fleet and
International. In line with the previous year, given this sectoral
focus is more relevant to our organisation, the decision has
been made that it is not appropriate to break risks and
opportunities down geographically.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
49
1. Current and new environmental compliance including
legislation and tax.
Transition Risk: Policy and Legal
SECTOR
Group-wide | Agriculture | Food | Clothing & Home |
Property | Fleet
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Increase in operating costs to manage environmental compliance
such as carbon tax.
Summary of relevant quantitative scenario analysis which looked
at the impact across different sectors (Food, Clothing & Home,
Fleet and Property) can be found in Strategy C) on page 54.
Increase in capital expenditure required to address emissions areas
in M&S-owned assets such as refrigeration, energy consumption
and diesel fleet.
Capital expenditure on LED lighting, store controls upgrades,
voltage optimisation, fridge doors, electric vehicles and other
areas are included in the budget and three-year plan used to
support asset impairment reviews, details of which can be found
on pages 164-165 of the Financial Statements.
BUSINESS RESPONSE
Group
– Working towards our 2029/30 science-based target, which
guides our goal setting process for net zero targets as part of
our business transformation.
Supply chain
– Built net zero as a consideration into our sourcing strategy for
Food and Clothing & Home.
– Identified the suppliers who have greatest impact on emissions
in our supply chain as a key focus for engagement and measure
impact through Higg Index and Manufacture 2030.
Our operations
– Capital investment through proactive asset replacement which
is integrated into a three-year financial plan to phase out our
F-gas refrigeration systems. New store specifications include
being 100% electric, with full LED lighting in Foodhalls.
NET ZERO PRIORITIES
NET
ZERO
– Impacts all 10 net zero priority areas.
TARGETS
– 55% reduction in absolute Scope 1 & 2 emissions by 2029/30 from
2016/17 base year.
– 55% reduction in absolute Scope 3 emissions by 2029/30 from
2016/17 base year.
2. Ability to keep pace with customer trends and behaviours
as we see an increase in consumer preferences towards
more sustainable product choices.
Transition Risk: Market & Reputation
Opportunity: Products and Services
SECTOR
Food | Clothing & Home
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Revenue loss if we do not keep pace with customer trends and
develop suitable low-carbon product offerings.
Whilst we have considered quantifying this risk, we are not
disclosing a financial impact as there is no clear methodology or
set of assumptions that would lead to a meaningful financial
quantification.
Revenue opportunity from climate conscious customers who want
to choose low-carbon products.
BUSINESS RESPONSE
Our products
– Quarterly review of ESG preferences and perceptions through
our ESG Reputation Tracker.
– Ongoing investment in innovation and new product and
proposition development to ensure we develop suitable
low-carbon products to maximise customer preferences.
– In Food, we achieved our sales from plant-based product target
and currently over two-thirds of our food sales (tonnage) comes
from fruit and vegetables (24%), vegetarian and vegan
products.
– For Clothing & Home we are focusing on alternative raw
materials. We also continue exploring circular solutions for our
customers.
NET ZERO PRIORITIES
NET
ZERO
– Increasing the range of plant-based protein
– Circular economy
– Sustainable sourcing
– Low-impact farming
TARGETS
– 100% of cotton used in Clothing & Home (C&H) products from
more responsible sources by 2025/26 (% of all cotton used).
– 100% of polyester used in C&H products from verified recycled
sources by 2025/26 (% of all polyester used).
– 100% of MMCF used in C&H products from more responsible
sources by 2025/26 (% of all MMCF used).
– Remove 1bn units of plastic packaging by the end of 2027/28
from 2016/17.
TABLE 1: BUSINESS-WIDE RISK AND OPPORTUNITY SUMMARY
Near-term:
<3 years
Medium-term: 3-10 years
Long-term:
>10 years
Quantified
Immaterial
No meaningful quantification
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FINANCIAL DISCLOSURES REPORT CONTINUED
TABLE 1: BUSINESS-WIDE RISK AND OPPORTUNITY SUMMARY CONTINUED
3. Availability of low-carbon technological solutions and
infrastructure to support low-carbon activities for example
low- and zero-carbon fleet options.
Transition Risk: Technology
SECTOR
Group-wide | Property | Fleet
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Increase in capital and operational expenditure required to source
the necessary low-carbon technology and infrastructure to
achieve our net zero goals.
Potential impact of £50m-£60m in 2030 if not mitigated.
BUSINESS RESPONSE
Group
– Mapping our roadmap to achieve our science aligned 2029/30
target, and focus on proactively managing the need for new
low-carbon technological solutions and infrastructure to
support our journey to net zero.
Our operations
– Trialling bio-LNG and electric vehicles in our logistics network to
understand emission reduction impact. More information in our
ESG Report.
NET ZERO PRIORITIES
NET
ZERO
– Zero emissions property.
– Zero emissions transport.
TARGETS
– 55% reduction in absolute Scope 1 & 2 emissions by 2029/30 from
2016/17 base year.
– 55% reduction in absolute Scope 3 emissions by 2029/30 from
2016/17 base year.
4. Energy efficiency and resilience in our operations and
supply chain.
Transition Risk: Market
Opportunity: Resource Efficiency & Energy Source
SECTOR
Group-wide | Food | Clothing & Home | Property
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Increase cost in our supply chain caused by increasing energy
costs if energy efficiency or greener solutions are not put in place.
Potential impact of £0m-£10m in 2030 if not mitigated.
Reduction in operational costs if energy consumption is effectively
managed. Opportunity to reduce reliance of grid electricity by
facilitating on-site renewable energy generation.
BUSINESS RESPONSE
Supply chain
– Working with suppliers to reduce energy consumption and move
to the use of renewable energy. Examples of this include our
participation in the Carbon Leadership Programme and our six
key asks from Food suppliers. More information in our ESG
Report.
Our operations
– Continue to integrate energy efficiency measures such as
improved metering across property estate and investment in
energy efficiency projects such as doors on fridges, to lower
energy consumption.
NET ZERO PRIORITIES
NET
ZERO
– Zero emissions property.
– Zero emissions transport.
– Low-impact farming.
– Suppliers and business partners on net zero journey.
TARGETS
– 55% reduction in absolute Scope 1 & 2 emissions by 2029/30 from
2016/17 base year.
– 55% reduction in absolute Scope 3 emissions by 2029/30 from
2016/17 base year.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
51
5. Failure to meet our public climate change commitments.
Transition Risk: Reputation
SECTOR
Group-wide
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Reputational impact due to failure to meet our net zero targets.
Leads to lower sales and makes it harder to attract and retain
customers and colleagues.
Whilst we have considered quantifying this risk, we are not
disclosing a financial impact as there is no clear methodology or
set of assumptions that would lead to a meaningful financial
quantification.
BUSINESS RESPONSE
Group
– Net zero has been incorporated into the strategic pillars of our
Business Transformation with a set of clear metrics for
accountable business owners.
– Quarterly updates on our climate targets at our ESG Business
Forum, which then feed into updates to the ExCo and our ESG
Committee. More information on our Governance structure
found on page 46.
– Continue supporting innovation with suppliers and partners on
reducing emissions through our “Plan A Accelerator Fund”.
TARGETS
– 34% (1.9m tonne) reduction in carbon emissions by 2025/26 from
2016/17 base year.
– 55% reduction in absolute Scope 1 & 2 emissions by 2029/30 from
2016/17 base year.
– 55% reduction in absolute Scope 3 emissions by 2029/30 from
2016/17 base year.
6. Reliance on third parties, local government and broader
infrastructure to achieve our mitigation actions.
Transition Risk: Market
SECTOR
Group-wide
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Increase capital and operational expenditure required to meet our
net zero goals e.g. increased cost in renewable energy
procurement if grid decarbonisation is not delivered.
Whilst we have considered quantifying this risk, we are not
disclosing a financial impact as there is no clear methodology or
set of assumptions that would lead to a meaningful financial
quantification.
BUSINESS RESPONSE
Group
– Collaborate closely with industry trade associations to ensure
we are working towards the same goals, such as the British Retail
Consortium (BRC) and Institute of Grocery Distribution (IGD).
– Engage with non-government organisations such as WWF,
RSPCA and WRAP.
– Proactively engage with governments to ensure that broader
policy and infrastructure will support us on our net zero
journey.
Near-term:
<3 years
Medium-term: 3-10 years
Long-term:
>10 years
Quantified
Immaterial
No meaningful quantification
STRATEGIC REPORT
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TASKFORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES REPORT CONTINUED
7. Failure to meet the requirements of our franchise partners
based on the impact of climate change on our supply chain.
Transition Risk: Reputation
Physical Risk: Acute & Chronic
SECTOR
International
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Reputational impact due to failure to meet the requirements of
our partners. Loss of revenue from not being able to provide
necessary stock to partners.
Whilst we have considered quantifying this risk, we are not
disclosing a financial impact as there is no clear methodology or
set of assumptions that would lead to a meaningful financial
quantification.
BUSINESS RESPONSE
Our operations
– Plan and targets to reach net zero across our entire value
chain.
– Carry out risk reviews on the resilience of our supply chain,
including climate impact.
– Ensuring we have a business continuity team who apply
learnings from crises, such as the invasion in Ukraine, as to how
we are able to adapt our supply chain to ensure we are able to
meet partner requirements, irrespective of the cause of the
disruption.
TARGETS
– 55% reduction in absolute Scope 1 & 2 emissions by 2029/30 from
2016/17 base year.
– 55% reduction in absolute Scope 3 emissions by 2029/30 from
2016/17 base year.
8. Volatility in the supply of raw materials caused by the
impact of climate change.
Physical risk: Acute & Chronic
SECTOR
Agriculture | Food | Clothing & Home
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Increase in sourcing costs based on supply chain disruption
caused by increased likelihood of extreme weather.
Loss of revenue if we are not able to source specific products
due to the impact of physical climate risks.
Summary of relevant quantitative scenario analysis can be
found in Strategy C) in Table 2 on pages 54-56.
BUSINESS RESPONSE
Supply chain
– Track financial impact of climate change on fresh produce to
identify hotspots and the impact on the business.
– Strengthened our focus on supporting producers as they
transition to net zero. Putting a greater emphasis on resilience in
our standards and partnerships, such as Fairtrade.
– Increased focus on regenerative agriculture, through our
Farming with Nature programme and work with the Better
Cotton Initiative. More information in our ESG Report.
NET ZERO PRIORITIES
NET
ZERO
– Low-impact farming
– Sustainable sourcing
TARGETS
– Maintain 100% Fairtrade-certified tea and coffee (% of all M&S tea
and coffee products).
– 100% of cotton used in Clothing & Home products from more
responsible sources by 2025/26 (% of all cotton used).
– 100% of MMCF used in Clothing & Home products from more
responsible sources by 2025/26 (% of all MMCF used).
TABLE 1: BUSINESS-WIDE RISK AND OPPORTUNITY SUMMARY CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
53
9. Managing infrastructure and operations (both owned and
supply chain) in extreme weather.
Physical Risk: Acute
SECTOR
Group-wide | Property | Fleet
TIME HORIZON
POTENTIAL FINANCIAL IMPACT ON
THE BUSINESS
Loss of revenue from increased likelihood of extreme weather
events (e.g. flooding, extreme temperatures) leading to closures
of shops, distribution centres and key transport hubs.
Summary of relevant quantitative scenario analysis can be
found in Strategy C) in Table 2 on pages 54-56.
BUSINESS RESPONSE
Our operations
– To support with the management of extreme weather events in
stores, distribution centres and key transport hubs such as
Chittagong port, Bangladesh, we have in place robust business
continuity procedures.
NET ZERO PRIORITIES
NET
ZERO
– Zero emissions property
– Zero emissions transport
How climate-related issues serve as an input to our financial
planning process
As outlined in our introduction, this year we worked towards
creating a financial model for our emissions reduction
initiatives. Where required, spend associated with certain
projects linked to climate-related risks and opportunities is
incorporated into the 2024/25 budget and the three-year
financial planning process, both approved by the Board. We
have done so by including the capital expenditure required
to manage the impact of our climate-related risks in our
operations and the profit impact from climate-linked products
and services. For example, capital investment in our store
estate to improve energy efficiency. This financial planning
process forms the cash flow projections within our going
concern and impairment assessments (see page 71 for
more details).
Our Transition Plan
Last year, to support us on our journey to net zero, our 2029/30
reduction target was validated by the Science Based Targets
Initiative (SBTi).
As outlined on page 47, looking ahead we will continue to
build upon our 10 priority areas and work towards a detailed
transition plan that is aligned with our science-based targets
and the Transition Plan Taskforce. We aim to submit updated
targets to the SBTi this year, with a separate target considering
Forest, Land and Agriculture (FLAG) emissions. We will also
submit our net zero target and plans to achieve it, noting
there are challenges that we cannot solve on our own.
More information on this can be found in our ESG Report.
Near-term:
<3 years
Medium-term: 3-10 years
Long-term:
>10 years
Quantified
Immaterial
No meaningful quantification
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THE RESILIENCE OF OUR STRATEGY, TAKING INTO
CONSIDERATION DIFFERENT CLIMATE-RELATED
SCENARIOS (STRATEGY C)
Quantitative scenario analysis
Quantitative scenario analysis is a valuable tool to help
understand the potential impact of risks and opportunities
identified by the business. Last year we undertook scenario
analysis on four areas of our business; Property, Fleet, Protein
and Cotton. These areas were selected following a materiality
assessment which considered the potential climate-related
impact and the impact on financial performance to M&S, while
ensuring fair and balanced reporting across the accountable
businesses. The analysis looked at the impact of two plausible
future states. We chose to use a low-carbon transition scenario
(average global temperature increases of 1.5˚C due to climate
change by 2100) and a physical climate impact scenario
(average global temperature increases of 4˚C due to climate
change by 2100). These scenarios were chosen to show the
impact of both a high level of transition risk (1.5˚C pathway),
assuming the implementation of a carbon tax, and physical risk
(4˚C pathway) assuming low levels of Government intervention
leading to more frequent and impactful weather events.
Consistent with last year, the results of the scenario analysis
are included in Table 2. We have aligned our financial impact
criteria to our Group risk assessment criteria as follows:
FINANCIAL IMPACT
Minor
<1% on sales and profit before
tax (PBT)
Moderate
1-3% impact on sales
1-5% impact on PBT
Major
3-5% impact on sales
5-10% impact on PBT
Critical
>5% impact on sales
>10% impact on PBT
AREA & SCOPE
PROPERTY
UK Property Estate (including Gist properties)
Risk/Opportunity category (as identified in Table 1)
TRANSITION RISK
Current and new environmental
compliance including legislation
and tax
PHYSICAL RISK
Managing infrastructure and
operations (both owned and
supply chain) in extreme
weather
Risk modelled
– Carbon tax on Scope 1 & 2
emissions
– Flood risk
Impact of climate risk on our organisation’s financial
performance in 2030, assuming no mitigating actions
– Potential operating profit
impact of £20m to £30m
– Immaterial
Quantification of impact
Moderate to Major
Minor
Targets in place to manage these risks
– 55% reduction in absolute
Scope 1 & 2 emissions by
2029/30 from 2016/17 base
year
TABLE 2: QUANTITATIVE SCENARIO ANALYSIS SUMMARY
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
55
AREA & SCOPE
FLEET
UK fleet (including Gist)
Risk/Opportunity category (as identified in Table 1)
TRANSITION RISK
Current and new environmental compliance including legislation
and tax
Risk modelled
– Carbon tax on Scope 1 & 2 emissions
Impact of climate risk on our organisation’s financial
performance in 2030, assuming no mitigating actions
– Potential operating profit impact of £15m to £25m
Quantification of impact
Moderate to Major
Targets in place to manage these risks
– 55% reduction in absolute Scope 1 & 2 emissions by 2029/30
from 2016/17 base year
AREA & SCOPE
PROTEIN
UK and Ireland sourced beef, lamb, pork, chicken and turkey
products
Risk/Opportunity category (as identified in Table 1)
TRANSITION RISK
Current and new environmental
compliance including legislation
and tax
PHYSICAL RISK
Volatility in the supply of raw
materials caused by the impact
of climate change
Risk modelled
– Carbon tax on agricultural
emissions (to the farm-gate)
– Extreme weather events and
chronic climate change
impact on agricultural
production
Impact of climate risk on our organisation’s financial
performance in 2030, assuming no mitigating actions
– Potential operating profit
impact of £35m to £50m
– Immaterial
Quantification of impact
Moderate to Major
Minor
Targets in place to manage these risks
- 55% reduction in absolute
Scope 3 emissions by 2029/30
from 2016/17 base year
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AREA & SCOPE
COTTON
Globally sourced raw material used in our clothing
Risk/Opportunity category (as identified in Table 1)
TRANSITION RISK
Current and new environmental
compliance including legislation
and tax
PHYSICAL RISK
Volatility in the supply of raw
materials caused by the impact
of climate change
Risk modelled
– Carbon tax on agricultural
(seed to farm-gate) and
manufacturing (all steps in
cotton production)
emissions
– Extreme weather events and
chronic climate change
impact on agricultural
production
Impact of climate risk on our organisation’s financial
performance in 2030, assuming no mitigating actions
– Potential operating profit
impact of £45m to £60m
– Immaterial
Quantification of impact
Major
Minor
Targets in place to manage these risks
– 55% reduction in absolute
Scope 3 emissions by 2029/30
from 2016/17 base year
– 100% of cotton used in
Clothing & Home products
from more responsible
sources by 2025/26 (% of all
cotton used)
Resilience of our business
Our scenario analysis identified that the transition risk
associated with the introduction of a carbon tax in 2030
remains a material risk, with a potential operating profit impact
across Property, Fleet, Protein and Cotton of between £115m
and £165m assuming no mitigation.
This risk highlights the need for continued effort to work
towards our 2029/30 emissions reduction target, with a focus
on emissions in our value chain, which make up 94% of our total
emissions.
In 2023, we worked with climate consultancy South Pole to
calculate Scope 3 emissions from manufacturing our Clothing
& Home products. This provided greater clarity of emissions
hot spot areas which allowed us to produce a roadmap of
emissions reduction activities. This year, we also undertook
analysis on our property portfolio to gather further insights
into our property-related emissions and roadmap to reduce
these emissions.
To support the requirement for greater collaboration, research
and development, our “Plan A Accelerator Fund” provided
funding to over eight projects in 2023/24, that have the
potential to reduce emissions in our supply chain. These
actions will play a role in strengthening the resilience of the
organisation’s strategy to the climate-related risks and
opportunities identified in the near-term.
Through the work to identify emission reduction initiatives
across the business and the projected cost, we have an
understanding of the financial impact of meeting our
emissions reduction target and have accounted for this in our
three-year plan. Moreover, even if there were to be significant
issues that meant we were unable to deliver on our mitigations,
given the health of our balance sheet, we would be able to
absorb the impact of the carbon tax calculated in Table 2.
While the physical risks identified in our scenario analysis are
quantified as immaterial, we are aware fresh produce supply is
especially vulnerable to unpredictable weather patterns and
extreme weather events. In our Food business work has begun
to identify root causation, vulnerable hotspots and the impact
on the business when we have to use contingency sourcing, to
ensure we can identify if physical climate risk is an emerging
material risk.
Next year, we will look to update our scenario analysis,
capturing the most recent scenario information and
considering a broader scope if relevant and material to
our business.
TABLE 2: QUANTITATIVE SCENARIO ANALYSIS SUMMARY
CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
57
METRICS USED TO ASSESS CLIMATE-RELATED RISKS AND
OPPORTUNITIES (TCFD METRICS AND TARGETS A)
We report against a broad range of ESG metrics and targets,
with a number of these relating to our Plan A ambition to be net
zero across our entire supply chain by 2039/40.
Within the 10 priority net zero areas, highlighted on page 47, are
related targets and metrics. All related ESG metrics and targets
linked to our climate-related risks and opportunities are also
highlighted in our Strategy section in Table 1. While we consider
other climate-related metrics and targets, our focus remains
on our GHG emissions metrics, which feed into our near- and
medium-term emissions reduction targets that are aligned to
the UN ambition to limit global warming to 1.5˚C.
This year, we calculated an internal price of carbon per tonne,
based on our in-flight emissions reduction initiatives. This gives
us an indication of the potential cost of future emissions
reduction initiatives to achieve our targets. Looking ahead to
2024/25, we intend to explore mechanics for embedding a
carbon price into investment appraisal across the business.
This year the Remuneration Committee discussed the
appropriateness of introducing an ESG-related component
into the Performance Share Plan (PSP) award. As ESG and
climate commitments are embedded in our business
operations, they are already reflected in the achievement of
our existing bank of PSP strategic measures, so the Committee
agreed that inclusion of a separate ESG measure would
not further our Plan A ambition. This will remain under
consideration in future years, and more information can
be found on page 97.
SCOPE 1, 2 AND 3 GREENHOUSE GAS EMISSIONS
(TCFD METRICS AND TARGETS B)
Scope 1 & 2
Our Scope 1 & 2 carbon emissions, reported in line with the
Greenhouse Gas (GHG) Protocol, result mainly from operating
our logistics fleet and powering our sites and offices. The table
to the right outlines our 2023/24 Scope 1 & 2 emissions,
reported in line with the Streamlined Energy and Carbon
Reporting requirements. Across the business, we capture the
data and calculate these emissions on technology platform
Sphera, and this data has been assured by DNV Business
Assurance Services UK Limited. More information can be found
in our ESG Report.
Scope 3
Last year, we committed to enhancing our Scope 3 reporting
which remains a complex task that will need continuous
refinement. This year we are able to report an improved
inventory, which includes a greater amount of supplier-specific
data within our most material Scope 3 category, Purchased
goods and services.
The chart on the next page discloses our updated 2022/23
Scope 3 emissions data, which has been calculated in line with
the GHG Protocol. In order to report more accurate Scope 3
emissions, we are reporting a year in arrears.
In our Food business, we are working with Manufacture 2030
and Mondra to obtain more supplier-specific data and
incorporate this into our Scope 3 emissions inventory.
For Clothing & Home, working with third-party South Pole, we
have calculated an updated and more granular inventory and
baseline, utilising data from the HIGG index. More detail on this
can be found in our ESG Report.
STREAMLINED ENERGY AND CARBON REPORTING
Energy consumption (GWh)
2023/24
2022/23^
% change
UK Operations
1,382
1,402
-1%
International
Operations
77
69
10%
Group
1,459
1,472
-1%
^ Performance for last year has been re-stated to reflect data accuracy
improvements.
ENERGY EFFICIENCY INITIATIVES IMPLEMENTED
THIS YEAR
– Our new store shell specification and model requirements
reflect our ESG commitments, and include: 100% electric
stores, fully LED and voltage optimisation.
– We have installed energy-efficient fridge doors in 30 of our
Foodhalls, which help to regulate temperature and deliver
20%-30% energy savings per store per year.
– Over 2023/24, we invested in LED lighting to cover 76% of
our stores, voltage optimisation and store controls, which
has reduced emissions by 2300t CO2e and improved
operational efficiencies.
– We have continued to roll-out LED lighting across our owned
international store estate with an additional 10 stores
2023/24.
– We have reviewed trading lighting requirements across the
our store estate which has saved 1.8m Kwh across the year.
Greenhouse gas emissions (000 tonnes CO2e)
2023/24
2022/23^
% change
Scope 1 emissions
207
225
-8%
of which UK
203
218
-7%
Scope 2 emissions
(location-based)
154
137
12%
of which UK
120
113
6%
Total location-
based Scope 1&2
emissions
361
362
of which UK
323
332
-3%
GHG intensity per
1,000 sq ft of sales
floor
18.1
18.5
-2%
Scope 2 emissions
(market-based)
233*
20
–*
Total market-based
Scope 1&2 emissions
439
245
80%
of which UK
407
219
86%
* As outlined in the 2023 M&S Sustainability report we are no longer
purchasing Renewable Energy Guarantees of Origin (REGOs) and we now
calculate Scope 2 market-based emissions using supplier-specific
emissions factors in line with the GHG protocol.
^ Performance for last year has been re-stated to reflect data accuracy and
methodology improvements .
METRICS AND TARGETS
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Marks and Spencer Group plc
TARGETS USED TO MANAGE CLIMATE-RELATED RISKS
AND OPPORTUNITES (TCFD METRICS AND TARGETS C)
In 2022, the Science-Based Targets Initiative (SBTi) approved
our target:
Marks and Spencer plc commits to reduce absolute Scope 1 and
Scope 2 GHG emissions 55% by 2030 from a 2017 base year. Marks
and Spencer plc also commits to reduce absolute Scope 3 GHG
emissions 55% within the same time frame.
In support of this, we set ourselves a near-term target to reduce
our total emissions by 34% or 2.1m tonnes by 2025/26. This year,
we have restated our 2016/17 base year so that our 34% target is
now quantified as 1.9m tonnes thanks to improved emissions
data providing us with a more accurate base year calculation.
We have also been able to calculate delivered emissions
reduction by 447,000 tonnes from our base year to 2022/23.
It is important to note that we will, on an ongoing basis,
continue to review our externally communicated carbon
targets. This will allow us to reflect ongoing business change,
the evolution of carbon measurement techniques and
guidance and the impact of emerging technologies over the
coming years.
We also note the importance of societal change and advocacy
needed to overcome industry challenges. We will continue to
work with the Government, industry groups and non-
government organisations to help address these challenges.
Our ESG report outlines all of our targets used to manage our
ESG performance, including those relevant to managing our
climate-related risks.
TASKFORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES REPORT CONTINUED
2022/23 SCOPE 3 EMISSIONS
5.2m
tonnes
CO2e
Purchased goods & services –
Food (Category 1)
58%
Purchased goods & services –
C&H (Category 1)
31%
Upstream transportation &
distribution (Category 4)
6%
End-of-life treatment of
sold products (Category 12)
2%
Franchises (Category 14)
2%
Other Scope 3 categories
1%
Identifying emissions reduction
Last year, we reported that we had identified emissions
reduction initiatives equal to 62% of our near-term target.
Thanks to the further data gathering undertaken, we have been
able to update the scope of emissions reduction initiatives to
an improved 72%.
In 2024/25, we will be re-submitting our targets to SBTi. This
decision has been driven by our improved data calculation,
greater clarity of where emissions reduction initiatives should
be prioritised, as well as the SBTi’s published guidance on
Forest, Land and Agriculture emissions and the GHG Protocol’s
Land Sector and Removals Guidance due to be finalised in
summer 2024. To support this, we will be creating a detailed
transition plan in line with the Transition Plan Taskforce (TPT) to
help us deliver our 2029/30 emissions reduction target, as well
as our net zero ambition.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
59
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
The statements below reflect our commitment to, and management of, colleagues,
communities, the environment, human rights, anti-bribery and corruption in the last
12 months as required by sections 414CA and 414CB of the Companies Act 2006.
Policies on these matters can be found at corporate.marksandspencer.com.
Our Business Model can be found on page 8.
ENVIRONMENTAL MATTERS
Our Commitment
M&S is committed to becoming a net zero business across
our entire value chain by 2040. An ambitious roadmap has
been established and will ensure M&S plays its part in limiting
global warming to 1.5°C. We continue working towards our
2030 corporate greenhouse gas emissions reduction target
approved by SBTi (see official science-based target on
page 58.
M&S is a supporter of the Task Force on Climate-Related
Financial Disclosures (“TCFD”) which provides a framework for
our approach to identifying, assessing and managing our
climate-related risks and opportunities.
Dedicated corporate website areas:
Go to corporate.marksandspencer.com/sustainability/
plan-a-our-planet.
Go to marksandspencer.com/c/look-behind-the-label.
Relevant policies, documents, or reports that set out
our approach
– Climate & Energy Policy
– Food Waste Policy
– ESG Report 2024
Where to read more about the outcomes and related non-
financial KPIs in this report
– Our TCFD Report, on pages 44 to 58
– S.172 Statement, on pages 80 to 82
– ESG Committee Report, on pages 87 to 88
– Climate-related (“CR”) financial disclosures:
– (a) governance arrangements, on pages 45 to 46;
– (b) how CR risks and opportunities are identified, assessed
and managed, on page 47;
– (c) how processes for identifying, assessing and managing
CR risks are integrated within the Group’s overall risk
management framework, on page 47;
– (d) description of-
(i) principal CR risks and opportunities, on pages 49 to 53;
(ii) time periods to which these are assessed, on page 48;
– (e) actual and potential impacts of the principal CR risks and
opportunities on the business model and strategy, on pages
49 to 53;
– (f) resilience of the business model and strategy, taking into
consideration different CR scenarios, on pages 54 to 56;
– (g) targets used to manage CR risks and realise CR
opportunities and performance against targets, on page 57
and in the ESG Report; and
– (h) KPIs used to assess (g) targets above and calculations on
which these are based, on page 57 and in the ESG Report.
COLLEAGUES
Our Commitment
We’re committed to providing a safe, supportive, and
inclusive environment for our colleagues that’s built on
a foundation of respect. We’re proud of, and value, the
diversity of our teams and focus efforts to ensure
colleagues feel supported to develop and have equal
access to opportunities. Our aim is to create a place
where everyone can be themselves and be at their best.
Dedicated corporate website area:
Go to corporate.marksandspencer.com/sustainability/
our-people.
Relevant policies, documents, or reports that set out
our approach
– Code of Conduct
– Inclusion, Diversity & Equal Opportunities Policy
– People Principles
Where to read more about the outcomes and related non-
financial KPIs in this report
– Stakeholder engagement, on pages 9 to 11
– People & Culture, on pages 38 to 41
– S.172 Statement, on pages 80 to 82
– Nomination Committee report including Board and Senior
Management Diversity, on pages 84 to 86
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Marks and Spencer Group plc
NON-FINANCIAL AND SUSTAINABILITY CONTINUED
COMMUNITIES AND SOCIAL MATTERS
Our Commitment
M&S has been committed to supporting local communities
throughout its 140-year history. We aim to take a progressive
approach to our community engagement and actions that
make a big difference on some of the most pressing causes in
many parts of the world.
Dedicated corporate website areas:
Go to corporate.marksandspencer.com/sustainability/
our-communities.
Go to corporate.marksandspencer.com/sustainability/
our-products.
Relevant policies, documents, or reports that set out
our approach
– Charity Partnerships & Fundraising Policy
– Trading Standards & Consumer Protection Policy
– Food & Product Safety & Integrity Policy
– Farm Animal Health & Welfare Policy
– Groceries Supply Code of Practice (“GSCOP”) Compliance
Report
– Responsible Marketing Principles
– ESG Report 2024
Where to read more about the outcomes and related non-
financial KPIs in this report
Our contributions towards, and consideration of, communities
is integrated throughout the report and can also be found in:
– Stakeholder engagement, on pages 9 to 11
– S.172 Statement, on pages 80 to 82
– ESG Committee Report, on pages 87 to 88
HUMAN RIGHTS
Our Commitment
M&S is committed to respecting human rights in the UK and
internationally; ensuring people in our business and supply
chain are always treated fairly. To support this, we are
committed to continuous improvement by building
knowledge and awareness on human rights for all of our
colleagues and suppliers, as well as ensuring there are
methods of speaking up through our improved “Worker Voice”
technology platform.
Dedicated corporate website area:
Go to corporate.marksandspencer.com/sustainability/
human-rights-our-supply-chain.
Relevant policies, documents, or reports that set out
our approach
– Modern Slavery Statement
– Human Rights Policy
– Code of Conduct
– M&S Global Sourcing Principles
– Child Labour Procedure
– M&S grievance procedure for Food and Clothing & Home
supply chains
Where to read more about the outcomes and related non-
financial KPIs in this report
– Stakeholder Engagement, on pages 9 to 11
– ESG Committee Report, on pages 87 to 88
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
61
ANTI-BRIBERY AND ANTI-CORRUPTION
Our Commitment
M&S is committed to the highest standards of ethics, honesty
and integrity. We have a zero-tolerance approach to any form
of bribery and corruption and operate a compliance
programme to prevent bribery and corruption in our business
and supply chain. We set expected standards of conduct that
colleagues, contractors, suppliers, business partners and any
other third parties who act for or on behalf of M&S are obliged
to follow.
Relevant policies, documents, or reports that set out
our approach
– Anti-Bribery & Corruption Policy
– Code of Conduct
Where to read more about the outcomes and related
non-financial KPIs
– Other Disclosures, on page 118
PRINCIPAL RISKS
Our Commitment
We are committed to maintaining an effective and agile risk
management framework underpinned by appropriate
processes that allow the business to proactively identify and
manage risks and issues that may impact the achievement of
our business strategy, compliance with our values and our
position as a legally compliant retailer.
Relevant policies, documents, or reports that set out
our approach
– Group Risk Management Policy and Risk Appetite
Statements
Where to read more about the outcomes and related non-
financial KPIs
– Risk Management Framework, on pages 62 to 63
– Overview of Principal Risks and Uncertainties, on pages 64
to 70
– TCFD: Climate-related risks, on pages 49 to 53
STRATEGIC REPORT
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Marks and Spencer Group plc
RISK MANAGEMENT
OUR RISK MANAGEMENT PROCESS
We continue to maintain a structured
approach to risk management,
mindful that evolution and
refinement are needed to adapt to an
ever-changing environment.
Our risk management process allows the business
to maintain an appropriate risk culture that
supports business operations and assists the Board
in complying with obligations under the Corporate
Governance Code.
OUR FRAMEWORK
The Audit & Risk Committee, under delegated
authority from the Board, is accountable for
overseeing the effectiveness of risk management.
This includes identification of the principal risks
facing M&S, monitoring compliance with the Risk
Management Policy and periodically reviewing risk
appetite. Our top-down and bottom-up governance
approach supports this framework and the process
shown on the right. These activities are facilitated by
the Group Risk team, part of the broader Internal
Audit & Risk function, which has a direct reporting
line to the Chair of the Audit & Risk Committee.
M&S RISK GOVERNANCE STRUCTURE
Top
down
M&S Board
Audit & Risk Committee
Executive Committee
Business and functional
leadership teams
Bottom
up
Policy and process owners
Our risk management structure remains aligned to
the M&S operating model, with each business and
function responsible for the identification, tracking
and management of specific risks. These include a
wide variety of changes and uncertainties that may
impact our business, colleagues, customers and
third parties. In addition, risk management
processes at our joint ventures are understood and
considered as part of the overall evaluation.
The risk management process and output is subject
to periodic review and challenge with the business
and functional leadership teams and the Executive
Committee as part of our interim and year-end
reporting activities. Following this, the principal
risks and uncertainties are submitted to the Audit &
Risk Committee for review and agreement prior to
being recommended to the Board for approval.
The principal risks and uncertainties also feed into
the Group’s long-term viability assessment.
Read more on our long-term viability statement
on page 71.
PARTIES INVOLVED
M&S Board
Audit & Risk Committee
Executive Committee
Group Risk team
Executive Committee
Business and functional
leadership teams
Policy and process owners
Group Risk team
Executive Committee
Business and functional
leadership teams
Policy and process owners
Group Risk team
Executive Committee
Business and functional
leadership teams
Policy and process owners
Group Risk team
M&S Board
Audit & Risk Committee
Executive Committee
Business and functional
leadership teams
Group Risk team
M&S Board
Audit & Risk Committee
Executive Committee
Business and functional
leadership teams
Policy and process owners
Group Risk team
CONTINUOUS
REFINEMENT OF
THE PROCESS
5.
MONITORING,
REPORTING AND
ESCALATION
4.
RISK RESPONSE
AND ACTION
TRACKING
2.
RISK
IDENTIFICATION
AND OWNERSHIP
3.
RISK
ASSESSMENT
1.
SETTING AND
PERIODIC REVIEW
OF RISK APPETITE
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
63
KEY RISK ACTIVITIES
OUTCOMES AND REPORTING
Setting and periodic review of risk appetite
– Our Risk Appetite Statements are used to define and set appropriate risk-taking
parameters for business activity. These are subject to annual review and updates.
This iterative exercise incorporates input from business SMEs and Executive
Committee members, followed by a full review with the Executive Committee,
members of the Audit & Risk Committee and the Chairman.
– This is followed by consideration and approval at the Audit & Risk Committee, prior
to being recommended to the Board.
– Refreshed Group Risk Appetite
Statements aligned with strategy, core
operations, internal and external
compliance requirements, our purpose
and values.
Risk identification and ownership
– Identification, measurement and reporting of risks against a consistently applied
criteria considering the likelihood of occurrence and potential impact to the Group.
– Clear ownership is allocated to relevant members of the business and functional
leadership teams.
– Identification of emerging risks by each business and function where the full extent
and implications may not be fully understood but need to be tracked.
Risk assessment
– Detailed risk registers and mitigation plans are completed and monitored by each
business and function, approved by their leadership teams and appropriate
Executive Committee members.
– The output of underlying business and functional reviews are combined to provide
a business-wide view of common risk categories. This allows us to see a cross-
business view of common, related risks in addition to the specific business and
functional perspectives, with relevant risks being reported to appropriate
governance forums.
– Risk registers covering all key areas of
the business, including current and
emerging risks.
– Mitigation plans for risks that are not at
target level.
Risk response and action tracking
– The business develops and maintains plans to mitigate risks to an appropriate level,
in line with risk appetite.
– This includes ongoing assessment and update of risk profiles to reflect changes,
where needed, with challenge and input provided by specialist teams within the
corporate functions to support the application of specific mitigating activities.
– Independent review and challenge of the plans form part of the role of the Group
Risk team.
Monitoring, reporting and escalation
– Direct updates to the Audit & Risk Committee by each leadership team on a rolling
basis to confirm appropriate management of key risks and current areas of focus
– flexed to respond to changes or emerging issues.
– A formal half-yearly review of risk registers by the Group Risk team to provide
independent challenge and support cross-business alignment.
– The compilation of an overarching view of principal risks and uncertainties,
combining top-down and bottom-up perspectives, including strategic and
operational changes, as well as external changes and unexpected events.
– Monitoring business compliance with risk appetite in core policy and operational
areas through key risk metrics.
– Direct confirmation to the Audit & Risk
Committee on the management of key
risks.
– Compliance dashboard reporting to
monitor performance against risk
appetite.
– Principal risks and uncertainties
disclosed in the Annual Report and
Financial Statements and Interim
Statement.
In complying with the processes described above, examples of how risk management has evolved
during the year include:
– The update of our Risk Management Policy and Risk Appetite Statements to ensure that they
remain appropriate to the business and aid in delivering on our governance responsibilities;
– Continued refinement of the suite of key risk metrics to bring these in line with business changes;
– An enhanced process for actions tracking and reporting;
– Improved visibility of cross-business risks; and
– Assessing the impact of future requirements of the Corporate Governance Code.
STRATEGIC REPORT
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Marks and Spencer Group plc
PRINCIPAL RISKS AND UNCERTAINTIES
KEY
STRATEGIC PRIORITIES
1
Exceptional product, trusted retailer
6
Accelerating store rotation
2
Customer centric business
7
Modernised supply chain
3
Expanded global reach
8
Data, digital and technology
4
Structurally lower costs
9
Disciplined capital allocation
5
High performance culture
EXTERNAL RISK FACTORS
AN UNCERTAIN ENVIRONMENT
3
4
5
6
7
9
The business continues to operate in an uncertain environment impacted by a suite of challenging events which could individually, or
in aggregate, negatively impact our performance. Some of the factors we are currently monitoring include:
External factors
Risk details
Supply chain disruption
– disruption to the supply of materials and products as a result of geo-political issues such as the
issues in the Red Sea and/or cyber-related events;
– significant isolated events, such as catastrophic infrastructure failures, that could have a knock-on
impact at a global level;
– the consequences of extreme weather events; and
– the impact of animal disease.
Political environment
– global socio-political tensions and fragility, and their consequences both domestically and
internationally;
– policy changes following upcoming elections; and
– the risk of industrial action.
Cost of goods
– changes in the cost of goods, including the impact of both inflation and disinflation;
– supplier resilience as a result of wage inflation, changes in commodity prices and other input costs;
– change in consumer spending as a result of the increase in living costs; and
– the impact of climate change on the availability and cost of goods.
Financial instability
– changes in interest rates;
– foreign exchange movements; and
– the volatility of the global financial system.
Health and wellbeing
– the potential for future widespread health events; and
– changes in consumer preference as a result of lifestyle changes such as more demand for healthier
foods and activewear.
Mitigations
– A strong and varied senior leadership team to focus and respond to a wide range of activities.
– An established operating model with a family of accountable businesses who have aligned goals and objectives, and share M&S brand
values to promote stability.
– A three-year plan that remains aligned to current challenges, including an effective budgeting process, incorporating sensitivity
analysis to anticipate the impact of external uncertainty.
– Formal operating reviews enabling effective executive oversight, governance and alignment of each business.
– Disciplined focus on cost, range, trusted value and availability.
– Effective business continuity and crisis management processes to respond to issues as they arise.
– Efficient capital allocation.
– Structured supplier engagement to anticipate and support management of business critical issues such as cost changes.
Oversight by the Board and Executive Committee.
RISK TRAJECTORY
Stable
Increasing
Decreasing
Evolving
Our principal risks and uncertainties have been assessed in accordance with the risk framework and methodology outlined on the
previous pages. The principal risks and uncertainties have also been aligned with our strategic priorities to show where they may
impact the achievement of our strategy. This linkage is shown under each risk described below and on the following pages.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
65
STRATEGIC
BUSINESS TRANSFORMATION
1
2
3
4
5
6
7
8
9
Ongoing business transformation is dependent on our ability to prioritise capital spend and resources to accelerate and successfully
implement the suite of strategic projects. Delays or deferrals of transformation activity could impact the delivery of our medium- and
longer-term growth ambitions.
Context
Significant change programmes that underpin our transformation
include:
– enhancing our technology infrastructure, underlying systems
and digital capabilities;
– modernising our supply chain and logistics operations;
– accelerating the modernisation of our UK store estate;
– delivering a compelling omni-channel experience;
– investing in innovation to maintain brand differentiation; and
– transitioning to a simpler and more cost-effective structure.
While each initiative is individually significant and has its own set of
inherent risks, the aggregate impact of simultaneously delivering
these challenging projects creates further risks to successful
implementation.
Mitigations
– Transformation programmes aligned to the business strategy
and prioritised as part of our three-year planning and
budgeting processes.
– Delivery plans are in place with leadership-led governance
structures to drive our transformation programmes.
– Programme governance principles applied for core projects,
with clear accountabilities and milestones.
– Strategy & Transformation leadership reporting, including
benefits tracking in line with spend targets and value
outcomes.
– Periodic reporting on key business and functional initiatives to
the Audit & Risk Committee.
Oversight by Executive Committee and, where appropriate, supporting sub-committees.
JOINT VENTURES, INCLUDING OCADO RETAIL, AND FRANCHISE
1
2
3
4
9
The successful long-term performance of any joint venture is inherently complex due to a number of factors, including the ownership
and/or operational structure and the need to align different perspectives. Similarly, the success of our franchise operations is
dependent on our ability to work effectively with both domestic and international partners.
Context
Joint Ventures (JV)
The value of our investment in Ocado Retail Limited (ORL),
achievement of our multi-channel food strategy, protection of our
brand and delivery of anticipated trading performance are all
dependent on maintaining effective strategic and operational
relationships with both ORL and Ocado Group.
Similarly, although of lower magnitude, the business performance
of our India JV, M&S Reliance (MSR), will be shaped by the ability to
maintain strategic alignment and harmonised ways of working with
Reliance Industries.
Franchise
The strategic objective to achieve capital-light growth in both our
domestic and international markets is dependent on maintaining
effective working relationships with our franchise partners –
protecting our brand and delivering appropriate returns to both
parties.
Mitigations
– M&S nominated directors form part of the JV boards at ORL
and MSR.
– Joint approval of strategic and investment plans directing the
growth of the business.
– Appropriately aligned operational and people structures,
for example:
– a dedicated M&S Ocado delivery team to coordinate
sourcing, product development, ranging, customer data
and marketing; and
– oversight from our International leadership team and/or
secondments of UK resources to support activities at MSR
in India.
– Monitoring of internal audit and risk management processes
at JVs by the Audit & Risk Committee.
– Franchise growth strategy aligned with the three-year plan and
joint business plans with partners.
– Assurance programmes covering key risks, such as food safety,
across franchise stores in the UK and internationally.
– Annual confirmation from franchise partners on compliance
with key requirements.
Oversight by Ocado Retail Board and Audit Committee, M&S Reliance Board and Audit Committee, Consumer Brand Protection
Committee and Group Safety Committee.
STRATEGIC REPORT
66
Marks and Spencer Group plc
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
DISRUPTION
BUSINESS CONTINUITY AND RESILIENCE
1
2
3
A major operational or resilience failure at a key business location, such as one of our distribution centres, could result in business
interruption. More broadly, an inability to effectively respond to large, disruptive external events like extreme weather or
infrastructure failures could also impact our performance.
Context
While our business continues to demonstrate resilience to a broad
range of externally driven events and economic uncertainties, the
potential to be impacted by disruptive events remains. These
include:
– a major incident within our supply chain or logistics operations,
including our dedicated warehouses and distribution centres in
the UK or overseas, or at support facilities (such as IT centres);
– significant incidents or long-term resilience issues at key third
parties impacting our operations, such as cyber-attacks;
– geo-political tensions such as war or terrorist activity and
consequential policy changes such as trade sanctions;
– a major issue impacting one or more of our significant franchise
partnerships, either domestically or internationally;
– extreme weather events, natural disasters and/or environmental
crisis;
– industrial action in the UK or abroad; and
– widespread health events impacting people and/or animals.
Mitigations
– An experienced Business Continuity (BC) team with established
Group crisis and incident management processes.
– Risk-based BC assurance programme and plans that evolve in
response to new threats for stores, sourcing offices,
warehouses and IT sites, including disaster recovery plans for
technology infrastructure.
– Validation of critical supplier BC arrangements.
– Proactive testing of plans for key scenarios, with support from
third parties where needed.
– A digital platform to support the BC governance programme.
– Active engagement with external organisations with BC
expertise like the Retail BC Association and the National
Counter Terrorism Information Exchange.
Oversight by Executive Committee, Crisis Management Team and Business Continuity Committee.
INFORMATION SECURITY
1
2
3
7
8
A significant or wide-reaching data breach or cyber-attack, directly or at a connected third party, could result in loss of information
for our customers, colleagues and/or business and loss of confidence in M&S. This could adversely impact our reputation, result in
legal exposure including significant fines, and potentially cause business disruption.
Context
The sophistication and frequency of cyber-attacks continue to
increase, highlighting an escalating information security threat.
This is further exacerbated by the increased threat of cyber
incidents linked to current global uncertainties.
The profile of information security and the overall threat
landscape for our business is also changing as we use data more
intelligently, introduce new technology and digital solutions,
continue operating a hybrid work model, transition to the cloud,
enhance omni-channel experiences and build a broader
ecosystem.
Our reliance on key third parties for selected services and/or
hosting of data also exposes us to risks from vulnerabilities in their
cyber and data controls.
Mitigations
– Information security and data protection policies with
mandatory training for colleagues.
– A dedicated information security function, with multi-
disciplinary specialists, 24-hour security operations centre,
active monitoring of our threat environment and mature
incident management plan.
– Access to specialist third-party resources.
– Prioritised investment in response to increased security events,
breaches and potential threat of cyber-attacks.
– Focused security assurance around our digital product
lifecycle, operations model and significant change activities,
like omnichannel and new technologies.
– Risk-based cyber-security assurance programme, including
assessment of controls in overseas locations.
– Information security obligations included in third-party
contracts with a risk-based assurance programme.
Oversight by Executive Committee.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
67
For key to strategic priorities and risk trajectory, see page 64.
PEOPLE
CULTURE, TALENT AND CAPABILITY
1
2
3
4
5
6
7
8
9
The success of the business is dependent upon being an employer of choice – attracting, retaining and developing the right talent,
skills and capabilities and having a clear focus on:
– driving a high-performance culture;
– meeting the financial and wellbeing expectations of our colleagues;
– effectively managing labour cost pressures; and
– working collaboratively with our Business Involvement Group and unions.
Any shortfall in executing against these objectives could impact the delivery of core operational activities and longer-term strategy,
including aspects of our transformation programme.
Context
We employ more than 64,000 talented and passionate people and
remain an attractive brand to future colleagues. However, ongoing
pressure linked to the external environment and our own
transformation objectives result in the following challenges:
– maintaining focus and investment in driving a high-performance
culture against the backdrop of significant change;
– managing our investment in competitive pay and benefits for
colleagues in an uncertain cost environment;
– a tight labour market in some key and emerging areas like
digital, technology and artificial intelligence; and
– responding to changing colleague expectations and monitoring
cultural alignment in areas such as sustainability, diversity and
ethical values.
Mitigations
– Competitive employment packages with continued investment
in pay and wellbeing benefits, supported by external
benchmarking.
– Investment in internal and external talent to strengthen
capability in key roles, develop future leaders and drive internal
career progression, including:
– an established framework that supports performance,
development and progression;
– maintenance of succession plans for key roles;
– delivery of improvements in core people management
systems and processes, such as performance management,
to drive consistency and improve decision-making;
– embedding consistent standards across the business on
assessing, promoting and hiring leaders; and
– continued focus on driving digital literacy and capability
building.
– A well-established Business Involvement Group which is
actively involved in business-wide colleague engagement and
representation at Board meetings.
– Active monitoring of gender, ethnicity, disability and age profiles.
Oversight by Executive Committee.
STRATEGIC REPORT
68
Marks and Spencer Group plc
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
COMPLIANCE AND RESPONSIBILITY
CORPORATE COMPLIANCE AND RESPONSIBILITY
1
3
5
8
A failure to consistently deliver against an increasingly demanding set of legal and regulatory obligations or broader corporate
responsibility commitments would undermine our reputation as a responsible retailer. The consequences include a loss of trust by
customers, investors and other stakeholders, and/or legal exposure or regulatory sanctions which could negatively impact our ability
to operate and/or cause financial losses and harm.
Context
The increasingly broad and rigorous legal and regulatory
framework for all businesses creates pressure on business
performance and market sentiment, requiring investment,
frequent process changes and/or improvements in how we
operate. This includes:
– responding to the growing regulatory burden, with anticipated
changes around fraud, governance, and CSRD (the EU Corporate
Social Responsibility Directive) as well as new EU legislation on
artificial intelligence;
– the divergence of regulations in the countries in which we
operate, most notably in the EU; and
– potential for changes in policy and regulation following the UK
General Election, as well as other changes in the political
landscape, both domestically and internationally.
Changes in the external environment and challenging economic
conditions also leave ethical and social responsibilities open to a
heightened risk of mismanagement or exploitation, particularly
through our supply chains.
Non-compliance may result in fines, criminal prosecution for M&S
and/or colleagues, litigation, investment to rectify breaches,
disruption or cessation of business activity, as well as impact our
brand and reputation.
Mitigations
– Code of Conduct in place and underpinned by policies and
procedures in core areas.
– Group-wide mandatory training programme for higher-risk
regulatory areas, like safety, competition law, anti-bribery and
corruption, data privacy and information security.
– Established in-house legal team with dedicated subject-area
leaders and regulatory expertise.
– Mandatory sourcing principles set and shared with our supply
base and other third parties.
– Dedicated Group Data Protection Officers team and a network
of Data Compliance Managers in priority business areas.
– Assurance and monitoring systems covering legal, regulatory,
ethical and social considerations, including for our overseas
operations and suppliers.
– A confidential reporting line allowing colleagues and other
stakeholders to report concerns.
– Worker Voice programme in the Food business and
transparency initiatives within Clothing & Home.
– Active monitoring of customer feedback and public sentiment
on compliance and responsibility, including social media trends.
– Proactive engagement with regulators, legislators, trade
bodies and policy makers.
Oversight by Board, ESG Committee, Executive Committee, Group Safety Committee, Consumer Brand Protection Committee and
Fraud and Loss Committee.
PRODUCT SAFETY AND INTEGRITY
1
2
3
A failure to prevent and/or effectively respond to a major food or product safety incident, or to maintain product integrity, could
impact customer confidence in our brand and business performance.
Context
The safety of our products – food and all other product categories
– remains vital for our business. We need to manage the potential
risks to customer health and safety, and the associated consumer
confidence that face all retailers.
In doing this, along with maintaining effective internal processes
for managing product safety, the business remains focused on how
external pressures on the food, clothing and homeware industries
could impact the availability, quality, provenance and integrity of
our products. These include:
– animal disease;
– inflationary pressure;
– the impact of geo-political events;
– cross-border regulatory divergence;
– climate-related events; and
– the related pressures in the supply chain.
Mitigations
– Safety Policy and Compliance Standards, Terms of Trade and
product safety specifications with clearly set accountabilities.
– Qualified and experienced Food and Product Technology
teams.
– Established governance, assurance and risk management
processes to monitor and support the safety and integrity of
our products, such as:
– risk-based store, supplier and warehouse audit programmes,
including for our franchise operations;
– monitoring of product quality and customer complaints with
corrective action taken where required; and
– crisis management planning for safety incidents.
– Regular engagement with expert bodies to understand and
respond to changes in safety standards.
– Specific provisions included in third-party brand contracts.
Oversight by Executive Committee, Group Safety Committee and Consumer Brand Protection Committee.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
69
COMPLIANCE AND RESPONSIBILITY CONTINUED
For key to strategic priorities and risk trajectory, see page 64.
CLIMATE CHANGE AND ENVIRONMENTAL RESPONSIBILITY
1
3
6
7
9
There is increasing focus and pressure from carbon-conscious stakeholders for the business to operate in a more environmentally
sound and sustainable manner.
A failure to take appropriate actions to reduce the environmental impact of our business over time and progress towards our net zero
targets – those linked to our directly controlled operations and externally within our supply chain – as well as effectively manage the
consequences of climate-related risks (such as regulations or extreme weather events) could impact our brand, future trading
performance and other business costs, including financing.
Context
We will need to effectively monitor and manage the physical
impact of climate change to reduce the potential impact on key
aspects of our business. This includes:
- the impact on the availability of raw materials and food products;
- the geographical locations from which we source and operate;
and
- the condition of our buildings.
Future performance will therefore be impacted by our ability to
manage the transition to a low-carbon economy with greater
maturity and pace while maintaining value for our customers by:
– balancing commercial decisions with environmental
responsibility and regulatory requirements;
– responding to the growth in the circular economy, waste
reduction, low-carbon products, use of sustainable and recycled
fabrics and effective cost-management linked to these
elements;
– managing changes in customer sentiment; and
– responding to further regulatory interventions.
Mitigations
– Established Plan A programme with clear accountabilities in
each area of the business.
– Net zero targets agreed with the Board – our 2030 corporate
greenhouse gas emissions reduction target has been approved
by the SBTi (Science Based Targets initiative).
– Established policies and standards covering product and raw
material standards, clothing quality and environmental impact
– also shared with suppliers.
– Experienced ESG team members, with experts embedded in
key areas of the business.
– Business-led forum established to oversee the delivery of our
carbon commitments and ESG risks.
– Engagement and planning with partners and suppliers to
support their decarbonising activities.
– Business-wide climate risk and opportunity review undertaken
across all business areas.
– Proactive engagement with government bodies and industry
experts.
See TCFD disclosure on pages 44 to 58 for further detail.
Oversight by Executive Committee, ESG Committee.
STRATEGIC REPORT
70
Marks and Spencer Group plc
FINANCE
LIQUIDITY AND FUNDING
2
4
6
7
8
9
Barriers to maintaining affordable short- and long-term funding to meet business needs or an inability to effectively manage
associated market risks could impact our ability to transform at pace, as well as have an adverse impact on business performance and/
or viability.
Fragility in the financial markets could also impact the business directly (such as heightening counterparty risk or restricting access
to capital), or indirectly (such as triggering liquidity or funding support for the M&S Pension Scheme).
Context
The business continues to operate in a turbulent economic climate.
Focus on our liquidity and funding requirements through active
management of cash, liquidity and debt remains a priority.
Availability of, and access to, appropriate sources and levels of
funding remain vital for the continued operation of business and
transformation activities.
The business is exposed to a number of movements in the financial
markets that require active management. These include potential:
– changes in interest rates, impacting the cost of debt;
– unavailability of debt from certain capital markets;
– default by counterparties;
– foreign exchange volatility due to the significant volumes of
product sourced from overseas; and
– energy cost fluctuations relating to the operation of our estate.
Our ability to repay debt and fund working capital, capital
expenditures and other expenses is dependent on our operating
performance, ability to generate cash and to refinance existing
debt, where necessary.
Mitigations
– Review and refinement of our three-year plan, linked to
strategic priorities, with sensitivity analysis to assess the
impact of the changing economic environment.
– Board-approved Treasury Policy to mitigate financing risks and
future fluctuations in foreign exchange and energy price
volatility.
– Strong discipline over capital allocation decisions and scrutiny
and challenge of discretionary spend.
– Proactive management of working capital to improve cash flow
and reduce reliance on bank facilities.
– Continued focus on maintaining investment grading.
– A £850m undrawn, revolving credit facility and £1,022.4m of
cash and cash equivalents.
– Monitoring and stress testing of projected cash and debt
capability, covenants and other rating metrics.
– Frequent engagement and dialogue with the market and rating
agencies.
– Active monitoring and management of our pension fund
commitments, including regular engagement with the Trustees
and an agreed long-term funding plan.
Oversight by Board and Executive Committee.
MONITORING EMERGING RISKS
Our risk profile will continue to evolve as a result of future events and uncertainties. The emerging risks arising from these are
monitored to understand the potential impact on our business and to allow timely decision-making. These currently include:
– changes to corporate governance requirements;
– ESG and environmental matters, like the EU Corporate Sustainability Reporting Directive (CSRD);
– policy changes resulting from the UK General Election and in other countries where we operate; and
– future divergence of law and regulation across our countries of operation.
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
71
OUR APPROACH TO ASSESSING LONG-TERM VIABILITY
The UK Corporate Governance Code requires us to issue a
“viability statement” declaring whether we believe the Group
can continue to operate and meet its liabilities, taking into
account its current position and principal risks. The overriding
aim is to encourage directors to focus on the longer-term and
be more actively involved in risk management and internal
controls. In assessing viability, the Board considered a number
of key factors, including our business model (see page 8), our
strategy (see pages 12 to 27), approach to risk management
(see pages 62 to 63) and our principal risks and uncertainties
(see pages 64 to 70).
The Board is required to assess the Group’s viability over a
period greater than 12 months, and in keeping with the way that
the Board views the development of our business over the
long-term, a period of three years is considered appropriate for
business planning, measuring performance and remunerating
at a senior level. This three-year period aligns to the Group’s
annual strategic review exercise conducted within the business
and reviewed by the Board, and captures a large proportion
of the Group’s investment into its ongoing transformation
programme as well as the maturity of its June 2025 and May
2026 bonds.
The Group continues to maintain a robust financial position
with liquidity of £1.9bn, including cash and cash equivalents
of £1.0bn and access to a committed revolving credit facility
(“RCF”) of £850.0m.
In December 2023, the Group successfully extended its RCF
which now expires in June 2027. The facility contains a financial
covenant, being the ratio of earnings before interest, tax,
depreciation and amortisation; to net interest and depreciation
on right-of-use assets under IFRS 16. The covenant is measured
biannually.
For the purpose of assessing the Group’s viability, the Board
identified that, although all of the principal risks detailed on
pages 64 to 70 could have an impact on Group performance,
the following risks pose the greatest threat to the business
model, future performance, solvency and liquidity of the
Group and are therefore the most important to the assessment
of the viability of the Group:
– An uncertain environment.
– Business transformation.
– Joint ventures, including Ocado Retail, and franchise.
– Culture, talent and capability.
In assessing viability, the Board considered the position
presented in the approved Budget and Three-Year Plan. The
process adopted to prepare the financial model for assessing
the viability of the Group involved collaborative input from a
number of functions across the business to model a severe but
plausible downside scenario.
The severe but plausible downside scenario includes the
following assumptions:
– There will be a period of economic recession in 2024/25,
resulting in a reduction in sales growth of 2.0 – 5.0% across all
three business units compared to the Budget and Three-Year
Plan.
– A delay on transformation benefits results in incremental
sales expected from the transformation declining by 7.5%,
15% and 30% respectively across the three-year period.
– Ocado Retail Limited experiences limited customer demand,
with a 5.0% reduction in volume growth each year across the
three-year period compared to the Budget and Three-Year
Plan.
The Board has also considered the potential impact of changes
to environmental factors which may affect the business model
and performance in the future. As set out in the Taskforce on
Climate-related Financial Disclosures (“TCFD”) section on
pages 44 to 58, no material impact on the Group’s financial
performance is considered to exist in the short-term.
The impact of the severe but plausible downside scenario has
been reviewed against the Group’s projected cash flow position
and financial covenant over the three-year viability period.
In the event of this scenario materialising, mitigating actions
would be available, including, but not limited to, deferring
or cancelling discretionary spend (including discretionary
bonuses), reducing returns to shareholders and reducing
capital expenditure.
As a result, even under this scenario, which the Board considers
to reflect a plausible, but remote, outcome, the Group would
continue to have sufficient liquidity and headroom on its
existing facilities and meet the measurement criteria against
the revolving credit facility financial covenant. The Audit & Risk
Committee reviews the output of the viability assessment in
advance of final evaluation by the Board. The Board have also
satisfied themselves that they have the evidence necessary to
support the statement in terms of the effectiveness of the
internal control environment in place to mitigate risk.
Reverse stress testing has also been applied to the model to
determine the decline in profitability that the Group could
absorb before exhausting the Group’s total liquidity. Such a
scenario, and the sequence of events which could lead to it,
is considered to be extremely remote, as it requires EBITDA
reductions of more than 50% per annum over the three-year
assessment period compared to the Budget and Three-Year
Plan before total liquidity is exhausted. Further, it only includes
very limited mitigations, comprising the removal of bonus,
utilisation of centrally held contingency, removal of dividends
and a modest reduction in growth capex. While the occurrence
of one or more of the principal risks has the potential to affect
future performance, none of them are considered likely either
individually or collectively to give rise to a trading deterioration
of the magnitude indicated by the reverse stress testing and to
threaten the viability of the Group over the three-year
assessment period.
Having reviewed the current performance, forecasts, debt
servicing requirements, total facilities and current liquidity,
the Board expects the Group to have adequate resources to
continue in operation, meet its liabilities as they fall due,
retain sufficient available cash across all three years of the
assessment period and not breach the covenant under the
revolving credit facility. The Board therefore expects the Group
will remain commercially viable and the Viability Statement can
be found on page 118.
The Strategic Report, including pages 3 to 71, was approved by
a duly authorised Committee of the Board of Directors on 21
May 2024 and signed on its behalf by
STUART MACHIN
Chief Executive
21 May 2024
GOVERNANCE
72
Marks and Spencer Group plc
CHAIRMAN’S GOVERNANCE OVERVIEW
“
In another transformational year
for M&S, the Board’s role has been
to guide, support and
constructively challenge
management.
ARCHIE NORMAN
Chairman
This has been another transformational year for the business.
We run a very engaged board model and the Board’s role has
been to guide, support and constructively challenge
management. We have been especially focused on the delivery
of our strategic priorities and underlying change programmes.
Below are some of the highlights of this year, and the
Governance section that follows is by intention concise.
Further detail on the Board, Committees and our Governance
Framework is available at corporate.marksandspencer.com.
BOARD ACTIVITIES
Substantial items on the Board agenda have included:
execution of the “reshaping” plans for each main business;
addressing the issues in data and technology; reshaping our
end-to-end Clothing & Home supply chain; as well as the
development of our Executive Committee (“ExCo”), talent and
people. We hold two strategy away days a year with the ExCo
at which we discuss in depth our major transformation
programmes including our approach to loyalty and health.
More information on our Board’s activities and key decisions
can be found on pages 78 to 79.
DIVIDEND
We announced in May 2024 that we propose to pay a final
dividend of 2p per share. This, combined with the interim
dividend paid in January 2024, means the Company will have
paid a total dividend of 3p for FY2023/24.
Our approach this year strikes a balance between investing in
our business at a critical time in its reshaping, and providing
returns for shareholders, with the aim of creating a sustainable,
growing business. More information on our disciplined capital
allocation and how we have considered stakeholders in our
decision-making can be found on pages 10 and 82.
COLLEAGUE SHARESAVE SCHEME
We are pleased that over 9,200 colleagues have benefitted
from the vesting of our 2020 ShareSave Scheme on 1 February
2024. The scheme created unprecedented value for our
colleagues and to satisfy this, at year end, M&S had issued
over 68m new ordinary shares to scheme participants. More
information on how we consider our colleagues in decision-
making can be found on page 9.
PLANNED LEADERSHIP EVOLUTION
In March 2024, we announced Katie Bickerstaffe’s impending
retirement from her position as Co-CEO after the AGM in July
2024. She has had an important role in overseeing a marked
improvement in the performance of the business and moves
on with our best wishes. More information on our executive
succession planning can be found in our Nomination
Committee report on page 86.
EXTERNAL BOARD REVIEW
Global Future Partners conducted this year’s external review
of the Board’s effectiveness. The process and findings can be
found on page 83.
UK CORPORATE GOVERNANCE CODE
The UK Corporate Governance Code 2018 (the “Code”),
which is available to view on the Financial Reporting
Council’s website, is the standard against which we
measured ourselves in 2023/24.
The Board confirms that we complied with all of the
provisions set out in the Code for the period under review.
Details on how we have applied the principles set out in
the Code and how governance operates at M&S have
been summarised throughout this Governance section
and elsewhere in this Annual Report as set out below.
1.
Board Leadership and Company Purpose
Page(s)
A. Effective Board
74-76
B.
Purpose, values and culture
8-11, 38-41
C. Governance framework
76-77
D. Stakeholder engagement
8-11, 80-82, 98
E.
Workforce policies and practices
38-41
2.
Division of Responsibilities
F.
Role of Chairman
76
G. Independence
84
H. External commitments and conflicts of
interest
74-75, 84
I.
Board resources
76-77
3.
Composition, Succession and Evaluation
J.
Appointment to the Board
84-86
K.
Board skills, experience and knowledge
74-75, 85
L.
Annual Board evaluation
83
4.
Audit, Risk and Internal Control
M. External Auditor and Internal Auditor
93-94
N. Fair, balanced and understandable review
92
O. Internal financial controls and risk
management
89-90, 93
5.
Remuneration
P.
Linking remuneration to purpose and
strategy
95-97, 100-101,
103-108
Q. Remuneration policy review
100-101, 113
R.
Performance outcomes in 2023/24
96-97, 102-109
Our full Corporate Governance Statement
outlining our compliance is available online at
corporate.marksandspencer.com/about-us/
corporate-governance.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
73
KEY HIGHLIGHTS
Total dividend for 2023/24
3p
Questions asked at the 2023
AGM
129
2020 ShareSave shares
exercised by colleagues
in 2023/24
68m
BOARD TENURE (AS AT YEAR END)
Archie Norman
6 years 7 months
Stuart Machin
1 year 11 months
Katie Bickerstaffe
1 year 11 months
Evelyn Bourke
3 years 2 months
Fiona Dawson, CBE
2 years 11 months
Ronan Dunne
1 year 8 months
Andrew Fisher, OBE
8 years 4 months
Tamara Ingram, OBE
3 years 10 months
Justin King, CBE
5 years 3 months
Cheryl Potter
1 year 1 month
Sapna Sood
3 years 10 months
BOARD GENDER
EXECUTIVE COMMITTEE GENDER
BOARD ETHNICITY
EXECUTIVE COMMITTEE ETHNICITY
2023/24
Female
55%
Male
45%
2022/23
Female
55%
Male
45%
2023/24
Female
30%
Male
70%
2022/23
Female
33.3%
Male
66.6%
2023/24
Ethnic minority
9%
White
82%
Not specified
9%
2022/23
Ethnic minority
9%
White
82%
Not specified
9%
2023/24
Ethnic minority
10%
White
80%
Not specified
10%
2022/23
Ethnic minority
11%
White
78%
Not specified
11%
MEETING ATTENDANCE
Committee
Chair
Board
Nomination
Committee
Audit & Risk
Committee
Remuneration
Committee
ESG
Committee
Chairman
Archie Norman
N
11/11
4/4
5/5*
4/4
4/6*
Executive Directors
Stuart Machin
11/11
5/5*
4/4*
Katie Bickerstaffe
11/11
Non-executive Directors
Evelyn Bourke
A
11/11
4/4
5/5©
Fiona Dawson CBE
11/11
4/4
4/4
Ronan Dunne
11/11
4/4
5/5©
Andrew Fisher OBE
R
11/11
4/4
4/4
Tamara Ingram CBE
E
11/11
4/4
4/4
6/6
Justin King CBE
11/11
4/4
5/5
Cheryl Potter
10/11**
4/4
2/2
Sapna Sood
10/11**
4/4
3/6**
Senior Leadership
Jeremy Townsend
11/11*
5/5*
3/4*
Nick Folland
11/11*
5/5*
4/4*
2/2*
*Attended by standing invite.
**Unable to attend due to prior business commitments. ©Has recent and relevant financial experience.
†Our National Business Involvement Group Chair attended two meetings this year to represent the colleague voice and raise matters important to the workforce.
GOVERNANCE
74
Marks and Spencer Group plc
OUR BOARD
CHAIR AND EXECUTIVE DIRECTORS
COMMITTEE CHAIRS
ARCHIE NORMAN
CHAIRMAN
R
N
Appointed: September 2017
Current appointments:
– Chairman of Signal AI.
– Chairman of Global Counsel.
– Senior Independent Director of
Bridgepoint Group plc.
Prior experience:
– Experienced Chairman and former Chief
Executive having led major
transformation programmes at ITV,
Lazard, Asda and Energis.
– Lead Director at the Department for
Business, Energy & Industrial Strategy
from 2016-2020.
– Deputy Chairman of Coles Limited.
– Only FTSE 100 Chairman to be elected as
a Member of Parliament.
ANDREW FISHER
SENIOR INDEPENDENT DIRECTOR R
N
Appointed: December 2015
Current appointments:
– Non-Executive Chair of Rightmove plc.
– Non-Executive Chair of Epidemic Sound.
– Trustee at the Royal Marsden Cancer
Charity.
Prior experience:
– Instrumental in establishing mobile
lifestyle app Shazam, where he was
Executive Chairman until October 2018.
– Over 20 years’ experience leading and
growing numerous technology-focused
enterprises.
EVELYN BOURKE
NON-EXECUTIVE DIRECTOR
N
A
Appointed: February 2021
Current appointments:
– Non-Executive Director of Bank of
Ireland.
– Non-Executive Director of Admiral Plc.
– Senior Independent Director of AJ Bell
Plc.
Prior experience:
– CEO and CFO of Bupa Group.
– Leadership roles at Standard Life and
Friends Provident.
– Extensive experience in financial services.
TAMARA INGRAM
NON-EXECUTIVE DIRECTOR
R
N
E
Appointed: June 2020
Current appointments:
– Non-Executive Director of Reckitt
Benckiser Group plc.
– Non-Executive Director of Marsh
McLennan.
– Non-Executive Director of Intertek
Group.
Prior experience:
– Held leadership roles at WPP since 2002,
including as Non-Executive Chair of
Wunderman Thompson and CEO of
J Walter Thompson.
– Held the roles of CEO and Chair at
Saatchi and Saatchi.
– Led renowned marketing campaigns for
household brands around the world and
delivered cultural and business
transformation at pace within her own
businesses as well as on behalf of clients.
STUART MACHIN
CHIEF EXECUTIVE OFFICER
Appointed: May 2022
Current appointments:
– Director of M&S’ JV with Ocado,
Ocado Retail Limited.
Prior experience:
– M&S Food MD and joint COO.
– CEO of Steinhoff UK.
– Senior roles at Wesfarmers, as CEO of
Target Australia and COO of Coles
Supermarkets.
– Various leadership roles at Sainsbury’s,
British Home Stores, Tesco and Asda.
– Extensive experience of delivering retail
transformation and a deep
understanding of operations, trading,
marketing and online.
KATIE BICKERSTAFFE
CO-CHIEF EXECUTIVE OFFICER
Appointed: May 2022
Current appointments:
– Non-Executive Director and Chair of the
Remuneration Committee of Barratt
Developments PLC.
– Senior Independent Director of England
and Wales Cricket Board.
Prior experience:
– Held a number of roles at M&S including
Non-Executive Director, Chief Strategy
and Transformation Director, and joint
COO.
– Executive Chair of SSE Energy Services.
– Chief Executive, UK and Ireland of Dixons
Carphone plc.
– Extensive experience of digital, retail and
operations, and of leading consumer-
focused businesses.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
75
NON-EXECUTIVE DIRECTORS
FIONA DAWSON
NON-EXECUTIVE DIRECTOR
N
R
Appointed: May 2021
Current appointments:
– Non-Executive Director of LEGO.
– Non-Executive Director and Chair of the
Sustainability Committee of Kerry Group
plc.
– Trustee of The Social Mobility
Foundation.
– President of the Chartered Management
Institute.
Prior experience:
– Over 30 years at Mars Inc., latterly as
Global President Food, Multisales and
Global Customers and a member of the
Global Leadership Team.
– Chair of the Women’s Business Council.
– Strong track record in sustainability, health
and wellbeing, particularly women’s
entrepreneurship and human rights.
SAPNA SOOD
NON-EXECUTIVE DIRECTOR
N
E
Appointed: June 2020
Current appointments:
– President, Adecco APAC.
– Advisory Board member of Imperial
College Business School.
Prior experience:
– Chief of Staff to the Group CEO at Adecco.
– Senior executive at Compass Group.
– Non-Executive Director at Kering SA.
– In-depth knowledge of running complex
supply chains, including in food and
clothing.
– Experience of leading large
transformation programmes.
JUSTIN KING
NON-EXECUTIVE DIRECTOR
N
A
Appointed: January 2019
Current appointments:
– Chair of Allwyn Entertainment Limited.
– Chair of Dexters Group.
– Chair of OVO Energy.
– Non-Executive Director of ITIM Group
plc.
Prior experience:
– CEO of Sainsbury’s.
– Head of Food at M&S.
– Over 30 years’ experience in large retail
operations and transformations, with
various positions at Asda, Haagen-Dazs,
PepsiCo and Mars.
RONAN DUNNE
NON-EXECUTIVE DIRECTOR
N
A
Appointed: August 2022
Current appointments:
– Non-Executive Chair of Six Nations
Rugby.
– Trustee of the John King Brain Tumour
Foundation.
Prior experience:
– Extensive international experience in the
digital telecoms industry, as CEO of
Verizon Consumer Group and CEO of
Telefónica UK (O2).
– Financial expertise having previously
held Chief Financial Officer roles.
– Led businesses through technological
and people transformation.
CHERYL POTTER
NON-EXECUTIVE DIRECTOR
E N
Appointed: March 2023
Current appointments:
– Non-Executive Director of Best Secret.
– Board member (former chair) of Level 20,
a not-for-profit focused on getting more
women into senior investing roles in the
Private Equity industry.
Prior experience:
– Former head of the global consumer
team at private equity firm, Permira.
– Founding Patron of The Prince’s Trust
Women Supporting Women scheme.
Committees key
A Audit & Risk
E ESG
N Nomination
R Remuneration
Committee chair
SENIOR LEADERSHIP
JEREMY TOWNSEND
CHIEF FINANCIAL OFFICER
Appointed: November 2022
Jeremy brings a wealth of financial
leadership experience having held
senior financial and non-executive
roles across several public companies,
most recently, the Group CFO of
Rentokil Initial Plc.
NICK FOLLAND
GENERAL COUNSEL &
COMPANY SECRETARY
Appointed: February 2019
Nick has extensive legal and
governance experience, having been
General Counsel & Company Secretary
in FTSE 100 businesses since 2001;
originally qualifying as a solicitor at
Linklaters & Paines in 1993.
Full biographies are available at: corporate.marksandspencer.com/about-us/our-leadership.
More information on the Board’s skillset can be found on page 85.
GOVERNANCE
76
Marks and Spencer Group plc
OUR GOVERNANCE FRAMEWORK
Our governance framework facilitates responsive and effective decision-making while
supporting the development of good governance practices across the Group.
BOARD OF DIRECTORS
The Board is responsible for establishing a clear purpose and setting the strategic direction of M&S. It ensures our culture
is aligned with our strategy, oversees our conduct and affairs and promotes the success of M&S for the benefit of our
shareholders and wider stakeholders.
BOARD ROLES
During the year, and as at the date of this Annual Report, our Board has been comprised of the following roles.
CHAIRMAN
The Chairman, who was
considered independent on
appointment, is responsible
for leading the Board and
promoting the highest
standards of corporate
governance, assisted by the
General Counsel & Company
Secretary. Importantly, he is
responsible for establishing
effective shareholder
engagement and building
strong relationships with our
wider stakeholders.
CHIEF EXECUTIVE
OFFICER (CEO) AND
CO-CEO
The CEO is responsible for
the overall performance and
day-to-day management of
the Group. He oversees
development of business
strategies and is accountable
for their timely and effective
implementation. The
Co-CEO reports into the
CEO and is responsible for
specific business areas,
focused on driving the digital
future of the business.
SENIOR INDEPENDENT
DIRECTOR (SID)
The SID provides a sounding
board for the Chairman,
supporting on all
governance issues including
the annual review of Board
effectiveness and the
Chairman’s review. The SID
also acts as an additional
communication channel
between the Chairman and
NEDs and, when required,
principal shareholders
including representative
bodies.
NON-EXECUTIVE
DIRECTORS (NEDS)
Independent NEDs assess,
challenge and monitor the
executive team’s delivery of
strategy within the risk and
governance structure agreed
by the Board. As Board
Committee members, they
also review the integrity of the
Company’s financial
information, consider ESG
issues, recommend
appropriate succession plans,
and set director remuneration.
A full breakdown of the Board’s roles and responsibilities is available at
corporate.marksandspencer.com/about-us/corporate-governance.
BOARD COMMITTEES
The Board delegates certain matters to its four main Committees. At each Board meeting, the Committee Chairs provide
an update on their respective Committee’s activities. More information on meeting attendance, Committee members, their
skills and experience can be found on pages 73 to 75 and 85. The full Terms of Reference for each Committee can be found
on our website.
NOMINATION
COMMITTEE
Responsible for reviewing
Board and Committee
structure, composition and
diversity, and monitoring
the Company’s longer-
term leadership and
succession needs.
Oversees the process for
nomination, induction and
evaluation of directors,
while keeping under review
the range of skills and
experience on the Board
and that these remain
suited to the Group’s
strategic priorities.
Read more on
pages 84-86.
ESG COMMITTEE
Responsible for ensuring
the Group’s ESG strategy is
inspiring and remains fit for
the future, anticipating
changing consumer and
societal needs. Reviews the
effectiveness of the
strategy, and the
successful delivery of
targets. Considers and
recommends all ESG-
related reporting for the
Board’s approval and
advises the Audit & Risk
Committee on ESG-related
risks, including climate-
related risks.
Read more on
pages 87-88.
AUDIT & RISK
COMMITTEE
Responsible for monitoring
the integrity of the
financial statements,
reviewing the significant
financial reporting
judgements within them,
and maintaining an
appropriate relationship
with the external auditor.
Reviews the internal audit
programme and
effectiveness of the
internal audit function.
Reviews and assesses the
Group’s risk framework,
and systems of internal
control.
Read more on
pages 89-94.
REMUNERATION
COMMITTEE
Responsible for
remuneration policy,
performance-related pay
schemes and share-based
incentive plans, ensuring
practices are designed to
support and promote the
long-term success of the
Company and delivery of
its strategy. Reviews
Chairman, executive and
senior management
remuneration frameworks
in the context of our
culture and wider
workforce remuneration.
Read more on
pages 95-113.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
77
EXECUTIVE COMMITTEE
The Executive Committee (“ExCo”) is
our internal leadership team established
and led by the CEO, responsible for
executing strategy and for the day-to-
day management of the business. ExCo
members provide updates at Board
meetings, and also maintain a regular
dialogue with the Board to facilitate
support and challenge.
Biographies for all ExCo
members are available
at corporate.
marksandspencer.com/
about-us/our-leadership
STUART MACHIN
CHIEF EXECUTIVE OFFICER
JEREMY
TOWNSEND
CHIEF FINANCIAL
OFFICER
RICHARD PRICE
MANAGING
DIRECTOR OF
CLOTHING & HOME
SARAH
FINDLATER
PEOPLE
DIRECTOR
NICK FOLLAND
GENERAL
COUNSEL &
COMPANY
SECRETARY
ALEX
FREUDMANN
MANAGING
DIRECTOR OF
FOOD
SACHA BERENDJI
OPERATIONS
DIRECTOR
MARK LEMMING
MANAGING
DIRECTOR OF
INTERNATIONAL
VICTORIA
MCKENZIE-
GOULD
CORPORATE
AFFAIRS DIRECTOR
KATIE BICKERSTAFFE
CO-CHIEF EXECUTIVE OFFICER
SENIOR MANAGEMENT FORUMS
Our Senior Management Forums support the governance
framework on specific projects, business needs, or strategic
priorities, meeting as and when required. Decision-making is
delegated to them by the Group Delegation of Authority or
Board approved terms of reference. These include:
BUSINESS BOARDS
Our Business Boards are focused on the day-to-day
operational and risk management of the Group’s key business
units. They manage, monitor and provide executive input to
support strategic and operational decision-making, and the
delivery of transformation projects. These include:
SHARES & DEALING
COMMITTEE
FOOD
PROPERTY
COMMITTEE
INTERNATIONAL
FRAUD & LOSS
COMMITTEE
STORES
DATA COMMITTEE
OMNI-CHANNEL, ONLINE
& LOYALTY
DISCLOSURE &
OVERSIGHT
COMMITTEE
CLOTHING & HOME
COMPLIANCE
MONITORING
COMMITTEE
DIGITAL &
TECHNOLOGY
ESG BUSINESS
FORUM
PROPERTY & STORE
DEVELOPMENT
GOVERNANCE
78
Marks and Spencer Group plc
BOARD ACTIVITIES
The following pages set out
the Board’s key areas of focus
during the year.
BREAKDOWN OF BOARD ACTIVITIES
Meeting agendas, agreed in advance by the
Chairman, CEO and General Counsel & Company
Secretary, combine a balance of regular standing
items as outlined below:
Strategy
34%
Deep dives
28%
Executive updates
16%
Governance and
Committee reports
22%
STRATEGY
During these updates, the Board considers key
areas of strategy and progress made towards
delivery of in-year plans, advising on direction of
travel and focus. This year, the Board used these
sessions to challenge management to accelerate
the pace of strategic change.
DEEP DIVES
Deep dive sessions are presented on areas of
importance and focus from Senior Leadership
and Business Unit heads, providing an
opportunity for the Board to give feedback
and guidance.
EXECUTIVE UPDATES
Executive directors provide high-level
operational and financial updates, presenting the
key challenges and actions taken during the
month, and a look forward to priorities for the
coming period. These include consideration of
macroeconomic events impacting the business,
and any response where necessary.
GOVERNANCE AND COMMITTEE REPORTS
The General Counsel & Company Secretary
summarises the legal activities from the period,
alongside upcoming changes to law or
regulation. Contracts for approval outside the
Board-approved delegated authorities are
presented for consideration, as well as year-end
statutory reporting for publication. Committee
Chairs also provide regular updates on their
Committee meetings, highlighting any decisions
and key issues for the Board’s attention.
Read more on how the Board fulfils its duty under
Section 172 of the Companies Act 2006 in these
activities on pages 80 to 82.
2023
2023
APRIL
Approval: Clothing &
Home End-to-End (“E2E”)
Planning Platform contract
worth £89m over five years
to improve forecasting and
planning activities across
the supply chain.
Read more on page 81.
Discussion: Initial views on
a potential return
to dividend.
Read more on page 82.
Deep dive: Marketing
strategies and the importance
of defining what the M&S
Masterbrand stands for.
Discussion: How to respond to
changes in the inflationary
environment while
maintaining agility in pricing
strategy.
JUNE
Event: Strategy Away Day
to discuss delivery of the
next horizon of profitable
growth:
– Areas for growth and
issues facing the Food
and Clothing & Home
businesses over the next
three years.
– How the Digital, Data &
Technology function can
support transformation
programmes.
– Accelerating the legacy
store estate rotation.
– The Talent strategy’s role
in transforming
performance and
developing skills for the
future.
MAY
Announcement: Publication
of the 2022/23 preliminary
results.
Approval: Bond buyback
exercise up to £225m to
further strengthen the
balance sheet.
Read more on page 82.
Deep dive: Challenges and
opportunities for the
International business.
JULY
Event: Annual General
Meeting 2023.
Discussion: Marble Arch
decision – next steps
following planning
permission refusal.
Read more on page 81.
Deep dive: The strategic
direction for third-party
brands at M&S.
2023
FINANCIAL STATEMENTS
GOVERNANCE
STRATEGIC REPORT
INTRODUCTION
Annual Report & Financial Statements 2024
79
2024
AUGUST
Announcement: Update
and outlook for the year
due to strong trading.
SEPTEMBER
Discussion: RAAC concrete
– exposure assessment
underway across the store
estate.
Deep dives: Updates on
Strategy Away Day
challenges:
– Transforming the Digital,
Data & Technology
function to meet the future
needs of the business.
– Progress with shortening
the store rotation timeline
from five years into three.
NOVEMBER
Announcement:
Publication of the 2023/24
Half Year Results.
Approval: Payment of an
interim dividend to
shareholders.
Read more on
page 82.
Event: Capital Markets Day
for institutional investors
and analysts, setting out our
investment case and
progress against strategic
pillars to date.
Discussion: Autumn
statement – consideration of
increases to business rates
and national minimum wage.
JANUARY
Announcement: Publication of
the 2023/24 Christmas Trading
Results.
Approval: Investment in store
colleague pay offer worth £89m,
with an additional £5m to
enhance family leave policies.
FEBRUARY
Event: Strategy Away Day to
discuss current issues facing the
business and how to increase the
pace of change:
– Health trends and creating a
Health proposition in M&S
Food.
– The future of Sparks and
developing a customer-centric
strategy.
– Learnings from new stores and
renewals.
Event: Closer to Customers visit
to Leeds White Rose store and
tour of the M&S Archive.
OCTOBER
Approval: Package of
investments to modernise
omni-channel
infrastructure at our
distribution centres worth
£120m over three years, in
support of the Clothing &
Home E2E transformation.
Read more on page 81.
DECEMBER
Approval: Investment in
end-of-life replacement of
M&S Fleet vehicles worth
£49m.
Read more on page 82.
Discussion: Shares & Dealing
Committee preparations
ahead of the 2020 ShareSave
scheme maturity.
Discussion: Red Sea
disruption impact on
Clothing & Home shipping.
MARCH
Discussion: Setting our
dividend policy and
balancing internal
investment needs against
external expectations.
Read more on page 82.
LINK TO STRATEGIC PRIORITIES
Deliver profitable sales growth
Improve operating margins
Disciplined investment choices
Drive shareholder returns
GOVERNANCE
80
Marks and Spencer Group plc
Our Board carefully considers the diverse needs and priorities of stakeholders
in its decision-making, while ensuring M&S’ long-term success and reputation
is promoted and preserved. This responsibility is set out in Section 172(1) (a) to
(f) of the Companies Act 2006 (“s.172”).
HOW THE DIRECTORS FULFIL THEIR S.172
DUTY UNDER THE COMPANIES ACT 2006:
Diverse set of skills, knowledge and experience
– The Board has a diverse set of skills, knowledge and
experience which assists it in making informed decisions
promoting the long-term success of the Company whilst
considering the needs of our stakeholders.
– Information on our Board composition, including the
skills and experience of our directors, can be found in
“Our Board” on pages 74 to 75 and in the Nomination
Committee Report on pages 84 to 86.
Board information and monitoring
– The Board receives detailed papers and in-person
updates from management which they query, challenge,
and debate, to ensure conflicting stakeholder views are
carefully considered.
– Updates on the progress of actions and implementation
of decisions are also provided, to allow the Board to
review and adjust as situations (and stakeholder priorities)
inevitably evolve.
– Detail on the Board’s activities this year can be found on
pages 78 to 79.
Board discussion
– All directors constructively challenge and contribute to
discussions, as well as offer additional perspectives,
advice and strategic guidance.
– Further information can be found within the Chairman’s
Governance Overview on page 72, the Board Review
on page 83 and the Nomination Committee Report
on pages 84 to 86.
Strategic direction and culture
– The Board sets the strategic direction, values and culture
of the Company. It sets the tone for how business is done
throughout M&S and has embedded an expectation that
stakeholder considerations are central to decision-
making at all levels of the organisation.
– Further information on culture can be found on pages 38
to 41, and more information on our strategy can be found
on pages 12 to 27.
Stakeholder engagement
– Engagement plays a crucial role in enabling directors to
thoroughly grasp stakeholder needs and make informed
decisions addressing their priorities.
– Highlights of our stakeholder engagement during the
year can be found on pages 9 to 11.
Alongside the key decisions summarised in this statement, the
below table outlines other areas of this report which detail how
the directors have had regard to the s.172 factors.
S.172 FACTOR
FURTHER INFORMATION CAN BE
FOUND ON
(a) The likely
consequences of
any decisions in
the long-term
Our Business Model: page 8
Strategic Progress: pages 12-27
(b) Interests of
employees
Our Business Model: page 8
Stakeholder Engagement: page 9
People & Culture: pages 38-41
Remuneration Committee Report: pages
95-99
(c) Fostering the
company’s
business relation-
ships with
suppliers,
customers and
others
Our Markets: pages 6-7
Our Business Model: page 8
Stakeholder Engagement: pages 9-11
Strategic Progress: pages 12-27
(d) Impact of
operations on the
community and
environment
Our Business Model: page 8
Stakeholder Engagement: page 11
Strategic Progress: pages 12-27
ESG review: pages 42-43
TCFD: pages 44-58
ESG Committee Report: pages 87-88
corporate.marksandspencer.com/
ESGreport2024.
(e) Maintaining a
reputation for high
standards of
business conduct
Our Business Model: page 8
TCFD: pages 44-58
Non-Financial and Sustainability
Information Statement: pages 59-61
Risk Management: pages 62-70
Audit & Risk Committee Report:
pages 89-94
(f) Acting fairly
between members
of the company
Our Business Model: page 8
Stakeholder Engagement: pages 9-11
Strategic Progress: pages 12-27
Remuneration Committee Report:
pages 95-99
The following pages, which include examples of four key
decisions taken during the year, comprise our s.172 statement,
detailing how the Board has had regard to the matters set out
in s.172.
S.172 STATEMENT
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
81
Redevelopment
3
1
2
6
OF MARBLE ARCH
In July 2023, the Secretary of State for Levelling Up,
Housing and Communities rejected planning permission
for the proposed redevelopment of our store in Marble
Arch. Following the rejection, the Board carefully
considered whether it was right to launch legal action to
challenge this decision. Given the proposal was initially
discussed in 2019, the Board considered whether the
redevelopment remained the best option for M&S and its
stakeholders, or whether refurbishment or retrofit should
be reconsidered.
Although the redevelopment will mean the Group is
forgoing immediate financial benefit by closing the
existing store, directors agreed the widespread benefits
to customers, colleagues and the community more than
outweigh this cost. The proposed redevelopment will be
in the top 1% of London’s sustainable buildings and will
use only a quarter of the energy of the current building.
Thousands of jobs will be created, as will an improved
public space. The proposal also remains closely aligned to
M&S’ strategic priorities, particularly accelerating our store
rotation to create a store estate fit for the future.
The Board is therefore supportive of securing a better
future at Marble Arch for our local customers and
community. Modernising our store estate is at the heart
of delivering a business that is more sustainable, both
commercially and environmentally.
Consequently, the Board agreed a legal challenge was
the right option to pursue. In March 2024, the High Court
agreed with our arguments on five out of six counts
brought forward, ruling the Secretary of State’s decision to
block the development was unlawful. The decision has now
been referred back to the Secretary of State to reconsider.
KEY TO STAKEHOLDER GROUPS
1 Customers
3 Shareholders
5 Partners
2 Colleagues
4 Suppliers
6 Communities
CLOTHING
6
3
1
4
2
5
& HOME
END-TO-END
transformation
PROGRAMME
The C&H End-to-End Transformation Programme (the
“Programme”) was a recurring item on the Board’s agenda
this year. The Programme will deliver a reset of our C&H
operating model and involves large-scale business change,
impacting the majority of our stakeholders. It spans three
main programmes, upgrading our core commercial
processes, our network and our sourcing strategy.
The Board considered the following before reaching a
decision on the investment requests:
– While the Programme requires significant investment
in the short-term, it is key to the Group’s long-term
strategy and success. It will advance our processes,
making us a more efficient business, and allowing us to
grow future shareholder value. Financial benefits will be
delivered through better assortments and seasonal
buys, increased sales volumes through improved
availability, and better markdown avoidance.
– Customers will experience an enhanced proposition
across home delivery, click & collect, returns, product
availability, and better ranging, including from third-
party brands.
– Our franchise partners will receive product assortments
tailored to local demands to help drive our International
business.
– Given the complexity of the Programme and changes to
ways of working, it is vital colleagues are on board and
ready for a shift in culture. Feedback from colleagues via
our Business Involvement Group was supportive of the
Programme, as improved planning and productivity will
allow a focus on higher-value tasks and create a more
transparent supply chain.
– The Programme will ensure our sustainability and ethical
standards are met. Our new sourcing capabilities, in
particular, will underpin our ability to deliver our Plan A
commitments and end-to-end sustainability and
traceability.
Given the wide-reaching benefits to stakeholders, the
Board made the following decisions:
– Approved a contract with a new planning platform,
crucial to the core commercial process changes
delivering the efficiencies outlined above; and
– Approved a package of network strategy investments in
our key warehouse sites, Castle Donington and Bradford,
totalling £120m. These aim to create the right capacity to
support omni-channel growth, lower costs through
automation and improve customer proposition.
More information about the C&H end-to-end
transformation can be found on page 23.
GOVERNANCE
82
Marks and Spencer Group plc
S.172 STATEMENT CONTINUED
Disciplined
3
1
2
6
CAPITAL ALLOCATION
Ensuring M&S has a disciplined capital allocation
framework has been a key focus for the Board throughout
the year. It has been concerned with striking the right
balance between value creation and returns for
shareholders, and investing in our business’ sustainability
and long-term success. All whilst maintaining a robust
balance sheet and liquidity position.
The Board was conscious of the increasing expectations
of some shareholders to restore a dividend, from
engagement at the 2023 Annual General Meeting,
particularly given performance improvements in recent
years. They also heard from large institutional
shareholders that there was less appetite for a meaningful
dividend in the short-term, as long-term growth remains
their top priority. A large dividend would decrease the
business’ available funds to reinvest in the long-term
future of M&S, ultimately limiting our ability to undertake
the large-scale projects needed to execute our ongoing
transformation; including our end-to-end C&H
advancements, Digital, Data & Technology transformation,
and store rotations. Board directors agreed these projects
will positively impact most of our key stakeholders (as
demonstrated in the C&H end-to-end transformation case
study on page 81) and are vital to the long-term success
and reputation of M&S. They will provide efficiency for our
colleagues and suppliers, as well as an improved
experience and proposition for customers.
Having considered the importance of ensuring the Group
retains sufficient cash to reinvest in the future of M&S,
balanced with shareholder expectations, the Board agreed
to restore a modest dividend to shareholders. This
included an interim dividend of 1p per share, paid in
January 2024, and the recommendation to pay a final
dividend of 2p per share (subject to shareholder approval
at the 2024 Annual General Meeting).
Additionally, recognising our shareholders’ priority for
long-term value creation, the directors considered the
need diligently to manage the balance sheet, cash flow
generation and achieve investment grade credit metrics.
As a result, in May 2023 they also approved a repurchase
exercise of £225m of our medium-term bonds, reducing
our net debt position to strengthen our balance sheet.
FLEET
3
2
6
investment
Our acquisition of Gist last year has provided us the
opportunity to work closer with the wider logistics industry
to ensure we have a transition plan for a net zero fleet of
vehicles and trailers. This year, a number of existing
vehicles across our logistics network were nearing the end
of their useful life, and the Board considered a proposal to
replace them.
As well as considering the commercial and financial detail
of the proposal, environmental considerations were an
integral part of the discussion. Moving to a low-carbon
logistics network, with reduced dependency on diesel and
increased use of new technologies and cleaner fuels, is
vital in achieving our net zero ambitions (read more on
pages 42 to 43).
Therefore, as part of a wider investment in the fleet
renewal, the Board agreed a phased transition to
compressed natural gas (“CNG”) vehicles which use
renewable biomethane. CNG is a low-carbon, cost-effective
alternative to diesel engines and will reduce carbon
emissions by 90%. Although this came at an incremental
cost of £2.41m versus a like-for-like replacement, directors
agreed this was the right decision to align with our Plan A
commitments and to ensure we have a plan in place to
transition away from diesel heavy goods vehicles (“HGVs”)
by 2040 (2035 for HGVs weighing less than 26 tonnes).
KEY TO STAKEHOLDER GROUPS
1 Customers
3 Shareholders
5 Partners
2 Colleagues
4 Suppliers
6 Communities
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
83
BOARD REVIEW
This year’s annual assessment of the Board was facilitated
externally by Gurnek Bains and Anita Kirpal of Global Future
Partners (“GFP”), in accordance with the UK Corporate
Governance Code. Gurnek, Anita and GFP have provided senior
talent assessment and coaching services to the Company
during the year; they have no other connection with the
Company or its directors.
PROCESS
Our approach to the Board review is strongly
developmental, combining rigorous assessment with
one-to-one coaching and improvement programmes.
The assessment part of the review included evaluation of
the composition and effectiveness of the Board and its
Committees, and individual Board member’s contributions
and personal growth, in four stages:
STAGE 1 Briefing and Board observation
Collective Board feedback
One-to-one interviews with Board members
Collective ExCo feedback
Review of Board documents and structure
of meetings
STAGE 2 Results collated and evaluated
Board report produced
Individual director reports produced
STAGE 3 One-to-one development discussions with each
Board member
Agreement on collective Board improvement
goals
STAGE 4 Discussions with Chairman and Committee Chairs
Board discussion of development and achievement
2023/24 BOARD REVIEW INSIGHTS
Overall, the M&S Board operates to very high standards
and continues to add real value to the business. It is widely
regarded by its members as a rewarding and enjoyable Board.
A particular strength of the Board lies in its composition
of high-calibre individuals, who bring a diverse range of
experiences to bear. The Board is actively engaged with
the business, discussing topics that are both pertinent and
value-adding for the M&S transformation. Governance matters
are well handled whilst giving the Board time and space to
focus on business priorities. Communication within the Board
and between the Non-Executive Directors (“NEDs”) and the
Executive Committee (“ExCo”) is open and constructive.
The ExCo particularly values the individual personal support
provided through mentorship by the NEDs.
Developmentally, it is important the Board maintains and
enhances the strengths that have contributed to its past
success and evolves its role as the M&S journey unfolds. This
entails continuing to challenge the business to reach greater
heights, strategically focusing on what would help M&S
position itself for sustainable success in the long-term and
bringing the NEDs’ external perspectives and learnings more
actively into the business. Additionally, there are succession
needs for key roles that the Board will have to be cognisant of
in its next phase.
Committees
The Audit & Risk, Remuneration, and ESG Committees function
effectively and are well-chaired. There is good reporting back
to the Board and the Committees are perceived to discharge
their roles effectively.
The Nomination Committee’s discussions are largely informal
and going forward, there may be a need for it to meet more
consistently to consider succession for key roles.
Chairman
There is widespread appreciation of the importance of the
Chairman, who has created a high-quality Board. He has
established a sound rhythm of topics for discussion over the
year and guides these effectively. His engagement with the
business is recognised as being above what is typical for a chair,
but his involvement is viewed as important and value-adding
by the NEDs and the ExCo.
ACTION PLAN FOR 2024/25
The Board and Committees’ action plan for 2024/25 includes:
– The Chairman to lead a Board discussion on evolving
meeting rhythms and focus areas for the next phase of the
M&S journey, including the appropriate weight of operations
versus strategic focus.
– Following external meetings, the M&S Board to conduct
discussions to process and integrate learnings with key ExCo
members participating.
– To simplify and integrate performance reporting for the
Board.
– The Chairman to ensure the Nomination Committee is
focused on addressing impending succession needs.
– To preserve and enhance Board performance, NEDs to create
individual development plans, supplemented with coaching.
PROGRESS MADE AGAINST 2023/24 ACTIONS
Good progress has been made against the actions
identified as part of last year’s review.
– The Board has continued to build on and develop its
relationships with members of the ExCo by continuing
to act as mentors during the year. ExCo members also
attended both Board Strategy Away days.
– The Board champions M&S’ Closer to Customer
programme which sees Support Centre colleagues
spend seven days a year in-store to gain valuable
customer insights to allow informed decisions to be
made. As part of the Strategy Away Day in February,
directors visited our Leeds White Rose store,
experiencing this as if they were a customer. Examples
of customer engagement can be found on page 9 and
examples of how the Board considered customers in its
decision-making during the year can be found on pages
81 to 82.
– Ensuring the Group has a disciplined capital allocation
framework in place has been a key focus of the year.
This included the reintroduction of a dividend and an
improved credit rating. More information can be found
on page 82.
NON-EXECUTIVE DIRECTOR
INDEPENDENCE AND TENURE
As usual, this year’s review included a thorough
assessment of each non-executive director’s tenure,
independence and time commitments. More information
can be found in the Nomination Committee Report on
page 84.
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NOMINATION COMMITTEE REPORT
“
The Committee’s priorities included
overseeing the evolution of the top level
leadership structure.
ARCHIE NORMAN
Chair of the Nomination Committee
WHERE TO FIND OUT MORE
MEMBERSHIP
Details of Committee members and their attendance at all
meetings can be found on page 73.
Information on the skills and experience of all Committee
members can be found on pages 74 to 75 and 85.
RESPONSIBILITIES
The role and responsibilities of the Committee
can be found on page 76.
The full Terms of Reference for the Committee can be
found at corporate.marksandspencer.com.
EFFECTIVENESS
Details of the Committee’s annual performance
review can be found on page 83.
YEAR IN REVIEW
In a year of relatively little Board change, the Committee’s
priorities included overseeing the evolution of the top level
leadership structure and longer-term Board composition.
We continued to play a crucial role in planning for talent
and succession, as well as supporting the development
of the Executive Committee (“ExCo”) and its members.
The Committee recommended to the Board the
appointment of Cheryl Potter to the ESG Committee,
agreeing her experience working for not-for-profit
organisations alongside her past and present executive
and non-executive director positions on global retail
boards, would be valuable in the evolution and
implementation of our ESG strategy. Cheryl joined the ESG
Committee in January 2024.
To drive the next phase of our transformation, we reviewed
our internal talent pipeline approving the promotion
of Mark Lemming to the ExCo as Managing Director of
International. We also worked with an independent
executive search firm to identify Rachel Higham, who has
been appointed as Chief Digital and Technology Officer,
and will join the business and the ExCo in June 2024. They
are both strong additions to the Executive team and, with
their leadership, we will accelerate the pace of change in
the business as we continue our reshaping.
In March 2024, we announced that Katie Bickerstaffe, our
Co-CEO, will be retiring from her role after the AGM in
July 2024 as part of a planned leadership evolution. We are
grateful to Katie for her support in seeing M&S through
an important transformation period; we are now a much
stronger business, and she moves on to pursue her board
career with our best wishes.
ON THE COMMITTEE’S AGENDA IN 2023/24
BOARD TENURE
Director tenure and independence was reviewed as part of
the annual Board Review. No director’s tenure exceeded the
recommended nine years, and it was concluded that each
Non-Executive Director (“NED”) remained independent. The
Committee is aware that in December 2024, Andrew Fisher will
have served for nine years and, as such, appropriate succession
planning for the roles of Senior Independent Director (“SID”)
and Chair of the Remuneration Committee has commenced.
TIME COMMITMENTS
The Committee recognises the importance of all Non-
Executive and Executive Directors having the necessary
time available to perform effectively. The Committee has
reviewed all Directors’ external commitments and concluded
that each of them has sufficient time to commit to the
Company. Their individual contribution to Board discussions
reflects the significant time spent considering M&S matters
outside of scheduled meetings. Importantly, they are available
for the key moments in our financial calendar, as well as
unscheduled activity if necessary. They find additional time
to engage with colleagues across the whole business and
also to mentor ExCo members and host internal learning
opportunities for our Support Centre colleagues.
SUCCESSION PLANNING
When considering the succession needs of the business,
the Committee regularly reviews the composition, structure
and diversity of the Board and its Committees, as well as
considering future opportunities and prospective challenges
facing the Group. A skills matrix linked to our strategic
priorities, like the one opposite, is regularly reviewed by the
Committee to ensure the Board and its Committees have the
skillset required to reshape M&S for growth. Each of the Board
members have useful strategic experience working for
International organisations which will be valuable as M&S
prepares to reset the International business.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
85
BOARD DIVERSITY
The Board seeks to support and encourage a diverse and
inclusive environment throughout M&S as this is key to driving
our high-performance culture; it sets this tone with its own
diverse membership. The Board’s Diversity and Inclusion Policy,
which also applies to the Board’s Committees, outlines
objectives supportive of the FCA Listing Rules, FTSE Women
Leaders Review and Parker Review. The Committee is
responsible for ensuring these objectives are in line with
regulatory and best practice targets, and for monitoring our
performance against them.
As at 30 March 2024, the Board met each of the FCA Listing
Rules and FTSE Women Leaders Review targets of maintaining
a minimum of 40% female representation on the Board, with
our representation at 55%. More information on our
implementation of the Board’s Diversity and Inclusion Policy
is outlined in the table on page 86.
The Board’s Diversity and Inclusion Policy is available on
corporate.marksandspencer.com/about-us/corporate-
governance.
ETHNIC DIVERSITY REPORTING
As at 30 March 2024, one member of the Board was from a
minority ethnic background, meeting the target set out in the
FCA Listing Rules and the Parker Review recommendations.
The Committee is aware of the recent Parker Review objective
for FTSE 350 companies to set a target to 2027 for ethnic
minority representation at senior management level. M&S has
committed to achieving a target of 12% of senior management
roles being held by individuals from an ethnic minority
background by 2027. While the Parker Review guidance defines
senior management as “Executive Committee minus one”,
applying this definition would not be a true reflection of our
leadership team. At M&S we measure our Senior Management
population using our internal reward levels. Whilst the
individuals captured by this exercise do not all report directly
into the ExCo, these positions are collectively the ones that
have the biggest influence and responsibility in driving,
managing and delivering the Group’s business strategy.
Examples of how M&S is strengthening its diverse pipeline
include:
– Launch of a development programme for talented, junior-
level colleagues from ethnic minority backgrounds to build
a pipeline of leadership candidates for the future.
– Ethnic minority focus groups arranged to understand the
challenges colleagues face and how M&S can help them
overcome societal barriers.
– A new set of KPIs established to measure progress towards
our targets, and analysis of gender and ethnicity data and
current trends in retention and promotion in each of our
business areas. This localised approach ensures business
leaders are accountable for encouraging a diverse talent
pipeline.
The Board and ExCo’s gender and ethnicity data can be found
in the Chairman’s Governance Overview on page 73.
The Board and senior leadership’s gender and ethnicity data
presented in accordance with Listing Rule 9.8.6R(10) can be
found on page 114.
SKILLS AND EXPERIENCE OF THE BOARD
Stuart
Machin
Katie
Bickerstaffe
Archie
Norman
Evelyn
Bourke
Fiona
Dawson
Ronan
Dunne
Andrew
Fisher
Tamara
Ingram
Justin
King
Cheryl
Potter
Sapna
Sood
Jeremy
Townsend
Nick
Folland
Retail and hospitality
Food and beverage
Clothing and textiles
International
Consumers
Logistics
Marketing
Technology
Strategy
Finance
Risk management
Property and store
development
Organisational design
and culture
Sustainability
Corporate transactions,
legal and regulatory
Strategic priorities key:
Deliver profitable sales growth
Improve operating margins
Disciplined investment choices
Drive shareholder returns
CFO
General Counsel & Company Secretary
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EXECUTIVE COMMITTEE SUCCESSION PLANNING
The Committee plays an important role in overseeing the
development of a high-calibre, diverse pipeline for succession
to the ExCo across immediate, short- and longer-term
timescales. In doing so, it emphasises the importance of
identifying candidates who will support the reshaping of
M&S for growth, as well as M&S’ diversity ambitions.
The Committee recommended two new recruits to the
ExCo, both of whom have the skills to deliver against our
strategic pillars.
Mark Lemming was promoted internally from Clothing & Home
Supply Chain & Logistics Director, to Managing Director of
International, accountable for driving global reach and
growth through a capital-light franchise partner model.
The Committee recognised his transformation of Clothing &
Home logistics over the last two years, modernising M&S’
supply chain and improving the customer proposition. This
internal promotion demonstrates the success and value of
our leadership development initiatives in recent years.
Given Board and Audit & Risk Committee discussions on the
transformation of the Digital, Data & Technology function, the
Committee acknowledged the need for new leadership in this
area. This led to the recruitment of Rachel Higham as Chief
Digital and Technology Officer who will join the Company, and
ExCo, in June 2024, bringing the skills to deliver the next stage
of our digital transformation. She previously held the position
of Chief Information Officer at WPP.
STRENGTHENING THE SENIOR MANAGEMENT PIPELINE
In line with the Board’s Diversity and Inclusion Policy objective
to develop a pipeline of high-calibre candidates, there were
two key development programmes in operation during the
year. High-performing colleagues with clear future potential
were identified to participate in a newly launched FastTrack
programme. The aim of the programme is to broaden the
skillset of these individuals and accelerate their career
progression, strengthening our leadership succession
pipeline in the longer-term.
For our senior management, colleagues were encouraged to
build their personal development plans with unique stretch
and growth opportunities. The People team actively drive
ethnic and gender diversity through these schemes.
The gender data of Senior Management can be found in the
People & Culture section on page 41.
SENIOR MANAGEMENT PARKER REVIEW TARGET
2023/24
Ethnic minority
4%
White
90%
Not specified/
prefer not to say
6%
Target for 2027
Ethnic minority
12%
White/prefer not to say
88%
BOARD DIVERSITY AND INCLUSION POLICY
OBJECTIVES
IMPLEMENTATION
PROGRESS
Maintaining a continuous
level of at least 40% female
directors on the M&S
Group plc Board.
Succession planning sessions review the balance
of skills and experience on the Board to deliver our
long-term strategy. Independent executive search
firms are required to ensure any director searches
include a diverse range of candidates.
Ahead of our target at financial year end
with 55% female representation.
Appointing a female director
to at least one of the senior
Board positions (Chair, CEO,
SID, CFO).
Consideration of this topic is given as part of the
Board and ExCo succession planning process; as well
as in the development of our internal talent pipeline.
At year end, Katie Bickerstaffe holds a
senior Board position as Co-CEO. Katie’s
retirement from the Board in July 2024
will impact our achievement of this
objective. This objective will be considered
when agreeing successors for SID and
CFO in 2024/25.
Maintaining a level of at
least one director from an
ethnic minority background
on the Board.
Succession planning considerations ensure
the balance of skills and experience on the
Board to deliver on long-term strategy.
Independent executive search firms are required
to ensure any director searches include a diverse
range of candidates.
Target met at year end, with one Board
member identifying as being from an
ethnic minority background.
Assist the development
of a pipeline of high-calibre
candidates by encouraging
a diverse range of senior
individuals within the
business to take on additional
responsibilities and roles
to gain valuable board
experience.
High-performing senior colleagues have the
opportunity to participate in a FastTrack scheme,
of which there is more information below.
Initiatives strengthening our diverse pipeline
of leadership candidates are set out on
page 85 and below.
M&S has committed to achieving 50%
female, and 12% ethnic minority,
representation at senior management
level by 2027. The current diversity of this
population is 52% and 4%, respectively.
We acknowledge there is still work to be
done and remain committed to enhancing
the ethnic diversity of our talent pipeline.
NOMINATION COMMITTEE REPORT CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
87
YEAR IN REVIEW
Two years on from the relaunch of Plan A, our core priority
this year has been maintaining momentum and making
measurable progress with our ESG programme. As Plan A
has become more visibly embedded in activities across the
business and core strategic projects, we have been focused
on ensuring our Plan A priorities remain the right ones.
We have seen great progress across the business as a
result: a significant reduction in plastic across the end-to-
end journey of clothing; launch of our market-leading
recyclable takeaway coffee cups; and, identification of
opportunities to reduce carbon emissions in our beef
rearing practices. The quarterly insights from our new
ESG brand reputation tracker has then shown how our
programme of initiatives, marketing and messaging have
been perceived, helping to pinpoint the areas that will
matter the most to our customers.
During the year we have also spent time gaining a more
in-depth picture of our current emissions and the
challenges and opportunities for achieving our committed
targets. Key areas of our focus have included:
– Discussing our approach to trialling more sustainable
fuel alternatives, and investment in new technologies.
– Reviewing our supply chain to ensure we are doing
everything we can to protect human rights.
– Considering the action we are taking to ensure rotating
our store estate leads to a greener, lower carbon
footprint.
During the year we welcomed Cheryl Potter as a member
of the Committee. Cheryl brings a wealth of ESG
experience to discussions, having worked for not-for-profit
organisations as well as holding executive and non-
executive director positions on global retail boards.
“
Our core priorities have been to drive
measurable progress towards Net Zero and
across our ESG strategy, focused on what
matters most to our stakeholders.
TAMARA INGRAM
Chair of the ESG Committee
WHERE TO FIND OUT MORE
MEMBERSHIP
Details of Committee members and their attendance at all
meetings can be found on page 73.
Information on the skills and experience of
all Committee members can be found on pages 74 to 75
and 85.
RESPONSIBILITIES
The role and responsibilities of the Committee can be
found on page 76.
The full Terms of Reference for the Committee
can be found at corporate.marksandspencer.com.
EFFECTIVENESS
Details of the Committee’s annual performance
review can be found on page 83.
ON THE COMMITTEE’S AGENDA IN 2023/24
The Committee’s time and agendas this year were divided
between the following areas:
Delivery of Plan A Strategy
Performance Updates and Reporting
Brand Building and Engagement
“Outside-in” and Risks
April
May
June
September
January
March
40%
60%
52%
18%
17%
13%
43%
14%
29%
14%
57%
19% 5%
19%
60%
40%
20%
80%
ESG COMMITTEE REPORT
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Marks and Spencer Group plc
ESG COMMITTEE REPORT CONTINUED
DELIVERY OF PLAN A STRATEGY
The Committee received progress updates from members of
the Executive Committee (“ExCo”) and senior leadership team
against delivery of our net zero commitments and our
programme of sustainability activities throughout the year.
Highlights included:
Food
– Trials conducted on sustainable packaging alternatives
which resulted in the acceleration of our switch to paper bags
and recyclable coffee cups.
– Developed livestock decarbonisation roadmaps with our key
suppliers, leading to a £1m investment in low-methane feed
for cattle in our milk pool. Also consideration of our strategy
to offer better quality, low-carbon meat and more plant-
based alternatives.
Clothing & Home
– Achieved a tangible reduction in plastic during the year
through initiatives such as “Bring your Own Bag” and further
removal of hangers and plastic shroud from online orders to
customers.
– Conducted a deep dive into the end-to-end journey of
clothing, which identified the need to review our circularity
proposition.
– Reviewed the net zero roadmap, given challenges with
supplier decarbonisation and the need for industry-wide
adoption of new technologies and ways of working.
Read more on the transformation of our Clothing & Home
end-to-end journey on page 81.
Property & Retail
– Created a new property database to improve visibility of
energy use and carbon emissions on a store-by-store basis
and prioritise investment plans accordingly.
– Built energy efficiency and carbon reduction projects into
the store rotation programme. New stores have provided
insights on the efficacy of investments, and how customers
feel about changes such as adding fridge doors.
Read more on our redevelopment of Marble Arch on page 81.
Logistics
– Developed an initial carbon reduction roadmap for our Food
logistics network, which included trials of new technology by
Gist.
– Discussed available diesel alternative technology, which
resulted in the Committee agreeing a phased transition to a
more sustainable fleet for both Food and C&H.
Read more on our investment in a more sustainable fleet on
page 82.
Community
– Reset our Community Programme and launched
YoungMinds as M&S’ headline charity partner.
Read more on our YoungMinds charity partnership on page 11.
PERFORMANCE UPDATES AND REPORTING
The Committee received quarterly performance updates on
the delivery of ESG objectives. Progress was monitored against
centrally compiled metrics and targets spanning areas
including food waste, ethical trade, and responsible sourcing
policy compliance. The collated reports were tracked, reviewed
and challenged by the ESG Business Forum before being
presented to ExCo and the Committee. Updates also included:
– Improvements made by business units to the basis of
reporting for ESG-related disclosures. Including the accuracy
of data collection, particularly around metrics linked to our
Revolving Credit Facility.
– The work undertaken during the year to develop a
comprehensive picture of emissions throughout the
business.
The Committee also reviewed 2022/23 ESG reporting and
verified the process behind proposed disclosures. The
Committee recommended for approval our Streamlined
Energy & Carbon Reporting, the Taskforce for Climate-related
Financial Disclosures report, Modern Slavery Statement and
Sustainability Report.
BRAND BUILDING AND ENGAGEMENT
The Committee considered the perception of the Plan A brand
both internally with colleagues, and externally with customers,
suppliers and our wider stakeholders. Updates have included:
– Reviewed findings from the quarterly ESG reputation tracker.
These have shown us how our recent Plan A campaigns have
been received by customers.
– Reviewed results of an in-store ESG messaging audit, with the
Committee highlighting the need for clear and aligned Plan
A brand architecture.
OUTSIDE-IN AND RISKS
As part of its horizon scanning of sustainability issues and
stakeholder expectations, this year the Committee has heard
from a host of external speakers including:
– The Chief Executive Officer of a multinational clothing
company who shared insights on what a business can achieve
using its platform and resources to support global
sustainability initiatives.
– The Chair of the Ethical Trading Initiative who shared views on
ethical labour and sourcing. This highlighted the need to be
mindful of domestic modern slavery in the context of the
ongoing cost-of-living crisis and post-Brexit labour
shortages.
– Our external auditor, Deloitte, on compliance with Taskforce
on Climate-Related Financial Disclosures requirements and
keeping abreast of regulatory hot topics, including the
incoming Corporate Sustainability Reporting Directive and
European Sustainability Reporting Standards.
Finally, the Committee has discussed and assessed ESG risks
and opportunities, to advise the Audit & Risk Committee in
their half-year and full-year review of principal risks.
Read more in our TCFD report on pages 44-58.
Read more in our ESG Report available at corporate.
marksandspencer.com/ESGreport2024.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
89
AUDIT & RISK COMMITTEE REPORT
“
The positive performance of the Group this
year has not distracted us from continuing
to provide robust assessments and critical
judgements.
EVELYN BOURKE
Chair of the Audit & Risk Committee
WHERE TO FIND OUT MORE
MEMBERSHIP
Details of Committee members and their attendance at all
meetings can be found on page 73. The Committee also
meets without management present at the start and end of
meetings, where required.
Information on the skills and experience of all Committee
members can be found on pages 74 to 75 and 85.
RESPONSIBILITIES
The role and responsibilities of the Committee
can be found on page 76.
The full Terms of Reference for the Committee
can be found at corporate.marksandspencer.com.
EFFECTIVENESS
Details of the Committee’s annual performance
review can be found on page 83.
YEAR IN REVIEW
As the Audit & Risk Committee, we play a key role in
supporting the Board to ensure there is appropriate
oversight and challenge. The positive performance of the
Group this year has not distracted us from continuing to
provide robust assessments and critical judgements of our
financial reporting, internal controls and risk management.
We have also been focused on overseeing the execution of
key phases in our transformation, such as the reset of our
Clothing & Home operating model and the evolution of our
Digital, Data & Technology functions. We have challenged
management to ensure they are fully aware of risks and have
carefully thought through how best to mitigate these by
putting sensible controls and assurances in place. Other
prominent themes of our work have included:
– Assessing the suitability of accounting policies relating
to issues such as the store estate programme. More
details on page 91.
– Reviewing evolving corporate governance and reporting
requirements, particularly relating to ESG assurance and
non-financial reporting. More details below.
– Preparing for the upcoming external audit tender. More
details on page 94.
Additionally, we spent time during the year preparing for
long-awaited governance changes. This included a suite of
proposals amounting to a more Sarbanes-Oxley-style
compliance approach. Although the Government has now
withdrawn the secondary legislation establishing some of
these arrangements, they remain committed to plans to
establish ARGA (the Audit, Reporting and Governance
Authority) as successor to the Financial Reporting Council
(“FRC”). With this in mind, we have continued our planning,
and this will remain a recurring agenda item for the year to
come. We have also continued to consider the evolving risk
management and internal control landscape due to
enhancements made to reporting requirements,
particularly the updated Provision 29 of the UK Corporate
Governance Code.
ON THE COMMITTEE’S AGENDA 2023/24
The Audit & Risk Committee’s agenda followed our usual
cadence of activities relating to financial reporting, risk
management and internal controls. The following pages
provide an overview of what was discussed during the year.
KEY DISCUSSIONS IN THE YEAR
Clothing & Home End-to-End Transformation Programme
The Committee discussed the risks associated with the
Clothing & Home end-to-end transformation programme,
given the overhaul of key processes and activities, and the
significant cultural change needed to embed new ways of
working. This included discussion on the challenges of
decoupling inter-dependent systems. More information
on the programme can be found on pages 23 and 81.
Cyber Security
The Committee discussed the increased complexity of
cyber-attacks. Methods used by cyber-attackers are now highly
sophisticated and the Group continues to ensure its defences
are robust enough to withstand an attack. The Committee
heard the Group now has enhanced threat intelligence, security
monitoring, and detection capabilities in place which enable us
proactively to identify and mitigate potential cyber threats.
This ensures business continuity and safeguards our valuable
assets.
Digital, Data & Technology (DD&T)
This was a recurring agenda item during the year and included
consideration of the results of an external review of the DD&T
function at M&S. The Committee provided independent
challenge to this work, emphasising the importance of
improving the Group’s capabilities and capacity for change, to
ensure M&S can deliver its long-term strategy and ambitions.
Details of the Group’s risk management framework can be
found in the Strategic Report on pages 62 to 63.
GOVERNANCE
90
Marks and Spencer Group plc
AUDIT & RISK COMMITTEE REPORT CONTINUED
FINANCIAL REPORTING
As part of monitoring the integrity of the Group’s financial
information, the Committee considered key accounting
reporting judgements including: the reduction of the fair value
calculation of the Ocado contingent consideration to nil, asset
impairment reviews with focus on key property judgements
underlying the store estate programme, and the appropriate
classification of adjusting items (see page 91).
EXTERNAL AUDIT
The Committee owns the relationship with our external auditor,
ensuring independence, objectivity and effectiveness. A key
focus during the year was discussion of the upcoming audit
tender. More information can be found on page 94.
RISK MANAGEMENT, INTERNAL CONTROLS AND
INTERNAL AUDIT
The Executive Committee and senior management provide
regular updates on their risks and controls. These presentations
are scheduled on a rolling 18-month basis, with additional
matters identified by the Committee or by recommendation
from Internal Audit added throughout the year as they arise.
The Committee also meets privately with the Head of Internal
Audit & Risk after meetings, when required. During the year, the
Committee received updates as set out in the table below.
COMPLIANCE AND GOVERNANCE
In addition to the annual cycle of financial reporting approvals
and consideration of its own effectiveness, the Committee
discussed increasing reporting and assurance requirements.
This was particularly focused on ESG disclosures, and where
accountability should sit in the business to oversee
sustainability reporting, given the trajectory towards requiring
the same rigour and controls in non-financial reporting as in
financial reporting. Examples of the governance updates and
approvals considered by the Committee this year are set out in
the table below.
MAY
Full year results
NOVEMBER
Half year results
MARCH
Continuation of
external audit
planning (full year
results)
SEPTEMBER
External audit
planning (interim
results)
JANUARY
External audit
planning (full year
results)
FINANCIAL REPORTING CYCLE
KEY
Financial Reporting
External Audit
Risk Management, Internal Controls and Internal Audit
Compliance and Governance
RISK MANAGEMENT, INTERNAL CONTROLS AND INTERNAL AUDIT UPDATES
Executive Risk Updates
Reports from Internal Audit
Compliance and Governance
MAY
2023
International
Cyber Security
Cookie Usage
M&S Connect (Loyalty including
Sparks, Financial Services, gift
cards and payments)
Information Security for
Marks & Spencer Reliance India JV
Franchise Partner Management
Update on Ocado Retail Limited Audit
Committee meeting
Store Cash Management System review
Reviewed and approved:
– GSCOP Compliance Report
– Modern Slavery Statement
Reviewed the Group’s risk appetite
Reviewed key performance metrics for
compliance controls
SEPTEMBER
2023
Foreign Exchange Bureaus
Digital, Data & Technology
Food, including Gist, GSCOP
and Food Safety
Approach to changes in
Corporate Governance and
Reporting Requirements
Travel Money
Food Cost Price Changes
Gist Integrated Management System
Balance Sheet Reconciliations
Performance Management
Fraud Risk Management
Reviewed and approved the Internal Audit
& Risk Functional Charter
Considered the assurance of the
Revolving Credit Facility sustainability KPIs
Reviewed the Group’s:
– Data Protection Framework
– Bribery policies and bribery risk
assessment
NOVEMBER
2023
Ocado Retail Limited
ESG, including Plan A and
Non-Financial Metrics Assurance
(see above for more detail)
National Minimum Wage review
UK & Ireland Stores People Safety and
Security review
Reviewed the Group’s risk appetite
Reviewed key performance metrics for
compliance controls
Approved the Group’s Corporate
Criminal Offence Policy
JANUARY
2024
Clothing & Home
Property, including Store Estate
Transformation
Digital, Data & Technology
Sourcing office operations
Update on Ocado Retail Limited Audit
Committee meeting
Reviewed the Group Tax Contribution
Report
Reviewed and discussed the
independence of the Head of Internal
Audit & Risk
MARCH
2024
Asset Protection – Loss, Safety
and Business Continuity
People
Subsidiary business integration
Cyber Security
Reviewed and approved the Group’s Risk
Appetite
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
91
SIGNIFICANT ISSUES
The Audit & Risk Committee has assessed whether
suitable accounting policies have been adopted and
whether management has made appropriate judgements
and estimates.
Throughout the year, the Finance team has worked to ensure
the business is transparent and provides the required level
of disclosure regarding significant issues considered by the
Committee in relation to the financial statements, as well as
how these issues were addressed, while being mindful of
matters that may be business-sensitive.
This section outlines the main areas of judgement that have
been considered by the Committee to ensure that appropriate
rigour has been applied. All accounting policies can be found in
note 1 to the financial statements. Where further information is
provided in the notes to the financial statements, we have
included the note reference.
Each of the areas of judgement has been identified as an area
of focus and therefore the Committee has also received
detailed reporting on these matters from Deloitte.
PRESENTATION OF THE FINANCIAL STATEMENTS
The Committee gave consideration to the presentation of the
financial statements and, in particular, the use of alternative
performance measures and the presentation of adjusting items
in accordance with the Group accounting policy. This policy
states that adjustments are only made to reported profit
before tax where income and charges are significant in value
and/or nature. The Committee received detailed reports from
management outlining the judgements applied in relation
to the disclosure of adjusting items. In the current year,
management has included in this category: the
implementation and execution of strategic programmes; net
charges associated with the acquisition of Gist; impairment
reversals and write-offs of the carrying value of stores and
other property charges; charges relating to the M&S Bank
transformation and insurance mis-selling provisions; charges
relating to the Ocado Retail Limited – UK network capacity
review; pension net finance income; and the remeasurement
of Ocado Retail Limited contingent consideration.
See note 5 on page 148.
STORE ESTATE PROGRAMME (INCLUDING ASSET
WRITE-OFFS, ONEROUS LEASE CHARGES AND USEFUL
ECONOMIC LIVES)
The Committee has considered the assessments made in
relation to the accounting associated with the Group’s store
estate strategy. The Committee received detailed reports
from management outlining the accounting treatment of
the relevant charges and reversals, including impairment,
accelerated depreciation, dilapidations, redundancy and
onerous lease costs (including void periods). The Committee
has reviewed the basis for the key assumptions used in the
estimation of charges/reversals (most notably in relation to
the costs associated with property exit/sublet costs, the sale
proceeds expected to be recovered on exit, where relevant, and
the cash flows to be generated by each cash-generating unit
in the period to closure). The Committee has challenged
management and is satisfied that the assumptions made are
appropriate. The Committee is also satisfied that appropriate
costs and associated provisions have been recognised in the
current financial year.
See notes 1, 5, 15 and 22 on pages 136, 148, 164 and 179
respectively.
IMPAIRMENT OF TANGIBLE ASSETS
The Committee has considered the assessments made in
relation to the impairment and impairment reversals of
tangible fixed assets, including land and buildings, and store
assets. The Committee received detailed reports from
management outlining the treatment of impairments
and reversals, valuation methodology, the basis for key
assumptions (e.g. discount rate and long-term growth rate)
and the key drivers of the cash flow forecasts. The Committee
has challenged management and is satisfied that these are
appropriate. The Committee has also understood the
sensitivity analysis used by management in its review of
impairments and reversals, including consideration of the
specific sensitivity disclosures in the relevant notes. In addition,
the business plans detailing management’s expectations of
future performance of the business are Board-approved. The
Committee is satisfied that appropriate impairments and
reversals of tangible assets have been recognised.
See notes 1, 5 and 15 on pages 136, 148 and 164-166 respectively.
FAIR VALUATION OF CONTINGENT
CONSIDERATION PAYMENTS
The Committee has considered the impact of developments
during the year on the judgements applied by management
in determining the future probability of the final contingent
consideration payment due to Ocado Group plc. The final
payment is contingent on Ocado Retail Limited achieving a
specified target level of earnings in the financial year ending
November 2023. The performance target is binary. With the
performance year now complete, Ocado Retail Limited has not
met the target earnings level to trigger payment of the
contingent consideration.
The Committee gained an understanding of and challenged
management’s probability weighted scenarios used in fair
valuing the contingent consideration liability recorded on the
balance sheet. Having reviewed management’s calculations,
challenged the judgements made, advice of management’s
experts and the financial statement disclosures, the
Committee is comfortable with the fair value of the liability
recorded.
See notes 5 and 21 on pages 148 and 170 respectively.
GOING CONCERN AND VIABILITY STATEMENT
The Committee has reviewed the Group’s assessment of viability
over a period greater than 12 months. In assessing viability, the
Committee has considered the Group’s position presented in the
approved budget and three-year plan. In the context of the
current challenging environment as a result of the ongoing
cost-of-living crisis and continued inflationary pressures on the
business, a severe but plausible downside scenario was applied
to the plan. This included assumptions such as a sustained
economic recession, increased costs and an inability for the
Group to execute the transformation plan. The Committee has
concluded that these assumptions are appropriate.
The Committee has also reviewed the Group’s reverse stress
test that was applied to the model. The Committee has
reviewed this with management and is satisfied that this is
appropriate in supporting the Group as a Going Concern.
In addition, the Committee received regular updates on the
steps taken by management regarding liquidity, including the
successful extension of its revolving credit facility, which is now
set to run until June 2027.
The Committee is satisfied that these measures have reduced
liquidity risk.
See note 1 on page 136.
GOVERNANCE
92
Marks and Spencer Group plc
AUDIT & RISK COMMITTEE REPORT CONTINUED
RETIREMENT BENEFITS
Following the decrease in the pension surplus during the year,
the Committee has reviewed the actuarial assumptions, such
as discount rate, inflation rate, expected return of scheme
assets and mortality, which determine the pension cost and the
UK defined benefit scheme valuation, and has concluded that
they are appropriate. The assumptions have been disclosed in
the Financial Statements.
See note 11 on page 155.
VALUATION OF MARKS AND SPENCER GROUP PLC
COMPANY ONLY INVESTMENT
Marks and Spencer Group plc holds investments in Group
companies which are reviewed annually for impairment.
Management has prepared an impairment review based on
estimated value in use of the Group. A full reversal of the
impairment charges recorded in prior years has been made
(see note C6 on page 190). The Committee has reviewed
management papers outlining the key assumptions used in
calculating the value in use and is satisfied that these are
appropriate.
FAIR, BALANCED AND UNDERSTANDABLE ASSESSMENT
The Committee carried out a thorough assessment of the 2024 Annual Report to advise the Board on whether they consider it to
be fair, balanced, and understandable. The Committee considered how the report had been prepared, reflecting on the criteria
recommended by the Financial Reporting Council.
An annual report
working group was
established, consisting
of specific content
owners including:
Corporate
Communications,
Company Secretariat,
Group Finance, Executive
Reward, Internal Audit &
Risk, Investor Relations
and ESG.
The Chairman, CEO and
CFO provided input and
agreed on key elements
to be included, which set
the tone and balance of
the Report.
Early drafts, prepared by
content owners, were
reviewed by the
Chairman, CEO, CFO,
Committee Chairs and
General Counsel &
Company Secretary, with
any comments
incorporated.
The working group was
specifically challenged
to ensure the writing
style was consistent,
concise, avoiding
boilerplate language, as
well as making required
disclosures easy for the
reader to understand.
Sections were shared
between content owners
to ensure consistent
messaging across the
report.
Members of the
Disclosure & Oversight
Committee, with input
from Group Finance and
content owners,
thoroughly read the
Strategic and Directors’
reports carefully
considering whether the
narrative was reflective
of the information being
presented in the financial
statements.
The External Auditors
reviewed the Report as a
whole on more than one
occasion, with feedback
and recommendations
incorporated.
Content owners
completed a final round
of reviews of all sections,
considering the overall
content and narrative of
the report.
The Committee received
a full draft of the report,
highlighting areas that
would benefit from
further clarity. The draft
report was then
amended to incorporate
this feedback ahead of
final approval.
Following its review, the Committee recommended to the Board the 2024 Annual Report was fair, balanced and understandable
and provides shareholders with the necessary information to assess the Group’s position, performance, business model and
strategy.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
93
INTERNAL CONTROL ENVIRONMENT
The Audit & Risk Committee has delegated
responsibility from the Board for reviewing
the effectiveness of the Group’s systems of
internal control, which includes financial,
operational and compliance controls and
risk management systems.
RISK MANAGEMENT
The Committee’s accountability for overseeing the
effectiveness of our risk management process, includes
determining the Group’s risk appetite (for Board approval) and
monitoring how each business area and key function is actively
managing its risks and mitigations in accordance with the
Board’s risk appetite. Details of the Group’s risk management
process can be found in the Strategic Report on pages 62 to 63.
FRAMEWORK OF INTERNAL CONTROLS
Alongside our risk management processes, key components of
the Group’s internal controls environment include:
– Clearly defined lines of accountability via a Group delegation
of authority and underlying business area delegations.
– The Group’s Code of Conduct and suite of policies, setting
the floor of minimum commitments for our business
conduct. These commitments are linked to the Group’s
principal risks and uncertainties and ensure we act in line
with relevant legal and regulatory requirements, as well as
industry standards and stakeholder expectations.
– Procedures, operating standards and colleague training for
each of our business and key functional areas as appropriate,
to support the management of key risks and establishing
ways of working within the Board’s approved risk appetite.
These cover areas ranging from financial reporting,
corporate compliance, information security, trading safely
in stores and ethical sourcing.
Relevant business areas and functions own these underlying
components of our internal controls environment, and are
responsible for ensuring control processes and activities are
maintained and operate effectively. Functional assurance
activity also takes place across the business to target key risk
areas, overseen by relevant business experts or specialist
functional teams, including our Financial Controls, Cyber
Security and Group Asset Protection teams. Where relevant,
this functional activity is overseen and challenged by our
senior management forums, including our Business Boards,
Fraud & Loss Committee and Data Committee.
At each meeting, the Committee receives updates from
business leadership on their risk management, internal control
and assurance activities. The updates received this year are
detailed on page 90.
INTERNAL AUDIT & RISK FUNCTION
Our Internal Audit & Risk (“IA&R”) function provides additional
oversight and assurance to the Committee in discharging its
responsibilities. IA&R supports the business in improving the
overall control environment and identifying risks requiring
mitigation. The Head of IA&R has direct access to the
Committee and the IA&R function have unrestricted access
to the Group’s records, physical properties, and personnel
required to carry out any engagement. More information about
the IA&R function can be found in the IA&R Functional Charter
(annually reviewed and approved by the Committee) at
corporate.marksandspencer.com.
An Internal Audit Plan is approved by the Committee annually.
The plan is structured to align with the Group’s strategic
priorities and key risks and is developed by the IA&R function
with input from management. The plan is reviewed periodically
throughout the year to confirm it remains relevant for new and
emerging circumstances, both internal and external. The
findings and actions from IA&R reviews are agreed with the
relevant business area, communicated to the Committee and
tracked through to completion. Internal audits undertaken
during the year are detailed on page 90.
An External Quality Assessment of the IA&R function took
place early in 2023, with findings presented to the Committee
in May 2023. The assessment was carried out by EY and
concluded that the IA&R function is fit for purpose, with
strong conformance to the International Standards for the
Professional Practice of Internal Auditing.
The Committee considered the IA&R function’s effectiveness
again in May 2024, agreeing its leadership, structure and
available resources are appropriate and remain effective.
EFFECTIVENESS
The Committee considered whether the Group’s framework of
internal controls operated effectively throughout the financial
year 2023/24. Instances where the effectiveness of internal
controls were deemed to be insufficient were discussed during
the year, either by the Committee or the Board, and the
resulting improvement plans were monitored by the
Committee.
The Committee considered the controls findings raised in the
independent auditor’s report on pages 120 to 129. No other
significant failings or weaknesses were identified during the
Committee’s review in respect of the year ended 30 March 2024
and up to the date of this Annual Report.
GOVERNANCE
94
Marks and Spencer Group plc
AUDIT & RISK COMMITTEE REPORT CONTINUED
EXTERNAL AUDITOR
Audit Firm
Deloitte LLP
Date appointed
2014
Lead Audit Partner
Richard Muschamp (in post since the
start of the 2019/20 audit)
Incoming Lead Audit
Partner
Jane Whitlock (to be in post from the
start of the 2024/25 audit)
Non-audit fee ratio
0.13:1 (for the year ended 30 March
2024)
PARTNER ROTATION
Richard Muschamp has been our lead audit partner since the
start of the 2019/20 audit. At the end of this audit (2023/24),
Richard will have been in post for five years, meeting the term
limit according to the Auditing Practices Board’s Ethical
Standards. Following the completion of this year’s audit,
Richard will be replaced by Jane Whitlock.
TENURE
As noted in last year’s Annual Report, in May 2023 the Financial
Reporting Council approved a two-year extension to Deloitte’s
ten-year tenure as our external auditor due to exceptional
circumstances relating to the possibility of a competitive
tender. The Group will now be required to tender for the
financial year ending 31 March 2027. The Committee began
making preliminary plans for the tender during the year and
intends to run a competitive tender process in the coming
months. Action taken so far includes:
– Consideration of an indicative timetable;
– Informal approaches and meetings with audit firms to be
considered as potential alternatives to Deloitte; and
– Consideration of appropriate preliminary compliance and
governance, such as independence and conflict
considerations of potential alternative firms.
A decision is expected to be made by the end of 2024. This
timeline will allow time for a sufficient handover if necessary.
The Committee recommends that Deloitte be reappointed as
the Company’s statutory auditor for the 2024/25 financial year.
It believes the independence and objectivity of the external
auditor and the effectiveness of the audit process are
safeguarded and remain strong. The Committee considered
the recommendations of the FRC’s Audit Committees and the
External Audit: Minimum Standard whilst overseeing the
effectiveness of the external audit process and tendering
activity. The Company is also in compliance with the
requirements of the Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014 and the UK Corporate Governance
Code. There are no contractual obligations that restrict the
Committee’s choice of external auditor.
EFFECTIVENESS
The Committee monitors the effectiveness of the external
auditor continuously throughout the year. The Committee has
the opportunity after each meeting to meet with the lead audit
partner without management present. This provides
opportunities for open conversations and allows the
Committee to assess whether the external auditors have
appropriately challenged management’s analysis. The external
auditors provided the Committee with a planning report ahead
of the FY2023/24 audit, giving Committee members the
opportunity to comment and input.
As well as this regular monitoring, the Committee annually
assesses the quality of the external audit. A targeted group
of individuals, each of whom has regular interactions with
the external auditor, were asked to complete a tailored
questionnaire. The Committee was provided with a summary
of the responses received to assist with its own considerations.
Feedback was positive overall. It was agreed that the audit
partner and team have a good understanding of our business,
as well as the wider industry in which we operate and the
challenges we face. Management views their engagement
as productive, pragmatic and rational. Early engagement
throughout the year on key accounting judgements continues
to be appreciated and allows a number of items to be
addressed in advance of the year end. This was valuable
when considering the challenges faced by the business from
inflationary pressures, the fair value judgements in relation to the
Ocado Retail contingent consideration and the renegotiation of
the Group’s relationship with M&S Bank which completed after
the year end.
A continued common theme reflected a desire for more focus
on planning and communication during certain aspects of the
audit cycle. Opportunities for improvement were identified
around responsiveness within the audit team to close out more
minor issues as well as areas of the audit that could be brought
forward outside of the peak year end period.
A key area of attention for the Committee has been the
planning for the audit partner transition from Richard
Muschamp to Jane Whitlock. Feedback received referenced
the significant time commitment this required outside of the
ordinary course audit and Committee activities.
NON-AUDIT FEES
To safeguard the independence and objectivity of the external
auditor, the Committee has an Auditor Engagement Policy
which it reviews annually. The policy is disclosed on our website
at corporate.marksandspencer.com.
The Committee is satisfied that the Company was compliant
during the year with both the UK Corporate Governance Code
and the Financial Reporting Council’s Ethical and Auditing
Standards in respect of the scope and maximum permitted
level of fees incurred for non-audit services provided by
Deloitte. Where non-audit work is performed by Deloitte,
both the Company and Deloitte ensure adherence to robust
processes to prevent the objectivity and independence of the
auditor from being compromised.
All non-audit work performed by Deloitte with fees in excess
of £50,000 was put to the Audit & Risk Committee for prior
consideration and approval. For non-audit work, where fees
were below £50,000, approval was obtained from the Chief
Financial Officer and the Audit & Risk Committee notified of all
work falling within this threshold. A full breakdown of the total
fees paid, and details on the non-audit services provided by
Deloitte, can be found in note 4 to the financial statements
on page 147.
The non-audit fees to audit fees ratio for the financial year
ended 30 March 2024 was 0.13:1, compared with the previous
year’s ratio of 0.11:1. The total non-audit fees paid to Deloitte for
the year was £358,000. The majority of these fees relate to
assurance services provided during the year. No additional
recurring or one-off non-audit services were provided during
the year.
In addition, the Committee reviewed and approved the audit
fee for the year, making sure any fee increase was understood
and reasonable.
REMUNERATION COMMITTEE REPORT
WHERE TO FIND OUT MORE
MEMBERSHIP
Details of Committee members and their attendance at all
meetings can be found on page 73.
Information on the skills and experience of all Committee
members can be found on pages 74 to 75 and 85.
RESPONSIBILITIES
The role and responsibilities of the Committee can be
found on page 76.
The Committee’s full Terms of Reference and compliance
with the UK Corporate Governance Code can be found at
corporate.marksandspencer.com.
EFFECTIVENESS
Details of the Committee’s annual performance review
can be found on page 83.
“
Using reward to drive our high
performance culture has been a
guiding principle for the Committee.
ANDREW FISHER
Chair of the Remuneration Committee
YEAR IN REVIEW
In a year of strong financial results, with improved trading,
a strengthened balance sheet and a return to shareholder
dividends, our focus as the Remuneration Committee has
been ensuring our remuneration policy and practices
support and promote M&S’ strategy of reshaping for
growth. In doing so, our guiding principles have been to
ensure pay is competitive across M&S, our lower paid
colleagues are supported through the current inflationary
environment, and reward is used as a tool for driving our
high performance culture.
Concentrating on the rigour and integrity of our
performance assessment processes, we have ensured
that individual and business objectives are appropriately
challenging and vesting outcomes are considered in the
context of our wider colleague experience and stakeholder
expectations.
Alongside this priority, the Committee has continued to
fulfil its core duties, ensuring our remuneration policy and
practices support and promote M&S’ strategy of reshaping
for growth. Key discussions included:
– Investment of £89m in our UK Retail colleague pay,
representing a 10% increase in hourly pay since last year.
Our Customer Assistant population also made up the
majority of participants in our 2020 ShareSave maturity,
having saved in the scheme throughout the Covid-19
lockdowns and recovery. We are pleased that our
hard-working frontline colleagues have benefitted
directly from their contribution to M&S’ transformation
and resulting share price improvement. Further details
on page 98.
– Disciplined application of our remuneration framework
during leadership changes, while ensuring packages
for those joining are appropriately competitive. This
was considered in the recruitment and promotion
of Executive Committee members and in the exit
arrangements for Katie Bickerstaffe. Read more on
page 111.
– The setting and monitoring of stretching performance
objectives, and consideration of pay-based incentives
as a driver for continued growth. This resulted in annual
pay reviews for salaried colleagues being differentiated
by performance, with higher performing colleagues
receiving larger percentage increases on their base pay.
The Remuneration Report has been streamlined this year,
in keeping with the rest of the Governance section; more
information is available on our corporate website.
ON THE COMMITTEE’S AGENDA 2023/24
The Committee’s agenda followed its usual cadence of
activities this year, with time divided between the following
areas, as detailed overleaf:
Annual Bonus Scheme
Long-term incentives
Pay arrangements
Governance and external market
April
May
September
January
30%
20%
35%
38%
25%
6%
31%
15%
15%
25%
10%
50%
35%
24%
24%
17%
KEY DISCUSSIONS IN THE YEAR
When considering and determining Directors’ Remuneration
Policy and practices, the Committee considers the Code
requirements for clarity, simplicity, risk mitigation,
predictability, proportionality and alignment to culture.
Improving outturns
As outlined in the Financial Review on pages 29 to 37, this year
has seen strong results in all areas with profit before tax and
adjusting items at £716.4m. Performance exceeded both the
budget and external expectations due to strong volume and
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
95
REMUNERATION COMMITTEE REPORT CONTINUED
ANNUAL BONUS SCHEME (ABS)
In addition to assessing the achievement of objectives for this
year’s ABS, and noting the total budgeted expenditure as a
result, the Committee set transparent and stretching targets
for the 2024/25 ABS. This involved:
2023/24 ABS OUTCOME
– Robust assessment of achievements against 2023/24
performance objectives for executive directors and the
Executive Committee. With improving business performance,
the Committee continuously monitored performance
outturns and projected bonus expenditure, focusing on
ensuring performance management processes were rigorous
and individuals were appropriately rewarded for their
contribution. This included consideration of whether it would
be appropriate to apply discretion to outcomes. The 2023/24
ABS remained focused on driving profitable growth, with
performance for executive directors concentrated on
Group Profit Before Tax (PBT) (70%) and individual objectives
set against delivery of M&S’ transformation (30%). On
assessment, and in the context of business performance and
wider stakeholder experience, the Committee was satisfied
that outturns were appropriate, and no application of
discretion was required. See pages 103 to 105 for more details.
2024/25 ABS DESIGN
– Approving the scheme design, operation and targets for
the 2024/25 ABS. The Committee agreed the maximum
opportunity under the scheme should remain at 200% of
base salary, and performance should continue to be
measured against PBT (70%) and individual objectives (30%),
believing this remains appropriate when considering the
continuing drive to reshape M&S for growth. More details
on page 105.
LONG-TERM INCENTIVES
The Committee assessed the achievement of objectives and
corresponding vesting level of the 2021 Performance Share
Plan (PSP) awards, alongside approving the 2024 PSP awards
and targets to ensure appropriate alignment between driving
exceptional performance and retaining talent. This consisted of:
– Monitoring all in-flight PSPs against targets and ensuring
performance measures were rigorously assessed when
approving the vesting level of the 2021 PSP award. The
Committee closely monitored projected vesting levels
and scheme costs in the context of improving business
performance during the year, this included considering
the appropriateness of applying discretion to the vesting
outcomes. Consequently, it determined the vesting outcome
of the store staff cost to sales ratio should be reduced by
50%. The 2021 PSP award therefore vested at 90% and the
Committee agreed it was satisfied that this outcome was
appropriate and no application of discretion was required.
– Approving the scheme design and targets for the 2024 PSP,
ensuring the targets struck an appropriate balance between
motivating individuals and setting stretching targets. The
Committee’s priority has been to ensure M&S’ remuneration
framework is aligned with shareholder interests. The
Committee agreed the 2024 PSP should maintain the
financial measures applied to the 2023 PSP awards; being
30% adjusted earnings per share, 30% return on capital
employed and 20% relative total shareholder return. The
remaining 20% will continue to be subject to a basket of
three strategic measures. See page 107 for more details.
value performance, leading to growth in market share in both
Clothing & Home and Food. With performance improving
throughout the year, the Committee has been focused on
ensuring that scheme outturns are appropriate in the context
of financial performance and wider stakeholder experience.
Investments in pay
Recognising ongoing inflationary cost challenges for
colleagues, the Committee has been focused on ensuring our
pay framework supports M&S’ fundamental value of fairness,
where everyone in the business is appropriately recognised and
rewarded for hard work and delivering financial results. More
detail on page 98.
PAY ARRANGEMENTS
The Committee reviewed budgeted salary expenditure and the
principles for reward allocation across M&S, also considering
the appropriateness of the senior remuneration framework
in the context of wider workforce pay. Talent and succession
pipeline needs were also discussed when reviewing
remuneration packages for senior leadership changes.
In particular, this year, this has included:
– Review and support of management’s proposed approach to
pay reviews across the business. In doing so, the Committee
considered market data and the need to stay competitive
amongst peers. Wider workforce experience given continued
inflationary pressures was also a key factor in discussions,
with the Committee supportive of management’s proposals
to introduce minimum salaries for lower reward level roles,
and also to award higher increases to lower paid colleagues.
The Committee also agreed with management’s approach to
differentiating pay increases based on year-end performance
ratings, in support of the business’ high performance culture.
More details on the Committee’s consideration of colleague
pay increases are on page 98.
– Consideration of Katie Bickerstaffe’s exit arrangements. As
announced on 7 March 2024, Katie will retire from her role as
Co-CEO on the Executive Committee following the Annual
General Meeting in July 2024. The Committee adhered to
M&S’ remuneration policy in full when setting Katie’s exit
arrangements. More on page 111.
– Review and approval of an increase of 3% in the CEO’s pay,
effective from 1 July 2024. The Committee considered this
increase in the context of pay decisions for the wider
workforce, agreeing that while it was below the average pay
increase across the business, this was appropriate when
considering the CEO’s overall remuneration. See Figure 3
on page 102 and Figures 22 and 23 on page 110 for more details.
– Assessing the remuneration packages for incoming
Executive Committee members, alongside packages for
other senior leadership changes. The talent and succession
pipeline was discussed in these senior leader updates, with
the Committee emphasising the importance of discipline
when setting remuneration while being mindful of the need
to attract the talent required to continue reshaping M&S
for growth.
GOVERNANCE
96
Marks and Spencer Group plc
– Discussing the appropriateness of introducing an ESG-
related component to the performance measures for the
2024 PSP award, given recent market developments and
some investor expectations. The Committee considered the
business’ development of an ESG reputation tracker (see
pages 87 and 88 for more details) and whether this would
provide a suitable PSP measure, agreeing it would not be
appropriate given the tracker was in the early stages of its
development. In addition, as ESG commitments are
embedded in our business operations, they are already
reflected in the achievement of our existing basket of PSP
strategic measures, so the Committee agreed that inclusion
of a separate ESG measure would not further our Plan A
ambitions. This will remain under consideration for future
PSP awards.
– Approving the level of 2024 PSP awards to be granted,
mindful of the need to incentivise executives and ensure they
remain aligned with the long-term interests of shareholders.
The Committee intends to grant 2024 PSP awards of 250%
of salary to the CEO in July 2024.
GOVERNANCE AND EXTERNAL MARKET
As well as its annual approval of the Directors’ Remuneration
Report, and review of Committee performance and Terms of
Reference, the Committee considered colleague expectations
and external market conditions when making remuneration
and reward decisions (supported by its Remuneration advisers,
PwC; further details on page 113). This included:
– Discussion of ongoing cost-of-living pressures on lower
paid colleagues in particular, combined with lowering
unemployment rates, and the consequent need to ensure
hourly-pay for retail and warehouse colleagues remains
competitive in the market to aid recruitment and retention.
– Engagement with our Business Involvement Group (BIG),
hearing colleague feedback directly from the BIG Chair on
pay packages, bonus allocations and the 2020 ShareSave
outcome, which was eagerly anticipated by colleagues saving
in the scheme. Read more on page 98.
– Consideration of regulatory updates and evolving investor
guidance and expectations, including discussion on the
proposed changes to the UK Corporate Governance Code.
Shareholder feedback on executive shareholder
requirements was also reviewed, with the Committee
concluding executive and senior leadership shareholding
requirements should use current salary as the basis for
calculation, rather than salary on appointment.
See Figure 1, on pages 100 and 101 for further details on how
the Director’s Remuneration Policy will be implemented
in 2024/25.
The policy, schemes and practices referred to in the Remuneration Committee overview on page 76, are designed to support
our strategy and promote the long-term success of M&S, while following the principles:
Clarity
Remuneration
arrangements
are transparent
and promote
effective
engagement
with
shareholders
and the
workforce.
Simplicity
Remuneration
structures are
uncomplicated,
and their
rationale and
operation are
easy to
understand.
Risk
Ensure that
reputational
and other risks
from excessive
rewards, and
behavioural
risks that can
arise from
target-based
incentive plans,
are identified
and mitigated.
Predictability
The range of
possible values
of rewards to
executive
directors is
identified and
explained at the
time of
approving the
policy.
Proportionality
The link
between
individual
awards, the
delivery of
strategy and the
long-term
performance of
the Company is
clear. Outcomes
should not
reward poor
performance.
Alignment
with culture
Incentive
schemes that
drive
behaviours
consistent with
M&S’ purpose,
values and
strategy.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
97
Pay data
Salary (£000)
Total pay and
benefits1 (£000)
Salary (£000)
Total pay and
benefits (£000)
2022/23
2022/23
2023/24
2023/24
CEO remuneration
809
2,864
818
4,729
UK colleague 25th percentile
21
22
22
24
UK colleague 50th percentile
22
24
24
26
UK colleague 75th percentile
27
28
29
31
1. Restated to reflect value of PSP at time of vesting.
GENDER PAY GAP
The M&S median gender pay gap for the year to April 2023 is 6.2%, compared with 8.3% for the Retail sector. The M&S mean
gap for the same period is 12.6%.
Our Diversity, Equity and Inclusion (DE&I) strategy is built on two pillars: driving improved diverse representation at all levels
of the business; and developing a continually evolving and inclusive culture. Our colleagues are central to the design of our
plans, with our eight Inclusion and Diversity Networks at the heart of bringing our communities together, amplifying the
voice of our colleagues and guiding the business. Our Gender Equality, Menopause and Family & Carers networks continue
to be the fastest growing with over 5,000 members involved.
Acknowledging that progress needs to be driven from the top down, we’ve taken steps to increase accountability amongst
our leaders and build a more robust framework of KPIs to help us analyse progress and impact, which is reviewed regularly
with the Executive Committee. We have introduced new ways of working and developed tools to equip key stakeholders with
the skills, knowledge and confidence to drive action in the areas of the business they are responsible for.
Women are well represented in our talent pipelines at all levels, and we have strong female talent in the pipelines for our top
and most critical business roles. Redesigning our future leader programmes has proven to have sustainable impact as we
continue to see women make up the majority of participants.
Providing a safe space for colleagues is a fundamental principle, with respect for each other being the foundation of our DE&I
approach. We are clear that any forms of discrimination, harassment, bullying and victimisation are not tolerated at M&S, with
processes in place to ensure any allegations are handled effectively.
We have made progress in our ambition to become the leading employer for women in retail; reinforcing our commitment to
promote flexible working options and increasing awareness and support for women’s health, in particular menopause where
we achieved our Menopause Friendly Employer accreditation. We have also improved our family leave proposition for all
colleagues, investing in industry leading Maternity, Paternity and Adoption leave whilst also working hard to understand and
improve the experience for colleagues too.
We know there is more to do, and continue to take a forensic approach to understanding the challenges faced by women
– particularly in the areas considered “male dominated industries” – and taking action to ensure any barriers faced are
addressed so women feel supported in having the career they want at M&S.
REMUNERATION IN CONTEXT
COLLEAGUE ENGAGEMENT
The Committee strongly believes in the key role colleague
voice plays in contextualising remuneration decisions.
Committee members receive colleague feedback directly
or as part of Board meetings.
The Committee also engages with colleagues directly via BIG.
Since 2018, the Chair of BIG has been invited to attend a
Remuneration Committee meeting each year to share
colleague feedback and contribute to reward discussions.
This engagement gives the Committee greater visibility of the
things that really matter to our colleagues. It also gives the
Committee the opportunity to explain and discuss our pay
practices, and how executive pay aligns with pay across the
wider workforce.
Examples of colleague engagement can be found throughout
this Annual Report, but particularly on pages 38 to 41.
CONSIDERATION OF COLLEAGUE PAY
The Committee monitors and reviews the application and
effectiveness of M&S’ executive reward policy and its
compatibility with remuneration policies in the wider workforce.
To do so, management provides the Committee with updates
on pay arrangements and their proposed approach to
forthcoming pay reviews. The Committee then considers
the executive directors’ pay in line with these arrangements.
This year, this included discussion of a further investment in
pay of £89m for our UK Retail colleagues, which took effect
in April 2024. This represents an increase in the M&S national
rate for Customer Assistants of 10%, when compared to the
equivalent rate in April 2023. For salaried colleagues a tailored
approach was agreed with salary increases ranging from 7-11%
for our lower-paid salaried colleagues and 4-7% for
management roles; 3% for the most senior.
In approving the budget for the annual bonus, the Committee
reviews all bonus costs for the Company against the operating
plan. The Committee also reviews and approves any PSP
awards made to executive directors and the Executive
Committee in the context of rewarding the wider workforce
for financial performance.
Colleagues who were not eligible for the Group bonus this
year received a one-off M&S e-gift card in recognition of their
contribution to trading during our peak period over Christmas.
SHARE OWNERSHIP ACROSS OUR COLLEAGUES
M&S is a proud advocate of employee share ownership.
The Board believes this supports colleagues sharing in M&S’
success, being owners of our business, and aligned with our
shareholders’ interests.
Across our UK colleagues, M&S has a significant number of
participants in all-employee share schemes; colleagues hold
over 42m save as you earn (SAYE) options in our ShareSave
scheme and over 3,500 colleagues hold shares in our share
incentive plan (SIP) ShareBuy.
In February 2024, our 2020 ShareSave scheme matured.
Over 9,200 colleagues were participants, the majority being
Customer Assistants. As at year end, 68m shares have been
exercised under the scheme, with participants saving a typical
£150 per month able to realise a gain in share price
representing over £10,000.
Additionally, all colleagues eligible under the annual bonus
scheme receive a portion of their bonus in shares with deferred
vesting after three years. For our most senior colleagues, 50%
of the bonus award is deferred, while for less senior colleagues
this deferred element represents a third of their total award.
CONSIDERATION OF SHAREHOLDER VIEWS
The Committee is dedicated to an open and transparent
dialogue with shareholders on the issue of executive
remuneration. The Committee actively engaged with
shareholders and shareholder representative bodies ahead
of its review of the Directors’ Remuneration Policy, which was
subsequently approved at our AGM on 4 July 2023 with a vote
in favour of 97.74%.
The Committee, led by the Chair, annually engages with
investors ahead of our AGM, to answer remuneration queries
and provide additional context for decisions. This typically
takes place in written format, but can include face-to-face
meetings, telephone and video calls where requested.
CEO PAY RATIO
Year
Methodology
25th
percentile
ratio
50th
percentile
ratio
75th
percentile
ratio
2024
Option A
200:1
183:1
154:1
2023
Option A
131:1
120:1
102:1
2022
Option A
128:1
117:1
99:1
2021
Option A
55:1
50:1
42:1
2020
Option A
64:1
59:1
51:1
As in prior years, the Committee approved the use of
Methodology A, as set out in the regulations, believing this to
be the simplest, most appropriate and robust way to calculate
the ratio.
Option A requires the pay and benefits of all UK colleagues to
be calculated to identify the three colleagues at the 25th, 50th
and 75th percentiles as at 30 March 2024. This is calculated on
the same basis as the CEO total single figure of remuneration,
except that the individual performance element of the ABS
that is applicable to the relevant colleagues (when applicable),
is the estimated actual value. This requires:
– starting with colleague pay calculated based on actual base
pay, benefits, bonus and long-term incentives for the 12
monthly payrolls within the full financial year. Earnings for
part-time colleagues are annualised on a full-time equivalent
basis to allow equal comparisons;
– adjusting the value of any bonus so that it only reflects the
amount earned in respect of the 2023/24 financial year and
does not include the value of any deferred shares vesting in
the year; and
– adding in the employer pension contribution from the Your
M&S Pension Saving Plan or the Pay in Lieu of Pension as
appropriate.
Joiners and leavers in the year have been excluded from
the calculations. The percentile figures are therefore
representative of the whole colleague population but
do not include all colleagues as at 30 March 2024.
To calculate the ratios in the table above, colleague pay at the
given percentiles has been compared to the CEO total single
figure remuneration as disclosed in Figure 3 on page 102.
We believe the median pay ratio this year is consistent with
pay, reward and progression policies for UK colleagues, as it
reflects M&S’ policy of paying for performance. The increase in
pay ratio this year is due to an increase in the variable element
of the CEO remuneration structure with bonus of 192% of salary
and 90% of the PSP award vesting. The remuneration of the
CEO consists of a high proportion of variable pay, and therefore
the pay ratio fluctuates in line with incentive outturns each year.
GOVERNANCE
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
98
Marks and Spencer Group plc
Annual Report & Financial Statements 2024
99
GOVERNANCE
100
Marks and Spencer Group plc
SUMMARY OF REMUNERATION POLICY
FIXED PAY
2029
2028
2027
2026
2025
2024
ANNUAL
BONUS
SCHEME (ABS)
CASH BONUS
2028
2027
2026
2025
2024
Link to strategy
DEFERRED
SHARE BONUS
PLAN (DSBP)
2029
2028
2027
2026
2025
Link to strategy
Remuneration Policy
Implementation in 2024/25
Salary
– Salaries are payable in cash and are reviewed
annually by considering a number of factors,
including external market data, historic
increases and salary review principles applied
to the rest of the business.
– 3% increase for the CEO, below that
of the wider workforce.
– Further salary details are on
page 103.
Pension
– Directors may participate in the Your M&S
Pension Saving Plan (a defined contribution
arrangement), on the same terms as all other
colleagues: maximum employer contribution
of 12% of salary where the employee
contributes 6% of salary.
– An alternative cash in lieu of pension payment
is available (capped at 5% of salary).
– The defined benefit pension scheme is closed
to new members. None of the current
directors are members.
– The CEO is a member of the Your
M&S Pension Savings Plan, as
described on page 103. He
contributes 3% of his salary into the
scheme, and the Company
contributes 6%.
– Further pension benefit details are
on page 103.
Benefits
– As with all colleagues, directors are offered
benefits including colleague discount, salary
sacrifice schemes and participation in
all-employee share schemes.
– No change versus implementation
in 2023/24.
– Further benefit details are on
page 103.
Remuneration Policy
Implementation in 2024/25
ABS
– Directors participate in this non-contractual,
discretionary scheme. Performance is
measured against one-year financial and
individual performance targets linked with
delivery of the business plan.
– At least half of awards are measured against
financial measures, which typically include
Group PBT before adjusting items (PBT).
– Corporate and individual elements may be
earned independently, no part of the
individual objectives may be earned unless a
threshold level of PBT has been achieved,
after which up to 40% of the maximum may be
payable for the achievement of individual
objectives.
– Total maximum annual potential of up to
200% of salary for each director.
– The Committee retains the right to exercise
discretion, both upwards and downwards, to
ensure that the level of award is appropriate.
– CEO maximum bonus opportunity
of 200% of salary.
– 70% will be measured against PBT
and 30% will be payable for the
achievement of individual
objectives. Targets will be
disclosed retrospectively for
reasons of commercial sensitivity.
An overview of personal objectives
for 2024/25 is provided on
page 105.
DSBP
– Not less than 50% of any bonus earned is paid
in shares which are deferred for three years.
– Malus provisions apply to the deferred share
awards. Cash bonus payments are subject to
two-year clawback provisions. Clawback
applies in circumstances such as, but not
limited to, a material misstatement of the
Company’s audited results, an error in
calculation of the award, gross misconduct, or
events or behaviour that have a detrimental
impact on the reputation of any member of
the Group.
– 50% of any bonus earned by the
CEO in respect of 2024/25 will be
deferred into shares for three
years.
Our current Directors’ Remuneration Policy, which was approved by shareholders on 4 July 2023, is summarised in the table
below. The full policy can be found on pages 108 to 115 of the 2023 Annual Report, available on our corporate website.
The Policy took effect from this date and is designed to attract, retain and motivate our leaders within a framework aligned to our
shareholders interests and designed to promote the long-term success of M&S.
FIGURE 1: SUMMARY OF POLICY AND IMPLEMENTATION IN 2024/25
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
101
PERFORMANCE
SHARE PLAN
(PSP)
2029
2028
2027
2026
2025
2024
Link to strategy
SHARE
OWNERSHIP
2027
2026
2025
2024
2023
2022
Link to strategy
Remuneration Policy
Implementation in 2024/25
PSP
– Directors are eligible to participate in the PSP.
This is a non-contractual, discretionary plan and
is M&S’ main long-term incentive scheme.
– Performance may be measured against
appropriate financial, non-financial and/or
strategic measures. Financial measures must
comprise at least 50% of awards.
– Malus and clawback provisions apply to these
awards. Clawback triggers include, but are not
limited to, a material misstatement of the
Company’s audited results, an error in
calculation of the award, gross misconduct or
events or behaviour that has a detrimental
impact on the reputation of any member of the
Group.
– The maximum value of shares at grant is
capped at 300% in respect of a financial year.
– Awards are subject to a further two-year
holding period after the vesting date.
– Award of 250% of salary for the
CEO.
– 20% of the PSP award is based on
strategic transformation goals
relevant to the achievement of the
business strategy over the next three
years and the remaining 80% of the
award is based on EPS (30%), adjusted
ROCE (30%) and relative TSR (20%).
– Further details are on pages 107
and 108.
Remuneration Policy
Implementation in 2024/25
Shareholding
requirements
– Directors are required to hold shares equivalent
in value to a minimum percentage of their
salary within a five-year period from their
appointment date.
– For the CEO this requirement is 250%
of salary.
– For all other executive directors, the
requirement is 200%.
Post-cessation
holding
requirements
– Directors are required to continue to hold their
shareholding requirement, or, if their level of
shareholding is below the requirement, their
actual shareholding, for two years after
leaving M&S.
RECRUITMENT POLICY
– Service contract. Executive directors have rolling contracts
for service which may be terminated by M&S giving 12
months’ notice and the individual giving six months’ notice.
– Base salary. Salaries are set by the Committee, taking into
consideration a number of factors, including the current pay
for other executive directors, the experience, skill and
current pay level of the individual, and external market
forces.
– For details of pension, benefits, ABS and PSP see pages 103
to 108.
– Buy-out awards. The Committee may offer compensatory
payments or buy-out awards, determined on a case-by-case
basis. The specifics of any buy-out awards would be
dependent on the individual circumstances of recruitment.
The Committee’s intention would be that the expected
value awarded is no greater than the expected value
forfeited by the individual.
TERMINATION POLICY
– Salary, pension and benefits. Payment made in line with
contractual notice periods.
– ABS. There is no contractual entitlement to payments under
the ABS. If the director is under notice or not in active
service at either the relevant year-end or on the date of
payment, awards (and any unvested deferred bonus shares)
may lapse. The Committee may use its discretion to make a
bonus award.
– Long-term incentive awards. The treatment of outstanding
awards is determined in accordance with the plan rules.
– Repatriation. M&S may pay for repatriation where a director
has been recruited from overseas.
– Legal expenses & outplacement. Where a director leaves by
mutual consent, M&S may reimburse reasonable legal and
outplacement services.
STRATEGIC PRIORITIES KEY
Deliver profitable sales growth
Improve operating margins
Disciplined investment choices
Drive shareholder returns
GOVERNANCE
102
Marks and Spencer Group plc
EXECUTIVE DIRECTORS’ REMUNERATION
Each year, the Remuneration Committee assesses the current senior remuneration framework to determine whether the existing
incentive arrangements remain appropriately challenging in the context of the business strategy, fulfil current external
guidelines and are aligned with a range of internal factors, including the pay arrangements and policies throughout the rest
of the business.
In its discussions, the Committee aims to ensure not only that the remuneration framework is aligned to the delivery of business
priorities, but also that awards made during the year fairly reflect the performance of the business and individuals.
A significant proportion of the performance measures used in the incentive schemes are integrated with M&S’ KPIs and strategic
priorities detailed in the Strategic Report, as illustrated on pages 28 and 2 and 5.
Figure 2 details the achievement of each executive director under the Company’s incentive schemes as a result of short- and
long-term performance to the end of the reported financial year and summarises the main elements of the senior remuneration
framework. Further details of payments made during the year are set out in the table below (Figure 3) and later in this report.
FIGURE 2: REMUNERATION STRUCTURE 2023/24
FIXED PAY
+ ANNUAL BONUS
+ PSP
= TOTAL PAY FOR 2023/24
BASE SALARY
200% of salary maximum
bonus opportunity (with 50%
deferral)
Measured against Group PBT
before adjusting items and
individual performance
225% of salary awarded
in 20211
Total payments are
between 90.2%-93.7%
of maximum potential
BENEFITS
Measured against adjusted
EPS, adjusted ROCE, TSR
and strategic measures
PENSION BENEFITS
Salary increase effective
1 July 2023
Outcomes are between 85%-
96% of maximum bonus
opportunity
90% of award vested
Read more on
on pages 104 to 105.
Read more on
on page 107.
1. The awards for Stuart Machin and Katie Bickerstaffe were made prior to Board appointment at a level of 225% of salary.
FIGURE 3: TOTAL SINGLE FIGURE REMUNERATION (AUDITED)
Director
Year
Salary
£000
Benefits2
£000
Total
bonus
£000
Total PSP
vested3
£000
Pension
benefits
£000
Total
pay
£000
Total
fixed pay
£000
Total
variable pay
£000
Stuart Machin
2023/24
2022/23
818
669
0
0
1,570
1,081
2,251
878
90
80
4,729
2,708
908
749
3,821
1,959
Katie
Bickerstaffe1
2023/24
2022/23
767
626
46
34
1,304
989
2,251
702
38
31
4,406
2,382
851
691
3,555
1,691
1. Katie Bickerstaffe’s salary reflects a more flexible four-day working pattern.
2. As disclosed in the 2022/23 Remuneration Report, Katie Bickerstaffe is permitted to claim travel and accommodation costs between home and her normal work
location until 25 May 2024. The 2022/23 benefits figure has been restated to include the grossed up value of accommodation costs of £18,000.
3. 2022/23 values restated based on share price of £1.89 at time of PSP vesting.
SALARIES
When reviewing salary levels, the Committee takes into account a number of internal and external factors, including Company
performance during the year, external market data, historic increases made to the individual and, to ensure a consistent
approach, the salary review principles applied to the rest of the business.
For salaries effective July 2024, the Committee has awarded an increase of 3% to Stuart Machin and his new salary will be
£848,720. Across the wider population, salary increases ranged from 3% to 11% for the wider salaried population and 10% for
Customer Assistants. Katie Bickerstaffe did not participate in the annual salary review.
The next annual salary review for the CEO will be effective in July 2025. The table on the next page details the executive directors’
salaries as at 1 July 2023 and salaries which will take effect from 1 July 2024.
REMUNERATION REPORT
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
103
FIGURE 4: SALARIES
Annual salary
as of 1 July 2023
(£000)
Annual salary
as of 1 July 2024
(£000)
Change in
salary %
increase
Stuart Machin
824.0
848.7
3%
Katie Bickerstaffe
772.5
772.5
0%
BENEFITS (AUDITED)
The Remuneration Policy permits that each executive director may receive a car or cash allowance as well as being offered the
benefit of a driver. Neither Stuart Machin or Katie Bickerstaffe receives a car or cash allowance. As agreed in March 2020 to
facilitate Katie Bickerstaffe’s recruitment to Chief Strategy and Transformation Director, and prior to her appointment to the
Board, she is permitted to claim travel and accommodation costs between home and her normal work location until 25 May 2024.
The taxable value of these benefits in kind is detailed in Figure 3 on the previous page.
In line with all other colleagues, executive directors receive life assurance, colleague discount and are eligible to participate in
salary sacrifice schemes such as Cycle2Work.
PENSION BENEFITS (AUDITED)
Stuart Machin is a member of the Your M&S Pension Savings Plan, as described on page 100. During the year, Stuart contributed
6% and then 3% of his salary into the scheme, and the Company matched this with a contribution of 12% then 6%. The change took
effect in February 2024. The maximum level of contribution offered by M&S to all other colleagues is 12%.
During the year, Katie Bickerstaffe received a 5% of salary cash payment in lieu of participation in the M&S pension scheme.
The value of the Company’s contribution in the year for Stuart and Katie shown in the single figure table in Figure 3 on the
previous page.
DEFERRED ANNUAL BONUS (AUDITED)
FIGURE 5: DSBP AWARDS MADE IN RESPECT OF 2022/23
Currently 50% of any bonus award is compulsorily deferred into a conditional share award. These awards vest after three years,
subject to continued employment as well as malus provisions. Consistent with the reporting requirements, the face value shown
in the table below relates to the total number of shares granted in July 2023.
Basis of award
Face value of award £0001
End of deferral period
Stuart Machin
50% of bonus
£634
07/07/2026
Katie Bickerstaffe
50% of bonus
£579
07/07/2026
1. We note that the value shown for the 2022/23 bonus awards in the single figure table on page 102 represents the bonus earned for the period that they served as
executive directors only, following their appointment on 25 May 2022.
ANNUAL BONUS SCHEME 2023/24 (AUDITED)
Annual performance for the year was measured against pre-determined Group PBT before adjusting items (PBT) (70%) and
individual performance (30%) targets. PBT is used as a core bonus determinant, being an important measure of overall
performance and is consistent with how business performance is assessed internally by the Board and the Executive Committee.
Individual performance was measured against a scorecard of individual measures set against the areas of delivery of the
transformation plan that were deemed most critical to the future success of M&S. Individual performance was measured
independently of PBT performance; no individual element could be earned until a threshold level of PBT was achieved. For
threshold PBT performance up to 10% of bonus opportunity can be earned.
PBT outturn for the year was £716.4m, which was above the target set to trigger awards under both the corporate and individual
elements of the scheme. Targets were set at the start of the year amongst much ongoing uncertainty and were stretching versus
consensus at the time. Performance has exceeded both the budget and external expectations due to strong volume and value
performance, leading to growth in market share in both Clothing & Home and Food. As shown in Figures 6 and 7 pages 104 and
105, executive directors were awarded 70% of maximum opportunity under the corporate element of the scheme and 15%– 26%
of the maximum for individual performance. The Co-CEO’s bonus was agreed as part of her exit arrangements. Overall bonus
achievement was 192% of opportunity for the CEO and 170% for the Co-CEO.
The Committee reviewed achievement to ensure that total awards were appropriate in the context of several factors. These
included M&S’ overall financial performance, the outturn of individual objectives, and the level of bonus payable elsewhere in
the business.
Figures 6 and 7 set out the extent to which each director achieved their individual objectives, worth up to 30% of maximum bonus
opportunity, along with the achievement against Group PBT targets up to a maximum 70% of awards. Total awards shown directly
correspond to the figure included in the single figure table (Figure 3) on page 102.
GOVERNANCE
104
Marks and Spencer Group plc
REMUNERATION REPORT CONTINUED
FIGURE 6: INDIVIDUAL OBJECTIVES (AUDITED)
Director
Individual
Stuart Machin
– Continued leadership and governance of the Executive Committee and developing a high performing
leadership team. Continuation of regular cadence with Executive Committee; key discussion topics include
performance, strategy, culture, talent, health and safety and driving shareholder value. Time spent on talent
and high performance culture significantly upweighted. Operating boards across key business areas
established, with focus on driving growth. New vision, purpose and set of behaviours to drive a high
performance culture established. Executive coach in place to support the Executive Committee’s leadership
development, each member of the team paired with non-executive director ‘mentor’.
– Embed simplified organisational structure changes and realise financial benefits. Promoted Mark Lemming
to Managing Director, International and recruited Rachel Higham as Chief Data, Digital and Technology Officer,
both Executive Committee roles. Delivered financial savings through simplification of the support centre.
Improved focus on tackling under-performance to drive a high performance culture. Simplified the Home
category by rationalising some “bulky” furniture lines, reducing cost and complexity in the supply chain and
stores, and repurposing space to drive core Home.
– Solidify ways of working with Ocado to recover and grow online presence as identified through the three-
year plan. Established ways of working between M&S and Ocado Retail. Continued to be a member of the
Ocado Retail Board providing challenge and support. Coaching the CEO Ocado Retail and played a critical role
in recruiting a new Chief Financial Officer and Chief Commercial Officer to bolster the management team. M&S
range has grown by over 1,000 lines increasing the range from 69% to over 86%, which covers over 90% of the
addressable sales. Availability of M&S lines has improved and delivered seven joint marketing activities in the
year. M&S sales on Ocado.com in Q4 ahead of total Ocado Retail sales.
– Delivery of the next phase of the end-to-end supply chain across Food, and Clothing & Home. Improved
productivity, achieving the target two years early. Led the recruitment of Gist CEO to drive further
improvements and lead the Food network strategy. All Chilled lines (c.3,000, 50% of the total Food range) are
now live in the Food Forecasting, Ordering and Allocation platform. “One Best Way” trial commenced in Leeds
region for Food and completed in C&H. Improved stock integrity and stock file accuracy, supporting a reduction
in stock loss. Capital investment approved for automation investments in Castle Donington and Bradford, and
contract signed for implementation of new end-to-end planning system. Improved financial performance in
both businesses with cost per case better than Budget.
– Accelerate the property store rotation programme targeting five years into three. Continued rollout of
renewal programme with an omni-channel focus. Significant progress made in year, across openings, closures
and renewals. 20% of the store estate is now in the ‘renewed’ format. In the year, five destination stores in
Liverpool, Manchester, Thurrock, Birmingham and Leeds were opened, all delivering strong sales uplifts and
investment returns ahead of plan. Continued progress on store closures in line with plan.
– Step-change digital plans to benefit customer engagement and experience through efficient use of capital
investment which delivers financial efficiencies. We have executed a more modern digital marketing strategy
in Food and Clothing & Home, using influencers, M&S ambassadors and social media channels to increase
engagement with customers. Implemented the roll-out of digital click and collect hubs across more than 90%
of the estate, making it easier for customers to collect and return products at the stores. Recruited a Head of
Customer to step-change both customer experience and engagement.
Katie Bickerstaffe
– Increase online sales penetration and improve operating margin to ensure M&S can make channel agnostic
decisions. Online sales penetration increased. Operating margin improved through the delivery of increased
supply chain efficiencies.
– Drive customer engagement through M&S Connect. Active Sparks members plateaued and as a result, loyalty
programme to drive customer engagement being reset.
– Deliver step-change in omni-channel experience. M&S Active App users grew. Rolling out digital click and
collect hubs.
– Drive growth in Clothing & Home market share. Growth in Clothing market share delivered with an increase of
20 basis points. Decrease seen in Home market share.
– Commence restructure of the international business operating model for growth. Supported promotion of
Mark Lemming as the Managing Director, International.
– Integrate the initial phase of Clothing & Home to reset category management an end-to-end forecasting
technology solution. Commenced the end-to-end planning programme. The programme is in early stages.
– Deliver digital and technology return on investment. External consultant reviewed current ways of working,
efficiency and return of capital investment. This has resulted in a reset of the function.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
105
FIGURE 7: ANNUAL BONUS SCHEME 2023/24 (AUDITED)
CORPORATE GROUP PBT (70%)
INDIVIDUAL (30%)
TOTAL AWARD
Target/performance
Performance
Achievement
Director
Min £482m
Max £550m
% of salary
£000
Stuart Machin
70% of max opportunity
26% of max opportunity
192%
1,570
£716.4m
87%
Katie Bickerstaffe
70% of max opportunity
15% of max opportunity
170%
1,304
£716.4m
50%
DEFERRED SHARE BONUS PLAN (AUDITED)
Currently 50% of any bonus award is compulsorily deferred into a conditional share award. These awards vest after three years,
subject to continued employment as well as malus provisions. The table below provides details of share awards in respect of
bonus payments made in 2023/24. The face value of each award reflects half of the value shown for 2023/24 bonus payments in
the single figure table Figure 3 on page 102.
FIGURE 8: DSBP AWARDS IN RESPECT OF 2023/24
Basis of award
Face value of award £000
End of deferral period
Stuart Machin
50% of bonus
£785
03/07/2027
Katie Bickerstaffe
50% of bonus
£652
03/07/2027
ANNUAL BONUS SCHEME FOR 2024/25
During the year, the Committee reviewed the 2024/25 scheme, considering the next phase of growth together with bonus
arrangements elsewhere in the business.
The Committee was satisfied that the structure of the ABS, as approved by shareholders at the 2023 AGM (and unchanged from
2023/24), remains appropriate. Subject to the achievement of stretching targets, set in line with the 2024/25 financial plan, the
scheme provides for a competitive bonus opportunity with a strong focus on stretching PBT performance.
The CEO is eligible to receive a bonus award of up to 200% of salary. The Co-CEO is not participating in the 2024/25 scheme.
Performance will be focused on Group PBT before adjusting items (70%). The remaining 30% will be measured against a scorecard
of individual objectives, identified as the measurable key priorities required to drive the continued growth of M&S. Individual
performance will again be measured independently of PBT performance; no individual element may be earned until a threshold
level of PBT is achieved.
The performance targets for the 2024/25 scheme are deemed by the Board to be too commercially sensitive to disclose in this
report but, where possible, they will be disclosed in next year’s. The Committee, at its absolute discretion, may use its judgement
to adjust outcomes to ensure that any awards made reflect overall business and individual performance during the year. Any
discretion applied will be justified and clearly disclosed.
FIGURE 9: EXECUTIVE DIRECTOR OBJECTIVES FOR 2024/25 ANNUAL BONUS SCHEME
CORPORATE TARGETS
INDIVIDUAL OBJECTIVES
Director
Group PBT
before adjusting
items PBT
Scorecard of
individual
measures
% bonus
% bonus
Measures
Stuart Machin
70%
30%
– Continued leadership and governance of Executive
Committee and development of a high performing
leadership team.
– Continue to restructure the cost base, delivering a
permanent reduction.
– Accelerate the supply chain strategies across Food
and Clothing & Home.
– Deliver a revised Data, Digital & Technology strategy.
– Improve the online C&H performance.
– Role model and embed the M&S purpose, vision and
behaviours across the business.
GOVERNANCE
106
Marks and Spencer Group plc
REMUNERATION REPORT CONTINUED
PERFORMANCE SHARE PLAN (PSP)
PSP AWARDS MADE IN 2023/24 (AUDITED)
Ahead of grants being made, the Committee reviewed the long-term incentive framework at M&S, assessing the extent to which it
remained suitable. After consideration, it was decided that the current structural arrangements remained appropriate: 20% of the
2023 PSP award is based upon strategic transformation goals relevant to the achievement of the business strategy over the next
three years and the remaining 80% of the award is based on EPS (30%), adjusted ROCE (30%) and relative TSR (20%).
For the 2023 PSP awards, the store staff cost to sales ratio was replaced with a broader operating costs to sales ratio. The
Committee agreed this revised measure provides greater focus on M&S’ simplification agenda and better measures efficiency
across the whole business.
TSR is measured against a bespoke group of 12 companies taken from the FTSE 350 General and Food & Drug Retailers indices,
reviewed prior to grant to ensure the constituents remain appropriately aligned to M&S’ business operations. These companies
are listed in Figure 11.
For the 2023 PSP, grants of 250% of salary for the CEO and Co-CEO were approved by the Committee and were made on
5 July 2023.
The strategic targets are deemed too commercially sensitive to disclose but will be reported at the time of vesting.
In line with policy, awards will vest three years after the date of grant, to the extent that the performance conditions are met,
and must then be held for a further two years. Clawback provisions apply during this holding period. For financial measures,
20% of awards will vest for threshold performance, increasing to 100% on a straight-line basis between threshold and maximum
performance. For strategic measures, no element of this award shall vest if the targets are not achieved. This supports the
Committee’s view that delivery of these strategic measures is critical; payment for achievement below the target would not be
appropriate. Detailed targets can be seen in Figure 10.
FIGURE 10: PERFORMANCE CONDITIONS FOR PSP AWARDS MADE IN 2023/24 (AUDITED)
DETAILS
2023/24 award measures
WEIGHTING
THRESHOLD
MAXIMUM
Adjusted EPS in 2025/26 (p)
30%
16.7p
25.7p
Adjusted ROCE in 2025/26 (%)
30%
11.5%
14.0%
Relative TSR
20%
Median
Upper quartile
Strategic measures
20%
M&S.com growth
Food like-for-like sales
Operating cost to sales ratio
FIGURE 11: TSR COMPARATOR GROUP 2023/24 AWARDS
– ASOS
– Currys
– Frasers
– J Sainsbury
– N Brown Group
– Tesco
– B&M European
– Dunelm Group
– JD Sports Fashion
– Kingfisher
– Next
– WHSmith
FIGURE 12: PSP AWARDS MADE IN 2023/24 (AUDITED)
Basis of award %
of salary
Threshold
level of
vesting
Face value of
award £000
End of
performance
period
Vesting date
Stuart Machin
250%
20%
2,000
28/03/2026
05/07/2026
Katie Bickerstaffe
250%
20%
1,875
28/03/2026
05/07/2026
PSP grants were made as a conditional share award. When calculating the face value of awards to be granted, the number of
shares awarded was multiplied by the average mid-market share price on the five dealing days prior to the date of grant. For the
2023 award, the share price was calculated as £1.924, being the average share price between 28 June 2023 and 4 July 2023.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
107
FIGURE 13: PSP AWARDS VESTING IN 2023/24 (AUDITED)
For directors in receipt of PSP awards granted in 2021, the awards will vest in June 2024, based on three-year performance over
the period to 30 March 2024. For threshold performance, 20% of the 2021/22 award would vest, increasing to 100% on a straight-
line basis between threshold and maximum performance. Despite achieving the store staff cost to sales ratio target, this measure
is also underpinned by a requirement there is no significant increase in central headcount over the period. The Committee
considered the impact of additional central costs and determined that the vesting outcome of this strategic measure should be
reduced by 50%. Otherwise, performance was assessed and the Committee determined that 90% of the total award will vest.
The Committee reviewed this level of vesting against the wider business performance of the period and determined this level
of payment was appropriate; no discretion was applied for either share price movements or formulaic vesting outcomes.
Details of performance against the specific targets set are shown in the table below. The total vesting values shown in Figure 14
directly correspond to the figure included in the single figure table Figure 3 on page 102.
Final Year
Adjusted EPS
(p)
Final Year
Adjusted
ROCE (%)
TSR
(Relative
Ranking)
Strategic Measures
M&S.com
growth
Food
like-for-like
sales
Store staff
cost: Sales
ratio
Target and weighting
30%
30%
20%
20%
Overall
vesting
Threshold performance
15p
10.5%
Median
N/A
N/A
N/A
Maximum performance
24p
13.5%
Upper
quartile
15.0%
1.5%
10.5%
Actual performance achieved
24.1p
13.9%
Above
upper
quartile
7.9%
8.4%
9.9%
Percentage of maximum achieved
30%
30%
20%
0%
6.7%
3.3%
90%
FIGURE 14: VESTING VALUE OF AWARDS VESTING IN 2023/24 (AUDITED)
At the end of performance period (30 March 2024)
Number of
shares
granted
% of salary
granted
Dividend
equivalents
accrued
during the
performance
period
Number of
shares
vesting
Number of
shares
lapsing
Impact
of share price
performance
Total vesting
of award
£000
Stuart Machin
994,792
225%
3,796
898,729
99,859
47.6%
£2,251
Katie Bickerstaffe
994,792
225%
3,796
898,729
99,859
47.6%
£2,251
Total vesting values are based on a share price of £2.504 (the average share price from 2 January 2024 to 30 March 2024).
A dividend of 1p per share was paid during the performance period in January 2024; dividend equivalents accrued during the
performance period are shown in the table above.
PSP AWARDS TO BE MADE IN 2024/25
During the year, the Committee reviewed the long-term incentive framework at M&S, assessing the extent to which it remained
suitable. The 2024 PSP will maintain the measures used for the 2023 PSP awards (30% adjusted EPS, 30% adjusted ROCE, 20%
relative TSR and 20% strategic measures).
The strategic targets are deemed too commercially sensitive to disclose but will be reported at the time of vesting.
TSR will once again be measured against a bespoke group of companies taken from the FTSE 350 General and Food & Drug
Retailers indices. The existing group of 12 companies, as detailed in Figure 11, was thoroughly reviewed to ensure the constituents
remained appropriate and aligned to M&S’ business operations. The TSR comparator group of 12 companies for the 2024/25 award
can be found in Figure 16. EPS and adjusted ROCE targets have been set with reference to business plan and are reflective of
stretching ambitions.
Following careful consideration and discussion on the need to incentivise the most senior leaders of M&S and reward truly
exceptional performance, the Committee approved a 250% of salary award for the CEO in 2024. The Co-CEO is not participating
in the 2024/25 scheme.
Performance will be measured as shown in Figure 15 below, with 20% of awards vesting for threshold performance and 100%
for maximum.
GOVERNANCE
108
Marks and Spencer Group plc
REMUNERATION REPORT CONTINUED
FIGURE 15: PERFORMANCE CONDITIONS FOR PSP AWARDS TO BE MADE IN 2024/25
DETAILS
2024/25 award measures
WEIGHTING
THRESHOLD
MAXIMUM
Adjusted EPS in 2026/27 (p)
30%
30.5p
39.5p
Adjusted ROCE in 2026/27 (%)
30%
15.9%
18.4%
Relative TSR
20%
Median
Upper quartile
Strategic measures
20%
M&S.com growth
Food like-for-like sales
Operating cost to sales ratio
FIGURE 16: TSR COMPARATOR GROUP 2024/25 AWARD
– ASOS
– Currys
– Frasers
– J Sainsbury
– N Brown Group
– Tesco
– B&M European
– Dunelm Group
– JD Sports Fashion
– Kingfisher
– Next
– WHSmith
FIGURE 17: DIRECTORS’ SHAREHOLDINGS (AUDITED)
The table below sets out the total number of shares held by each executive director serving on the Board during the period to
30 March 2024.
There have been no changes in the current directors’ interests in shares or options granted by the Company and its subsidiaries
between the end of the financial year and 21 May 2024. No director had an interest in any of the Company’s subsidiaries at the
statutory end of the year.
Unvested
With performance
conditions
Without performance conditions
Shares owned
outright1
Performance
Share Plan2
Deferred Share
Bonus Plan3
Restricted
Share Plan4
Unvested
unexercised options5
Stuart Machin
522,932
3,480,085
734,272
401,716
Nil
Katie Bickerstaffe
350,9407
3,324,992
697,058
501,908
4,535
1. Includes shares owned by connected persons.
2. Performance Share Plan (PSP) awards were made as conditional share awards, the performance conditions have previously been disclosed.
3. Awards under the Deferred Share Bonus Plan (DSBP) relate to half of the annual bonus earned in respect of 2021/22 and 2022/23, deferred into shares for three years.
4. Awards under the Restricted Share Plan (RSP) were granted to Stuart Machin and Katie Bickerstaffe in June 2021 prior to their appointment to the Board.
5. These are HMRC approved ShareSave awards.
6. The figures in the table above include dividend equivalents that are accrued on awards under the PSP, DSBP and RSP.
7. On 29 April 2024, Katie Bickerstaffe purchased 57 shares under the Company’s SIP. As at 21 May 2024 her holding of shares owned outright increased to
350,997 shares.
FIGURE 18: SHAREHOLDING REQUIREMENTS INCLUDING POST-CESSATION (AUDITED)
All executive directors are required to build a holding of shares equivalent in value to a minimum percentage of their salary within
a five-year period from their appointment date. For the CEO and Co-CEO, this requirement is 250% of salary. A similar
requirement of 100% of salary currently applies to members of the Executive Committee.
The chart below shows the extent to which each executive director has met their target shareholding as at 30 March 2024. For
Stuart Machin and Katie Bickerstaffe, their shareholding requirement is measured from their date of appointment as CEO and
Co-CEO.
For the purposes of the requirements, the net number of unvested share awards not subject to performance conditions is
included and is reflected in the chart below. The Committee continues to keep shareholding requirement guidelines and actual
director shareholdings under review and will take appropriate action should it consider it necessary.
To support the Committee’s intention to drive long-term, sustainable decision-making for the benefit of M&S and our
shareholders and in line with the 2018 UK Corporate Governance Code changes and the Investment Association’s updated
guidelines, in 2020 the Committee approved the extension of shareholding guidelines to beyond the time at which an executive
director leaves M&S. Directors are required to maintain their minimum shareholding requirement, or, if their level of shareholding
is below this, their actual shareholding, for two years after leaving M&S. The Committee has approved all vesting awards from
2020 grants onwards to be held in a nominee vehicle to ensure the successful operation of this policy.
For the purposes of this calculation, an average share price is used to reduce the impact of share price volatility on the results.
The average share price for the year was £2.207, with resultant shareholdings illustrated in the chart below.
Stuart Machin
Katie Bickerstaffe
[0]%
[0]% of salary
[0]%
Shares owned outright
Unvested DSBP/RSP shares
301%
282%
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
109
FIGURE 19: EXECUTIVE DIRECTORS’ INTERESTS IN THE COMPANY’S SHARE SCHEMES (AUDITED)
Maximum
receivable at
1 April 2023
Awarded
during
the year
Exercised
during
the year
Lapsed
during the
year
Dividend
equivalents
accrued
Maximum
receivable at 30
March 2024
Stuart Machin
PSP1
3,336,953
1,039,501
463,895
445,704
13,230
3,480,085
DSBP
401,900
329,582
–
–
2,790
734,272
RSP2
450,000
–
50,000
-
1,716
401,716
SAYE3
21,951
–
21,951
–
–
Nil
Total
4,210,804
1,369,083
535,846
445,704
17,736
4,616,073
Katie Bickerstaffe
PSP1
3,065,498
974,532
371,116
356,563
12,641
3,324,992
DSBP
393,439
300,970
–
–
2,649
697,058
RSP2
700,000
–
200,000
–
1,908
501,908
SAYE3
21,951
4,535
21,951
–
–
4,535
Total
4,180,888
1,280,037
593,067
356,563
17,198
4,528,493
1. The share price on the date of vesting for the PSP awards was £1.89.
2. The share price on the date of vesting for Stuart Machin’s RSP award was £2.59. The share price on the date of vesting for Katie Bickerstaffe’s RSP award was £1.89.
3. The option price for the SAYE options exercised was £0.82, the share price on the date of exercise was £2.31.
EMPLOYEE SHARE SCHEMES
ALL-EMPLOYEE SHARE SCHEMES (AUDITED)
Executive directors may participate in ShareSave, the Company’s save as you earn (SAYE) scheme, and ShareBuy, the Company’s
share incentive plan, on the same basis as all other eligible colleagues. Further details of the schemes are set out in note 13 of the
financial statements on pages 159 to 161.
DILUTION OF SHARE CAPITAL BY EMPLOYEE SHARE PLANS
Awards granted under the Company’s SAYE scheme and discretionary share plans can be met by the issue of new shares when the
options are exercised or through market purchase shares. The Company monitors the number of shares issued under these
schemes and their impact on dilution limits.
FIGURE 20: ALL SHARE PLANS
(AS AT 30 MARCH 2024)
10%
6.70%
Actual
Limit
FIGURE 21: EXECUTIVE SHARE PLANS
(AS AT 30 MARCH 2024)
5%
0.99%
Actual
Limit
GOVERNANCE
110
Marks and Spencer Group plc
REMUNERATION REPORT CONTINUED
FIGURE 22: PERFORMANCE AND CEO REMUNERATION COMPARISON
This graph illustrates the Company’s performance against the FTSE 100 over the past 10 years. M&S re-entered the FTSE 100 Index
on 18 September 2023. The calculation of TSR is in accordance with the relevant remuneration regulations. The table below the
TSR chart sets out the remuneration data for directors undertaking the role of CEO during each of the last 10 financial years.
TSR
Marks and Spencer Group plc
FTSE 100 index
£
01/04/23
30/03/24
02/04/22
03/04/21
28/03/20
30/03/19
31/03/18
01/04/17
02/04/16
28/03/15
29/03/14
2022/23
2023/24
2021/22
2020/21
2019/20
2018/19
2017/18
2016/17
2015/16
2014/15
2013/14
0
50
100
150
200
CEO
CEO single
figure (£000)
Stuart Machin
–
–
–
–
–
–
–
–
2,708
4,729
Steve Rowe
–
–
1,642
1,123
1,517
1,205
1,068
2,630
156
–
Marc Bolland
2,095
2,015
–
–
–
–
–
–
–
–
Annual bonus
payment
(% of maximum)
Stuart Machin
–
–
–
–
–
–
–
–
81.1%
96%
Steve Rowe
–
–
36.98%
0.00%
0.00%
0.00%
0.00%
95.0%
–
–
Marc Bolland
30.55%
31.9%
–
–
–
–
–
–
–
–
PSP vesting
(% of maximum)
Stuart Machin
–
–
–
–
–
–
–
–
51.0%
90%
Steve Rowe
–
–
0.00%
8.20%
34.0%
11.20%
0.00%
0.00%
51.0%
90%
Marc Bolland
4.70%
4.80%
–
–
–
–
–
–
–
–
FIGURE 23: PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION
2023/24
2022/23
2021/22
2020/21
% change 2022/23-2023/24
% change 2021/22-2022/23
% change 2020/21-2021/22
% change 2019/20-2020/21
2022/23
Base
salary/
fees
Benefits
Annual
bonus
2021/22
Base
salary/
fees
Benefits
Annual
bonus
2020/21
Base
salary/
fees
Benefits
Annual
bonus
2019/20
Base
salary/
fees
Benefits
Annual
bonus
Stuart Machin
3%
12.5%
21%
–
–
–
–
–
–
–
–
–
Katie
Bickerstaffe
3%
29%
10%
–
–
–
–
–
–
–
–
–
Archie Norman
3%
–
–
3%
-100%
–
1%
100%
–
0%
-74%
–
Andrew Fisher
3%
–
–
3%
-100%
–
1%
–
–
0%
–
–
Justin King
3%
–
–
3%
–
–
1%
–
–
0%
–
–
Tamara Ingram
3%
–
–
3%
–
–
1%
–
–
0%
–
–
Sapna Sood
3%
–
–
3%
–
–
1%
–
–
0%
–
–
Evelyn Bourke
3%
–
–
3%
-100%
–
1%
–
–
–
–
–
Fiona Dawson
3%
–
–
3%
–
–
1%
–
–
–
–
–
Ronan Dunne
3%
–
–
–
–
–
–
–
–
–
–
-
Cheryl Potter
3%
–
–
–
–
–
–
–
–
–
–
–
UK colleagues
(average FTE)
8.5%
17%
23%
6%
0%
-6%
2%
–
100%
0%
0%
–
1. See Figure 3 on page 102 for details of executive director remuneration which support the percentage changes above.
2. See Figure 26 on page 112 for details of non-executive director remuneration which support the percentage changes above.
3. Change in benefit is blank where the benefit value was zero in prior year as no figure to compare to.
4. No changes were made to benefits during the year. The increase in the benefit % for UK colleagues represents the consolidation of car allowances into base salary
and the increase to company pension contributions following the investment in colleague pay during the year.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
111
FIGURE 24: RELATIVE IMPORTANCE OF SPEND ON PAY
The table below illustrates the Company’s expenditure on pay in comparison with profits before tax and distributions to
shareholders by way of dividend payments and share buyback. Total colleague pay is the total pay for all Group colleagues.
Group PBT before adjusting items has been used as a comparison, as this is the key financial metric that the Board considers when
assessing Company performance.
2022/23 £m
2023/24 £m
% change
Total colleague pay1
1,712.71
2,040.1
19.1%
Total returns to shareholders
Nil
19.6
–
Group PBT before adjusting items2
453.33
716.4
58%
1. Last year ‘s figure has been restated to reflect certain employee costs related to Gist Limited and Gist Distribution Limited.
2. Group PBT before adjusting items as disclosed on page 2.
3. Comparative information has been restated due to a change in adjusting items classification.
FIGURE 25: SERVICE AGREEMENTS
In line with our policy, directors have rolling contracts which may be terminated by the Company giving 12 months’ notice or the
director giving six months’ notice.
Date of appointment
Notice period
Stuart Machin
25/05/2022
12 months/6 months
Katie Bickerstaffe
25/05/2022
12 months/6 months
CHANGES TO EXECUTIVE MEMBERSHIP OF THE BOARD DURING 2023/24
PAYMENTS FOR THE LOSS OF OFFICE (AUDITED)
As announced on 7 March 2024, Katie Bickerstaffe will retire from her role as Co-CEO, step down from the Board and cease to
be a Director on 10 July 2024. Katie will continue to receive her normal remuneration in terms of salary, pension and company
benefits in accordance with her service agreement, up to and including 10 July 2024. In determining Katie’s exit arrangements,
the Committee did not want to pay excessively in the context of the remainder of her notice period following her departure.
To achieve this, Katie will not receive any of her fixed pay elements (salary, pension and Company benefits) from 10 July 2024.
Katie is not participating in the 2024/25 ABS and is not eligible for a 2024 PSP award.
The Committee determined good leaver treatment in line with the plan rules, and therefore her unvested conditional shares
awarded under the 2021, 2022 and 2023 PSP awards, the Restricted Share Plan (RSP) and the 2022 and 2023 DSBP awards will
be time pro-rated to 10 July 2024. They will vest on the relevant normal vesting date to the extent that performance has been
achieved, where applicable. The deferred element of the 2023/24 ABS is outlined in Figure 8 on page 105 and will vest on the
normal timescales.
To the extent that performance conditions are met for the 2022 PSP award, the subsequent vesting of this award will be reported
in next year’s report along with confirmation of the vesting of Katie’s RSP award and 2022 DSBP award.
In line with policy, Katie will be subject to post-cessation holding requirements and will continue to maintain her in-employment
shareholding requirement for two years after leaving M&S.
PAYMENTS TO PAST DIRECTORS (AUDITED)
As reported in the 2021/22 report, Steve Rowe stepped down as CEO after the preliminary results on 25 May 2022 and ceased
full-time employment with M&S on 5 July 2022.
As reported last year, 51% of the PSPs granted in 2020 vested on 6 July 2023. For Steve Rowe, based on the share price at the time
of vesting of £1.89, the 496,308 shares that vested had a value of £938,022.
As detailed earlier in the report on page 107, 90% of PSP awards granted in 2021 will vest in June 2024. For Steve Rowe, the award
is pro-rated so of the 455,503 shares and 5,215 dividend equivalents accrued during the performance period 414,646 shares will
vest at an estimated value of c.£1,038,274 based on the average share price of £2.504 between 2 January 2024 and 30 March 2024.
Steve has no further PSP awards outstanding.
EXTERNAL APPOINTMENTS
The Company recognises that executive directors may be invited to become non-executive directors of other companies, and
that these appointments can broaden their knowledge and experience to the benefit of the Company. The Policy is for the
individual director to retain any fee.
Katie Bickerstaffe is a non-executive director of the England and Wales Cricket Board (ECB) and Barratt Developments plc.
Katie received fees of £29,167 from the ECB and £96,269 from Barratt Developments in 2023/24 in respect of these external
appointments.
GOVERNANCE
112
Marks and Spencer Group plc
NON-EXECUTIVE DIRECTORS’ TOTAL SINGLE FIGURE REMUNERATION (AUDITED)
Non-executive directors receive fees reflecting the time commitment, demands and responsibilities of the role. Fees paid to the
non-executive directors and Board Chairman for 2023/24 and 2022/23 are detailed in Figure 26.
Benefits include expense reimbursements relating to travel, accommodation and subsistence in connection with the attendance
at Board and Committee meetings during the year, which are deemed by HMRC to be taxable.
The amounts in the table below are the taxable expenses that the Company grossed up and paid the UK tax on, for the non-
executive directors. Non-taxable expense reimbursements have not been included in the table.
In line with pay increases across the business, non-executive director fees will increase by 3% to £78,909 with effect from 1 July
2024. The Board Chairman was also awarded an increase of 3% bringing the total aggregate fee to £675,305.
To reflect the time commitment, demands and responsibilities of Committee members, with effect from 1 July 2024, a membership
fee of £5,000 will be payable to non-executive directors serving on a Board Committee. The membership fee will not be paid to
the Chair of our committees, the Board Chairman or to members of the Nomination Committee.
Fee levels will again be reviewed in the year, ahead of any changes which would be effective 1 July 2025.
FIGURE 26: NON-EXECUTIVE DIRECTORS’ TOTAL SINGLE FIGURE REMUNERATION (AUDITED)
Director
Year
Basic fees
£000
Additional
fees
£000
Benefits
£000
Total
£000
Archie Norman
2023/24
2022/23
76
74
575
558
1
0
652
632
Andrew Fisher
2023/24
2022/23
76
74
51
28
1
0
128
102
Justin King
2023/24
2022/23
76
74
0
0
1
0
77
74
Tamara Ingram
2023/24
2022/23
76
74
20
20
0
0
96
94
Sapna Sood
2023/24
2022/23
76
74
0
0
0
0
76
74
Evelyn Bourke
2023/24
2022/23
76
74
20
16
0
0
96
90
Fiona Dawson
2023/24
2022/23
76
74
0
0
0
0
76
74
Ronan Dunne
2023/24
2022/23
76
50
0
0
0
0
76
50
Cheryl Potter
2023/24
2022/23
76
6
0
0
0
0
76
6
FIGURE 27: NON-EXECUTIVE DIRECTORS’ SHAREHOLDINGS (AUDITED)
The non-executive directors are not permitted to participate in any of the Company’s incentive arrangements. All non-executive
directors are required to build and maintain a shareholding of at least 2,000 shares in the Company upon joining M&S.
The table below details the shareholding of the non-executive directors who served on the Board during the year as at 30 March
2024, including those held by connected persons.
Changes in the current non-executive directors’ interests in shares in the Company and its subsidiaries between the end of the
financial year and 21 May 2024 are shown in the table below.
Director
Number of shares held
as at 30 March 2024
Number of shares held
as at 21 May 2024
Archie Norman
148,600
148,600
Andrew Fisher
4,243
4,243
Justin King
64,000
64,000
Tamara Ingram
2,000
2,000
Sapna Sood
2,000
2,000
Evelyn Bourke
50,000
50,000
Fiona Dawson
21,432
21,432
Ronan Dunne
25,000
25,000
Cheryl Potter
100,000
100,000
REMUNERATION REPORT CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
113
FIGURE 28: NON-EXECUTIVE DIRECTORS’ AGREEMENTS FOR SERVICE
Non-executive directors have an agreement for service for an initial three-year term which can be terminated by either party
giving three months’ notice (or six months’ notice for the Chairman).
The table below sets out these terms for all current members of the Board.
Director
Date of appointment
Notice period
Archie Norman
01/09/2017
6 months/6 months
Andrew Fisher
01/12/2015
3 months/3 months
Justin King
01/01/2019
3 months/3 months
Tamara Ingram
01/06/2020
3 months/3 months
Sapna Sood
01/06/2020
3 months/3 months
Evelyn Bourke
01/02/2021
3 months/3 months
Fiona Dawson
25/05/2021
3 months/3 months
Ronan Dunne
01/08/2022
3 months/3 months
Cheryl Potter
01/03/2023
3 months/3 months
REMUNERATION COMMITTEE MEMBERS
The Committee members during the year were Andrew Fisher (Committee Chair), Archie Norman, Fiona Dawson and Tamara
Ingram. The role and responsibilities of the Committee can be found on page 76.
REMUNERATION COMMITTEE ADVISERS
In carrying out its responsibilities, the Committee is independently advised by external advisers. The Committee was advised
by PwC during the year. PwC is a founding member of the Remuneration Consultants Group and voluntarily operates under
the code of conduct in relation to executive remuneration consulting in the UK. The code of conduct can be found at
remunerationconsultantsgroup.com.
The Committee has not explicitly considered the independence of the advice it receives, although it regularly reflects on the
quality and objectivity of this advice. The Committee is satisfied that any conflicts are appropriately managed.
PwC was appointed by the Committee as its independent adviser in 2014, following a rigorous and competitive tender process.
PwC provides independent commentary on matters under consideration by the Committee and updates on legislative
requirements, best practice and market practice. During the year, PwC charged £50,000 for Remuneration Committee matters.
This is based on an agreed fee for business as usual support, with additional work charged at hourly rates. PwC’s advisory team
has no connection with any individual director of the Group.
The Committee also seeks internal support from the CEO, CFO, General Counsel & Company Secretary, People Director, and the
Head of Reward as necessary. All may attend the Committee meetings by invitation but are not present for any discussions that
relate directly to their own remuneration.
The Committee also reviews external survey and bespoke benchmarking data, including that published by Aon Hewitt Limited,
KPMG, PwC, FIT Remuneration Consultants, Korn Ferry and Willis Towers Watson.
SHAREHOLDER SUPPORT FOR THE REMUNERATION POLICY AND 2022/23 DIRECTORS’ REMUNERATION REPORT
At the Annual General Meeting on 4 July 2023, 97.83% of shareholders voted in favour of the advisory resolution to approve
the Directors’ Remuneration Report for 2022/23. In addition, 97.74% of shareholders voted in favour of the Remuneration Policy.
The Committee believes this illustrates the strong level of shareholder support for the senior remuneration framework. Figure 29
below shows full details of the voting outcomes for the 2022/23 Directors’ Remuneration Report and Remuneration Policy.
FIGURE 29: VOTING OUTCOMES FOR THE REMUNERATION POLICY AND 2022/23 REMUNERATION REPORT
Member
Votes for
% Votes for
Votes against
% Votes against
Votes withheld
Remuneration Policy (at the 2023 AGM)
1,286,748,793
97.74
29,785,038
2.26
261,392
2022/23 Remuneration Report (at the 2023 AGM)
1,280,489,585
97.83
28,445,795
2.17
7,859,859
APPROVED BY THE BOARD
Andrew Fisher Chair of the Remuneration Committee
21 May 2024
The Remuneration Policy and this Remuneration Report have been prepared in accordance with the relevant provisions of the
Companies Act 2006 and on the basis prescribed in the Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (“the Regulations”). Where required, data has been audited by our external auditor, Deloitte, and
this is indicated appropriately.
GOVERNANCE
114
Marks and Spencer Group plc
OTHER DISCLOSURES
DIRECTORS’ REPORT
Marks and Spencer Group plc (the “Company”) is the holding
company of the Marks and Spencer Group of companies (the
“Group”).
The Directors’ Report for the year ended 30 March 2024
comprises pages 72 to 119 and pages 214 to 215 of this report,
together with the sections of the Annual Report incorporated
by reference. As permitted by legislation, some of the matters
required to be included in the Directors’ Report have instead
been included in the Strategic Report on pages 3 to 71, as the
Board considers them to be of strategic importance.
Specifically, these are:
– Future business developments (throughout the Strategic
Report).
– Risk management on pages 62 to 63.
– Information on how the directors have had regard for the
Company’s stakeholders, and the effect of that regard,
on pages 9 to 11.
The Strategic Report and the Directors’ Report together form
the Management Report for the purposes of the Disclosure
Guidance and Transparency Rules (“DTR”) 4.1.8R.
Information relating to financial instruments can be found on
pages 170 to 179 and is incorporated by reference.
For information on our approach to social, environmental and
ethical matters, please see our ESG Committee report on
pages 87 to 88, our ESG Review and TCFD Report on pages 42
to 58, and our ESG Report available on the dedicated
sustainability section of our website: corporate.
marksandspencer.com/sustainability.
Other information to be disclosed in the Directors’ Report is
given in this section.
The Directors’ Report fulfils the requirements of the Corporate
Governance Statement for the purposes of DTR 7.2.3R. The
Company’s full Corporate Governance Statement is available
online at corporate.marksandspencer.com/about-us/
corporate-governance.
Both the Strategic Report and the Directors’ Report have been
drawn up and presented in accordance with, and in reliance
upon, applicable English company law, and the liabilities of the
directors in connection with those reports shall be subject to
the limitations and restrictions provided by such law.
INFORMATION TO BE DISCLOSED UNDER LR 9.8.4R
Listing Rule
Detail
Page reference
9.8.4R (1) (2)
(5-14) (A) (B)
Not applicable
N/A
9.8.4R (4)
Long-term incentive schemes
96-97, 101-102, 106-109
BOARD OF DIRECTORS
The membership of the Board and biographical details of the
directors are provided on pages 74 to 75. There were no
changes to the directors during the year. The appointment and
replacement of directors is governed by the Company’s
Articles of Association (the “Articles”), the UK Corporate
Governance Code, the Companies Act 2006 and related
legislation. The Articles may be amended by a special
resolution of the shareholders. Subject to the Articles, the
Companies Act 2006 and any directions given by special
resolution, the business of the Company will be managed by
the Board who may exercise all the powers of the Company.
The directors may from time to time appoint one or more
directors. The Board may appoint any person to be a director
(so long as the total number of directors does not exceed the
limit prescribed in the Articles). Under the Articles, any such
director shall hold office only until the next Annual General
Meeting (“AGM”) where they will stand for annual election.
Details of directors’ beneficial and non-beneficial interests in
the shares of the Company are shown on pages 107 to 109 and
112. Options granted to directors under the Save As You Earn
(“SAYE”) and Executive Share Option Schemes are shown on
page 109. Further information regarding employee share
option schemes is provided in note 13 to the financial
statements on pages 159 to 161.
The Company may, by ordinary resolution, declare dividends
not exceeding the amount recommended by the Board.
Subject to the Companies Act 2006, the Board may pay interim
dividends and also any fixed rate dividend, whenever the
financial position of the Company, in the opinion of the Board,
justifies its payment.
NUMERICAL DIVERSITY DATA
Our gender identity and ethnicity data in accordance with
Listing Rule 9.8.6R(10) as at 30 March 2024 is set out below.
Board and Executive Committee (“ExCo”) members are asked
to complete a diversity disclosure to confirm which of the
categories set out below they identify with. Note, the CFO
is a member of ExCo but not a member of the Board.
Gender identity
Number of Board
members
% of the Board
Number of senior
positions on the Board
(CEO, CFO, SID and
Chair)
Number in ExCo
% of ExCo
Women
6
55
1
3
30
Men
5
45
3
7
70
Non-binary
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
Ethnic background
Number of Board
members
% of the Board
Number of senior
positions on the Board
(CEO, CFO, SID and
Chair)
Number in ExCo
% of ExCo
White British or other White (including
minority-White groups)
9
82%
3
8
80%
Mixed/Multiple Ethnic Groups
–
–
–
1
10%
Asian/Asian British
1
9%
–
–
–
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group, including Arab
–
–
–
–
–
Not specified/prefer not to say
1
9%
1
1
10%
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
115
DIRECTORS’ CONFLICTS OF INTEREST
The Company has procedures in place for managing conflicts
of interest. All directors are required to avoid situations in which
they have, or could have, a direct or indirect interest that
conflicts, or possibly may conflict, with the interests of the
Company. Should a director become aware that they, or any
of their connected parties, have an interest in an existing or
proposed transaction with the Company or its subsidiaries,
they should notify the Board in writing or at the next Board
meeting. Internal controls are in place to ensure that any
related party transactions involving directors, or their
connected parties, are conducted on an arm’s length basis.
Directors have a continuing duty to update any changes to
these conflicts.
DIRECTORS’ INDEMNITIES
The Company maintains directors’ and officers’ liability
insurance which provides appropriate cover for legal action
brought against its directors and officers. The Company has
also granted indemnities to each of its directors and the
Company Secretary to the extent permitted by law. Qualifying
third-party indemnity provisions (as defined by Section 234 of
the Companies Act 2006) were in force during the year ended
30 March 2024 and remain in force in relation to certain losses
and liabilities which the directors (or Company Secretary) may
incur to third parties in the course of acting as directors or
Company Secretary or employees of the Company or of any
associated company. Qualifying pension scheme indemnity
provisions (as defined by Section 235 of the Companies Act
2006) were in force during the course of the financial year
ended 30 March 2024 for the benefit of the Trustees of the
Marks & Spencer UK Pension Scheme, both in the UK and the
Republic of Ireland.
PROFIT AND DIVIDENDS
The profit for the financial year, after taxation, amounts to
£425.2m (last year £364.5m). The directors have declared
dividends as follows:
Ordinary shares
£m
Paid interim dividend of 1p per share
(last year no proposed interim dividend)
19.6
Proposed final dividend of 2p per share
(last year no proposed final dividend)
40.8
Total dividend of 3p per share for 2023/24
(last year no proposed dividend)
60.4
Subject to shareholder approval at this year’s AGM, the final
dividend will be paid on 5 July 2024 to shareholders whose
names were on the Register of Members at close of business on
31 May 2024.
SHARE CAPITAL
The Company’s issued ordinary share capital as at 30 March
2024 comprised a single class of ordinary share. Each share
carries the right to one vote at general meetings of the
Company.
During the financial year, 69,181,462 ordinary shares in the
Company were issued under the terms of the United Kingdom
Employees’ SAYE Share Option Scheme. 682,231 shares were
issued at a price of 151p, 68,193,661 shares at a price of 82p,
21,205 shares at a price of 189p, 14,169 shares at a price of 99p,
and a further 270,196 ordinary shares were issued at their
nominal value of 1p.
In addition, during the period, 6,240,430 ordinary shares were
issued at their nominal value of 1p to satisfy employee share
awards under the Company’s Performance Share Plan and
Restricted Share Plan.
Details of movements in the Company’s issued share capital
can be found in note 24 to the financial statements on page 181.
RESTRICTIONS ON TRANSFER OF SECURITIES
There are no specific restrictions on the transfer of securities in
the Company, which are governed by its Articles and prevailing
legislation. The Company is not aware of any agreements
between holders of securities that may result in restrictions
on the transfer of securities or that might result in restrictions
on voting rights.
VARIATION OF RIGHTS
Subject to applicable statutes, rights attached to any class
of share may be varied with the written consent of the holders
of at least three-quarters in nominal value of the issued shares
of that class, or by a special resolution passed at a separate
general meeting of the shareholders.
RIGHTS AND OBLIGATIONS ATTACHING TO SHARES
Subject to the provisions of the Companies Act 2006, any
resolution passed by the Company under the Companies Act
2006 and other shareholders’ rights, shares may be issued with
such rights and restrictions as the Company may by ordinary
resolution decide, or (if there is no such resolution or so far as
it does not make specific provision) as the Board may decide.
POWERS FOR THE COMPANY ISSUING OR BUYING BACK
ITS OWN SHARES
The Company was authorised by shareholders at the 2023 AGM
to purchase in the market up to 10% of the Company’s issued
share capital, as permitted under the Company’s Articles. No
shares were bought back under this authority during the year
ended 30 March 2024 and up to the date of this report. This
standard authority is renewable annually; the directors will
seek to renew it at the 2024 AGM.
The directors were granted authority at the 2023 AGM to allot
relevant securities up to a nominal amount of £6,550,886.24.
This authority will apply until the conclusion of the 2024 AGM.
At this year’s AGM, shareholders will be asked to grant an
authority to allot relevant securities (i) up to a nominal amount
of £6,823,061.67 and (ii) comprising equity securities up to a
nominal amount of £13,646,123.34 (after deducting from such
limit any relevant securities allotted under (i)), in connection
with a pre-emptive offer (the Section 551 amount), such Section
551 amount to apply until the conclusion of the AGM to be held
in 2025 or on 1 October 2025, whichever is sooner.
At the 2023 AGM, two separate special resolutions were passed
empowering the directors to allot equity securities for cash
without first offering them to existing shareholders in
proportion to their existing holdings. A special resolution will
be proposed at the 2024 AGM to renew the directors’ powers –
in line with the latest institutional shareholder guidelines – to
make non-pre-emptive issues for cash only and otherwise up
to a nominal amount of £2,046,918.50. In addition, a separate
special resolution will be proposed to authorise directors to
make non-pre-emptive issues for cash in connection with
acquisitions or specified capital investments, up to a further
nominal amount of £2,046,918.50. In both cases an additional
follow-on offer, up to a nominal amount equal to 20% of any
allotment made under either special resolution can be made
to existing holders of securities not allocated shares under the
allotment, as envisaged by paragraph 3 of Section 2B of the
Statement of Principles on Disapplying Pre-Emption Rights
issued by the Pre-Emption Group in November 2022.
GOVERNANCE
116
Marks and Spencer Group plc
A special resolution will also be proposed to renew the
directors’ authority to repurchase the Company’s ordinary
shares in the market. The authority will be limited to a
maximum of 204,691,850 ordinary shares and sets the
minimum and maximum prices which would be paid.
DEADLINES FOR EXERCISING VOTING RIGHTS
Votes are exercisable at a general meeting of the Company in
respect of which the business being voted upon is being heard.
Votes may be exercised in person, by proxy or, in relation to
corporate members, by corporate representatives. The Articles
provide a deadline for submission of proxy forms of not less
than 48 hours before the time appointed for the holding of
the meeting or adjourned meeting. However, when calculating
the 48-hour period, the directors can, and have, decided not
to take account of any part of a day that is not a working day.
SIGNIFICANT AGREEMENTS – CHANGE OF CONTROL
There are a number of agreements to which the Company
is party that take effect, alter or terminate upon a change
of control of the Company following a takeover bid. Details
of the significant agreements of this kind are as follows:
– The $300m US Notes issued by the Company to various
institutions on 6 December 2007 under Section 144a of the
US Securities Act contain an option such that, upon a change
of control event, combined with a credit ratings downgrade,
any holder of such a US Note may require the Company to
prepay the principal amount of that US Note.
– The £850m Credit Agreement dated 13 December 2021
between the Company and various banks contains a
provision such that, upon a change of control event, unless
new terms are agreed within 60 days, the facility under this
agreement will be cancelled with all outstanding amounts
becoming immediately payable with interest.
The Company does not have agreements with any director or
employee that would provide compensation for loss of office or
employment resulting from a takeover except that provisions
of the Company’s share schemes and plans may cause options
and awards granted to employees under such schemes and
plans to vest on a takeover.
INTERESTS IN VOTING RIGHTS
Information provided to the Company pursuant to the Financial Conduct Authority’s DTRs is published on a Regulatory
Information Service and on the Company’s website. As at 30 March 2024, the following information has been received,
in accordance with DTR 5, from holders of notifiable interests in the Company’s issued share capital.
The information provided below was correct at the date of notification; however, the date it was received may not have been
within the current financial year. It should be noted that these holdings are likely to have changed since the Company was
notified. However, notification of any change is not required until the next notifiable threshold is crossed.
Notifiable interests
% of capital disclosed
Date notified
Ameriprise Financial, Inc
4.978
7 March 2024
RWC Asset Management LLP
4.937
12 February 2024
Schroders plc
4.760152
20 September 2023
BRANCHES
In accordance with the Companies Act 2006 and the Disclosure
and Transparency Rules, the Group discloses below the
subsidiary companies that have branches outside the UK:
– Marks and Spencer plc: Isle of Man.
– Marks and Spencer (Shanghai) Limited: Dongguan.
COLLEAGUE INVOLVEMENT
We remain committed to colleague involvement throughout
the business. Examples of colleague involvement and
engagement, and information on our approach to our
workforce, are highlighted throughout this Annual Report
and specifically on pages 8 to 9, 38 to 41, 81 and 98 to 99.
Share schemes are a long-established and successful part
of colleagues’ total reward packages, encouraging and
supporting employee share ownership. The Company operates
both an all-employee SAYE Scheme and a Share Incentive Plan.
As at 30 March 2024, 13,234 colleagues were participating in the
Company’s SAYE Scheme. Full details of all schemes are given
on pages 159 to 161.
There are websites for both pension schemes – the defined
contribution scheme (Your M&S UK Pension Saving Plan) and
the defined benefit scheme (the Marks & Spencer UK Pension
Scheme) – which are fully accessible to colleagues and former
colleagues who have retained benefits in either scheme.
Colleagues are updated as needed with any pertinent
information on their pension savings.
OTHER DISCLOSURES CONTINUED
INTRODUCTION
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Annual Report & Financial Statements 2024
117
EQUAL OPPORTUNITIES
The Group is committed to an active approach to Diversity,
Equity and Inclusion (“DE&I”). Our strategy is built on two pillars
– driving improved diverse representation at all levels of the
business and developing a continually evolving inclusive
culture. Providing a safe space for colleagues is a fundamental
principle, with respect for each other being the foundation
of our DE&I approach. We are clear that any forms of
discrimination, harassment, bullying and victimisation are not
tolerated, with processes in place to ensure any allegations are
handled effectively.
Our colleagues are central to the design of our plans, with our
eight Inclusion and Diversity Networks at the heart of bringing
our communities together, amplifying the voice of our
colleagues and guiding the business. We have over 10,000
members within our networks.
Whilst our approach is designed around all colleagues, from all
backgrounds, all levels and all business areas, we have
particular focus on the experience and representation of
women and colleagues from ethnic minority backgrounds.
We have made good progress against our ambition to become
the leading employer for women in retail, reaching our target
of 50% of senior leader roles held by women and driving strong
representation in our talent pipelines.
We have taken action to better understand the experiences and
challenges of colleagues from ethnic minority backgrounds
and have much to do in this space, but are confident that we
have effective plans in place to address these and drive
improved representation across the business.
We have reset our target for ethnic minority representation
in senior leader roles, and aim to have 12% ethnic minority
representation by 2027, and 20% representation by 2030. We
are committed to taking the necessary steps to achieve this,
and have established a clear framework of KPIs to measure our
progress towards this, as well as strengthening the diversity
within our talent pipelines. More information on our ethnic
minority targets and how this relates to the Parker Review
recommendation can be found in our Nomination Committee
report on page 85.
More information on our inclusion and diversity initiatives can
be found on pages 38 to 41, and pages 85 to 86.
EMPLOYEES WITH DISABILITIES
The Company is clear in its commitment to support colleagues
and candidates with both visible and non-visible accessibility
challenges and health conditions. We have continued to
demonstrate our commitment to interviewing those applicants
with disabilities who fulfil the minimum criteria. We are
proactive in taking steps to support colleagues through health
and wellbeing reviews and reasonable adjustments, and our
colleague health and wellbeing network provides an additional
space for colleagues to access available support. We continue
to provide workplace opportunities through our innovative
Marks and Start scheme, working closely with The Prince’s Trust
and Jobcentre Plus.
RESEARCH & DEVELOPMENT
Research and innovation remain key to our Food and Clothing
& Home offers, enabling the development of better products.
Further information is available on our corporate website:
corporate.marksandspencer.com, and in our ESG Report 2024.
GROCERIES SUPPLY CODE OF PRACTICE
The Groceries (Supply Chain Practices) Market Investigation
Order 2009 (the “Order”) and The Groceries Supply Code of
Practice (the “Code”) impose obligations on M&S regarding its
relationships with its suppliers of groceries. Under the Order
and Code, M&S is required to submit an annual compliance
report to the Audit & Risk Committee for approval and then to
the Competition and Markets Authority and Groceries Code
Adjudicator (“GCA”).
M&S submitted its report, covering the period from 2 April 2023
to 30 March 2024 to the Audit & Risk Committee on 9 May 2024.
It was approved on 16 May 2024.
In accordance with the Order, a summary of that compliance
report is set out below.
M&S believes that it has materially complied with the Code and
the Order during the relevant period. No formal disputes under
the Code have arisen during the reporting period. There have
been three instances during the reporting period in which
suppliers have either alleged a breach or made a reference to
potential non-compliance with the Code. M&S has worked with
the suppliers to address the issues raised and all of them have
been resolved or closed, with no issues remaining open. Two
Code references made by suppliers before 2 April 2023 were
also closed during the reporting period.
A detailed summary of the compliance report is available on
our corporate website: corporate.marksandspencer.com.
GOVERNANCE
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Marks and Spencer Group plc
ANTI-BRIBERY & CORRUPTION
Our Anti-Bribery & Corruption (“ABC”) Policy outlines the
expected standards of conduct that colleagues, contractors,
suppliers, business partners and any other third parties who
act for or on behalf of M&S are obliged to follow.
Our programme includes detailed procedures and controls
around giving and receiving gifts, hospitality and
entertainment; procedures for engaging new suppliers and
partners, specifically those who are based in higher-risk
jurisdictions; standard contract clauses; and clear reporting
channels, including confidential reporting.
All colleagues are required to undertake mandatory ABC
e-learning. The Company will consider taking disciplinary
action against anyone who fails to comply with its ABC Policy,
up to and including dismissal. Any potential incidents reported
internally, or to the external confidential reporting channels,
are followed up and full investigations launched where such
action is deemed appropriate after preliminary enquiries. All
investigations are subsequently reported to the Audit & Risk
Committee. Bribery Risk Assessments are conducted on an
annual basis with outcomes reported to the Audit & Risk
Committee.
POLITICAL DONATIONS
The Company did not make any political donations or incur any
political expenditure during the year ended 30 March 2024.
M&S has a policy of not making donations to political
organisations or independent election candidates or incurring
political expenditure anywhere in the world as defined in the
Political Parties, Elections and Referendums Act 2000.
GOING CONCERN
In adopting the going concern basis for preparing the financial
statements, the directors have considered the business
activities as set out on pages 12 to 27, the financial position
of the Group, its cash flows, liquidity position and borrowing
facilities as set out in the Financial Review on pages 29 to 37, the
Group’s financial risk management objectives and exposures to
liquidity and financial risks as set out in note 21 to the financial
statements, as well as the Group’s principal risks and
uncertainties as set out on pages 64 to 70.
Based on the Group’s cash flow forecasts, the Board expects
the Group to have adequate resources to continue in operation,
meet its liabilities as they fall due, retain sufficient available
cash and not breach the covenant under its revolving credit
facility for the foreseeable future, being a period of at least 12
months from the approval of the financial statements. The
Board therefore considers it appropriate for the Group to adopt
the going concern basis in preparing its financial statements.
See note 20 to the financial statements for more information
on our facilities.
LONG-TERM VIABILITY STATEMENT
The directors have assessed the prospects of the Company
over a three-year period to March 2027. This has taken into
account the business model, strategic aims, risk appetite, and
principal risks and uncertainties, along with the Company’s
current financial position. Based on this assessment, the
directors have a reasonable expectation that the Company will
be able to continue in operation and meet its liabilities as they
fall due over the three-year period under review.
See our approach to assessing long-term viability on page 71.
AUDITOR
Resolutions to reappoint Deloitte LLP as auditor of the
Company and to authorise the Audit & Risk Committee to
determine its remuneration will be proposed at the 2024 AGM.
ANNUAL GENERAL MEETING
The AGM of Marks and Spencer Group plc will be a digitally-
enabled meeting, broadcast from M&S’ Waterside House
support centre on 2 July 2024 at 11am. If a shareholder wishes
to attend the AGM in person, seats will be allocated on a
first-come first-served basis. Shareholders are requested to
register their intention to do so in advance, so we can manage
capacity on the day. The Notice of Meeting is given, together
with explanatory notes and guidance on how to access the
meeting and vote, on pages 202 to 213.
DIRECTORS’ RESPONSIBILITIES
The Board is of the view that the Annual Report should be truly
representative of the year and provide shareholders with the
information necessary to assess the Group’s position,
performance, business model and strategy.
The Board requested that the Audit & Risk Committee review
the Annual Report and provide its opinion on whether the
report is fair, balanced and understandable. The Audit & Risk
Committee’s opinion is on page 92.
The directors are also responsible for preparing the Annual
Report, the Remuneration Report and Policy and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
are required to prepare the Group financial statements in
accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006
and International Financial Reporting Standards (“IFRS”) as
adopted by the UK. Under company law, the directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and the Company and of the profit or loss of the Group and the
Company for that period.
In preparing these financial statements, the directors are
required to:
– Select suitable accounting policies and then apply them
consistently.
– Make judgements and accounting estimates that are
reasonable and prudent.
– State whether applicable IFRS (as adopted by the UK) have
been followed, subject to any material departures disclosed
and explained in the financial statements.
– Prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
OTHER DISCLOSURES CONTINUED
INTRODUCTION
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119
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to
ensure the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets
of the Group and the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Each of the current directors, whose names and functions are
listed on pages 74 and 75, confirms that, to the best of their
knowledge:
– The Group financial statements, prepared in accordance with
the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the
consolidation taken as a whole.
– The Management Report includes a fair review of the
development and performance of the business and the
position of the Company and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face.
– The Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the necessary information for
shareholders to assess the Group’s position, performance,
business model and strategy.
DISCLOSURE OF INFORMATION TO AUDITOR
Each of the persons who are directors at the time when this
Directors’ Report is approved confirms that, so far as they are
aware, there is no relevant audit information of which the
Company’s auditor is unaware and that they have taken all the
steps that they ought to have taken as a director to make
themselves aware of any relevant audit information and to
establish that the Company’s auditor is aware of that
information.
The Directors’ Report was approved by a duly authorised
committee of the Board of Directors on 21 May 2024 and
signed on its behalf by
NICK FOLLAND
General Counsel & Company Secretary
London, 21 May 2024
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120
Marks and Spencer Group plc
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF MARKS AND SPENCER GROUP PLC
We have audited the financial statements
which comprise:
– the Consolidated Income Statement;
– the Consolidated Statement of
Comprehensive Income;
– the Consolidated and Parent Company
Statements of Financial Position;
– the Consolidated and Parent Company
Statements of Changes in Equity;
– the Consolidated and Parent Company
Statements of Cash Flows; and
– the related notes 1 to 31 and C1 to C7.
The financial reporting framework that
has been applied in their preparation is
applicable law and United Kingdom
adopted international accounting
standards and, as regards the Parent
Company financial statements, as
applied in accordance with the provisions
of the Companies Act 2006.
2. BASIS FOR OPINION
We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards
are further described in the auditor’s
responsibilities for the audit of the
financial statements section of our
report.
We are independent of the Group and the
Parent Company in accordance with the
ethical requirements that are relevant to
our audit of the financial statements in
the UK, including the Financial Reporting
Council’s (the “FRC’s”) Ethical Standard as
applied to listed public interest entities,
and we have fulfilled our other ethical
responsibilities in accordance with these
requirements. The non-audit services
provided to the Group and Parent
Company for the year are disclosed in
note 4 to the financial statements. We
confirm that we have not provided any
non-audit services prohibited by the
FRC’s Ethical Standard to the Group or
the Parent Company.
We believe that the audit evidence we
have obtained is sufficient and
appropriate to provide a basis for our
opinion.
Report on the audit of the financial statements
1. OPINION
Key audit matters
The key audit matters that we identified in the current year were:
– impairment and impairment reversal of UK store assets;
– accounting for the Store Estate programme;
– disclosure of adjusting items as part of alternative
performance measures; and
– fair value of Ocado contingent consideration.
Materiality
The materiality that we used for the Group financial statements
was £34.0m (2023: £24.0m) which was determined by considering
a number of different metrics used by investors and other
readers of the financial statements. These included:
– profit before tax;
– profit before tax and adjusting items;
– earnings before interest, tax, depreciation and amortisation
(“EBITDA”); and
– revenue.
Scoping
We have performed a full-scope audit on the UK component of
the business. Balances subject to full scope audit represents 92%
(2023: 93%) of Group revenue, 97% (2023: 90%) of profit before tax
and adjusting items, 98% (2023: 81%) of profit before tax, 72%
(2023: 78%) of total assets and 79% (2023: 84%) of total liabilities.
We perform specified audit procedures in relation to the India
business and analytical procedures on residual balances.
Significant changes in our approach
The changes made to the key audit matters during the current
year are the addition of fair value of Ocado contingent
consideration and the removal of inventory provisions within UK
Clothing & Home.
– As a result of the impact on our audit strategy and allocation
of resources, we have identified the fair value of contingent
consideration arising from the arrangement with Ocado as a
key audit matter in the current period.
– In the prior period inventory provisions within UK Clothing &
Home was identified as a key audit matter given the quantum
of UK Clothing & Home gross inventory and the judgement
required in assessing the future salability of products in a
challenging trading environment. Due to the continued
improvement in trading performance, there is a reduction in
the level of uncertainty associated with estimating the
required provision and accordingly we have not identified
inventory provisions for UK Clothing & Home as a key audit
matter in the current period.
– We have reduced the risk on impairment and impairment
reversal of UK store assets due to the recent performance of
UK store estate coupled with an improvement in business
performance resulting in the level of risk reducing. We have
continued to identify this as a key audit matter as a result of
the level of audit effort in responding to this matter.
3. SUMMARY OF OUR AUDIT APPROACH
In our opinion:
– the financial statements of Marks and
Spencer Group plc (the ‘Parent
Company’) and its subsidiaries (the
‘Group’) give a true and fair view of the
state of the Group’s and of the Parent
Company’s affairs as at 30 March 2024
and of the Group’s profit for the 52
weeks then ended;
– the Group financial statements have
been properly prepared in accordance
with United Kingdom adopted
international accounting standards;
– the Parent Company financial
statements have been properly
prepared in accordance with United
Kingdom adopted international
accounting standards and as applied in
accordance with the provisions of the
Companies Act 2006; and
– the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
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121
4. CONCLUSIONS RELATING TO
GOING CONCERN
In auditing the financial statements, we
have concluded that the directors’ use of
the going concern basis of accounting in
the preparation of the financial
statements is appropriate.
Our evaluation of the directors’
assessment of the Group’s and Parent
Company’s ability to continue to adopt
the going concern basis of accounting
included:
– obtaining an understanding of relevant
controls relating to the assessment of
going concern models, including the
review of the inputs and assumptions
used in those models;
– obtaining management’s board-
approved three-year cash flow
forecasts and covenant compliance
forecasts, including sensitivity analysis;
– reviewing the entity’s assessment of
going concern and viability, including
the three-year plan, as set out in their
paper to the Audit & Risk Committee;
– assessing the appropriateness of
forecast assumptions by:
– reading analyst reports, industry
data and other external information
and comparing these with
management’s estimates;
– comparing forecast sales with recent
historical financial information to
consider accuracy of forecasting;
– testing the underlying data
generated to prepare the forecast
scenarios and to determine whether
there was adequate support for the
assumptions underlying the
forecast;
– reviewing correspondence relating
to the availability of the Group’s
financing arrangements;
– assessing the impact of macro-
economic conditions on the business;
– considering the results of the
sensitivity analyses performed; and
– evaluating the adequacy of the
Group’s disclosures on going
concern in the financial statements.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or
conditions that, individually or
collectively, may cast significant doubt
on the Group’s and Parent Company’s
ability to continue as a going concern for
a period of at least twelve months from
when the financial statements are
authorised for issue.
In relation to the reporting on how the
Group has applied the UK Corporate
Governance Code, we have nothing
material to add or draw attention to in
relation to the directors’ statement in the
financial statements about whether the
directors considered it appropriate to
adopt the going concern basis of
accounting.
Our responsibilities and the
responsibilities of the directors with
respect to going concern are described
in the relevant sections of this report.
5. KEY AUDIT MATTERS
Key audit matters are those matters that,
in our professional judgement, were of
most significance in our audit of the
financial statements of the current
period and include the most significant
assessed risks of material misstatement
(whether or not due to fraud) that we
identified. These matters included those
which had the greatest effect on: the
overall audit strategy; the allocation of
resources in the audit; and directing the
efforts of the engagement team.
These matters were addressed in the
context of our audit of the financial
statements as a whole, and in forming our
opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter description
As at 30 March 2024 the Group held
£3,554.5 million (2023: £3,452.5 million) of
UK store assets in respect of stores not
considered for closure within the store
estate programme. In accordance with IAS
36 Impairment of Assets, the Group has
undertaken an annual assessment of
indicators of impairment. An impairment
charge of £0.5 million (2023: £17.3 million)
and a reversal of previously recognised
impairment charges of £35.6 million
(2023: £33.1 million) have been recognised.
As described in note 15 to the financial
statements, the Group has estimated the
recoverable amount of store assets based
on their value in use, derived from a
discounted cash flow model prepared by
the entity. The model relies on certain
assumptions and estimates of future
trading performance, incorporating
committed strategic changes to the UK
Clothing & Home and Food businesses
and the performance of new stores
operating within their shelter period
(which takes into account the time new
stores take to establish themselves in the
market), all of which involve a degree of
estimation uncertainty (as disclosed in
note 15).
The key assumptions applied by
management in the impairment reviews
performed are:
– future revenue growth and changes in
gross margin;
– long term growth rates; and
– discount rates.
The Audit & Risk Committee considers this
to be a significant matter. Their
consideration is on page 91.
How the scope of our audit responded to the key audit matter
In responding to the identified key audit
matter, we completed the following audit
procedures:
– obtained an understanding of relevant
controls relating to the impairment
review process;
– assessed and challenged the entity’s
range of impairment indicators and
indicators of reversal with due
consideration given to the profitability
impact of committed strategic changes
to the UK Clothing & Home and Food
businesses and the performance of
new stores;
– assessed the mechanical accuracy of
the impairment models and the
methodology applied by the entity for
consistency with the requirements of
IAS 36;
– assessed the appropriateness of
forecast revenue and gross margin
growth rates through comparison with
external economic benchmarking data
and with reference to historical
forecasting accuracy;
– assessed the appropriateness of the
discount rates applied with the
involvement of our valuations
specialists and compared the rates
applied with our benchmarking data;
– performed profiling of all stores’ data to
provide insights into store performance
and to identify any outliers;
– evaluated the appropriateness and
completeness of information included
in the impairment model based on our
cumulative knowledge of the business
driven by our review of trading plans,
strategic initiatives, minutes of property
and investment committee meetings,
and meetings with regional store
managers and senior trading managers
from key product categories, together
with our wider retail industry
knowledge; and
– assessed the completeness and
accuracy of disclosure within the
financial statements in accordance
with IFRS.
5.1. Impairment and impairment reversal of UK store assets
FINANCIAL STATEMENTS
122
Marks and Spencer Group plc
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF MARKS AND SPENCER GROUP PLC CONTINUED
Key observations
We are satisfied that the judgements applied, impairment charges and reversals recorded and disclosures within the financial
statements are appropriate.
Key audit matter description
In February 2018, the Board approved a
list of stores marked for closure as part
of its Store Estate programme. The total
charge recognised in connection with
this closure programme in previous
periods was £870 million. A further net
charge of £93 million has been
recognised in the current period as a
result of:
– an increase in the number of stores
assessed as probable for closure and
the update of estimates made in light
of known developments in the exit
strategy, including current trading
performance, negotiations with
landlords and changes in the retail
property market;
– depreciation of store assets where
previously identified for closure, as
they approach their planned closure
dates; and
– accelerated depreciation and
impairment of buildings and fixtures
and fittings in respect of additional
stores added to the programme.
Further information is set out in notes 1,
where this matter is also disclosed as a
key source of estimation uncertainty, 5
and 15 to the financial statements and
page 16 of the strategic report.
Our key audit matter was focused on
the specific assumptions applied in the
discounted cash flow analysis prepared
by the entity including the discount
rate, expected sublet income, sublet
lease incentives, void periods, freehold
sales proceeds, leasehold surrender
costs and store closure costs.
The Audit & Risk Committee considers
this to be a significant matter. Their
consideration is on page 91.
How the scope of our audit responded to the key audit matter
In responding to the identified key audit
matter, we completed the following
audit procedures:
– obtained an understanding of
relevant controls relating to the
review and approval of the Group’s
UK store exit model;
– performed enquiries of the Board and
inspected the latest strategic plans,
Board and relevant sub-committee
minutes of meetings;
– understood and challenged the basis
of the entity’s judgement where
stores previously marked for closure
are no longer expected to close and
additional stores have been identified
for closure;
– with the involvement of our real
estate specialists, we evaluated the
appropriateness of the entity’s
judgements for a representative
sample of properties and
benchmarked with reference to
external data;
– assessed the mechanical accuracy of
discounted cash flow models and
other key provision calculations;
– assessed the integrity of key inputs to
the discounted cash flow models
including the discount rate, store
closure costs, freehold sales
proceeds, leasehold surrender costs,
expected sublet income, sublet lease
incentives and void periods with
reference to available evidence;
– recalculated the closing provision for
a representative sample of stores;
– evaluated the accuracy and
completeness of provisions recorded
in light of the status of the Group’s
store estate plan; and
– assessed the completeness and
accuracy of disclosures within the
financial statements in accordance
with IFRS.
Key observations
We are satisfied that the Group’s estimate of the store exit charges and the associated disclosures are appropriate.
5.2. Accounting for the Store estate programme
INTRODUCTION
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FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
123
Key audit matter description
The Group has presented an alternative
performance measure being profit
before tax and adjusting items of £716.4
million (2023 restated: £453.3 million),
which is derived from profit before tax
of £672.5 million (2023: profit before tax
of £475.7 million) adjusted for a number
of items totalling £43.9 million (2023:
restated net credit of £22.4 million)
which the Group considers meet their
definition of an ‘adjusting item’. Due to a
change in the Group’s classification of
pension net finance income as an
adjusting item (refer to note 1), the
comparative amounts have been
restated. Judgement is exercised by the
entity in determining the classification
of such items in accordance with
guidance issued by the FRC and ESMA.
We consider there to be a risk of fraud in
the reporting of adjusting items within
the alternative performance measures.
Explanations of each adjusting item
are set out in note 5 to the financial
statements and are summarised in
the graphic.
Statutory PBT
Store estate
UK logistics
Organisation
Store impairments
Ocado related
Furniture
simplification
Adjusted PBT
Gist
M&S Bank
transformation
Net pension interest
£’ million
672.5
93.0
3.5
7.0
8.6
716.4
18.3
(5.3)
(35.1)
(22.1)
(24.0)
660.0
680.0
700.0
720.0
740.0
760.0
780.0
In determining profit before tax and
adjusting items, we identified the
following risks:
– the identification and classification of
items as ‘adjusting’ as part of the
presentation of alternative
performance measures may be
inappropriate, distorting the reported
results;
– the omission of items which are
considered material, one-off or
significant in nature, distorting the
alternative performance measures;
and
– the clarity and detail of disclosures in
respect of adjusting items as part of
alternative performance measures
may be insufficient, preventing
investors from obtaining a clear
understanding of the Group’s results
and performance.
The Group’s policy regarding adjusting
items is set out in note 1, where this is
also highlighted as a critical accounting
judgement. This is a significant matter
considered by the Audit & Risk
Committee on page 91.
How the scope of our audit responded to the key audit matter
In responding to the identified key audit
matter we completed the following
audit procedures:
– obtained an understanding of
relevant controls, relating to the
identification and disclosure of
adjusting items within alternative
performance measures;
– performed enquiries of the entity to
understand the rationale applied in
identifying items as adjusting and
completed an independent
assessment as to the selection and
presentation of adjusting items based
on their nature;
– assessed the identification and
consistency of items reported as
adjusting period on period, with
reference to guidance published by
ESMA and the FRC;
– performed tests over a
representative sample of adjusting
items through agreement to
supporting evidence;
– benchmarking certain adjusting
items identified by the entity with
comparable companies;
– use of our cumulative audit
knowledge and applied data analytics
to identify other transactions outside
of the normal course of business, or
which display characteristics of being
material, significant or one-off in
nature;
– considered the impact of adjusting
items on the directors’ remuneration
targets to determine whether any
increased fraud risk factor existed
based on actual results for the period;
and
– assessed the completeness and
accuracy of disclosures within the
financial statements in accordance
with IFRS.
Key observations
The value of adjusting items results in a material difference between the statutory and adjusted results. We are satisfied the
adjusting items in their classification and presentation is consistent with the Group’s policy and the amounts are appropriate.
5.3. Disclosure of adjusting items as part of alternative performance measures
FINANCIAL STATEMENTS
124
Marks and Spencer Group plc
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF MARKS AND SPENCER GROUP PLC CONTINUED
Key audit matter description
As described in note 21 to the financial
statements, the purchase of 50% of
Ocado Retail Limited (“ORL”) from
Ocado Group PLC (“Ocado”) in August
2019 included contingent consideration
equal to £156.3m, plus interest, that is
contingent on ORL achieving certain
performance targets (“the Target”) in
the financial year to November 2023.
This is based on the contractual terms
and the outcome is binary such that if
the measure is not met or exceeded, no
amount is payable by M&S to Ocado.
The measurement period has ended
with the Target not met. The share
purchase agreement contains a
mechanism for reasonable adjustments
to be made to the Target by either
shareholder to reflect certain events, if
applicable. No adjustments have been
made at this point in time.
The contingent consideration
represents a financial liability and is
accounted for in accordance with IFRS 9
Financial Instruments and measured at
fair value under IFRS 13 Fair Value
Measurement. The group has recorded
a liability of £nil (FY23: £64.7m). As
described on page 91, the entity has
estimated the fair value using the
expected present value technique that
is based on a number of probability-
weighted possible scenarios that a
market participant would consider in
valuing the contract.
As a result of the impact on our audit
strategy and allocation of resources, we
have identified the fair value of Ocado
contingent consideration as a key audit
matter. Further information related to
this area is set out in the Audit & Risk
Committee report on page 91, in note 21
and in note 1 to the group financial
statements.
How the scope of our audit responded to the key audit matter
In responding to the identified key audit
matter we completed the following
audit procedures:
– reviewed the terms of the share
purchase agreement and
shareholders’ agreement to identify
and consider clauses that are relevant
to determining a fair value of the
contingent consideration;
– obtained an understanding of
relevant controls, relating to the
determination of the fair value of
the contingent consideration;
– assessed the competence,
capabilities and objectivity of
the Group’s external advisors;
– held partner-led enquiries with senior
management and the Group’s
external advisors to challenge the
judgements adopted by the entity
in their assessment;
– inspected evidence for the estimates
and judgements adopted by the
entity in their qualitative and
quantitative assessment of the fair
value of the liability;
– involved our valuations and disputes
resolution specialists to challenge
the entity’s methodology and
assumptions and to search for
potential contradictory evidence
to the judgements adopted by
management;
– developed an independent range
using probability-weighted scenario-
based models and comparing this
with the Group’s valuation; and
– assessed the completeness and
accuracy of the Group’s disclosures
in accordance with IFRS.
Key observations
We are satisfied that the judgements applied, the fair value recorded, and disclosures within the financial statements are
reasonable.
5.4. Fair value of Ocado contingent consideration
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
125
Group financial statements
Parent Company financial statements
Materiality
£34.0 million (2023: £24.0 million)
£30.6 million (2023: £21.6 million)
Basis for
determining
materiality
We consider the following metrics in
the current and prior period:
– profit before tax and adjusting
items;
– profit before tax;
– earnings before interest, tax,
depreciation and amortisation
(“EBITDA”); and
– revenue.
Using professional judgement, we
determined materiality to be
£34.0m based on the four key
metrics above. The increase in
materiality primarily reflects the
year-on-year increase in the
profitability of the Group.
We have used 3% of net assets
in both the current and the
prior period, capped at 90% of
Group materiality, as the basis
for materiality.
Rationale
for the
benchmark
applied
In determining our benchmark for
materiality, we have used the same
approach as last year where we have
considered a number of different
metrics used by investors and other
readers of the financial statements.
Group materiality represents:
Metric
%
Profit before tax
5.1
Profit before tax
and adjusting items
4.7
EBITDA
2.5
Revenue
0.3
Net assets is used as the
benchmark as the Parent
Company operates primarily as
a holding company for the
Group and we therefore
consider this as the key metric
for the Parent Company.
We capped materiality at 90%
of Group materiality to reduce
the risk of a material error
arising as a result of the
consolidation of the Parent
Company’s result in the Group
financial statements.
Group financial statements
Parent Company financial statements
Performance
materiality
65% (2023: 65%) of Group
materiality
65% (2023: 65%) of Parent
Company materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following
factors:
– our cumulative knowledge of the Group and its environment,
including industry specific trends;
– the change in the level of judgement required in key accounting
estimates;
– reliability on internal control over financial reporting;
– the level of change to the business in the period;
– the stability in key management personnel;
– the level of centralisation in the Group’s financial reporting
controls and processes; and
– the level of misstatements identified in prior periods, both
corrected and uncorrected.
6. OUR APPLICATION OF MATERIALITY
6.1. Materiality
We define materiality as the magnitude
of misstatement in the financial
statements that makes it probable that
the economic decisions of a reasonably
knowledgeable person would be
changed or influenced. We use
materiality both in planning the scope of
our audit work and in evaluating the
results of our work.
Based on our professional judgement, we
determined materiality for the financial
statements as a whole as follows:
6.2. Performance materiality
We set performance materiality at a level
lower than materiality to reduce the
probability that, in aggregate,
uncorrected and undetected
misstatements exceed the materiality for
the financial statements as a whole.
FINANCIAL STATEMENTS
126
Marks and Spencer Group plc
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF MARKS AND SPENCER GROUP PLC CONTINUED
6.3. Error reporting threshold
We agreed with the Audit & Risk
Committee that we would report to the
Committee all audit differences in excess
of £1.7 million (2023: £1.2 million), as well
as differences below that threshold that,
in our view, warranted reporting on
qualitative grounds. We also report to
the Audit & Risk Committee on disclosure
matters that we identified when
assessing the overall presentation of
the financial statements.
7. AN OVERVIEW OF THE SCOPE
OF OUR AUDIT
7.1. Identification and scoping
of components
Our audit was scoped by obtaining an
understanding of the Group and its
environment, including Group-wide
controls, and assessing the risks of
material misstatement at the Group level.
Components were selected to provide an
appropriate basis for undertaking audit
work to address the risks of material
misstatement identified. Based on our
assessment we have focused our audit on
the UK and India businesses which were
subject to full scope audit procedures
and specified audit procedures
respectively. We have performed our full
scope audit of the UK component using a
materiality of £30.6 million (or 90.0% of
Group materiality) (2023: £21.6 million),
and our specified audit procedures in
India using a component materiality of
£5.0 million (or 14.7% of Group
materiality) (2023: £3.5 million).
The Group holds 50% of the ordinary
shares of Ocado Retail Ltd (‘ORL’).
This interest is accounted for as an
investment in associate in accordance
with IAS 28 on the basis that the
shareholders’ agreement gives control
over ORL to Ocado Group plc. In the
current period the Group recorded a
share of loss of associate from ORL of
£79.9 million (2023: £43.5 million) and was
subject to specified audit procedures.
At a Group level, we tested the
consolidation and performed analytical
review procedures over components not
in scope.
REVENUE
Full audit
scope
92%
Specified audit
procedures
0%
Review at
group level
8%
ADJUSTED PROFIT BEFORE TAX
Full audit
scope
97%
Specified audit
procedures
0%
Review at
group level
3%
PROFIT BEFORE TAX
Full audit
scope
98%
Specified audit
procedures
0%
Review at
group level
2%
TOTAL ASSETS
Full audit
scope
72%
Specified audit
procedures
0%
Review at
group level
28%
TOTAL LIABILITIES
Full audit
scope
79%
Specified audit
procedures
0%
Review at
group level
21%
7.2. Our consideration of the control
environment
Our audit strategy is to rely on controls
over certain processes within a number
of business cycles. These included
procurement within UK Clothing & Home
and Food, inventory, sales to cash and
fixed assets including IFRS 16. As part of
our controls testing, we obtained an
understanding of the Group’s processes
and tested controls through a combination
of tests of inquiry, observation, inspection,
and re-performance.
On certain business cycles, we also
obtained an understanding of the
controls relating to inventory provisions,
food rebates and financial close and
reporting processes.
Given the importance of information
technology (“IT”) to the recording of
financial information and transactions,
we have tested General IT controls
relating to certain of the Group’s IT
systems where relevant to our audit work.
We have been able to place IT controls
reliance across these systems to support
the audit of a number of business cycles,
such as payables, procurement, lease
accounting, property plant and
equipment and inventory.
Where controls deficiencies and
improvements are identified, these are
reported to management and the Audit
and Risk Committee as appropriate. The
Group continues to invest in responding
to, and addressing, our observations.
7.3. Our consideration of climate-
related risks
The Group continues to reassess the
potential impacts of climate change and
set targets which the directors consider
to be aligned with the Paris Agreement.
The entity has identified a number of
milestones, including the target of
net zero carbon emissions by FY2040,
as discussed in the Task Force on
Climate-Related Financial Disclosures
report on pages 44 to 58. This
assessment focused on property, fleet
and two of the Group’s key resources:
protein and cotton.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
127
The entity considers that the most likely
impact on the financial statements will
be in relation to its three-year cash flow
forecasts and has included the impact
within these forecasts where appropriate.
Whilst at this stage there is significant
uncertainty regarding what the long-
term impact of climate change initiatives
may be, the forecasts reflect the entity’s
best estimate of the impact on the
financial statements as explained in
note 1.
As a part of our audit procedures, we
have obtained the entity’s climate-
related risk assessment and held
discussions with management to
understand the process of identifying
climate-related risks, the determination
of mitigating actions and the impact on
the Group’s financial statements. We
performed our own qualitative risk
assessment of the potential impact of
climate change on the Group’s account
balances and classes of transaction and
did not identify any reasonable possible
risks of material misstatement. Our
procedures were performed with the
involvement of our climate-change
specialists and included reading
disclosures included in the Strategic
Report to consider whether they are
materially consistent with the financial
statements and our knowledge obtained
in the audit.
In considering the disclosures presented
as part of the Strategic Report, we
engaged our climate-change specialists
to assess compliance with the TCFD
and CFD requirements and the
recommendations made by both the
Task Force and FRC as set out in their
thematic reviews. We have also assessed
whether these disclosures reflect our
understanding of the Group’s approach
to climate.
We did not identify climate-related risk
as a separate key audit matter in our
audit given the nature of the Group’s
operations and knowledge gained of its
impact on critical accounting estimates
and judgements during our risk
assessment procedures and audit
procedures.
We have not been engaged to provide
assurance over the accuracy of these
disclosures.
7.4. Working with other auditors
We have two component audit teams:
Deloitte UK and Deloitte India. We have
issued detailed instructions to both
component audit teams to perform audit
procedures. Due to the non-co-terminus
year-end of ORL, we have performed a
review of the component auditor’s files
for the period ended 3 December 2023
and the reporting received from the
component auditor for the period
subsequent to 3 December 2023.
We have engaged regularly with the
component auditors throughout the
audit process, determining the nature,
timing and extent of the audit
procedures to be performed and to
review their component reporting.
8. OTHER INFORMATION
The other information comprises the
information included in the annual
report, other than the financial
statements and our auditor’s report
thereon. The directors are responsible
for the other information contained
within the annual report.
Our opinion on the financial statements
does not cover the other information
and, except to the extent otherwise
explicitly stated in our report, we do
not express any form of assurance
conclusion thereon.
Our responsibility is to read the other
information and, in doing so, consider
whether the other information is
materially inconsistent with the financial
statements, or our knowledge obtained
in the course of the audit, or otherwise
appears to be materially misstated.
If we identify such material
inconsistencies or apparent material
misstatements, we are required to
determine whether this gives rise to a
material misstatement in the financial
statements themselves. If, based on the
work we have performed, we conclude
that there is a material misstatement of
this other information, we are required to
report that fact.
We have nothing to report
in this regard.
9. RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’
responsibilities statement, the directors
are responsible for the preparation of
the financial statements and for being
satisfied that they give a true and fair
view, and for such internal control as
the directors determine is necessary
to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud or
error.
In preparing the financial statements, the
directors are responsible for assessing
the Group’s and the Parent Company’s
ability to continue as a going concern,
disclosing as applicable, matters related
to going concern and using the going
concern basis of accounting unless the
directors either intend to liquidate the
Group or the Parent Company or to
cease operations, or have no realistic
alternative but to do so.
10. AUDITOR’S RESPONSIBILITIES
FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level of
assurance but is not a guarantee that
an audit conducted in accordance with
ISAs (UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or
error and are considered material if,
individually or in the aggregate, they
could reasonably be expected to
influence the economic decisions
of users taken on the basis of these
financial statements.
A further description of our
responsibilities for the audit of the
financial statements is located on the
FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditor’s report.
FINANCIAL STATEMENTS
128
Marks and Spencer Group plc
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF MARKS AND SPENCER GROUP PLC CONTINUED
11. EXTENT TO WHICH THE AUDIT
WAS CONSIDERED CAPABLE OF
DETECTING IRREGULARITIES,
INCLUDING FRAUD
Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
above, to detect material misstatements
in respect of irregularities, including
fraud. The extent to which our
procedures are capable of detecting
irregularities, including fraud is detailed
below.
11.1 Identifying and assessing potential
risks related to irregularities
In identifying and assessing risks of
material misstatement in respect of
irregularities, including fraud and
non-compliance with laws and
regulations, we considered the following:
– the nature of the industry and sector,
control environment and business
performance including the design of
the Group’s remuneration policies, key
drivers for directors’ remuneration,
bonus levels and performance targets;
– the Group’s own assessment of the
risks that irregularities may occur
either as a result of fraud or error that
was approved by the board;
– results of our enquiries of
management, the directors, internal
audit and the Audit & Risk Committee
about their own identification and
assessment of the risks of
irregularities, including those that are
specific to the Group’s sector;
– any matters we identified having
obtained and reviewed the Group’s
documentation of their policies and
procedures relating to:
– identifying, evaluating and
complying with laws and regulations
and whether they were aware of any
instances of non-compliance;
– detecting and responding to the
risks of fraud and whether they have
knowledge of any actual, suspected
or alleged fraud;
– the internal controls established to
mitigate risks of fraud or non-
compliance with laws and
regulations;
– the matters discussed among the audit
engagement team and relevant
internal specialists, including tax,
valuations, pensions, IT, climate-
change, dispute resolution and
analytics specialists regarding how
and where fraud might occur in the
financial statements and any potential
indicators of fraud.
As a result of these procedures, we
considered the opportunities and
incentives that may exist within the
organisation for fraud and identified
the greatest potential for fraud in the
disclosure of adjusting items as part of
alternative performance measures. In
common with all audits under ISAs (UK),
we are also required to perform specific
procedures to respond to the risk of
management override.
We also obtained an understanding
of the legal and regulatory framework
that the Group operates in, focusing on
provisions of those laws and regulations
that had a direct effect on the
determination of material amounts and
disclosures in the financial statements.
The key laws and regulations we
considered in this context included the
UK Companies Act, Financial Conduct
Authority regulations, Listing Rules,
pensions and tax legislation.
In addition, we considered provisions of
other laws and regulations that do not
have a direct effect on the financial
statements but compliance with which
may be fundamental to the Group’s
ability to operate or to avoid a material
penalty. These included the competition
and anti-bribery laws, data protection,
Groceries Supply Code of Practice, and
employment, environmental and health
and safety regulations.
11.2 Audit response to risks identified
As a result of performing the above, we
identified the disclosure of adjusting
items as part of alternative performance
measures as a key audit matter related to
the potential risk of fraud. The key audit
matters section of our report explains
the matter in more detail and also
describes the specific procedures we
performed in response to that key audit
matter.
In addition to the above, our procedures
to respond to risks identified included
the following:
– reviewing the financial statement
disclosures and testing to supporting
documentation to assess compliance
with provisions of relevant laws and
regulations described as having a
direct effect on the financial
statements;
– enquiring of management, the Audit &
Risk Committee and in-house legal
counsel concerning actual and
potential litigation and claims;
– performing analytical procedures to
identify any unusual or unexpected
relationships that may indicate risks of
material misstatement due to fraud;
– reading minutes of meetings of those
charged with governance, reviewing
internal audit reports and reviewing
correspondence with HMRC, and
– in addressing the risk of fraud through
management override of controls,
testing the appropriateness of journal
entries and other adjustments;
assessing whether the judgements
made in making accounting estimates
are indicative of a potential bias; and
evaluating the business rationale of
any significant transactions that are
unusual or outside the normal course
of business.
We also communicated relevant
identified laws and regulations and
potential fraud risks to all engagement
team members including internal
specialists and component audit teams
and remained alert to any indications of
fraud or non-compliance with laws and
regulations throughout the audit.
Report on other legal and
regulatory requirements
12. OPINIONS ON OTHER MATTERS
PRESCRIBED BY THE COMPANIES
ACT 2006
In our opinion the part of the
Directors’ Remuneration Report to be
audited has been properly prepared in
accordance with the Companies Act
2006.
In our opinion, based on the work
undertaken in the course of the audit:
– the information given in the strategic
report and the directors’ report for
the financial year for which the
financial statements are prepared is
consistent with the financial
statements; and
– the strategic report and the directors’
report have been prepared in
accordance with applicable legal
requirements.
In the light of the knowledge and
understanding of the Group and the
Parent Company and their
environment obtained in the course of
the audit, we have not identified any
material misstatements in the strategic
report or the directors’ report.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
129
13. CORPORATE GOVERNANCE
STATEMENT
The Listing Rules require us to review the
directors’ statement in relation to going
concern, longer-term viability and that
part of the Corporate Governance
Statement relating to the Group’s
compliance with the provisions of the UK
Corporate Governance Code specified
for our review.
Based on the work undertaken as part
of our audit, we have concluded that
each of the following elements of the
Corporate Governance Statement is
materially consistent with the financial
statements and our knowledge
obtained during the audit:
– the directors’ statement with regards
to the appropriateness of adopting
the going concern basis of
accounting and any material
uncertainties identified set out on
page 118;
– the directors’ explanation as to its
assessment of the Group’s prospects,
the period this assessment covers
and why the period is appropriate set
out on page 71;
– the directors’ statement on fair,
balanced and understandable set out
on page 119;
– the board’s confirmation that it has
carried out a robust assessment of
the emerging and principal risks set
out on page 119;
– the section of the annual report that
describes the review of effectiveness
of risk management and internal
control systems set out on page 62;
and
– the section describing the work of the
Audit & Risk Committee set out on
page 90.
14. MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY EXCEPTION
14.1. Adequacy of explanations received
and accounting records
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
– we have not received all the
information and explanations we
require for our audit; or
– adequate accounting records have not
been kept by the Parent Company, or
returns adequate for our audit have
not been received from branches not
visited by us; or
– the Parent Company financial
statements are not in agreement with
the accounting records and returns.
We have nothing to report in respect
of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are
also required to report if in our opinion
certain disclosures of directors’
remuneration have not been made or the
part of the Directors’ Remuneration
Report to be audited is not in agreement
with the accounting records and returns.
We have nothing to report in respect
of these matters.
15. OTHER MATTERS WHICH WE ARE
REQUIRED TO ADDRESS
15.1. Auditor tenure
Following the recommendation of the
Audit & Risk Committee, we were
appointed by the shareholders on 8 July
2014 to audit the financial statements for
the year ending 28 March 2015 and
subsequent financial periods. The period
of total uninterrupted engagement
including previous renewals and
reappointments of the firm is 10 years,
covering the years ending 28 March 2015
to 30 March 2024.
15.2. Consistency of the audit report
with the additional report to the
Audit & Risk Committee
Our audit opinion is consistent with the
additional report to the Audit & Risk
committee we are required to provide
in accordance with ISAs (UK).
16. USE OF OUR REPORT
This report is made solely to the
Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has
been undertaken so that we might state to
the Company’s members those matters
we are required to state to them in an
auditor’s report and for no other purpose.
To the fullest extent permitted by law, we
do not accept or assume responsibility to
anyone other than the Company and the
Company’s members as a body, for our
audit work, for this report, or for the
opinions we have formed.
As required by the Financial Conduct
Authority (FCA) Disclosure Guidance and
Transparency Rule (DTR) 4.1.15R – DTR
4.1.18R, these financial statements will
form part of the Electronic Format
Annual Financial Report filed on the
National Storage Mechanism of the FCA
in accordance with DTR 4.1.15R – DTR
4.1.18R. This auditor’s report provides no
assurance over whether the Electronic
Format Annual Financial Report has been
prepared in compliance with DTR 4.1.15R
– DTR 4.1.18R.
RICHARD MUSCHAMP FCA
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London
21 May 2024
FINANCIAL STATEMENTS
130
Marks and Spencer Group plc
CONSOLIDATED INCOME STATEMENT
52 weeks
ended 30
March 2024
52 weeks
ended 1 April
2023
Notes
£m
£m
Revenue
2, 3
13,040.1
11,931.3
Share of result in associate – Ocado Retail Limited
3, 29
(79.9)
(43.5)
Operating profit
3, 5
714.2
515.1
Finance income
5, 6
146.7
166.1
Finance costs
5, 6
(188.4)
(205.5)
Profit before tax
4, 5
672.5
475.7
Income tax expense
7
(247.3)
(111.2)
Profit for the year
425.2
364.5
Attributable to:
Owners of the parent
431.2
363.4
Non-controlling interests
(6.0)
1.1
425.2
364.5
Earnings per share
Basic earnings per share
8
21.9p
18.5p
Diluted earnings per share
8
20.8p
17.9p
Reconciliation of profit before tax and adjusting items:
Profit before tax
672.5
475.7
Adjusting items1
5
43.9
(22.4)
Profit before tax and adjusting items1 – non-GAAP measure
716.4
453.3
Adjusted earnings per share – non-GAAP measure
Adjusted basic earnings per share1
8
24.6p
16.9p
Adjusted diluted earnings per share1
8
23.3p
16.4p
1. Comparative information has been restated due to a change in adjusting items classification. See note 1 for details.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
131
52 weeks
ended 30
March 2024
52 weeks
ended 1 April
2023
Notes
£m
£m
Profit for the year
425.2
364.5
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss
Remeasurements of retirement benefit schemes
11
(419.2)
(622.8)
Tax on retirement benefit schemes
104.8
158.0
(314.4)
(464.8)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences
– movements recognised in other comprehensive income
(11.5)
4.3
Cash flow hedges
– fair value movements recognised in other comprehensive income
21
(27.5)
77.0
– reclassified and reported in profit or loss
21
5.3
(14.4)
Tax charge/(credit) on cash flow hedges
6.1
(18.6)
(27.6)
48.3
Other comprehensive (expense) for the year, net of tax
(342.0)
(416.5)
Total comprehensive income/(expense) for the year
83.2
(52.0)
Attributable to:
Owners of the parent
89.2
(53.1)
Non-controlling interests
(6.0)
1.1
83.2
(52.0)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FINANCIAL STATEMENTS
132
Marks and Spencer Group plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
30 March
2024
As at
1 April
2023
(restated)
As at
3 April
2022
(restated)
Notes
£m
£m
£m
Assets
Non-current assets
Intangible assets
14
179.5
163.1
192.5
Property, plant and equipment
15
5,190.1
5,203.7
4,902.3
Investment property
11.6
11.8
15.0
Investments in joint ventures and associates
29
684.2
767.9
810.9
Other financial assets
16
12.6
7.9
4.5
Retirement benefit assets
11
81.8
482.0
1,043.9
Trade and other receivables
17
356.7
298.7
270.6
Derivative financial instruments
21
0.7
0.1
21.4
Deferred tax assets
23
11.7
7.6
–
6,528.9
6,942.8
7,261.1
Current assets
Inventories
776.9
764.4
706.1
Other financial assets
16
12.3
13.0
17.6
Trade and other receivables
17
302.0
280.6
217.1
Derivative financial instruments
21
6.8
22.6
43.6
Current tax assets
32.9
6.5
–
Cash and cash equivalents
18
1,022.4
1,067.9
1,197.9
2,153.3
2,155.0
2,182.3
Total assets
8,682.2
9,097.8
9,443.4
Liabilities
Current liabilities
Trade and other payables
19
2,107.9
2,048.8
1,960.9
Partnership liability to the Marks & Spencer UK Pension Scheme
12
88.8
73.0
71.9
Borrowings and other financial liabilities
20
250.4
444.0
247.2
Derivative financial instruments
21
20.0
58.1
3.2
Provisions
22
47.6
44.0
53.6
Current tax liabilities
1.5
38.5
34.0
2,516.2
2,706.4
2,370.8
Non-current liabilities
Retirement benefit deficit
11
4.6
4.6
5.7
Trade and other payables
19
116.7
181.3
188.2
Partnership liability to the Marks & Spencer UK Pension Scheme
12
–
51.8
120.4
Borrowings and other financial liabilities
20
2,882.8
3,184.0
3,561.0
Derivative financial instruments
21
21.9
7.1
0.4
Provisions
22
104.1
75.4
91.8
Deferred tax liabilities
23
205.8
206.4
321.3
3,335.9
3,710.6
4,288.8
Total liabilities
5,852.1
6,417.0
6,659.6
Net assets
2,830.1
2,680.8
2,783.8
Equity
Issued share capital
24
20.5
19.8
19.7
Share premium account
967.0
910.7
910.6
Capital redemption reserve
2,680.4
2,680.4
2,680.4
Hedging reserve
21
(8.4)
(31.9)
17.6
Cost of hedging reserve
21
5.4
4.2
3.6
Other reserve
(6,542.2)
(6,542.2)
(6,542.2)
Foreign exchange reserve
(81.1)
(69.6)
(73.9)
Retained earnings
5,789.6
5,705.0
5,763.8
Equity attributable to owners of the parent
2,831.2
2,676.4
2,779.6
Non-controlling interests
(1.1)
4.4
4.2
Total equity
2,830.1
2,680.8
2,783.8
Deferred tax and retained earnings have been restated in the comparative information. See note 1 for further details. The financial
statements were approved by the Board and authorised for issue on 21 May 2024. The financial statements also comprise notes 1 to 31.
STUART MACHIN
KATIE BICKERSTAFFE
Chief Executive Officer
Co-Chief Executive Officer
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
133
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary
share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Hedging
reserve
£m
Cost of
hedging
£m
Other
reserve¹
£m
Foreign
exchange
reserve
£m
Retained
earnings
£m
Total
£m
Non-
controlling
interest
£m
Total
£m
As at 3 April 2022
19.7
910.6
2,680.4
17.6
3.6
(6,542.2)
(73.9)
5,897.9
2,913.7
4.2
2,917.9
Prior year restatement
–
–
–
–
–
–
–
(134.1)
(134.1)
–
(134.1)
As at 3 April 2022
(restated)
19.7
910.6
2,680.4
17.6
3.6
(6,542.2)
(73.9)
5,763.8
2,779.6
4.2
2,783.8
Profit for the year
–
–
–
–
–
–
–
363.4
363.4
1.1
364.5
Other comprehensive
(expense)/income:
Foreign currency
translation
– movements recognised
in other comprehensive
income
–
–
–
–
–
–
4.3
–
4.3
–
4.3
Remeasurements of
retirement benefit
schemes
–
–
–
–
–
–
–
(622.8)
(622.8)
–
(622.8)
Tax on retirement benefit
schemes
–
–
–
–
–
–
–
158.0
158.0
–
158.0
Cash flow hedges
– fair value movement in
other comprehensive
income
–
–
–
76.2
0.8
–
–
–
77.0
–
77.0
– reclassified and
reported in profit or
loss
–
–
–
(14.4)
–
–
–
–
(14.4)
–
(14.4)
Tax on cash flow hedges
–
–
–
(18.4)
(0.2)
–
–
–
(18.6)
–
(18.6)
Other comprehensive
(expense)/income:
–
–
–
43.4
0.6
–
4.3
(464.8)
(416.5)
–
(416.5)
Total comprehensive
(expense)/income
–
–
–
43.4
0.6
–
4.3
(101.4)
(53.1)
1.1
(52.0)
Cash flow hedges
recognised in inventories
–
–
–
(123.9)
–
–
–
–
(123.9)
–
(123.9)
Tax on cash flow hedges
recognised in inventories
–
–
–
31.0
–
–
–
–
31.0
–
31.0
Transactions with
owners:
Transactions with
non-controlling
shareholders
–
–
–
–
–
–
–
–
–
(0.9)
(0.9)
Shares issued in respect
of employee share
options
0.1
0.1
–
–
–
–
–
(0.1)
0.1
–
0.1
Purchase of shares held
by employee trusts
–
–
–
–
–
–
–
(0.1)
(0.1)
–
(0.1)
Credit for share-based
payments
–
–
–
–
–
–
–
38.0
38.0
–
38.0
Deferred tax on share
schemes
–
–
–
–
–
–
–
4.8
4.8
–
4.8
As at 1 April 2023
19.8
910.7
2,680.4
(31.9)
4.2
(6,542.2)
(69.6)
5,705.0
2,676.4
4.4
2,680.8
FINANCIAL STATEMENTS
134
Marks and Spencer Group plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED
Ordinary
share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Hedging
reserve
£m
Cost of
hedging
£m
Other
reserve¹
£m
Foreign
exchange
reserve
£m
Retained
earnings
£m
Total
£m
Non-
controlling
interest
£m
Total
£m
As at 2 April 2023
19.8
910.7
2,680.4
(31.9)
4.2
(6,542.2)
(69.6) 5,705.0
2,676.4
4.4
2,680.8
Profit for the year
–
–
–
–
–
–
–
431.2
431.2
(6.0)
425.2
Other comprehensive
income/(expense):
Foreign currency
translation
– movements recognised
in other comprehensive
income
–
–
–
–
–
–
(11.5)
–
(11.5)
–
(11.5)
Remeasurements of
retirement benefit
schemes
–
–
–
–
–
–
–
(419.2)
(419.2)
–
(419.2)
Tax on retirement benefit
schemes
–
–
–
–
–
–
–
104.8
104.8
–
104.8
Cash flow hedges
– fair value movement in
other comprehensive
income
–
–
–
(29.1)
1.6
–
–
–
(27.5)
–
(27.5)
– reclassified and
reported in profit or
loss
–
–
–
5.3
–
–
–
–
5.3
–
5.3
Tax on cash flow hedges
–
–
–
6.5
(0.4)
–
–
–
6.1
–
6.1
Other comprehensive
(expense)/income
–
–
–
(17.3)
1.2
–
(11.5)
(314.4)
(342.0)
–
(342.0)
Total comprehensive
(expense)/income
–
–
–
(17.3)
1.2
–
(11.5)
116.8
89.2
(6.0)
83.2
Cash flow hedges
recognised in inventories
–
–
–
54.4
–
–
–
–
54.4
–
54.4
Tax on cash flow hedges
recognised
in inventories
–
–
–
(13.6)
–
–
–
–
(13.6)
–
(13.6)
Transactions with
owners:
Dividends
–
–
–
–
–
–
–
(19.6)
(19.6)
–
(19.6)
Transactions with
non-controlling
shareholders
–
–
–
–
–
–
–
–
–
0.5
0.5
Shares issued in respect
of employee share
options
0.7
56.3
–
–
–
–
–
–
57.0
–
57.0
Purchase of shares held
by employee trusts
–
–
–
–
–
–
–
(83.1)
(83.1)
–
(83.1)
Credit for share-based
payments
–
–
–
–
–
–
–
48.3
48.3
–
48.3
Tax on
share schemes
–
–
–
–
–
–
–
22.2
22.2
–
22.2
As at 30 March 2024
20.5
967.0
2,680.4
(8.4)
5.4
(6,542.2)
(81.1) 5,789.6
2,831.2
(1.1)
2,830.1
1. The “Other reserve” was originally created as part of the capital restructuring that took place in 2002. It represents the difference between the nominal value of the
shares issued prior to the capital reduction by the Company (being the carrying value of the investment in Marks and Spencer plc) and the share capital, share
premium and capital redemption reserve of Marks and Spencer plc at the date of the transaction.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
135
Notes
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Cash flows from operating activities
Cash generated from operations
26
1,492.9
1,100.5
Income tax paid
(191.2)
(70.6)
Net cash inflow from operating activities
1,301.7
1,029.9
Cash flows from investing activities
Proceeds on property disposals
6.1
1.1
Purchase of property, plant and equipment
(359.5)
(325.8)
Purchase of intangible assets
(69.8)
(84.5)
Proceeds on disposal of current financial assets
0.7
5.3
Purchase of non-current financial assets
(2.6)
(4.2)
Proceeds on disposal of non-current financial assets
–
0.2
Acquisition of subsidiary, net of cash acquired1
–
(102.8)
Loans to related parties
28
(62.0)
(30.0)
Interest received
51.8
24.1
Net cash used in investing activities
(435.3)
(516.6)
Cash flows from financing activities
Interest paid2
(185.0)
(212.5)
Redemption of Medium-Term Notes3
(395.6)
(189.9)
Repayment of lease liabilities
(243.5)
(231.8)
Payment of partnership liability to the Marks & Spencer UK Pension Scheme
(40.0)
(66.0)
Equity dividends paid
(19.6)
–
Shares issued on exercise of employee share options
24
57.0
–
Purchase of own shares by employee trust
(83.1)
(0.1)
Cash received from settlement of derivatives
–
56.5
Net cash used in financing activities
(909.8)
(643.8)
Net cash from activities
(43.4)
(130.5)
Effects of exchange rate changes
(2.1)
0.5
Opening net cash
1,067.9
1,197.9
Closing net cash
27
1,022.4
1,067.9
1. Last year includes £102.8m relating to the purchase of Gist Limited, being consideration of £170.6m net of cash acquired of £67.8m.
2. Includes interest paid on the partnership liability to the Marks & Spencer UK Pension Scheme of £nil (last year: £5.9m) and interest paid on lease liabilities of £102.0m
(last year: £121.9m).
3. Includes £267.5m of outstanding 2023, 2025, and 2026 notes repurchased in June 2023, resulting in a gain of £10.3m recognised within “interest payable on
Medium-Term Notes” in net finance costs.
CONSOLIDATED STATEMENT OF CASH FLOWS
FINANCIAL STATEMENTS
136
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
General information
Marks and Spencer Group plc (the “Company”) is a public
limited company domiciled and incorporated in England and
Wales under the Companies Act 2006. The address of the
Company’s registered office is Waterside House, 35 North
Wharf Road, London W2 1NW, United Kingdom.
The principal activities of the Company and its subsidiaries (the
“Group”) and the nature of the Group’s operations are as a
Clothing & Home and Food retailer.
These financial statements are presented in sterling, which is
also the Company’s functional currency, and are rounded to
the nearest hundred thousand. Foreign operations are
included in accordance with the policies set out within this note.
Basis of preparation
The financial statements have been prepared for the 52 weeks
ended 30 March 2024 (last year: 52 weeks ended 1 April 2023) in
accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those
standards.
The Marks and Spencer Scottish Limited Partnership has taken
an exemption under paragraph 7 of the Partnership (Accounts)
Regulations 2008 from the requirement to prepare and deliver
financial statements, in accordance with the Companies Act.
The financial statements have been prepared on a going
concern basis. In adopting the going concern basis, the Board
has considered the business activities as set out on pages 12 to
27, the financial position of the Group, its cash flows, liquidity
position and borrowing facilities as set out in the Financial
Review on pages 29 to 37, the Group’s financial risk
management objectives and exposures to liquidity and other
financial risks as set out in note 21 and the principal risks and
uncertainties as set out on pages 64 to 70.
The Group continues to maintain a robust financial position
providing it with sufficient access to liquidity, through a
combination of cash and committed facilities, to meet its needs
in the short and medium-term. At 30 March 2024, the Group
had liquidity of £1,897.4m (last year: £1,942.9m), comprising
cash and cash equivalents of £1,022.4m, an undrawn
committed syndicated bank revolving credit facility (“RCF”)
of £850.0m, and undrawn uncommitted facilities amounting
to £25.0m.
In December 2023, the Group successfully extended its RCF,
which now expires in June 2027. The facility contains a financial
covenant, being the ratio of earnings before interest, tax,
depreciation and amortisation; to net interest and depreciation
on right-of-use assets under IFRS 16. The covenant is measured
biannually.
In adopting the going concern basis of preparation, the Board
has assessed the Group’s cash flow forecasts which incorporate
a latest estimate of the ongoing impact of current market
conditions on the Group and include a number of assumptions
including sales growth and customer behaviour. While trading
continues to be strong, in forming their outlook on the future
financial performance, the Board considered a variety of
downsides that the Group might experience, such as a
sustained economic recession and an inability for the Group to
execute the transformation plan.
Under these latest forecasts, the Group is able to operate
without the need to draw on its available facilities and without
taking any supplementary mitigating actions, such as reducing
capital expenditure and other discretionary spend. The
forecast cash flows also indicate that the Group will comply
with all relevant banking covenants during the forecast period,
being at least 12 months from the approval of the financial
statements.
The Board has modelled a severe, but plausible, downside
scenario. This downside scenario assumes that:
– There will be a period of economic recession in 2024/25,
resulting in a reduction in sales growth of 2.0-5.0% across all
three business units compared to the Budget and Three-Year
Plan.
– A delay on transformation benefits results in incremental
sales expected from the transformation declining by 7.5%,
15% and 30% respectively across the three-year period across
all three business units.
– Ocado Retail Limited experiences limited customer demand,
with a 5.0% decline in volume growth each year across the
three-year period compared to the Budget and Three-Year
Plan.
Even under this severe but plausible downside scenario, the
Group would continue to have sufficient liquidity and
headroom on its existing facilities and against the RCF financial
covenant for the forecast period. In addition, should such a
scenario arise, there are a range of mitigating actions that
could be taken to reduce the impact. Given current trading and
expectations for the business, the Board considers that this
downside scenario reflects a plausible, but remote, outcome
for the Group.
In addition, reverse stress testing has been applied to the
model to determine the decline in sales that the Group could
absorb before exhausting the Group’s total liquidity. Such a
scenario, and the sequence of events which could lead to it, is
considered to be extremely remote.
As a result, the Board expects the Group to have adequate
resources to continue in operation, meet its liabilities as they
fall due, retain sufficient available cash and not breach the
covenant under the revolving credit facility for the foreseeable
future, being a period of at least 12 months from the approval
of the financial statements. The Board therefore considers it
appropriate for the Group to adopt the going concern basis in
preparing its financial statements.
New accounting standards adopted by the Group
The Group has applied the following new standards and
interpretations for the first time for the annual reporting period
commencing 2 April 2023:
– IFRS 17 Insurance Contracts.
– Amendments to IAS 1 and IFRS Practice Statement 2:
Disclosure of Accounting Policies.
– Amendments to IAS 8: Definition of Accounting Estimates.
– Amendments to IAS 12: Deferred Tax Related to Assets and
Liabilities arising from a Single Transaction.
– Amendments to IAS 12: International Tax reform – Pillar Two
Model rules.
The adoption of the standards and interpretations listed above
has not led to any changes to the Group’s accounting policies
or had any other material impact on the financial position or
performance of the Group.
New accounting standards in issue but not yet effective
New standards and interpretations that are in issue but not yet
effective are listed below:
– Amendment to IFRS 16: Lease Liability in a Sale and
Leaseback.
– Amendments to IAS 1: Classification of Liabilities as Current
or Non-Current.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
137
– Amendments to IAS 1: Non-current Liabilities with Covenants.
– Amendments to IAS 7 and IFRS 7: Supplier Finance
Arrangements.
– Amendments to IAS 21: Lack of Exchangeability.
– Amendments to IFRS 10 and IAS 28: Sale or Contribution of
Assets between an Investor and its Associate or Joint
Venture.
– IFRS 18: Presentation and Disclosure in Financial Statements.
With the exception of the adoption of IFRS 18, the adoption of
the above standards and interpretations is not expected to
lead to any changes to the Group’s accounting policies nor
have any other material impact on the financial position or
performance of the Group.
IFRS 18 was issued in April 2024 and is effective for periods
beginning on or after 1 January 2027. Early application is
permitted and comparatives will require restatement. The
standard will replace IAS 1 Presentation of Financial Statements
and although it will not change how items are recognised and
measured, the standard brings a focus on the income
statement and reporting of financial performance. Specifically
classifying income and expenses into three new defined
categories - “operating”, “investing” and “financing” and two new
subtotals “operating profit and loss” and “profit or loss before
financing and income tax”, introducing disclosures of
management defined performance measures (MPMs) and
enhancing general requirements on aggregation and
disaggregation. The impact of the standard on the Group is
currently being assessed and it is not yet practicable to
quantify the effect of IFRS 18 on these consolidated financial
statements, however there is no impact on presentation for the
Group in the current year given the effective date - this will be
applicable for the Group’s 2027/28 Annual Report.
Prior year restatement
An error has been identified within the Group’s deferred tax
calculations which was triggered by a series of historic changes
in the residual value applied to Buildings impacting the portion
of the asset to be recovered through use and the portion
through sale. In line with IAS 8, the Group has restated balances
as at 1 April 2023 and 2 April 2022.
Specifically the impact on the financial results as at 1 April 2023
was a £134.1m increase in deferred tax liabilities recognised in
relation to Buildings following management’s downwards
revision of its estimate of the residual value on Buildings. There
is no impact on cash flow statement in any years.
The financial impact of the errors identified are as follows:
As at 1 April 2023
As at 2 April 2022
Reported
£m
Adjust-
ment
£m
Restated
£m
Reported
£m
Adjust-
ment
£m
Restated
£m
Deferred
tax liability
72.3
134.1
206.4
187.2
134.1
321.3
Retained
earnings
5,839.1
(134.1) 5,705.0
5,897.9
(134.1) 5,763.8
Alternative performance measures
In reporting financial information, the Group presents
alternative performance measures (“APMs”), which are not
defined or specified under the requirements of IFRS.
The Group believes that these APMs, which are not considered
to be a substitute for, or superior to, IFRS measures, provide
stakeholders with additional helpful information on the
performance of the business. These APMs are consistent with
how the business performance is planned and reported within
the internal management reporting to the Board and Executive
Committee. Some of these measures are also used for the
purpose of setting remuneration targets.
The key APMs that the Group uses include: sales; like-for-like
sales growth; adjusted operating profit; adjusted operating
margin; profit before tax and adjusting items; adjusted basic
earnings per share; net debt; net debt excluding lease liabilities;
free cash flow; free cash flow from operations; capital
expenditure; and return on capital employed. Each of these
APMs, and others used by the Group, is set out in the Glossary,
including explanations of how they are calculated and how
they can be reconciled to a statutory measure where relevant.
The Group reports some financial measures, primarily
International sales, on both a reported and constant currency
basis. The constant currency basis, which is an APM, retranslates
the previous year revenues at the average actual periodic
exchange rates used in the current financial year. This measure
is presented as a means of eliminating the effects of exchange
rate fluctuations on the year-on-year reported results.
The Group makes certain adjustments to the statutory profit
measures in order to derive many of these APMs. The Group’s
policy is to exclude items that are considered significant in
nature and/or quantum over the total expected life of the
programme or are consistent with items that were treated as
adjusting in prior periods. The Group’s definition of adjusting
items is consistent with prior periods. Adjusted results are
consistent with how business performance is measured
internally and presented to aid comparability of performance.
On this basis, the following items were included within
adjusting items for the 52-week period ended 30 March 2024:
– Net charges associated with the strategic programme in
relation to the review of the store estate.
– Significant restructuring costs and other associated costs
arising from strategy or operational changes that are not
considered by the Group to be part of the normal operating
costs of the business.
– Impairment charges and provisions that are considered to be
significant in nature and/or value to the trading performance
of the business.
– Charges and reversals of previous impairments arising from
the write-off of assets and other property charges that are
significant in nature and/or value. Impairment charges are
recognised in adjusted operating profit where they relate to
stores not previously impaired or do not otherwise meet the
Group’s adjusting items policy.
– Adjustments to income from M&S Bank due to a provision
recognised by M&S Bank for the cost of providing redress to
customers in respect of possible mis-selling of M&S Bank
financial products.
– Amortisation of the identified intangible assets arising as
part of the investment in Ocado Retail Limited.
– Remeasurement of Ocado Retail Limited contingent
consideration.
– Significant costs relating to the acquisition of Gist Limited.
– Net finance costs incurred in relation to Gist Limited deferred
and contingent consideration.
– (New) Share of net charges associated with Ocado Retail
Limited’s UK network capacity review.
– (New) Net pension finance income in relation to closed
scheme not considered part of ongoing operating activities
of the Group.
– (New) Significant charges relating to the renegotiation of the
Group’s Relationship Agreement with M&S Bank.
– (New) Significant charges in relation to the furniture
simplification programme that are not considered to be
day-to-day operational costs of the business, mainly relating
FINANCIAL STATEMENTS
138
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
to contractual obligations with suppliers.
Refer to note 5 for a summary of the adjusting items.
Due to a change in the Group’s classification of pension net
finance income as an adjusting item (see note 5), the
comparative amounts have been restated.
The impact on the 52 weeks ended 1 April 2023 income
statement is a decrease to the adjusting items charge of
£28.7m (resulting in a net adjusting items credit), a decrease to
profit before tax & adjusting items of £28.7m, a decrease to
adjusted basic earnings per share of 1.2p and a decrease to
adjusted diluted earnings per share of 1.1p. There is no impact
on profit before tax, earnings per share or net assets.
A summary of the Company’s and the Group’s material
accounting policies is given below.
Accounting convention
The financial statements are drawn up on the historical cost
basis of accounting, except for certain financial instruments
(including derivative instruments) and plan assets of defined
benefit pension schemes which are measured at fair value at
the end of each reporting period, as explained in the
accounting policies below.
Basis of consolidation
The Group financial statements incorporate the financial
statements of Marks and Spencer Group plc and all its
subsidiaries made up to the period end date. Where necessary,
adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used in line with
those used by the Group.
Subsidiaries
Subsidiary undertakings are all entities (including special
purpose entities) over which the Company has control. Control
is achieved when the Company has the power over the entity; is
exposed, or has rights to, variable returns from its involvement
with the entity; and has the ability to use its power to affect its
returns. The Company reassesses whether or not it controls an
entity if facts and circumstances indicate that there are
changes to one or more of these three elements of control.
Consolidation of a subsidiary begins when the Company
obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Subsidiary
undertakings acquired during the year are recorded using the
acquisition method of accounting and their results are included
from the date of acquisition.
The separable net assets, including property, plant and
equipment and intangible assets, of the newly acquired
subsidiary undertakings are incorporated into the consolidated
financial statements on the basis of the fair value as at the
effective date of control.
Intercompany transactions, balances, and unrealised gains on
transactions between Group companies are eliminated on
consolidation.
Associates
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a
joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but
is not control nor joint control over those policies. The results
and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting.
Under the equity method, an investment in an associate is
recognised initially in the consolidated statement of financial
position at cost and adjusted thereafter to recognise the
Group’s share of the profit or loss and other comprehensive
income of the associate. When the Group’s share of losses of an
associate exceeds the Group’s interest in that associate (which
includes any long-term interests that, in substance, form part
of the Group’s net investment in the associate), the Group
discontinues recognising its share of further losses. Additional
losses are recognised only to the extent that the Group has
incurred legal or constructive obligations or made payments
on behalf of the associate. Dividends received or receivable
from an associate are recognised as a reduction in the carrying
amount of the investment.
Associated undertakings acquired during the year are recorded
using the equity method of accounting and their results are
included from the date of acquisition. On acquisition of the
investment in an associate, any excess of the cost of the
investment over the Group’s share of the net fair value of the
identifiable assets and liabilities of the investee is recognised as
goodwill, which is included within the carrying amount of the
investment. Any excess of the Group’s share of the net fair
value of the identifiable assets and liabilities over the cost of
the investment, after reassessment, is recognised immediately
in profit or loss in the period in which the investment is
acquired. The Group’s share of the net fair value of identified
intangible assets is amortised over the expected useful
economic life of the assets.
The requirements of IAS 36 are applied to determine whether it
is necessary to recognise any impairment loss with respect to
the Group’s investment in an associate. When necessary, the
entire carrying amount of the investment (including goodwill)
is tested for impairment in accordance with IAS 36 as a single
asset by comparing its recoverable amount (higher of value in
use and fair value less costs of disposal) with its carrying
amount.
When a Group company transacts with an associate of the
Group, profits and losses resulting from the transactions with
the associate are recognised only to the extent of interests in
the associate that are not related to the Group.
Revenue
Revenue comprises sales of goods to customers outside the
Group less an appropriate deduction for actual and expected
returns, discounts and loyalty scheme vouchers, and is stated
net of value added tax and other sales taxes. Revenue is
recognised when performance obligations are satisfied and
goods are delivered to our franchise partners or the customer
and the control of goods is transferred to the buyer. Online sales
are recognised when items are delivered, as this is when the
performance obligation is deemed to have been satisfied. Where
third-party branded goods are sold on a consignment basis,
only the commission receivable is included in statutory revenue.
A right of return is not a separate performance obligation and
the Group is required to recognise revenue net of estimated
returns. A refund liability and a corresponding asset in
inventory representing the right to recover products from the
customer are recognised.
The Group enters into agreements which entitle other parties
to operate under the Marks & Spencer brand name for certain
activities and operations, such as M&S Bank and M&S Energy.
These contracts give rise to performance-based variable
consideration. Income dependent on the performance of the
third-party operations is recognised when it is highly probable
that a significant reversal in the amount of income recognised
will not occur, and presented as other operating income.
Revenue from the rendering of supply chain services is
recognised when a performance obligation is satisfied.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
139
Supplier income
In line with industry practice, the Group enters into agreements
with suppliers to share the costs and benefits of promotional
activity and volume growth. The Group receives income from
its suppliers based on specific agreements in place. Supplier
income received is recognised as a deduction from cost of sales
based on the entitlement that has been earned up to the
balance sheet date for each relevant supplier agreement.
Marketing contributions, equipment hire and other non-
judgemental, fixed rate supplier charges are not included in the
Group’s definition of supplier income.
The types of supplier income recognised by the Group and the
associated recognition policies are:
A. Promotional contribution Includes supplier contributions to
promotional giveaways and pre-agreed contributions to annual
“spend and save” activity.
Income is recognised as a deduction to cost of sales over the
relevant promotional period. Income is calculated and invoiced
at the end of the promotional period based on actual sales or
according to fixed contribution arrangements. Contributions
earned, but not invoiced, are accrued at the end of the relevant
period.
B. Volume-based rebates Includes annual growth incentives,
seasonal contributions and contributions to share economies
of scale resulting from moving product supply.
Annual growth incentives are calculated and invoiced at the
end of the financial year, once earned, based on fixed
percentage growth targets agreed for each supplier at the
beginning of the year. They are recognised as a reduction in
cost of sales in the year to which they relate. Other volume-
based rebates are agreed with the supplier and spread over the
relevant season/contract period to which they relate.
Contributions earned, but not invoiced, are accrued at the end
of the relevant period.
Uncollected supplier income at the balance sheet date is
classified within the financial statements as follows:
A. Trade and other payables The majority of income due from
suppliers is net against amounts owed to that supplier as the
Group has the legal right and intention to offset these
balances.
B. Trade and other receivables Supplier income that has been
earned, but not invoiced, at the balance sheet date is
recognised in trade and other receivables and primarily relates
to volume-based rebates that run up to the period end.
In order to provide users of the accounts with greater
understanding in this area, additional balance sheet disclosure
is provided in note 17 to the financial statements.
M&S Bank
The Group has an economic interest in M&S Bank which entitles
the Group to a 50% share of the profits of M&S Bank after
appropriate contractual deductions.
Dividends
Final dividends are recorded in the financial statements in the
period in which they are approved by the Company’s
shareholders. Interim dividends are recorded in the period in
which they are approved and paid.
Pensions
Funded pension plans are in place for the Group’s UK
employees and some overseas employees.
For defined benefit (“DB”) pension schemes, the difference
between the fair value of the assets and the present value of
the DB obligation is recognised as an asset or liability in the
statement of financial position. The DB obligation is actuarially
calculated using the projected unit credit method. An asset can
be recognised as, in the event of a plan wind-up, the pension
scheme rules provide the Group with an unconditional right to
a refund of surplus assets, assuming a full settlement of plan
liabilities. In the ordinary course of business, the Trustees have
no rights to wind-up or change, the benefits due to the
members of the scheme. As a result, any net surplus in the UK
DB scheme is recognised in full.
The service cost of providing retirement benefits to employees
during the year, together with the cost of any curtailment, is
charged to operating profit in the year. The Group no longer
incurs any service cost or curtailment costs related to the UK
DB Pension Scheme as the scheme is closed to future accrual.
The net interest cost on the net retirement benefit asset/
liability is calculated by applying the discount rate, measured
at the beginning of the year, to the net defined benefit asset/
liability and is included as a single net amount in finance
income.
Remeasurements, being actuarial gains and losses, together
with the difference between actual investment returns and the
return implied by the net interest cost, are recognised
immediately in other comprehensive income.
Payments to defined contribution retirement benefit schemes
are charged as an expense on an accruals basis.
For further details on pension schemes and the partnership
liability to the Marks & Spencer UK Pension scheme, see notes
11 and 12.
Intangible assets
A. Goodwill Goodwill arising on consolidation represents the
excess of the consideration paid and the amount of any
non-controlling interest in the acquiree over the fair value of
the identifiable assets and liabilities (including intangible
assets) of the acquired entity at the date of the acquisition.
Goodwill is recognised as an asset and assessed for impairment
annually or as triggering events occur. Any impairment in value
is recognised within the income statement.
B. Acquired intangible assets Acquired intangible assets
include trademarks or brands. These assets are capitalised on
acquisition at cost and amortised on a straight-line basis over
their estimated useful lives.
Acquired intangible assets are tested for impairment as
triggering events occur. Any impairment in value is recognised
within the income statement.
C. Software intangibles Where computer software is not an
integral part of a related item of computer hardware, the
software is treated as an intangible asset. Capitalised software
costs include external direct costs of goods and services, as
well as internal payroll-related costs for employees who are
directly associated with the project. When the Group incurs
configuration and customisation costs as part of a cloud-based
software-as-a-service agreement, and where this does not
result in the creation of an asset which the Group has control
over, then these costs are expensed.
Capitalised software development costs are amortised on a
straight-line basis over their expected economic lives, normally
between three and five years. Computer software under
development is held at cost less any recognised impairment
loss. Any impairment in value is recognised within the income
statement.
FINANCIAL STATEMENTS
140
Marks and Spencer Group plc
Property, plant and equipment
The Group’s policy is to state property, plant and equipment at
cost less accumulated depreciation and any recognised
impairment loss. Property is not revalued for accounting
purposes. Assets in the course of construction are held at cost
less any recognised impairment loss. Costs include
professional fees and, for qualifying assets, borrowing costs.
Leasehold buildings with lease premiums and ongoing
peppercorn lease payments are considered in-substance
purchases and are therefore included within the buildings
category of property, plant and equipment.
Depreciation is provided to write-off the cost of tangible
non-current assets (including investment properties), less
estimated residual values on a straight-line basis as follows:
– Freehold land – not depreciated.
– Buildings – depreciated to their residual value over their
estimated remaining economic lives of 10-50 years.
– Fixtures, fittings and equipment – 3-25 years, according to
the estimated economic life of the asset.
Residual values and useful economic lives are reviewed
annually. Depreciation is charged on all additions to, or
disposals of, depreciating assets in the year of purchase or
disposal.
Any impairment in value, or reversal of an impairment, is
recognised within the income statement.
Leasing
The Group recognises a right-of-use asset and corresponding
liability at the date at which a leased asset is made available for
use by the Group, except for short-term leases (defined as
leases with a lease term of 12 months or less) and leases of
low-value assets. For these leases, the Group recognises the
lease payments as an operating expense on a straight-line
basis over the term of the lease.
Lease liabilities are measured at the present value of the future
lease payments, excluding any payments relating to non-lease
components. Future lease payments include fixed payments,
in-substance fixed payments, and variable lease payments that
are based on an index or a rate, less any lease incentives
receivable. Lease liabilities also take into account amounts
payable under residual value guarantees and payments to
exercise options to the extent that it is reasonably certain that
such payments will be made. The payments are discounted at
the rate implicit in the lease or, where that cannot be readily
determined, at an incremental borrowing rate.
Right-of-use assets are measured initially at cost based on the
value of the associated lease liability, adjusted for any
payments made before inception, initial direct costs and an
estimate of the dismantling, removal and restoration costs
required in the terms of the lease. The Group presents right-of-
use assets in “property, plant and equipment” in the
consolidated statement of financial position.
Subsequent to initial recognition, the lease liability is reduced
for payments made and increased to reflect interest on the
lease liability (using the effective interest method). The related
right-of-use asset is depreciated over the term of the lease or, if
shorter, the useful economic life of the leased asset. The lease
term shall include the period of an extension option where it is
reasonably certain that the option will be exercised. Where the
lease contains a purchase option, the asset is written-off over
the useful life of the asset when it is reasonably certain that the
purchase option will be exercised.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
– The lease term has changed or there is a change in the
assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised
lease payments using a revised discount rate.
– The lease payments change due to changes in an index or
rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is remeasured
by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised
discount rate is used).
– A lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease
payments using a revised discount rate.
Leases for which the Group is a lessor are classified as finance
or operating leases. A lease is classified as a finance lease if it
transfers substantially all the risks and rewards of ownership to
the lessee, and classified as an operating lease if it does not.
When the Group is an intermediate lessor, it accounts for the
head lease and the sublease as two separate contracts. The
sublease is classified as a finance or operating lease by
reference to the right-of-use asset arising from the head lease.
Amounts due from lessees under finance leases are recognised
as receivables at the amount of the Group’s net investment in
the leases. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return on the
Group’s net investment in the lease. Rental income from
operating leases is recognised on a straight-line basis over the
term of the relevant lease.
Cash and cash equivalents
Cash and cash equivalents includes short-term deposits with
banks and other financial institutions, with an initial maturity of
three months or less, money market funds and credit card
payments received within 48 hours. Bank transactions are
recorded on their settlement date.
Inventories
Inventories are valued on a weighted average cost basis and
carried at the lower of cost and net realisable value. Cost
includes all direct expenditure and other attributable costs
incurred in bringing inventories to their present location and
condition. All inventories are finished goods. Certain purchases
of inventories may be subject to cash flow hedges for foreign
exchange risk. The initial cost of hedged inventory is adjusted
by the associated hedging gain or loss transferred from the
cash flow hedge reserve (“basis adjustment”).
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the best estimate of the expenditure required to
settle the obligation at the end of the reporting period, and are
discounted to present value where the effect is material.
Share-based payments
The Group issues equity-settled share-based payments to
certain employees. A fair value for the equity-settled share
awards is measured at the date of grant. The Group measures
the fair value of each award using the Black-Scholes model
where appropriate.
The fair value of each award is recognised as an expense over
the vesting period on a straight-line basis, after allowing for an
estimate of the share awards that will eventually vest. The level
of vesting is reviewed at each reporting period and the charge
is adjusted to reflect actual and estimated levels of vesting.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
141
Foreign currencies
The financial statements are presented in sterling which is the
Company’s functional currency.
The results of overseas subsidiaries are translated at the
weighted average of monthly exchange rates for revenue and
profits. The statements of financial position of overseas
subsidiaries are translated at year-end exchange rates. The
resulting exchange differences are booked into reserves and
reported in the consolidated statement of comprehensive
income. On disposal of an overseas subsidiary the related
cumulative translation differences recognised in reserves are
reclassified to profit or loss and are recognised as part of the
gain or loss on disposal.
Transactions denominated in foreign currencies are translated
at the exchange rate at the date of the transaction. Foreign
currency monetary assets and liabilities held at the end of the
reporting period are translated at the closing balance sheet
rate. The resulting exchange gain or loss is recognised within
the income statement.
Taxation
Tax expense comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that
it relates to items recognised in other comprehensive income
or directly in equity, in which case the related tax is recognised
in other comprehensive income or directly in equity.
Provision is made for uncertain tax positions when it is
considered probable that there will be a future outflow of funds
to a tax authority. The provision is calculated using the single
best estimate where that outcome is more likely than not and a
weighted average probability in other circumstances. The
position is reviewed on an ongoing basis, to ensure appropriate
provision is made for each known tax risk.
Deferred tax is accounted for using a temporary difference
approach, and is the tax expected to be payable or recoverable
on temporary differences between the carrying amount of
assets and liabilities in the statement of financial position and
the corresponding tax bases used in the computation of
taxable profit. Deferred tax is calculated based on the
expected manner of realisation or settlement of the carrying
amount of assets and liabilities, applying tax rates and laws
enacted, or substantively enacted, at the end of the reporting
period.
Deferred tax liabilities are generally recognised for all taxable
temporary differences. Deferred tax liabilities are recognised
for taxable temporary differences arising on investments in
subsidiaries, associates and joint ventures, except where the
reversal of the temporary difference can be controlled by the
Group and it is probable that the difference will not reverse in
the foreseeable future. In addition, deferred tax liabilities are
not recognised on temporary differences that arise from
goodwill which is not deductible for tax purposes.
Deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which the
deductible temporary differences can be utilised. The carrying
amount of deferred tax assets is reviewed at the end of each
reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax assets and liabilities are not recognised in respect
of temporary differences that arise on initial recognition of
assets and liabilities acquired other than in a business
combination.
Financial instruments
Financial assets and liabilities are recognised in the Group’s
statement of financial position when the Group becomes a
party to the contractual provisions of the instrument. Financial
assets are initially classified as at fair value through profit and
loss, fair value through other comprehensive income or
amortised cost depending on the Group’s business model for
managing the financial asset and its cash flow characteristics.
Financial assets that are held for collection of contractual cash
flows, where those cash flows represent solely payments of
principal and interest, are measured at amortised cost.
The table below sets out the Group’s accounting classification
of each class of its financial assets and liabilities:
Note
Measurement
Financial assets:
Other investments
16
FVTPL1
Loans to related parties
17
Amortised cost
Trade receivables
17
Amortised cost
Lease receivables
17
Amortised cost
Other receivables
17
Amortised cost
Cash and cash equivalents
18
Amortised cost2
Derivative financial instruments
21
FVTPL
Financial liabilities:
Borrowings and overdrafts
20
Amortised cost
Trade payables
19
Amortised cost
Other payables
19
Amortised cost
Contingent consideration
19
FVTPL
Accruals
19
Amortised cost
Lease liabilities
20
Amortised cost
Derivative financial instruments
21
FVTPL
1Fair value through profit or loss.
2 Deposits held in low volatility net asset value money market funds are classified
as FVTPL.
A. Trade and other receivables Trade receivables are recorded
initially at transaction price and subsequently measured at
amortised cost, except those which, due to factoring
arrangements, are held within a “hold to collect and sell”
business model and are measured at fair value through other
comprehensive income (“FVOCI”). Trade receivables measured
at amortised cost are carried at nominal value less an
allowance for any doubtful debts. The allowance for doubtful
debts is recognised based on management’s expectation of
losses without regard to whether an impairment trigger
happened or not (an “expected credit loss” model).
B. Other financial assets Other financial assets consist of loans
receivable, venture capital investments and short-term
investments with a maturity date of more than 90 days.
Financial assets that do not meet the criteria for being
measured at amortised cost are measured at fair value through
profit or loss (“FVTPL”) with gains and losses arising from
changes in fair value included in the income statement for the
period.
C. Classification of financial liabilities and equity Financial
liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities.
FINANCIAL STATEMENTS
142
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D. Bank borrowings Interest-bearing bank loans and overdrafts
are initially recorded at fair value, which equals the proceeds
received, net of direct issue costs. They are subsequently held
at amortised cost. Finance charges, including premiums
payable on settlement or redemption and direct issue costs,
are accounted for using an effective interest rate method and
are added to, or deducted from, the carrying amount of the
instrument.
E. Loan notes Long-term loans are initially measured at fair
value net of direct issue costs and are subsequently held at
amortised cost. If the loan is designated in a fair value hedge
relationship, the carrying value of the loan is adjusted for fair
value gains or losses attributable to the risk being hedged.
F. Trade payables Trade payables are recorded initially at fair
value and subsequently measured at amortised cost.
Generally, this results in their recognition at their nominal
value.
G. Equity instruments Equity instruments issued by the Group
are recorded at the consideration received, net of direct issue
costs.
Derivative financial instruments and hedging activities
The Group primarily uses cross-currency swaps and forward
foreign currency contracts to manage its exposures to
fluctuations in interest rates and foreign exchange rates. These
instruments are initially recognised at fair value on the trade
date and are subsequently remeasured at their fair value at the
end of the reporting period. The method of recognising the
resulting gain or loss is dependent on whether the derivative is
designated as a hedging instrument and the nature of the item
being hedged.
The Group designates certain hedging derivatives as either:
– A hedge of a highly probable forecast transaction or change
in the cash flows of a recognised asset or liability (a cash flow
hedge); or
– A hedge of the exposure to change in the fair value of a
recognised asset or liability (a fair value hedge).
At the inception of a hedging relationship, the hedging
instrument and the hedged item are documented, along with
the risk management objectives and strategy for undertaking
various hedge transactions and prospective effectiveness
testing is performed. During the life of the hedging
relationship, prospective effectiveness testing is performed to
ensure that the instrument remains an effective hedge of the
transaction. Changes in the fair value of derivative financial
instruments that do not qualify for hedge accounting are
recognised in the income statement as they arise.
A. Cash flow hedges Changes in the fair value of derivative
financial instruments that are designated and effective as
hedges of future cash flows are recognised in other
comprehensive income. The element of the change in fair value
which relates to the foreign currency basis spread is recognised
in the cost of hedging reserve, with the remaining change in fair
value recognised in the hedging reserve and any ineffective
portion is recognised immediately in the income statement in
finance costs. If the firm commitment or forecast transaction
that is the subject of a cash flow hedge results in the recognition
of a non-financial asset or liability, then, at the time the asset or
liability is recognised, the associated gains or losses on the
derivative that had previously been recognised in other
comprehensive income and accumulated in the cash flow
hedge reserve are removed directly from equity and included in
the initial measurement of the asset or liability. If the hedged
item is transaction-related, the foreign currency basis spread is
reclassified to profit or loss when the hedged item affects profit
or loss. If the hedged item is time-period related, then the
amount accumulated in the cost of hedging reserve is
reclassified to profit or loss on a systematic and rational basis.
Those reclassified amounts are recognised in profit or loss in the
same line as the hedged item. If the hedged item is a non-
financial item, then the amount accumulated in the cost of
hedging reserve is removed directly from equity and included in
the initial carrying amount of the recognised non-financial item.
For hedges that do not result in the recognition of an asset or a
liability, amounts deferred in the cash flow hedge reserve are
recognised in the income statement in the same period in
which the hedged items affect net profit or loss.
B. Fair value hedges Changes in the fair value of a derivative
instrument designated in a fair value hedge are recognised in
the income statement. The hedged item is adjusted for
changes in fair value attributable to the risk being hedged with
the corresponding entry in the income statement.
Changes in the fair value of derivative financial instruments
that do not qualify for hedge accounting are recognised in the
income statement as they arise.
C. Discontinuance of hedge accounting Hedge accounting is
discontinued when the hedge relationship no longer qualifies
for hedge accounting. This includes when the hedging
instrument expires, is sold, terminated or exercised, or when
occurrence of the forecast transaction is no longer highly
probable. The Group cannot voluntarily de-designate a
hedging relationship.
When a cash flow hedge is discontinued, any cumulative gain or
loss on the hedging instrument accumulated in the cash flow
hedge reserve is retained in equity until the forecast
transaction occurs. Subsequent changes in the fair value are
recognised in the income statement. If a hedged transaction is
no longer expected to occur, the net cumulative gain or loss
accumulated in the cash flow hedge reserve is transferred to
the income statement for the period.
When a fair value hedge is discontinued, the fair value
adjustment to the carrying amount of the hedged item arising
from the hedged risk is amortised to the income statement
based on the recalculated effective interest rate at that date.
The Group does not use derivatives to hedge income
statement translation exposures.
Reserves
The following describes the nature and purpose of each reserve
within equity:
A. Share premium account Proceeds received in excess of the
nominal value of shares issued, net of any transaction costs.
B. Capital redemption reserve Amounts transferred from
share capital on redemption or repurchase of issued shares.
C. Hedging reserve Cumulative gains and losses on hedging
instruments deemed effective in cash flow hedges.
D. Cost of hedging Cumulative gains and losses on the portion
excluded from the designated hedging instrument that relates
to changes in the foreign currency basis.
E. Other reserve Originally created as part of the capital
restructuring that took place in 2002. It represents the
difference between the nominal value of the shares issued
prior to the capital reduction by the Company (being the
carrying value of the investment in Marks and Spencer plc) and
the share capital, share premium and capital redemption
reserve of Marks and Spencer plc at the date of the transaction.
INTRODUCTION
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Annual Report & Financial Statements 2024
143
F. Foreign exchange reserve Gains and losses arising on
retranslating the net assets of overseas operations into
sterling.
G. Retained earnings All other net gains and losses and
transactions with owners (e.g. dividends) not recognised
elsewhere.
Critical accounting judgements and key sources of
estimation uncertainty
The preparation of consolidated financial statements requires
the Group to make estimates and judgements that affect the
application of policies and reported amounts.
Critical judgements represent key decisions made by
management in the application of the Group accounting
policies. Where a significant risk of materially different
outcomes exists due to management assumptions or sources
of estimation uncertainty, this will represent a key source of
estimation uncertainty. Estimates and judgements are
continually evaluated and are based on historical experience
and other factors, including expectations of future events that
are believed to be reasonable under the circumstances. Actual
results may differ from these estimates.
The estimates which have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities
within the next 12 months are discussed below.
Critical accounting judgements
Adjusting items
The directors believe that the adjusted profit and earnings per
share measures provide additional useful information to
shareholders on the performance of the business. These
measures are consistent with how business performance is
measured internally by the Board and Executive Committee.
The profit before tax and adjusting items measure is not a
recognised profit measure under IFRS and may not be directly
comparable with adjusted profit measures used by other
companies. The classification of adjusting items requires
significant management judgement after considering the
nature and intentions of a transaction. The Group’s definitions
of adjusting items are outlined within both the Group
accounting policies and the Glossary. These definitions have
been applied consistently year on year.
Note 5 provides further details on current year adjusting items
and their adherence to Group policy.
UK defined benefit pension surplus
Where a surplus on a defined benefit scheme arises, the rights
of the Trustees to prevent the Group obtaining a refund of that
surplus in the future are considered in determining whether it is
necessary to restrict the amount of the surplus that is
recognised. The UK defined benefit scheme is in surplus at 30
March 2024.
Following consultation with external advisers, the directors
have made the judgement that these amounts meet the
requirements of recoverability on the basis that paragraph 11(b)
of IFRIC 14 applies, enabling a refund of surplus assuming the
gradual settlement of the scheme liabilities over time until all
members have left the scheme, and a surplus of £81.8m has
been recognised.
Assessment of control over Ocado Retail Limited
The directors have assessed that the Group has significant
influence over Ocado Retail Limited and has therefore
accounted for the investment as an associate (see note 29). This
assessment is based on the current rights held by the
respective shareholders and requires judgement in assessing
these rights. These rights include determinative rights
currently held by Ocado Group plc, after agreed dispute
resolution procedures, in relation to the approval of the Ocado
Retail Limited business plan and budget and the appointment
and removal of Ocado Retail Limited’s Chief Executive Officer.
Any future change to these rights requires a reassessment of
control and could result in a change in the status of the
investment from associate to joint venture, subsidiary or
investment.
Determining the lease term
The Group determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to terminate the
lease if it is reasonably certain not to be exercised.
The Group has several lease contracts for land and buildings
that include extension and termination options. The Group
applies judgement in evaluating whether it is reasonably
certain whether or not to exercise the option to renew or
terminate the lease. That is, it considers all relevant factors that
create an economic incentive for it to exercise either the
renewal or termination, including: whether there are significant
penalties to terminate (or not extend); whether any leasehold
improvements are expected to have a significant remaining
value; historical lease durations; the importance of the
underlying asset to the Group’s operations; and the costs and
business disruption required to replace the leased asset.
Most renewal periods and periods covered by termination
options are included as part of the lease term for leases of land
and buildings. The Group typically exercises its option to renew
(or does not exercise its option to terminate) for these leases
because there will be a significant negative effect on trading if
a replacement property is not readily available.
The lease term is reassessed if a significant event or a
significant change in circumstances occurs which affects the
assessment of reasonable certainty, for example if a store is
identified to be closed as part of the store estate strategic
programme.
Determining whether forecast purchases are highly probable
The Group is exposed to foreign currency risk, most
significantly to the US dollar as a result of sourcing Clothing &
Home products from Asia which are paid for predominantly in
US dollars. The Group hedges these exposures using forward
foreign exchange contracts and hedge accounting is applied
when the requirements of IFRS 9 are met, which include that a
forecast transaction must be “highly probable”.
The Group has applied judgement in assessing whether
forecast purchases are “highly probable”. In making this
assessment, the Group has considered the most recent
budgets and plans. The Group’s policy is a “layered” hedging
strategy where only a small fraction of the forecast purchase
requirements is initially hedged, with incremental hedges
layered on over time as the buying period for that season
approaches and therefore as certainty increases over the
forecast purchases. As a result of this progressive strategy, a
reduction in the supply pipeline of inventory does not
immediately lead to over-hedging and the disqualification of
“highly probable”. If the forecast transactions were no longer
expected to occur, any accumulated gain or loss on the
hedging instruments would be immediately reclassified to
profit or loss.
FINANCIAL STATEMENTS
144
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Key sources of estimation uncertainty
Climate change impact
In preparing the consolidated financial statements, the Group
has considered the impact of climate change, particularly in
the context of the TCFD disclosures set out on pages 44 to 58
and the Group’s sustainability targets. The Group’s existing
fixed asset replacement programme is phased over several
years and therefore any changes in the requirements
associated with climate change would not have a material
impact in any given year. The costs expected to be incurred in
connection with the Group’s commitments are included within
the Group’s budget and three-year plan which have been used
to support the impairment reviews of non-current assets and
the going concern and viability assessments. Further
disclosures in relation to the impact of climate change on the
impairment assessment of intangibles and property, plant and
equipment are included in notes 14 and 15. Given the identified
risks are expected to be present in the medium to long-term,
the impact of climate change on the going concern period and
viability of the Group over the next three years is not expected
to be material and is therefore not currently classified as a key
source of estimation uncertainty.
Store estate programme
The Group is undertaking a significant strategic programme to
review its store estate, resulting in a net charge of £93.0m (last
year: £51.3m) in the year. A significant level of estimation has
been used to determine the charges to be recognised in the
year. The most significant judgement that impacts the charge
is that the stores identified as part of the programme are more
likely than not to close. Further significant closure costs and
impairment charges may be recorded in future years,
depending on decisions made about further store closures and
the successful delivery of the transformation programme.
Where a store closure has been announced, there is a reduced
level of estimation uncertainty as the programme actions are
to be taken over a shorter and more immediate timeframe.
Further significant estimation uncertainty arises in respect of
determining the recoverable amount of assets and the costs to
be incurred as part of the programme. Significant assumptions
have been made including:
– Reassessment of the useful lives of store fixed assets and
closure dates.
– Estimation in respect of the expected shorter-term trading
value in use, including assumptions with regard to the period
of trading as well as changes to future sales, gross margin
and operating costs.
– Estimation of the sale proceeds for freehold stores which is
dependent upon location-specific factors, timing of likely
exit and future changes to the retail property market
valuations.
– Estimation of the value of dilapidation payments required for
leasehold store exits, which is dependent on a number of
factors including the extent of modifications of the store, the
terms of the lease agreement, and the condition of the
property.
The assumption most likely to have a material impact is closure
date. See notes 5 and 15 for further detail.
Post-retirement benefits
The determination of pension net interest income and the
defined benefit obligation of the Group’s defined benefit
pension schemes depends on the selection of certain
assumptions which include the discount rate, inflation rate and
mortality rates. Differences arising from actual experiences or
future changes in assumptions will be reflected in subsequent
periods. The fair value of unquoted investments within total
plan assets is estimated with consideration of fair value
estimates provided by the manager of the investment or fund.
See note 11 for further details on the impact of changes in the
key assumptions and estimates.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
145
2 SEGMENTAL INFORMATION
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reporting on components of the
Group that are regularly reviewed by the chief operating decision-maker to allocate resources to the segments and to assess their
performance.
The chief operating decision-maker has been identified as the Executive Committee. The Executive Committee reviews the
Group’s internal reporting in order to assess performance and allocate resources across each operating segment.
The Group’s reportable operating segments have therefore been identified as follows:
– UK Clothing & Home – comprises the retailing of womenswear, menswear, lingerie, kidswear and home products through UK
retail stores and online.
– UK Food – includes the results of the UK retail food business, UK Food franchise operations and UK supply chain services, with
the following five main categories: protein deli and dairy; produce; ambient and in-store bakery; meals, dessert and frozen;
hospitality and “Food on the Move”; and direct sales to Ocado Retail Limited.
– International – consists of Marks and Spencer-owned businesses in Europe and Asia and the international franchise operations.
– Ocado – includes the Group’s share of profits or losses from the investment in Ocado Retail Limited.
Other business activities and operating segments, including M&S Bank and M&S Energy, are combined and presented in “All other
segments”. Finance income and costs are not allocated to segments as each is managed on a centralised basis.
The Executive Committee assesses the performance of the operating segments based on a measure of adjusted operating profit.
This measurement basis excludes the effects of adjusting items from the operating segments.
The following is an analysis of the Group’s revenue and results by reportable segment:
52 weeks ended 30 March 2024
52 weeks ended 1 April 2023
UK
Clothing &
Home
£m
UK
Food
£m
International
£m
Ocado
£m
All
other
segments
£m
Group
£m
UK
Clothing &
Home
£m
UK
Food
£m
International
£m
Ocado
£m
All
other
segments
£m
Group
£m
Sales1
3,910.7
8,158.8
1,039.8
–
– 13,109.3
3,715.0
7,218.0
1,055.0
–
–
11,988.0
Revenue
3,841.5
8,158.8
1,039.8
–
– 13,040.1
3,658.3
7,218.0
1,055.0
–
–
11,931.3
Adjusted
operating
profit/(loss)2
402.8
395.3
75.6
(37.3)
2.2
838.6
323.8
248.0
84.8
(29.5)
(0.5)
626.6
Finance income
before adjusting
items3
58.0
29.4
Finance costs
before adjusting
items3
(180.2)
(202.7)
Profit/(loss)
before tax and
adjusting items
402.8
395.3
75.6
(37.3)
2.2
716.4
323.8
248.0
84.8
(29.5)
(0.5)
453.3
Adjusting items3
(43.9)
22.4
Profit/(loss)
before tax
402.8
395.3
75.6
(37.3)
2.2
672.5
323.8
248.0
84.8
(29.5)
(0.5)
475.7
1 . Sales is revenue stated prior to adjustments for UK Clothing & Home brand consignment sales of £69.2m (last year: £56.7m).
2 . Adjusted operating profit/(loss) is stated as gross profit less operating costs prior to adjusting items. At reportable segment level costs are allocated where directly
attributable or based on an appropriate cost driver for the cost.
3 . See note 1 for details on a change in adjusting items and the resulting restatement.
FINANCIAL STATEMENTS
146
Marks and Spencer Group plc
Other segmental information
52 weeks ended 30 March 2024
52 weeks ended 1 April 2023
UK
Clothing &
Home
£m
UK
Food
£m
International
£m
Ocado
£m
All other
segments
£m
Group
£m
UK
Clothing &
Home
£m
UK
Food
£m
International
£m
Ocado
£m
All
other
segments
£m
Group
£m
Additions to
property, plant and
equipment, and
intangible assets
(excluding goodwill
and right-of-use
assets)
193.5
201.0
18.9
–
–
413.4
170.4
221.1
29.9
–
–
421.4
Depreciation and
amortisation1,2
(219.6)
(236.6)
(45.4)
–
–
(501.6)
(267.9)
(274.8)
(35.7)
–
–
(578.4)
Impairment
charges,
impairment
reversals and asset
disposals1
(43.4)
(29.0)
–
–
–
(72.4)
10.2
6.1
(1.9)
–
–
14.4
1 These costs are allocated to a reportable segment where they are directly attributable. Where costs are not directly attributable, a proportional allocation is made to
each segment based on an appropriate cost driver.
2 Includes £0.2m (last year: £0.2m) depreciation and impairments on investment property.
Segment assets and liabilities, including investments in associates and joint ventures, are not disclosed because they are not
reported to or reviewed by the Executive Committee.
3 EXPENSE ANALYSIS
2024
£m
2023
£m
Revenue
13,040.1
11,931.3
Cost of sales
(8,447.2)
(7,786.7)
Gross profit
4,592.9
4,144.6
Selling and administrative expenses
(3,822.4)
(3,609.2)
Other operating income
23.6
23.2
Share of results of Ocado Retail Limited
(79.9)
(43.5)
Operating profit
714.2
515.1
The figures above include £124.4m (last year: £111.5m) adjusting item charges within operating profit (see note 5). These are further
analysed against the categories of selling and administrative expenses (£81.8m; last year: £103.8m), other operating income (£nil;
last year: £6.3m) and share of results of Ocado Retail Limited (£42.6m; last year: £14.0m).
The selling and administrative expenses are further analysed below:
2024
£m
2023
£m
Employee costs1
1,505.9
1,449.5
Occupancy costs
493.8
463.9
Repairs, renewals and maintenance of property
134.5
111.2
Depreciation, amortisation and asset impairments and disposals2
607.2
574.7
IT costs
229.9
228.6
Marketing costs
249.4
220.2
Other costs3
601.7
561.1
Selling and administrative expenses
3,822.4
3,609.2
1 There are an additional £268.2m (last year: £155.8m) employee costs recorded within cost of sales. These costs are included within the aggregate remuneration
disclosures in note 10A.Last year is restated to reflect certain employee costs related to Gist Limited and Gist Distribution Limited, omitted in error.
2 Includes £0.2m (last year: £0.2m) depreciation and £nil (last year: £2.9m) impairment charged on investment property.
3 Includes costs such as logistics, professional fees and sundry costs.
Adjusting items categorised as selling and administrative expenses are further analysed as employee income £1.9m (last year
£19.0m cost); occupancy costs £20.6m (last year: cost £8.2m); depreciation, amortisation and asset impairments and disposals
£29.6m (last year: £43.0m); and other costs £33.5m (last year: £33.6m).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
147
4 PROFIT BEFORE TAXATION
The following items have been included in arriving at profit before taxation:
2024
£m
2023
£m
Net foreign exchange (gains)/losses
0.4
6.7
Cost of inventories recognised as an expense
7,419.2
6,751.3
Write-down of inventories recognised as an expense
300.6
266.0
Depreciation of property, plant and equipment1
– owned assets
275.0
310.5
– right-of-use assets
172.1
180.9
Amortisation of intangible assets
54.7
87.0
Impairments and disposals of intangible assets and property, plant and equipment2
78.8
35.4
Impairment reversals of property, plant and equipment
(32.0)
(40.2)
Impairments of right-of-use assets
21.7
14.8
Impairment reversals of right-of-use assets
(13.6)
(14.9)
1 Includes £0.2m (last year: £0.2m) depreciation charged on investment property.
2 Includes £nil (last year: £2.9m) impairment charged on investment property.
Included in administrative expenses is the auditor’s remuneration, including expenses for audit and non-audit services, payable
to the Company’s auditor Deloitte LLP and its associates as follows:
2024
£m
2023
£m
Annual audit of the Company and the consolidated financial statements
2.1
2.0
Audit of subsidiary companies
0.7
0.7
Total audit fees
2.8
2.7
Audit-related assurance services
0.3
0.3
Total non-audit services fees
0.3
0.3
Total audit and non-audit services
3.1
3.0
FINANCIAL STATEMENTS
148
Marks and Spencer Group plc
5 ADJUSTING ITEMS
The total adjusting items reported for the 52-week period ended 30 March 2024 is a net charge of £43.9m (last year: restated net
credit of £22.4m). Refer to note 1 for further details on the restatement. The adjustments made to reported profit before tax to
arrive at adjusted profit are:
Notes
2024
£m
2023
£m
Included in share of result of associate – Ocado Retail Limited
Ocado Retail Limited – UK network capacity review
29
(29.7)
–
Amortisation and fair value adjustments arising as part of the investment in Ocado
Retail Limited
29
(12.9)
(14.0)
(42.6)
(14.0)
Included in operating profit
Strategic programmes – Store estate
15,22
(93.0)
(51.3)
Strategic programmes – Furniture simplification
22
(18.3)
–
Strategic programmes – Organisation
17
(3.5)
(10.7)
Strategic programmes – Structural simplification
22
–
(16.4)
Strategic programmes – UK logistics
15,22
5.3
(10.5)
Store impairments, impairment reversals and other property charges
15
35.1
15.1
M&S Bank transformation and insurance mis-selling provisions
(7.0)
(2.0)
Acquisition of Gist Limited
(0.4)
(22.1)
Franchise restructure
–
0.4
(81.8)
(97.5)
Included in net finance income/(costs)
Remeasurement of Ocado Retail Limited contingent consideration
64.7
108.0
Pension net finance income1
11
24.0
28.7
Net finance costs incurred in relation to Gist Limited deferred and contingent consideration
(8.2)
(2.8)
80.5
133.9
Adjustments to profit before tax1
(43.9)
22.4
1. See note 1 for details on restatement.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Ocado Retail Limited – UK network capacity review (£29.7m)
On 25 April 2023, Ocado Retail Limited announced the plan to
cease operation at its Customer Fulfilment Centre (“CFC”) in
Hatfield as part of the wider review of UK network capacity.
During H2 2023/24, Ocado Retail Limited also undertook a
strategy and capacity review for the Zoom network.
As a result, Ocado Retail Limited has recorded impairment
charges, restructuring costs and other related costs of closure.
The Group’s share of these costs, reported within the Group’s
“share of result of associate – Ocado Retail Limited”, are
considered to be adjusting items as they are one-off in nature
and significant in value to the results of the Group and to the
Ocado segment. No further charges are expected in this
programme.
Amortisation and fair value adjustments arising as part of
the investment in Ocado Retail Limited (£12.9m)
Intangible assets of £366.0m were acquired as part of the
investment in Ocado Retail Limited in 2019/20 relating to the
Ocado brand and acquired customer relationships. These
intangibles are being amortised over their useful economic
lives of 10-40 years with an amortisation charge of £17.2m (last
year: £17.1m) recognised in the period and a related deferred tax
credit of £4.3m (last year: £3.1m).
The amortisation charge and changes in the related deferred
tax liability are included within the Group’s share of the profit or
loss of the associate and are considered to be adjusting items
as they are based on judgements about their value and
economic life and are not related to the Group’s underlying
trading performance. These charges are reported as adjusting
items on the basis that they are significant in quantum and to
aid comparability from one period to the next.
Strategic programmes – Store estate (£93.0m)
In November 2016, the Group announced a strategic
programme to transform and rotate the store estate with the
overall objective to improve our store estate to better meet our
customers’ needs. The Group has incurred charges of £963m in
the eight years up to March 2024 under this programme
primarily relating to closure costs associated with stores
identified as part of the strategic transformation plans.
The Group has recognised a charge of £93.0m in the period in
relation to those stores identified as part of the rotation plans.
The charge primarily reflects the latest view of store closure
plans and latest assumptions for estimated store closure costs,
as well as charges relating to the impairment of buildings and
fixtures and fittings, and depreciation as a result of shortening
the useful economic life of stores based on the most recent
approved exit routes.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
149
Further charges relating to the closure and rotation of the store
estate are anticipated over the next seven years as the
programme progresses, the quantum of which is subject to
change throughout the programme period as the Group gets
greater certainty of circumstances that need to be in place to
make closure financially viable. Future charges will not include
Foodhall closures at a lease event where there is opportunity
for a better location, as this is not in the scope of the
programme.
As at 30 March 2024, the total closure programme now consists
of 211 stores, 122 of which have already closed. Further charges
of c.£209m are estimated within the next seven financial years,
bringing anticipated total programme costs since 2016 to
c.£1.2bn. In addition, where store exit routes in the next seven
years lead to the recognition of gains on exit, particularly those
relating to asset management, these credits will also be
recognised within adjusting items as part of the programme.
The anticipated total programme costs to date do not include
any costs that may arise in relation to a further c.30 stores
currently under consideration for closure within the next seven
years. At this stage these c.30 stores remain commercially
supportable and in the event of a decision to close the store,
the exit routes are not yet certain.
These costs are reported as adjusting items on the basis that
they are significant in quantum, relate to a strategic initiative
focused on reviewing our store estate and to aid comparability
from one period to the next. The programme includes all stores
within the programme to be closed by 2030/31, but charges in
the year, and future charges, did not include Foodhall closures
at a lease event where there is opportunity to secure a better
location.
Strategic programmes – Furniture simplification (£18.3m)
In March 2024 the Group withdrew from its two-person
furniture delivery operation. Following this the Group will no
longer sell bulky products through its existing 2-person
delivery network.
As part of this closure the Group has incurred £18.3m of one-off
charges that are not considered to be day-to-day operational
costs of the business. This mainly relates to contractual
obligations with suppliers.
These costs are adjusting items as they relate to a significant
withdrawal of an operation within the UK Clothing & Home
segment and the business would not have incurred these costs
but for the closure. Further costs of £7.2m are expected in
2024/25 in relation to the operation closure, expected to be
offset by profit on disposal of a distribution centre in the range
of £5.0m to £15.0m.
Strategic programmes – Organisation (£3.5m)
During 2016/17, the Group announced a wide-ranging strategic
review across a number of areas of the business which included
UK organisation and the programme to centralise our London
Head Office functions into one building. In the period, an
impairment charge of £3.5m has been recognised (last year:
£10.7m impairment). This relates to the updating of
assumptions and market fluctuations over the life of the
sub-let of previously closed offices. Total costs of centralising
our London Head Office functions into one building incurred to
date are c.£101m. Any future charges/reversals will relate to the
updating of assumptions and market fluctuations over the life
of the sub-let lease to September 2040.
These charges are reported as adjusting items as they are
significant in value in total, relate to a strategic initiative, are
not considered to be normal operating costs of the business
and are consistent with the disclosure of costs previously
recognised.
Strategic programmes – UK logistics (£5.3m credit)
In 2017/18, as part of the previously announced long-term
strategic programme to transition to a single-tier UK
distribution network, the Group announced the opening of a
new Clothing & Home distribution centre in Welham Green,
Hertfordshire. As a direct result, the Group announced the
closure of two existing distribution centres. In February 2020,
the next phase of the single tier programme was announced
with the closure of three further distribution centres across
2020/21, 2021/22 and 2022/23.
A net credit of £5.3m has been recognised in the period,
reflecting a revised view of estimated closure costs. Total
programme costs to date are £23.1m with further net charges
of £14.7m expected over the next four financial years.
These charges are reported as adjusting items on the basis that
they are significant in quantum, relate to a strategic initiative
focused on reviewing our UK logistics network and to aid
comparability from one period to the next.
Store impairments, impairment reversals and property
charges (£35.1m credit)
The Group has recognised a number of charges and credits in
the period associated with the carrying value of items of
property, plant and equipment.
The Group has performed impairment testing based on the
latest Board approved budget and three-year plan future cash
flow projections for UK and International stores (excluding
those stores that have been captured as part of the store estate
programme). As a result, store impairment testing has
identified stores where the current and anticipated future
performance does not support the carrying value of the stores.
A charge of £0.5m (last year: £18.0m) has been incurred
primarily in respect of the impairment of assets associated with
these stores. In addition, a credit of £35.6m (last year: £33.1m)
has been recognised for the reversal of store impairments
incurred in previous periods, where revised future cash flow
projections more than support the carrying value of the stores,
reflecting improved trading expectations compared to those
assumed at the prior year end. Refer to note 15 for further
details on the impairments.
The charges/credits have been classified as an adjusting item
on the basis of the significant quantum of the charge/credit in
the period to the results of the Group. Any future charges or
reversals relating to stores previously impaired within adjusting
items will continue to be recognised within adjusting items in
line with the original charge. Any future charges or reversals
relating to stores not previously impaired within adjusting
items or not otherwise meeting the Group’s adjusting items
policy will be recognised in the underlying results.
M&S Bank transformation and insurance mis-selling
provisions (£7.0m)
Up until April 2024, the Group had an economic interest in
Marks and Spencer Financial Services plc (trading as M&S Bank),
a wholly owned subsidiary of HSBC UK Bank plc, by way of a
Relationship Agreement that entitles the Group to a 50% share
of the profits of M&S Bank after appropriate deductions. The
Group did not share in any losses of M&S Bank and is not
obliged to refund any profit share received from HSBC,
although future income may have been impacted by significant
one-off deductions.
Since the year ended 31 December 2010, M&S Bank has
recognised in its audited financial statements an estimated
liability for redress to customers in respect of possible mis-
selling of financial products. The Group’s profit share and fee
income from M&S Bank has been reduced by the deduction of
the estimated liability in both the current and prior years. In line
FINANCIAL STATEMENTS
150
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
with the accounting treatment that was in the Relationship
Agreement, there was a cap on the amount of charges that
could be offset against the profit share in any one year,
whereby excess liabilities carried forward would be deducted
from the Group’s future profit share from M&S Bank. The
deduction in the period is £2.0m (last year: £2.0m).
The treatment of this in adjusting items is in line with previous
charges in relation to settlement of PPI claims and although it
is recurring, it is significant in quantum in the context of the
total charges recognised for PPI mis-selling to-date and is not
considered representative of the normal operating
performance of the Group. As previously noted, while the
August 2019 deadline to raise potential mis-selling claims has
now passed, costs relating to the estimated liability for redress
are expected to continue. The total charges recognised in
adjusting items since September 2012 for PPI is £321.9m which
exceeds the total offset against profit share of £248.7m to date
resulting in a deficit of £73.2m as at 30 March 2024.
On 9 April 2024, the Group and HSBC UK agreed a new seven-
year deal focused on enhancing M&S’ credit offering and
payment solutions through M&S Bank and bringing together
digital payments and loyalty for M&S customers.
£5.0m of legal and consultancy costs have been recognised
during the period in connection with the new agreement. Under
the term of the new agreement, material charges are expected
over the next seven years, predominantly related to the
settlement of the existing deficit of £73.2m.
All of these costs are considered to be adjusting items as they
are significant in quantum and have crystallised as a result of
major business change linked to M&S Bank. Recognition of
these costs within adjusting items is consistent with the
disclosure of costs relating to the deficit previously recognised
within adjusting items. Furthermore these costs are significant
in value to the results of both the Group and to the “all other
segments” segment.
Acquisition of Gist Limited (£0.4m)
On 30 September 2022 the Group completed the acquisition of
Gist Limited from Storeshield Limited, a subsidiary of The BOC
Group Limited, as part of M&S’ multi-year programme to
modernise its Food supply chain network to support growth. As
part of the transaction the Group has incurred charges of
£0.4m in the period relating to retention bonuses and had in
the previous year incurred £28.3m of one-off charges to date
that are not considered to be day-to-day operational costs of
the business. Transaction costs of £6.8m were incurred and
£3.3m of other costs, mainly retention bonuses, along with
£18.2m of charges relating to the settlement of our pre-existing
relationship with Gist Limited. This was offset by a £6.2m gain
on bargain purchase.
These costs are adjusting items as they relate to a major
transaction and, but for the transaction, the business would
not have incurred these costs and as a result are not considered
to be normal operating costs of the business. No future
charges are expected in this programme.
Remeasurement of contingent consideration including
discount unwind (£64.7m credit)
Contingent consideration, resulting from the investment in
Ocado Retail Limited, is remeasured at fair value at each
reporting date with the changes in fair value recognised in
profit or loss. A credit of £64.7m has been recognised in the
period, representing the revaluation of the contingent
consideration payable. See note 21 for further details. The
change in fair value is considered to be an adjusting item as it
relates to a major transaction and consequently is not
considered representative of the normal operating
performance of the Group.
Net pension finance income (£24.0m credit)
During the year, the Group has reviewed the classification of
net pension finance income or costs and concluded these
should be treated as adjusting items, in line with the Group’s
adjusting items policy.
The net pension finance income or expense can fluctuate
significantly each year due to changes in external market
factors that are outside management’s control. Furthermore,
as the scheme is now closed, it is not considered to be part of
the ongoing operating activities of the Group.
Therefore, consistent with how management assess the
performance of the business, the net pension finance income is
considered to be an adjusting item. To aid comparability, the
comparative amount of £28.7m has been restated.
Net finance costs incurred in relation to Gist Limited
deferred and contingent consideration (£8.2m)
Deferred consideration, resulting from the acquisition of Gist
Limited, is held at amortised cost, whilst the contingent
consideration is remeasured at fair value at each reporting date
with the changes in fair value recognised in profit or loss. A
charge of £8.2m (last year: £2.8m) has been recognised in the
period, representing the discount unwind of the deferred
consideration and revaluation of the contingent consideration
payable. See note 21 for further details. The discount unwind
and change in fair value is considered to be an adjusting item as
it relates to a major transaction and consequently is not
considered representative of the normal operating
performance of the Group. The discount unwind and
remeasurement will be recognised in adjusting items until the
final payments are made.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
151
6 FINANCE INCOME/(COSTS)
2024
£m
2023
£m
Bank and other interest receivable
52.3
22.9
Other finance income
–
0.9
Interest income of subleases
5.7
5.6
Finance income before adjusting items¹
58.0
29.4
Finance income in adjusting items¹
88.7
136.7
Finance income
146.7
166.1
Other finance costs
(6.3)
(6.4)
Interest payable on syndicated bank facility
(4.8)
(4.5)
Interest payable on Medium-Term Notes
(42.2)
(65.4)
Interest payable on lease liabilities
(116.2)
(116.7)
Unwind of discount on provisions
(6.6)
(5.4)
Unwind of discount on Partnership liability to the Marks & Spencer UK Pension Scheme (see note 12)
(4.1)
(4.3)
Finance costs before adjusting items
(180.2)
(202.7)
Finance costs in adjusting items
(8.2)
(2.8)
Finance costs
(188.4)
(205.5)
Net finance costs
(41.7)
(39.4)
1Due to a change in classification of pension net finance income as an adjusting item, the comparative amounts have been restated. See notes 1 and 5 for details.
7 INCOME TAX EXPENSE
A. Taxation charge
2024
£m
2023
£m
Current tax
UK corporation tax on profits for the year at 25% (last year: 19%)
– current year
151.8
67.6
– adjustments in respect of prior years
(8.4)
(3.8)
UK current tax
143.4
63.8
Overseas current taxation
– current year
9.6
9.9
– adjustments in respect of prior years
(2.9)
(3.6)
Total current taxation
150.1
70.1
Deferred tax
– origination and reversal of temporary differences
65.6
26.5
– adjustments in respect of prior years
31.6
8.1
– changes in tax rate
–
6.5
Total deferred tax (see note 23)
97.2
41.1
Total income tax expense
247.3
111.2
FINANCIAL STATEMENTS
152
Marks and Spencer Group plc
B. Taxation reconciliation
The effective tax rate was 36.8% (last year: 23.4%) and is explained below.
2024
£m
2023
£m
Profit before tax
672.5
475.7
Notional taxation at standard UK corporation tax rate of 25% (last year: 19%)
168.1
90.4
Adjustment to land and buildings deferred tax following changes in residual values
21.1
–
Depreciation and other amounts in relation to fixed assets that do not qualify for tax relief
11.2
6.2
Tax benefit arising from UK super deduction regime
–
(7.9)
Other income and expenses that are not taxable or allowable for tax purposes
17.9
16.7
Joint venture results accounted for as profit after tax
8.6
5.5
Impact of tax rate differential
–
6.6
Overseas profits taxed at rates different to those of the UK
(3.3)
0.4
Movement in unrecognised deferred tax assets
(1.1)
0.3
Controlled foreign companies charge
2.1
–
Adjustments to the current and deferred tax charges in respect of prior periods
2.4
5.4
Adjusting items:
– Store and strategic programme impairments and other property charges where no tax relief is available
1.3
2.7
– Cost incurred on acquisition of Gist
0.3
3.6
– Other strategic programme income and expenses that are not taxable or allowable for tax purposes
6.4
2.7
– Amortisation arising as a part of the investment in Ocado Retail Limited
3.2
2.7
– Release of Ocado contingent consideration
(8.7)
(19.4)
– Adjustments to the current and deferred tax charges in respect of prior periods
17.8
(4.7)
Total income tax expense
247.3
111.2
The effective tax rate in respect of the profit adjusting items was 33.2% (last year: 26.4% restated).
Pillar Two legislation was substantively enacted in the UK on 20 June 2023 and will be effective for the Group’s financial year
beginning 1 April 2024.
The Group has applied the temporary exemption under IAS 12 in relation to the accounting for deferred taxes arising from the
implementation of the Pillar Two rules, so that the Group neither recognises nor discloses information about deferred tax assets
and liabilities related to Pillar Two.
The Group has performed an assessment of the Group’s potential exposure to Pillar Two income taxes. The assessment of the
potential exposure to Pillar Two incomes taxes is based on the most recent tax filings, country-by-country reporting and financial
statements for the constituent entities in the Group. Based on the assessment, the Pillar Two effective tax rates in most of the
jurisdictions in which the Group operated are above 15%. However, there are a limited number of jurisdictions where the
transitional safe harbour relief does not apply and the Pillar Two effective tax rate is close to 15%. The Group does not expect a
material exposure to Pillar Two incomes taxes in those jurisdictions.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
153
C. Current tax reconciliation
The current tax reconciliation shows the tax effect of the main adjustments made to the Group’s accounting profits in order to
arrive at its taxable profits. The reconciling items differ from those in note 7B as the effects of deferred tax temporary differences
are ignored below.
2024
£m
2023
£m
Profit before tax
672.5
475.7
Notional taxation at standard UK corporation tax rate of 25% (last year: 19%)
168.1
90.4
Disallowable accounting depreciation and other similar items
66.6
55.8
Deductible capital allowances
(108.0)
(77.9)
Adjustments in relation to employee share schemes
(2.4)
5.8
Adjustments in relation to employee pension schemes
14.6
7.6
Overseas profits taxed at rates different from those of the UK
(3.3)
0.4
Joint venture results accounted for as profit after tax
8.6
5.5
Utilisation or increase of unrecognised losses
–
0.3
Other income and expenses that are not taxable or allowable
15.4
2.8
Controlled foreign companies
2.1
–
Adjusting items:
–
– Store and strategic programme impairments and other property charges where no tax relief is available
4.5
2.7
– Employee pension scheme
(6.0)
(5.5)
– Store estate lease surrender payments
6.0
–
– Other strategic programme income and expenses that are not taxable nor allowable for tax purposes
0.4
2.7
– Cost incurred on acquisition of Gist
0.3
3.6
– Amortisation arising as a part of the investment in Ocado Retail Limited
10.7
2.7
– Release of Ocado contingent consideration
(16.2)
(19.4)
Current year current tax charge
161.4
77.5
Represented by:
UK current year current tax
151.8
67.6
Overseas current year current tax
9.6
9.9
161.4
77.5
UK adjustments in respect of prior years
(8.4)
(3.8)
Overseas adjustments in respect of prior years
(2.9)
(3.6)
Total current taxation (note 7A)
150.1
70.1
8 EARNINGS PER SHARE
The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares
in issue during the year.
The adjusted earnings per share figures have also been calculated based on earnings before adjusting items that are significant in
nature and/or quantum and are considered distortive to underlying results (see note 5). These have been presented to provide
shareholders with an additional measure of the Group’s year-on-year performance.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The Group has four types of dilutive potential ordinary shares, being: those share options
granted to employees where the exercise price is less than the average market price of the Company’s ordinary shares during the
year; unvested shares granted under the Deferred Share Bonus Plan; unvested shares granted under the Restricted Share Plan;
and unvested shares within the Performance Share Plan that have met the relevant performance conditions at the end of the
reporting period.
FINANCIAL STATEMENTS
154
Marks and Spencer Group plc
Details of the adjusted earnings per share are set out below:
2024
£m
2023
£m
Profit attributable to equity shareholders of the Company
431.2
363.4
Add/(less):
Adjusting items (see note 5)1
43.9
(22.4)
Tax on adjusting items1
9.5
(8.2)
Profit before adjusting items attributable to equity shareholders of the Company
484.6
332.8
Million
Million
Weighted average number of ordinary shares in issue
1,973.2
1,963.5
Potentially dilutive share options under Group’s share option schemes
102.7
70.4
Weighted average number of diluted ordinary shares
2,075.9
2,033.9
Pence
Pence
Basic earnings per share
21.9
18.5
Diluted earning per share
20.8
17.9
Adjusted basic earnings per share1
24.6
16.9
Adjusted diluted earnings per share1
23.3
16.4
1. See note 1 for details on a change in adjusting items and the resulting restatement.
9 DIVIDENDS
2024
per share
2023
per share
2024
£m
2023
£m
Dividends on equity ordinary shares
Paid interim dividend
1.0p
–
19.6
–
1.0p
–
19.6
–
With the Group generating a further improvement in operating performance, balance sheet and credit metrics, the Board
restored a dividend to shareholders in the year, starting with an interim dividend of 1.0p per share (last year: 0.0p per share), paid
on 12 January 2024.
The directors have approved a final dividend of 2.0p per share (last year: 0.0p per share), which, in line with the requirements of
IAS 10 Events after the Reporting Period, has not been recognised within these results. This final dividend of c.£40.8m (last year:
£nil) will be paid on 5 July 2024 to shareholders whose names are on the Register of Members at the close of business on 31 May
2024. The ordinary shares will be quoted ex dividend on 30 May 2024.
A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their dividends in the shares of the
Company. For those shareholders electing to receive the DRIP, the last date for receipt of a new election is 14 June 2024.
10 EMPLOYEES
A. Aggregate remuneration
The aggregate remuneration and associated costs of Group employees (including Executive Committee) were:
2024
Total
£m
2023
Total
£m
Wages and salaries1
1,738.1
1,454.9
Social security costs1
128.7
106.0
Pension costs1
104.0
86.6
Share-based payments (see note 13)
42.3
32.7
Employee welfare and other personnel costs
47.5
47.4
Capitalised staffing costs
(20.5)
(14.9)
Total aggregate remuneration2
2,040.1
1,712.7
1. Last year restated to reflect certain employee costs related to Gist Limited and Gist Distribution Limited, omitted in error.
2. Excludes amounts recognised within adjusting items of £1.9m income (last year: £19.0m cost) (see notes 3 and 5).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
155
Details of key management compensation are given in note 28.
B. Average monthly number of employees
2024
2023
UK stores
– management and supervisory categories
4,915
4,823
– other
52,150
50,019
UK support centre
– management and supervisory categories
3,709
3,823
– other
917
822
UK operations
– management and supervisory categories
723
682
– other
6,491
6,856
Overseas
5,392
5,291
Total average number of employees
74,297
72,316
The average number of full-time equivalent employees is 52,639 (last year: 52,092).
11 RETIREMENT BENEFITS
The Group provides pension arrangements for the benefit of its UK employees through the Your M&S Pension Saving Plan (a
defined contribution (“DC”) arrangement) and prior to 2017, through the Marks & Spencer Pension Scheme (“UK DB Pension
Scheme”) (a defined benefit (“DB”) arrangement).
The legacy UK DB Pension Scheme operated on a final pensionable salary basis and is governed by a Trustee board which is
independent of the Group. The UK DB Pension Scheme closed to future accrual on 1 April 2017. There will be no further service
charges relating to the scheme and no future monthly employer contributions for current service. At year end, the UK DB Pension
Scheme had no active members (last year: nil), 46,779 deferred members (last year: 49,634) and 54,085 pensioners (last year:
53,634).
The DC plan is a pension plan under which the Group pays contributions to an independently administered fund. Such
contributions are based upon a fixed percentage of employees’ pay. The Group has no legal or constructive obligations to pay
further contributions to the fund once the contributions have been paid. Members’ benefits are determined by the amount of
contributions paid by the Group and the member, together with the investment returns earned on the contributions arising from
the performance of each individual’s investments and how each member chooses to receive their retirement benefits. As a result,
actuarial risk (that benefits will be lower than expected) and investment risk (that assets invested in will not perform in line with
expectations) fall on the employee. At the year end, the DC arrangement had some 50,641 active members (last year: 56,520) and
some 64,473 deferred members (last year: 52,956).
The Group also operates a small legacy funded DB pension scheme in the Republic of Ireland. This scheme closed to future
accrual on 31 October 2013. Other retirement benefits also include a UK post-retirement healthcare scheme and unfunded
retirement benefits.
The total Group retirement benefit cost was £45.9m (last year: £36.4m). Of this, income of £18.9m (last year: income of £24.1m)
relates to the UK DB Pension Scheme, costs of £61.7m (last year: costs of £57.4m) to the UK DC plan and costs of £3.1m (last year:
costs of £3.1m) to other retirement benefit schemes.
The Group considers two measures of the pension deficit. The accounting position is shown on the Group balance sheet. The
funding position, calculated at the triennial actuarial valuation, is used to agree contributions made to the schemes. The two
measures will vary because they are for different purposes, and are calculated at different dates and in different ways. The key
calculation difference is that the funding position considers the expected returns of scheme assets when calculating the liability,
whereas the accounting position calculated under IAS 19 discounts liabilities is based on corporate bond yields.
The most recent actuarial valuation of the UK DB Pension Scheme was carried out as at 31 March 2021 and showed a funding
surplus of £687m. This is an improvement on the previous position at 31 March 2018 (funding surplus of £652m), primarily due to
lower assumed life expectancy. The Company and Trustee have confirmed, in line with the current funding arrangement, that no
further contributions will be required to fund past service as a result of this valuation (other than those already contractually
committed under the existing Marks and Spencer Scottish Limited Partnership arrangements – see note 12).
By funding its DB pension schemes, the Group is exposed to the risk that the cost of meeting its obligations is higher than
anticipated. This could occur for several reasons, for example:
– Investment returns on the schemes’ assets may be lower than anticipated, especially if falls in asset values are not matched by
similar falls in the value of the schemes’ liabilities.
– The level of price inflation may be higher than that assumed, resulting in higher payments from the schemes.
– Scheme members may live longer than assumed; for example, due to advances in healthcare. Members may also exercise (or
not exercise) options in a way that leads to increases in the schemes’ liabilities; for example, through early retirement or
commutation of pension for cash.
– Legislative changes could also lead to an increase in the schemes’ liabilities.
FINANCIAL STATEMENTS
156
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
In addition, the Group is exposed to additional risks through its obligation to the UK DB Pension Scheme via its interest in the
Scottish Limited Partnership (see note 12). In particular, under the legal terms of the Partnership, a default by the Group on the
rental payments to the Partnership or a future change in legislation could trigger earlier or higher payments to the pension
scheme, or an increase in the collateral to be provided by the Group.
With the pensioner buy-in policies purchased in September 2020, April 2019 and March 2018, the Scheme has now, in total, insured
around 73% of the pensioner cash flow liabilities for pensions in payment. The buy-in policies cover specific pensioner liabilities
and pass all risks to an insurer in exchange for a fixed premium payment, thus reducing the Group’s exposure to changes in
longevity, interest rates, inflation and other factors.
The Group is aware of a UK High Court legal ruling in June 2023 between Virgin Media Limited and NTL Pension Trustees II Limited,
which decided that certain historic rule amendments were invalid if they were not accompanied by the actuarial certifications. The
ruling is subject to appeal and the Group is monitoring developments. As the outcome of the appeal is still unknown, no
adjustments have been made to the Consolidated Financial Statements at 30 March 2024.
A. Pensions and other post-retirement liabilities
2024
£m
2023
£m
Total market value of assets
6,108.9
6,781.9
Present value of scheme liabilities
(6,027.1)
(6,299.9)
Net funded pension plan asset
81.8
482.0
Unfunded retirement benefits
(2.2)
(2.2)
Post-retirement healthcare
(2.4)
(2.4)
Net retirement benefit surplus
77.2
477.4
Analysed in the statement of financial position as:
Retirement benefit asset
81.8
482.0
Retirement benefit deficit
(4.6)
(4.6)
Net retirement benefit surplus
77.2
477.4
In the event of a plan wind-up, the pension scheme rules provide Marks and Spencer plc with an unconditional right to a refund of
surplus assets assuming the full settlement of plan liabilities. In the ordinary course of business, the Trustee has no right to
wind-up or change the benefits due to members of the scheme. As a result, any net surplus in the UK DB Pension Scheme is
recognised in full.
B. Scheme assets
Changes in the fair value of the scheme assets are as follows:
2024
£m
2023
£m
Fair value of scheme assets at start of year
6,781.9
10,090.7
Interest income based on discount rate
313.4
267.0
Actual return on scheme assets excluding amounts included in net interest income¹
(647.8)
(3,231.1)
Actuarial loss – asset ceiling
(2.5)
(38.2)
Employer contributions
0.5
38.1
Benefits paid
(331.8)
(344.9)
Administration costs
(5.2)
(4.6)
Exchange movement
0.4
4.9
Fair value of scheme assets at end of year
6,108.9
6,781.9
1. The actual return on scheme assets was a loss of £334.4m (last year: loss of £2,964.1m).
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
157
C. Pensions and other post-retirement liabilities
Changes in the present value of retirement benefit obligations are as follows:
2024
£m
2023
£m
Present value of obligation at start of year
6,304.5
9,052.5
Current service cost
0.1
0.1
Administration costs
0.2
0.2
Interest cost
289.4
238.3
Benefits paid
(331.8)
(344.9)
Actuarial loss – experience
5.5
250.3
Actuarial gain – demographic assumptions
(102.0)
(205.4)
Actuarial gain – financial assumptions
(134.6)
(2,691.4)
Exchange movement
0.4
4.8
Present value of obligation at end of year
6,031.7
6,304.5
Analysed as:
Present value of pension scheme liabilities
6,027.1
6,299.9
Unfunded pension plans
2.2
2.2
Post-retirement healthcare
2.4
2.4
Present value of obligation at end of year
6,031.7
6,304.5
The average duration of the defined benefit obligation at 30 March 2024 is 13.0 years (last year: 14.0 years).
D. Analysis of assets
The investment strategy of the UK DB Pension Scheme is driven by its liability profile, including its inflation-linked pension
benefits. In addition to its interest in the Scottish Limited Partnership (refer to note 12), the scheme invests in different types of
bond (including corporate bonds and gilts) and derivative instruments (including inflation, interest rate, cross-currency and total
return swaps) in order to align movements in the value of its assets with movements in its liabilities arising from changes in
market conditions. Broadly, the scheme has hedging that covers 93% of interest rate movements and 102% of inflation
movements, as measured on the Trustee’s funding assumptions which use a discount rate derived from gilt yields.
The fair value of the total plan assets at the end of the reporting period for each category is as follows:
2024
2023
Quoted
£m
Unquoted
£m
Total
£m
Quoted
£m
Unquoted
£m
Total
£m
Debt investments
– Government bonds net of repurchase agreements1
1,706.0
(106.2)
1,599.8
2,023.7
(196.6)
1,827.1
– Corporate bonds
12.4
1.1
13.5
12.0
1.2
13.2
– Asset backed securities and structured debt
–
258.8
258.8
–
443.6
443.6
Scottish Limited Partnership Interest (see note 12)
–
88.5
88.5
–
122.8
122.8
Equity investments
– Developed markets
13.2
–
13.2
41.6
–
41.6
– Emerging markets
–
–
–
109.5
–
109.5
Growth asset funds
–
–
– Global property
–
219.3
219.3
–
287.0
287.0
– Hedge and reinsurance
5.7
314.5
320.2
12.0
316.3
328.3
– Private equity and infrastructure
–
148.1
148.1
–
171.9
171.9
Derivatives
– Interest and inflation rate swaps
168.1
–
168.1
7.0
88.6
95.6
– Foreign exchange contracts and other derivatives
(3.5)
–
(3.5)
–
21.4
21.4
Cash and cash equivalents
230.7
–
230.7
4.0
206.2
210.2
Other
– Buy-in insurance
–
2,026.3
2,026.3
–
2,150.0
2,150.0
– Secure income asset funds
–
1,064.4
1,064.4
–
998.3
998.3
Total2
2,132.6
4,014.8
6,147.4
2,209.8
4,610.7
6,820.5
1. Repurchase agreements were £106.2m (last year: £196.6m).
2. The difference between the total assets of £6,147.4m above compared to £6,108.9m is £38.5m.This relates to the cap applied to the Irish DB scheme and therefore
the actuarial gain is not recognised.
FINANCIAL STATEMENTS
158
Marks and Spencer Group plc
The fair values of the above equity and debt investments are based on publicly available market prices wherever available.
Unquoted investments, hedge funds and reinsurance funds are stated at fair value estimates provided by the manager of the
investment or fund. Property includes both quoted and unquoted investments. The fair value of the Scottish Limited Partnership
interest is based on the expected cash flows and benchmark asset-backed credit spreads. It is the policy of the scheme to hedge a
proportion of interest rate and inflation risk. The scheme reduces its foreign currency exposure using forward foreign exchange
contracts.
E. Financial assumptions
The financial assumptions for the UK DB Pension Scheme and the most recent actuarial valuations of the other post-retirement
schemes have been updated by independent qualified actuaries to take account of the requirements of IAS 19 Employee Benefits
in order to assess the liabilities of the schemes and are as follows:
2024
%
2023
%
Rate of increase in pensions in payment for service
2.1-3.1
2.2-3.2
Discount rate
4.80
4.75
Inflation rate (RPI)
3.20
3.25
Long-term healthcare cost increases
7.20
7.30
F. Demographic assumptions
The UK demographic assumptions are mainly in line with those adopted for the last formal actuarial valuation of the scheme
performed as at 31 March 2021. The UK post-retirement mortality assumptions are based on an analysis of the pensioner
mortality trends under the scheme for the period to March 2021. The specific mortality rates used are based on the VITA lite
tables, with future projections based on up-to-date industry models, parameterised to reflect scheme data. The life expectancies
underlying the valuation are as follows:
2024
2023
Current pensioners (at age 65)
– male
21.7
22.0
– female
24.1
24.4
Future pensioners – currently in deferred status (at age 65) – male
23.0
23.6
– female
25.5
26.1
G. Sensitivity analysis
The table below summarises the estimated impact of reasonably possible changes in the significant actuarial assumptions on the
UK DB Pension Scheme surplus:
2024
£m
2023
£m
Decrease in scheme surplus caused by a decrease in the discount rate of 0.25%
(30.0)
(25.0)
Increase in scheme surplus caused by an increase in the discount rate of 0.25%
25.0
20.0
Decrease in scheme surplus caused by a decrease in the discount rate of 1.0%
(120.0)
(95.0)
Increase in scheme surplus caused by an increase in the discount rate of 1.0%
100.0
80.0
Decrease in scheme surplus caused by a decrease in the inflation rate of 0.25%
(20.0)
(30.0)
Decrease in scheme surplus caused by a decrease in the inflation rate of 0.5%
(40.0)
(60.0)
Increase in scheme surplus caused by decrease in the average life expectancy of one year
130.0
130.0
The sensitivity analysis above is based on a change in one assumption while holding all others constant. Therefore,
interdependencies between the assumptions have not been taken into account within the analysis. The sensitivities reflect the
range of recent assumption movements and illustrate that the financial assumption sensitivities do not move in a linear fashion.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
159
H. Analysis of amounts charged against profits
Amounts recognised in comprehensive income in respect of defined benefit retirement plans are as follows:
2024
£m
2023
£m
Current service cost
0.1
0.1
Administration costs
5.2
4.8
Net interest income
(24.0)
(28.7)
Total
(18.7)
23.8
Remeasurement on the net defined benefit surplus:
Actual return on scheme assets excluding amounts included in net interest income
647.8
3,231.1
Actuarial gain – demographic assumptions
(102.0)
(205.4)
Actuarial loss – experience
5.5
250.3
Actuarial gain – financial assumptions
(134.6)
(2,691.4)
Actuarial loss – asset ceiling
2.5
38.2
Components of defined benefit expense recognised in other comprehensive income
419.2
622.8
12 MARKS AND SPENCER SCOTTISH LIMITED PARTNERSHIP
Marks and Spencer plc is a general partner and the Marks & Spencer UK Pension Scheme is a limited partner of the Marks and
Spencer Scottish Limited Partnership (the “Partnership”). Under the Partnership agreement, the limited partners have no
involvement in the management of the business and shall not take any part in the control of the Partnership. The general partner
is responsible for the management and control of the Partnership and as such, the Partnership is consolidated into the results of
the Group.
The Partnership holds £1.3bn (last year: £1.3bn) of properties at book value which have been leased back to Marks and Spencer
plc. The Group retains control over these properties, including the flexibility to substitute alternative properties into the
Partnership. The first limited Partnership interest (held by the Marks & Spencer UK Pension Scheme), previously entitled the
Pension Scheme to receive £73.0m in 2023 and £54.4m in 2024. During the period, the Group and the Pension Scheme Trustees
agreed to amend the distribution dates so that the Pension Scheme received £40.0m in October 2023 and will receive £89.7m in
June 2024.
The second Partnership interest (also held by the Marks & Spencer UK Pension Scheme), previously entitled the Pension Scheme
to receive a further annual distribution of £36.4m from June 2017 until June 2031. During the period, the Group and the Pension
Scheme Trustees agreed to amend the distribution dates so that the Pension Scheme is entitled to £38.3m in June 2024 and then
an annual distribution of £36.4m from June 2024 to June 2031. All profits generated by the Partnership in excess of these
amounts are distributable to Marks and Spencer plc.
The Partnership liability in relation to the first interest of £88.8m (last year: £124.8m) is included as a financial liability in the
Group’s financial statements as it is a transferable financial instrument and measured at amortised cost, being the net present
value of the future expected distributions from the Partnership. During the year to 30 March 2024 an interest charge of £4.1m (last
year: £4.3m) was recognised in the income statement representing the unwinding of the discount included in this obligation. The
first limited Partnership interest of the Pension Scheme is included within the UK DB Pension Scheme assets, valued at £88.5m
(last year: £122.8m).
The second Partnership interest is not a transferable financial instrument as the Scheme Trustee does not have the right to
transfer it to any party other than a successor Trustee. It is therefore not included as a plan asset within the UK DB pension
scheme surplus reported in accordance with IAS 19. Similarly, the associated liability is not included on the Group’s statement of
financial position, rather the annual distribution is recognised as a contribution to the scheme each year.
The Group and Pension scheme are in ongoing discussions to ensure that the distributions to the scheme are appropriate. If the
ongoing discussions are successfully concluded, the profile of contributions to the scheme would be revised so that distributions
in the year would substantially reduce and the Group would commit to extending the distribution profile, if required, to ensure
that the scheme was fully funded.
13 SHARE-BASED PAYMENTS
This year a charge of £42.3m was recognised for share based payments (last year: £32.7m). Of the total share-based payments
charge, £6.9m (last year: £15.2m) relates to the UK Save As You Earn Share Option scheme, £18.7m (last year: £7.0m) relates to
Performance Share Plans, £3.2m (last year: £3.4m) relates to Restricted Share Plans, £13.4m relates to Deferred Share Bonus
Schemes (last year: £6.9m) and the remaining charge of £0.1m relates to Republic of Ireland Save As You Earn Share Option
Scheme (last year: £0.2m).
In addition, a charge of £6.0m was recognised in relation to Annual Bonus Schemes under the Deferred Share Bonus Scheme (last
year: £5.3m). The Annual Bonus for 2023/24 is due to be granted in July 2024. Further details of the option and share schemes that
the Group operates are provided in the Remuneration Report.
FINANCIAL STATEMENTS
160
Marks and Spencer Group plc
A. Save As You Earn scheme – £6.9m
The Save As You Earn (SAYE) scheme was approved by shareholders for a further 10 years at the 2017 Annual General Meeting
(AGM). Under the terms of the scheme, the Board may offer options to purchase ordinary shares in the Company once in each
financial year to those employees who enter into His Majesty’s Revenue & Customs (HMRC) approved SAYE savings contract. The
scheme allows participants to save up to a maximum of £500 (last year: £500) each month. The price at which options may be
offered is 80% of the average mid-market price for three consecutive dealing days preceding the offer date. The options may
normally be exercised during the six-month period after the completion of the SAYE contract.
2024
2023
Number of
options
Weighted average
exercise price
Number of
options
Weighted average
exercise price
Outstanding at beginning of the year
107,052,423
94.3p
110,562,961
100.9p
Granted
16,992,982
204.0p
14,349,909
99.0p
Exercised
(69,447,176)
83.7p
(690,665)
111.1p
Forfeited
(4,293,304)
119.4p
(14,390,102)
124.9p
Expired
(4,217,661)
149.4p
(2,779,680)
220.0p
Outstanding at end of year
46,087,264
143.2p
107,052,423
94.3p
Exercisable at end of year
9,196,010
83.2p
6,309,033
144.2p
For SAYE share options exercised during the period, the weighted average share price at the date of exercise was 238.7p (last year:
144.1p).
The fair values of the options granted during the year have been calculated using the Black-Scholes model assuming the inputs
shown below:
2024
2023
3-year plan
3-year plan
3-year plan
2021
modified1
Grant date
Dec 23
Dec 22
Dec 22
Share price at grant date
255p
123p
123p
Exercise price
204p
99p
189p
Option life in years
3 years
3 years
3 years
Risk-free rate
3.9%
3.3%
3.3%
Expected volatility
37.6%
51.0%
51.0%
Expected dividend yield
1.2%
0.0%
0.0%
Fair value of option
87p
43p
26p
Incremental fair value of option
n/a
n/a
17p
1. In the prior year, there was a modification to the 2021 scheme relating to employees cancelling awards from previous years in substitution for awards granted under
the 2023 scheme. The fair value of the modified awards has been amortised based on the incremental fair value. The incremental fair value is the difference between
the fair value of the 2023 options being 43p, and the fair value of repriced previous awards, calculated using 2021 award assumptions, keeping the initial exercise
price consistent. The fair value of the modified options, being 17p for 2021 modified options was recognised in operating profit. In the current year, modifications in
relation to previous schemes were immaterial.
Volatility has been estimated by taking the historical volatility in the Company’s share price over a three-year period.
The resulting fair value is expensed over the service period of three years on the assumption that 30% (last year: 27%) of options
will lapse over the service period as employees leave the Group.
Outstanding options granted under the UK Employee SAYE Scheme are as follows:
Number of options
Weighted average remaining
contractual life (years)
Options granted1
2024
2023
2024
2023
Option price
January 2019
–
13,016
–
(0.8)
238p
February 2020
17,994
5,732,723
(0.7)
0.3
151p
February 2021
11,607,154
81,037,194
0.3
1.3
82p
February 2022
5,609,211
6,333,538
1.3
2.3
189p
February 2023
12,381,002
13,935,952
2.3
3.3
99p
February 2024
16,471,903
–
3.3
–
204p
46,087,264 107,052,423
2.1
1.6
143.2p
1. For the purpose of the above table, the option granted date is the contract start date.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
161
B. Performance Share Plan* – £18.7m
The Performance Share Plan (“PSP”) is the primary long-term incentive plan for approximately 145 of the most senior managers
within the Group. It was first approved by shareholders at the 2005 AGM and again at the 2020 AGM. Under the plan, annual
awards, based on a percentage of salary, may be offered. The extent to which an award vests is measured over a three-year period
against financial targets which for 2023/24 included Adjusted Earnings Per Share (“EPS”), Adjusted Return on Capital Employed
(“ROCE”), Total Shareholder Return (“TSR”) and strategic measures. The value of any dividends earned on the vested shares during
the three years may also be paid on vesting. Awards under this plan have been made in each year since 2005. More information is
available in relation to this plan within the Remuneration Report.
During the year, 13,926,961 shares (last year: 22,498,271) were awarded under the plan. The weighted average fair value of the
shares awarded was 192.4p (last year: 139.6p). As at 30 March 2024, 41,854,500 shares (last year: 47,532,523) were outstanding
under the plan.
Movement during the year of share options granted under the PSP Scheme are as follows:
2024
2023
Number of options
Number of options
Outstanding at beginning of the year
47,532,523
44,534,437
Granted
13,926,961
22,498,271
Exercised
(7,429,851)
(20,053)
Lapsed
(12,175,133)
(19,480,132)
Outstanding at end of year
41,854,500
47,532,523
C. Deferred Share Bonus Plan* – £13.4m
The Deferred Share Bonus Plan (“DSBP”) was first introduced in 2005/06 as part of the Annual Bonus Scheme and was reapproved
by shareholders at the 2020 AGM. It may be operated for approximately 4,750 employees within the Group. As part of the plan,
the employees are required to defer a proportion of any bonus paid into shares which will be held for three years. There are no
further performance conditions on these shares, other than continued employment within the Group and the value of any
dividends earned on the vested shares during the deferred period may also be paid on vesting. More information is available in
relation to this plan within the Remuneration Report.
During the year 18,919,979 shares (last year: 29,630,372 shares) have been awarded under the plan in relation to the annual bonus.
As at 30 March 2024, 40,631,579 shares (last year: 26,794,048) were outstanding under the plan.
D. Restricted Share Plan*– £3.2m
The Restricted Share Plan (“RSP”) was established in 2000 as part of the reward strategy for retention and recruitment of senior
managers who are vital to the success of the business and the plan was reapproved by shareholders at the 2020 AGM. The plan
operates for the senior management team. Awards vest at the end of the restricted period (typically between one and three
years) subject to the participant still being in employment of the Company on the relevant vesting date. The value of any
dividends earned on the vested shares during the restricted period may also be paid on vesting. More information is available in
relation to this plan within the Remuneration Report.
During the year, 824,300 shares (last year: 2,624,496) have been awarded under the plan. The weighted average fair value of the
shares awarded was 45.9p (last year: 76.9p). As at 30 March 2024, 3,450,543 shares (last year: 5,557,542) were outstanding under
the plan.
E. Republic of Ireland Save As You Earn scheme – £0.1m
Sharesave, the Company’s Save As You Earn scheme, was introduced in 2009 to all employees in the Republic of Ireland for a
10-year period, after approval by shareholders at the 2009 AGM and again at the 2019 AGM. The scheme allows participants to
save up to a maximum of €500 (last year: €500) each month. The price at which options may be offered is 80% of the average
mid-market price for three consecutive dealing days preceding the offer date. The options may normally be exercised during the
six-month period after the completion of the SAYE contract.
During the year, no options were granted (last year: no options granted). As at 30 March 2024, 426,760 options (last year: 1,264,131)
were outstanding under the scheme.
F. Marks and Spencer Employee Benefit Trust
The Marks and Spencer Employee Benefit Trust (the “Trust”) holds 31,840,513 (last year: 166,057) shares with a book value of £0.3m
(last year: £0.0m) and a market value of £84.4m (last year: £0.3m). These shares were acquired by the Trust through a combination
of market purchases and new issues and are shown as a reduction in retained earnings in the consolidated statement of financial
position. Awards are granted to employees at the discretion of Marks and Spencer plc and the Trust agrees to satisfy the awards in
accordance with the wishes of Marks and Spencer plc under the senior executive share plans described above. Dividends are
waived on all of these shares.
G. ShareBuy
ShareBuy, the Company’s Share Incentive Plan, enables the participants to buy shares directly from their gross salary. This
scheme does not attract an IFRS 2 charge.
* All awards both this year and last year were conditional shares. For the purposes of calculating the number of shares awarded, the share price used is the average of
the mid-market price for the five consecutive dealing days preceding the grant date.
FINANCIAL STATEMENTS
162
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14 INTANGIBLE ASSETS
Goodwill
£m
Brands
£m
Computer
software
£m
Computer
software
under
development
£m
Total
£m
At 2 April 2022
Cost
140.6
118.7
1,570.1
76.1
1,905.5
Accumulated amortisation, impairments and disposals
(112.0)
(113.1)
(1,455.8)
(32.1)
(1,713.0)
Net book value
28.6
5.6
114.3
44.0
192.5
Year ended 1 April 2023
Opening net book value
28.6
5.6
114.3
44.0
192.5
Additions
–
–
5.3
79.1
84.4
Acquired through business combinations
–
–
1.5
1.2
2.7
Transfers and reclassifications
–
–
35.6
(64.2)
(28.6)
Disposals
–
–
(0.7)
–
(0.7)
Amortisation charge
–
(0.6)
(86.4)
–
(87.0)
Exchange difference
(0.2)
–
–
–
(0.2)
Closing net book value
28.4
5.0
69.6
60.1
163.1
At 1 April 2023
Cost
140.6
118.7
1,612.5
92.2
1,964.0
Accumulated amortisation, impairments and disposals
(112.2)
(113.7)
(1,542.9)
(32.1)
(1,800.9)
Net book value
28.4
5.0
69.6
60.1
163.1
Year ended 30 March 2024
Opening net book value
28.4
5.0
69.6
60.1
163.1
Additions
–
–
1.0
68.8
69.8
Transfers and reclassifications
–
–
89.3
(82.2)
7.1
Disposals
–
–
(5.6)
–
(5.6)
Amortisation charge
–
(0.7)
(54.0)
–
(54.7)
Exchange difference
–
–
(0.2)
–
(0.2)
Closing net book value
28.4
4.3
100.1
46.7
179.5
At 30 March 2024
Cost
140.6
118.7
1,702.5
78.8
2,040.6
Accumulated amortisation, impairments and disposals
(112.2)
(114.4)
(1,602.4)
(32.1)
(1,861.1)
Net book value
28.4
4.3
100.1
46.7
179.5
Goodwill related to the following assets and groups of cash-generating units (CGUs):
per una
£m
India
£m
Sports Edit
£m
Other
£m
Total
Goodwill
£m
Net book value at 1 April 2023 and 30 March 2024
16.5
6.4
4.8
0.7
28.4
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
163
Goodwill impairment testing
Goodwill is not amortised but is tested annually for impairment with the recoverable amount being determined from value in use
calculations.
The goodwill balance relates to the goodwill recognised on the acquisition of per una £16.5m (last year: £16.5m), India £6.4m (last
year: £6.4m), Sports Edit £4.8m (last year: £4.8m) and other £0.7m (last year: £0.7m).
Goodwill for India is monitored by management at a country level, including the combined retail and wholesale businesses, and
has been tested for impairment on that basis.
The per una brand is a definite life intangible asset amortised on a straight-line basis over a period of 15 years. The brand
intangible was acquired for a cost of £80.0m and has been fully amortised. It is held at a net book value of £nil (last year: £nil). The
per una goodwill of £16.5m is tested annually for impairment.
The cash flows used for impairment testing are based on the Group’s latest budget and forecast cash flows, covering a three-year
period, which have regard to historical performance and knowledge of the current market, together with the Group’s views on the
future achievable growth and the impact of committed cash flows. The cash flows include ongoing capital expenditure required
to maintain the store network, but exclude any growth capital initiatives not committed.
Cash flows beyond this three-year period are extrapolated using a long-term growth rate based on the Group’s current view of
achievable long-term growth. The Group’s current view of achievable long-term growth for per una is 2.0% (last year: 1.6%), which
is the same as the overall Group long-term growth rate of 2.0% (last year: 2.0%). The Group’s current view of achievable long-term
growth for India is 5.5% (last year: 5.5%).
Management estimates discount rates that reflect the current market assessment of the time value of money and the risks
specific to each asset or CGU. The pre-tax discount rates are derived from the Group’s post-tax weighted average cost of capital
(“WACC”) which has been calculated using the capital asset pricing model, the inputs of which include a country risk-free rate,
equity risk premium, Group size premium and a risk adjustment (beta). The post-tax WACC is subsequently grossed up to a
pre-tax rate and was 13.5% for per una (last year: 13.4%) and 16.1% for India (last year: 15.4%).
The immediately quantifiable impacts of climate change and costs expected to be incurred in connection with our net zero
commitments, are included within the Group’s budget and three-year plan which have been used to support the impairment
reviews, with no material impact on cash flows.
Management has performed sensitivity analysis on the key assumptions in the impairment model using reasonably possible
changes in these key assumptions, both individually and in combination. Management has considered reasonably possible
changes in key assumptions that would cause the carrying amounts of goodwill or brands to exceed the value in use for each
asset.
For both per una and India respectively, there are no reasonably possible changes in key assumptions that would lead to an
impairment and the assumptions do not give rise to a key source of estimation uncertainty.
FINANCIAL STATEMENTS
164
Marks and Spencer Group plc
15 PROPERTY, PLANT AND EQUIPMENT
The Group’s property, plant and equipment of £5,190.1m (last year: £5,203.7m) consists of owned assets of £3,760.8m (last year:
£3,747.7m) and right-of-use assets of £1,429.3m (last year: £1,456.0m).
Property, plant and equipment – owned
Land and
buildings
£m
Fixtures,
fittings and
equipment
£m
Assets in the
course of
construction
£m
Total
£m
At 2 April 2022
Cost
2,764.8
5,275.7
141.2
8,181.7
Accumulated depreciation, impairments and disposals
(812.5)
(3,864.5)
(18.2)
(4,695.2)
Net book value
1,952.3
1,411.2
123.0
3,486.5
Year ended 1 April 2023
Opening net book value
1,952.3
1,411.2
123.0
3,486.5
Additions
0.8
40.0
296.2
337.0
Acquired through business combinations
150.5
38.7
3.8
193.0
Transfers and reclassifications
15.0
292.3
(280.7)
26.6
Disposals
–
(0.7)
–
(0.7)
Impairment reversals
25.8
14.4
–
40.2
Impairment charge
(22.5)
(9.3)
–
(31.8)
Depreciation charge
(59.9)
(250.4)
–
(310.3)
Exchange difference
5.5
1.6
0.1
7.2
Closing net book value
2,067.6
1,537.7
142.4
3,747.7
At 1 April 2023
Cost
2,911.4
5,532.3
160.6
8,604.3
Accumulated depreciation, impairments and disposals
(843.8)
(3,994.6)
(18.2)
(4,856.6)
Net book value
2,067.6
1,537.7
142.4
3,747.7
Year ended 30 March 2024
Opening net book value
2,067.6
1,537.7
142.4
3,747.7
Additions
3.4
26.9
313.3
343.6
Transfers and reclassifications
10.3
304.9
(324.0)
(8.8)
Disposals
(46.5)
(1.6)
(1.1)
(49.2)
Impairment reversals
19.2
12.8
–
32.0
Impairment charge
(9.1)
(14.9)
–
(24.0)
Depreciation charge
(32.5)
(242.3)
–
(274.8)
Exchange difference
(3.5)
(2.1)
(0.1)
(5.7)
Closing net book value
2,008.9
1,621.4
130.5
3,760.8
At 30 March 2024
Cost
2,852.7
5,709.5
148.8
8,711.0
Accumulated depreciation, impairments and disposals
(843.8)
(4,088.1)
(18.3)
(4,950.2)
Net book value
2,008.9
1,621.4
130.5
3,760.8
Disposals in the year include assets with gross book value of £216.1m (last year: £240.9m).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
165
Right-of-use assets
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Land and
buildings
£m
Fixtures,
fittings and
equipment
£m
Total
£m
At 2 April 2022
1,368.4
47.4
1,415.8
Additions
198.0
37.3
235.3
Acquired through business combinations
6.7
14.1
20.8
Transfers and reclassifications
2.1
(0.1)
2.0
Disposals
(27.8)
(10.7)
(38.5)
Impairment reversals
14.9
–
14.9
Impairment charge
(14.8)
–
(14.8)
Depreciation charge
(159.0)
(21.9)
(180.9)
Exchange difference
1.3
0.1
1.4
At 1 April 2023
1,389.8
66.2
1,456.0
Additions
161.1
15.0
176.1
Transfers and reclassifications
1.7
–
1.7
Disposals
(17.6)
–
(17.6)
Impairment reversals
13.6
–
13.6
Impairment charge
(21.7)
–
(21.7)
Depreciation charge
(148.8)
(23.3)
(172.1)
Exchange difference
(6.6)
(0.1)
(6.7)
As at 30 March 2024
1,371.5
57.8
1,429.3
Impairment of property, plant and equipment and right-of-use assets
For impairment testing purposes, the Group has determined that each store is a separate CGU, with the exception of Outlets
stores, which are considered together as one CGU. Click & Collect sales are included in the cash flows of the relevant CGU.
Each CGU is tested for impairment at the balance sheet date if any indicators of impairment and impairment reversal have been
identified. Stores identified within the Group’s store estate programme are automatically tested for impairment (see note 5).
The value in use of each CGU is calculated based on the Group’s latest budget and forecast cash flows, covering a three-year
period, which have regard to historic performance and knowledge of the current market, together with the Group’s views on the
future achievable growth and the impact of committed initiatives. The cash flows include ongoing capital expenditure required to
maintain the store network, but exclude any growth capital initiatives not committed. Cash flows beyond this three-year period
are extrapolated using a long-term growth rate based on management’s future expectations, with reference to forecast GDP
growth. These growth rates do not exceed the long-term growth rate for the Group’s retail businesses in the relevant territory. If
the CGU relates to a store which the Group has identified as part of the store estate programme, the value in use calculated has
been modified by estimation of the future cash flows up to the point where it is estimated that trade will cease and then
estimation of the timing and amount of costs associated with closure detailed fully in note 5. The immediately quantifiable
impacts of climate change and costs expected to be incurred in connection with our net zero commitments, are included within
the Group’s budget and three-year plan which have been used to support the impairment reviews, with no material impact on
cash flows. We also expect any potential store refurbishments to be phased over multiple years and therefore any changes
required due to climate change would not have a material impact in any given year and the warehouse and support centres are
located in areas which we would not expect to be physically impacted by climate change. As a consequence there has been no
material impact in the forecast cash flows used for impairment testing.
The key assumptions in the value in use calculations are the growth rates of sales and gross profit margins, changes in the
operating cost base, long-term growth rates and the risk-adjusted pre-tax discount rate. The pre-tax discount rates are derived
from the Group’s weighted average cost of capital, which has been calculated using the capital asset pricing model, the inputs of
which include a country risk-free rate, equity risk premium, Group size premium and a risk adjustment (beta). The pre-tax discount
rates range from 12.5% to 17.6% (last year: 12.5% to 18.1%). If the CGU relates to a store which the Group has identified as part of the
store estate programme, the additional key assumptions in the value in use calculations are costs associated with closure, the
disposal proceeds from store exits and the timing of the store exits.
FINANCIAL STATEMENTS
166
Marks and Spencer Group plc
Impairments – UK stores excluding the store estate programme
During the year, the Group has recognised an impairment charge of £0.5m and impairment reversals of £31.5m in property, plant
and equipment as a result of UK store impairment testing unrelated to the store estate programme (last year: impairment charge
of £17.3m and impairment reversals of £33.1m). These have been recognised within adjusting items (see note 5). The impaired
stores were impaired to their value in use recoverable amount of £37.4m, which is their carrying value at year end. The stores with
impairment reversals were written-back to the lower of their value in use recoverable amount, and the carrying value if the
impairment had not occurred, of £171.7m.
For UK stores, when considering both impairment charges and reversals, cash flows beyond the three-year period are
extrapolated using the Group’s current view of achievable long-term growth of 2.0%, adjusted to 0% where management believes
the current trading performance and future expectations of the store do not support the growth rate of 2.0%. The rate used to
discount the forecast cash flows for UK stores is 12.5% (last year: 8.5%).
As disclosed in the accounting policies (note 1), the cash flows used within the impairment model are based on assumptions which
are sources of estimation uncertainty and small movements in these assumptions could lead to further impairments.
Management has performed sensitivity analysis on the key assumptions in the impairment model using reasonably possible
changes in these key assumptions across the UK store portfolio.
Neither an increase or reduction in sales of 5% from the three-year plan in year 3, a 25 basis point increase in the discount rate, a 25
basis point increase or reduction in gross profit margin from year 3 onwards, result in a significant change to the impairment
charge or impairment reversal, individually or in combination with the other reasonably possible scenarios considered.
Impairments – Store estate programme
During the year, the Group has recognised an impairment charge of £37.0m and impairment reversals of £14.1m relating to the
ongoing store estate programme (last year: impairment charge of £28.6m and impairment reversals of £22.0m). These stores
were impaired to their value in use recoverable amount of £120.2m, which is their carrying value at year end. The impairment
charge relates to the store closure programme and has been recognised within adjusting items (see note 5). Impairment reversals
predominantly reflect changes to expected store closure dates and improved trading expectations compared to those assumed
at the end of the prior year end.
Where the planned closure date for a store is outside the three-year plan period, no growth rate is applied. The rate used to
discount the forecast cash flows for UK stores is 7.3% (last year: 8.5%).
As disclosed in the accounting policies (note 1), the cash flows used within the impairment models for the store estate programme
are based on assumptions which are sources of estimation uncertainty and small movements in these assumptions could lead to
further impairments. Management has performed sensitivity analysis on the key assumptions in the impairment model using
reasonably possible changes in these key assumptions across the store estate programme.
A delay of 12 months in the date of each store exit would result in a decrease in the impairment charge of £53.5m.
Neither an increase or decrease of 5% from the three-year plan in years 2 and 3, a 25 basis point increase in the discount rate, a 25
basis point reduction in gross profit margin during the period of trading nor a 2% increase in the costs associated with exiting a
store would result in a significant increase to the impairment charge, individually or in combination with the other reasonably
possible scenarios considered.
Impairments – International stores
During the year the Group recognised an impairment charge of £0.7m (last year: £0.7m) in International stores as a result of store
impairment testing.
16 OTHER FINANCIAL ASSETS
2024
£m
2023
£m
Non-current
Other investments¹
12.6
7.9
12.6
7.9
Current
Other investments2
12.3
13.0
12.3
13.0
1. Includes £9.4m (last year: £7.3m) of venture capital investments managed by True Capital Limited. See note 21 for further details.
2. Includes £4.7m (last year: £5.6m) of money market deposits held by Marks and Spencer plc in an escrow account.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
167
17 TRADE AND OTHER RECEIVABLES
2024
£m
2023
£m
Non-current
Lease receivables – net of provision for impairment
62.0
64.6
Other receivables
1.9
2.5
Loans to related parties (see note 28)
92.2
30.0
Prepayments
200.6
201.6
356.7
298.7
Current
Trade receivables
137.2
128.3
Less: provision for impairment of receivables
(1.3)
(5.4)
Trade receivables – net
135.9
122.9
Lease receivables – net of provision for impairment
1.0
0.9
Other receivables
37.0
36.8
Prepayments
109.0
97.0
Accrued income
19.1
23.0
302.0
280.6
The directors consider that the carrying amount of trade and other receivables approximates their fair value. The Group’s
assessment of any expected credit losses is included in note 21(b). Included in accrued income is £6.0m (last year: £8.8m) of
accrued supplier income relating to rebates that have been earned but not yet invoiced. An immaterial amount of supplier
income that has been invoiced but not yet settled against future trade creditor balances is included within trade creditors, where
there is a right to offset.
The Group entered into finance leasing arrangements as a lessor for surplus office space in the Merchant Square building in
London, which is sub-let for the remaining duration of the lease.
The maturity analysis of the Group’s lease receivables is as follows:
2024
£m
2023
£m
Timing of cash flows
Within one year
4.7
4.7
Between one and two years
6.1
4.7
Between two and three years
7.8
6.1
Between three and four years
7.8
7.8
Between four and five years
7.8
7.8
More than five years
105.5
113.3
Total undiscounted cash flows
139.7
144.4
Effect of discounting
(62.5)
(68.2)
Present value of lease payments receivable
77.2
76.2
Less: provision for impairment of receivables
(14.2)
(10.7)
Net investment in the lease
63.0
65.5
Included within trade and other receivables is £1.3m (last year: £0.4m) which, due to non-recourse factoring arrangements in
place, are held within a “hold to collect and sell” business model and are measured at FVOCI.
18 CASH AND CASH EQUIVALENTS
Cash and cash equivalents are £1,022.4m (last year: £1,067.9m). The carrying amount of these assets approximates their fair value.
The effective interest rate on short-term bank deposits is 5.3% (last year: 4.1%). These deposits have an average maturity of 15 days
(last year: 18 days).
FINANCIAL STATEMENTS
168
Marks and Spencer Group plc
19 TRADE AND OTHER PAYABLES
2024
£m
2023
£m
Current
Trade payables
762.3
801.7
Other payables
363.5
370.8
Social security and other taxes
80.1
85.3
Deferred income from gift card sales
203.2
189.2
Accruals
648.9
554.5
Deferred income
49.9
47.3
2, 107.9
2,048.8
Non-current
Other payables
103.6
166.6
Deferred income
13.1
14.7
116.7
181.3
Included within current other payables is £6.9m (last year: £7.2m) of deferred and contingent consideration and within non-
current other payables £102.2m (last year: £100.6m) of deferred and contingent consideration, both relating to the acquisition of
Gist Limited. Also included in non-current other payables is £nil (last year: £64.7m) of contingent consideration relating to the
investment in Ocado Retail Limited. See note 21(d)for further details.
A contract liability arises in respect of gift cards and voucher schemes as payment has been received for a performance
obligation which will be performed at a later point in time. Included within other payables are gift card/voucher scheme liabilities:
2024
£m
2023
£m
Opening balance
189.2
189.6
Issues
456.7
415.9
Released to the income statement
(442.7)
(416.3)
Closing balance
203.2
189.2
The Group operates a number of supplier financing arrangements, under which suppliers can obtain accelerated settlement on
invoices from the finance provider. This is a form of reverse factoring which has the objective of serving the Group’s suppliers by
giving them early access to funding. The Group settles these amounts in accordance with each supplier’s agreed payment terms.
The Group is not party to these financing arrangements and the arrangements do not permit the Group to obtain finance from
the provider by paying the provider later than the Group would have paid its supplier. The Group does not incur any interest
towards the provider on the amounts due to the suppliers. The Group therefore discloses the amounts factored by suppliers
within trade payables because the nature and function of the financial liability remain the same as those of other trade payables.
The payments by the Group under these arrangements are included within operating cash flows because they continue to be part
of the normal operating cycle of the Group and their principal nature remains operating – i.e. payments for the purchase of goods
and services.
At 30 March 2024, £284.1m (last year: £303.9m) of trade payables were amounts owed under these arrangements. During the year
the maximum facility available at any one time under the arrangements was £441.4m (last year: £442.6m).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
169
20 BORROWINGS AND OTHER FINANCIAL LIABILITIES
2024
£m
2023
£m
Current
Lease liabilities
220.3
216.7
3.00% £300m Medium-Term Notes 20231
–
185.3
Interest accrued on Medium-Term Notes
30.1
42.0
250.4
444.0
Non-current
4.75% £400m Medium-Term Notes June 20251,2
205.6
330.0
3.75% £300m Medium-Term Notes May 20261
200.8
298.9
3.25% £250m Medium-Term Notes July 20271
248.9
248.6
7.125% US$300m Medium-Term Notes December 20373,4
251.8
251.8
Revaluation of Medium-Term Notes5
(15.5)
(10.2)
Lease liabilities
1,991.2
2,064.9
2,882.8
3,184.0
Total
3,133.2
3,628.0
1. These notes are issued under Marks and Spencer plc’s £3bn Euro Medium-Term Note programme and all pay interest annually.
2. The Group occasionally enters into interest rate swaps to manage interest rate exposure. At year end, £2.1m (last year: £6.1m) of fair value adjustment for terminated
hedges to be amortised over the remaining debt maturity.
3. Interest on these bonds is payable biannually.
4. US$300m Medium-Term Note exposure swapped to sterling (fixed-to-fixed cross currency interest rate swaps). Refer to note 21 for further details.
5. Revaluation consists of cumulative foreign exchange gain on revaluation of the 7.125% US$300m Medium-Term Notes 2037 of £15.5m (last year: £10.2m).
Leases
The Group leases various stores, offices, warehouses and equipment with varying terms, escalation clauses and renewal rights.
The Group has certain leases with lease terms of 12 months or less and leases of assets with low values. The Group applies the
“short-term lease” and “lease of low-value assets” recognition exemptions for these leases.
Set out below are the carrying amounts of lease liabilities and the movements during the period.
2024
£m
2023
£m
Opening lease liabilities
2,281.6
2,278.7
Acquisitions
–
21.3
Additions
176.0
249.4
Interest expense relating to lease liabilities
120.0
121.0
Payments
(345.5)
(353.8)
Disposals
(12.8)
(39.0)
Exchange difference
(7.8)
4.0
2,211.5
2,281.6
Current
220.3
216.7
Non-current
1,991.2
2,064.9
The maturity analysis of lease liabilities is disclosed in note 21(a).
Future cash outflows related to the post break clause period included in the lease liability
The Group holds certain leases that contain break clause options to provide operational flexibility. In accordance with IFRS 16, the
Group has calculated the full lease term, beyond break, to represent the reasonably certain lease term (except for those stores
identified as part of the store estate programme) within the total £2,211.5m of lease liabilities held on the balance sheet.
The following amounts were recognised in profit or loss:
2024
£m
2023
£m
Expenses relating to short-term leases
15.5
13.2
Expenses relating to low-value assets
0.1
–
Expenses relating to variable consideration
5.8
4.9
FINANCIAL STATEMENTS
170
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 FINANCIAL INSTRUMENTS
Treasury policy
The Group operates a centralised treasury function to manage the Group’s funding requirements and financial risks in line with
the Board-approved treasury policies and procedures, and their delegated authorities.
The Group’s financial instruments, other than derivatives, comprise borrowings, cash and liquid resources and various items, such
as trade receivables and trade payables that arise directly from its operations. The main purpose of these financial instruments is
to finance the Group’s operations.
The Group treasury function also enters into derivative transactions, principally cross-currency swaps and forward currency
contracts. The purpose of these transactions is to manage the interest rate and foreign currency risks arising from the Group’s
operations and financing.
It remains the Group’s policy not to hold or issue financial instruments for trading purposes, except where financial constraints
necessitate the need to liquidate any outstanding investments. The treasury function is managed as a cost centre and does not
engage in speculative trading.
Financial risk management
The principal financial risks faced by the Group are liquidity and funding, counterparty, foreign currency and interest rate risks.
The policies and strategies for managing these risks are summarised on the following pages:
(a) Liquidity & funding risk
The risk that the Group could be unable to settle or meet its obligations as they fall due:
– The Group’s funding strategy ensures a mix of funding sources offering sufficient headroom, maturity and flexibility, and
cost-effectiveness to match the requirements of the Group.
– Marks and Spencer plc is financed by a combination of retained profits, bank borrowings, Medium-Term Notes and committed
syndicated bank facilities.
– Operating subsidiaries are financed by a combination of retained profits, bank borrowings and intercompany loans.
The Group has a committed syndicated bank revolving credit facility of £850m with a current maturity date of 13 June 2027. The
facility contains a financial covenant, being the ratio of earnings before interest, tax, depreciation and amortisation; to net
interest and depreciation on right-of-use assets under IFRS 16. The covenant is measured biannually. The Group was not in breach
of this metric at the reporting date.
The revolving credit facility includes four sustainability metrics where the margin payable on the facility is adjusted to reflect the
Group’s performance against ESG targets material to the Group’s “Plan A” objectives. Any adjustment to the margin relating to
these metrics would not be material to the Group.
The Group also has a number of uncommitted facilities available to it. At year end, these amounted to £25m (last year: £25m), all
of which are due to be reviewed within a year. At the balance sheet date, a sterling equivalent of £nil (last year: £nil) was drawn
under the committed facilities and £nil (last year: £nil) was drawn under the uncommitted facilities.
In addition to the existing borrowings, the Group has a Euro Medium-Term Note programme of £3bn, of which £0.7bn (last year:
£1.1bn) was in issuance as at the balance sheet date. The initial rate of interest is fixed at the date of issue and the Notes are
referred to as fixed rate borrowings throughout the Annual Report as the coupon does not change with movements in
benchmark interest rates. However, the rate of interest on certain Notes varies both up and down in response to third-party credit
ratings (to above/below Baa3 or above/below BBB-) that reflects the relative deterioration or improvement in the Group’s cost of
credit, and the interest payable on these Notes increases or decreases from the next interest payment date following a relevant
credit rating downgrade or upgrade. As the original contractual terms of these Notes provide for changes in cash flows to be
reset to reflect the relative deterioration or improvement in the Group’s cost of credit, the Group considers these Notes to be
floating rate instruments when determining amortised cost under IFRS 9 and consequently the Group applied IFRS 9 paragraph
B5.4.5, which requires no adjustment to the carrying amount of the liabilities or immediate impact on profit and loss. If the Group
had determined these Notes to be fixed rate instruments, the Notes would be remeasured to reflect the revised cash flows
discounted at the original effective rate. This would result in initially a higher interest expense to profit or loss, offset by lower
interest charges subsequently, when compared to the Group’s treatment.
Ocado Retail Limited, an associate of the Group, had entered into a £30m revolving credit facility which expired on 19 December
2023 (last year: £25.0m drawn). Subsequent to the year end, on 9 May 2024, a new £30m revolving credit facility was agreed. The
Group, along with Ocado Group plc, jointly guarantee the facility.
The table below summarises the contractual maturity of the Group’s non-derivative financial liabilities and derivatives translated
at the year end spot rate, excluding trade payables, other payables and accruals. The carrying value of all trade payables, other
payables (excluding contingent consideration payable) and accruals of £1,769.2m (last year: £1,721.1m) is equal to their contractual
undiscounted cash flows (see note 19) which are due within one year. Contingent consideration (see the fair value hierarchy section
within note 21) and deferred consideration of £6.9m (last year: £7.2m) is expected to become payable within one year and £102.2m
(last year: £165.3m) between two and five years.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
171
Medium-Term
Notes
£m
Lease
liabilities1
£m
Partnership
liability to
the Marks
& Spencer
UK Pension
Scheme
(note 12)
£m
Total
borrowings
and other
financial
liabilities
£m
Cash
inflow on
derivatives2
£m
Cash
outflow on
derivatives2
£m
Total
derivative
liabilities
£m
Timing of cash flows
Within one year
(252.7)
(318.8)
(73.0)
(644.5)
1,062.3
(1,120.6)
(58.3)
Between one and two years
(59.3)
(320.4)
(54.4)
(434.1)
145.8
(147.4)
(1.6)
Between two and five years
(1,002.2)
(805.2)
–
(1,807.4)
26.0
(26.0)
–
More than five years
(415.6)
(2,982.1)
–
(3,397.7)
207.8
(214.7)
(6.9)
Total undiscounted cash flows
(1,729.8)
(4,426.5)
(127.4)
(6,283.7)
1,441.9
(1,508.7)
(66.8)
Effect of discounting
383.4
2,144.9
2.6
2,530.9
At 1 April 2023
(1,346.4)
(2,281.6)
(124.8)
(3,752.8)
Timing of cash flows
Within one year
(47.9)
(331.2)
(89.7)
(468.8)
1,334.7
(1,355.6)
(20.9)
Between one and two years
(251.6)
(317.0)
–
(568.6)
83.7
(84.1)
(0.4)
Between two and five years
(532.3)
(742.7)
–
(1,275.0)
50.7
(51.1)
(0.4)
More than five years
(389.6)
(2,847.7)
–
(3,237.3)
389.6
(406.2)
(16.6)
Total undiscounted cash flows
(1,221.4)
(4,238.6)
(89.7)
(5,549.7)
1,858.7
(1,897.0)
(38.3)
Effect of discounting
299.7
2,027.1
0.9
2,327.7
At 30 March 2024
(921.7)
(2,211.5)
(88.8)
(3,222.0)
1. Total undiscounted lease payments of £746.6m relating to the period post-break clause, and the earliest contractual lease exit point, are included in lease liabilities.
These undiscounted lease payments should be excluded when determining the Group’s contractual indebtedness under these leases, where there is a contractual
right to break. Furthermore, £60.8m of these payments relate to leases where, following the break clause, the Group will have the ability to exit the lease at any point
before the lease expiry with a maximum of six months’ notice.
2. Cash inflows and outflows on derivative instruments that require gross settlement (such as cross-currency swaps and forward foreign exchange contracts) are
disclosed gross. Cash inflows and outflows on derivative instruments that settle on a net basis are disclosed net.
(b) Counterparty risk
Counterparty risk exists where the Group can suffer financial loss through the default or non-performance of the counterparties
with whom it transacts.
Exposures are managed in accordance with the Group treasury policy which limits the value that can be placed with each
approved counterparty to minimise the risk of loss. The minimum long-term rating for all counterparties is long-term Standard &
Poor’s (S&P)/Moody’s A-/A3 (BBB+/Baa1 for committed lending banks). In the event of a rating by one agency being different from
the other, reference will be made to Fitch to determine the casting vote of the rating group. In the absence of a Fitch rating the
lower agency rating will prevail. Limits are reviewed regularly by senior management. The credit risk of these financial instruments
is estimated as the fair value of the assets resulting from the contracts.
The table below analyses the Group’s short-term investments and derivative assets by credit exposure, excluding bank balances,
store cash and cash in transit.
Credit rating of counterparty
AAA
£m
AA+
£m
AA
£m
AA-
£m
A+
£m
A
£m
A-
£m
BBB
£m
Total
£m
Cash and cash equivalents1
99.4
–
–
90.6
355.9
284.3
65.0
–
895.2
Other investments2
–
–
–
4.9
4.3
3.1
–
–
12.3
Derivative assets3
–
–
–
–
10.0
7.4
5.0
0.3
22.7
At 1 April 2023
99.4
–
–
95.5
370.2
294.8
70.0
0.3
930.2
AAA
£m
AA+
£m
AA
£m
AA-
£m
A+
£m
A
£m
A-
£m
BBB
£m
Total
£m
Cash and cash equivalents1
116.7
–
–
130.9
242.2
95.6
197.2
–
782.6
Other investments2
–
–
–
3.0
8.0
1.3
–
–
12.3
Derivative assets3
–
–
–
0.9
6.0
0.3
0.2
0.1
7.5
At 30 March 2024
116.7
–
–
134.8
256.2
97.2
197.4
0.1
802.4
1. Includes cash on deposit and money market funds held by Marks and Spencer Scottish Limited Partnership, Marks and Spencer plc and Marks and Spencer General
Insurance. Excludes cash in hand and in transit of £239.8m (last year: £172.7m).
2. Relates to money market deposits held by Marks and Spencer General Insurance. Excludes other non-rated investments of £nil (last year: £0.7m).
3. Standard & Poor’s equivalent rating shown as reference to the majority credit rating of the counterparty from either Standard & Poor’s, Moody’s or Fitch
where applicable.
FINANCIAL STATEMENTS
172
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 FINANCIAL INSTRUMENTS CONTINUED
The Group has a very low retail credit risk due to transactions principally being of high volume, low value and short maturity.
The maximum exposure to credit risk at the balance sheet date was as follows: trade receivables £137.2m (last year: £128.3m), lease
receivables £63.0m (last year: £65.5m), other receivables (including loans to related parties) £131.1m (last year: £69.3m), cash and
cash equivalents £1,022.4m (last year: £1,067.9m) and derivatives £7.5m (last year: £22.7m).
Impairment of financial assets
The credit risk management practices of the Group include internal review and reporting of the ageing of trade and other
receivables by days past due by a centralised accounts receivable function, and grouped by respective contractual revenue
stream, along with liaison with the debtors by the credit control function.
The Group applies the IFRS 9 simplified approach in measuring expected credit losses which use a lifetime expected credit loss
allowance for all trade receivables and lease receivables.
To measure expected credit losses, trade receivables have been grouped by shared credit risk characteristics along the lines of
differing revenue streams such as international franchise, UK franchise, food, corporate and sundry, as well as by geographical
location and days past due. In addition to the expected credit losses calculated using a provision matrix, the Group may provide
additional provision for the receivables of particular customers if the deterioration of financial position was observed. The Group’s
trade receivables are of very low credit risk due to transactions being principally of high volume, low value and short maturity.
Therefore, it also has very low concentration risk.
The expected loss rates are determined based on the average write-offs as a proportion of average debt over a period of 36
months prior to the reporting date. The historical loss rates are adjusted for current and forward-looking information where
significant. The Group considers GDP growth, unemployment, sales growth and bankruptcy rates of the countries in which goods
are sold to be the most relevant factors and, where the impact of these is significant, adjusts the historical loss rates based on
expected changes in these factors.
Historical experience has indicated that debts aged 180 days or over are generally not recoverable. The Group has incorporated
this into the expected loss model through a uniform loss rate for ageing buckets below 180 days dependent on the revenue
stream and country and providing for 100% of debt aged more than 180 days past due. Where the Group specifically holds
insurance or holds the legal right of offset with debtors which are also creditors, the loss provision is applied only to the extent of
the uninsured or net exposure.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there may be no reasonable
expectation of recovery include the failure of the debtor to engage in a payment plan, and failure to make contractual payments
within 180 days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating profit and subsequent recoveries
are credited to the same line item.
As at 1 April 2023
Current
£m
Up to 30 days
past due
£m
31-60 days
past due
£m
61-90 days
past due
£m
91-180 days
past due
£m
181 days or
more past due
£m
Total
£m
Gross carrying amount – trade receivables
98.5
22.1
2.9
1.9
1.3
1.6
128.3
Expected loss rate
0.8%
3.2%
27.6%
31.6%
69.2%
100.0%
4.2%
Lifetime expected credit loss
0.8
0.7
0.8
0.6
0.9
1.6
5.4
Net carrying amount
97.7
21.4
2.1
1.3
0.4
–
122.9
As at 30 March 2024
Current
£m
Up to 30 days
past due
£m
31-60 days
past due
£m
61-90 days
past due
£m
91-180 days
past due
£m
181 days or
more past due
£m
Total
£m
Gross carrying amount – trade receivables
119.3
9.3
4.3
0.7
3.1
0.5
137.2
Expected loss rate
0.1%
0.8%
4.5%
8.9%
11.0%
100.0%
0.9%
Lifetime expected credit loss
0.1
0.1
0.2
0.1
0.3
0.5
1.3
Net carrying amount
119.2
9.2
4.1
0.6
2.8
–
135.9
The closing loss allowances for trade receivables reconciles to the opening loss allowances as follows:
Trade receivables expected loss provision
2024
£m
2023
£m
Opening loss allowance
5.4
4.8
(Decrease)/increase in loss allowance recognised in profit and loss during the year
(2.3)
5.5
Receivables written off during the year as uncollectable
(1.8)
(4.9)
Closing loss allowance
1.3
5.4
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
173
21 FINANCIAL INSTRUMENTS CONTINUED
The closing loss allowances for lease receivables reconciles to the opening loss allowances as follows:
Lease receivables expected loss provision
2024
£m
2023
£m
Opening loss allowance
10.7
–
Increase in loss allowance recognised in profit and loss during the year1
3.5
10.7
Closing loss allowance
14.2
10.7
1Relates to the sub-let of previously closed offices associated with the strategic programme to centralise the Group’s London Head Office functions (see note 5).
The provision for other receivables is highly immaterial (it can be quantified) and therefore no disclosure is provided.
(c) Foreign currency risk
Transactional foreign currency exposure arises primarily from the import of goods sourced from overseas suppliers and also
from the export of goods from the UK to overseas subsidiaries. The most significant exposure is to the US dollar, incurred in the
sourcing of Clothing & Home products from Asia.
Group Treasury hedges these Clothing & Home foreign currency exposures principally using forward foreign exchange contracts
progressively based on dynamic forecasts from the business. Hedging is generally carried out in the six months before the period
when purchase orders are entered into.
Other exposures arising from the export of goods to overseas subsidiaries are also hedged progressively over the course of the
year before they are incurred. As at the balance sheet date, the gross notional value in sterling terms of forward foreign exchange
sell or buy contracts amounted to £2,011.0m (last year: £1,785.7m) with a weighted average maturity date of seven months (last
year: six months).
Gains and losses in equity on forward foreign exchange contracts designated in cash flow hedge relationships as at 30 March
2024 will be reclassified to the income statement at various dates over the following 14 months (last year: 14 months) from the
balance sheet date.
The foreign exchange forwards are designated as cash flow hedges of highly probable forecast transactions. Both spot and
forward points are designated in the hedge relationship; under IFRS 9 the currency basis spread may be excluded from the hedge
relationship and recognised in other comprehensive income – cost of hedging reserve. The change in the fair value of the hedging
instrument, to the degree effective, is deferred in equity and subsequently either reclassified to profit or loss or removed from
equity and included in the initial cost of inventory as part of the “basis adjustment”. This will be realised in the income statement
once the hedged item is sold. The Group has considered, and elected not to, recognise the currency basis spread element in the
cost of hedging reserve, owing to the relatively short-dated nature of the hedging instruments.
The Group regularly reviews the foreign exchange hedging portfolio to confirm whether the underlying transactions remain
highly probable. Any identified instance of over-hedging or ineffectiveness would result in immediate recycling to the income
statement.
A change in the timing of a forecast item does not disqualify a hedge relationship nor the assertion of “highly probable” as there
remains an economic relationship between the underlying transaction and the derivative.
The foreign exchange forwards are recognised at fair value. The Group has considered and elected to apply credit/debit valuation
adjustments. The risks at the reporting date are representative of the financial year.
The Group also holds a number of cross-currency swaps to designate its fixed rate US dollar debt to fixed rate sterling debt. These
are reported as cash flow hedges. The change in the fair value of the hedging instrument, to the degree effective, is retained in
other comprehensive income, segregated by cost and effect of hedging. Under IFRS 9, the currency basis on the cross-currency
swaps is excluded from the hedge designation and recognised in other comprehensive income – cost of hedging reserve.
Effectiveness is measured using the hypothetical derivative approach. The contractual terms of the cross-currency swaps include
break clauses every five years which allow for the interest rates to be reset (last reset November 2022).
The cross-currency swaps are recognised at fair value. The inclusion of credit risk on cross-currency swaps will cause
ineffectiveness of the hedge relationship. The Group has considered and elected to apply credit/debit valuation adjustments,
owing to the swaps’ relative materiality and longer dated nature.
The Group also hedges foreign currency intercompany loans where these exist. Forward foreign exchange contracts in relation to
the hedging of the Group’s foreign currency intercompany loans are classified as fair value through profit and loss. The
corresponding fair value movement of the intercompany loan balance resulted in a £1.1m loss (last year: £1.8m loss) in the income
statement. As at the balance sheet date, the gross notional value of intercompany loan hedges was £246.7m (last year: £125.8m).
FINANCIAL STATEMENTS
174
Marks and Spencer Group plc
21 FINANCIAL INSTRUMENTS CONTINUED
After taking into account the hedging derivatives entered into by the Group, the currency and interest rate exposure of the
Group’s borrowings and other financial liabilities, is set out below:
2024
2023
Fixed rate
£m
Floating rate
£m
Total
£m
Fixed rate
£m
Floating rate
£m
Total
£m
Currency
Sterling
2,920.0
–
2,920.0
3,419.6
–
3,419.6
Euro
95.0
–
95.0
106.8
–
106.8
Rupee
118.0
-
118.0
101.0
-
101.0
Other
0.2
-
0.2
0.6
–
0.6
3,133.2
–
3,133.2
3,628.0
–
3,628.0
As at the balance sheet date and excluding lease liabilities, post-hedging, the GBP and USD fixed rate borrowings are at an
average rate of 5.3% (last year: 5.1%) and the weighted average time for which the rate is fixed is five years (last year: five years).
(d) Interest rate risk
The Group is exposed to interest rate risk in relation to sterling, US dollar and euro variable rate financial assets and liabilities.
The Group’s policy is to use derivative contracts where necessary to maintain a mix of fixed and floating rate borrowings to
manage this risk. The structure and maturity of these derivatives correspond to the underlying borrowings and are accounted for
as fair value or cash flow hedges as appropriate.
At the balance sheet date, fixed rate borrowings amounted to £3,133.2m (last year: £3,628.0m) representing the public bond
issues and lease liabilities, amounting to 100% (last year: 100%) of the Group’s gross borrowings.
The effective interest rates at the balance sheet date were as follows:
2024
%
2023
%
Committed and uncommitted borrowings
N/A
N/A
Medium-Term Notes
5.3%
5.1%
Leases
5.2%
5.1%
Derivative financial instruments
The below table illustrates the effects of hedge accounting on the consolidated statement of financial position and consolidated
income statement through detailing separately by risk category and each type of hedge the details of the associated hedging
instrument and hedged item.
1 April 2023
Current
Non Current
Forward foreign
exchange
contracts
£m
Forward foreign
exchange
contracts
£m
Cross-currency
swaps
£m
Forward foreign
exchange
contracts
£m
Hedging risk strategy
Cash flow
hedges
FVTPL
Cash flow
hedges
Cash flow
hedges
Notional/currency legs
1,504.7
125.8
252.9
155.2
Carrying amount assets
22.6
–
0.1
–
Carrying amount (liabilities)
(56.0)
(2.1)
(5.3)
(1.8)
Maturity date
to Jul 2023
to Jun 2023
to Dec 2037
to May 2024
Hedge ratio
100%
n/a
100%
100%
Description of hedged item
Highly
probable
transactional
FX exposures
Inter-company
loans/deposits
USD fixed rate
borrowing
Highly
probable
transactional
FX exposures
Change in fair value of hedging instrument
49.6
(2.1)
30.9
(4.3)
Change in fair value of hedged item used to determine hedge
effectiveness
(49.6)
0.3
(30.0)
4.3
Weighted average hedge rate for the year
GBP/USD 1.20;
GBP/EUR 1.14
–
GBP/USD 1.19
GBP/USD 1.22;
GBP/EUR 1.12
Net amounts recognised within finance costs in profit and loss
–
(1.8)
0.9
–
Balance on cash flow hedge reserve at 1 April 2023
47.3
–
(7.0)
1.8
Balance on cost of hedging reserve at 1 April 2023
–
–
(5.8)
–
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
175
21 FINANCIAL INSTRUMENTS CONTINUED
30 March 2024
Current
Non Current
Forward foreign
exchange
contracts
£m
Forward foreign
exchange
contracts
£m
Cross-currency
swaps
£m
Forward foreign
exchange
contracts
£m
Hedging risk strategy
Cash flow
hedges
FVTPL
Cash flow
hedges
Cash flow
hedges
Notional / currency legs
1,547.6
246.7
252.9
216.7
Carrying amount assets
6.6
0.2
–
0.7
Carrying amount (liabilities)
(18.2)
(1.8)
(21.6)
(0.3)
Maturity date
to Oct 2024
to Apr 2024
to Dec 2037
to Jun 2025
Hedge ratio
100%
n/a
100%
100%
Description of hedged item
Highly
probable
transactional
FX exposures
Inter-
company
loans/
deposits
USD fixed rate
borrowing
Highly
probably
transactional
FX exposures
Change in fair value of hedging instrument
17.6
0.5
(18.4)
2.2
Change in fair value of hedged item used to determine hedge
effectiveness
(17.6)
(1.6)
18.4
(2.2)
Weighted average hedge rate for the year
GBP/USD 1.25;
GBP/EUR 1.14
–
GBP/USD 1.19 GBP/USD 1.27;
GBP/EUR 1.14
Amounts recognised within finance costs in profit and loss
–
(1.1)
–
–
Balance on cash flow hedge reserve at 30 March 2024
6.0
–
6.1
(0.5)
Balance on cost of hedging reserve at 30 March 2024
–
–
(7.4)
–
30 March 2024
1 April 2023
Notional Value
Fair Value
Notional Value
Fair Value
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Current
Forward
foreign
exchange
contracts
– cash flow
hedges
501.3
1,046.3
6.6
(18.2)
559.2
945.6
22.6
(56.0)
– FVTPL
60.6
186.1
0.2
(1.8)
8.0
117.7
–
(2.1)
561.9
1,232.4
6.8
(20.0)
567.2
1,063.3
22.6
(58.1)
Non-current
Cross-
currency
swaps
– cash flow
hedges
–
252.9
–
(21.6)
125.0
127.9
0.1
(5.3)
Forward
foreign
exchange
contracts
– cash flow
hedges
149.9
66.8
0.7
(0.3)
18.1
137.1
–
(1.8)
149.9
319.7
0.7
(21.9)
143.1
265.0
0.1
(7.1)
FINANCIAL STATEMENTS
176
Marks and Spencer Group plc
21 FINANCIAL INSTRUMENTS CONTINUED
The Group’s hedging reserves disclosed in the consolidated statement of changes in equity, relate to the following hedging
instruments:
Cost of
hedging
reserve
CCIRS1
£m
Deferred
tax
£m
Total cost of
hedging
reserve
£m
Hedge
reserve FX
derivatives
£m
Hedge
reserve
CCIRS
£m
Hedge
reserve gilt
locks
£m
Deferred
tax
£m
Total hedge
reserve
£m
Opening balance 3 April 2022
(5.0)
1.4
(3.6)
(29.5)
9.5
0.1
2.3
(17.6)
Add: Change in fair value of hedging
instrument recognised in OCI2
–
–
–
(45.3)
(30.9)
–
–
(76.2)
Add: Costs of hedging deferred and
recognised in OCI
(0.8)
–
(0.8)
–
–
–
–
–
Less: Reclassified to the cost of inventory
–
–
–
123.9
–
–
–
123.9
Less: Reclassified from OCI to profit or
loss
–
–
–
–
14.4
–
–
14.4
Less: Deferred tax
–
0.2
0.2
–
–
–
(12.6)
(12.6)
Closing balance 1 April 2023
(5.8)
1.6
(4.2)
49.1
(7.0)
0.1
(10.3)
31.9
Opening balance 2 April 2023
(5.8)
1.6
(4.2)
49.1
(7.0)
0.1
(10.3)
31.9
Add: Change in fair value of hedging
instrument recognised in OCI
–
–
–
10.7
18.4
–
–
29.1
Add: Costs of hedging deferred and
recognised in OCI
(1.6)
–
(1.6)
–
–
–
–
–
Less: Reclassified to the cost of inventory
–
–
–
(54.4)
–
–
–
(54.4)
Less: Reclassified from OCI to profit or
loss
–
–
–
–
(5.3)
–
–
(5.3)
Less: Deferred tax
–
0.4
0.4
–
–
–
7.1
7.1
Closing balance 30 March 2024
(7.4)
2.0
(5.4)
5.4
6.1
0.1
(3.2)
8.4
1. Cross-currency interest rate swaps.
2. Other comprehensive income.
The Group holds a number of cross-currency interest rate swaps to designate its USD to GBP fixed debt. These are reported as
cash flow hedges. The ineffective portion recognised in profit or loss that arises from the cash flow hedge amounts to a £nil gain
(last year: £0.9m gain) as the gain on the hedged items was £18.4m (last year: £30.0m loss) and the movement on the hedging
instruments was a £18.4m loss (last year: £30.9m gain).
Movement in hedged items and hedging instruments
2024
£m
2023
£m
Net (loss)/gain in fair value of cross-currency interest rate swap
(18.4)
30.9
Net gain/(loss) on hedged items
18.4
(30.0)
Ineffectiveness
–
0.9
Sensitivity analysis
The table below illustrates the estimated impact on the income statement and equity as a result of market movements in foreign
exchange and interest rates in relation to the Group’s financial instruments. The directors consider that a 2% +/- (last year: 2%)
movement in interest and a 20% +/- (last year: 20%) movement in sterling against the relevant currency represent reasonably
possible changes. However, this analysis is for illustrative purposes only. The directors believe that these illustrative assumed
movements continue to provide sufficient guidance.
The table excludes financial instruments that expose the Group to interest rate and foreign exchange risk where such a risk is fully
hedged with another financial instrument. Also excluded are trade receivables and payables as these are either sterling
denominated or the foreign exchange risk is hedged.
Interest rates The impact in the income statement due to changes in interest rates reflects the effect on the Group’s floating rate
debt and cash balances as at the balance sheet date. The impact in equity reflects the fair value movement in relation to the
Group’s cross-currency swaps.
Foreign exchange The impact from foreign exchange movements reflects the change in the fair value of the Group’s
transactional foreign exchange cash flow hedges at the balance sheet date. The equity impact shown for foreign exchange
sensitivity relates to derivatives. This value is expected to be materially offset by the re-translation of the related transactional
exposures.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
177
21 FINANCIAL INSTRUMENTS CONTINUED
2% decrease in
interest rates
£m
2% increase in
interest rates
£m
20% weakening
in sterling
£m
20%
strengthening
in sterling
£m
At 1 April 2023
Impact on income statement: (loss)/gain
(17.2)
17.2
–
–
Impact on other comprehensive income: (loss)/gain
3.0
(2.3)
227.9
(227.9)
At 30 March 2024
Impact on income statement: (loss)/gain
(15.0)
15.0
–
–
Impact on other comprehensive income: (loss)/gain
5.8
(4.4)
278.9
(278.9)
Offsetting of financial assets and liabilities
The following tables set out the financial assets and financial liabilities which are subject to offsetting, enforceable master netting
arrangements and similar agreements. Amounts which are set off against financial assets and liabilities in the Group’s balance
sheet are set out below. For trade and other receivables and trade and other payables, amounts not offset in the balance sheet,
but which could be offset under certain circumstances, are also set out. To reconcile the amount shown in the tables below to the
Statement of Financial Position, items which are not subject to offsetting should be included.
Gross financial
assets/
(liabilities)
£m
Gross
financial
(liabilities)/
assets set off
£m
Net financial
assets/
(liabilities) per
statement of
financial
position
£m
Related
amounts not
set off in the
statement of
financial
position
£m
Net
£m
At 1 April 2023
Trade and other receivables
19.2
(16.5)
2.7
–
2.7
Derivative financial assets
22.7
–
22.7
(18.0)
4.7
41.9
(16.5)
25.4
(18.0)
7.4
Trade and other payables
(317.3)
16.5
(300.8)
–
(300.8)
Derivative financial liabilities
(65.2)
–
(65.2)
18.0
(47.2)
(382.5)
16.5
(366.0)
18.0
(348.0)
Gross
financial
assets/
(liabilities)
£m
Gross
financial
(liabilities)/
assets set off
£m
Net financial
assets/
(liabilities)
per statement
of financial
position
£m
Related
amounts not
set off in the
statement of
financial
position
£m
Net
£m
At 30 March 2024
Trade and other receivables
33.1
(31.2)
1.9
–
1.9
Derivative financial assets
7.5
–
7.5
(6.7)
0.8
40.6
(31.2)
9.4
(6.7)
2.7
Trade and other payables
(357.8)
31.2
(326.6)
–
(326.6)
Derivative financial liabilities
(41.9)
–
(41.9)
6.7
(35.2)
(399.7)
31.2
(368.5)
6.7
(361.8)
Amounts which do not meet the criteria for offsetting on the balance sheet, but could be settled net in certain circumstances,
principally relate to derivative transactions under International Swaps and Derivatives Association agreements where each party
has the option to settle amounts on a net basis in the event of default of the other party.
FINANCIAL STATEMENTS
178
Marks and Spencer Group plc
21 FINANCIAL INSTRUMENTS CONTINUED
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
– Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities.
– Level 2: not traded in an active market but the fair values are based on quoted market prices or alternative pricing sources with
reasonable levels of price transparency. The Group’s level 2 financial instruments include interest rate and foreign exchange
derivatives. Fair value is calculated using discounted cash flow methodology, future cash flows are estimated based on forward
exchange rates and interest rates (from observable market curves) and contract rates, discounted at a rate that reflects the
credit risk of the various counterparties for those with a long maturity.
– Level 3: techniques that use inputs which have a significant effect on the recorded fair value that are not based on observable
market data.
At the end of the reporting period, the Group held the following financial instruments at fair value:
2024
2023
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Assets measured at fair value
Financial assets at fair value through
profit or loss (FVTPL)
– derivatives held at FVTPL
–
0.2
–
0.2
–
–
–
–
– other investments1
–
12.3
12.6
24.9
–
12.3
8.6
20.9
Derivatives used for hedging
–
7.5
–
7.5
–
22.7
–
22.7
Liabilities measured at fair value
Financial liabilities at fair value through
profit or loss
– derivatives held at FVTPL
–
(1.8)
–
(1.8)
–
(2.1)
–
(2.1)
– Ocado contingent consideration2
–
–
–
–
–
–
(64.7)
(64.7)
– Gist contingent consideration3
–
–
(25.6)
(25.6)
–
–
(25.0)
(25.0)
Derivatives used for hedging
–
(40.2)
–
(40.2)
–
(63.1)
–
(63.1)
There were no transfers between the levels of the fair value hierarchy during the period. There were also no changes made to any
of the valuation techniques during the period.
1. Within Level 3 other investments, the Group holds £9.4m of venture capital investments, managed by True Capital Limited, measured at FVTPL (last year: £7.3m) (see
note 16) which are Level 3 instruments. The fair value of these investments has been determined in accordance with the International Private Equity and Venture
Capital (“IPEV”) Valuation Guidelines. Where investments are either recently acquired or there have been recent funding rounds with third parties, the primary input
when determining the valuation is the latest transaction price.
2. As part of the investment in Ocado Retail Limited, a contingent consideration arrangement was agreed. The arrangement comprises three separate elements which
only become payable on the achievement of three separate financial and operational performance targets. In 2021/22, £33.8m was settled, relating to the first two
targets. The final target relates to Ocado Retail Limited achieving a specified target level of earnings in the financial year ending November 2023, with any resulting
payment due in 2024 following completion of the Ocado Retail Limited audited FY23 statutory accounts. The performance target is binary, meaning that a payment
of £156.3m plus interest will be made if the performance target is met. Should the target not be met, no consideration would be payable.
Previously, the fair value of the contingent consideration was estimated using an expected present value technique and was based on probability-weighting
possible scenarios. With Ocado Retail Limited’s FY23 year now closed, the end of the measurement period for the target has been reached and the valuation of the
contingent consideration has been revisited.
The actual FY23 performance is below the target required for automatic payment of the contingent consideration. However, there is a mechanism for reasonable
adjustments to be made to the performance target to reflect certain events, if applicable. Both shareholders have proposed adjustments which are currently being
evaluated but we have not, to date, seen evidence we believe would result in a payment being made.
In these circumstances, the fair value of the liability has been recorded as £nil.
3. As part of the investment in Gist Limited, the Group has agreed to pay the former owners of Gist Limited additional consideration of up to £25.0m plus interest
when freehold properties are disposed of under certain conditions (for other consideration payable please see note 19). There is no minimum amount payable.
The Group has the ability to retain the properties should it wish to do so, in which case the full amount of £25.0m plus interest will be payable on the third
anniversary of completion.
The fair value of the contingent consideration arrangement of £25.6m was estimated by calculating the present value of the future expected cashflows.
The estimates are based on a discount rate of 5.1%. A 2.5% change in the discount rate would result in a change in fair value of £0.9m.
The Marks & Spencer UK Pension Scheme holds a number of financial instruments which make up the pension asset of £6,108.9m
(last year: £6,781.9m). Level 1 and Level 2 financial assets measured at fair value through other comprehensive income amounted
to £2,074.3m (last year: £2,754.7m). Additionally, the scheme assets include £4,034.6m (last year: £4,027.2m) of Level 3 financial
assets. See note 11 for information on the Group’s retirement benefits.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
179
21 FINANCIAL INSTRUMENTS CONTINUED
The following table represents the changes in Level 3 instruments held by the Pension Schemes:
2024
£m
2023
£m
Opening balance
4,027.2
5,144.9
Fair value gain/(loss) recognised in other comprehensive income
362.5
(401.8)
Cash withdrawals
(355.1)
(715.9)
Closing balance
4,034.6
4,027.2
Fair value of financial instruments
With the exception of the Group’s fixed rate bond debt and the Partnership liability to the Marks & Spencer UK Pension Scheme
(note 12), there were no material differences between the carrying value of non-derivative financial assets and financial liabilities
and their fair values as at the balance sheet date.
The carrying value of the Group’s fixed rate bond debt (level 1 equivalent) was £921.7m (last year: £1,346.4m); the fair value of this
debt was £919.8m (last year: £1,264.3m) which has been calculated using quoted market prices and includes accrued interest. The
carrying value of the Partnership liability to the Marks & Spencer UK Pension Scheme (level 2 equivalent) is £88.8m (last year:
£124.8m) and the fair value of this liability is £81.9m (last year: £121.9m).
Capital policy
The Group’s objectives when managing capital are to fund investment in the transformation and deliver financial performance at
an investment grade level, to safeguard its ability to continue as a going concern in order to provide optimal returns for
shareholders and to maintain an efficient capital structure to reduce the cost of capital.
In doing so, the Group’s strategy is to sustain a capital structure that supports an investment grade credit rating and to retain
appropriate levels of liquidity headroom to ensure financial stability and flexibility. To achieve this strategy, the Group regularly
monitors key credit metrics such as the gearing ratio, cash flow to net debt and fixed charge cover to maintain this position. In
addition, the Group ensures a combination of appropriate committed short-term liquidity headroom with a diverse and balanced
long-term debt maturity profile which avoids creating a significant re-financing risk in any one financial period. As at the balance
sheet date, the Group’s average debt maturity profile was five years (last year: five years). During the year, the Group maintained
its credit rating with Moody’s of Ba1 but with an improved positive outlook and was upgraded to BBB- (stable) with Standard &
Poor’s.
In order to maintain or realign the capital structure, the Group will consider the appropriate level of dividends paid to
shareholders and options to return capital to shareholders, issue new shares or sell assets to reduce debt.
22 PROVISIONS
Property
£m
Restructuring
£m
Other
£m
Total
£m
At 3 April 2022
95.8
35.4
14.2
145.4
Acquired through business combinations
1.8
–
1.5
3.3
Provided in the year – charged to profit or loss
25.3
14.0
12.3
51.6
Released in the year
(46.0)
(0.2)
(0.6)
(46.8)
Utilised during the year
(3.5)
(32.3)
(3.8)
(39.6)
Exchange differences
–
–
0.1
0.1
Discount rate unwind
5.4
–
–
5.4
At 1 April 2023
78.8
16.9
23.7
119.4
Analysed as:
Current
44.0
Non-current
75.4
Property
£m
Restructuring
£m
Other
£m
Total
£m
At 2 April 2023
78.8
16.9
23.7
119.4
Provided in the year – charged to profit or loss
54.9
25.0
6.4
86.3
Provided in the year – charged to property, plant & equipment
5.3
–
–
5.3
Released in the year
(24.4)
(9.1)
(9.9)
(43.4)
Utilised during the year
(11.2)
(2.3)
(9.2)
(22.7)
Exchange differences
–
–
0.2
0.2
Discount rate unwind
6.6
–
–
6.6
At 30 March 2024
110.0
30.5
11.2
151.7
Analysed as:
Current
47.6
Non-current
104.1
FINANCIAL STATEMENTS
180
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
22 PROVISIONS CONTINUED
Property provisions relate primarily to obligations such as dilapidations arising as a result of the closure of stores as part of the
store estate strategic programme. These provisions are expected to be utilised over the period to the end of each specific lease
(up to 10 years).
Restructuring provisions relate primarily to the strategic programme to transition to a single-tier UK distribution network,
expected to be utilised over the period of closure of sites and new costs in the year associated with the furniture simplification
strategic programme.
Other provisions include amounts in respect of probable liabilities for employee-related matters.
Provisions related to adjusting items were £130.6m at 30 March 2024 (last year: £100.3m), with a net charge in the year of £43.8m
(last year: £3.9m) (see note 5).
23 DEFERRED TAX
Deferred tax is provided under the balance sheet liability method using the tax rate at which the balances are expected to unwind
of 25% (last year: 25%) for UK differences and local tax rates for overseas differences. Details of the changes to the UK corporation
tax rate and the impact on the Group are described in note 7.
The movements in deferred tax assets and liabilities (after the offsetting of balances within the same jurisdiction as permitted by
IAS 12 Income Taxes) during the year are shown below.
Deferred tax assets/(liabilities)
Land and
buildings
temporary
differences
£m
Capital
allowances in
excess of
depreciation
£m
Pension
temporary
differences
£m
IFRS 16
adjustment
£m
Other
short-term
temporary
differences
£m
Total UK
deferred tax
£m
Overseas
deferred tax
£m
Total
£m
At 3 April 2022 (restated)
(199.8)
26.3
(292.1)
117.5
24.2
(323.9)
2.6
(321.3)
(Charged)/credited to
income statement
3.7
(36.4)
(7.4)
(5.7)
4.9
(40.9)
(0.2)
(41.1)
Credited to equity/other
comprehensive income
–
–
158.0
–
17.6
175.6
(0.6)
175.0
Acquisition of Gist
(11.5)
(1.0)
1.0
–
0.1
(11.4)
–
(11.4)
At 1 April 2023 (restated)
(207.6)
(11.1)
(140.5)
111.8
46.8
(200.6)
1.8
(198.8)
At 2 April 2023 (restated)
(207.6)
(11.1)
(140.5)
111.8
46.8
(200.6)
1.8
(198.8)
Credited/(charged) to
income statement
(21.1)
(69.0)
(3.9)
(7.1)
(0.9)
(102.0)
4.7
(97.3)
Credited/(charged) to
equity/other comprehensive
income
–
–
104.7
–
(1.9)
102.8
(0.8)
102.0
At 30 March 2024
(228.7)
(80.1)
(39.7)
104.7
44.0
(199.8)
5.7
(194.1)
Deferred tax has been restated in the comparative information. See note 1 for further details.
Other short-term temporary differences relate mainly to employee share options and financial instruments.
The deferred tax liability on land and buildings temporary differences is reduced by the benefit of capital losses with a gross
value of £162.4m (last year: £170.2m (restated)) and a tax value of £40.6m (last year: £42.6m (restated)). The gross carried forward
capital losses are £399.0m (last year: £348.0m) with a tax value of £99.8m (last year: £87.0m) and are inclusive of the gross £162.4m
of losses used to reduce the deferred tax liability on land and buildings.
Due to uncertainty over their future use, no benefit has been recognised in respect of trading losses carried forward in overseas
jurisdictions with a gross value of £5.2m (last year: £5.2m) and a tax value of £1.3m (last year: £1.3m).
No deferred tax is recognised in respect of undistributed earnings of overseas subsidiaries and joint ventures with a gross value of
£46.4m (last year: £46.1m) unless a material liability is expected to arise on distribution of these earnings under applicable tax
legislation. There is a potential tax liability in respect of undistributed earnings of £4.4m (last year: £4.4m) however this has not
been recognised on the basis that the distribution can be controlled by the Group, and it is not probable that the temporary
difference will reverse in the foreseeable future.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
181
24 ORDINARY SHARE CAPITAL
2024
2023
Ordinary shares
of £0.01 each
Ordinary shares
of £0.01 each
Shares
£m
Shares
£m
Issued and fully paid
At start of year
1,964,933,931
19.8
1,958,905,344
19.7
Shares issued in respect of employee share option schemes
75,421,892
0.7
6,028,587
0.1
At end of year
2,040,355,823
20.5
1,964,933,931
19.8
Issue of new shares
A total of 75,421,892 (last year: 6,028,587) ordinary shares having a nominal value of £0.7m (last year: £0.1m) were allotted during
the year under the terms of the Company’s share schemes which are described in note 13 of the Group financial statements. The
aggregate consideration received was £57.0m (last year: £0.1m).
25 CONTINGENCIES AND COMMITMENTS
A. Capital commitments
2024
£m
2023
£m
Commitments in respect of properties in the course of construction
175.2
100.8
Software capital commitments
6.5
6.1
181.7
106.9
During 2021/22, the Group committed to invest up to £25.0m, over a three-year period to 2024/25, in an innovation and consumer
growth fund managed by True Capital Limited. This period was extended to 2026/27 during the year. The fund can drawdown
amounts at any time over the five-year period to make specific investments. At 30 March 2024, the Group had invested £10.1m
(last year: £7.5m) of this commitment, which is held as a non-current other investment and measured at fair value through profit
or loss (see note 16).
B. Other material contracts
See note 12 for details on the Partnership arrangement with the Marks & Spencer UK Pension Scheme.
FINANCIAL STATEMENTS
182
Marks and Spencer Group plc
26 ANALYSIS OF CASH FLOWS GIVEN IN THE STATEMENT OF CASH FLOWS
Cash flows from operating activities
2024
£m
2023
£m
Profit on ordinary activities after taxation
425.2
364.5
Income tax expense
247.3
111.2
Finance costs
188.4
205.5
Finance income
(146.7)
(166.1)
Operating profit
714.2
515.1
Share of results of Ocado Retail Limited
37.3
29.5
Share of results in other joint ventures
0.3
–
Increase in inventories
(31.3)
(58.5)
Increase in receivables
(17.5)
(33.7)
Increase in payables
126.0
82.1
Depreciation, amortisation and disposals
526.3
523.2
Non-cash share based payment expense
48.3
38.0
Non-cash pension expense
5.3
–
Defined benefit pension funding
(0.4)
(36.8)
Adjusting items net cash outflows1,2
(38.0)
(67.9)
Adjusting items M&S Bank3
(2.0)
(2.0)
Adjusting operating profit items
124.4
111.5
Cash generated from operations
1,492.9
1,100.5
1. Excludes £24.1m (last year: £11.5m) of surrender payments included within repayment of lease liabilities in the consolidated statement of cash flows relating to
leases within the store estate programme.
2. Adjusting items net cash outflows relate to strategic programme costs associated with the Store estate, UK logistics, Structural simplification programme, M&S
financial services transformation and interest payments relating to the deferred and contingent consideration for the acquisition of Gist Limited.
3. Adjusting items M&S Bank relates to M&S Bank income recognised in operating profit offset by charges incurred in relation to the insurance mis-selling provision,
which is a non-cash item.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
183
27 ANALYSIS OF NET DEBT
A. Reconciliation of movement in net debt
At
3 April
2022
£m
Cash
flow
£m
Changes
in fair
values
£m
Lease
additions and
remeasure-
ments
£m
Exchange
and other
non-cash
movements1
£m
At
1 April
2023
£m
Net debt
Cash and cash equivalents (see note 18)
1,197.9
(130.5)
–
–
0.5
1,067.9
Net cash per statement of cash flows
1,197.9
(130.5)
–
–
0.5
1,067.9
Current other financial assets (see note 16)
17.6
(5.3)
–
–
0.7
13.0
Liabilities from financing activities
Medium-Term Notes (see note 20)
(1,529.5)
262.3
–
–
(79.2)
(1,346.4)
Lease liabilities (see note 20)
(2,278.7)
353.8
–
(270.7)
(86.0)
(2,281.6)
Partnership liability to the Marks & Spencer
UK Pension Scheme (see note 12)
(187.9)
66.0
–
–
–
(121.9)
Derivatives held to hedge Medium-Term Notes
18.5
(57.4)
33.7
–
–
(5.2)
Liabilities from financing activities
(3,977.6)
624.7
33.7
(270.7)
(165.2)
(3,755.1)
Less: Cash flows related to interest and derivative
instruments
63.3
(171.7)
(33.7)
–
179.1
37.0
Net debt
(2,698.8)
317.2
–
(270.7)
15.1
(2,637.2)
At
2 April
2023
£m
Cash
flow
£m
Changes
in fair
values
£m
Lease
additions and
remeasure-
ments
£m
Exchange
and other
non-cash
movements1
£m
At
30 March
2024
£m
Net debt
Cash and cash equivalents (see note 18)
1,067.9
(43.4)
–
–
(2.1)
1,022.4
Net cash per statement of cash flows
1,067.9
(43.4)
–
–
(2.1)
1,022.4
Current other financial assets (see note 16)
13.0
(0.7)
–
–
–
12.3
Liabilities from financing activities
Medium-Term Notes (see note 20)
(1,346.4)
461.3
–
–
(36.6)
(921.7)
Lease liabilities (see note 20)
(2,281.6)
345.5
–
(176.0)
(99.4)
(2,211.5)
Partnership liability to the Marks & Spencer UK Pension
Scheme (see note 12)
(121.9)
40.0
–
–
–
(81.9)
Derivatives held to hedge Medium-Term Notes
(5.2)
–
(16.4)
–
–
(21.6)
Liabilities from financing activities
(3,755.1)
846.8
(16.4)
(176.0)
(136.0)
(3,236.7)
Less: Cash flows related to interest and derivative
instruments
37.0
(185.7)
16.4
–
168.5
36.2
Net debt
(2,637.2)
617.0
–
(176.0)
30.4
(2,165.8)
1. Exchange and other non-cash movements includes interest charges on Medium-Term Notes of £42.2m (last year: £65.4m), interest charges on lease liabilities of
£116.2m (last year: £116.7m) and interest charges on the Partnership liability to the Marks & Spencer UK Pension Scheme of £4.1m (last year: £4.3m).
FINANCIAL STATEMENTS
184
Marks and Spencer Group plc
27 ANALYSIS OF NET DEBT CONTINUED
B. Reconciliation of net debt to statement of financial position
2024
£m
2023
£m
Statement of financial position and related notes
Cash and cash equivalents (see note 18)
1,022.4
1,067.9
Current other financial assets (see note 16)
12.3
13.0
Medium-Term Notes – net of foreign exchange revaluation (see note 20)
(937.2)
(1,356.6)
Lease liabilities (see note 20)
(2,211.5)
(2,281.6)
Partnership liability to the Marks & Spencer UK Pension Scheme (see note 12 and 21)
(88.8)
(124.8)
(2,202.8)
(2,682.1)
Interest payable included within related borrowing and the partnership liability to the Marks & Spencer UK
Pension Scheme
37.0
44.9
Net debt
(2,165.8)
(2,637.2)
28 RELATED PARTY TRANSACTIONS
A. Subsidiaries
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note. Transactions between the Company and its subsidiaries are disclosed in the Company’s separate
financial statements.
B. Joint ventures and associates
Ocado Retail Limited
The following transactions were carried out with Ocado Retail Limited, an associate of the Group.
Loan to Ocado Retail Limited
2024
£m
2023
£m
Opening balance
30.9
–
Loans advanced
60.0
30.0
Interest charged
6.0
0.9
Interest repaid
(4.7)
–
Closing balance
92.2
30.9
The loan matures during 2039/40 and accrues interest at Sterling Overnight Index Average (“SONIA”) plus an applicable margin.
Parent guarantee
Ocado Retail Limited, an associate of the Group, had entered into a £30m revolving credit facility which expired on 19 December
2023 (last year: £25.0m drawn) and subsequent to the year end, on 9 May 2024, was renewed. The Group, along with Ocado Group
plc, jointly guarantee the facility.
Sales and purchases of goods and services
2024
£m
2023
£m
Sales of goods and services
44.9
35.7
Purchases of goods and services
0.1
0.1
Included within trade and other receivables is a balance of £4.1m (last year: £2.9m) owed by Ocado Retail Limited.
Nobody’s Child Limited
Nobody’s Child Limited became an associate of the Group in November 2021.
During the year, the Group made purchases of goods amounting to £7.0m (last year: £6.3m).
At 30 March 2024, there was a balance of £0.1m within trade and other payables (last year: £nil) owed to Nobody’s Child Limited,
and £2.7m included within other financial assets (last year: £0.7m) owed from Nobody’s Child Limited.
C. Marks & Spencer UK Pension Scheme
Details of other transactions and balances held with the Marks & Spencer UK Pension Scheme are set out in notes 11 and 12.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
185
D. Key management compensation
The Group has determined that the key management personnel constitute the Board and the members of the Executive
Committee.
2024
£m
2023
£m
Salaries and short-term benefits
10.6
14.3
Pension costs1
0.4
0.3
Share-based payments
10.0
4.8
Total
21.0
19.4
1. Last year restated to include split of pension costs, including payments in lieu of pension which were omitted last year.
E. Other related party transactions
The Group acquired 77.7% of the issued share capital of The Sports Edit Limited (“TSE”) in February 2022. A further 4.8% of TSE’s
issued share capital was owned by Mr. Justin King, a Non-Executive Director of the Group (the “JK TSE Shares”). Following
shareholder approval, the Group acquired the JK TSE Shares from Mr. Justin King at a total purchase price of £0.3m in July 2022.
29 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
The Group holds a 50% interest in Ocado Retail Limited, a company incorporated in the UK. The remaining 50% interest is held by
Ocado Group Plc. Ocado Retail Limited is an online grocery retailer, operating through the ocado.com and ocadozoom.com
websites.
Ocado Retail Limited is considered an associate of the Group as certain rights are conferred on Ocado Group plc for an initial
period of at least five years from acquisition in August 2019, giving Ocado Group plc control of the company. Through Board
representation and shareholder voting rights, the Group is currently considered to have significant influence and therefore the
investment in Ocado Retail Limited is treated as an associate and the Group applies the equity method of accounting. It is
currently expected that Ocado Group plc will give up those rights to the Group in early April 2025. There will be no change in
economic interest of both shareholders in Ocado Retail Limited, or any consideration paid by the Group, as a result of this
proposed change. After Ocado Group plc give up the rights, it is expected that Ocado Retail Limited will then be consolidated as
a subsidiary of the Group.
Ocado Retail Limited had a financial year end date of 3 December 2023, aligning with its parent company, Ocado Group plc. For
the Group’s purpose of applying the equity method of accounting, Ocado Retail Limited has prepared financial information to the
nearest quarter-end date of its financial year end, as to do otherwise would be impracticable. The results of Ocado Retail Limited
are incorporated in these financial statements from 27 February 2023 to 3 March 2024. There were no significant events or
transactions in the period from 3 March 2024 to 30 March 2024.
The carrying amount of the Group’s interest in Ocado Retail Limited is £677.1m (last year: £756.9m). The Group’s share of Ocado
Retail Limited losses of £79.9m (last year: loss of £43.5m) includes the Group’s share of underlying losses of £37.3m (last year:
share of underlying losses: £29.5m) and the Group’s share of adjusting items of £29.7m (last year: £nil) and adjusting item charges
of £12.9m (last year: £14.0m) (see note 5).
Summarised financial information in respect of Ocado Retail Limited (the Group’s only material associate) is set out below and
represents amounts in the Ocado Retail Limited financial statements prepared in accordance with IFRS, adjusted by the Group for
equity accounting purposes.
As at 3
March 2024
£m
As at 26
February 2023
£m
Ocado Retail Limited
Current assets
261.7
220.0
Non-current assets
517.4
618.7
Current liabilities
(272.3)
(267.7)
Non-current liabilities
(491.2)
(421.7)
Net assets
15.6
149.3
27 February
2023 to
3 March
2024
£m
28 February
2022 to
26 February
2023
£m
Revenue
2,470.3
2,222.0
Loss for the period
(133.7)
(59.0)
Total comprehensive loss
(133.7)
(59.0)
FINANCIAL STATEMENTS
186
Marks and Spencer Group plc
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Reconciliation of the above summarised financial information to the carrying amount of the interest in Ocado Retail Limited
recognised in the consolidated financial statements:
As at 30
March 2024
£m
As at 1
April 2023
£m
Ocado Retail Limited
Net assets
15.6
149.3
Proportion of the Group’s ownership interest
7.8
74.6
Goodwill
449.1
449.1
Brand
229.7
236.2
Customer relationships
56.5
67.1
Other adjustments to align accounting policies
(71.7)
(75.8)
Acquisition costs
5.7
5.7
Carrying amount of the Group’s interest in Ocado Retail Limited
677.1
756.9
In addition, the Group holds immaterial investments in joint ventures and associates totalling £7.1m (last year: £11.0m). The
Group’s share of losses totalled £0.5m (last year: £0.5m profit) and an impairment of £3.5m (last year: £nil) was recognised.
30 CONTINGENT ASSETS
The Group is currently seeking damages from an independent third party following their involvement in anti-competitive
behaviour that adversely impacted the Group. The Group expects to receive an amount from the claim (either in settlement or
from the legal proceedings), a position reinforced by recent court judgements in similar claims. The value of the claim is
confidential and is therefore not disclosed.
31 SUBSEQUENT EVENTS
On 10 April 2024 M&S and HSBC UK announced a new seven-year deal focused on enhancing M&S’ credit and payments offering
through M&S Bank. See note 5 for further details.
The Board have approved a tender offer to repurchase the Group’s 2025 and 2026 Medium-Term Notes on an “any and all” basis,
which will be announced on 22 May 2024.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
187
COMPANY STATEMENT OF FINANCIAL POSITION
As at
30 March
2024
As at
1 April
2023
Notes
£m
£m
Assets
Non-current assets
Investments in subsidiary undertakings
C6
10,004.6
8,006.9
Total assets
10,004.6
8,006.9
Liabilities
Current liabilities
Amounts owed to subsidiary undertakings
2,483.6
2,541.0
Total liabilities
2,483.6
2,541.0
Net assets
7,521.0
5,465.9
Equity
Ordinary share capital
C7
20.5
19.8
Share premium account
C7
967.0
910.7
Capital redemption reserve
2,680.4
2,680.4
Merger reserve
C7
1,397.3
–
Retained earnings
2,455.8
1,855.0
Total equity
7,521.0
5,465.9
The Company’s profit for the year was £1,975.9m (last year: loss of £1,429.5m).
The financial statements were approved by the Board and authorised for issue on 21 May 2024. The financial statements also comprise the notes C1 to C7.
Stuart Machin
Chief Executive Officer
Katie Bickerstaffe Co-Chief Executive Officer
Registered number: 04256886
COMPANY STATEMENT OF CHANGES IN
SHAREHOLDERS’ EQUITY
Ordinary
share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Retained
earnings
Total
£m
£m
£m
£m
£m
£m
At 3 April 2022
19.7
910.6
2,680.4
870.9
2,380.9
6,862.5
Loss for the year
–
–
–
–
(1,429.5)
(1,429.5)
Capital contribution for share-based payments
–
–
–
–
32.7
32.7
Shares issued on exercise of employee share options
0.1
0.1
–
–
–
0.2
Reclassification from merger reserve
–
–
–
(870.9)
870.9
–
At 1 April 2023
19.8
910.7
2,680.4
–
1,855.0
5,465.9
At 2 April 2023
19.8
910.7
2,680.4
–
1,855.0
5,465.9
Profit for the year
–
–
–
–
1,975.9
1,975.9
Dividends
–
–
–
–
(19.6)
(19.6)
Capital contribution for share-based payments
–
–
–
–
41.8
41.8
Shares issued on exercise of employee share options
0.7
56.3
–
–
–
57.0
Reclassification to merger reserve (see note C7)
–
–
–
1,397.3
(1,397.3)
–
At 30 March 2024
20.5
967.0
2,680.4
1,397.3
2,455.8
7,521.0
FINANCIAL STATEMENTS
188
Marks and Spencer Group plc
COMPANY STATEMENT OF CASH FLOWS
52 weeks
ended
30 March
2024
52 weeks
ended
1 April 2023
£m
£m
Cash flow from investing activities
Dividends received
20.0
–
Net cash (used in)/generated from investing activities
20.0
–
Cash flows from financing activities
Shares issued on exercise of employee share options
57.0
0.2
Repayment of intercompany loan
(57.4)
(0.2)
Equity dividends paid
(19.6)
–
Net cash generated from/(used in) financing activities
(20.0)
–
Net cash inflow from activities
–
–
Cash and cash equivalents at beginning and end of year
–
–
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
189
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1 ACCOUNTING POLICIES
General information
Marks and Spencer Group plc (the “Company”) is a public limited company domiciled and incorporated in England and Wales
under the Companies Act 2006. The address of the Company’s registered office is Waterside House, 35 North Wharf Road, London
W2 1NW, United Kingdom.
The principal activities of the Company and the nature of the Company’s operations is as a holding entity.
These financial statements are presented in sterling, which is the Company’s functional currency, and are rounded to the nearest
hundred thousand.
The Company’s accounting policies are the same as those set out in note 1 of the Group financial statements, except as
noted below.
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment. The Company grants share-
based payments to the employees of subsidiary companies. Each period the fair value of the employee services received by the
subsidiary as a capital contribution from the Company is reflected as an addition to investments in subsidiaries.
Loans from other Group undertakings and all other payables are initially recorded at fair value, which is generally the proceeds
received. They are then subsequently carried at amortised cost. The loans are non-interest bearing and repayable on demand.
In accordance with the exemption allowed by Section 408(3) of the Companies Act 2006, the Company has not presented its own
income statement or statement of comprehensive income.
Key sources of estimation uncertainty
Impairment of investments in subsidiary undertakings
The carrying value of the investment in subsidiary undertakings is reviewed for impairment or impairment reversal on an annual
basis. The recoverable amount is determined based on value in use which requires the determination of appropriate assumptions
(which are sources of estimation uncertainty) in relation to the cash flows over the three-year strategic plan period, the long-term
growth rate to be applied beyond this three-year period and the risk-adjusted pre-tax discount rate used to discount the assumed
cash flows to present value.
Estimation uncertainty arises due to changing economic and market factors, the channel shift from stores to online, increasing
technological advancement and the Group’s ongoing strategic transformation programmes. See note C6 for further details on
the assumptions and associated sensitivities.
The Company’s financial risk is managed as part of the Group’s strategy and policies as discussed in note 21 of the Group
financial statements.
C2 Employees
The Company had no employees during the current or prior year. Directors received emoluments in respect of their services to
the Company during the year of £1,350,288 (last year: £1,273,406). The Company did not operate any pension schemes during the
current or preceding year. For further information see the Remuneration Report.
C3 Auditor’s remuneration
Auditor’s remuneration in respect of the Company’s annual audit has been borne by its subsidiary Marks and Spencer plc and has
been disclosed on a consolidated basis in the Company’s consolidated financial statements as required by Section 494(4)(a) of the
Companies Act 2006.
C4 Dividends
2024
2023
2024
2023
per share
per share
£m
£m
Dividends on equity ordinary shares
Paid interim dividend
1.0p
–
19.6
–
1.0p
–
19.6
–
With the Group generating a further improvement in operating performance, balance sheet and credit metrics, the Board
restored a dividend to shareholders in the year, starting with an interim dividend of 1.0p per share (last year: 0.0p per share), paid
on 12 January 2024.
The directors have approved a final dividend of 2.0p per share (last year: 0.0p per share) which in line with the requirements of IAS
10 Events after the Reporting Period, has not been recognised within these results. This final dividend of c.£40.8m (last year: £nil)
will be paid on 5 July 2024 to shareholders who are on the Register of Members at the close of business on 31 May 2024. The
ordinary shares will be quoted ex dividend on 30 May 2024.
A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their dividends in the shares of the
Company. For those shareholders electing to receive the DRIP, the last date for receipt of a new election is 14 June 2024.
C5 RELATED PARTY TRANSACTIONS
During the year, the Company received a dividend of £20.0m (last year: £nil) and decreased its loan from Marks and Spencer plc
by £57.4m (last year: £0.2m). The outstanding balance was £2,483.6m (last year: £2,541.0m) and is non-interest bearing. There were
no other related party transactions.
FINANCIAL STATEMENTS
190
Marks and Spencer Group plc
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C6 INVESTMENTS
A. Investments in subsidiary undertakings
2024
2023
£m
£m
Beginning of the year
8,006.9
9,403.7
Contributions to subsidiary undertakings relating to share-based payments
41.8
32.7
Impairment reversal/(charge)
1,955.9
(1,429.5)
End of year
10,004.6
8,006.9
Shares in subsidiary undertakings represent the Company’s investment in Marks and Spencer plc, Marks and Spencer Holdings
Limited and Marks and Spencer (A2B) Limited.
Impairment of investments in subsidiary undertakings
The Company evaluates its investments in subsidiary undertakings annually for any indicators of impairment or impairment
reversal. The Company considers the relationship between its market capitalisation and the carrying value of its investments,
among other factors, when reviewing for indicators of impairment. As at 30 March 2024, the market capitalisation of the Group
was significantly above the carrying value of its investment in Marks and Spencer plc of £7,442.5m, indicating a potential
impairment reversal, due to strong Group performance.
The recoverable amount of the investment in Marks and Spencer plc has been determined based on a value in use calculation.
The Company has updated its assumptions as at 30 March 2024, reflecting the latest budget and forecast cash flows covering a
three-year period. The pre-tax discount rate of 12.5% (last year: 12.5%) was derived from the Group’s weighted average cost of
capital, the inputs of which include a country risk-free rate, equity risk premium, Group size premium and a risk adjustment (beta).
The long-term growth rate of 2.0% (last year: 2.0%), was based on inflation forecasts by recognised bodies with reference to rates
used within the retail industry.
The Company has determined that the recoverable amount of its investment in Marks and Spencer plc is £11,226.5m and as a
result has recognised an impairment reversal of £1,955.9m. This fully reverses the impairments charged from 2019/20 to 2022/23.
This reversal primarily relates to improved trading expectations, reflecting the Group’s strategy and current three-year plan.
Sensitivity analysis
As disclosed in the accounting policies note C1, the cash flows used within the value in use model, the long-term growth rate and
the discount rate are sources of estimation uncertainty. Management has performed a sensitivity analysis on the key assumptions
and using reasonably possible changes would result in the following impacts:
– A 10% reduction in cash flows from the three-year plan would reduce the headroom by £1,122.7m;
– A 50-basis point decrease in the long-term growth rate would reduce the headroom by £441.5m; and
– A 250-basis point increase in the discount rate would reduce the headroom by £2,154.4m.
None of these in isolation would result in impairment. In the event that all three were to occur simultaneously, the impairment
reversal would be reduced by £1,166.3m.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
191
C6 INVESTMENTS CONTINUED
B. Related undertakings
In accordance with Section 409 of the Companies Act 2006, a full list of related undertakings, the country of incorporation and
the effective percentage of equity owned, as at 30 March 2024 is disclosed below. All undertakings are indirectly owned by the
Company unless otherwise stated.
Subsidiary and other related undertakings registered in the UK(i)
Share class
Proportion of
shares held
Name
(%)
Founders Factory
Retail Limited
Registered office:
Founders Factory
(Level 7) Arundel Street
Building 180 Strand,
2 Arundel Street,
London WC2R 3DA
£0.0001 ordinary
(25.001% of total capital)
0.004
£0.0001 preferred
(74.999% of total capital)
100
Hedge End Park Limited
Registered Office:
33 Holborn, London,
EC1N 2HT
£1 ordinary A
(50% of total capital)
–
£1 ordinary B
(50% of total capital)
100
Marks and Spencer
Pension Trust
Limited (ii) (iii)
£1 ordinary A
100
£1 ordinary B
–
£1 ordinary C
–
Marks and Spencer plc (iii) £0.25 ordinary
100
Marks and Spencer
Scottish Limited
Partnership (iv)
Registered Office:
2-28 St Nicholas Street,
Aberdeen, AB10 1BU
Partnership interest
100
Ocado Retail Limited
Registered Office:
Apollo Court, 2 Bishop
Square, Hatfield
Business Park, Hatfield,
Hertfordshire, AL10 9NE
£0.01 ordinary
50
Amethyst Leasing
(Holdings) Limited
£1 ordinary
100
M & S Limited
£1 ordinary
100
Share class
Proportion of
shares held
Name
(%)
Marks and Spencer
Pearl (1) Limited
£1 ordinary
100
Manford (Textiles)
Limited
£1 ordinary
100
Marks and Sparks
Limited
£1 ordinary
100
Marks and Spencer
(Northern Ireland)
Limited
Registered Office:
Merchant Square,
20-22 Wellington Place,
Belfast, BT1 6GE
£1 ordinary
100
Marks and Spencer
Property Developments
Limited
£1 ordinary
100
Nobody’s Child Limited
Registered Office:
10-11 Greenland Place,
Camden, London,
NW1 0AP
£0.01 ordinary
(72.910% of total capital)
–
£0.01 Preference
(27.090% of total capital)
100
St. Michael (Textiles)
Limited
£1 ordinary
100
(i)
All companies registered at Waterside House, 35 North Wharf Road, London,
W2 1NW, United Kingdom, unless otherwise stated.
(ii) In accordance with the articles of association of Marks and Spencer Pension
Trust Limited, the holders of B and C ordinary shares are both directors of
that company.
(iii) Interest held directly by Marks and Spencer Group plc.
(iv) Marks and Spencer (Initial LP) Limited and Marks and Spencer Pension Trust
Limited are the limited partners; Marks and Spencer plc is the General Partner.
FINANCIAL STATEMENTS
192
Marks and Spencer Group plc
C6 INVESTMENTS CONTINUED
B. Related undertakings continued
UK registered subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006
for the year ended 30 March 2024. Unless otherwise stated, the undertakings listed below are registered at Waterside House, 35
North Wharf Road, London, W2 1NW, United Kingdom and have a single class of ordinary share with a nominal value of £1. All
undertakings are indirectly owned by the Company unless otherwise stated.
The Company will guarantee the debts and liabilities of the above UK subsidiary undertakings at the balance sheet date of
£106.1m in accordance with section 479C of the Companies Act 2006. The Company has assessed the probability of loss under
the guarantee as remote.
(i) Interest held directly by Marks and Spencer Group plc.
(ii) No share capital, as the company is limited by guarantee. Marks and Spencer plc is the sole member.
Proportion of
shares held
Company
Number
Name
(%)
Amethyst Leasing
(Properties) Limited
100
4246934
Busyexport Limited
100
4411320
Marks and Spencer
(Initial LP) Limited (i)
Registered Office: 2 Semple Street
Edinburgh, EH3 8BL
100
SC315365
Marks and Spencer
(Property Ventures) Limited
100
5502513
Marks and Spencer 2005
(Brooklands Store) Limited
100
5502608
Marks and Spencer 2005
(Chester Store) Limited
100
5502542
Marks and Spencer 2005
(Fife Road Kingston Store) Limited
100
5502598
Marks and Spencer 2005
(Glasgow Sauchiehall Store)
Limited
100
5502546
Marks and Spencer 2005 (Hedge
End Store) Limited
100
5502538
Marks and Spencer 2005
(Kensington Store) Limited
100
5502478
Marks and Spencer 2005
(Kingston-on-Thames Satellite
Store) Limited
100
5502523
Marks and Spencer 2005
(Kingston-on-Thames Store)
Limited
100
5502520
Marks & Spencer Outlet Limited
100
4039568
Marks & Spencer
Simply Foods Limited
100
4739922
Marks and Spencer
(Property Investments) Limited
100
5502582
Marks and Spencer Chester Limited
100
5174129
Marks and Spencer France Limited
100
5502548
Marks and Spencer International
Holdings Limited
100
2615081
Proportion of
shares held
Company
Number
Name
(%)
Marks and Spencer (Investment
Holdings) Limited
100
13587353
Marks and Spencer (A2B) Limited (i)
100
14228803
Marks and Spencer Company
Archive (CIC) (ii)
N/A
7377510
Marks and Spencer 2005 (Parman
House Kingston Store) Limited
100
5502588
Marks and Spencer 2005 (Pudsey
Store) Limited
100
5502544
Marks and Spencer 2005
(Warrington Gemini Store) Limited
100
5502502
Marks and Spencer Holdings
Limited (i)
100
11845975
Marks and Spencer Investments
100
4903061
Marks and Spencer Property
Holdings Limited
100
2100781
Ruby Properties
(Cumbernauld) Limited
100
4922798
Ruby Properties (Hardwick) Limited
100
4716018
Ruby Properties
(Long Eaton) Limited
100
4716031
Ruby Properties
(Thorncliffe) Limited
100
4716110
Ruby Properties
(Tunbridge) Limited
100
4716032
Simply Food (Property
Investments)
100
5502543
Simply Food
(Property Ventures) Limited
100
2239799
Marks and Spencer (Bradford)
Limited
100
10011863
Marks and Spencer (Jaeger) Limited
100
13098074
Marks and Spencer Pearl
(Daventry) Limited
100
14267865
Gist Limited
100
502669
St. Michael Finance Limited
100
1339700
The Sports Edit Limited
82.583
9331295
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
193
C6 INVESTMENTS CONTINUED
B. Related undertakings continued
International subsidiary undertakings(i)
Registered
address
Country
Share class
Proportion
of shares
held by
subsidiary
Name
(%)
Marks and
Spencer
(Australia)
Pty Limited
Minter Ellison,
Governor
Macquarie
Tower, Level 40,
1 Farrer Place,
Sydney, NSW,
2000
Australia
AUD 2
Ordinary
100
Marks and
Spencer
(Shanghai)
Limited(ii)
Unit 03-04 16/F,
Eco City 1788,
1788 West Nan
Jing Road,
Shanghai, China
China
USD NPV
100
Marks and
Spencer
Czech
Republic a.s
Jemnická 1138/1,
Michle, Praha 4,
140 00, Czech
Republic
Czech
Republic
CZK 1,000
Ordinary
100
CZK 100,000
Ordinary
100
CZK 1,000,000
Ordinary
100
Marks and
Spencer
Services
S.R.O
Jemnická 1138/1,
Michle, Praha 4,
140 00, Czech
Republic
Czech
Republic
CZK NPV
100
Marks and
Spencer
Marinopoulos
Greece SA
33-35 Ermou
Street, Athens
10563, Greece
Greece
€3 Ordinary
80(iii)
€3 Preference
100
Ignazia
Limited
Heritage Hall,
Le Marchant
Street, St Peter
Port, GY1 4JH,
Guernsey
Guernsey
£1 Ordinary
100
Teranis
Limited
Heritage Hall,
Le Marchant
Street, St Peter
Port, GY1 4JH,
Guernsey
Guernsey
£1 Ordinary
100
M.S. General
Insurance L.P.
Heritage Hall,
Le Marchant
Street, St Peter
Port, GY1 4JH,
Guernsey
Guernsey
Partnership
Interest
100
Marks and
Spencer
(Hong Kong)
Investments
Limited
Suites 807-13,
8/F, South
Tower, World
Finance Centre,
Harbour City,
Kowloon, Hong
Kong
Hong Kong
No Par Value
Ordinary
100
Marks and
Spencer
(India) pvt
Limited
Plot No 64, 2nd
Floor, Holly
Hocks, Sector
44, Gurgaon –
122 002,
Haryana, India
India
INR10
Ordinary
100
Marks and
Spencer
Reliance
India pvt Ltd
4th Floor, Court
House,
Lokmanya Tilak
Marg, Dhobi
Talao, Mumbai,
400 002, India
India
INR 10 Class A
(14.619% of
total capital)
51
INR 10 Class B
(43.544% of
total capital)
100
INR 5 Class
C(iv) (41.837% of
total capital)
0
Registered
address
Country
Share class
Proportion
of shares
held by
subsidiary
Name
(%)
Aprell
Limited
24/29 Mary
Street, Dublin 2,
Ireland
Ireland
€1.25
Ordinary
100
Marks and
Spencer
(Ireland)
Limited
24/27 Mary
Street, Co.
Dublin, D01
YE83, Ireland
Ireland
€1.25 Ordinary
100
Marks and
Spencer
Pensions
Trust (Ireland)
Company
Limited By
Guarantee
24-27 Mary
Street, Dublin 1,
D01 YE83,
Ireland
Ireland
N/A(v)
–
M & S Mode
International
B.V. (vi)
Basisweg 10
1043 AP
Amsterdam
Netherlands
Netherlands
€100 Ordinary
100
Marks and
Spencer
(Nederland)
B.V.
Basisweg 10
1043 AP
Amsterdam
Netherlands
Netherlands
€450 Ordinary
100
Marks and
Spencer BV
Basisweg 10
1043 AP
Amsterdam
Netherlands
Netherlands
€100 Ordinary
100
Marks and
Spencer
Stores BV (in
liquidation)
Basisweg 10
1043 AP
Amsterdam
Netherlands
Netherlands
€450 Ordinary
100
Marks &
Spencer
(Portugal)
Lda.
Avenida da
Liberdade 249,
8º, 1250-143,
Lisbon, Portugal
Portugal
€1 Ordinary
100
Marks and
Spencer
(Singapore)
Investments
Pte. Ltd.
77 Robinson
Road, #13-00
Robinson 77,
Singapore
068896,
Singapore
Singapore
SGD NPV
100
Marks and
Spencer (SA)
(Pty) Limited
Woolworths
House, 93
Longmarket
Street, Cape
Town 8001,
South Africa
South Africa
ZAR 2
Ordinary
100
Marks and
Spencer
Clothing
Textile
Trading
J.S.C
Havalani Karsisi
istanbul Dunya
Ticaret Merkezi
A3 Blok, Kat:11
Yesilkoy,
Bakirkoy,
Istanbul, Turkey
Turkey
TRL 25.00
Ordinary
100
Gist
Distribution
Limited
24-27 Mary
Street, Dublin 1,
Ireland
Ireland
€1 Ordinary
100
NOTE: A number of the companies listed are legacy companies which no longer
serve any operational purpose.
(i)
The shares of all international subsidiary undertakings are held by companies
within the Group other than the Company (Marks and Spencer Group plc).
(ii)
Registered address from 19 April 2024: Unit 03-05A 16/F, Eco City 1788,
1788 West Nan Jing Road, Shanghai, China.
(iii)
20% of ordinary shares are owned by JV partner.
(iv)
INR 5 Class C shares 100% owned by JV partner.
(v)
No share capital as the company is limited by guarantee.
(vi)
Liquidated on 15 May 2024.
FINANCIAL STATEMENTS
194
Marks and Spencer Group plc
C7 SHARE CAPITAL AND OTHER RESERVES
Issue of new shares
A total of 75,421,892 (last year: 6,028,587) ordinary shares having a nominal value of £0.7m (last year: £0.1m) were allotted during
the year under the terms of the Company’s share schemes which are described in note 13 of the Group financial statements. The
aggregate consideration received was £57.0m (last year: £0.1m).
Merger reserve
The Company’s merger reserve was created as part of a Group reorganisation that occurred in 2001/02 and has an economical
relationship to the Company’s investment in Marks and Spencer plc. Between 2019/20 and 2022/23 an amount equal to the
original merger reserve balance of £1,397.3m has been transferred from the merger reserve to retained earnings as that amount
had become a realised profit in accordance with TECH 02/17. Following the reversal of impairment recognised in 2023/24, an
amount equal to the original merger reserve balance of £1,397.3m has been transferred from retained earnings to the merger
reserve, in accordance with TECH 02/17.
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
195
GROUP FINANCIAL RECORD
2024
52 weeks
2023
52 weeks
(restated)
2022
52 weeks
(restated)
2021
53 weeks
(restated)
2020
52 weeks
(restated)
£m
£m
£m
£m
£m
Income statement
Revenue1
UK Clothing & Home
3,841.5
3,658.3
3,308.3
2,239.0
3,209.1
UK Food
8,158.8
7,218.0
6,639.6
6,138.5
6,028.2
International
1,039.8
1,055.0
937.2
789.4
944.6
Revenue before adjusting items
13,040.1
11,931.3
10,885.1
9,166.9
10,181.9
Adjusting items included in revenue
–
–
–
(11.2)
–
Revenue
13,040.1
11,931.3
10,885.1
9,155.7
10,181.9
Adjusted operating profit/(loss)1
UK Clothing & Home
402.8
323.8
330.7
(130.8)
223.9
UK Food
395.3
248.0
277.8
228.6
236.7
Ocado
(37.3)
(29.5)
13.9
78.4
2.6
Other
2.2
(0.5)
13.0
1.9
16.8
International
75.6
84.8
73.6
44.1
110.7
Total adjusted operating profit
838.6
626.6
709.0
222.2
590.7
Adjusting items included in operating profit
(124.4)
(111.5)
(136.8)
(252.9)
(335.9)
Total operating profit/(loss)
714.2
515.1
572.2
(30.7)
254.8
Net interest payable
(122.2)
(173.3)
(199.3)
(219.1)
(211.2)
Adjusting items included in net finance costs2
80.5
133.9
18.8
40.4
23.6
Net finance costs
(41.7)
(39.4)
(180.5)
(178.7)
(187.6)
Profit on ordinary activities before taxation and adjusting items3
716.4
453.3
509.7
3.1
379.5
Profit/(loss) on ordinary activities before taxation
672.5
475.7
391.7
(209.4)
67.2
Income tax (expense)/credit3
(247.3)
(111.2)
(180.3)
17.0
(57.8)
Profit/(loss) after taxation3
425.2
364.5
211.4
(192.4)
9.4
FINANCIAL STATEMENTS
196
Marks and Spencer Group plc
GROUP FINANCIAL RECORD CONTINUED
2024
52 weeks
2023
52 weeks
2022
52 weeks
2021
53 weeks
2020
52 weeks
Basic earnings per share1
Basic earnings/Weighted
average ordinary shares in issue
21.9p
18.5p
10.7p
(9.7p)
0.3p
Adjusted basic earnings per share1, 3
Adjusted basic earnings/
Weighted average ordinary
shares in issue
24.6p
16.9p
16.2p
(0.1p)
14.7p
Dividend per share declared in
respect of the year
1.0p
–
–
–
3.9p
Dividend cover
Adjusted earnings per share/
Dividend per share
24.6x
–
–
–
3.8x
Retail fixed charge cover4
Operating profit before
depreciation/Fixed charges
5.1x
3.7x
3.5x
2.0x
3.4x
Statement of financial position
Net assets3 (£m)
2,830.1
2,680.8
2,783.8
2,249.3
3,663.2
Net debt5 (£m)
2,165.8
2,637.2
2,698.8
3,515.9
3,950.6
Capital expenditure (£m)
393.4
402.8
300.2
146.9
332.0
Stores and space
UK stores
1,058
1,064
1,035
1,037
1,038
UK selling space (m sq ft)
16.7
16.8
16.7
16.8
16.8
International stores6
434
403
452
472
483
International selling space6 (m sq ft)
4.5
4.4
5.0
5.1
5.0
Staffing (full–time equivalent)
UK
47,680
47,266
42,550
44,423
49,094
International
4,959
4,826
4,558
4,754
4,894
The above results are prepared under IFRS for each reporting period on a consistent basis.
1. Based on continuing operations.
2. Net pension income moved to adjusting items in 2023/24.
3. See note 1 for details on a change in adjusting items and the resulting restatement.
4. Calculated on Marks and Spencer Group plc’s consolidated basis.
5. Excludes accrued interest.
6. Prior year International stores and selling space has been restated.
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
197
The Group tracks a number of alternative performance measures in managing its business, which are not defined or specified
under the requirements of IFRS because they exclude amounts that are included in, or include amounts that are excluded from,
the most directly comparable measure calculated and presented in accordance with IFRS, or are calculated using financial
measures that are not calculated in accordance with IFRS.
The Group believes that these alternative performance measures, which are not considered to be a substitute for or superior to
IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These alternative
performance measures are consistent with how the business performance is planned and reported within the internal
management reporting to the Board. Some of these alternative performance measures are also used for the purpose of setting
remuneration targets.
These alternative performance measures should be viewed as supplemental to, but not as a substitute for, measures presented in
the consolidated financial information relating to the Group, which are prepared in accordance with IFRS. The Group believes that
these alternative performance measures are useful indicators of its performance. However, they may not be comparable with
similarly-titled measures reported by other companies due to differences in the way they are calculated.
Alternative performance
measure (“APM”)
Closest equivalent
statutory measure
Reconciling items to
statutory measure
Definition and purpose
Income Statement Measures
Sales
Revenue
Consignment sales
Sales includes the gross value of consignment sales (excluding
VAT). Where third-party branded goods are sold on a consignment
basis, only the commission receivable is included in statutory
revenue. This measure has been introduced given the Group’s focus
on launching and growing third-party brands and is consistent with
how the business performance is reported and assessed by the
Board and the Executive Committee.
Clothing & Home
store/Clothing &
Home online sales
None
Not applicable
The growth in revenues on a year-on-year basis is a good indicator
of the performance of the stores and online channels.
2024
2023
£m
£m
%
UK Clothing & Home
Store sales1
2,642.3
2,538.6
4.1
Consignment sales
(18.6)
(21.4)
Store revenue
2,623.7
2,517.2
4.2
Online sales1
1,268.4
1,176.4
7.8
Consignment sales
(50.6)
(35.3)
Online revenue
1,217.8
1,141.1
6.7
UK Clothing & Home sales
3,910.7
3,715.0
5.3
Consignment sales
(69.2)
(56.7)
Total UK Clothing & Home
revenue
3,841.5
3,658.3
5.0
1. UK Clothing & Home store sales excludes revenue from “shop your way” and
Click & Collect, which are included in UK Clothing & Home online sales.
There is no material difference between sales and revenue for UK Food
and International.
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
FINANCIAL STATEMENTS
198
Marks and Spencer Group plc
Alternative performance
measure (“APM”)
Closest equivalent
statutory measure
Reconciling items to
statutory measure
Definition and purpose
Like-for-like sales
growth
Movement in revenue
per the income
statement
Revenue from non
like-for-like stores
The period-on-period change in sales (excluding VAT) from stores
which have been trading and where there has been no significant
change (greater than 10%) in footage for at least 52 weeks and
online sales. The measure is used widely in the retail industry as an
indicator of sales performance. It excludes the impact of new stores,
closed stores, stores with significant footage change and non-retail
businesses such as supply chain services.
2023/24
2022/23
£m
£m
%
UK Food
Like-for-like
7,780.6
6,992.9
11.3
Net new space1
378.2
225.1
Total UK Food sales
8,158.8
7,218.0
13.0
UK Clothing & Home
Like-for-like
3,814.8
3,626.9
5.2
Net new space
95.9
88.1
Total UK Clothing &
Home sales
3,910.7
3,715.0
5.3
1. UK Food net new space includes Gist third party revenue.
Revenue from
non-retail businesses
Consignment sales
M&S.com sales/
Online sales
None
Not applicable
Total sales through the Group’s online platforms. These sales are
reported within the relevant UK Clothing & Home, UK Food and
International segment results. The growth in sales on a year-on-year
basis is a good indicator of the performance of the online channel
and is a measure used within the Group’s incentive plans. Refer to
the Remuneration Report for an explanation of why this measure is
used within incentive plans.
International online
None
Not applicable
International sales through International online platforms.
These sales are reported within the International segment results.
The growth in sales on a year-on-year basis is a good indicator of
the performance of the online channel. This measure has been
introduced given the Group’s focus on online sales.
2023/24
2022/23
£m
£m
%
International sales
Stores
875.6
874.5
0.0
Online
164.2
180.5
(9.0)
At reported currency
1,039.8
1,055.0
(1.4)
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
199
Alternative performance
measure (“APM”)
Closest equivalent
statutory measure
Reconciling items to
statutory measure
Definition and purpose
Sales growth at
constant currency
None
Not applicable
The period-on-period change in sales retranslating the previous
year sales at the average actual periodic exchange rates used in
the current financial year. This measure is presented as a means
of eliminating the effects of exchange rate fluctuations on the
period-on-period reported results.
2023/24
2022/23
£m
£m
%
International sales
At constant currency
1,039.8
1,039.9
0.0
Impact of FX retranslation
–
15.1
At reported currency
1,039.8
1,055.0
(1.4)
Adjusting items
None
Not applicable
Those items which the Group excludes from its adjusted profit
metrics in order to present a further measure of the Group’s
performance. Each of these items, costs or incomes, is considered
to be significant in nature and/or quantum or are consistent with
items treated as adjusting in prior periods. Excluding these items
from profit metrics provides readers with helpful additional
information on the performance of the business across periods
because it is consistent with how the business performance is
planned by, and reported to, the Board and the Executive
Committee.
Adjusted
operating profit
Operating profit before
adjusting items
Operating profit
Adjusting items
(see note 5)
Operating profit before the impact of adjusting items. The Group
considers this to be an important measure of Group performance
and is consistent with how the business performance is reported
and assessed by the Board and the Executive Committee.
Adjusted operating
margin
Operating margin
before adjusting items
None
Not applicable
Adjusted operating profit as a percentage of sales.
Finance income before
adjusting items
Finance income
Adjusting items
(see note 5)
Finance income before the impact of adjusting items. The Group
considers this to be an important measure of Group performance
and is consistent with how the business performance is reported
and assessed by the Board and the Executive Committee.
Finance costs before
adjusting items
Finance costs
Adjusting items
(see note 5)
Finance costs before the impact of adjusting items. The Group
considers this to be an important measure of Group performance
and is consistent with how the business performance is reported
and assessed by the Board and the Executive Committee.
Net interest payable
on leases
Finance
income/costs
Finance
income/costs
(see note 6)
The net of interest income on subleases and interest payable
on lease liabilities. This measure has been introduced as it allows
the Board and Executive Committee to assess the impact of IFRS
16 Leases.
Net financial interest
Finance
income/costs
Finance
income/costs
(see note 6)
Calculated as net finance costs, excluding interest on leases and
adjusting items. The Group considers this to be an important
measure of Group performance and is consistent with how the
business performance is reported and assessed by the Board and
the Executive Committee.
EBIT before
adjusting items
EBIT1
Adjusting items
(see note 5)
Calculated as profit before the impact of adjusting items, net
finance costs and tax as disclosed on the face of the consolidated
income statement. This measure is used in calculating the return on
capital employed for the Group.
Ocado Retail Limited
Adjusted EBITDA
EBIT1
Not applicable
Calculated as Ocado Retail Limited earnings before interest, taxation,
depreciation, amortisation, impairment and adjusting items.
Profit before tax and
adjusting items
Profit before tax
Adjusting items
(see note 5)
Profit before the impact of adjusting items and tax. The Group
considers this to be an important measure of Group performance
and is consistent with how the business performance is reported
and assessed by the Board and the Executive Committee.
This is a measure used within the Group’s incentive plans. Refer to
the Remuneration Report for an explanation of why this measure is
used within incentive plans.
FINANCIAL STATEMENTS
200
Marks and Spencer Group plc
Alternative performance
measure (“APM”)
Closest equivalent
statutory measure
Reconciling items to
statutory measure
Definition and purpose
Adjusted basic
earnings per share
Earnings per share
Adjusting items
(see note 5)
Profit after tax attributable to owners of the parent and before the
impact of adjusting items, divided by the weighted average number
of ordinary shares in issue during the financial year.
This is a measure used within the Group’s incentive plans. Refer to
the Remuneration Report for an explanation of why this measure
is used.
Adjusted diluted
earnings
per share
Diluted earnings
per share
Adjusting items
(see note 5)
Profit after tax attributable to owners of the parent and before the
impact of adjusting items, divided by the weighted average number
of ordinary shares in issue during the financial year adjusted for the
effects of any potentially dilutive options.
Effective tax rate
before adjusting items
Effective tax rate
Adjusting items and
their tax impact
(see note 5)
Total income tax charge for the Group excluding the tax impact of
adjusting items divided by the profit before tax and adjusting items.
This measure is an indicator of the ongoing tax rate for the Group.
Balance Sheet Measures
Net debt
None
Reconciliation
of net debt
(see note 27)
Net debt comprises total borrowings (bank and bonds net of
accrued interest and lease liabilities), the spot foreign exchange
component of net derivative financial instruments that hedge the
debt and the Scottish Limited Partnership liability to the Marks and
Spencer UK Pension Scheme less cash, cash equivalents and
unlisted and short-term investments. Net debt does not include
contingent consideration as it is conditional upon future events
which are not yet certain at the balance sheet date.
This measure is a good indication of the strength of the Group’s
balance sheet position and is widely used by credit rating agencies.
Net funds/(debt)
excluding lease
liabilities
None
Reconciliation
of net debt
(see note 27)
Lease liabilities
(see note 20)
Calculated as net debt less lease liabilities. This measure is a good
indication of the strength of the Group’s balance sheet position and
is widely used by credit rating agencies.
Cash Flow Measures
Free cash flow
from operations
Operating profit
See Financial Review
Calculated as operating profit less adjusting items within operating
profit, depreciation and amortisation before adjusting items, cash
lease payments, working capital, defined benefit scheme pension
funding, capex and disposals, financial interest, taxation, employee-
related share transactions, share of (profit)/loss from associate,
adjusting items in cash flow and loans to associates.
Free cash flow
Operating profit
See Financial Review
Calculated as free cash flow from operations less acquisitions,
investments and divestments. This measure shows the cash
generated by the Group during the year that is available for
returning to shareholders and is used within the Group’s incentive
plans.
Free cash flow after
shareholder returns
Operating profit
See Financial Review
Calculated as free cash flow less dividends paid.
This measure shows the cash retained by the Group in the year.
Other Measures
Capital expenditure
None
Not applicable
Calculated as the purchase of property, plant and equipment,
investment property and intangible assets during the year, less
proceeds from asset disposals excluding any assets acquired or
disposed of as part of a business combination or through an
investment in an associate.
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Annual Report & Financial Statements 2024
201
Alternative performance
measure (“APM”)
Closest equivalent
statutory measure
Reconciling items to
statutory measure
Definition and purpose
Adjusted return on
capital employed
(“ROCE”)
None
Not applicable
Calculated as being adjusted operating profit divided by the
average of opening and closing capital employed. The measures
used in this calculation are set out below:
2024
2023
£m
£m
Operating profit
714.2
515.1
Adjusting items included in operating profit
(see note 5)1
124.4
111.5
Adjusted operating profit
838.6
626.6
Net assets
2,830.1
2,680.8
Add back:
Partnership liability to the Marks & Spencer
UK Pension Scheme
88.8
124.8
Deferred tax liabilities
205.8
206.4
Non-current borrowings and other
financial liabilities
2,882.8
3,184.0
Retirement benefit deficit
4.6
4.6
Derivative financial instruments
34.4
42.5
Current tax liabilities
1.5
38.5
Less:
Investment property
(11.6)
(11.8)
Retirement benefit assets
(81.8)
(482.0)
Current tax assets
(32.9)
(6.5)
Deferred tax assets
(11.7)
(7.6)
Net operating assets
5,910.0
5,773.7
Add back: Provisions related
to adjusting items
130.6
100.3
Capital employed
6,040.6
5,874.0
Average capital employed
5,957.3
5,888.4
ROCE %
14.1%
10.6%
1. See note 1 for details on a change in adjusting items and the resulting
restatement.
This measure is used within the Group’s incentive plans. Refer to
the Remuneration Report for an explanation of why this
measure is used within incentive plans.
1. EBIT is not defined within IFRS but is a widely accepted profit measure being earnings before interest and tax.
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NOTICE OF MEETING 2024
Annual Report & Financial Statements 2024
203
202
Marks and Spencer Group plc
Tuesday 2 July 2024 at 11am
Held at, and broadcast from,
Waterside House, 35 North Wharf Road,
London W2 1NW
THIS DOCUMENT IS IMPORTANT AND
REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to the action you should take, you
should immediately consult your stockbroker, bank manager,
solicitor, accountant or other independent professional adviser
authorised under the Financial Services and Markets Act 2000
if you are resident in the United Kingdom or, if you reside
elsewhere, another appropriately authorised financial adviser.
If you have sold or otherwise transferred all your shares in the
Company, please forward this document and accompanying
documents (except any personalised form of proxy, if
applicable) to the purchaser or transferee, or to the
stockbroker or other agent through whom the sale or transfer
was effected, for transmission to the purchaser or transferee.
NOTICE OF MEETING 2024
“
I am pleased to announce the
23rd Annual General Meeting
of Marks and Spencer Group
plc will be held on 2 July 2024.
NICK FOLLAND
General Counsel & Company Secretary
DEAR SHAREHOLDER,
ANNUAL GENERAL MEETING (“AGM”)
The Board regards the AGM as an important opportunity to
listen to its shareholders and to be held to account by them.
As well as presenting the Company’s business matters for
shareholders to vote upon, it is also when the Board updates
shareholders directly on the Company’s performance and M&S’
future strategy.
The Board is committed to leading on shareholder
engagement, through our innovative private shareholder panel
and public campaign to enhance the shareholder voice. The
Board continues to believe a digitally-enabled meeting is the
best way for directors to interact and engage with the broadest
range of shareholders. Participation levels have increased
considerably year-on-year since our last in-person meeting
and, for the first time last year, we partnered with Interactive
Investor to provide shareholders on their platform with their
own unique link to participate in our AGM.
The 2024 AGM will therefore be a digitally-enabled meeting,
broadcast from M&S’ Waterside House Support Centre at
11am on Tuesday 2 July 2024.
Shareholders may participate in the AGM electronically via the
Lumi AGM platform, which can be accessed by logging on to
https://web.lumiagm.com/148-969-154. On this website,
questions and voting instructions can be submitted, both
during the meeting and in advance. A step-by-step guide on
how to join the meeting electronically and submit votes and
questions can be found on pages 212 to 213.
As the AGM is a digital-first event, shareholders will enjoy the
best experience by joining the meeting online. If a
shareholder wishes to attend in person, seats will be allocated
on a first-come first-served basis. Shareholders are requested
to register their intention to do so in advance, to help us to
manage capacity on the day. Details of how to register to
attend in person can be found on page 211.
Anita Anand, leading radio and television broadcaster,
journalist and author, will again be joining this year’s meeting to
act as your shareholder advocate. Anita’s role is to ensure
shareholder views and questions are put to the Board.
Shareholders are strongly encouraged to log on and submit
questions in advance of the meeting, so their views are heard
even if they are unable to participate live.
VOTING BEFORE THE MEETING
All shareholders are encouraged to vote either in advance or on
the day. There are several ways to submit voting instructions
before the meeting, which are available from the publication
date of this Notice:
(1) The Lumi AGM platform;
(2) Equiniti’s Shareview website;
(3) The CREST or Proxymity electronic proxy appointment
platforms; or
(4) By completing and returning a paper proxy form.
Votes submitted electronically via the Lumi or Shareview
websites, or via the CREST or Proxymity platforms, (options 1, 2
and 3 above) should be registered by no later than 11am on
Friday 28 June 2024. After then, shareholders will no longer
be able to submit their proxy vote via Shareview, CREST or
Proxymity. Voting via the Lumi website will also close at 11am
on Friday 28 June 2024, but will reopen for voting on the day of
the meeting.
Paper proxy votes (option 4 above) must be received by no
later than 11am on Friday 28 June 2024. Paper proxy forms are
available from Equiniti on request; shareholders can call our
shareholder helpline on 0345 609 0810, or use any of Equiniti’s
alternative contact details listed on page 214.
Shareholders will be able to vote in one of three ways for each
of the resolutions: “For”, “Against” or “Vote Withheld”. Please
note that a “Vote Withheld” is not a vote in law and will not be
counted in the calculation of votes “For” and “Against” each
resolution.
JOINING THE MEETING AND VOTING ON THE DAY
Shareholders can watch the broadcast live, vote and ask
questions on the day of the meeting via the Lumi website.
Pages 211 to 213 provide instructions on how to join the
meeting and submit votes and questions on the day.
Shareholders who wish to attend the AGM in person are
requested to register their intention to do so in advance, to
help us to manage capacity on the day. Details of how to
register to attend in person can be found on page 211.
Voting on all resolutions on the day will be by way of a poll.
The Lumi website will reopen at 10am on Tuesday 2 July 2024,
and votes can be cast once the poll has been declared open.
NOTICE
OF ANNUAL
GENERAL
MEETING 2024
NOTICE OF MEETING 2024
NOTICE OF MEETING 2024
204
Marks and Spencer Group plc
Annual Report & Financial Statements 2024
205
NOTICE OF MEETING 2024 CONTINUED
QUESTIONS
On the day, shareholder questions will be posed to the Board
by Anita Anand. Where a number of questions are received
covering the same topic, Anita will group these to address as
many queries as possible. Questions may be submitted via
Lumi, either in advance, to be received before 11am on Friday 28
June 2024, or on the day (more information can be found
on pages 211 to 213).
Shareholders can also send a video recording of their question
by email to AGMquestionsubmission@marks-and-spencer.
com, to be received by no later than 5pm on Friday 28 June
2024.
VOTING RESULTS
The results of the voting will be announced through a
Regulatory Information Service and will be published on our
website, corporate.marksandspencer.com, on Tuesday 2 July
2024, or as soon as reasonably practicable thereafter.
In 2023, all resolutions were passed at the meeting with votes
ranging from 86.12% to 99.99% in favour.
EXPLANATORY NOTES
An explanation of each of the resolutions to be voted on at the
AGM is set out below and on pages 205 to 206.
M&S WEBSITE
Our corporate website, corporate.marksandspencer.com,
is the principal means we use to communicate with our
shareholders. There is a wealth of information online
including:
A copy of our full Annual Report, which includes our
Strategic Report.
All the latest M&S news, press releases and investor
presentations.
A detailed account of our approach to corporate
governance at M&S.
EXPLANATORY NOTES TO THE RESOLUTIONS
1 TO RECEIVE THE REPORT AND ACCOUNTS
The Board asks that shareholders receive the Annual Report
and Financial Statements for the 52 weeks ended 30 March
2024.
2 APPROVAL OF THE DIRECTORS’ REMUNERATION
REPORT
The Directors’ Remuneration Report sets out the pay and
benefits received by each of the directors for the year ended
30 March 2024. In line with legislation, this vote is advisory
and the directors’ entitlement to remuneration is not
conditional on it.
3 FINAL DIVIDEND
The Board proposes a final dividend of 2p per share for the
year ended 30 March 2024. If approved, the recommended
final dividend will be paid on 5 July 2024 to all shareholders
who were on the Register of Members at the close of business
on 31 May 2024.
4–12 ELECTION OF DIRECTORS
The directors believe that the Board continues to maintain an
appropriate balance of knowledge and skills and that all the
Non-Executive Directors are independent in character and
judgement. This follows a process of formal evaluation, which
confirms that each director in office at the time of the
evaluation makes an effective and valuable contribution to
the Board and demonstrates commitment to the role
(including making sufficient time available for Board and
Committee meetings and other duties as required).
On 7 March 2024 the Company announced Katie Bickerstaffe
will be retiring from the Board following the conclusion of
this year’s AGM to pursue her board career. Katie will
therefore not be standing for re-election. On 28 May 2024
Andrew Fisher informed the Company that he will be
stepping down from the Board on 2 July 2024 and therefore
will also not be standing for re-election.
In accordance with the UK Corporate Governance Code, all
other directors will stand for re-election at the AGM this year.
Biographies are available on pages 74 to 75 of the Annual
Report, with further details available on our website,
corporate.marksandspencer.com. It is the Board’s view that
the directors’ biographies illustrate why each of their
contributions are, and continue to be, important to the
Company’s long-term sustainable success.
13–14 APPOINTMENT AND REMUNERATION OF AUDITOR
On the recommendation of the Audit & Risk Committee, the
Board proposes in resolution 13 that Deloitte LLP be
reappointed as auditor of the Company. Resolution 14
proposes that the Audit & Risk Committee be authorised to
determine the level of the auditor’s remuneration.
15 AUTHORITY TO MAKE POLITICAL DONATIONS
The Company’s policy is that it does not, directly or through
any subsidiary, make what are commonly regarded as
donations to any political party. The authorities being
requested from shareholders are not designed to change
this. However, the Companies Act 2006 (the “Act”) defines
political donations very broadly and, as a result, covers
activities that form part of normal relationships and which
are accepted as a way of engaging with stakeholders and
opinion formers to ensure that the Company’s issues and
concerns are considered and addressed. Activities of this
nature are not designed to support any political party or to
influence public support for a particular party and would not
be thought of as political donations in the ordinary sense of
those words. Shareholder approval is being sought on a
precautionary basis only.
The resolution, if passed, will renew the directors’ authority
until the conclusion of the AGM in 2025 or on 1 October 2025,
whichever is sooner, to make donations and incur
expenditure which might otherwise be caught by the terms
of the Act, up to an aggregate amount of £50,000 for the
Company and for subsidiary companies. In the financial year
ended 30 March 2024, the Company and its subsidiaries did
not incur any expenditure pursuant to equivalent authorities.
16 RENEWAL OF THE POWERS OF THE BOARD TO
ALLOT SHARES
Paragraph (A) of this resolution 16 would give the directors
the authority to allot ordinary shares of the Company up to
an aggregate nominal amount equal to £6,823,061.67
(representing 682,306,167 ordinary shares of £0.01 each). This
amount represents approximately one third (33.33%) of the
Company’s issued ordinary share capital as at 21 May 2024,
the latest practicable date before the publication of this
Notice.
In line with guidance issued by the Investment Association in
February 2023, paragraph (B) of this resolution would give
the directors authority to allot ordinary shares in connection
with a pre-emptive offer in favour of ordinary shareholders
up to an aggregate nominal amount equal to £13,646,123.34
(representing 1,364,612,334 ordinary shares), as reduced by
the nominal amount of any shares issued under paragraph
(A) of this resolution. This amount (before any reduction)
represents approximately two-thirds (66.66%) of the
Company’s issued ordinary share capital as at 21 May 2024,
the latest practicable date before the publication of
this Notice.
The authorities sought under paragraphs (A) and (B) of this
resolution will expire at the conclusion of the AGM in 2025 or
on 1 October 2025, whichever is sooner. The directors have no
present intention to exercise either of the authorities sought
under this resolution; however, the Board wishes to ensure
that the Company has maximum flexibility in managing the
Group’s capital resources. As at the date of this Notice, no
shares are held by the Company in treasury.
17–18 AUTHORITY TO DISAPPLY PRE-EMPTION RIGHTS
Resolutions 17 and 18 are proposed as special resolutions. If
the directors wish to allot new shares or other equity
securities or sell treasury shares for cash (other than in
connection with an employee share scheme), company law
requires that these shares are first offered to shareholders in
proportion to their existing holdings.
At last year’s AGM, two separate special resolutions were
passed, in line with institutional shareholder guidelines,
empowering the directors to allot equity securities for cash
without first offering them to existing shareholders in
proportion to their existing holdings. It is proposed that
these authorities be renewed, in line with institutional
shareholder guidelines, including the Statement of Principles
on Disapplying Pre-Emption Rights issued by the Pre-
Emption Group in November 2022 (the “2022 Statement of
Principles”). Whilst there is no current intention to make use
of these authorities, the Board believes it is in the best
interests of shareholders for the directors to have the
flexibility to take advantage of these authorities if required.
If approved, resolution 17, which follows the Pre-Emption
Group’s template resolution, will authorise the directors, in
accordance with the 2022 Statement of Principles, to issue
shares in connection with pre-emptive offers (paragraph (A)
of the resolution), or otherwise to issue shares and/or sell
treasury shares for cash:
1) under paragraph (B) of the resolution, up to an aggregate
nominal amount of £2,046,918.50 (representing
204,691,850 ordinary shares), being approximately 10% of
the Company’s issued ordinary share capital as at 21 May
2024 (the latest practicable date before the publication
of this Notice); and
2) under paragraph (C) of the resolution, up to an additional
aggregate amount equal to 20% of any allotment under
paragraph (B) of the resolution, for the purposes of
making a follow-on offer to existing shareholders as
described in the 2022 Statement of Principles. The
maximum additional nominal amount that could be
issued under paragraph (C) of the resolution (based on
the authority under paragraph (B) being used in full) is
£409,383.70 (representing approximately 2% of the
Company’s issued ordinary share capital as at
21 May 2024).
The total maximum nominal amount of equity securities to
which resolution 17 relates is £2,456,302.20 (representing
approximately 12% of the Company’s issued ordinary share
capital as at 21 May 2024).
The purpose of resolution 18, which also follows the Pre-
Emption Group’s template resolution and reflects the 2022
Statement of Principles, is to authorise the directors to allot
new shares and other equity securities pursuant to the
allotment authority given by resolution 16, or sell treasury
shares for cash, without first being required to offer such
securities to existing shareholders:
1) under paragraph (A) of the resolution, up to a further
nominal amount of £2,046,918.50 (representing
204,691,850 ordinary shares), being approximately 10% of
the Company’s issued ordinary share capital as at 21 May
2024 (the latest practicable date before the publication
of this Notice), to be used only in connection with an
acquisition or specified capital investment of a kind
contemplated by the 2022 Statement of Principles, and
which is announced contemporaneously with the
allotment, or which has taken place in the preceding
12-month period and is disclosed in the announcement of
the issue; and
2) under paragraph (B) of the resolution, up to an additional
aggregate amount equal to 20% of any allotment under
paragraph (A) of the resolution, for the purposes of
making a follow-on offer to existing shareholders as
described in the 2022 Statement of Principles. The
maximum additional nominal amount that could be
issued under paragraph (B) of the resolution (based on
the authority under paragraph (A) being used in full) is
£409,383.70 (representing approximately 2% of the
Company’s issued ordinary share capital as at
21 May 2024).
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NOTICE OF MEETING 2 JULY 2024
The total maximum nominal amount of equity securities to
which resolution 18 relates is £2,456,302.20 (representing
approximately 12% of the Company’s issued ordinary share
capital as at 21 May 2024).
The authority granted by resolution 18 would be in addition
to the general authority to disapply pre-emption rights
under resolution 17. The maximum nominal value of equity
securities that could be allotted if both authorities were used
would be £4,912,604.40, which represents approximately 24%
of the Company’s issued ordinary share capital as at 21 May
2024, being the latest practicable date before the publication
of this Notice.
The Board confirms that, should it exercise the authorities
granted by resolutions 17 or 18, it intends to follow best
practice as regards their use, including (i) following the
shareholder protections in Part 2B of the 2022 Statement of
Principles; and (ii) in respect of any follow-on offer, following
the expected features set out in paragraph 3 of Part 2B of the
2022 Statement of Principles.
The directors have no current intention to allot shares except
in connection with employee share schemes. These
authorities will expire at the conclusion of the AGM in 2025
or on 1 October 2025, whichever is sooner.
19 AUTHORITY FOR THE COMPANY TO PURCHASE ITS
OWN SHARES
Authority is sought for the Company to purchase up to 10%
of its issued ordinary shares, renewing the authority granted
by the shareholders at previous AGMs.
The directors have no present intention of exercising the
authority to purchase the Company’s own shares; however,
this authority would provide them with the flexibility to do so
in the future, if the prevailing market conditions made such
purchases in the best interests of shareholders generally.
Ordinary shares purchased by the Company pursuant to this
authority may be held in treasury or may be cancelled. It
remains the Company’s intention to cancel any shares it
buys back rather than hold them in treasury. The Company
currently holds no shares in treasury. The resolution specifies
the minimum and maximum prices which may be paid for any
ordinary shares purchased under this authority, reflecting
the requirements of the Listing Rules.
The Company has options outstanding over 39,292,082
ordinary shares, representing 1.92% of the Company’s issued
ordinary share capital as at 21 May 2024, the latest
practicable date before the publication of this Notice.
If the existing authority given at the 2023 AGM and the
authority now being sought by this resolution were to be
fully used, these options would represent 2.13% of the
Company’s ordinary share capital in issue at that date.
20 NOTICE OF GENERAL MEETING
In accordance with the 2006 Act, the notice period for
general meetings (other than the AGM) is 21 clear days’ notice
unless the Company:
i)
has gained shareholder approval for the holding of
general meetings on 14 clear days’ notice by passing a
special resolution at the most recent AGM; and
ii) offers the facility for all shareholders to vote by
electronic means.
The Company would like to preserve its ability to call general
meetings (other than the AGM) on 14 clear days’ notice.
This shorter notice period would not be used as a matter
of routine, but only where the flexibility is merited by the
business of the meeting and is thought to be in the interests
of shareholders as a whole.
Resolution 20 seeks such approval and, should this
resolution be approved, it will remain valid until the end of
the next AGM. This is the same authority as was sought and
granted at last year’s AGM.
RECOMMENDATION
Your directors believe that the proposals described above
are in the best interests of the Company and its shareholders
as a whole, and recommend you give them your support by
voting in favour of all the resolutions, as they intend to in
respect of their own beneficial shareholdings.
Yours faithfully,
NICK FOLLAND
General Counsel & Company Secretary
London, 21 May 2024
Notice is given that the Annual General Meeting of Marks and
Spencer Group plc (the “Company”) will be held at and
broadcast from Waterside House, 35 North Wharf Road,
London W2 1NW, in accordance with the information provided
on page 211, on Tuesday 2 July 2024 at 11am (the “AGM”) for
the purposes set out below.
Resolutions 1 to 16 will be proposed as ordinary resolutions, and
resolutions 17 to 20 will be proposed as special resolutions.
1. To receive the Annual Report and Financial Statements for
the 52 weeks ended 30 March 2024.
2. To approve the Directors’ Remuneration Report for the year
ended 30 March 2024, as set out on pages 95 to 113 of the
Annual Report (excluding the part summarising the
Directors’ Remuneration Policy on pages 100 and 101).
3. To declare a final dividend for the year ended 30 March
2024 of 2p per ordinary share, payable on 5 July 2024 to
shareholders on the Register of Members as at the close of
business on 31 May 2024.
To re-elect the following directors who are seeking annual
re-election in accordance with the UK Corporate Governance
Code:
4. Archie Norman
5. Stuart Machin
6. Evelyn Bourke
7. Fiona Dawson
8. Ronan Dunne
9. Tamara Ingram
10. Justin King
11. Cheryl Potter
12. Sapna Sood
13. To resolve that Deloitte LLP be, and is hereby, reappointed
as auditor of the Company to hold office until the
conclusion of the next general meeting at which accounts
are laid before the Company.
14. To resolve that the Audit & Risk Committee determine the
remuneration of the auditor on behalf of the Board.
15. POLITICAL DONATIONS
To resolve that, in accordance with Section 366 of the
Companies Act 2006, the Company, and any company which,
at any time during the period for which this resolution has
effect, is a subsidiary of the Company, be authorised to:
(A) make political donations to political parties and/or
independent election candidates, not exceeding £50,000 in
total;
(B) make political donations to political organisations, other
than political parties, not exceeding £50,000 in total; and
(C) incur political expenditure not exceeding £50,000 in total;
provided that the aggregate amount of any such donations
and expenditure shall not exceed £50,000, during the period
beginning with the date of the passing of this resolution and
ending at the conclusion of the AGM to be held in 2025 or on
1 October 2025, whichever is sooner.
For the purpose of this resolution, the terms “political
donations”, “political parties”, “independent election
candidates”, “political organisations” and “political expenditure”
have the meanings set out in Sections 363 to 365 of the
Companies Act 2006.
16. DIRECTORS’ AUTHORITY TO ALLOT SHARES
To resolve that the directors are authorised under Section 551
of the Companies Act 2006 generally and unconditionally to
exercise all the powers of the Company to allot shares in the
Company and to grant rights to subscribe for or convert any
security into shares in the Company:
(A) up to a nominal amount of £6,823,061.67 (such amount to
be reduced by any allotments or grants made under
paragraph (B) below in excess of such sum); and
(B) comprising equity securities (as defined in Section 560(1) of
the Companies Act 2006) up to a nominal amount of
£13,646,123.34 (such amount to be reduced by any
allotments made under paragraph (A) above) in connection
with a pre-emptive offer:
i.
to ordinary shareholders in proportion (as nearly as may
be practicable) to their existing holdings; and
ii. to holders of other equity securities as required by the
rights of those securities or as the directors otherwise
consider necessary;
and so that the directors may impose any limits or restrictions
and make any arrangements which they consider necessary or
appropriate to deal with any treasury shares, fractional
entitlements, record dates, legal, regulatory or practical
problems in, or under the laws of, any territory or any other
matter.
The authorities conferred on the directors to allot securities
under paragraphs (A) and (B) will expire at the conclusion of the
AGM of the Company to be held in 2025 or on 1 October 2025,
whichever is sooner, unless previously revoked or varied by the
Company, and such authority shall extend to the making
before such expiry of an offer or an agreement that would or
might require relevant securities to be allotted after such
expiry, and the directors may allot relevant securities in
pursuance of that offer or agreement as if the authority
conferred hereby had not expired.
17. GENERAL DISAPPLICATION OF PRE-EMPTION RIGHTS
To resolve as a special resolution that, subject to the passing of
resolution 16, the directors be empowered to allot equity
securities (as defined in Section 560(1) of the Companies Act
2006) for cash under the authority given by that resolution 16
(set out in this Notice of Meeting), and/or to sell ordinary shares
held by the Company as treasury shares for cash, as if Section
561 of the Companies Act 2006 did not apply to any such
allotment or sale, provided that such authority be limited:
(A) to the allotment of equity securities and/or sale of treasury
shares in connection with an offer of, or invitation to apply
for, equity securities:
i.
to ordinary shareholders in proportion (as nearly as may
be practicable) to their existing holdings; and
ii. to holders of other equity securities as required by the
rights of those securities or as the directors otherwise
consider necessary;
so that the directors may impose any limits or restrictions
and make any arrangements which they consider
necessary or appropriate to deal with any treasury shares,
fractional entitlements, record dates, legal, regulatory or
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practical problems in, or under the laws of, any territory or
any other matter; and
(B) in the case of the authority granted under paragraph (A) of
resolution 16 and/or in the case of any sale of treasury
shares, to the allotment of equity securities and/or sale of
treasury shares (otherwise than under paragraph (A) above)
up to a nominal amount of £2,046,918.50; and
(C) to the allotment of equity securities and/or sale of treasury
shares (otherwise than under paragraph (A) or paragraph
(B) above) up to a nominal amount equal to 20% of any
allotment of equity securities and/or sale of treasury
shares from time to time under paragraph (B) above, such
authority to be used only for the purposes of making
a follow-on offer which the Board of the Company
determines to be of a kind contemplated by paragraph 3 of
Section 2B of the Statement of Principles on Disapplying
Pre-Emption Rights most recently published by the
Pre-Emption Group prior to the date of this Notice of
Meeting,
and shall expire at the conclusion of the AGM to be held in 2025
or on 1 October 2025, whichever is sooner (unless previously
revoked or varied by the Company in general meeting),
provided that the Company may before that date make offers,
and enter into agreements, which would, or might, require
equity securities to be allotted (and/or treasury shares to be
sold) after the authority ends and the directors may allot
equity securities (and/or sell treasury shares) under any such
offer or agreement as if the authority had not ended.
18. ADDITIONAL DISAPPLICATION OF
PRE-EMPTION RIGHTS
To resolve as a special resolution that, subject to the passing of
resolution 16, the directors be empowered in addition to any
authority granted under resolution 17 to allot equity securities
(as defined in Section 560(1) of the Companies Act 2006) for
cash under the authority given by that resolution 16 (set out
in this Notice of Meeting) and/or to sell ordinary shares held
by the Company as treasury shares for cash as if Section 561 of
the Companies Act 2006 did not apply to any such allotment
or sale, provided that such authority be limited:
(A) to the allotment of equity securities and/or sale of treasury
shares up to a nominal amount of £2,046,918.50, such
authority to be used only for the purposes of financing (or
refinancing, if the authority is to be used within 12 months
after the original transaction) a transaction which the
directors of the Company determine to be either an
acquisition or a specified capital investment of a kind
contemplated by the Statement of Principles on
Disapplying Pre-Emption Rights most recently published
by the Pre-Emption Group prior to the date of this Notice of
Meeting; and
(B) to the allotment of equity securities or sale of treasury
shares (otherwise than under paragraph (A) above) up to a
nominal amount equal to 20% of any allotment of equity
securities or sale of treasury shares made under paragraph
(A) above, such authority to be used only for the purposes
of making a follow-on offer which the Board of the
Company determines to be of a kind contemplated by
paragraph 3 of Section 2B of the Statement of Principles on
Disapplying Pre-Emption Rights most recently published
by the Pre-Emption Group prior to the date of this Notice
of Meeting,
and shall expire at the conclusion of the AGM to be held in 2025
or on 1 October 2025, whichever is sooner (unless previously
revoked or varied by the Company in general meeting)
provided that the Company may before that date make offers,
NOTES
1
Biographies of the directors seeking election (or re-
election) are given in the Annual Report on pages 74 to 75,
including their membership of the principal Board
Committees, with further details available on our website,
corporate.marksandspencer.com. The notice periods of
the current directors are set out in the Directors’
Remuneration Report on pages 111 and 113.
2
Registered shareholders: Members are entitled to appoint a
proxy to exercise all or any of their rights to attend, speak
and vote on their behalf at the AGM. Members may appoint
more than one proxy in relation to the AGM, provided that
each proxy is appointed to exercise the rights attached to a
different share or shares held by that shareholder. A proxy
need not be a shareholder of the Company. To request one
or more paper proxy forms (to appoint more than one
proxy), please contact our shareholder helpline on +44
(0)345 609 0810. Please indicate the number of shares in
relation to which each proxy is authorised to act in the box
below the proxy holder’s name. Please also indicate if the
instruction is one of multiple instructions being given,
and if a proxy is being appointed for less than your full
entitlement, please enter the number of shares in relation
to which each such proxy is entitled to act in the box below
the relevant proxy holder’s name. The proxy form assumes
you wish to vote on all your shares in the same way. To vote
only part of your holding or to vote some shares one way
and some another, please contact the shareholder helpline.
All proxy forms must be signed and should be returned
together.
3
If you would like to submit your vote electronically in
advance of the AGM, you can do so by accessing the Lumi
website, https://web.lumiagm.com/148-969-154.
Instructions are available on page 212 of this Notice.
Alternatively, you can submit your instruction by visiting
shareview.co.uk. All advance proxy votes, regardless of how
they are cast, are to be returned by 11am on Friday 28 June
2024. If you return paper and electronic instructions, those
received last by the Registrar before 11am on Friday 28 June
2024 will take precedence. Electronic communication
facilities are available to all shareholders and those that use
them will not be disadvantaged.
4
In the case of joint holders, where more than one of the joint
holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted.
Seniority is determined by the order in which the names
of the joint holders appear in the Company’s register of
members in respect of the joint holding (the first-named
being the most senior).
5
Votes submitted in advance of the meeting using the Lumi
website will constitute an instruction to appoint the
Chairman of the meeting as proxy. The shares covered by
the instruction will be voted as directed by the shareholder
in respect of the resolutions referred to in this Notice of
Meeting at the meeting and at any adjournment of it.
6
To be valid, any proxy form or other instrument appointing
a proxy delivered by post or by hand (during normal
business hours only) must be received at Equiniti, Aspect
House, Spencer Road, Lancing, West Sussex BN99 6DA no
later than 11am on Friday 28 June 2024.
7
The appointment of a proxy electronically, the return of
a completed paper proxy form, other such instrument or
any CREST/Proxymity proxy instruction (as described on
the following page) will not prevent a shareholder from
attending and voting at the meeting if they wish to do so.
You must inform the Company’s Registrar in writing of any
termination of the authority of a proxy.
8
Indirect shareholders: Any person to whom this Notice
is sent who is a person nominated under Section 146 of
the Companies Act 2006 to enjoy information rights (a
“Nominated Person”) may, under an agreement between
them and the shareholder by whom they were nominated,
have a right to be appointed (or to have someone else
appointed) as a proxy for the AGM. If a Nominated Person
has no such proxy appointment right or does not wish to
exercise it, they may, under any such agreement, have a
right to give instructions to the shareholder as to the
exercise of voting rights.
9
The statements of the rights of shareholders in relation to
the appointment of proxies in paragraphs 2 to 7 does not
apply to Nominated Persons. The rights described in these
paragraphs can only be exercised by shareholders of the
Company.
10 Nominated Persons are reminded that they should contact
the registered holder of their shares (and not the Company)
on matters relating to their investments in the Company.
11 To be entitled to join the meeting, submit questions and
vote (and for the purpose of the determination by the
Company of the votes they may cast), shareholders must
be entered on the Register of Members of the Company by
6.30pm on Friday 28 June 2024 (or, in the event of any
adjournment, 6.30pm on the date which is two working days
prior to the adjourned meeting). Changes to the Register of
Members after the relevant deadline will be disregarded in
determining the rights of any person to join, submit
questions and vote at the meeting.
12 The following documents are available for inspection at an
agreed time at the Company’s registered office: Waterside
House, 35 North Wharf Road, London W2 1NW. Email
company.secretary@marks-and-spencer.com during
normal business hours on any weekday (excluding public
holidays).
i.
Copies of the executive directors’ service contracts.
ii. Copies of the non-executive directors’ letters of
appointment.
iii. Copies of the directors’ Deeds of Indemnity.
iv. A copy of the Articles of Association of the Company.
Copies of these documents will also be available at the
AGM upon request, from 10am on the morning of the AGM
until the meeting’s conclusion.
13 Shareholders are advised that, unless otherwise specified,
the telephone numbers, website and email addresses set
out in this Notice or proxy forms are not to be used for
the purpose of serving information or documents on
the Company, including the service of documents or
information relating to proceedings at the Company’s AGM.
and enter into agreements, which would, or might, require
equity securities to be allotted (and/or treasury shares to be
sold) after the authority ends and the directors may allot
equity securities (and/or sell treasury shares) under any such
offer or agreement as if the authority had not ended.
19. COMPANY’S AUTHORITY TO PURCHASE ITS
OWN SHARES
To resolve as a special resolution that the Company is
authorised for the purposes of Section 701 of the Companies
Act 2006 to make one or more market purchases (as defined in
Section 693(4) of the Companies Act 2006) of its ordinary
shares of £0.01 each, such power to be limited:
(A) to a maximum number of 204,691,850 ordinary shares;
(B) by the condition that the minimum price which may be paid
for an ordinary share is £0.01 and the maximum price which
may be paid for an ordinary share is the highest of:
i.
an amount equal to 105% of the average market value of
an ordinary share for the five business days immediately
preceding the day on which that ordinary share is
contracted to be purchased; and
ii. the higher of the price of the last independent trade of
an ordinary share and the highest current independent
bid for an ordinary share on the trading venue where the
purchase is carried out;
in each case, exclusive of expenses,
such power to apply until the end of the AGM to be held in 2025
or until 1 October 2025, whichever is sooner, but in each case
so that the Company may enter into a contract to purchase
ordinary shares which will or may be completed or executed
wholly or partly after the power ends and the Company may
purchase ordinary shares pursuant to any such contract as if
the power had not ended.
20. CALLING OF GENERAL MEETINGS ON 14 DAYS’ NOTICE
To resolve as a special resolution that a general meeting other
than the Annual General Meeting may be called on no fewer
than 14 clear days’ notice.
By order of the Board
NICK FOLLAND
General Counsel & Company Secretary
London, 21 May 2024
Registered office: Waterside House, 35 North Wharf Road,
London W2 1NW. Registered in England and Wales. No. 4256886
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14 As at 21 May 2024 (the latest practicable date before the
publication of this Notice), the Company’s issued share
capital consists of 2,046,918,502 ordinary shares carrying
one vote each. No shares are held in treasury. Therefore, the
total voting rights in the Company as at 21 May 2024 are
2,046,918,502.
15 CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so for the AGM and any adjournment thereof by
using the procedures described in the CREST manual.
CREST personal members or other CREST-sponsored
members, and those CREST members who have appointed
a service provider, should refer to their CREST sponsor or
voting service provider, who will be able to take the
appropriate action on their behalf.
16 For a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message
(a “CREST proxy instruction”) must be properly
authenticated in accordance with Euroclear UK & Ireland
Limited’s specifications and must contain the information
required for such instruction, as described in the CREST
manual (available via euroclear.com). The message,
regardless of whether it constitutes the appointment of
a proxy or is an amendment to the instruction given to a
previously appointed proxy must, in order to be valid, be
transmitted so as to be received by Equiniti (ID RA19) by
11am on Friday 28 June 2024. For this purpose, the time
of receipt will be taken to be the time (as determined by
the time stamp applied to the message by the CREST
Application Host) from which Equiniti is able to retrieve the
message by enquiry to CREST in the manner prescribed by
CREST. After this time, any change of instructions to proxies
appointed through CREST should be communicated to the
appointee through other means.
17 CREST members and, where applicable, their CREST
sponsors, or voting service providers should note that
Euroclear UK & Ireland Limited does not make available
special procedures in CREST for any particular message.
Normal system timings and limitations will, therefore, apply
in relation to the input of CREST proxy instructions. It is the
responsibility of the CREST member concerned to take (or,
if the CREST member is a CREST personal member, or
sponsored member, or has appointed a voting service
provider, to procure that their CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary
to ensure that a message is transmitted by means of the
CREST system by any particular time. In this connection,
CREST members and, where applicable, their CREST
sponsors or voting system providers are referred in
particular to those sections of the CREST manual
concerning practical limitations of the CREST system and
timings.
18 The Company may treat as invalid a CREST proxy
instruction in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
19 If you are an institutional investor, you may be able to
appoint a proxy electronically via the Proxymity platform,
a process which has been agreed by the Company and
approved by the Registrar. For further information
regarding Proxymity, please go to proxymity.io. Your proxy
must be lodged by 11am on Friday 28 June 2024 in order to
be considered valid. Before you can appoint a proxy via this
process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you
read these carefully as you will be bound by them and they
will govern the electronic appointment of your proxy.
20 Any corporation that is a member can appoint one or more
corporate representatives who may exercise on its behalf all
of its powers as a member, provided that they do not do so
in relation to the same shares.
21 Under Section 527 of the Companies Act 2006, members
meeting the threshold requirements set out in that section
have the right to require the Company to publish on a
website a statement setting out any matter relating to:
i.
the audit of the Company’s accounts (including the
auditor’s report and the conduct of the audit) that are to
be laid before the AGM; or
ii. any circumstance connected with an auditor of the
Company ceasing to hold office since the previous
meeting at which annual accounts and reports were laid
in accordance with Section 437 of the Companies Act
2006.
The Company may not require the shareholders requesting
any such website publication to pay its expenses in
complying with Sections 527 or 528 of the Companies Act
2006. Where the Company is required to place a statement
on a website under Section 527 of the Companies Act 2006,
it must forward the statement to the Company’s auditor no
later than the time when it makes the statement available
on the website. The business that may be dealt with at the
AGM includes any statement that the Company has been
required to publish on a website under Section 527 of the
Companies Act 2006.
22 Any member joining the meeting has the right to ask
questions. The Company must cause to be answered any
such question relating to the business being dealt with at
the meeting but no such answer need be given if:
i.
to do so would interfere unduly with the preparation for
the meeting or involve the disclosure of confidential
information;
ii. the answer has already been given on a website in the
form of an answer to a question; or
iii. it is undesirable in the interests of the Company or the
good order of the meeting that the question be
answered.
We will not permit behaviour which may interfere with
anyone’s safety and comfort, or the orderly conduct of the
meeting. Guests will be admitted at the discretion of the
Company.
23 A copy of this Notice, and other information required by
Section 311A of the Companies Act 2006, can be found at
corporate.marksandspencer.com.
24 Please see the letter dated 21 May 2024 from the General
Counsel & Company Secretary on pages 203 to 204 for
further explanatory notes.
INFORMATION FOR THE DAY
TIMINGS
Date:
10:00am
Monday 3 June 2024
Registration opens for vote casting and question
submission in advance of the meeting.
Date:
11:00am
Friday 28 June 2024
Opportunity to submit votes and questions in
advance of the meeting closes.
Date:
10:00am
Tuesday 2 July 2024
Meeting registration opens and question
submission reopens.
11:00am
AGM begins and you will be able to vote once the
Chairman declares the poll open.
1:00pm
approx
AGM closes. The results of the poll will be released
to the London Stock Exchange once collated.
ATTENDANCE AT THE AGM
Shareholders will enjoy the best experience by joining the
2024 AGM online. This can be done by accessing the AGM
website: https://web.lumiagm.com/148-969-154. Please
refer to the following information and the user guide
provided on pages 212 to 213 for details of how to join and
participate in the meeting electronically.
Shareholders who wish to attend the AGM in person are
asked to register their intention to do so in advance of the
meeting. Shareholders can register by emailing
privateshareholders@marks-and-spencer.com, providing
their full name and shareholder reference number, or
nominee holding details, as applicable. Shareholders holding
via a nominee should refer to note 8. Spaces will be allocated
on a first-come first-served basis. As the meeting will be
broadcast live, shareholders attending the meeting in person
may be included in the live broadcast. By attending the
meeting, shareholders are consenting to being filmed.
ACCESSING THE AGM WEBSITE
Lumi AGM can be accessed online using most well-known
internet browsers such as Chrome, Firefox and Safari on a PC,
laptop or internet-enabled device such as a tablet or
smartphone. If you wish to access the AGM using this
method, please go to https://web.lumiagm.com/148-969-
154 on the day.
LOGGING IN
Go to https://web.lumiagm.com/148-969-154 where
shareholders will be prompted to enter their Shareholder
Reference Number and PIN. This can be found on the Notice
of Availability or Voting Card sent by post. Access to the AGM
website to vote and submit questions in advance will be
available from 10am on 3 June 2024 until 11am on 28 June
2024. Access to the AGM website will reopen to participate on
the day from 10am on 2 July 2024.
QUESTIONS
Shareholders are able to submit questions live during the
meeting on the Lumi website by clicking on the “Messaging”
button. Alternatively, questions can be submitted in advance
via Lumi. A step-by-step guide to voting and question
submission in advance and on the day is on pages 212 to 213.
Those attending the meeting in person who wish to ask a
question will be provided with details and instructions on
how to do so on the day of the meeting.
As noted in the Company Secretary’s letter on pages 203 to
204 of this Notice, Anita Anand will be posing shareholder
questions to the Board during the meeting. Shareholders are
able to submit a recorded video question by email to
AGMquestionsubmission@marks-and-spencer.com, to be
received by no later than 5pm on Friday 28 June 2024. Please
ensure question recordings last no longer than one minute,
so that we can hear from as many shareholders as possible.
By submitting a video question, you consent to your video
being played during the AGM broadcast; please note that the
AGM recording will be made publicly available on our
corporate website after the meeting.
Shareholder questions and answers will be published on the
corporate website as soon as practicable after the meeting.
Where we receive a number of questions covering the same
topic, we will publish summarised questions and answers
addressing as many questions received as possible.
VOTING
For shareholders voting live during the meeting, the voting
options will appear on the screen after the resolutions have
been proposed. Shareholders should press or click the
option that corresponds with the way in which they wish to
vote: “For”, “Against” or “Withheld”. If a mistake is made or
shareholders wish to change their voting instruction, press or
click the correct choice for that resolution until the poll is
closed. If shareholders wish to cancel their “live” vote, they
should press “Cancel”. Please note that an active internet
connection is required to cast your vote successfully when
the Chairman commences polling on the resolutions. It is the
responsibility of shareholders to ensure connectivity for the
duration of the meeting. Advance voting is also available
from 3 June 2024, and details on the different methods for
voting in advance are set out in the Company Secretary’s
letter on pages 203 to 204 of this Notice. A step-by-step
guide to voting via the Lumi website live on the day, and in
advance, is on pages 212 to 213. Shareholders who attend the
meeting in person are encouraged to vote electronically as
set out above. Poll cards will be available on request.
PROXIES & CORPORATE REPRESENTATIVES
Duly appointed proxy or corporate representatives should
contact the Company’s Registrar, Equiniti, before 11am on
Monday 1 July 2024 by emailing hybrid.help@equiniti.com,
for their unique username and password to join the meeting.
Please ensure a valid proxy appointment has been made by
no later than the voting deadline detailed on page 203.
Mailboxes are monitored 9.00am to 5.00pm Monday to
Friday (excluding public holidays in England & Wales).
NOTICE OF MEETING 2 JULY 2024 CONTINUED
ONLINE USER GUIDE TO THE 2024 ANNUAL GENERAL MEETING
ONLINE USER GUIDE TO THE 2024 ANNUAL GENERAL MEETING
212
Marks and Spencer Group plc
Annual Report & Financial Statements 2024
213
ONLINE USER GUIDE TO THE
2024 ANNUAL GENERAL MEETING
LUMI AGM PLATFORM GUIDE: BEFORE THE AGM
LUMI AGM PLATFORM GUIDE: ON THE DAY
1
Go to https://web.lumiagm.com/148-969-154.
Shareholders will be prompted to enter their Shareholder
Reference Number (“SRN”) and PIN, both of which can be
found on the Notice of Availability. Shareholders should
contact Equiniti by emailing hybrid.help@equiniti.com
quoting their full name and address to obtain their SRN if
they do not have it. When successfully authenticated,
shareholders will be taken to the home page.
4
Scroll down the full list of resolutions and vote on each.
Once completed, at the bottom of the page, select the
“Submit” button.
2
To cast a proxy vote, select the voting button at the top of
the screen. The resolutions and voting choices will be
displayed within the navigation bar. Further instructions on
how to vote can be found on the home page and at the top
of the voting page.
5
If you would like to change your mind, you can do so by
clicking “Edit Responses”.
3
To vote, shareholders should select their voting direction
from the options shown on screen. Simply select a different
option if the wrong choice is selected.
Note: Proxy voting will close at 11am on Friday 28 June 2024.
6
During the proxy voting period, shareholders can submit a
question by typing it into the “Messaging” feature.
7
The AGM will commence at 11am on Tuesday 2 July 2024. It
can be accessed through the same platform: https://web.
lumiagm.com/148-969-154. Shareholders will be prompted
to enter their SRN and PIN, both of which can be found on
the Notice of Availability.
10 For each resolution, shareholders should select the choice
corresponding with the way they wish to vote. When
selected, a confirmation message will appear. Press a
different choice to override a previous selection. To cancel a
vote, press “Cancel”.
8
The meeting presentation will begin at the start of the AGM,
when the broadcast panel will automatically appear at the
side of the screen. The screen can be expanded and
minimised by pressing the arrow at the top of the page.
11 To vote for all resolutions at the same time, click on the
“Vote All” direction button at the top of the page. Individual
resolutions can still be changed if needed while using this
feature.
9
When the Chairman declares the poll open, a list of all
resolutions and voting choices will appear. Scroll through
the list to view all resolutions.
12 To ask a question, select the messaging option in
the navigation bar at the top of the page. Type a message
within the chat box at the top of the messaging screen.
Click the send button to submit.
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
214
Marks and Spencer Group plc
Annual Report & Financial Statements 2024
215
SHAREHOLDER INFORMATION
ANALYSIS OF SHARE REGISTER
Ordinary shares
As at 30 March 2024, the Company had 122,264 registered holders of ordinary shares. Their shareholdings are analysed below. It
should be noted that many of our private investors hold their shares through nominee companies; therefore, the actual number
of shares held privately will be higher than indicated below.
Range of shareholding
Number of shareholders
Percentage of total
shareholders
Number of ordinary
shares
Percentage of issued
share capital
1-500
65,460
53.54
12,146,937
0.60
501-1,000
22,392
18.32
16,677,055
0.82
1,001-2,000
17,469
14.29
24,890,642
1.22
2,001-5,000
11,930
9.76
36,372,556
1.78
5,001-10,000
3,083
2.52
21,082,056
1.03
10,001-100,000
1,445
1.18
32,566,725
1.60
100,001-1,000,000
299
0.24
118,340,155
5.80
1,000,001-Highest
186
0.15
1,778,279,697
87.15
Total
122,264
100
2,040,355,823
100
Category of shareholder
Number of shareholders
Percentage of total
shareholders
Number of ordinary
shares
Percentage of issued
share capital
Private
120,982
98.95
133,925,194
6.57
Institutional and corporate
1,282
1.05
1,906,430,629
93.43
Total
122,264
100
2,040,355,823
100
USEFUL CONTACTS
Marks and Spencer Group plc
Registered Office
Waterside House
35 North Wharf Road
London W2 1NW
Telephone +44 (0)20 7935 4422
Registered in England and Wales (No. 4256886)
General queries
Customer queries: +44 (0)333 014 8555
Shareholder queries: +44 (0)345 609 0810
Or email: chairman@marks-and-spencer.com
Registrar/shareholder queries
Equiniti Limited, Aspect House,
Spencer Road, Lancing, West Sussex
BN99 6DA, United Kingdom
Telephone +44 (0)345 609 0810. Please use the country code
when contacting from outside the UK.
Online: help.shareview.co.uk (from here, you will be able to
securely email Equiniti with your enquiry).
Students
Please note, students are advised to source information from
our website.
Additional documents
An interactive version of our Annual Report is available online
at corporate.marksandspencer.com/investors.
Additionally, the Annual Report (which contains the Strategic
Report) is available for download in pdf format at
corporate.marksandspencer.com/investors.
2024/25 FINANCIAL CALENDAR AND KEY DATES
30 May 2024
Ex-Dividend Date, Final Dividend
31 May 2024
Record Date to be eligible for Final Dividend
2 July 2024
Annual General Meeting (11am)
5 July 2024
Final Dividend Payment Date
6 November 2024*
Half Year Results†
9 January 2025*
Results, Christmas Trading Update†
† Those who have registered for electronic communication or news alerts at corporate.marksandspencer.com will receive notification by email when this is available.
* Provisional dates.
SHAREHOLDER QUERIES
The Company’s Share Register is maintained by our Registrar,
Equiniti. Shareholders with queries relating to their
shareholding should contact Equiniti directly using one of
the methods listed on page 214 or by visiting shareview.co.uk.
For more general queries, shareholders should consult the
Investors section of our corporate website.
MANAGING YOUR SHARES ONLINE
Shareholders can manage their holdings online by registering
with Shareview, a secure online platform provided by Equiniti.
Registration is a straightforward process and allows
shareholders to:
– Sign up for electronic shareholder communications.
– Receive trading updates and other electronic-only
broadcasts by the Company via email.
– View all of their shareholdings in one place.
– Update their records following a change of address.
– Have dividends paid into their bank account.
– Vote in advance of Company general meetings.
M&S encourages shareholders to sign up for electronic
communications as the Company has found this creates a more
engaged shareholder base. The reduction in printing costs and
paper usage also makes a valuable contribution to our Plan A
commitments.
To find out more information about the services offered by
Shareview and to register, please visit shareview.co.uk.
DIVIDENDS
Subject to the relevant Board and shareholder approvals,
dividends are paid in January and July each year. Shareholders
who receive their dividend payments directly into their bank
accounts will receive an Annual Dividend Confirmation in
January, covering both dividend payments made during the
tax year.
DUPLICATE DOCUMENTS
Many shareholders have more than one account on the Share
Register and receive duplicate documentation from us as a
result. If you fall into this group, please contact Equiniti to
combine your accounts.
SHAREGIFT
If you have a very small shareholding that is uneconomical to
sell, you may want to consider donating it to ShareGift
(Registered charity no. 1052686), a charity that specialises in
the donation of small, unwanted shareholdings to good causes.
You can find out more by visiting sharegift.org or by calling
+44 20 7930 3737.
SHAREHOLDER SECURITY
An increasing number of shareholders have been contacting us
to report unsolicited and suspicious phone calls received from
purported “brokers” who offer to buy their shares at a price far
in excess of their market value. It is unlikely that firms
authorised by the Financial Conduct Authority (“FCA”) will
contact you with offers like this. As such, we believe these calls
are part of a scam, commonly referred to as a “boiler room”. The
callers obtain your details from publicly available sources of
information, including the Company’s Share Register, and can
be extremely persistent and persuasive.
Shareholders are cautioned to be very wary of any unsolicited
advice, offers to buy shares at a discount, sell your shares at a
premium or requests to complete confidentiality agreements
with the callers. Remember, if it sounds too good to be true, it
probably is!
More detailed information and guidance is available on our
corporate website. We also encourage shareholders to read
the FCA’s guidance on how to avoid scams at fca.org.uk/
consumers/protect-yourself-scams. An overview of current
common scams is available on the Action Fraud website
actionfraud.police.uk.
AGM
The 2024 AGM will be a digitally-enabled meeting, broadcast
from M&S’ Waterside House Support Centre at 11am on Tuesday
2 July 2024. Shareholders may participate in the AGM
electronically via the Lumi AGM platform, which can be
accessed by logging on to web.lumiagm.com/148-969-154.
On this website, questions and voting instructions can be
submitted, both during the meeting and in advance. A step-by-
step guide on how to join the meeting electronically and
submit votes and questions can be found on pages 212 to 213.
As the AGM is a digital-first event, shareholders will enjoy the
best experience by joining the meeting online. If a shareholder
wishes to attend in person, seats will be allocated on a first-
come first-served basis. Shareholders are requested to register
their intention to do so in advance, so we can manage capacity
on the day. Details of how to register attendance can be found
on page 211.
The meeting will also be available to view online after the event
at corporate.marksandspencer.com/investors.
M&S reserves the right to retain and use footage or stills for any
purpose, including Annual Reports, marketing materials and
other publications.
216
Marks and Spencer Group plc
INDEX
A
Page
Accounting policies
136
Adjusting items
148
Appointment and retirement of directors
114
Audit & Risk Committee Report
89
Auditor
94
Auditor’s remuneration
147
Auditor’s report
120
Annual General Meeting
202
B
Board
74
Borrowing facilities
169
Business model
8
C
Capital commitments
181
Capital expenditure
35
Colleague involvement
116
Conflicts of interest
115
Corporate governance
72
Cost of sales
146
Critical accounting judgements
143
D
Deadlines for exercising voting rights
203
Deferred tax
180
Depreciation
140, 164
Derivatives
170
Diluted earnings per share
153
Directors’ indemnities
115
Directors’ interests
108, 112
Directors’ responsibilities
118
Directors’ single figure of remuneration
102
Disclosure of information to auditor
119
Dividend cover
196
Dividend per share
28
E
Earnings per share
153
Employees
38
Employees with disabilities
117
Equal opportunities
117
ESG Committee Report
87
F
Finance income/costs
151
Financial assets
166
Financial instruments
170
Financial liabilities
169
Financial review
29
Fixed charge cover
196
G
Glossary of alternative performance measures
197
Going concern
118, 136
Goodwill
162
Groceries Supply Code of Practice
117
H
Page
Hedging reserve
133
I
Income statement
130
Intangible assets
162
Interests in voting rights
116
International Financial Reporting Standards
136
Inventories
140
Investment property
132
K
Key performance indicators
28
L
Lease liabilities
169
N
Nomination Committee Report
84
P
Principal risks and uncertainties
64
Profit and dividends
115
Power to issue shares
115
Political donations
118
R
Risk management
62
Remuneration Policy
100
Remuneration Committee
95
Remuneration Report
102
S
Segmental information
145
Shareholder information
214
Share capital
181
Share schemes
100-101, 105-109
Significant agreements
116
Statement of cash flows
135
Statement of comprehensive income
131
Statement of financial position
132
Strategic progress
12
Subsidiary undertakings
190
T
Taxation
151
Total shareholder return
110
Trade and other payables
168
Trade and other receivables
167
Transfer of securities
115
V
Variation of rights
115
Viability statement
118
FINANCIAL STATEMENTS
Page
Consolidated income statement
130
Consolidated statement
of comprehensive income
131
Consolidated statement
of financial position
132
Consolidated statement
of changes in equity
133
Consolidated cash flow statement
135
Note
1
Accounting policies
136
2
Segmental information
145
3
Expense analysis
146
4
Profit before taxation
147
5
Adjusting items
148
6
Finance income/costs
151
7
Income tax expense
151
Note
Page
8
Earnings per share
153
9
Dividends
154
10
Employees
154
11
Retirement benefits
155
12
Marks and Spencer
Scottish Limited Partnership
159
13
Share-based payments
159
14
Intangible assets
162
15
Property, plant and equipment
164
16
Other financial assets
166
17
Trade and other receivables
167
18
Cash and cash equivalents
167
19
Trade and other payables
168
20
Borrowings and other
financial liabilities
169
21
Financial instruments
170
22
Provisions
179
Note
Page
23
Deferred tax
180
24
Ordinary share capital
181
25
Contingencies and commitments 181
26
Analysis of cash flows given in
the statement of cash flows
182
27
Analysis of net debt
183
28
Related party transactions
184
29
Investments in joint ventures
and associates
185
30
Contingent assets
186
31
Subsequent events
186
Company financial statements
187
Notes to the Company
financial statements
189
Group financial record
195
INDEX
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