Marks and Spencer Group plc

1 Never the Same Again Forging a reshaped M&S. Marks and Spencer Group plc Annual Report & Financial Statements & Notice of Annual General Meeting 2021. AT A GLANCE. M&S IS A BRITISH VALUE FOR MONEY RETAILER. focused on own label businesses, including Food, Clothing & Home and Bank & Services in the UK and internationally. Today, we operate a family of businesses, selling high-quality, great-value own-brand products in the UK and internationally, from 1,509 stores and over 100 websites globally. Together our 70,000 colleagues across our stores, support centres, warehouses and supply chain serve nearly 30 million customers each year. The objective of our transformation programme is to restore the M&S business and brand, to deliver long-term, sustainable, profitable growth for our investors, colleagues and wider communities. In a year defined by the pandemic, through our Never the Same Again programme, we have accelerated our transformation and forged a reshaped business as we emerge from the crisis.

2 Group OVERVIEW. ( )m (19/20: ). (19/20: ). Group revenue Group loss before tax Percentage of UK Clothing & Home sales online ( )p ( 19/20: ). 67% (19/20: 63%). Basic loss per share APM rofit before tax and P. adjusting items Food: Value for money perception No dividend paid for 20/21. 81 (19/20: 68). APM Net debt excluding lease liabilities Stores: Net promoter score1. (19/20: ). 51 (19/20: 57). APM Adjusted earnings per share M& : Net promoter score1. Cover APM. Alternative performance measures Our colleagues, The report provides alternative performance measures ( APMs ) which are not defined or specified including Vicky in under the requirements of International Financial Reporting Standards as adopted by the EU. our York Vangarde We believe these APMs provide readers with important additional information on our business. store, seen here with We have included a glossary on pages 191 to 195 which provides a comprehensive list of the APMs our new Family Dine In that we use, including an explanation of how they are calculated, why we use them and how they offer, went above and can be reconciled to a statutory measure where relevant.

3 Beyond this year to 53 week year serve our customers and local communities. This year we are reporting statutory results on the 53 weeks to 3rd April 2021. In order to provide a meaningful comparison with last year's 52 week period financial information above has been presented on a 52 week basis. Statutory results: Group revenue: 9, , Loss before tax: ( )m, Basic loss per share: ( )p. 1. Net promoter score (NPS) equals percentage of promoters' minus the percentage. Inside this report Strategic report FOOD. See p10. 02 Chairman's letter 04 Chief Executive's statement 07 Our strategic priorities 08 Market context STRATEGIC REPORT. 09 Business model 30 Plan A review 33 Non-financial information statement 34 Engagement & decision-making 37. 38. Key performance indicators Financial review CLOTHING. 47 Risk management & HOME. 48 Principal risks and uncertainties See p16. STORE ESTATE INTERNATIONAL. See p24 See p22. Governance Financial statements PEOPLE. 58 Chairman's governance overview 123 Consolidated financial statements & CULTURE 60 Leadership and oversight 129 Notes to the financial statements 61 Board composition and 182 Company financial statements See p26.

4 Meeting attendance 184 Notes to the Company 62 Our Board financial statements 64 Balanced leadership 189 Group financial record DIRECTORS' REPORT. 66 Board activities 191 Glossary 70 Board review 71 Nomination Committee report 196 Notice of Annual General Meeting 73 ESG Committee report 77 Audit Committee report 210 Shareholder information1. 84 Remuneration overview 212 Index 88 Remuneration in context 90 Remuneration Policy 1.. Shareholder information forms part of the Directors' Report. 94 Remuneration report 106 Other disclosures 111 Independent auditor's report Go digital Join our Digital First community To register, visit , Access to more detailed and sign up for online communications a secure platform provided by and interactive content only, in time for next year's report. our Registrar, Equiniti. From the home It's much less fuss, much more page, simply click Portfolio , followed The money saved on interactive and you'll be helping by Open Portfolio Account , and follow printing and postage M&S to reduce its impact on the on-screen instructions.

5 You will need will help lower our costs our environment. your shareholder reference number and activation code to register; these Reduces our carbon footprint have been posted to you in this year's Notice of Availability. and saves paper Annual Report & Financial Statements 2021 01. STRATEGIC REPORT. CHAIRMAN'S. LETTER. For all of our businesses we believe we will come out of the pandemic year not just changed but stronger. Archie Norman, Chairman . Dear shareholder, Probably the most profound acceleration In the last year the Covid-19 pandemic strategy in the year has been the has thoroughly distorted our trading and substantial shift to online and digital. The Magic' operations in all our businesses. For large parts of the year, the majority of our floor In September, M&S Food and a selection of clothing basics successfully launched on the Ocado platform through our partners. space has been closed and even in Food of M&S Food large parts of the business have been unable to trade.

6 As a result, financially it In November, we announced the creation of MS2, our integrated Clothing & Home Market-leading has been a lost year . Shareholders and online and data business. We have as a innovation, such as colleagues alike have borne the burden result pivoted towards online in both sales our Taste Buds range of no bonus, no pay increase in 2020 and and management organisation to become which was developed no dividend. a business selling through multiple with Great Ormond channels. The next stage will be to create Street Hospital for With that, Covid-19 and the associated a seamless single face to the customer to children aged 4-10, lockdowns have accelerated changes become omni-channel . is a key part of our in the market that were previously Food strategy. proceeding in the slow lane. In many areas, At the same time bringing forward it has been a case of five years in one . technology innovation in the store The dramatic increase in the move to channel has moved us to a much faster, online, including in food, the shift to more flexible way of working, which in informal in clothing demand, the use turn enabled a significant reduction in the of technology to connect colleagues, numbers of colleagues.

7 As a result, some suppliers and customers, and the demise 8,000 colleagues left the business, mostly of many high streets and shopping through voluntary redundancy, in 2020. centres are trends which will never reverse. For all of our businesses, we believe we will To add to this, Brexit has made it much come out of the pandemic year not just more costly to trade our businesses in the changed but stronger, and we look EU and Northern Ireland. For customers, forward to a resumption of full trading competitors and suppliers, the landscape across the estate. Our Clothing & Home has changed forever. ranges were already going through For a business like M&S in the third year of profound change to improve style and a gargantuan transformation programme, buy fewer products in greater depth. still wrestling with an old slow culture and The Food business, which was performing only halfway through profound change, strongly prior to Covid-19, coped well with this posed a huge additional challenge.

8 The headwinds caused by lockdowns, the Early on, therefore, we launched our closure of travel locations and hospitality, Never the Same Again programme to and the shift to scratch cooking. recognise that things would never go back to normal and it was time to change for good. We were and are determined to embrace the changes and get ahead of them. 02 Marks and Spencer Group plc Some people have commented that our as events came up through the For everyone in our business and all our transformation seems perpetual and windscreen into view. We have been shareholders, this year has been a year like I understand why they say that, but we are delighted to welcome Eoin Tonge as a no other. But we are emerging stronger, addressing decades of torpitude at a time strong new Chief Financial Officer and leaner and fitter. It has brought out the when the world is moving on at an ever Richard Price as Managing Director of best in the M&S family of colleagues, faster pace. One of our values is talking Clothing & Home.

9 At non-executive Board suppliers and customers. Many colleagues straight and we are a long, long way from level, Tamara Ingram and Sapna Sood have had to change role to put all hands to declaring victory. There is more to do joined nearly a year ago and Evelyn the pump. Others have been furloughed in every aspect of the business but Bourke, the former Chief Executive of and come back in good heart. And some STRATEGIC REPORT. especially in reforming our supply chain BUPA, joined in February. Fiona Dawson, have lost colleagues or family members and modernising the legacy store estate Global President of Mars Food, has from the pandemic. It has truly been a year where the need to speed up is absolute. recently joined the Board and she brings of all in it together and we thank them all. extensive experience in food retailing and Retail is at heart a people business and As ever, transformational change. Pip McCrostie, tackling what is probably the biggest who lit up our boardroom for three years turnaround in UK retailing needs a top with her good humour and insight, stood team supported by an experienced down with our heartfelt good wishes and and engaged Board.

10 We continue to thanks. With great regret, we learned strengthen the talent in the business at all Archie Norman, Chairman shortly afterwards that she has left us. levels and the Board has had a busy year, Her contribution and what she stood for often coming together for short sharp will remain bright in our memory for years weekly meetings to support the executive to come. Reopening As retail across the UK reopened, Renewed C&H. we concentrated on Focusing on contemporary design helping customers and customer relevancy in the wake Product Engine look ahead to brighter of the pandemic has underpinned days and highlighted our reshaped Clothing business. our flexible, easy shopping experience. Annual Report & Financial Statements 2021 03. STRATEGIC REPORT. CHIEF EXECUTIVE'S. STATEMENT.. across the week, together with reduced marketing costs, delivered a strong improvement in profitability. The overall We are taking the right result included the Group 's share of insurance receipts related to business actions and a more resilient, reshaped M&S is emerging interruption at the Andover customer ful lment centre ( CFC ).