I am so lost with all of this and the worst part it is due in an hour and a half. I don't know what to do please help.

In this course you will have the opportunity to apply the concepts learned to a real-world financial reporting scenario as part of your Term Project. For this project you will be creating a report about an assigned company. You will research the company, answer questions, and analyze their financial statements. Attention will be given to a comparison of GAAP and IFRS reporting requirements. Project Milestones and Schedule of Delivery Below is a table of project milestones that you will deliver throughout this term. These milestones will help you to manage your time effectively. ACC319 Course Project Summary of Requirements Project Part Submission Dates Part 1: Business Summary Part 2: Ratio Analysis Discussion Part 3: Financial Statements and Disclosure Notes Part 4: Pulling It All Together Analysis and Conclusion Unit 2 Unit 3 Unit 4 Units 5 General Instructions: 1. Download the 2010 annual report for Marks & Spencer, PLC. 2. Download the Excel template file for Part 2 - Ratio Analysis. 3. Thoroughly read the annual report then address the requirements for each part of your project. Use complete sentences and be sure to cite the source of your response. If the question asks for a numerical response, give supporting details from the Disclosure notes to fully explain your response. For example, if you are asked to compute a ratio, cite the location (page number) in the annual report where you found the number and explain the significance of this ratio and the result that you calculated. 4. Write the report in MS Word. Make sure to use complete, grammatically correct sentences. 5. Use APA formatting with a Cover Page. 6. Use at least two outside resources to support your opinions and assertions. For a list of possible resources, please see the Term Project Resources file under the Course Materials section of our course website. 7. Be sure to include your Excel file calculations as an Appendix to your written report. 8. Run the Spellcheck function, and proofread your report! Sometimes the Spellchecker replaces the wrong word. 9. Submit each Part in the appropriate unit. Each Part will be graded independently of the others. 10. When you pull your report together in Part 4, be sure to add appropriate headings. Requirements Part 1: Business Summary You will begin working on your project in Unit 2 and will submit Part 1 of your project in this unit. (Part 1 will become the introduction of your report when you pull your project together in Unit 5). In this portion of your project you will be identifying the background information about the company. For Part 1 of your project: 1. Write a brief summary of M&S, PLC's: Line of business, Countries in which it operates, Corporate HQ address, and Currency in which its Financial Statements are prepared. 2. Discuss the Standards under which the report was prepared, i.e. GAAP or IFRS and discuss the differences between the reporting standard and the alternate standard. An appropriate length for this part of your project is 1-2 pages. Note: Later in Unit 5, as you complete Part 4, this section will become the introduction for your report in Part 4. Part 2: Ratio Analysis In Unit 3 you will complete and submit Part 2 of your project. This part of your project will provide you with experience in working with ratio analysis. Click HERE to download and use the Microsoft Excel template to compute the following ratios. You will also need to discuss their significance. 1. Cash Debt coverage ratio 2. Current ratio 3. Receivables turnover 4. Free cash flow 5. Profit Margin 6. EPS Please note you will include this information later in your final report in the Appendix section of your report in Part 4. Part 3: The Body In this part of your project you will address the financial statements and disclosure notes. Be sure to use complete sentences and to write in paragraph form. Do NOT write your paper in a Question and Answer format. Please use subheadings to signify a change in topic. For example: Assets, Cash and Equivalents, Revenue, etc. Be sure to answer all questions. The Financial Statements Review the M&S 2010 Annual Report to discuss the information below. 1. What were the Total assets on the last day of the reporting period for the last two years? What was the reason for the difference? 2. What were the Cash and Cash equivalent balances for both years? Explain why this difference is significant. 3. What were the selling and marketing expenses for 2010? For 2009? 4. What were Revenues for 2010? For 2009? Discuss why they are different. 5. What were Depreciation and Amortization expense for 2009 and 2010? Explain the increase/decrease. 6. What type of Income Statement format does M&S use? Discuss why they have chosen this form. 7. What were the cash flows from its operating, investing and financing activities for 2010? What was the trend in net cash provided by operating activities over the period from 2009 to 2010? Explain the changes. This section should be approximately 1-2 pages in length. The Disclosure Notes Carefully read the Disclosure Notes and discuss the following information in relation to M&S's Revenue Recognition policy. 1. Is their accounting policy consistent from year to year? Please explain. 2. Give two examples where Historical Cost is used and two examples where Fair Value is used. Be sure to explain the significance of this accounting policy, and cite the source of your information. 3. What is their policy regarding refunds and loyalty schemes? Discuss the significance of this policy. The disclosure section should be approximately 1-2 pages in length. You will submit both the financial statement and disclosure sections for Part 3 of your project. Remember to proof read your work before you submit it. Additionally, Part 3 of your project must be submitted in Unit 4. Note: In the next unit, for Part 4, you will use this information as the body of report as you pull all parts together of your project. Part 4: Pulling It All Together - Analysis and Conclusion For Part 4 of your project you will combine all Parts of your project into one document and add create the conclusion for your report. You will submit your entire report before the last day of unit. Part 1 will become the introduction. Part 2 will become the Appendix. Copy the calculations from your Excel document into in the Appendix section of your report. Part 3 of your project is the body of your paper. For Part 4 you are required to discuss the overall significance of the ratio analysis results above and form a conclusion about the overall financial status of M&S. Be specific with your response and support your opinion with facts from the Annual Report, research from the Internet, and your textbook. Be sure to use complete, grammatically correct sentences. Use proper APA formatting for your references. You must use at least two resources to support your opinion. For example, you may use a comparison of Industry ratios, or Revenue trends. Your conclusion should be approximately 1-2 pages. Overall Grading The entire Course Project will be worth 15% of your over-all course grade. You will be graded on the accuracy of your calculations, completeness of the project, as well as your critical thinking and reasoning skills. Each part of your project will be grading independently of the others, and will be proportionately weighted as follows: The Course Project Parts are weighted as follows: o Part 1 - 10% o Part 2- 35% o Part 3- 40 % o Part 4 - 15 % Total Project 100% Detailed Grading Criteria Part 1 Content 85% - Content demonstrates sufficient elaboration on subject; exhibits problem solving and critical thinking skills; appropriate length, logical sequence and order, clarity, appropriate use of any graphics and supplemental material; opinions are supported by research material. Written Communication 15% - Demonstrates proper written communication: proper grammar, correct spelling, word usage, syntax, composition, properly cited references. Part 2 Calculations 100% - Financial Ratios are correctly calculated. Part 3 Content 85% - Content demonstrates sufficient elaboration on subject; exhibits problem solving and critical thinking skills; appropriate length, logical sequence and order, clarity, appropriate use of any graphics and supplemental material; opinions are supported by research material. Written Communication 15% - Demonstrates proper written communication: proper grammar, correct spelling, word usage, syntax, composition, etc. Part 4 Content 70% - Content demonstrates sufficient elaboration on subject; exhibits problem solving and critical thinking skills; appropriate length, logical sequence and order, clarity, appropriate use of any graphics and supplemental material; opinions are supported by research material. Written Communication 15% - Demonstrates proper written communication: proper grammar, correct spelling, word usage, syntax, composition, etc. APA Style 15% - Proper use of APA style to include the appropriate sections, spacing, font, headings, in-text citations and references. http://lms.ecpionline.com/file.php/4616/documents/ACC319_TermProject_Annual_Report.pdf for part 1 report Certain Cash Contributions for Typhoon Haiyan Relief Efforts in the Philippines Can Be Deducted on Your 2013 Tax Return A new law allows you to choose to deduct certain charitable contributions of money on your 2013 tax return instead of your 2014 return. The contributions must have been made after March 25, 2014, and before April 15, 2014, for the relief of victims in the Republic of the Philippines affected by the November 8, 2013, typhoon. Contributions of money include contributions made by cash, check, money order, credit card, charge card, debit card, or via cell phone. The new law was enacted after the 2013 forms, instructions, and publications had already been printed. When preparing your 2013 tax return, you may complete the forms as if these contributions were made on December 31, 2013, instead of in 2014. To deduct your charitable contributions, you must itemize deductions on Schedule A (Form 1040) or Schedule A (Form 1040NR). The contribution must be made to a qualified organization and meet all other requirements for charitable contribution deductions. However, if you made the contribution by phone or text message, a telephone bill showing the name of the donee organization, the date of the contribution, and the amount of the contribution will satisfy the recordkeeping requirement. Therefore, for example, if you made a $10 charitable contribution by text message that was charged to your telephone or wireless account, a bill from your telecommunications company containing this information satisfies the recordkeeping requirement. Form 1040 2013 (99) Department of the TreasuryInternal Revenue Service U.S. Individual Income Tax Return For the year Jan. 1-Dec. 31, 2013, or other tax year beginning OMB No. 1545-0074 , 2013, ending Your first name and initial See separate instructions. , 20 Your social security number Last name Jane IRS Use OnlyDo not write or staple in this space. Smith 1 2 3 4 5 6 7 8 9 Spouse's social security number Last name If a joint return, spouse's first name and initial Apt. no. Home address (number and street). If you have a P.O. box, see instructions. 2020 Oakcrest Road City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking Foreign postal code a box below will not change your tax or refund. You Spouse Boca Raton, FL 33431 Foreign country name Filing Status Check only one box. Exemptions Foreign province/state/county 1 4 Single Married filing jointly (even if only one had income) 2 3 c Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your dependent, enter this child's name here. Married filing separately. Enter spouse's SSN above and full name here. 6a b 5 Qualifying widow(er) with dependent child Yourself. If someone can claim you as a dependent, do not check box 6a . Spouse . Dependents: (1) First name . . . . . . . . . . . (2) Dependent's social security number Last name . . . . . . . . . . . . . . . . } (4) if child under age 17 qualifying for child tax credit (see instructions) (3) Dependent's relationship to you Dependents on 6c not entered above d Total number of exemptions claimed . . . . . . . . . . . . . . . . . . . . . . 7 . . . . . . . 8a 700 9a Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . 8a b 9a Taxable interest. Attach Schedule B if required . Tax-exempt interest. Do not include on line 8a . Ordinary dividends. Attach Schedule B if required . . . . . . . . . . . 10 11 Qualified dividends . . . . . . . . . . . 9b Taxable refunds, credits, or offsets of state and local income taxes Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 12 13 14 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . Capital gain or (loss). Attach Schedule D if required. If not required, check here Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . 12 13 14 15a 16a 17 IRA distributions . 15a b Taxable amount . . . Pensions and annuities 16a b Taxable amount . . . Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 15b 16b 17 Farm income or (loss). Attach Schedule F . Unemployment compensation . . . . Social security benefits 20a 18 19 20b Other income. List type and amount Combine the amounts in the far right column for lines 7 through 21. This is your total income 23 Educator expenses 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ 25 Health savings account deduction. Attach Form 8889 . 24 25 26 27 28 Moving expenses. Attach Form 3903 . . . . . . Deductible part of self-employment tax. Attach Schedule SE . Self-employed SEP, SIMPLE, and qualified plans . . 26 27 28 29 30 31a Self-employed health insurance deduction Penalty on early withdrawal of savings . . . . . . . . . . Alimony paid b Recipient's SSN IRA deduction . . . . . . . Student loan interest deduction . . Tuition and fees. Attach Form 8917 . 29 30 31a 32 33 34 . . . . . . . . . . . . 32 33 34 35 36 37 Adjusted Gross Income . 800 . . . 21 22 If you did not get a W-2, see instructions. 1 101000 . 8b . . 7 . Add numbers on lines above . 18 19 20a Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. Boxes checked on 6a and 6b No. of children on 6c who: lived with you did not live with you due to divorce or separation (see instructions) If more than four dependents, see instructions and check here Income Make sure the SSN(s) above and on line 6c are correct. Domestic production activities deduction. Attach Form 8903 35 Add lines 23 through 35 . . . . . . . . . . . . . Subtract line 36 from line 22. This is your adjusted gross income b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b Taxable amount . . . . . . . . . . 10000 21 22 91700 23 . . . For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. . . . . . . . . . 36 37 Cat. No. 11320B 91700 Form 1040 (2013) Page 2 Form 1040 (2013) Tax and Credits Standard Deduction for People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. All others: Single or Married filing separately, $6,100 Married filing jointly or Qualifying widow(er), $12,200 Head of household, $8,950 Other Taxes 38 Amount from line 37 (adjusted gross income) 39a Check if: If you have a qualifying child, attach Schedule EIC. . . . You were born before January 2, 1949, Spouse was born before January 2, 1949, . . Blind. Blind. . } . . . . . 38 . . . 42 43 Exemptions. If line 38 is $150,000 or less, multiply $3,900 by the number on line 6d. Otherwise, see instructions Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . Form 4972 c Tax (see instructions). Check if any from: a Form(s) 8814 b 44 45 46 Alternative minimum tax (see instructions). Attach Form 6251 . Add lines 44 and 45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2500 . . . . . . . b . 47 48 Foreign tax credit. Attach Form 1116 if required . Credit for child and dependent care expenses. Attach Form 2441 49 50 51 Education credits from Form 8863, line 19 . . . . . Retirement savings contributions credit. Attach Form 8880 Child tax credit. Attach Schedule 8812, if required . . . Residential energy credits. Attach Form 5695 . . . . 52 3800 b 8801 c Other credits from Form: a 53 Add lines 47 through 53. These are your total credits . . . . . Subtract line 54 from line 46. If line 54 is more than line 46, enter -0- 56 57 Self-employment tax. Attach Schedule SE . . . . Unreported social security and Medicare tax from Form: 58 59a b Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required Household employment taxes from Schedule H . . . . . . . . a 4137 . . . . . Paid Preparer Use Only 81700 44 45 46 . . . First-time homebuyer credit repayment. Attach Form 5405 if required . . . . Form 8959 b Form 8960 c Instructions; enter code(s) Taxes from: a . . . . Add lines 55 through 60. This is your total tax . . . . . . . . . . . . Federal income tax withheld from Forms W-2 and 1099 . . 2013 estimated tax payments and amount applied from 2012 return 64a b Earned income credit (EIC) . . . . . . Nontaxable combat pay election 64b Additional child tax credit. Attach Schedule 8812 . . . . . . . . . American opportunity credit from Form 8863, line 8 . Reserved . . . . . . . . . . . . . Amount paid with request for extension to file . . . . . . . . . . . . . . . . . . . . 62 63 64a 2500 0 55 56 57 60 61 18000 1000 65 66 67 68 . . . . 69 Credit for federal tax on fuels. Attach Form 4136 . . . . 70 Credits from Form: a 2439 b Reserved c 8885 d 71 Add lines 62, 63, 64a, and 65 through 71. These are your total payments . Excess social security and tier 1 RRTA tax withheld . . . . 73 If line 72 is more than line 61, subtract line 61 from line 72. This is the amount you overpaid Amount of line 73 you want refunded to you. If Form 8888 is attached, check here . c Type: Routing number Checking Savings Account number Amount of line 73 you want applied to your 2014 estimated tax 75 Amount you owe. Subtract line 72 from line 61. For details on how to pay, see instructions 75 76 54 58 59a 59b . . . 62 63 65 66 . . 8919 . 77 77 Estimated tax penalty (see instructions) . . . . . . . Do you want to allow another person to discuss this return with the IRS (see instructions)? Designee's name Phone no. 72 73 19000 1000 74a 1000 76 Yes. Complete below. No Personal identification number (PIN) Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation Daytime phone number Spouse's signature. If a joint return, both must sign. Date Spouse's occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.) PTIN Check if self-employed Joint return? See instructions. Keep a copy for your records. 43 6100 49 50 51 52 53 54 55 . . 74a b d Sign Here 85600 3900 47 48 Third Party Designee 40 41 42 39b Itemized deductions (from Schedule A) or your standard deduction (see left margin) Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . Direct deposit? See instructions. Amount You Owe 91700 Total boxes checked 39a 40 41 67 68 69 70 71 72 Refund . If your spouse itemizes on a separate return or you were a dual-status alien, check here b 60 61 Payments { . Print/Type preparer's name Firm's name Preparer's signature Date Firm's EIN Firm's address Phone no. Form 1040 (2013) marksandspencer.com Register for online communications and get your 10% off voucher for marksandspencer.com For details see page 117. Marks and Spencer Group plc Annual report and financial statements 2010 Read our online Annual Report and How We Do Business Report at marksandspencer.com/annualreport2010 What's in this report? Table of contents About Us See under flap for the M&SOverview Annual report and financial statements 2010 Directors' report Overview 01 06 07 p12 p16 What we sell Womenswear Lingerie Menswear Kidswear Home Food How we sell Multi-channel Where we sell International Efficient delivery IT, Logistics & Supply Chain How we do business Plan A Our people Being an employer of choice Financial review Governance Quality, Value, Service, Innovation and Trust 44 46 58 72 77 Our brand by Steven Sharp Our marketplace Operating & Financial review 16 28 32 34 36 40 42 p08 Performance overview by Ian Dyson Key performance indicators Brand & Marketplace 12 14 Chairman's overview by Sir Stuart Rose Management Board Introduction from Marc Bolland Performance & KPIs 08 10 p01 p44 Overview and Board of Directors Governance report Remuneration report Other disclosures Auditors report Financial statements and other information Financial statements 78 78 79 80 81 82 112 112 113 113 114 p78 Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated cash flow information Notes to the financial statements Company income statement Company statement of financial position Company statement of changes in shareholders' equity Company statement of cash flows Company notes to the financial statements 116 Key performance measures 117 Shareholder information 120 Index marksandspencer.com Register for online communications and get your 10% off voucher for marksandspencer.com For details see page 117. Marks and Spencer Group plc Annual report and financial statements 2010 Read our online Annual Report and How We Do Business Report at marksandspencer.com/annualreport2010 What's in this report? Table of contents About Us See under flap for the M&SOverview Annual report and financial statements 2010 Directors' report Overview 01 06 07 p12 p16 What we sell Womenswear Lingerie Menswear Kidswear Home Food How we sell Multi-channel Where we sell International Efficient delivery IT, Logistics & Supply Chain How we do business Plan A Our people Being an employer of choice Financial review Governance Quality, Value, Service, Innovation and Trust 44 46 58 72 77 Our brand by Steven Sharp Our marketplace Operating & Financial review 16 28 32 34 36 40 42 p08 Performance overview by Ian Dyson Key performance indicators Brand & Marketplace 12 14 Chairman's overview by Sir Stuart Rose Management Board Introduction from Marc Bolland Performance & KPIs 08 10 p01 p44 Overview and Board of Directors Governance report Remuneration report Other disclosures Auditors report Financial statements and other information Financial statements 78 78 79 80 81 82 112 112 113 113 114 p78 Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated cash flow information Notes to the financial statements Company income statement Company statement of financial position Company statement of changes in shareholders' equity Company statement of cash flows Company notes to the financial statements 116 Key performance measures 117 Shareholder information 120 Index Highlights from the past year About M&S Marks & Spencer is one of the UK's leading retailers with over 21 million customers visiting our stores every week. We sell high quality, great value clothing and home products and outstanding quality food. We source our products responsibly from 2,000 suppliers around the world. Over 76,000 people work for M&S both in the UK and in 41 territories overseas, where we have a growing international business. The statutory results for the year are for the 53 weeks ended 3 April 2010. In order to be able to compare these with last year's 52 week period, where appropriate, the 52 week results have been stated. The Finance Review on page 42 explains the calculation of the 52 week results. Our core values of Quality, Value, Service, Innovation and Trust are as important to us today as they were when M&S was founded over 125 years ago. In September 2009 Kantar Worldpanel adjusted its market share data for the period to March 2009. The market share data in this report is based on these more accurate figures. Page 16 With an annual turnover of 8.4bn*, our UK business has a broadly even split between General Merchandise (clothing and home) and Food. General Merchandise 4.1bn sales (+4.0%)* With more than 1 in 10 clothing items bought from M&S, we remain the UK's largest clothing retailer and the first choice for stylish, great value clothes for the whole family. We lead the market in womenswear, lingerie and menswear and have an expanding kidswear and home business. Market share (value) 11 .0% 11 .2% Adjusted Group operating profit (53 weeks) 9.5bn +5.2% 843.9m +9.8% 9.3bn +3.2% 779.3m +1.4% (52 weeks) (52 weeks) Group profit before tax Adjusted Group profit before tax (53 weeks) Market share (volume) (53 weeks) 702.7m -0.5% Source: Kantar Worldpanel Food 4.3bn sales (+1.8%)* We are the UK's leading provider of high quality food, selling everything from fresh produce and groceries, to partly-prepared meals and ready meals and an award winning range of wines. Underpinning this is our commitment to healthy eating, ethical sourcing and innovation. Group revenue (53 weeks) What we sell Our core UK business Market share 3.8% 694.6m +14.9% 640.6m -9.3% How we sell Multi-channel Page 28 Customers shop with M&S in many ways - in stores, online or over the phone. Our aim is that everyone receives the same consistently high level of service from purchase through to delivery. Our UK stores We have 690 stores across the UK - in a wide range of convenient locations - from high streets to retail parks, train stations to airports. Over the past four years we have transformed these stores into bright and contemporary destinations with a range of hospitality options. (52 weeks) Interim + final dividend Adjusted earnings per share 5.5p+9.5p Total dividend 2009/10 =15.0p 33.0p +17.9% (53 weeks) 42 Major 30.0p +7.1% 242 High Street (52 weeks) 690 UK stores: 10 Premiere 46 Outlets 156 Simply Food wholly-owned For all our full and detailed key performance indicators See p10 194 Simply Food franchises M&S Direct 413m sales (+27%)* M&S Direct is key to improving customer convenience and service including via our website and our newly launched 'Shop Your Way' facility. We are on target to achieve 500m in sales by 2010/11. 632.5m +4.6% (52 weeks) Source: Kantar Worldpanel M&S Direct: Register for online communications and get your 10% off voucher for marksandspencer.com. See page 117 for more details. E-commerce website Home catalogue Flowers & wine delivery Hampers Food to Order 10% off lunchtogo Where we sell International Page 32 International 949m sales (+5.7%)* With a portfolio of over 320 owned and franchised stores in 41 territories we continue to grow our International business. Our mix of ownership models and countries enabled us to perform well over the past year even when individual markets were weak. *52 weeks. How we do business Plan A Page 36 Over the past three years, our eco and ethical plan, Plan A, has helped us reduce our environmental impact, develop new sustainable products and services and improve the lives of people in our local communities. This year we extended our plan to involve all our customers and employees and to set ourselves the ambitious goal of becoming the world's most sustainable major retailer by 2015. Why go online? marksandspencer.com/annualreport2010 If you haven't already tried it, visit our easy-to-use, fully interactive online Annual Report. Many shareholders are now benefiting from more accessible information and helping the environment too. It's a more engaging and interactive experience It's printable as individual pages It saves paper and costs This report is printed on Revive Pure uncoated, a 100% recycled paper made from post-consumer collected waste. Revive Pure uncoated is manufactured to the certified environmental management system ISO 14001. Designed and produced by Radley Yeldar ry.com Printed by Royle Print Highlights from the past year About M&S Marks & Spencer is one of the UK's leading retailers with over 21 million customers visiting our stores every week. We sell high quality, great value clothing and home products and outstanding quality food. We source our products responsibly from 2,000 suppliers around the world. Over 76,000 people work for M&S both in the UK and in 41 territories overseas, where we have a growing international business. The statutory results for the year are for the 53 weeks ended 3 April 2010. In order to be able to compare these with last year's 52 week period, where appropriate, the 52 week results have been stated. The Finance Review on page 42 explains the calculation of the 52 week results. Our core values of Quality, Value, Service, Innovation and Trust are as important to us today as they were when M&S was founded over 125 years ago. In September 2009 Kantar Worldpanel adjusted its market share data for the period to March 2009. The market share data in this report is based on these more accurate figures. Page 16 With an annual turnover of 8.4bn*, our UK business has a broadly even split between General Merchandise (clothing and home) and Food. General Merchandise 4.1bn sales (+4.0%)* With more than 1 in 10 clothing items bought from M&S, we remain the UK's largest clothing retailer and the first choice for stylish, great value clothes for the whole family. We lead the market in womenswear, lingerie and menswear and have an expanding kidswear and home business. Market share (value) 11 .0% 11 .2% Adjusted Group operating profit (53 weeks) 9.5bn +5.2% 843.9m +9.8% 9.3bn +3.2% 779.3m +1.4% (52 weeks) (52 weeks) Group profit before tax Adjusted Group profit before tax (53 weeks) Market share (volume) (53 weeks) 702.7m -0.5% Source: Kantar Worldpanel Food 4.3bn sales (+1.8%)* We are the UK's leading provider of high quality food, selling everything from fresh produce and groceries, to partly-prepared meals and ready meals and an award winning range of wines. Underpinning this is our commitment to healthy eating, ethical sourcing and innovation. Group revenue (53 weeks) What we sell Our core UK business Market share 3.8% 694.6m +14.9% 640.6m -9.3% How we sell Multi-channel Page 28 Customers shop with M&S in many ways - in stores, online or over the phone. Our aim is that everyone receives the same consistently high level of service from purchase through to delivery. Our UK stores We have 690 stores across the UK - in a wide range of convenient locations - from high streets to retail parks, train stations to airports. Over the past four years we have transformed these stores into bright and contemporary destinations with a range of hospitality options. (52 weeks) Interim + final dividend Adjusted earnings per share 5.5p+9.5p Total dividend 2009/10 =15.0p 33.0p +17.9% (53 weeks) 42 Major 30.0p +7.1% 242 High Street (52 weeks) 690 UK stores: 10 Premiere 46 Outlets 156 Simply Food wholly-owned For all our full and detailed key performance indicators See p10 194 Simply Food franchises M&S Direct 413m sales (+27%)* M&S Direct is key to improving customer convenience and service including via our website and our newly launched 'Shop Your Way' facility. We are on target to achieve 500m in sales by 2010/11. 632.5m +4.6% (52 weeks) Source: Kantar Worldpanel M&S Direct: Register for online communications and get your 10% off voucher for marksandspencer.com. See page 117 for more details. E-commerce website Home catalogue Flowers & wine delivery Hampers Food to Order 10% off lunchtogo Where we sell International Page 32 International 949m sales (+5.7%)* With a portfolio of over 320 owned and franchised stores in 41 territories we continue to grow our International business. Our mix of ownership models and countries enabled us to perform well over the past year even when individual markets were weak. *52 weeks. How we do business Plan A Page 36 Over the past three years, our eco and ethical plan, Plan A, has helped us reduce our environmental impact, develop new sustainable products and services and improve the lives of people in our local communities. This year we extended our plan to involve all our customers and employees and to set ourselves the ambitious goal of becoming the world's most sustainable major retailer by 2015. Why go online? marksandspencer.com/annualreport2010 If you haven't already tried it, visit our easy-to-use, fully interactive online Annual Report. Many shareholders are now benefiting from more accessible information and helping the environment too. It's a more engaging and interactive experience It's printable as individual pages It saves paper and costs This report is printed on Revive Pure uncoated, a 100% recycled paper made from post-consumer collected waste. Revive Pure uncoated is manufactured to the certified environmental management system ISO 14001. Designed and produced by Radley Yeldar ry.com Printed by Royle Print To find out more, visit marksandspencer.com/annualreport2010 01 Overview\b Chairman's overview \"Leading your very special business for the last six years has been a pleasure and a privilege.\" Brand & Marketplace\b p20 Operating & Financial review\bp26 p50 Financial statements\b Sir Stuart Rose Chairman p14 Governance\b by Sir Stuart Rose Performance & KPIs\b p78 A platform for growth This year M&S returned to growth, demonstrating the resilience of the brand through difficult times. 2009/10 has been about leading the business through the recession without losing sight of our long-term plan or our core values. We remain committed to building a world-class retailer through increasing the pace of change and driving operational excellence in the business; building our multi-channel capability; growing our international portfolio; and, as the economy returns to a stronger footing, reinvigorating our brand communications. Our progress was interrupted - but not altered - by the recession. Last year, we continued to implement short-term objectives to guide M&S through the economic downturn. As a result of this decisive action our long-term strategy remains in place. We have built a strong platform for growth and have improved or maintained market share in all our core areas. We grew because we managed our costs prudently, listened and responded to our customers' changing needs and stayed true to our core values of Quality, Value, Service, Innovation and Trust, reminding our customers of what makes M&S different. This year we have worked hard to further improve our quality and our customers have told us they have noticed this improvement. A year ago, I told you the Board had cut the dividend by 20.9%. This was not an easy decision but it gave us the flexibility to continue to invest in the business despite the downturn. Although we scaled back investment in new stores we continued to invest in our infrastructure, particularly our supply chain and IT systems. We also invested in our margins, to give customers the extra value they were looking for without compromising quality. Whilst some retailers attempted to meet this need by repositioning themselves as 'low cost', M&S continued to stand for value and not just price - an approach that is serving us well as consumer confidence returns. 02 Marks and Spencer Group plc Annual report and financial statements 2010 Directors' report Overview Chairman's overview continued quality Above: Wrapping up As Britain's coldest winter in decades took hold customers turned to M&S to keep them cosy. In December we sold enough knitwear to clothe every woman between the ages of 20 and 84 living in London, with sales of women's knitwear up 18%. Quality & INNOVATION Above: Extending the asparagus season John Chinn has been growing asparagus for M&S for over six years: \"In 2003 I went to an asparagus growers' conference where an M&S buyer gave a talk and invited any growers interested in extending the season to come and see him.\" Since then John, with the help of M&S, has doubled the length of the British season by growing early varieties on the south facing slopes of his Wye Valley farm. The later-cropping asparagus are planted on the north facing slopes which are still being harvested well into July. Plan A: Your green Idea Trust In March we launched Your Green Idea a major Plan A competition, offering a chance to win 100,000 to 'green' an organisation, such as a school or a local community group. Your Green Idea invited people to share their ideas for new, 'green actions' that M&S could implement under Plan A, so that all of our 21 million customers can get involved in helping the environment. For more information about Plan A see p36 or visit marksandspencer.com/plana * 52 weeks. Despite the economic challenges, we have also renewed our commitment to Plan A, our eco and ethical plan. We know environmental issues matter to our customers and that the recession has not altered their level of concern. They continue to look to M&S to lead the way, so this year we set out our vision to become the world's most sustainable major retailer by 2015. Since its launch in 2007, we have moved from the implementation of Plan A to making it the key driver of how we do business. In doing so, we have become more efficient and in 2009/10 alone Plan A generated 50m additional profit, which has been invested back into the business. This year I worked with the Board to identify Marc Bolland as my successor as Chief Executive. Though we remain cautious about the year ahead, the worst effects of the recession are behind us. Furthermore, M&S is in a stronger position and I am convinced that Marc is the right man to lead the business forward, as he brings a wealth of experience to the role. As Chairman, I will continue to work with the Board and with the management team to ensure a smooth transition until I leave the business. Our performance this year* Marks & Spencer has had a good year, with our adjusted profits up 4.6% on last year to 632.5m. Before the 80.9m bonus we paid to our colleagues to thank them for their extraordinarily hard work, profits were at 713.4m, a 17.5% increase on 2008/09. You will see from Ian Dyson's finance review on page 8 that Group sales increased by 3.2%. Positive UK like-for-like sales have returned, up 0.9% and we have seen growth across all parts of the business, as the external market conditions improved and our customers became more confident. Food has now delivered a sixth consecutive quarter of growth. As outlined in John Dixon's review on page 24 this has been achieved by better value, availability and product innovation, whilst continuing to deliver outstanding quality. The pace of development in Food will not slow and this year we committed to renewing 25% of our food range every year. Our clothing market share continues to grow, up 0.3% to 11%, as our customers have started to invest in their wardrobes again. Feedback from them tells us we have got the products right and are in touch with the latest trends. As set out in Kate Bostock's clothing review on page 16 we've responded to customer requests for an easy to wear, casual range with the launch of Indigo Collection. We have also used our 'good', 'better' and 'best' pricing structure to ensure we continue to offer something for everyone, making it easy for our customers to trade up and down within M&S to suit their priorities and budgets. To find out more, visit marksandspencer.com/annualreport2010 03 Overview\b Performance & KPIs\b p14 Brand & Marketplace\b p20 Operating & financial review\b p26 Governance\b p50 Financial statements\b p78 Well Suited Over the last 12 months we've strengthened our share of the menswear market to 10.4% by value. We've sharpened our brands, such as Collezione, featured left, which we relaunched in February. Find out more about the work we have done on page 21. Find out more at marksandspencer.com 04 Marks and Spencer Group plc Annual report and financial statements 2010 Directors' report Overview Chairman's overview continued Innovation Left: Reversy Percy Customers told us they like to eat Percy Pigs jelly ears first so in March 2010 we reversed him to give fans more of their favourite bits. Percy Pig is exclusive to M&S and has his own Facebook Appreciation Society, with over 200,000 members and over 1.5 million Percy Pigs are eaten a week! Trust Above: The Marks in Time exhibition was launched as part of our 125 celebrations. It showcased the M&S journey from market stall to international retailer, highlighting its role in British cultural history since Michael Marks opened his first stall in 1884. Held at the University of Leeds, it features nearly 200 items from the M&S Company Archive and marks the beginning of a unique partnership which will see the entire archive relocate to the University in 2011. Sir Stuart Rose and Twiggy opened the exhibition alongside University Vice-Chancellor, Michael Arthur. See more at marksintime.marksandspencer.com Service & trust Below: Three Lions One Tailor As World Cup fever hits the country this summer we'll be kitting out the England squad for their trip to South Africa. Fans won't be left out and they can get their hands on the same suits for 199 and waistcoat for 35. We remain focused on helping our customers shop with us whichever way they want, bringing together our various shopping channels to provide greater convenience and flexibility. As explained on page 28 of the report, this year we launched 'Shop Your Way', a new ordering service that has been rolled-out to over 300 stores, allowing customers to place orders either in stores, online or over the phone, for delivery to either a nominated address or free of charge to their nearest store. Our International sales were up 5.7%, despite difficult trading conditions in the Republic of Ireland and Greece. We remain confident in our International growth plans and this year we have focused on building sustainable businesses in emerging economies such as India and China. Improvements across M&S are a result of our consistent delivery of quality and value to our customers. Through good times and through adversity we have remained true to our core values. It is these values that continue to set M&S apart from the competition and I believe they are more relevant than ever before in our 125 year history. Trust Our customers know they can trust us to do the right thing and nowhere is this better demonstrated than through Plan A. This year we raised the bar - setting ourselves the ambitious goal of becoming the world's most sustainable major retailer by 2015. Our extended Plan A will reach further and move us faster - covering every part of our business and reaching out to our 2,000 suppliers in the UK and overseas and into the homes of our 21 million customers. We are also encouraging our 76,000 employees to live 'greener lifestyles' and this is explained in more detail in our people section on page 40. As part of this all M&S employees are now entitled to a paid volunteer day - so that we can give something back to the communities we serve. By 2020 we aim to convert the 2.7 billion individual M&S food, clothing and home products sold each year, to 'Plan A products', so that each carries at least one sustainable or ethical quality. In doing so, we will make a positive contribution to the environment and society across everything we do and everything we sell. Plan A is not just the right thing to do ethically, it also makes commercial sense. By further embedding sustainability into the way we do business we will continue to become more efficient, develop new markets and build customer loyalty. 125th anniversary Against the backdrop of recession, our 125th anniversary celebrations served as a rallying call to remind both customers and employees of the values M&S has stood for throughout its 125 year history. To this effect, we brought back the Penny Bazaar under the original slogan - 'Don't ask the price it's a penny' - attracting over three million customers in just three days. As part of the celebrations we also set our employees a target of raising 1.25m in just To find out more, visit marksandspencer.com/annualreport2010 05 Overview\b Performance & KPIs\b p14 Brand & Marketplace\b p20 Operating & Financial review\bp26 Governance\b p50 Financial statements\b p78 INNOVATION Quality & Trust Above: Show stopping desserts This year our pudding experts created the inside-out trifle, with layers of swiss roll on the outside holding a filling of custard and raspberry jelly. Also popular was the Snow Storm - inspired by old fashioned snow globes it's made using transparent vanilla jelly interspersed with coconut flakes on a white chocolate panna cotta base. Left: Cashmere Goats John Worley, our knitwear product technologist conducted a fact-finding visit to Inner Mongolia to discover more about the age old production of cashmere, which we use in our luxury knits. John's hosts showed him how they comb and remove the goats' hair by hand to ensure it's of the highest quality. You have to comb one and a half goats to collect enough fibre to produce one men's jumper. 125 days. Across the country, employees rose to the challenge, more than doubling this target to raise 2.8m benefiting over 500 local charities. Foundations for the future In October we held an Investor Day to explain in more detail our long-term change programme, which we launched a year ago as Project 2020. This year we have begun to accelerate the pace of activity to fundamentally transform the way M&S does business. It is: - \u0007 elivering a step-change in the way we d service our customers' needs and the way we operate our business; - increasing the pace of change and operational execution; - accelerating Multi-channel; and - driving our International business. Our investment will not only create a solid platform for future growth but will also deliver tangible customer benefits - from improved on shelf availability to more convenient delivery times. Handing over a stronger business As we welcome Marc Bolland as our new Chief Executive, I would like to reflect briefly on what has been achieved over the past six years. Marks & Spencer is a significantly stronger business today than it was when I became Chief Executive in 2004. QUALITY & Innovation Left: In print Our Limited Collection geometric print dress was our take on the graphic prints displayed on the 2009/10 catwalk. Using the latest digital print technology, it was a hit with both customers and the fashion press, named by Sunday Times Style Magazine as 'the best print dress on the high street - ever.' We have taken the business back to its core values of Quality, Value, Service, Innovation and Trust. We reconnected with our customers and employees by focusing on these values and launching the successful 'Your M&S' campaign, as well as Plan A. Our revenues have grown by 1.9bn, with International revenues doubling since 2004. We have significantly expanded our UK store base, from 375 stores to almost 700 today including putting M&S in previously under-represented locations - like out-of-town and retail parks. We have revitalised our clothing offer, filling the gaps in our ranges, keeping up to date with key trends and making our prices much more competitive. We now offer stylish, good value and great quality products for all our customers - regardless of their age, lifestyle or budget. Six years ago, for example, only 12% of our total clothing offer was at our opening price points, compared to just under a third today. The growth we've seen in our market share shows us that this approach is working. We have strengthened our performance across all areas of clothing - in womenswear, lingerie, menswear and kidswear - and our market share has risen to 11%. 06 Marks and Spencer Group plc Annual report and financial statements 2010 Directors' report Overview Chairman's overview continued 6 10 3 4 8 9 5 7 2 1 management Board 1. Sir Stuart Rose Chairman* 2. Marc Bolland Chief Executive** 3.\t\u0007 Dyson Group Finance and Operations Ian Director*** 4. Steven Sharp Executive Director, Marketing 5.\t\u0007 Kate Bostock Executive Director, General Merchandising 6. John Dixon Executive Director, Food 7.\t\u0007 Clem Constantine Director, International, Property and Store Development 8. Tanith Dodge Director, Human Resources 9.\t\u0007Nayna McIntosh Director, Store Marketing and Design 10.\tSteve Rowe Director, Retail and M&S Direct 11.\tAndrew Skinner Trading Director, per una 12.\tDarrell Stein Director, IT and Logistics *\t\u0007 From 31 July 2010, will handover CEO role, leaving the Company by March 2011 ** Joined 1 May 2010 ***\t\u0007\t\u0007 esigned from the Company on 5 May 2010. Ian will R step down from the Board following the AGM on 14 July and will leave the Company on 31 August 2010. We have also built up our position as the UK's leading retailer of good quality, fresh food. We have driven innovation while staying true to our quality and ethical sourcing principles. We have improved our pricing and made our Food offer more convenient. We now have 350 Simply Food stores across the UK - in locations such as high streets, railway stations and airports - up from 100 in 2004. Meanwhile we have made significant, long overdue investment in the business. Our total capital expenditure has been around 3.5bn of which 2.2bn has been invested in stores. Over 80% of our store portfolio has been completely renovated and we are building new logistics and delivery systems, which are essential to the future of our business - especially our two key areas of growth, Multi-channel and International. We have also invested in our people - with training and career paths - and we reinstated an active customer feedback programme. We know our customer service has improved because of this. Our mystery shopping scores currently stand at 89%, up from 70% when we introduced this measure in 2006. Finally, over the same period, I am pleased to say that we have given back around 4.6bn to our shareholders in dividends and buy-backs. The M&S team Marc will be able to benefit from the wealth of experience within the management team that has led M&S over the last year. In 2009, I announced that Kate Bostock would take responsibility for our Home division, bringing our entire General Merchandise offer under her leadership. Over the last 12 months we have seen the benefits of this, with greater collaboration and shared learning across the GM business units. Similarly, the management of all our shopping channels transferred to Steve Rowe, allowing us to better focus on our ambitions as a multi-channel retailer. In September 2009, John Dixon was promoted to the Board as Executive Director of Food. Since his appointment as Director of Food in July 2008, John has been instrumental in improving the performance of the Food division and returning it to positive like-for-like sales. To find out more, visit marksandspencer.com/annualreport2010 07 Overview\b Performance & KPIs\b p14 Brand & Marketplace\b p20 Operating & Financial review\bp26 Governance\b p50 Financial statements\b p78 Introduction 12 11 Marks & Spencer is a great brand and I am very proud to have the opportunity to lead a company with such a unique heritage. Since I arrived in May I have been getting to know the business and our customers and I am looking forward to working with the team as we continue to build on the strong foundations that have been put in place by Stuart. Marc Bolland Chief Executive\b In May 2010, Ian Dyson resigned from his position as Group Finance & Operations Director to join Punch Taverns plc as its Group Chief Executive. On behalf of the M&S Board, I would like to thank Ian for the significant contribution he has made to M&S over the last five years and wish him well with his future career. Our management team has worked together throughout the recession, focusing on both our long and short-term priorities, enabling the business to emerge stronger and ready to capitalise as the economy recovers. The progress we have made would not have been possible without the hard work and commitment of our dedicated workforce - particularly during the challenge of a recession. I am delighted that we have been able to pay all our staff a bonus this year. I would like to say a personal thank you to all of them. Joined 1 May 2010 It has been a great pleasure and a privilege to lead your very special business over the past six years. I am confident that with strong foundations in place, our core values revitalised and a brand that inspires confidence and recognition worldwide, M&S is poised for an exciting new era of growth under the direction of a new Chief Executive. Sir Stuart Rose Chairman Quality Above: Super sweet carrots M&S organic carrots are grown exclusively by Steven Jack on the wild Moray coast in the shadow of the Grampian Mountains. Long daylight hours in the summer mean sweeter, better tasting carrots and the light sandy soils ensure carrots with a fine skin that just need a gentle brushing before cooking, so there is no need to peel them. 08 Marks and Spencer Group plc Annual report and financial statements 2010 Directors' report Performance Page Title overview by Ian Dyson Page Title continued Ian Dyson Group Finance and Operations Director Underlying cost savings 145m Group capital expenditure 389m Net debt 2.1bn Plan A: UK Eco Factory Since its opening in 2008, our furniture supplier's first UK eco factory - the 150,000 sq ft Westbridge Furniture factory in Holywell, Wales - has reduced its CO2 emissions by 48%, energy use by 56% and water consumption by 30%. The factory is also on target to send no waste to landfill by 2012. At the same time it produces some of the most stylish pieces in the M&S range. For more information about Plan A see p36 or visit marksandspencer.com/plana Last year we took decisive action to give us the strength and flexibility we needed to navigate the recession. As a result we have emerged in a stronger position and delivered an improved performance, with an adjusted 52 week profit before tax of 632.5m up 4.6% from 604.4m in 2008/09. Whilst we have tackled the short-term issues caused by the downturn we have remained focused on our long-term strategy. Over the last 12 months, we have continued to invest in M&S, building a platform for future growth through Project 2020. Our performance* Cost management* This year our Group sales were up 3.2% to 9.3bn. A combination of improving market conditions and our own efforts helped us achieve an increase in UK sales of 2.9%, with a strong performance in all areas of our business. Despite tough trading conditions, particularly in Republic of Ireland and Greece, our International business delivered a strong performance, with sales up 5.7%. GM has seen market share growth in both value and volume, with sales up 4.0%. Continued investment in our margins has helped Food return to positive like-for-like sales of +0.3%. M&S Direct has delivered another good performance, with sales increasing to 413m and remains on track to deliver 500m by 2010/11. Total UK operating costs, excluding bonuses, were 2,769m, an increase of 1.0%. Despite the pressure of increased volumes, depreciation and inflation on our cost base, through prudent cost management we delivered savings of 5.3% representing an underlying saving of 145m. In addition, due to our significant outperformance against our plan we have paid a bonus of 81m to be shared by employees across M&S. Throughout 2009/10 we have remained focused on improving our cash flows. We reduced capital expenditure to 389m, down from 652m in 2008/09 and have a working capital inflow of 78m. As a result we have generated a net cash inflow of 412m after tax and dividend. Margins* Focus on cash flow management has Our UK gross margin was 41.2%, down 5 bps. enabled us to further reduce our net debt to 2.1bn, from 2.5bn in 2008/09. This reflects our continued investment in Food margins to provide our customers with the value they want, without compromising quality. Food gross margin was down 95 bps at 30.6%, with investment in prices and promotions partly offset by better buying and a reduction in food waste. GM margin was up 70 bps at 52.5%, despite the weak sterling performance this year. Over the last 12 months we have worked with our suppliers to manage currency pressures in our supply chain and delivered tighter stock control and management of markdowns. INNOVATION Right: Click to watch In December we launched our iViewer TV - a British high street first. Viewers can get BBC iPlayer straight to their screen with the touch of a button. The TV also doubles as a digital photoframe. * 52 weeks. Balance sheet management To find out more, visit marksandspencer.com/annualreport2010 09 Overview\b p01 Performance and KPIs\b p20 Operating & Financial review\bp26 Governance\b p50 Financial statements\b p78 Brand & Marketplace\b Service Quality Above: Say it with flowers On Valentines Day this year we delivered just under 30,000 bouquets of flowers to customers up and down the UK. Above: Store design We have now completed our modernisation programme in over 80% of stores. Refinancing Dividend We completed a buy-back of 200m worth of bonds, enabling us to issue a new longer term bond, taking advantage of the favourable conditions in the debt capital market. This has allowed us to strengthen our long term position by extending the average maturity life of our debt capital. In May 2009 the Board made the difficult decision to rebase the Group's dividend payment for 2009/10 to 15.0p per share to provide us with greater flexibility during the downturn. This decision resulted in a final dividend of 9.5p per share (last year 9.5p). Having rebuilt cover to two times, our policy is to grow dividends in line with adjusted earnings per share. Defined Benefit Pension Scheme In May 2010 we and the Trustees of our UK Defined Benefit Pension Scheme agreed a funding plan with a present value of 800m, following the outcome of the Scheme's triennial actuarial valuation which showed a deficit of 1.3bn at 31 March 2009. The funding plan includes the following contributions from M&S: Investing for the future In the midst of a recession, when it was easy to focus only on the short-term, we decided to re-examine our long-term strategy and gave it a renewed sense of purpose, resulting in the creation of Project 2020, which has the following aims: --cash contributions of 35m per annum for --increase the pace of change and operational execution the first three years of the funding plan increasing to 60m per annum until 2018. --accelerate towards becoming a multi-channel retailer This has a present day cash value of 376m; --drive our International business --300m of value through the granting of The overall objective of the programme is a further interest in the property-backed partnership established between M&S and to create long term sustainable growth in shareholder value. This year we have the Pension Scheme in 2007. This new focused on three priorities - restructuring interest entitles the Pension Scheme to our supply chain, implementing new IT a fixed annual distribution of c. 36m for systems and driving operational execution. 15 years commencing in 2017 and a There is more detail about our progress capital sum in 2031 equal to the lower in these specific areas on page 36. of 350m or any funding deficit in the Pension Scheme at that point in time; and These changes will deliver long-term benefits including: --124m of value through the transfer of Improving our cost efficiency The assets from existing US$ debt hedge implementation of changes in our supply contracts held by M&S. chain and systems requires a capital investment of 1bn by 2015/16. We expect this to deliver cost efficiencies of around 175m per year by 2012/13, rising to 250m per year by 2015/16, made up of 150m savings from our supply chain and 100m from systems. We are on track and this year we have achieved cost savings of 35m. Driving sales growth Through better cataloguing and product control we will be able to deliver improvements in on-shelf availability. Customers have also started to see tangible benefits, such as better fulfilment in our online ordering. Provide a platform for future profitable growth Our current systems are outdated and we need a better support infrastructure so that we can grow profitably in both Multi-channel and International. This year we have made substantial progress, including signing the lease on our new dedicated e-commerce warehouse due to open in 2012. Looking ahead Though market conditions have improved, we remain cautious about the year ahead. We are confident that the actions we have taken have put the business in good financial shape to weather uncertainty and emerge strongly as the economy improves. Throughout 2010/11 we will continue our delivery of Project 2020, focused on our goal of creating long-term sustainable growth. Ian Dyson Finance and Operations Director 10 Marks and Spencer Group plc Annual report and financial statements 2010 Directors' report Performance Page Title overview Key performance indicators Page Title continued Financial performance These financial performance indicators are based on the statutory 53 week period ended 3 April 2010. Group revenue 9.5bn 2009/10 9,536.6m m 06/07 2008/09 +5.2% 9,062.1m 2007/08 9.022.0m International 2006/07 +9.8% 09/10 08/09 712.9 968.7 897.8 8,588.1 9,022.0 9,062.1 9,536.6 m 2009/10 07/08 08/09 09/10 956.5 972.9 652.8 701.2 87.5 116.4 116.1 142.7 1,044.0 1,089.3 768.9 843.9 International 843.9m 2008/09 06/07 UK Adjusted Group operating profit* 843.9m 610.6 Total 8.588.1m 07/08 7,977.5 8,309.1 8,164.3 8,567.9 UK 768.9m Total 2007/08 1,089.3m 2006/07 1,044.0m Performance against our strategy What we sell Growing our core UK business p16 UK market share Clothing and footwear Analysis: During the year we grew our value market share and held on volume, see page 16 onwards for details of our clothing business. Source: Kantar Worldpanel UK market share Food Value market share Volume market share 11.0% 11.2% 2008/09 10.7% 2007/08 11.0% 2006/07 11.1% Analysis: Our market share is slightly down, reflecting the fact we were the only retailer to lower prices during what was an inflationary period. See page 24 for details on how we are working to further improve our Food business. 2008/09 11.2% 2007/08 11.3% 2006/07 10.7% 3.8% 2008/09 3.9% 2007/08 4.3% 2006/07 4.2% Source: Kantar Worldpanel Average weekly UK footfall Analysis: Around half of UK stores have cameras fitted at the entrance to allow us to track customer visits. We calculate our average footfall by analysing the ratios between visits and sales in these stores and then applying it to stores without cameras. 2007/08 21.8m 2006/07 21.0m Average weekly footfall 2009/10 21.0m 2008/09 21.6m 21.0m UK mystery shopping programme Analysis: Mystery shoppers anonymously visit all of our UK stores once a month - twice for flagship stores - to evaluate the levels of service, scoring factors such as how staff welcome customers and the management of store environment. This year over 6,500 visits were conducted and we have seen a 5% increase in service scores. Apr May Jun Jul Aug Sep Oct Nov 88 88 88 88 88 88 2009/10 2008/09 % 82 83 83 81 83 84 Feb Mar 90 90 88 87 86 84 80 Jan 90 89 88 Dec 84 86 Visits completed 6,500 average score 89% To find out more, visit marksandspencer.com/annualreport2010 11 p01 Overview\b Performance and KPIs\b p20 Operating & Financial review\bp26 Governance\b p50 Financial statements\b p78 Brand & Marketplace\b Adjusted Group profit before tax* 694.6m +14.9% 2009/10 694.6m 2008/09 604.4m 2007/08 1,007.1m 2006/07 965.2m Group profit before tax 702.7m -0.5% Adjusted earnings per share* 33.0p 2008/09 706.2m 2007/08 1,129.1m 2006/07 936.7m *The adjusted profit measures are stated before property disposals and exceptional items. How we sell Building our Multi-channel business p28 413m* Store, office, warehouse, business travel and logistics carbon dioxide emissions in tonnes CO2e per 1000 sq ft of salesfloor. Residual emissions will be offset in 2012. +27% Why carbon efficiency? Improving carbon efficiency reduces green house emissions and costs. However, this year our capital expenditure has been focused on laying the foundations for future growth under Project 2020. 80% Where we sell Expanding our International business p32 * 52 weeks. 10.2%* 2009