REG - Marston's Plc - Annual Financial Report
20/12/2021 16:20
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RNS Number : 2517W Marston's PLC 20 December 2021
Marston's PLC (the "Company")
Annual Report and Accounts and Notice of Annual General Meeting 2022
The following documents have now been posted or otherwise made available to
shareholders:
· 2021 Annual Report and Accounts;
· Notice of Annual General Meeting to be held on 25 January 2022
("AGM Notice");
· Proxy forms for the 2022 Annual General Meeting.
In accordance with LR 9.6.1R, a copy of each of these documents has been
submitted to the Financial Conduct Authority's Electronic Submission Service
and may shortly be viewed on the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
As required by DTR 6.3.5R(3), the Company confirms that the 2021 Annual Report
and Accounts and AGM Notice are now available to view or download in PDF
format from the Marston's PLC website: www.marstonspubs.co.uk/investors/
(http://www.marstonspubs.co.uk/investors/)
A condensed set of the Company's financial statements and information on
important events that have occurred during the financial year and their impact
on the financial statements were included in the Company's preliminary results
announcement on 30 November 2021. That information together with the
information set out below, which is extracted from the 2021 Annual Report and
Accounts, constitute the requirements of DTR 6.3.5 which is to be communicated
via an RIS in unedited full text. This announcement is not a substitute for
reading the full 2021 Annual Report and Accounts. Page and note references
in the text below refer to page numbers in the 2021 Annual Report and
Accounts. To view the preliminary announcement, slides of the results
presentation and audio webcast please visit
www.marstonspubs.co.uk/investors/results-presentations/
(http://www.marstonspubs.co.uk/investors/results-presentations/) .
For further information, please contact:
Anne-Marie Brennan
Group Secretary
01902 329163
Additional information
Our Principal Risks and Uncertainties
The Board recognise the following principal risks as those that could impact
upon the operation of the business and the achievement of its strategic
objectives. The Group's risks change over time and consequently this is not
intended to be a complete assessment of all risks. Pandemic risk remains as an
individual key risk due to the continued uncertainty of any future
restrictions and their impact upon operations. It remains as one of the few
risks which can result in the complete shut down of our pub estate.
1. Pandemic
Risk context The risk Potential impact Mitigation
COVID-19 uncertainty regarding the continued impact upon public health and our There is a risk that infection rates increase leading to further restrictions Ability of our teams to operate safely. • Tracking Government advice and implementing it effectively.
behaviour. on the public and further trading regulations for pubs and lodges.
Reduced numbers of guests, and shorter stays. • Adaption of our pubs to facilitate social distancing.
The duration of measures taken to reduce the infection rate
Increased operating costs. • Training our team members.
is uncertain.
• Building contingency plans for future lockdowns.
• Consulting with our employees on safety concerns and operational issues.
• Simplified menus, streamlined guest offering to concentrate upon
offering the highest guest satisfaction at the right margin.
• Regular scrutiny of asset values.
Movement - No change in risk: COVID-19 remains a risk to our business. The
world is still in the midst of the pandemic. Future variants of the virus are
possible while vaccination rates remain low in many countries. Future
Government restrictions on trading could be announced in response to the NHS
once again coming under pressure.
Opportunity: Our pubs were sorely missed during the lockdowns, demonstrating
their importance to communities. Pubs can benefit from the increased spend by
the public within the locality of their homes due to changing work location
patterns and more holidays taken in the UK. The changing marketplace creates
opportunities to standout to
our guests.
2. Liquidity
Risk context The risk Potential impact Mitigation
Financial strategy is to While the UK recovers from the The liquidity of the business could come under strain as a result of steps · Significant headroom in our bank facility to provide operational
taken by the Government. liquidity. See page 31 (of the Annual Report and Accounts) for our Viability
reduce debt. pandemic there is still a risk of regional lockdowns or national measures
Statement.
which could impact
• Reduce debt.
upon the ability of the pubs to trade.
• Conserve liquid funds by reducing costs.
• Maintain strong relationships with financial backers.
· Continual demonstration that pubs can operate in a COVID-19-safe
manner.
· Lobby Government on the importance of the pub trade to the UK
economy.
· Plan for resilience within our financial model to cover further
short-term disruption.
Movement - No change in risk: Uncertainty remains regarding the UK recovery
from the pandemic, infection rates and future Government policies.
Opportunity: In the medium-term, competition may reduce as a result of
operators having scaled back their activity, or left the market, bringing
opportunities at the right rate of return.
3. Health and safety
Risk context The risk Potential impact Mitigation
The safety of our guests, our people and the public is fundamental to our Breaches of health and safety regulations attract media attention and high Financial penalties Significant damage to reputation. • Health, safety and hygiene management systems embedded.
activities. We seek to attain the highest levels of safety. Lapses of safety penalties.
damage the trust and reputation of the Group.
• Operating instructions amended to reflect Government instructions. Pub
Further COVID-19 trading restrictions. teams trained on the new instructions. Pubs audited on their implementation.
• Dedicated safety advisers seeking continuous improvement.
• Regular independent expert safety audits at our pubs.
• Training of team members.
• Escalation of potential safety threats to senior operational management.
Movement - No change in risk: Breaches of safety are taken seriously by all
levels of our business. When our systems of control are found to be at fault,
we confront any failing honestly, in order to learn and build stronger
processes for the future.
Opportunity: In a competitive marketplace there is an increased opportunity
for us to be differentiated by our absolute commitment to guest care and
building long-term trust.
4. Food safety
Risk context The risk Potential impact Mitigation
The provision of accurate and reliable information on food to our guests is Breaches of food standards regulations attract adverse media attention and Financial penalties. • Maintain excellent levels of compliance through policies, training and
paramount. high penalties.
monitoring.
Significant damage to reputation.
Our guests trust in our high standards of food hygiene, but this can be Public concern over allergens continues to grow.
• E-learning module on allergens for completion by all pub team members.
quickly eroded by individual incidents.
There is a risk that information is collected incorrectly from our suppliers • Working with our supply chain to maintain robust systems for identifying
and/or misinterpreted for our menu items. There is also a risk if a team constituent food ingredients.
member mis-advises a guest on ingredients or serves the wrong meal.
• Due diligence on accepting new suppliers, monitoring and tracking.
Increased regulation directly affecting Marston's, or our suppliers, could
increase the complexity of the information to be provided and the cost of • Tracking meal constituents all the way through to our menus and the
compliance. descriptions contained therein and the accompanying allergens lists supplied
to our team members and the public.
• Rigorous investigation of complaints.
• Tracking legislative changes and adapting operations.
· Food information system facilitating the collection of detailed
information on food constituents, providing a clear audit trail and removing,
where possible, the chance of manual error.
• Smaller menus than previously, allowing a greater focus upon quality.
Movement - No change in risk: The risk remains significant because of the wide
variety of food items we source, and levels of food intolerance amongst the
public.
Opportunity: There is an opportunity to enhance Marston's reputation for food
safety and the care of our guests. Our implementation this year of a new food
information system will allow us to collect and provide more detail to our
guests and enhance safety further.
5. Financial covenants, pension fund deficit, and accounting controls
Risk context The risk Potential impact Mitigation
The Group's financial system handles many transactions accurately and Breach of the covenants with our lenders. Incorrect reporting of financial Loss of investor confidence and reputational damage. Breach of covenants, • Covenant waiver permission sought from bondholders/financial lenders.
securely. results. resulting in additional financial operating restrictions.
• Regular detailed management accounts, budgets and forecasts.
Accurate reporting is key to running the business effectively, and in Unauthorised transactions.
compliance with our financial covenants.
• Detailed financial data collected from our sites.
The pension deficit will increase while investment yields fall.
• Financial auditing of our sites based on data analysis.
Further lockdowns or other COVID-19 safety restrictions could impact upon the
normal operation of our pubs and lodges. • Constant monitoring of financial ratios.
Covenants could be impacted by a fall in profit. • Internal and external audits.
• Segregation of duties.
• Access controls within our systems.
• Levels of authority.
• Commitment to reduce debt.
• Management of the pension's investment portfolio to spread risk.
Movement - No change in risk: There are strong controls mitigating this risk
to a low level. Uncertainty regarding further Government imposed COVID-19
safety restrictions in the future remains. The impact on our covenants is
reduced by clear communications to, and engagement with, our lenders which
explains the effect of the current trading conditions.
Opportunity: To further strengthen our relationships with our bondholders,
communicating information on the business and its recovery from the pandemic.
6. Market and operational
Risk context The risk Potential impact Mitigation
Marston's revenue is dependent upon being able to offer, and attract, our Failure to attract or retain the best people negatively impacting pub Reduction in the number of sales or lost opportunities to increase our value · Continual awareness of our people offer compared to our competitors
guests to an enjoyable experience of high quality at the right price. It is performance. proposition. through participation in appropriate networks.
reliant upon attracting back existing guests and winning new guests.
Recruitment could be more of a challenge due to the high number of vacancies Reduction in guest satisfaction levels, and repeat visits to our pubs. • Improved training, induction and development programmes.
Marston's competes for high calibre people to operate our pubs. Our strategic currently within the sector.
objectives are heavily reliant upon the quality and training of our people.
Increased costs as a result of seeking alternative suppliers. • Surveying the engagement of our employees and identifying action
Disruption to key suppliers, particularly those closely involved with our
points for teams.
Uninterrupted operations are dependent on the continual supply of goods and day-to-day activities (logistics, food, drink), or shortage of commodities
services often from single sources. could significantly impact • Continual assessment of guest preferences; market and consumer
insight data.
The operational performance of our partnership with Carlsberg is materially Marston's operations.
significant to our total profit.
• Continual analysis of sales performance data of single sites and by
Disruption to food supplies from the EU due to administration, or customs pub format.
checks, impacting upon our offering to guests and our cost base.
• Pricing strategy built upon careful analysis, in sufficient detail,
That our pubs, brands or services fail to attract guests, do not reflect of guests' sensitivities.
changing preferences, or offer poor service or quality. Equally there is a
risk that our prices become uncompetitive. • Marketing, including digital marketing campaigns.
Inflationary pressure on costs might be difficult to pass on, resulting in • Cost control, including menu margin analysis.
reduced margin.
• Investment, location and design of our pubs.
• Continual assessment of suppliers' resilience and capacity.
• Site visits to our suppliers to assess crisis planning.
• Contingency planning: identifying how products or services can be
substituted.
Movement - Increasing: Competition to recruit the best people is likely to
increase during the 2021/22 financial year. Short-term supply chain problems
are increasingly likely to create some disruption, which the Group will seek
to alleviate. The operation of our pubs could be impacted upon by further, or
extended, trading restrictions as a result of the pandemic.
Opportunity: Post pandemic, pubs have an opportunity to build on the renewed
interest in pubs.
7. Political and economic risk
Risk context The risk Potential impact Mitigation
The Government could bring in additional restrictions for pubs and lodges to Supply chain disruption could reduce the ability of the UK to recover and grow Costs of food, commodities and equipment could rise as a result of a lack of • Positioning our guest offer at the right price point.
operate within. the economy. It could also fuel further inflation resulting in less disposable supply.
income for consumers.
• Continue to lobby Government on the COVID-19 safety measures operated
Supply chain issues could continue to create operational problems for our
It may be harder to secure long-term agreements with our suppliers. within our premises.
suppliers. The import of goods from the EU could be disrupted by the Government's plan to
start customs checks in early 2022. Fresh food is reliant upon fast delivery. Customs duty border checks could disrupt our supply chain impacting upon the • Continual assessment of supply contracts and renegotiation of terms when
Inflationary pressure could increase the cost of the Group's inputs, whilst In the event of disruption, it could be difficult to source alternative availability of food and drink brands to our pubs. they fall due, to protect our business from customs duties.
undermining consumer confidence. supplies of food and drink for the same cost.
• Where feasible, working with our key suppliers to hold stocks in the UK
of food and drink sufficient to cover short-term disruption.
• Consider alternative sources of supply if our suppliers have trouble
importing goods.
Movement - Increasing: We recognise the disruptive effect that cross-border
controls could have upon our imports, and those of our suppliers. Increasing
inflation would impact the cost base for many of our suppliers and pub
operations, and also for our tenants.
Opportunity: The Government's delay in custom checking all goods from the EU
until the start of 2022 is welcome, and will hopefully result in greater
efficiency during the customs declaration process. Pubs normally remain very
competitive when prices are rising in the economy, offering an experience
which is value for money.
8. Information Technology
Risk context The risk Potential impact Mitigation
Our business activity is reliant upon the Group's IT network to communicate, Threats to IT are both external and internal and could result in a network Reduction in the effectiveness of operations, business interruption and loss • Anti-virus and firewall protection.
operate effectively, serve our guests, process transactions and report on outage, loss, theft or corruption of data or denial of service. of profit.
results.
• Access control, password protection and IT policy adherence.
Regulatory fines as a result of the loss of data.
The continuous operation of our business is dependent upon the uninterrupted
• Network controls and monitoring.
running of our computer network, site links and the internet.
• Penetration testing and remediation.
An increased cyber threat as criminals try to take advantage of the increase
in homeworking compared with two years ago. • Backup procedures.
Marston's handles the personal contact details of many of its guests who opt • Data recovery plans and rehearsals.
to use the Wi-Fi or receive mails, as well as a large number of employees.
• Raising employee awareness regarding IT security.
• Data security policies, processes and training.
• Data breach incident response plan and scenario training.
• Work at home policy.
• Additional network bandwidth and additional VPN access.
Movement - No change in risk: Global cyber risk has evolved in recent years,
targeting the theft of personal data, launching ransomware attacks and
intercepting transfers of money. Marston's has invested in its network
protection, firewall and device monitoring functionality. Penetration testing
is conducted on its network and, each year, specific cyber risk reviews are
conducted on security by an independent team.
Opportunity: The ability for our support teams to securely work from home, as
required, creates greater agility and resilience for the business. Our
engagement with guests through technology in a cyber secure manner creates
more digital marketing opportunities.
Statement of Directors' Responsibilities in respect of the Annual Report and
the Financial Statements
The Directors are responsible for preparing the Annual Report and the Group
and parent Company financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under that law they 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 applicable law and have elected to prepare the parent Company
financial statements in accordance with UK accounting standards and applicable
law, including FRS 102 The Financial Reporting Standard applicable in the UK
and Republic of Ireland. In addition, the Group financial statements are
required under the UK Disclosure Guidance and Transparency Rules to be
prepared in accordance with International Financial Reporting Standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union. 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 parent Company and of the Group's profit
or loss for that period. In preparing each of the Group and parent Company
financial statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable, relevant,
reliable and prudent;
• for the Group financial statements, state whether they have been
prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and International Financial
Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union;
• for the parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the parent Company financial statements;
• assess the Group and parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern;
• and use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease operations or
have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations. The Directors are responsible for the maintenance and
integrity of the corporate and financial information included on the Company's
website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors
We confirm that to the best of our knowledge:
• the 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; and
· the Strategic Report/Directors' Report includes a fair review of the
development and performance of the business and the position of the issuer and
the undertakings included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties that they face. We
consider the Annual Report and Accounts, taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to
assess the Group's position and performance, business model and strategy.
Disclosure of information to Auditor
The Directors who held office at the date of approval of this Directors'
Report confirm that, so far as they are each aware, there is no relevant audit
information of which the Company's Auditor is unaware; and each Director has
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.
Andrew Andrea
Hayleigh Lupino
Chief Executive
Officer
Chief Financial Officer
ENDS
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