TIDMMARS
RNS Number : 8655J
Marston's PLC
24 December 2020
Marston's PLC (the "Company")
Annual Report and Accounts and Notice of Annual General Meeting
2021
The following documents have now been posted or otherwise made
available to shareholders:
-- 2020 Annual Report and Accounts;
-- Notice of Annual General Meeting to be held on 27 January 2021 ("AGM Notice");
-- Proxy forms for the 2021 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
As required by DTR 6.3.5R(3), the Company confirms that the 2020
Annual Report and Accounts and AGM Notice are now available to view
or download in PDF format from the Marston's PLC website:
www.marstons.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 10
December 2020. That information together with the information set
out below, which is extracted from the 2020 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 2020 Annual Report and
Accounts. Page and note references in the text below refer to page
numbers in the 2020 Annual Report and Accounts. To view the
preliminary announcement, slides of the results presentation and
audio webcast please visit
www.marstons.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 recognises the following principal risks could
materially impact upon the operation of the business and its
strategic objectives.
Pandemic risk is recognised as an individual key risk below due
to the uncertainty of the current crisis, its duration of impact
and its eventual resolution. It is one of the very few risks which
can result in the complete shutdown of our pub estate.
At present it is appropriate to recognise that future lockdowns
at a local or national level remain possible.
Many of our principal risks are amplified by the pandemic
crisis, necessitating additional mitigations to be put in place to
support future business continuity. The pandemic impact upon the
individual principal risks is shown on the following pages.
1. Pandemic
Risk context The risk Potential impact Mitigation
COVID-19 There is a risk Ability of our * Tracking government advice and implementing it
uncertainty that infection teams to operate effectively.
regarding the rates increase safely.
continued impact leading to Reduced numbers
upon public further of guests, and * Adapting our pubs to facilitate distancing.
health restrictions shorter stays.
and our on the public Increased
behaviour. and further operating * Training our team members.
The duration of trading costs.
measures taken regulations for
to reduce the pubs * Building contingency plans for future lockdowns.
infection rate and lodges.
is uncertain.
* Consulting with our employees on safety concerns and
operational issues.
* Simplifying our menus, streamlining our guest
proposition and our supply chain to concentrate on
offering the highest guest satisfaction at the right
margin.
* Regular scrutiny of asset values.
----------------- ------------------ ------------------------------------------------------------
Impact The pandemic has impacted the valuation
of the Group. Hospitality sector share prices
are depressed to a historic low. The determination
of asset values must consider future trading
levels which are at present uncertain.
--------------------------------------------------------------------------------
Movement - Increased: The world is in the midst of a global pandemic. Until a vaccine
has been successfully deployed, our operating environment and the ability to engage
with our guests remains potentially disrupted.
Opportunity: Our pubs have been sorely missed by guests when forced to close, and
upon reopening, their popularity especially during the EOHO promotion has been a
reminder of their importance to their community. The situation reinforces our guests'
loyalty to their local pub. Pubs can benefit from the increased spend by the public
within the locality of their homes. The changing marketplace provides opportunity
for us to stand out to our guests.
The vaccination of the most vulnerable has begun in the UK, hopefully this will continue
successfully, leading to widespread immunisation in 2021.
2. Liquidity
Risk context The risk Potential impact Mitigation
Business strategy While the UK The liquidity * Continue to lobby Government for pubs to remain open
is to reduce battles the of the business with the assurance that they can operate in a
debt, however pandemic, could come under COVID-19 safe manner.
short-term there is a risk strain as a result
disruption of regional of steps taken
could necessitate lockdowns by the UK * Lobby Government for more financial support.
the need for or national Government.
additional measures
finance. which could * Reduce debt.
impact
upon the ability
of the pubs to * Conserve liquid funds by cutting back on capex spend
trade. and reducing costs.
* Maintain strong relationships with financial backers
.
----------------- ------------------ ------------------------------------------------------------
Pandemic impact Successive waves
of the pandemic * Significant headroom in our bank facility to provide
could impact operational liquidity for at least 18 months without
upon the further recourse.
confidence
of banks to back
those businesses * Lobby Government on the importance of the pub trade
most affected, to the UK economy.
such as
hospitality.
* Plan for resilience within our financial model to
cover further short-term disruption.
------------------ ------------------------------------------------------------
Movement - Increased: UK Government have taken action to help protect
the hospitality business during the pandemic, which has helped liquidity
within Marston's, however trading conditions are likely to remain
disrupted in the short term.
Opportunity: In the medium-term competition may reduce as a result
of operators scaling back or leaving the market, bringing opportunities
at the right rate of return.
3. Health and safety
Risk context The risk Potential impact Mitigation
The safety of Breaches of Significant * Health, safety and hygiene management systems
our guests, our health damage embedded.
people and the and safety to reputation.
public is regulations
fundamental might endanger * Dedicated safety advisers seeking continuous
to our the health of improvement.
activities. an individual,
We seek to attain attract media
the highest attention and * Regular independent expert safety audits at our pubs.
levels high penalties.
of safety. Lapses
of safety damage * Training of team members.
the trust and
reputation of
the Group. * Escalation of potential safety threats to senior
operational management.
----------------- ----------------- -------------------------------------------------------------
Pandemic impact The Government Once issued, regulations have
and local been communicated by our Health
authorities and Safety team to our operational
have issued managers to ensure they are
instructions clear about the steps they
for hospitality need to follow. Pub teams
venues to operate have been retrained on new
safely which measures when necessary. Our
have changed health and safety audits and
depending upon our Regional Safety Advisers
the rate of have checked upon compliance
infection. at site level.
----------------- -------------------------------------------------------------
Movement - Increased: There is an increased responsibility for Marston's
to operate safely during the current pandemic. 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
to be differentiated in our guests' minds by our absolute commitment
to guest care, thereby building long-term trust
4. Food safety
Risk context The risk Potential impact Mitigation
Our guests must Breaches of food Increased * Maintaining excellent levels of compliance through
be provided standards regulation policies, training and monitoring.
with accurate regulations directly
and reliable attract adverse affecting
information media attention Marston's, or * The release of a new e-learning module on allergens
on the food and our suppliers, for completion by all pub team members.
ingredients high penalties. could increase
within our The reliability the complexity
products. of the of the * Working with our supply chain to maintain robust
It is paramount information information systems for identifying constituent food ingredients.
that we can given to our to be provided
guarantee this team members, and the cost
and that we their training, of compliance. * Due diligence on accepting new suppliers, monitoring
keep their trust. and their care and tracking.
Public concern to engage with
over allergens this matter is
has grown in key. * Tracking meal constituents all the way through to our
recent years Our guests' trust menus and the descriptions contained therein and the
and attracts in our high accompanying allergens lists supplied to our team
media coverage. standards members and the public.
of food hygiene
could be quickly
eroded by * Rigorous investigation of complaints.
individual
incidents.
* Tracking legislative changes and adapting operations.
----------------- ----------------- -------------------------------------------------------------
Pandemic impact Disruption to
the food supply * Since the first reopening of pubs we have reduced our
chain resulting menus, with a higher focus upon the quality of our
in financial food items.
pressure on food
suppliers to
the hospitality * Limiting the number of food items also supports our
industry. Wasted suppliers' margins.
food and drink
trapped in sites
locked down. * Substitution of food items to avoid waste.
----------------- -------------------------------------------------------------
Movement - Decreased: The decrease in the number of menu items has
brought greater focus upon the quality of food. Increased training
on allergens for our pub teams.
Opportunity: There is an opportunity for Marston's reputation for food
safety and the care of our guests to grow. In 2021 we will continue
with the development of a new food information system to collect more
detail from our suppliers and enhance safety further.
5. Financial covenants, pension fund deficit, and accounting controls
Risk context The risk Potential impact Mitigation
The Group's Breach of the Loss of investor * Regular detailed management accounts, budgets and
financial covenants with confidence, and forecasts.
system handles our lenders. reputational
many transactions Incorrect damage. Breach
accurately and reporting of covenants, * Detailed financial data collected from our sites.
securely. of financial resulting in
Accurate reporting results. additional
is key to running Unauthorised financial * Financial auditing of our sites based on data
the business transactions. operating analysis.
effectively, The pension restrictions.
and in compliance deficit
with our financial will increase * Constant monitoring of financial ratios.
covenants. while investment
The Group's assets yields fall.
are valued on * Internal and external audits.
the basis of
future
profitability. * Segregation of duties.
The pandemic
increases
uncertainty * Access controls within our systems.
and therefore
increases the
risk that the * Levels of authority.
accounting
valuation
diverges from * Commitment to reduce debt.
market valuation.
* Management of the pension's investment portfolio to
spread risk.
------------------ ----------------- -----------------------------------------------------------
Pandemic impact Lockdowns and
COVID-19 safety * Communication and good relations with our bond
restrictions holders and financial lenders enabled agreement to
impact upon the make appropriate covenant amendments and waivers
normal operation where necessary.
of our pubs and
lodges.
Covenants could
be impacted by
a fall in profit.
----------------- -----------------------------------------------------------
Movement - Increased: There are strong controls mitigating this risk
to a low level. The pandemic has however reduced our profitability
this year. The impact on our covenants is reduced by clear communication
and good long-term relationships with our lenders in order to effectively
explain the impact of the current trading conditions.
Opportunity: The collection of financial data from our sites continues
to increase the knowledge of our guests' spend. In recent years we
have developed our capability to analyse this data to a depth not previously
possible. The use of the data improves the margins we achieve on food
and drink. It also means that offers to guests can be more focused,
and marketing campaigns can be deployed more quickly across the pub
estate.
6. Market/operational
Risk context The risk Potential impact Mitigation
Marston's revenue Our pubs, brands Longer-term * Continual assessment of guests preferences: market
is dependent or services fail reduction of and consumer insight data.
upon being able to attract sales as a result
to offer, and guests, of the pandemic,
attract, our do not reflect or losing * Continual analysis of sales performance data of
guests to an changing opportunities single sites and by pub format.
enjoyable guest preferences to increase
experience, of or offer poor our value
high quality service or proposition. * Pricing strategy built upon careful analysis at
at the right quality. The business sufficient detail of guests' sensitivities.
price. It is Equally there will look to
reliant upon is a risk that reduce costs
attracting back our prices in reaction * Marketing, including digital marketing campaigns.
existing guests become to a sustained
and winning new uncompetitive. reduction in
guests. Failure to sales. * Costs reduced in response to any sustained loss of
Marston's competes attract Reduction in sales, including menu margin analysis.
for high calibre or retain the guest
people to operate best people satisfaction
our pubs. Our negatively levels, and * Investment, location and design of our pubs.
strategic impacting pub re- visits to
objectives performance. our pubs.
are heavily Trading Increased costs * Continual assessment of suppliers' resilience and
reliant restrictions as a result capacity.
upon and the impact of seeking
the quality and on consumer alternative
training of our confidence suppliers in * Site visits to our suppliers to assess crisis
people. as a result of order to build planning.
Uninterrupted COVID-19 creates more resilience
operations are the risk of within our supply
dependent on substantially chain. * Contingency planning identifying how products or
the continual lower sales until services can be substituted.
supply of goods a vaccine is
and services widely
often from single deployed. * Continual awareness of our people offer compared to
sources. Disruption to our competitors through participation in appropriate
The pandemic key suppliers, networks.
caused additional particularly
operating costs those
due to business closely involved * Improved training, induction and development
disruption such with our day-to- programmes.
as stock day activities
write-offs (logistics, food,
and bad debts. drink), or * Surveying our employee engagement and identifying
The operational shortage action points for teams.
performance of of commodities
our joint venture could
with Carlsberg significantly Organised transition of processes
is materially impact Marston's into the new joint venture
significant to operations. with Carlsberg.
our total profit. Disruption to
food supplies
from the EU, with
or without a
trade
agreement.
Increases in
customs
duties could
impact
our offering to
guests and our
cost base.
----------------- ----------------- ------------------------------------------------------------
Pandemic impact Local and
national * Enhanced safety controls.
lockdowns.
Compliance with
evolving * Campaigns and promotions.
regulation.
Guest care.
Safety of our * Communicating with our guests, collecting feedback,
people. acting upon points of improvement and keeping their
Supporting our trust.
suppliers.
* Working with our suppliers to remove complexity.
----------------- ------------------------------------------------------------
Movement - Lower likelihood: The threat from intense competition on
price amongst hospitality companies has receded this year. The operation
of our pubs could be impacted upon by further or extended trading
restrictions as a result of the pandemic.
Opportunity: The reopening of the pubs rekindled guests' appreciation
of their local pubs. The importance of pubs to social interaction
with communities and individual wellbeing has been reinforced by the
crisis. Pubs have an opportunity to build on renewed interest.
7. Political and economic
Risk context The risk Potential impact Mitigation
The UK economy High persistent Our costs to * Positioning our customised offer at the right price
could stay in levels of import food and point.
recession, unemployment drink could rise
compounded could impact as a result of
by UK Government consumer spend customs duties * Lobbying Government on the COVID-19 safety measures
and the EU in our pubs, imposed beyond operated within our premises.
failing particularly December 2020.
to conclude a those with a These costs could
trade deal by more premium also rise as * Continual assessment of supply contracts and
December 2020. focus. a result of a renegotiation of terms when they fall due, to protect
The failure to The import of lack of supply. our business from customs duties.
conclude a trade goods, including It may be harder
agreement to fresh food, from to secure
date has the EU could long-term * Where feasible, working with our key suppliers to
increased be disrupted. agreements with hold stocks in the UK of food and drink sufficient to
business In the event our suppliers. cover short- term disruption.
uncertainty of disruption, Border delays
regarding it could be could disrupt
the flow of goods difficult our supply chain, * Consider alternative sources of supply if our
and services to source impacting upon suppliers have trouble importing goods.
to and from the alternative the availability
EU. supplies of food of food and drink
UK Government and drink for brands to our
could bring in the same cost. pubs.
additional
restrictions
for pubs and
lodges to
operate.
----------------- ----------------- -------------------------------------------------------------
Pandemic impact With little or
no scientific * Effective deployment and management of COVID-19
data, pubs can safety measures.
be blamed for
increased rates
of infection. * Lobby Government to keep pubs open.
* Keep the public's trust.
----------------- -------------------------------------------------------------
Movement - Lower impact: Trade talks with the EU have reached a broad
consensus of agreement compared to the position a year ago. However,
significant uncertainty still exists and the scenario of both sides
pulling away from talks is a possibility. Irrespective of an agreement,
new cross border controls could still cause disruption to imports
from the EU for our suppliers.
Opportunity: Measures brought in by the UK Government will ease the
flow of goods when they arrive in the UK during the first half of
2021. Government investment in the infrastructure of customs handling
should thereafter provide greater efficiency during the customs declaration
process.
The impact on the UK economy by the pandemic is likely to be felt
for a long time. The Government's preference is for lockdowns at a
local level rather than national, which allows the pubs to operate
during the periods in which restrictions are released.
8. Information Technology
Risk context The risk Potential impact Mitigation
Our business Threats to IT Reduction in the * Anti-virus and firewall protection.
activity are both external effectiveness of
is reliant upon and internal operations,
the Group's IT and could result business * Access control, password protection and IT poli
network to in a network interruption cy
communicate, outage, loss, and loss of adherence.
operate theft or profit.
effectively, corruption Regulatory fines
serve our guests, of data or denial as a result of the * Network controls and monitoring.
process of service. loss of data
transactions
and report on * Penetration testing and remediation.
results.
The continuous
operation of our * Backup procedures.
business is
dependent
upon the * Data recovery plans and rehearsals.
uninterrupted
running of our
computer network, * Raising people awareness regarding IT security.
site links and
the internet.
Marston's handles * Data security policies, processes and training.
the personal
contact
details of many
of its guests
who opt to use
the wifi or
receive
emails, as well
as a large number
of our people.
------------------- ------------------- -------------------------------------------------------
Pandemic impact An increase in
homeworking. * Raised people awareness regarding IT security.
An increased cyber
threat as
criminals * Network monitoring increased, additional VPN ca
try to take pacity
advantage. provided.
* Homeworking policy communicated.
------------------- -------------------------------------------------------
Movement - Slight net movement: Global cyber risk has evolved in
recent years, targeting the theft of personal data, launching ransomware
attacks and intercepting transfers of money.
For many years Marston's has invested in its network protection,
firewall and device monitoring functionality. Marston's conducts
penetration testing 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, if required, creates greater agility and resilience for
our business.
Our engagement with guests creates more digital marketing opportunities,
for which security and continuity of our network, as well as the
trust of our guests, is fundamental.
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 Financial Reporting Standards as
adopted by the European Union (IFRS as adopted by the EU) and
applicable law and have elected to prepare the parent Company
financial statements in accordance with UK accounting standards,
including FRS 102 'The Financial Reporting Standard applicable in
the UK and Republic of Ireland'.
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
their 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 IFRS as adopted by the EU;
-- 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 themself aware of
any relevant audit information and to establish that the Company's
Auditor is aware of that information.
Ralph Findlay Andrew Andrea
Chief Executive Officer Chief Financial and
Corporate Development Officer
10 December 2020
ENDS
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