Marston's PLC (the "Company")
Annual Report and Accounts and Notice of Annual General Meeting 2019
The following documents have now been posted or otherwise made available to shareholders:
· 2018 Annual Report and Accounts;
· Notice of Annual General Meeting to be held on 23 January 2019 ("AGM Notice");
· Form of Proxy.
In accordance with LR 9.6.1R, a copy of each of these documents has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM.
As required by DTR 6.3.5R(3), the Company confirms that the 2018 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 21 November 2018. That information together with the information set out below which is extracted from the 2018 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 2018 Annual Report and Accounts. Page and note references in the text below refer to page numbers in the 2018 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 following risks are, in the opinion of the Board, the principal risks which could impact on the achievement of our strategy. It is not intended to be a complete analysis of all risks and may change over time. A reminder of the two key components to our strategy:
1. Operating high quality pubs and lodges offering great places to drink, eat and stay.
2. Operating a 'best in class' beer business offering a wide range of premium and local brands and great service.
Market/operational
| Risk context | The risk | Potential impact | Mitigation |
| Marston's revenue is dependent upon being able to offer customers an enjoyable experience at the right price. It is reliant upon attracting back existing customers and winning new customers.
In addition, Brexit could impact upon discretionary spend and consumer confidence.
| That our pubs, brands or services fail to attract customers, do not reflect changing customer preferences, or offer poor service or quality. Equally there is a risk that our prices become uncompetitive.
| Reduction in sales, or heavy discounting in order to attract customers.
| · Customer satisfaction surveys, market and consumer insight. · Continual analysis of sales performance data of individual sites and by pub format. · Pricing strategy, built upon careful analysis of customers' sensitivities at a sufficient level of detail. · Cost control, including menu margin analysis. · Investment, location and design of our pubs. · Structure of our teams aligned with our pub formats.
|
| Movement: The UK economy continues to face uncertainty. Economic drivers for our customers in the near future could be employment uncertainty, interest rate rises, depreciation in the value of sterling and inflation. This creates a risk for our Group in attracting customers and setting prices at an appropriate level. These conditions also present an opportunity to gain market sharefrom other operators who cannot manage the risk as effectively. | |||
Business continuity
| Risk context | The risk | Potential impact | Mitigation |
| Marston's operations depend upon supplies of goods and services often from single sources.
| Disruption to key suppliers, particularly those closely involved with our day-to-day activities (logistics, food, drink), or shortage of commodities could significantly impact Marston's operations. | Disruption to trade impacting upon profit.
| · 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: Marston's recognises the disruptive effects upon our ability to manage events outside of the Group's control. In 2018 we performed audits of resilience at some of our major suppliers' sites in order to understand how the risk can be further mitigated by working in partnership. | |||
Health and safety, including food hygiene
| Risk context | The risk | Potential impact | Mitigation |
| Care for our employees, our customers and the public is a priority for our business and defines the parameters for the risks the business accepts and those activities we reject. We continually seek improvements in the protection of people through investment, training, policies and practices.
Reducing accidents, increasing safety and hygiene is a key priority for our business. | Ultimately, harm or injury to people through breaches of health and safety or food hygiene regulations.
| Personal injury.
Significant damage to reputation, particularly through increased media attention.
Financial penalties.
| · Health, safety and hygiene management systems embedded. · Dedicated health and safety managers seeking improvement. · Regular, documented inspections. · Training of staff. · Escalation of potential safety threats to senior management.
|
| Movement: At Marston's, food hygiene has been consistently and rigorously controlled. The increase in business activity is likely to put more pressure on safe practices. Our busy and evolving working environment continues to be a challenge.
In 2018 we took steps to invest in more resource for health and safety and repositioned its management within the Group HR function in order to meet the need for greater focus. | |||
Information technology
| Risk context | The risk | Potential impact | Mitigation |
| Our business activity is very reliant upon the Group's IT network to communicate, operate effectively, serve our customers, process transactions and report on results. | Threats to IT are both external and internal and could result in a network outage, loss, theft or corruption of data, or denial of service.
| Reduction in the effectiveness of operations, business interruption and loss of profit. Regulatory fine as a result of the loss of data.
| · Anti-virus and firewall protection. · Access control, password protection and IT policy adherence. · Network controls and monitoring. · Penetration testing and remediation. · Backup procedures. · Data recovery plans and rehearsals. |
| Movement: Global cyber risk has evolved recently; theft of personal data is becoming more common; ransomware attacks are now more widespread and attacks are more sophisticated.
Marston's has conducted penetration testing on its network for many years. Specific cyber risk reviews have been conducted in recent years on IT security by independent teams. We have invested in additional network and device monitoring functionality.
In 2018 we enhanced the monitoring of devices accessing our network. Next year we intend to engage more with our people to encourage greater awareness of cyber threats and their role in protecting our IT network. | |||
Our people
| Risk context | The risk | Potential impact | Mitigation |
| Marston's operates in a very competitive environment with a talent outflow from the sector and a shortage of skilled roles such as chefs. Demand for high calibre people adds further pressure in a labour market tightening due to Brexit. Our lack of brand presence and the need to prudently manage costs increases this challenge. | Failure to attract or retain the best people.
| Reduction in customer satisfaction levels.
Financial targets and strategic objectives are not met. | · Continually review and benchmark our people offer against our competitors through participation in appropriate networks. · Development of our 'People Promise'. · Improved induction, training and development programmes. · Increased focus on development of our line managers to improve employee retention. |
| Movement: The sustained growth in our business has allowed for improvements in training programmes and given more opportunity for our people to progress.
Our Performance, Career and Development Review (PCDR) cycle has brought a common approach to people development across the Group, enhancing the dialogue on expectation, achievement and career progression. | |||
Financial covenants, pension fund deficit and accounting controls
| Risk context | The risk | Potential impact | Mitigation |
| The Group's financial system handles a large number of transactions accurately and securely. Accurate reporting is key to running the business effectively and in compliance with our financial covenants. | Breach of the covenants with our lenders. Inadequate funding of the pension scheme. Incorrect reporting of financial results. Unauthorised transactions.
| Loss of investor confidence and reputational damage. Potential loss as a result of fraud. Breach of covenants, resulting in additional financial and operating restrictions. | · Regular detailed management accounts, budgets and forecasts. · Constant monitoring of financial ratios. · Programme of internal and external audits. · Segregation of duties. · Access controls within our systems. · Levels of authority. · Monitoring pension investment yields and increasing contributions in order to clear the pension deficit within a reasonable timeframe. |
| Movement: There are strong controls mitigating this risk to a low level. There has been no change in the risk since last year. | |||
Brexit
| Risk context | The risk | Potential impact | Mitigation |
| The Withdrawal Agreement setting out the terms by which the UK will leave the EU is currently in negotiation. Once concluded the terms will still require approval by the UK Government and the EU. | There is a risk that there is no agreement by the time the UK leaves the EU on 29 March 2019. | A 'no deal' scenario would impact upon our costs to import food and drink due to currency fluctuation, tariffs and inflation. Our ability to export beer could also be impacted by tariffs.
It may be harder to secure long-term agreements with our suppliers.
Border delays could disrupt our supply chain impacting upon the availability of food and drink brands to our pubs and our customers' businesses. The UK job market could become less desirable for EU nationals, which could lead to a shortage of specific types of skilled workers within our market sector. | · Continual assessment of supply contracts and renegotiation of terms when they fall due, to protect our business from Brexit related costs. · Establish procedures to account for customs declarations and tariffs. · Consider alternative sources of supply if our suppliers experience difficulty importing goods. · Less than 4% of our employees are EU nationals. We aim to support our people once information on working within the UK has been confirmed. |
| Movement: Marston's recognises the disruptive effects that Brexit has upon our business and the UK economy, particularly during this period of uncertainty.
Brexit related risks will be continually monitored and reported to our PLC Exec and Board and independent assurance will be sought regarding any business change necessary to meet legislative and commercial requirements. | |||
Statement of Directors' responsibilities in respect of the financial statements
The Directors are responsible for preparing the Annual Report and Accounts and the financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (FRS 102), and applicable law). 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 Company and of the profit or loss of the Group for that period. In preparing the financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· state whether applicable IFRS as adopted by the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 102, have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;
· make judgements and accounting estimates that are reasonable and prudent; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' confirmations
The Directors consider that 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 and Company's performance, business model and strategy.
Each of the Directors, whose names and functions are listed on pages 42 to 43 confirm that, to the best of their knowledge:
· the Company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102, and applicable law), give a true and fair view of the assets, liabilities and financial position of the Company;
· the Group financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
· the Strategic Report together with the Directors' Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors' Report is approved:
· so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
| Ralph Findlay Chief Executive Officer | Andrew Andrea Chief Financial and Corporate Development Officer |
21 November 2018
ENDS