Marston's PLC Annual Report and Accounts 2020
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Marston’s PLC Annual Report and Accounts 2020 Marston ’s PLC Annual Report and Accounts 2020 1 For all of us, this has been an incredibly challenging year. The COVID-19 global pandemic has created a huge amount of worry, stress and uncertainty across our business, and in our personal lives. I never imagined a time that would see the closure of our entire pub estate, nor that varying restrictions would remain in place as we continue to navigate our way through this crisis. I am immensely proud and inspired by the response of our people in these very challenging circumstances. We pulled together, shared experiences and applied our knowledge and skills to close and reopen our pubs safely, for our people and our guests. Our people played their part and, along with key workers across the nation, and many members of the communities within which we live and work, went ‘above and beyond’ to help others at this time of need. I am extremely grateful and offer a personal message of thanks to you all. Ralph Findlay Chief Executive Officer 2 Marston ’s PLC Annual Report and Accounts 2020 A Snapshot of 2020 For the 53 weeks ended 3 October 2020 Underlying Total 2020 2019 2020 2019 Total revenue £821.0m £1,173.5m £821.0m £1,173.5m Total (loss)/profit before tax £(22.0)m £95.1m £(397.1)m £(20.1)m Basic (Loss)/earnings per share (1.7)p 12.7p (56.8)p (2.8)p Net cash flow £50.5m £(10.5)m £50.5m £(10.5)m Resilient trading performance Transformational Carlsberg post reopening joint venture completed 30 October 2020 Response to COVID-19 prioritised safety, livelihoods, pub ambience, Signifcant cash headroom post fnancial sustainability joint venture completion, further debt reduction targeted Lower debt – net borrowings before joint venture completion Future strategy: focused c.£50m lower than 2019 pub business well placed as market recovers Notes: The results above reflect the total performance of the Group including discontinued operations. These results are detailed in the Group Income Statement on page 84 and note 8 on page 102. The underlying results reflect the performance of the Group before non-underlying items. The Directors consider that these figures provide a useful indication of the underlying performance of the Group. A reconciliation between the underlying results and the statutory numbers can be found in the Group Income Statement on page 84. The Strategic Report, outlined from the inside front cover to page 43 incorporates: A Message of Thanks, A Snapshot of 2020, At a Glance, Our Business Model, Chairman’s Statement, Stakeholder Engagement, Chief Executive’s Statement, Our Market Environment, Our Strategy, Our Key Performance Indicators, Group Operating and Financial Review, Risks and Risk Management, Our Principal Risks and Uncertainties, Our Levels of Defence, Managing and Nurturing our Resources and Relationships, Non-Financial Information Statement and Section 172 (1) Statement. By order of the Board Ralph Findlay Chief Executive Officer 10 December 2020 Marston’s PLC Annual Report and Accounts 2020 3 In this year’s report Strategic Report Strategic Strategic Report A Message of Thanks 1 Our Business A Snapshot of 2020 2 Model At a Glance 4 Our Business Model 6 Chairman’s Statement 8 Stakeholder Engagement 9 Pages 6–7 Chief Executive’s Statement 10 Our Market Environment 12 Our Strategy 13 Our Key Performance Indicators 16 Group Operating and Financial Review 18 Risks and Risk Management 21 Market Our Principal Risks and Uncertainties 22 Our Levels of Defence 28 Environment Managing and Nurturing our Resources and Relationships 30 and Strategy Non-Financial Information Statement 42 Section 172 (1) Statement 43 Pages 12–15 Governance Chairman’s Introduction 45 Board of Directors 46 Corporate Governance Report 48 Nomination Committee Report 52 Our KPIs Audit Committee Report 56 Directors’ Remuneration Report: 59 Annual Statement by Chairman 59 Remuneration Summary 2019/20 63 Annual Report on Remuneration 64 Directors’ Report 72 Pages 16–17 Statement of Directors’ Responsibilities 74 Financial Statements Independent Auditor’s Report to the Members of Marston’s PLC 76 Group Income Statement 84 Our Resources Group Statement of Comprehensive Income 85 and Group Cash Flow Statement 86 Group Balance Sheet 87 Relationships Group Statement of Changes in Equity 88 Notes to the Group Accounts 89 PagesPage 00-00 30–41 Company Balance Sheet 132 Company Statement of Changes in Equity 133 Notes to the Company Accounts 134 Additional Information Information for Shareholders 146 Directors’ Glossary 149 Remuneration Report Pages 59–71 Financial Statements Page 76–144 Find out more online For a full year-end press release, preliminary results presentation and webcast, visit: www.marstons.co.uk/investors 4 Marston’s PLC Annual Report and Accounts 2020 At a Glance Marston’s has around 9,400 employees and a diverse estate of over 1,350 pubs and bars that allows us to offer something for every guest, in each of the communities within which we operate. For the first time in our long history, we are a focused pub operator, with a culture that places guests at the heart of everything we do. Pubs and Bars • Larger food-led managed pubs, premium bars and restaurants, Pubs and Bars accommodation. • Typical guests: value seekers or those looking for a premium experience. • Community and independently run pubs, either managed, franchised or tenanted, often more wet-led in their format/offer. 1,365 • Great pubs that maximise the abilities of skilled entrepreneurs, with a Rooms licensee who connects with their community. • Typical guests: those wanting to enjoy a drink, socialise and be entertained with people from their community. • Majority of pubs estate in suburban locations, with 27 pubs in city centres; 1,665 less exposure to impact of COVID-19 on footfall in city centres. Pubs and Bars revenue £515.5m Pubs and Bars underlying operating proft £84.7m Brewing* • Six breweries producing a wide portfolio of cask, keg and Locations packaged beers. • Key brands: Pedigree, Hobgoblin, Wainwright and Shipyard, and licensed brands including Estrella Damm. • Local provenance in regional markets with Banks’s, Jennings, Mansfield, 18 Ringwood, Brakspear and Eagle. Brewing revenue • Typical consumers: discerning and knowledgeable drinker at home and away from home (in pubs, clubs and bars). £305.5m Brewing underlying operating proft * Brewing is a discontinued operation following the sale of Marston’s Beer Company into the joint venture with Carlsberg UK, which completed on 30 October 2020. £17.3m Group Services • Our central teams provide a range of functional services that support and connect the business, including IT, HR, Finance, Health and Safety and Governance. All are focused on setting the financial and governance framework that helps to deliver our strategic objectives. Marston’s PLC Annual Report and Accounts 2020 5 Strategic Report Strategic Marston’s Estate in 2019/20/ We operate across the UK, with the majority of our pubs and bars located in suburban areas. Scotland 21 250 1 In a city centre location North of England 375 225 1 4 13 In city centre locations Midlands 630 494 2 3 6 In city centre locations Wales 104 159 South of England 235 537 3 5 7 In city centre locations Key Pubs and Bars Rooms Brewing* Distribution centres and depots* * Since the period end, the Brewing assets, including distribution centres and depots, have transferred to the joint venture with Carlsberg UK. 6 Marston’s PLC Annual Report and Accounts 2020 Our Business Model We are focused on operating a high-quality pub and rooms business offering great places to drink, eat and stay. While pubs may have changed a lot over the years, the reasons people use them remain the same. The pub is where we go to socialise, celebrate, share an experience or simply enjoy a cold beer or a bite to eat at the end of a long day. We are at the heart of local communities, offering a warm welcome and value for money. Our biggest contributor of profit comes from the sites under our direct management and our flexible approach enables us to select the right operating model and proposition for each pub to maximise its return. Purpose Values To build relationships and bring people The Marston’s Way together, creating happy, memorable As a business that prides itself on engaging and and meaningful experiences. enabling team members to take responsibility, it is important that we all know what is expected of us and that we have the support and guidance Culture to make the right decisions. Marston’s is a people-powered business and there is one element at its core that never fades, regardless of how big our business has become, and that is we care. Our ‘reason for being’ as a business is to help people feel good, whether they are… We are one Marston’s, one team – trusted to make • drinking our beer the right decisions and play our part. • eating our food • experiencing our hospitality • staying in our accommodation • working with us or for us • investing with us We care – we take time to listen, understand and do If we are to achieve this, it is important that we run the right things for our customers and stakeholders. our business in an ethical and responsible manner, truly caring for the people and places we impact along the way. Resources and relationships Our business relies on the strength of its people We celebrate – when we do something really well, and their relationships with our key stakeholders to we shout about it and have fun celebrating. maximise the value from our portfolio and manage our financial capital prudently.