The Group is a leading independent brewing and pub retailing business operating a vertically integrated business model. We operate around 2,150 pubs and bars situated across England and Wales, comprising 1,664 tenanted or leased pubs and 489 managed pubs at the heart of thriving local communities offering a welcoming environment and value for money. Annual Report 2010 Report Annual We operate five breweries — Banks’s Brewery in Wolverhampton, Marston’s Brewery in Burton upon Trent, Jennings Brewery in the Lake District, Ringwood Brewery in Hampshire and Wychwood Brewery in Oxfordshire. Marston’s PLC Marston’s House, Brewery Road Wolverhampton, WV1 4JT Registered No. 31461 Telephone 01902 711811 Annual Report 2010 The Group is a leading independent brewing and pub retailing business operating a vertically integrated business model. We operate around 2,150 pubs and bars situated across England and Wales, comprising 1,664 tenanted or leased pubs and 489 managed pubs at the heart of thriving local communities offering a welcoming environment and value for money. Annual Report 2010 Report Annual We operate five breweries — Banks’s Brewery in Wolverhampton, Marston’s Brewery in Burton upon Trent, Jennings Brewery in the Lake District, Ringwood Brewery in Hampshire and Wychwood Brewery in Oxfordshire. Marston’s PLC Marston’s House, Brewery Road Wolverhampton, WV1 4JT Registered No. 31461 Telephone 01902 711811 Annual Report 2010 CONTeNTS GROUP AT A GLANCe Di Marston’s Inns and Taverns has transformed itself, over the past few years, R e from a wet-led, community-based business into the premier league pub CT HIGHLIGHTS 01 restaurant operator you see today. Approximately 70% of combined sales are i ON OUR MARKET & STRATEGY 02 now generated from the desire to enjoy a value driven dining experience, with greater frequency. INVESTING IN THE MARSTON’S ESTATE 04 Group Revenue Share CHAIRMAN’S LETTER 06 Contributing factors to this dramatic evolution are: the disciplined pursuit of the ‘F-Plan’ — food, families, females, forty/fifty somethings; the outperformance of the new build programme; the recruitment, development 01 –07 58% and retention of top quality people. BUSINESS REVIEW: 08 MORE ABOUT MARSTON’S INNS AND TAVERNS P e MARSTON’S INNS AND TAVERNS 12 RFORMANC ON PAGE 12 MARSTON’S PUB COMPANY 14 MARSTON’S BEER COMPANY 16 KEY RELATIONSHIPS 18 e FINANCIAL REVIEW 19 CORPORATE SOCIAL RESPONSIBILITY 21 Marston’s Pub Company operates 1,664 Retail Agreement, tenanted and leased pubs (as at 2 October 2010). Our income is derived from the sale 08–25 of beers, ciders, wines, spirits and soft drinks to the tenants and lessees of our pubs, from rent and gaming machines. Drink, food and gaming machine Group Revenue Share turnover from 104 Retail Agreements has started to make an important GOV DIRECTORS & ADVISERS 26 contribution to income. e RNANC DIRECTORS’ REPORT 28 We seek to attract and retain the best licensees by offering a wide range of CORPORATE GOVERNANCE REPORT 31 innovative agreements, a flexible approach to the sharing of risk and reward and by building strong business relationships with them. We also provide e DIRECTORS’ REMUNERATION REPORT 37 26% training, advice and value adding business solutions through our Business STATEMENT OF DIRECTORS’ RESPONSIBILITIES 45 Development Managers, My Marston’s Online and our Customer Service Team. 26–45 MORE ABOUT MARSTON’S PUB COMPANY ON PAGE 14 F i NANC GROUP ACCOUNTS INDEPENDENT AUDITORS’ REPORT 46 i AL STAT STATEMENTS 47 NOTES 52 Marston’s Beer Company is our brewing division and focuses on premium cask and bottled beers with true local provenance. Our brands include a wide e M COMPANY ACCOUNTS range of classic English ales brewed in our five breweries: e NTS INDEPENDENT AUDITORS’ REPORT 93 ● Marston’s Brewery, Burton upon Trent, where our national flagship brand BALANCE SHEET 94 Group Revenue Share Marston’s Pedigree is brewed NOTES 95 ● Banks’s Brewery, Wolverhampton brewing Banks’s Bitter and Mild FIVE YEAR RECORD 103 ● Castle Brewery, Cockermouth, producing Jennings beers such as Cumberland Ale and Sneck Lifter 16% ● Ringwood Brewery, Hampshire known for its cask beers including Best 47–103 Bitter, Fortyniner and Old Thumper ● Wychwood Brewery, Oxfordshire, is home to Hobgoblin, Wychwood and Brakspear ales. MORE ABOUT MARSTON’S BEER COMPANY ON PAGE 16 CONTeNTS GROUP AT A GLANCe Di Marston’s Inns and Taverns has transformed itself, over the past few years, R e from a wet-led, community-based business into the premier league pub CT HIGHLIGHTS 01 restaurant operator you see today. Approximately 70% of combined sales are i ON OUR MARKET & STRATEGY 02 now generated from the desire to enjoy a value driven dining experience, with greater frequency. INVESTING IN THE MARSTON’S ESTATE 04 Group Revenue Share CHAIRMAN’S LETTER 06 Contributing factors to this dramatic evolution are: the disciplined pursuit of the ‘F-Plan’ — food, families, females, forty/fifty somethings; the outperformance of the new build programme; the recruitment, development 01 –07 58% and retention of top quality people. BUSINESS REVIEW: 08 MORE ABOUT MARSTON’S INNS AND TAVERNS P e MARSTON’S INNS AND TAVERNS 12 RFORMANC ON PAGE 12 MARSTON’S PUB COMPANY 14 MARSTON’S BEER COMPANY 16 KEY RELATIONSHIPS 18 e FINANCIAL REVIEW 19 CORPORATE SOCIAL RESPONSIBILITY 21 Marston’s Pub Company operates 1,664 Retail Agreement, tenanted and leased pubs (as at 2 October 2010). Our income is derived from the sale 08–25 of beers, ciders, wines, spirits and soft drinks to the tenants and lessees of our pubs, from rent and gaming machines. Drink, food and gaming machine Group Revenue Share turnover from 104 Retail Agreements has started to make an important GOV DIRECTORS & ADVISERS 26 contribution to income. e RNANC DIRECTORS’ REPORT 28 We seek to attract and retain the best licensees by offering a wide range of CORPORATE GOVERNANCE REPORT 31 innovative agreements, a flexible approach to the sharing of risk and reward and by building strong business relationships with them. We also provide e DIRECTORS’ REMUNERATION REPORT 37 26% training, advice and value adding business solutions through our Business STATEMENT OF DIRECTORS’ RESPONSIBILITIES 45 Development Managers, My Marston’s Online and our Customer Service Team. 26–45 MORE ABOUT MARSTON’S PUB COMPANY ON PAGE 14 F i NANC GROUP ACCOUNTS INDEPENDENT AUDITORS’ REPORT 46 i AL STAT STATEMENTS 47 NOTES 52 Marston’s Beer Company is our brewing division and focuses on premium cask and bottled beers with true local provenance. Our brands include a wide e M COMPANY ACCOUNTS range of classic English ales brewed in our five breweries: e NTS INDEPENDENT AUDITORS’ REPORT 93 ● Marston’s Brewery, Burton upon Trent, where our national flagship brand BALANCE SHEET 94 Group Revenue Share Marston’s Pedigree is brewed NOTES 95 ● Banks’s Brewery, Wolverhampton brewing Banks’s Bitter and Mild FIVE YEAR RECORD 103 ● Castle Brewery, Cockermouth, producing Jennings beers such as Cumberland Ale and Sneck Lifter 16% ● Ringwood Brewery, Hampshire known for its cask beers including Best 47–103 Bitter, Fortyniner and Old Thumper ● Wychwood Brewery, Oxfordshire, is home to Hobgoblin, Wychwood and Brakspear ales. MORE ABOUT MARSTON’S BEER COMPANY ON PAGE 16 strategy HIgHLIgHts ● Managed pub development — 15 new-build pubs ● ‘Localness’ and premium ale strategy — Premium completed with performance ahead of target; on ale volumes up by 3%; premium ale brands now D I track to complete next 20 new-build sites in 2011 representing 61% of our ale portfolio; maintained re C t I position as market leader in the premium ale market o N ● The ‘F-Plan’ — Food now represents 40% of sales; over 24 million meals sold in managed pubs, up 5% ● Changes to Board structure — proposed from on last year, at an average spend of £6 2 October 2011 ● Tenanted and leased pub development — For more info on our operations go to: Retail Agreement implemented in 104 pubs www.marstons.co.uk with profit uplift in line with targets, on track to roll out a further 200 Agreements in 2011 FINaNCIaL HIgHLIgHts revenue Underlying* Underlying* operating profit profit before tax 10 £650.7m 10 £148.7m 10 £73.5m 09 £645.1m 09 £147.4m 09 £70.3m 08 £666.1m 08 £161.6m 08 £85.1m 07 £652.8m 07 £163.2m 07 £98.0m 06 £595.5m 06 £152.3m 06 £101.5m £650.7m £148.7m £73.5m Dividend per share Underlying* earnings per share 5.8p 10.0p * The underlying results reflect the 10 10 performance of the Group before exceptional items. The Directors consider 09 7.1p 09 13.4p that these figures provide a useful indication of the underlying performance 08 9.5p 08 18.3p of the Group. 07 9.2p 07 18.8p Earnings and dividends per share have been adjusted where appropriate to reflect the 06 7.7p 06 17.1p 4-for-1 share split in January 2007 and the impact of the issue of new shares under a rights issue in July 2009. 5.8p 10.0p MARSTON’s PLC Annual Report 2010 www.marstons.co.uk 01 Stock Exchange Code: MARS 18528.04 3/12/2010 Proof 7 oUr MarKet & STRATEGY Our Strategic Objectives Our strategy is to exploit and Managed pub development develop further competitive advantage in the pub and brewing We derive a source of competitive advantage sectors based upon our existing in site selection and new pub-restaurant market positions, the knowledge development through our industry-leading and operational capabilities of investment programme. We develop hand- our employees, and the traditional picked sites in excellent trading locations, vertically integrated business model building pubs which reflect the expectations of the Group. In each of our trading of today’s consumer.